1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,760 Speaker 2: Terminal and the Bloomberg Business app. Geita Goberenath has been 10 00:00:37,800 --> 00:00:40,879 Speaker 2: Deputy Managing Director of the International Monetary Fund during one 11 00:00:40,880 --> 00:00:44,000 Speaker 2: of the most transformative economic periods in modern history, including 12 00:00:44,000 --> 00:00:47,040 Speaker 2: the pandemic, inflation, shock, and the push to de globalites. 13 00:00:47,120 --> 00:00:49,479 Speaker 2: After seven years at the IMF, she's stepping down tomorrow 14 00:00:49,680 --> 00:00:52,920 Speaker 2: and joins us now for a final conversation. Geita, welcome 15 00:00:52,960 --> 00:00:55,120 Speaker 2: back to Bloomberg Surveillance and thank you for sharing your 16 00:00:55,120 --> 00:00:57,920 Speaker 2: time with us this morning. Let's start there. Let's look 17 00:00:57,920 --> 00:01:00,480 Speaker 2: at your time at the International Monagery Fund. How much 18 00:01:00,520 --> 00:01:03,400 Speaker 2: has changed over almost a decade. 19 00:01:04,720 --> 00:01:06,080 Speaker 3: Hi, and the pleasure to join you. 20 00:01:06,720 --> 00:01:07,280 Speaker 4: Pretty much. 21 00:01:07,280 --> 00:01:11,440 Speaker 3: I think everything has changed. I started at the IMF 22 00:01:11,520 --> 00:01:14,640 Speaker 3: in twenty nineteen and that feels like that was the 23 00:01:14,760 --> 00:01:17,319 Speaker 3: calm before the storm, and you had the pandemic, you 24 00:01:17,440 --> 00:01:21,200 Speaker 3: had war in Ukraine, and now geoeconomic fragmentation. I think 25 00:01:21,240 --> 00:01:25,520 Speaker 3: the global economic order is transforming in ways we haven't 26 00:01:25,520 --> 00:01:29,800 Speaker 3: seen in decades, and it's still highly unclear where the 27 00:01:29,880 --> 00:01:33,560 Speaker 3: global economy will settle. I think the second big difference 28 00:01:33,640 --> 00:01:36,840 Speaker 3: between twenty nineteen and now is on the fiscal front. 29 00:01:36,959 --> 00:01:40,520 Speaker 3: Death levels are incredibly high, they are ever increasing, and 30 00:01:40,560 --> 00:01:42,480 Speaker 3: while in the past you might have said, so what 31 00:01:42,760 --> 00:01:45,679 Speaker 3: markets will take it, that's not the case anymore, even 32 00:01:45,680 --> 00:01:48,360 Speaker 3: in advanced economies. You see that in France, the UK, 33 00:01:48,520 --> 00:01:50,880 Speaker 3: and also in terms of long eels in the US. 34 00:01:51,280 --> 00:01:54,280 Speaker 3: And I say that third big change is on technology. 35 00:01:54,600 --> 00:01:57,560 Speaker 3: AI over the last few years has certainly cut the 36 00:01:57,600 --> 00:02:00,960 Speaker 3: imagination of everybody, huge promise, the huge risks. 37 00:02:01,440 --> 00:02:04,040 Speaker 5: How has the IMF's for all changed during this period, 38 00:02:04,120 --> 00:02:07,480 Speaker 5: given that it was set up under a very different 39 00:02:07,520 --> 00:02:09,200 Speaker 5: infrastructure at a time, and a lot of people are 40 00:02:09,240 --> 00:02:12,359 Speaker 5: saying we're now in the post Bretton Woods era. 41 00:02:14,280 --> 00:02:19,720 Speaker 3: The IMF has great experience dealing with turbulence. You know, 42 00:02:19,760 --> 00:02:21,480 Speaker 3: there was a period when you had the end of 43 00:02:21,520 --> 00:02:26,160 Speaker 3: Breton Woods going off the fixed exchange rate to the 44 00:02:26,240 --> 00:02:30,000 Speaker 3: dollar and the dollars to gold. That change happened and 45 00:02:30,120 --> 00:02:33,440 Speaker 3: the IMF adapted, and we are obviously now in a 46 00:02:33,480 --> 00:02:36,680 Speaker 3: world with big shifts in terms of how countries work 47 00:02:36,760 --> 00:02:40,600 Speaker 3: with each other. The IMF has always functioned as trying 48 00:02:40,639 --> 00:02:42,839 Speaker 3: to do the art of the possible, which is due 49 00:02:43,000 --> 00:02:45,320 Speaker 3: the best you can given the constraints, and done it 50 00:02:45,440 --> 00:02:48,440 Speaker 3: very successfully. So if ever there was a time for 51 00:02:48,480 --> 00:02:52,639 Speaker 3: this institution, it's super important now. It has the ability 52 00:02:52,680 --> 00:02:56,320 Speaker 3: to bring different countries together around the table, good discussions 53 00:02:56,320 --> 00:02:59,760 Speaker 3: to happen on the in the economy, on the outlook. Again, 54 00:03:00,200 --> 00:03:02,080 Speaker 3: very vital institution for the world. 55 00:03:02,280 --> 00:03:04,320 Speaker 5: Do you see a risk that it doesn't survive though 56 00:03:04,400 --> 00:03:07,799 Speaker 5: at a time when funding is really in question, it's 57 00:03:07,800 --> 00:03:10,880 Speaker 5: a lot of major economies. We've seen China go it alone. 58 00:03:10,960 --> 00:03:12,960 Speaker 5: There have been questions about the United States. 59 00:03:14,840 --> 00:03:18,720 Speaker 3: Firstly, the IMFs funding structure doesn't rely on any budgetary 60 00:03:18,720 --> 00:03:22,000 Speaker 3: support from any country, so it's in a very strong 61 00:03:22,080 --> 00:03:25,880 Speaker 3: place because of that, and everything we've seen so far 62 00:03:26,280 --> 00:03:31,120 Speaker 3: points to all the members wanting the IMF to continue functioning. 63 00:03:30,680 --> 00:03:31,320 Speaker 1: As it has. 64 00:03:31,480 --> 00:03:35,600 Speaker 3: We work very closely with the US administration. That engagement 65 00:03:35,680 --> 00:03:39,360 Speaker 3: is going extremely well, but also the other one hundred 66 00:03:39,360 --> 00:03:43,240 Speaker 3: and ninety member countries that we have so as of now, 67 00:03:43,880 --> 00:03:46,360 Speaker 3: lots of support. Of course, the environment has changed and 68 00:03:46,400 --> 00:03:48,400 Speaker 3: the IMF is going to adapt to it in this 69 00:03:48,440 --> 00:03:51,360 Speaker 3: new geopolitical environment that we have, but it has a 70 00:03:51,400 --> 00:03:53,760 Speaker 3: lot of experience dealing with these kinds of events. 71 00:03:53,960 --> 00:03:56,040 Speaker 5: One thing that you've done during your tenure at the 72 00:03:56,080 --> 00:03:59,120 Speaker 5: IMF is really study the change in the geopolitical relationship. 73 00:03:59,120 --> 00:04:02,040 Speaker 5: You've talked a lot about that, including the reliance on 74 00:04:02,080 --> 00:04:04,320 Speaker 5: the dollar, and that's been a point of big speculation 75 00:04:04,480 --> 00:04:07,680 Speaker 5: of late in markets as well. How much you actually 76 00:04:07,760 --> 00:04:12,800 Speaker 5: seeing worldwide nations try to shift to alternatives from the 77 00:04:12,840 --> 00:04:15,760 Speaker 5: green back, this idea of insulating themselves from some of 78 00:04:15,800 --> 00:04:18,239 Speaker 5: the policy uncertainty that have made a lot of headlines 79 00:04:18,240 --> 00:04:18,599 Speaker 5: this year. 80 00:04:20,640 --> 00:04:24,240 Speaker 3: So we do see small shifts on the margin, right 81 00:04:24,320 --> 00:04:27,960 Speaker 3: We are seeing countries diversifying out of the US, but 82 00:04:28,040 --> 00:04:31,520 Speaker 3: again on the margin, because they were so exposed to 83 00:04:31,560 --> 00:04:33,800 Speaker 3: the US, several of them are hedging against a dollar risk. 84 00:04:33,839 --> 00:04:34,760 Speaker 1: We're seeing some of that. 85 00:04:34,720 --> 00:04:37,800 Speaker 3: Too, But I think the narrative that somehow something is 86 00:04:37,880 --> 00:04:40,520 Speaker 3: dramatically changed about the behavior of the dollar. 87 00:04:40,720 --> 00:04:43,760 Speaker 1: It's really too early. People point to the correlation. 88 00:04:43,440 --> 00:04:46,960 Speaker 3: Between what's happening with long term bond eels and the 89 00:04:47,000 --> 00:04:49,159 Speaker 3: strength of the dollar and saying, well, that's changed, and 90 00:04:49,200 --> 00:04:50,719 Speaker 3: therefore something has changed dramatically. 91 00:04:50,800 --> 00:04:51,520 Speaker 6: That's not the case. 92 00:04:51,520 --> 00:04:55,040 Speaker 3: We take long enough period, the relationship between the dollar 93 00:04:55,320 --> 00:04:58,479 Speaker 3: and borrowing costs is you know, it can move in 94 00:04:58,520 --> 00:05:01,720 Speaker 3: different ways. So there's nothing unpre idented. But of course 95 00:05:01,800 --> 00:05:04,720 Speaker 3: these are still early days. We shall see where all 96 00:05:04,800 --> 00:05:08,159 Speaker 3: of the shifts in the global economic order are headed. 97 00:05:08,240 --> 00:05:10,880 Speaker 3: And I think that's the source of tremendous uncertainty that's 98 00:05:10,880 --> 00:05:12,280 Speaker 3: still weighing on the world economy. 