WEBVTT - Fed, Chips, Battery Mining, Markets, and Real Estate (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.080 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.400 --> 0:00:23.960 A lot to chew on in terms of, you know, 0:00:24.040 --> 0:00:26.040 kind of where these central banks are going, where rates 0:00:26.040 --> 0:00:31.200 are going, we had clearly this this ECB panel in Portugal. 0:00:31.440 --> 0:00:33.040 A lot to chew on here, but I think the 0:00:33.080 --> 0:00:36.640 consistent message and again I think the central banks have 0:00:36.720 --> 0:00:40.279 been consistent from day one. Yeah, we are fighting inflation 0:00:41.040 --> 0:00:43.080 after they you know, I think the FED obviously was 0:00:43.320 --> 0:00:45.240 late to the game. You could argue with that whole 0:00:45.240 --> 0:00:47.920 transitory talk a couple of years ago, but since then, 0:00:48.280 --> 0:00:50.639 I think it's been pretty consistent. Yet if you look 0:00:50.640 --> 0:00:53.800 at the WRP function, the markets are kind of suggesting 0:00:53.840 --> 0:00:56.520 that there may be some changes to that, so we'll 0:00:56.520 --> 0:00:58.320 have to see you about it. Our next guest actually 0:00:58.320 --> 0:01:00.560 has an informed opinion, which is great because we're just 0:01:00.640 --> 0:01:03.040 kind of, you know, we're amateurs here. But Tim Dewey. 0:01:03.160 --> 0:01:06.600 He's the chief US economist at sg H Macro Advisors, 0:01:06.640 --> 0:01:09.120 and he's a professor at the University of Oregon at 0:01:09.160 --> 0:01:13.360 The Ducks joined us here in our Bloomberg Interactive Broker Studio. So, Tim, 0:01:13.400 --> 0:01:17.080 we heard from the central bankers today in Portugal. You know, 0:01:17.200 --> 0:01:20.760 it seems like that they're pretty consistent with our job's 0:01:20.760 --> 0:01:21.120 not done. 0:01:21.120 --> 0:01:23.920 You right, right, And that was the message from the 0:01:23.959 --> 0:01:26.360 dots for the Fed two weeks ago that they were 0:01:26.360 --> 0:01:29.600 looking at another fifty basis points of raid hikes this year. 0:01:30.000 --> 0:01:32.040 And Paul actually, I think sort of opened up the 0:01:32.160 --> 0:01:36.039 chance for even more than that when he sort of said, well, 0:01:36.080 --> 0:01:38.240 maybe we'll have to move in September two or you know, 0:01:38.280 --> 0:01:40.440 we want to rule out moving every other meeting again. 0:01:40.720 --> 0:01:43.640 And that's something that I don't think has really been 0:01:43.680 --> 0:01:47.280 on the radar yet, the possibility that six percent is 0:01:47.319 --> 0:01:49.240 still out there as an outcome. 0:01:49.120 --> 0:01:51.280 And you think next meeting is a definite hike. 0:01:51.440 --> 0:01:53.600 Yeah, I think I think we're I mean, i'd almost 0:01:53.600 --> 0:01:56.000 say one hundred percent, just just because I don't know 0:01:56.280 --> 0:01:58.440 everything all happened between now and then, but I think 0:01:58.480 --> 0:02:01.440 that decision was made. In fact, if Paul is saying 0:02:01.520 --> 0:02:04.320 we might have to go again in September. That would 0:02:04.320 --> 0:02:06.720 tell me that that July is for sure. 0:02:07.360 --> 0:02:10.320 So where does that take us into our discussion about 0:02:10.360 --> 0:02:12.560 a recession? Where do you think that kind of shakes 0:02:12.600 --> 0:02:15.280 out here? Because the economic data is still pretty solid. 