WEBVTT - Bloomberg Surveillance TV: July 31, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 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 --> 0:00:37.200 Terminal and the Bloomberg Business App. Dan joins us now 0:00:37.360 --> 0:00:39.080 for more, Dan, It's good to see you, greed b. 0:00:39.200 --> 0:00:41.520 Let's start with that cloud revenue number, so that disappointed, 0:00:41.560 --> 0:00:43.440 and then we started to hear a little bit more 0:00:43.720 --> 0:00:47.120 the contribution from AI's picking up. We're going to see 0:00:47.200 --> 0:00:50.000 that softness continue in the current quarter, but then reaccelerate. 0:00:50.040 --> 0:00:52.080 Things start to pick up again in the back half 0:00:52.120 --> 0:00:54.640 of fiscal twenty twenty five. Can you just frame the 0:00:54.640 --> 0:00:57.000 second piece of this for us? What do you think 0:00:57.040 --> 0:00:59.320 that is so much more important than what we're seeing 0:00:59.320 --> 0:01:00.000 play out this morning? 0:01:00.280 --> 0:01:02.840 The words heard around the world and I think around 0:01:02.880 --> 0:01:07.280 the street when Nadella and Amy talked about the acceleration 0:01:07.600 --> 0:01:10.440 for a Zure in the second half and that AI 0:01:10.600 --> 0:01:15.840 monitorization that actually starts for real in January. And that's 0:01:16.080 --> 0:01:18.360 look ultimate. You go back to last week the knee 0:01:18.440 --> 0:01:21.840 jerk in terms of the white knuckle moment. Alphabet Street 0:01:22.000 --> 0:01:26.640 needed to hear about validation monization for AI. They heard 0:01:26.680 --> 0:01:29.520 it from the Deella on that call, bullish, not just 0:01:29.560 --> 0:01:31.440 from Microsoft for the broader tack socket. 0:01:31.240 --> 0:01:33.040 And you find it out that the sucks down this morning. 0:01:33.280 --> 0:01:35.240 Oh, I mean, in my opinion, and we were tall 0:01:35.400 --> 0:01:37.640 last night. I mean, I think there's stock that goes 0:01:37.720 --> 0:01:40.040 green in terms of I can't say today, but this 0:01:40.120 --> 0:01:43.160 isn't stick to I be shocked if it sticks because 0:01:43.200 --> 0:01:47.040 anyone that heard that conference call, you come out more 0:01:47.200 --> 0:01:52.280 bullish on Microsoft rather than any sort of skepticism because 0:01:52.320 --> 0:01:56.720 of the acceleration for Azure, because of monization, because of 0:01:56.880 --> 0:01:59.760 commercial booking, Sean and I expect. And that's how it 0:01:59.760 --> 0:02:03.480 looks knee jerk. The haters come out. They've been negative 0:02:03.520 --> 0:02:06.240 on Microsoft the last one hundred and fifty points. It 0:02:06.400 --> 0:02:09.679 all is about the AI revolution, AI monization, validation. 0:02:09.800 --> 0:02:12.760 Why did you sound to Lisa than talking about he like. 0:02:12.680 --> 0:02:14.600 He's like the haters over here who have been talking 0:02:14.639 --> 0:02:17.399 down this story forever, Lisa, now listen this. I don't 0:02:17.400 --> 0:02:19.680 think it sounded like people were the haters who were 0:02:19.720 --> 0:02:22.000 actually skeptical of these numbers. They weren't coming out and 0:02:22.040 --> 0:02:25.320 saying AI is bogus and then everything is wrong and 0:02:25.320 --> 0:02:28.160 they're going to tank. It was that they weren't surprised 0:02:28.320 --> 0:02:31.079 dramatically to the upside, and the actual gains that we've 0:02:31.120 --> 0:02:35.600 seen on the stock imply significant profit gains going forward. 0:02:35.760 --> 0:02:38.680 Here's one investor. It was really about the cloud services number. 