WEBVTT - Bloomberg Surveillance TV: November 10th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Ameri Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.680 Terminal and the Bloomberg Business app. Has turned to the 0:00:36.680 --> 0:00:40.280 Federal Reserve policymakers remaining divided ahead of the December meeting. 0:00:40.320 --> 0:00:43.159 The San Francisco FED President Mary Daily, writing in a 0:00:43.159 --> 0:00:45.920 blog this morning, we must ask ourselves, are we in 0:00:45.960 --> 0:00:49.080 the nineteen seventies or the nineteen nineties. We can't ignore 0:00:49.080 --> 0:00:52.040 the seventies or the post pandemic inflation run up, but 0:00:52.560 --> 0:00:55.200 we can't ignore the rest of history either. The Fed 0:00:55.240 --> 0:00:57.800 President Mary Daily joined us now for more. President Daily, 0:00:57.840 --> 0:01:00.000 welcome back to the program. Always good to see you. 0:01:00.160 --> 0:01:02.640 Let's just start with that question that you ask yourself, 0:01:02.960 --> 0:01:05.240 what's guiding your assessment of where we are? 0:01:06.920 --> 0:01:10.040 So I'm looking at both inflation and productivity. And if 0:01:10.040 --> 0:01:13.160 you look at inflation you're seeing that it's been pretty 0:01:13.200 --> 0:01:16.640 contained so far in the goods prices which have been 0:01:16.640 --> 0:01:19.360 directly tariff and then you look at the other parts 0:01:19.360 --> 0:01:22.240 of inflation, you just don't see much of a run up. 0:01:22.280 --> 0:01:25.319 So that's good news, and inflation expectations what people expect 0:01:25.600 --> 0:01:29.000 remain very well anchored. Look at productivity and you see 0:01:29.040 --> 0:01:32.240 that productivity is rising GDP growth is rising while the 0:01:32.319 --> 0:01:34.760 labor market is slowing. So that tells me there's a 0:01:34.800 --> 0:01:38.000 little bit of that boost coming from firms looking to 0:01:38.000 --> 0:01:40.360 do more with less, but that's also causing a slow 0:01:40.400 --> 0:01:42.640 down in the labor market. So the fifty basis point 0:01:42.680 --> 0:01:46.360 adjustment we've made has helped support the labor market, but 0:01:46.480 --> 0:01:49.600 still keeps policy restrictive so that we can put downward 0:01:49.600 --> 0:01:50.480 pressure on inflation. 0:01:51.360 --> 0:01:54.120 President Daily, what are you looking at to determine whether 0:01:54.160 --> 0:01:56.360 it's the nineteen seventies the nineteen nineties. 0:01:57.560 --> 0:01:59.920 Well, I'm going to really look at things that improve 0:02:00.080 --> 0:02:02.960 productivity to think about the nineties, and it's more than 0:02:03.080 --> 0:02:06.680 just the stock market valuations for AI companies. It really 0:02:06.760 --> 0:02:09.680 is about the companies out there who might be using 0:02:09.720 --> 0:02:12.640 AI and then asking them, going directly to them and 0:02:12.680 --> 0:02:14.000 asking them what's it doing. 0:02:13.840 --> 0:02:16.359 For your bottom line? And how are you using it? 0:02:16.600 --> 0:02:20.079 And what we're hearing are pretty encouraging, but very early signs. 0:02:20.280 --> 0:02:22.320 They see how it can help their bottom line, how 0:02:22.360 --> 0:02:25.880 can improve their productivity, even how they can be supportive 0:02:25.919 --> 0:02:28.000 of their workers, give them more interesting work, take the 0:02:28.080 --> 0:02:30.639 less interesting work away. But they all tell us it's 0:02:30.680 --> 0:02:33.120 early days, so more to come on that. And then 0:02:33.160 --> 0:02:36.000 on the inflation part, are we in the nineteen seventies 0:02:36.280 --> 0:02:40.360 really asking employers and firms what are you doing with prices? 