1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:36,879 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. We begin the 10 00:00:36,920 --> 00:00:39,680 Speaker 2: sour stocks rising as traiders await the FED decision and 11 00:00:39,720 --> 00:00:42,960 Speaker 2: earnings from big tech. Julian and Manuel have Evercore staying 12 00:00:43,000 --> 00:00:45,960 Speaker 2: overweight tech on a three month view. While the dust settles, 13 00:00:46,040 --> 00:00:49,640 Speaker 2: many of these names, particularly the Semis, may remain pressured 14 00:00:49,680 --> 00:00:52,199 Speaker 2: on a three quarter and three year view. You want 15 00:00:52,200 --> 00:00:54,280 Speaker 2: to buy these, Julian joins us now for more. Junian, 16 00:00:54,280 --> 00:00:56,520 Speaker 2: good morning, good morning. I can't believe it's only Wednesday. 17 00:00:56,640 --> 00:00:58,880 Speaker 2: I said on Tuesday. It found like it's already Friday. 18 00:00:59,080 --> 00:01:01,280 Speaker 2: Let's get into these earn little bit like say you say, 19 00:01:01,640 --> 00:01:04,520 Speaker 2: maybe by over a three quarter, multi year view. 20 00:01:04,880 --> 00:01:09,280 Speaker 3: Why because essentially what we saw over the last three 21 00:01:09,360 --> 00:01:14,600 Speaker 3: days tells you that the importance of AI as a 22 00:01:14,640 --> 00:01:19,880 Speaker 3: revolutionary technology that's going to advance the world is not 23 00:01:20,040 --> 00:01:24,120 Speaker 3: only robust, but is an absolute imperative. Okay, and the 24 00:01:24,160 --> 00:01:28,040 Speaker 3: stocks reacted the way they did on Monday because of 25 00:01:28,080 --> 00:01:32,119 Speaker 3: this sort of psychological displacement with regard to deep seek. 26 00:01:32,920 --> 00:01:35,960 Speaker 3: But what it really means is that now the race 27 00:01:36,040 --> 00:01:40,280 Speaker 3: is on to implement and from our work twenty twenty 28 00:01:40,280 --> 00:01:42,640 Speaker 3: five and the work we did almost two years ago 29 00:01:42,720 --> 00:01:47,280 Speaker 3: now when AI first it was introduced, is that twenty 30 00:01:47,319 --> 00:01:49,880 Speaker 3: twenty five was going to be the inflection year in 31 00:01:50,040 --> 00:01:52,760 Speaker 3: adoption and this catalyzes it. 32 00:01:52,840 --> 00:01:54,920 Speaker 2: So what does that mean for sector preferences as we 33 00:01:54,960 --> 00:01:57,080 Speaker 2: shift away from Annapolis to adopt us. 34 00:01:57,080 --> 00:01:57,880 Speaker 4: What does that look like? 35 00:01:58,480 --> 00:02:02,480 Speaker 3: So there has been over the last year or to 36 00:02:02,960 --> 00:02:08,160 Speaker 3: a swath of companies across industries who constantly. 37 00:02:07,680 --> 00:02:09,239 Speaker 4: Speak to the idea of AI. 38 00:02:09,760 --> 00:02:13,640 Speaker 3: Again, a lot of it is largely anecdotal, because I 39 00:02:13,680 --> 00:02:16,640 Speaker 3: think there's been a reticence to talk about what cost 40 00:02:16,680 --> 00:02:19,920 Speaker 3: savings looks like versus things that drive revenue, and frankly, 41 00:02:20,000 --> 00:02:21,840 Speaker 3: companies are still trying to figure out. 42 00:02:21,800 --> 00:02:22,960 Speaker 4: What that mix looks like. 43 00:02:23,560 --> 00:02:26,600 Speaker 3: But those are the companies that are forward about it, 44 00:02:26,639 --> 00:02:28,800 Speaker 3: and we're going to hear a lot more. It's not 45 00:02:28,880 --> 00:02:32,320 Speaker 3: just the earnings calls of the mag seven this period 46 00:02:32,400 --> 00:02:32,800 Speaker 3: that matter. 47 00:02:32,880 --> 00:02:35,480 Speaker 4: It's the earnings calls of the other companies. 48 00:02:35,240 --> 00:02:37,960 Speaker 3: And those that are talking about it and telling you 49 00:02:38,200 --> 00:02:39,240 Speaker 3: how they're deploying. 50 00:02:39,480 --> 00:02:40,639 Speaker 4: Are the names you want to own? 51 00:02:40,760 --> 00:02:43,040 Speaker 5: Do you think that this is actually the tipping point 52 00:02:43,080 --> 00:02:45,920 Speaker 5: that so many people were waiting for were suddenly some 53 00:02:45,960 --> 00:02:47,919 Speaker 5: of the biggest winners. And it's not just in Nvidia, 54 00:02:47,960 --> 00:02:51,280 Speaker 5: it's also the power generators which didn't recover really yesterday 55 00:02:51,639 --> 00:02:53,760 Speaker 5: are not going to necessarily benefit in the same way 56 00:02:53,760 --> 00:02:55,079 Speaker 5: that they did in twenty twenty four. 57 00:02:56,600 --> 00:03:01,840 Speaker 3: There's a bifurcation going on, and you actually, if you're 58 00:03:01,960 --> 00:03:05,800 Speaker 3: j Powell and you're Donald Trump, you like the fact 59 00:03:06,000 --> 00:03:08,959 Speaker 3: that yields have come in over the last couple of 60 00:03:09,040 --> 00:03:12,239 Speaker 3: days because the implication is the news that we had 61 00:03:12,280 --> 00:03:15,880 Speaker 3: over the weekend in terms of deep seek is actually 62 00:03:15,919 --> 00:03:21,639 Speaker 3: a disinflationary impulse. But the downside of that is as 63 00:03:21,639 --> 00:03:25,839 Speaker 3: a power producer, it's much more difficult to see what 64 00:03:25,919 --> 00:03:29,040 Speaker 3: the next three years looks like. And whenever you have 65 00:03:29,760 --> 00:03:34,200 Speaker 3: a company or a theme that one moment had sort 66 00:03:34,200 --> 00:03:38,200 Speaker 3: of this concept of infinite growth, whatever that number was, 67 00:03:38,560 --> 00:03:41,880 Speaker 3: and then all of a sudden, it's infinite minus a handicap. 