0:02:39.000 --> 0:02:41.560 It needed to just be a little higher. What do 0:02:41.600 --> 0:02:43.280 you make of that? Just sort of how people have 0:02:43.360 --> 0:02:45.680 priced in the forward growth rate and whether they've gotten 0:02:45.720 --> 0:02:47.080 over their skis in terms of the pace. 0:02:47.560 --> 0:02:50.600 Look, it's a great point, and that's why the most 0:02:50.680 --> 0:02:55.160 important thing here is show that monization's coming. Show that 0:02:55.440 --> 0:02:58.320 you're now going to have growth rates on cloud in 0:02:58.360 --> 0:03:01.720 the thirty percent. Ultimately, if you trajector it out in 0:03:01.840 --> 0:03:06.560 incremental fifteen to twenty billion for Microsoft, you're not going 0:03:06.639 --> 0:03:09.600 to see that right away. What Bates in the Dell 0:03:09.680 --> 0:03:12.440 in Microsoft showed this is coming and we're going to 0:03:12.560 --> 0:03:15.120 guide to it. So I think that was the most 0:03:15.120 --> 0:03:18.400 important thing for the call, despite in terms of the 0:03:18.440 --> 0:03:22.040 actual quarter being strong but not a wow pop the 0:03:22.160 --> 0:03:23.000 Champagne quarter. 0:03:23.240 --> 0:03:25.680 There's also this issue of who's going to benefit the 0:03:25.680 --> 0:03:29.560 most as some of the big the big tech names 0:03:30.000 --> 0:03:33.480 build out their cloud provisions and build out some of 0:03:33.520 --> 0:03:35.200 their AI capacities. 0:03:35.480 --> 0:03:36.440 Were both really. 0:03:36.280 --> 0:03:40.640 Struck by AMD overnight actually seeming to gaining share. Do 0:03:40.640 --> 0:03:42.200 you think this is a game changer in terms of 0:03:42.240 --> 0:03:43.680 how much they could compete with in video? 0:03:43.800 --> 0:03:46.720 When Lisa Sue talks, everyone listens, and I think this 0:03:46.920 --> 0:03:49.880 just shows it's not just about the godfather of AI, 0:03:50.480 --> 0:03:54.920 Jensen and Nvidia AMD. They're getting into that AI party. 0:03:54.960 --> 0:03:57.680 It's nine pm. They're gett onto the dance floor. So 0:03:57.720 --> 0:04:02.240 what you saw from Lisa's sue bullish for AMD, triangulate 0:04:02.320 --> 0:04:04.680 that with Microsoft. With what I believe we're going to 0:04:04.720 --> 0:04:09.000 hear from Amazon, Meta and others, it should monitation starting 0:04:09.200 --> 0:04:12.440 the next phase of AI playing out. That's Bush for 0:04:12.560 --> 0:04:18.120 servers now, Oracle, Dell, Poundteer salesforce now, it's about second, third, 0:04:18.200 --> 0:04:21.400 fourth derivative playing out. That's why I last everyone's focused 0:04:21.400 --> 0:04:24.080 on there's two companies in the world. Everyone's focused on 0:04:24.200 --> 0:04:29.479 Microsoft and video, AMD said, hey, don't forget about us, important. 0:04:29.000 --> 0:04:30.720 Call and video up in the pre market as well. 0:04:30.760 --> 0:04:32.040 Off the back of some of this, there was also 0:04:32.040 --> 0:04:33.920 the story Danny was talking about it the story out 0:04:33.960 --> 0:04:37.559 of routsas that's lifting Tokyo Electron and SML, the report 0:04:37.600 --> 0:04:40.159 that they bind an administration plan to exempt ship equipment 0:04:40.160 --> 0:04:43.360 makers in Japan, the Netherlands and South Korea from upcoming 0:04:43.400 --> 0:04:45.880 export restrictions. How important is that story? 0:04:46.160 --> 0:04:49.120 Very important because what's the one thing that could spoil 0:04:49.240 --> 0:04:53.960 the AI party. It's not fed, it's not value e shit, 0:04:54.480 --> 0:04:57.520 it's about restrictions. It's about basically like what we see 0:04:57.560 --> 0:05:00.800 on tariffs, and ultimately this viewers trying to call tech 0:05:00.839 --> 0:05:02.000 war that's playing out. 0:05:02.279 --> 0:05:03.680 That was a huge move by. 0:05:03.560 --> 0:05:07.320 The Beltway, just keeping that tight group where you want 0:05:07.400 --> 0:05:10.440 to sound tough and obviously in terms of what's playing out, 0:05:10.960 --> 0:05:14.200 very significant for ASML and also it just should you 0:05:14.240 --> 0:05:18.680 cannot disrupt the supply chain as all of this constraint. 0:05:18.839 --> 0:05:20.960 Microsoft talked about it as well as pointing out. 0:05:20.920 --> 0:05:23.120 So we've done the cloud business, We've done the chip makers. 