0:02:40.680 --> 0:02:43.120 Are you thinking about raising your prices? How are you 0:02:43.320 --> 0:02:45.600 going to think about losing volumes if you do so 0:02:45.760 --> 0:02:49.400 in a slowing economy, especially for consumers from the fiftieth 0:02:49.400 --> 0:02:52.600 percentile down. And putting those two things together, I think 0:02:52.639 --> 0:02:55.760 we'll get a lot of clarity about which direction we're heading. 0:02:55.760 --> 0:02:59.240 And with policy you know, been slightly adjusted, we are 0:02:59.280 --> 0:03:01.960 in a good place to continue to evaluate the information 0:03:02.120 --> 0:03:05.840 before we make any decisions. We can't know Xante before 0:03:05.919 --> 0:03:07.480 the day to come out, and before we get that 0:03:07.560 --> 0:03:10.280 information really what we're facing. We just have to have 0:03:10.360 --> 0:03:12.280 an open mind about which one it could be. 0:03:12.600 --> 0:03:15.000 And maybe other periods of history. I didn't even mention. 0:03:15.080 --> 0:03:18.040 President Daily how different would the neutral rate be if 0:03:18.040 --> 0:03:20.760 it were, say, more like the nineteen seventies or more 0:03:20.800 --> 0:03:24.000 like the nineteen nineties. Just how different would FED policy 0:03:24.040 --> 0:03:27.560 be in response to one or the other paradigm. 0:03:28.160 --> 0:03:31.320 Well, you know, there's many nuanced ways it could affect 0:03:31.320 --> 0:03:33.160 the neutral rate. But I can back up from that 0:03:33.280 --> 0:03:35.520 and just ask what were the policy remedies. 0:03:35.720 --> 0:03:37.720 If you think we're about to have. 0:03:37.600 --> 0:03:40.920 An inflation run up, then we obviously would have to 0:03:40.960 --> 0:03:44.160 hold policy tighter for longer because we wouldn't want that 0:03:44.280 --> 0:03:48.480 to occur. You know, honestly, Americans have endured already too 0:03:48.560 --> 0:03:50.800 much inflation, and we really need to get that back 0:03:50.840 --> 0:03:53.960 down to two percent to restore price stability, as we've 0:03:54.000 --> 0:03:57.800 committed to. On the other side, if it's productivity, you 0:03:57.840 --> 0:04:01.480 would start seeing the economy run a little bit longer. 0:04:01.760 --> 0:04:03.880 Maybe if you go back to the debates of the nineties, 0:04:04.040 --> 0:04:07.480 you know, we saw the labor market slow. Workers were insecure, 0:04:07.560 --> 0:04:10.480 but the labor market had unemployment that was fairly low, 0:04:10.840 --> 0:04:13.400 and many at the time were worried that could spur inflation. 0:04:14.000 --> 0:04:18.080 But Greenspan Chairman green Span held on with his colleagues. 0:04:18.120 --> 0:04:20.839 They didn't raise rates, and what you saw was, you know, 0:04:20.880 --> 0:04:23.560 the nineties, which was a booming time, and we ended 0:04:24.040 --> 0:04:26.839 around target inflation and we had a productivity boom. So 0:04:26.880 --> 0:04:29.560 you're trying to balance those two things together, and it 0:04:29.680 --> 0:04:32.800 means not looking just at headlined information, but getting below 0:04:32.880 --> 0:04:37.160 that information, talking to firms, talking to consumers, talking to workers, 0:04:37.440 --> 0:04:39.880 really on the ground work like we do at the 0:04:39.920 --> 0:04:42.160 reserve banks and other places. You know, the FED is 0:04:42.200 --> 0:04:44.520 built to do this on the ground work as well 0:04:44.560 --> 0:04:45.720 as look at the published data. 0:04:46.040 --> 0:04:48.599 President Daily, reading the blog post this morning, it seems 0:04:48.600 --> 0:04:50.960 like you're leaning more towards the nineteen ninety side of 0:04:50.960 --> 0:04:52.359 things than in nineteen seventies. 0:04:52.400 --> 0:04:52.880 Is that right? 