1
00:00:00,280 --> 00:00:07,200
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,119 --> 00:00:11,720
Speaker 2: Right now, many of the most prominent and powerful people

3
00:00:11,800 --> 00:00:15,320
Speaker 2: in economics and finance are in Washington. The World Bank

4
00:00:15,360 --> 00:00:18,560
Speaker 2: and the International Monetary Fund are holding their annual meetings,

5
00:00:18,840 --> 00:00:22,239
Speaker 2: and so is the Institute of International Finance. It's a

6
00:00:22,280 --> 00:00:25,639
Speaker 2: who's who of central bankers and finance ministers and a

7
00:00:25,720 --> 00:00:28,640
Speaker 2: chance for them to coordinate how they respond to big

8
00:00:28,680 --> 00:00:32,640
Speaker 2: issues in the global economy. On the sidelines, Treasury Secretary

9
00:00:32,720 --> 00:00:36,519
Speaker 2: Scott Bessett tried to rally support from US allies and

10
00:00:36,600 --> 00:00:40,640
Speaker 2: condemn China for proposing new export restrictions on critical minerals.

11
00:00:40,840 --> 00:00:42,760
Speaker 3: This should be a clear sign to our allies that

12
00:00:42,840 --> 00:00:46,519
Speaker 3: we must work together, and work together we will. There

13
00:00:46,520 --> 00:00:49,920
Speaker 3: will be a series of meetings this week during World

14
00:00:49,920 --> 00:00:52,000
Speaker 3: Bank IMF week, and.

15
00:00:52,120 --> 00:00:55,840
Speaker 2: We are all on It's a moment for policymakers to

16
00:00:55,960 --> 00:00:58,600
Speaker 2: take stock of the global economy and what's driving in.

17
00:00:59,040 --> 00:01:01,560
Speaker 2: Andrew Bailey, the Governor of the Bank of England, is

18
00:01:01,560 --> 00:01:02,000
Speaker 2: one of them.

19
00:01:02,120 --> 00:01:03,959
Speaker 3: We've got to look at productivity growth and I think

20
00:01:03,960 --> 00:01:09,880
Speaker 3: we have to say what's the next likely general purpose technology? Well,

21
00:01:09,880 --> 00:01:12,039
Speaker 3: it's related to AI. It seems to me.

22
00:01:12,560 --> 00:01:15,480
Speaker 2: Who else has been making the pilgrimage to Washington this week.

23
00:01:15,880 --> 00:01:19,440
Speaker 2: Bloomberg reporters and editors from all over the world, including

24
00:01:19,480 --> 00:01:22,240
Speaker 2: Brendan Murray, who heads up our coverage of global trade,

25
00:01:22,720 --> 00:01:26,080
Speaker 2: along with Joe Wisenthal and Tracy Alloway, hosts of Odd Lots,

26
00:01:26,560 --> 00:01:29,200
Speaker 2: and they've been watching the dynamics between President Trump and

27
00:01:29,280 --> 00:01:32,319
Speaker 2: other world leaders, many of whom are still trying to

28
00:01:32,360 --> 00:01:33,840
Speaker 2: strike trade deals with the US.

29
00:01:33,920 --> 00:01:37,440
Speaker 4: President Trump is kind of realizing that if you're important

30
00:01:37,520 --> 00:01:41,119
Speaker 4: enough in the global financial system, and you drive hard

31
00:01:41,200 --> 00:01:43,800
Speaker 4: enough of a bargain, you can basically get what you want.

32
00:01:44,280 --> 00:01:47,039
Speaker 2: Tracy and Joe say, these meetings are taking place at

33
00:01:47,040 --> 00:01:51,280
Speaker 2: a time when big multilateral institutions, including the World Bank

34
00:01:51,360 --> 00:01:54,640
Speaker 2: and the IMF, are under threat, and at a time

35
00:01:54,640 --> 00:01:58,200
Speaker 2: when the US capital is in disarray. The federal government

36
00:01:58,520 --> 00:01:59,160
Speaker 2: is shut down.

37
00:01:59,400 --> 00:02:01,600
Speaker 1: I think this is like this direct link that you

38
00:02:01,640 --> 00:02:04,000
Speaker 1: can draw between the fact that the government is shut

39
00:02:04,040 --> 00:02:08,200
Speaker 1: down right now for who knows how long, and the

40
00:02:08,240 --> 00:02:11,320
Speaker 1: fact that all of these sort of institutions underneath them

41
00:02:11,360 --> 00:02:15,119
Speaker 1: there's this erosion, and that is why there's so much

42
00:02:15,160 --> 00:02:17,880
Speaker 1: concern about the stability of these entities.

43
00:02:21,960 --> 00:02:23,840
Speaker 2: I'm David Gerrett, and this is the big take from

44
00:02:23,840 --> 00:02:26,680
Speaker 2: Bloomberg News Today on the show, a look at the

45
00:02:26,760 --> 00:02:30,280
Speaker 2: health of the economy and global markets, with Tracy Alloway

46
00:02:30,320 --> 00:02:33,519
Speaker 2: and Joe Wisenthal of Odd Lots and Bloomberg's Brendan Murray

47
00:02:33,960 --> 00:02:36,880
Speaker 2: what they're hearing at panels and lectures and on the

48
00:02:36,919 --> 00:02:40,160
Speaker 2: sidelines of these big meetings about what the future holds

49
00:02:40,360 --> 00:02:43,720
Speaker 2: for the economy and the international financial system and for

50
00:02:43,800 --> 00:02:54,600
Speaker 2: the IMF, the World Bank, and the IIF themselves. Bloomberg's

51
00:02:54,600 --> 00:02:57,800
Speaker 2: Brendan Murray is spending this week in Washington, in DC's

52
00:02:57,800 --> 00:03:00,840
Speaker 2: Foggy Bottom neighborhood, which is home to the World Bank

53
00:03:00,880 --> 00:03:04,120
Speaker 2: and the International Monetary Fund. I asked him what he's

54
00:03:04,160 --> 00:03:05,760
Speaker 2: been hearing at their annual meetings.

