WEBVTT - Bloomberg Surveillance TV: November 25th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 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 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.560 --> 0:00:39.600 Peter Sheer of Academy Securities writing, the end of free 0:00:39.600 --> 0:00:42.640 money has been a major factor in the recent downturn 0:00:42.680 --> 0:00:44.920 and could weigh on the economy and markets going forward. 0:00:45.159 --> 0:00:47.800 I think the economy is at a greater risk than 0:00:47.800 --> 0:00:48.800 we've seen in some time. 0:00:48.880 --> 0:00:51.120 Peter joins us. Now, Peter, great to see you, see 0:00:51.159 --> 0:00:51.400 you too. 0:00:51.479 --> 0:00:53.120 This seems to be echoing what we heard from Neil 0:00:53.120 --> 0:00:55.320 Dotta yesterday of Renaissance Macro, where he said that he 0:00:55.360 --> 0:00:57.320 thinks the train may have already left the station when 0:00:57.360 --> 0:01:00.080 it comes to FED rate cuts and the potential damage 0:01:00.560 --> 0:01:02.880 that has been foisted upon the economy. 0:01:03.200 --> 0:01:04.640 Why are you so negative as well. 0:01:05.040 --> 0:01:07.120 So what I'm seeing, I think is what we're calling the 0:01:07.160 --> 0:01:08.880 end of free money and kind of being a bit 0:01:08.959 --> 0:01:10.560 cavalier about that. But there was a time, right if 0:01:10.600 --> 0:01:13.080 you announced you were spending x billion on data centers 0:01:13.160 --> 0:01:15.640 or AI, your stock went up two x And all 0:01:15.680 --> 0:01:17.800 of a sudden, now you're seeing people question that. You're 0:01:17.800 --> 0:01:21.080 seeing stories emerged about ooh, which technology should we use? 0:01:21.080 --> 0:01:22.480 So I think we're going through this breather right. 0:01:22.480 --> 0:01:24.560 A year ago at this time, if you didn't have 0:01:24.600 --> 0:01:27.280 an AI strategy, you were ridiculed as a CEO. Your 0:01:27.319 --> 0:01:29.559 stock was going to suffer. So there was spend, spend, spend. 0:01:29.560 --> 0:01:31.559 There was this kind of real rush to spend, spend, spend. 0:01:32.120 --> 0:01:34.240 Now I think everyone's sitting back, Okay, what do we 0:01:34.280 --> 0:01:34.959 want to spend on? 0:01:35.120 --> 0:01:36.400 What is the best value? 0:01:36.520 --> 0:01:38.880 And the hyperscalers Right, all of a sudden, you can't 0:01:38.920 --> 0:01:41.080 just say you're going to build more and your stock 0:01:41.120 --> 0:01:41.480 goes up. 0:01:41.520 --> 0:01:43.640 So this is kind of this first time. 0:01:43.680 --> 0:01:45.120 I think we might see a bit of an AI 0:01:45.240 --> 0:01:47.080 diet where people are like, Okay, how do we be 0:01:47.160 --> 0:01:48.920 cautious on this? Where do we spend? What do we 0:01:48.960 --> 0:01:51.640 spend on? What technology is emerging. We haven't talked about 0:01:51.680 --> 0:01:53.600 anything out of China yet that could derail some of 0:01:53.600 --> 0:01:54.160 our stocks. 0:01:54.240 --> 0:01:55.440 So I think this is where we get a bit 0:01:55.440 --> 0:01:56.000 of a slowdown. 0:01:56.040 --> 0:01:57.600 Right now, before we get into the details of the 0:01:57.600 --> 0:01:58.920 AI trade, you said the end. 0:01:58.880 --> 0:01:59.520 Of free money. 0:01:59.600 --> 0:02:01.560 I don't want to dive into that because yesterday we 0:02:01.560 --> 0:02:04.040 were talking about tightening liquidity conditions. Now a lot of 0:02:04.080 --> 0:02:06.360 people attributed that to the sell off that we saw 0:02:06.400 --> 0:02:08.840 in things like bitcoin and also the big tech names. 0:02:09.160 --> 0:02:11.280 Why is this now the end of free money with 0:02:11.320 --> 0:02:14.200 the federers are of cutting rates and ending quantitative tightening. 