0:05:23.160 --> 0:05:24.840 We need to finish with your thing for it your baby. 0:05:25.040 --> 0:05:27.200 We need to talk about Apple, the Mark German report 0:05:27.240 --> 0:05:29.479 of the last couple of days, you've seen it. The 0:05:29.600 --> 0:05:33.000 chance that the iPhone is released in September without all 0:05:33.040 --> 0:05:36.080 the AI goodies. Now you've had this thesis for a 0:05:36.080 --> 0:05:38.359 long time. They've come out with this phone that'd be 0:05:38.400 --> 0:05:41.280 this monster upgrade cycle. It's one of the biggest pillars 0:05:41.279 --> 0:05:44.240 for your bullish call on the Apple stock. Does it 0:05:44.320 --> 0:05:46.039 change with that report from Mark German? 0:05:46.360 --> 0:05:48.920 No at all. I mean a career report by Germans 0:05:49.000 --> 0:05:52.760 or is But developers got it on time, all the marriages. 0:05:52.800 --> 0:05:55.080 Developers are going to build hundreds of apps on it 0:05:55.520 --> 0:05:59.720 and on iPhone sixteen, even if it's an update October. 0:05:59.760 --> 0:06:02.800 We're talking a few weeks and I go back to 0:06:02.880 --> 0:06:04.719 all of our Asia checks will be in Asia again 0:06:04.760 --> 0:06:08.440 this weekend. It started off as eighty million units for 0:06:08.480 --> 0:06:11.719 iPhone sixteen. Guess what it is now based on our checks, 0:06:11.839 --> 0:06:14.400 ninety million. So the point is it is not going 0:06:14.400 --> 0:06:16.279 from eighty to seventies, going to eighty to ninety. 0:06:16.320 --> 0:06:17.120 What that means is. 0:06:17.080 --> 0:06:21.000 Cooper Tino news Cook sees it where demand is going 0:06:21.040 --> 0:06:23.760 to be in an AI driven supercycle. 0:06:24.040 --> 0:06:26.680 Do we already have a sense of what some of 0:06:26.720 --> 0:06:30.080 the AI applications are consumer facing that are going to 0:06:30.160 --> 0:06:33.480 be sort of game changing because I understand on a 0:06:33.520 --> 0:06:36.120 sort of corporate sphere, but just getting sort of an 0:06:36.160 --> 0:06:39.120 emoji that's personalized isn't necessarily a game changer. 0:06:39.240 --> 0:06:42.240 Yeah, of course, and that's why what's so important. A 0:06:42.360 --> 0:06:46.279 year from now, you're gonna have hundreds of apps on 0:06:46.360 --> 0:06:49.680 this iPhone, on the Apple ecosystem that are AI driven. 0:06:49.960 --> 0:06:54.200 That's why developers, that's the hearts and lungs of this story. 0:06:54.400 --> 0:06:57.760 Apple's given it to them Apple Intelligence. Now the AI 0:06:57.839 --> 0:07:01.080 consumer story runs through Cooper Tina, and it just comes 0:07:01.080 --> 0:07:04.560 down to water. This week, Cook's going to talk about. Obviously, 0:07:04.720 --> 0:07:06.760 June I View is almost a background noise to the 0:07:06.800 --> 0:07:10.680 actual the main event September when this gets launched. What 0:07:10.840 --> 0:07:14.520 I View is really a strong upgrade. Second, very importantly China. 0:07:15.120 --> 0:07:18.520 This will be the last negative quarter China growth stories 0:07:18.560 --> 0:07:19.240 back for Apple. 0:07:19.480 --> 0:07:20.120 Before we get went. 0:07:20.120 --> 0:07:22.240 On air and you were talking about how you've got 0:07:22.240 --> 0:07:23.600 a lot of events to go to and you didn't 0:07:23.640 --> 0:07:24.400 really want to show up. 0:07:24.520 --> 0:07:25.160 Very casual. 0:07:25.560 --> 0:07:28.560 What does casual look like for Dan ives so well? 0:07:28.560 --> 0:07:31.680 First of the biggest insult for a college football fan 0:07:31.840 --> 0:07:34.720 or if someone calls you a casual that's to me, 0:07:34.840 --> 0:07:37.440 that is the most insulting you could ever get as 0:07:37.440 --> 0:07:40.200 a sports fan. Someone says you're a casual. Now, obviously 0:07:40.320 --> 0:07:43.800 Farah being a huge F one fan, he is along 0:07:43.840 --> 0:07:46.640 with the Netflix epic got me into F one. I 0:07:46.680 --> 0:07:48.960 will be going to my first F one race in 0:07:49.080 --> 0:07:51.480 Vegas wear my Ferrari gear. 0:07:51.680 --> 0:07:54.000 Well done. You're not a casual, A cashl I would 0:07:54.000 --> 0:07:56.040 say it's a Red Bull fan and I've not been 0:07:56.040 --> 0:07:57.320 involved in a spoil very long. 0:07:57.520 --> 0:07:59.480 The casual the biggest insult. 