55
00:03:06,280 --> 00:03:09,440
Speaker 5: So basically, all the main topics that are affecting the

56
00:03:09,480 --> 00:03:12,639
Speaker 5: world economy are on the agenda here. I would describe

57
00:03:12,639 --> 00:03:18,960
Speaker 5: the mood as sort of cautiously optimistic so far, with

58
00:03:19,120 --> 00:03:21,799
Speaker 5: the caveat that we haven't seen the worst of what

59
00:03:21,840 --> 00:03:26,079
Speaker 5: people think might happen in the situation that we're in,

60
00:03:26,160 --> 00:03:32,240
Speaker 5: with tariffs being completely unpredictable, rising government debt, and all

61
00:03:32,280 --> 00:03:35,160
Speaker 5: the other financial strains that are coming to bear on

62
00:03:35,200 --> 00:03:37,680
Speaker 5: some of these economies. So there's a lot of concern

63
00:03:37,760 --> 00:03:41,640
Speaker 5: that we're seeing sort of a slow burn happen rather

64
00:03:41,720 --> 00:03:44,400
Speaker 5: than a sudden shock to the global economy.

65
00:03:44,160 --> 00:03:48,840
Speaker 2: As we move from the IMF toif Tracy is cautious

66
00:03:48,920 --> 00:03:51,840
Speaker 2: optimism ruling the day. There at that meeting as well.

67
00:03:51,680 --> 00:03:55,000
Speaker 4: Well, I wasn't something called Debt Con which is held

68
00:03:55,080 --> 00:03:57,880
Speaker 4: every year over at Georgetown. It features a lot of

69
00:03:58,280 --> 00:04:03,080
Speaker 4: sought debt con bt coo N. This was Debt Con

70
00:04:03,200 --> 00:04:05,480
Speaker 4: eight from Crase you were wondering.

71
00:04:07,720 --> 00:04:08,120
Speaker 2: Must be.

72
00:04:09,920 --> 00:04:13,640
Speaker 4: But it features a lot of you know, policymakers, officials,

73
00:04:14,000 --> 00:04:17,000
Speaker 4: sovereign debt lawyers, those types of people. And there were

74
00:04:17,080 --> 00:04:19,279
Speaker 4: a couple of people from the IMF there, and I

75
00:04:19,360 --> 00:04:21,680
Speaker 4: asked them to give me some sort of on the

76
00:04:21,720 --> 00:04:24,719
Speaker 4: ground color of what they were hearing in their own meetings,

77
00:04:25,440 --> 00:04:28,960
Speaker 4: and they said that everyone was kind of surprised by

78
00:04:29,120 --> 00:04:34,520
Speaker 4: how optimistic Crystallina Georgieva, the director, sounded in her sort

79
00:04:34,560 --> 00:04:37,800
Speaker 4: of opener where they upgraded the economic outlook for the

80
00:04:37,800 --> 00:04:40,320
Speaker 4: world and basically said, you know, things are looking pretty

81
00:04:40,360 --> 00:04:43,400
Speaker 4: resilient so far. We've managed to weather all these tariffs

82
00:04:43,640 --> 00:04:47,200
Speaker 4: quite well. But they were telling me that a few

83
00:04:47,279 --> 00:04:50,000
Speaker 4: days before there was a curtain raiser by one of

84
00:04:50,000 --> 00:04:54,120
Speaker 4: the deputy directors, and he struck a very very different tone,

85
00:04:54,400 --> 00:04:57,600
Speaker 4: more quietly behind closed doors, and it was a little

86
00:04:57,600 --> 00:04:59,960
Speaker 4: bit more dire, a little bit more passive. I don't

87
00:05:00,000 --> 00:05:02,479
Speaker 4: if you can be a little bit more dire, certainly

88
00:05:02,520 --> 00:05:06,159
Speaker 4: more pessimistic than what we heard in the official you know,

89
00:05:06,240 --> 00:05:09,520
Speaker 4: economic projection update. So take of that what you will.

90
00:05:10,200 --> 00:05:11,880
Speaker 2: Right, let's talk a bit about the economy sort of.

91
00:05:11,880 --> 00:05:14,920
Speaker 2: Brennan will turn to you first. I've covered these meetings

92
00:05:14,920 --> 00:05:16,920
Speaker 2: before and they're kind of this interesting prism through which

93
00:05:16,960 --> 00:05:18,800
Speaker 2: you can get a sense of how the global economy

94
00:05:18,839 --> 00:05:20,719
Speaker 2: is doing and what people think about it. So there's

95
00:05:20,720 --> 00:05:23,359
Speaker 2: the anecdotal side of things. Then you're getting these forecasts,

96
00:05:23,360 --> 00:05:26,560
Speaker 2: these data from the institutions themselves. Could you just walk

97
00:05:26,640 --> 00:05:30,360
Speaker 2: us through what the IMF said, it's chief economists said

98
00:05:30,400 --> 00:05:33,599
Speaker 2: about how it's thinking about the path forward here for

99
00:05:33,600 --> 00:05:34,440
Speaker 2: the global economy.

