WEBVTT - Bloomberg Surveillance TV: December 9th, 2025 0:00:02.400 --> 0:00:09.960 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.479 --> 0:00:39.240 We begin this hour with stocks holding steady as investors 0:00:39.240 --> 0:00:42.080 look ahead to that two day FED meeting. John Sofas 0:00:42.120 --> 0:00:45.199 of Oppenheimer raising his year end price target on the 0:00:45.280 --> 0:00:47.839 S and P five hundred for twenty twenty six to 0:00:47.960 --> 0:00:50.320 a street high of eighty one hundred, once again the 0:00:50.320 --> 0:00:53.880 biggest bull on Wall Street. Writing, monetary policy, fiscal policy, 0:00:53.920 --> 0:00:56.880 and the continuing progress of innovation and corporate earnings growth 0:00:57.120 --> 0:01:00.520 are key to growing earnings and revenues in the year ahead. 0:01:00.680 --> 0:01:03.400 John joins us. Now, John, you have been the biggest 0:01:03.400 --> 0:01:05.880 bull and you have been right. Why do you think 0:01:05.959 --> 0:01:08.840 this time people are getting it wrong about how accommodative 0:01:09.120 --> 0:01:11.800 both monetary and fiscal policy makers are going to be well. 0:01:12.840 --> 0:01:14.959 I think, Lisa, the big thing is, you know, we're 0:01:14.959 --> 0:01:18.360 in a process of normalization of interest rates coming out 0:01:18.360 --> 0:01:22.839 of a hike cycle, and a remarkable hike cycle, because 0:01:22.880 --> 0:01:26.160 the Fed bock raised drakes eleven times on pause fourteen 0:01:26.600 --> 0:01:29.840 with only five cuts in this whole process, but no recession, 0:01:30.240 --> 0:01:33.720 brought inflation growth down from nine point seven to based 0:01:33.760 --> 0:01:36.360 on the PCE last week sometime between two point eight 0:01:36.400 --> 0:01:38.679 and three, So you know, it looks pretty good. It 0:01:38.720 --> 0:01:41.920 shows sensitivity for the dual mandate, a balance. There's a 0:01:41.920 --> 0:01:45.440 bit of a walking the tightrope for Jerown Powell, but 0:01:45.560 --> 0:01:48.000 I think he loves it. He's a real pro and 0:01:48.080 --> 0:01:50.040 I think, you know, he's got to walk the tightrope 0:01:50.080 --> 0:01:51.520 here to give you a little bit of balance. So 0:01:51.560 --> 0:01:55.440 we get enough stimulus for the economy essentially for sustainable 0:01:55.480 --> 0:02:00.000 growth without upsetting the job cart terribly, and we moved 0:02:00.120 --> 0:02:03.040 forward and around the world. You know that we've seen 0:02:03.440 --> 0:02:05.800 interest rate cuts and now the thought that maybe it's 0:02:05.840 --> 0:02:08.120 gone too far. I think this is a lot like 0:02:08.160 --> 0:02:12.320 the different that it's got the override of the Bernanki legacy, 0:02:12.600 --> 0:02:17.440 high transparency, communications in its policy, the way the FED operates, 0:02:17.800 --> 0:02:21.680 But it's we're looking for that normalization and inflation tends 0:02:21.720 --> 0:02:24.800 to be stickier for longer after you've had a period 0:02:24.800 --> 0:02:27.799 of ontoward levels of inflation. Takes a while to work 0:02:27.840 --> 0:02:30.720 out in the system, and it's a drama that traders 0:02:30.800 --> 0:02:33.680 and investors need to work out and play to their benefit. 0:02:33.840 --> 0:02:36.040 Right now, the drama is playing out. You are seeing 0:02:36.040 --> 0:02:38.560 people ratchet back their expectations for rate cuts next week, 0:02:38.680 --> 0:02:41.240 now next year, to now two rate cuts from three 0:02:41.480 --> 0:02:43.720 just a couple of weeks ago. I am wondering, though, 0:02:44.000 --> 0:02:46.720 how much that matters versus the AI trade. I mean, 0:02:46.760 --> 0:02:49.960 there was a recent GOLBSAC survey of investors and they 0:02:50.000 --> 0:02:51.920 agree with you on the basis that you will get 0:02:51.960 --> 0:02:54.200 FED rate cuts, but they disagree that you're going to 0:02:54.200 --> 0:02:57.239 get that kind of screaming return because the AI trade 0:02:57.320 --> 0:02:59.840 is hitting some roadblocks, isn't in hypergrowth mode. How much 0:02:59.840 --> 0:03:00.600 do you buy into that? 0:03:01.040 --> 0:03:03.960 You know, some of that sounds to me like the 0:03:04.000 --> 0:03:08.480 trading establishment in a way, because it's the action where 0:03:08.480 --> 0:03:10.640 it can you add BIPs to the bucket, you know, 0:03:11.080 --> 0:03:14.359 in trading, working with the spread and the daily basis 0:03:15.120 --> 0:03:17.560 I'd have to say this is not just not uncommon. 