WEBVTT - OpenAI Board Plans, Powell House Testimony

0:00:02.920 --> 0:00:10.799
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

0:00:10.840 --> 0:00:15.000
<v Speaker 1>Bloomberg Intelligence podcast. Catch us live weekdays at ten am

0:00:15.040 --> 0:00:17.520
<v Speaker 1>Eastern on Apple car Playing and broyd Otto with the

0:00:17.520 --> 0:00:21.400
<v Speaker 1>Bloomberg Business App. Listen on demand wherever you get your podcasts,

0:00:21.640 --> 0:00:24.000
<v Speaker 1>or watch us live on YouTube.

0:00:25.360 --> 0:00:27.640
<v Speaker 2>There's a story out there, and the headline doesn't help

0:00:27.640 --> 0:00:29.120
<v Speaker 2>me because I really don't know what's going on here.

0:00:29.440 --> 0:00:34.560
<v Speaker 2>Microsoft and Apple drop open AI board plans as scrutiny grows.

0:00:35.120 --> 0:00:36.400
<v Speaker 3>I thought we wanted the big.

0:00:36.240 --> 0:00:39.680
<v Speaker 2>Tech names to be supporting AI, and I don't know

0:00:39.720 --> 0:00:40.440
<v Speaker 2>what's going on here.

0:00:40.560 --> 0:00:42.479
<v Speaker 4>So it was like a freebe scene. Isn't it like

0:00:42.560 --> 0:00:43.320
<v Speaker 4>they're just watching?

0:00:43.600 --> 0:00:46.199
<v Speaker 3>Yeah, exactly, but they tell me it's important.

0:00:46.240 --> 0:00:48.519
<v Speaker 2>And Dina Bass, who's a really good technology she's been

0:00:48.520 --> 0:00:51.880
<v Speaker 2>a great technology reporter for i'm gonna say thirty plus years.

0:00:51.880 --> 0:00:55.440
<v Speaker 2>I was reading here stuff way before she came to Bloomberg.

0:00:55.600 --> 0:00:57.800
<v Speaker 2>All right, So I'm gonna self admit I don't know

0:00:57.800 --> 0:00:59.480
<v Speaker 2>what's going on here. So I said, please get me

0:00:59.520 --> 0:01:01.840
<v Speaker 2>in deep Seeing, because I'm just guessing he knows what's

0:01:01.880 --> 0:01:04.200
<v Speaker 2>going on man deep Seeing. He's a tech analyst apt

0:01:04.200 --> 0:01:08.039
<v Speaker 2>Bloomberg Intelligence, Microsoft and Apple drop plans to take board

0:01:08.240 --> 0:01:12.440
<v Speaker 2>roles at open Ai in a surprise decision that underscores

0:01:12.480 --> 0:01:16.440
<v Speaker 2>growing regulatory scrutiny a big text influence over artificial intelligence.

0:01:17.440 --> 0:01:18.200
<v Speaker 3>What's going on here?

0:01:18.760 --> 0:01:22.400
<v Speaker 5>Well, so, I mean if you roll back through last

0:01:22.480 --> 0:01:25.680
<v Speaker 5>year when we had the open ai drama, you know,

0:01:25.880 --> 0:01:30.440
<v Speaker 5>the board firing Sam Altman and then open Ai adding

0:01:30.520 --> 0:01:36.400
<v Speaker 5>four new members, and I think everyone so far has

0:01:36.480 --> 0:01:41.080
<v Speaker 5>been just sort of interested in how open ai has

0:01:41.120 --> 0:01:44.000
<v Speaker 5>evolved since then in the sense that they have even

0:01:44.040 --> 0:01:49.040
<v Speaker 5>though they have added independent board members. Microsoft, you know,

0:01:49.280 --> 0:01:53.000
<v Speaker 5>and now Apple probably would have joined the board. It

0:01:53.000 --> 0:01:57.560
<v Speaker 5>doesn't make sense like when you have vested interests. In

0:01:57.600 --> 0:01:59.880
<v Speaker 5>the case of Microsoft, they have a forty nine per

0:02:00.080 --> 0:02:04.520
<v Speaker 5>sense steak in open ai and they're the primary cloud

0:02:04.520 --> 0:02:08.000
<v Speaker 5>provider for open Ai. How can you do a good

0:02:08.080 --> 0:02:11.080
<v Speaker 5>job of being an independent board member. And that's where

0:02:11.160 --> 0:02:14.080
<v Speaker 5>you know, the regulatory scrutiny comes into play, because the

0:02:14.160 --> 0:02:19.040
<v Speaker 5>regulators obviously are concerned about how Microsoft bought Inflection Ai.