68 00:03:43,240 --> 00:03:45,040 Speaker 3: That's punishing for the stocks. 69 00:03:45,080 --> 00:03:47,040 Speaker 5: Is that the right way to interpret the movie yields 70 00:03:47,240 --> 00:03:50,840 Speaker 5: that it was an expression of greater disinflation as a 71 00:03:50,840 --> 00:03:53,280 Speaker 5: result of technological advance or was it simply a risk 72 00:03:53,320 --> 00:03:56,200 Speaker 5: off move knee jerk basically by bonds. 73 00:03:56,400 --> 00:03:59,400 Speaker 3: Well, you would have said that except for the fact 74 00:03:59,400 --> 00:04:03,279 Speaker 3: that yields ended up on their lows yesterday basically unchanged 75 00:04:04,160 --> 00:04:07,920 Speaker 3: with the market recovering. So I think there was certainly 76 00:04:07,920 --> 00:04:12,880 Speaker 3: an element of that on Monday. But the other message, 77 00:04:12,880 --> 00:04:16,960 Speaker 3: and again obviously overnight we've seen more rhetoric about the 78 00:04:17,000 --> 00:04:21,080 Speaker 3: intention to reduce the size of government. All in this 79 00:04:21,160 --> 00:04:24,160 Speaker 3: has calmed the bond market down, and from our point 80 00:04:24,160 --> 00:04:26,320 Speaker 3: of view, talking about the names and the sectors that 81 00:04:26,360 --> 00:04:30,159 Speaker 3: we like, the bull market leaders, yield's remaining calm is 82 00:04:30,160 --> 00:04:31,880 Speaker 3: a very important part of that thesis. 83 00:04:31,960 --> 00:04:34,799 Speaker 2: It, Sonning depends why on the conference board numbers yesterday 84 00:04:35,279 --> 00:04:38,720 Speaker 2: went great? Why have we settled down on bond yoats? 85 00:04:38,800 --> 00:04:40,640 Speaker 2: Is it just good stuff or is this some pad 86 00:04:40,640 --> 00:04:41,440 Speaker 2: stuff in that too. 87 00:04:43,240 --> 00:04:47,720 Speaker 3: Look, even when things are going gangbusters in an economy. 88 00:04:48,040 --> 00:04:51,040 Speaker 3: You can always find the one, two or three items 89 00:04:51,279 --> 00:04:55,080 Speaker 3: that are unsettling. You look deep enough, you find them. 90 00:04:55,520 --> 00:04:59,680 Speaker 3: But frankly, from our point of view, you're in a 91 00:04:59,720 --> 00:05:03,160 Speaker 3: mode where and again I'll go back to your introduction, 92 00:05:03,800 --> 00:05:04,600 Speaker 3: we think. 93 00:05:04,560 --> 00:05:06,159 Speaker 4: It's skip not pause. 94 00:05:06,279 --> 00:05:11,440 Speaker 3: Okay, why because basically, the trend towards inflation if you 95 00:05:11,480 --> 00:05:15,040 Speaker 3: think about it, the last several months, very much like 96 00:05:15,160 --> 00:05:17,520 Speaker 3: the spring of twenty twenty four, you had a couple 97 00:05:17,520 --> 00:05:21,720 Speaker 3: of months in there where the thesis was questioned about 98 00:05:21,800 --> 00:05:23,560 Speaker 3: the trend of travel of inflation. 99 00:05:23,760 --> 00:05:27,200 Speaker 4: You paused, but yet it kept going. 100 00:05:27,640 --> 00:05:31,680 Speaker 3: And the weakening of some of those data elements, continuing 101 00:05:31,760 --> 00:05:36,520 Speaker 3: claims moving to new multi year highs among them, tell 102 00:05:36,560 --> 00:05:40,760 Speaker 3: you that the trend of inflation moving lower is intact. 103 00:05:40,880 --> 00:05:41,920 Speaker 4: And that's what the Fed wants. 104 00:05:41,880 --> 00:05:44,279 Speaker 2: Is that cool? Traite dependent. We'll head down to Washington, 105 00:05:44,360 --> 00:05:47,080 Speaker 2: catchup with the marine about five minutes time. Is your 106 00:05:47,120 --> 00:05:50,000 Speaker 2: call on a skip and not a pause? Traite dependent? 107 00:05:50,320 --> 00:05:53,839 Speaker 2: And what happens this weekend? Avoid tariffsaw implement them? 108 00:05:54,480 --> 00:06:00,760 Speaker 3: So very good question, and I think the answered there 109 00:06:01,040 --> 00:06:05,039 Speaker 3: is is, if you look back, Donald Trump learned a 110 00:06:05,080 --> 00:06:08,760 Speaker 3: lot from his first term in office, okay. And one 111 00:06:08,760 --> 00:06:11,520 Speaker 3: of the things that he learned was that the bond 112 00:06:11,600 --> 00:06:15,440 Speaker 3: market really could call the shots for the degree of 113 00:06:15,560 --> 00:06:19,960 Speaker 3: policy implementation. And you know how far you pressed once 114 00:06:20,000 --> 00:06:23,200 Speaker 3: things were announced. So in that respect, there is an 115 00:06:23,279 --> 00:06:26,839 Speaker 3: element of that to it. But we do think that, 116 00:06:27,040 --> 00:06:30,320 Speaker 3: you know, you go back to the original appointment of Vessent, 117 00:06:30,880 --> 00:06:34,799 Speaker 3: there is an acknowledgment of the importance of financial markets 118 00:06:34,880 --> 00:06:39,120 Speaker 3: and the desire not to disrupt that narrative to be 119 00:06:39,240 --> 00:06:41,480 Speaker 3: able to long term implement policy. 120 00:06:41,640 --> 00:06:43,880 Speaker 5: We'll get into the details when we speak with Emory 121 00:06:43,920 --> 00:06:46,680 Speaker 5: in just a moment, but you said, just in general, 122 00:06:46,800 --> 00:06:49,760 Speaker 5: as a stock analyst, as an equity analyst, more broadly, 123 00:06:50,200 --> 00:06:53,320 Speaker 5: looking at the path of policy, it looks like basically 124 00:06:53,400 --> 00:06:56,760 Speaker 5: a repeat of twenty eighteen. And yet in twenty eighteen 125 00:06:57,120 --> 00:06:59,279 Speaker 5: the S and P ended the year down six and 126 00:06:59,279 --> 00:07:01,440 Speaker 5: a quarter percent, and why is this time different? 