0:02:15.520 --> 0:02:18.120 Well, the economy is always more resilient than people give 0:02:18.160 --> 0:02:20.440 it credit for. You know that the focus right now 0:02:20.520 --> 0:02:22.639 is on recession because you can you can really chase 0:02:22.760 --> 0:02:25.400 those rate cuts down from from a market perspective, right 0:02:25.440 --> 0:02:27.920 you know that there's there's a potential for some for 0:02:27.919 --> 0:02:32.959 for some big gains on that. But uh, it's it's 0:02:33.000 --> 0:02:37.000 hard to knock the US economy down, is what we're 0:02:37.040 --> 0:02:39.960 learning here, especially now when we're still on the side 0:02:39.960 --> 0:02:43.560 effect of an enormous amount of phiscal stimulus and easy 0:02:43.600 --> 0:02:46.560 monetary conditions that I think are still you know, propelling 0:02:47.520 --> 0:02:52.160 underlying activity. So, uh, it is a recession going to 0:02:52.200 --> 0:02:55.160 happen eventually? Can I tell you that it's going to 0:02:55.200 --> 0:02:58.720 happen in the third quarter? It won't. Can I tell 0:02:58.760 --> 0:03:01.320 you it will happen, you know, second quarter of next year? Maybe? 0:03:01.560 --> 0:03:04.240 You know, I think that from my perspective. The interesting 0:03:04.320 --> 0:03:06.400 thing here is that if you don't get that recession 0:03:06.400 --> 0:03:09.639 anytime soon. There's really room for central banks to keep 0:03:09.720 --> 0:03:12.480 hiking here in the second half, and it'll go on 0:03:12.639 --> 0:03:13.320 beyond July. 0:03:13.680 --> 0:03:17.160 Well, you mentioned stimulus, but Powell said that excess savings 0:03:17.200 --> 0:03:19.760 is not the main driver of inflation. He's more concerned 0:03:19.800 --> 0:03:23.160 about the labor market driving up income and consumption. 0:03:23.680 --> 0:03:25.120 How would you rate that comment. 0:03:25.760 --> 0:03:28.760 I think that's that's a real real issue, is if 0:03:28.760 --> 0:03:32.120 you don't cool down the labor market eventually, you know, 0:03:32.240 --> 0:03:34.880 the we've got some benefit right now, and we've got 0:03:34.920 --> 0:03:37.760 certainly got lower energy prices. We're seeing headline inflation come down, 0:03:37.760 --> 0:03:40.720 We're probably use car prices come down, shelter prices, so 0:03:40.760 --> 0:03:42.680 we've got some benefits there that are really I think 0:03:43.040 --> 0:03:45.680 going to likely hold down inflation here in the second 0:03:45.760 --> 0:03:49.040 half of the year. We'll see those any of those 0:03:49.080 --> 0:03:53.400 forecasts have actually you know, turned out badly in the past. 0:03:53.960 --> 0:03:56.880 But but you know, if you if it's almost like 0:03:56.920 --> 0:03:59.280 the pause that refreshes though, right, is that that's kind 0:03:59.320 --> 0:04:04.280 of bringing down bringing up real incomes and spending capacity 0:04:04.320 --> 0:04:06.160 that then would come to bear in the first first 0:04:06.160 --> 0:04:09.040 half of the next year. So you know, if you 0:04:09.120 --> 0:04:11.560 don't really I think that if you don't think the 0:04:11.600 --> 0:04:14.560 Fed's right. If you don't start getting a little bit 0:04:14.560 --> 0:04:17.839 more softer even software activity in labor markets, you are risking, 0:04:17.960 --> 0:04:19.440 you know, a repeat of inflation. 0:04:19.760 --> 0:04:22.080 Are you surprised that the labor market's been as resilient 0:04:22.480 --> 0:04:24.240 as it has been. We still have a jolts number 0:04:24.279 --> 0:04:26.800 that's near ten million job openings. You have to make 0:04:26.839 --> 0:04:26.960 of that. 0:04:27.279 --> 0:04:30.640 I think that people again underestimate the resilience of the economy. 0:04:30.760 --> 0:04:33.880 Is that what has really amount is that we really 0:04:34.920 --> 0:04:40.280 stoked it stoked, stoked the fire pretty hot. And so no, 0:04:40.400 --> 0:04:43.200 I have I haven't been surprised. I'm not surprised by 0:04:43.200 --> 0:04:45.880 the rebound in the housing market at all. I think 0:04:45.920 --> 0:04:47.719 that you know, the FED has more work to do here. 0:04:48.080 --> 0:04:50.680 Well, can we talk about housing numbers as well, because 0:04:50.720 --> 0:04:53.880 housing starts leaping in May. I wonder if you think 0:04:53.880 --> 0:04:58.480 that the FED failed to anticipate how higher rates would 0:04:58.720 --> 0:05:01.680 sort of convince people to not put their homes on 0:05:01.760 --> 0:05:04.520 