WEBVTT - Bloomberg Surveillance TV: November 21st, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.200 --> 0:00:37.760 The New York Fed President. 0:00:37.440 --> 0:00:40.640 John Williams pushing back against hawkish commentary from the FMC 0:00:40.800 --> 0:00:43.960 and Wall Street now pricing in better than fifty percent 0:00:44.000 --> 0:00:47.160 odds the federal cut race in December. FED Governor Stephen 0:00:47.200 --> 0:00:49.120 Moram was the loan to cent for a fifty basis 0:00:49.120 --> 0:00:52.360 point raid cup at last month FMC meeting, and Governor 0:00:52.400 --> 0:00:54.440 Myron joins us now from more Governor Maron, good morning, 0:00:54.560 --> 0:00:55.800 come for once again, thanks for. 0:00:55.760 --> 0:00:57.000 Being here, Thanks for having me back. 0:00:57.000 --> 0:00:59.080 We've got to start with the labor market, your reflections 0:00:59.120 --> 0:01:01.320 and what we saw. Yes, does it lean one way 0:01:01.480 --> 0:01:01.840 or the other? 0:01:02.200 --> 0:01:04.040 Yeah, I mean I think the implications of yesterday were 0:01:04.040 --> 0:01:06.200 obviously dubvish, and if anyone was on the fence, I 0:01:06.240 --> 0:01:07.839 would hope that this would move them in the direction 0:01:07.920 --> 0:01:10.240 of cutting. I mean, you saw the unemployment rate edged 0:01:10.319 --> 0:01:13.120 up a bit. You know, you saw some other indicators 0:01:13.160 --> 0:01:16.560 like an increase in permanent layoffs. You know, those are 0:01:16.640 --> 0:01:19.920 indications that the labor market has been affected by restrictive 0:01:20.000 --> 0:01:22.800 FED policy. And given the outlook for inflation, there's not 0:01:22.840 --> 0:01:24.640 really much of a need to be as restrictive as 0:01:24.680 --> 0:01:24.960 we are. 0:01:25.120 --> 0:01:26.759 And yet on the committee we have pushed back. 0:01:26.800 --> 0:01:29.480 Almost immediately after that, FED Governor Michael ba had this 0:01:29.560 --> 0:01:32.760 to say, I'm concerned that we're seeing inflation still around 0:01:32.800 --> 0:01:35.319 three percent. Inflation is closer to three than it is 0:01:35.360 --> 0:01:37.080 to two. What do you make of that argument? How 0:01:37.080 --> 0:01:38.520 percuisive is it. 0:01:37.840 --> 0:01:39.679 It's not persuasive to me. 0:01:39.840 --> 0:01:41.120 And I'll tell you why. 0:01:41.680 --> 0:01:43.959 All of the inflation access, sorry, almost all of the 0:01:43.959 --> 0:01:47.280 inflation access is a mirage. It's not indicative of supply 0:01:47.360 --> 0:01:49.440 demand imbalances. And so, for example, if you look at 0:01:49.480 --> 0:01:52.280 the housing market right market, rents have been running at 0:01:52.280 --> 0:01:55.160 about one percent for a couple of years. Measured inflation 0:01:55.440 --> 0:01:57.680 in the index is actually much higher than that because 0:01:57.720 --> 0:01:59.480 it takes a really long time for the index to 0:01:59.520 --> 0:02:02.760 converge to where market rents are. That's a statistical artifact, right, 0:02:02.760 --> 0:02:05.960 That's an artifact of the statistical measurement process. It's indicative 0:02:06.000 --> 0:02:07.920 of a supplied demand in balance that was there in 0:02:07.960 --> 0:02:11.760 twenty twenty two, twenty twenty three. Montre policy works with lags. 0:02:11.800 --> 0:02:13.760 It has to be set now for twenty twenty seven. 0:02:14.720 --> 0:02:17.080 So when you look at the housing data, right you 0:02:17.120 --> 0:02:19.160 see market rents running about one percent for a couple 0:02:19.200 --> 0:02:21.600 of years. There's no supply demand in balance there. We 0:02:21.639 --> 0:02:24.440 should not be setting policy for twenty twenty seven based 0:02:24.440 --> 0:02:26.360 on a supply demand in balance that existed in twenty 0:02:26.400 --> 0:02:27.520 twenty two or twenty twenty three. 