0:02:19.120 --> 0:02:22.680
<v Speaker 5>Even though it wasn't an acquisition, they got all the

0:02:22.720 --> 0:02:26.680
<v Speaker 5>employees of Inflection Ai. So that's when it comes down

0:02:26.720 --> 0:02:28.440
<v Speaker 5>to the optics of it.

0:02:28.560 --> 0:02:32.120
<v Speaker 4>Here, break down for me again, what the relationship is

0:02:32.160 --> 0:02:35.800
<v Speaker 4>now with open ai and Apple versus open ai and Microsoft.

0:02:36.120 --> 0:02:39.560
<v Speaker 5>So Microsoft has a forty nine percent stake in open Ai.

0:02:39.680 --> 0:02:42.200
<v Speaker 5>They made a ten billion dollar investment, and so you

0:02:42.240 --> 0:02:44.440
<v Speaker 5>could argue, if you're an investor in a company, you

0:02:44.480 --> 0:02:47.080
<v Speaker 5>should get a board seat as a Sequoia and some

0:02:47.200 --> 0:02:50.440
<v Speaker 5>other private investors that open Ai has. Apple, on the

0:02:50.480 --> 0:02:54.480
<v Speaker 5>other hand, just partnered with open ai, which is going

0:02:54.560 --> 0:02:58.280
<v Speaker 5>to be one of the providers of Genai model on

0:02:58.360 --> 0:03:03.200
<v Speaker 5>their iOS and other devices, and so it's more of

0:03:03.240 --> 0:03:06.600
<v Speaker 5>a customer supplier relationship if you want to call it

0:03:06.600 --> 0:03:09.480
<v Speaker 5>that way. That Apple is using open e as a supplier,

0:03:09.880 --> 0:03:11.919
<v Speaker 5>why were they getting a board seat, Well, you could

0:03:12.040 --> 0:03:15.000
<v Speaker 5>argue they could be an independent board member, like Fijisimo

0:03:15.160 --> 0:03:18.440
<v Speaker 5>is one of the board members for open Eyes. She's

0:03:18.480 --> 0:03:23.200
<v Speaker 5>the CEO of Instacart. Now, I think that's where the

0:03:23.360 --> 0:03:27.760
<v Speaker 5>fact that these technologies are so intertwined in terms of

0:03:28.040 --> 0:03:32.400
<v Speaker 5>AI being deployed on Apple devices, you could argue the

0:03:32.480 --> 0:03:36.160
<v Speaker 5>independence of the board comes into question, and given how

0:03:36.240 --> 0:03:40.320
<v Speaker 5>important AI ethics and guardrails and all the things that

0:03:40.440 --> 0:03:44.680
<v Speaker 5>regulators care about that everyone cares about. Frankly, I think

0:03:44.720 --> 0:03:48.880
<v Speaker 5>the independence of the board was questionable, and these companies

0:03:48.960 --> 0:03:52.600
<v Speaker 5>decided to proactively not you join the board, which I

0:03:52.640 --> 0:03:55.200
<v Speaker 5>think is good for optics.

0:03:55.760 --> 0:04:01.040
<v Speaker 2>So Microsoft is under scrutiny in Europe and by US

0:04:01.280 --> 0:04:07.160
<v Speaker 2>regulators into I guess their alleged dominance of AI. What's

0:04:07.200 --> 0:04:10.120
<v Speaker 2>the view on the street about that risk to Microsoft?

0:04:10.160 --> 0:04:12.120
<v Speaker 2>And I don't know because at some point maybe Apple

0:04:12.120 --> 0:04:13.320
<v Speaker 2>out of it, but certainly Microsoft.

0:04:13.680 --> 0:04:16.800
<v Speaker 5>I mean, the best way to look at it is

0:04:17.360 --> 0:04:21.440
<v Speaker 5>these companies require a lot of compute for training their models.

