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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: us live on YouTube.

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Speaker 2: So the SMP closed around six thousand on Friday. We

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Speaker 2: are above barely that level now, but nonetheless, I mean

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Speaker 2: we are now officially in a bowl market. So now

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Speaker 2: our eyes turned to the trade talks in London between

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Speaker 2: US and China representatives, and that's going to be enough

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Speaker 2: to start moving the needle for the equity market higher.

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Speaker 2: Joining us now is Brendan Murray. He is Bloomberg Global

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Speaker 2: Trade Editor. What's a win for both sides.

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Speaker 3: A win for both sides is going back to the

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Speaker 3: Geneva agreement from a month ago and saying here are

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Speaker 3: the clear goalposts that we set for each other and

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Speaker 3: that we're going to try to meet going four forward,

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Speaker 3: and then setting the setting the stage for future rounds

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Speaker 3: of talks that they have enough in common and the

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Speaker 3: tone in the room is good. Remember, these are two

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Speaker 3: sides that sat sat together a month ago and came

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Speaker 3: away and didn't really understand what they had agreed to.

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Speaker 3: So so here we are again. They just started the

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Speaker 3: discussions a couple of hours ago here in London. It's

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Speaker 3: expected to go well into the into the early evening,

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Speaker 3: maybe even into Tuesday if if they get hung up tonight.

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Speaker 3: So the the real goal here is to re establish

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Speaker 3: the framework for some talks were two months from the

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Speaker 3: the end of the ninety day reprieve that that both

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Speaker 3: both sides agreed to when they brought their tariffs down.

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Speaker 3: So time is ticking and these are complicated talks and

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Speaker 3: they can't They're not going to be done in just

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Speaker 3: a few meetings.

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Speaker 4: So the real the real.

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Speaker 3: Goal here is momentum and maintaining the forward momentum.

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Speaker 5: I know, my strategy would be just walking down to

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Speaker 5: the local pub, you know, have a couple of pints,

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Speaker 5: work this thing out. I mean not tough, going to.

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Speaker 4: Be Brendan, where are we on terrrifts?

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Speaker 6: Are here?

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Speaker 5: I can't keep track of where we are on tariffs?

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Speaker 5: Could you just remind us kind of what the current

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Speaker 5: status is?

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Speaker 3: Yeah, So part of that ninety day reprieve was to

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Speaker 3: bring the very high tariffs down one hundred and forty

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Speaker 3: five percent on Chinese imports into the US. Extremely high

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Speaker 3: tariffs for US goods going to China. They brought those down.

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Speaker 3: The US is at about thirty percent on Chinese goods

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Speaker 3: now China brought theirs down to ten. So those are

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Speaker 3: by no means low tariffs. Those are still having an effect.

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Speaker 3: They're diminishing the share of trade that's moving between the

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Speaker 3: two countries, So tariffs are going to be there for

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Speaker 3: a while. Those are Those aren't the kinds of things

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Speaker 3: you start taking off this early in a negotiation. Those

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Speaker 3: are leverage that you take off later on down the road,

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Speaker 3: once you can accomplish some of the other things that

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Speaker 3: you accomplish. And for the moment, the US is focused

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Speaker 3: on seeing the those rare earth elements, those key magnets

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Speaker 3: and other things that are needed to make batteries and

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Speaker 3: high tech medical equipment come start flowing back to the

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Speaker 3: US so American companies don't have to shut down their

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Speaker 3: production lines. And China wants some of the export restrictions

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Speaker 3: that the US put on it's high tech exports to

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Speaker 3: China some of those lifted. It seems like the two

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Speaker 3: sides came into these talks willing to give up some

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Speaker 3: of those. So we'll we'll have to wait and see

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Speaker 3: where it goes from here, but we're expecting that they

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Speaker 3: they'll come away from these discussions with some sort of

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Speaker 3: basis to continue the negotiations on a whole host of

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Speaker 3: other things. Tariffs, like I said, not going to be

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Speaker 3: addressed today, those are further down the road.

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Speaker 2: What who is the leverage? This is my favorite question

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Speaker 2: in a minute, who's the leverage?