0:02:27.560 --> 0:02:28.560 That doesn't make any sense. 0:02:28.639 --> 0:02:31.560 There's other things too, like portfolio management services which confuse 0:02:31.639 --> 0:02:34.320 quantities for prices. This stuff is all well known. If 0:02:34.360 --> 0:02:36.600 you look at market based measures of inflation, they're much 0:02:36.600 --> 0:02:38.240 closer too than the ARC to three. So I think 0:02:38.280 --> 0:02:40.880 that the excess, the overage is a mirage, and it's 0:02:40.880 --> 0:02:43.360 a mistake to ask people to lose their jobs because 0:02:43.400 --> 0:02:44.959 of the corks of the statistical measurement. 0:02:44.680 --> 0:02:46.280 Process, and you've got to put out new foecasts on 0:02:46.320 --> 0:02:48.360 December tenth as well, which is going to be complicated 0:02:48.360 --> 0:02:50.919 by the fact we've had limited data more recently, How 0:02:50.919 --> 0:02:53.720 relevant do you think the canidaentially is, because I'll i'llfer 0:02:53.760 --> 0:02:55.480 you the perspective on more straight At the moment, it 0:02:55.480 --> 0:02:57.840 goes something like this, the meeting's on the tenth, you 0:02:57.840 --> 0:03:00.240 don't get the dates until the sixteenth. The FED kind 0:03:00.240 --> 0:03:01.919 of constrained by that, they can't do kind of thing. 0:03:02.040 --> 0:03:03.240 What's your perspective on that? 0:03:03.400 --> 0:03:05.079 Yeah, So, as I said a moment ago, Monte policy 0:03:05.080 --> 0:03:06.560 works with lags. It would be much easier if it 0:03:06.600 --> 0:03:09.280 hit the economy immediately, but it doesn't. It works with lags, 0:03:09.520 --> 0:03:11.720 so you have to set policy based on the forecast. 0:03:12.120 --> 0:03:15.160 So the data matter insofar as they affect your forecast. 0:03:15.440 --> 0:03:17.520 It doesn't make sense to be setting policy for where 0:03:17.520 --> 0:03:18.440 the economy was three. 0:03:18.360 --> 0:03:19.600 Or six months ago. 0:03:19.760 --> 0:03:21.560 We should be setting policy based for where the economy 0:03:21.600 --> 0:03:23.239 is going to be twelve to eighteen months from now. 0:03:23.720 --> 0:03:25.919 And so if we have data, it gives us the 0:03:25.919 --> 0:03:27.200 ability to update our forecast. 0:03:27.520 --> 0:03:30.000 But the lack of data doesn't mean that we don't 0:03:30.000 --> 0:03:30.600 have a forecast. 0:03:30.600 --> 0:03:31.480 We did have a forecast. 0:03:31.520 --> 0:03:33.800 It all gives us as opportunities to falsify our forecast. 0:03:34.080 --> 0:03:37.000 And there hasn't been anything in the data in the news, 0:03:37.160 --> 0:03:40.120 in media stories, in private sector data, alternative data that's 0:03:40.120 --> 0:03:41.880 available to us that would make us think that the 0:03:41.920 --> 0:03:44.680 forecast is somehow nullified. And there's been a big shock 0:03:44.720 --> 0:03:47.080 to it. So, if anything, all the information that we've 0:03:47.080 --> 0:03:51.480 gotten the interim since September FMC has inclined to the 0:03:51.560 --> 0:03:55.000 other side. You know, we got weaker inflation than people expected, 0:03:55.160 --> 0:03:58.680 and we got a higher unemployment rate than folks were expecting, 0:03:58.720 --> 0:04:00.640 so all of that information to push one in the 0:04:00.720 --> 0:04:01.400 dubvish direction. 0:04:01.520 --> 0:04:03.280 But they are still fed officials that are looking for 0:04:03.400 --> 0:04:05.840 more data, and they have said they're data dependent. They 0:04:05.840 --> 0:04:08.040 want that insurance that they're cutting right now and it's 0:04:08.080 --> 0:04:10.920 the right time. Potentially the unemployment rate might be moving 0:04:11.000 --> 0:04:13.560 up to four point five percent on December sixteenth. Would 0:04:13.560 --> 0:04:16.160 you be in favor of just moving the meeting if 0:04:16.160 --> 0:04:19.640 it meant others felt more reassured to cut interest rates 0:04:19.680 --> 0:04:20.200 in December. 