0:07:59.040 --> 0:08:01.120 For any sports fan, without a doubt. Dan, It's good 0:08:01.120 --> 0:08:03.160 to see you. Dan, I's of webbush A dropped by 0:08:03.160 --> 0:08:05.200 the green room this morning. Dan was talking to Juning 0:08:05.240 --> 0:08:07.160 the Manuell about what was happening in the equity market. 0:08:07.240 --> 0:08:09.520 Dan said he was this close to dressing in black 0:08:09.880 --> 0:08:13.320 for this morning's appearance. When the Microsoft numbers first dropped 0:08:25.560 --> 0:08:29.480 Harris with some real momentum. The latest looks like this 0:08:29.640 --> 0:08:32.840 a new Bloomberg and Morning Console poll showing Kamala Harris 0:08:32.840 --> 0:08:36.600 closing in on Donald Trump's lead across all seven swing states, 0:08:36.640 --> 0:08:40.079 the biggest gains coming in Michigan and Arizona. Henry thetres 0:08:40.080 --> 0:08:43.120 of Vader partners writing this, Kamala Harris's entrance into the 0:08:43.200 --> 0:08:45.560 race has brought the Democratic ticket to high has not 0:08:45.600 --> 0:08:48.240 seen all year and leveled out the twenty four election. 0:08:48.480 --> 0:08:51.160 Our forecast still anticipates that Donald Trump will win the 0:08:51.200 --> 0:08:56.000 election with sixty percent odds to Harris's forty. Henrietta joined 0:08:56.080 --> 0:08:58.480 us now for more. Henryett, I want to get into 0:08:58.480 --> 0:09:00.560 something Lisa and I have been talking about out for 0:09:00.600 --> 0:09:03.240 the last two weeks, or at least the last week. 0:09:03.840 --> 0:09:07.040 This has felt like what we would call inequity markets, 0:09:07.080 --> 0:09:10.600 a position squeeze that the old CEO is left and 0:09:10.640 --> 0:09:13.600 the short positions on the Democratic stock have come off. 0:09:14.040 --> 0:09:16.440 I want to understand if it's more than just that. 0:09:16.480 --> 0:09:18.680 Are we starting to see some real momentum that could 0:09:18.800 --> 0:09:21.960 last as we go through Q three and into Q four. 0:09:23.360 --> 0:09:25.360 I think there's a lot of reason to anticipate that 0:09:25.440 --> 0:09:27.360 this is momentum that has not peaked yet. 0:09:27.400 --> 0:09:29.079 I'll give you a number of reasons why. 0:09:29.800 --> 0:09:32.520 First of all, there was an actual election in Arizona 0:09:32.640 --> 0:09:33.079 last night. 0:09:33.160 --> 0:09:34.920 We've been tracking it for the last. 0:09:34.640 --> 0:09:38.920 Two months, but it's a primary election that Carrie Lake, 0:09:39.160 --> 0:09:42.480 the Republican candidate on the Senate ticket, against Reuben Galeo, 0:09:42.559 --> 0:09:46.400 a more progressive Democrat, think kirston Cinema who is retiring 0:09:46.440 --> 0:09:49.800 this year. Kerry Lake is very close to Donald Trump, 0:09:50.240 --> 0:09:52.800 tours with them, regularly, goes tomorrow, Lago, goes to the 0:09:52.800 --> 0:09:56.440 White House, et cetera. And she only got fifty three, 0:09:56.520 --> 0:09:59.439 I think percent of the vote, which means that amongst Republicans, 0:10:00.160 --> 0:10:02.559 seven percent of Republican voters voted. 0:10:02.240 --> 0:10:03.480 Against her last night. 