99 00:05:12,320 --> 00:05:15,400 Speaker 5: How much has any perceived loss of FED independence changed that? 100 00:05:15,720 --> 00:05:18,520 Speaker 5: And we've been talking about how there's this dissonance between 101 00:05:18,839 --> 00:05:23,159 Speaker 5: the commentary by a lot of analysts and economists about 102 00:05:23,200 --> 00:05:25,520 Speaker 5: the fear of some sort of loss of independence and 103 00:05:25,520 --> 00:05:27,280 Speaker 5: then a lack of market reaction that you would kind 104 00:05:27,279 --> 00:05:29,360 Speaker 5: of expect on the other side. Are you seeing any 105 00:05:29,480 --> 00:05:31,799 Speaker 5: shifts that maybe are less visible. 106 00:05:34,200 --> 00:05:37,480 Speaker 3: I think everybody agrees on this, would be markets and 107 00:05:38,360 --> 00:05:44,000 Speaker 3: economic professionals, policymakers. Everybody agrees that central bank independence is critical. 108 00:05:44,040 --> 00:05:47,280 Speaker 3: One tree policy independence is critical. So if we are 109 00:05:47,320 --> 00:05:50,040 Speaker 3: not seeing much market reaction, it must be that people 110 00:05:50,080 --> 00:05:55,200 Speaker 3: think that well, that independence is still intact, that independence 111 00:05:55,240 --> 00:05:58,160 Speaker 3: has been critical to bring down inflation from the high 112 00:05:58,240 --> 00:06:02,320 Speaker 3: levels we saw post pandemic inflation expectations were anchored because 113 00:06:02,320 --> 00:06:03,520 Speaker 3: of that, inflation came down. 114 00:06:03,520 --> 00:06:04,480 Speaker 4: So I don't think there's. 115 00:06:04,240 --> 00:06:06,240 Speaker 1: Any ibsence but about that. 116 00:06:06,800 --> 00:06:11,160 Speaker 3: It must be that everybody still believes that independence, especially 117 00:06:11,240 --> 00:06:14,159 Speaker 3: operational independence in terms of setting arntry policy rates, will 118 00:06:14,160 --> 00:06:14,719 Speaker 3: be maintained. 119 00:06:15,240 --> 00:06:17,560 Speaker 5: So you reject the idea that the market's just somehow 120 00:06:17,800 --> 00:06:20,080 Speaker 5: ignoring a reality or something like that. You think the 121 00:06:20,080 --> 00:06:22,400 Speaker 5: market's speaking and that we should listen to the market. 122 00:06:23,200 --> 00:06:25,520 Speaker 3: No, I just think that everybody at this point is 123 00:06:25,880 --> 00:06:29,200 Speaker 3: functioning on the fog of uncertainty. I mean, there's really 124 00:06:30,080 --> 00:06:34,320 Speaker 3: a lot of information thrown out there. Separating the week 125 00:06:34,360 --> 00:06:36,600 Speaker 3: from the chef. It's not that easy, and so I 126 00:06:36,600 --> 00:06:40,240 Speaker 3: think everybody is on wait and see mode. And right now, 127 00:06:40,360 --> 00:06:42,359 Speaker 3: at least, of course, I think that the markets are 128 00:06:42,640 --> 00:06:46,919 Speaker 3: putting very very low probability on any big negative event. 129 00:06:47,240 --> 00:06:50,200 Speaker 3: That may be excessive. I think is more to worry 130 00:06:50,240 --> 00:06:53,679 Speaker 3: about than what the markets are showing right now. But again, 131 00:06:53,800 --> 00:06:55,360 Speaker 3: we should have to wait and see GATA. 132 00:06:55,440 --> 00:06:56,880 Speaker 1: Let's put some of these things together. 133 00:06:56,960 --> 00:06:59,480 Speaker 2: If you look at developments in the UK, in France, 134 00:06:59,520 --> 00:07:02,560 Speaker 2: the bil to address fiscal concerns and find that additional 135 00:07:02,640 --> 00:07:05,799 Speaker 2: fiscal space, the latest developments here in America as well, 136 00:07:06,040 --> 00:07:08,479 Speaker 2: are you witnessing Do you think we're witnessing a convergence 137 00:07:08,480 --> 00:07:10,920 Speaker 2: between the kind of dynamics we typically see an EM 138 00:07:11,280 --> 00:07:15,120 Speaker 2: with DM and do you think those terms are useful anymore? 139 00:07:15,320 --> 00:07:16,240 Speaker 1: In quite the same way. 140 00:07:18,840 --> 00:07:21,920 Speaker 3: I think we have certainly moved away from the case 141 00:07:22,000 --> 00:07:27,120 Speaker 3: of advanced economies. Rich economies can keep increasing their death 142 00:07:27,160 --> 00:07:30,520 Speaker 3: which is what's projected to happen, and there's not nouchu 143 00:07:30,520 --> 00:07:33,680 Speaker 3: to worry about. I think we certainly pass that major 144 00:07:34,240 --> 00:07:37,760 Speaker 3: economies are beginning to worry about what's happening to their eels. 145 00:07:37,760 --> 00:07:40,360 Speaker 3: You're seeing that it's a major concern France right now 146 00:07:41,000 --> 00:07:44,160 Speaker 3: as we speak. But even in the US long term 147 00:07:44,160 --> 00:07:47,520 Speaker 3: meals are basically back to PREGFC level. We are away 148 00:07:47,560 --> 00:07:50,119 Speaker 3: from that world of a big global savings glad, away 149 00:07:50,120 --> 00:07:52,800 Speaker 3: from that world of central banks buying large amounts of 150 00:07:52,880 --> 00:07:58,120 Speaker 3: government assets. So I think it would be really complacent 151 00:07:58,280 --> 00:08:02,760 Speaker 3: for any government, rich or poor to say that well, no, 152 00:08:03,280 --> 00:08:05,840 Speaker 3: our debt will always be bought. And I think one 153 00:08:05,840 --> 00:08:07,600 Speaker 3: point I want to make is that we talk about 154 00:08:07,640 --> 00:08:11,320 Speaker 3: resilience for the global economy, which has been really you know, 155 00:08:11,400 --> 00:08:14,880 Speaker 3: the positive of these last many years, despite all these shocks. 156 00:08:15,360 --> 00:08:16,080 Speaker 1: But we should. 157 00:08:15,880 --> 00:08:18,680 Speaker 3: Recognize that the reason we've seen resilience is because we 158 00:08:18,800 --> 00:08:22,960 Speaker 3: haven't had a financial crisis. Despite the pandemic, despite wards, 159 00:08:23,040 --> 00:08:27,400 Speaker 3: despite geoeconomic fragmentation, despite FED rates going up very sharply, 160 00:08:27,720 --> 00:08:30,360 Speaker 3: we've not had a financial crisis. That doesn't mean that 161 00:08:30,360 --> 00:08:32,960 Speaker 3: that will never happen. We have very high levels of 162 00:08:32,960 --> 00:08:37,400 Speaker 3: debt around the world. I think bond markets are in. 163 00:08:37,040 --> 00:08:38,040 Speaker 6: A fragile place. 164 00:08:38,720 --> 00:08:42,600 Speaker 3: You have valuations in equity markets that are sky high. 165 00:08:43,040 --> 00:08:45,440 Speaker 3: So I would say trede carefully because if you do 166 00:08:45,520 --> 00:08:48,520 Speaker 3: have a financial crisis, we know those the scarring that 167 00:08:48,559 --> 00:08:50,400 Speaker 3: comes from that is long lasting. 168 00:08:50,800 --> 00:08:53,160 Speaker 5: And when you talk about a financial crisis, some people 169 00:08:53,160 --> 00:08:55,560 Speaker 5: are wondering what can potentially trigger it. Are you saying 170 00:08:55,559 --> 00:08:58,600 Speaker 5: that the sovereign debt market of developed markets is of 171 00:08:58,640 --> 00:08:59,960 Speaker 5: the greatest concern at this point? 172 00:09:01,160 --> 00:09:03,160 Speaker 3: I mean, usually when you get a financial crisis, it's 173 00:09:03,160 --> 00:09:06,960 Speaker 3: a combination of events that can trigger it, right, And 174 00:09:07,040 --> 00:09:09,720 Speaker 3: so if you have multiple markets that seem to be 175 00:09:09,760 --> 00:09:13,160 Speaker 3: in a vulnerable position. You could end up with a 176 00:09:13,200 --> 00:09:15,600 Speaker 3: negative event, right, and so the bond markets what you're 177 00:09:15,600 --> 00:09:20,000 Speaker 3: seeing with very high levels of debt fragility. Associated with 178 00:09:20,120 --> 00:09:24,040 Speaker 3: that equity valuations that are very high. Yes, there's a 179 00:09:24,120 --> 00:09:27,520 Speaker 3: promise that maybe AI will truly transform the world, but 180 00:09:27,559 --> 00:09:29,599 Speaker 3: as we know from the dot com bust, even a 181 00:09:29,679 --> 00:09:32,280 Speaker 3: technology like the Internet that did transform the world went 182 00:09:32,280 --> 00:09:36,000 Speaker 3: through a boom bus cycle. So that combination non bank 183 00:09:36,040 --> 00:09:40,840 Speaker 3: financial institutions we've never had a crisis, well they've been 184 00:09:40,880 --> 00:09:44,000 Speaker 3: as large as they are right now. The amount of 185 00:09:44,000 --> 00:09:48,719 Speaker 3: corporate borrowing that's happening with nbfi's much higher than pre 186 00:09:48,880 --> 00:09:52,880 Speaker 3: twenty nineteen. So there's a lot that looks stretched at 187 00:09:52,880 --> 00:09:55,719 Speaker 3: this moment. And at the same time, I think the 188 00:09:55,760 --> 00:09:58,920 Speaker 3: world economy is gambling with all kinds of new policies. 189 00:09:59,320 --> 00:10:04,520 Speaker 3: So I would say trade carefully, make sure that financial 190 00:10:04,559 --> 00:10:09,520 Speaker 3: supervision and regulation is continued. See what needs to be 191 00:10:09,520 --> 00:10:12,360 Speaker 3: done with NBFI is what's the appropriate level of supervision 192 00:10:12,360 --> 00:10:14,000 Speaker 3: and regulation that's required over there. 