0:04:20.920 --> 0:04:23.400 So you know, I haven't really thought about that, and 0:04:23.440 --> 0:04:25.520 it's not a conversation that It's not a conversation that 0:04:25.560 --> 0:04:28.480 I've been part of I mean, I agree the meeting dates, 0:04:28.480 --> 0:04:31.440 see the meeting dates seem kind of arbitrary, But at 0:04:31.480 --> 0:04:33.200 the same time, a lot of there's a lot of 0:04:33.200 --> 0:04:35.719 stuff that gets done as a result of those meeting dates. 0:04:35.720 --> 0:04:39.600 And you know, people have investments and contracts and other 0:04:39.680 --> 0:04:43.240 decisions that are tied to the timing of the meeting date. 0:04:43.440 --> 0:04:45.479 And I don't know to what extent moving those dates 0:04:45.480 --> 0:04:48.320 would be disruptive for all that. So it's something that 0:04:48.360 --> 0:04:52.640 I'm not sure about. But this ultimately comes down to 0:04:52.680 --> 0:04:55.479 the question of data dependence. Is what you do when 0:04:55.480 --> 0:04:57.200 you don't have a forecast or when you don't have 0:04:57.240 --> 0:05:00.480 any confidence in your forecast. Right, we should be forecast, 0:05:00.600 --> 0:05:03.440 not data dependent. Being excessively data dependent is to be 0:05:03.480 --> 0:05:05.800 too backward looking. And if you're too backward looking, you 0:05:05.920 --> 0:05:07.760 necessarily are going to have the wrong policies. 0:05:07.839 --> 0:05:09.599 Yil daughter rights and he says, the only question that 0:05:09.640 --> 0:05:12.000 matters for you is will you descend for fifty if 0:05:12.040 --> 0:05:14.200 you believe it means not being able to push through 0:05:14.480 --> 0:05:16.200 a twenty five basis point cut. 0:05:16.480 --> 0:05:18.400 Yeah, so absolutely not. 0:05:18.640 --> 0:05:20.559 I would absolutely vote for for a twenty five basis 0:05:20.600 --> 0:05:23.479 one cut if my vote were the marginal vote. There's 0:05:23.480 --> 0:05:27.160 no question about that. I you know, to do otherwise 0:05:27.160 --> 0:05:30.760 would be to cause real harm to the economy for 0:05:31.880 --> 0:05:34.000 purposes of vanity, and that's not who I am. 0:05:33.960 --> 0:05:36.840 Going into next year talking about the forecast of what's 0:05:36.839 --> 0:05:38.800 going to happen. A lot of economists to come on 0:05:38.839 --> 0:05:41.840 the show expect a reacceleration on the backs of the 0:05:42.000 --> 0:05:45.560 tax refunds and some of the other stimulative measures that 0:05:45.600 --> 0:05:48.520 could come early next year. How do you factor that 0:05:48.720 --> 0:05:52.479 into your forecast for ongoing weakness in the labor market 0:05:52.480 --> 0:05:53.080 and the consumer. 0:05:53.720 --> 0:05:57.240 Yeah, so I think that, you know, I have not 0:05:57.480 --> 0:06:03.760 been a what I would think of as excessively pessimistic 0:06:04.040 --> 0:06:07.080 on the economy. I do think policy is restrictive, and 0:06:07.120 --> 0:06:09.640 I do think that it's too restrictive, and we don't 0:06:09.680 --> 0:06:11.880 need to be. And the longer we remain restrictive, the 0:06:11.920 --> 0:06:14.279 greater the chances that we are the source of an 0:06:14.320 --> 0:06:18.440 economic downturn, which we should not seek to be. I 0:06:18.480 --> 0:06:22.080 think that many of the many of the factors that 0:06:22.120 --> 0:06:23.839 will be kicking in over the next twelve months that 0:06:23.920 --> 0:06:27.320 might be supportive of GDP growth are things that necessarily 0:06:27.440 --> 0:06:30.680 don't have hawk s implications for montary policy because they 0:06:30.720 --> 0:06:33.599 affect the supply side. And when you think about things 0:06:33.720 --> 0:06:36.400 like relaxing regulations, and I think that that has been 0:06:36.400 --> 0:06:40.880 going on at actually impressive pace. These are things that 0:06:40.920 --> 0:06:42.920 push out the supply side of the economy and therefore 0:06:42.960 --> 0:06:47.760 don't necessarily create a demand excess of supply, right Monterey, 0:06:47.760 --> 0:06:50.280 policy should be tight if demand is too much an 0:06:50.279 --> 0:06:52.279 excess of supply, and if you push out the supply 0:06:52.320 --> 0:06:54.559 side of the economy, then that's not something you worry about. 