0:02:14.520 --> 0:02:16.280 Well, you've also seen coming back to some of the 0:02:16.320 --> 0:02:19.920 crypto you had the dacos or the digital asseid treasury companies. 0:02:20.040 --> 0:02:22.040 Some are very sophisticated, some do a lot of things, 0:02:22.160 --> 0:02:24.760 some simply buy the underlying And there was a period 0:02:24.800 --> 0:02:26.600 of time right if you bought x amount of ether, 0:02:26.720 --> 0:02:27.880 your stock went up two x. 0:02:28.120 --> 0:02:29.520 All of a sudden, that's not happening. 0:02:29.560 --> 0:02:32.160 So all these trades that we're kind of self perpetuating 0:02:32.440 --> 0:02:35.120 are falling down, and you're having a bit less liquidity 0:02:35.160 --> 0:02:38.000 come through this and everything I hear and see when 0:02:38.000 --> 0:02:41.320 we're talking whether it's consumers, corporate, I feel there's belt tightening. 0:02:41.000 --> 0:02:41.640 Going on everywhere. 0:02:41.639 --> 0:02:42.800 I think people are going to be a little bit 0:02:42.800 --> 0:02:45.680 surprised where as they go through the budgeting process that 0:02:45.760 --> 0:02:50.280 companies are actually shrinking their budgets rather than growing full scale. 0:02:50.880 --> 0:02:53.519 What do you think the administration does in this? Because 0:02:53.560 --> 0:02:56.519 we were speaking with the Commerce Secretary yesterday who was 0:02:56.600 --> 0:02:59.080 beating the drum saying AI has been such a boon 0:02:59.160 --> 0:03:02.000 for our economy. David Sacks, the cryptos are, which also 0:03:02.080 --> 0:03:04.200 has an ear to the administration, was putting on x 0:03:04.320 --> 0:03:08.840 yesterday that it is an AI related investment accounts that 0:03:09.000 --> 0:03:10.920 half of GDP in a reversal. 0:03:10.520 --> 0:03:11.560 Would risk recession. 0:03:12.080 --> 0:03:14.200 Is this an administration that would see the sector as 0:03:14.280 --> 0:03:16.799 too big to fail? As Sam Altman has hinted at 0:03:16.840 --> 0:03:18.520 to the ugarn of others at open AI. 0:03:18.800 --> 0:03:20.120 You know what I think they are doing, I think 0:03:20.160 --> 0:03:23.760 it's rightfully to do, is investing heavily in electricity and 0:03:23.840 --> 0:03:26.160 energy production. Right we are putting money into nuclear, We're 0:03:26.200 --> 0:03:29.600 putting money into everything. That's that's really the bottleneck right 0:03:29.600 --> 0:03:31.200 now is this electricity. And supposedly that's one of the 0:03:31.240 --> 0:03:34.360 arguments with the TPUs versus the GPUs is lower electricity 0:03:34.400 --> 0:03:36.880 US so I think electricity is actually a bottleneck. I 0:03:36.920 --> 0:03:38.600 see the government spending a lot of time on that, 0:03:38.640 --> 0:03:40.720 which fits very much. I know you're sick of hearing it. 0:03:40.760 --> 0:03:43.320 But production for security or prosec I think they are 0:03:43.400 --> 0:03:45.480 trying to figure out mark. I think these are the 0:03:45.520 --> 0:03:47.840 things that the government's trying to make sure goes along. 0:03:47.960 --> 0:03:49.520 I think it's gonna be hard for them to intervene 0:03:49.520 --> 0:03:51.520 directly in a But yes, if we get this AI 0:03:51.600 --> 0:03:54.360 slow down, unless other parts of the economy really pick up, 0:03:54.600 --> 0:03:57.720 we are going to see this potential maybe not a recession, but. 0:03:57.680 --> 0:03:59.480 A slow down. And that's why I'm concerned. How does 0:03:59.480 --> 0:04:00.560 the WELFERFI to play into that? 0:04:00.560 --> 0:04:02.160 At least it has been talking about how just more 0:04:03.280 --> 0:04:06.680 of everyday people of household's own equities at this point, 0:04:06.880 --> 0:04:08.480 and a lot of the gains and equities have been 0:04:08.520 --> 0:04:10.800 tied to AI. If AI starts to take a breather, 0:04:10.920 --> 0:04:12.760 what overall wealth effect does that come back and have 0:04:12.840 --> 0:04:13.800 on the consumer we I think. 