the market. And if that's something that you are weighing in. 0:05:04.440 --> 0:05:07.039 Your speration, it certainly seems to be like, Hey, it's 0:05:07.040 --> 0:05:09.120 that the FED miss missed this. And we know this 0:05:09.200 --> 0:05:13.200 because you know, last week during Paul's testimony. In the 0:05:13.200 --> 0:05:15.799 first day he is written testimony, he says the housing 0:05:15.839 --> 0:05:18.160 markets a week, and the second day he says, well, 0:05:18.160 --> 0:05:19.880 we met with some builders yesterday and it turns out 0:05:19.920 --> 0:05:23.240 the housing market's not that way right. Actually, it's rebounding. 0:05:23.240 --> 0:05:25.440 And then we see the numbers start to come out. Now, 0:05:25.839 --> 0:05:28.800 I think that we've been writing about this forever because 0:05:30.520 --> 0:05:34.279 it seemed obvious to us that you really did break 0:05:34.320 --> 0:05:37.760 the housing market in some respects by holding interest rates, 0:05:37.800 --> 0:05:40.320 you know, near zero the policy level for so long. 0:05:40.400 --> 0:05:43.400 You have so many people locked into these three percent 0:05:43.440 --> 0:05:47.080 or less rates. There's no selling pressure. It's not like 0:05:47.120 --> 0:05:48.960 two thousand and five, two thousand and six, two thousand 0:05:49.000 --> 0:05:51.440 stas and even if some people start losing their job, 0:05:51.720 --> 0:05:54.680 you're not gonna have mass selling pressure. At the same time, 0:05:54.720 --> 0:05:57.240 you have the demographics of more and more millennials wanting 0:05:57.320 --> 0:05:59.880 to buy homes, and so the only game in that 0:06:00.120 --> 0:06:04.400 talent then becomes new construction. So, you know, we've thought, 0:06:04.520 --> 0:06:07.240 you know, that the housing market was going to be 0:06:07.320 --> 0:06:11.159 more durable than people anticipated for for what's really a 0:06:11.200 --> 0:06:13.159 substantial increase in mortgage rates. 0:06:13.320 --> 0:06:16.720 Yep, tell me about you. 0:06:14.640 --> 0:06:17.760 Know, so if anybody's trying to move lately. It's kind 0:06:17.760 --> 0:06:20.160 of a shocker, but you know, these are things that 0:06:20.200 --> 0:06:22.000 once you sort of wrap your mind around and you 0:06:22.040 --> 0:06:24.920 need a house, you say, okay, well, you know seven percent, 0:06:25.000 --> 0:06:27.240 Eventually I'll be able to refinance it in five percent 0:06:27.360 --> 0:06:30.520 or four percent, and I got to just pull the trigger. 0:06:30.680 --> 0:06:33.800 So, Tim, what's the biggest risk to this economic outlook 0:06:33.839 --> 0:06:35.320 for the next twelve months? Do you think is it 0:06:35.400 --> 0:06:38.680 something exogenous or is there because we had the bank 0:06:38.760 --> 0:06:40.960 issue a few months ago, people thought that might be 0:06:41.040 --> 0:06:43.000 a real challenge for the economy. That's kind of abated 0:06:43.040 --> 0:06:44.440 a little bit. What's the biggest risk out there? 0:06:44.480 --> 0:06:49.120 Yeah, so it's it's it's always the exogenous shocks that 0:06:49.200 --> 0:06:50.840 gets you at the end, right, I mean, so one 0:06:50.920 --> 0:06:52.520 risk is the FED. I mean, it's sort of a 0:06:52.560 --> 0:06:55.880 conventional story is that the FED has you know that 0:06:55.880 --> 0:06:59.159 the Fed's already overtightened or will overtighten, and eventually that 0:06:59.240 --> 0:07:03.120 will crash fresh investment activity and eventually firms will have 0:07:03.160 --> 0:07:05.320 to lay off workers. Right, that's kind of the standard 0:07:05.360 --> 0:07:08.240 recession story. But what seems to be emerging is right 0:07:08.279 --> 0:07:12.200 now the FED is slowing the economy, and maybe it's 0:07:12.240 --> 0:07:15.160 not until we get a real good shock, you know, 0:07:15.240 --> 0:07:18.520 like last year, that Ukraine shock, or the energy shock 0:07:18.560 --> 0:07:22.920 from Russia's invasion