0:06:54.640 --> 0:06:57.280 There's a duration mismatch here though, the idea that if 0:06:57.279 --> 0:07:00.320 you reduce regulations and you allow people to build apply 0:07:01.480 --> 0:07:03.320 that it takes a longer time than say, if you 0:07:03.320 --> 0:07:06.120 give people two thousand dollars checks right up front that 0:07:06.160 --> 0:07:08.799 they can spend immediately, or if they get a rebate 0:07:08.839 --> 0:07:11.800 that's a lot bigger from their tax from their tax filings. 0:07:12.320 --> 0:07:14.800 How do you factor in that timing mismatch? Would you 0:07:14.840 --> 0:07:15.680 look through. 0:07:15.560 --> 0:07:18.880 Any bump up in inflation next year from both stimulative 0:07:18.880 --> 0:07:21.280 measures as well as the price increases that we're we're 0:07:21.320 --> 0:07:23.360 hearing from a lot of retailers that they're going to 0:07:23.360 --> 0:07:23.920 pass along. 0:07:24.480 --> 0:07:27.120 So you know, I wouldn't look through I wouldn't look 0:07:27.120 --> 0:07:32.280 through bumps from checks like that, right, you know, I 0:07:32.280 --> 0:07:32.640 don't think that. 0:07:32.680 --> 0:07:33.720 I don't think they'd be able to. 0:07:33.720 --> 0:07:37.080 However, a policy like that has been hasn't been formalized, 0:07:37.080 --> 0:07:39.840 that hasn't been introduced. We don't know the parameters of it. 0:07:39.840 --> 0:07:41.920 It's too early to sort of think about basing a 0:07:41.960 --> 0:07:44.320 forecast on something like that. 0:07:44.480 --> 0:07:47.800 What we do know is that is that the labor. 0:07:47.560 --> 0:07:49.520 Market data have been coming in not as strong as 0:07:49.520 --> 0:07:52.080 we'd like them to be in that policy is too restrictive, Governor. 0:07:51.840 --> 0:07:53.440 If we can stay on inflation? Do you know when 0:07:53.440 --> 0:07:55.920 we're going to get some inflation data? When are we 0:07:55.920 --> 0:07:58.679 going to get that? Because we've heard about the payroll schedule. 0:07:58.720 --> 0:08:01.040 I haven't really heard anything about the EPI schedule. You've 0:08:01.080 --> 0:08:02.920 got any indication whatsoever when it's coming. 0:08:03.080 --> 0:08:05.440 Yeah, the BLS put it out on its website this week. 0:08:05.480 --> 0:08:08.080 I think that we're not going to get the November 0:08:08.600 --> 0:08:11.240 CPI data until after the next FMC. 0:08:11.120 --> 0:08:13.080 So we've got to wait for that too. We've got it, 0:08:13.160 --> 0:08:14.760 we've got to waste that. Do you see that, Lisa? 0:08:14.880 --> 0:08:15.480 Yes? I did. 0:08:15.520 --> 0:08:17.240 I saw that we have to wait and it's not 0:08:17.320 --> 0:08:19.200 clear exactly when we're going to get it. But there's 0:08:19.200 --> 0:08:21.080 a real question going forward about when we might. 0:08:20.960 --> 0:08:22.200 Get We don't have the day ship, but we don't 0:08:22.240 --> 0:08:24.520 have the deal the date the data are on the website. 0:08:24.600 --> 0:08:27.440 Yeah, the BLS has a has a has a list 0:08:27.440 --> 0:08:28.240 of the release dates on. 0:08:28.240 --> 0:08:30.520 The payrolls one. But I've missed the CPI one. 0:08:30.600 --> 0:08:32.880 Which doesn't that just make it an even stronger case 0:08:33.000 --> 0:08:34.560 just to wait and have this meeting when we've got 0:08:34.600 --> 0:08:35.280 all this data. 0:08:35.640 --> 0:08:37.240 Why is it that we have to wait so much 0:08:37.280 --> 0:08:38.719 long before a governor. 