0:04:13.720 --> 0:04:15.600 We've already seen a big hit to crypto right Bitcoin 0:04:15.640 --> 0:04:17.240 itself is down six hundred and fifty. 0:04:17.000 --> 0:04:18.800 Billion, and it seems to track very well. 0:04:18.800 --> 0:04:21.400 You know, I always use ARKK as a proxy for 0:04:21.400 --> 0:04:24.240 disruptive stocks. Those stocks are down, so you've kind of 0:04:24.279 --> 0:04:27.040 seen this big move in certain segments of the market. 0:04:27.120 --> 0:04:29.480 Almost anything momentum related is down. So I think you've 0:04:29.480 --> 0:04:31.920 already seen a chunk of wealth wiped out for people 0:04:31.920 --> 0:04:34.160 who would spend that money. So I think we need 0:04:34.200 --> 0:04:36.400 to see this turnaround or you're going to see everyone. Hey, 0:04:36.440 --> 0:04:38.000 maybe we've got to be a little bit classes right, 0:04:38.640 --> 0:04:40.440 everything's going to the moon. Crypto is going to two 0:04:40.520 --> 0:04:42.440 hundred thousand, wherever the number is. All of a sudden, 0:04:42.440 --> 0:04:44.279 you're sitting here at eighty six thousand on bitcoin. 0:04:44.560 --> 0:04:45.440 I think it. 0:04:45.200 --> 0:04:47.640 Doesn't create this negative wealth effect where people are. 0:04:47.600 --> 0:04:49.200 Going to be conservative coming into their spending. 0:04:49.279 --> 0:04:50.479 So there are three ways to look at this. 0:04:50.680 --> 0:04:52.480 There's one way to look at it saying, Okay, this 0:04:52.520 --> 0:04:53.919 is going to be a recession next year that no 0:04:53.920 --> 0:04:55.919 one's expecting, which is typically how it happens, which is 0:04:55.920 --> 0:04:58.200 what we heard from neal data. Then there's a way 0:04:58.200 --> 0:05:00.000 of saying that actually there's going to be a rebound 0:05:00.160 --> 0:05:02.760 early next year because of the tax refunds and other 0:05:02.800 --> 0:05:05.480 types of stimulative effort, but that there will be sort 0:05:05.480 --> 0:05:07.560 of this flagging growth. And then the third way of 0:05:07.600 --> 0:05:09.920 looking at this is it is going to be morally 0:05:10.000 --> 0:05:13.240 hazardous for either this administration or the Federal Reserve to 0:05:13.279 --> 0:05:15.520 allow this market to creter. So you're going to see 0:05:15.520 --> 0:05:19.400 this bazooka of stimulus coming from quantitative easing, from federrate cuts, 0:05:19.400 --> 0:05:22.280 and from fiscal that will ultimately propel this market higher. 0:05:22.279 --> 0:05:23.000 Where do you fall in? 0:05:24.200 --> 0:05:26.000 You know, I do think coming into the midterm elections, 0:05:26.000 --> 0:05:27.440 we are going to see a huge effort. I think 0:05:27.480 --> 0:05:30.000 Trump and Trump one point, Oh, learn the pain. If 0:05:30.000 --> 0:05:32.080 you don't win the midterms, it's really hard to govern 0:05:32.160 --> 0:05:34.080 your next two years. So I expect a lot of 0:05:34.120 --> 0:05:37.160 stimulus coming into that, and I have liked, for example, 0:05:37.279 --> 0:05:39.360 my favorite trade right now has been to be underweight 0:05:39.480 --> 0:05:42.360 NASDAQ one hundred so QQQ and ETF form and I 0:05:42.520 --> 0:05:44.920 like the S and P five hundred equal weights, so 0:05:45.120 --> 0:05:47.400 RSP is one you know ETF that you can use 0:05:47.400 --> 0:05:49.080 for that. And I think you're going to get this 0:05:49.120 --> 0:05:50.880 bit of a rebouncing right. Some of the air is 0:05:50.880 --> 0:05:52.800 going to leak out of the AI, some of it 0:05:52.839 --> 0:05:54.719 should be transferring to the rest of the economy. And 0:05:54.720 --> 0:05:56.359 that's why I like kind of the equal weighted S 0:05:56.360 --> 0:05:58.559 and P five hundred. I think as we take away 0:05:58.680 --> 0:06:02.400 investor focus from the AAI to electricity, which is still 0:06:02.400 --> 0:06:03.960 going to be a part of this, But what else 0:06:04.040 --> 0:06:04.840 is going on in the economy? 