WEBVTT - Bloomberg Surveillance TV: July 21st, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 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 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:38.199 Terminal and the Bloomberg Business App. Chris Harvey of Wells Fargo, 0:00:38.280 --> 0:00:40.839 the most bullish man on Wall Street s and P 0:00:41.000 --> 0:00:43.960 five hundred price target of seven thousand and seven, and 0:00:44.080 --> 0:00:45.120 he joins us now for more. 0:00:45.120 --> 0:00:46.640 Good morning, Chris, Good, good morning. 0:00:46.640 --> 0:00:49.640 You're uncomfortable with that. I want to give you some 0:00:49.680 --> 0:00:52.800 credit before we start. Credit to you for not changing 0:00:52.840 --> 0:00:55.720 this call in the tariff storm of early April. So 0:00:55.800 --> 0:00:56.560 let's start there. 0:00:56.880 --> 0:00:59.760 Why did you stick with it so nine months in 0:00:59.800 --> 0:01:04.040 the financial market. That's an eternity. The other thing we 0:01:04.080 --> 0:01:06.679 had seen Trump one point zero. We know his style. 0:01:06.720 --> 0:01:08.640 It's to go out to the end degree and then 0:01:08.640 --> 0:01:12.440 to come back in Furthermore, the underlying fundamentals were still fine, 0:01:12.880 --> 0:01:15.640 and our EPs and our price target wasn't predicated on 0:01:15.720 --> 0:01:18.560 a strong economy. What we're seeing is the winners continue 0:01:18.600 --> 0:01:22.280 to win. The ubercap companies have the higher margins, are 0:01:22.280 --> 0:01:25.399 gaining more market share. There is a real secular trade 0:01:25.440 --> 0:01:28.440 in AI that will continue. I was here during the nineties. 0:01:28.640 --> 0:01:31.679 This is not a fair comparison. It is much stronger 0:01:31.680 --> 0:01:34.120 and the fundamentals are much better than today than they 0:01:34.120 --> 0:01:34.680 were back then. 0:01:34.800 --> 0:01:37.399 Seven K is not tariff dependent, It is not August 0:01:37.440 --> 0:01:38.080 one dependent. 0:01:38.560 --> 0:01:41.600 No, So people ask, well, what's the fear. 0:01:41.640 --> 0:01:42.360 The fear is. 0:01:42.720 --> 0:01:45.759 There's a couple of fears. One is do taras start 0:01:45.760 --> 0:01:48.320 to flare back up? And that's possible, right, we just 0:01:48.360 --> 0:01:51.120 can't can't predict that. The other fear, which is much 0:01:51.160 --> 0:01:54.320 more real fear, is what's happening with the Fed? Do 0:01:54.400 --> 0:01:56.640 we worry about the Fed and confidence in the Fed? 0:01:56.680 --> 0:01:58.600 Because the back and forth between the Fed and White House, 0:01:58.640 --> 0:02:02.000 that's not healthy, right, and that can cause problems in 0:02:02.040 --> 0:02:04.680 the bond market, and that can cause problems with competence. 0:02:04.840 --> 0:02:07.200 But overall, we're starting to see M and A activity 0:02:07.280 --> 0:02:09.800 kick up. We think that M and A will continue 0:02:09.840 --> 0:02:12.640 to be very, very healthy up and down the capitalization. 0:02:12.800 --> 0:02:15.400 We do think the FEDS are going to cut. Fundamentals 0:02:15.480 --> 0:02:18.760 are fine, the consumers okay, And we're not seeing the 0:02:18.840 --> 0:02:21.440 kind of price increases that people are talking about. We're 0:02:21.440 --> 0:02:24.520 seeing people say surgical when they're talking about price increases 0:02:24.560 --> 0:02:25.320 and selectively. 