127 00:07:01,720 --> 00:07:04,920 Speaker 3: So if you look at it, the path in twenty 128 00:07:04,960 --> 00:07:09,800 Speaker 3: eighteen was very violatile, and actually at midyear you were 129 00:07:09,880 --> 00:07:14,120 Speaker 3: up substantially, almost double digits, and then what happened was 130 00:07:14,440 --> 00:07:19,680 Speaker 3: you got to a point where the bottom vigilantes stepped in. 131 00:07:19,680 --> 00:07:23,240 Speaker 3: In twenty eighteen, three percent on the ten year yield 132 00:07:23,520 --> 00:07:26,080 Speaker 3: was the equivalent of five percent on the ten year 133 00:07:26,120 --> 00:07:27,560 Speaker 3: yield right now, and. 134 00:07:27,480 --> 00:07:28,840 Speaker 4: We've already seen. 135 00:07:30,120 --> 00:07:32,600 Speaker 3: Whether it's the last couple months, we're going back to 136 00:07:33,000 --> 00:07:35,520 Speaker 3: the start of this bull market cycle, that once you 137 00:07:35,600 --> 00:07:38,560 Speaker 3: get towards five percent, the markets don't like that. 138 00:07:38,920 --> 00:07:41,120 Speaker 4: And so that is well known. 139 00:07:41,120 --> 00:07:42,960 Speaker 5: Which is the reason why the commentary that we will 140 00:07:42,960 --> 00:07:45,680 Speaker 5: get this afternoon won't necessarily be from Mark Zuckerberg, it 141 00:07:45,720 --> 00:07:49,560 Speaker 5: won't necessarily be from Sacha Nadella, it won't necessarily be 142 00:07:49,600 --> 00:07:51,840 Speaker 5: from fedchair J. Powell, will be from Donald Trump in 143 00:07:51,880 --> 00:07:54,600 Speaker 5: response to fedshair J. Powell with regardless of what he said, 144 00:07:54,600 --> 00:07:57,520 Speaker 5: and if there is a pause and not a skip, 145 00:07:57,600 --> 00:07:59,560 Speaker 5: if there is an indication that this is it and 146 00:07:59,560 --> 00:08:01,360 Speaker 5: they are on and that frankly there's even a chance 147 00:08:01,400 --> 00:08:03,800 Speaker 5: of them hiking rates again, how big would the tantrum 148 00:08:03,880 --> 00:08:05,560 Speaker 5: be in markets? 149 00:08:05,600 --> 00:08:07,760 Speaker 4: Pretty substantial. I mean you're talking to help big with 150 00:08:07,840 --> 00:08:09,000 Speaker 4: the tantrum be in the White House? 151 00:08:09,480 --> 00:08:11,760 Speaker 6: Well, I mean we already know that that answer. I 152 00:08:11,760 --> 00:08:13,640 Speaker 6: mean the question is, you know, this. 153 00:08:13,640 --> 00:08:15,320 Speaker 5: Is sort of par for the course, so they already 154 00:08:15,320 --> 00:08:17,880 Speaker 5: have it and pre write they basically just presco anyway, 155 00:08:17,920 --> 00:08:18,280 Speaker 5: carry on. 156 00:08:18,440 --> 00:08:23,400 Speaker 3: But again the point being here that at the valuations 157 00:08:23,440 --> 00:08:27,119 Speaker 3: where we are in the market. Both you know, less 158 00:08:27,160 --> 00:08:30,880 Speaker 3: than perfect and or very good news is met with 159 00:08:31,000 --> 00:08:34,600 Speaker 3: violent reactions. So basically we have deep seek. On Monday, 160 00:08:34,640 --> 00:08:37,520 Speaker 3: we have, you know, a pretty substantial selloff, but that 161 00:08:37,679 --> 00:08:42,760 Speaker 3: was preceded by ten days of literally parabolic gains given 162 00:08:42,800 --> 00:08:45,360 Speaker 3: the fact that the inflation news was so good. So 163 00:08:46,200 --> 00:08:50,000 Speaker 3: where's the next three to five percent? Well, let's see 164 00:08:50,040 --> 00:08:52,480 Speaker 3: what we hear from the White House, and you know, 165 00:08:52,640 --> 00:08:57,360 Speaker 3: let's see what the corporate what the dialogue around deep 166 00:08:57,360 --> 00:09:01,400 Speaker 3: seek is in these reporters this afternoon. The long term 167 00:09:01,640 --> 00:09:04,600 Speaker 3: trend of travel is still higher in our view. 168 00:09:04,440 --> 00:09:06,200 Speaker 2: At least we were talking about this earlier this morning 169 00:09:06,240 --> 00:09:08,640 Speaker 2: before we came on air, that we were basically seen 170 00:09:08,640 --> 00:09:11,160 Speaker 2: from Donald Trump, the President, a similar approach that we've 171 00:09:11,160 --> 00:09:13,560 Speaker 2: seen from Elon Musk, the CEO, but this time to 172 00:09:13,600 --> 00:09:15,959 Speaker 2: federal government and not to a private company. 173 00:09:16,080 --> 00:09:19,720 Speaker 5: Similar approach, I would say, basically the same approach. In fact, 174 00:09:19,720 --> 00:09:22,720 Speaker 5: the email sent to federal workers yesterday had. 175 00:09:22,679 --> 00:09:24,360 Speaker 6: The subject fork in the road. 176 00:09:24,520 --> 00:09:28,079 Speaker 5: That is the same email subject that Elon Musk used 177 00:09:28,200 --> 00:09:31,760 Speaker 5: in an email to Twitter now Acts when he was 178 00:09:31,800 --> 00:09:34,600 Speaker 5: talking about downsizing the staff. There can you do the 179 00:09:34,640 --> 00:09:36,840 Speaker 5: same in a federal government, the courts will. 180 00:09:36,720 --> 00:09:39,440 Speaker 2: Decide Juda and Emmanuel. Of ever, course, still with us, Julian, 181 00:09:39,520 --> 00:09:41,600 Speaker 2: A lot to unpack here. Let's start with trade. Lisa 182 00:09:41,640 --> 00:09:44,360 Speaker 2: mentioned GM. She's right to pick up on General Motors. 183 00:09:44,400 --> 00:09:47,360 Speaker 2: GM's numbers went bad, The outlook was okay, nothing wrong here. 184 00:09:47,679 --> 00:09:50,280 Speaker 2: Stock was down by close to nine percent of the close. 185 00:09:50,400 --> 00:09:54,560 Speaker 2: How investible are somebody sectors some of these stocks without 186 00:09:54,600 --> 00:09:56,880 Speaker 2: getting that clarity on trade? 