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Speaker 3: Well, you could argue that both sides have leverage. Look,

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Speaker 3: President Trump has said he'll just take he'll take terriffs

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Speaker 3: back up, and he'll cut off the US trade with

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Speaker 3: with China as he did. You know initially China would say, yeah,

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Speaker 3: well we'll just starveview of rare earth elements and see

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Speaker 3: how well your auto industry survives a couple of months

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Speaker 3: of that. So both sides have a fair amount of leverage.

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Speaker 3: This is a game of pain thresholds. How much pain

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Speaker 3: can your economy take? How much backlash can you take

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Speaker 3: from the general public, from lawmakers. So we're at the

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Speaker 3: very early stage of the leverage that's being applied, and

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Speaker 3: you could argue that both sides have a fair amount

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Speaker 3: of it. It's just who can withstand it the longest.

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Speaker 4: Right, Very good.

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Speaker 5: Brenda Murray, global Trade editor for wear Bloomberg News, joining

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Speaker 5: us from London, where there's talks are taking place between

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Speaker 5: the Chinese and the American trade debt delegations. And again

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Speaker 5: it just feels like if they're having dialogue, that's a

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Speaker 5: good thing to me. I don't think anything, I don't know,

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Speaker 5: necessarily bad, but you got to keep talking and kind

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Speaker 5: of pushing the ball down the road.

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Speaker 3: I guess.

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Speaker 1: Well.

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Speaker 2: That's my question too, is like what's going to be

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Speaker 2: good news for the market. Do you just need no

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Speaker 2: bad news news?

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Speaker 6: I think that might be it, or do you.

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Speaker 2: Start to need some trade deals where the ink assigned

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Speaker 2: not necessarily with China, but with somebody kind of lets

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Speaker 2: go yeah.

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Speaker 5: I don't know, we'll see.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App, Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on.

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Speaker 6: YouTube in DC. There's still stuff going on as well.

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Speaker 2: Nathan Dean, Bloomberg Intelligence Senior policy analyst, joins us now. Nathan,

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Speaker 2: obviously the headline over the weekend is the riots in

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Speaker 2: LA and then the National Guard being sent in without

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Speaker 2: the governor having.

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Speaker 6: Asked for it. What is how is that unfurling in

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Speaker 6: DC right now?

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Speaker 7: So I would say, you know, it was one of

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Speaker 7: those things where President Trump wanted this fight because it

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Speaker 7: plays to one of his key messages that won him

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Speaker 7: the election, and that.

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Speaker 4: Was on immigration.

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Speaker 7: But you know, in terms of how it plays in

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Speaker 7: terms of things like the one big beautiful bill or

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Speaker 7: to tariffs or to the you know that's really not

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Speaker 7: happening just yet. You know, there was a lot of

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Speaker 7: discussions about medicaid cuts and snap reductions and inflation reduction acts,

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Speaker 7: and those messages are very difficult for Republicans, but they're

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Speaker 7: still moving forward. So when it comes to Los Angeles

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Speaker 7: and this idea of troops, I think President Trump certainly

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Speaker 7: wants that to try and deflect some that messages away

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Speaker 7: from medicaid cuts. For example, the question is, you know,

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Speaker 7: we anticipate the one big beautiful build going into July.

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Speaker 7: You know, will California go into July? Time will only tell.

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Speaker 5: So where are we on either I don't know, cuts

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Speaker 5: too expenses like medicaid or new revenue like taxes. Where

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Speaker 5: are we in that discussion these days?

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Speaker 7: Yeah, So you know, there's really three things that came

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Speaker 7: out of the House bill. It's the Medicaid, it's the

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Speaker 7: Snap benefits, and it's the Inflation Reduction Act. Now, each

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Speaker 7: one of those was given a certain timeframe of when

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Speaker 7: those tax you know, tax credits, and then the Medicaid

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Speaker 7: cuts an example, when they would actually take into effect.

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Speaker 4: Now, the House Conservatives insist if.