0:03:17.720 --> 0:03:20.720 I mean there's always questions. You've got you have to 0:03:20.800 --> 0:03:23.400 invest a lot of money to do what this proposes 0:03:23.520 --> 0:03:27.280 to do, whether it's the data centers, whether it's all 0:03:27.400 --> 0:03:31.640 the ancillary software and the design changes to be made. 0:03:31.960 --> 0:03:34.320 But the companies that are doing it are very well 0:03:34.360 --> 0:03:36.920 positioned in terms of their balance sheet. And when they 0:03:36.960 --> 0:03:39.520 borrow money, it's probably because they rather keep the cash 0:03:39.520 --> 0:03:42.240 on the balance sheet and just use other people's money. 0:03:42.280 --> 0:03:44.680 Oh pm, other people's money the old thing for the 0:03:44.720 --> 0:03:47.320 old days, right, And so I look at it, it 0:03:47.360 --> 0:03:49.800 looks to me AI is for real, you know. I 0:03:49.800 --> 0:03:53.840 think whenever I talk to people who are institutional users, 0:03:53.880 --> 0:03:56.520 and I don't mean just in finance, but if it's healthcare, 0:03:56.680 --> 0:04:01.400 consumer discretionary insurance, what have you, people are using AI 0:04:01.720 --> 0:04:04.440 and it's and the consumers are using it either for 0:04:04.560 --> 0:04:07.280 fun or just to shock each other what they can 0:04:07.360 --> 0:04:09.800 do with GPT, whatever the heck it's called. You know 0:04:09.840 --> 0:04:12.440 what I mean, they put your face on somebody else, 0:04:12.480 --> 0:04:14.280 you know, and you're running down the street place you 0:04:14.320 --> 0:04:16.880 look like thirty year old, you know, there you go, 0:04:17.160 --> 0:04:20.200 and it's the whole thing is it's just not uncommon. 0:04:20.279 --> 0:04:22.440 It just looks to me like and haven't I been 0:04:22.440 --> 0:04:25.120 here before? But the wonderful thing about this, in a 0:04:25.200 --> 0:04:29.679 digitalized environment, the market tends to discount both good news 0:04:29.720 --> 0:04:32.840 and bad news fairly quickly. And that's what gives us 0:04:32.880 --> 0:04:35.159 this effect of one day the trader's on the market. 0:04:35.200 --> 0:04:38.000 The next day it's intermediate long term investors as they 0:04:38.040 --> 0:04:40.640 buy up the babies that got throughout the bathwater. The 0:04:40.640 --> 0:04:43.240 next day, then they visit mids and smalls and they 0:04:43.240 --> 0:04:47.280 go It's a rotating market, but it's it discounts good 0:04:47.320 --> 0:04:50.799 news and bad news more quickly. Because the digital news 0:04:50.839 --> 0:04:55.280 travels faster, it's quicker to analyze, determine, and the play 0:04:55.360 --> 0:04:56.880 is the play is on. 0:04:57.080 --> 0:04:59.039 John we got in terms of the play is on. 0:04:59.279 --> 0:05:01.560 Nvidia is getting the green light to sell the H 0:05:01.640 --> 0:05:04.760 two hundreds in China. When you look at that decision 0:05:04.760 --> 0:05:07.240 by the administration, does it say to you that in 0:05:07.279 --> 0:05:10.160 twenty twenty six, trade tensions are going to be a 0:05:10.200 --> 0:05:11.920 little bit more quiet than they were this year? 0:05:12.520 --> 0:05:14.839 You know, that's a tough one to say, because when 0:05:14.839 --> 0:05:17.000 it comes to trade tension, it seems to be just 0:05:17.160 --> 0:05:19.640 part of the way things work. With the current administration, 0:05:20.200 --> 0:05:23.720 but likely would also continue