193 00:10:14,360 --> 00:10:16,000 Speaker 4: All of that is going to be very important. 194 00:10:16,400 --> 00:10:18,760 Speaker 5: So you're leaving the IMF and you're going back to 195 00:10:18,960 --> 00:10:22,600 Speaker 5: Harvard A university that you've known very well, what are 196 00:10:22,640 --> 00:10:25,319 Speaker 5: you going to be doing there? And how important is 197 00:10:25,400 --> 00:10:29,000 Speaker 5: it for you to really get this sense back in 198 00:10:29,040 --> 00:10:34,760 Speaker 5: the economics profession of pure research and true rigor versus 199 00:10:34,760 --> 00:10:36,880 Speaker 5: some of the politicization that we've seen recently. 200 00:10:38,960 --> 00:10:43,280 Speaker 3: So I think the reason that the economics profession has 201 00:10:43,280 --> 00:10:45,680 Speaker 3: been able to contribute so well over these last few 202 00:10:45,760 --> 00:10:48,640 Speaker 3: years is because in the phase of unprecedented shocks, you 203 00:10:48,720 --> 00:10:50,880 Speaker 3: really need to go back to some of your training 204 00:10:50,920 --> 00:10:52,880 Speaker 3: to figure out how you're going to respond to a 205 00:10:52,880 --> 00:10:55,280 Speaker 3: pandemic that you haven't seen in one hundred years or 206 00:10:55,320 --> 00:10:58,760 Speaker 3: war in Europe, right, So having that base of knowledge 207 00:10:58,800 --> 00:11:00,280 Speaker 3: is very important. But at the same time, Hi, I 208 00:11:00,280 --> 00:11:02,880 Speaker 3: think the economics profession has to recognize that there is 209 00:11:02,920 --> 00:11:07,760 Speaker 3: something of a trust deficit, especially with mainstream economists, and 210 00:11:07,840 --> 00:11:11,000 Speaker 3: how do we get over that. There's broad consensus in 211 00:11:11,000 --> 00:11:17,160 Speaker 3: the economics profession that open trade, central bank independence super important. 212 00:11:17,200 --> 00:11:18,040 Speaker 1: Those are the crown. 213 00:11:17,880 --> 00:11:22,040 Speaker 3: Jewels for good economic policy, and yet the policy direction 214 00:11:22,160 --> 00:11:24,760 Speaker 3: is away from that. So I think there is absolutely 215 00:11:24,760 --> 00:11:27,800 Speaker 3: some bit of soul searching, some bit of stepping back 216 00:11:27,800 --> 00:11:30,240 Speaker 3: and asking yourself, how do you solve this trust deficit? 217 00:11:30,840 --> 00:11:32,640 Speaker 3: How do you make sure this in this new world 218 00:11:32,640 --> 00:11:35,520 Speaker 3: of communication, that the good ideas still come true. 219 00:11:36,080 --> 00:11:39,520 Speaker 1: Stay with us. More Bloomberg surveillance coming up after this. 220 00:11:48,800 --> 00:11:51,640 Speaker 2: Dan Ives, the global head of tech research of Wentburst, writing, 221 00:11:51,679 --> 00:11:53,800 Speaker 2: we view any declined and invidious stock to be a 222 00:11:53,800 --> 00:11:56,680 Speaker 2: clear buying opportunity as it remains the only game in 223 00:11:56,720 --> 00:12:01,160 Speaker 2: town fueling this fourth Industrial revolution. On just now for more, Dan, 224 00:12:01,200 --> 00:12:03,000 Speaker 2: you sit in the headlines the boom is over. What's 225 00:12:03,000 --> 00:12:04,040 Speaker 2: the pushback this morning? 226 00:12:05,120 --> 00:12:07,320 Speaker 7: I think the booms just starting. I mean, if you 227 00:12:07,360 --> 00:12:10,000 Speaker 7: look at these numbers, especially when you factor in what 228 00:12:10,200 --> 00:12:12,920 Speaker 7: China is going to be. I mean, you know Jensen 229 00:12:12,960 --> 00:12:17,320 Speaker 7: talked about fifty fifty percent type growth number, This just 230 00:12:17,400 --> 00:12:21,600 Speaker 7: shows the next stage of adoption is actually just starting. 231 00:12:21,640 --> 00:12:23,880 Speaker 6: I think, Look, I think the stock is green today. 232 00:12:25,160 --> 00:12:26,880 Speaker 5: By the end of the day, Dan, that's what you're saying. 233 00:12:26,880 --> 00:12:28,280 Speaker 5: You think that by the end of the day people 234 00:12:28,280 --> 00:12:31,080 Speaker 5: will realize come around to your point of view that 235 00:12:31,200 --> 00:12:35,240 Speaker 5: actually what the disappointment was was a non inclusion of 236 00:12:35,280 --> 00:12:39,480 Speaker 5: any China sales, but a real robust growth elsewhere. 237 00:12:39,520 --> 00:12:40,320 Speaker 6: Is that your argument? 238 00:12:41,120 --> 00:12:44,360 Speaker 7: You just exactly like summarize it, because the reality is 239 00:12:44,360 --> 00:12:46,800 Speaker 7: is that when you look at data center and then 240 00:12:46,800 --> 00:12:48,800 Speaker 7: you actually factor and with China's going to be when 241 00:12:48,840 --> 00:12:50,920 Speaker 7: you look at two to five billion and you look 242 00:12:50,920 --> 00:12:53,480 Speaker 7: at the acceleration next few quarters, I mean, there's no 243 00:12:53,559 --> 00:12:57,960 Speaker 7: reason that's not accelerating. And now in China with the 244 00:12:58,000 --> 00:13:01,120 Speaker 7: pay for play model back in you're talking about could 245 00:13:01,120 --> 00:13:04,920 Speaker 7: be an incremental twenty twenty five thirty billion. That's why 246 00:13:04,920 --> 00:13:07,880 Speaker 7: it comes down to the godfather of Ai Jensen and 247 00:13:08,000 --> 00:13:11,040 Speaker 7: Video continue to dominate this and I think this is 248 00:13:11,080 --> 00:13:13,520 Speaker 7: just a further validation tech stocks go higher. 249 00:13:13,720 --> 00:13:15,160 Speaker 5: Dan, I feel like we should do a show where 250 00:13:15,200 --> 00:13:17,320 Speaker 5: in the world is Dan ives of Webbush because you're 251 00:13:17,320 --> 00:13:19,920 Speaker 5: always somewhere different. This morning, it looks like you're down 252 00:13:20,000 --> 00:13:22,480 Speaker 5: under in Sydney, and I'm curious about the rest of 253 00:13:22,480 --> 00:13:25,680 Speaker 5: the world. It's actually really telling that you've been traveling 254 00:13:25,720 --> 00:13:28,400 Speaker 5: the world because outside of China and Video's growth has 255 00:13:28,400 --> 00:13:32,040 Speaker 5: been tremendous and we've seen a real increase, particularly in 256 00:13:32,160 --> 00:13:33,520 Speaker 5: other Asian countries. 257 00:13:33,600 --> 00:13:34,439 Speaker 6: How much does that. 258 00:13:34,480 --> 00:13:37,319 Speaker 5: Give you that extra bullish push that, even if it's 259 00:13:37,360 --> 00:13:39,760 Speaker 5: not China, you are seeing the rest of the world 260 00:13:40,120 --> 00:13:42,400 Speaker 5: rush to adopt as much as they can of in 261 00:13:42,520 --> 00:13:46,320 Speaker 5: video before maybe some of the policies change yeah. 262 00:13:46,400 --> 00:13:48,200 Speaker 7: Look, and I think you see that Leason when you 263 00:13:48,240 --> 00:13:50,760 Speaker 7: look in Middle East, I mean Middle East, perfect example, 264 00:13:50,960 --> 00:13:54,679 Speaker 7: they're just continuing to just massively build that out when 265 00:13:54,720 --> 00:13:58,040 Speaker 7: it comes to Saudi UAE. Look, the reality is is 266 00:13:58,080 --> 00:13:59,559 Speaker 7: that they're years ahead. 267 00:13:59,280 --> 00:14:00,920 Speaker 6: To any other chip player. 268 00:14:01,240 --> 00:14:04,440 Speaker 7: I mean you look at everything happened from a Huawei perspective. 269 00:14:04,480 --> 00:14:05,800 Speaker 6: There, they've narrowed the gap. 270 00:14:05,840 --> 00:14:09,040 Speaker 7: But the reality is that every Chinese big tech player 271 00:14:09,320 --> 00:14:12,920 Speaker 7: wants in vidio chips. And I think what you started 272 00:14:12,920 --> 00:14:15,560 Speaker 7: and now realize is that you talk about a third 273 00:14:15,600 --> 00:14:18,200 Speaker 7: of that overall revenue going to in video. This is 274 00:14:18,360 --> 00:14:20,400 Speaker 7: trillion that's going to be playing out. That's why I 275 00:14:20,480 --> 00:14:23,320 Speaker 7: believe there's a five trillion dollar mark cap. You know, 276 00:14:23,480 --> 00:14:25,560 Speaker 7: either by year end they're early twenty six. 277 00:14:26,080 --> 00:14:28,360 Speaker 8: But Dan, the China policy is subject to change on 278 00:14:28,400 --> 00:14:30,680 Speaker 8: the US side, and also we have seen in the 279 00:14:30,720 --> 00:14:34,880 Speaker 8: past Beijing telling firms not to buy and video chips. 280 00:14:35,360 --> 00:14:38,120 Speaker 8: Can this company continue to grow the way you envision 281 00:14:38,240 --> 00:14:41,040 Speaker 8: if say China was taken out of the of the play. 282 00:14:42,320 --> 00:14:45,640 Speaker 7: Yeah, Look, there's no doubt China continues to be That's 283 00:14:45,640 --> 00:14:48,520 Speaker 7: the golden goose for Jensen Avini. But that's also why 284 00:14:48,720 --> 00:14:53,720 Speaker 7: look Jensen ten percent politician, ninety percent CEO. And when 285 00:14:53,760 --> 00:14:56,800 Speaker 7: you think about the China market, but also Beijing telling 286 00:14:56,960 --> 00:15:00,600 Speaker 7: Chinese company is big tech not to buy in idio chips, 287 00:15:00,600 --> 00:15:02,760 Speaker 7: that's like telling a kid don't eat the candy. 