0:04:54.279 --> 0:04:56.400 Well, you know right now, you know, I'm in the 0:04:56.400 --> 0:04:59.080 West in I have the nine states in the Western 0:04:59.160 --> 0:05:02.280 United States, and it's not just Silicon Valley that seems 0:05:02.279 --> 0:05:04.960 interested in AI. No matter who we talk to, whether 0:05:05.040 --> 0:05:11.080 they're you know, small businesses, medium or large businesses, manufacturing, tourism, etc. 0:05:11.440 --> 0:05:14.479 They're using AI in a way that they say is 0:05:14.560 --> 0:05:18.120 going to improve their productivity and they're already seeing parts 0:05:18.120 --> 0:05:20.279 of it. So when I see that, I'm like, Okay, 0:05:20.279 --> 0:05:22.960 we need to think about that. What really will spur 0:05:23.120 --> 0:05:25.200 this is an ongoing thing, is if they start to 0:05:25.279 --> 0:05:26.640 change their business processes. 0:05:26.680 --> 0:05:28.480 So that's what I'm looking at now. 0:05:28.720 --> 0:05:31.159 That means, but I guess a different way to say 0:05:31.160 --> 0:05:33.640 that is we cannot take our eyes off inflation again. 0:05:33.920 --> 0:05:37.120 Americans have endured high inflation too long. That's our mandate. 0:05:37.360 --> 0:05:40.000 So while I'm looking for productivity gains and seeing if 0:05:40.000 --> 0:05:43.680 they're going to continue, I'm also keeping my eye completely 0:05:43.680 --> 0:05:46.320 focused on inflation to make sure that it doesn't pick 0:05:46.400 --> 0:05:48.680 up in a way that would suggest we need to 0:05:48.720 --> 0:05:50.440 do more or we need to hold longer. 0:05:50.560 --> 0:05:52.560 President Teddy, how would you respond to the criticism that 0:05:52.600 --> 0:05:55.000 the Federal Reserve as an institution has taken its side 0:05:55.200 --> 0:05:57.720 off inflation, that inflation is close to the three than 0:05:57.720 --> 0:05:59.359 it is the two, and the Fed's been kind of 0:05:59.360 --> 0:05:59.880 interest rates. 0:06:01.480 --> 0:06:03.880 You know, I don't think that if you unpack the 0:06:03.880 --> 0:06:06.920 inflation data you really see signs of that. It's true 0:06:07.000 --> 0:06:09.680 that headline inflation is printing at that level, but you 0:06:09.760 --> 0:06:12.360 have to take a part that inflation and ask how 0:06:12.440 --> 0:06:15.280 much of it is the effective tarots passing through the 0:06:15.360 --> 0:06:18.159 goods prices that we expect to be a one time, 0:06:18.480 --> 0:06:21.919 price level adjustment, and not a consistent run up in inflation. 0:06:22.000 --> 0:06:24.120 And if you unpack the data, what you see is 0:06:24.160 --> 0:06:27.320 you don't see inflation running up in services or housing, 0:06:27.520 --> 0:06:31.320 and importantly, you don't see it spreading into inflation expectations 0:06:31.520 --> 0:06:33.520 that would be the thing that would continue to run 0:06:33.600 --> 0:06:36.360 up inflation coming forward. We also see a labor market 0:06:36.440 --> 0:06:39.240 that's softening and wage growth that is moderating, so you're 0:06:39.279 --> 0:06:41.120 really not going to see a lot of pressure coming 0:06:41.360 --> 0:06:43.839 on the cost side of labor. So I put those 0:06:43.839 --> 0:06:45.960 things together, and we don't want to make the mistake 0:06:46.000 --> 0:06:48.880 of holding on too long for rates only to find 0:06:48.880 --> 0:06:50.080 out we injure the economy. 0:06:50.200 --> 0:06:51.880 Presidents, any can we just pick up on the cost 0:06:51.880 --> 0:06:54.760 of labor. I think this is really important right now, clearly, 0:06:55.200 --> 0:06:56.280 and it's hard to dispute this. 0:06:56.279 --> 0:06:56.960 It's in the data. 0:06:56.960 --> 0:06:59.640 We've had a massive step down and pay rolls growths. 0:07:00.320 --> 0:07:03.360 That is a little bit more confusing. Is it demand? 0:07:03.760 --> 0:07:06.360 Is it cyclical? Is it structural? Is it something else? 0:07:06.480 --> 0:07:09.479 Like immigration? What's your town right now? What can you 0:07:09.520 --> 0:07:12.000 point to that helps tell you it's one thing over 0:07:12.040 --> 0:07:12.360 the other. 