on with any other administration 0:05:23.880 --> 0:05:27.839 because that's the way President g operates. Also, there's a 0:05:27.920 --> 0:05:31.279 balance between fig leaf and the. 0:05:33.839 --> 0:05:34.159 Acts. 0:05:34.320 --> 0:05:38.159 You know, it's a constant. This is a game of chess, 0:05:38.600 --> 0:05:41.920 and it's not a friendly one. But ultimately both sides 0:05:42.000 --> 0:05:46.360 want trade because trade is peace is more profitable than 0:05:46.440 --> 0:05:49.279 building war machines and battling each other. Look what's happened 0:05:49.279 --> 0:05:51.760 to Russia financially really when you look at what the 0:05:51.880 --> 0:05:54.640 cost of doing what they've done to Ukraine has been. 0:05:55.400 --> 0:05:57.880 And on the other hand, if you play with your 0:05:58.320 --> 0:06:02.919 financial partners nicely, you know, and you compete, you really 0:06:02.960 --> 0:06:05.840 you produce better results for your own people, and you 0:06:05.880 --> 0:06:09.960 also improve the for China would be the Silk Road 0:06:09.960 --> 0:06:13.520 and the success of that, the competition that's occurring then, 0:06:13.240 --> 0:06:16.560 and what it's felt by other emerging markets. It's just, 0:06:16.800 --> 0:06:19.320 you know, it's just this is the way things work. 0:06:19.480 --> 0:06:22.120 But the tension, it's like they often say, the market 0:06:22.160 --> 0:06:25.840 doesn't like uncertainty, it loves it. The traders love uncertainty. 0:06:26.160 --> 0:06:29.359 Both sides can benefit intermeding to long term investors. Again, 0:06:29.680 --> 0:06:32.440 babies that get thrown out with the bathwater. The traders 0:06:32.480 --> 0:06:35.640 looking for the BIPs a new vanity plate with the 0:06:35.680 --> 0:06:36.360 trophy car. 0:06:36.520 --> 0:06:39.839 Yeah, maybe bonfire of the vanity play. I am curious 0:06:39.920 --> 0:06:42.359 going forward about how much you see this rotation as durable, 0:06:42.600 --> 0:06:44.880 given the fact that you still see the AI stall 0:06:44.920 --> 0:06:47.680 warts as really having a lot of the strength. Are 0:06:47.720 --> 0:06:49.320 they going to keep leading or do you think that 0:06:49.320 --> 0:06:51.000 there is this durable shift that is. 0:06:52.440 --> 0:06:55.159 That's a great question, and I think what we have 0:06:55.279 --> 0:06:58.960 seen since twenty three, and many people deny it, has 0:06:59.000 --> 0:07:02.800 been a broadening of the rally with other sectors sharing 0:07:03.400 --> 0:07:09.279 the stage with information technology and communication services, which is 0:07:09.279 --> 0:07:12.400 where the streamers and the social media and the search 0:07:12.440 --> 0:07:15.400 engines are as well as the old phone codes. But 0:07:15.680 --> 0:07:18.600 when you look at it, you're in a situation where 0:07:18.800 --> 0:07:24.040 other sectors like financials, industrials, healthcare utilities are beginning to 0:07:24.040 --> 0:07:29.800 find interest by investors more greater diversification in portfolios to 0:07:29.920 --> 0:07:34.480 benefit from the other nine sectors that can benefit from technology. 0:07:35.200 --> 0:07:38.320 Any company that wants to keep a competitive edge needs AI. 0:07:38.800 --> 0:07:41.679 Any company that wants to gain a competitive edge needs AI. 0:07:42.040 --> 0:07:44.440 Any company that just wants to maintain a good premise 0:07:44.560 --> 0:07:48.600 is a value company to attract and maintain investor loyalty 0:07:48.880 --> 0:07:52.200 needs AI. It looks like into the future. It's you know, 0:07:52.480 --> 0:07:54.840 here we go, what is it? Back to the future. Yeah, 0:07:54.880 --> 0:07:55.360 here we go. 0:07:55.800 --> 0:07:59.400 Stay with us. Multil intex Savanas coming up off to this. 0:08:08.600 --> 0:08:09.040 Ahead of the. 0:08:09.040 --> 0:08:11.640 Latest FED decision, the team at Morgan Stanley expecting a 0:08:11.680 --> 0:08:14.880 cut tomorrow followed by two more next year. Michelle Weaver 0:08:15.000 --> 0:08:17.440 of Morgan Stanley writing, this is a bullet set up 0:08:17.480 --> 0:08:20.840 for stocks that are looking ahead towards accelerating earnings revisions 0:08:21.080 --> 0:08:25.239 and FED cuts based on lagging moderate labor weeks market weakness. 