288 00:15:03,280 --> 00:15:06,040 Speaker 6: The reality is they want in video chips. 289 00:15:06,120 --> 00:15:09,400 Speaker 7: They don't want to have a third fourth rate chip. 290 00:15:09,440 --> 00:15:11,640 Speaker 7: And that's why Jensen knows it. And they're going to 291 00:15:11,680 --> 00:15:14,320 Speaker 7: continue to kind of play this policy. And I think 292 00:15:14,360 --> 00:15:17,640 Speaker 7: we see here six nine, twelve months now China's a 293 00:15:17,680 --> 00:15:20,600 Speaker 7: fifty billion dollars annual market for them. 294 00:15:20,840 --> 00:15:23,520 Speaker 8: Jensen Wang last night said they keep advocating on the 295 00:15:23,560 --> 00:15:26,440 Speaker 8: sensibility of an importance of American tech companies to lead 296 00:15:26,520 --> 00:15:30,200 Speaker 8: and win the AI race. Basically, we keep lobbying the 297 00:15:30,240 --> 00:15:32,560 Speaker 8: American government when it comes to Blackwell, do you think 298 00:15:32,600 --> 00:15:34,160 Speaker 8: at some point they'll be able to sell those chips 299 00:15:34,200 --> 00:15:34,680 Speaker 8: into China? 300 00:15:35,760 --> 00:15:38,400 Speaker 7: Hey for play model, right, I mean maybe that fifteen 301 00:15:38,440 --> 00:15:42,920 Speaker 7: percent goes to twenty five percent. Look, because Jensen understands 302 00:15:43,000 --> 00:15:47,080 Speaker 7: that what they can sell that gives Huawei and China 303 00:15:47,160 --> 00:15:49,880 Speaker 7: that much more power. And I think in this AI 304 00:15:50,000 --> 00:15:54,080 Speaker 7: arms race between the US and China's biggest poker chip 305 00:15:54,280 --> 00:15:56,960 Speaker 7: on the table continues to be in video, and I 306 00:15:57,000 --> 00:15:59,600 Speaker 7: think that's the reality. There's no one that has more 307 00:15:59,640 --> 00:16:03,200 Speaker 7: info when it comes to AI, you know, relative to Trump. 308 00:16:03,360 --> 00:16:06,440 Speaker 6: Vin Jentsen, I mean he's become really I think. 309 00:16:06,320 --> 00:16:09,680 Speaker 7: A big strategic advisor for Trump administration when it comes 310 00:16:09,720 --> 00:16:10,120 Speaker 7: to AI. 311 00:16:10,360 --> 00:16:12,760 Speaker 2: Now, nobody's saying the growth story is gone a way. 312 00:16:12,880 --> 00:16:14,680 Speaker 2: We don't think this is going to next growth. No 313 00:16:14,680 --> 00:16:17,200 Speaker 2: one's suggesting that we're going to see healthy double digit 314 00:16:17,280 --> 00:16:19,600 Speaker 2: growth figures. Based on what we heard from the company overnight. 315 00:16:19,880 --> 00:16:22,480 Speaker 2: What they are suggesting is that the level of growth 316 00:16:22,560 --> 00:16:25,160 Speaker 2: is going to change, and perhaps we need to reassess 317 00:16:25,440 --> 00:16:27,800 Speaker 2: our view of this company With that in mind, don 318 00:16:27,840 --> 00:16:30,760 Speaker 2: how have you changed your view as growth decelerates just 319 00:16:30,800 --> 00:16:31,440 Speaker 2: by definition? 320 00:16:32,560 --> 00:16:36,080 Speaker 7: Yeah, Look, my view is that as you start to 321 00:16:36,120 --> 00:16:38,760 Speaker 7: actually go into physical AI world and you go into 322 00:16:38,920 --> 00:16:42,040 Speaker 7: Thomas going to robotics, you look at the next few years. 323 00:16:42,320 --> 00:16:46,640 Speaker 7: I could argue streets underestimating numbers twenty five thirty percent 324 00:16:46,840 --> 00:16:49,960 Speaker 7: next fe years. So I think as this actually plays out, 325 00:16:50,160 --> 00:16:54,040 Speaker 7: my view is like in video is undervalued relative to 326 00:16:54,080 --> 00:16:57,120 Speaker 7: where this is all going, and we're only in Like 327 00:16:57,160 --> 00:17:00,240 Speaker 7: I've talked about, the AI party was nine pm, now 328 00:17:00,360 --> 00:17:03,800 Speaker 7: ten ten fifteen pm. That party goes to four am, 329 00:17:03,880 --> 00:17:05,679 Speaker 7: and Jensen's going to be out there in the dans 330 00:17:05,720 --> 00:17:09,600 Speaker 7: for because he and in video we in the AI 331 00:17:09,640 --> 00:17:12,080 Speaker 7: revolution and one with the hyper scalurs and pound Teer. 332 00:17:12,400 --> 00:17:14,560 Speaker 5: What's become clear though, from the earnings of the likes 333 00:17:14,600 --> 00:17:17,840 Speaker 5: of Microsoft and Google or Alphabet, is that there is 334 00:17:17,880 --> 00:17:20,120 Speaker 5: some pushback when it comes to the investor in community 335 00:17:20,280 --> 00:17:23,119 Speaker 5: about how much some of these companies are spending and 336 00:17:23,160 --> 00:17:25,679 Speaker 5: it needs to broaden out in a significant way, and 337 00:17:25,720 --> 00:17:28,480 Speaker 5: if it does, that raises questions about how much in 338 00:17:28,560 --> 00:17:31,800 Speaker 5: Vidia has to steal market share from other players. Who's 339 00:17:31,840 --> 00:17:34,960 Speaker 5: going to be the biggest loser as in Vidia continues 340 00:17:35,000 --> 00:17:38,480 Speaker 5: and charts its path over complete dominance of this industry. 341 00:17:39,119 --> 00:17:43,000 Speaker 7: Yeah, losers are clearly Intel, right, I mean, despite obviously 342 00:17:43,000 --> 00:17:46,520 Speaker 7: what we see with US government and you know, obviously 343 00:17:46,600 --> 00:17:49,040 Speaker 7: soft Bank. I mean, I just think there's a better 344 00:17:49,119 --> 00:17:52,320 Speaker 7: chance to meet playing Ryder cup beck Page than Intel 345 00:17:52,400 --> 00:17:55,720 Speaker 7: gaining share, you know, And I think that's that's part 346 00:17:55,760 --> 00:17:58,880 Speaker 7: of the issue, is that AMD is going to gain 347 00:17:58,920 --> 00:18:01,800 Speaker 7: share in video in the game chair. You're clearly on 348 00:18:01,880 --> 00:18:04,680 Speaker 7: broad common others, but it's a have and to have 349 00:18:04,880 --> 00:18:07,120 Speaker 7: nots that's going to continue to play out. 350 00:18:07,440 --> 00:18:10,359 Speaker 6: But but you look at last night's quarter along. 351 00:18:10,119 --> 00:18:13,040 Speaker 7: With what we've seen from earnings as a ball, you 352 00:18:13,080 --> 00:18:15,959 Speaker 7: feel really good in terms of the validation story for AI. 353 00:18:16,160 --> 00:18:18,880 Speaker 2: Down before you go, Shaitkeigan Bradley have chosen himself. 354 00:18:19,840 --> 00:18:22,439 Speaker 7: Look, I think he could have chosen himself. You know, 355 00:18:22,680 --> 00:18:25,639 Speaker 7: it was obviously maybe a good decision for him. But 356 00:18:26,160 --> 00:18:29,480 Speaker 7: I think ultimately US wins. That wins a Ryder cup 357 00:18:29,600 --> 00:18:30,040 Speaker 7: that pitch. 358 00:18:31,080 --> 00:18:34,560 Speaker 2: Stay with us mult Blomberg Surveillance coming up after this. 359 00:18:44,000 --> 00:18:46,600 Speaker 2: Stuart Kaiser, the head of Equity Trading Strategy a city 360 00:18:46,760 --> 00:18:49,280 Speaker 2: right in the following. In videos, earnings is the largest 361 00:18:49,280 --> 00:18:51,200 Speaker 2: event for the S and P five hundred over the 362 00:18:51,240 --> 00:18:54,119 Speaker 2: next month. For equity investors, the AI theme and the 363 00:18:54,160 --> 00:18:57,760 Speaker 2: impact of that on returns is on par with the FED. 364 00:18:57,880 --> 00:18:59,720 Speaker 2: She joins us now for more Stuke and Mornic, good 365 00:18:59,720 --> 00:19:01,680 Speaker 2: morning things. A pretty calm on bike. What you make 366 00:19:01,720 --> 00:19:01,919 Speaker 2: of that? 367 00:19:02,480 --> 00:19:03,120 Speaker 4: I mean, I think the. 368 00:19:03,160 --> 00:19:06,600 Speaker 9: Video numbers were just about good enough effectively, probably right 369 00:19:06,600 --> 00:19:08,480 Speaker 9: at the low end of where the whisper number was. 370 00:19:08,880 --> 00:19:11,240 Speaker 9: The China stuff obviously adds a little bit a little 371 00:19:11,240 --> 00:19:13,199 Speaker 9: bit of noise to it, but I mean margin seventy 372 00:19:13,520 --> 00:19:16,119 Speaker 9: you know, seventy whatever four and a half, seventy three 373 00:19:16,119 --> 00:19:18,040 Speaker 9: and a half percent ey sackmor they wanted to be fifty. 374 00:19:17,760 --> 00:19:18,720 Speaker 4: Four billion of revenues. 375 00:19:18,880 --> 00:19:20,720 Speaker 9: I think that the test here was if a video 376 00:19:20,760 --> 00:19:23,040 Speaker 9: was really strong, what would it have done to. 377 00:19:23,040 --> 00:19:23,760 Speaker 4: The Russell trade? 