WEBVTT - Markets Push Higher amid Rate Cut Optimism 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.360 --> 0:00:30.000 Joining us down in studio Lindza pegx. She was stiffel, 0:00:30.440 --> 0:00:33.159 she was My comments of the year. Just brave, Brave, 0:00:33.320 --> 0:00:37.800 Brave Interviews twelve and eighteen months ago. Let's get brave 0:00:37.840 --> 0:00:40.680 here on PPI coming up in a moment. What's the 0:00:40.840 --> 0:00:44.279 character of our inflation? Is it an immovable feast up 0:00:44.360 --> 0:00:48.600 or down? Or is just a leadenness a resiliency to 0:00:48.680 --> 0:00:50.320 where we are in price change? 0:00:50.479 --> 0:00:53.760 I think right now inflation is experiencing some sort of 0:00:53.920 --> 0:00:57.640 a floor support. But around that floor we are going 0:00:57.680 --> 0:01:00.000 to continue to see movement. Any movement to the down 0:01:00.200 --> 0:01:04.120 side simply solidifies the Fed's growing concerns about the employment 0:01:04.160 --> 0:01:07.880 side of the equation, and really any upside risk, at 0:01:07.959 --> 0:01:12.560 least from a minimal standpoint, is going to maybe keep 0:01:12.600 --> 0:01:15.960 the FED still focused on acazing, but limit the amount 0:01:16.000 --> 0:01:17.640 of using For two of. 0:01:17.600 --> 0:01:21.319 Our listeners across the nation right now on YouTube on 0:01:21.480 --> 0:01:25.120 radio are saying she's nuts. They're looking at their day 0:01:25.160 --> 0:01:29.800 to day living and it screams inflation. Are we going 0:01:29.880 --> 0:01:32.240 to see that in four minutes? Are we going to 0:01:32.280 --> 0:01:33.080 see that tomorrow? 0:01:33.160 --> 0:01:36.520 As CPI, we've been seeing that for years, inflation is 0:01:36.600 --> 0:01:40.240 well above that two percent target. We're nowhere near getting 0:01:40.319 --> 0:01:43.600 back to that, and yet the Fed seemingly is abandoning 0:01:44.000 --> 0:01:48.680 their concern about inflation now shifting very furiously their focus 0:01:48.720 --> 0:01:52.240 on the employment data. I think if the Fed had 0:01:52.320 --> 0:01:55.360 stayed true to their mandate early on, we would be 0:01:55.440 --> 0:01:58.680 in a much better position from a broader economic standpoint. 0:01:59.040 --> 0:02:01.520 They stopped short of where they needed to raise rates 0:02:01.640 --> 0:02:04.240 back in the day. They've been slow playing it, and 0:02:04.280 --> 0:02:06.800 now we're still contending with this easing that we saw 0:02:06.840 --> 0:02:11.240 at the end of last year, exacerbating this underlying embeddedness 0:02:11.280 --> 0:02:13.240 of inflation in the economy. 0:02:13.400 --> 0:02:16.560 So what do you attribute that an inability to balance 0:02:16.600 --> 0:02:20.280 both at once over focusing on the inflation side of 0:02:20.320 --> 0:02:22.600 the mandate, and what does that tell us about the 0:02:22.600 --> 0:02:24.880 path forward here? You mentioned kind of the risks going 0:02:24.919 --> 0:02:27.720 forward when it comes to the labor market. What confidence 0:02:27.720 --> 0:02:30.120 should we have in the Fed's capacity to again balance 0:02:30.160 --> 0:02:31.959 both of these things going forward, as the labor market 0:02:32.000 --> 0:02:34.360 becomes something that it seems understandably is going to attract 0:02:34.400 --> 0:02:35.200 much more of their attention. 0:02:35.400 --> 0:02:36.040 Well, it's a. 0:02:35.960 --> 0:02:37.679 Delicate balance, So I don't want to say this is 0:02:37.720 --> 0:02:39.840 an easy job by any means. I think they're doing 0:02:39.880 --> 0:02:42.080 the best that they can. But I do think that 0:02:42.120 --> 0:02:45.359 the fed's focus should be and should have been, more 0:02:45.400 --> 0:02:49.239 fervently on inflation. And now at this point that window 0:02:49.280 --> 0:02:53.800 of opportunity is closing because the economy is losing some momentum, 0:02:53.840 --> 0:02:57.320 the labor market is losing some momentum, and the focus 0:02:57.360 --> 0:03:01.240 now is shifting, and that's going to I think retard 0:03:01.560 --> 0:03:05.840 or in some cases maybe even completely outright remove the fedsibility. 