0:08:25.400 --> 0:08:27.400 Michelle joins us. Now, Michelle, thank you so much for 0:08:27.400 --> 0:08:27.960 being with us. 0:08:28.000 --> 0:08:28.320 Thank you. 0:08:28.480 --> 0:08:30.280 It seems to all be predicated in the idea that 0:08:30.280 --> 0:08:32.959 two rate cuts comes with strong growth. Yes, what gives 0:08:33.000 --> 0:08:34.920 you confidence that we are going to get strong growth 0:08:35.040 --> 0:08:37.320 despite some of the weakening that we've seen in recent 0:08:37.400 --> 0:08:38.360 labor market metrics. 0:08:38.480 --> 0:08:41.079 Yeah, so we think that we've seen in the alternative 0:08:41.160 --> 0:08:43.000 data more softness in the fall. So I think when 0:08:43.040 --> 0:08:44.840 we get the official numbers next week, we are going 0:08:44.880 --> 0:08:46.760 to see more softness, but that we're not going to 0:08:46.800 --> 0:08:51.080 get one of those nonlinear, really concerning type rises in 0:08:51.160 --> 0:08:54.840 unemployment data. We think the setup is really constructive into 0:08:54.880 --> 0:08:57.800 next year for a broadening and earnings. If I think 0:08:57.840 --> 0:08:59.760 about the past couple of years, it's all been about 0:08:59.760 --> 0:09:02.120 the world cap stocks. It's all been about those who 0:09:02.160 --> 0:09:04.760 are exposed to the AI trade. We've seen a lot 0:09:04.760 --> 0:09:07.400 more weakness under the surface for the Russell three thousand. 0:09:07.480 --> 0:09:09.840 Over the past couple of years, earnings growth has been 0:09:09.880 --> 0:09:12.400 flat to negative for most of those stocks. We finally 0:09:12.440 --> 0:09:15.400 saw that turnaround last quarter with those names growing eight percent. 0:09:15.720 --> 0:09:17.960 So we are starting to see a more constructive setup 0:09:18.000 --> 0:09:21.000 for that broadening. And I think that combined with a 0:09:21.000 --> 0:09:24.400 FED that is easing but without a really concerning spike 0:09:24.400 --> 0:09:26.679 and unemployment, is a great setup for stocks into next year. 0:09:26.800 --> 0:09:28.400 Is it as simple as saying that some of these 0:09:28.440 --> 0:09:31.400 smaller companies are deploying some of these AI tools to 0:09:31.440 --> 0:09:34.880 be more efficient and preserve some of their margins, and 0:09:34.920 --> 0:09:36.959 that's the reason why you might see now performance. 0:09:37.280 --> 0:09:37.600 I think. 0:09:37.640 --> 0:09:40.040 I think AI is certainly part of that story. When 0:09:40.040 --> 0:09:42.120 we think about AI deployment, next year, I think is 0:09:42.120 --> 0:09:43.760 really going to be the year of the AI adopter. 0:09:44.600 --> 0:09:47.240 It's taken companies a couple of years to work with 0:09:47.280 --> 0:09:49.800 the technology to set up the guardrails to retrain their 0:09:49.840 --> 0:09:53.560 employees to really get AI deployed. Our tech team has 0:09:53.559 --> 0:09:55.640 a great CIO survey. They think that by the end 0:09:55.679 --> 0:09:58.040 of this year, sixty percent of companies will have at 0:09:58.120 --> 0:10:01.240 least one AI product live the field, and then that 0:10:01.280 --> 0:10:03.280 will rise to eighty percent by the end of next year. 0:10:03.320 --> 0:10:05.200 So we are finally starting to see this wave of 0:10:05.240 --> 0:10:06.640 adoption flow through the market. 0:10:06.920 --> 0:10:09.479 Can you see that wave of adoption without layoffs? 