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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business App. Jim Zouder, the president

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Speaker 2: of Apollo Global Management, out with a new report, asking

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Speaker 2: the question, what if the world doesn't work the way

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Speaker 2: you think it does? Zout from the team, going on

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Speaker 2: to write the era of free money is over, ultra

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Speaker 2: low interest rates. Our history inflation is structural, not transitory.

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Speaker 2: It's redefining risk, return and the cost of capital. Jim

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Speaker 2: joins us, now for more. Jim good Mornic.

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Speaker 3: I got to hire you at Apollo as a marketing guy.

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Speaker 4: You're doing a good job.

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Speaker 5: Go one step further.

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Speaker 4: Thank you.

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Speaker 2: I woke up the other week, came into the office

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Speaker 2: handwritten note from you, and it said, public markets power

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Speaker 2: the narrative, private markets power the economy.

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Speaker 5: Just start there.

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Speaker 2: What is the question you're posing for clients at the moment,

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Speaker 2: what you want to get them to think about.

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Speaker 3: Well, it's a bigger conversation about market structure and the

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Speaker 3: changing backdrops, about how investors think about investing from a

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Speaker 3: sixty to forty portfolio historically, and the tools they have

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Speaker 3: to create better outcomes with less volatility.

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Speaker 4: The reality is.

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Speaker 3: Alternatives have worked for forty years for institutions, and if

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Speaker 3: we think thoughtfully about the growing need for retirees around

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Speaker 3: the globe, how do we augment which worked well in

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Speaker 3: the past but may not be the compass for the future.

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Speaker 3: On the other side of the coin, it's for companies

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Speaker 3: eight thousand companies down to four thousand, the role of

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Speaker 3: private capital is changing. Companies like SpaceX and Spie and

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Speaker 3: Stripe can become the state it for much longer, and

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Speaker 3: so a little bit when I hear about your headlines

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Speaker 3: this morning, I feel like many folks that come on

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Speaker 3: talk a little bit about the world in the rear

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Speaker 3: view mirror versus looking to the windshield. And the real

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Speaker 3: AHA moment for us came two three years ago when

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Speaker 3: we heard, when we saw what was going on with

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Speaker 3: rates rising dramatically in this cycle, and universally we all

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Speaker 3: thought that the economy would hit skids and they would

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Speaker 3: be tightening financial conditions, and that.

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Speaker 4: Really didn't happen.

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Speaker 3: So that was a very practical situation where we really said,

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Speaker 3: maybe our textbook that we've using all along is wrong.

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Speaker 3: But changing market structure, how companies finance, how investors invest,

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Speaker 3: it is a new playbook, a new.

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Speaker 2: Paradigm redefining public and private markets. Our good friend Mark

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Speaker 2: Round would often talk about this and say, often the

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Speaker 2: distinction was risk high risk in private markets, and now

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Speaker 2: the distinction I think you and a team want to

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Speaker 2: make is liquidity.

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Speaker 3: Yeah, I mean the old idea when we grew up

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Speaker 3: in a marketplace. This is my fortieth year in the

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Speaker 3: business where private was was risky and volatile and public

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Speaker 3: was safe and liquid. And there's many examples right now.

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Speaker 3: I come from the world of credit, you know, and

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Speaker 3: I started out as a high yield slash junk bond

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Speaker 3: trader back in the eighties, and there was it might

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Speaker 3: have been it might have been a public security, but

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Speaker 3: trust me, it was volatile and it was risky. And

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Speaker 3: now over thirty years is now junk bonds have become

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Speaker 3: high yield and asset class. There's still a lot of

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Speaker 3: inherent volatility in that. And again we would say that

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Speaker 3: across the whole risk reward spectrum. You know, I grew

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Speaker 3: up in Rochester, New York. Coodeax Xerox, Bousel, MOAM, three

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Speaker 3: great American icon companies. They didn't get the memo on disruption.

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Speaker 3: They were safe in investment grade companies and Vohil they're

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Speaker 3: not in existence anymore.

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Speaker 2: Can we talk about how things have changed over the

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Speaker 2: last forty years? So you and the team would often

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Speaker 2: talk about you are what you originate, you are what

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Speaker 2: you create. The capex needs of companies now seem to

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Speaker 2: have changed. I was reading the transcript from your address

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Speaker 2: at a financial markets conference earlier this week, and you

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Speaker 2: talked about the capex needs twenty to thirty forty years

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Speaker 2: ago relative to now and the change in quality, the

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Speaker 2: changing character of things. How important is that given where

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Speaker 2: we're at.

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Speaker 3: Well, just just to reset that question. You know, in

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Speaker 3: the last thirty years, the high ual market globally has

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Speaker 3: finance companies that are going through either regulatory change or

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Speaker 3: technology change. Think cable, think shale, think airlines, think telecommunications,

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Speaker 3: and for the most part that massive capbax was on

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Speaker 3: non investment grade companies. As we sit here in twenty

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Speaker 3: twenty five. In the next ten years, massive capbacks boom

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Speaker 3: between data, AI, sustainability, energy transition, transmission lines, the transaction

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Speaker 3: we did for RWE this year, this week in Germany.

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Speaker 3: And so I don't think people are still thinking that

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Speaker 3: private credit and private capital is small, ill liquid, non

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Speaker 3: investment grade companies. And the reality is eighty to ninety

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Speaker 3: percent of the private credit market is really investment grade

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Speaker 3: counter parties, investment grade debt. And again many, many companies

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Speaker 3: now are afforded the opportunity to stay private much longer

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Speaker 3: because of the breath and the breadth of the financing markets.

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Speaker 6: To build on what John is talking about, does private

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Speaker 6: debt have more of a role than private equity at

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Speaker 6: this point?

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Speaker 3: Well, the debt markets and the capital markets and the

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Speaker 3: credit markets are, as the Congress learned in seven oh nine,

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Speaker 3: it's the lifeblood of the economy. When ge could not

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Speaker 3: roll over their commercial paper, it was the aha moment

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Speaker 3: for the Congress to say, wait a second, we need

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Speaker 3: to act here. And so when you think about the

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Speaker 3: scope of private credit and scale, certainly the application with

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Speaker 3: investment grade solutions, it's in the multi multi trillions, tend

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Speaker 3: to forty trillion, and the PE industry is a seven

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Speaker 3: to ten trillion, depending on how you think about the

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Speaker 3: dry powder and the overhang.

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Speaker 4: So I would argue over the.

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Speaker 3: Next decade, the impact of private credit, investment grade and

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Speaker 3: non investment grade will probably have as large an impact,

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Speaker 3: if not larger, than private equity has had in the

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Speaker 3: last decade.

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Speaker 1: So the peak of private equities over well, I.

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Speaker 4: Wouldn't say that.