378 00:19:23,800 --> 00:19:25,239 Speaker 9: And I think that's what a lot of people were 379 00:19:25,280 --> 00:19:28,320 Speaker 9: sort of debating, was if we get a because you know, Snowflake, 380 00:19:28,359 --> 00:19:30,760 Speaker 9: a mango dB both very strong results on the soffar 381 00:19:30,800 --> 00:19:32,760 Speaker 9: Ai side, if you had gotten that from a video, 382 00:19:32,800 --> 00:19:35,200 Speaker 9: would that have made people you turn out of the 383 00:19:35,280 --> 00:19:38,480 Speaker 9: Russell and value trade back into growth. It doesn't seem 384 00:19:38,520 --> 00:19:40,399 Speaker 9: like the numbers were strong enough to do that, but 385 00:19:40,400 --> 00:19:41,879 Speaker 9: they were strong enough to keep the S and P 386 00:19:41,960 --> 00:19:42,560 Speaker 9: from selling offs. 387 00:19:42,560 --> 00:19:45,520 Speaker 2: So mill toast in video rapport is good for small camps. 388 00:19:46,440 --> 00:19:49,400 Speaker 9: Yeah, at least tactically, you know, at least to highlighted 389 00:19:49,440 --> 00:19:51,680 Speaker 9: with the mix of policy versus data. I think that 390 00:19:51,680 --> 00:19:53,840 Speaker 9: that small cap trade as really poor risk reward as 391 00:19:53,840 --> 00:19:56,960 Speaker 9: we go into September, because it's careful what you wish for, 392 00:19:57,080 --> 00:19:59,720 Speaker 9: wish for good news, good news news, bad news type situation. 393 00:20:00,080 --> 00:20:02,879 Speaker 9: But yeah, exactly, But yeah, I think I think the 394 00:20:03,040 --> 00:20:06,000 Speaker 9: video report kind of like threaded the needle. Right, it 395 00:20:06,080 --> 00:20:08,080 Speaker 9: was strong enough that you didn't get kind of a 396 00:20:08,119 --> 00:20:10,959 Speaker 9: liquidation in those long positions, but it wasn't so strong 397 00:20:11,000 --> 00:20:13,119 Speaker 9: that it disrupted the rotation that's been going on for 398 00:20:13,160 --> 00:20:13,560 Speaker 9: the last. 399 00:20:13,440 --> 00:20:13,920 Speaker 4: Couple of weeks. 400 00:20:14,119 --> 00:20:17,200 Speaker 5: Is this actually a connected idea that somehow big tech 401 00:20:17,359 --> 00:20:21,200 Speaker 5: winning is small companies losing or is this just simply 402 00:20:21,480 --> 00:20:23,760 Speaker 5: that markets can only focus on one idea at a time, 403 00:20:24,000 --> 00:20:25,800 Speaker 5: and if they're not focused in AI, they're focus in 404 00:20:25,800 --> 00:20:26,120 Speaker 5: the FED. 405 00:20:26,640 --> 00:20:28,520 Speaker 9: Yeah, it's probably a little bit of both, but yeah, 406 00:20:28,920 --> 00:20:30,280 Speaker 9: I would agree with that. I think there is some 407 00:20:30,400 --> 00:20:32,360 Speaker 9: view that how do you keep up with the spending 408 00:20:32,400 --> 00:20:35,520 Speaker 9: that these hyperscalers are doing, or if you're a smaller company, 409 00:20:36,040 --> 00:20:38,600 Speaker 9: the market right now is to some degree in one 410 00:20:38,720 --> 00:20:42,480 Speaker 9: big trade, right, and that trade is long growth long 411 00:20:42,560 --> 00:20:45,520 Speaker 9: large cap long the AI thematic right, and everything else 412 00:20:45,600 --> 00:20:47,919 Speaker 9: has sort of been ignored to some degree. What we 413 00:20:47,960 --> 00:20:50,600 Speaker 9: saw in August is people trying to re engage with 414 00:20:50,680 --> 00:20:54,119 Speaker 9: those smaller cap, lower quality laggards to some extent. And 415 00:20:54,160 --> 00:20:55,919 Speaker 9: to your point, I mean, there's a limited amount of money, right, 416 00:20:56,080 --> 00:20:58,040 Speaker 9: Money's got to be in one place, and right now 417 00:20:58,119 --> 00:20:59,800 Speaker 9: it's getting kind of rotated a little bit. 418 00:21:00,080 --> 00:21:01,880 Speaker 4: To that value, trade al right. 419 00:21:02,040 --> 00:21:04,760 Speaker 5: Is any money coming out of bonds and going into stocks. 420 00:21:04,760 --> 00:21:05,520 Speaker 4: And this is something that a. 421 00:21:05,560 --> 00:21:07,880 Speaker 5: Number of people had been flirting with earlier in the year, 422 00:21:07,920 --> 00:21:11,160 Speaker 5: the idea that they could get better yield on stocks 423 00:21:11,200 --> 00:21:13,480 Speaker 5: at a time when inflation was going to be a 424 00:21:13,480 --> 00:21:17,800 Speaker 5: little bit more elevated than say bonds, especially with uncertain policy. 425 00:21:18,119 --> 00:21:20,080 Speaker 9: Yeah, it'd be interesting to see if the Fed actually 426 00:21:20,080 --> 00:21:22,600 Speaker 9: does start cutting and those money marketing yields actually get 427 00:21:22,600 --> 00:21:24,360 Speaker 9: down to a level where it's a little bit attractive 428 00:21:24,400 --> 00:21:26,080 Speaker 9: if we see a re engagement. If you look at 429 00:21:26,080 --> 00:21:28,480 Speaker 9: the balances in retail money market funds, I mean, you're 430 00:21:28,600 --> 00:21:31,679 Speaker 9: like three trillion bucks. It's a lot of money. Not 431 00:21:31,840 --> 00:21:33,840 Speaker 9: all of that is coming into stocks, right. I think 432 00:21:33,880 --> 00:21:36,440 Speaker 9: some of that was basically bank account money that got 433 00:21:36,440 --> 00:21:37,280 Speaker 9: put into money. 434 00:21:37,160 --> 00:21:38,080 Speaker 4: Markets for yield. 435 00:21:38,320 --> 00:21:40,800 Speaker 9: I don't necessarily know if that would go directly into equities, 436 00:21:40,840 --> 00:21:42,639 Speaker 9: but there's the potential you get a little bit of 437 00:21:42,680 --> 00:21:44,680 Speaker 9: a tailwind, a little bit of a toil went there. 438 00:21:44,720 --> 00:21:47,199 Speaker 9: The question there, though, is if there is, why are 439 00:21:47,200 --> 00:21:49,600 Speaker 9: they cutting? Is ultimately what this gets into. If they're 440 00:21:49,640 --> 00:21:52,200 Speaker 9: cutting because the labor market is falling apart, money is 441 00:21:52,240 --> 00:21:53,919 Speaker 9: not going to be rushing into equities, and that's going 442 00:21:53,960 --> 00:21:57,120 Speaker 9: to be negative for Russell et cetera. If they're cutting 443 00:21:57,160 --> 00:21:59,960 Speaker 9: because that sort of base cases in play where they're 444 00:22:00,080 --> 00:22:03,440 Speaker 9: just gradually going back to new neutral and otherwise solid economy, 445 00:22:03,600 --> 00:22:05,600 Speaker 9: then yeah, you might get money out of bonds and equities. 446 00:22:05,600 --> 00:22:08,080 Speaker 8: Well, with the event of Nvidia behind us, what's the 447 00:22:08,080 --> 00:22:10,360 Speaker 8: market going to be focused on now? Is it squarely 448 00:22:10,400 --> 00:22:12,359 Speaker 8: on the labor market report ahead of the Fed meeting? 449 00:22:12,640 --> 00:22:12,840 Speaker 4: Yeah? 450 00:22:12,840 --> 00:22:14,919 Speaker 9: I think it's payrolls and then September ninth you get 451 00:22:14,960 --> 00:22:18,400 Speaker 9: the BLS revision to payrolls, which, as you cover Trump, 452 00:22:18,440 --> 00:22:21,600 Speaker 9: I'm sure that'll be very, very very certifuction this. 453 00:22:21,560 --> 00:22:23,359 Speaker 8: Week in the cabinet meeting that he expects a very 454 00:22:23,400 --> 00:22:24,840 Speaker 8: strong labor market report. 455 00:22:25,680 --> 00:22:28,440 Speaker 9: He might get a decent labor market report, but look, 456 00:22:28,440 --> 00:22:30,920 Speaker 9: I mean, consensus is sub one hundred k. Chairpal last 457 00:22:30,920 --> 00:22:33,840 Speaker 9: week said break even on jobs right now is fifty 458 00:22:33,840 --> 00:22:36,520 Speaker 9: to seventy five K. So look, I mean a strong 459 00:22:36,560 --> 00:22:38,600 Speaker 9: report right now will probably be one hundred and twenty five. 460 00:22:39,000 --> 00:22:41,320 Speaker 4: But you know, our economists think you might get. 461 00:22:41,200 --> 00:22:44,640 Speaker 9: You know, four hundred thousand, you know, negative revisions from 462 00:22:44,640 --> 00:22:46,880 Speaker 9: the BLS benchmark that is not going to go over 463 00:22:46,920 --> 00:22:50,399 Speaker 9: well politically and honestly, from a market's perspective, that's a 464 00:22:50,440 --> 00:22:52,880 Speaker 9: sneaky event. On September ninth, you know how many jobs 465 00:22:52,920 --> 00:22:54,199 Speaker 9: get kind of revised out of the BLS. 466 00:22:54,359 --> 00:22:55,679 Speaker 1: It's a ready else setup, isn't it. 467 00:22:55,680 --> 00:22:58,520 Speaker 2: This market is pricing in a cyclical up term federal reserves, 468 00:22:58,800 --> 00:23:01,800 Speaker 2: ready consent increasing center baut cyclical DOWNSTND. 469 00:23:01,960 --> 00:23:04,199 Speaker 4: What gives I agree with three hundred percent. But I 470 00:23:04,200 --> 00:23:06,200 Speaker 4: actually thought the response to the FED. 471 00:23:06,280 --> 00:23:08,480 Speaker 9: The response to the FED was much more positive than 472 00:23:08,520 --> 00:23:09,160 Speaker 9: I would have guessed. 473 00:23:09,200 --> 00:23:11,160 Speaker 4: I think what happened was the initial. 