0:08:38.760 --> 0:08:39.560 Wait for the data? 0:08:39.760 --> 0:08:43.520 Yes, well, because the government shutdown introduced a whole number 0:08:43.559 --> 0:08:46.160 of snags into the data collection process, and so that 0:08:46.360 --> 0:08:49.040 those snags mean extra time to collect the data, extra 0:08:49.080 --> 0:08:50.080 time to process the data. 0:08:50.280 --> 0:08:52.440 People have a logjam of work to get back to. 0:08:52.720 --> 0:08:54.640 I mean we just you know, sort of spent several 0:08:54.679 --> 0:08:58.679 years talking about talking talking about bull whips from supply chains, 0:08:58.760 --> 0:09:01.120 right and you know, it's gets pulled in at once. 0:09:01.160 --> 0:09:02.760 And when you have a government shut down, all the 0:09:02.760 --> 0:09:04.880 government employees aren't working and they come back to work 0:09:04.880 --> 0:09:06.040 and they've got a ton of work to do all 0:09:06.080 --> 0:09:09.239 at once. And so you know, we have those bullwhips 0:09:09.600 --> 0:09:12.240 in government data right now. And you know, if that 0:09:12.320 --> 0:09:14.520 were a market, you'd see some inflation in the price 0:09:14.559 --> 0:09:14.920 of data. 0:09:14.960 --> 0:09:15.920 But it's not a market. 0:09:16.000 --> 0:09:17.840 So give me for coming down with the hawkish hits. 0:09:17.840 --> 0:09:19.480 But we got another one in the last twenty four 0:09:19.520 --> 0:09:21.880 hours two and it came from Beth hammock laring interest 0:09:21.920 --> 0:09:24.240 rights to support the labor market risk prolonging this period 0:09:24.280 --> 0:09:27.400 of elevated inflation, and it could also encourage risk tanking 0:09:27.440 --> 0:09:29.840 and financial markets. Can we finish on that last point, 0:09:30.040 --> 0:09:33.320 risk taking and financial markets? How excessive is it and 0:09:33.320 --> 0:09:35.880 should it be on the ritar of the f WEBC Sure? 0:09:35.920 --> 0:09:38.120 So, first of all, as I said before, the excess 0:09:38.120 --> 0:09:40.920 of inflation is a quirk of the statistical process, and 0:09:40.960 --> 0:09:42.720 it is a mistake to ask people to lose their 0:09:42.800 --> 0:09:44.680 jobs as a result of a quirk of the statistical 0:09:44.720 --> 0:09:47.880 process on financial markets. You know, Look, I think that 0:09:47.920 --> 0:09:51.480 lots of things affect financial markets. Tax policy does, regulation does, 0:09:51.920 --> 0:09:55.559 technology like artificial intelligence does. It's a mistake to conflate 0:09:55.640 --> 0:09:57.880 the stance of the status of financial markets with the 0:09:57.880 --> 0:10:00.600 status of monetary policy. Right, and when you look at 0:10:00.640 --> 0:10:04.599 us something as a financial markets as deeply connected to 0:10:05.600 --> 0:10:10.199 monitor policy like interest rates. We've lived through periods of conundrums, right, 0:10:10.280 --> 0:10:13.560 we're passing through of the Fed funds rate into longer 0:10:13.640 --> 0:10:16.200 term interest rates was confusing to people. So it's just 0:10:16.240 --> 0:10:18.800 a mistake to do a one for one mapping of 0:10:18.840 --> 0:10:20.240 these things. And I think that when you look at 0:10:20.280 --> 0:10:22.800 financial conditions, the financial condition that matters most for the 0:10:22.840 --> 0:10:26.520 real economy is and remain, has been and remains housing, right, 0:10:26.559 --> 0:10:29.040 And this is an area where financial conditions are not tight, 0:10:29.120 --> 0:10:31.199 so are not loose. This is an area where financial 0:10:31.240 --> 0:10:34.600 conditions are are still quite tight going out getting a mortgage. 0:10:34.600 --> 0:10:37.040 You know, this is this is not something that's not 0:10:37.160 --> 0:10:39.800 a financial condition that I would consider to be excessively easy. 0:10:40.520 --> 0:10:42.000 And so I think it's I think it's a mistake. 