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Speaker 7: Medicaid, for example, that would start in December twenty twenty six,

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Speaker 7: the Inflation Reduction Act twenty twenty eight. All this being said, now,

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Speaker 7: what the Senate is doing at the moment is looking

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Speaker 7: how to mod moderate it. And so Senator John Thune

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Speaker 7: gave a statement just last week saying that we're going

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Speaker 7: to anticipate a lot of that pushing back. So what

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Speaker 7: we're telling our clients is is that go back to

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Speaker 7: the original House in ways and means text where for

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Speaker 7: a lot of these tax cuts and a lot of

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Speaker 7: these tax extensions they would start taking place in like

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Speaker 7: twenty twenty eight or twenty twenty nine, beyond Trump's the

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Speaker 7: rest of his administration. That's where we think the Senate

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Speaker 7: goes now when it comes to Medicaid in particular. Obviously

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Speaker 7: it's a very difficult vote for a lot of Republicans

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Speaker 7: that have either constituencies or states that are heavily development

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Speaker 7: or heavily reliant on Medicaid. You know, we think that

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Speaker 7: most likely that those ultimate decisions, if you will, are

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Speaker 7: going to be votes to kick the can and push

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Speaker 7: those cuts off, so that if a future president wants

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Speaker 7: to come back and revisit it, that person would have flexibility.

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Speaker 3: Right.

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Speaker 2: Interesting in terms of the few between Elon Musk and

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Speaker 2: President Trump, I guess it's a twofer like one.

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Speaker 6: Where are we with that?

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Speaker 2: But then more importantly, kind of what is dose doing

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Speaker 2: within the government without Elon Musk?

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Speaker 4: So it seems like we're sort of at a truce

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Speaker 4: at the moment.

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Speaker 7: Now I say that obviously it could change almost instantly.

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Speaker 7: But in terms of where we are with that, well,

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Speaker 7: the White House sent what is known as a recissions

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Speaker 7: package trying to codify around nine billion dollars in cuts.

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Speaker 7: Now this is mostly USAAD State and PR We looked

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Speaker 7: at it from an investment point of view, and we

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Speaker 7: actually don't think there's much their market moving. But the

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Speaker 7: reason why it's important to talk about is that this

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Speaker 7: is the first of many recisions packages that will come

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Speaker 7: probably throughout the rest of this year. Now the White

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Speaker 7: House can literally say, essentially say, look, Doges, identify these

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Speaker 7: billion dollars number of cuts. Now we need Congress to

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Speaker 7: go in there and actually approve this. Now, you don't

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Speaker 7: need a filibuster. It's just a majority vote in the House,

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Speaker 7: majority vote in the Senate. But obviously there are differences

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Speaker 7: between what Doge wants to do and what Senators want

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Speaker 7: to do. This happened one time in twenty eighteen, and

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Speaker 7: the Republicans just said, look, I can't vote to cut these.

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Speaker 4: Things that are ultimately going to impact my districts.

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Speaker 7: So we are going to continue to see things like

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Speaker 7: clean energy tax I'm sorry, loans grants, and so forth

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Speaker 7: like that. Those recisions packages are most likely coming later

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Speaker 7: this year.

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Speaker 5: Last week, Alex and I were broadcasting remotely from Washington,

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Speaker 5: DC area. One afternoon, I was walking around town, walking

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Speaker 5: past a Department of Agriculture, which is a massive building

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Speaker 5: taken up like a whole square block, and it was

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Speaker 5: quit in time and people were coming out by the thousands.

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Speaker 5: I mean, I don't you know, it goes back to

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Speaker 5: I don't know what we don't know what these people do,

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Speaker 5: and I'm sure they're doing good work. But now that

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Speaker 5: Elon Musk is out of the picture, is dose still

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Speaker 5: a thing? Are people just going to come back into

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Speaker 5: the federal workforce now?

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Speaker 7: Well, anecdotally, I would say yes, DOUGH is still a thing.