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Speaker 3: I mean I think that the private equity industry is

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Speaker 3: going to go through an evolution, and it's going to

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Speaker 3: be a Darwinian evolution, and I think that the challenges

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Speaker 3: of monetization, the challenges of upfront capital commitments, there will

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Speaker 3: be fewer and fewer firms that are able to go

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Speaker 3: to investors and have that dialogue and have that relationship.

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Speaker 3: We believe for one of them because of our investment

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Speaker 3: track record, But the reality is I think that many

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Speaker 3: PE firms that business model is going to change and

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Speaker 3: how can they adapt.

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Speaker 6: This is a really important conversation to be having, especially

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Speaker 6: because on surveillance we keep talking about the divide between

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Speaker 6: public markets and the underlying economy, and it seems like

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Speaker 6: it's growing increasingly dramatic fashion, and we keep wondering whether

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Speaker 6: the economy is really struggling right now, at least by

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Speaker 6: virtue of some of these labor market pictures. The same

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Speaker 6: time that you're seeing the oracles of the world do

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Speaker 6: very well.

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Speaker 1: Are you seeing that?

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Speaker 6: Are you seeing the need for money to be a

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Speaker 6: little more free right now in order to rejucee some

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Speaker 6: of that activity?

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Speaker 4: You know, we're not seeing yet.

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Speaker 3: But I do think the question you're really asking is

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Speaker 3: and it is the same question about you know, with

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Speaker 3: the amount public markets used to be a great diversifier

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Speaker 3: for portfolios, and it really was the bellweather how the

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Speaker 3: US economy and the global economy was doing. But as

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Speaker 3: more companies have stayed private and more companies are funding privately,

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Speaker 3: you really are questioning that barometer and what is telling you.

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Speaker 3: Torsen has a good piece out this morning talking about

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Speaker 3: the concentration of the CAPEX cycle and how it's concentrated

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Speaker 3: in a handful of companies in data, AI and technology.

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Speaker 3: And while the CAPEX is a massive number and it's

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Speaker 3: driving a north started growth. You're asking a provocative question,

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Speaker 3: is it really hiding the underlying economy, which is driven

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Speaker 3: by private companies? Ninety percent of the hiring in America

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Speaker 3: is by private companies, and is at a different story today?

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Speaker 3: It could be we're seeing if you look at the

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Speaker 3: public numbers in terms of earnings over the second quarter,

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Speaker 3: it beat consensus by seven hundred basis points eleven versus four.

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Speaker 3: And for the most part, the credit portfolios that we oversee,

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Speaker 3: the multi thousands of counterpartysusite to four thousand, it actually

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Speaker 3: showed quality upgrades three to one versus downgrades in terms

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Speaker 3: of performance. So in the breadth of our credit portfolios,

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Speaker 3: we're not seeing a weakness. I will tell you we

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Speaker 3: definitely see more lingering inflation. And I do believe that

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Speaker 3: the while this administration is dead set on getting rates lower,

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Speaker 3: I believe that there is a legacy inflation issues in

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Speaker 3: the economy. When's the last time any one of us

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Speaker 3: bought something in the last year and he said, wow,

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Speaker 3: that was cheaper than a year ago.

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Speaker 4: It has not happened.

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Speaker 3: And that's just in the and I do believe that's

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Speaker 3: going to be the scourge of this rate cycle because

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Speaker 3: I do believe there's greater inflation and companies are having

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Speaker 3: it a much more challenging time passing that along to consumers.

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Speaker 3: This is that we're seeing it across the board.

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Speaker 5: There's lots to impact that.

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Speaker 2: One of the things I wanted to impact was the

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Speaker 2: concentration risk and the AI financing that we've seen both

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Speaker 2: in data centers and the energy transition. There's a quote

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Speaker 2: in the last year that's just stuck with me for

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Speaker 2: the last twelve months, and it came from the Alphabet

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Speaker 2: CEO that the bigger risk is under investing and not

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Speaker 2: over investing, and that just sounded like a commitment to

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Speaker 2: over investing. Now, I'd want to understand how your industry

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Speaker 2: avoids a massive misallocation of resources at a time when

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Speaker 2: everyone is chasing the same story.

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Speaker 3: Well, it feels like you have a bug in our

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Speaker 3: investment committee rooms. I mean, I've been talking the last

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Speaker 3: six months about the cycles of dark fiber and the

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Speaker 3: late nineties, of shale on the early teens, ten to

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Speaker 3: twelve to sixteen, and certainly enterprise software in the last

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Speaker 3: five years, and you have to be concerned as an

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Speaker 3: investor today, are you taking equity risk for a fixed

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Speaker 3: rate of return. That's the ultimate sort of bubble, if

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Speaker 3: you would, And I don't think that the true economics.

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Speaker 3: Certainly consumers industry, the economy is going to benefit, but

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Speaker 3: not all industries as they evolved. Was it a great

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Speaker 3: investor to be an investor? The cell phone industry is

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Speaker 3: a great example. Only in the last decade is it

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Speaker 3: become a good investment for companies to invest. So I

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Speaker 3: don't have the answer that once it's a question we're

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Speaker 3: asking ourselves. Now we find ourselves both on the debt

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Speaker 3: and the equity side of funding a lot of the

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Speaker 3: data center activity. But there's a tremendous amount needed and

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Speaker 3: there's a voracious appetite. But I certainly understand what the

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Speaker 3: Alphabet executive was saying.

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Speaker 2: Do you think there's a bit of a duration mismatch

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Speaker 2: between how long it takes to build a data center

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Speaker 2: and how long it takes to build the energy infrastructure

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Speaker 2: to enable it?

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Speaker 5: And could that be problematic?

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Speaker 4: There?

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Speaker 3: Certainly is we have spent more time. The energy supply

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Speaker 3: issue could be a governor to growth, and that's a

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Speaker 3: challenge that we've not seen yet. But if you pencil

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Speaker 3: out the numbers, that could be a concern, but I

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Speaker 3: think the bigger questions back The first one we asked

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Speaker 3: is these are ten twenty thirty year infrastructure builds. Who

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Speaker 3: really with our marketplace going towards indexes and ETFs and

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Speaker 3: multipod shops that are all thinking about, you know, moment

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Speaker 3: to moment liquidity. The era of the long investor is

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Speaker 3: a question mark. Who is that long investor? And we

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Speaker 3: would say it's the retirees of tomorrow. Every day twelve

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Speaker 3: thousand folks in the US you hit sixty five, and

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Speaker 3: the West broadly speaking, and other countries around the world

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Speaker 3: have not done a great job with retirees, and so

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Speaker 3: the ability to thoughtfully introduce long duration infrastructure inflation hedge

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Speaker 3: assets into these portfolios. In the UK they call it

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Speaker 3: matching adjustment for insurance assets. Those are really where the

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Speaker 3: growth of our business is going to go, and that's

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Speaker 3: going to benefit investors.

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Speaker 2: This makes a lot of sense, particularly if you're investing

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Speaker 2: for retirement. You don't need daily liquidity, that's just logical.

