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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Lisa A.

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Speaker 2: Bromoids, along with Tom Keen and Jonathan Ferrell. Join us

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Speaker 2: each day for insight from the best in economics, geopolitics,

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Speaker 2: finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance.

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Speaker 2: the Bloomberg Business App.

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Speaker 3: I've been looking forward to this conversation all morning. Richard Clarida,

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Speaker 3: the Global Economic Advisor at Pimco and former Fed Reserve

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Speaker 3: Vice Chair and a good friend of this program for many,

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Speaker 3: many years. Rich wonderful to catch up with you, sir.

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Speaker 3: I was thinking back to our conversation we had on

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Speaker 3: the West Coast when Pimco put out their second outlook

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Speaker 3: and you and I talked about what you called the

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Speaker 3: Fed tolerating two points something. Did you hear that from

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Speaker 3: Chairman Power in that news conference yesterday, because I did.

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Speaker 4: Well, well, yeah, I think that you know, they've had

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Speaker 4: a lot to do, They've done a lot of happy

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Speaker 4: at lifting. Ultimately, they do want to get inflation to

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Speaker 4: two but they understand and that if the year from

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Speaker 4: now it's running in the twos, that will have been

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Speaker 4: a big accomplishment, and they can adjust rates down. They don't,

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Speaker 4: you know, they obviously don't want to tighten too much.

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Speaker 4: And so yes, I think two points something is kicking

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Speaker 4: and alive for sure right now.

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Speaker 3: Rich, it's worth going over what they're basically talingus. Explicitly,

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Speaker 3: they're willing to cut interest rates with inflation above two percent?

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Speaker 3: How controversial might that be?

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Speaker 4: I think they'll do a good job explaining it. What

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Speaker 4: they're going to say is, look, as inflation falls, if

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Speaker 4: the Fed doesn't count rates, it's actually tightening policy because

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Speaker 4: policy is the real rate. So if the nomine rates unchanged,

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Speaker 4: inflation's falling, they're tightening and they won't think they need

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Speaker 4: to add additional tightening if they think the inflation momentum

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Speaker 4: is going in the right way. So that's the way

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Speaker 4: that they will that they'll explain it.

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Speaker 2: The FED was talking a lot about data dependency and

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Speaker 2: how they really aren't giving forward guidance at this point.

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Speaker 1: Did you get a sense.

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Speaker 2: Of which data could really shift their views before September?

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Speaker 2: Even though we do get a of data, we've heard

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Speaker 2: every time them come out and say, one data point

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Speaker 2: a trend does not make.

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Speaker 4: Sure, and I think so they'll have They'll have two

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Speaker 4: more inflation prints and two more labor market prints. But Lisa,

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Speaker 4: I thought for a long time that another important development

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Speaker 4: that they're going to be following is what's going on

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Speaker 4: in the labor market. They like the fact that the

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Speaker 4: labor market is buoyant, but wages are going up faster

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Speaker 4: than consistent with the with the two percent target. So

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Speaker 4: I do think they'll be looking at the labor market data,

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Speaker 4: wage employment cost index, as well as the price inflation.

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Speaker 1: So what would they have to see?

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Speaker 2: How high is the threshold for them to hike again

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Speaker 2: in September or, if not in September, in November.

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Speaker 4: I think it's I think it's maybe a closer call

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Speaker 4: than some of the market pricing right now. You know,

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Speaker 4: they did write down two more hikes in June. We

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Speaker 4: got one of them yesterday, and an overwhelming majority of

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Speaker 4: the committee thought in June that appropriate policy would call

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Speaker 4: for one more hike. So I think certainly one more

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Speaker 4: hike is in play at some point in the fall.

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Speaker 4: The chair said that explicitly. He also said that when

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Speaker 4: he was in Europe, a couple of weeks ago. So

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Speaker 4: I don't think it's an overly high hurdle to get

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Speaker 4: that hike. I don't think they necessarily have to do

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Speaker 4: it in September. I will say this, whatever hiking they

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Speaker 4: think they need to do, I think they want to

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Speaker 4: get in this year.

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Speaker 5: Why this year, Rich? Why is that important?

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Speaker 6: Well?

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Speaker 4: I think a couple of reasons. I think that I

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Speaker 4: think they think they're close to the end anyway, and

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Speaker 4: inflation's moving, however, slowly in their direction, and I think

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Speaker 4: they would like to stay out of the spotlight in

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Speaker 4: an election year. Now we've had the FED hike in

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Speaker 4: election years four nineteen eighty four come to mind. And

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Speaker 4: they'll do that if they really think that inflation really

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Speaker 4: requires a much higher ratepath. But I think this cycle

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Speaker 4: is aiming to finish up sometime in the fall.

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Speaker 3: You know that this FED is always criticized. The Committee

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Speaker 3: always faces criticism for something. The criticism we heard from

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Speaker 3: some guests in the news conference before the news conference

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Speaker 3: and after the news conference too was just how data

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Speaker 3: dependent this FED actually is. They took a break from

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Speaker 3: hiking rich, then they come back and hike again, and

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Speaker 3: in the intimated period we had inflation that actually improved

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Speaker 3: the inflationy backdrops seem to get better, and yet they

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Speaker 3: hiked anyway. How data dependent are they?

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Speaker 4: Well, good good point. Data dependent is a very elastic

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Speaker 4: phrase which has opened to various interpretations. I think, on balance,

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Speaker 4: really the going forward, especially after this meeting yesterday, they

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Speaker 4: really are data dependent. As you know, I've said on

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Speaker 4: your air before most of this rate hike cycle, they've

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Speaker 4: not been that data dependent. In March of last year,

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Speaker 4: they knew two things. The funds rate was at zero

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Speaker 4: and inflation was at five going to six. That's all

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Speaker 4: the data they needed to set off this this very

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Speaker 4: aggressive rate hike cycle. I do think that we do

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Speaker 4: get close to the terminal rate, that the margin is

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Speaker 4: more a data dependent although I did I agree, and

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Speaker 4: I said on Bloomberg after that meeting it was it

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Speaker 4: was an awkward pause in June, that's for sure.

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Speaker 2: It's an awkward moment also right now, given that the

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Speaker 2: FED is removing recession as the base case and we're

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Speaker 2: looking at a soft landing. And yet there's a real

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Speaker 2: question mark among analysts and a real split among investors

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Speaker 2: about whether inflation could reaccelerate as a result of the strength,

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Speaker 2: the resilience, the wages.

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Speaker 1: Where do you fall on this? What do you think

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Speaker 1: the FED falls on this, given that.

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Speaker 2: They seem to be taking perhaps a bit more of

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Speaker 2: a dubbish stance.

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Speaker 4: Yes, quite quite frankly, Lisa, I was surprised in the

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Speaker 4: press conference. I wasn't surprised to hear the chair says

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Speaker 4: he has many times that he thinks there's a path

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Speaker 4: to a soft landing. That's okay, sure there's a path.