187 00:09:57,080 --> 00:10:01,200 Speaker 3: Well, I mean the share proce reaction, yes, spoke for itself. 188 00:10:02,240 --> 00:10:06,720 Speaker 3: But again similar to how one is thinking about the 189 00:10:06,760 --> 00:10:10,640 Speaker 3: share price reactions in the mag seven, et cetera on 190 00:10:10,720 --> 00:10:14,040 Speaker 3: Monday to deep seek. These are the kinds of things 191 00:10:14,160 --> 00:10:17,360 Speaker 3: that if you're a long term investor, you know that 192 00:10:17,440 --> 00:10:20,960 Speaker 3: whatever comes out in the beginning, whether it's it's you know, 193 00:10:21,080 --> 00:10:23,760 Speaker 3: twenty five percent across the board or what have you. 194 00:10:23,800 --> 00:10:27,840 Speaker 3: And we know that the automobile industry is going to 195 00:10:27,880 --> 00:10:31,480 Speaker 3: be the most impacted if that kind of tax is 196 00:10:31,520 --> 00:10:35,800 Speaker 3: taken towards Mexico, but that it is not likely to 197 00:10:35,840 --> 00:10:37,760 Speaker 3: sustain itself infinitely. 198 00:10:37,840 --> 00:10:39,000 Speaker 4: It sort of never has. 199 00:10:39,679 --> 00:10:43,080 Speaker 3: And those are the kinds of times, particularly at valuations, 200 00:10:43,120 --> 00:10:47,000 Speaker 3: when you're talking about four and five times earnings. Granted, 201 00:10:47,040 --> 00:10:51,560 Speaker 3: the earnings will be handicapped, but that's where long term 202 00:10:51,600 --> 00:10:53,120 Speaker 3: investors find value. 203 00:10:53,280 --> 00:10:54,079 Speaker 6: Just hold on a second. 204 00:10:54,080 --> 00:10:56,440 Speaker 5: Are you saying that you bought GM yesterday. 205 00:10:57,080 --> 00:10:59,000 Speaker 4: I'm not saying, okay, I'm. 206 00:10:58,880 --> 00:11:00,679 Speaker 6: Just wondering, you know, is it too early? 207 00:11:00,800 --> 00:11:01,240 Speaker 4: Right? Is it? 208 00:11:01,280 --> 00:11:04,320 Speaker 5: Basically this right now is noise and you can't really 209 00:11:04,320 --> 00:11:06,040 Speaker 5: get involved in it. And at a certain point you 210 00:11:06,040 --> 00:11:08,160 Speaker 5: can start to say, all right, now I can start 211 00:11:08,160 --> 00:11:09,080 Speaker 5: picking up the pieces. 212 00:11:09,120 --> 00:11:14,600 Speaker 3: Well again, it's it's it's evaluation sensitive thing. A lot 213 00:11:14,640 --> 00:11:18,200 Speaker 3: of these companies, if you look at it, we like 214 00:11:18,520 --> 00:11:22,840 Speaker 3: five year average valuations. Okay, a lot of these companies 215 00:11:22,920 --> 00:11:27,440 Speaker 3: are trading at substantial discounts to their five year average valuation. 216 00:11:27,960 --> 00:11:31,800 Speaker 3: So I have a numerical advantage coming in that allows 217 00:11:31,840 --> 00:11:35,320 Speaker 3: me to sort of ride out the volatility, even if 218 00:11:35,360 --> 00:11:38,840 Speaker 3: it's multiple quarters for that kind of you know, potential 219 00:11:38,920 --> 00:11:39,640 Speaker 3: change in earnings. 220 00:11:39,800 --> 00:11:42,959 Speaker 2: Chilly and certainly volatile, volatile week, that's for sure. I 221 00:11:43,000 --> 00:11:45,880 Speaker 2: have an apost few days, gentle amen. While of Ebico 222 00:11:54,840 --> 00:11:56,760 Speaker 2: Basis shout out to Mulk and Stanley, saying the search 223 00:11:56,920 --> 00:11:59,640 Speaker 2: in long term bond yields has created a headwind for 224 00:11:59,720 --> 00:12:02,840 Speaker 2: US equacies, which have ridden valuation expansion for the better 225 00:12:02,880 --> 00:12:06,079 Speaker 2: part of twenty seven months. The market narrative is now 226 00:12:06,120 --> 00:12:10,040 Speaker 2: focused on show me Earning's achievement. Lisa John's staff more, 227 00:12:10,160 --> 00:12:13,199 Speaker 2: Lasa Kimonic Komarnick cost some Earning's achievement over in Europe 228 00:12:13,240 --> 00:12:15,760 Speaker 2: ass them out just absolutely stunning, and we saw how 229 00:12:15,840 --> 00:12:18,840 Speaker 2: stock investors rewarded them. Would you look for from some 230 00:12:18,880 --> 00:12:20,880 Speaker 2: of the big tech players not just the southfternoon, but 231 00:12:20,920 --> 00:12:21,720 Speaker 2: over the next week. 232 00:12:21,960 --> 00:12:24,560 Speaker 7: So look, I think obviously, you know, tech is under 233 00:12:24,559 --> 00:12:27,760 Speaker 7: the spotlight, you know, not just given the fact that 234 00:12:27,880 --> 00:12:32,160 Speaker 7: their performance has been somewhat really lackluster since you know, 235 00:12:32,240 --> 00:12:36,120 Speaker 7: the first week in December. But you know, the expectation 236 00:12:36,480 --> 00:12:38,840 Speaker 7: for twenty twenty five and twenty twenty six is that 237 00:12:38,920 --> 00:12:42,760 Speaker 7: earnings growth rates are going to decelerate, right, and that 238 00:12:42,760 --> 00:12:46,320 Speaker 7: that element has been math and that's what's kind of 239 00:12:46,360 --> 00:12:49,760 Speaker 7: baked in, And so I think people are looking for 240 00:12:50,120 --> 00:12:53,000 Speaker 7: that guidance more than what they do for the fourth quarter, 241 00:12:53,080 --> 00:12:55,880 Speaker 7: but looking for that guidance to see, you know, are 242 00:12:55,960 --> 00:12:59,520 Speaker 7: in fact the tech companies more measured or are they 243 00:12:59,559 --> 00:13:03,400 Speaker 7: more optimistic? And I think that's that guidance forward guidance 244 00:13:03,400 --> 00:13:06,200 Speaker 7: that's really going to carry the day here, because you know, 245 00:13:06,280 --> 00:13:10,840 Speaker 7: coming into twenty twenty five twenty twenty six for tech companies, 246 00:13:10,920 --> 00:13:13,839 Speaker 7: I think some of the expectations were a little bit 247 00:13:13,920 --> 00:13:15,119 Speaker 7: more realistic. 