WEBVTT - TikTok Buyers Group to Include Oracle, Silver Lake, Andreessen

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<v Speaker 2>Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.

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<v Speaker 3>We've been monitoring some news when it comes to TikTok.

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<v Speaker 4>Yeah, we'll speaking of President Trumpy sign an executive order

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<v Speaker 4>to extend the deadline for TikTok's Chinese parent Byte Dance

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<v Speaker 4>to divest the platform's US operations until December sixteenth, So

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<v Speaker 4>another extension. Also some details about US operations including Oracle,

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<v Speaker 4>silver Lake, and Intrise and Horowitz. Oracle would keep the

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<v Speaker 4>TikTok cloud contract. This would be the group that would

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<v Speaker 4>control the US operations of TikTok. For more, I want

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<v Speaker 4>to bring in Brad's Stone. He's the editor of Bloomberg

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<v Speaker 4>Business Week and the author of Amazon Unbound, Jeff Bezos

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<v Speaker 4>and the Invention of a Global Empire, among many other books.

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<v Speaker 4>He joins us from our San Francisco bureau. Brad the

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<v Speaker 4>latest on TikTok. It's it's not. It's interesting because it's

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<v Speaker 4>it's one that's sort of faded into the background a

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<v Speaker 4>little bit until it comes up for deadline and then

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<v Speaker 4>also comes up as sort of like a tool for

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<v Speaker 4>trade negotiations. I'm just curious what you think of this

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<v Speaker 4>group Oracle, silver Lake Andries and Horowitz, and the idea

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<v Speaker 4>that US operations would be controlled by a group that

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<v Speaker 4>you know, you've come to know pretty well in Silicon Valley.

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<v Speaker 5>Right. Well, first of all, Tim, how long have we

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<v Speaker 5>been talking about TikTok.

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<v Speaker 6>I can tell you I.

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<v Speaker 4>Can answer that question for you. It was during the

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<v Speaker 4>first longer longer than I've been at Bloomberg. It was

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<v Speaker 4>during the first Trump administration that we were talking.

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<v Speaker 5>Webb in the retirement home one day, analyzing this.

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<v Speaker 6>Look.

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<v Speaker 5>I mean, i mean, first of all, you know, they're

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<v Speaker 5>talking about spinning off the US operation into this consortium

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<v Speaker 5>of Oracle and and recent Horowitz. They're talking about asking

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<v Speaker 5>TikTok's one hundred and seventy million US users to download

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<v Speaker 5>a new app. So that's a little bit of friction

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<v Speaker 5>right there. I mean, frankly, it seems this to me

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<v Speaker 5>seems like it would be a win for meta and YouTube.

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<v Speaker 5>I mean, there's very little that says this new TikTok

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<v Speaker 5>Us operation that licenses the technology from ByteDance but then

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<v Speaker 5>recreates the algorithm domestically. It just doesn't sound like an

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<v Speaker 5>agile company that can adapt to the rapid changes we're

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<v Speaker 5>seeing in social media and AI. And I just have

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<v Speaker 5>to question, you know, because we have been talking about

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<v Speaker 5>it for so long, whether the spinoff will really happen.

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<v Speaker 5>You know, this has been promised and or threatened many

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<v Speaker 5>times over the years.

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<v Speaker 3>And you know, Brad and also seeing some reporting out

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<v Speaker 3>I think from the Journal, but said US investors holding

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<v Speaker 3>a roughly eighty percent stake in Chinese shareholders owning the

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<v Speaker 3>rest according to those in the know. So like, and

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<v Speaker 3>I think there's going to be a board in that

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<v Speaker 3>there's going to be one board member designated by the

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<v Speaker 3>US government. It just as you say, it just sounds

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<v Speaker 3>like kind of a strained entity.

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<v Speaker 5>And tiptoeing around the law, right because during the Biden administration,

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<v Speaker 5>you know, Congress passed a law that said that the

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<v Speaker 5>TikTok algorithm would have to be created and controlled in

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<v Speaker 5>the US. And yet you know, according to this report,

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<v Speaker 5>they'll still be licensing some technology from Bytten, So of

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<v Speaker 5>course the devil will be in the details. And you know,

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<v Speaker 5>you can also imagine that it's all subject to the

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<v Speaker 5>next presidential pronouncement and a potential trade deal with China,

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<v Speaker 5>and so we'll see, we'll see. But look, I mean

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<v Speaker 5>this is terrain that as we know in Silicon Valley,

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<v Speaker 5>everything changes every single day. And the idea of asking

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<v Speaker 5>one hundred and seventy million users to download a new

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<v Speaker 5>app with a new algorithm and then to compete with

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<v Speaker 5>the likes of YouTube and Instagram, that really, over the

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<v Speaker 5>past few years have copied a lot of TikTok's functionality.

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<v Speaker 6>Not doing it, not doing it.

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<v Speaker 3>And I'm appt out already, Brad, What I want to

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<v Speaker 3>ask you about I'd much rather look at some AI slop?

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<v Speaker 3>Can you talk about AI slap?

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<v Speaker 6>I do have to say.

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<v Speaker 4>I just have to say, people give AI slop a

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<v Speaker 4>hard time. Eryl Masser Brad is a fan of this stuff.

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<v Speaker 4>She's like baby reading the story earlier today and she's saying,

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<v Speaker 4>I love this stuff.

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<v Speaker 3>I've lost many moments of my time watching stuff.

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<v Speaker 5>Tell us what it is though, right, Well, so this

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<v Speaker 5>was my my opening essay for our October issue.

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<v Speaker 7>It's our screen time issue.

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<v Speaker 5>And I'm looking at and if you use social media,

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<v Speaker 5>you're probably familiar with it. The AI generated video that

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<v Speaker 5>has come to Instagram and TikTok and YouTube. So talking

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<v Speaker 5>dogs with their own podcast, babies being interviewed, Bunny is

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<v Speaker 5>jumping on trampolines, you know, all sorts of craziness that

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<v Speaker 5>has in he feeds right now. It really has been

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<v Speaker 5>ushered in just over the past few months, in large

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<v Speaker 5>part Google introducing a new tool, vo three, which you know,

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<v Speaker 5>as you can see here, does a pretty good job

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<v Speaker 5>not just with video generation but also audio generation transform

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<v Speaker 5>transferring a written script that the user inputs into spoken dialogue,

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<v Speaker 5>and also a sort of realistic depiction of it.

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<v Speaker 3>I gotta tell you, I'm watching those dogs. Sorry for

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<v Speaker 3>those who are listening on radio, But those dogs men,

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<v Speaker 3>I mean, I believe it.

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<v Speaker 4>Do you think they're really talking?

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<v Speaker 8>Yeah?

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<v Speaker 3>I believe that they have a podcast.

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<v Speaker 5>I mean, it's what is the matter with my dog

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<v Speaker 5>that he's not podcasting?

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<v Speaker 7>I don't know.

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<v Speaker 6>Yeah, here, here, here.

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<v Speaker 4>Here, see more podcasts.

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<v Speaker 3>Are people making a lot of money off of this?

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<v Speaker 5>You know, a create I've talked to a bunch of

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<v Speaker 5>creators and you know, all of them alarmingly young. I

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<v Speaker 5>talked to one thirteen year old who is who is

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<v Speaker 5>generating videos using Stormtroopers.

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<v Speaker 7>So you know Disney ip uh.

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<v Speaker 5>He made like a couple of thousand dollars over the

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<v Speaker 5>summer just putting up these short videos of Stormtrooper misadventures

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<v Speaker 5>onto Instagram and TikTok. I talked to another set of

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<v Speaker 5>brothers from Montreal who were supporting their dog, their pet

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<v Speaker 5>app by producing the dog podcasting videos and it's been

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<v Speaker 5>a great marketing tool. So yeah, some of the social

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<v Speaker 5>networks do pay creators for creative content.

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<v Speaker 7>It's also a marketing tool.

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<v Speaker 5>I don't know that anyone's getting exceedingly wealthy, but certainly

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<v Speaker 5>the attention and the eyeballs are there.

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<v Speaker 4>I'm curious about what this all means for Hollywood and

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<v Speaker 4>for content creation. And it kind of gets into this

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<v Speaker 4>a little bit because, as you mentioned, this is the

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<v Speaker 4>introduction for the screen time issue of Bloomberg Business wee Can.

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<v Speaker 4>I'll use this as an opportunity to plug the event

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<v Speaker 4>Bloomberg screen Time October eighth and ninth in Hollywood. Carol

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<v Speaker 4>and I will be there. I assume, Brad, you will

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<v Speaker 4>be there. If there's still tickets, you can get them

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<v Speaker 4>at Bloomberg Live dot com. We hope to see you there.

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<v Speaker 4>What does it mean for Hollywood, because there's been there

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<v Speaker 4>have been a lot of concerns about the ability to

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<v Speaker 4>create content that has become so realistic and what it

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<v Speaker 4>means for the folks who are to the south of you.

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<v Speaker 7>Brad.

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<v Speaker 5>Yeah, I mean, I think I think it just shows

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<v Speaker 5>how rapidly things are changing. Just a few years ago,

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<v Speaker 5>during the writers strike, you know, Hollywood writers expressed a

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<v Speaker 5>real allergy to the use of AI and professional productions,

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<v Speaker 5>and now we have this ground swell of content that's

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<v Speaker 5>being created in dorm rooms and in basements that's flooding

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<v Speaker 5>social media.