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Speaker 2: I think where the criticism is coming from for your

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Speaker 2: industry at the moment is that family offices are already

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Speaker 2: doing a lot of this. I think you are the

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Speaker 2: team we talked about that a ton high net worth

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Speaker 2: individuals are doing the same. You're now going go after retail,

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Speaker 2: and then people start to feel a little bit uncomfortable

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Speaker 2: with that. Are you're looking for a new bank older?

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Speaker 2: Are we looking for someone else to pick up the pieces?

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Speaker 2: What's the response from you and the team to address

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Speaker 2: that head on?

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Speaker 3: I think it's all about doing it in a methodical, logical,

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Speaker 3: diverse way. You know, this is all about the you know,

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Speaker 3: the proper amount in the proper diversity. Certainly, we would

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Speaker 3: never advocate for someone taking an outsized portfolio of their

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Speaker 3: retirement and putting it all into alternatives. But clearly, over

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Speaker 3: the last thirty to forty years, history has shown us

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Speaker 3: that an allocation of alternatives ten to twenty percent of

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Speaker 3: a portfolio increases returns and brings down volatility. And so

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Speaker 3: from our perspective, there's a variety of areas in the

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Speaker 3: world of credit, in particular the world of infrastructure, the

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Speaker 3: world of secondaries that are more yield oriented, compounding type

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Speaker 3: of vehicles. And certainly we have a view that private equity,

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Speaker 3: while a very attractive asset class, even in returns over

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Speaker 3: the next decade, mid to high teens that that should

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Speaker 3: be done in appropriate doses. So it's all about diversity

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Speaker 3: and proper portfolio allocation.

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Speaker 2: Stay with us more Bloomberg surveillance coming up.

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Speaker 4: Off to this.

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Speaker 2: Congressman French Hill, chairman of the House Financial Committee on

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Speaker 2: Financial Services, joined us now for more. Congressman Hill, welcome

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Speaker 2: to the program. So I've got a lot to get through,

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Speaker 2: and I just wanted to stop with the independence of

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Speaker 2: the Federal serve and the role that your committee's got

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Speaker 2: to play is this spat continues to build down at Washington.

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Speaker 7: Blogan Morthon, Jonathan, great to be with you. As you know,

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Speaker 7: I've spoken out many times about the importance of the

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Speaker 7: independence of the FED, and so has my colleague across

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Speaker 7: the capital, Tim Scott, the chairman of the Senate Banking Committee.

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Speaker 7: But because we fully support FED independence doesn't mean the

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Speaker 7: Fed's immune from criticism. And every president in my adult

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Speaker 7: life has been very vocal about criticizing the FED at

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Speaker 7: one time or another. So I don't think FED independence

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Speaker 7: is in question when it comes.

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Speaker 8: To what could actually happen in terms of financial stability.

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Speaker 8: We have FED Governor Lisa Cook's lawyer saying that the

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Speaker 8: President was a lawful and removing Governor Cook and said

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Speaker 8: it's vague allegations would endanger the stability of our financial

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Speaker 8: system and undermine the rule of law.

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Speaker 4: Do you agree with that assessment?

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Speaker 7: Well, I think there's some hyperbole in there. Lisa Cook

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Speaker 7: has been accused of effectively mortgage fraud. Those are significant

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Speaker 7: allocations for someone, allegations, for someone who is a financial regulator.

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Speaker 7: But I think they need to be adjudicated. I mean,

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Speaker 7: she needs her due process, her day in court to

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Speaker 7: prove that in fact that's not the case, and I

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Speaker 7: think that's underway right now. And that's again something I've

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Speaker 7: said in recent days.

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Speaker 8: Do you think the president should have waited for the

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Speaker 8: courts to play out in terms of this investigation, for

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Speaker 8: these allegations to actually become charges and a conviction to

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Speaker 8: then take up this idea to fire her for cause.

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Speaker 7: Look, the president's entitled to his own opinion. He has

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Speaker 7: access to the facts that probably I don't, so he's

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Speaker 7: made his decision about it. But by judgment is that's

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Speaker 7: a serious allegation and if true, is certainly potentially a

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Speaker 7: disqualifying allegation and charge for someone who's involved, very much

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Speaker 7: intimately involved in the federal regulatory process.

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Speaker 8: Taking a step back, though, do you agree with the

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Speaker 8: Treasury Secretary on resetting the Fed's mission.

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Speaker 7: Well, you know, I believe that for a long time,

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Speaker 7: I believe the FED should have a single mandate, which

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Speaker 7: is price stability. The biggest, most punishing tax on the

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Speaker 7: American people, our citizens, is inflation, and inflation's caused by

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Speaker 7: too much money chasing too few goods. And we've had

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Speaker 7: a dramatic example of that FED policy during the pandemic

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Speaker 7: and the Biden administration's fiscal policy in combination very punishing

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Speaker 7: forty year highs in inflation. So I believe we need

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Speaker 7: fewer mandates, and I think we need that monetary policy

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Speaker 7: focused on price stability.

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Speaker 4: Again.

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Speaker 7: That's why I set up a task force in this

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Speaker 7: Congress to review the Fed's monetary policy since two thousand

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Speaker 7: and eight, review the Fed's role and a financial regulation

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Speaker 7: and supervision, and to make sure that we're also taking

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Speaker 7: steps to make sure our treasury security market is resilient.

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Speaker 7: All this work is led by Frank Lucas of Oklahoma,

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Speaker 7: and we're deep in that process. So I think taking

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Speaker 7: a strong look at the Fed's monetary policy and their Governman,

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Speaker 7: it's an important factor, and I agree with the Treasury

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Speaker 7: Secretary on that.

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Speaker 6: Well, inflation has not been below two percent for more

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Speaker 6: than four years at this point, and we're still talking

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Speaker 6: about fifty basis point rate cuts, maybe seventy five basis

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Speaker 6: points of rate cuts this year. Do you think that

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Speaker 6: that's premature, If this should be a single mandate federal

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Speaker 6: Reserve that looks solely on inflation, Well, I.

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Speaker 7: Think this is the tough decision they have coming up.

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Speaker 7: And we've seen a softness in the economy during the

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Speaker 7: whole year in terms of consumer's ability to purchase the

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Speaker 7: jobs reports that we've gotten. This is why the FED chairman,

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Speaker 7: I think consistent. We have said, let's look at the data,

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Speaker 7: look at our data assessment and the forecast associated with it,

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Speaker 7: and also make our own judgment about whether we're at

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Speaker 7: the neutral rate for pricing, because we don't want to

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Speaker 7: see the economy stall out and then go into stagflation,

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Speaker 7: particularly when you're right about inflation getting close to two

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Speaker 7: but not below too and not right at two. But

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Speaker 7: when you look at inflation expectations, they seem to be

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Speaker 7: more closely anchored it to and that should give the

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Speaker 7: Fed some confidence as they entertain their decision in the

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Speaker 7: next few days.