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Speaker 7: Just talking to my friends and family around the region,

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Speaker 7: they certainly are still ACQUI and there are DOGE employees

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Speaker 7: at pretty much all these agencies. And what I would

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Speaker 7: say is is that rather than being the bully pulpit

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Speaker 7: of Elon Musk, now each agency leader is the one

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Speaker 7: that actually has to make that decision. For example, over

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Speaker 7: at the Federal Reserve, DOGE isn't there yet are as

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Speaker 7: much as I can tell, they're not there yet.

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Speaker 4: But FEDWCE Chair for Supervision.

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Speaker 7: If you look at Michelle Boumanever's speech for last week,

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Speaker 7: it had a lot of Doughe elements to it in

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Speaker 7: terms of saying, look, we need to get cut, we

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Speaker 7: need to actually become more streamlined, and so.

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Speaker 4: Forth like that.

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Speaker 7: So the idea of DOJ is certainly going through the agencies,

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Speaker 7: but the bully pulpit of Elon Musk isn't there, so

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Speaker 7: you will see cuts and you will see streamline efforts

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Speaker 7: continuing throughout the rest of this year.

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Speaker 2: A Nathan, thanks a lot, super appreciate Nathan, Dean Bloomberg

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Speaker 2: Intelligence and your policy analyst, joining us from Washington, DC.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Alex youel here alongside Paul Sweeney. This is Bloomberg Intelligence Radio.

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Speaker 2: We bring you all the top news and business, teconomics

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Speaker 2: and finance. There are lends of our Bloomberg Intelligence folks.

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Speaker 2: They cover two thousand companies and one hundred and thirty

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Speaker 2: industries all around the world. Split up, that's not a

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Speaker 2: surprise at all for anyone on Wall Street. Is Warner

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Speaker 2: Brothers Discovery splitting into two publicly traded companies, one with

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Speaker 2: HBO Max film and TV business, the.

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Speaker 6: Other with its cable business.

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Speaker 2: The stock is up over seven percent and for more

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Speaker 2: Keitha Mrangana than Bloomberg Intelligence analysts on US media is

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Speaker 2: with us.

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Speaker 6: Githa do we like this plan was what in it?

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Speaker 5: Was?

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Speaker 6: It all surprising?

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Speaker 8: We liked the plan, Alex. This has been many months

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Speaker 8: in the making, so last December they had actually reorganized

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Speaker 8: the existing business into these two separate units, the TV

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Speaker 8: business and then the streaming and the studio business, kind

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Speaker 8: of eventually paving the way for exactly the announcement today.

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Speaker 8: I think the surprising part and this is a little

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Speaker 8: bit of a pleasant surprise for Warner Brothers, Discovery has

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Speaker 8: really been on the debt side. So as you well know,

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Speaker 8: well the linear TV business is challenged, but the bigger

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Speaker 8: problem for WBT has really been a huge amount of debt.

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Speaker 8: And this debt was really as part of the combination

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Speaker 8: of Warner Brothers and Discovery, which happened a few years ago.

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Speaker 8: At that point the company had over fifty five billion

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Speaker 8: dollars in debt. They've paid about nineteen billion down, but

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Speaker 8: they still have thirty five billion. But what they're doing

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Speaker 8: now as part of this transaction is they have a

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Speaker 8: tender offer out there, really kind of looking to streamline

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Speaker 8: the capital structure. So when you have these two new

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Speaker 8: public companies, there's going to be a much more manageable

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Speaker 8: debt load. At both of those companies, and I think

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Speaker 8: investors are really reacting positively to that news Keetha.

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Speaker 5: When they put the companies together, one of the arguments

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Speaker 5: was to create scale to compete against Netflix and Disney.

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Speaker 5: What happened to that argument.

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Speaker 8: Yeah, exactly, Paul. You know, yes, they did create scale

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Speaker 8: as far as the TV networks part of the business

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Speaker 8: was concerned. You know, you have Discovery, which is really

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Speaker 8: the leader when it comes to nonfiction. You have you know,

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Speaker 8: the Warner Networks and HBO, which is the leader when

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Speaker 8: it comes to fiction and quality dramas and scripted series.