0:04:21.440 --> 0:04:24.440
<v Speaker 5>So whether it's open ai and Tropic, any of the

0:04:24.600 --> 0:04:28.920
<v Speaker 5>independent GENI model providers, they need a lot of compute. Now,

0:04:28.920 --> 0:04:32.880
<v Speaker 5>in the case of Microsoft, arrangement is really you know,

0:04:33.320 --> 0:04:37.560
<v Speaker 5>full of their interests Because OpenAI ends up using Microsoft

0:04:37.600 --> 0:04:40.640
<v Speaker 5>Compute for training their models.

0:04:40.680 --> 0:04:42.799
<v Speaker 3>What does that mean? What is compute?

0:04:42.839 --> 0:04:47.040
<v Speaker 5>So think of all the Nvidia GPUs that open ai needs,

0:04:47.400 --> 0:04:51.800
<v Speaker 5>but it's deployed on Microsoft Cloud. So if I need

0:04:52.040 --> 0:04:55.800
<v Speaker 5>compute to train the models, I'm not setting up my

0:04:56.040 --> 0:04:59.120
<v Speaker 5>data center and Tropic open Ai they're not setting up

0:04:59.200 --> 0:05:03.279
<v Speaker 5>data centers. They're using Microsoft Data centers to get access

0:05:03.320 --> 0:05:06.520
<v Speaker 5>to that compute. And that's where they could have gone

0:05:06.560 --> 0:05:09.920
<v Speaker 5>to Amazon or Google to get that compute. The reason

0:05:09.960 --> 0:05:12.760
<v Speaker 5>they're going to Microsoft is because of the you know,

0:05:12.839 --> 0:05:15.640
<v Speaker 5>the stake they have and the board seed. And so

0:05:16.040 --> 0:05:19.640
<v Speaker 5>if you are open ai and Microsoft is sitting in

0:05:19.680 --> 0:05:22.080
<v Speaker 5>that board, are you really going to pick any of

0:05:22.120 --> 0:05:26.000
<v Speaker 5>the alternative cloud providers for training your models? Probably not.

0:05:26.960 --> 0:05:31.120
<v Speaker 4>Do you feel like open ai will ever go public

0:05:31.520 --> 0:05:35.120
<v Speaker 4>or be bought by Microsoft? Like, how does that situation

0:05:35.320 --> 0:05:35.840
<v Speaker 4>play out?

0:05:36.160 --> 0:05:40.799
<v Speaker 5>I mean, everyone knows their antitrust concerns around Bigpeg buying

0:05:40.839 --> 0:05:43.720
<v Speaker 5>any of these companies, So the acquisition is definitely out

0:05:43.720 --> 0:05:47.160
<v Speaker 5>of the window. And that's why the way Microsoft got

0:05:47.200 --> 0:05:50.760
<v Speaker 5>all the employees of Inflection Ai, it was a pseudo acquisition.

0:05:51.160 --> 0:05:53.880
<v Speaker 5>You get all of the employees, you pay six hundred

0:05:53.920 --> 0:05:57.159
<v Speaker 5>million dollars, and you're not calling it an acquisition. So

0:05:57.320 --> 0:06:00.320
<v Speaker 5>in the case of OpenAI, obviously that's not gonna have happened.

0:06:00.320 --> 0:06:02.960
<v Speaker 5>But they Microsoft does have a forty nine percent stake.

0:06:03.360 --> 0:06:07.040
<v Speaker 5>Google bought DeepMind for six hundred million. Now they bought it,

0:06:07.160 --> 0:06:09.560
<v Speaker 5>you know, a few years back. But it just goes

0:06:09.600 --> 0:06:13.640
<v Speaker 5>to show how, you know, these companies positioned themselves for

0:06:13.680 --> 0:06:16.599
<v Speaker 5>the future and they end up buying a lot of

0:06:16.640 --> 0:06:19.920
<v Speaker 5>the startups. So I don't see an acquisition on the cards.