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<v Speaker 7>It's it's pretty good, it's pretty high quality.

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<v Speaker 5>And then we're seeing a little bit of a of

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<v Speaker 5>a loosening of the restrictions in Hollywood. There was a

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<v Speaker 5>studio that was aligned with Amazon that recently announced it

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<v Speaker 5>would be sort of finishing or recovering some scenes from

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<v Speaker 5>one of the last Orson Wells productions, The Magnificent Ambersons.

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<v Speaker 7>Using AI.

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<v Speaker 5>So you sort of consense the winds shifting a little

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<v Speaker 5>bit in Hollywood in a realization that the technology is.

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<v Speaker 7>Getting so good it can no longer be ignored.

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<v Speaker 3>The one thing I keep thinking about, and you touch

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<v Speaker 3>upon this is the responsibility of social media companies brought

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<v Speaker 3>in this column. And you know, we've already seen the

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<v Speaker 3>difficulties in policing harmful posts and information, and I'm thinking

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<v Speaker 3>deep fakes and so on and so forth. Take this

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<v Speaker 3>potentially to a whole other level. So I don't know

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<v Speaker 3>what are we hearing when it comes to oversight and

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<v Speaker 3>responsibility and stuff that could be harmful.

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<v Speaker 5>Yeah, when a creator uploads a video to Instagram or TikTok,

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<v Speaker 5>they are asked to check a box as to whether

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<v Speaker 5>the video has been AI generated.

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<v Speaker 7>It's essentially optional. And look, I mean, I think the.

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<v Speaker 5>Potential for confusion for deep fakes that defraud deceive viewers

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<v Speaker 5>is so high that it probably is incumbent upon the

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<v Speaker 5>companies to label those and to use technology, employe technology

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<v Speaker 5>to look for you know, hidden fingerprints or other indications

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<v Speaker 5>of AI, and to do their viewers as service and

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<v Speaker 5>show when AI is being employed. I use the example

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<v Speaker 5>and maybe some listeners remember this. If the bunnies jumping

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<v Speaker 5>on a trampoline a lot of people thought.

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<v Speaker 7>That was real.

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<v Speaker 5>It was AI generated. It was a video that was

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<v Speaker 5>popular over the summer. You know, the creator of that

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<v Speaker 5>video didn't even realize he was being asked to mark

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<v Speaker 5>the video as AI generated. So it probably the companies

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<v Speaker 5>probably need to do a little better job telling people

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<v Speaker 5>what's AI and what's not.

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<v Speaker 4>Hey, Brad, real quick apologies to end on a somber

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<v Speaker 4>note here, but I've been meaning to ask you about this,

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<v Speaker 4>and we have the opportunity now. Last week, Governor Spencer

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<v Speaker 4>Cox of Utah gave a press conference following the assassination

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<v Speaker 4>of Charlie Kirk, and he said something that stuck with me.

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<v Speaker 4>He said, social media is a cancer. And it made headlines,

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<v Speaker 4>but it made me question, is this going to be

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<v Speaker 4>a moment where social media companies take a look at

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<v Speaker 4>their algorithms or is this just a speed bump or

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<v Speaker 4>something that isn't even considered when thinking about algorithms.

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<v Speaker 7>I mean, Tim, there's no evidence of it. You know,

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<v Speaker 7>particularly over the.

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<v Speaker 5>Last year, they have downshifted content moderation strategies, you know,

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<v Speaker 5>part partly under pressure from the US administration, and you know,

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<v Speaker 5>and then you look at services like x over the

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<v Speaker 5>last week, and everyone is almost their worst sells right

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<v Speaker 5>and going to battle over what's really undeniably at tragedy.

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<v Speaker 5>So no, there's no sense that the companies are amplifying

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<v Speaker 5>or amping up their content moderation strategies. In fact, they

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<v Speaker 5>might see it as a political danger and so are

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<v Speaker 5>doing the opposite.

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<v Speaker 3>Yeah, it's kind of remarkable this environment. Brad we got

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<v Speaker 3>to run. Thank you so much, looking forward to talking

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<v Speaker 3>to you more and looking forward to being there with

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<v Speaker 3>you on screen time. That, of course, is our Bradstone,

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<v Speaker 3>editor of Bloomberg Business Week. He's the author of Amazon

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<v Speaker 3>on Bound, Jeff Bezos and the Invention of a Global Empire,

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<v Speaker 3>many many other books too, so highly recommend all that

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<v Speaker 3>he has written on.

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<v Speaker 4>Stay with us more from Bloomberg Business Week Daily coming

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<v Speaker 4>up after this.

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<v Speaker 2>You're listening to the Bloomberg Business Weekdaily podcast. Catch us

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<v Speaker 2>live weekday afternoons from two to five pm Eastern Listen

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<v Speaker 3>Let's get to tim A's trusted voice when it comes

0:11:21.880 --> 0:11:24.079
<v Speaker 3>to the US Treasury, trade and what the Fed is

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<v Speaker 3>up to.

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<v Speaker 4>Katie Kaminski is Chief research strategist Dan portfolio manager with

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<v Speaker 4>Alpha Simplex Group. She joins us from Boston. Also the

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<v Speaker 4>co author of the book trend Following with Managed Features

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<v Speaker 4>the Search for Crisis Alpha. Katie, good to have you

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<v Speaker 4>with us this afternoon. First, make the call about the FEDS,

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<v Speaker 4>not just tomorrow's move, but also the move to the

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<v Speaker 4>end of the year. We want to put you on

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<v Speaker 4>the spot here. What do you think happens tomorrow and

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<v Speaker 4>then what do you think happens for the remainder of

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<v Speaker 4>the year when it comes to the path of policy.

0:11:52.679 --> 0:11:53.600
<v Speaker 6>Oh, you love to do that.

0:11:53.640 --> 0:11:57.320
<v Speaker 9>I get that, So I'd say twenty five tomorrow, but

0:11:57.360 --> 0:11:59.800
<v Speaker 9>that's consensus. But I do think we will get some

0:11:59.880 --> 0:12:02.199
<v Speaker 9>more or cuts later this year, and the market has

0:12:02.240 --> 0:12:06.160
<v Speaker 9>definitely already been pricing that in, particularly in the futures market.

0:12:07.120 --> 0:12:09.400
<v Speaker 9>What that means is that people are expecting this to

0:12:09.440 --> 0:12:13.000
<v Speaker 9>be a catalyst a start of a new regime, which

0:12:13.040 --> 0:12:13.600
<v Speaker 9>is important.

0:12:14.640 --> 0:12:17.480
<v Speaker 3>Well, having said that, you know, I'm thinking about your background.

0:12:17.559 --> 0:12:19.719
<v Speaker 3>You've got a Bachelor of Science and electrical engineering, a

0:12:19.760 --> 0:12:23.520
<v Speaker 3>PhD in operations research from MIT. Yeah, you're super smart.

0:12:23.559 --> 0:12:24.280
<v Speaker 6>We know, we know.

0:12:25.040 --> 0:12:27.000
<v Speaker 3>I'm just wondering, Katie, is it easier to kind of

0:12:27.000 --> 0:12:31.360
<v Speaker 3>figure out FED policy the US fixed income market right now,

0:12:31.440 --> 0:12:34.520
<v Speaker 3>or is it easier figuring out a complicated electronic schematic.

0:12:34.559 --> 0:12:38.680
<v Speaker 3>I'm just curious with all that's coming out, investors. I

0:12:38.720 --> 0:12:41.920
<v Speaker 3>actually think it's equally as complex. And let me tell

0:12:41.920 --> 0:12:42.320
<v Speaker 3>you why.

0:12:42.480 --> 0:12:45.880
<v Speaker 9>Is right now is a very interesting time and history

0:12:45.920 --> 0:12:48.640
<v Speaker 9>for looking at the FED, and just the amount of

0:12:48.760 --> 0:12:54.400
<v Speaker 9>dissent is actually is unprecedented. So we haven't seen three

0:12:54.440 --> 0:12:58.360
<v Speaker 9>descents since nineteen eighty eight, and you're starting to see

0:12:58.400 --> 0:13:01.559
<v Speaker 9>a much wider range of views on.

0:13:01.559 --> 0:13:02.400
<v Speaker 6>The FED itself.

0:13:02.720 --> 0:13:04.920
<v Speaker 9>So I'd like to say that this is going to

0:13:04.960 --> 0:13:09.440
<v Speaker 9>cause a much wider reaction, a range of reaction, or

0:13:09.480 --> 0:13:14.720
<v Speaker 9>more volatility in the reaction function of markets once those

0:13:14.760 --> 0:13:16.720
<v Speaker 9>decisions come out and we try to figure out what

0:13:16.720 --> 0:13:17.240
<v Speaker 9>that means.

0:13:17.360 --> 0:13:19.640
<v Speaker 3>Is that descent, in your view, political or is it

0:13:20.440 --> 0:13:23.280
<v Speaker 3>representative of a lot of things coming out investors and

0:13:23.320 --> 0:13:24.760
<v Speaker 3>maybe some mixed signals.

0:13:25.600 --> 0:13:30.480
<v Speaker 9>Well, I think you know, there's clearly some political leading

0:13:30.559 --> 0:13:31.280
<v Speaker 9>in terms of.