0:06:04.880 --> 0:06:06.360 What else are we building? What are we making? 0:06:06.560 --> 0:06:08.680 We are going to be trying to build manufacturing plants, 0:06:08.680 --> 0:06:10.360 We're going to be trying to build mindes. We're going 0:06:10.400 --> 0:06:13.280 to be trying to build refining and processing companies. So 0:06:13.320 --> 0:06:15.440 there will be activity, and I think that's the area 0:06:15.440 --> 0:06:16.560 that's going to shine next year. 0:06:16.760 --> 0:06:20.200 If you are defensive, can you go into long term 0:06:20.240 --> 0:06:23.880 bonds with the expectation that this is an incentivized fed 0:06:23.880 --> 0:06:27.240 to reserve to ultimately bring down long term costs in 0:06:27.279 --> 0:06:29.560 whatever type of financial engineering it requires. 0:06:30.040 --> 0:06:32.160 Normally I would say yes, but I'm kind of stuck 0:06:32.200 --> 0:06:34.080 more in the belly of the curve five to seven years. 0:06:34.240 --> 0:06:36.800 I just think there's going to be some outward pressure 0:06:36.839 --> 0:06:39.200 on the tens and beyond as people are nervous did 0:06:39.240 --> 0:06:40.840 we cut too much? Are we being too aggressive? Are 0:06:40.880 --> 0:06:43.120 we paying attention to inflation? So I think that's going 0:06:43.160 --> 0:06:44.600 to diminish a bit of the rally there. So I 0:06:44.720 --> 0:06:46.160 kind of like the belly of the curve. I think 0:06:46.200 --> 0:06:48.760 you're going to see two ten spreads actually go potentially 0:06:48.760 --> 0:06:50.120 to one hundred. So I could see us down at 0:06:50.120 --> 0:06:52.400 three percent on FED funds, and I could still see 0:06:52.440 --> 0:06:53.839 a ten year close to four percent. 0:06:54.120 --> 0:06:56.000 Are you getting those vibes from the Fed that they 0:06:56.000 --> 0:06:57.640 are going to be forceful in their cuts. We heard 0:06:57.680 --> 0:07:00.520 from Chris Waller yesterday saying yes, December, and then it's 0:07:00.560 --> 0:07:02.479 meeting by meeting, I'll. 0:07:02.320 --> 0:07:04.640 Be slightly embarrassing, and honest, I'm not really paying that 0:07:04.720 --> 0:07:06.440 much attention. I think we are going to get a 0:07:06.480 --> 0:07:09.920 new administration. The Fed's going to look very different next year. 0:07:10.000 --> 0:07:12.040 We're going to get to three percent before the middle 0:07:12.040 --> 0:07:13.400 of the summer. I don't really care whether it's a 0:07:13.400 --> 0:07:15.320 cut in December or not. That's kind of my base case, 0:07:15.400 --> 0:07:17.080 right this is the direction we're headed. It's going to 0:07:17.080 --> 0:07:19.800 come almost hill or high water. So that's kind of 0:07:19.800 --> 0:07:21.640 how I'm thinking about it. I'm spending less attention to 0:07:21.640 --> 0:07:23.920 who's talking today and tomorrow. Look who's going to be 0:07:23.960 --> 0:07:26.400 talking in the future. We know we're getting these cuts 0:07:26.440 --> 0:07:26.840 next year. 0:07:27.120 --> 0:07:30.800 Peter's share of academy securities is still with us, Mister Prosek, 0:07:30.920 --> 0:07:33.360 Let's put that hat on because ultimately this really does 0:07:33.400 --> 0:07:35.800 go down to what is your takeaway. Does this have 0:07:35.840 --> 0:07:39.280 more consequences potentially for Ukraine, Russia or potentially for Taiwan. 0:07:39.560 --> 0:07:41.760 I think probably more for Taiwan. So when we're looking 0:07:41.800 --> 0:07:45.000 at this, and again I work with thirty retired general's admirals, 0:07:45.040 --> 0:07:47.000 a couple of CIA people, so we spend a lot 0:07:47.000 --> 0:07:47.960 of time on where. 