100
00:05:34,760 --> 00:05:39,559
Speaker 5: The IMF chief economists laid out basically four major risk

101
00:05:39,720 --> 00:05:41,760
Speaker 5: areas that they're looking at.

102
00:05:41,880 --> 00:05:45,000
Speaker 6: Besides straight tensions, I want to quickly flag four other

103
00:05:45,279 --> 00:05:46,200
Speaker 6: downside risks.

104
00:05:46,520 --> 00:05:49,159
Speaker 5: Now, the IMF is kind of like the lifeguard, you know,

105
00:05:49,200 --> 00:05:50,600
Speaker 5: they sort of blow the whistle when you get a

106
00:05:50,640 --> 00:05:52,640
Speaker 5: little bit too far out beyond the waves, or you

107
00:05:52,680 --> 00:05:54,880
Speaker 5: get too close to a riptide. They sort of this

108
00:05:54,920 --> 00:05:57,520
Speaker 5: is what they do. And they pointed to the AI

109
00:05:57,640 --> 00:05:59,560
Speaker 5: boom and they said, you know, this looks a lot

110
00:05:59,600 --> 00:06:01,800
Speaker 5: like the com bubble of twenty five years ago.

111
00:06:01,920 --> 00:06:04,520
Speaker 6: It was the Internet then, it is AI now.

112
00:06:04,880 --> 00:06:10,000
Speaker 5: They pointed to the erosion of credibility and institutions, which

113
00:06:10,040 --> 00:06:13,440
Speaker 5: is a way of saying, you know, Donald Trump is

114
00:06:13,640 --> 00:06:16,159
Speaker 5: chipping away at the Fed's credibility when it tells it

115
00:06:16,200 --> 00:06:17,440
Speaker 5: to lower interest rates.

116
00:06:17,600 --> 00:06:19,960
Speaker 6: We are seeing rising pressures on central banks.

117
00:06:20,120 --> 00:06:23,160
Speaker 5: They also talked about the rise of government debt and

118
00:06:23,200 --> 00:06:26,640
Speaker 5: how there needs to be more fiscal buffers.

119
00:06:26,440 --> 00:06:29,880
Speaker 6: In too many countries, insufficient progress has been made to

120
00:06:29,960 --> 00:06:31,560
Speaker 6: rebuild fiscal space.

121
00:06:31,640 --> 00:06:34,960
Speaker 5: And just generally they look at the tone the breakdown

122
00:06:35,080 --> 00:06:39,680
Speaker 5: in global integration as a risk overall that could sort

123
00:06:39,720 --> 00:06:45,600
Speaker 5: of create this permanent or structural headwind to growth potential

124
00:06:45,640 --> 00:06:48,400
Speaker 5: over the longer term. So instead of growing, you know,

125
00:06:48,560 --> 00:06:50,839
Speaker 5: at a healthy three to three and a half to

126
00:06:50,920 --> 00:06:53,960
Speaker 5: four percent clip, we're looking at three two and a

127
00:06:54,000 --> 00:06:56,479
Speaker 5: half to three percent over the medium to longer term.

128
00:06:56,640 --> 00:06:59,479
Speaker 6: The tariff shock is here, and it is further dimming

129
00:06:59,839 --> 00:07:02,280
Speaker 6: already weak growth prospects.

130
00:07:02,480 --> 00:07:05,520
Speaker 5: So those are the main sort of themes that the IMF,

131
00:07:06,160 --> 00:07:09,400
Speaker 5: the lifeguard of the global economy, is raising and wants

132
00:07:09,440 --> 00:07:13,920
Speaker 5: governments to adopt sort of policies that are aware of

133
00:07:13,960 --> 00:07:14,520
Speaker 5: those risks.

134
00:07:14,840 --> 00:07:17,160
Speaker 1: I think there's like this direct link that you can

135
00:07:17,280 --> 00:07:19,680
Speaker 1: draw between the fact that the government is shut down

136
00:07:19,800 --> 00:07:23,920
Speaker 1: right now for who knows how long, and the fact

137
00:07:23,960 --> 00:07:27,000
Speaker 1: that all of these sort of institutions is Brendan described

138
00:07:27,080 --> 00:07:31,680
Speaker 1: like the erosion underneath them. There is this erosion, and

139
00:07:32,160 --> 00:07:34,960
Speaker 1: that is why there's so much concern about the stability

140
00:07:35,280 --> 00:07:39,280
Speaker 1: of these entities, because the political will to support them

141
00:07:39,640 --> 00:07:41,640
Speaker 1: does not exist. And I don't think it's just a

142
00:07:41,760 --> 00:07:44,720
Speaker 1: US story either. I think around the world you would

143
00:07:44,760 --> 00:07:48,600
Speaker 1: see the same sort of attacks on either independent or

144
00:07:48,720 --> 00:07:51,520
Speaker 1: multilateral institutions. I think it's happening everywhere.