0:06:19.960 --> 0:06:22.640
<v Speaker 5>But my open AI is unique in the sense it's

0:06:22.680 --> 0:06:26.479
<v Speaker 5>a nonprofit and then they are looking to build a

0:06:26.480 --> 0:06:29.760
<v Speaker 5>business out of it. So their structure was sort of

0:06:30.279 --> 0:06:33.240
<v Speaker 5>very weird to begin with. And now they had that

0:06:33.360 --> 0:06:35.960
<v Speaker 5>board trouble where it was a three percent board that

0:06:36.040 --> 0:06:39.760
<v Speaker 5>fired their CEO. Now they are expanding with independent board members.

0:06:39.800 --> 0:06:42.919
<v Speaker 5>So I don't think they've got it right still, but

0:06:43.000 --> 0:06:46.080
<v Speaker 5>at least, you know, not having Microsoft and Apple on

0:06:46.120 --> 0:06:48.840
<v Speaker 5>the board is good in terms of optics. And that's

0:06:48.839 --> 0:06:50.160
<v Speaker 5>what I can conclude.

0:06:49.760 --> 0:06:51.120
<v Speaker 3>Here on surveillance.

0:06:51.400 --> 0:06:53.960
<v Speaker 2>Earlier today we had a London based headshunt which I

0:06:53.960 --> 0:06:56.200
<v Speaker 2>had never heard from heard of rougher like I about

0:06:56.200 --> 0:06:58.320
<v Speaker 2>thirty eight billion dollars in assets under under management.

0:06:58.480 --> 0:07:00.599
<v Speaker 3>They have a Parish call on the market.

0:07:00.600 --> 0:07:03.000
<v Speaker 2>They think so overheated, everything's overhead blah blah blah, and

0:07:03.000 --> 0:07:05.800
<v Speaker 2>that includes AI. Now they're saying they believe AI that

0:07:05.880 --> 0:07:08.080
<v Speaker 2>of course they've been wrong by their owned mission and

0:07:08.080 --> 0:07:10.480
<v Speaker 2>they've been trying their peers because the market's been going up.

0:07:10.960 --> 0:07:13.239
<v Speaker 2>But the AI call is simply that yeah, AI is transformed,

0:07:13.280 --> 0:07:14.400
<v Speaker 2>blah blah blah blah.

0:07:14.480 --> 0:07:15.480
<v Speaker 3>But we don't even.

0:07:15.400 --> 0:07:18.120
<v Speaker 2>Know what the uses are and we don't all the

0:07:18.120 --> 0:07:20.800
<v Speaker 2>money that's being invested in AI. Explain to me what

0:07:20.800 --> 0:07:23.320
<v Speaker 2>the return on investment is on that. How do you

0:07:23.840 --> 0:07:25.240
<v Speaker 2>answer that or deal with that?

0:07:25.760 --> 0:07:28.960
<v Speaker 5>I mean, we know some tangible use cases right now.

0:07:29.080 --> 0:07:33.120
<v Speaker 5>One is from a developer co pilot perspective AI works,

0:07:33.440 --> 0:07:37.360
<v Speaker 5>and this thing is getting deployed at every company. Developers

0:07:37.400 --> 0:07:41.200
<v Speaker 5>are using copilot, same thing with customer service chatbots. This

0:07:41.240 --> 0:07:46.000
<v Speaker 5>thing is productivity enhancing and this is getting deployed. So

0:07:46.280 --> 0:07:49.040
<v Speaker 5>I think it's hard to argue that there is no

0:07:49.160 --> 0:07:53.320
<v Speaker 5>tangible use case. But look, the valuations have run up

0:07:53.520 --> 0:07:55.920
<v Speaker 5>and there will be a disconnect at some point where

0:07:56.040 --> 0:07:59.880
<v Speaker 5>valuations are way ahead of reality. And that's where you

0:08:00.160 --> 0:08:02.400
<v Speaker 5>as an investor, you got to pick your spots. I mean,

0:08:02.600 --> 0:08:05.960
<v Speaker 5>a TSMC will continue to benefit, whether it's in VideA,

0:08:06.000 --> 0:08:08.720
<v Speaker 5>whether it's Apple or anyone else that needs the latest

0:08:08.760 --> 0:08:11.040
<v Speaker 5>chips for AI, they won't continue to benefit.