0:07:13.800 --> 0:07:16.880 Yes, you look at prices. In this case, the price 0:07:16.920 --> 0:07:20.640 of labor as wages. If it was simply a supply 0:07:21.120 --> 0:07:24.600 and firms were still scrambling to find workers to fill 0:07:24.640 --> 0:07:28.280 what was jobs that were supported by the previous immigrants, 0:07:28.640 --> 0:07:31.040 you would find wages going up as they bid for 0:07:31.120 --> 0:07:32.720 workers to try to fill those jobs. 0:07:32.760 --> 0:07:34.160 But that's actually not what you see. 0:07:34.320 --> 0:07:38.080 You see wage growth slowing, even in sectors where immigration 0:07:38.200 --> 0:07:41.720 played a larger role, and so that to me says 0:07:41.720 --> 0:07:44.760 it's a demand shock, a negative demand shock along with 0:07:44.840 --> 0:07:49.280 just a coincidental negative supply shock. So you lost workers, 0:07:49.440 --> 0:07:51.680 but you lost jobs at the same time, or you 0:07:51.720 --> 0:07:55.920 had job growth slowing. And what we're seeing now does 0:07:55.960 --> 0:07:57.160 that continue to net out? 0:07:57.440 --> 0:07:57.600 Right? 0:07:57.760 --> 0:08:00.280 What if the supply of workers doesn't keep going down 0:08:00.320 --> 0:08:02.640 but the demand for workers does well, then we'd end 0:08:02.720 --> 0:08:05.000 up with a rise in unemployment. So have to keep 0:08:05.120 --> 0:08:07.920 squarely focused on those types of things. We're definitely in 0:08:08.000 --> 0:08:13.120 a low firing, low hiring period and interrogating that labor market, 0:08:13.120 --> 0:08:16.160 continuing to watch the information, see what firms do next. 0:08:16.360 --> 0:08:17.960 That's going to be the important part. 0:08:18.080 --> 0:08:19.720 And it's something that a lot of people have said, 0:08:19.880 --> 0:08:22.440 really is the case shape the idea that, particularly on 0:08:22.480 --> 0:08:25.239 the lower end, you have not seen wages keep pace 0:08:25.680 --> 0:08:29.119 with the rest of the income spheres. I just wonder, though, 0:08:29.440 --> 0:08:31.880 how much we are seeing a massive amount of inflation 0:08:31.920 --> 0:08:35.160 and acid prices and how that feeds into what you're 0:08:35.200 --> 0:08:37.920 looking at, especially at a time that may rhyme with 0:08:37.960 --> 0:08:40.000 the nineteen nineties, and we know what happened after the 0:08:40.080 --> 0:08:40.880 nineteen nineties. 0:08:41.200 --> 0:08:43.080 How much do you weigh that? How much do you 0:08:43.320 --> 0:08:46.320 have to pay attention? Well, you know one of. 0:08:46.320 --> 0:08:47.040 The things that you do. 0:08:47.559 --> 0:08:51.440 So financial market conditions are one input into our decision making. 0:08:51.480 --> 0:08:53.400 That one of the many inputs. You know, we have 0:08:53.480 --> 0:08:55.959 two goals, price stability, full employment. We're trying to think 0:08:55.960 --> 0:09:00.640 about what inputs affect those two variables, those two goals. 0:09:00.880 --> 0:09:03.400 But what I look at is if you look under 0:09:03.400 --> 0:09:06.199 the valuations, you know, people are really talking about one 0:09:06.200 --> 0:09:09.520 of two things. This is going to be a transformative technology. 0:09:09.800 --> 0:09:11.720 AI is going to change the world to be like 0:09:11.760 --> 0:09:13.559 electricity or the steam engine. 0:09:13.640 --> 0:09:16.200 And then the people who are a little more skeptical. 0:09:15.800 --> 0:09:18.280 Are saying it's going to be a business as usual technology. 0:09:18.360 --> 0:09:20.960 Think of computers in the Internet. The thing that's true 0:09:20.960 --> 0:09:23.840 about both of those is they're both productive. You get 0:09:23.840 --> 0:09:26.600 productivity from both of those. They both help with growth. 0:09:26.840 --> 0:09:30.280 They both help the pie and the US expand. And 0:09:30.360 --> 0:09:33.080 so we're not talking about a bunch of ideas with 0:09:33.160 --> 0:09:36.760 no backing. We're talking about, you know, equity investors, not 0:09:36.960 --> 0:09:41.240 highly leveraged going in and making banking bets really on 0:09:41.360 --> 0:09:43.840 whether it's going to be transformative or business as usual. 