0:10:10.120 --> 0:10:12.559 I think you can. I think it's I think around 0:10:12.600 --> 0:10:15.640 the margin, you may see some companies do a little 0:10:15.640 --> 0:10:17.840 bit of layoffs, but it's largely going to be an 0:10:17.880 --> 0:10:20.000 incremental story. I think a lot of the messaging I've 0:10:20.000 --> 0:10:22.640 heard from CEOs on Ernie's calls is we're going to 0:10:22.720 --> 0:10:24.360 keep headcount flat, but we're going to be able to 0:10:24.360 --> 0:10:25.920 see more growth. We're going to be able to do 0:10:26.000 --> 0:10:28.080 more with the same number of employees thanks to AI. 0:10:28.320 --> 0:10:31.280 Do you think that AI can also continue if the 0:10:31.520 --> 0:10:35.200 energy demand isn't quite there so I'm able to meet 0:10:35.200 --> 0:10:35.720 that demand? 0:10:35.880 --> 0:10:39.360 Yeah, it's absolutely a tricky setup around around the power world. 0:10:39.480 --> 0:10:41.959 Our team has a great model where we take our 0:10:42.040 --> 0:10:45.959 semiconductor analyst chip sales forecasts, say what's the power needed 0:10:46.000 --> 0:10:47.599 for that and how much power are we going to 0:10:47.679 --> 0:10:50.880 need in the US through twenty twenty eight. We're forecasting 0:10:50.960 --> 0:10:53.679 a forty seven gigawatch shortfall in power just through the 0:10:53.720 --> 0:10:57.360 traditional grid interconnect power for scale, that's around ten x 0:10:57.360 --> 0:10:58.880 the power consumed by New York City. So that's a 0:10:58.960 --> 0:11:02.320 huge shortfall. But there are a lot of innovative type 0:11:02.360 --> 0:11:04.280 of solutions that that can apply to this. 0:11:04.400 --> 0:11:08.920 So ten new York City's short yes, but through things 0:11:09.000 --> 0:11:11.960 like natural natural gas turbines, those are behind the meter, 0:11:12.360 --> 0:11:14.520 those are apart from the grid interconnect process. 0:11:15.160 --> 0:11:18.040 And then bitcoin site conversions I think are really interesting. 0:11:18.720 --> 0:11:21.320 So some of these companies have essentially realized that the 0:11:21.320 --> 0:11:23.560 power that they're sitting on is more valuable than some 0:11:23.600 --> 0:11:27.200 of the underlying business. We think there's around twenty gigawatts there, 0:11:27.240 --> 0:11:28.840 so there's a lot of power to be had there. 0:11:28.880 --> 0:11:31.000 And then nuclear is the last one that's a little 0:11:31.000 --> 0:11:33.720 bit more politically challenging, but we may see some nuclear 0:11:33.760 --> 0:11:34.800 for that problem. 0:11:34.840 --> 0:11:37.800 Bitcoin conversion sites, so you're saying that people who previously 0:11:37.880 --> 0:11:40.600 mind bitcoin aren't necessarily seeing the gains there and so 0:11:40.679 --> 0:11:44.600 they're transforming that into a fuel essentially for artificial intelligence. 0:11:44.800 --> 0:11:48.000 Is this the sort of not the death of the 0:11:48.000 --> 0:11:51.000 bitcoin trade, but really the shifting in terms of where 0:11:51.000 --> 0:11:54.360 the enthusiasms go that has broader market implications. 0:11:54.880 --> 0:11:56.600 Yeah, so I wouldn't say it's the death of a 0:11:56.600 --> 0:11:59.120 bitcoin trade by any means, But there were some bitcoin 0:11:59.200 --> 0:12:02.000 miners who masked a ton of energy to be able 0:12:02.040 --> 0:12:06.280 to do bitcoin mining, and they essentially saw, we're sitting 0:12:06.280 --> 0:12:08.840 on gold rush here. We have so much power. These 0:12:08.920 --> 0:12:12.040 hyperscalers need power. They're willing to pay a huge premium 0:12:12.080 --> 0:12:14.319 for it. Let's just fell off the power. That's a 0:12:14.360 --> 0:12:15.320 fascinating trend. 