0:03:05.960 --> 0:03:08.480 Can we can we go NERD report? 0:03:08.600 --> 0:03:08.799 Yeah? 0:03:09.880 --> 0:03:16.160 On a Slavsky Hicksian income substitution effect. I'm screaming that 0:03:16.240 --> 0:03:19.639 what we're seeing is a massive income effect of all 0:03:19.680 --> 0:03:23.120 of American economics right now, which will be a decline 0:03:23.320 --> 0:03:26.480 in our purchasing power. Do we see that now? 0:03:26.800 --> 0:03:27.440 Absolutely? 0:03:27.720 --> 0:03:31.760 Remember the consumption data that we're seeing, while still somewhat positive, 0:03:31.840 --> 0:03:34.960 somewhat stable, is not cost adjusted. So when we talk 0:03:35.000 --> 0:03:38.560 about a four percent retail sales number, we're not adjusting 0:03:38.640 --> 0:03:41.960 for buying twelve apples for one dollar or one apple 0:03:42.000 --> 0:03:45.080 for twelve dollars. Consumers are still out in the marketplace. 0:03:45.120 --> 0:03:48.200 They're still spending. There's still the backbone to the US economy, 0:03:48.640 --> 0:03:51.720 but we're getting there less for our money. Absolutely, we're 0:03:51.760 --> 0:03:53.160 taking home Lis just. 0:03:53.120 --> 0:03:55.560 Brilliant doctor pigs with us. 0:03:55.920 --> 0:03:58.760 You were at n y U, Right at Northwestern Northwestern? 0:03:58.760 --> 0:04:01.240 Excuse me started with an N. I could remember which 0:04:01.240 --> 0:04:06.480 a Northwestern football New York University ball? Right, Okay, I 0:04:06.520 --> 0:04:10.520 got a disinflationary report this morning. If I get the 0:04:10.560 --> 0:04:16.279 same view tomorrow with CPI, doesn't it scream fifty beeps 0:04:16.440 --> 0:04:18.000 and check a lot of boxes. 0:04:18.480 --> 0:04:21.159 I don't think it screams fifty basis points. I think 0:04:21.200 --> 0:04:25.480 it screams the Fed can cut policy by twenty five 0:04:25.520 --> 0:04:28.520 basis points. But remember, we're still talking about an elevated 0:04:28.520 --> 0:04:33.560 inflationary environment. One report getting US closer to two percent 0:04:34.080 --> 0:04:36.440 does not remove the thread of inflation, and I would 0:04:36.520 --> 0:04:39.039 argue that the risk of inflation still remains to the 0:04:39.120 --> 0:04:41.200 upside if we look out to the end of the 0:04:41.279 --> 0:04:44.640 year and the growth profiles higher than expecting. Right, consumers 0:04:44.680 --> 0:04:48.160 pick up spending in that key holiday spending season, businesses 0:04:48.200 --> 0:04:51.359 start passing along terarf related costs more than they have 0:04:51.960 --> 0:04:54.360 over the past couple of months. We're going to see 0:04:54.360 --> 0:04:56.719 inflation pick up and that's going to remove the Fed's 0:04:56.720 --> 0:04:58.520 ability to cut race Northwestern. 0:04:58.560 --> 0:05:00.840 You've got the magic of Robert Gordon in others. I mean, 0:05:00.880 --> 0:05:03.880 there's a huge historical bent there. Have we seen this 0:05:04.080 --> 0:05:06.400 before or is this original charactory? 0:05:06.880 --> 0:05:10.360 I think this is a new type of market. We've 0:05:10.440 --> 0:05:14.000 never seen this environment post COVID with a forty percent 0:05:14.080 --> 0:05:16.880 explosion in the money supply, with this type of change 0:05:16.920 --> 0:05:20.039 in fiscal policy coming down the pipeline. This is a 0:05:20.080 --> 0:05:22.479 new type of market that is trying to absorb these 0:05:22.600 --> 0:05:25.640 massive inflationary pressures that have been in place for a 0:05:25.720 --> 0:05:28.600 number of reasons over a number of years, and the 0:05:28.640 --> 0:05:33.520 Fed continues to seem tolerant of above target inflation. 