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Speaker 4: But I was surprised that he invoked the change in

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Speaker 4: the staff forecast. I don't think that was in the

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Speaker 4: June minutes, and so he's obviously entitled to do that.

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Speaker 4: But yes, not my base case, not our base case.

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Speaker 4: But there is a scenario where we get some good

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Speaker 4: news on inflation in this fall because of falling rents,

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Speaker 4: use car prices again falling. But if the FED finds

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Speaker 4: itself in Marsha twenty twenty four with an unemployment rate

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Speaker 4: of forig an inflation rate of four, you know, with

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Speaker 4: some of that temporary good news behind them, they're in

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Speaker 4: a very tough spot. So I do think it's a risk.

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Speaker 4: It's not the base case, but it's certainly something if

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Speaker 4: I were still there, I would be.

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Speaker 2: I'd be assessing, what do you think right now is

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Speaker 2: the bigger risk rich the idea of inflation reaccelerating and

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Speaker 2: still being a problem, or the idea of recession and

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Speaker 2: avoiding something more entrenched, which could happen if the FED

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Speaker 2: moves slower.

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Speaker 4: Well, personally, I do think that, you know, again, I'm

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Speaker 4: in the private sector now, I do think that the FED.

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Speaker 4: The bigger risk is for the FED is to declare

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Speaker 4: a mission accomplished too early and find themselves next year

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Speaker 4: having to restart the rate hike. So if I were there,

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Speaker 4: it would skew me to getting in, you know, that

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Speaker 4: additional hike this year, and I think some members of

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Speaker 4: the committee we'll see it that way, lookly. So the

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Speaker 4: other thing is the Fed's own projection, which I agree with,

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Speaker 4: has unemployment rate rising by about a point by the

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Speaker 4: end of next year. That would be very modest. That

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Speaker 4: would probably be the most modest downturn we've had. But historically,

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Speaker 4: as we know the so rule, whenever the unemployment rate

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Speaker 4: rises by more than a half a point, it's ultimately

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Speaker 4: declared a recession. So I actually think a truly non

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Speaker 4: recession outcome without any rise in the unemployment rate at

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Speaker 4: all is going to be tough.

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Speaker 3: That's my personal view, would be phenomenal if that materialized.

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Speaker 3: I want to finish on this if we can rich. Yeah,

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Speaker 3: no dissent. We talked about this yesterday. I've been talking

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Speaker 3: about it for a while. You've been on the committee.

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Speaker 3: Why do people, even when we know they might disagree

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Speaker 3: with the decision, make the decision not to descend. Why

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Speaker 3: does that happen on the committee?

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Speaker 4: Well, you know, the FED has been an institution that's

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Speaker 4: been around for one hundred plus years, and there are

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Speaker 4: certain cultural norms, and certainly it's been a very long

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Speaker 4: time since you've had a governor dissent on a policy

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Speaker 4: rate decision. If you go back to the Vulgar years,

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Speaker 4: he had governors and his vice chair dissenting. But you

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Speaker 4: know since green Span. But the Reserve Bank presidents can

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Speaker 4: indue dissent. Certainly, during my time at the FED, especially

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Speaker 4: in twenty nineteen, we had three descents, and we had

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Speaker 4: several presidents saying they would have descended if they had

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Speaker 4: had a vote. So descents can happen. The other thing

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Speaker 4: I should notice we've had a lot of turnover among

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Speaker 4: the Regional Bank, District Bank presidential, the announcement of Jim

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Speaker 4: Bullard recently Aster George at Charlie Evans Rosengrin. You know

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Speaker 4: there's accumulated fifty plus years of institutional experience that's no

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Speaker 4: longer in that room. I think that's also relevant.

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Speaker 5: Richard, thank you sir for wangan. That's catch up.

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Speaker 3: So next time in studio please Richard Cloard of the

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Speaker 3: the former FED Vice Chair and now with pim Coke

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Speaker 3: joining us now for a preview of the ECP. James Athy,

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Speaker 3: investment director at Aberdeen. James much had a decision for

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Speaker 3: the Government Council in the European Central Bank. The FED

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Speaker 3: has the luxury of saying growth is good, the labour

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Speaker 3: market is strong.

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Speaker 5: Right now.

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Speaker 3: I'm not sure President the Guard can go into that

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Speaker 3: news conference a little bit later this od James and

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Speaker 3: say growth is good.

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Speaker 5: Is this a hard one for her?

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Speaker 7: H Hey, John, I mean you could argue it's a

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Speaker 7: little bit easier because again, these the transmission for monetary

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Speaker 7: policy to influence inflation is largely via demand. So if anything,

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Speaker 7: the ECB is facing a slightly easier task because they

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Speaker 7: can see that demand and forward demand through things like

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Speaker 7: the bank lending survey are already softening and softening significantly,

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Speaker 7: which suggests that their policy is further into restrictive territory

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Speaker 7: and maybe they can more convincingly consider the end. Whereas

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Speaker 7: you know, as you guys were just discussing, if the

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Speaker 7: US consumer doesn't die down, if the US labor market

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Speaker 7: doesn't soften, it's difficult to believe that they've found equilibrium,

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Speaker 7: and it feels like would have to come back to

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Speaker 7: the table. So the communication is difficult because we're moving

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Speaker 7: from this very backward looking policy stance into something highly

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Speaker 7: data dependent. Central bankers know that markets have a tendency

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Speaker 7: to get carried away and they don't want that easing

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Speaker 7: of financial conditions, but that's a problem they cannot really resolve.

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Speaker 7: I think we'll see a very similar outcome today. Non committal,

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Speaker 7: not really full of information.

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Speaker 2: Meanwhile, we've been talking about the bank lending transmission mechanism

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Speaker 2: in Europe and John rightly pointed out that it is

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Speaker 2: more sensitive to this type of contraction which we've heard

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Speaker 2: and we've seen. What are you experiencing, What are you

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Speaker 2: seeing on the ground in terms of how quickly credit

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Speaker 2: is contracting in the euroregion?

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Speaker 7: Well, I mean, that's difficult to say on the ground.

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Speaker 7: I think we all have to rely on the data

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Speaker 7: as we see it. And I look at the contents

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Speaker 7: of the bank lending survey and I think more pertinently

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Speaker 7: on the demand side than the supply side. Of course,

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Speaker 7: supply conditions matter, they always do. But what matters for

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Speaker 7: judging the stance of and transmission of monetary policy is

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Speaker 7: more about the demand for loans, and we can see

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Speaker 7: that that really does look incredibly soft across the Eurozone.

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Speaker 7: If you look at the sort of pre pandemic estimates

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Speaker 7: for neutral rates in Europe and the US, maybe half

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Speaker 7: a percent in the Eurozone and maybe two and a

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Speaker 7: half percent in the US, there's two hundred basis points

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Speaker 7: between them, but actually there's only one hundred hundred and

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Speaker 7: fifty basis points between the cash rates. So that alone

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Speaker 7: suggests that European policy is already tighter than US policy,

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Speaker 7: and I do think we see that in the data.