0:07:47.760 --> 0:07:48.679 This is all playing out. 0:07:48.800 --> 0:07:50.920 And I think as we're having conversation with clients, we're 0:07:50.960 --> 0:07:54.120 reminding one g said he wants his military to be 0:07:54.200 --> 0:07:55.440 ready by twenty twenty seven. 0:07:55.560 --> 0:07:56.280 It's not a sign that. 0:07:56.240 --> 0:07:58.200 He's going to do anything in twenty twenty seven. But 0:07:58.280 --> 0:08:00.360 we've always thought what's going to happen is there's going 0:08:00.400 --> 0:08:03.200 to be a multiple application of the levers of power. 0:08:03.240 --> 0:08:06.920 So the levers of power are diplomacy, information, military, and economics. 0:08:06.920 --> 0:08:08.920 So the DIME framework, I think they are going to 0:08:08.920 --> 0:08:11.800 put so much pressure on Taiwan that Taiwan may eventually 0:08:11.840 --> 0:08:14.480 just say enough's enough. And we are seeing the US 0:08:14.520 --> 0:08:16.080 pivot a little bit away from the kind of this 0:08:16.160 --> 0:08:20.520 global policeman of the world to really focused on domestic 0:08:20.600 --> 0:08:23.240 right north South, the Monroe doctrine seems to be taking 0:08:23.280 --> 0:08:26.560 place again. Right we move the forward into the aircraft 0:08:26.560 --> 0:08:29.280 carry into the Caribbean. So there's this big domestic focus. 0:08:29.280 --> 0:08:31.520 So I think there is some risks that Taiwan feels 0:08:31.520 --> 0:08:34.079 a little bit maybe left out, a little bit nervous. 0:08:34.160 --> 0:08:36.640 And when we look at trade negotiations right now, the 0:08:36.679 --> 0:08:38.719 two things that I think China has some power over 0:08:38.800 --> 0:08:41.640 us are still the processed and refined rarest and critical minerals. 0:08:41.679 --> 0:08:43.160 So on pro sac, I think we are trying to 0:08:43.160 --> 0:08:44.840 do a lot of that. I am convinced that this 0:08:44.920 --> 0:08:47.520 administration from some talks as well. One we want to 0:08:47.520 --> 0:08:49.760 produce the rarest and critical minerals, but really we want 0:08:49.800 --> 0:08:51.440 to make sure we can process and refine them to 0:08:51.440 --> 0:08:54.120 break that lock that China has us on us. We 0:08:54.160 --> 0:08:56.600 control the chips, we control the best quality chips. Again, 0:08:56.679 --> 0:08:58.839 maybe now we throw the TPUs into that. Those are 0:08:58.840 --> 0:09:01.600 things China wants. At the same time, China controls a 0:09:01.600 --> 0:09:04.200 little bit the ability for Taiwan to ship things. So 0:09:04.280 --> 0:09:05.960 far China has not done anything, but they do have 0:09:06.000 --> 0:09:08.920 this very very large maritime militia. They've used it in 0:09:08.920 --> 0:09:10.880 the past and little incidents, but they could put this 0:09:10.920 --> 0:09:11.200 to work. 0:09:11.200 --> 0:09:12.400 It's largely shipping vessels. 0:09:12.440 --> 0:09:14.680 They have larger vessels within that and they would just 0:09:14.679 --> 0:09:16.720 disperse themselves in such a way that it would slow 0:09:16.800 --> 0:09:17.600 shipping down. 0:09:17.760 --> 0:09:18.560 They would throw. 0:09:18.360 --> 0:09:21.280 Logs off back, they would throw knits nets trying to 0:09:21.640 --> 0:09:24.040 foul propellers, so they could do a lot if they 0:09:24.080 --> 0:09:26.760 really wanted to push on us against Taiwan. So I 0:09:26.760 --> 0:09:29.160 don't know where this is all headed, but it feels 0:09:29.200 --> 0:09:31.440 a little bit Parson Parcel where we're focusing a little 0:09:31.440 --> 0:09:34.480 bit more north south Monroe doctrine, and maybe China has 0:09:34.480 --> 0:09:35.840 a little bit more control in that region. 