0:05:33.720 --> 0:05:36.560 David, the revisions come out and they too show a 0:05:36.640 --> 0:05:40.080 modest disinflation as well. That'll put a little fire on this. 0:05:40.720 --> 0:05:44.160 We're hearing the Interactive Broker's studio. You're in Chicago. What's 0:05:44.200 --> 0:05:46.599 the reaction to this? On Sathless Salle Street in Chicago, 0:05:46.640 --> 0:05:48.560 Austin gools Be telling us last week he wanted to 0:05:48.560 --> 0:05:50.719 see these numbers. These numbers were going to be important 0:05:50.720 --> 0:05:53.719 for him as he makes his way to Washington next week. 0:05:53.760 --> 0:05:56.200 How does this do you think change his sense of 0:05:56.240 --> 0:05:57.479 the calculus here going forward? 0:05:57.560 --> 0:05:58.800 Well, I think the Fed is going to look at 0:05:58.839 --> 0:06:02.000 these figures and say there's it's not a material upside 0:06:02.160 --> 0:06:05.640 risk to inflation, at least not this month. And given 0:06:05.720 --> 0:06:08.680 the material decline in the labor market data that we've 0:06:08.720 --> 0:06:11.760 seen as of late, the three month average right round 0:06:11.920 --> 0:06:15.320 thirty thousand jobs per month, that's going to be enough 0:06:15.360 --> 0:06:18.280 to justify a rate cut next week. I don't think 0:06:18.320 --> 0:06:21.279 it's enough to justify fifty basis points, but twenty five 0:06:21.360 --> 0:06:24.640 basis points, with possibly a couple descents in favor of 0:06:24.680 --> 0:06:27.599 a larger cut. But going forward, it's going to continue 0:06:27.600 --> 0:06:30.440 to depend on the evolution of the employment data and 0:06:30.640 --> 0:06:33.599 the inflation side of the equation, which has far from 0:06:33.720 --> 0:06:35.239 been satisfied at this point. 0:06:35.400 --> 0:06:40.640 You are celebrating with your time off a new issuance 0:06:40.680 --> 0:06:44.760 of offspring as well, and there's a whole affinity here 0:06:44.880 --> 0:06:47.760 to Julie Andrews and the sound of music. Are there 0:06:47.800 --> 0:06:50.400 going to be seven Lindsay's I mean, are we heading 0:06:50.520 --> 0:06:51.560 for seven. 0:06:51.400 --> 0:06:53.360 K three is where we're going to cap it. 0:06:53.440 --> 0:06:56.120 I think that's the case. Just to lead a governess 0:06:56.160 --> 0:06:57.159 and a lot more. 0:06:57.040 --> 0:07:01.280 Help Julie Andrews to show up, but either careful. 0:07:00.960 --> 0:07:04.920 Of those of Childcares is going on things. 0:07:05.279 --> 0:07:08.600 That's a real no no, it's it's doubled. 0:07:09.680 --> 0:07:14.320 To congratulations from all of us within Lindsay Jason really 0:07:14.360 --> 0:07:18.440 really appreciated. Doctor pigs is with Steve Wall Stay with us. 0:07:18.440 --> 0:07:21.680 More from Bloomberg Surveillance coming up after this. 0:07:28.920 --> 0:07:32.520 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:07:32.560 --> 0:07:35.720 weekday afternoons from seven to ten am Eastern Listen on 0:07:35.800 --> 0:07:39.480 Applecarplay and Android Otto with the Bloomberg Business app, or 0:07:39.640 --> 0:07:41.080 watch us live on YouTube. 0:07:41.480 --> 0:07:45.120 Nick Ackerman joins us, now starting his career in the 0:07:45.160 --> 0:07:49.360 depth of Watergate, but far more than that, working in 0:07:49.600 --> 0:07:53.080 corporate law in fraud. We are honored he could be 0:07:53.120 --> 0:07:56.120 with us today. David Girl, why don't you bring in 0:07:56.160 --> 0:07:57.640 the esteem mister Ackerman? 0:07:57.840 --> 0:08:00.440 Well, Nick, great to speak with you, and I took 0:08:00.480 --> 0:08:01.880 your council quite a bit over the course of the 0:08:01.920 --> 0:08:04.520 first Trump administration on all matter of legal issues when 0:08:04.560 --> 0:08:06.280 I was at another network. It's great to speak with 0:08:06.320 --> 0:08:10.000 you once again. You're another year. Let's secret, it's about traitor. 