0:02:25.760 --> 0:02:27.320 So there's a lot to unpack there. And we'll get 0:02:27.360 --> 0:02:29.240 to the FED independence in just a second. And what 0:02:29.360 --> 0:02:32.120 point yields have to rise to before that really triggers 0:02:32.120 --> 0:02:35.400 some sort of response and equity markets, what about valuations, 0:02:35.440 --> 0:02:38.520 the idea that you're talking about an eleven percent gain 0:02:38.560 --> 0:02:40.480 from where we are right now, and the S and 0:02:40.480 --> 0:02:43.840 P five hundred, after already reaching record highs amid a 0:02:43.880 --> 0:02:46.640 wall of orion, frankly growth that is expected to slow. 0:02:47.280 --> 0:02:49.680 So we talk about this all the time because people say, oh, 0:02:49.720 --> 0:02:52.280 look at twenty years ago, look at twenty five years ago. 0:02:52.400 --> 0:02:54.600 The SMP is not the same as it was twenty 0:02:54.600 --> 0:02:56.760 five years ago. The constittioning the S and P five 0:02:56.840 --> 0:02:59.720 hundred is much more growthy, it's much more techy, The 0:03:00.600 --> 0:03:03.840 multiples are much higher, the productivity is much better. The 0:03:03.840 --> 0:03:08.519 people running the companies are much more uh attuned and 0:03:08.680 --> 0:03:11.600 and the acumen is much higher, and so the valuation, 0:03:11.800 --> 0:03:15.720 yes it's high, but it's justified in our minds. And again, 0:03:15.800 --> 0:03:18.040 we don't need to see a whole lot of multiple 0:03:18.080 --> 0:03:20.600 expansion to get to that level. We're not very far 0:03:20.639 --> 0:03:22.120 from that level at this point in time. 0:03:22.080 --> 0:03:25.320 So valuation concerns don't really uh spend You don't spend 0:03:25.360 --> 0:03:26.920 a lot of time on those. I do want to 0:03:26.919 --> 0:03:28.840 go to the FED independent side, though, there is a 0:03:28.919 --> 0:03:31.960 question of what point yields have to rise to before 0:03:32.000 --> 0:03:35.200 it triggers true concern in stock markets because we've asked 0:03:35.240 --> 0:03:37.480 that questions many times. People give us a level and 0:03:37.480 --> 0:03:40.040 then we pass that level and stock markets struggled off 0:03:40.080 --> 0:03:42.320 and say healthy, healthy, good. Yeah. 0:03:42.160 --> 0:03:44.960 I I it's hard for me to really answer that question. 0:03:45.320 --> 0:03:49.200 The I think what's happening right now is you had 0:03:49.240 --> 0:03:51.600 Trump come out and say I'm not going to fire powers, right, 0:03:51.880 --> 0:03:53.480 and I think he needs to go out and say 0:03:53.520 --> 0:03:57.320 that right. There's a lot of talk and uh rumors 0:03:57.360 --> 0:03:59.880 and situations in the marketplace. At the end of the day, 0:03:59.880 --> 0:04:02.440 we need the FED. We need the FED to be independent, 0:04:02.760 --> 0:04:05.680 We need to be the FED to be apolitical because 0:04:05.720 --> 0:04:08.520 it is a very important part of our marketplace, and 0:04:08.560 --> 0:04:10.360 as long as we can do that, that's great. I 0:04:10.400 --> 0:04:12.960 don't know if raids really have a play in this. 0:04:13.240 --> 0:04:14.960 I think it's just cooler heads and need to prevail. 0:04:15.280 --> 0:04:17.919 You read Trump correctly when it comes to tariffs. He 0:04:17.960 --> 0:04:20.480 put out a truth over the weekend about what best 0:04:20.680 --> 0:04:22.320 potentially laid out to him. When it comes to the 0:04:22.320 --> 0:04:24.919 market impact of firing Besset, people don't explain to me. 0:04:25.040 --> 0:04:27.159 I explained to them, says the President of the United States. 0:04:27.360 --> 0:04:30.680 Did you take that as him basically acknowledging he understands 0:04:30.720 --> 0:04:33.440 the negative impacts that could have on financial markets. 0:04:34.640 --> 0:04:38.000 I think his team understands. I think he understands. I 0:04:38.080 --> 0:04:40.880 think if you go back and one of them, when 0:04:40.880 --> 0:04:42.320 we were on the show a while ago, we were 0:04:42.320 --> 0:04:45.920 talking about will the feedback loop close? Right? Will the 0:04:45.960 --> 0:04:49.040 administration see what's happening that capital markets and react to that? 0:04:49.240 --> 0:04:52.240 And they did so. I do think they understand. But 0:04:52.279 --> 0:04:54.160 I also think that he feels like he's playing with 0:04:54.200 --> 0:04:56.240 a very stronghand, and to a certain degree he is. 0:04:57.000 --> 0:04:58.640 And one of the things we are beginning to worry 0:04:58.680 --> 0:05:03.280 about it is he's looking at tariff's as a revenue generator. Right, 0:05:03.320 --> 0:05:06.400 We have what we have with the deficit and saying, hey, 0:05:06.560 --> 0:05:09.440 this could be a good way to reduce the deficit. 