0:09:44.080 --> 0:09:47.239 But everybody agrees on one thing. It will change productivity. 0:09:47.480 --> 0:09:49.880 At the same time, President Daily some people would suggest 0:09:49.920 --> 0:09:52.439 that yes, you will see stocks continue to go up 0:09:52.600 --> 0:09:55.200 in the face of another rate cut, But at the 0:09:55.200 --> 0:09:59.160 same time, the transmission mechanism of the additional cuts are 0:09:59.200 --> 0:10:02.120 slower to take. It's less efficient in terms of the 0:10:02.160 --> 0:10:04.400 pass through just based on how much lending there is, 0:10:04.400 --> 0:10:06.880 whether it's in the private lending sphere or beyond. 0:10:07.400 --> 0:10:08.520 How do you measure. 0:10:08.240 --> 0:10:11.440 These things at a confusing moment, Well, you. 0:10:11.440 --> 0:10:14.679 Know, I guess this argument that we've somehow lost our 0:10:14.679 --> 0:10:18.240 power monetary policy doesn't transmit. I simply don't see it 0:10:18.280 --> 0:10:20.640 in the information. If you go out and you look 0:10:20.679 --> 0:10:24.320 at what happened when inflation was running really, really high, 0:10:24.480 --> 0:10:28.880 we raised rates pretty aggressively, and mortgage interest rates rose rapidly, 0:10:29.000 --> 0:10:32.480 car loan rates rose rapidly, and the economy slowed. Inflation 0:10:32.600 --> 0:10:35.560 came down. Right now, what I'm seeing is we adjust rates. 0:10:35.600 --> 0:10:38.600 Mortgage interest rates come down, not one for one, that's 0:10:38.640 --> 0:10:41.000 not how it works. Usually is less than one for one, 0:10:41.040 --> 0:10:43.320 but they come down. You see a little more activity 0:10:43.320 --> 0:10:45.840 in the housing market, you see a little more activity 0:10:45.840 --> 0:10:48.840 in the borrowing market more generally, and you see that 0:10:48.960 --> 0:10:51.960 dynamic work. So I guess the most important thing is 0:10:52.040 --> 0:10:54.600 just to remember that Monterey policy acts with a lag 0:10:54.840 --> 0:10:57.000 and right now we're making decisions not just for what's 0:10:57.000 --> 0:10:59.240 going to happen next week, but what's going to happen 0:10:59.240 --> 0:11:01.400 in the next six month to a year. So that's 0:11:01.440 --> 0:11:03.599 how we have to think about it, with our forecasts 0:11:03.679 --> 0:11:07.040 and then how we adjust policy as those forecasts evolve. 0:11:07.200 --> 0:11:11.160 How frustrating has it been not to get government data? 0:11:11.280 --> 0:11:14.480 You know, I really want the information, the fullest amount 0:11:14.480 --> 0:11:16.800 of information we can possibly get. But one of the 0:11:16.840 --> 0:11:21.679 things that I think maybe underestimated in public about what 0:11:21.679 --> 0:11:25.160 the FED does is we're regularly relying on government provided 0:11:25.240 --> 0:11:27.560 data that's the gold standard of data in the world. 0:11:27.880 --> 0:11:30.679 We're also relying on private sector surveys which have been 0:11:30.679 --> 0:11:34.120 collected for many, many years, and we can correlate them 0:11:33.920 --> 0:11:37.120 with the government collected data over time and know exactly 0:11:37.320 --> 0:11:39.480 how they relate to one another. And then, of course 0:11:39.480 --> 0:11:43.199 there's really no replacement, especially at inflection points in the economy, 0:11:43.520 --> 0:11:49.880 for talking to businesses, workers, communities, and consumers, asking people 0:11:49.920 --> 0:11:50.920 what they're really doing. 0:11:51.200 --> 0:11:53.280 And then you know, I like to do this, Go to. 0:11:53.240 --> 0:11:56.000 The parking lots of your favorite retail stores and look 0:11:56.040 --> 0:11:57.640 at how many cars are in the parking lot and 0:11:57.640 --> 0:11:58.560 what people are buying. 