0:10:42.040 --> 0:10:44.160 And I think it's also a mistake, as I said before, 0:10:44.800 --> 0:10:50.600 to ask people to experience job losses because you think 0:10:50.640 --> 0:10:52.320 the stock market is too high. I don't know what 0:10:52.360 --> 0:10:54.880 the right level for the stock market is. And I 0:10:54.920 --> 0:10:57.440 think that it's it's a very challenging question to be 0:10:57.520 --> 0:10:59.840 able to answer credibly, and to say that we need 0:10:59.880 --> 0:11:03.280 to create job losses in order to sort of restore 0:11:03.320 --> 0:11:04.960 the stock market to some level that we think is 0:11:05.000 --> 0:11:07.560 more reflective of fair value is just not a policy 0:11:07.640 --> 0:11:08.240 view that I hold. 0:11:08.480 --> 0:11:09.960 A lot of people have come on this show and 0:11:10.000 --> 0:11:12.280 said that right now the FED is stuck between a 0:11:12.320 --> 0:11:15.000 conundrum of the K shaped economy where you have people 0:11:15.040 --> 0:11:17.000 at the upper end who are doing just fine and 0:11:17.040 --> 0:11:19.719 are supporting consumption, and people on the lower end who 0:11:19.720 --> 0:11:22.880 are experiencing lack of wage gains and they're experiencing those 0:11:22.960 --> 0:11:24.600 job losses more significantly. 0:11:25.320 --> 0:11:28.360 How concerned are you about sort of your dual. 0:11:28.240 --> 0:11:31.120 Roles of trying to help prop up and prevent some 0:11:31.160 --> 0:11:34.280 of those job losses from really escalating, while at the 0:11:34.320 --> 0:11:37.880 same time, potentially cutting rates would exacerbate that case shape, 0:11:37.920 --> 0:11:41.520 and you only exacerbate what you're seeing with respect to 0:11:41.600 --> 0:11:42.640 the wealth divide. 0:11:42.960 --> 0:11:48.560 So Congress didn't task us with addressing all social problems 0:11:48.559 --> 0:11:50.240 in the world, in equality one of them. 0:11:50.280 --> 0:11:51.040 They tasked us with. 0:11:51.240 --> 0:11:55.840 Tackling aggregate maximum employment and stable prices. And so therefore 0:11:55.920 --> 0:11:59.600 the right policy to take is to stabilize employment and prices, 0:12:00.320 --> 0:12:02.720 and that's the policy. That's the policy that I support. 0:12:03.120 --> 0:12:05.880 I do think though, while discussing the subject of inequality, 0:12:06.120 --> 0:12:08.040 it would be much worse for the people at the 0:12:08.080 --> 0:12:10.840 lower end of the income distribution if the unemployment rate 0:12:10.840 --> 0:12:13.400 continued to go up as a result of our policies. 0:12:14.080 --> 0:12:16.360 That's not something that they would be that they would welcome, 0:12:16.360 --> 0:12:17.800 and it's not something that I would welcome either. 0:12:17.920 --> 0:12:19.560 Governor arts with the President this week and you have 0:12:19.559 --> 0:12:21.679 an office and I asked him about the FED interviews. 0:12:21.800 --> 0:12:23.800 It says lots of names, we may go the standard 0:12:23.800 --> 0:12:25.720 way quote, it's nice every once in a while to 0:12:25.760 --> 0:12:28.960 go politically correct. Out of the names that we know 0:12:29.120 --> 0:12:31.400 that are being interviewed, who is politically correct? 0:12:32.240 --> 0:12:34.839 You know, I don't really know the answere we worked. 