0:05:09.720 --> 0:05:12.320 We haven't seen the real impact to the economy. What's 0:05:12.320 --> 0:05:12.840 the big deal? 0:05:12.960 --> 0:05:15.039 In that same truth, he said, if it weren't for him, 0:05:15.360 --> 0:05:17.520 the market wouldn't be at record highs right now. But 0:05:17.560 --> 0:05:20.040 if it weren't for him, would potentially ready be at 0:05:20.040 --> 0:05:22.559 your seven double host seven mark. 0:05:23.320 --> 0:05:27.360 Yeah, there's a lot of speculation on speculation there. I 0:05:27.400 --> 0:05:30.640 think we could have done this. Talking my book, one 0:05:30.680 --> 0:05:32.240 of the things I said, one of the things I 0:05:32.240 --> 0:05:34.560 believe is you could have put a ten percent tariffon 0:05:34.920 --> 0:05:36.039 and then just walked away. 0:05:36.320 --> 0:05:36.520 Right. 0:05:36.640 --> 0:05:39.320 We talked about how there was a seller's tariff and 0:05:38.960 --> 0:05:43.560 how people whether it's through Airbnb or Amazon, they understand 0:05:43.560 --> 0:05:46.480 that you had Congress put that ten percent tariffon, walk 0:05:46.520 --> 0:05:50.240 away and we can do something more productive. But we 0:05:50.320 --> 0:05:53.440 chose this path and it's okay, it's a little bit bumpy, 0:05:54.160 --> 0:05:55.320 but we're getting there. 0:05:55.520 --> 0:05:58.360 Mike and bumpy. A pityshev accountemy. Without the markets pressuring 0:05:58.360 --> 0:06:01.440 the administration, why would they pull back going it's the 0:06:01.480 --> 0:06:01.920 next month? 0:06:02.040 --> 0:06:04.520 Well, this to me is the key question. How much 0:06:04.680 --> 0:06:08.040 is this administration playing chicken on tariffs with the market. 0:06:08.080 --> 0:06:10.760 If the market's looking past something that hasn't happened yet, 0:06:10.760 --> 0:06:13.840 does that push them to potentially go even harder because 0:06:13.839 --> 0:06:15.880 they could extract more that could off set the deficit 0:06:15.920 --> 0:06:17.560 concerns from the one big, beautiful bill. 0:06:18.000 --> 0:06:20.440 And there we go, and you see these countries lining 0:06:20.520 --> 0:06:22.840 up to really want to do deals and getting a 0:06:22.839 --> 0:06:25.760 little bit nervous when you have Howard Latnach, the Commerce Secretary, 0:06:25.800 --> 0:06:29.279 coming on a Sunday show saying August first is hard 0:06:29.279 --> 0:06:31.479 to stop deal. Also, he's already telling us what to 0:06:31.520 --> 0:06:33.440 expect next year. He said, of course, we're going to 0:06:33.480 --> 0:06:37.040 renegotiate USMCA, so we could prepare for more headwinds in 0:06:37.120 --> 0:06:39.120 terms of Canada, Mexico and United. 0:06:38.960 --> 0:06:41.240 It's gonna keep coming. It's gonna keep coming. Chris, just 0:06:41.240 --> 0:06:42.839 to wrap it up, the US versus the rest of 0:06:42.880 --> 0:06:44.600 the world, what if you mighte to that debate over 0:06:44.640 --> 0:06:45.279 the YSIFA. 0:06:45.680 --> 0:06:48.680 So we thought that was possible, We thought that was 0:06:48.800 --> 0:06:51.440 probable early in the year. It happened. Now we're just 0:06:51.480 --> 0:06:54.080 walking away, which you just don't. We're done, We're good. 0:06:54.480 --> 0:06:57.600 You had that repricing. Now let's go back to fundamentals. 0:06:57.640 --> 0:06:59.880 And the fundamentals are telling you back to the US, 0:07:00.279 --> 0:07:01.559 back to back to growth. 