of Ukraine. That could have been the 0:07:22.960 --> 0:07:26.760 sort of recessionary shock had not the economy been flying 0:07:26.880 --> 0:07:31.720 so high at that time. So, you know, I again, 0:07:32.040 --> 0:07:34.960 will a recession happen? You know, no, But these are 0:07:35.320 --> 0:07:39.120 recessions are fairly rare. I mean, yeah, so, and they're 0:07:39.160 --> 0:07:41.960 all adiosyncratic. There's a lot of you know, we tell 0:07:42.080 --> 0:07:44.760 different stories about every session, and we'll tell a different 0:07:44.760 --> 0:07:46.880 story about the next one than we have in undeath 0:07:46.880 --> 0:07:47.440 the rest. 0:07:47.400 --> 0:07:49.080 Tim for better worse. You are one of our go 0:07:49.160 --> 0:07:53.120 to people for the Pacific Northwest. Your professor, University of Oregon. 0:07:53.120 --> 0:07:55.960 That's where you got your PhD undergraduate, the University of 0:07:56.000 --> 0:07:59.360 pujit sound most of us don't get to go to 0:07:59.440 --> 0:08:00.680 that part of the world, maybe as much as we 0:08:00.720 --> 0:08:03.000 would like, kind of kind of remote talk to us 0:08:03.000 --> 0:08:06.480 about the economy out there, housing market, just job market. 0:08:06.520 --> 0:08:08.920 How what's what's the feeling of the person on the 0:08:08.920 --> 0:08:10.920 street in University of Oregon. 0:08:11.200 --> 0:08:14.920 Well, you know the job I mean, during the pandemic, 0:08:14.960 --> 0:08:16.600 you had a lot of people move to you know, 0:08:16.800 --> 0:08:19.520 move into these you know, western towns, to be able 0:08:19.520 --> 0:08:22.400 to gain gain gain advantage of that. I think some 0:08:22.440 --> 0:08:25.840 of that has faded in the Northwest, and the Northwest has, 0:08:26.000 --> 0:08:28.160 you know, more recently, I think struggled with some of 0:08:28.160 --> 0:08:29.480 the things you see in a lot of the West 0:08:29.560 --> 0:08:33.480 Western cities, you know, the the higher rates of homelessness 0:08:33.559 --> 0:08:37.440 and so uh. You know, I think the economy is 0:08:37.440 --> 0:08:41.120 is solid out there, but maybe not as solids as 0:08:41.120 --> 0:08:43.960 we would we would have expected coming out of of 0:08:43.960 --> 0:08:46.679 of this pandemic relative to where other places have been. 0:08:46.760 --> 0:08:48.880 So did you guys get that influx of I don't know, 0:08:49.200 --> 0:08:51.520 I mean just California for example, did they come up 0:08:51.559 --> 0:08:52.720 to that part of the world. 0:08:52.760 --> 0:08:58.520 You know, the Northwest has regularly been a receiver of 0:08:58.160 --> 0:09:02.000 of of emmigrants from from California, just like a lot 0:09:02.000 --> 0:09:04.200 of other places. And so yeah, that's certainly been a 0:09:04.240 --> 0:09:09.680 long time trend that supported Organ's growth in particular. You know, 0:09:09.800 --> 0:09:13.960 one one one interesting thing is Organ's internal natural rate 0:09:13.960 --> 0:09:16.360 of growth has really slow to to basically zero. 0:09:17.200 --> 0:09:19.280 So what are some of the core industries out there 0:09:19.320 --> 0:09:20.160 that still. 0:09:20.400 --> 0:09:23.160 Well, you know, the big ones that people talking about. 0:09:23.280 --> 0:09:26.720 Everybody knows Nike obviously, Nike's got a big private vision 0:09:26.760 --> 0:09:30.520 there and you have Intel has a large manufacturing facility, 0:09:30.559 --> 0:09:33.720 and of course you have uh in Seattle, you know, 0:09:33.760 --> 0:09:37.360 the Amazon Microsoft that's sort of that sort of tech around. 0:09:38.040 --> 0:09:41.000 Tech is big in the Northwest. We have still forest 0:09:41.000 --> 0:09:45.920 products certainly also another historical uh you know, element of 0:09:45.960 --> 0:09:48.280 the of the of the Northwest economy. 0:09:48.559 --> 0:09:50.439 All right, good stuff. He's one of our go to 0:09:50.559 --> 0:09:53.760 people there. You don't see too many people come through. 