0:13:31.200 --> 0:13:32.160
<v Speaker 6>That type of dissent.

0:13:32.320 --> 0:13:35.080
<v Speaker 9>I mean there's but just the fact that you have

0:13:35.160 --> 0:13:39.120
<v Speaker 9>such wide range of opinions and I think, like I said,

0:13:39.200 --> 0:13:43.760
<v Speaker 9>we haven't seen this many descents in FED votes for decades,

0:13:43.880 --> 0:13:46.840
<v Speaker 9>So it kind of suggests a new regime shift, a

0:13:46.960 --> 0:13:50.640
<v Speaker 9>very different type of FED to try to analyze, and

0:13:50.679 --> 0:13:53.320
<v Speaker 9>everyone's trying to understand are these descents going to move

0:13:53.360 --> 0:13:55.600
<v Speaker 9>to a new consensus or are we just going to

0:13:55.640 --> 0:13:59.040
<v Speaker 9>be in the same scenario for a longer period of time.

0:14:00.000 --> 0:14:03.400
<v Speaker 4>I think the FED is is independent right now.

0:14:05.400 --> 0:14:08.360
<v Speaker 9>I mean, I think you know it's hard to have

0:14:08.960 --> 0:14:12.439
<v Speaker 9>nothing is ever one hundred percent independent in Washington, as

0:14:12.480 --> 0:14:16.120
<v Speaker 9>you guys already noted, you all already noted. But I

0:14:16.160 --> 0:14:19.280
<v Speaker 9>think the fact that you know, there's definitely influence coming

0:14:19.360 --> 0:14:24.600
<v Speaker 9>from those that are appointed that has a potential to

0:14:25.120 --> 0:14:27.880
<v Speaker 9>make independence a little bit weaker than it was before.

0:14:27.920 --> 0:14:31.920
<v Speaker 9>And that's definitely the market's sentiment on that. And the

0:14:31.960 --> 0:14:34.000
<v Speaker 9>things that you see is there's a lot of concern

0:14:34.120 --> 0:14:37.640
<v Speaker 9>over that, and that could put the bond market at risk.

0:14:38.400 --> 0:14:40.960
<v Speaker 3>So when you look at the I mean, what are

0:14:41.000 --> 0:14:44.320
<v Speaker 3>you now looking and thinking in terms of how low

0:14:44.400 --> 0:14:46.280
<v Speaker 3>rates can go? O Katie. I mean, we have talked

0:14:46.280 --> 0:14:49.920
<v Speaker 3>with you throughout the last three to six to nine

0:14:49.960 --> 0:14:53.400
<v Speaker 3>to twelve months, and there's points where we were talking

0:14:53.480 --> 0:14:56.120
<v Speaker 3>about what five percent on the ten year. We've gone

0:14:56.160 --> 0:14:59.240
<v Speaker 3>below four percent on the tenure where right now kind

0:14:59.240 --> 0:15:03.000
<v Speaker 3>of at it. So I'm just curious what's the smart

0:15:03.080 --> 0:15:06.160
<v Speaker 3>thinking in your view when it comes to where US

0:15:06.320 --> 0:15:07.080
<v Speaker 3>rates trend.

0:15:08.520 --> 0:15:10.000
<v Speaker 6>So this is a very good point.

0:15:10.040 --> 0:15:13.160
<v Speaker 9>We have seen more long pressure in bonds, We're starting

0:15:13.160 --> 0:15:17.680
<v Speaker 9>to see trajectory towards lower rates. What I get concerned

0:15:17.680 --> 0:15:19.600
<v Speaker 9>about is if we stay in the middle and we

0:15:19.640 --> 0:15:22.760
<v Speaker 9>sort of have a smooth and steady ride down in rates,

0:15:23.880 --> 0:15:27.800
<v Speaker 9>I think that maybe something where nothing, no balance gets tipped.

0:15:27.880 --> 0:15:30.320
<v Speaker 9>On the other hand, if we have a very aggressive

0:15:30.920 --> 0:15:34.680
<v Speaker 9>move downward in rates, we could have some overstimulation, we

0:15:34.760 --> 0:15:38.840
<v Speaker 9>could be at risk for inflation, and we could risk

0:15:38.960 --> 0:15:42.240
<v Speaker 9>losing parts of the long end of the bond curve

0:15:42.400 --> 0:15:45.680
<v Speaker 9>just due to investors being concerned about rates being too

0:15:45.760 --> 0:15:48.920
<v Speaker 9>low and inflation being too high. So I think for me,

0:15:49.000 --> 0:15:51.520
<v Speaker 9>it's coasting in the middle will give us a nice

0:15:52.480 --> 0:15:54.000
<v Speaker 9>trend down in yields.

0:15:54.120 --> 0:15:55.760
<v Speaker 3>Right, So did you give me levels.

0:15:57.400 --> 0:15:59.800
<v Speaker 6>Exactly? But maybe maybe three?

0:16:00.160 --> 0:16:00.640
<v Speaker 2>I don't know.

0:16:01.400 --> 0:16:06.560
<v Speaker 9>Really hopefully maybe one. Wait, depends on the time horizon though.

0:16:06.680 --> 0:16:07.520
<v Speaker 3>Did you say one?

0:16:08.800 --> 0:16:10.320
<v Speaker 6>No, I definitely didn't say one.

0:16:10.440 --> 0:16:12.960
<v Speaker 3>Okay, but maybe three? Are you saying three? For like

0:16:12.960 --> 0:16:13.280
<v Speaker 3>the five?

0:16:13.320 --> 0:16:13.560
<v Speaker 4>Three?

0:16:13.640 --> 0:16:15.720
<v Speaker 3>Three and a half three, three and a half, perhaps

0:16:16.000 --> 0:16:16.560
<v Speaker 3>all along.

0:16:16.600 --> 0:16:19.920
<v Speaker 9>I mean that six months sofa contract is already trading

0:16:19.960 --> 0:16:23.240
<v Speaker 9>at a three four, so you know we could get there.

0:16:23.320 --> 0:16:24.600
<v Speaker 6>I don't know what.

0:16:24.560 --> 0:16:27.040
<v Speaker 4>About when it comes to growth. Should investors be concerned

0:16:27.080 --> 0:16:27.880
<v Speaker 4>about stackflation?

0:16:29.760 --> 0:16:30.080
<v Speaker 6>Well?

0:16:30.280 --> 0:16:34.200
<v Speaker 9>I mean I think stagflation is one of those corner

0:16:34.280 --> 0:16:37.880
<v Speaker 9>cases where you know, if things are calmon, we have

0:16:37.960 --> 0:16:42.960
<v Speaker 9>a balance in terms of growth is strong enough to withstand,

0:16:43.120 --> 0:16:48.240
<v Speaker 9>for example, tariffs inflation, then we should be in an

0:16:48.240 --> 0:16:51.120
<v Speaker 9>okay position. I think what people really get concerned about

0:16:51.160 --> 0:16:53.760
<v Speaker 9>is sort of putting the pedal to the metal, right,

0:16:53.800 --> 0:16:58.400
<v Speaker 9>so you basically cut rates too quickly, try to overstimulate,

0:16:58.480 --> 0:17:02.680
<v Speaker 9>it doesn't work, and suddenly inflated prices are there anyways,

0:17:02.720 --> 0:17:05.600
<v Speaker 9>And so I think there is a concern because it

0:17:05.640 --> 0:17:08.960
<v Speaker 9>is really sort of a very bad economic situation. It's

0:17:09.000 --> 0:17:12.000
<v Speaker 9>not just low growth, it's low growth when the power

0:17:12.040 --> 0:17:14.280
<v Speaker 9>of your purchasing power has gone down. And so I

0:17:14.280 --> 0:17:16.440
<v Speaker 9>think we love to talk about it because it's sort

0:17:16.440 --> 0:17:17.879
<v Speaker 9>of like the armagedon.

0:17:19.080 --> 0:17:21.240
<v Speaker 6>Of difficult scenarios.

0:17:21.680 --> 0:17:23.199
<v Speaker 4>Hey, I just want to get a couple headlines that

0:17:23.240 --> 0:17:26.800
<v Speaker 4>are crossing the bloomberg right now, silver Lake and Intries

0:17:26.880 --> 0:17:29.720
<v Speaker 4>and Horowitz in a TikTok investor group. This according to

0:17:29.760 --> 0:17:32.840
<v Speaker 4>The Wall Street Journal. The Wall Street Journal also reporting

0:17:32.880 --> 0:17:36.720
<v Speaker 4>that TikTok's US consortium would include Oracle. The TikTok deal

0:17:36.720 --> 0:17:39.280
<v Speaker 4>would create a new entity, and US TikTok users would

0:17:39.280 --> 0:17:41.119
<v Speaker 4>be asked to shift to a new app. This is

0:17:41.160 --> 0:17:43.280
<v Speaker 4>all according to the Wall Street Journal. This comes after

0:17:43.640 --> 0:17:46.000
<v Speaker 4>we did learn a little earlier that the US has

0:17:46.040 --> 0:17:48.800
<v Speaker 4>extended the deadline to sell TikTok until December sixteenth.

0:17:48.880 --> 0:17:49.640
<v Speaker 6>The White House.