0:07:01.640 --> 0:07:15.680 Chris Halveylstfagapre Siedaser. Let's continue the conversation. Claudia Sama of 0:07:15.680 --> 0:07:18.239 New Century Advisors joins us. Now for more. Claudia, welcome 0:07:18.240 --> 0:07:20.360 back to the show. It's good to see you, as always. 0:07:20.520 --> 0:07:22.360 Want to pick up on that space from Governor Waller 0:07:22.480 --> 0:07:25.240 what he said before our conversation with him, looking across 0:07:25.240 --> 0:07:27.320 the soft and hard data, I get a picture of 0:07:27.320 --> 0:07:30.040 a labor market on the edge. Do you get a 0:07:30.080 --> 0:07:32.200 picture of a labor market on the edge. 0:07:34.320 --> 0:07:36.400 That's what I would characterize the labor market. 0:07:36.440 --> 0:07:38.760 But I think demon and Waller lays out a very 0:07:38.840 --> 0:07:41.960 reasonable argument for reading the data right there. 0:07:42.840 --> 0:07:45.880 Labor market has had some crap, has some weaknesses to it. 0:07:45.920 --> 0:07:47.760 I mean, I think they were maybe more apparent last 0:07:47.840 --> 0:07:49.800 year's you know, the unemployment rate has been rising. 0:07:50.720 --> 0:07:54.680 But he pays a picture and he ties it to data. Again, 0:07:54.720 --> 0:07:55.320 I think it's. 0:07:55.200 --> 0:07:58.080 Really unfortunate that it becomes wrapped in this conversation of 0:07:58.120 --> 0:07:59.760 it as a politicized view. 0:07:59.640 --> 0:08:02.480 Of his I don't see it that way, but just 0:08:02.520 --> 0:08:03.120 to have that. 0:08:03.080 --> 0:08:06.600 Kind of injective of the conversation does tend to undermine 0:08:06.600 --> 0:08:07.280 what he's saying. 0:08:07.440 --> 0:08:10.080 Claudia, do you think, from your perspective, in your years 0:08:10.120 --> 0:08:13.200 of experience studying the labor market and how that affects 0:08:13.200 --> 0:08:15.720 FED policy, do you think that right now weakening in 0:08:15.760 --> 0:08:19.560 the labor market really is a greater concern than a prolonged, 0:08:19.640 --> 0:08:23.160 protracted inflationary push from the tariffs and from strength that 0:08:23.200 --> 0:08:25.200 we have seen ongoing in corporate America. 0:08:27.440 --> 0:08:30.280 So I would agree that there are several threats on 0:08:30.320 --> 0:08:32.640 the growth side to policies have been put in place. 0:08:32.679 --> 0:08:35.880 I mean, kars have an aspect of weakening growth throughout 0:08:35.880 --> 0:08:38.920 the higher prices we've seen, immigration policy. I mean, there's 0:08:38.960 --> 0:08:40.600 a whole set of reasons why you look out at 0:08:40.600 --> 0:08:42.800 this year. We've seen growth slow this year, and that 0:08:42.840 --> 0:08:45.160 will eventually show up in the labor markets. You definitely 0:08:45.160 --> 0:08:48.600 can see those risks. And if one, as Christopher Waller 0:08:48.679 --> 0:08:51.360 laid out, looks at the potential inflation risks and says 0:08:51.360 --> 0:08:53.800 these are tempered, we can look through these, then I 0:08:53.800 --> 0:08:54.960 think you would be right back. 0:08:54.840 --> 0:08:55.480 To where we were. 0:08:55.559 --> 0:08:57.840 You know in twenty nineteen, where does thateral reserve base 0:08:57.880 --> 0:09:00.640 with care? They tu preamptively, which is we're not in 0:09:00.640 --> 0:09:03.920 an environment where inflation is subdued. It's actually been above 0:09:03.960 --> 0:09:06.520 target for more than four years. There are real rists there. 0:09:06.800 --> 0:09:09.120 We still don't know what the terear policy actually is. 0:09:09.160 --> 0:09:11.080 It could be going higher, it could not, like, so 0:09:11.160 --> 0:09:13.480 there's just a lot of uncertainy. I think with the 0:09:13.520 --> 0:09:15.719 way that the kind of majority of. 0:09:15.640 --> 0:09:17.560 The FED is lining up their arguments makes a lot 0:09:17.600 --> 0:09:18.040 of sense. 