248 00:13:15,440 --> 00:13:17,560 Speaker 2: Does it get hard is to justify the big spending 249 00:13:17,559 --> 00:13:20,360 Speaker 2: they've been doing following the news of the last week 250 00:13:20,600 --> 00:13:21,920 Speaker 2: and the price sanction of Monday. 251 00:13:22,480 --> 00:13:25,360 Speaker 7: Certainly, you know, it raises the question on what is 252 00:13:25,400 --> 00:13:27,040 Speaker 7: your capex efficiency? 253 00:13:27,480 --> 00:13:27,680 Speaker 2: Right? 254 00:13:27,760 --> 00:13:31,480 Speaker 7: Do you really need to spend you know, as much 255 00:13:31,520 --> 00:13:34,600 Speaker 7: capex and build as many data centers with as many 256 00:13:34,679 --> 00:13:38,560 Speaker 7: GPUs that use as many in video chips? Are you 257 00:13:38,640 --> 00:13:41,559 Speaker 7: going to be able to, through process and software engineering, 258 00:13:42,320 --> 00:13:46,320 Speaker 7: as we've seen, do things you know, cheaper and faster, 259 00:13:46,880 --> 00:13:50,000 Speaker 7: especially if you're willing to use an open source chassis. 260 00:13:50,320 --> 00:13:52,480 Speaker 7: And I think that these open source chassis are going 261 00:13:52,520 --> 00:13:55,840 Speaker 7: to get more and more and more sophisticated, and they're free. 262 00:13:56,640 --> 00:13:57,800 Speaker 6: And that's that's. 263 00:13:58,200 --> 00:14:00,600 Speaker 7: I think the magic here that we're going to have 264 00:14:00,640 --> 00:14:02,640 Speaker 7: to watch and look. I don't think that this is 265 00:14:02,720 --> 00:14:06,040 Speaker 7: new news to Sam Altman or or you know, to 266 00:14:06,400 --> 00:14:08,559 Speaker 7: the folks at Microsoft and Google, but I do think 267 00:14:08,559 --> 00:14:09,440 Speaker 7: they're going to now. 268 00:14:09,320 --> 00:14:10,240 Speaker 6: Have to talk about it. 269 00:14:10,400 --> 00:14:12,720 Speaker 5: Earning Season used to be launched by the big banks, 270 00:14:12,840 --> 00:14:15,280 Speaker 5: and it seems as if now that's shifted, it really 271 00:14:15,360 --> 00:14:17,640 Speaker 5: is the tech players and there is a broader economic 272 00:14:17,720 --> 00:14:21,200 Speaker 5: read through depending on what happens there. We've been talking 273 00:14:21,200 --> 00:14:23,640 Speaker 5: a lot about whether we are reaching the tipping point 274 00:14:24,000 --> 00:14:27,040 Speaker 5: at which investment in AI is moving away from the 275 00:14:27,120 --> 00:14:29,640 Speaker 5: chips and the data centers into broader application. 276 00:14:30,280 --> 00:14:32,880 Speaker 6: What would you have to hear at today's. 277 00:14:32,520 --> 00:14:36,200 Speaker 5: Earnings reports to think this is truly that tipping point. 278 00:14:36,640 --> 00:14:41,320 Speaker 7: I think it's it's them, not you know, taking up 279 00:14:41,360 --> 00:14:44,280 Speaker 7: the guidance on cap X. I think it's them answering 280 00:14:44,320 --> 00:14:47,440 Speaker 7: the questions, hey, we've put the number out there at X, 281 00:14:48,040 --> 00:14:52,120 Speaker 7: you know that's our number, right, and being somewhat combative 282 00:14:52,280 --> 00:14:55,280 Speaker 7: with analysts on that. I think that would scare people 283 00:14:55,360 --> 00:14:58,080 Speaker 7: if they're if they suggest that there's no incremental upside 284 00:14:58,120 --> 00:14:59,480 Speaker 7: to their CAPAX spend. 285 00:14:59,280 --> 00:15:02,160 Speaker 5: As an investment, does that make you more optimistic about 286 00:15:02,160 --> 00:15:06,040 Speaker 5: the rest of the universe they could potentially benefit from 287 00:15:06,200 --> 00:15:07,000 Speaker 5: AI adaption. 288 00:15:07,360 --> 00:15:11,000 Speaker 7: Yeah, So that's to me, I think the great question Lisa, Right, 289 00:15:11,040 --> 00:15:12,800 Speaker 7: So I think that there's two things. 290 00:15:12,880 --> 00:15:14,479 Speaker 6: I think there's. 291 00:15:14,280 --> 00:15:18,120 Speaker 7: One among the mag seven themselves who are going to 292 00:15:18,160 --> 00:15:21,920 Speaker 7: be the ones who actually grab onto this and say, 293 00:15:22,040 --> 00:15:26,000 Speaker 7: you know what, we've actually been studying this. We do 294 00:15:26,080 --> 00:15:28,120 Speaker 7: think we're going to be able to be more effective, 295 00:15:28,120 --> 00:15:32,040 Speaker 7: more efficient and spend twenty percent less. And then there's 296 00:15:32,080 --> 00:15:35,960 Speaker 7: going to be the folks who are the adopters, right, 297 00:15:36,000 --> 00:15:42,080 Speaker 7: who are apps, guys are who are actually developing tools 298 00:15:42,120 --> 00:15:47,640 Speaker 7: that are using you know, agent AI, the sales forces 299 00:15:47,680 --> 00:15:50,120 Speaker 7: of the world, the accentures. 300 00:15:49,400 --> 00:15:50,000 Speaker 6: Of the world. 301 00:15:50,040 --> 00:15:52,680 Speaker 7: Who are that next wave of companies who are who 302 00:15:52,760 --> 00:15:55,800 Speaker 7: are going to say, hey, we're using these tools, We're 303 00:15:55,880 --> 00:15:59,160 Speaker 7: driving efficiencies and effectiveness, we know how to do this, 304 00:15:59,520 --> 00:16:03,360 Speaker 7: and that they're the next market leaders in this you know, 305 00:16:03,560 --> 00:16:05,160 Speaker 7: tech diffusion cycle. 