0:12:34.559 --> 0:12:36.920 For the presidents. You understand how his mind works. Do 0:12:36.960 --> 0:12:39.200 you think it means someone that is currently on the board, 0:12:39.360 --> 0:12:42.439 like a Governor Waller or someone that's very close to 0:12:42.520 --> 0:12:44.400 him in your former colleague Kevin has it. 0:12:44.840 --> 0:12:46.600 Yeah, So I mean it should be pretty clear that 0:12:46.640 --> 0:12:48.240 I just always say what's on my mind, and therefore 0:12:48.240 --> 0:12:50.440 I don't even know what politically correct is. So I 0:12:50.440 --> 0:12:52.560 don't even know how to begin addressing that, you know, 0:12:52.600 --> 0:12:53.560 But look, I don't. 0:12:53.400 --> 0:12:55.480 Make care seeing too politically correct right now? 0:12:55.520 --> 0:12:56.880 Actually am I I've. 0:12:56.679 --> 0:12:58.640 Never been accused of that before, so hey, you know, 0:12:58.880 --> 0:12:59.920 I'm happy to have it first. 0:13:00.200 --> 0:13:02.000 Going a very diplomatic it's going to see you. Thanks 0:13:02.040 --> 0:13:02.800 to drop them by. 0:13:03.480 --> 0:13:07.000 Stay with us more Bloomberg Surveillance coming up after this, 0:13:15.600 --> 0:13:18.760 Gil Lauria of DA Davidson remaining bullish on in Vidia, 0:13:18.880 --> 0:13:21.920 reiterating his by rating and price target of two fifty 0:13:21.920 --> 0:13:24.360 on the stock. Gill joined us now for more get welcome. 0:13:24.480 --> 0:13:26.600 I think we've still got to reflect on what happened yesterday. 0:13:26.840 --> 0:13:29.680 How is this name suddenly looking so French out. 0:13:31.200 --> 0:13:33.640 Well, I think for the last couple of years, in 0:13:33.800 --> 0:13:36.880 video has driven the market, and yesterday something happened around 0:13:36.960 --> 0:13:40.280 ten forty five Eastern and the market started driving in video, 0:13:40.440 --> 0:13:43.240 something that really has nothing to do with then video. 0:13:43.280 --> 0:13:47.320 The results were very, very good, and more importantly, back 0:13:47.360 --> 0:13:51.840 to the conversation you've been having so far this hour, Microsoft, Amazon, 0:13:51.880 --> 0:13:56.160 in Google and Video's main customers have all the customers, 0:13:56.200 --> 0:14:00.400 They have all the business customers through open Ai and Thenthropic, 0:14:00.480 --> 0:14:03.800 they have most of the consumer customers as well. And 0:14:03.840 --> 0:14:05.960 what they told us a couple of years, a couple 0:14:06.000 --> 0:14:09.960 of weeks ago, is that they're seeing an acceleration in demand, 0:14:10.840 --> 0:14:15.839 so they're able to build out these compute infrastructure for 0:14:16.120 --> 0:14:19.760 contract that are already committed. So their customers, which again 0:14:19.840 --> 0:14:23.880 is pretty much every other company, and most consumers are 0:14:23.880 --> 0:14:26.920 booking demand in advance and willing to pay for it. 0:14:26.960 --> 0:14:31.560 So to be precise, here, Amazon, Microsoft and Google are 0:14:31.720 --> 0:14:35.160 generating very good returns on their investment in terms of 0:14:35.200 --> 0:14:38.200 the build out of the data center. It's their customers 0:14:38.200 --> 0:14:41.920 that are not yet generating returns but are booking so 0:14:42.040 --> 0:14:46.200 much demand in advance that it looks like they feel 0:14:46.520 --> 0:14:50.920 they believe that they will generate those returns. So the 0:14:51.000 --> 0:14:54.640 results from Nvidia reflected that acceleration and demand. They were 0:14:54.880 --> 0:14:58.640 very good. That's why the stock opened up. Something else 0:14:58.720 --> 0:15:00.960 happened yesterday at ten four forty five Eastern. 0:15:01.280 --> 0:15:02.800 I imagine we'll find out. 0:15:02.720 --> 0:15:07.400 Something like some liquidation of a fund, somebody selling the 0:15:07.440 --> 0:15:08.960 AI portfolio as a whole. 0:15:09.480 --> 0:15:11.920 It had little to do if nothing, within video. 0:15:12.200 --> 0:15:14.000 That's aid Gil, and I hear you about sort of 0:15:14.040 --> 0:15:16.880 the technical selling or this question about whether there were 0:15:17.040 --> 0:15:18.120 some weekends. 0:15:17.640 --> 0:15:19.000 That were flushed out yesterday. 