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Speaker 8: And they thought that that would do well. But unfortunately

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Speaker 8: what happened is, you know, and all media companies, as

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Speaker 8: you will know, Paul, have this conundrum because they have

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Speaker 8: the TV business, which brings in a lot of the cash,

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Speaker 8: but is literally a no growth business. In fact, it

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Speaker 8: doesn't decline. Both advertising as well as affiliate fees are

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Speaker 8: in decline. But then you had the streaming business, which

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Speaker 8: initially kind of had a little bit of trouble because

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Speaker 8: you know, in that whole game of subscribers and that

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Speaker 8: land graph for subscribers, they actually ended up incurring a

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Speaker 8: huge amount of losses. But there is this whole wave

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Speaker 8: of content cost rationalization. We've seen a turnaround and all

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Speaker 8: of the streaming businesses and Warner Brothers Discovery actually has

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Speaker 8: kind of led the charge there. So they were actually

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Speaker 8: the first to get profitable in terms of streaming, and

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Speaker 8: so now we're seeing this huge disconnect, or at least

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Speaker 8: they are saying that there is this huge disconnect between

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Speaker 8: the TV network's business and the streaming the studios business,

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Speaker 8: which should arguably get a much higher multiple, and that's

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Speaker 8: kind of the reason for this split. So we're seeing

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Speaker 8: how multiple companies do this. Actually, so Comcast, which has

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Speaker 8: the NBC division, they're splitting out their cable networks. We

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Speaker 8: had Live Skate and Stars, where you have Lion Skate

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Speaker 8: as a movie independent movie studio, Stars of the media networks,

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Speaker 8: and now you have Warner Brothers Discovery. So there's this

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Speaker 8: whole big movement now towards you know, this vertical kind

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Speaker 8: of separation if you will, I mean, do.

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Speaker 2: They all come together then and create kind of one

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Speaker 2: less great TV network thing?

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Speaker 8: Yeah, that's kind of the plan. So the most logical combination,

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Speaker 8: and this has been floated around for for months now,

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Speaker 8: is that with this news of the Comcast, you know,

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Speaker 8: the NBC cable network separation. Who would have would that

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Speaker 8: become like this kind of roll up vehicle, And that's

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Speaker 8: kind of what you know, a lot of the industry

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Speaker 8: experts are thinking, they're expecting now that you have this

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Speaker 8: news today with Warner Brothers Discovery, everybody's kind of expecting

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Speaker 8: down the road, some combination of maybe that Warner Brothers

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Speaker 8: Discovery TV assets along with the Comcast assets and who

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Speaker 8: knows who else kind of spins off their networks and

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Speaker 8: then that becomes this giant kind of TV network umbrella.

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Speaker 8: Going back to Paul's point about scale, because scale really

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Speaker 8: matters now at this business.

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Speaker 5: All right, how about Paramount, the other sick child in

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Speaker 5: your coverage, what's going on there?

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Speaker 8: Yeah, so we really don't know what's going on there.

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Speaker 8: So there's been a lot of ups and downs, Paul,

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Speaker 8: with the whole closing of the deal. So the Paramount

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Speaker 8: sky Dance transaction, it was announced last year sometime in July.

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Speaker 8: It was supposed to close by the first half, by

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Speaker 8: the end of the first half of twenty twenty five,

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Speaker 8: but there's just been so many different press reports. They've

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Speaker 8: had to do different things to appease the current administration

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Speaker 8: to a peace President Trump, I'm not sure he is

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Speaker 8: yielding so easily. So we're actually it's still kind of

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Speaker 8: fifty to fifty Paul, whether that transaction actually, yeah, actually closes.

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Speaker 8: So there's just too many things up in the air.

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Speaker 8: And then again there's the lingering question because we know

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Speaker 8: that sky Dance is really was really only interested in

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Speaker 8: the Paramount's studio business. So again what they kind of

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Speaker 8: do with the TV network's business they do with the

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Speaker 8: streaming business, that's all a huge question mark. So visibility

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Speaker 8: very very limited right now for Paramount.

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Speaker 2: I guess I just wonder if you stick all the

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Speaker 2: cable networks together, how does that actually generate real income?

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Speaker 2: I mean, I know that's a cash cow to some extent, right,

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Speaker 2: but then you have a lot of debt and there's

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Speaker 2: no growth. Like, what kind of asset is that?