0:08:11.440 --> 0:08:16.360 All of this on two words for cause. Help us 0:08:16.400 --> 0:08:18.640 understand here the case that Lisa Cook and her attorney, 0:08:18.680 --> 0:08:21.000 Aviy Lowell are trying to make here, and the difficulty 0:08:21.040 --> 0:08:22.840 of proving that as we get to the appeal stage 0:08:22.840 --> 0:08:24.920 of this, maybe all the way up to the Supreme Court. 0:08:26.000 --> 0:08:30.160 Well, it's not that difficult. Actually, for cause on the 0:08:30.280 --> 0:08:33.560 judge in the District Court interpreted that to me, and 0:08:33.640 --> 0:08:36.920 it has to be something some kind of malfeasance during 0:08:36.960 --> 0:08:40.520 the time that Lisa Cook was actually serving on the 0:08:40.520 --> 0:08:44.559 Federal Reserve Board. She went through the legislative history, looked 0:08:44.600 --> 0:08:48.840 at the what was intended in the Amendment to the 0:08:48.880 --> 0:08:52.720 Federal Reserve Act back in nineteen thirty five. I looked 0:08:52.720 --> 0:08:55.520 at the fact that what Congress was concerned about was 0:08:55.600 --> 0:08:59.360 malfeasance in office. So as a matter of law, she 0:08:59.559 --> 0:09:03.040 found that four cause can only relate to the time 0:09:03.120 --> 0:09:08.079 period that Lisa Cook was in office, and this all 0:09:08.440 --> 0:09:12.920 allegedly occurred prior to her appointment as a Federal Reserve 0:09:13.000 --> 0:09:13.680 Board member. 0:09:14.160 --> 0:09:16.840 Nick, you know, well, there are many of these agencies 0:09:16.880 --> 0:09:20.079 that have some degree of independence from the administration or 0:09:20.120 --> 0:09:23.079 from Congress in Washington. The Supreme Court is should a 0:09:23.120 --> 0:09:25.400 decision a few months back in which it noted that 0:09:25.440 --> 0:09:28.880 the fens independence is a unique one and a special one. 0:09:29.280 --> 0:09:32.080 How is that going to shape what happens here going forward? 0:09:32.240 --> 0:09:33.679 If this does in fact make its way to the 0:09:33.720 --> 0:09:36.600 Supreme Court, how will that color the decision that those 0:09:36.679 --> 0:09:37.640 nine justices made. 0:09:38.480 --> 0:09:41.560 Oh, I think that's the bottom line. The fact that 0:09:41.600 --> 0:09:43.800 the Supreme Court, I think it was in Wilcox has 0:09:43.840 --> 0:09:48.040 already said that it was essentially dicta in another decision, 0:09:48.480 --> 0:09:51.600 but I think everyone agrees, and the District Court opinion 0:09:51.880 --> 0:09:56.800 made a very strong case for the notion that Congress's 0:09:56.880 --> 0:10:00.920 intention in creating the Federal Reserve Board, well over one 0:10:00.960 --> 0:10:04.720 hundred years ago at this point, was done in order 0:10:04.760 --> 0:10:09.000 to keep it independent from the ongoing politics of the nation. 0:10:09.200 --> 0:10:11.680 The fact that the person is appointed to a fourteen 0:10:11.760 --> 0:10:15.760 year term, the fact that it was only a person 0:10:15.800 --> 0:10:21.520 could only be removed for cause that really, I think 0:10:21.640 --> 0:10:24.200 is going to color this straight up through. 0:10:24.800 --> 0:10:27.520 Nick I had a hockey injury during Watergate, and I 0:10:27.600 --> 0:10:30.880 was flat on my back that summer where we leisurely 0:10:30.960 --> 0:10:34.800 went through meetings in Sammervan and Howard Baker and all 0:10:34.840 --> 0:10:37.400 the rest of it. Those days are gone. Now we 0:10:37.440 --> 0:10:39.439 want to be at the Supreme Court in three and 0:10:39.520 --> 0:10:43.400 a half days. Nick Ackerman, how has our law changed 0:10:43.800 --> 0:10:47.120 because we're so damn in a rush? 0:10:47.200 --> 0:10:50.120 Well, I think it's the Supreme Court with their docket this. 0:10:50.480 --> 0:10:56.560 I mean they decide things on stays very rapidly without 0:10:56.559 --> 0:11:00.199 full briefing. I mean it just is not right. Get 0:11:00.240 --> 0:11:03.400 the Watergate thing with the repeal on the tapes went 0:11:03.520 --> 0:11:06.920 very quickly. The whole thing occurred within a seven month period, 0:11:07.200 --> 0:11:10.480 which in terms of normal litigation was really fast. But 0:11:10.600 --> 0:11:14.080 today people are running up to the Supreme Court immediately. 