0:08:11.640 --> 0:08:14.360
<v Speaker 2>And I think I can kind of write the press

0:08:14.400 --> 0:08:17.880
<v Speaker 2>release from in Video or any company that's really been

0:08:17.920 --> 0:08:21.760
<v Speaker 2>lifted by AI. You know, it's almost kind of a

0:08:21.800 --> 0:08:24.360
<v Speaker 2>customer fatigue. They've already bought all this stuff, They've already

0:08:24.360 --> 0:08:25.360
<v Speaker 2>invested all this money.

0:08:25.680 --> 0:08:26.880
<v Speaker 3>Our customers have pulled.

0:08:26.640 --> 0:08:28.840
<v Speaker 2>Three to four years of capex forward and spent it

0:08:28.880 --> 0:08:31.720
<v Speaker 2>over the last twenty four months, and we're seeing instead

0:08:31.720 --> 0:08:33.760
<v Speaker 2>of going forty eight percent, we're gonna go with thirty percent.

0:08:34.720 --> 0:08:37.200
<v Speaker 2>That's a bad day, yeah, text and for the market,

0:08:37.360 --> 0:08:38.560
<v Speaker 2>I think, And it's.

0:08:38.480 --> 0:08:41.480
<v Speaker 5>Still going to be uniform. So some sectors will see

0:08:41.800 --> 0:08:45.640
<v Speaker 5>very tangible productivity benefit of AI, some others will have

0:08:45.679 --> 0:08:48.760
<v Speaker 5>a delayed benefit or maybe no benefit, and that's where

0:08:48.800 --> 0:08:51.040
<v Speaker 5>the disconnect will start to show up. But right now

0:08:51.080 --> 0:08:54.520
<v Speaker 5>we are in that you know mode where everyone believes

0:08:54.559 --> 0:08:56.839
<v Speaker 5>AI is the next big thing and it will have

0:08:57.040 --> 0:08:58.120
<v Speaker 5>productivity boots.

0:08:58.160 --> 0:09:00.240
<v Speaker 4>And then just one quick point on what Paul was

0:09:00.240 --> 0:09:04.360
<v Speaker 4>talking about too, just that the monetization part, Like you say,

0:09:04.360 --> 0:09:07.240
<v Speaker 4>the use cases are there, but then how you monetize it? Yeah,

0:09:07.679 --> 0:09:09.600
<v Speaker 4>Like we don't know what that really looks like yet,

0:09:09.600 --> 0:09:11.720
<v Speaker 4>Like everyone's gonna keep wanting in video chips. Okay, I

0:09:11.760 --> 0:09:14.520
<v Speaker 4>get that, But then what the use case is for that? Okay,

0:09:14.800 --> 0:09:16.960
<v Speaker 4>then you got to monetize it. And at some point

0:09:17.520 --> 0:09:19.080
<v Speaker 4>that's gonna have to be proven.

0:09:19.360 --> 0:09:21.839
<v Speaker 5>I mean, look at Cloud. So when Cloud came through

0:09:21.840 --> 0:09:25.760
<v Speaker 5>the scene, everyone said, Okay, it's a secular trend. But

0:09:26.120 --> 0:09:29.680
<v Speaker 5>the monetization came about over time, and there are certain

0:09:29.800 --> 0:09:34.200
<v Speaker 5>cloud native apps that really did very well as a business.

0:09:34.480 --> 0:09:38.240
<v Speaker 5>So that's where an AI native app I think it's

0:09:38.280 --> 0:09:41.120
<v Speaker 5>going to do exceedingly well. Whereas if you're changing a

0:09:41.200 --> 0:09:44.120
<v Speaker 5>business and you're overlaying AI, you may or may not

0:09:44.160 --> 0:09:46.120
<v Speaker 5>be successful, but we'll find out.

0:09:46.559 --> 0:09:48.920
<v Speaker 3>Good time to be a tech analyst, he's the best.

0:09:49.000 --> 0:09:51.120
<v Speaker 4>Yeah, I know, like you can ask the dumbest questions

0:09:51.160 --> 0:09:54.319
<v Speaker 4>and he's like right there for you. Yeah, I appreciate it.

0:09:54.320 --> 0:09:56.640
<v Speaker 3>It's amazing. Mandeep, thank you so much for joining us.