0:10:03.880 --> 0:10:08.120 That is a trajectory shift in a critical swing state 0:10:08.360 --> 0:10:11.360 that your polls as well laid it on and pointed 0:10:11.400 --> 0:10:15.520 to hard confirmable actual elections as opposed to even just 0:10:15.559 --> 0:10:17.600 polling data, which is the best we can do right now, 0:10:17.880 --> 0:10:22.520 suggesting that independent voters and moderate voters are trending away 0:10:22.600 --> 0:10:25.160 from Donald Trump. And that's something that you showed up 0:10:25.200 --> 0:10:29.400 in swing states across your polling last night, and others 0:10:29.440 --> 0:10:34.439 did as well, including in Pennsylvania, another critical swing state. Effectively, 0:10:34.480 --> 0:10:37.520 everywhere that Trump was ahead, he is now declining in 0:10:37.920 --> 0:10:39.559 and Harris is on the surge. 0:10:39.280 --> 0:10:42.719 Upward the opening that you just described in places like Arizona. 0:10:42.760 --> 0:10:45.160 Do you think those kind of developments influenced the VP 0:10:45.360 --> 0:10:46.960 pick in the coming week. 0:10:47.960 --> 0:10:50.679 Well, it's if my pet belief that Mark Kelly will 0:10:50.679 --> 0:10:52.880 be the vice presidential Canada. I don't have any special 0:10:52.880 --> 0:10:55.960 insight there, but to me, you are not going to 0:10:55.960 --> 0:10:59.800 get a tremendous move from the VP pick in either direction. 0:11:00.200 --> 0:11:03.000 Jade Vince maybe an example of how we could be 0:11:03.040 --> 0:11:06.600 wrong there. His negatives have increased pretty substantially. 0:11:06.600 --> 0:11:08.720 I think he's negative fifteen right now. That might be 0:11:08.760 --> 0:11:11.120 a drag on the ticket, particularly with female voters. 0:11:11.480 --> 0:11:13.640 But for Mark Kelly, I mean you really don't need 0:11:13.640 --> 0:11:15.920 to read too far into it. As my colleague Spencer 0:11:15.960 --> 0:11:18.040 Proma likes to say, I mean they're talking about a 0:11:18.160 --> 0:11:21.720 naval fighter, an ass or not, you know, gun violence 0:11:21.800 --> 0:11:24.960 survivor with his wife Gabby Giffords. It's pretty much a 0:11:25.000 --> 0:11:28.000 no brainer. But even voters in Arizona will say that 0:11:28.040 --> 0:11:29.280 it's not going to move the needle for them. 0:11:29.280 --> 0:11:29.760 I will leave. 0:11:29.800 --> 0:11:32.000 The polling is at sixty percent of people in Arizona 0:11:32.080 --> 0:11:34.000 say picking Mark Kelly won't move the needle. 0:11:34.000 --> 0:11:36.040 I think it's a more broad. 0:11:36.120 --> 0:11:39.559 National approach, specifically on immigration that leads me to think 0:11:39.600 --> 0:11:43.079 that Kelly is the candidet that Kamala Harrison choose. 0:11:43.160 --> 0:11:44.680 And I think it just gave a lot of reasons 0:11:44.679 --> 0:11:47.040 for why this kind of has been a changed race. 0:11:47.360 --> 0:11:49.640 Why do you see the outcome being the same. 0:11:51.120 --> 0:11:54.240 Because I don't have enough data yet. It's really very fresh. 0:11:54.240 --> 0:11:57.160 The Bloomberg Morning Console data is the best and the 0:11:57.320 --> 0:12:00.079 latest and the only data that we have across all 0:12:00.080 --> 0:12:03.800 swing states since Kamala Harris joined the ticket. So it's 0:12:03.800 --> 0:12:05.640 going to take a lot more of that to convince me. 0:12:05.800 --> 0:12:08.240 And as my clients know, I have a very aggressive 0:12:08.280 --> 0:12:11.320 incumbency bias for our purposes. Now, I believe that the 0:12:11.320 --> 0:12:14.319 incumbent in this race is Donald Trump, and I need 0:12:14.360 --> 0:12:17.400 to see the Democratic candidate, particularly in the electoral College, 0:12:17.440 --> 0:12:20.440 pull ahead two to four points in all of those 0:12:20.480 --> 0:12:23.680 states consistently in order for me to change any of 0:12:23.679 --> 0:12:27.359 the races. So I'm looking very closely at Nevada, at Georgia, 0:12:27.720 --> 0:12:30.240 obviously at Pennsylvania, but I think Arizona is moving in 0:12:30.280 --> 0:12:31.640 the direction that Kamala. 0:12:31.280 --> 0:12:32.360 Harris wants to see. 0:12:33.000 --> 0:12:36.040 Donald Trump's best luck is on Pennsylvania and North Carolina. 