0:11:14.120 --> 0:11:17.640 In the shadow docket that the Supreme Court has fostered 0:11:18.280 --> 0:11:22.920 allows for instant opinions without really a good opinion, not 0:11:23.040 --> 0:11:24.760 a substantial. 0:11:24.240 --> 0:11:27.880 How does the Chief Justice defend the institution and the 0:11:27.920 --> 0:11:31.560 remainder of the Roberts term, the Roberts era. 0:11:32.840 --> 0:11:35.520 I think it's very difficult because when you're not actually 0:11:35.559 --> 0:11:40.560 writing full opinions, explaining your reasoning, giving both sides an 0:11:40.559 --> 0:11:43.280 opportunity to put in a full briefing. There's a reason 0:11:43.320 --> 0:11:46.080 for all of that. It's so that these issues, which 0:11:46.120 --> 0:11:50.559 are very important can be decided in a normal course 0:11:50.880 --> 0:11:55.120 where everybody has a chance to actually put best foot forward. 0:11:55.520 --> 0:11:57.480 One final question. I got to get this in Michael 0:11:57.480 --> 0:11:59.640 Barr's Waiting for the News with mister Ackerman. This is 0:11:59.640 --> 0:12:05.360 too how political our appeals courts because so and so 0:12:05.480 --> 0:12:07.479 appointed this judge or that judge. 0:12:08.960 --> 0:12:11.520 I think they come down to being very political in 0:12:11.559 --> 0:12:14.200 the sense that this was not something that we looked 0:12:14.240 --> 0:12:19.640 at back during the days of Watergate. There are judges 0:12:19.679 --> 0:12:23.240 that are appointed specifically because they wrote particular articles on 0:12:23.280 --> 0:12:26.840 an issue that appeals to the president. I think they're 0:12:26.880 --> 0:12:30.000 much more political than they were, and certainly the Supreme 0:12:30.040 --> 0:12:32.320 Court comes across now. 0:12:32.320 --> 0:12:35.000 As David said at the beginning of this conversation, we're 0:12:35.040 --> 0:12:37.840 just thrilled in hunted you could be with us. Nick Eckerman, 0:12:38.000 --> 0:12:41.200 thank you so much for giving us needed perspective here 0:12:41.600 --> 0:12:45.680 among amidst this legal moment. I should say, stay with us. 0:12:45.880 --> 0:12:49.160 More from Bloomberg Surveillance coming up after this. 0:12:56.360 --> 0:12:59.920 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:13:00.080 --> 0:13:03.559 weekday afternoons from seven to ten am Eastern Listen on Apple, 0:13:03.600 --> 0:13:06.960 Karplay and Android Otto with the Bloomberg Business app, or 0:13:07.080 --> 0:13:08.160 watch us live on. 0:13:08.120 --> 0:13:11.480 YouTube the late Vince Ferrell, who I abdored. He was 0:13:11.520 --> 0:13:14.360 on Wall Street Week with lu Lu Kaiser. Vince Ferrell 0:13:14.360 --> 0:13:17.480 and I used to be in tears laughing about how 0:13:17.520 --> 0:13:21.520 many kids we were still paying their iPhones for. Here 0:13:21.559 --> 0:13:25.240 to brief us this morning, tone down with a new 0:13:25.240 --> 0:13:27.960 Pittsburgh Pirates cap is Dan Ives. For those of you 0:13:28.040 --> 0:13:31.040 on radio, you're lucky. What's the p on your hat? 0:13:31.120 --> 0:13:34.520 It's Arnold Palmer had from arn Palmer torn him big, 0:13:34.559 --> 0:13:35.640 big arma Palmer fan. 0:13:35.760 --> 0:13:37.800 Let's get this out of the way. You signed as 0:13:37.840 --> 0:13:41.880 a chairman of a crypto thing this week. Explain what 0:13:41.920 --> 0:13:43.680 the game is you're doing there? Yep. 0:13:44.080 --> 0:13:46.760 So you know we announced that I'm gonna be chairman 0:13:46.840 --> 0:13:50.160 of EKO and a KO. You know is you know 0:13:50.400 --> 0:13:52.800 when you think about Sam Alman in the build out 0:13:52.840 --> 0:13:56.560 of World, what Dave essentially done is it's really gonna 0:13:56.600 --> 0:14:02.120 be the infrastructure authentic keys for AI in the future. 