145
00:07:51,600 --> 00:07:53,760
Speaker 2: Tracy, let me pick up on that and Joe suggesting

146
00:07:53,760 --> 00:07:56,080
Speaker 2: it's not just a US story. But we do see

147
00:07:56,080 --> 00:07:59,080
Speaker 2: the US playing this incredibly outsized role in determining the

148
00:07:59,160 --> 00:08:02,200
Speaker 2: course of the global economy right now. And I wonder

149
00:08:02,200 --> 00:08:04,760
Speaker 2: what you make of that. Is that novelists you see

150
00:08:04,800 --> 00:08:07,200
Speaker 2: it when it comes to what the US is pioneering

151
00:08:07,200 --> 00:08:09,840
Speaker 2: in terms of trade policy, and it's tariffs that's put

152
00:08:09,880 --> 00:08:12,400
Speaker 2: in place. How much determinisment has about the future of

153
00:08:12,440 --> 00:08:13,640
Speaker 2: the global economy, I.

154
00:08:13,560 --> 00:08:15,160
Speaker 4: Mean, I think it has an enormous amount.

155
00:08:15,280 --> 00:08:15,440
Speaker 3: Right.

156
00:08:15,480 --> 00:08:18,960
Speaker 4: Trump is kind of realizing that if you're important enough

157
00:08:19,000 --> 00:08:22,720
Speaker 4: in the global financial system and to drive hard enough

158
00:08:22,760 --> 00:08:25,000
Speaker 4: of a bargain, you can basically get what you want.

159
00:08:25,160 --> 00:08:29,000
Speaker 4: But we are seeing more and more countries potentially trying

160
00:08:29,040 --> 00:08:32,240
Speaker 4: to solve some of their problems or maybe achieve some

161
00:08:32,280 --> 00:08:36,160
Speaker 4: of their strategic targets by doing it unilaterally. Right, and again,

162
00:08:36,800 --> 00:08:38,920
Speaker 4: the US is kind of the poster child for this.

163
00:08:39,040 --> 00:08:43,240
Speaker 4: So take a look at Argentina. Milay was in town

164
00:08:43,440 --> 00:08:48,880
Speaker 4: to finalize the twenty billion dollar swap slash bailout that

165
00:08:48,920 --> 00:08:53,000
Speaker 4: he's getting from the US. Argentina has gotten many many

166
00:08:53,000 --> 00:08:57,320
Speaker 4: bailouts from the IMF. Previously, I'd lost count I know,

167
00:08:57,360 --> 00:08:59,679
Speaker 4: I tried to count them up and I stopped when

168
00:08:59,720 --> 00:09:02,920
Speaker 4: I went past twenty. So there we go, Argentina serial

169
00:09:02,960 --> 00:09:07,840
Speaker 4: defaulter Cereal Bailey. But now the US is stepping in

170
00:09:07,960 --> 00:09:09,920
Speaker 4: and saying like, all right, well, we're going to use

171
00:09:10,080 --> 00:09:12,720
Speaker 4: the US Treasury to give you this twenty billion dollar

172
00:09:13,080 --> 00:09:16,000
Speaker 4: What is essentially alone, and we're not going to tie

173
00:09:16,080 --> 00:09:19,240
Speaker 4: any conditions to it because you are a strategic ally

174
00:09:19,440 --> 00:09:22,120
Speaker 4: of ours. And in fact, Trump actually said this week,

175
00:09:22,800 --> 00:09:24,920
Speaker 4: not only are we not tying conditions to it, the

176
00:09:24,960 --> 00:09:27,680
Speaker 4: only real condition we seem to have with it is

177
00:09:27,720 --> 00:09:32,920
Speaker 4: that Malay actually wins the midterms, which is highly, highly

178
00:09:33,559 --> 00:09:38,800
Speaker 4: unusual in the way America sort of exercises its international influence.

179
00:09:38,880 --> 00:09:40,880
Speaker 4: So I think we're probably going to see more of that.

180
00:09:41,040 --> 00:09:43,720
Speaker 2: Gran What do people at the IMF make of this? Here?

181
00:09:43,760 --> 00:09:47,160
Speaker 2: You have the US effectively going alone after seeing the

182
00:09:47,160 --> 00:09:50,080
Speaker 2: IMF get burned over and over again. What are these

183
00:09:50,160 --> 00:09:52,680
Speaker 2: global policy makers make of what the US is doing here?

184
00:09:52,880 --> 00:09:54,640
Speaker 5: Yeah, I think you see a lot of sort of

185
00:09:55,120 --> 00:09:59,000
Speaker 5: strained attempts at putting on a brave face with what

186
00:09:59,040 --> 00:10:03,440
Speaker 5: the US is doing, and you hear policymakers say things like, well,

187
00:10:03,800 --> 00:10:05,839
Speaker 5: you know, the US has a huge economy, but it's

188
00:10:05,880 --> 00:10:08,720
Speaker 5: really only fifteen percent of global trade, and the rest

189
00:10:08,760 --> 00:10:12,160
Speaker 5: of global trade is happening at a fairly robust rate

190
00:10:12,200 --> 00:10:15,320
Speaker 5: without the US. I think what you're seeing is, on

191
00:10:15,400 --> 00:10:19,400
Speaker 5: one hand, the sort of shock at what's happening and

192
00:10:19,520 --> 00:10:23,320
Speaker 5: the upending of the global order, and an effort to

193
00:10:23,440 --> 00:10:26,320
Speaker 5: hold together the order that has kept it, you know,

194
00:10:26,840 --> 00:10:30,400
Speaker 5: globalization moving for decades.