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Speaker 4: Cheer Hill.

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Speaker 8: I know you and your colleagues almost just recently got

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Speaker 8: back from summer recess. But our Trumper first is fast

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Speaker 8: approaching and the Trump administration is weighing and pushing for

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Speaker 8: this idea for a stopgap funding measure to keep the

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Speaker 8: government open through January thirty first, would you be on

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Speaker 8: board with that?

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Speaker 7: But we're talking about it among ourselves and obviously with

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Speaker 7: our friends in the Senate. We've each passed three appropriations

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Speaker 7: bills and the Senate in the House, I think it

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Speaker 7: would be great to go to conference on those bills

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Speaker 7: and then pursue get those enacted into law, and then

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Speaker 7: pursue a CR that's a shorter term. CR would be

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Speaker 7: my advice for consideration so that we can get this

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Speaker 7: work done. We're very close. Both the House and Senate

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Speaker 7: are processing these bills. We have the Republicans in charge

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Speaker 7: of the House and the Senator in the White House.

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Speaker 7: So we ought to get together, find our top line number,

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Speaker 7: and get our work done this year.

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Speaker 2: T Wisman, Before you got the important stuff Arkansas football

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Speaker 2: razor Backs got to get done this year.

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Speaker 7: I really enjoyed watching the quarterback come and have his

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Speaker 7: great game against Arkansas State. This was the first time

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Speaker 7: in Arkansas history that Arkansas State played the University of

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Speaker 7: Arkansas in Little Rocket, the famous nineteen forty nine War

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Speaker 7: Memorial Stadium. It was a fantastic day. He looks pretty good.

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Speaker 7: We play Ole Miss this weekend, so that'll be the

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Speaker 7: first SEC game and that's where the rubber hits the road.

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Speaker 2: Stay with us, Mulplindex. Savanna's coming up after this. Let's

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Speaker 2: get the bullush freew on things. Danas of Wetbush two

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Speaker 2: seventy price target outperform writing on Chance of Apple. Dan

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Speaker 2: John just now for more dank and monic.

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Speaker 4: Great to be here.

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Speaker 2: You've sat here so many times in September alongside us

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Speaker 2: and talked about the upgrade super cycle.

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Speaker 5: It hasn't happened. Is it has happened? With this? And

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Speaker 5: why no?

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Speaker 9: I mean, I look this in those supercycles we've talked about,

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Speaker 9: I mean they definitely were disappointing, right, I mean the

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Speaker 9: reality I think this is one where street expectations going

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Speaker 9: in are I think pretty soft relative to the next year.

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Speaker 9: So when you think about on scale one ten, this

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Speaker 9: is probably eight point five. Well, do you have over

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Speaker 9: three hundred million that haven't upgrade their iPhone? Is there

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Speaker 9: going to be a huge catalyst here? Are they a

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Speaker 9: wi just pin up to men, especially in China?

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Speaker 4: But the reality.

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Speaker 9: Is the elephant in the room, it's AI and I

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Speaker 9: think that's when you talk about what's going to truly

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Speaker 9: drive the stock.

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Speaker 4: That's it. We've talked about it. That right now is

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Speaker 4: front and.

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Speaker 6: Center before we get there, and we'll find out more

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Speaker 6: I'm assuming later this year at the WWDC. There is

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Speaker 6: this signal from the fact that they didn't raise prices

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Speaker 6: on the phone significantly except for the highest end phone.

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Speaker 6: Does this suggest that they're going to take it more

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Speaker 6: on margin, especially given how much their costs are increasing

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Speaker 6: pretty much across the board.

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Speaker 9: Yeah, I mean some small price increased book. I think

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Speaker 9: also the reality that's why Cook, you know, play nice

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Speaker 9: in the sandbox with Trump, right because it's very important

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Speaker 9: in terms of Indian and trying to make sure that

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Speaker 9: you have some exemptions when it comes to the tariffs.

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Speaker 9: But look, the reality is they cannot raise prices significant

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Speaker 9: at this point because the last thing you want is

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Speaker 9: churn other competitive issues. You have a phone that's definitely

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Speaker 9: an improvement, but nothing that's jaw dropping. And it all

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Speaker 9: leads the whole reason you own Apple. See in saal base.

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Speaker 9: I mean, it's all about when they monetize the one

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Speaker 9: point five billion iPhones for.

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Speaker 5: Just jump in the install base.

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Speaker 2: For a long time, you've seen that as a source

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Speaker 2: of potential growth. It isn't about time to start seeing

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Speaker 2: as a source of potential risk that you've got this

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Speaker 2: massive install base that hasn't upgraded for a long long time.

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Speaker 3: Done.

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Speaker 2: We have to start questioning whether they have a will

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Speaker 2: and whether the real risk here is they might actually

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Speaker 2: go and buy a different phone from someone else.

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Speaker 4: Look, we've talked about that.

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Speaker 9: That's what we've been so I think, you know, strong

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Speaker 9: in our view, like the clock struck midnight in terms

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Speaker 9: of them needing to now goes back to AI because

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Speaker 9: when you talking about monization and what keeps people in

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Speaker 9: the ecosystem and what really is the golden goods for

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Speaker 9: mines comes down to AI and reality is every Apple

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Speaker 9: event the last few years, I feel like Michael J.

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Speaker 4: Fox back to the future, you know, and.

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Speaker 9: That's been a big part of the problem relative to

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Speaker 9: the rest of tech when it comes embracing AI.

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Speaker 1: The install based is sick of waiting.

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Speaker 6: That is sort of a worry that a lot of

443
00:22:50,840 --> 00:22:53,160
Speaker 6: people have in Samsung right now. And Google are out

444
00:22:53,160 --> 00:22:55,560
Speaker 6: there trying to troll everybody who's been waiting for something

445
00:22:55,600 --> 00:22:56,480
Speaker 6: new and saying.

446
00:22:56,240 --> 00:22:57,560
Speaker 1: Ha ha, look ours fold.

447
00:22:58,160 --> 00:23:00,960
Speaker 6: There's a question about, especially if they're getting a heads

448
00:23:01,040 --> 00:23:03,119
Speaker 6: up or if they're getting a head start on the

449
00:23:03,200 --> 00:23:06,960
Speaker 6: AI development of whether they install base starts to leave.

450
00:23:07,160 --> 00:23:09,119
Speaker 1: Aren't we starting to see signs? If that doesn't that

451
00:23:09,240 --> 00:23:09,840
Speaker 1: worry you.

452
00:23:09,960 --> 00:23:10,800
Speaker 4: Look, I think it is.