0:09:56.640 --> 0:10:00.480
<v Speaker 2>Man Deep seeing senior tech industryental from Bloomberg Intelligence coming

0:10:00.520 --> 0:10:03.199
<v Speaker 2>into the New York office on like his management team, So.

0:10:03.160 --> 0:10:05.120
<v Speaker 3>We appreciate that. Thank you, man Man Deep.

0:10:06.679 --> 0:10:10.560
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:10:10.640 --> 0:10:14.160
<v Speaker 1>weekdays at ten am Eastern on applecar Play and Android

0:10:14.200 --> 0:10:17.000
<v Speaker 1>Auto with the Bloomberg Business app. You can also listen

0:10:17.080 --> 0:10:20.200
<v Speaker 1>live on Amazon Alexa from our flagship New York station

0:10:20.559 --> 0:10:25.560
<v Speaker 1>Just Say Alexa playing Bloomberg eleven thirty ben.

0:10:25.480 --> 0:10:27.280
<v Speaker 4>Cher J Powell. He is speaking of the House Financial

0:10:27.280 --> 0:10:29.440
<v Speaker 4>Services Committee. In his opening statement, we will bring you

0:10:29.480 --> 0:10:32.600
<v Speaker 4>the Q and A when that kicks off. Steve Matthews'

0:10:32.600 --> 0:10:36.120
<v Speaker 4>Bloomberg Federal Reserve reporter. He joins us, Now he's anything

0:10:36.120 --> 0:10:38.760
<v Speaker 4>we're going to hear different today than yesterday.

0:10:40.040 --> 0:10:42.520
<v Speaker 6>I think the plan is not to hear anything different.

0:10:42.559 --> 0:10:46.800
<v Speaker 6>I mean, Powell's plan yesterday was pretty clearly to try

0:10:46.920 --> 0:10:49.600
<v Speaker 6>not to make news. And he was asked repeatedly about

0:10:49.800 --> 0:10:52.360
<v Speaker 6>we're going to get a right cut in September and

0:10:52.679 --> 0:10:56.280
<v Speaker 6>or July or whenever, and he said, I'm not going

0:10:56.360 --> 0:11:00.120
<v Speaker 6>to give any guidance on rights. And I think he

0:11:00.200 --> 0:11:04.480
<v Speaker 6>was trying to be very balanced. In most of the

0:11:04.559 --> 0:11:11.040
<v Speaker 6>recent testimony, the semi annual Hemphrey Hawkins testimony, he has

0:11:11.120 --> 0:11:14.040
<v Speaker 6>tried not to make a lot of news because, you know,

0:11:14.200 --> 0:11:18.800
<v Speaker 6>and this is a particular political situation, it's right before

0:11:18.880 --> 0:11:22.680
<v Speaker 6>the election. He doesn't want to make a lot of news.

0:11:22.720 --> 0:11:25.480
<v Speaker 6>So I think that you're going to see the same

0:11:25.559 --> 0:11:27.400
<v Speaker 6>tone today, Alex.

0:11:27.480 --> 0:11:29.800
<v Speaker 3>One of the things I love about Bloomberg and Bloomberg News.

0:11:29.720 --> 0:11:33.960
<v Speaker 2>Is we actually have a dedicated reporter for the Federal Reserve.

0:11:34.200 --> 0:11:35.720
<v Speaker 3>How cool is that? Nobody else does that?

0:11:35.840 --> 0:11:36.760
<v Speaker 4>No, it's really cool.

0:11:36.840 --> 0:11:39.719
<v Speaker 3>Yeah, Steve, Yeah, you're the best. Steve, Thanks so much.

0:11:40.760 --> 0:11:43.199
<v Speaker 2>I want to ask you just mentioned the election help

0:11:43.280 --> 0:11:46.960
<v Speaker 2>us understand how the FED thinks about timing of any

0:11:47.240 --> 0:11:50.400
<v Speaker 2>rate movement and the election when when is too close?

0:11:50.520 --> 0:11:53.880
<v Speaker 4>Are you stealing John Tucker's question? He's totally stealing John

0:11:53.880 --> 0:11:55.600
<v Speaker 4>Tucker's question. Sorry, go ahead, Steve.