0:09:53.640 --> 0:09:55.720 Our office from you know, I'll try to do it 0:09:55.760 --> 0:09:56.160 more often. 0:09:56.200 --> 0:10:01.160 Yeah, exactly right, Dewey. He's the chief US economist S. G. H. Macroadvice, 0:10:01.200 --> 0:10:04.760 which is also a professor at the University of Oregon. 0:10:05.000 --> 0:10:07.720 The Ducks right there, PCUM coming into our Bloomberg Interactive 0:10:07.720 --> 0:10:09.880 Brookers studio. Right now, let's get a little bit of 0:10:09.880 --> 0:10:11.720 a reset here. We're going to get a business last 0:10:11.720 --> 0:10:12.560 with mister John Tucker. 0:10:12.600 --> 0:10:15.840 All right, Fares Stocksco. Right now, the major averages they 0:10:15.960 --> 0:10:20.120 are mixed to. Little change now. The message that investors 0:10:20.120 --> 0:10:23.760 for now seem to be latched onto from Fed cheer 0:10:23.880 --> 0:10:27.520 Jerome Pal. A recession, he said, is not the most 0:10:27.640 --> 0:10:32.200 likely scenario, as the economy remains fairly resilient. At that 0:10:32.679 --> 0:10:36.160 Central Bank confab taking place in Portugal, so we're seeing 0:10:36.160 --> 0:10:39.880 a rally in megacap stocks like Tesla and Amazon dot Com. 0:10:40.240 --> 0:10:43.840 The chip makers also trimming some of the earlier sell 0:10:43.840 --> 0:10:46.000 off that was driven by a report that the US 0:10:46.080 --> 0:10:50.240 considering new curbs shares of Nvidia. Right now, that's one 0:10:50.240 --> 0:10:53.200 of the laggards in the Nasdaq one hundred. It is 0:10:53.280 --> 0:10:57.080 down just about one percent right now. Overall, SMP five 0:10:57.160 --> 0:11:00.840 hundred one point lower, the Nasdaq one hundred up forty 0:11:00.960 --> 0:11:03.400 seven points. That's up three tents of a percent. 0:11:03.640 --> 0:11:03.760 Now. 0:11:03.800 --> 0:11:06.600 The down jones of Dunster larverage one hundred and twenty 0:11:06.840 --> 0:11:10.240 points lower. Right now. I'm going to see if Madison 0:11:10.280 --> 0:11:12.679 knows this one. I know that I know that you're 0:11:12.720 --> 0:11:16.120 going to get this. No, the guy, the man who 0:11:16.240 --> 0:11:21.640 brought you chachia and clap on, clap off has died. Really, 0:11:21.760 --> 0:11:25.959 Advertising executive Joseph Pettitt turned the Chia pet and clapper 0:11:26.080 --> 0:11:28.600 light switch into retail sensations. 0:11:28.760 --> 0:11:30.640 I know it was going to be a sad story. 0:11:30.679 --> 0:11:32.640 You had me popping into the microphone. 0:11:32.640 --> 0:11:33.440 It was ninety one. 0:11:33.880 --> 0:11:35.480 He had clap on. 0:11:35.559 --> 0:11:39.360 Now I see the founder clapper crapper, So. 0:11:39.440 --> 0:11:43.200 Yeah, he's going Okay, that's a giant in the in 0:11:43.240 --> 0:11:45.560 the business. All right, John Tucker, thank you so much. 0:11:45.800 --> 0:11:46.719 We appreciate it. 0:11:48.280 --> 0:11:52.120 You're listening to the team can't Live program Bloomberg Markets 0:11:52.160 --> 0:11:55.280 weekdays at ten am Eastern on Bloomberg dot Com, the 0:11:55.360 --> 0:11:57.920 iHeartRadio app and the Bloomberg Business. 0:11:57.559 --> 0:12:00.480 App, or listen on demand wherever you get your guess. 0:12:02.120 --> 0:12:04.640 Now, we've got the US government saying, hey, hey, let's 0:12:04.679 --> 0:12:07.640 think about what chips were exporting to China, and that's 0:12:07.640 --> 0:12:09.440 an issue for Nvidia and some of the other names. 0:12:09.440 --> 0:12:11.520 So let's bring in somebody who kind of smart on 0:12:11.559 --> 0:12:13.839 this stuff. We pay him to be smart on this stuff. 0:12:13.880 --> 0:12:17.880 That's Man Deep Singh. He's head of our tech research 0:12:17.880 --> 0:12:21.000 at Bloomberg Intelligence, along with some other guy in Chicago. 0:12:21.880 --> 0:12:23.560 Man Deep talk to us about kind of just the 0:12:23.559 --> 0:12:26.520 news today about the government and it's wanted to maybe 0:12:26.520 --> 0:12:28.600 put a curb on the export of some of our 0:12:29.320 --> 0:12:30.920 best chip technology to China. 