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Speaker 8: Yeah, it's definitely a melting ice cube kind of an asset,

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Speaker 8: which is exactly what you know, the TV networks have

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Speaker 8: been the argument that all of these media companies making

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Speaker 8: are making alex is that somehow by kind of banding together,

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Speaker 8: you know, because each one of them will have one

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Speaker 8: or two networks that is kind of a must have networks.

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Speaker 8: If you're looking at Warner you have CNN. You know,

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Speaker 8: if you're looking at again, if you're looking at the

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Speaker 8: NBC networks, you have USAU have MSNBC. So you know,

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Speaker 8: there are definitely always going to be some must have

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Speaker 8: networks in each portfolio and kind of putting them all

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Speaker 8: together will stem that rate of decline, or at least

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Speaker 8: that is the argument that they're making. But again we've

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Speaker 8: seen that couret cutting has actually been far worse than

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Speaker 8: what it was initially projected, So again it remains to

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Speaker 8: be seen. But the idea is they want to milk

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Speaker 8: it till it kind of runs dry.

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Speaker 5: Can do we have any any early feedback from Orlando

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Speaker 5: with the new Universal Park? John Tucker's asking it's fun?

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Speaker 1: Yeah, so it is.

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Speaker 8: It is awesome, and we you know the initial so

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Speaker 8: this actually only opened about ten to fifteen days ago, Paul,

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Speaker 8: And so far everything seems to be going in the

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Speaker 8: right direction for Epic Universe and for Comcast, and we

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Speaker 8: know that they are really kind of doubling down on

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Speaker 8: their parks business. They actually have a new park coming

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Speaker 8: out just out of London, and they have all these

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Speaker 8: other attractions that are opening in the US as well,

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Speaker 8: but so far from Orlando, the signs are pretty pretty strong.

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Speaker 2: So my daughter's ten, she's never once asked to go

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Speaker 2: to Disney and she has asked to go to this thing.

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Speaker 8: Really.

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Speaker 5: Yes see, it's interesting, isn't it. But now you're going

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Speaker 5: to go to Orlando, you go to the universal thing.

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Speaker 5: You say, since we're here, let's do a couple at

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Speaker 5: Disney World, And that's kind of the plan.

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Speaker 6: There, right, Yeah, No, we're not doing either of those things.

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Speaker 2: I'm just saying more just on like the buzz for

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Speaker 2: the actual kids who are going to make their parents

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Speaker 2: do that.

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Speaker 6: Go figure. All right, Keith. Always good to catch up.

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Speaker 2: Keith running off on Boomberg Intelligence Analyst on US media.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, Alex de Oli, Paulsweeni, this is Boomberg Intelligence Rady.

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Speaker 2: We bring you all the top news in business, economics

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Speaker 2: and finance. There are a lens of our Bloomberg intelligence folks.

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Speaker 2: They cover two thousand companies and one hundred and thirty

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Speaker 2: industries all around the world. So the SMP is treating

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Speaker 2: a six thousand and eight now what Ann Berry is founding.

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Speaker 2: A managing partner at Thread Needle joins us now. And

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Speaker 2: the question I was asking before break is do we

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Speaker 2: need actual good news for a sustained move higher to

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Speaker 2: all time highs or is it less bad news going

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Speaker 2: to be enough?

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Speaker 9: Unfortunately, it feels like less bad news is going to

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Speaker 9: be enough. Alex and I continue to be perplexed as

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Speaker 9: to how the market level can be higher today than

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Speaker 9: it was before we started down this Liberation Day tariff regime.

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Speaker 9: So I think the market sentiment is such like, don't

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Speaker 9: shock us with something terrible, and we're just going to

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Speaker 9: keep on humming on up. That's how it feels at

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Speaker 9: the moment.

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Speaker 5: Technology, and give us your thoughts on just the tech

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Speaker 5: sector in general. Is that still a leading sector for

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Speaker 5: this market overall?