0:17:49.440 --> 0:17:52.520
<v Speaker 4>Issued in order earlier just in the last hour on TikTok,

0:17:52.600 --> 0:17:54.800
<v Speaker 4>extending that TikTok enforcement delay.

0:17:55.000 --> 0:17:59.000
<v Speaker 3>Hey kay, before you go, what are you watching out for?

0:17:59.080 --> 0:18:01.280
<v Speaker 3>Most we get a dot plus tomorrow. We've got a

0:18:01.320 --> 0:18:04.879
<v Speaker 3>new member on the FED board, Stephen Myron, of course

0:18:04.880 --> 0:18:08.320
<v Speaker 3>from the FED. Enough from the Fed, excuse me, nominated

0:18:08.359 --> 0:18:11.560
<v Speaker 3>by the President. So I'm just curious. What's top of mind.

0:18:11.560 --> 0:18:12.720
<v Speaker 3>I feel like there's going to be a lot coming

0:18:12.760 --> 0:18:13.480
<v Speaker 3>at US tomorrow.

0:18:14.440 --> 0:18:18.000
<v Speaker 9>I think for me, it's the dispersion in the dot plots.

0:18:18.080 --> 0:18:21.119
<v Speaker 9>Do we see a much wider range and how do

0:18:21.160 --> 0:18:24.240
<v Speaker 9>we distill that information? And also the size of the cut.

0:18:24.320 --> 0:18:26.640
<v Speaker 9>Let's just be honest, like, do we get a surprise.

0:18:26.840 --> 0:18:30.240
<v Speaker 9>I mean, I think that is always an interesting scenario

0:18:30.320 --> 0:18:32.120
<v Speaker 9>to think about a zero or fifty.

0:18:32.600 --> 0:18:34.879
<v Speaker 3>All right, Gonna leave it out there. I'm always always

0:18:34.880 --> 0:18:38.119
<v Speaker 3>appreciate your time in such a timely interview at that

0:18:38.320 --> 0:18:41.240
<v Speaker 3>Katie B. L Kati Kaminski. She's chief research strategist and

0:18:41.240 --> 0:18:45.400
<v Speaker 3>portfolio manager at Alpha Simplex Group. Joining us from Boston, Massachusetts.

0:18:46.680 --> 0:18:50.520
<v Speaker 2>This is the Bloomberg Business Week Daily Podcast. Listen live

0:18:50.640 --> 0:18:53.520
<v Speaker 2>each weekday starting at two pm Eastern on Apple car

0:18:53.600 --> 0:18:56.600
<v Speaker 2>Play and Android Auto with the Bloomberg Business App. You

0:18:56.600 --> 0:18:59.760
<v Speaker 2>can also listen live on Amazon Alexa from our flagship

0:19:00.040 --> 0:19:03.760
<v Speaker 2>York station Just Say Alexa played Bloomberg eleven thirty.

0:19:04.160 --> 0:19:06.280
<v Speaker 3>Hey over the summer. One of the things that caught

0:19:06.359 --> 0:19:09.840
<v Speaker 3>our attention Bloomberg News reporting of the world's largest technology

0:19:09.840 --> 0:19:13.359
<v Speaker 3>companies that we're talking Microsoft, Amazon, Google, all of them

0:19:13.400 --> 0:19:16.200
<v Speaker 3>planning to spend billions of dollars more than three hundred

0:19:16.240 --> 0:19:19.480
<v Speaker 3>and forty four billion dollars on capital expenditures, with much

0:19:19.480 --> 0:19:22.199
<v Speaker 3>of it tim going to data centers for AI models.

0:19:22.320 --> 0:19:25.879
<v Speaker 4>According to Bloomberg Intelligence analyst Amandy saying, companies have quote

0:19:25.880 --> 0:19:29.119
<v Speaker 4>basically tripled capex investment in cloud due to AI with

0:19:29.200 --> 0:19:32.879
<v Speaker 4>executives emphasizing they need to invest quickly to get ahead

0:19:32.880 --> 0:19:35.840
<v Speaker 4>our next guests. Is helping those hyper scalers scale up

0:19:35.840 --> 0:19:38.000
<v Speaker 4>when it comes to AI. With us in studio as

0:19:38.000 --> 0:19:40.679
<v Speaker 4>a dere Fox Martin, President and CEO of Aquinix, the

0:19:40.720 --> 0:19:43.240
<v Speaker 4>nearly seventy six a billion dollar market cap data center

0:19:43.240 --> 0:19:46.280
<v Speaker 4>readA trades under the ticker EQIX, down so far this

0:19:46.400 --> 0:19:49.320
<v Speaker 4>year about eighteen percent. Dear, welcome, good to see.

0:19:49.080 --> 0:19:51.080
<v Speaker 3>You, Thank you so much, Thank you for having me, das.

0:19:51.040 --> 0:19:53.920
<v Speaker 6>To have you. So, how's business? Business is very good?

0:19:54.080 --> 0:19:55.159
<v Speaker 4>Like the best you've seen it.

0:19:56.040 --> 0:19:58.720
<v Speaker 1>Like we're in the middle of a very strong cyclical

0:19:58.760 --> 0:20:01.920
<v Speaker 1>demand cycle for you know, the products and services.

0:20:01.520 --> 0:20:02.000
<v Speaker 6>That we offer.

0:20:02.160 --> 0:20:05.080
<v Speaker 4>When you say we're in the middle, help us understand

0:20:05.119 --> 0:20:07.480
<v Speaker 4>how long that means of a runway there is to

0:20:07.480 --> 0:20:07.840
<v Speaker 4>go here?

0:20:07.880 --> 0:20:11.160
<v Speaker 1>Sure you know, at Equinics, we see a very significant

0:20:11.440 --> 0:20:16.520
<v Speaker 1>trend from the training of models in the AI economy

0:20:16.520 --> 0:20:18.240
<v Speaker 1>that we refer to in your opening there with the

0:20:18.320 --> 0:20:22.840
<v Speaker 1>hyperscalors to the deployment of those models in enterprise systems,

0:20:23.240 --> 0:20:27.040
<v Speaker 1>and that deployment is called imprints, and we see that

0:20:27.119 --> 0:20:31.560
<v Speaker 1>opportunity as potentially double the size of the training opportunity

0:20:31.640 --> 0:20:33.720
<v Speaker 1>and at our company, we feel where we're built for

0:20:33.760 --> 0:20:34.200
<v Speaker 1>this moment.

0:20:34.280 --> 0:20:36.600
<v Speaker 3>Has that happened faster than everybody anticipated, because I do

0:20:36.640 --> 0:20:39.040
<v Speaker 3>feel like the conversation although we've been talking about AI

0:20:39.080 --> 0:20:41.080
<v Speaker 3>of now almost two and a half years, well or

0:20:41.119 --> 0:20:43.000
<v Speaker 3>well into two and a half years, but we are

0:20:43.040 --> 0:20:45.520
<v Speaker 3>now increasingly talking about all this stuff starting to be

0:20:45.600 --> 0:20:46.280
<v Speaker 3>put to work.

0:20:46.560 --> 0:20:50.399
<v Speaker 1>Right, you can certainly see organizations we have ten thousand

0:20:50.480 --> 0:20:54.200
<v Speaker 1>customers across the world moving from proof of concepts into

0:20:54.400 --> 0:20:57.080
<v Speaker 1>production systems and applications of the technology.

0:20:57.200 --> 0:20:59.400
<v Speaker 3>One of the things I think we're curious about is,

0:20:59.640 --> 0:21:02.600
<v Speaker 3>as you know, the news flow is fast and furious

0:21:02.600 --> 0:21:05.880
<v Speaker 3>from the White House and out of Washington, and there

0:21:05.880 --> 0:21:08.320
<v Speaker 3>have been some announcements out of Trump administration about AI

0:21:08.440 --> 0:21:11.919
<v Speaker 3>infrastructure initiatives specifically. So I'm curious that dare have you

0:21:12.119 --> 0:21:16.320
<v Speaker 3>seen any impact of that on your existing properties leasing effort?

0:21:16.560 --> 0:21:19.159
<v Speaker 3>And I'm curious how you compete with how does that

0:21:19.240 --> 0:21:22.440
<v Speaker 3>kind of compete their program with your own development program.

0:21:22.760 --> 0:21:25.440
<v Speaker 1>Look, we very much welcome the focus that the current

0:21:25.480 --> 0:21:28.320
<v Speaker 1>administration has on data centers and the importance and the

0:21:28.320 --> 0:21:31.560
<v Speaker 1>recognition of data centers and their important role in the

0:21:31.560 --> 0:21:36.639
<v Speaker 1>infrastructure of any economy, and we certainly are looking at,

0:21:36.680 --> 0:21:40.399
<v Speaker 1>you know, some of the properties that have been identified

0:21:40.400 --> 0:21:44.080
<v Speaker 1>as potential for RFPs, and we would choose based on

0:21:44.200 --> 0:21:48.200
<v Speaker 1>locations that would be accreative to our business because we're

0:21:48.359 --> 0:21:52.000
<v Speaker 1>very focused in cities in metro areas close to where

0:21:52.040 --> 0:21:53.960
<v Speaker 1>humans are who will use this technology.