453
00:23:11,480 --> 00:23:13,960
Speaker 9: It's probably the stickiest install based out there right in

454
00:23:14,040 --> 00:23:17,360
Speaker 9: terms of just when you think about Apple and customers

455
00:23:17,600 --> 00:23:20,840
Speaker 9: that really don't leave. I think the worry is really

456
00:23:20,840 --> 00:23:23,960
Speaker 9: around the monization, and that's why we've said, like okay,

457
00:23:24,000 --> 00:23:27,119
Speaker 9: perplexity was really more to see what happened with Google

458
00:23:27,160 --> 00:23:29,040
Speaker 9: once DOJ Once they had that victory.

459
00:23:29,320 --> 00:23:31,080
Speaker 4: Now I think they walk down the aisle.

460
00:23:30,840 --> 00:23:33,760
Speaker 9: From some sort of major partnership from a Gemini perspective,

461
00:23:34,080 --> 00:23:36,400
Speaker 9: but I think this is Look, this is a critical

462
00:23:36,520 --> 00:23:40,000
Speaker 9: time next six to nine months for Apple to make

463
00:23:40,040 --> 00:23:42,560
Speaker 9: sure you have the AI strategy, you don't lose customers,

464
00:23:42,560 --> 00:23:44,639
Speaker 9: you have an upgrade cycle that you know right now

465
00:23:44,640 --> 00:23:46,639
Speaker 9: in New York City cab drivers, Barish and Apple. So

466
00:23:46,680 --> 00:23:49,680
Speaker 9: I think that sets up pretty positive relative there. But

467
00:23:49,840 --> 00:23:52,879
Speaker 9: it comes down to AI innovation. This is a very

468
00:23:52,920 --> 00:23:55,480
Speaker 9: chance to me playing Ryder Cup bes Page and that

469
00:23:55,800 --> 00:23:59,920
Speaker 9: happening inside of Apple, it has come externally.

470
00:24:00,280 --> 00:24:03,359
Speaker 8: Dan, you mentioned Tim Cook playing nice in the sandbox

471
00:24:03,359 --> 00:24:05,240
Speaker 8: with Donald Trump. Should he go on the state visit

472
00:24:05,320 --> 00:24:07,679
Speaker 8: next week when Trump's bringing a bunch of tech executives

473
00:24:07,720 --> 00:24:08,800
Speaker 8: like Jensen Wang.

474
00:24:08,960 --> 00:24:11,440
Speaker 9: I think you get on that plane because I mean,

475
00:24:11,480 --> 00:24:13,679
Speaker 9: you know, you know it so well. It's like he

476
00:24:13,720 --> 00:24:16,600
Speaker 9: obviously got called out in terms of Middle East. To

477
00:24:16,680 --> 00:24:19,280
Speaker 9: the right, you have really the new Trust their advisor

478
00:24:19,280 --> 00:24:21,159
Speaker 9: wearing the black leather jack of Jens And I mean

479
00:24:21,240 --> 00:24:23,200
Speaker 9: Cook needs to make sure he's not on the outside

480
00:24:23,480 --> 00:24:26,080
Speaker 9: looking in. And that's why that you know, what we

481
00:24:26,119 --> 00:24:28,800
Speaker 9: saw last week in DC was also an important moment.

482
00:24:28,520 --> 00:24:31,119
Speaker 8: Too when you say that he's playing nice in the

483
00:24:31,119 --> 00:24:34,520
Speaker 8: sandbox when Lisa was asking about pricing of iPhones. He's

484
00:24:34,560 --> 00:24:36,879
Speaker 8: constrained you think by the White House and audience are one.

485
00:24:37,080 --> 00:24:39,000
Speaker 8: You think he's constrained by where the consumers are right

486
00:24:39,040 --> 00:24:40,400
Speaker 8: now and has to meet them where they are.

487
00:24:40,640 --> 00:24:41,800
Speaker 4: Yeah, I think it's a combo.

488
00:24:41,880 --> 00:24:44,520
Speaker 9: But I think the reality too is that raising prices

489
00:24:44,600 --> 00:24:46,280
Speaker 9: definitely is not the right thing to do from a

490
00:24:46,280 --> 00:24:47,280
Speaker 9: consumer perspective.

491
00:24:47,640 --> 00:24:48,320
Speaker 4: But when it comes to.

492
00:24:48,400 --> 00:24:51,960
Speaker 9: Tariffs, that's also where like the India, they're essentially doing

493
00:24:51,960 --> 00:24:54,480
Speaker 9: a dance around right when it comes to India and

494
00:24:54,600 --> 00:24:59,199
Speaker 9: China tariff exemptions. Obviously, he's significantly investing in the US,

495
00:24:59,400 --> 00:25:02,640
Speaker 9: but we've talked about like it's a fairy tale that

496
00:25:02,680 --> 00:25:05,800
Speaker 9: they'll ever make iPhone pros.

497
00:25:06,480 --> 00:25:07,159
Speaker 4: In the US.

498
00:25:07,640 --> 00:25:10,040
Speaker 9: Again, it goes back to like if you like three

499
00:25:10,080 --> 00:25:12,760
Speaker 9: thousand dollars iPhones, we should make them New Jersey. So

500
00:25:12,880 --> 00:25:15,199
Speaker 9: I just think that that's going to continue to be

501
00:25:15,440 --> 00:25:17,840
Speaker 9: something that's in Asia despite off to a lot of

502
00:25:17,840 --> 00:25:19,560
Speaker 9: the investments from an AI perspective.

503
00:25:19,560 --> 00:25:20,000
Speaker 4: In the US.

504
00:25:20,040 --> 00:25:22,400
Speaker 2: You're a published guy. Let's just finish on already pick

505
00:25:22,480 --> 00:25:26,120
Speaker 2: nine this morning, Oracle and twenty five. But the dollar

506
00:25:26,119 --> 00:25:28,119
Speaker 2: plus a market camp could be added to this company,

507
00:25:28,160 --> 00:25:30,480
Speaker 2: like thround this morning, we're high up by thirty two

508
00:25:30,480 --> 00:25:31,840
Speaker 2: percent in the pre market.

509
00:25:32,119 --> 00:25:32,959
Speaker 5: What do you make of this month?

510
00:25:33,119 --> 00:25:33,639
Speaker 4: I mean it's a.

511
00:25:33,720 --> 00:25:36,679
Speaker 9: Drop the mic from Saffra and Ellison, right, because the

512
00:25:36,760 --> 00:25:40,040
Speaker 9: reality is that it shows this AI revolution, you know,

513
00:25:40,040 --> 00:25:44,399
Speaker 9: as much of the haters and the skeptic you could. No, no, no, no,

514
00:25:44,560 --> 00:25:47,680
Speaker 9: I'm saying, dude, you're dude, you're a big supporter. I'm saying,

515
00:25:47,720 --> 00:25:50,080
Speaker 9: like but Li said, I think, but I think the

516
00:25:50,119 --> 00:25:53,520
Speaker 9: reality is that many they are is skeptical of maybe like.

517
00:25:53,640 --> 00:25:54,439
Speaker 4: Some of the growth.