306 00:16:05,320 --> 00:16:06,840 Speaker 2: Is it too early to jump on that theme? Would 307 00:16:06,840 --> 00:16:08,800 Speaker 2: you think the starting gun was found on Monday? 308 00:16:08,880 --> 00:16:11,360 Speaker 7: I well, I think the starting gun on it was 309 00:16:11,880 --> 00:16:14,480 Speaker 7: probably fired in the fourth quarter of last year. If 310 00:16:14,480 --> 00:16:17,280 Speaker 7: you look at those stocks, they've started to move, but 311 00:16:17,560 --> 00:16:19,840 Speaker 7: you know, for them, we still think it's kind of 312 00:16:19,840 --> 00:16:21,800 Speaker 7: bottom of the first inning, top of the second. 313 00:16:21,880 --> 00:16:23,720 Speaker 2: When do we start to see the big efficiency gains 314 00:16:23,720 --> 00:16:26,440 Speaker 2: and sectors like the financials We've been hearing about this 315 00:16:26,520 --> 00:16:28,520 Speaker 2: now for years. When it comes to the bank, Yeah, 316 00:16:28,600 --> 00:16:30,920 Speaker 2: the banks could benefit big time. You could see them 317 00:16:30,960 --> 00:16:33,760 Speaker 2: become really efficient we hear from the CEOs, each additional 318 00:16:33,800 --> 00:16:36,680 Speaker 2: dollar revenue will become less and less labor intensive. Are 319 00:16:36,680 --> 00:16:37,240 Speaker 2: we close to that? 320 00:16:38,280 --> 00:16:41,360 Speaker 7: So I want to define close? Right? Look, I think 321 00:16:41,920 --> 00:16:44,200 Speaker 7: a lot of effort is being expended, a lot of money, 322 00:16:44,240 --> 00:16:48,240 Speaker 7: a lot of consulting dollars are being expended here. I 323 00:16:48,320 --> 00:16:51,560 Speaker 7: still think that in terms of moving the needle on margins, 324 00:16:51,600 --> 00:16:55,240 Speaker 7: you're still probably two to three years away from seeing, 325 00:16:55,360 --> 00:16:58,880 Speaker 7: you know, companies truly be able to say we're hiring 326 00:16:59,000 --> 00:17:02,800 Speaker 7: many fewer people, our productivity has gone up by you know, x, 327 00:17:02,960 --> 00:17:07,199 Speaker 7: Y or z. Because it's most of these businesses, the 328 00:17:07,359 --> 00:17:11,720 Speaker 7: stakes of getting it wrong are so high that before 329 00:17:11,800 --> 00:17:15,560 Speaker 7: you really start pulling people out and relying on machines 330 00:17:15,640 --> 00:17:19,320 Speaker 7: to do your you know, client service or your customer 331 00:17:19,359 --> 00:17:23,439 Speaker 7: interaction or your billing or whatever, you're going to have 332 00:17:23,440 --> 00:17:24,200 Speaker 7: to know that it works. 333 00:17:24,280 --> 00:17:26,160 Speaker 5: This is all very nuanced, and a lot of areer 334 00:17:26,280 --> 00:17:28,160 Speaker 5: clients are probably thinking. 335 00:17:27,880 --> 00:17:29,840 Speaker 6: All right, market's going to go up or down, and. 336 00:17:29,880 --> 00:17:31,600 Speaker 5: What do we have to look at to figure out 337 00:17:31,600 --> 00:17:34,160 Speaker 5: where we should invest? And if there is some sort 338 00:17:34,240 --> 00:17:36,440 Speaker 5: of macro theme, it really does come down to the 339 00:17:36,520 --> 00:17:39,120 Speaker 5: yield space. This idea that you see some of these 340 00:17:39,119 --> 00:17:43,720 Speaker 5: stories is potentially constructive, earning's growth is potentially positive, and 341 00:17:43,800 --> 00:17:46,919 Speaker 5: yet it all hinges on what happens today. 342 00:17:47,000 --> 00:17:47,639 Speaker 6: We've about to share J. 343 00:17:47,760 --> 00:17:50,359 Speaker 5: Powell, not necessarily today, but just generally with the bond market. 344 00:17:50,520 --> 00:17:52,960 Speaker 6: Can you talk about that relationship? Sure? 345 00:17:53,119 --> 00:17:55,879 Speaker 7: I mean, look, I think what we've seen is, you know, 346 00:17:55,920 --> 00:17:59,240 Speaker 7: the magic number has been four point five percent. When 347 00:17:59,240 --> 00:18:01,919 Speaker 7: we get yields through four point five percent on the 348 00:18:01,960 --> 00:18:05,600 Speaker 7: ten year, we've seen those positive correlations between yields and 349 00:18:05,680 --> 00:18:09,120 Speaker 7: stock prices. You know the quote that Jonathan started with it, 350 00:18:09,200 --> 00:18:12,320 Speaker 7: you know that starts becoming a headwind to valuations. Now, 351 00:18:12,320 --> 00:18:15,000 Speaker 7: why is four point five percent such a magic number? 352 00:18:15,080 --> 00:18:15,240 Speaker 6: Right? 353 00:18:15,480 --> 00:18:18,760 Speaker 7: I constantly explain to people, Look, we've been in an 354 00:18:18,800 --> 00:18:23,320 Speaker 7: economy that's been nominally growing at more than five percent 355 00:18:23,440 --> 00:18:27,080 Speaker 7: per year, and as long as you're growing faster than 356 00:18:27,119 --> 00:18:29,320 Speaker 7: your cost of capital, you're going to be able to 357 00:18:29,400 --> 00:18:34,320 Speaker 7: cover your interest payments. Right as those interest rates get 358 00:18:34,400 --> 00:18:37,600 Speaker 7: closer and closer to that nominal growth rate of five percent, 359 00:18:38,119 --> 00:18:42,119 Speaker 7: that ability to cover pay interest payments gets harder. You 360 00:18:42,200 --> 00:18:45,000 Speaker 7: start thinking, well, are some of these companies actually going 361 00:18:45,080 --> 00:18:49,040 Speaker 7: to have dented margins because they're their cost of capital 362 00:18:49,160 --> 00:18:52,240 Speaker 7: may actually be six and maybe you know GDP is 363 00:18:52,240 --> 00:18:56,840 Speaker 7: only five and so you know, we're we're watching the 364 00:18:56,880 --> 00:19:00,280 Speaker 7: direction of the long end. What we have observed is 365 00:19:00,280 --> 00:19:02,520 Speaker 7: that a lot of the movement on the long end 366 00:19:02,600 --> 00:19:06,600 Speaker 7: has been driven by two things, not inflation expectations, actually. 