0:09:36.000 --> 0:09:38.520 Where does that leave someone like Japan, who has been 0:09:38.600 --> 0:09:41.720 leading on the US alliance in their current height intentions 0:09:41.760 --> 0:09:43.839 with China after the Prime Minister made those off the 0:09:43.840 --> 0:09:46.600 cuff marks that they would support or take action if 0:09:46.679 --> 0:09:48.360 China had military action against Taiwan. 0:09:49.120 --> 0:09:51.240 I think it leaves everyone a little bit questioning what 0:09:51.360 --> 0:09:52.120 is our mission? Right? 0:09:52.120 --> 0:09:55.000 The Biden administration is very clear that we would support Taiwan. 0:09:55.040 --> 0:09:57.680 Trump has not been clear so far, And our official 0:09:57.679 --> 0:10:01.040 doctrine before Biden has always been ambiguity, right, Strategic ambiguity 0:10:01.040 --> 0:10:02.840 has been a part of this. The one thing to me, 0:10:02.920 --> 0:10:04.760 it comes back and we've been talking to clients about 0:10:04.760 --> 0:10:06.079 this for four years and people used to kind of 0:10:06.120 --> 0:10:07.800 roll their eyes at us, and now I think they're listening. 0:10:07.880 --> 0:10:10.920 Is shipping you have to diversify your supply chains along 0:10:10.960 --> 0:10:14.240 shipping routes. You cannot be dependent on one shipping lane. 0:10:14.320 --> 0:10:16.760 So Thailand and Vietnam, you're not diversified. They're going through 0:10:16.800 --> 0:10:18.920 the same place, maybe even South Korea. So I think 0:10:18.960 --> 0:10:20.760 this is kind of a huge wake up call that 0:10:20.800 --> 0:10:23.280 everyone has to look at shipping as a bigger risk 0:10:23.320 --> 0:10:25.320 than we ever have in the past and say, hey, 0:10:25.520 --> 0:10:28.320 what happens if and maybe it never happens, Maybe we 0:10:28.400 --> 0:10:30.520 go on living peacefully and we have these great economic 0:10:30.559 --> 0:10:32.960 deals that allow it. I think we have to prepare 0:10:33.000 --> 0:10:35.520 for more and more deglobalization and more and more risk. 0:10:35.720 --> 0:10:38.000 That's so interesting you say that, because I've had conversations 0:10:38.040 --> 0:10:40.720 with private equity executives who have companies, lots of them 0:10:40.760 --> 0:10:43.200 that need to deal with supply chain issues, and they said, 0:10:43.200 --> 0:10:45.000 we've done such a good job since Trump came in 0:10:45.000 --> 0:10:47.720 as present, because we've de risked from China and now 0:10:47.720 --> 0:10:48.640 we're in South Asia. 0:10:48.679 --> 0:10:50.240 To your point, we're in Vietnam, We're. 0:10:50.080 --> 0:10:53.040 In these places that still might feel blowback should there 0:10:53.080 --> 0:10:54.480 be a larger scale conflict. 0:10:54.880 --> 0:10:56.120 Are there other options? 0:10:56.240 --> 0:10:58.960 Is the supply chain resilient enough to completely move away 0:10:58.960 --> 0:11:01.720 from that region even if it's not China? 0:11:01.840 --> 0:11:03.360 No, But I think you can diversify, you can have 0:11:03.400 --> 0:11:05.120 some there, you can have some other reasons because you 0:11:05.160 --> 0:11:06.720 are going to want to try and sell into that region. 0:11:06.800 --> 0:11:06.920 Right. 0:11:06.920 --> 0:11:09.120 India is a huge growth story. There's all sorts of opportunities, 0:11:09.160 --> 0:11:10.319 so you want to be there. But I think you 0:11:10.360 --> 0:11:12.360 want to look at South and Central America. What's going 0:11:12.400 --> 0:11:15.679 on there right? Whatever happens, you know, how do we 0:11:15.720 --> 0:11:17.679 do better with Brazil? So far Brazil has been tough. 