0:21:54.200 --> 0:21:57.000
<v Speaker 3>Are you getting pushed back from cities and humans who

0:21:57.000 --> 0:21:58.320
<v Speaker 3>don't necessarily want those.

0:21:58.200 --> 0:22:01.000
<v Speaker 6>Data interest not? Not hugely.

0:22:01.080 --> 0:22:03.520
<v Speaker 1>I mean, we're very conscious of the role that we

0:22:03.640 --> 0:22:05.639
<v Speaker 1>play and you know, the role that we play with

0:22:05.720 --> 0:22:10.080
<v Speaker 1>communities where we have data centers, and we're very considered

0:22:10.080 --> 0:22:11.160
<v Speaker 1>about our approach there.

0:22:11.280 --> 0:22:13.520
<v Speaker 4>What makes a good location for a data center because

0:22:13.520 --> 0:22:16.159
<v Speaker 4>it doesn't actually apart from the construction, it doesn't actually

0:22:16.160 --> 0:22:19.040
<v Speaker 4>involve that many people to keep it up and running

0:22:19.119 --> 0:22:21.640
<v Speaker 4>relative to the amount of money that's spent on it

0:22:21.760 --> 0:22:23.520
<v Speaker 4>and what actually happens in there.

0:22:23.600 --> 0:22:26.400
<v Speaker 1>Yeah, it's really interesting because I think you know, when

0:22:26.400 --> 0:22:28.720
<v Speaker 1>you think about the operations of a data center, you

0:22:28.840 --> 0:22:32.880
<v Speaker 1>tend in your mind to go immediately to technicians and technology,

0:22:33.240 --> 0:22:35.720
<v Speaker 1>but actually there's a whole series of onsoung heroes in

0:22:35.760 --> 0:22:38.600
<v Speaker 1>the operation of a data center, which are the craftsmen

0:22:38.640 --> 0:22:41.879
<v Speaker 1>and the tradesmen and women, you know, the plumbers, the electricians,

0:22:41.920 --> 0:22:44.959
<v Speaker 1>the engineers who basically keep the Internet up and running,

0:22:45.000 --> 0:22:47.200
<v Speaker 1>you know, through this data center infrastructure.

0:22:47.280 --> 0:22:50.000
<v Speaker 3>So difficulties in finding those workers. We've done some reporting

0:22:50.040 --> 0:22:52.600
<v Speaker 3>about that that there's you know, okay, yay, great, the

0:22:52.640 --> 0:22:54.919
<v Speaker 3>spend and the build, but there's not enough workers to diet.

0:22:55.040 --> 0:22:58.080
<v Speaker 1>So I think, you know, the constraints that the industry

0:22:58.119 --> 0:23:02.399
<v Speaker 1>are facing, you know, are around energy and power, around

0:23:02.440 --> 0:23:06.400
<v Speaker 1>skilled workforce, and then into the supply chain for the equipment.

0:23:06.480 --> 0:23:08.600
<v Speaker 1>That's that's part and parwercel of a data center.

0:23:08.920 --> 0:23:10.879
<v Speaker 3>Structuring the bill that you guys are trying to do

0:23:10.920 --> 0:23:11.719
<v Speaker 3>and meet that demand.

0:23:11.960 --> 0:23:14.560
<v Speaker 1>It is something that you have to actively manage as

0:23:14.600 --> 0:23:16.919
<v Speaker 1>you are looking to build. You know, for example, in

0:23:17.000 --> 0:23:20.680
<v Speaker 1>our case, around some of our supply chain portfolio, we've

0:23:20.720 --> 0:23:23.120
<v Speaker 1>pre purchased in order to ensure that we can have

0:23:23.160 --> 0:23:25.960
<v Speaker 1>the delivery dates that we need to bring capacity online.

0:23:26.480 --> 0:23:28.639
<v Speaker 4>We talked about the three hundred and forty four billion

0:23:28.680 --> 0:23:31.000
<v Speaker 4>dollars that some of the world's largest tech companies are

0:23:31.040 --> 0:23:33.240
<v Speaker 4>planning to spend. When it comes to Capex, it's like

0:23:33.240 --> 0:23:36.199
<v Speaker 4>the thing we look for now quarterly when a company

0:23:36.240 --> 0:23:42.120
<v Speaker 4>reports results, how much of hyperscalers Capex budgets actually flow

0:23:42.200 --> 0:23:43.160
<v Speaker 4>through your company.

0:23:44.119 --> 0:23:47.960
<v Speaker 1>We have a very significant approach on a part of

0:23:48.000 --> 0:23:50.480
<v Speaker 1>the data center industry that we call co location because

0:23:50.520 --> 0:23:53.560
<v Speaker 1>not all data centers are the same, and so colocation

0:23:53.920 --> 0:23:57.359
<v Speaker 1>is where enterprise customers, businesses sixty percent of the Fortune

0:23:57.400 --> 0:24:01.760
<v Speaker 1>five hundred for instance, would locate their workloads or their

0:24:01.800 --> 0:24:05.040
<v Speaker 1>machinery with us and the inner shared facility. We have

0:24:05.119 --> 0:24:10.760
<v Speaker 1>a JV structure that works with the Hyperscalors to build

0:24:10.840 --> 0:24:13.560
<v Speaker 1>to suit for the hyperscalors, and so that's how we

0:24:13.920 --> 0:24:17.560
<v Speaker 1>service the Hyperscaler opportunity and maintain that very important partnership

0:24:17.600 --> 0:24:18.119
<v Speaker 1>that we have with I.

0:24:18.119 --> 0:24:19.920
<v Speaker 3>Mean, I guess we're trying to figure out your exposure.

0:24:19.920 --> 0:24:22.440
<v Speaker 3>I think your top ten customers represent about sixteen percent

0:24:22.480 --> 0:24:25.800
<v Speaker 3>of monthly recurring revenue, so your exposure to the hyperscalers

0:24:25.840 --> 0:24:28.800
<v Speaker 3>is pretty big, right idea Is it manageable?

0:24:28.960 --> 0:24:29.760
<v Speaker 6>It's manageable.

0:24:29.880 --> 0:24:33.040
<v Speaker 1>You know, the hyperscalators, for example, when they operate in

0:24:33.080 --> 0:24:36.919
<v Speaker 1>our retail facilities, they do so because of the connectivity

0:24:37.000 --> 0:24:40.600
<v Speaker 1>of equinics. So that's going to be a requirement, you know,

0:24:40.720 --> 0:24:45.160
<v Speaker 1>for inferencing and for the actual activation of these AI workloads.

0:24:45.640 --> 0:24:48.679
<v Speaker 1>So it is for us about connectivity. Connectivity is the

0:24:48.720 --> 0:24:52.360
<v Speaker 1>secret source of as the data center productor.

0:24:52.040 --> 0:24:54.239
<v Speaker 3>Means specifically by that, because I think we can use

0:24:54.240 --> 0:24:56.560
<v Speaker 3>the word connectivity to mean a lot of different things,

0:24:56.840 --> 0:24:59.200
<v Speaker 3>certainly in the business world. What does it mean specifically

0:24:59.680 --> 0:24:59.960
<v Speaker 3>for us?

0:25:00.040 --> 0:25:03.760
<v Speaker 1>Yeah, so in our world, it essentially means we're located

0:25:03.800 --> 0:25:06.280
<v Speaker 1>in two hundred and seventy three data centers right across

0:25:06.320 --> 0:25:06.840
<v Speaker 1>the planet.

0:25:07.400 --> 0:25:09.120
<v Speaker 6>Inside those data centers, we have.

0:25:09.119 --> 0:25:12.760
<v Speaker 1>Ecosystems of customers, customers whose value chains are connected to

0:25:12.800 --> 0:25:16.400
<v Speaker 1>each other, and we physically connect them, you know, literally

0:25:16.560 --> 0:25:20.160
<v Speaker 1>internect interconnect those customers one to the other. That's the

0:25:20.200 --> 0:25:23.640
<v Speaker 1>first part of interconnection. So that allows for low latency

0:25:23.680 --> 0:25:26.159
<v Speaker 1>transactions to happen, say, for example, on a trading floor.

0:25:26.440 --> 0:25:28.400
<v Speaker 1>That allows for that to happen in real time.

0:25:28.680 --> 0:25:32.160
<v Speaker 4>Yeah, we're speaking right now with the dere Fox Martin,

0:25:32.200 --> 0:25:34.399
<v Speaker 4>president and CEO of Aquinix joining us here. In the

0:25:34.400 --> 0:25:37.399
<v Speaker 4>Bloomberg Business Week studio, you mentioned the difference between training

0:25:37.920 --> 0:25:42.119
<v Speaker 4>and in inference. Thank you. When you think about this,

0:25:42.320 --> 0:25:44.680
<v Speaker 4>like a company like core we for example, where does

0:25:44.680 --> 0:25:47.080
<v Speaker 4>that fit into this, Well, a core.

0:25:46.920 --> 0:25:48.520
<v Speaker 6>Weave is a neo cloud.

0:25:48.880 --> 0:25:53.320
<v Speaker 1>They're a company you know that provides GPU capability to

0:25:53.440 --> 0:25:56.600
<v Speaker 1>companies who want to train their models so they fit

0:25:56.680 --> 0:25:59.360
<v Speaker 1>into the ecosystem in the same way for US as.