195
00:10:30,040 --> 00:10:35,920
Speaker 2: Now coming up the markets AI and how these international

196
00:10:36,000 --> 00:10:39,120
Speaker 2: organizations view their future at a time when they face

197
00:10:39,280 --> 00:10:51,400
Speaker 2: so much hostility. This week, as meetings got underway at

198
00:10:51,440 --> 00:10:54,480
Speaker 2: the International Monetary Fund, the World Bank, and the Institute

199
00:10:54,480 --> 00:10:57,720
Speaker 2: of International Finance, the trade war between the US and

200
00:10:57,800 --> 00:11:01,520
Speaker 2: China escalated. That spooked in Ess, who it seemed had

201
00:11:01,559 --> 00:11:04,359
Speaker 2: gotten pretty used to all the back and forths and skirmishes.

202
00:11:04,960 --> 00:11:07,240
Speaker 2: I asked Joe and Tracy why this moment had such

203
00:11:07,240 --> 00:11:09,040
Speaker 2: a profound impact on the markets.

204
00:11:09,400 --> 00:11:12,080
Speaker 1: There are probably two things that have driven the market higher.

205
00:11:12,360 --> 00:11:16,200
Speaker 1: Which is one is AI we all know about, and

206
00:11:16,600 --> 00:11:19,760
Speaker 1: that is an industry that is an investment mega trend

207
00:11:19,840 --> 00:11:23,160
Speaker 1: that does not seem to be particularly sensitive to tariffs.

208
00:11:23,360 --> 00:11:25,640
Speaker 1: And then I think people had sort of forgotten about tariffs,

209
00:11:25,640 --> 00:11:28,520
Speaker 1: and you know, the idea that it all gets smoothed

210
00:11:28,520 --> 00:11:30,320
Speaker 1: out in the end wasn't that big of a deal.

211
00:11:30,360 --> 00:11:33,080
Speaker 1: It's sort of minor. It doesn't really affect the growth areas.

212
00:11:33,320 --> 00:11:35,720
Speaker 1: But I think you could argue that, yes, we did

213
00:11:35,840 --> 00:11:38,360
Speaker 1: have a lot of volatility last week, but in the

214
00:11:38,360 --> 00:11:41,160
Speaker 1: grand scheme of things, not that much so. I think

215
00:11:41,200 --> 00:11:44,120
Speaker 1: it was just sort of like under the conditions in

216
00:11:44,160 --> 00:11:46,920
Speaker 1: which there's so much enthusiasm, so much specuative money, so

217
00:11:47,040 --> 00:11:51,720
Speaker 1: much hot money flowing into risky assets, the reminder that yes,

218
00:11:51,800 --> 00:11:54,160
Speaker 1: trade is a live issue. Many of these things haven't

219
00:11:54,160 --> 00:11:58,200
Speaker 1: been settled to us is vulnerable still to the cutoff

220
00:11:58,320 --> 00:12:01,160
Speaker 1: of various things such as rare earth metalism and so forth.

221
00:12:01,600 --> 00:12:03,640
Speaker 1: I would say it gave people a little time for

222
00:12:03,640 --> 00:12:04,040
Speaker 1: a breather.

223
00:12:04,360 --> 00:12:05,480
Speaker 4: I thought you were going to say it was a

224
00:12:05,520 --> 00:12:06,440
Speaker 4: healthy correction, Joe.

225
00:12:06,480 --> 00:12:09,560
Speaker 1: It was a healthy if we're on TV, that's what

226
00:12:09,920 --> 00:12:12,600
Speaker 1: is a healthy. We needed that, we needed this correction.

227
00:12:12,880 --> 00:12:15,160
Speaker 1: This is very healthy, Yeah, Tracy.

228
00:12:15,160 --> 00:12:17,480
Speaker 2: When you look at the agenda for the IF meeting,

229
00:12:17,480 --> 00:12:19,800
Speaker 2: the IMF meeting, World Bank meeting, there are a lot

230
00:12:19,800 --> 00:12:22,400
Speaker 2: of mentions of AI, of artificial intelligence, and there is

231
00:12:22,480 --> 00:12:25,520
Speaker 2: kind of this infusion of more skepticism, or if not

232
00:12:25,559 --> 00:12:28,600
Speaker 2: more skepticism, at least a sense that all of this

233
00:12:28,679 --> 00:12:30,719
Speaker 2: money has been spent, is being spent and it has

234
00:12:30,760 --> 00:12:34,040
Speaker 2: to amount to something sooner rather than later. Yeah, are

235
00:12:34,040 --> 00:12:35,200
Speaker 2: we talking about it differently?

236
00:12:35,320 --> 00:12:37,520
Speaker 4: You need to see actual cash flows at some point.

237
00:12:37,720 --> 00:12:40,120
Speaker 4: I mean, I think what's really changed is people are

238
00:12:40,120 --> 00:12:42,760
Speaker 4: starting to get more nervous about some of the very

239
00:12:42,800 --> 00:12:46,440
Speaker 4: intricate and complex financing arrangements that we're seeing, you know,

240
00:12:46,480 --> 00:12:49,600
Speaker 4: stuff where like in video sells chips to so and

241
00:12:49,640 --> 00:12:51,480
Speaker 4: so and then they use that money to make a

242
00:12:51,520 --> 00:12:53,520
Speaker 4: loan to so and so, and then they send.

243
00:12:53,280 --> 00:12:54,160
Speaker 2: That money back to her.