0:11:58.840 --> 0:11:59.920 That tells you a lot. 0:12:00.240 --> 0:12:03.240 You know, airports are are full, people are out there. 0:12:03.480 --> 0:12:05.199 You can go to you know, go to a sporting 0:12:05.200 --> 0:12:07.320 event or a concert, see how many people are there. 0:12:07.600 --> 0:12:09.800 What you see as an economy that is slower than 0:12:09.800 --> 0:12:13.200 it was. Consumers that are not they're more picky about 0:12:13.200 --> 0:12:16.240 what they spend on, but they're still out there participating 0:12:16.240 --> 0:12:16.960 in the economy. 0:12:17.000 --> 0:12:17.880 And that's how we get the. 0:12:17.840 --> 0:12:21.040 Information we need to make the right decisions that are 0:12:21.080 --> 0:12:23.640 according to our mandates, but mostly for the American people. 0:12:23.760 --> 0:12:24.319 Presidentially. 0:12:24.360 --> 0:12:26.280 You've been working with the FED or on the FED 0:12:26.800 --> 0:12:29.440 Committee for a long long time on these in these debates, 0:12:29.480 --> 0:12:32.000 have you ever seen it more divided than it is 0:12:32.080 --> 0:12:32.439 right now? 0:12:32.480 --> 0:12:33.280 On the FMC. 0:12:35.160 --> 0:12:36.320 He knows, of course. 0:12:36.679 --> 0:12:38.000 I mean, look at the if you look at the 0:12:38.040 --> 0:12:40.520 transcripts and the meeting minutes, and you know it's helpful. 0:12:40.600 --> 0:12:42.760 Go back and look at the nineteen nineties debates, and 0:12:42.800 --> 0:12:45.760 go back and look at the commentary around the nineteen seventies. 0:12:46.040 --> 0:12:49.000 You know it is a misnomer to think people always 0:12:49.040 --> 0:12:51.640 agree the right way to think about it. In my judgment, 0:12:51.679 --> 0:12:54.520 this has been my experience, is that the debate we 0:12:54.640 --> 0:12:57.200 have I wouldn't even call a division. I would call 0:12:57.240 --> 0:13:00.439 it differences of opinion that are really healthy in about 0:13:00.440 --> 0:13:03.160 trying to make policy in an uncertain time. 0:13:03.200 --> 0:13:05.600 With no truth. We don't have truth. 0:13:05.679 --> 0:13:09.840 We have forecasts, we have our best estimates. We have 0:13:10.080 --> 0:13:12.520 taking the evidence and then taking it again and looking 0:13:12.559 --> 0:13:15.560 through it with different lenses. I see that as a 0:13:15.600 --> 0:13:18.240 strength of the committee, a strength of the Federal Reserve, 0:13:18.600 --> 0:13:22.520 and importantly is it is delivering the best possible decisions 0:13:22.520 --> 0:13:26.320 we can make. So I have seen this many times before, 0:13:26.520 --> 0:13:28.680 and I think it's always at inflection points that you 0:13:28.720 --> 0:13:32.160 see the broadest amount of disagreement, and it's exactly what 0:13:32.200 --> 0:13:35.360 I hope people would want from a committee making decisions 0:13:35.400 --> 0:13:38.319 on inflation and full employment. It really does help us 0:13:38.640 --> 0:13:41.120 make sure that we're doing the best we possibly can. 0:13:41.280 --> 0:13:43.160 So you're happy to confirm on the record you have 0:13:43.200 --> 0:13:45.600 not seen Governor Maron and President Smith in a fight 0:13:45.920 --> 0:13:48.200 in the C day meeting. Can we confirm that President 0:13:48.280 --> 0:13:49.920 Daty today that hasn't happened. 0:13:51.440 --> 0:13:53.960 You always try, and yet I'm not a rookie. 0:13:54.880 --> 0:13:57.520 Marry Daty, thank you. That's always good to see you. 0:13:57.679 --> 0:13:58.319 Stay with us. 0:13:58.640 --> 0:14:11.040 Multile Imberg surveillance coming up after this, stop scanning some ground. 0:14:11.120 --> 0:14:14.600 Sarah Hunt Vampindt Saxton words, writing, investors are seeking refuge 0:14:14.600 --> 0:14:19.520 in companies that demonstrate financial resilience, prioritizing steady dividend growers 0:14:19.600 --> 0:14:22.120 and firms with a strong free cash flow needed to 0:14:22.240 --> 0:14:23.440 weather a downturn. 