0:25:59.440 --> 0:26:02.200
<v Speaker 4>Other cloud like a GPU as a service correct, okay,

0:26:02.240 --> 0:26:04.480
<v Speaker 4>So what are the average lease terms for an agreement

0:26:04.560 --> 0:26:07.320
<v Speaker 4>with GPU as a service coorganization?

0:26:07.960 --> 0:26:11.800
<v Speaker 1>It would depend, you know, they can be relatively short.

0:26:12.000 --> 0:26:14.840
<v Speaker 1>For us, are leasing in our wholesale side is ten

0:26:14.920 --> 0:26:16.080
<v Speaker 1>years plus. Okay.

0:26:16.680 --> 0:26:18.440
<v Speaker 3>Now, one of the things I think is interesting is

0:26:18.440 --> 0:26:19.800
<v Speaker 3>I think we're all trying to figure out the boom

0:26:19.840 --> 0:26:24.159
<v Speaker 3>and bust of all. And today on Bloomberg there was

0:26:24.359 --> 0:26:28.280
<v Speaker 3>an investor Jack Selby. He is a z VC founder

0:26:28.280 --> 0:26:32.480
<v Speaker 3>and managing partner his longtime managing director of billionaire entrepreneurs

0:26:32.520 --> 0:26:36.080
<v Speaker 3>Peter Teele's family office, and he said the euphoria around

0:26:36.119 --> 0:26:37.879
<v Speaker 3>AI may have led to the biggest bubble yet in

0:26:37.920 --> 0:26:41.240
<v Speaker 3>private technology investing, and so sounding warning bells that a

0:26:41.280 --> 0:26:43.399
<v Speaker 3>correction startup valuations is in the cards.

0:26:43.600 --> 0:26:43.800
<v Speaker 1>Now.

0:26:43.840 --> 0:26:46.520
<v Speaker 3>We understand when you throw AI there's a lot of

0:26:46.560 --> 0:26:50.120
<v Speaker 3>different players, but behind it all is the data center spend.

0:26:50.480 --> 0:26:52.639
<v Speaker 3>And we have had a lot of conversations about the

0:26:52.720 --> 0:26:58.080
<v Speaker 3>hyperscalers making you know, multiple duplicate arrangements with power providers

0:26:58.320 --> 0:26:59.760
<v Speaker 3>that they're not going to use all of them, but

0:26:59.760 --> 0:27:01.240
<v Speaker 3>they just want to make sure they've got the power

0:27:01.240 --> 0:27:03.399
<v Speaker 3>where they need it. Is there any signs to you

0:27:03.480 --> 0:27:10.040
<v Speaker 3>that there's exuberance that the spend is slowing down, starting

0:27:10.080 --> 0:27:12.960
<v Speaker 3>to will start to slow down. Maybe next year you're

0:27:13.000 --> 0:27:14.600
<v Speaker 3>seeing it. You've got a front row scene.

0:27:14.680 --> 0:27:18.639
<v Speaker 1>Yeah, I guess we believe in the enduring nature of

0:27:19.080 --> 0:27:23.040
<v Speaker 1>the transformation that AI and the technology associated with it

0:27:23.080 --> 0:27:26.000
<v Speaker 1>can bring and can bring to businesses. I mean, as

0:27:26.040 --> 0:27:31.280
<v Speaker 1>I said, we support manyfold workloads of our customers, you know,

0:27:31.359 --> 0:27:35.320
<v Speaker 1>not just AI workloads, but you know, standard business process workloads,

0:27:35.600 --> 0:27:39.080
<v Speaker 1>and we really are about that being that connectivity engine.

0:27:39.119 --> 0:27:42.120
<v Speaker 1>So you know, I think in many ways our business

0:27:42.160 --> 0:27:47.960
<v Speaker 1>model is you know, somewhat protected from any potential.

0:27:47.640 --> 0:27:48.439
<v Speaker 6>Before we let you go.

0:27:48.480 --> 0:27:50.960
<v Speaker 4>As I mentioned some headlines on TikTok crossing from the

0:27:51.000 --> 0:27:53.080
<v Speaker 4>Wall Street Journal, the deal would create a new US

0:27:53.280 --> 0:27:57.159
<v Speaker 4>entity Oracle and recent horror with silver Lake. Are you

0:27:57.200 --> 0:27:58.000
<v Speaker 4>involved in this at all?

0:27:58.080 --> 0:28:00.760
<v Speaker 1>Well, we partner very closely with Oracles, so it would

0:28:00.800 --> 0:28:02.879
<v Speaker 1>be through that partnership that we would be supporting.

0:28:03.280 --> 0:28:05.920
<v Speaker 4>So you think you will support as independent TikTok.

0:28:05.800 --> 0:28:10.000
<v Speaker 1>Potentially with Oracle with Oracle, Yes, I very key partner.

0:28:10.200 --> 0:28:13.560
<v Speaker 3>One last question, your stocks down? Why if it's so

0:28:14.080 --> 0:28:16.240
<v Speaker 3>the sp I mean, I know, there's also an incredible

0:28:16.320 --> 0:28:19.679
<v Speaker 3>spend in what you are doing. You've got to spend

0:28:19.800 --> 0:28:22.840
<v Speaker 3>in order to meet the demand, you know, and so

0:28:22.960 --> 0:28:25.280
<v Speaker 3>maybe that is why there isn't some reward from some

0:28:25.320 --> 0:28:28.359
<v Speaker 3>of your investors. Is it kind of a conflict.

0:28:28.720 --> 0:28:31.639
<v Speaker 1>Well, we're very focused on long term value creation for

0:28:31.880 --> 0:28:35.440
<v Speaker 1>our shareholders, and you know, we announced that we are

0:28:35.480 --> 0:28:38.080
<v Speaker 1>going to bring on as much capacity in the next

0:28:38.200 --> 0:28:41.000
<v Speaker 1>five years as we have done in the previous twenty

0:28:41.040 --> 0:28:44.400
<v Speaker 1>seven years of our operations, and so we're very focused

0:28:44.400 --> 0:28:47.360
<v Speaker 1>on executing against our strategy. We believe in the opportunity

0:28:47.440 --> 0:28:49.720
<v Speaker 1>that we see in the market and hope to deliver

0:28:49.800 --> 0:28:52.000
<v Speaker 1>proof points to that to our investor community very soon.

0:28:52.080 --> 0:28:53.880
<v Speaker 3>We have to leave it there. We apologize. There's been

0:28:53.880 --> 0:28:55.480
<v Speaker 3>a lot going on today, so we hope you will

0:28:55.480 --> 0:28:57.560
<v Speaker 3>come back and give us that day. Thank you very

0:28:57.640 --> 0:28:59.720
<v Speaker 3>much for having me. We appreciate it. Dere Fox, Martin

0:28:59.720 --> 0:29:03.560
<v Speaker 3>Present and CEO of Equinox joining us right here in studio.

0:29:04.440 --> 0:29:07.240
<v Speaker 4>Stay with us. More from Bloomberg Business Week Daily coming

0:29:07.320 --> 0:29:08.239
<v Speaker 4>up after this.

0:29:11.920 --> 0:29:15.920
<v Speaker 2>You're listening to the Bloomberg Business weekdaily podcast. Catch US

0:29:16.000 --> 0:29:19.440
<v Speaker 2>live weekday afternoons from two to five pm Eastern Listen

0:29:19.480 --> 0:29:23.040
<v Speaker 2>on Apple CarPlay and Android Auto with the Bloomberg Business app,

0:29:23.200 --> 0:29:25.600
<v Speaker 2>or watch US live on YouTube.

0:29:25.760 --> 0:29:28.160
<v Speaker 4>The Wall Street Trader is gearing up for the FED decision,

0:29:28.240 --> 0:29:30.560
<v Speaker 4>refraining from making big bets as they await clues on

0:29:30.600 --> 0:29:32.440
<v Speaker 4>the path of rates that will shape the outlook for

0:29:32.520 --> 0:29:35.240
<v Speaker 4>markets over the next few months. On the Outlook back

0:29:35.280 --> 0:29:38.280
<v Speaker 4>with us as Ali McCartney, Managing director, Wealth Management and

0:29:38.320 --> 0:29:41.280
<v Speaker 4>private wealth advisor with Alignment Partners at UBS. It manages

0:29:41.800 --> 0:29:43.520
<v Speaker 4>just over a billion dollars. Ali joins us here in

0:29:43.520 --> 0:29:46.040
<v Speaker 4>the Bloomberg Interactive Brokers studio. I want to get to

0:29:46.080 --> 0:29:48.480
<v Speaker 4>your outlook everything that you're watching. But when you walked

0:29:48.520 --> 0:29:52.280
<v Speaker 4>into our studio, you made the point that today's the

0:29:52.280 --> 0:29:54.400
<v Speaker 4>anniversary or yesterday, depending on how you look at it

0:29:54.880 --> 0:29:57.280
<v Speaker 4>of the Great Financial Crisis, and you were there, you

0:29:57.280 --> 0:29:58.160
<v Speaker 4>were part of it.