474 00:23:10,760 --> 00:23:14,360 Speaker 9: Headline was about their getting ready to cut, but if 475 00:23:14,400 --> 00:23:17,280 Speaker 9: you read his speech, it was because they are seeing 476 00:23:17,320 --> 00:23:19,680 Speaker 9: some you know, weakness in the labor market. Not only 477 00:23:19,680 --> 00:23:21,600 Speaker 9: if they say weakness, I think the risk reward is 478 00:23:21,640 --> 00:23:24,000 Speaker 9: really poor. And then a lot of folks, I think, 479 00:23:24,080 --> 00:23:27,359 Speaker 9: believe that they're prioritizing growth. But he also specifically said 480 00:23:27,359 --> 00:23:29,840 Speaker 9: we're not going to allow character of inflation to become 481 00:23:29,840 --> 00:23:32,760 Speaker 9: a bigger problem. So I was surprised, honestly at how 482 00:23:32,800 --> 00:23:35,320 Speaker 9: positively the market reacted to the FED. 483 00:23:36,320 --> 00:23:38,159 Speaker 4: But yeah, I'm with you. 484 00:23:38,280 --> 00:23:40,320 Speaker 9: I think you have a little bit of I don't 485 00:23:40,320 --> 00:23:42,600 Speaker 9: want to say a disagreement but you have a situation 486 00:23:42,640 --> 00:23:44,720 Speaker 9: where the FED is clearly worried about the growth side 487 00:23:44,720 --> 00:23:47,760 Speaker 9: of their mandate. The market has been willing to ignore 488 00:23:47,840 --> 00:23:50,320 Speaker 9: that to some degree, and as I said, I think 489 00:23:50,320 --> 00:23:52,199 Speaker 9: that gives you really poor risk award to some of 490 00:23:52,200 --> 00:23:53,080 Speaker 9: these smaller captures. 491 00:23:53,119 --> 00:23:54,760 Speaker 2: There's a phrase I really don't like, but I'm going 492 00:23:54,800 --> 00:23:57,520 Speaker 2: to use it. Hawkish cup Is that kind of what 493 00:23:57,560 --> 00:24:00,720 Speaker 2: you're thinking about September seventeenth, of course, relative to what's 494 00:24:00,760 --> 00:24:02,879 Speaker 2: expected at the time and what comes in on the 495 00:24:02,960 --> 00:24:04,440 Speaker 2: data front over the next few weeks. 496 00:24:04,480 --> 00:24:05,760 Speaker 1: But it's that where you're at now. 497 00:24:06,560 --> 00:24:08,439 Speaker 9: I guess you know in the sense that yeah, they 498 00:24:08,480 --> 00:24:10,680 Speaker 9: are probably going to cut, and yes, I think they're 499 00:24:10,680 --> 00:24:12,560 Speaker 9: going to be very cautious, and how they cautious and 500 00:24:12,600 --> 00:24:15,080 Speaker 9: how they message that in the sense that this is not, 501 00:24:15,760 --> 00:24:17,800 Speaker 9: you know, an aggressive kind of cutting regime. 502 00:24:17,840 --> 00:24:17,879 Speaker 6: No. 503 00:24:17,920 --> 00:24:19,879 Speaker 9: Look, if you get a very weak labor market report, 504 00:24:20,200 --> 00:24:23,040 Speaker 9: that cut may it may not come across as as hawkey. 505 00:24:23,160 --> 00:24:25,520 Speaker 4: So you know, they are very very data dependent. 506 00:24:25,560 --> 00:24:28,400 Speaker 9: But although equal, let's say we print a consentious job 507 00:24:28,480 --> 00:24:30,640 Speaker 9: number of call it seventy five K, and you get 508 00:24:30,680 --> 00:24:33,159 Speaker 9: an okay inflation print, then yes they'll cut. But to 509 00:24:33,200 --> 00:24:34,879 Speaker 9: your point, They're not going to message this as an 510 00:24:34,920 --> 00:24:37,280 Speaker 9: aggressive cutting cycle. They're probably going to message this as 511 00:24:37,680 --> 00:24:41,080 Speaker 9: a meeting by meeting process that is data dependent. 512 00:24:41,520 --> 00:24:43,159 Speaker 5: So if you just turn this on its head and 513 00:24:43,160 --> 00:24:45,600 Speaker 5: take it a step further, is this essentially a market 514 00:24:45,680 --> 00:24:48,080 Speaker 5: that's hoping this is a politicized rate cut and then 515 00:24:48,080 --> 00:24:50,399 Speaker 5: it's going to be a politicized rate cutting cycle that 516 00:24:50,440 --> 00:24:53,800 Speaker 5: doesn't necessarily warrant it based on where the economy is, 517 00:24:54,000 --> 00:24:56,960 Speaker 5: which will give fuel to equities but won't actually be 518 00:24:57,040 --> 00:24:58,600 Speaker 5: as a result of economic weakness. 519 00:24:58,840 --> 00:25:01,440 Speaker 9: Well, myself out of trouble, I'm going to call those 520 00:25:01,440 --> 00:25:06,280 Speaker 9: insurance customs yes, and I think that well, probably yes, 521 00:25:07,080 --> 00:25:10,359 Speaker 9: enjoy some insurance counts. Look, there is a sneaky uber 522 00:25:10,400 --> 00:25:13,480 Speaker 9: Bowl case out there lurking right, which is that for 523 00:25:13,560 --> 00:25:16,760 Speaker 9: three months corporate Americas said on their hands, did less hiring, 524 00:25:16,880 --> 00:25:19,800 Speaker 9: did less capital investment because of the uncertainty around tariffs 525 00:25:19,800 --> 00:25:22,880 Speaker 9: and taxes and immigration. And we get into September, things 526 00:25:22,920 --> 00:25:25,159 Speaker 9: have calmed down, and you have budgets that need to 527 00:25:25,160 --> 00:25:27,320 Speaker 9: be spent into your end and you get some hiring 528 00:25:27,440 --> 00:25:30,160 Speaker 9: that is a low probability but very bullsh out come. 529 00:25:30,240 --> 00:25:31,719 Speaker 4: No, you say that it's low probability. 530 00:25:31,720 --> 00:25:34,240 Speaker 5: But I was looking at your very own economic surprise 531 00:25:34,320 --> 00:25:36,360 Speaker 5: index and it actually is at the highest, the most 532 00:25:36,400 --> 00:25:38,439 Speaker 5: positive going back to the end of last year. So 533 00:25:38,480 --> 00:25:41,280 Speaker 5: if you see, yes, the economic data hasn't been great, 534 00:25:41,440 --> 00:25:43,639 Speaker 5: but it's been trending in the right direction. It's actually 535 00:25:43,640 --> 00:25:46,720 Speaker 5: begoing the opposite direction of some sort of doom and 536 00:25:46,760 --> 00:25:48,639 Speaker 5: gloom in the economy. So how do you square that 537 00:25:48,640 --> 00:25:51,159 Speaker 5: with the idea that there really is weakness under the 538 00:25:51,160 --> 00:25:52,439 Speaker 5: hood that the FED is responding to. 539 00:25:52,600 --> 00:25:54,159 Speaker 9: Well, what's interesting about that too, is a lot of 540 00:25:54,240 --> 00:25:56,399 Speaker 9: us come from the soft data, which is survey data. 541 00:25:56,560 --> 00:25:58,080 Speaker 4: You mish was actually quite weak. 542 00:25:58,359 --> 00:26:01,479 Speaker 9: So is the survey data that's in you're figuring No, 543 00:26:01,720 --> 00:26:04,480 Speaker 9: But the survey data that's improved has been corporate survey data. 544 00:26:04,600 --> 00:26:05,600 Speaker 4: It's been the PMIS. 545 00:26:05,920 --> 00:26:07,919 Speaker 9: So in the sense, if you believe that corporates are 546 00:26:07,920 --> 00:26:10,199 Speaker 9: going to re engage, that's very positive news. If you're 547 00:26:10,200 --> 00:26:12,200 Speaker 9: worried about the labor market, you're kind of a little 548 00:26:12,200 --> 00:26:14,800 Speaker 9: more circumspect about it. So agree that the data looks 549 00:26:14,840 --> 00:26:17,400 Speaker 9: pretty good. Look, economic surprise can be positive for two reasons. 550 00:26:17,480 --> 00:26:20,000 Speaker 9: It could be really strong data or really low expectations. 551 00:26:20,359 --> 00:26:22,239 Speaker 9: In this case, it might be that the expectations were 552 00:26:22,280 --> 00:26:24,359 Speaker 9: kind of low when we're clearing relatively low. 553 00:26:24,200 --> 00:26:26,280 Speaker 8: Mark that kind of set up with Corporate America having 554 00:26:26,280 --> 00:26:29,800 Speaker 8: the one big beautiful build deregulation and some clarity on tariffs. 555 00:26:29,840 --> 00:26:31,560 Speaker 8: What does that mean for the FED in twenty twenty six. 556 00:26:32,640 --> 00:26:35,200 Speaker 9: I mean, I probably mean someth that'll be really if 557 00:26:35,200 --> 00:26:38,080 Speaker 9: they're in a cutting cycle, doing it very very methodically 558 00:26:38,240 --> 00:26:40,840 Speaker 9: and maybe like a quarter to quarter basis instead of 559 00:26:40,880 --> 00:26:43,280 Speaker 9: a meeting to meeting basis. Look if they get if 560 00:26:43,280 --> 00:26:45,040 Speaker 9: you were to have all of that stuff kind of 561 00:26:45,040 --> 00:26:47,720 Speaker 9: coalesce into a little bit of an upturn in the 562 00:26:47,840 --> 00:26:49,919 Speaker 9: US economic data, then yeah, the FED is going to 563 00:26:49,960 --> 00:26:53,680 Speaker 9: be much more focused on ensuring that the inflation risk 564 00:26:54,080 --> 00:26:55,720 Speaker 9: is out of there. I mean, you have a FED 565 00:26:55,800 --> 00:27:00,280 Speaker 9: chair who was there during an inflation surge is getting 566 00:27:00,280 --> 00:27:02,720 Speaker 9: ready to leave that seat. I can't imagine he wants 567 00:27:02,760 --> 00:27:05,560 Speaker 9: to leave that seat with inflation pressure again kind of 568 00:27:05,600 --> 00:27:08,399 Speaker 9: being an issue. So it would actually be a blessing 569 00:27:08,440 --> 00:27:10,280 Speaker 9: for the FED. I think if you got an upturning 570 00:27:10,280 --> 00:27:13,159 Speaker 9: corporate corporate economic activity that allowed the FED then to 571 00:27:13,200 --> 00:27:14,000 Speaker 9: kind of take their time. 572 00:27:14,119 --> 00:27:16,320 Speaker 2: I didn't take you as a humisch kind of guy. 573 00:27:16,840 --> 00:27:18,320 Speaker 2: I used to be a Humich kind of guy. And 574 00:27:18,320 --> 00:27:20,480 Speaker 2: then I realized that the respondent right, you know, the 575 00:27:20,520 --> 00:27:22,360 Speaker 2: response right is just ridiculous. 