518
00:25:54,800 --> 00:25:58,360
Speaker 9: You look at these numbers, that arr number, that that's

519
00:25:58,400 --> 00:25:59,879
Speaker 9: a drop to mic and I think with that sho

520
00:26:00,400 --> 00:26:03,000
Speaker 9: the rest of tech, the rest of a That's what.

521
00:26:03,080 --> 00:26:03,800
Speaker 4: We continue to say.

522
00:26:03,840 --> 00:26:07,160
Speaker 9: It's ten fifteen and the AI party was nine pm,

523
00:26:07,400 --> 00:26:09,000
Speaker 9: and that party goes to four am.

524
00:26:09,160 --> 00:26:11,479
Speaker 2: It's an outfit worthy of the SNCK move. It's going

525
00:26:11,520 --> 00:26:13,959
Speaker 2: to see it. Thanks, Do I appreciate it, sir. I've

526
00:26:14,000 --> 00:26:16,879
Speaker 2: got a distance to play, Beth Page, you never know

527
00:26:17,119 --> 00:26:17,440
Speaker 2: more of.

528
00:26:17,359 --> 00:26:19,480
Speaker 4: A short game. I don't have. I don't have Pharaoh's

529
00:26:19,520 --> 00:26:20,800
Speaker 4: long long.

530
00:26:21,520 --> 00:26:23,480
Speaker 2: I wish I had that kind of distant exactly like

531
00:26:23,600 --> 00:26:25,840
Speaker 2: Mcarroy three fifty kind of stuff.

532
00:26:25,520 --> 00:26:29,640
Speaker 9: Exactly book Bethpage Black that that tests the distance.

533
00:26:29,760 --> 00:26:30,800
Speaker 5: I'm very pro America.

534
00:26:30,880 --> 00:26:32,359
Speaker 2: That's gonna be like a few days that I'm going

535
00:26:32,400 --> 00:26:35,920
Speaker 2: to be very pro Europe on this program. Oh but

536
00:26:36,080 --> 00:26:38,160
Speaker 2: I's just you're gonna have to let it go, of course,

537
00:26:38,240 --> 00:26:38,840
Speaker 2: give me some space.

538
00:26:38,960 --> 00:26:41,880
Speaker 9: But again Europe doesn't have a guy named.

539
00:26:41,640 --> 00:26:43,920
Speaker 5: Scarley stay with us.

540
00:26:44,240 --> 00:26:57,440
Speaker 2: Marblinderg surveillance coming up after this. Seth competor of Mark

541
00:26:57,480 --> 00:26:58,520
Speaker 2: and Stanley Seth, good.

542
00:26:58,359 --> 00:26:59,720
Speaker 5: Morning, it's good to see it, great to be here.

543
00:26:59,760 --> 00:27:01,359
Speaker 2: Thank you. I want to give you some time before

544
00:27:01,359 --> 00:27:03,600
Speaker 2: we get into this data point to flesh out how

545
00:27:03,640 --> 00:27:05,399
Speaker 2: you view the world right now. So I've been following

546
00:27:05,400 --> 00:27:07,720
Speaker 2: your research and certainly you and the team consider what

547
00:27:07,800 --> 00:27:10,359
Speaker 2: took place on April second and the months after that

548
00:27:10,800 --> 00:27:12,920
Speaker 2: not as an event but as a process. And we've

549
00:27:12,920 --> 00:27:14,240
Speaker 2: got to wait to let this play out in the

550
00:27:14,280 --> 00:27:16,159
Speaker 2: coming months. Just flesh that out for us. How you're

551
00:27:16,160 --> 00:27:18,159
Speaker 2: thinking about the world with regards the teriffs and a

552
00:27:18,200 --> 00:27:19,360
Speaker 2: pass through to end inflation.

553
00:27:19,600 --> 00:27:21,359
Speaker 10: Yeah, no, I think that's a key question. And I

554
00:27:21,400 --> 00:27:23,960
Speaker 10: do get the sense talking to lots of investors around

555
00:27:24,000 --> 00:27:27,080
Speaker 10: the world that people feel like we've seen seen tariffs,

556
00:27:27,160 --> 00:27:29,320
Speaker 10: we've seen sort of how high they could go, we've

557
00:27:29,320 --> 00:27:32,040
Speaker 10: seen the retlacement. We get it. Now let's move on

558
00:27:32,119 --> 00:27:34,480
Speaker 10: and look at what's next. And I'm not sure we

559
00:27:34,520 --> 00:27:39,600
Speaker 10: can quite move that quickly. Evidence we have from twenty

560
00:27:39,640 --> 00:27:42,439
Speaker 10: eighteen to twenty nineteen. Evidence we have now this round

561
00:27:42,960 --> 00:27:45,720
Speaker 10: is that it takes three four months before you really

562
00:27:45,760 --> 00:27:48,440
Speaker 10: start to see the effect of the tariffs show through

563
00:27:48,960 --> 00:27:53,520
Speaker 10: to consumer prices. The last two cbi prints, in fact,

564
00:27:53,520 --> 00:27:57,200
Speaker 10: we were able to get evidence that in at least

565
00:27:57,200 --> 00:27:59,719
Speaker 10: the core consumer goods components where we expect to see it,

566
00:28:00,080 --> 00:28:02,760
Speaker 10: are starting to see an initial pickup. It's not crazy.

567
00:28:02,840 --> 00:28:04,880
Speaker 10: It's not the inflation that we saw a few years ago,

568
00:28:04,920 --> 00:28:08,000
Speaker 10: but it's moving up for sure. I think the tricky

569
00:28:08,040 --> 00:28:10,679
Speaker 10: part here is going to be the tariffs were much

570
00:28:10,720 --> 00:28:13,600
Speaker 10: broader than what we saw in twenty eighteen, so trade

571
00:28:13,600 --> 00:28:15,800
Speaker 10: diversion is going to be harder. On the other hand,

572
00:28:15,960 --> 00:28:19,600
Speaker 10: there's a lot more negotiation back and forth, So how

573
00:28:19,640 --> 00:28:22,880
Speaker 10: many industries are going to be gaming absorb it for now,

574
00:28:23,080 --> 00:28:26,160
Speaker 10: pass it on later? And I think that uncertainty is critical.

575
00:28:26,760 --> 00:28:28,880
Speaker 10: I think we still have a lot of additional inflation

576
00:28:28,920 --> 00:28:31,240
Speaker 10: from tariffs in front of us. And then what we

577
00:28:31,280 --> 00:28:34,320
Speaker 10: can't forget as well is that tariffs hurt economic growth

578
00:28:34,359 --> 00:28:37,080
Speaker 10: as well. In twenty eighteen, the evidence was six, seven, eight,

579
00:28:37,240 --> 00:28:40,280
Speaker 10: nine months of a lag. We're just coming up on

580
00:28:40,320 --> 00:28:43,680
Speaker 10: that in the fourth quarter and then into next year.