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Speaker 7: And that's without even getting to the structural challenges in

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Speaker 7: the Eurozone.

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Speaker 3: We've got to talk about some of those challenges now

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Speaker 3: on the ground. In Frankfurt, Germany, Bloomberg's Marit toed out

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Speaker 3: outside of the ECB headquarters. Maria, I just frame how

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Speaker 3: difficult this is going to be for the European Central

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Speaker 3: Bank in thirty minutes time for President of Guard when

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Speaker 3: she has to deliver that news conference.

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Speaker 8: Well, this is going to be a very difficult communications

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Speaker 8: exercise for the head of the European Central Bank because

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Speaker 8: on the one hand, we know they will hike twenty

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Speaker 8: five basis points out with the guidance to the market

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Speaker 8: and everyone as well calibrated for them. But the big

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Speaker 8: question is what happens next. And you've talked about this

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Speaker 8: range of data, some of it very soft when you

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Speaker 8: look at the BMIs, and it wasn't just Germany this week.

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Speaker 8: You also had significant downturns coming also from economies like France.

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Speaker 8: We also had that lending survey, which we know they

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Speaker 8: look at. But then core inflation's sticky. So again the

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Speaker 8: market will be focused on any guidance, any bias potentially

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Speaker 8: in this decision, but I'm not sure they want to

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Speaker 8: do that. If anything, the European Central Bank, you could argue,

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Speaker 8: wants to go for the most neutral possible, the most

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Speaker 8: options open, look at the data, say we go back

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Speaker 8: to very data dependent and look back in September where

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Speaker 8: we are so, I think this is going to be

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Speaker 8: a tricky exercise. There will be a lot of questions

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Speaker 8: to try to get an indication of.

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Speaker 1: Where they want to go. But I'm not sure she

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Speaker 1: wants to do that yet.

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Speaker 3: You follow the speakers we heard from Klasska not of

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Speaker 3: the Netherlands recently in the last couple of weeks, the

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Speaker 3: individual members of the Governing Council, the traditional hawks, Maria,

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Speaker 3: do you send from them that even they are unsure

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Speaker 3: about what comes next after July?

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Speaker 8: Yeah, and remember, Jonathan, this was presented today July as

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Speaker 8: a quote necessity for the Central Bank. When it comes

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Speaker 8: to September, we've seen maybe it's now fifty to fifty.

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Speaker 8: Maybe it's now an open call. Maybe we need to

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Speaker 8: look at the data again, the waiting for new projections

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Speaker 8: in September. So I think there's been almost a rethinking

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Speaker 8: over the past two weeks. What I'm also curious to

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Speaker 8: hear about is, and this will be sure a question,

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Speaker 8: is this idea of rate cuts potentially earlier than expected.

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Speaker 8: That would be the worst case scenario for the Central

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Speaker 8: Bank to have inflation that is above target and get

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Speaker 8: all this chit chat and market's about potentially because of

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Speaker 8: the state of the economy cutting beforehand. I'm also very

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Speaker 8: curious is to see can she shut it.

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Speaker 1: Down and how will she push back against that idea.

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Speaker 2: We're about five minutes away from that ECB rate decision,

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Speaker 2: still with us James Athey of Aberdeen and James, I'd

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Speaker 2: love your take on the data dependency, the maximum optionality

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Speaker 2: that we're hearing certainly from the FED and as Maria

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Speaker 2: was suggesting, from the ECB coming up as well, what

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Speaker 2: data are you.

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Speaker 1: Honed in on?

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Speaker 2: Are you going to be trading more aggressively on data

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Speaker 2: in a new way?

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Speaker 9: Yeah?

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Speaker 7: I mean that's unfortunately the game of investing it. It

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Speaker 7: really is John Maynard Kine's beauty contest. Much as I

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Speaker 7: would like to look more heavily at the most forward

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Speaker 7: looking data, the fact of the matter is that the

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Speaker 7: markets are still somewhat focused on the most lagging indicators,

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Speaker 7: that's jobs and inflation. So I think some balance between

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Speaker 7: the two is probably the right path to tread. I

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Speaker 7: agree with Maria completely. The EACB really doesn't want to

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Speaker 7: give a strong signal one way or the other. There

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Speaker 7: is definitely persistent weakness across the manufacturing sector that's much

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Speaker 7: more significant in the Eurzone than it is in the US.

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Speaker 7: We're now starting to see softening in the service sector

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Speaker 7: as well, and that is good news. But of course

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Speaker 7: none of these central banks want to box them in,

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Speaker 7: you know, to Nick John's words, they want maximum optionality,

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Speaker 7: So some sort of obfuscation, constructional, constructive ambiguity is what

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Speaker 7: we're likely to see. I think once these risk of

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Speaker 7: are out the way, the market at the moment is

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Speaker 7: in the mood to then run with the themes and

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Speaker 7: the trades that it wanted to run with anyway. So

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Speaker 7: I think we saw that in the US last night.

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Speaker 7: Week a dollar risk on probably lower yields for the summer.

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Speaker 7: That's what I'm expecting, and I don't expect Madame Lagarde

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Speaker 7: to necessarily put a hole in that this afternoon.

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Speaker 2: Do you expect the dollar to weaken and the euro

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Speaker 2: to strengthen because of the US or because of Europe's actions.

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Speaker 7: Well, I think the dollar is weakening because it's become

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Speaker 7: a bit of a self fulfilling prophecy. The market always

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Speaker 7: has a bias to want a week a dollar because

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Speaker 7: risk tends to perform better in a week dollar environment.

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Speaker 7: The market has been and continues to love the carry

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Speaker 7: trade that generally involves at least selling dollar as an

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Speaker 7: intermediate step. But I look at the dynamics currently and

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Speaker 7: it doesn't necessarily look like a week dollar environment. To me,

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Speaker 7: US rates are higher than European rates, the European data

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Speaker 7: is rolling over far more quickly. As a general rule,

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Speaker 7: that looks like a reasonably solid dollar environment versus the

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Speaker 7: US euros. So we're marginally long the dollar here. We

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Speaker 7: think already the market's got a little bit over excited.

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Speaker 7: But short term, as I say, the market tends to

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Speaker 7: run with the themes it wants to. I think positioning

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Speaker 7: is a bigger headwind, a bigger headwind medium term. It

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Speaker 7: exactly everybody sees what they want to It's.

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Speaker 3: Always the way, James. I just wonder, I know what

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Speaker 3: investors want. They'd like a big easing program out of China.

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Speaker 3: Do you think that's what policy makers under government Council

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Speaker 3: would like to see right now? Would that be welcomed

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Speaker 3: by them?

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Speaker 9: Yeah?