576 00:27:22,840 --> 00:27:25,080 Speaker 5: You need to defend yourself here because you know, humish 577 00:27:25,160 --> 00:27:25,520 Speaker 5: kind of guy. 578 00:27:25,560 --> 00:27:27,640 Speaker 4: Ehodaently is your new kind of. 579 00:27:28,040 --> 00:27:30,240 Speaker 1: Slight conspiracy theorists, humish kind of guy. 580 00:27:30,680 --> 00:27:32,920 Speaker 4: This is what happens when the British come. They don't 581 00:27:33,000 --> 00:27:34,240 Speaker 4: like the Dow, they don't. 582 00:27:34,119 --> 00:27:39,760 Speaker 9: Like they're anti America. 583 00:27:42,280 --> 00:27:45,760 Speaker 2: Stay with us, malplinpag Savanna's coming up off to this, 584 00:27:54,880 --> 00:27:56,560 Speaker 2: would like to bring in Nati Richards and the chief 585 00:27:56,560 --> 00:27:59,720 Speaker 2: economist of ADP nat A good morning, Good morning. If 586 00:27:59,760 --> 00:28:01,240 Speaker 2: you took some time off, not that you ever do, 587 00:28:01,480 --> 00:28:03,000 Speaker 2: but if you did, and you didn't know any of 588 00:28:03,000 --> 00:28:05,240 Speaker 2: the economic data and I just showed you jobless claims, 589 00:28:05,320 --> 00:28:07,280 Speaker 2: would you have a decent read on the languor market 590 00:28:07,400 --> 00:28:07,800 Speaker 2: right now? 591 00:28:08,600 --> 00:28:11,320 Speaker 10: Yes, I would think it was pretty strong. But if 592 00:28:11,359 --> 00:28:14,560 Speaker 10: I unpacked it a little bit, then I haven't taken 593 00:28:14,600 --> 00:28:15,440 Speaker 10: a lot of time off. 594 00:28:15,560 --> 00:28:17,080 Speaker 6: Actually I've been a mock. 595 00:28:18,560 --> 00:28:23,640 Speaker 10: I actually identify four crosswalks between macro trends that are 596 00:28:23,720 --> 00:28:26,760 Speaker 10: big in the making and also the very granular real 597 00:28:26,800 --> 00:28:28,960 Speaker 10: time data that we're seeing. Then the first one is 598 00:28:29,000 --> 00:28:32,800 Speaker 10: the consumer. That consumer spending, which you're seeing picked up 599 00:28:32,800 --> 00:28:36,080 Speaker 10: in the GDP numbers, has been a resilient driver of 600 00:28:36,119 --> 00:28:38,400 Speaker 10: the labor market as well. So where you see strength 601 00:28:38,440 --> 00:28:41,240 Speaker 10: in the consumer, you're seeing strength in the jobs market, 602 00:28:41,480 --> 00:28:45,040 Speaker 10: namingly leisure and hospitality, and there's some trade and transportation 603 00:28:45,160 --> 00:28:48,000 Speaker 10: that has been strong. But then you see this other 604 00:28:48,080 --> 00:28:51,440 Speaker 10: macro theme of uncertainty, and I think that's depressing some 605 00:28:51,640 --> 00:28:55,760 Speaker 10: job gains in professional services. So there's a lot going 606 00:28:55,800 --> 00:28:59,680 Speaker 10: on between the big picture macro trends and the smaller, granular, 607 00:28:59,720 --> 00:29:02,800 Speaker 10: real time hiring that businesses are doing right now. 608 00:29:02,920 --> 00:29:06,240 Speaker 5: How much is there stealth firing or sort of attrition 609 00:29:06,440 --> 00:29:09,479 Speaker 5: plans that are in place that don't make it some 610 00:29:09,560 --> 00:29:13,160 Speaker 5: of the overall numbers as necessarily job losses in the 611 00:29:13,200 --> 00:29:14,000 Speaker 5: traditional way. 612 00:29:14,360 --> 00:29:16,120 Speaker 10: You know, this is a super and I'm glad you 613 00:29:16,160 --> 00:29:19,400 Speaker 10: asked me this question because it's a super complex question 614 00:29:20,120 --> 00:29:22,720 Speaker 10: because what we're seeing on the part of the employer 615 00:29:22,800 --> 00:29:24,200 Speaker 10: may not be demand driven. 616 00:29:24,760 --> 00:29:25,800 Speaker 6: First of all, we had this. 617 00:29:25,880 --> 00:29:31,280 Speaker 10: Great, big, great resignation in twenty twenty two, and young 618 00:29:31,320 --> 00:29:34,680 Speaker 10: people are supposed to turn over, they're supposed to leave 619 00:29:34,720 --> 00:29:37,320 Speaker 10: these jobs. They're staying put. And so there's a little 620 00:29:37,360 --> 00:29:40,680 Speaker 10: bit less hiring because people are staying put, and then 621 00:29:40,720 --> 00:29:43,280 Speaker 10: you have the effect of AI. There's been new research 622 00:29:43,320 --> 00:29:46,880 Speaker 10: from Stanford that was out using ADP data. A paper 623 00:29:47,040 --> 00:29:50,920 Speaker 10: was released yesterday saying that in AI exposed fields like 624 00:29:51,000 --> 00:29:54,760 Speaker 10: software developers or customer service reps, you are seeing an 625 00:29:54,800 --> 00:29:58,440 Speaker 10: impact in early career. So you can't look at the macro. 626 00:29:58,560 --> 00:30:00,680 Speaker 10: You have to dig beneath the SURFA to see all 627 00:30:00,840 --> 00:30:03,880 Speaker 10: the things that are different about this labor market, making 628 00:30:03,920 --> 00:30:06,960 Speaker 10: it very challenging to predict its next moves. 629 00:30:07,040 --> 00:30:09,520 Speaker 5: But do you get a sense of whether it is 630 00:30:09,600 --> 00:30:12,600 Speaker 5: weakening in a way that would justify some sort of 631 00:30:12,760 --> 00:30:16,400 Speaker 5: FED move or that would require some sort of policy adjustment, 632 00:30:16,840 --> 00:30:20,200 Speaker 5: or is it just transforming. Is it just a structural 633 00:30:20,240 --> 00:30:23,040 Speaker 5: shift that has nothing to do with policy. Frankly, it 634 00:30:23,080 --> 00:30:24,680 Speaker 5: has to do everything with technology. 635 00:30:24,760 --> 00:30:27,520 Speaker 10: Yes, and yes, and that's what makes it so hard. Yes, 636 00:30:27,560 --> 00:30:30,240 Speaker 10: it is weakening. We are seeing a slow down and 637 00:30:30,360 --> 00:30:32,720 Speaker 10: hiring momentum. It's a slow down from the beginning of 638 00:30:32,760 --> 00:30:35,440 Speaker 10: the year. It's a slow down from last year. Some 639 00:30:35,480 --> 00:30:38,640 Speaker 10: of that is what Chair Pal said in his speech, 640 00:30:38,720 --> 00:30:41,640 Speaker 10: that we're seeing lower supply, lower demand, but still some 641 00:30:41,720 --> 00:30:44,200 Speaker 10: equilibrium that gives us a pretty good unemployment rate. 642 00:30:44,400 --> 00:30:45,840 Speaker 6: But yes, it is structural. 643 00:30:45,880 --> 00:30:51,040 Speaker 10: We're seeing aging demographics really cut into labor and these 644 00:30:51,160 --> 00:30:55,760 Speaker 10: nascent technologies affecting early career in real time. So yes 645 00:30:55,840 --> 00:30:59,240 Speaker 10: and yes, it's both, and that's why you can't predict it. 646 00:30:59,280 --> 00:31:02,520 Speaker 10: You're going to see companies be hesitant and slow down. 647 00:31:02,680 --> 00:31:05,880 Speaker 10: They're hiring because of macro trends that have nothing to 648 00:31:05,920 --> 00:31:08,520 Speaker 10: do with their customer base, and then they're going to 649 00:31:08,560 --> 00:31:10,480 Speaker 10: be come back in the market and hire. 650 00:31:10,240 --> 00:31:11,000 Speaker 4: When they need to. 651 00:31:11,440 --> 00:31:14,040 Speaker 10: And so we won't know if a one month slow 652 00:31:14,080 --> 00:31:18,320 Speaker 10: down is indicative of a really weakening labor market or 653 00:31:18,360 --> 00:31:20,280 Speaker 10: just some hesitancy. So we have to look at a 654 00:31:20,360 --> 00:31:22,560 Speaker 10: couple more months to get that trend right. The Ocean 655 00:31:22,600 --> 00:31:24,680 Speaker 10: First Financial CEO is just on. He was saying with 656 00:31:24,720 --> 00:31:27,720 Speaker 10: his commercial clients, they're not hiring as much because of AI. 657 00:31:28,200 --> 00:31:30,720 Speaker 10: You were at Jackson Hole, the theme was labor and transition, 658 00:31:30,840 --> 00:31:34,440 Speaker 10: Yet you said no one presented a paper on artificial intelligence. 659 00:31:35,000 --> 00:31:37,320 Speaker 10: Is the FED too late to really understanding what's going on? 660 00:31:37,440 --> 00:31:39,040 Speaker 10: You know, it is so new and it's a great 661 00:31:39,120 --> 00:31:42,760 Speaker 10: question these themes, these papers in general, I mean, economists 662 00:31:43,200 --> 00:31:47,240 Speaker 10: have a lot of good attributes being on track all 663 00:31:47,280 --> 00:31:49,880 Speaker 10: the time in the micro data is not always one 664 00:31:49,920 --> 00:31:52,440 Speaker 10: of them, so some of them, I know, it's a 665 00:31:52,440 --> 00:31:56,920 Speaker 10: big reveal. So these papers are really important. They had 666 00:31:56,960 --> 00:32:01,160 Speaker 10: big themes like fertility and population growth and mobility. 