581
00:28:44,720 --> 00:28:46,760
Speaker 10: Take the imports from China. Two thirds of what we

582
00:28:46,800 --> 00:28:50,440
Speaker 10: import from China are either capital goods or intermedia goods

583
00:28:50,680 --> 00:28:52,760
Speaker 10: that go into manufacturing in the US. So the tariffs

584
00:28:52,800 --> 00:28:56,240
Speaker 10: are at tax on domestic capex and attacks on domestic manufacturing.

585
00:28:56,800 --> 00:28:59,160
Speaker 10: The tax provision helped on the capex side of things

586
00:28:59,160 --> 00:29:01,120
Speaker 10: to some degree. A tariff are going in the opposite direction.

587
00:29:01,760 --> 00:29:03,600
Speaker 10: Where's the net? How are things going to work out?

588
00:29:03,600 --> 00:29:05,720
Speaker 10: I think these are the reasons why no one should

589
00:29:05,720 --> 00:29:08,160
Speaker 10: feel like they have the whole picture already clear in

590
00:29:08,160 --> 00:29:08,520
Speaker 10: their head.

591
00:29:08,640 --> 00:29:10,960
Speaker 6: Yeah, well, what you just describe sounds a lot like stagflation,

592
00:29:10,960 --> 00:29:12,800
Speaker 6: which no one should feel too happy about. It's always

593
00:29:12,840 --> 00:29:14,880
Speaker 6: kind of a disaster, at least tagflation light, as some

594
00:29:14,880 --> 00:29:16,400
Speaker 6: people have been describing it as.

595
00:29:16,760 --> 00:29:18,360
Speaker 1: Do you disagree with fed Shair J.

596
00:29:18,520 --> 00:29:21,600
Speaker 6: Powell who said that any kind of inflationary pressure from

597
00:29:21,680 --> 00:29:24,120
Speaker 6: tariff's will be a one time price adjustment, and that

598
00:29:24,240 --> 00:29:26,440
Speaker 6: is the reason why this central bank seems to be

599
00:29:26,440 --> 00:29:28,680
Speaker 6: placing a greater emphasis on the slow on that you're

600
00:29:28,680 --> 00:29:31,440
Speaker 6: talking about, or as we saw yesterday, some of the

601
00:29:31,520 --> 00:29:34,560
Speaker 6: revisions and just the labor market lack of momentum that

602
00:29:34,600 --> 00:29:35,120
Speaker 6: we've seen.

603
00:29:35,640 --> 00:29:38,600
Speaker 10: Well, I think as a baseline forecast and we have

604
00:29:38,640 --> 00:29:41,200
Speaker 10: to make our baseline forecast. The answer to that is yeah,

605
00:29:41,240 --> 00:29:43,480
Speaker 10: the most likely outcome is that teriffs will lead to

606
00:29:43,520 --> 00:29:45,800
Speaker 10: a one time increase in the price level, which means

607
00:29:45,800 --> 00:29:48,960
Speaker 10: that the inflationary effect, the percentage change in prices will

608
00:29:48,960 --> 00:29:50,840
Speaker 10: be temporary. I think that's a really great place to

609
00:29:50,880 --> 00:29:53,720
Speaker 10: start a forecast. That's where our forecast is. That's not

610
00:29:53,960 --> 00:29:56,320
Speaker 10: the only game that the FED has to play. They

611
00:29:56,360 --> 00:29:58,400
Speaker 10: also have to ask, well, what if we are wrong

612
00:29:58,600 --> 00:30:02,160
Speaker 10: about our forecast when things turn out differently than our baseline.

613
00:30:02,760 --> 00:30:05,160
Speaker 10: And in particular, the last time we saw tariffs and

614
00:30:05,240 --> 00:30:07,840
Speaker 10: it was temporary, we had the biggest problem for the

615
00:30:07,880 --> 00:30:10,200
Speaker 10: FED was too low inflation, not too high inflation. Here

616
00:30:10,240 --> 00:30:13,400
Speaker 10: we are over four years into inflation being above the

617
00:30:13,400 --> 00:30:15,960
Speaker 10: fed's target for a long time. Businesses are kind of

618
00:30:15,960 --> 00:30:19,000
Speaker 10: getting used to inflation being high. Consumers might be getting

619
00:30:19,040 --> 00:30:20,920
Speaker 10: used to inflation being high. They might be getting sick

620
00:30:20,920 --> 00:30:23,800
Speaker 10: of it, But they also might put less effort into thinking,

621
00:30:23,840 --> 00:30:25,640
Speaker 10: oh my god, do I have to go look somewhere

622
00:30:25,640 --> 00:30:28,560
Speaker 10: else for an additional lower price because now everything is

623
00:30:28,680 --> 00:30:31,560
Speaker 10: just more expensive. So I think there's a risk that

624
00:30:31,800 --> 00:30:34,040
Speaker 10: the inflationary impulse is longer this time.

625
00:30:34,280 --> 00:30:35,160
Speaker 4: Gets more embedded.

626
00:30:35,680 --> 00:30:38,560
Speaker 10: And let's not forget in the services component of things,

627
00:30:38,560 --> 00:30:41,960
Speaker 10: we have now labor restriction going on because of immigration.

628
00:30:42,040 --> 00:30:46,080
Speaker 10: We talked about the revisions to the labor market. Job

629
00:30:46,120 --> 00:30:48,400
Speaker 10: creation was less than people thought. Job creation has come

630
00:30:48,440 --> 00:30:52,040
Speaker 10: down a great deal. The unemployment rate four point three percent.

631
00:30:52,840 --> 00:30:54,760
Speaker 10: I'm old enough to remember when four point three percent

632
00:30:54,840 --> 00:30:57,680
Speaker 10: was actually pretty good, and it's bowed unchanged. It's only

633
00:30:57,760 --> 00:30:59,720
Speaker 10: up a little bit from a year ago. That to

634
00:30:59,760 --> 00:31:01,920
Speaker 10: me says is that the labor supply side of things

635
00:31:01,920 --> 00:31:04,200
Speaker 10: has also come down a lot. And so then the

636
00:31:04,280 --> 00:31:07,760
Speaker 10: question becomes, how do the services industry, especially the ones

637
00:31:07,760 --> 00:31:10,080
Speaker 10: who might find themselves constrained for labor, How does that

638
00:31:10,120 --> 00:31:11,000
Speaker 10: show through in prices?

639
00:31:11,080 --> 00:31:12,800
Speaker 6: So that brings us to the data that we get today,

640
00:31:13,000 --> 00:31:15,400
Speaker 6: which shows that inflation really isn't as big of a

641
00:31:15,400 --> 00:31:17,880
Speaker 6: concern as some people expected. When it comes to producer prices.