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Speaker 7: I mean that's a really good question. I'm not sure

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Speaker 7: there's necessarily a huge supply side stimulus from China easing aggressively,

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Speaker 7: so that might actually complicate their picture ad to demand

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Speaker 7: without an offset via supply. I think I think the

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Speaker 7: Central Bank would like to see inflation closer to two

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Speaker 7: percent by hook or by crook, and then they can

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Speaker 7: worry about the balance between supply and demand and how

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Speaker 7: stimulatory or how restrictive their policy is. For what it's worth,

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Speaker 7: I don't think China is going to engage in the

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Speaker 7: sort of massive sticks we've seen in twenty fifteen, sixteen

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Speaker 7: or two thousand and seven and eight. I think there's

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Speaker 7: a lot of adjustment and fiddling around the edges. I

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Speaker 7: don't think they're going to go back to the sort

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Speaker 7: of debt funded infrastructure investment stimulus that we've seen historically.

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Speaker 7: So I don't think there's a massive impulse for Europe

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Speaker 7: coming from China so far.

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Speaker 3: Lots of people would agree with you. James Athy, investment

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Speaker 3: director at Aberdeen.

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Speaker 2: Right now, I really want to get through what we're

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Speaker 2: looking at in terms of is it a soft landing

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Speaker 2: or is it a head fake? And I'm pleased to

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Speaker 2: say that we're joined by Vincent rein Hart, chief economist

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Speaker 2: and macro strategist at Dreyfus and Melan Vincent, what's your

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Speaker 2: take on the slew of data that we just got

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Speaker 2: that really highlights both the soft landing and on the

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Speaker 2: margins disinflation.

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Speaker 10: We probably heard it from care Pal yesterday. Importantly, he

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Speaker 10: said that the board staff had taken out air forecast

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Speaker 10: of recession, and Mike noted that GDP wasn't a surprise

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Speaker 10: to the Atlanta Fed that had an estimate of two

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Speaker 10: point four percent growth last quarter. Board staff invests a

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Speaker 10: lot of resources in doing the same thing. So I

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Speaker 10: don't really think that this morning, certainly from the National

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Speaker 10: Income Accounts, was that much of a surprise. Big question

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Speaker 10: is does it make it more or less likely there's

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Speaker 10: a soft landing? Sure leans that way, but it's one

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Speaker 10: data point. That's what shar Pale would say.

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Speaker 9: At this point, What.

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Speaker 2: Do you make of initial jobless claims second consecutive month

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Speaker 2: that there's been an upside surprise or at least a

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Speaker 2: positive downside surprise. Basically there are fewer people filing for

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Speaker 2: unemployment than previously expected in the prior month. How does

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Speaker 2: this confirm with the idea that we need a loosening

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Speaker 2: labor market in order to achieve disinflation.

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Speaker 10: Yeah, So the other part of soft landing is new

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Speaker 10: productivity that we are getting very strong employment growth that

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Speaker 10: is at least matching that and output we're not gaining

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Speaker 10: anything in terms of output.

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Speaker 9: Power, among other things.

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Speaker 10: That means that wage gains are more serious because there's

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Speaker 10: no cushion between what firms pay workers and what they produce.

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Speaker 9: I think that, among other.

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Speaker 10: Things, you know that the main takeaway is tight labor

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Speaker 10: market is fueling household income, and household income is supporting consumption,

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Speaker 10: which isady to get a recession that way, which.

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Speaker 2: Is a reason why some people are wondering whether this

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Speaker 2: is somewhat of an uncomfortable rational that you're seeing strengthen

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Speaker 2: the economy, and yet the Fed is moving away from

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Speaker 2: any forward guidance of further rate hikes. Do you think

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Speaker 2: that this is a mistake that there wasn't a greater

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Speaker 2: indication to markets that the Fed did plan to raise

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Speaker 2: rates again once in this particular year, Considering that rich

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Speaker 2: Clara earlier on this show said that he, if he

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Speaker 2: were still on the FED, would vote to raise rates

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Speaker 2: again this fall.

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Speaker 10: Well, last guidance was that they would raise rates. In

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Speaker 10: the summary of economic projections, chairpala is pretty confusing. He

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Speaker 10: wanted to assert very strongly that every decision is every

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Speaker 10: meeting is live, that every meeting is made based.

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Speaker 9: On the data.

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Speaker 10: But in fact there seemed to be guiding us to

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Speaker 10: a slower pace of policy firming. Twelve and a half

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Speaker 10: basis points of meeting on average. That sounds like a

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Speaker 10: committee that is number one divided and number two pretty

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Speaker 10: close to the end.

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Speaker 2: Do you get the senses you look through this data

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Speaker 2: that there is strength in the economy, that perhaps they're

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Speaker 2: not really watching closely enough that there does seem to

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Speaker 2: be something that could reignite inflation later in the year.

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Speaker 10: So I think they're watching closely the data. They see

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Speaker 10: the strength of the economy, and if your chair of

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Speaker 10: pal you're encouraged by it. He's never really had a hard.

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Speaker 9: Landing in his outlook. I think that.

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Speaker 10: The extent that the strong data is coming from the

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Speaker 10: labor market, it's got to be troubling. It's got to

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Speaker 10: be reason why you have to lean toward more policy firming,

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Speaker 10: and I think it does pose a fundamental challenge.

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Speaker 2: Are you concerned that there isn't more dissent, at least

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Speaker 2: publicly on the federal Reserve at a time where as

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Speaker 2: you said it was somewhat confusing, and it seems as

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Speaker 2: though there's a bit of a herding cats type of

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Speaker 2: trend going on there.

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Speaker 10: So I think we saw the the division in the

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Speaker 10: committee just by the two press conferences in a succession.

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Speaker 10: In the June meeting, the chair spent a lot of

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Speaker 10: time talking about all they've done was slow the pace

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Speaker 10: slowing policy tightening allows more information to gather. But this

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Speaker 10: time it was had he had it, must have had

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Speaker 10: a yellow sticky note on his talking point saying, say,

440
00:22:25,359 --> 00:22:30,520
Speaker 10: meeting by meeting, live, live, data dependent as often as

441
00:22:30,560 --> 00:22:34,560
Speaker 10: you can. That suggests to me that he wants a

442
00:22:34,640 --> 00:22:38,960
Speaker 10: slow pace of policy firming. So he's got optionality. May

443
00:22:39,119 --> 00:22:42,040
Speaker 10: may or may not tighten in November, but he's got

444
00:22:42,160 --> 00:22:46,920
Speaker 10: enough rest of colleagues saying nope, every meeting is live.

445
00:22:47,280 --> 00:22:50,399
Speaker 10: Go out there and remind everybody every meeting is live.

446
00:22:50,600 --> 00:22:54,320
Speaker 10: That's a division in the committee. We'll see probably better

447
00:22:54,400 --> 00:22:56,080
Speaker 10: in three weeks when we.