244
00:12:54,559 --> 00:12:57,960
Speaker 4: It's very circular, very incestuous, and it's the kind of

245
00:12:58,040 --> 00:13:01,520
Speaker 4: thing that's going to remind people of you know, previous bubbles.

246
00:13:01,520 --> 00:13:05,520
Speaker 4: So that's happening. What I would say is there is

247
00:13:05,559 --> 00:13:09,599
Speaker 4: still so much enthusiasm out there about the future potential

248
00:13:09,760 --> 00:13:12,240
Speaker 4: of AI, and the vast majority of investors that you

249
00:13:12,280 --> 00:13:15,240
Speaker 4: speak to will say something like, oh yeah, sure, it

250
00:13:15,320 --> 00:13:17,920
Speaker 4: might be frothy now. You know, maybe some of these

251
00:13:17,960 --> 00:13:23,240
Speaker 4: financing arrangements you know, are pumping up values or concealing

252
00:13:23,559 --> 00:13:27,080
Speaker 4: real cash flow and things like that. But we know

253
00:13:27,240 --> 00:13:29,240
Speaker 4: this is going to be the next big thing. We

254
00:13:29,360 --> 00:13:32,360
Speaker 4: know they are going to be winners emerging from the space.

255
00:13:32,400 --> 00:13:34,200
Speaker 4: In the same way that even though we had the

256
00:13:34,280 --> 00:13:37,800
Speaker 4: dot com bubble burst, we had winners that emerged from

257
00:13:37,800 --> 00:13:40,320
Speaker 4: that early era of the Internet and went on to

258
00:13:40,520 --> 00:13:43,040
Speaker 4: make a lot of money. So I think everyone is

259
00:13:43,080 --> 00:13:45,240
Speaker 4: sort of diving in on the assumption that they can

260
00:13:45,280 --> 00:13:48,680
Speaker 4: either get out first before everyone else, or they're the

261
00:13:48,679 --> 00:13:51,480
Speaker 4: ones that are going to be able to identify the real,

262
00:13:51,920 --> 00:13:54,320
Speaker 4: true winning players in all of this.

263
00:13:54,720 --> 00:13:59,640
Speaker 1: We haven't had that moment yet where some big corporate

264
00:13:59,640 --> 00:14:02,480
Speaker 1: and or someone says, you know what, we are not

265
00:14:02,520 --> 00:14:06,160
Speaker 1: getting an ROI from this. No one has ever said

266
00:14:06,480 --> 00:14:09,800
Speaker 1: in a major way, you know what, this is not productive.

267
00:14:09,880 --> 00:14:12,480
Speaker 1: If there is like a bubble, if people are getting

268
00:14:12,520 --> 00:14:15,679
Speaker 1: out over their skis, it would end in theory at

269
00:14:15,679 --> 00:14:18,160
Speaker 1: that moment that some really big investor says, you know what,

270
00:14:18,520 --> 00:14:20,520
Speaker 1: this is like a this is just a thing that

271
00:14:20,600 --> 00:14:23,920
Speaker 1: predicts the next word and doesn't really do much. That

272
00:14:23,960 --> 00:14:27,360
Speaker 1: hasn't happened yet. And so there's that faith, and there's

273
00:14:27,440 --> 00:14:29,720
Speaker 1: the ongoing investment, and there's that fear of missing out,

274
00:14:29,960 --> 00:14:32,440
Speaker 1: and so far that aspect of it hasn't really changed.

275
00:14:32,560 --> 00:14:34,640
Speaker 2: Brendan. There's still some blindness, I guess that we have

276
00:14:34,720 --> 00:14:37,000
Speaker 2: about what this is going to mean for the economy.

277
00:14:37,240 --> 00:14:40,240
Speaker 2: As you kind of dig through what's in the IMP's

278
00:14:40,320 --> 00:14:42,720
Speaker 2: latest forecast, the kind of commentary around it, are we

279
00:14:42,760 --> 00:14:46,560
Speaker 2: any closer to maybe not knowing but having a sense

280
00:14:46,600 --> 00:14:48,640
Speaker 2: of what this is going to mean for productivity. If

281
00:14:48,640 --> 00:14:50,720
Speaker 2: all that's promised comes to pass.

282
00:14:50,520 --> 00:14:53,520
Speaker 5: You know, we can theorize that all of this investment

283
00:14:53,560 --> 00:14:57,120
Speaker 5: that's going into data centers and all the capacity that

284
00:14:57,200 --> 00:14:59,840
Speaker 5: needs to be built up, you know, will create a

285
00:15:00,040 --> 00:15:04,600
Speaker 5: productivity boomlet at least no one really knows. It sounds

286
00:15:04,640 --> 00:15:07,280
Speaker 5: great on paper, and for the US to lead that.

287
00:15:07,560 --> 00:15:09,920
Speaker 5: Donald Trump is very proud to be part of it

288
00:15:10,640 --> 00:15:13,680
Speaker 5: and invites it. But what he really needs to do

289
00:15:13,800 --> 00:15:16,840
Speaker 5: is create the blue collar you know, the sort of

290
00:15:17,320 --> 00:15:22,480
Speaker 5: romanticized version of factory jobs that he promised his base,

291
00:15:23,120 --> 00:15:27,360
Speaker 5: and we've yet to see that. Politically, what matters more

292
00:15:27,400 --> 00:15:31,400
Speaker 5: than anything right now is factory expansions in the US

293
00:15:31,480 --> 00:15:34,320
Speaker 5: between now and next November, and we'll know the answer

294
00:15:34,320 --> 00:15:36,320
Speaker 5: to those sooner than we will know the answer to

295
00:15:36,360 --> 00:15:38,120
Speaker 5: the productivity impact of AI.