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Speaker 9: So I think tech has been extremely highly valued for

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Speaker 9: two years at this point. But what's been really interesting

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Speaker 9: to me about this earning season is a lot of

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Speaker 9: these businesses, those that have been giving out and increased

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Speaker 9: guidance have been rewarded with increased investor support, and I

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Speaker 9: think there are some areas of tech that continue to

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Speaker 9: be interesting. A lot of these software companies that are

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Speaker 9: becoming one stop shop for enterprises both large and small.

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Speaker 9: So it does feel like there are certain pockets of opportunity.

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Speaker 9: But I do think that the market's becoming slightly more

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Speaker 9: disciplined around which are providing more guide guidance to walk

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Speaker 9: to the upside and not hiding behind this you know,

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Speaker 9: macro uncertainty narrative.

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Speaker 2: Well to that point, does the macro uncertainty still touch

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Speaker 2: these specific areas of tech?

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Speaker 9: Well, I'll sort of answer that alex from two different perspectives,

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Speaker 9: and one is from the actual client perspective, the customer perspective.

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Speaker 9: And so when I think about the boardrooms that I'm

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Speaker 9: sitting in, the conversation we're having is, you know, whether

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Speaker 9: we're manufacturing business or consumer businesses, we are concerned about

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Speaker 9: the macro outlook despite what I think is a euphoric

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Speaker 9: equity market, and as a result, when it comes to

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Speaker 9: hiring decisions, when it comes to capex capital expenditure decisions,

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Speaker 9: we're being more thoughtful and more conservative but the one

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Speaker 9: space that is still getting allocation of dollars is productivity

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Speaker 9: enhancing software and so places like into it that I

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Speaker 9: look at, places like Salesforce that I look at, you know,

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Speaker 9: their share prices. Crm's been down into it, it's been up,

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Speaker 9: It's been awarded for a great, great post tax season.

440
00:20:57,440 --> 00:20:57,639
Speaker 8: You know.

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00:20:57,720 --> 00:20:59,840
Speaker 9: I do see spend continuing to go there. It's about

442
00:21:00,240 --> 00:21:02,400
Speaker 9: sorting through to try and find the places where valuation

443
00:21:02,440 --> 00:21:03,120
Speaker 9: looks reasonable.

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00:21:04,119 --> 00:21:06,520
Speaker 5: And what's the state of play of AI? I mean,

445
00:21:06,560 --> 00:21:09,360
Speaker 5: prior to all this tariff talking of twenty twenty five,

446
00:21:09,440 --> 00:21:13,399
Speaker 5: all the market talked about cared about valued was AI.

447
00:21:13,800 --> 00:21:15,600
Speaker 5: We've kind of stepped away from that a little bit.

448
00:21:15,720 --> 00:21:18,240
Speaker 5: What's your view today about AI and maybe how investors

449
00:21:18,240 --> 00:21:19,280
Speaker 5: should have exposure to it.

450
00:21:20,240 --> 00:21:22,400
Speaker 9: I'm not sure that we have stepped away from AI,

451
00:21:22,560 --> 00:21:24,520
Speaker 9: but I think instead of it being this sort of

452
00:21:24,600 --> 00:21:28,880
Speaker 9: novelty that's grabbed headlines, it's something that instead is woven

453
00:21:28,880 --> 00:21:32,199
Speaker 9: into all the depths of the earnings narrative. So if

454
00:21:32,240 --> 00:21:34,720
Speaker 9: you look back at the earnings called transcripts, the vast

455
00:21:34,720 --> 00:21:37,040
Speaker 9: majority of business was talking about the ways in which

456
00:21:37,040 --> 00:21:40,879
Speaker 9: they were currently or planning to incorporate AI into their

457
00:21:41,000 --> 00:21:45,119
Speaker 9: own product development, into enhancing efficiency, into using it for

458
00:21:45,240 --> 00:21:47,560
Speaker 9: marketing and for sales, and to reaching out consumers. So

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00:21:47,600 --> 00:21:51,119
Speaker 9: I think it's actually now becomes something that's become table stakes.