448
00:22:56,040 --> 00:22:58,320
Speaker 2: Get the minutes in about five minutes time, will get

449
00:22:58,680 --> 00:23:01,879
Speaker 2: maybe a sense of what's on the sticky note, the

450
00:23:01,960 --> 00:23:05,119
Speaker 2: yellow sticky note of Christine Legard. In the meantime, I

451
00:23:05,160 --> 00:23:06,960
Speaker 2: do want to head back to Michael McKee who's been

452
00:23:07,040 --> 00:23:10,240
Speaker 2: parsing through all of the data, Mike, what stands out

453
00:23:10,280 --> 00:23:14,280
Speaker 2: to you in the details, the fine line items underpinning GDP,

454
00:23:14,520 --> 00:23:18,000
Speaker 2: underpinning durable goods well GDP.

455
00:23:18,320 --> 00:23:20,480
Speaker 6: The interesting thing here is we've seen a couple of

456
00:23:20,520 --> 00:23:24,679
Speaker 6: months where inventories in trade really affected the numbers, but

457
00:23:24,760 --> 00:23:28,040
Speaker 6: not in the second quarter. They both subtracted about a

458
00:23:28,119 --> 00:23:32,360
Speaker 6: tenth of a percent from the overall number. They kind

459
00:23:32,400 --> 00:23:36,600
Speaker 6: of offset each other, and the real strength was in

460
00:23:36,680 --> 00:23:40,040
Speaker 6: business spending up one percent and consumer spending up one

461
00:23:40,080 --> 00:23:42,760
Speaker 6: point one percent. So that makes up most of what

462
00:23:42,840 --> 00:23:47,240
Speaker 6: we saw during the second quarter, and it does suggest strength.

463
00:23:47,320 --> 00:23:51,440
Speaker 6: Government consumption was up two point six percent. That's down

464
00:23:51,480 --> 00:23:55,600
Speaker 6: from five percent in the previous quarter. Non defense spending,

465
00:23:55,640 --> 00:23:57,479
Speaker 6: which was up ten and a half percent in this

466
00:23:57,840 --> 00:24:00,720
Speaker 6: first quarter, was down one point one percent, so not

467
00:24:00,800 --> 00:24:03,760
Speaker 6: a huge contribution from the government this time. It's consumers

468
00:24:03,760 --> 00:24:06,679
Speaker 6: and business spending the C and I part of C

469
00:24:06,880 --> 00:24:10,560
Speaker 6: plus I plus G plus NX, and in terms of

470
00:24:10,880 --> 00:24:14,000
Speaker 6: durable goods, it's just overall good news that there is

471
00:24:14,080 --> 00:24:17,159
Speaker 6: some spending, but it did slow in the capital goods

472
00:24:17,240 --> 00:24:20,000
Speaker 6: non defense area. So we'll see what kind of contribution

473
00:24:20,119 --> 00:24:22,280
Speaker 6: that we get from durable goods. When we go into

474
00:24:22,280 --> 00:24:24,960
Speaker 6: the next month. I think the FED looks at today's

475
00:24:25,040 --> 00:24:29,119
Speaker 6: numbers and has obviously has to change their forecast for

476
00:24:29,400 --> 00:24:33,320
Speaker 6: GDP for the year at the September meeting, and the

477
00:24:33,400 --> 00:24:36,960
Speaker 6: jobless claims numbers just tell the FED we're not going

478
00:24:37,000 --> 00:24:40,879
Speaker 6: to see unemployment start to rise in the near future,

479
00:24:40,920 --> 00:24:43,800
Speaker 6: so they may have to adjust those as well. And

480
00:24:44,119 --> 00:24:46,760
Speaker 6: this is the kind of report I guess that keeps

481
00:24:46,800 --> 00:24:49,560
Speaker 6: them on alert, not going to make them make a

482
00:24:49,600 --> 00:24:52,800
Speaker 6: decision because we're a long way away from September twenty first,

483
00:24:53,119 --> 00:24:56,480
Speaker 6: but keeps them on alert for the possibility of having

484
00:24:56,560 --> 00:24:57,560
Speaker 6: to raise rates again.

485
00:24:57,640 --> 00:24:58,439
Speaker 1: Thank you so much, Mike.

486
00:24:58,520 --> 00:25:02,160
Speaker 2: Great synopsis there, especially as we start to see increasing

487
00:25:02,200 --> 00:25:05,200
Speaker 2: momentum or at least stability in the consumer vincent rein

488
00:25:05,280 --> 00:25:08,840
Speaker 2: hardstill with US vincent. How long can consumers keep spending

489
00:25:08,920 --> 00:25:11,200
Speaker 2: like this at a time or we're seeing results from

490
00:25:11,240 --> 00:25:13,880
Speaker 2: the likes of Hurts, from the likes of Royal Caribbean,

491
00:25:14,240 --> 00:25:15,600
Speaker 2: that trend is still in place.

492
00:25:16,800 --> 00:25:17,720
Speaker 9: So a couple things.

493
00:25:17,720 --> 00:25:22,040
Speaker 10: They still have the retained fiscal transfers they got in

494
00:25:22,119 --> 00:25:25,560
Speaker 10: twenty In twenty twenty one, they've worked down a lot

495
00:25:25,600 --> 00:25:29,119
Speaker 10: of that nound but they still have that saving. And

496
00:25:29,240 --> 00:25:34,280
Speaker 10: second is we're generating jobs and wage growth is strong.

497
00:25:34,600 --> 00:25:37,560
Speaker 10: That means they're getting household income. Two points to what

498
00:25:38,000 --> 00:25:41,200
Speaker 10: Mike said, I actually see a lot of the government

499
00:25:41,240 --> 00:25:46,320
Speaker 10: and the GDP print and that's incentives for capital spending.

500
00:25:46,400 --> 00:25:48,720
Speaker 10: I think that's part of the reason capital spending was

501
00:25:48,760 --> 00:25:53,680
Speaker 10: so strong, given all the green initiatives. Second thing, inventory

502
00:25:53,760 --> 00:25:58,880
Speaker 10: is on the soft side. The closest relationship of business

503
00:25:59,000 --> 00:26:03,120
Speaker 10: loans to eken activity is the inventory component. So some

504
00:26:03,160 --> 00:26:06,920
Speaker 10: of the softening in bank lending we've seen might actually

505
00:26:06,920 --> 00:26:10,680
Speaker 10: be demand, not supply and credit constriction.

506
00:26:10,400 --> 00:26:12,120
Speaker 2: And that's what we've seen over in Europe as well.

507
00:26:12,160 --> 00:26:15,000
Speaker 2: It was a drop off in demand, not necessarily on

508
00:26:15,280 --> 00:26:18,520
Speaker 2: the supply side. As you parse through this, though, are

509
00:26:18,560 --> 00:26:21,080
Speaker 2: you watching things like the student loan repayments. Is that

510
00:26:21,119 --> 00:26:22,920
Speaker 2: going to really play a role or is it really

511
00:26:22,920 --> 00:26:27,040
Speaker 2: going to have to come from some I guess tightening

512
00:26:27,280 --> 00:26:30,080
Speaker 2: further in a way that might be a little more disorderly.