0:12:15.480 --> 0:12:17.320 Meanwhile, we've been talking a lot about deals and how 0:12:17.400 --> 0:12:19.679 much deals have been taking place both in the AI 0:12:19.720 --> 0:12:22.000 and the tech space, but as well as the media 0:12:22.000 --> 0:12:24.800 space and beyond. I'm just wondering how that plays into 0:12:24.880 --> 0:12:27.240 some of your forecasts. Is that a positive thing or 0:12:27.280 --> 0:12:29.720 is that sort of a catalyst for winners and losers 0:12:29.760 --> 0:12:32.760 that really will differentiate the winners and losers within the 0:12:32.760 --> 0:12:34.200 investing space in twenty twenty six. 0:12:34.440 --> 0:12:36.720 Yeah, it's a very very positive thing for us. We 0:12:36.760 --> 0:12:38.959 think that you're going to continue to see pretty strong 0:12:39.080 --> 0:12:41.440 M and A and capital markets activity into next year. 0:12:41.880 --> 0:12:44.320 I think a lot of the hesitation we saw this 0:12:44.400 --> 0:12:47.280 year was really around the public policy front. What's going 0:12:47.320 --> 0:12:49.439 to happen on tariffs, what's going to happen on the 0:12:49.480 --> 0:12:52.160 regulatory front. How quickly are we going to see deregulation? 0:12:52.280 --> 0:12:55.040 Where's tax going. I think now that we're going into 0:12:55.080 --> 0:12:57.280 next year with a little bit more clarity on that 0:12:57.320 --> 0:12:59.640 policy picture, I think you're going to continue to see 0:13:00.000 --> 0:13:02.520 some of that corporate risk taking a little more aggressiveness 0:13:02.559 --> 0:13:03.719 on them and I front. 0:13:03.559 --> 0:13:06.199 At a certain point, is the year of the adapter 0:13:06.679 --> 0:13:09.240 rather than the adopter, rather than the year of the 0:13:09.280 --> 0:13:12.880 AI tech innovator? Does that disadvantage the United States over 0:13:12.920 --> 0:13:15.000 the rest of the world As we see jpmmorgan come 0:13:15.000 --> 0:13:17.600 out this morning and say they see the emerging equity 0:13:17.679 --> 0:13:21.160 market outperforming the develop market one for yet another year 0:13:21.280 --> 0:13:22.640 after years of underperformance. 0:13:23.360 --> 0:13:25.559 Yeah, So I think that we're going to continue to 0:13:25.600 --> 0:13:29.120 see that adoption really ramp up, and that broader diffusion 0:13:29.240 --> 0:13:31.199 is what's going to really help the US market. It's 0:13:31.240 --> 0:13:34.880 been so concentrated the return story on the enabler side 0:13:34.880 --> 0:13:37.720 that as we see that adopter story broaden out, that 0:13:37.800 --> 0:13:39.760 will be more constructive on the enabler side. Though we 0:13:39.800 --> 0:13:41.880 did have the announcement, so that company will see some 0:13:41.920 --> 0:13:43.559 games there. So there's a little bit more gains to 0:13:43.600 --> 0:13:45.400 be had in the enabler side, but I do think 0:13:45.400 --> 0:13:46.720 it's overall constructive setup. 0:13:46.760 --> 0:13:48.760 When it comes to the real economy, is the consumer 0:13:48.800 --> 0:13:49.320 holding up? 0:13:50.679 --> 0:13:53.439 It's been really tricky for the consumer. We held our 0:13:53.559 --> 0:13:56.120 consumer conference last week in New York and we had 0:13:56.200 --> 0:13:58.400 over one hundred companies in attendance. We got a pretty 0:13:58.400 --> 0:14:01.120 good read on the consumer from that. I think one 0:14:01.600 --> 0:14:04.200 key takeaway there was the k economy is still very 0:14:04.280 --> 0:14:07.280 much in place. We're really still seeing that bifurcation between 0:14:07.559 --> 0:14:11.199 higher income consumers and lower income consumers. I think you're 0:14:11.200 --> 0:14:13.360 going to start to see that continue into next year. 0:14:13.400 --> 0:14:15.160 But that's really what companies were talking about. 0:14:15.240 --> 0:14:17.600 Is that what makes the FED a little bit more 0:14:17.640 --> 0:14:18.680 complicated next year? 0:14:19.360 --> 0:14:21.680 Yeah, I think there's some complication there. I also want 0:14:21.680 --> 0:14:23.800 to bring this back to the energy story that we 0:14:23.800 --> 0:14:27.720 were talking about earlier. Affordability concerns are huge, and there's 0:14:27.760 --> 0:14:32.160 been a lot of discussion around is this demand for 0:14:32.400 --> 0:14:34.760 AI power starting to weigh on the consumer? So just 0:14:34.760 --> 0:14:38.080 bringing those two conversations together, and we've found that in 0:14:38.160 --> 0:14:42.360 certain regions that activity has really pressured consumer electricity bills 0:14:42.680 --> 0:14:44.840 in the mid Atlantic, those bills have risen by about 0:14:44.840 --> 0:14:47.880 eighteen percent, where data center activity is really concentrated. 