0:11:55.720 --> 0:12:00.079
<v Speaker 6>There is a theory out there among Fed watchers that

0:12:00.160 --> 0:12:03.319
<v Speaker 6>the FED would prefer not to move in September. It's

0:12:03.360 --> 0:12:06.800
<v Speaker 6>the last meeting before the election. If they move in September,

0:12:06.840 --> 0:12:10.640
<v Speaker 6>there will be complaints, Oh, you're doing it for political reasons.

0:12:11.080 --> 0:12:14.520
<v Speaker 6>What Powell has said about this is they don't think

0:12:14.559 --> 0:12:17.640
<v Speaker 6>about it at all. If September is the right time,

0:12:17.720 --> 0:12:22.439
<v Speaker 6>they will move in September, and you know it doesn't

0:12:22.720 --> 0:12:27.320
<v Speaker 6>enter their discussions or as an influence at all. So

0:12:27.960 --> 0:12:30.200
<v Speaker 6>you know, some people believe there is a little bit

0:12:30.280 --> 0:12:34.000
<v Speaker 6>higher bar to move in September. But you know, if

0:12:34.040 --> 0:12:36.040
<v Speaker 6>that's what the data says is the right time, that

0:12:36.120 --> 0:12:37.120
<v Speaker 6>they would go ahead and move.

0:12:37.520 --> 0:12:39.559
<v Speaker 4>I'm going to bring in what Joe Wisenthal was talking

0:12:39.559 --> 0:12:42.240
<v Speaker 4>about in his column today, saying that yesterday the headline

0:12:42.280 --> 0:12:44.720
<v Speaker 4>was Powell says that labor is not a source of

0:12:44.720 --> 0:12:48.400
<v Speaker 4>inflationary pressures now and his point was like, well, that's

0:12:48.480 --> 0:12:51.679
<v Speaker 4>kind of the game, right, Like if the FED no

0:12:51.760 --> 0:12:55.680
<v Speaker 4>longer sees the risks of that wage price spiral and

0:12:55.679 --> 0:12:58.520
<v Speaker 4>that inflation spiral from the labor market, which is what

0:12:58.559 --> 0:13:01.440
<v Speaker 4>the FED can control. If the FED looks at it

0:13:01.480 --> 0:13:03.800
<v Speaker 4>that way, that could set him up for a cut.

0:13:04.040 --> 0:13:05.920
<v Speaker 4>What do you think about that?

0:13:05.920 --> 0:13:09.520
<v Speaker 6>That's certainly true. I agree with Joe. Joe's a smart guy.

0:13:11.160 --> 0:13:14.600
<v Speaker 6>Over the last three years, Powell has basically said, it's

0:13:14.600 --> 0:13:19.319
<v Speaker 6>all about inflation. We have one sided risks. We want

0:13:19.360 --> 0:13:22.720
<v Speaker 6>to return to price stability. The labor market is fine.

0:13:23.200 --> 0:13:26.160
<v Speaker 6>Now he's saying there are two sided wrests. There's risks

0:13:26.160 --> 0:13:29.240
<v Speaker 6>on inflation, there's risks on the labor market. And that

0:13:29.360 --> 0:13:32.520
<v Speaker 6>does set up a rate cut. I mean, because you

0:13:32.520 --> 0:13:36.400
<v Speaker 6>know they don't want to see the labor market softened further.

0:13:37.520 --> 0:13:41.320
<v Speaker 2>Steve to make a rate change, either up or down.

0:13:41.400 --> 0:13:44.280
<v Speaker 2>Does it have to be unanimous or what does a

0:13:44.280 --> 0:13:44.960
<v Speaker 2>FED like to do?

0:13:45.040 --> 0:13:49.160
<v Speaker 6>Typically it doesn't have to be unanimous. Powell has kept

0:13:49.160 --> 0:13:54.360
<v Speaker 6>things unanimous for the last couple of years. But I

0:13:54.400 --> 0:13:57.840
<v Speaker 6>think you know, particularly in the political environment, he would

0:13:57.920 --> 0:14:01.800
<v Speaker 6>much prefer that there be unanimous vote. But there are

0:14:01.840 --> 0:14:05.720
<v Speaker 6>a couple of hawks on the committee, so that that

0:14:05.800 --> 0:14:08.200
<v Speaker 6>may be tough. To get. I mean, you probably will

0:14:08.240 --> 0:14:08.880
<v Speaker 6>get a dissent.