513
00:26:31,160 --> 00:26:34,800
Speaker 9: So I think it's got to be the latter. I e.

514
00:26:35,520 --> 00:26:39,080
Speaker 10: At this stage in the monetary transmission mechanism, is the

515
00:26:39,080 --> 00:26:43,240
Speaker 10: credit constriction that Japwell is waiting for. It is going

516
00:26:43,280 --> 00:26:47,919
Speaker 10: to be uh, you know the cumulative toll of the

517
00:26:48,040 --> 00:26:49,240
Speaker 10: earlier bank grounds.

518
00:26:49,560 --> 00:26:53,159
Speaker 9: And by the way, quantitative tightening is actually.

519
00:26:52,800 --> 00:26:56,520
Speaker 10: Starting in earnest only now first year of the program

520
00:26:56,560 --> 00:27:01,520
Speaker 10: when the when the FED ran off its secure securities holdings,

521
00:27:01,800 --> 00:27:04,400
Speaker 10: the Treasury paid for it by working down at its

522
00:27:04,480 --> 00:27:07,440
Speaker 10: cash balance at the FED just move money from one

523
00:27:07,480 --> 00:27:11,119
Speaker 10: pocket for the government to another. And now with the

524
00:27:11,160 --> 00:27:15,720
Speaker 10: Treasury keeping its cash balance at a high level, all

525
00:27:15,840 --> 00:27:20,359
Speaker 10: the security redemptions the FED is doing is going to

526
00:27:20,359 --> 00:27:23,040
Speaker 10: be coming out of the assets the private sector holds.

527
00:27:23,400 --> 00:27:26,800
Speaker 10: We're quantitative titan is really kicking in now.

528
00:27:27,000 --> 00:27:30,360
Speaker 2: We're just minutes away from Christine Legard giving a press conference.

529
00:27:30,400 --> 00:27:33,800
Speaker 1: It's scheduled to be eight forty five. However, there usually are.

530
00:27:33,920 --> 00:27:37,280
Speaker 2: A lot of photos and introductions, so it may be

531
00:27:37,400 --> 00:27:38,720
Speaker 2: a couple of minutes after that.

532
00:27:38,840 --> 00:27:41,520
Speaker 1: Vincent Reinhardt with us of Dreyfus and.

533
00:27:41,480 --> 00:27:54,520
Speaker 3: Mellon METSA up by close to one hundred and fifty percent.

534
00:27:54,560 --> 00:27:57,800
Speaker 3: Yet today before these earnings, after them, we could it

535
00:27:57,840 --> 00:27:59,800
Speaker 3: go through that level. The METSA right now is a

536
00:28:00,240 --> 00:28:03,399
Speaker 3: close to nine percent in the pre market after beating

537
00:28:03,560 --> 00:28:06,560
Speaker 3: estimers and providing guidance that the way well be more

538
00:28:06,600 --> 00:28:09,560
Speaker 3: to come. Mandy's seeing joins us now senior technology analyst

539
00:28:09,600 --> 00:28:11,159
Speaker 3: for Bloomberg Intelligence Mandate.

540
00:28:11,320 --> 00:28:12,840
Speaker 5: Just Wow, they got it done.

541
00:28:12,920 --> 00:28:14,680
Speaker 3: And the question I think lots of people are asking

542
00:28:14,680 --> 00:28:17,000
Speaker 3: at the moment is that just cost control or are

543
00:28:17,000 --> 00:28:19,480
Speaker 3: we seeing a reacceleration in revenue growth. I spoke to

544
00:28:19,520 --> 00:28:23,080
Speaker 3: analyst later on yesterday who said, we're expecting the latter.

545
00:28:23,400 --> 00:28:24,439
Speaker 3: Are you seeing the latter?

546
00:28:24,920 --> 00:28:28,159
Speaker 11: I think so, And look, it's both. Cost control is

547
00:28:28,200 --> 00:28:31,159
Speaker 11: the primary driver of why the stock has run up

548
00:28:31,240 --> 00:28:33,920
Speaker 11: so much because the margins are trending in the right direction.

549
00:28:34,560 --> 00:28:37,920
Speaker 11: But with inflation pulling back, it's good for ads spending,

550
00:28:37,960 --> 00:28:41,000
Speaker 11: and that's what we saw that you know from Alphabet.

551
00:28:41,120 --> 00:28:44,040
Speaker 11: I think Meta was an exception. The one thing both

552
00:28:44,080 --> 00:28:46,640
Speaker 11: these companies seem to be doing right is the pivot

553
00:28:46,680 --> 00:28:49,080
Speaker 11: to AI and how they are using it to improve

554
00:28:49,120 --> 00:28:52,720
Speaker 11: their ranking and recommendations in terms of the content that

555
00:28:53,440 --> 00:28:54,240
Speaker 11: is being viewed.

556
00:28:54,000 --> 00:28:54,560
Speaker 5: On the apps.

557
00:28:54,560 --> 00:28:58,080
Speaker 11: And that's what Meta called out yesterday. It's driving engagement

558
00:28:58,720 --> 00:29:02,360
Speaker 11: in their blue app, which everyone thought was a declining business.

559
00:29:02,400 --> 00:29:06,120
Speaker 11: Well it grew. And I think that is what AI

560
00:29:06,240 --> 00:29:09,840
Speaker 11: can do in terms of driving that content engagement, which

561
00:29:09,880 --> 00:29:12,920
Speaker 11: is the pole really to drive impressions, and you know

562
00:29:12,960 --> 00:29:14,960
Speaker 11: in an ad business, that is what matters.

563
00:29:14,960 --> 00:29:17,640
Speaker 3: At least I mentioned earlier that Facebook, not tourist, is

564
00:29:17,760 --> 00:29:21,680
Speaker 3: very good at copying other people cough TikTok, and Reels

565
00:29:22,040 --> 00:29:24,960
Speaker 3: how successful, how sticky has that product become.

566
00:29:25,440 --> 00:29:28,080
Speaker 11: So one data point they shared last night was Reels

567
00:29:28,120 --> 00:29:30,920
Speaker 11: is now a ten billion dollar rund rate business versus

568
00:29:31,000 --> 00:29:33,480
Speaker 11: three billion last fall, and.

569
00:29:33,360 --> 00:29:36,920
Speaker 5: That just goes to show three x wow in.

570
00:29:36,880 --> 00:29:39,960
Speaker 11: A matter of three quarters. I think that just goes

571
00:29:40,000 --> 00:29:42,720
Speaker 11: to show the point that yes, they're very good at

572
00:29:42,840 --> 00:29:45,640
Speaker 11: incorporating new features, but I do think it's going to

573
00:29:45,680 --> 00:29:50,200
Speaker 11: cannibalize their existing ad inventory, the high priced ad inventory,

574
00:29:50,440 --> 00:29:53,000
Speaker 11: which is why in the print the only negative I

575
00:29:53,000 --> 00:29:56,320
Speaker 11: could find is the ad pricing went down sixteen percent.