367 00:19:06,280 --> 00:19:07,360 Speaker 6: By our analytics. 368 00:19:07,600 --> 00:19:12,360 Speaker 7: What we're looking at is we've had positive economic growth surprises, right, 369 00:19:12,400 --> 00:19:15,080 Speaker 7: so that's taken up the real component. And we've had 370 00:19:15,080 --> 00:19:17,879 Speaker 7: an increase in the term premium. And as I know, 371 00:19:18,000 --> 00:19:21,200 Speaker 7: you know, you know, having kind of you know, studied 372 00:19:21,480 --> 00:19:24,120 Speaker 7: fixed income for a really long time, you know, over 373 00:19:24,720 --> 00:19:28,359 Speaker 7: the last you know, eighty years, term premiums on the 374 00:19:28,400 --> 00:19:30,639 Speaker 7: long end have been as wide as one hundred and 375 00:19:30,680 --> 00:19:31,719 Speaker 7: fifty basis points. 376 00:19:32,080 --> 00:19:34,040 Speaker 6: Term premiums, for your listeners. 377 00:19:33,840 --> 00:19:37,000 Speaker 7: Who may not know this, are basically just the extra 378 00:19:37,160 --> 00:19:41,359 Speaker 7: risk premium that investors demand for policy uncertainty, right, for 379 00:19:41,359 --> 00:19:45,720 Speaker 7: for the fact that time over time things change anything 380 00:19:45,720 --> 00:19:47,480 Speaker 7: from policy to technology to. 381 00:19:48,920 --> 00:19:49,399 Speaker 6: Et cetera. 382 00:19:50,200 --> 00:19:52,680 Speaker 7: And so, you know, I think what we what we're 383 00:19:52,760 --> 00:19:55,159 Speaker 7: looking at is, you know, what are the drivers of 384 00:19:55,200 --> 00:19:59,840 Speaker 7: those interest rates. What has been interesting is FED expectations 385 00:20:00,080 --> 00:20:03,000 Speaker 7: got crushed in the fourth quarter. So for us, our 386 00:20:03,080 --> 00:20:05,680 Speaker 7: observation of what's happened over the last you know, six 387 00:20:05,760 --> 00:20:08,480 Speaker 7: eight weeks is it hasn't been that much about the FED. 388 00:20:09,280 --> 00:20:10,879 Speaker 7: So this is a very long winded way of me 389 00:20:10,920 --> 00:20:13,440 Speaker 7: answering your question. Look, I think Powell today is gonna 390 00:20:13,440 --> 00:20:16,280 Speaker 7: be very measured. I think he's going to say very 391 00:20:16,320 --> 00:20:19,080 Speaker 7: little in this press conference, and I think he's going 392 00:20:19,080 --> 00:20:22,480 Speaker 7: to try to say as little as possible about anything 393 00:20:22,560 --> 00:20:25,840 Speaker 7: that has to do at the White House, anything about tariffs, 394 00:20:25,880 --> 00:20:29,560 Speaker 7: anything about debts and deficits. I think he's going to 395 00:20:29,960 --> 00:20:33,560 Speaker 7: really walk a very fine line, and he's going. 396 00:20:33,560 --> 00:20:36,840 Speaker 6: To stick to the script of we're data driven. That's it. 397 00:20:37,080 --> 00:20:40,640 Speaker 7: We've had some stronger data. We think inflations under control. 398 00:20:40,720 --> 00:20:42,000 Speaker 7: We're watching and waiting. 399 00:20:42,240 --> 00:20:44,399 Speaker 5: So all of that said, if the FED is no 400 00:20:44,440 --> 00:20:48,199 Speaker 5: longer in the driver's seat, the policy uncertainty is in 401 00:20:48,200 --> 00:20:51,520 Speaker 5: the driver's seat. What kind of move up we're looking 402 00:20:51,560 --> 00:20:53,959 Speaker 5: at a tenure right now four point five to three percent. 403 00:20:54,359 --> 00:20:56,639 Speaker 5: What kind of move up would you have to see 404 00:20:57,000 --> 00:20:59,880 Speaker 5: real serious declines inequities. 405 00:21:00,280 --> 00:21:02,879 Speaker 7: I think if we surge back through four seventy five, 406 00:21:03,520 --> 00:21:07,760 Speaker 7: you know sometime over the next month, that just stops 407 00:21:08,160 --> 00:21:09,400 Speaker 7: stocks in their tracks again. 408 00:21:09,920 --> 00:21:11,960 Speaker 2: Just twenty two basis points away. Lisa is good to 409 00:21:11,960 --> 00:21:14,800 Speaker 2: see you gay Lisa shan At that of Morgan Stanley 410 00:21:14,840 --> 00:21:27,520 Speaker 2: on the federerser the former Kansas City FED president Esther 411 00:21:27,600 --> 00:21:30,560 Speaker 2: George jounderstand for more, Esther, Welcome to the program. We're 412 00:21:30,560 --> 00:21:32,480 Speaker 2: all looking forward to Chairman Power a little bit later. 413 00:21:32,600 --> 00:21:34,560 Speaker 2: How boring can he make this and is that the 414 00:21:34,600 --> 00:21:36,679 Speaker 2: objective later on this afternoon? 415 00:21:37,840 --> 00:21:39,560 Speaker 1: Oh, I think he'd love to make it just as 416 00:21:39,600 --> 00:21:43,080 Speaker 1: boring as he can, in the sense that it doesn't 417 00:21:43,119 --> 00:21:46,200 Speaker 1: stir up new speculation. So we'll we'll see. He's got 418 00:21:46,200 --> 00:21:46,840 Speaker 1: a tough job. 419 00:21:47,600 --> 00:21:50,359 Speaker 5: Well, what do you think, Esther, the idea that right 420 00:21:50,359 --> 00:21:53,880 Speaker 5: now markets are really concerned that the FED might be 421 00:21:53,960 --> 00:21:56,600 Speaker 5: on a path to basically hold rates here for the 422 00:21:56,600 --> 00:21:57,400 Speaker 5: rest of the year. 423 00:21:57,520 --> 00:21:59,639 Speaker 6: If he has asked that, how would you characterize not 424 00:21:59,680 --> 00:22:03,400 Speaker 6: doing anything today a pause or a skip? How will 425 00:22:03,400 --> 00:22:03,879 Speaker 6: he answer? 