0:12:36.120 --> 0:12:38.800 Right now, John, I love that Donald Trump is the incumbent, 0:12:38.920 --> 0:12:42.400 and basically Kamala Harris is not being considered as Joe 0:12:42.440 --> 0:12:44.280 Biden's kind of surrogate and any kind of well. 0:12:44.240 --> 0:12:45.880 She make of that, because I remember when Joe Biden 0:12:45.880 --> 0:12:48.000 stepped down. We did, especially in the evening, and the 0:12:48.000 --> 0:12:50.000 first question we all asked about Kamala Harris is how 0:12:50.080 --> 0:12:52.800 much distance she could put between herself and Joe Biden. 0:12:52.960 --> 0:12:54.839 Well, that's exactly the question, Henriette. I mean, how much 0:12:55.080 --> 0:12:57.240 distance is there? Isn't it fair to say that she's 0:12:57.440 --> 0:13:03.760 essentially the incumbent policy president or does she really represent 0:13:03.840 --> 0:13:05.840 an independent voice from Joe Biden. 0:13:06.920 --> 0:13:10.080 Yeah, No, she's definitely a different candidate. 0:13:10.160 --> 0:13:13.199 And I would love if this race were about policy, but. 0:13:13.160 --> 0:13:15.000 We haven't gotten there yet. I mean, whenever we get 0:13:15.040 --> 0:13:16.520 to tax policy, I'll be thrilled. 0:13:16.520 --> 0:13:20.080 But at this point, it's really the change is in 0:13:20.400 --> 0:13:26.200 Democratic activation, specifically, with double digit gains for the Democratic ticket, 0:13:26.600 --> 0:13:29.480 plus twenty five with Black voters, plus twenty four with 0:13:29.559 --> 0:13:33.839 Latino voters, huge gains with female voters, double digit gains 0:13:33.840 --> 0:13:34.680 with youth voters. 0:13:34.720 --> 0:13:36.720 It's a new ticket and she's. 0:13:36.480 --> 0:13:39.280 Not the incumbent because it's brought a brand new basket 0:13:39.280 --> 0:13:40.199 of voters. 0:13:40.000 --> 0:13:40.680 To the field. 0:13:40.920 --> 0:13:43.760 There was a slight uptick in Democratic voter registration in 0:13:43.800 --> 0:13:46.600 North Carolina in the last week, for example, so it's 0:13:46.640 --> 0:13:49.839 not that there is a policy shift, it's that this 0:13:49.880 --> 0:13:51.600 is a fresh face for the ticket. You can see 0:13:51.640 --> 0:13:54.280 it in her approval ratings, which have changed faster than 0:13:54.320 --> 0:13:56.160 any candidate I've ever seen. 0:13:56.360 --> 0:13:59.000 You know, the most ridiculous thing about all of this, Henritta, 0:13:59.280 --> 0:14:02.000 This was the object all along to have the early debate, 0:14:02.520 --> 0:14:05.880 to engage the population, to drum up the enthusiasm, to 0:14:05.880 --> 0:14:08.480 get people engaged early. This is just not how we 0:14:08.480 --> 0:14:10.800 thought things would turn out. It was the objective of 0:14:10.800 --> 0:14:12.800 the Democratic ticket, of course, but we thought on the 0:14:12.840 --> 0:14:14.720 ticket at the top would be Joe Biden and of 0:14:14.720 --> 0:14:17.520 course Lisa. The debate went in a different direction and 0:14:17.960 --> 0:14:19.600 ultimately the outcome has been the same, but with a 0:14:19.600 --> 0:14:21.360 different name on the ticket. It's amazing, isn't it. 0:14:21.400 --> 0:14:24.280 And we're talking instead not about policy, in fact, that's 0:14:24.360 --> 0:14:28.200 kind of lost the stage, or instead talking about weird and. 0:14:28.360 --> 0:14:30.880 It's fair enough, and retch can I jump in just quickly, 0:14:30.960 --> 0:14:33.720 just quickly, when will we talk about policy? We've seen 0:14:33.760 --> 0:14:36.640 a massive change in this election race, and Kamala Harris 0:14:36.680 --> 0:14:39.200 has gone on some scripted rallies, which I get it, 0:14:39.240 --> 0:14:41.640 drumming up loads of enthusiasm, But when do we start 0:14:41.640 --> 0:14:43.240 to hear about actual policy. 