0:29:58.280 --> 0:30:00.880
<v Speaker 8>What was I was on over the counter equity and

0:30:00.920 --> 0:30:03.800
<v Speaker 8>hedge funder road of desk, So it was at Lehman

0:30:04.040 --> 0:30:06.480
<v Speaker 8>at Lehman. Yeah, sorry, I should have said that. I

0:30:06.560 --> 0:30:10.160
<v Speaker 8>sort of thought that was implied. It was a crazy,

0:30:10.320 --> 0:30:14.440
<v Speaker 8>crazy time and it's interesting because a lot of the

0:30:14.480 --> 0:30:18.520
<v Speaker 8>conversations now are are we in a bubble? What do

0:30:18.560 --> 0:30:20.640
<v Speaker 8>we do when the market is at you know, depending

0:30:20.680 --> 0:30:22.120
<v Speaker 8>on what you look at. The S and P right

0:30:22.160 --> 0:30:25.040
<v Speaker 8>now is trading at twenty two point three times forward earnings.

0:30:25.240 --> 0:30:28.200
<v Speaker 8>You take out the mag seven, the broad based four

0:30:28.280 --> 0:30:30.560
<v Speaker 8>ninety three is at twenty point two times.

0:30:30.840 --> 0:30:32.600
<v Speaker 6>So people are anxious, right.

0:30:33.080 --> 0:30:35.760
<v Speaker 8>I think the big difference we have right now has

0:30:35.800 --> 0:30:40.280
<v Speaker 8>a lot to do with the FED. There have been

0:30:41.040 --> 0:30:46.280
<v Speaker 8>four other times in history since nineteen fifty that markets

0:30:46.360 --> 0:30:49.840
<v Speaker 8>have been this highly valued, and in two of those

0:30:49.880 --> 0:30:55.360
<v Speaker 8>cases the markets have outperformed over the next twelve months,

0:30:55.560 --> 0:30:57.680
<v Speaker 8>and in two of those cases the markets have corrected.

0:30:57.800 --> 0:31:01.640
<v Speaker 8>And the difference is very very clear. The markets have

0:31:01.680 --> 0:31:07.160
<v Speaker 8>outperformed in decreasing FED interest rate environments where earnings are

0:31:07.200 --> 0:31:12.080
<v Speaker 8>growing or stable. They have tanked when the FED is

0:31:12.120 --> 0:31:15.520
<v Speaker 8>tightening and earnings are slowing. So I think we have

0:31:15.600 --> 0:31:18.840
<v Speaker 8>a little bit of a recipe for We still think

0:31:18.840 --> 0:31:22.120
<v Speaker 8>the bull market continues, but you have to be cautious.

0:31:22.160 --> 0:31:24.320
<v Speaker 8>We have to look at volatility, and tomorrow is going

0:31:24.360 --> 0:31:28.440
<v Speaker 8>to be really meaningful in terms of the summary of

0:31:28.480 --> 0:31:32.120
<v Speaker 8>economic projections. The dot plot the dissents as your former

0:31:32.160 --> 0:31:35.120
<v Speaker 8>guest said, and just in general the tone.

0:31:34.880 --> 0:31:37.200
<v Speaker 3>How much juice do you think the economy really really

0:31:37.240 --> 0:31:39.520
<v Speaker 3>needs right now? Because you know, we've got to read

0:31:39.560 --> 0:31:42.480
<v Speaker 3>on retail sales and consumers are still spending, and I

0:31:42.520 --> 0:31:45.080
<v Speaker 3>know there's it feels like there's a mixed bunch of

0:31:45.120 --> 0:31:47.360
<v Speaker 3>data points alley, So how much do you think that

0:31:47.400 --> 0:31:48.400
<v Speaker 3>the FED needs to do?

0:31:49.240 --> 0:31:51.520
<v Speaker 6>There are a lot just for tomorrow. Yeah, so you

0:31:51.520 --> 0:31:52.440
<v Speaker 6>know it's the right question.

0:31:52.720 --> 0:31:55.600
<v Speaker 8>What does this whole tightening cycle and what does the

0:31:55.640 --> 0:32:00.120
<v Speaker 8>neutral rate look like? So the question is back to

0:32:00.120 --> 0:32:04.239
<v Speaker 8>what we were talking about initially, is this insurance or

0:32:04.520 --> 0:32:10.400
<v Speaker 8>is this against a growth scare? The numbers that we

0:32:10.480 --> 0:32:13.560
<v Speaker 8>have seen have been very mixed. The effect on consumers

0:32:13.640 --> 0:32:16.400
<v Speaker 8>in terms of tariffs, in terms of dwindling savings, in

0:32:16.440 --> 0:32:20.880
<v Speaker 8>terms of high interest rates have not really appeared to

0:32:20.920 --> 0:32:22.600
<v Speaker 8>create issues yet.

0:32:23.480 --> 0:32:26.200
<v Speaker 6>I don't think it derails a bull.

0:32:26.120 --> 0:32:31.080
<v Speaker 8>Market, a FED tightening cycle and increasing earnings really as

0:32:31.120 --> 0:32:35.760
<v Speaker 8>a tailwind with AI and increased efficiency. But it's not

0:32:35.800 --> 0:32:38.720
<v Speaker 8>going to be easy. Right We increasingly have a world

0:32:38.760 --> 0:32:41.200
<v Speaker 8>that is the haves and the have nots and the

0:32:41.240 --> 0:32:44.560
<v Speaker 8>have lots are in a really, really tough place. And

0:32:44.600 --> 0:32:46.880
<v Speaker 8>so I think that some of these interest rate cuts

0:32:46.920 --> 0:32:50.840
<v Speaker 8>are going to be stimulating the housing market, stimulating main street,

0:32:51.040 --> 0:32:56.080
<v Speaker 8>allowing people to borrow, and making economic opportunity more uniform.

0:32:57.360 --> 0:32:58.920
<v Speaker 6>But I think we go ahead.

0:32:59.120 --> 0:33:02.840
<v Speaker 3>Well, yes, because Tim and I talk about so much

0:33:02.880 --> 0:33:04.760
<v Speaker 3>like with Peter Atworder over at women and Mary of

0:33:04.800 --> 0:33:07.240
<v Speaker 3>the k shaped economy, right Ithas and the have nots,

0:33:07.560 --> 0:33:09.840
<v Speaker 3>And I get it. I get why rate cuts will

0:33:09.880 --> 0:33:12.760
<v Speaker 3>help folks that are having a tougher time right now.

0:33:13.280 --> 0:33:16.040
<v Speaker 3>But can we do that without those folks who are

0:33:16.040 --> 0:33:19.600
<v Speaker 3>doing just fine, not leveraging up and doing crazy things.

0:33:20.040 --> 0:33:22.600
<v Speaker 6>We're going to see the answer is probably not right.

0:33:22.760 --> 0:33:25.960
<v Speaker 8>And think back to the times in the economy where

0:33:26.000 --> 0:33:28.440
<v Speaker 8>we have had very low interest rates and ultimately what

0:33:28.480 --> 0:33:30.600
<v Speaker 8>has happened, because what does it do when you lower

0:33:30.640 --> 0:33:32.880
<v Speaker 8>interest rates? You put people into you push people into

0:33:32.960 --> 0:33:35.600
<v Speaker 8>risk assets. So what I'm looking to see tomorrow is

0:33:35.640 --> 0:33:39.320
<v Speaker 8>exactly that. Are we getting a dubvish fed right? Are

0:33:39.320 --> 0:33:42.040
<v Speaker 8>they saying this is the beginning of three to five

0:33:42.080 --> 0:33:44.480
<v Speaker 8>more cuts over the next twelve months, in which case

0:33:44.520 --> 0:33:47.200
<v Speaker 8>I think markets and risk takers will go all in,

0:33:47.920 --> 0:33:50.520
<v Speaker 8>or are we getting a hawkish cut, which is sort

0:33:50.520 --> 0:33:53.920
<v Speaker 8>of the standard Powell response, which is We're still going

0:33:53.960 --> 0:33:56.640
<v Speaker 8>to be data dependent. We still know there's a lot

0:33:56.720 --> 0:33:59.320
<v Speaker 8>of risks out there, but I'm looking at the labor market.

0:34:00.160 --> 0:34:03.760
<v Speaker 4>I just can't imagine Fetcher Powell making a commitment that

0:34:03.880 --> 0:34:06.680
<v Speaker 4>far in advance, somebody who has made such a point

0:34:06.720 --> 0:34:09.279
<v Speaker 4>of emphasizing how data dependent he is and how data

0:34:09.320 --> 0:34:12.000
<v Speaker 4>dependent the FED is. I can't imagine it's going to

0:34:12.000 --> 0:34:13.520
<v Speaker 4>be the former. I think it's going to be the latter.

0:34:13.680 --> 0:34:14.160
<v Speaker 6>Agreed.

0:34:14.440 --> 0:34:16.640
<v Speaker 8>But that's why I think the concept of the sense

0:34:16.760 --> 0:34:19.359
<v Speaker 8>and understanding who the dots on the dot plots are,

0:34:19.360 --> 0:34:22.560
<v Speaker 8>because remember, his dot's going away very soon. The other

0:34:22.680 --> 0:34:25.000
<v Speaker 8>dots and the ones that are going to be the

0:34:25.080 --> 0:34:28.640
<v Speaker 8>future dots are probably going to be much more politically

0:34:28.640 --> 0:34:32.919
<v Speaker 8>and partisan aligned. So I think that's really what one

0:34:32.960 --> 0:34:36.080
<v Speaker 8>needs to focus on in terms of deciding if we're

0:34:36.080 --> 0:34:38.759
<v Speaker 8>going further north or if it's time to sell and

0:34:38.800 --> 0:34:39.360
<v Speaker 8>take your games.

