WEBVTT - Bloomberg Surveillance TV: August 29, 2024 0:00:00.120 --> 0:00:06.800 Boo, Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.920 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.479 Terminal and the Bloomberg Business app. Here's the latest CEO, 0:00:37.840 --> 0:00:41.839 Jensen Fag telling Bloomberg supplies will be plentiful, even as 0:00:41.840 --> 0:00:44.479 in Video's new black wild processor lineup is proving more 0:00:44.560 --> 0:00:48.400 challenging to manufacture. Danaus of Webbursch still bullish, we believe 0:00:48.400 --> 0:00:51.680 in videos surging AI chip demand, black whol delay concerns 0:00:51.720 --> 0:00:56.160 are laid. Robust outlook and a meteoric enterprise pipeline speaks 0:00:56.200 --> 0:00:58.959 to this AI revolution just starting to kick off its 0:00:59.040 --> 0:01:02.279 next phase of growth. Dan drops by the studio for more. 0:01:02.320 --> 0:01:03.120 Thank him, mon, it's here. 0:01:03.200 --> 0:01:03.840 Great to be here. 0:01:03.920 --> 0:01:06.800 Let's start with the production problems. What did he say 0:01:06.840 --> 0:01:09.120 of a night that ALLEXI your concerns. 0:01:09.440 --> 0:01:12.000 There were worries that these Douys were actually going to 0:01:12.080 --> 0:01:15.200 linger into your end, and essentially they put that to rest. 0:01:15.360 --> 0:01:18.560 And I think that's something you talk about billions from Blackwell, 0:01:18.600 --> 0:01:21.240 but ultimately we're talking about what could be tens of billions. 0:01:21.680 --> 0:01:24.440 So if anyone thing was going to spoil this party, 0:01:24.640 --> 0:01:27.160 it was the Blackwell douy is. And I believe even 0:01:27.200 --> 0:01:29.959 though the initial reaction bears came out of hibernation mood 0:01:30.040 --> 0:01:31.959 for a whittle last night, it was good to see him. 0:01:32.319 --> 0:01:35.600 I believe this is a star that should be green today. 0:01:36.000 --> 0:01:39.679 And for broader tech, you heard everything you needed to 0:01:39.760 --> 0:01:42.600 and from a demand perspective from godfather. 0:01:42.080 --> 0:01:45.919 Of Ai Jensen, manufacturing this stuff is incredibly complex. Apart 0:01:45.920 --> 0:01:49.040 from saying it will increase. Was there any real detail 0:01:49.120 --> 0:01:52.440 about manufacturing yield improving somewhat through the quarter. Did you 0:01:52.480 --> 0:01:55.400 get any real detail about what was actually happening at 0:01:55.440 --> 0:01:56.240 these factories? 0:01:56.320 --> 0:01:59.840 He talked about yields improved, and if you look from 0:01:59.840 --> 0:02:03.080 a yield perspective, the biggest thing that could hurt this 0:02:03.200 --> 0:02:08.399 story was significant Blackhall delays, and that's something that that 0:02:08.800 --> 0:02:11.359 checked the box. You look at the demanders in terms 0:02:11.360 --> 0:02:13.880 of the October quarter, Okay, could whisper has been thirty 0:02:13.960 --> 0:02:18.839 three billion or thirty two point five on the margin. Realistically, 0:02:19.240 --> 0:02:21.680 as they executed, this is probably going to be a 0:02:21.720 --> 0:02:25.120 thirty three thirty four billion type of quarter. So then 0:02:25.240 --> 0:02:28.080 you look out further and you're like, okay, you start 0:02:28.080 --> 0:02:31.200 to get these two billion and two billion continued beats. 0:02:31.919 --> 0:02:34.400 You start to look at earnings power that significantly goes 0:02:34.480 --> 0:02:38.040 higher into next year, and relative to Cappax and everything 0:02:38.040 --> 0:02:41.800 we're seeing in tech, this was the most watched earnings. 0:02:42.240 --> 0:02:43.480 I mean, we had watch parties. 0:02:43.480 --> 0:02:44.640 I'm going sure if you were at one of the 0:02:44.680 --> 0:02:48.720 watch parties and it's something where I think they came 0:02:49.200 --> 0:02:51.760 delivered and I think for tech it's going to put 0:02:51.840 --> 0:02:52.720 fuel in that rally. 0:02:52.960 --> 0:02:54.920 Sure's a comment from one of those parties. 0:02:55.120 --> 0:02:55.680 It's fun. 0:02:55.760 --> 0:02:57.040 It's like a cultural thing. 0:02:57.280 --> 0:02:58.720 You don't have to be here to root for a 0:02:58.760 --> 0:03:01.160 winning team. I'm just letting you know very much of 0:03:01.200 --> 0:03:01.919 the popular site. 0:03:01.919 --> 0:03:02.160 Guys. 0:03:02.280 --> 0:03:03.560 I'm very curious. 0:03:03.200 --> 0:03:05.760 Though about what you think with the Blackwell revenues that 0:03:05.760 --> 0:03:06.760 they are projecting out. 0:03:06.919 --> 0:03:08.200 They were very non specific. 