0:14:46.080 --> 0:14:48.480 Never I imagine it won't get around to that. 0:14:48.600 --> 0:14:50.400 I mean, at the best case, we could say after 0:14:50.480 --> 0:14:53.680 Labor Day, when people come back from vacation, we'll start 0:14:53.680 --> 0:14:57.600 to tune in. But the immigration and maybe fentanyl are 0:14:57.680 --> 0:14:59.880 areas where I think Trump has a really good chance 0:15:00.560 --> 0:15:03.200 slamming Kamala Harris and taking away some of her early 0:15:03.560 --> 0:15:07.040 and hopefully for him not locked in gains. But I 0:15:07.040 --> 0:15:10.120 don't see a race between Kamala Harris and Donald Trump 0:15:10.480 --> 0:15:13.320 talking about you know, capital gains, tax rates or a 0:15:13.320 --> 0:15:14.200 corporate tax rate. 0:15:14.440 --> 0:15:15.840 I really just don't see that happening. 0:15:15.920 --> 0:15:18.560 I think it's more about the top of the message, 0:15:19.440 --> 0:15:22.920 and the gender divide is probably the biggest indicator of that. 0:15:23.000 --> 0:15:25.800 The largest divide in the electorate right now is between. 0:15:25.440 --> 0:15:26.000 Men and women. 0:15:26.400 --> 0:15:41.240 Interesting, Henretta, thank you, Henrita. Trace their avader partners. Let's 0:15:41.240 --> 0:15:43.200 talk to a man who's been in the actual room 0:15:43.240 --> 0:15:45.760 making the decision many times before over the years. Joining 0:15:45.840 --> 0:15:48.200 us now is Jim Bullat, the dean of the Mitchell E. 0:15:48.360 --> 0:15:51.160 Daniels Junior School of Business at Purdue University and the 0:15:51.240 --> 0:15:54.320 former Saint Louis fed President. Jim, It's wonderful to catch 0:15:54.360 --> 0:15:57.240 up with you, sir, once again, a timely conversation. You 0:15:57.320 --> 0:16:00.920 have lived this repeatedly, and you've experienced the calls coming 0:16:00.960 --> 0:16:05.560 from outside the building, beyond the FMC to do something. 0:16:05.800 --> 0:16:07.800 And we've heard plenty of those calls. You've seen them too, 0:16:08.080 --> 0:16:10.000 from the likes of Alan Blinder, from the likes of 0:16:10.040 --> 0:16:12.960 Bill Dudley, from Muhammad al Arians saying this Federal Reserve 0:16:13.400 --> 0:16:15.040 needs to get a move on. I want to pick 0:16:15.080 --> 0:16:17.400 up on the last one, Muhammad Aller, And the point 0:16:17.400 --> 0:16:20.000 that he's made is a similar one that you've made, Jim, 0:16:20.080 --> 0:16:22.320 is that this Federal Reserve seems to have become more 0:16:22.400 --> 0:16:26.200 data point dependent and not data dependent. Can you just 0:16:26.240 --> 0:16:28.920 explain the distinction and the importance between the two. 0:16:31.120 --> 0:16:32.960 Yeah. I think if you say you're waiting to the 0:16:33.040 --> 0:16:36.680 next meeting because you want to see some data between 0:16:36.720 --> 0:16:42.040 now and the next meeting, that makes markets wonder, Okay, 0:16:42.040 --> 0:16:45.880 well what is it that could derail a red cut 0:16:46.320 --> 0:16:50.200 between now and the next meeting? If you do react 0:16:50.240 --> 0:16:54.160 to that data, then that's kind of data point dependence. 0:16:54.160 --> 0:16:56.520 And I think that's what Muhammad al Arian has been 0:16:56.600 --> 0:17:01.120 talking about. One thing that I did, I'd often say 0:17:01.160 --> 0:17:03.240 when I was on the committee was that you know, 0:17:03.920 --> 0:17:05.720 if you know you're going to do something with one 0:17:05.800 --> 0:17:08.600 hundred percent probability at the next meeting, why aren't you 0:17:08.680 --> 0:17:11.359 doing it at this meeting? And I think that gets 0:17:11.520 --> 0:17:14.080 often gets the committee into a little bit of hot 0:17:14.119 --> 0:17:18.359 water because sometimes the data don't cooperate between this meeting 0:17:18.359 --> 0:17:21.000 and the next meeting, so it can be managed, but 0:17:21.160 --> 0:17:23.600 it's it's kind of a committee dynamic that's been on 0:17:23.680 --> 0:17:26.080 and off over the last decade or more. 0:17:26.200 --> 0:17:28.960 This is the reason why many