0:14:02.640 --> 0:14:04.719 And you know, I was a huge believer in this. 0:14:04.920 --> 0:14:06.640 You know, I'm not taking this on just for any 0:14:06.679 --> 0:14:08.640 crypto equity in This. 0:14:10.800 --> 0:14:13.439 Is a rasearch channelist. This is a sidecard deal. 0:14:13.679 --> 0:14:17.079 Yeah, this is this is a total separate initiative. Uh, 0:14:17.200 --> 0:14:20.120 you know, total separate from my web bush. But but 0:14:20.440 --> 0:14:24.360 Tom factors really into my view of the AI revolution. 0:14:24.520 --> 0:14:26.160 I'm doing this because I think this is going to 0:14:26.200 --> 0:14:29.680 be the fact of standard for really you're going to. 0:14:29.680 --> 0:14:32.360 Take a minority interest in perplexity. If they called you, 0:14:33.400 --> 0:14:33.920 we need. 0:14:34.520 --> 0:14:36.760 As long as it comes through Keen. 0:14:39.920 --> 0:14:42.880 Earlier this week was a corrugated packaging company. 0:14:43.360 --> 0:14:47.360 It basically is a treasury vehicle for world Coin in 0:14:47.440 --> 0:14:49.840 terms of what we've done, and that's why I think. 0:14:49.840 --> 0:14:52.240 You know, receptions obviously been great. You know, we raised 0:14:52.240 --> 0:14:56.400 capital and closed that this morning. Okay, it was super 0:14:56.400 --> 0:14:59.800 exciting to just put another you want to talk. 0:14:59.720 --> 0:15:02.320 Now this appears, which is like Worldcoin, it's a means 0:15:02.320 --> 0:15:05.400 of authentication. You have your iris scane to know that 0:15:05.440 --> 0:15:06.720 you're the person that you say you are. 0:15:06.880 --> 0:15:09.400 Glad you know, well, okay, that's enough so that there's 0:15:09.400 --> 0:15:12.880 a stor involved to bring the orb for community next time. 0:15:13.560 --> 0:15:17.120 What did mag five learn from the Oracle pop last night? 0:15:17.760 --> 0:15:21.080 This AI party, it's ten pm going to four am. 0:15:21.120 --> 0:15:24.440 I mean, the point is the infrastructure was that's gonna 0:15:24.440 --> 0:15:26.920 be historic quarter when you look at work and it 0:15:27.000 --> 0:15:30.120 shows the type of cap backs we're seeing and the 0:15:30.240 --> 0:15:31.560 use cases are exploding. 0:15:32.600 --> 0:15:34.800 We've talked about so much here in the Change My Life. 0:15:35.000 --> 0:15:36.480 I mean as simple as that. 0:15:36.720 --> 0:15:41.480 Look and the reality is anyone that thinks hype not real. 0:15:42.000 --> 0:15:45.480 That oracle number is a validation. That's a drop the 0:15:45.640 --> 0:15:50.520 mic from Saffra and Ellison. That shows to me what's 0:15:50.560 --> 0:15:52.440 going to happen the rest attack and it ze Brahmin. 0:15:52.560 --> 0:15:54.440 Did we have a drop the mic moment with mister 0:15:54.480 --> 0:15:57.640 Cook yesterday? I tuned in for twelve seconds. It's so manipulated. 0:15:57.920 --> 0:16:00.440 I can't watch it. You and had Ludlow saw were 0:16:00.480 --> 0:16:01.920 your thumbs up, like Gene Mounster. 0:16:02.400 --> 0:16:06.000 Look, it's a thumbs up relative to I think expectations. 0:16:06.080 --> 0:16:08.480 Our view here is that the elf in the room 0:16:08.520 --> 0:16:10.040 continues to be as we talk about AI. 0:16:10.200 --> 0:16:13.680 But I do believe with the DOJ Google situation now you. 0:16:13.600 --> 0:16:15.840 Know in the rearview mirror, they will double down then 0:16:15.880 --> 0:16:18.800 and that's going to be ultimately their AI partnership. But 0:16:19.200 --> 0:16:22.080 in terms of the actual iPhone, look, three hundred million 0:16:22.120 --> 0:16:24.440 plus have an upgrade four plus years. The point is 0:16:24.480 --> 0:16:27.400 this is going to be includes John Tucker, including talker. 