0:34:39.400 --> 0:34:42.040
<v Speaker 4>Does that concern you though, if the dots are politically

0:34:42.040 --> 0:34:46.239
<v Speaker 4>aligned rather than aligned with what these individuals think or

0:34:46.239 --> 0:34:48.880
<v Speaker 4>what economists think the race should.

0:34:48.600 --> 0:34:52.200
<v Speaker 8>Be it personally and professionally, it concerns me a lot.

0:34:52.280 --> 0:34:55.520
<v Speaker 8>I think a politically aligned or said another way, a

0:34:55.600 --> 0:34:59.080
<v Speaker 8>non independent FED is a really challenging place to be.

0:34:59.239 --> 0:35:02.520
<v Speaker 4>Does it make you think differently about deploying assets in

0:35:02.560 --> 0:35:03.440
<v Speaker 4>the United States?

0:35:04.160 --> 0:35:04.879
<v Speaker 6>I think that.

0:35:06.600 --> 0:35:11.759
<v Speaker 8>Long term implications yes, but I think that at this

0:35:11.880 --> 0:35:14.239
<v Speaker 8>point in time, and when I say short term, I

0:35:14.320 --> 0:35:19.799
<v Speaker 8>even mean throughout this presidency, no one's going away from

0:35:19.880 --> 0:35:20.360
<v Speaker 8>the dollar.

0:35:20.800 --> 0:35:21.880
<v Speaker 6>They may be going more into.

0:35:21.760 --> 0:35:25.319
<v Speaker 8>Gold, which is also dollar denominated. They're buying a little

0:35:25.400 --> 0:35:26.960
<v Speaker 8>less treasuries overseas, but.

0:35:26.960 --> 0:35:28.160
<v Speaker 6>Not much so.

0:35:28.200 --> 0:35:31.960
<v Speaker 8>I think that we have sixty plus percent of the

0:35:32.000 --> 0:35:35.040
<v Speaker 8>equity capital markets of the world. The AI trend is

0:35:35.080 --> 0:35:39.920
<v Speaker 8>one that is internationally recognized as a megacap five as

0:35:39.920 --> 0:35:43.120
<v Speaker 8>a US silicon valley based phenomenon, both from the current

0:35:43.200 --> 0:35:46.520
<v Speaker 8>hyperscalers and from the fact that they have so much

0:35:46.800 --> 0:35:50.440
<v Speaker 8>cash on hand that they're going to buy, not and.

0:35:50.480 --> 0:35:52.600
<v Speaker 6>Build everything that's next.

0:35:53.120 --> 0:35:58.000
<v Speaker 8>So does this create or is this another warning sign

0:35:58.200 --> 0:36:01.960
<v Speaker 8>along with the deficit, along with all their polarities of

0:36:02.080 --> 0:36:06.399
<v Speaker 8>things that might put a chink in the US's armor. Yes,

0:36:06.719 --> 0:36:09.400
<v Speaker 8>But do I think it's in the next three to

0:36:09.520 --> 0:36:10.200
<v Speaker 8>five years.

0:36:10.360 --> 0:36:11.040
<v Speaker 6>Probably not.

0:36:11.360 --> 0:36:14.919
<v Speaker 3>Would that have happened without this current administration At.

0:36:14.840 --> 0:36:15.520
<v Speaker 6>The end of the day.

0:36:15.560 --> 0:36:18.400
<v Speaker 8>One of the things that as a trained economist I

0:36:18.440 --> 0:36:20.160
<v Speaker 8>always look at is the demographics?

0:36:20.239 --> 0:36:20.439
<v Speaker 1>Right?

0:36:20.640 --> 0:36:23.000
<v Speaker 6>So the demographics of this country are in trouble.

0:36:23.239 --> 0:36:26.160
<v Speaker 8>Right. We have more people retiring than andying of the

0:36:26.160 --> 0:36:29.920
<v Speaker 8>first workforce that was before we stopped immigration. The birth

0:36:29.960 --> 0:36:32.279
<v Speaker 8>rate's gone down. So when you look at US and

0:36:32.320 --> 0:36:35.960
<v Speaker 8>you look at us relative to let's say India or China,

0:36:36.400 --> 0:36:37.240
<v Speaker 8>it's a problem.

0:36:38.080 --> 0:36:42.319
<v Speaker 6>But again, when does that catch up with us?

0:36:42.520 --> 0:36:44.319
<v Speaker 8>And what is the rule of law and the rule

0:36:44.360 --> 0:36:47.440
<v Speaker 8>of capital in those other places? And they are not

0:36:47.719 --> 0:36:51.759
<v Speaker 8>as capital or law friendly as we are in terms

0:36:51.760 --> 0:36:55.360
<v Speaker 8>of attracting monetary dollars or resources.

0:36:55.440 --> 0:36:58.160
<v Speaker 3>What is your expertise in kind of understanding some really

0:36:58.280 --> 0:37:02.560
<v Speaker 3>dark moments in US financial history? Yeah, and maybe the

0:37:02.600 --> 0:37:04.359
<v Speaker 3>world looking at us like, oh my god, I can't

0:37:04.400 --> 0:37:05.720
<v Speaker 3>believe like what you did?

0:37:06.000 --> 0:37:06.200
<v Speaker 1>Right?

0:37:06.400 --> 0:37:09.680
<v Speaker 3>Yeah, but then understanding because I think some would say

0:37:09.680 --> 0:37:12.080
<v Speaker 3>that it feels a little dark right now in trying

0:37:12.120 --> 0:37:15.080
<v Speaker 3>to understand how policies are going to impact the US

0:37:15.120 --> 0:37:19.440
<v Speaker 3>longer term. But showing that we can have dark, difficult

0:37:19.480 --> 0:37:25.000
<v Speaker 3>moments and then rise again. Yeah, our global investors willing

0:37:25.040 --> 0:37:26.600
<v Speaker 3>to kind of look at the US and say, Okay,

0:37:26.600 --> 0:37:29.160
<v Speaker 3>this is a moment in time, and that doesn't mean

0:37:29.200 --> 0:37:32.360
<v Speaker 3>that the investment environment or the political environment, or the

0:37:32.400 --> 0:37:35.160
<v Speaker 3>global environment. The US role in it won't change again.

0:37:35.880 --> 0:37:39.399
<v Speaker 8>I think that this is a very shocking and emotional

0:37:39.600 --> 0:37:42.800
<v Speaker 8>time for many people in and outside the US.

0:37:43.360 --> 0:37:44.680
<v Speaker 6>I think that this is.

0:37:47.160 --> 0:37:52.280
<v Speaker 8>This is more serious than a lot of other points

0:37:52.360 --> 0:37:58.880
<v Speaker 8>in time in how much we changed about our role

0:37:59.239 --> 0:38:02.879
<v Speaker 8>as an ally, as the police of the world, as

0:38:02.920 --> 0:38:07.440
<v Speaker 8>the financier of the world. But again, Russia can't take

0:38:07.480 --> 0:38:10.360
<v Speaker 8>our place, European Union can't take our place, India can

0:38:10.480 --> 0:38:14.440
<v Speaker 8>take our place. Africa is developing, China has issues, and

0:38:14.480 --> 0:38:18.080
<v Speaker 8>their demographics are challenging as well. So I think it's

0:38:18.080 --> 0:38:21.080
<v Speaker 8>one of those things where a lot of people and

0:38:21.160 --> 0:38:24.279
<v Speaker 8>investors have hurt feelings. But at the end of the day,

0:38:24.640 --> 0:38:27.799
<v Speaker 8>one thing I tell my clients is, regardless of how

0:38:27.840 --> 0:38:30.680
<v Speaker 8>you feel about the policies and politics of this country,

0:38:31.160 --> 0:38:34.400
<v Speaker 8>you need to lean into that greed and then decide

0:38:34.400 --> 0:38:36.560
<v Speaker 8>what to do with your spoils to make the change

0:38:36.560 --> 0:38:38.680
<v Speaker 8>you want to make. I think that's how other countries

0:38:38.719 --> 0:38:39.120
<v Speaker 8>look at it.

0:38:39.200 --> 0:38:41.520
<v Speaker 3>You have to be quick ten seconds. But if we

0:38:41.600 --> 0:38:45.160
<v Speaker 3>don't have an independent FED, it changes.

0:38:45.480 --> 0:38:48.000
<v Speaker 8>I think it changes because I think that, especially let's

0:38:48.040 --> 0:38:51.200
<v Speaker 8>go back to the financial crisis, you need independence and

0:38:51.239 --> 0:38:54.320
<v Speaker 8>balance to get yourself out of tough situations and have disciplined.

0:38:54.400 --> 0:38:57.280
<v Speaker 3>Ali McCartney, thank you, Thank you, Managing Director, Wealth Management

0:38:57.280 --> 0:39:00.360
<v Speaker 3>and Private Wealth Advisor with Alignment Partners at UBS. This

0:39:00.440 --> 0:39:01.600
<v Speaker 3>is Bloomberg Business WEEKDAP.

0:39:01.960 --> 0:39:07.279
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0:39:07.400 --> 0:39:11.120
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