people, including Muhammad Larry 0:17:29.040 --> 0:17:31.200 and say the FED probably is not going to cut 0:17:31.280 --> 0:17:34.240 rates today by twenty five basis points, even if there 0:17:34.280 --> 0:17:36.280 is a consensus that they are going to in September, 0:17:36.320 --> 0:17:39.320 because they haven't telegraphed it. In New disrupt markets saying 0:17:39.320 --> 0:17:41.560 what do they now think that they didn't think at 0:17:41.560 --> 0:17:44.879 the last meeting. However, Liz Young, we were talking to 0:17:44.960 --> 0:17:48.440 we were also talking to James Camp of Ego Asset Management. 0:17:48.520 --> 0:17:51.080 They're suggesting the FED could set up a fifty basis 0:17:51.119 --> 0:17:54.640 point rate cut in September. Are you sympathetic with that. 0:17:56.160 --> 0:17:59.440 Now? I think that's too much. What I do think 0:17:59.480 --> 0:18:03.760 could happen is that they'll get going in September, but 0:18:03.880 --> 0:18:11.200 the discussion will turn to what about November, what about December? 0:18:11.240 --> 0:18:15.080 What will the pace be? Shaf Powell said that this 0:18:15.160 --> 0:18:18.640 first rate cut is consequential because it starts a process. 0:18:19.520 --> 0:18:23.679 What is that process? And if the data continue to 0:18:23.800 --> 0:18:27.800 confirm disinflationary trends, I think you could bring November onto 0:18:27.840 --> 0:18:31.600 the table and then you could have a sequence of 0:18:31.680 --> 0:18:34.040 rake cuts into the first part of next year, and 0:18:34.080 --> 0:18:37.600 then the committee could assess at that point where they 0:18:37.640 --> 0:18:39.760 are and how they want to play it from that point. 0:18:39.920 --> 0:18:41.800 Do you feel like they've backed themselves into a corner 0:18:41.840 --> 0:18:45.159 in some ways by being so data dependent, by just 0:18:45.200 --> 0:18:47.560 repeating that sort of de facto to every question. 0:18:50.520 --> 0:18:53.720 I don't know. This is a pretty successful policy here. 0:18:54.400 --> 0:18:58.840 You know, output growing, you know, between two and two 0:18:58.880 --> 0:19:01.960 and a half percent on a rate that's very close 0:19:02.000 --> 0:19:05.879 to the potential growth rate for the US economy, Unemployment 0:19:06.040 --> 0:19:10.960 coming up ever so slightly as they predicted, inflation coming 0:19:11.040 --> 0:19:15.720 down as they predicted. There's a lot to like about this. 0:19:16.000 --> 0:19:18.919 And the last piece of the soft landing would be 0:19:19.000 --> 0:19:23.040 to get the short end of the curve down and 0:19:23.640 --> 0:19:26.560 get rid of the inversion of the yield curve. So 0:19:27.200 --> 0:19:30.119 to do that in an organized way without signaling that 0:19:30.160 --> 0:19:32.199 you're worried about the economy, because I don't think they 0:19:32.240 --> 0:19:33.840 are worried about the economy right now. 0:19:35.440 --> 0:19:36.640 Is really the trick here. 0:19:36.640 --> 0:19:38.159 Jim, Do you think they should be worried about the 0:19:38.160 --> 0:19:39.480 economy right now? 0:19:40.880 --> 0:19:43.600 You know, I think it's still to me, it looks 0:19:43.600 --> 0:19:45.879 like an economy that's in a soft landing is growing 0:19:45.920 --> 0:19:51.359 at a trend pace pretty good. Of course, there's always 0:19:51.480 --> 0:19:55.359 risks out there. There's always the possibility that some big 0:19:55.400 --> 0:20:00.639 shock would occur, or one of the geopolitical events wood 0:20:00.840 --> 0:20:03.919 would sort of roll back onto the global macroeconomy. But 0:20:05.280 --> 0:20:09.160 you just sitting here with this data, this looks awfully good. 0:20:09.400 --> 0:20:11.919 And so if they can get the last piece of 0:20:11.920 --> 0:20:13.960 the puzzle in place, I think they'll be in great shape. 0:20:14.000 --> 0:20:15.879 I said earlier this morning that the Federal Reserve is 0:20:15.880 --> 0:20:17.920