0:16:27.640 --> 0:16:30.200 So if you think about on a scale one to 0:16:30.280 --> 0:16:33.120 ten from an upgrade cycle. Super cycle being a ten, 0:16:33.480 --> 0:16:35.400 it's probably going to be about an eight point five. 0:16:35.720 --> 0:16:37.600 But what I tell you is the street right now 0:16:37.840 --> 0:16:41.360 numbers are conservative. New York City cab driver or uber 0:16:41.440 --> 0:16:44.160 is still barished on Apple, and I think that to 0:16:44.320 --> 0:16:47.480 me sets it up well as well as you add 0:16:47.520 --> 0:16:50.400 AI and they actually make a big move there. You 0:16:50.440 --> 0:16:52.440 tell about another you know, one hundred dollars per share 0:16:52.560 --> 0:16:52.960 to the stock. 0:16:53.040 --> 0:16:55.160 What does Apple have to do when it comes to AI? 0:16:55.280 --> 0:16:57.440 So I look at Meta for instance, and they pay 0:16:57.480 --> 0:16:58.840 a lot of money. They're hiring a lot of big 0:16:58.920 --> 0:17:00.120 name people. And I think if you look at the 0:17:00.160 --> 0:17:02.240 history of Apple that had a bad luck of bringing 0:17:02.240 --> 0:17:06.600 in outside talent, particularly the executive level, to mix things up, 0:17:06.760 --> 0:17:08.800 to change things around, are they able to do that? 0:17:08.800 --> 0:17:10.000 What do they have to do to kind of re 0:17:10.119 --> 0:17:12.639 establish themselves here at the vanguard of AI. 0:17:12.760 --> 0:17:14.920 Look, there's a better chance of me playing in Beth 0:17:15.000 --> 0:17:20.159 Page Ryder Cup in September then AI innovation happening from Apple, 0:17:20.200 --> 0:17:22.240 and I think that's the issue that they got to 0:17:22.280 --> 0:17:23.040 go outside. 0:17:23.480 --> 0:17:24.160 It has to be good. 0:17:24.200 --> 0:17:25.280 You're a way to make that work. 0:17:25.359 --> 0:17:28.880 Danae with Wedbush with us this morning. David Gerntin can 0:17:28.920 --> 0:17:31.560 good Morning across the nation and the way you listen 0:17:31.640 --> 0:17:34.040 to us on radio good Morning nineties to nine FM 0:17:34.400 --> 0:17:37.919 in Boston, on YouTube and your home at your office. 0:17:37.960 --> 0:17:41.280 Floored by the sign up, Thank you so much, Bloomberg 0:17:41.320 --> 0:17:45.200 podcast Go out to YouTube and subscribe it Bloomberg Podcasts. 0:17:45.480 --> 0:17:48.080 Thank you for your attention to our new dan ives 0:17:48.200 --> 0:17:51.159 like digital. Maybe I should start wearing bright pink. What 0:17:51.200 --> 0:17:51.879 do you think, David? 0:17:51.960 --> 0:17:52.480 I could see that. 0:17:52.520 --> 0:17:56.080 Why don't you continue with mister? I've talked about the 0:17:56.200 --> 0:17:58.520 pink both for I know what. 0:17:58.640 --> 0:18:00.400 The hoodie beneath the jacket would be a good look 0:18:00.400 --> 0:18:00.520 for you. 0:18:00.640 --> 0:18:03.080 I think when I thought Dan I have's clothing, we 0:18:03.119 --> 0:18:06.280 could add potentially a bow tie and it would be called. 0:18:07.080 --> 0:18:09.399 Everything is like two X. You know, it's like for 0:18:09.480 --> 0:18:12.240 little people. What's the name of the company. 0:18:12.359 --> 0:18:14.560 It's snow milk. My cost snow milk. 0:18:14.600 --> 0:18:17.080 They got to make like adult sizes like we we 0:18:17.119 --> 0:18:17.879 have X six X. 0:18:18.320 --> 0:18:20.000 I think we go down the route with a keen 0:18:20.080 --> 0:18:22.560 bow tie. I have been I'm actually advocate. 