0:09:18.400 --> 0:09:20.480 But there is a real perspective, and I would agree 0:09:20.480 --> 0:09:22.520 that the diversity of thought on the ped and making 0:09:22.520 --> 0:09:25.200 those arguments carefully with data like that's a good thing. 0:09:25.360 --> 0:09:29.720 It's just is extremely unfortunate the environment. By having the 0:09:29.720 --> 0:09:32.960 White House and the President very directly say what they 0:09:33.000 --> 0:09:33.439 want to. 0:09:33.440 --> 0:09:35.520 See in terms of rapes, it's kind of created this. 0:09:35.640 --> 0:09:38.680 You know, It's made it really difficult for the fend 0:09:38.679 --> 0:09:41.080 to have this kind of discipline data conversation. 0:09:41.400 --> 0:09:43.240 And it's even more difficult by the fact that the 0:09:43.320 --> 0:09:45.559 data is really confusing and it can paint a different 0:09:45.559 --> 0:09:48.000 story depending on how you read it. I mean, we 0:09:48.120 --> 0:09:51.439 keep kind of wondering what the labor market is showing us, 0:09:51.480 --> 0:09:53.720 whether it does show some sort of more dramatic weakening, 0:09:53.800 --> 0:09:56.240 or whether the housing market is kind of ringing a 0:09:56.280 --> 0:09:59.720 five alarm fire alarm, saying, hey, we're clearly as a problem. 0:09:59.760 --> 0:10:02.160 I mean, at what point do you think that keeping 0:10:02.280 --> 0:10:06.160 rates at this level would really create a weakness that 0:10:06.200 --> 0:10:09.079 currently hasn't manifested itself in the economy. 0:10:12.040 --> 0:10:16.080 We're likely pointed in that direction. I mean, the economy 0:10:16.080 --> 0:10:18.760 has proven quite resilience. I mean this is not just 0:10:18.920 --> 0:10:21.160 talking about this year, but in recent years. The higher 0:10:21.200 --> 0:10:23.000 interest rates, and there are probably a lot of different 0:10:23.000 --> 0:10:25.839 reasons for that, but eventually, you know, and we do 0:10:25.920 --> 0:10:28.599 see an interest rates that sensitive sectors like how do 0:10:28.720 --> 0:10:30.120 we do see these. 0:10:30.000 --> 0:10:31.360 Rates weighing down the question? 0:10:31.520 --> 0:10:34.280 The reason that the federal funds rate is elevated is 0:10:34.320 --> 0:10:37.000 because it is trying to push down on inflation. 0:10:37.120 --> 0:10:39.360 Once the inflation issue is taken. 0:10:39.080 --> 0:10:41.400 Care of, well, then there's no reason to have the 0:10:41.840 --> 0:10:43.600 rates as high as they are, and you should see 0:10:43.600 --> 0:10:45.360 them coming down, and that then tells us that the 0:10:45.400 --> 0:10:47.720 direction they're pointed in, they're just not ready to take 0:10:47.760 --> 0:10:48.200 that move. 0:10:48.600 --> 0:10:50.520 But you know, there are. 0:10:50.640 --> 0:10:53.400 Costs, There are costs in the economy to the said 0:10:53.520 --> 0:10:54.920 having interest rates as high. 0:10:54.760 --> 0:10:57.760 As they are, and we will see those costs build 0:10:57.840 --> 0:10:58.640 as interest. 0:10:58.440 --> 0:11:01.120 Rates, say higher, So well, We're not looking at some 0:11:01.240 --> 0:11:03.560 dramatic falling off a cliff. We're looking at more of 0:11:03.600 --> 0:11:06.360 a slow grind and it does impact certain parts of 0:11:06.360 --> 0:11:09.080 the economy, certain consumers, people trying to buy homes. Like 0:11:09.120 --> 0:11:11.640 that is where the effect is. But the goal is 0:11:11.679 --> 0:11:14.439 to get you know, inflation down. Unfortunately, you know, we've 0:11:14.440 --> 0:11:17.560 got data that moving in the wrong directions. That may 0:11:17.600 --> 0:11:20.080 be temporary, but like there's a reason the rates are 0:11:20.080 --> 0:11:20.679 where they are. 0:11:20.800 --> 0:11:21.400 It's not. 0:11:24.240 --> 0:11:26.040 Government but that there are costs. 