667 00:32:01,160 --> 00:32:02,920 Speaker 8: Well, what's happening right in front of them right now. 668 00:32:03,120 --> 00:32:06,320 Speaker 10: But AI is harder because you have to have granular data. 669 00:32:06,360 --> 00:32:08,760 Speaker 10: And that's why this paper that I mentioned from Stanford, 670 00:32:08,800 --> 00:32:12,840 Speaker 10: looking at ADP's millions of job titles, you actually see 671 00:32:13,120 --> 00:32:17,160 Speaker 10: the effect AI is happening. So for employers there are 672 00:32:17,200 --> 00:32:20,680 Speaker 10: some big investments in AI. Some of that investment will 673 00:32:20,720 --> 00:32:25,080 Speaker 10: augment career, so for later career, more tenured workers, AI 674 00:32:25,280 --> 00:32:28,800 Speaker 10: is seen to boost productivity, and those investments are being 675 00:32:28,840 --> 00:32:32,480 Speaker 10: made by companies. But for jobs that are easily automated, 676 00:32:32,560 --> 00:32:35,760 Speaker 10: you might see a transition of those workers, and you're 677 00:32:35,800 --> 00:32:38,520 Speaker 10: already seeing that transition happening. I think it's going to 678 00:32:38,520 --> 00:32:41,160 Speaker 10: be short term. I think labor shifts to where the 679 00:32:41,200 --> 00:32:44,080 Speaker 10: puck is heading when it comes to productivity. But we're 680 00:32:44,120 --> 00:32:46,960 Speaker 10: in the midst of that transformation right now. And yes 681 00:32:47,000 --> 00:32:49,200 Speaker 10: it's not really being picked up in economic models. 682 00:32:49,280 --> 00:32:51,240 Speaker 1: If you want to just tune again, welcome to the program. 683 00:32:51,280 --> 00:32:54,040 Speaker 2: Just moments ago some economic data on GDP and on 684 00:32:54,160 --> 00:32:56,920 Speaker 2: jobless claims. Mi McKee standing by was a little bit more. 685 00:32:57,080 --> 00:32:58,840 Speaker 2: Might you've had a second look, what'd you say. 686 00:32:59,000 --> 00:33:00,520 Speaker 4: Well, we can do. It's under the hood here. 687 00:33:00,600 --> 00:33:03,320 Speaker 11: And the basic reason we saw a rise in GDP 688 00:33:03,480 --> 00:33:06,320 Speaker 11: in the first revision for the second quarter is personal 689 00:33:06,320 --> 00:33:09,320 Speaker 11: consumption rose to one point six percent from one point 690 00:33:09,360 --> 00:33:13,880 Speaker 11: four percent. In business investment significantly increased, non residential fixed 691 00:33:13,920 --> 00:33:16,840 Speaker 11: investment up five point seven percent. It was one point 692 00:33:16,960 --> 00:33:21,080 Speaker 11: nine percent in the original print. Exports were down one 693 00:33:21,120 --> 00:33:24,360 Speaker 11: point three percent, a little bit less than they were 694 00:33:24,360 --> 00:33:27,560 Speaker 11: in the initial print, and imports were down twenty nine 695 00:33:27,600 --> 00:33:32,080 Speaker 11: point eight percent, basically unchanged in terms of overall trade numbers, 696 00:33:32,080 --> 00:33:34,520 Speaker 11: but we did see that shift from the first quarter 697 00:33:34,560 --> 00:33:37,360 Speaker 11: to second quarter where imports were huge in the first 698 00:33:37,400 --> 00:33:41,480 Speaker 11: quarter and dropped off negative actually in the second quarter. 699 00:33:41,720 --> 00:33:45,960 Speaker 11: And then finally we had the federal government down spending 700 00:33:46,160 --> 00:33:49,320 Speaker 11: down four point seven percent and non defense spending down 701 00:33:49,360 --> 00:33:52,280 Speaker 11: twelve point five percent, So a big drop there in 702 00:33:52,720 --> 00:33:55,320 Speaker 11: what the government was spending and the bottom line, and 703 00:33:55,400 --> 00:33:57,560 Speaker 11: Neili will appreciate this, I guess as one of those 704 00:33:57,560 --> 00:34:00,680 Speaker 11: economists who looks at the micro and macro numbers is 705 00:34:00,720 --> 00:34:04,320 Speaker 11: that real final sales to domestic purchasers were up one 706 00:34:04,320 --> 00:34:08,200 Speaker 11: point six percent over one point one percent in the 707 00:34:08,440 --> 00:34:12,799 Speaker 11: first initial print. Overall real final sales six point eight 708 00:34:12,920 --> 00:34:17,200 Speaker 11: percent from six point three percent, So we have a 709 00:34:17,200 --> 00:34:20,160 Speaker 11: little bit stronger GDP than we thought we had in 710 00:34:20,200 --> 00:34:20,879 Speaker 11: the second quarter. 711 00:34:20,920 --> 00:34:22,960 Speaker 4: Of course, now it's all about quarter. 712 00:34:22,800 --> 00:34:23,840 Speaker 1: Three Mi mckaye. 713 00:34:23,880 --> 00:34:26,640 Speaker 2: Just before you go, it feels like in April the 714 00:34:26,680 --> 00:34:28,960 Speaker 2: wisdom paralysis and the economy. A lot of people have 715 00:34:29,160 --> 00:34:31,160 Speaker 2: back trying to work out what was happening with policy. 716 00:34:31,480 --> 00:34:34,720 Speaker 2: Are you getting a read, a clean read on anything 717 00:34:34,760 --> 00:34:37,359 Speaker 2: to do with just things bouncing back that maybe we 718 00:34:37,400 --> 00:34:39,839 Speaker 2: will see that reacceleration as the year progresses and people 719 00:34:39,920 --> 00:34:41,480 Speaker 2: re engage with the economy. 720 00:34:41,760 --> 00:34:42,439 Speaker 4: I think we're too. 721 00:34:42,360 --> 00:34:44,359 Speaker 11: Far away from the second quarter numbers to say that 722 00:34:44,400 --> 00:34:47,160 Speaker 11: they have this revision has much bearing on what's going 723 00:34:47,200 --> 00:34:50,160 Speaker 11: to happen. The good news was that businesses were spending 724 00:34:50,280 --> 00:34:53,560 Speaker 11: in the second quarter, and that's been what everybody's watching. 725 00:34:53,600 --> 00:34:55,160 Speaker 4: Were they going to hold off or not? 726 00:34:55,680 --> 00:34:58,440 Speaker 11: Consumer spending continues at a slower pace than it had 727 00:34:58,719 --> 00:35:00,319 Speaker 11: but they're still hanging in there. 728 00:35:00,600 --> 00:35:01,680 Speaker 4: So where do we go from here? 729 00:35:01,719 --> 00:35:05,239 Speaker 11: Everybody's been waiting to see what effect the tariffs would have, 730 00:35:05,280 --> 00:35:06,960 Speaker 11: and this is about the time when we're going to 731 00:35:07,000 --> 00:35:07,560 Speaker 11: start seeing that. 732 00:35:07,840 --> 00:35:10,040 Speaker 2: Mimi kay, I appreciate it, Mike, thank you. Sir As 733 00:35:10,080 --> 00:35:11,839 Speaker 2: always might come the tank to that NATA is still 734 00:35:11,840 --> 00:35:13,520 Speaker 2: with us. NATA, we wanted a word from you on 735 00:35:13,520 --> 00:35:15,960 Speaker 2: the Federal serve. September in some ways feels like an 736 00:35:15,960 --> 00:35:18,319 Speaker 2: easy co now they're going to cut rights. How would 737 00:35:18,360 --> 00:35:21,080 Speaker 2: you set things out for people for September and beyond 738 00:35:21,360 --> 00:35:22,919 Speaker 2: into twenty six of the Federal Serve. 739 00:35:23,040 --> 00:35:25,360 Speaker 10: I think it's really helpful to look at how the 740 00:35:25,400 --> 00:35:30,440 Speaker 10: FED has moved historically, which is in small bites, moderated 741 00:35:30,560 --> 00:35:34,560 Speaker 10: over a long time prime That may not be the 742 00:35:34,560 --> 00:35:37,280 Speaker 10: way that they can act now because there's so many 743 00:35:37,360 --> 00:35:40,720 Speaker 10: moving parts of this economy. Whether you think that tariffs 744 00:35:40,760 --> 00:35:45,000 Speaker 10: are a one time price increase or have ripple effects, 745 00:35:46,120 --> 00:35:50,000 Speaker 10: the fact is the lags between monetary policy and the 746 00:35:50,080 --> 00:35:53,200 Speaker 10: lags between what's going on in the economy, they might 747 00:35:53,239 --> 00:35:57,200 Speaker 10: miss each other. And so I expect a FED that 748 00:35:57,280 --> 00:36:00,600 Speaker 10: will be constantly data driven and may have to pause 749 00:36:00,960 --> 00:36:04,160 Speaker 10: to recalibrate where the economy is moving. I don't think 750 00:36:04,200 --> 00:36:06,319 Speaker 10: it's going to be clear to them even when they 751 00:36:06,320 --> 00:36:06,960 Speaker 10: start acting. 752 00:36:07,800 --> 00:36:11,360 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 753 00:36:11,360 --> 00:36:14,640 Speaker 2: in markets, economics, and geopolitics. You can watch the show 754 00:36:14,760 --> 00:36:17,680 Speaker 2: live on Bloomberg TV weekday mornings from six am to 755 00:36:17,800 --> 00:36:21,560 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 756 00:36:21,719 --> 00:36:23,960 Speaker 2: or anywhere else you listen, and, as always, on the 757 00:36:23,960 --> 00:36:26,399 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.