0:14:23.680 --> 0:14:25.880 Sarah joins us now for more. Sarah Good Mornick Heaoy morning. 0:14:25.920 --> 0:14:28.320 There's some tech companies determined to eat into that cash flow, 0:14:28.320 --> 0:14:28.720 aren't they. 0:14:29.080 --> 0:14:31.120 They are definitely determined to eat into it. And I 0:14:31.160 --> 0:14:33.240 think that between that and the fact that they're raising 0:14:33.320 --> 0:14:35.080 some debt is what's given some people. 0:14:34.840 --> 0:14:36.560 Some pause on the story right now. 0:14:36.760 --> 0:14:38.960 So I think you mentioned earlier today sticker shock that 0:14:39.000 --> 0:14:40.800 people are getting from some of these investments, So I 0:14:40.800 --> 0:14:42.000 think that there is an issue there. 0:14:42.040 --> 0:14:44.520 So it's AI the consumer slowed down. I mentioned that 0:14:44.600 --> 0:14:46.760 note from Stuart Kaisher City. There's been a range of 0:14:46.800 --> 0:14:48.320 reasons for the pullback. What do you think is the 0:14:48.320 --> 0:14:50.000 dominant one in the last week. 0:14:50.880 --> 0:14:53.120 It's interesting. I think it's really the end of all 0:14:53.160 --> 0:14:53.360 of it. 0:14:53.400 --> 0:14:55.440 And I think the government shutdown didn't matter until it 0:14:55.480 --> 0:14:57.200 started to matter. And when you start to see those 0:14:57.240 --> 0:14:59.200 pain points, people start thinking about when do we get 0:14:59.200 --> 0:15:01.360 this resolved, how do we get this resolved? And how 0:15:01.400 --> 0:15:04.360 bad does it make things going forward? And I think 0:15:04.680 --> 0:15:06.840 all of a sudden that started to matter again. You 0:15:06.920 --> 0:15:09.640 start to layer in enough things and it's the totality 0:15:09.640 --> 0:15:11.760 of them, I think, more than an individual one. 0:15:12.000 --> 0:15:12.800 Is it noise or. 0:15:12.760 --> 0:15:14.960 Signal the sell off that we saw last week. Is 0:15:15.000 --> 0:15:17.400 it something that is viable and just a blip that 0:15:17.440 --> 0:15:20.040 offers opportunities, or is it signaling that there is some 0:15:20.120 --> 0:15:22.840 weakness under the surface that needs to be paid attention to. 0:15:23.520 --> 0:15:25.640 I think the magnitude of some of the declines on 0:15:25.680 --> 0:15:27.800 the MISSUS gives you a little bit more pause than 0:15:27.920 --> 0:15:29.120 you would have normally. 0:15:29.160 --> 0:15:30.800 I think there's nothing wrong. 0:15:30.560 --> 0:15:33.840 With having the market stabilize and or have some sort 0:15:33.840 --> 0:15:36.240 of a down draft for a while after hitting record high. 0:15:36.120 --> 0:15:37.720 After record high after record high. 0:15:37.920 --> 0:15:41.320 So this is not like there's some massive change underneath, 0:15:41.520 --> 0:15:44.240 but I do think that there is some willingness now 0:15:44.320 --> 0:15:46.720 to look out and say these better grow, these earnings 0:15:46.720 --> 0:15:48.720 better grow into some of these valuations, and or these 0:15:48.800 --> 0:15:51.320 valuations are on a high level. Markets don't generally correct 0:15:51.360 --> 0:15:53.960 because of valuation, but it certainly could give things pause. 0:15:54.000 --> 0:15:56.000 And I don't think you've seen a major downdraft here, 0:15:56.000 --> 0:15:58.320 but you definitely have seen some under the surface. You've 0:15:58.320 --> 0:16:01.080 seen a lot more percolating and big drawdowns than you 0:16:01.160 --> 0:16:02.520 normally would in individual names. 