0:11:26.120 --> 0:11:28.480 Governor Waller though, is looking at these cracks in the 0:11:28.559 --> 0:11:31.680 labor market. Even individuals like Mary Daily is talking about 0:11:31.679 --> 0:11:35.160 it's reasonable to expect two cuts this year, Claudia, when 0:11:35.160 --> 0:11:37.040 do you expect the FED to first move? 0:11:39.679 --> 0:11:42.360 So it will absolutely depend on the data as they 0:11:42.360 --> 0:11:44.880 go forward, but there is certainly a case, and I think, 0:11:44.960 --> 0:11:47.440 you know, keep an eye on the inflation data that's 0:11:47.480 --> 0:11:49.600 not connected to TARRAF. I mean, I think that's actually 0:11:49.640 --> 0:11:51.920 been part of the encouraging cases that we've seen some 0:11:51.960 --> 0:11:55.280 weakness in you know, some discretionary spending areas. 0:11:55.280 --> 0:11:56.080 That housing has. 0:11:56.000 --> 0:11:57.520 Certainly shown some cooling off. 0:11:57.840 --> 0:12:01.040 So I think they're building the data, are building the case. 0:12:01.080 --> 0:12:03.440 As long as you know, the terrorists don't really like 0:12:03.559 --> 0:12:06.679 move much higher. You know, things really go dramatically sideways. 0:12:07.040 --> 0:12:10.560 I think they're on track for September or October. You know, 0:12:10.600 --> 0:12:13.600 as the data come in and Governor Walla could absolutely 0:12:13.600 --> 0:12:16.000 be correct, and we see some employment numbers that are 0:12:16.000 --> 0:12:18.400 not as positive as recent ones, and that that doesn't 0:12:18.440 --> 0:12:21.520 move them much more quickly to the cut. But I 0:12:21.559 --> 0:12:25.120 think this is the data thus far have supported their 0:12:26.040 --> 0:12:27.880 let's wait and see, and I think that's where they're 0:12:27.880 --> 0:12:29.880 going to come down as a group next week. But 0:12:30.000 --> 0:12:31.440 of course, you know, you can look at the data 0:12:31.440 --> 0:12:34.720 differently and they are pointed in the direction of cuts. 0:12:34.760 --> 0:12:36.480 I mean some aren't even looking for this year. But 0:12:36.520 --> 0:12:38.440 I mean that's you know, they have a lot. 0:12:38.320 --> 0:12:41.920 Of coherence in what they're thinking. It's just timing is hard. 0:12:42.280 --> 0:12:44.760 It's it's really hard to figure out because timing is 0:12:44.760 --> 0:12:45.640 hard in the economy. 0:12:46.280 --> 0:12:49.160 Cloda, I appreciate itsime. Clodia sound that new century of 0:12:49.240 --> 0:13:01.240 signed chasms a signical the ISSUS has this to say. 0:13:01.320 --> 0:13:04.120 Our vice case has been and remains. The US President 0:13:04.200 --> 0:13:07.000 Donald Trump will not dismiss Fedchad to run PAL at 0:13:07.040 --> 0:13:10.560 the very least until after the September FMC meeting chance 0:13:10.640 --> 0:13:12.360 John to snap for Moss, so challengeing given us the 0:13:12.360 --> 0:13:15.000 best case two months. What happens after that if they 0:13:15.080 --> 0:13:16.480 haven't reduced interest rights? 0:13:17.679 --> 0:13:20.480 Yeah, if the FED doesn't cut at the September meeting, 0:13:20.640 --> 0:13:23.760 I think the President moves forward with a shadow chair 0:13:24.080 --> 0:13:28.360 nominee announcement and continues to build the case to dismiss 0:13:28.440 --> 0:13:32.439 Pale for cause, hoping that Powell will resign. I don't 0:13:32.480 --> 0:13:34.719 think Powell will resign, but I think that case will 0:13:34.760 --> 0:13:37.760 continue to be built. What the President really wants is 0:13:38.120 --> 0:13:40.920 for the FED chair to resign, and you know Pal's 0:13:41.000 --> 0:13:43.679 not going to do that most likely. And the other 0:13:43.800 --> 0:13:46.199 part of this process is the President really trying to 0:13:46.280 --> 0:13:50.560 socialize with the markets, this idea of replacing the FED chair. 0:13:51.360 --> 0:13:53.959 The only guardrail working in the United States today in 0:13:54.080 --> 0:13:56.839 terms of a check on executive power is the bond market, 0:13:57.120 --> 0:13:59.520 and I think that's what they're most worried about. The 0:14:00.120 --> 0:14:03.360 September FOMC meeting is critical and we'll see what the 0:14:03.400 --> 0:14:05.319 FED does. Otherwise we have a shadow FED chair. 