0:14:48.080 --> 0:14:50.760 Stay with US multiple IMPEX dividance coming up. 0:14:51.080 --> 0:15:02.760 Off to this, turning to the trade war between the 0:15:02.840 --> 0:15:05.800 US and China, China's top leaders signaling they are on 0:15:05.880 --> 0:15:08.120 alert for a potential flare up as they draw up 0:15:08.120 --> 0:15:11.640 economic plans for next year. Joining us now to discusseswar. 0:15:11.680 --> 0:15:16.080 Prasad Senior Fellow at the Brookings Institute Esmar, thank you 0:15:16.160 --> 0:15:18.240 so much for being with us. I want to start 0:15:18.400 --> 0:15:21.040 with the trade war and the context of this recent 0:15:21.080 --> 0:15:23.960 move by the United States for Nvidia to be allowed 0:15:24.000 --> 0:15:26.920 to sell its h two hundred chips into China. Do 0:15:26.960 --> 0:15:30.560 we have a sense of where buying those chips fits 0:15:30.680 --> 0:15:33.760 into China's plans as they try to turn more inward 0:15:34.040 --> 0:15:35.920 and rely on domestic champions. 0:15:37.280 --> 0:15:40.520 So we are looking at competition in one area which 0:15:40.600 --> 0:15:42.800 is going to be the most intense between the US 0:15:42.800 --> 0:15:46.360 and China, which is technology. The Chinese government has been 0:15:46.480 --> 0:15:50.120 very keen on upgrading its manufacturing sector, moving up to 0:15:50.200 --> 0:15:54.360 value added chain and trying to dominate the high technology sectors. 0:15:54.400 --> 0:15:57.960 You know, solar panels, electric vehicles and now AI. For 0:15:58.000 --> 0:16:00.960 the US, it's a very dicey st right now. On 0:16:01.000 --> 0:16:03.120 the one hand, you don't want to lose access to 0:16:03.160 --> 0:16:06.360 the Chinese market or deny China some of these chips, 0:16:06.400 --> 0:16:09.000 because that means that it gives China much more of 0:16:09.040 --> 0:16:12.720 an incentive to move forward with its domestic innovation strategy. 0:16:13.200 --> 0:16:15.560 But at the same time, providing these tips to China, 0:16:15.560 --> 0:16:17.760 it does make it a lot easier for them to 0:16:17.880 --> 0:16:20.800 move forward in terms of that innovation. And of course, 0:16:21.240 --> 0:16:24.200 the Trump team seems to be betting that this is 0:16:24.200 --> 0:16:27.640 going to help in video gain significant market share there. 0:16:27.640 --> 0:16:30.400 Whether that's going to be a durable increase in market share, 0:16:30.680 --> 0:16:35.000 whether in Vidia can hold on when China competes with 0:16:35.040 --> 0:16:37.400 all the state resources behind it, I think it's the 0:16:37.480 --> 0:16:40.360 key question. But in the short term, in Video's revenues 0:16:40.400 --> 0:16:44.200 are certainly going to take a big positive bounds, and 0:16:44.440 --> 0:16:46.200 there are going to be some revenues coming in for 0:16:46.200 --> 0:16:48.560 the US government, But I'm not quite sure that this 0:16:48.680 --> 0:16:51.480 is going to serve the long term US national security 0:16:51.640 --> 0:16:53.080 or economic interest very well. 0:16:53.520 --> 0:16:53.840 As far. 0:16:53.880 --> 0:16:57.400 I'm wondering the Belton road, the digital Belton road that 0:16:57.440 --> 0:17:00.480 we've heard Jenson Wan talk about that China would create 0:17:00.520 --> 0:17:04.000 a system of dependence on some of its technologies and 0:17:04.080 --> 0:17:08.720 goods in Southeast Asia. How far has China gotten in 0:17:09.000 --> 0:17:14.600 creating that type of ecosystem where domestic economies nearby really 0:17:14.640 --> 0:17:18.080 rely on China, both technologically as well as beyond that. 0:17:19.480 --> 0:17:22.359 So in terms of trade and finance, China I certainly 0:17:22.400 --> 0:17:24.560 made a lot of progress through the Belton Road and 0:17:24.600 --> 0:17:28.400 other initiatives, and technology is what they're coming from. At 0:17:28.440 --> 0:17:31.399 the moment. I think there is still a sense that 0:17:31.520 --> 0:17:36.359 China is able to not innovate fundamentally, but take existing innovations, 0:17:36.359 --> 0:17:39.320 many of which come out of the US, and commercialize 0:17:39.359 --> 0:17:42.159 them and scale them up in a way that is, 0:17:42.640 --> 0:17:46.080 you know, clearly world beating. And that is the advantage 0:17:46.119 --> 0:17:49.560 that is certainly very relevant in terms of increasing the 0:17:49.600 --> 0:17:53.520 scope of its technological you know, influence within Asia. That 0:17:53.600 --> 0:17:56.080 is happening. It is happening a little slowly, and the 0:17:56.119 --> 0:17:58.560 fact that the US is somewhat receding from the region 0:17:58.920 --> 0:18:02.040 and many countries in the feel that they cannot disengage 0:18:02.080 --> 0:18:05.760 from China because they don't have an alternative, trustworthy partner, 0:18:05.880 --> 0:18:08.920 is certainly helping China in this process as well. 0:18:09.000 --> 0:18:12.400 When it comes to China's relationship with Europe, especially now 0:18:12.440 --> 0:18:13.880 given Ammanu macrom is just there. 0:18:13.880 --> 0:18:15.400 He's talking about how it's unstable. 0:18:16.000 --> 0:18:18.480 Do you see China going to have to not just 0:18:18.600 --> 0:18:22.040 dump more in Europe but try have to invest more 0:18:22.080 --> 0:18:23.919 in Europe because the walls have gone up and it's been 0:18:23.920 --> 0:18:25.439 so complicated with the United States. 0:18:27.200 --> 0:18:29.760 The walls are going up for Chinese exports and they're 0:18:29.800 --> 0:18:31.920 going to go up more because the reality is that 0:18:32.040 --> 0:18:36.439 China is now a very very unbalanced growth model, with 0:18:36.600 --> 0:18:38.600 most of the growth coming from the supply side of 0:18:38.640 --> 0:18:40.960 the economy, which in normal times is not a bad thing, 0:18:41.320 --> 0:18:44.080 but domestic demand is not keeping up, and with every 0:18:44.119 --> 0:18:47.080 passing day, every passing quarter, there is more capacity in 0:18:47.160 --> 0:18:49.720 China that needs to be exported. The US has put 0:18:49.800 --> 0:18:53.800 up walls at least to direct Chinese exports to the US, 0:18:53.840 --> 0:18:57.919 So Europe and other countries that need exports themselves to 0:18:58.000 --> 0:19:00.960 boast their economies are going to face The brand in 0:19:01.080 --> 0:19:05.080 China is very cognizant of this issue, its reliance on 0:19:05.119 --> 0:19:07.880 exports to power its own growth, but also the fact 0:19:07.920 --> 0:19:10.119 that wolves are going up to its exports around the world, 0:19:10.200 --> 0:19:13.520 so it is trying to befriend these countries by essentially 0:19:13.560 --> 0:19:17.400 investing in those countries, and this again poses an existential 0:19:17.520 --> 0:19:19.960 risk in my view for some of the companies in 0:19:20.000 --> 0:19:23.280 these countries, especially in the high technology sectors, because they 0:19:23.320 --> 0:19:27.240 could get swallowed up by these Chinese investments and essentially 0:19:27.400 --> 0:19:31.399 become find it very difficult to compete against Chinese firms 0:19:31.440 --> 0:19:34.200 operating on their own soil. But that's the direction that 0:19:34.280 --> 0:19:37.000 Chinese are taking, and at the moment, very few countries 0:19:37.040 --> 0:19:38.159 are able to resist. 0:19:38.400 --> 0:19:40.200 A lot of times the United States will say that 0:19:40.240 --> 0:19:44.000 they are pushing other countries to do this, to not 0:19:44.080 --> 0:19:47.400 exactly combat, but have this competition with China. What kind 0:19:47.400 --> 0:19:50.000 of message is the US sending at the same time 0:19:50.000 --> 0:19:52.399