426 00:22:05,640 --> 00:22:05,840 Speaker 4: Well? 427 00:22:06,040 --> 00:22:09,240 Speaker 1: Is I think we got a clue from the December 428 00:22:09,280 --> 00:22:13,479 Speaker 1: meeting right the minutes have told us that there was 429 00:22:14,200 --> 00:22:18,800 Speaker 1: a sense that inflation was not coming down quickly enough, 430 00:22:18,800 --> 00:22:23,800 Speaker 1: that that disinflationary process may have stalled out, and so 431 00:22:24,359 --> 00:22:28,919 Speaker 1: for their mandate they have to be cautious at this point, 432 00:22:28,960 --> 00:22:33,320 Speaker 1: I think, and watch to see how things will unfold. 433 00:22:33,760 --> 00:22:35,800 Speaker 1: The challenge for them, of course, is it is for 434 00:22:35,920 --> 00:22:39,560 Speaker 1: many people today, is saying, how do you manage through 435 00:22:39,560 --> 00:22:42,320 Speaker 1: this uncertainty? How do you look at the risk and 436 00:22:42,359 --> 00:22:46,159 Speaker 1: the outlook ahead when you don't have clarity in the moment, 437 00:22:46,560 --> 00:22:52,760 Speaker 1: And the truth is you rarely have that clarity. It'd 438 00:22:52,800 --> 00:22:55,760 Speaker 1: be unusually high right now in terms of uncertainty, which 439 00:22:55,800 --> 00:22:57,840 Speaker 1: means you have to pivot, in my view, to thinking 440 00:22:57,840 --> 00:23:00,760 Speaker 1: about the long run, and that where I hope we 441 00:23:00,840 --> 00:23:04,440 Speaker 1: hear the focus not so much on next month's data 442 00:23:04,440 --> 00:23:06,280 Speaker 1: and the next but really where we're coming out in 443 00:23:06,280 --> 00:23:08,040 Speaker 1: the long run for inflation esther. 444 00:23:08,119 --> 00:23:11,320 Speaker 5: There's also the added complication right now that we have 445 00:23:11,480 --> 00:23:14,200 Speaker 5: a really disparate FED. Right the different FED members seem 446 00:23:14,200 --> 00:23:18,160 Speaker 5: to be pretty split. Is this a unique feature right now? 447 00:23:18,200 --> 00:23:20,520 Speaker 5: Does it seem like it is more divided than it 448 00:23:20,560 --> 00:23:24,200 Speaker 5: has been when you are there or in previous administrations? 449 00:23:26,400 --> 00:23:30,000 Speaker 1: So I think there is always a diversity. That is 450 00:23:30,040 --> 00:23:33,600 Speaker 1: the design of this committee. I think what creates what 451 00:23:33,720 --> 00:23:37,240 Speaker 1: may sound like dissonance right now comes at what I 452 00:23:37,320 --> 00:23:40,600 Speaker 1: call turning points. There are times in the economy when 453 00:23:40,640 --> 00:23:44,320 Speaker 1: the decision making is less clear, when the path ahead 454 00:23:44,400 --> 00:23:47,359 Speaker 1: is less clear, and that's when you will tend to 455 00:23:47,400 --> 00:23:51,719 Speaker 1: see surface in this discussion a range of views, and 456 00:23:51,760 --> 00:23:56,200 Speaker 1: depending on how strong those voices are, the chairman has 457 00:23:56,280 --> 00:24:00,000 Speaker 1: to bring those together because you have to make a decision, 458 00:24:00,040 --> 00:24:03,440 Speaker 1: and sometimes that decision is to wait and see. And 459 00:24:03,480 --> 00:24:06,040 Speaker 1: I think today is going to be one of those times. 460 00:24:06,359 --> 00:24:08,120 Speaker 2: I'd love you of you on what you'd be doing. 461 00:24:08,119 --> 00:24:11,320 Speaker 2: How would you balance the evolving data with expected policy changes? 462 00:24:11,359 --> 00:24:12,600 Speaker 2: Why would you put the most weight? 463 00:24:14,520 --> 00:24:18,840 Speaker 1: So for me, the weight is always on thinking about 464 00:24:19,080 --> 00:24:25,159 Speaker 1: the inflation because that is the most direct influence that 465 00:24:25,240 --> 00:24:29,520 Speaker 1: the central Bank has on its mandate. And having seen 466 00:24:29,600 --> 00:24:33,320 Speaker 1: the disinflationary process slow down, we are now in a 467 00:24:33,400 --> 00:24:37,200 Speaker 1: fifth year of inflation running well above the Fed's target. 468 00:24:38,080 --> 00:24:41,040 Speaker 1: I would be in a position myself to say we 469 00:24:41,119 --> 00:24:44,960 Speaker 1: can wait, we should wait. The economy is performing well. 470 00:24:45,520 --> 00:24:48,240 Speaker 1: We have a number of risks that are evolving here 471 00:24:48,359 --> 00:24:51,000 Speaker 1: in terms of telling us what the outlook might be, 472 00:24:51,560 --> 00:24:55,560 Speaker 1: and now seems a particularly good time to sit on 473 00:24:55,680 --> 00:24:58,360 Speaker 1: the sidelines and wait for more clarity. 474 00:24:58,760 --> 00:25:00,600 Speaker 2: Esther, it's good to hear from you. Miss your voice 475 00:25:00,600 --> 00:25:03,000 Speaker 2: on the FMC as the George there, the former Kansas 476 00:25:03,000 --> 00:25:07,240 Speaker 2: City FED president. This is the bloomberg surveillance podcast, bringing 477 00:25:07,320 --> 00:25:10,919 Speaker 2: you the best in markets, economics, and geopolitics. You can 478 00:25:10,960 --> 00:25:13,720 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 479 00:25:13,760 --> 00:25:17,000 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 480 00:25:17,080 --> 00:25:20,600 Speaker 2: on Apple, Spotify, or anywhere else you listen, and as always, 481 00:25:20,640 --> 00:25:23,200 Speaker 2: on the Bloomberg Terminal and the Bloomberg Business app.