576
00:29:56,400 --> 00:29:59,000
Speaker 11: We saw that from Snap it was down twelve percent,

577
00:29:59,040 --> 00:30:01,880
Speaker 11: and we thought it's a so media problem. In this case,

578
00:30:01,920 --> 00:30:06,160
Speaker 11: they're actually cannibalizing their own ad inventory because Reels doesn't

579
00:30:06,200 --> 00:30:08,560
Speaker 11: monetize as well as their other formats.

580
00:30:08,600 --> 00:30:10,960
Speaker 2: Of course, if you own the world and you earn

581
00:30:11,000 --> 00:30:12,960
Speaker 2: a little bit less off of everything, you're still earning

582
00:30:13,000 --> 00:30:15,240
Speaker 2: a lot of money. How much are we seeing them

583
00:30:15,520 --> 00:30:20,240
Speaker 2: consolidate market share for the ad business versus simply just

584
00:30:20,360 --> 00:30:24,160
Speaker 2: organically growing. In other words, is there gain someone else's loss.

585
00:30:24,760 --> 00:30:28,080
Speaker 11: Well, so look at messaging. Messaging no one was able

586
00:30:28,120 --> 00:30:31,800
Speaker 11: to monetize till now. Now they messaging is a ten

587
00:30:31,880 --> 00:30:34,760
Speaker 11: pillion dollars rundread business for them. And they talked about

588
00:30:34,800 --> 00:30:38,720
Speaker 11: incorporating AI agents. So the customer service use case for

589
00:30:38,800 --> 00:30:41,959
Speaker 11: WhatsApp is huge. Again we are still very early on,

590
00:30:42,400 --> 00:30:45,920
Speaker 11: but the fact that they're talking about running digital storefronts

591
00:30:45,920 --> 00:30:49,520
Speaker 11: who can do their customer service through WhatsApp AI agents.

592
00:30:49,880 --> 00:30:52,200
Speaker 11: I mean, the market gets excited with these kind of things.

593
00:30:52,240 --> 00:30:54,560
Speaker 2: And can I just tell you, John, I get really

594
00:30:54,560 --> 00:30:56,440
Speaker 2: frustrated when you go to a website and then you

595
00:30:56,520 --> 00:30:58,760
Speaker 2: look for a phone number and there is no phone number.

596
00:30:58,760 --> 00:31:01,280
Speaker 1: They're just chatbots. And then you discussed with the chat

597
00:31:01,320 --> 00:31:02,040
Speaker 1: but and they help.

598
00:31:01,920 --> 00:31:04,120
Speaker 5: You not to all space to the automatic chat bobs.

599
00:31:04,160 --> 00:31:06,720
Speaker 1: Well then you can't find a total number. So frequently

600
00:31:06,960 --> 00:31:07,360
Speaker 1: we can.

601
00:31:07,320 --> 00:31:09,719
Speaker 11: Find their WhatsApp channel now and you can talk to

602
00:31:09,960 --> 00:31:12,240
Speaker 11: that channel. That's what they're trying to do with their.

603
00:31:12,600 --> 00:31:15,520
Speaker 3: Real person there though no no, of course, not that

604
00:31:15,720 --> 00:31:17,560
Speaker 3: I've got no time for that. MANDI I want to

605
00:31:17,560 --> 00:31:18,240
Speaker 3: speak to people.

606
00:31:18,360 --> 00:31:20,720
Speaker 1: I totally agree. I absolutely hear you.

607
00:31:20,800 --> 00:31:23,840
Speaker 2: I am curious with respect to Meta going forward, how

608
00:31:23,920 --> 00:31:26,520
Speaker 2: much of their earnings had to do with crushing it

609
00:31:26,640 --> 00:31:29,080
Speaker 2: on the advertising revenue and how much had to do

610
00:31:29,160 --> 00:31:29,920
Speaker 2: with the job cuts.

611
00:31:30,280 --> 00:31:33,000
Speaker 11: I mean, job cuts was a big factor, twenty five

612
00:31:33,040 --> 00:31:35,920
Speaker 11: percent layoffs. So they've already reduced their expenses six to

613
00:31:35,960 --> 00:31:38,600
Speaker 11: seven billion, and that shows up in the free cash flow.

614
00:31:39,120 --> 00:31:42,040
Speaker 11: And they didn't cut anything on the reality lab side.

615
00:31:42,080 --> 00:31:45,880
Speaker 11: That was the big surprise. They talked about raising their

616
00:31:45,920 --> 00:31:49,040
Speaker 11: expenses on the reality labs front. So they're still going

617
00:31:49,080 --> 00:31:52,360
Speaker 11: to lose fifteen billion on building this metal works again

618
00:31:52,440 --> 00:31:55,640
Speaker 11: this year, and that's why the stock is not up more. Otherwise,

619
00:31:55,680 --> 00:31:58,720
Speaker 11: I think investors would have cheered this print even more.

620
00:31:58,840 --> 00:32:01,520
Speaker 3: So you still think that day and Mark Zuckerberg's big

621
00:32:01,560 --> 00:32:03,880
Speaker 3: hopes and dreams are the metaverse still.

622
00:32:03,720 --> 00:32:06,360
Speaker 11: Oh absolutely, that was evident on the call, Like he

623
00:32:06,480 --> 00:32:09,480
Speaker 11: firmly believes in this. He thinks this will still drive

624
00:32:09,520 --> 00:32:11,560
Speaker 11: the next leg of growth. But at the time he's

625
00:32:11,880 --> 00:32:15,320
Speaker 11: he's course corrected pivoted to AI rightly so, and that's

626
00:32:15,360 --> 00:32:16,280
Speaker 11: been a good.

627
00:32:16,080 --> 00:32:18,760
Speaker 5: For the need describe it. What does he have in mind?

628
00:32:18,840 --> 00:32:21,240
Speaker 5: What does he think this is going to look like well.