0:11:17.720 --> 0:11:19.760 We are working closely, I think with Argentina. So I 0:11:19.760 --> 0:11:21.320 think there's going to be a lot of opportunities in 0:11:21.320 --> 0:11:23.960 that North South and again, you know, keep coming back 0:11:24.000 --> 0:11:26.160 and lots of things I've learned not being military, but 0:11:26.240 --> 0:11:27.959 you know they talk about at academy security is the 0:11:28.000 --> 0:11:30.520 tyranny of distance. So in war, it is really hard 0:11:30.520 --> 0:11:32.000 to fight a war if you're far away. If you 0:11:32.040 --> 0:11:36.840 look at where Guam is relative to Taipei or Taiwan, 0:11:37.160 --> 0:11:38.800 it is a very far distance. It's going to be 0:11:38.800 --> 0:11:40.640 hard for us even when we try and do something 0:11:40.640 --> 0:11:42.960 to support that relative to what China. They have the 0:11:43.000 --> 0:11:44.800 same problem when you look at Central and South America. 0:11:44.840 --> 0:11:47.319 And let's not forget the first place Mark rule Rubio 0:11:47.440 --> 0:11:50.199 went was the Panama Canal. That has never really happened 0:11:50.240 --> 0:11:52.439 in our history. Right the you know Secretary of Defense 0:11:52.480 --> 0:11:57.240 to or sorry secretary almost always goes to the UK. 0:11:57.640 --> 0:11:59.680 He went to Panama Canal. So there is something shifting 0:11:59.679 --> 0:12:01.760 in this. So I have pay close attention to that. 0:12:02.040 --> 0:12:03.679 And if you want to be where the US government's 0:12:03.679 --> 0:12:05.199 going to protect you and do the most, I think 0:12:05.200 --> 0:12:07.200 it's pretty clear to me you want to be edging 0:12:07.480 --> 0:12:11.880 or favoring North and Central and South America over Asia. 0:12:11.960 --> 0:12:14.520 Five years ago, when the pandemic was raging, everyone was 0:12:14.559 --> 0:12:17.199 talking about the deglobalization and this idea that you had 0:12:17.200 --> 0:12:19.719 to build in sort of inefficiency in your supply chain 0:12:19.760 --> 0:12:20.920 to create redundancies. 0:12:21.160 --> 0:12:22.400 It was going to be inflationary. 0:12:22.760 --> 0:12:25.960 Now we're not talking about inflation, we're talking about disinflation 0:12:26.080 --> 0:12:29.920 from artificial intelligence. Even as we see an acceleration of 0:12:29.960 --> 0:12:33.480 this trend of being more regional, is there still an 0:12:33.480 --> 0:12:38.120 inflationary overlay to this that's the reverse of what globalization provided. 0:12:38.360 --> 0:12:40.440 I think there is as it comes online, there is 0:12:40.480 --> 0:12:42.360 going to be some pressure on commodity prices if we 0:12:42.400 --> 0:12:44.440 really start building these factories, if we build out the 0:12:44.559 --> 0:12:47.040 energy production that we need, or electricity production, we are 0:12:47.040 --> 0:12:48.960 going to see levels of inflation that have been higher. 0:12:49.000 --> 0:12:50.679 I think it's persistent, say that two and a half 0:12:50.679 --> 0:12:52.280 to three and nine percent. It's not going to get 0:12:52.280 --> 0:12:54.800 out of control. But over time, we've also built a 0:12:54.880 --> 0:12:56.960 much more secure system. I think costs will go down 0:12:57.000 --> 0:12:59.280 over time. Right if you're not shipping things long ways? 0:12:59.360 --> 0:13:01.679 Can I just keep coming back to I really believe 0:13:01.720 --> 0:13:04.440 this kind of concept of production for security is going 0:13:04.480 --> 0:13:07.680 to replace kind of EESG. When we're thinking about sustainability. 0:13:07.840 --> 0:13:09.760 It's going to be much more like what do we 0:13:09.800 --> 0:13:11.920 need at the base? And this is going to sound wonky, 0:13:11.960 --> 0:13:14.560 but you know, I look at Maso's hierarchy of needs. 0:13:14.559 --> 0:13:16.400 I always think that's probably the most useful course I 0:13:16.400 --> 0:13:17.079 took with psych. 0:13:16.920 --> 0:13:17.680 One oh one. 0:13:17.800 --> 0:13:21.040 But it talks about you basically need shelter, you need food, 0:13:21.040 --> 0:13:22.480 and all those things before you can move up to 0:13:22.480 --> 0:13:25.559 self actualization. And we're kind of at the self actualization. 