296
00:15:38,560 --> 00:15:40,720
Speaker 2: Tracy, I can't resist asking you about something else that's

297
00:15:40,720 --> 00:15:43,080
Speaker 2: in the backdrop here, and that is the earnings that

298
00:15:43,080 --> 00:15:45,240
Speaker 2: we've gotten from the big banks this week, and there

299
00:15:45,480 --> 00:15:48,240
Speaker 2: are more to come from regional, smaller banks in the

300
00:15:48,240 --> 00:15:51,080
Speaker 2: coming days. But we've seen them beat a lot of

301
00:15:51,120 --> 00:15:54,680
Speaker 2: analyst expectations. Goldman had a record quarter, Morgan Stanley had

302
00:15:54,680 --> 00:15:57,600
Speaker 2: a record quarter. It's because of trading, but it's because

303
00:15:57,600 --> 00:15:59,800
Speaker 2: of deal making as well, And I'm curious how you

304
00:15:59,840 --> 00:16:02,960
Speaker 2: think about that and what it says about the environment

305
00:16:03,000 --> 00:16:06,440
Speaker 2: we're in. We're seeing these institutions doing so well here

306
00:16:06,680 --> 00:16:08,360
Speaker 2: in the third quarter of twenty twenty five.

307
00:16:09,040 --> 00:16:11,120
Speaker 4: Mostly what it says is that in a period of

308
00:16:11,160 --> 00:16:13,760
Speaker 4: sluggish growth, or in a period where you are anticipating

309
00:16:13,840 --> 00:16:17,640
Speaker 4: further sluggish growth, one way to actually grow your way

310
00:16:17,680 --> 00:16:22,320
Speaker 4: out of that is acquisitions, right, buy more companies, get bigger,

311
00:16:22,520 --> 00:16:25,400
Speaker 4: have more pricing power. This has been the sort of

312
00:16:25,440 --> 00:16:30,120
Speaker 4: dominant theme of I guess late stage American corporate capitalism

313
00:16:30,160 --> 00:16:32,800
Speaker 4: for a while now. We saw that for the past

314
00:16:32,800 --> 00:16:37,680
Speaker 4: few years. Immediately after the pandemic, people were trying their

315
00:16:37,720 --> 00:16:40,160
Speaker 4: best to get pricing power in the market. Then they

316
00:16:40,240 --> 00:16:43,440
Speaker 4: raise prices. Maybe they sell fewer items, but they make

317
00:16:43,520 --> 00:16:46,240
Speaker 4: that up in terms of the pricing, and it seemed

318
00:16:46,240 --> 00:16:47,800
Speaker 4: to work out well for a lot of them. We

319
00:16:47,880 --> 00:16:51,440
Speaker 4: had record corporate profits. So I'm not really surprised that

320
00:16:51,520 --> 00:16:55,160
Speaker 4: we're seeing a continuation of that strategy. What it means

321
00:16:55,200 --> 00:16:59,760
Speaker 4: for overall inflation, especially when the Trump administration has been

322
00:16:59,760 --> 00:17:02,960
Speaker 4: telling people that tariffs aren't going to cause your prices

323
00:17:02,960 --> 00:17:07,800
Speaker 4: to rise the foreign countries pay them. I think we're gonna.

324
00:17:07,520 --> 00:17:11,640
Speaker 1: See It does feel like when we had the initial

325
00:17:11,680 --> 00:17:15,080
Speaker 1: sort of Trump rally right after the election, one of

326
00:17:15,119 --> 00:17:17,159
Speaker 1: the hopes was like, oh, we're going to see like

327
00:17:17,400 --> 00:17:18,680
Speaker 1: Wall Street deregulation.

328
00:17:18,840 --> 00:17:19,000
Speaker 2: Right.

329
00:17:19,040 --> 00:17:20,600
Speaker 1: This is like one of if you think about like

330
00:17:20,800 --> 00:17:22,600
Speaker 1: the pillars of the stool or the legs of the

331
00:17:22,600 --> 00:17:24,440
Speaker 1: stool of why there was this boom, It's like, Okay,

332
00:17:24,440 --> 00:17:27,439
Speaker 1: we're gonna get tax cuts, We're gonna get deregulation. It

333
00:17:27,480 --> 00:17:31,160
Speaker 1: feels like the deregulation component is being delivered upon when

334
00:17:31,200 --> 00:17:34,040
Speaker 1: you look at all of this deal making activity, when

335
00:17:34,080 --> 00:17:37,920
Speaker 1: you look at sort of the enthusiasm with various things

336
00:17:37,960 --> 00:17:41,600
Speaker 1: related to fintech and crypto, in which it doesn't really

337
00:17:41,640 --> 00:17:44,080
Speaker 1: feel like there's any rules anymore at all, and if

338
00:17:44,080 --> 00:17:46,200
Speaker 1: you broke the rules in the past, they're probably not

339
00:17:46,280 --> 00:17:49,360
Speaker 1: gonna do anything about it. This sort of the animal

340
00:17:49,480 --> 00:17:53,639
Speaker 1: spirits and the deregulation element of this, that part seems

341
00:17:53,640 --> 00:17:56,960
Speaker 1: to be a real vindication of that thesis.