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00:21:51,119 --> 00:21:54,439
Speaker 9: We've moved past AI as a headline grammar into if

461
00:21:54,480 --> 00:21:56,840
Speaker 9: it's a headline, it may be maybe for the downside,

462
00:21:56,840 --> 00:21:59,639
Speaker 9: because you know, it's a surprise to the market. So

463
00:21:59,880 --> 00:22:01,400
Speaker 9: I I think it's now here, and I think it's

464
00:22:01,440 --> 00:22:05,040
Speaker 9: where a place where we're looking more watchfully to see

465
00:22:05,080 --> 00:22:07,920
Speaker 9: evidence of return on investment, and we're starting to see it.

466
00:22:08,240 --> 00:22:10,320
Speaker 9: We're starting to see some businesses come out and talk

467
00:22:10,359 --> 00:22:12,399
Speaker 9: about specific ways it added to the top line and

468
00:22:12,520 --> 00:22:14,200
Speaker 9: of the bottom line. I think those who aren't coming

469
00:22:14,240 --> 00:22:16,040
Speaker 9: out seeing that are going to suffer in the second

470
00:22:16,040 --> 00:22:20,040
Speaker 9: half of this year. So the question what do you like, Well,

471
00:22:20,080 --> 00:22:23,000
Speaker 9: there's a couple start with the US on that theme.

472
00:22:23,040 --> 00:22:25,359
Speaker 9: I do like into it they had. It was sort

473
00:22:25,359 --> 00:22:27,359
Speaker 9: of a surprising one to me because I'd had in

474
00:22:27,400 --> 00:22:29,320
Speaker 9: the back of my mind this bias when you looked

475
00:22:29,320 --> 00:22:31,320
Speaker 9: at what had happened to H and R block over time.

476
00:22:31,600 --> 00:22:33,560
Speaker 9: But when it came to the core tax product they

477
00:22:33,600 --> 00:22:37,359
Speaker 9: do TurboTax that was set for complete AI disruption. It

478
00:22:37,400 --> 00:22:39,479
Speaker 9: was going to be fully automated in the irs has

479
00:22:39,640 --> 00:22:43,240
Speaker 9: been talked about for two years now, issuing their own software,

480
00:22:43,240 --> 00:22:44,800
Speaker 9: and I thought that's going to be really difficult for

481
00:22:44,840 --> 00:22:47,480
Speaker 9: folks like TurboTax. They knocked it out of the park

482
00:22:47,480 --> 00:22:50,720
Speaker 9: there on the path for forty seven percent growth this year.

483
00:22:50,960 --> 00:22:53,800
Speaker 9: And what they figured out is that yes, the consumer,

484
00:22:53,920 --> 00:22:56,880
Speaker 9: yes the small business wants to have AI to improve

485
00:22:56,960 --> 00:22:59,760
Speaker 9: the efficacy of their tax file and get their refunds faster,

486
00:22:59,800 --> 00:23:01,800
Speaker 9: but they also want human beings they pick up the

487
00:23:01,800 --> 00:23:04,560
Speaker 9: phone and talk to. People are now, I think, sufficiently

488
00:23:04,600 --> 00:23:06,960
Speaker 9: spooked by the pace of change and the complexity of

489
00:23:07,040 --> 00:23:09,520
Speaker 9: change in the tax system that they're wanting a human

490
00:23:09,560 --> 00:23:12,040
Speaker 9: being to talk to and to walk them through what

491
00:23:12,080 --> 00:23:14,040
Speaker 9: it is they should be doing instead of filing themselves

492
00:23:14,160 --> 00:23:16,560
Speaker 9: or relying on just technology. So to me, that marriage

493
00:23:16,560 --> 00:23:19,160
Speaker 9: of human and artificial intelligence is one of the reasons

494
00:23:19,280 --> 00:23:21,280
Speaker 9: I like into it, and there are others.

495
00:23:21,119 --> 00:23:23,320
Speaker 5: Like it, And thanks so much for joining us. Really

496
00:23:23,359 --> 00:23:26,840
Speaker 5: appreciate it and very founder managing partner Threadneedle from New

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00:23:26,920 --> 00:23:27,679
Speaker 5: York City.

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501
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502
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