0:14:05.440 --> 0:14:07.720 Well, wouldn't it be even harder though, for the collective 0:14:07.800 --> 0:14:10.800 body of the FOMC to cut if he was to 0:14:10.840 --> 0:14:12.640 get rid of the FED chair or say he was 0:14:12.720 --> 0:14:14.520 going to fire him after the September meeting. 0:14:15.600 --> 0:14:18.920 Absolutely, I think you know, everyone in the markets understands 0:14:19.000 --> 0:14:22.520 that it's a twelve member FOMC vote. It's not just 0:14:22.640 --> 0:14:26.440 the FED chair. But the President sees Palell as the obstacle, 0:14:27.040 --> 0:14:29.880 and he really wants a FED chair in, whether it's 0:14:29.960 --> 0:14:33.400 shadow or if Palell resigns. Even if Palell resigns, by 0:14:33.440 --> 0:14:36.400 the way, the FOMC picks the FED chair, So I 0:14:36.440 --> 0:14:39.200 think what the President's really doing is using Palell as 0:14:39.240 --> 0:14:42.440 the punching bag for higher rates. He's also worried. I 0:14:42.480 --> 0:14:45.360 think that even though the administration doesn't believe the terris 0:14:45.400 --> 0:14:48.240 will be inflationary, that if inflation does pick up over 0:14:48.280 --> 0:14:51.280 the next several months, you can blame the FED, blame Pale. 0:14:51.640 --> 0:14:55.360 But ultimately I think this shadow FED chair idea, which 0:14:55.680 --> 0:14:58.360 even three or four months ago sounded really far out 0:14:58.400 --> 0:15:02.120 there or deeply concerning for markets, is now being socialized 0:15:02.160 --> 0:15:03.760 and probably happens after September. 0:15:03.880 --> 0:15:05.760 Well, the Treasury Secretary talked about the fact that there 0:15:05.800 --> 0:15:08.320 could be confusion with a shadow FED chair if j. 0:15:08.600 --> 0:15:12.880 Powell doesn't step down after his chairmanship is over, but 0:15:12.960 --> 0:15:15.360 he still has a governor seat until twenty twenty eight. 0:15:15.600 --> 0:15:17.800 Do you have any indication that he would stay the 0:15:17.880 --> 0:15:19.600 course until twenty twenty eight? 0:15:20.480 --> 0:15:24.120 Absolutely? I think Chair Powell will stay on the board 0:15:24.320 --> 0:15:27.560 after his chair term ends, and he stays on the 0:15:27.600 --> 0:15:28.720 board until the end of. 0:15:28.760 --> 0:15:31.440 His term in twenty twenty eight, wouldn't that look very political, 0:15:31.560 --> 0:15:35.560 Trembles Charles, That would look incredibly political. Most chairs step down. 0:15:37.040 --> 0:15:39.240 Absolutely, but I think it would be a really strong 0:15:39.360 --> 0:15:42.080 statement by Chair Powell, encouraged by some of the other 0:15:42.200 --> 0:15:45.880 members of the FOMC, perhaps as a statement of very 0:15:45.920 --> 0:15:49.440 strong independence. And that's why I think he stays on Charles. 0:15:49.440 --> 0:15:51.920 There's the question of what happens if, let's say Chair 0:15:51.960 --> 0:15:55.360 Powell is fired and for cause, let's get get smired 0:15:55.400 --> 0:15:58.360 in all sorts of legal disputes. There's this issue of 0:15:58.440 --> 0:16:02.760 does Congress confirm whoever President Trump nominates to replace him? 0:16:03.200 --> 0:16:06.760 How much unity is there right now among Republican Congress members. 0:16:08.240 --> 0:16:10.800 Well, I think you know, whoever is nominated has to 0:16:10.880 --> 0:16:14.600 be confirmed in the Senate. The Senate, including the Republican 0:16:14.720 --> 0:16:19.160 Caucus and the Republican leadership, do take fed independence very seriously. 0:16:19.520 --> 0:16:23.600 So whoever is nominated will be a very respectable and 0:16:23.680 --> 0:16:26.880 acceptable and very positive person for the markets. It'll be 0:16:27.000 --> 0:16:29.320 one of the folks that are auditioning very publicly for it. 0:16:30.720 --> 0:16:33.040 You know, But in the end, I don't think that's 0:16:33.080 --> 0:16:35.160 going to be the issue that person will get confirmed. 