0:15:19.200 --> 0:15:20.960 There is this broader fear about in video, and you've 0:15:20.960 --> 0:15:23.560 seen it in the stock performance even leading into the earnings. 0:15:23.560 --> 0:15:24.840 That the earnings were not able. 0:15:24.600 --> 0:15:27.440 To assuage that, yes, people are willing to buy all 0:15:27.480 --> 0:15:30.200 these chips, but whether they're able to without borrowing a 0:15:30.240 --> 0:15:32.840 lot of money is another question. You talk about how 0:15:32.880 --> 0:15:35.920 there is this expectation of the profits to follow some 0:15:36.040 --> 0:15:38.160 of the spending, but you see the likes of Open Eye, 0:15:38.360 --> 0:15:41.480 as you yourself said yesterday, is the classic example of 0:15:41.520 --> 0:15:43.840 fake it until you make it. Why do the accounts 0:15:43.880 --> 0:15:47.000 receivables not concern you? The idea that this is a 0:15:47.080 --> 0:15:49.760 huge bill and the cost of it is leaving some 0:15:50.040 --> 0:15:51.680 looking elsewhere to try to raise the money. 0:15:53.400 --> 0:15:56.760 Yeah, so that's it's a good important question to start 0:15:56.800 --> 0:16:00.680 asking ourselves what's healthy and real and what's unhealthy and 0:16:00.720 --> 0:16:01.240 not real. 0:16:01.760 --> 0:16:05.120 So I talked about the healthy part. Amazon, Microsoft, Google. 0:16:05.400 --> 0:16:06.720 They're buying all the. 0:16:06.680 --> 0:16:09.000 Nvidio chips they can get, by the way, that does 0:16:09.080 --> 0:16:14.520 include Google. While Google is using its TPUs extensively, and 0:16:14.560 --> 0:16:17.000 by the way, the TPU is really the only competitive 0:16:17.040 --> 0:16:20.360 product in the market to nvideo, they're using it extensively. 0:16:20.400 --> 0:16:22.480 They're still buying as many nvidio chips as they can 0:16:22.640 --> 0:16:25.480 to help provide those to their customers. 0:16:25.800 --> 0:16:27.280 That's all healthy behavior. 0:16:27.640 --> 0:16:31.880 The unhealthy behavior you're mentioning has to do with startups 0:16:32.320 --> 0:16:36.480 borrowing money at very high rates, making promises they can't keep. 0:16:36.640 --> 0:16:39.000 That's the poster childs for that are open AI and 0:16:39.080 --> 0:16:43.840 core Weave that really and in amongst each other, making 0:16:43.880 --> 0:16:47.080 these big promises, borrowing a lot of money to build 0:16:47.160 --> 0:16:50.960 data centers, that part of the demand isn't real. Now importantly, 0:16:51.000 --> 0:16:55.640 it's not even necessary. If those two didn't exist, Microsoft, Amazon, 0:16:55.640 --> 0:16:57.840 Google would still be buying the same amount of chips. 0:16:58.000 --> 0:17:01.440 If not more. But we do have to keep pointing. 0:17:01.040 --> 0:17:03.480 To the bad behavior to Nvidia giving a dollar to 0:17:03.560 --> 0:17:07.520 Core core Weave, borrowing nine dollars and using eight of 0:17:07.560 --> 0:17:11.560 the ten to buy in Nvidia chips, then having to 0:17:11.600 --> 0:17:13.680 pay a dollar of interest rate and only getting fifty 0:17:13.760 --> 0:17:14.880 cents of profit. 0:17:15.680 --> 0:17:17.879 That's unhealthy. That needs to stop. 0:17:18.320 --> 0:17:21.280 You mentioned in video's receivable as in inventory that has 0:17:21.359 --> 0:17:24.880 come up yesterday. But if you look historically, we are 0:17:24.960 --> 0:17:28.440 still at These numbers are just so big that if 0:17:28.480 --> 0:17:32.120 you look at them as a ratio, so the account 0:17:32.119 --> 0:17:34.359 sociable is a ratio of revenue is actually within the 0:17:34.440 --> 0:17:38.240 historical range. Inventories is a percent of cost, and good 0:17:38.320 --> 0:17:42.040 sold within the historical range. So there's not a specific 0:17:42.119 --> 0:17:46.520 concern about those numbers for Nvidia, it's more concern about 0:17:46.840 --> 0:17:50.639 are we letting bad behavior enter the system? Which the 0:17:50.720 --> 0:17:54.000