342
00:17:57,359 --> 00:18:00,200
Speaker 2: I think of how contemptuous President Trump is about out

343
00:18:00,560 --> 00:18:04,680
Speaker 2: international organizations, how much he's made an effort to undermine them.

344
00:18:04,760 --> 00:18:06,760
Speaker 2: We had Scott Best at the Treasury Sectory come to

345
00:18:06,800 --> 00:18:08,760
Speaker 2: the IMF a few months ago and say we're not

346
00:18:08,760 --> 00:18:10,760
Speaker 2: going to effectively, we're not going to burn this place down,

347
00:18:10,760 --> 00:18:13,359
Speaker 2: but we want to make some significant changes to it. Brendon,

348
00:18:13,400 --> 00:18:15,720
Speaker 2: let me put the last question to you, in light

349
00:18:15,760 --> 00:18:18,160
Speaker 2: of all of that hostility, if that's the right word,

350
00:18:18,600 --> 00:18:20,680
Speaker 2: how do you think the IMF and the World Bank

351
00:18:20,800 --> 00:18:24,640
Speaker 2: and the if these institutions think about their future. Yes,

352
00:18:24,680 --> 00:18:26,520
Speaker 2: in the near term, but the medium term as well.

353
00:18:26,720 --> 00:18:29,399
Speaker 5: What we've seen in the past six months is the

354
00:18:29,520 --> 00:18:33,280
Speaker 5: US kind of going at things unilaterally, saying, look, we're

355
00:18:33,280 --> 00:18:36,040
Speaker 5: in this for ourselves. You guys, can you know, whether

356
00:18:36,080 --> 00:18:39,320
Speaker 5: we're talking about NATO or whether we're talking about trade,

357
00:18:39,880 --> 00:18:42,640
Speaker 5: you know, you're on your own basically, and we'll take

358
00:18:42,680 --> 00:18:44,600
Speaker 5: care of ourselves and you're going to have to learn

359
00:18:44,640 --> 00:18:47,400
Speaker 5: to do the same for yourself. And I think what

360
00:18:47,480 --> 00:18:51,360
Speaker 5: we're going to see in the months ahead is there

361
00:18:51,359 --> 00:18:53,240
Speaker 5: aren't going to be times when the US is going

362
00:18:53,280 --> 00:18:55,879
Speaker 5: to need its traditional allies. We're seeing it with China

363
00:18:55,920 --> 00:18:59,280
Speaker 5: and rare Erse right now. Scott Bessett was saying, you know,

364
00:18:59,359 --> 00:19:02,200
Speaker 5: we need a cord dated response to counter what China

365
00:19:02,240 --> 00:19:04,800
Speaker 5: is trying to do with controlling rare earths, and so

366
00:19:05,560 --> 00:19:07,639
Speaker 5: you know, can you have it both ways? Can you

367
00:19:07,840 --> 00:19:11,240
Speaker 5: put tariffs on your allies them not retaliate and then

368
00:19:11,400 --> 00:19:13,720
Speaker 5: ask them to cooperate with you when you need them to.

369
00:19:13,800 --> 00:19:16,240
Speaker 5: And I think we're going to find out, and this

370
00:19:16,320 --> 00:19:18,720
Speaker 5: applies to whether it's the IMF, the World Bank, or

371
00:19:18,720 --> 00:19:22,040
Speaker 5: the World Trade Organization or any of these multilateral institutions.

372
00:19:22,480 --> 00:19:24,520
Speaker 5: We're going to find out if the US can really

373
00:19:24,560 --> 00:19:28,320
Speaker 5: have it both ways because economies like the European Union,

374
00:19:28,520 --> 00:19:31,119
Speaker 5: they're taking note of all this and they will bake

375
00:19:31,240 --> 00:19:34,720
Speaker 5: that into their calculus as to Okay, well you want

376
00:19:34,760 --> 00:19:37,280
Speaker 5: us to cooperate, now, how about giving us a little

377
00:19:37,280 --> 00:19:39,199
Speaker 5: bit of relief on tariffs. So there's going to be

378
00:19:39,640 --> 00:19:42,800
Speaker 5: this kind of push and pull between unilateralism and the

379
00:19:42,840 --> 00:19:45,679
Speaker 5: old vestiges of multilateralism I think going forward.

380
00:19:46,520 --> 00:19:48,600
Speaker 2: Brendan, Joe Tracy, thank you very much, and I'm looking

381
00:19:48,600 --> 00:19:49,640
Speaker 2: forward to debt Con nine.

382
00:19:50,720 --> 00:19:52,560
Speaker 1: Thanks for having us, Thanks so much.

383
00:19:52,680 --> 00:19:53,240
Speaker 5: Thanks David.

384
00:19:59,240 --> 00:20:01,720
Speaker 2: This is the Big Take from Bloomberg News. I'm David Gerra.

385
00:20:02,040 --> 00:20:04,560
Speaker 2: To get more from the Big Take and unlimited access

386
00:20:04,600 --> 00:20:08,040
Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg

387
00:20:08,080 --> 00:20:11,880
Speaker 2: dot com slash podcast offer. If you'd like this episode,

388
00:20:12,040 --> 00:20:14,160
Speaker 2: make sure to follow and review The Big Take wherever

389
00:20:14,200 --> 00:20:16,720
Speaker 2: you listen to podcasts. It helps people find the show.

390
00:20:17,200 --> 00:20:19,240
Speaker 2: Thanks for listening. We'll be back tomorrow