0:12:31.760 --> 0:12:34.840 Well, so, I think so far this was probably a 0:12:34.920 --> 0:12:38.760 little you know, probability event when you think about the 0:12:38.760 --> 0:12:43.080 odds of you know, government going full into you know, 0:12:43.120 --> 0:12:46.360 imposing a band and which happened in Russia by the way, 0:12:46.840 --> 0:12:51.440 last year when the war broke, And I think, right 0:12:51.440 --> 0:12:55.520 Now what investors are grappling with is what happens if 0:12:55.520 --> 0:12:58.760 that does occur, Like how does Nvidia get hit? And 0:12:58.800 --> 0:13:01.240 the answer to that is all they have, you know, 0:13:01.280 --> 0:13:04.200 fifteen twenty percent revenue expert. Now, what they did the 0:13:04.320 --> 0:13:07.520 last time around such a ban was imposed was they 0:13:07.679 --> 0:13:11.960 offered a lower performance variant which didn't fall in the 0:13:12.120 --> 0:13:15.160 restrictive category and they were still able to sell to China. 0:13:15.240 --> 0:13:18.400 So you could expect something similar from the chip makers. 0:13:18.400 --> 0:13:22.120 They'll try to skirt around those restrictions by offering some 0:13:22.240 --> 0:13:26.600 of their variant. I still think, you know, relocating the 0:13:26.600 --> 0:13:29.160 supply chains is going to be much harder, and that 0:13:29.360 --> 0:13:32.720 is the biggest risk for all these chip makers. Is 0:13:32.800 --> 0:13:36.480 you still going to Taiwan. Taiwan has elections next year. 0:13:36.760 --> 0:13:38.920 There's a lot that could happen, you know, in terms 0:13:39.000 --> 0:13:43.720 of low probability events actually happening or there is that 0:13:43.920 --> 0:13:46.520 risk that they could occur. So that's that's where we 0:13:46.559 --> 0:13:47.199 are at, you. 0:13:47.160 --> 0:13:50.440 Know, in terms of the risk of bringing things stateside. 0:13:50.480 --> 0:13:53.120 I'm curious about the Chips Act because Anawan had an 0:13:53.120 --> 0:13:56.800 amazing piece about this looking at how the Chips Act 0:13:57.160 --> 0:13:59.560 could be adding to the us GDP and having a 0:13:59.600 --> 0:14:03.400 negative effect on those inflation pressures because we're seeing so 0:14:03.520 --> 0:14:08.120 much investment and construction regarding chip making here in the States. 0:14:08.160 --> 0:14:10.480 Are you hearing about that from your sources? Kind of 0:14:10.520 --> 0:14:12.679 a flood of money into that state side? 0:14:13.080 --> 0:14:16.600 I mean there is, and every government right now wants that, 0:14:16.920 --> 0:14:20.840 you know, manufacturing to come back. When it comes to semiconductors, 0:14:20.920 --> 0:14:24.360 the problem is these are multi year investments. So you 0:14:24.440 --> 0:14:27.120 start building a fab now, it's not going to be 0:14:27.600 --> 0:14:30.600 productive for a couple of years. And that also is 0:14:30.640 --> 0:14:33.280 a phased approach when it comes to you know, the 0:14:33.600 --> 0:14:36.480 three nanometer or the five nanometer, we're talking about leading 0:14:36.960 --> 0:14:39.640 chips here. Those are the ones that are being restricted 0:14:39.680 --> 0:14:42.720 in terms of sales, and I would argue it's not 0:14:42.800 --> 0:14:45.000 going to be at least three four years before you're 0:14:45.000 --> 0:14:49.480 going to see leading node manufacturing here in the developed countries. 