0:16:02.640 --> 0:16:05.200 One thing that's raised some concerns, at least in conversations 0:16:05.200 --> 0:16:07.000 that I've had, is that one of the biggest players 0:16:07.000 --> 0:16:09.120 in this space is open Ai. And open Ai is 0:16:09.160 --> 0:16:12.080 a private company that's expanding very rapidly and has circular 0:16:12.120 --> 0:16:14.080 deals with all of the big tech players, and you 0:16:14.120 --> 0:16:16.720 don't have visibility into what they're doing, who they're hiring, 0:16:16.720 --> 0:16:19.240 how they're spending, or what their plans to growth grow 0:16:19.320 --> 0:16:22.920 in terms of specific new programming. How much does that 0:16:22.960 --> 0:16:25.720 give you true pause and actually make you lighten up 0:16:25.960 --> 0:16:28.560 some of your exposure to the AI players. 0:16:29.120 --> 0:16:32.360 I think the real question is the functionality and how 0:16:32.360 --> 0:16:34.840 we are going to use everything. I don't disagree on 0:16:34.840 --> 0:16:36.280 the open AI, and I think that part of the 0:16:36.320 --> 0:16:38.640 issue was the serve of discussion around whether or not 0:16:38.640 --> 0:16:40.240 there needed to be guarantees or needed to be this, 0:16:40.360 --> 0:16:40.920 or needed. 0:16:40.680 --> 0:16:42.040 To be that. In the end, we're going to need 0:16:42.280 --> 0:16:43.880 a lot more power. Are we going to need as 0:16:43.920 --> 0:16:45.400 much as we think we are. I'm not sure. 0:16:45.440 --> 0:16:48.160 I think that there will be efficiencies in there, but 0:16:48.240 --> 0:16:50.920 I think that the overall build is going to continue. 0:16:50.960 --> 0:16:54.640 The emphasis on CHAT GPT of all of the different 0:16:54.840 --> 0:16:58.040 large language models is one, but there are other ones 0:16:58.080 --> 0:17:00.520 out there. But I do think that the circular financing 0:17:00.600 --> 0:17:02.920 started to cause people to question it. And every time 0:17:02.960 --> 0:17:04.840 the questions come is when you start to see that 0:17:04.920 --> 0:17:05.639 NASA wobble. 0:17:05.880 --> 0:17:06.880 One reason why. 0:17:06.680 --> 0:17:09.080 This has been such a difficult economy and market to 0:17:09.119 --> 0:17:12.000 call is because you have this sort of secular tech trade. 0:17:12.080 --> 0:17:15.040 John's talked a lot about this overlaid on what could 0:17:15.080 --> 0:17:19.040 be a cyclical shift in the underlying economy. How much 0:17:19.080 --> 0:17:22.680 are you seeing a cyclical shift to the downside. It's 0:17:22.680 --> 0:17:26.440 some of the recent earnings reports, whether it's fast retailers, 0:17:26.480 --> 0:17:29.120 fast casual restaurants, or whether it's some of the other 0:17:29.200 --> 0:17:33.040 margin compression we've seen in other stores versus a sort 0:17:33.080 --> 0:17:35.440 of bottoming out in some ways, like the Mike Wilson's 0:17:35.480 --> 0:17:36.320 of the world seem. 0:17:36.119 --> 0:17:39.040 To think, well, this is going to come down to 0:17:39.480 --> 0:17:41.639 and this is where the tricky the data being not 0:17:41.800 --> 0:17:44.360 available is tricky. It's going to come down a lot 0:17:44.400 --> 0:17:46.480 to the labor market in the near term because what 0:17:46.520 --> 0:17:49.040 has happening there is going to i think, inform both 0:17:49.080 --> 0:17:51.879 the FED and some other areas of what's going to 0:17:51.880 --> 0:17:54.680 happen next. And I think it's hard to figure out 0:17:54.760 --> 0:17:57.280 right now if people are if that's an AI problem, 0:17:57.359 --> 0:17:59.639 if it's an inflation problem, if it's a cost problem. 0:17:59.800 --> 0:18:02.280 All those different pieces are swelling together, and without data, 0:18:02.320 --> 0:18:04.119 it's kind of hard to get a gut check on that. 0:18:04.440 --> 0:18:06.560 But I don't know that you're having a major major 0:18:06.680 --> 0:18:09.439 change until we really start to understand how to use 0:18:09.480 --> 0:18:12.640 the tools. So I'm not sure that it's a secular 0:18:12.680 --> 0:18:14.399 shift in the labor market as so much as we 0:18:14.480 --> 0:18:16.879