0:18:22.960 --> 0:18:24.280 Very good David jump in. 0:18:24.400 --> 0:18:26.560 Can I go back to Oracle? I diverted over to 0:18:26.560 --> 0:18:29.000 to appled love to go back to Oracle, what should 0:18:29.040 --> 0:18:30.960 make How quickly they were able to make this this pivot, 0:18:31.000 --> 0:18:33.040 What does it say about sort of the future direction 0:18:33.119 --> 0:18:36.800 of Oracle moving into cloud computing as rapidly as it did, 0:18:36.920 --> 0:18:38.520 as successfully as it did. Certainly when you look at 0:18:38.520 --> 0:18:39.080 the numbers. 0:18:38.880 --> 0:18:41.640 Of guess who's watching course, so you see what they did, 0:18:41.800 --> 0:18:45.920 it's Benioff, it's Adobee, it's software where right now they're 0:18:45.920 --> 0:18:47.000 not the cool kids table. 0:18:47.040 --> 0:18:48.560 I mean, what Oracle has been able to. 0:18:48.480 --> 0:18:53.080 Do because of the stack right it's it's been transformational. 0:18:53.400 --> 0:18:56.360 And I think that more is where we're seeing. Everyone 0:18:56.480 --> 0:18:59.040 wants that. That two to three trillion of cap backs, 0:18:59.600 --> 0:19:00.480 everyone wants it. 0:19:00.680 --> 0:19:04.040 Doug Cass emails in Okay, he's beside himself about the 0:19:04.119 --> 0:19:07.360 Yankees defense. They're averaging like three years a game. I mean, 0:19:07.760 --> 0:19:11.040 it's said Aaron Judge should be at first base, Dan ives. 0:19:11.080 --> 0:19:16.119 Dougcass has a question for you, the backlog dynamics versus 0:19:16.160 --> 0:19:19.760 the accounting on the statements. Is this an accounting issue 0:19:19.760 --> 0:19:22.879 to come not only for Oracle but for other mags 0:19:23.000 --> 0:19:27.679 seven and then there's so much future business that needs 0:19:27.720 --> 0:19:30.760 to adjust in the accounting statement. Is that a risk? 0:19:31.359 --> 0:19:34.159 And I hope Doug's doing well. It's a good question. 0:19:34.640 --> 0:19:37.600 I think there's definitely some normalization that's going to have 0:19:37.640 --> 0:19:39.760 to happen there over the coming quarters. So you got 0:19:39.760 --> 0:19:43.119 to normalize it, you know, from a backlog perspective in 0:19:43.200 --> 0:19:46.359 terms of arr Look, I think the reality is is 0:19:46.400 --> 0:19:49.920 that over the coming quarters, that's where like look for Oracle, 0:19:49.960 --> 0:19:51.639 if you got if you're the amount of stock that 0:19:51.680 --> 0:19:53.720 could go to three P fifty four hundred. You got 0:19:53.720 --> 0:19:57.280 to continue to show this because you as the normalization 0:19:57.520 --> 0:20:00.359 starts to happen, the comps ultimately start taking place. 0:20:00.720 --> 0:20:02.360 You need to continue to see that growth. 0:20:02.960 --> 0:20:07.120 You mentioned Google and uh Gemini, what are they waiting for? 0:20:07.640 --> 0:20:10.200 They were waiting they were waiting for DOJ I mean 0:20:10.280 --> 0:20:14.040 that and now the candleight dinner could happen between soon 0:20:14.160 --> 0:20:18.200 Dar and Cook. And I believe that is Look because 0:20:18.280 --> 0:20:21.240 I truly and we've talked about, if the dog went 0:20:21.480 --> 0:20:24.560 negative toward an Apple Google, then they have no choice 0:20:24.560 --> 0:20:26.760 called perplexity on the red phone and they have to 0:20:26.800 --> 0:20:30.200 do that deal. But now I think they double down. 0:20:30.240 --> 0:20:31.200 The joy they're. 0:20:31.040 --> 0:20:33.240 Waiting for is it literally like just Egos, they have 0:20:33.280 --> 0:20:34.320 to wait a little bit of time. 0:20:34.359 --> 0:20:36.119 I think you wait a little time look. And we 0:20:36.160 --> 0:20:39.639 also know in Cooper Tino there is a part of 0:20:39.680 --> 0:20:42.000 it that runs like a motor vehicle in New Jersey, 0:20:42.080 --> 0:20:44.720 and that's been some of the issue in terms of 0:20:44.720 --> 0:20:47.400 some of the bureaucracy that they're trying to get rid 0:20:47.400 --> 0:20:48.680