0:14:50.080 --> 0:14:53.760 So where are we now a week later, since maybe 0:14:53.760 --> 0:14:55.440 a lot last time we talked to you about AI. 0:14:56.280 --> 0:14:58.800 What are you hearing from an investors here? How are 0:14:58.800 --> 0:15:01.680 they going about trying to play this team? I know 0:15:01.720 --> 0:15:03.720 you guys have a big research report on which I 0:15:03.800 --> 0:15:05.960 highly recommend to folks that are on the Bloomberg terminal 0:15:07.560 --> 0:15:09.720 kind of laying out the market and the opportunities and 0:15:09.760 --> 0:15:11.720 so on. But when you talk to institutional investors, how 0:15:11.760 --> 0:15:12.760 are they playing it right now? 0:15:12.960 --> 0:15:17.600 Well, so clearly everyone wants exposure and hardware and semiconductors 0:15:17.680 --> 0:15:20.760 is still the most tangible thing. On the software side, 0:15:20.800 --> 0:15:23.840 you know, you have Snowflake and other database companies that 0:15:23.920 --> 0:15:28.360 are trying to leverage the capabilities that in video or 0:15:28.400 --> 0:15:31.200 some of these new types of chips offer. But at 0:15:31.200 --> 0:15:33.920 the end of the day, everyone is trying to build 0:15:34.000 --> 0:15:39.400 the compute capacity to you know, ingest their proprietary data 0:15:39.520 --> 0:15:42.640 to build a large anguage model, and over time you're 0:15:42.680 --> 0:15:45.680 going to find new use cases emerge which are more 0:15:45.720 --> 0:15:49.760 domain specific. But right now everyone wants to build on 0:15:49.800 --> 0:15:52.800 top of chat, GPT or you know, the large anguage 0:15:52.800 --> 0:15:55.320 models that are out there and see what they can 0:15:55.400 --> 0:15:58.760 get in terms of new output. And I think that's 0:15:59.200 --> 0:16:02.920 the phase wherey but everyone feels this is a strategic 0:16:02.920 --> 0:16:06.280 comparative right now from an IT spending perspective, and this 0:16:06.440 --> 0:16:09.400 is as non discretionary as it can get. 0:16:09.680 --> 0:16:13.840 Does it seem to you that the C three ais 0:16:14.080 --> 0:16:18.360 those those kind of they're not meme stocks but MIMI 0:16:18.520 --> 0:16:19.720 stocks and air quotes. 0:16:19.760 --> 0:16:22.800 There are falling to the wayside. 0:16:22.920 --> 0:16:27.080 Now, are we still seeing more euphoria around some of 0:16:27.120 --> 0:16:29.520 those smaller names. 0:16:29.840 --> 0:16:31.880 I think the way you have to think about it, 0:16:31.920 --> 0:16:33.880 and we lay this out in a report. There is 0:16:33.880 --> 0:16:37.800 that infrastructure layer for generative AI, which is dominated by 0:16:37.800 --> 0:16:41.200 the hyperscalers along with Nvidia. And then you have the 0:16:41.320 --> 0:16:46.560 platform layer, where every company is offering you a platform 0:16:46.800 --> 0:16:50.920 or something a workbench where you can build your applications 0:16:51.000 --> 0:16:53.840 on top of. And so the compute capacity will continue 0:16:53.880 --> 0:16:56.400 to come from the hyperscalers, but when it comes to 0:16:56.440 --> 0:16:58.960 the platform layer, it's very fragmented and it's going to 0:16:58.960 --> 0:17:03.880 be very domain Specif every industry, whether it's healthcare, you know, industrials, 0:17:04.160 --> 0:17:06.760 they'll have their own player in terms of offering a 0:17:06.800 --> 0:17:10.040 platform where you're going to build an application. So C 0:17:10.200 --> 0:17:12.680 three dot A I would fall in that platform layer. 0:17:13.240 --> 0:17:15.560 How big that opportunity is going to be, no one 0:17:15.600 --> 0:17:19.920 can tell right now, because ultimately it comes down to ROI, Right, 0:17:20.040 --> 0:17:21.679 can you generate ROI? 0:17:21.840 --> 0:17:24.119 I guess I'm curious then, what you think about a 0:17:24.160 --> 0:17:28.000 company like a Kroger mentioning AI eight times in their earnings? 