642
00:31:17,880 --> 00:31:20,920
Speaker 6: We'll see what CPI has to say. Some people are

643
00:31:20,920 --> 00:31:23,160
Speaker 6: calling for the FED to cut in a more significant

644
00:31:23,200 --> 00:31:25,800
Speaker 6: way next week, maybe even fifty basis points. Do you

645
00:31:25,800 --> 00:31:27,320
Speaker 6: think that if they were to do story even seventy

646
00:31:27,360 --> 00:31:30,520
Speaker 6: five basis points, it's catered to that bloomberpose subscriber do

647
00:31:30,560 --> 00:31:33,440
Speaker 6: you think that that would actually ignite the risk of

648
00:31:33,440 --> 00:31:35,760
Speaker 6: inflation over the medium term, or do you think that

649
00:31:35,840 --> 00:31:36,640
Speaker 6: would be appropriate.

650
00:31:37,680 --> 00:31:40,440
Speaker 10: So I think the risk is that it would be

651
00:31:40,520 --> 00:31:43,760
Speaker 10: premature to cut seventy five basis points for sure, and

652
00:31:44,120 --> 00:31:47,040
Speaker 10: even fifty basis points. I don't know from my judgment

653
00:31:47,360 --> 00:31:51,000
Speaker 10: that it balances the risk between slow growth and inflation.

654
00:31:51,800 --> 00:31:53,000
Speaker 4: Now this is flash.

655
00:31:53,000 --> 00:31:53,880
Speaker 5: I am not the chair of.

656
00:31:53,880 --> 00:31:56,000
Speaker 10: The Fed is so my opinion is much less important.

657
00:31:56,080 --> 00:31:57,680
Speaker 1: Yet I hear that you could be in the running.

658
00:31:59,520 --> 00:32:02,040
Speaker 10: So the way I think about it is they've got

659
00:32:02,080 --> 00:32:06,840
Speaker 10: a dual mandate full employment maximustainable employment, i e. How

660
00:32:06,880 --> 00:32:09,120
Speaker 10: close is the unemployment rate to what they perceive to

661
00:32:09,160 --> 00:32:11,000
Speaker 10: be full employment, which they've told us is four point

662
00:32:11,040 --> 00:32:14,480
Speaker 10: two percent, and stable prices, which they've defined as two percent.

663
00:32:14,520 --> 00:32:14,960
Speaker 4: Inflation.

664
00:32:15,200 --> 00:32:19,440
Speaker 10: Inflation's above target. Inflation's rising, it's not skyrocketing, but it's

665
00:32:19,480 --> 00:32:22,120
Speaker 10: going up. Tomorrow's CPI is going to be really important

666
00:32:22,120 --> 00:32:25,840
Speaker 10: for the consumer goods side of things. So where is

667
00:32:26,000 --> 00:32:28,160
Speaker 10: that balance of risks? I think that's really the question.

668
00:32:28,160 --> 00:32:30,120
Speaker 10: What char Powell told us that Jackson Hole was he

669
00:32:30,200 --> 00:32:32,680
Speaker 10: changed his mind a bit and said, you know what,

670
00:32:33,560 --> 00:32:36,240
Speaker 10: now we're going to lean more on the risk of

671
00:32:36,960 --> 00:32:40,640
Speaker 10: employment getting weaker and accept a little bit more risk

672
00:32:40,680 --> 00:32:45,240
Speaker 10: on inflation going higher. At the prior FMC press conference,

673
00:32:45,240 --> 00:32:47,160
Speaker 10: so he kind of had said, let's look at the

674
00:32:47,200 --> 00:32:50,280
Speaker 10: unemployment rate. You know, you could imagine payrolls coming down

675
00:32:50,320 --> 00:32:52,680
Speaker 10: a lot as long as the unemployment rate is stable.

676
00:32:52,960 --> 00:32:56,160
Speaker 10: That's what full employment, maximum sustainable employment is really about.

677
00:32:56,200 --> 00:32:58,200
Speaker 10: So there has been a little bit of a change

678
00:32:58,200 --> 00:33:02,400
Speaker 10: in that risk adjustment. Can't There's no black and white.

679
00:33:02,480 --> 00:33:04,880
Speaker 10: He's clearly wrong, He's clearly right. This is a very

680
00:33:05,040 --> 00:33:08,640
Speaker 10: very difficult situation for the Fed. There two variables that

681
00:33:08,680 --> 00:33:11,920
Speaker 10: they have mandates for are kind of going in opposite directions.

682
00:33:12,040 --> 00:33:14,560
Speaker 10: That is the most difficult situation for a central banker.

683
00:33:14,600 --> 00:33:17,160
Speaker 8: Well, he went full Waller basically at Jackson Hole. But

684
00:33:17,200 --> 00:33:19,360
Speaker 8: to John's point, all morning, if they had had this

685
00:33:19,480 --> 00:33:22,360
Speaker 8: information in terms of actually where the economy was, the

686
00:33:22,440 --> 00:33:25,240
Speaker 8: labor market was, do you think they should have been cutting?

687
00:33:25,320 --> 00:33:26,840
Speaker 8: Wouldn't they have been cutting sooner?

688
00:33:27,680 --> 00:33:30,160
Speaker 10: I mean, I think there's clearly the argument that they

689
00:33:30,240 --> 00:33:33,480
Speaker 10: might have been cutting sooner given where Powell is now,

690
00:33:34,080 --> 00:33:37,600
Speaker 10: given his remarks at Jackson Hole, given his remarks though

691
00:33:37,640 --> 00:33:40,760
Speaker 10: at the July press conference that the unemployment rate, which

692
00:33:40,800 --> 00:33:45,360
Speaker 10: is saying, how is labor demand doing relative to labor supply.

693
00:33:45,920 --> 00:33:48,600
Speaker 10: It's much less obvious that they're anywhere near as far

694
00:33:48,640 --> 00:33:51,800
Speaker 10: behind the curve as you would infer just from a

695
00:33:51,840 --> 00:33:53,800
Speaker 10: read on the non farm payrolls print. So this is

696
00:33:53,840 --> 00:33:58,200
Speaker 10: an extraordinarily difficult, nuanced, tricky situation. It is the time

697
00:33:58,240 --> 00:34:00,360
Speaker 10: where it's both great to be an economy because we

698
00:34:00,360 --> 00:34:02,000
Speaker 10: get to go into details, and it's terrible to be

699
00:34:02,000 --> 00:34:03,360
Speaker 10: an economist because nobody.

700
00:34:03,080 --> 00:34:05,760
Speaker 5: Wants to hear it. Well, actually, what do they tell you?

701
00:34:05,760 --> 00:34:06,360
Speaker 5: A matter a lot.

702
00:34:07,200 --> 00:34:10,719
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703
00:34:10,760 --> 00:34:14,080
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00:34:14,120 --> 00:34:17,080
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00:34:17,200 --> 00:34:20,960
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706
00:34:21,120 --> 00:34:23,320
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