0:16:35.520 --> 0:16:37.960 The issue is, you know, will they try to sway 0:16:38.000 --> 0:16:39.800 the FMC to be more dubbish. 0:16:40.280 --> 0:16:42.600 Charles Moss a second of glove that fives as Chiles. 0:16:43.080 --> 0:16:55.160 Thank you, Seth Angela. So you know I CFIRA has 0:16:55.160 --> 0:16:57.600 a buy rising on chance of alphabbat at two ten 0:16:57.680 --> 0:17:00.400 Friest talk and Angela, welcome to the program. That ad 0:17:00.520 --> 0:17:03.680 model at alphabet How insulated is it right now? 0:17:05.160 --> 0:17:08.040 Yes, thanks for having me John. As far as kind 0:17:08.080 --> 0:17:10.639 of the ad model is concerned, I mean, listen, I 0:17:10.760 --> 0:17:13.800 think they're doing a lot of great things as far 0:17:14.080 --> 0:17:17.160 as what's going on across search as well as YouTube 0:17:17.680 --> 0:17:21.679 integrating AI across the ecosystem. You've got AI mode ramping 0:17:21.800 --> 0:17:26.760 here on search AI overviews. So overall, I think the 0:17:26.840 --> 0:17:30.960 monetization potential looks pretty good as far as their AD 0:17:31.080 --> 0:17:35.440 based businesses and AI integrating across that ecosystem. You know, 0:17:35.520 --> 0:17:37.600 clearly there is a risk as we kind of go 0:17:37.760 --> 0:17:40.720 on here over the next couple of years, eventually open 0:17:40.800 --> 0:17:43.520 ai and others out there will probably have some sort 0:17:43.560 --> 0:17:46.680 of ad supported models, and that is you know, clearly 0:17:47.119 --> 0:17:50.280 a risk here for alphabet So sitting here today, I mean, 0:17:50.359 --> 0:17:53.879 we do think their ads. Google's ad supported businesses probably 0:17:53.960 --> 0:17:56.440 grow around in line with the broader digital ad market, 0:17:56.520 --> 0:18:00.000 let's call it high single digit growth. But you know, ultimately, 0:18:00.280 --> 0:18:02.040 as we kind of go into some of these forward 0:18:02.080 --> 0:18:04.840 looking years twenty twenty six, twenty twenty seven, we're looking 0:18:04.880 --> 0:18:07.400 at the growth pace of you know, something like search 0:18:07.520 --> 0:18:09.760 to grow at about half the pace of the digital 0:18:09.800 --> 0:18:12.080 ad market, just because you're going to have some you know, 0:18:12.240 --> 0:18:14.480 increasing competitive pressures out there. 0:18:14.560 --> 0:18:18.080 Angela, are we underestimating the speed of the adoption of 0:18:18.320 --> 0:18:22.360 open ai, of chatchpt and some of these algorithmic models 0:18:22.480 --> 0:18:26.280 that some people find superior to the classic search model. 0:18:26.280 --> 0:18:29.240 I mean, I was listening to John and man deep talking, 0:18:29.320 --> 0:18:31.840 and I'm thinking to myself, I've known so many people 0:18:31.880 --> 0:18:34.320 over the past six months that have utterly transformed their 0:18:34.359 --> 0:18:37.960 workflow because of chat GPT. Is the timeframe a little 0:18:37.960 --> 0:18:40.600 bit faster potentially than what we're talking about. 0:18:41.240 --> 0:18:44.320 I mean potentially, I mean, well, I guess we'll see here. 0:18:44.480 --> 0:18:48.320 I mean, ultimately, people are doing search and you know, 0:18:48.480 --> 0:18:52.120 in a different way than they have historically. But when 0:18:52.160 --> 0:18:56.440 we think about just overall, what app Alphabet has, you know, 0:18:56.520 --> 0:18:58.800 across their ecosystem as well, I don't think it should 0:18:58.840 --> 0:19:03.160 be underestimated. I think Gemini is an enormously powerful tool. 0:19:03.200 --> 0:19:06.119 I mean, I'm personally a power user of Gemini. I 0:19:06.240 --> 0:19:09.240 do love the fact that it's across their entire eco 0:19:09.640 --> 0:19:12.680