0:17:28.440 --> 0:17:30.719 Do you think that there are some companies that like 0:17:31.600 --> 0:17:32.720 you don't need to be mentioning this. 0:17:33.160 --> 0:17:36.400 Any company that has large amounts of data and they 0:17:36.440 --> 0:17:40.560 have digitized their systems, okay, fields, they have proprietary data 0:17:40.600 --> 0:17:43.920 to feel this to this large anguige model. Yeah, what 0:17:44.040 --> 0:17:46.840 kind of output or productivity they can generate? I don't 0:17:46.880 --> 0:17:49.160 think they have a clue, but at least they're investing 0:17:49.240 --> 0:17:52.240 with the hope that they can leverage their proprietary data. 0:17:53.040 --> 0:17:56.240 What's the number one topic with your clients these days? 0:17:56.280 --> 0:17:56.840 Is it AI? 0:17:57.480 --> 0:18:01.400 I think everyone is focused on generative AI, but they 0:18:01.480 --> 0:18:05.440 want to go to you know, the medium to long 0:18:05.520 --> 0:18:08.320 term outlook in terms of who has a real mode 0:18:08.760 --> 0:18:12.040 versus you know, what is near term and it will 0:18:12.040 --> 0:18:16.719 phase out because right now, as Madison said, you know, 0:18:16.800 --> 0:18:19.760 every company is talking about it in their earnings call. 0:18:20.040 --> 0:18:22.960 Obviously some of it is hype, and I think you 0:18:23.000 --> 0:18:25.200 will see some real winners and losers emerge. 0:18:25.440 --> 0:18:28.640 All right, Madison just sent me this really cool tweet 0:18:28.880 --> 0:18:32.000 about Airbnb, and I don't know it's from this guy, Nick Girly. 0:18:32.000 --> 0:18:35.240 I don't know who it is. Talking about Airbnb revenue 0:18:35.560 --> 0:18:39.160 top ten cities. It's dropping like crazy, forty fifty percent. 0:18:39.280 --> 0:18:39.800 Why is that? 0:18:40.240 --> 0:18:43.320 Well so travel? I think is in that phase where 0:18:43.440 --> 0:18:48.040 consumer travel was very strong, very resilient, and right now 0:18:48.080 --> 0:18:51.600 you could argue the concert are getting tougher for these companies. 0:18:52.040 --> 0:18:55.160 And if there is any type of slowdown, the one 0:18:55.200 --> 0:18:58.040 area where you think it's gonna hit is I think 0:18:58.200 --> 0:19:01.120 consumer travel, business travel contine news to be strong, but 0:19:01.160 --> 0:19:03.920 it was slow to come back. And that's fair. Uh, 0:19:03.960 --> 0:19:05.920 there is that risk that you know, growth can de 0:19:06.040 --> 0:19:10.800 cleberate sharply. Airbnb. We know it's still alternative accommodations, and 0:19:11.359 --> 0:19:13.440 I think a lot of people are thinking about the 0:19:13.480 --> 0:19:16.760 addressable market. Is it really that big to justify a 0:19:16.800 --> 0:19:18.640 premium that Airbnb had. 0:19:18.760 --> 0:19:21.480 I mean, it's interesting again, Maddie, thanks for forting this 0:19:21.520 --> 0:19:24.800 tweet here. But like Phoenix year every year for the 0:19:24.840 --> 0:19:29.399 month of May, Airbnb revenue Phoenix off forty seven percent, Austin, 0:19:29.440 --> 0:19:32.040 Texas off forty six percent, Myrtle Beach forty five percent. 0:19:32.080 --> 0:19:35.080 These are you know, actual North Carolina off forty two percent. 0:19:35.119 --> 0:19:38.159 So these are towns that just were COVID towns, if 0:19:38.160 --> 0:19:40.720 you will, COVID cities, people bailing out of the coast, 0:19:41.119 --> 0:19:44.520 going to the the you know, the Austin Texas is 0:19:44.520 --> 0:19:47.199 the Phoenixes of the world, and I guess that was 0:19:47.240 --> 0:19:50.120 a huge benefit for Airbnb at the time. Now you're 0:19:50.119 --> 0:19:51.480 just saying maybe some comps issues. 0:19:51.560 --> 0:19:54.320 Absolutely, and we've seen that time and again. I mean 0:19:54.320 --> 0:19:58.000 look at Zoom. You know, great covid pull forward, but 0:19:58.240 --> 0:20:01.320 after that the comps got so m's tougher that you know, 0:20:01.359 --> 0:20:04.280 they struggled for a while in terms of the top line. 0:20:04.320 --> 0:20:06.040 And so I'm not saying this is going to be 0:20:06.080 --> 0:20:08.680 another Zoom, but there's clearly a parallel to be drawn. 0:20:09.200 --> 0:20:12.120 Yeah, an Airbnb stock is still fifty to fifty year 0:20:12.160 --> 0:20:12.440 to date. 0:20:12.760 --> 0:20:15.879 Yeah well yeah, so sorry Paul to step on you, 0:20:15.920 --> 0:20:18.960 but it's interesting to look at just the read through 0:20:19.040 --> 0:20:19.600