0:13:25.640 --> 0:13:26.920 What we would like, well, I'd love to do this, 0:13:26.960 --> 0:13:28.840 I'd like to do these things, and then we realized 0:13:28.840 --> 0:13:29.560 we had to our base. 0:13:29.600 --> 0:13:31.840 It erodent. We cannot produce the things that we need. 0:13:31.880 --> 0:13:34.080 How can you be safe for sustainable if you're not 0:13:34.200 --> 0:13:37.200 making some level of your basic necessities. So I think 0:13:37.200 --> 0:13:39.160 that's where we are headed. I think the government's the 0:13:39.160 --> 0:13:41.360 first to see it. I think capital is already starting 0:13:41.360 --> 0:13:43.160 to flow into it. So capital is going to be second. 0:13:43.320 --> 0:13:45.440 Corporation is going to adopt it, and I think Europe's 0:13:45.440 --> 0:13:47.000 going to start falling. I think Europe's going to fight 0:13:47.040 --> 0:13:49.040 out a bit more tooth and nail, but ultimately they're 0:13:49.040 --> 0:13:50.760 going to get dragged into this where you have to 0:13:50.760 --> 0:13:53.640 produce your basic necessities or some portion of it yourself, 0:13:53.679 --> 0:13:55.959 and work with close allies because you cannot just rely 0:13:56.040 --> 0:13:57.319 on China to be your friend. 0:13:57.400 --> 0:13:58.040 Stay with us. 0:13:58.360 --> 0:14:00.800 Multile inpex Devinance coming up off. 0:14:00.640 --> 0:14:11.640 To this, I'd always say me of Columbia thread noodle 0:14:11.800 --> 0:14:15.160 casting doubt. I'm a so called productivity boom. Writing AI 0:14:15.280 --> 0:14:18.240 will lead to an acceleration and automation, which has been 0:14:18.280 --> 0:14:21.280 a central feature of economic growth. AI will have no 0:14:21.520 --> 0:14:25.480 impact an aggregate economic productivity. It joins us now at 0:14:25.480 --> 0:14:27.640 that bold statement, ed, why do you think that that's 0:14:27.680 --> 0:14:27.960 the case? 0:14:28.000 --> 0:14:29.920 Given the fact that so many people are saying. 0:14:29.880 --> 0:14:31.880 That is when this will start to pay off, that 0:14:32.040 --> 0:14:35.400 is when this will be disinflationary and not necessarily just 0:14:35.480 --> 0:14:38.120 the investment in nuts and bolts in the physical world. 0:14:38.320 --> 0:14:38.520 Yeah. 0:14:38.520 --> 0:14:42.360 Absolutely, Look, we've seen these waves before. The point I 0:14:42.400 --> 0:14:47.000 wanted to make is it's really difficult to translate technological innovation, 0:14:47.360 --> 0:14:50.120 which we've seen pretty much continuously over the course of 0:14:50.120 --> 0:14:54.960 the past forty years, into aggregate economic productivity. That's extraordinarily difficult. 0:14:55.080 --> 0:14:58.680 It really requires us to reorganize how we make economic widgets. 0:14:59.000 --> 0:15:01.920 So at this point, you're saying that there are implications 0:15:01.920 --> 0:15:05.000 for the fixed income world in terms of the ultimate payoff, right, 0:15:05.000 --> 0:15:07.720 because it comes to not only the corporate debt market 0:15:07.760 --> 0:15:10.560 that's been fueling a funding a lot of this, but. 0:15:10.560 --> 0:15:13.160 Also it goes down to the expected inflation. 0:15:13.280 --> 0:15:15.640 Right, just what kind of growth you can see on 0:15:15.680 --> 0:15:18.000 the heels of AI. So where do you think the 0:15:18.000 --> 0:15:19.920 biggest misunderstanding really is right now? 0:15:20.400 --> 0:15:24.200 Yeah, I mean part of the problem is with channeling 0:15:24.400 --> 0:15:28.400 an extraordinary amount of savings now into the AI thematic, 0:15:28.960 --> 0:15:31.920 it's going to cannibalize to some extent the capital that's 0:15:31.960 --> 0:15:35.200 available to other parts of the economy, including the treasury market. 0:15:35.600 --> 0:15:38.320 When in the early stages of this the AI theme 0:15:38.360 --> 0:15:41.560