629
00:32:21,040 --> 00:32:23,840
Speaker 11: So he thinks once he has the install base, and

630
00:32:23,880 --> 00:32:27,719
Speaker 11: he's very focused on building the hardware where you know,

631
00:32:27,800 --> 00:32:30,240
Speaker 11: he can have the content and control that ecosystem. He

632
00:32:30,320 --> 00:32:34,080
Speaker 11: called out Apple for thwarting, you know, their innovation and

633
00:32:34,200 --> 00:32:36,960
Speaker 11: changing the rules all of a certain which hurt ten

634
00:32:36,960 --> 00:32:39,880
Speaker 11: billion dollars of revenue last year for meta and I

635
00:32:39,920 --> 00:32:43,000
Speaker 11: think he wants to control that ecosystem. But with Apple

636
00:32:43,080 --> 00:32:45,760
Speaker 11: Vision Pro launch, I think at least it has validated

637
00:32:45,840 --> 00:32:49,120
Speaker 11: the market. I still think they are spending way too

638
00:32:49,240 --> 00:32:53,680
Speaker 11: much without really establishing a business case for Metaverse. I

639
00:32:53,720 --> 00:32:56,160
Speaker 11: don't think it's going to be that next computing platform

640
00:32:56,200 --> 00:32:58,800
Speaker 11: that he thinks is probably too far out of bed

641
00:32:58,920 --> 00:33:02,280
Speaker 11: and losing fifteen bills in every year. I mean, investors

642
00:33:02,280 --> 00:33:04,520
Speaker 11: won't like it. But at the same time, he's growing

643
00:33:04,520 --> 00:33:06,520
Speaker 11: top line twenty percent, so you may get a pass

644
00:33:06,560 --> 00:33:08,240
Speaker 11: for at least two three quarters.

645
00:33:08,280 --> 00:33:11,680
Speaker 2: Is he investing enough on the other tech innovations, in

646
00:33:11,720 --> 00:33:15,600
Speaker 2: particular artificial intelligence as he tries to lean into the

647
00:33:15,640 --> 00:33:20,800
Speaker 2: metaverse with dubious application and frankly a dubious leg up

648
00:33:20,840 --> 00:33:23,239
Speaker 2: on some of the other areas. They're companies that are

649
00:33:23,240 --> 00:33:23,880
Speaker 2: developing this.

650
00:33:24,160 --> 00:33:27,560
Speaker 11: Yeah, so they are open sourcing their large anguage model,

651
00:33:27,640 --> 00:33:30,760
Speaker 11: unlike chat, GPT or you know some of the other ones.

652
00:33:30,880 --> 00:33:32,880
Speaker 11: And what they're saying is since they don't have a

653
00:33:32,880 --> 00:33:36,360
Speaker 11: public cloud, they're going to partner with Microsoft and really

654
00:33:36,440 --> 00:33:39,560
Speaker 11: make that available for consumption. So it's a good way

655
00:33:39,640 --> 00:33:43,240
Speaker 11: to go about, you know, driving adoption. But I still think,

656
00:33:43,720 --> 00:33:45,880
Speaker 11: you know, with large anguid models and how they're going

657
00:33:45,880 --> 00:33:48,160
Speaker 11: to be monetized, I think public cloud vendors are the

658
00:33:48,160 --> 00:33:51,160
Speaker 11: best position, which is why Microsoft and Alphabet got a

659
00:33:51,160 --> 00:33:51,760
Speaker 11: bump from that.

660
00:33:52,040 --> 00:33:54,360
Speaker 2: Asam was talking about, in about a week's time after

661
00:33:54,400 --> 00:33:57,000
Speaker 2: the bell, we're going to hear from Apple. From Amazon

662
00:33:57,200 --> 00:34:00,960
Speaker 2: is the expectation that they'll similarly deliver than expected results

663
00:34:00,960 --> 00:34:03,560
Speaker 2: that we've seen from most of the other tech giants

664
00:34:04,160 --> 00:34:07,760
Speaker 2: snap not included. Is this basically a telltale sign that

665
00:34:07,800 --> 00:34:10,239
Speaker 2: the rally has been justified by fundamentals.

666
00:34:10,480 --> 00:34:12,479
Speaker 11: I mean, in the case of Amazon, you could see

667
00:34:12,520 --> 00:34:16,360
Speaker 11: ads spending getting a lift because overall AD spending has improved,

668
00:34:16,360 --> 00:34:19,239
Speaker 11: but a BLUs I think because of their lack of

669
00:34:19,360 --> 00:34:23,520
Speaker 11: exposure to generative AI and the expectations are low, you're

670
00:34:23,560 --> 00:34:26,399
Speaker 11: going to see a muted growth on that front. And Apple, Look,

671
00:34:26,560 --> 00:34:30,439
Speaker 11: we saw that from TSMC print smartphone demand is down,

672
00:34:30,560 --> 00:34:34,000
Speaker 11: so I can't see how Apple beats on the top line.

673
00:34:34,000 --> 00:34:36,320
Speaker 11: But at the same time, they still control the ecosystem,

674
00:34:36,360 --> 00:34:40,080
Speaker 11: which Mark Zuckerberg doesn't like, and I think that's why

675
00:34:41,040 --> 00:34:42,000
Speaker 11: they are where they are.

676
00:34:42,360 --> 00:34:45,200
Speaker 3: Apple earnings a week away, based on our reporting, maybe

677
00:34:45,280 --> 00:34:48,520
Speaker 3: units this year is stable, don't change much from last year,

678
00:34:48,560 --> 00:34:51,200
Speaker 3: but average selling prices are going to go up.

679
00:34:51,280 --> 00:34:57,640
Speaker 5: That's the hope, anyway, hope for her. The stock exactly.

680
00:34:58,840 --> 00:35:00,600
Speaker 3: Mine's a few years and I'm not upgrade on it

681
00:35:01,040 --> 00:35:02,719
Speaker 3: unless they do that thing they do where they sort

682
00:35:02,719 --> 00:35:04,759
Speaker 3: of press those buttons and come in and slow it

683
00:35:04,800 --> 00:35:06,680
Speaker 3: down aggressively, and then I've got to upgrade it. But

684
00:35:06,760 --> 00:35:07,920
Speaker 3: right now I want nothing to do with it.

685
00:35:08,080 --> 00:35:10,479
Speaker 1: I understand what am I upgrading to better.

686
00:35:10,640 --> 00:35:12,799
Speaker 11: You can run your large anguage model on your.

687
00:35:12,719 --> 00:35:16,040
Speaker 3: Phone large no interest in that all.

688
00:35:16,400 --> 00:35:17,800
Speaker 1: Well, I'm like a doctor.

689
00:35:17,960 --> 00:35:20,719
Speaker 3: I know on pretty much everything when it comes to technology.

690
00:35:20,840 --> 00:35:23,719
Speaker 3: Man Deep seen Genie technology analysts for Bloomberg Intelligence.

691
00:35:24,680 --> 00:35:28,120
Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and

692
00:35:28,160 --> 00:35:31,560
Speaker 2: anywhere else you get your podcasts. Listen live every weekday

693
00:35:31,640 --> 00:35:34,200
Speaker 2: starting at seven am Eastern on Bloomberg Dot com the

694
00:35:34,280 --> 00:35:36,399
Speaker 2: iHeartRadio app tune In, and.

695
00:35:36,440 --> 00:35:37,640
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696
00:35:37,960 --> 00:35:41,240
Speaker 2: You can watch us live on Bloomberg Television and always

697
00:35:41,320 --> 00:35:44,719
Speaker 2: on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz,

698
00:35:44,760 --> 00:35:45,840
Speaker 2: and this is Bloomberg