0:14:10.520 --> 0:14:12.720
<v Speaker 4>What do you think we're going to get tomorrow with inflation? Like,

0:14:12.760 --> 0:14:14.760
<v Speaker 4>what do you think the Fed? I mean JPL yesterday

0:14:14.800 --> 0:14:16.720
<v Speaker 4>definitely talked about how it's still going to be inflation

0:14:16.920 --> 0:14:19.960
<v Speaker 4>X services that core number, right, what do you think

0:14:19.960 --> 0:14:20.600
<v Speaker 4>we're going to learn?

0:14:21.920 --> 0:14:25.360
<v Speaker 6>I mean, all the estimates are that the CPI is

0:14:25.400 --> 0:14:28.640
<v Speaker 6>going to come in relatively low, and the Fed, you

0:14:28.680 --> 0:14:32.840
<v Speaker 6>have to remember, is focused on PCEE inflation. CPI goes

0:14:32.880 --> 0:14:36.760
<v Speaker 6>into it PPI, which comes out a little bit later.

0:14:37.080 --> 0:14:41.560
<v Speaker 6>We'll also go into that, and after PPI sometimes CPI

0:14:41.640 --> 0:14:45.080
<v Speaker 6>can be misleading. After PPI you'll get some estimates of

0:14:45.120 --> 0:14:50.360
<v Speaker 6>what they're their preferred measure of inflation is for the month.

0:14:50.400 --> 0:14:54.280
<v Speaker 6>And but the estimates are things are coming down. Housing

0:14:54.320 --> 0:15:00.280
<v Speaker 6>prices are coming down, and they know rents have been

0:15:00.280 --> 0:15:03.080
<v Speaker 6>coming down, and that's delayed in the official data.

0:15:04.200 --> 0:15:07.960
<v Speaker 2>Steve, the Fed had a you know, a knock certainly

0:15:08.000 --> 0:15:11.760
<v Speaker 2>that they were too late to raise rates here and

0:15:11.840 --> 0:15:14.880
<v Speaker 2>that they really missed the boat there. Does that influence

0:15:15.760 --> 0:15:17.760
<v Speaker 2>kind of they're thinking today or they just kind of

0:15:17.920 --> 0:15:20.400
<v Speaker 2>sloth that off.

0:15:20.440 --> 0:15:23.920
<v Speaker 6>It does influence their thinking in the respect that you

0:15:23.960 --> 0:15:26.960
<v Speaker 6>know they don't want to see a recurrence of inflation,

0:15:27.200 --> 0:15:29.000
<v Speaker 6>and if they're going to air on one side or

0:15:29.000 --> 0:15:31.520
<v Speaker 6>the other, they want to air on the side of

0:15:31.640 --> 0:15:34.080
<v Speaker 6>not seeing a recurrence. So they're afraid that if inflation

0:15:34.240 --> 0:15:38.520
<v Speaker 6>were to bark up again, that would be really problematic

0:15:38.560 --> 0:15:40.080
<v Speaker 6>for inflation expectations.

0:15:40.400 --> 0:15:42.440
<v Speaker 2>All right, Steve, thanks so much. We really appreciate Steve.

0:15:42.480 --> 0:15:45.440
<v Speaker 2>Matthews Feder reserve reporter for Bloomberg News.

0:15:45.760 --> 0:15:50.239
<v Speaker 1>This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

0:15:50.440 --> 0:15:53.360
<v Speaker 1>and anywhere else you will get your podcasts. Listen live

0:15:53.440 --> 0:15:57.040
<v Speaker 1>each weekday ten am to noon Eastern on Bloomberg dot Com,

0:15:57.160 --> 0:16:00.120
<v Speaker 1>the iHeart Radio app tune In, and the Bloomberg and

0:16:00.200 --> 0:16:03.040
<v Speaker 1>Ess that. You can also watch us live every weekday

0:16:03.080 --> 0:16:05.800
<v Speaker 1>on YouTube and always on the Bloomberg terminal

0:16:09.240 --> 0:16:09.280
<v Speaker 5>M