0:03:08.400 --> 0:03:10.959 They said, yeah, billions of dollars, and people are looking 0:03:10.960 --> 0:03:13.120 at that and saying, if you really want to convince 0:03:13.200 --> 0:03:16.160 us that this Blackwell delivery delay isn't going to be 0:03:16.200 --> 0:03:19.280 a serious problem, why not provide specifics, especially at a 0:03:19.280 --> 0:03:21.639 time where margins are coming in, especially at a time 0:03:21.639 --> 0:03:24.400 where they're not able to diversify their buyer base. 0:03:24.639 --> 0:03:26.800 Yeah, and we think that's ultimate from all of our 0:03:26.880 --> 0:03:29.640 checks in Asia, tens of billions, not just billions, but 0:03:29.760 --> 0:03:33.960 Jensen a grand wizard, grand master poker player, not going 0:03:33.960 --> 0:03:35.120 to reveal the playbook. 0:03:35.160 --> 0:03:38.120 That's smart. But if you look at Nvidia. 0:03:37.760 --> 0:03:40.360 Here, this is Lebron in high school in terms of 0:03:40.360 --> 0:03:42.280 where this story is ultimately going. 0:03:42.640 --> 0:03:44.080 And the most important thing is. 0:03:44.000 --> 0:03:46.680 The multiplier effect because it is for broader tech. 0:03:46.680 --> 0:03:49.120 It's not just spout in Nvidia. It's not just spent Microsoft. 0:03:49.280 --> 0:03:52.640 For every dollars spent on Nvidia chip, we believe it's 0:03:52.640 --> 0:03:56.040 an eight to ten multiplier cross tech. And I think 0:03:56.080 --> 0:03:58.840 that's something that's probably the most important for investors. 0:03:59.080 --> 0:04:01.280 You know, it's fun and it's fun to talk about 0:04:01.320 --> 0:04:04.160 the Godfather and popcorn and all that. You actually have 0:04:04.160 --> 0:04:05.960 been in Asia a lot, and you've been looking at 0:04:06.000 --> 0:04:08.120 the factories and you've been talking to people who are 0:04:08.120 --> 0:04:09.760 the um buyers of some of these chips and the 0:04:09.760 --> 0:04:12.440 producers to understand exactly how much demand there is. 0:04:13.040 --> 0:04:16.240 What have you seen that gives you such confidence. 0:04:15.680 --> 0:04:18.479 That this really is a takeoff story, even now with 0:04:18.600 --> 0:04:22.800 some questions about how long the magnificent three or four 0:04:23.240 --> 0:04:25.560 US big tech companies can continue to support it. 0:04:25.680 --> 0:04:28.600 Yeah, we'll be going back to Asia next week. 0:04:29.400 --> 0:04:30.640 A trillion dollars of. 0:04:30.680 --> 0:04:33.360 Cap backs is what we see from an AI perspective 0:04:33.400 --> 0:04:36.320 over the next three years. You go back six months ago, 0:04:36.360 --> 0:04:39.920 we thought that was five hudred billion, and every quarter 0:04:40.200 --> 0:04:42.479 if you look at the underlining demand not just some 0:04:42.600 --> 0:04:46.479 hyper scalers, but eventually what's going to be other enterprises. 0:04:46.680 --> 0:04:47.720 It's just starting. 0:04:47.839 --> 0:04:51.680 So all of our checks are showing demands actually continuing 0:04:51.760 --> 0:04:52.560 to accelerate. 0:04:53.040 --> 0:04:54.640 You know, it's far out to yield. 0:04:54.640 --> 0:04:57.719 You're improving from production perspective that they're the only game 0:04:57.760 --> 0:05:01.360 in town. Use cases are coming, so that would pollenteer. 0:05:01.720 --> 0:05:04.800 You see that with service now. Now this Fourth Industrial 0:05:04.839 --> 0:05:08.240 Revolution Roome wasn't built in a day, neither AI revolution. 0:05:08.800 --> 0:05:12.080 It's starting to come together. Anyone that thinks this is hype, 0:05:12.360 --> 0:05:18.400 you listen to commerce calls Nvidia, AMD, Microsoft, Pollunteer and others. 0:05:19.000 --> 0:05:22.360 I mean, I don't know what watch party dudes, Bears are, 0:05:22.560 --> 0:05:24.880 but they're not listening. 0:05:24.440 --> 0:05:26.160 To the calls that I am you Sain, it's the 0:05:26.240 --> 0:05:29.520 Brunet High School. Why isn't it zomb Williamson. Why couldn't 0:05:29.520 --> 0:05:31.120 we end up with a situation when we actually get 0:05:31.120 --> 0:05:33.719 real competition and it just doesn't do that well anymore? 0:05:33.720 --> 0:05:35.640 How big is this mout around this company? 0:05:35.760 --> 0:05:35.960 Yeah? 0:05:35.960 --> 0:05:38.760 And I think it's a great question. Right now, only 0:05:38.800 --> 0:05:41.839 game in town AMD and obviously least as soon others 0:05:41.880 --> 0:05:44.160 are going to benefit. The reason this is the lebron 0:05:44.200 --> 0:05:47.520 in high school is because they are so ahead of 0:05:47.560 --> 0:05:50.520 any other competitor, and right now they're the only game 0:05:50.520 --> 0:05:54.279 in town. The new gold, the new oil, the AMD chips. 0:05:54.560 --> 0:05:57.039 And when you come away from that conference call last night, 0:05:57.279 --> 0:06:00.000 now I get after hours and Bears will come out. 0:06:00.480 --> 0:06:04.120 But there's nothing that makes me think that we don't 0:06:04.160 --> 0:06:07.320 have a year from now or less. You have three 0:06:07.400 --> 0:06:10.720 four trillion dollars. Mark Aps, godfather of AI and Emdia. 0:06:11.000 --> 0:06:14.680 What's happening kuper Tina with the AI supercycle starting off 0:06:14.960 --> 0:06:18.239 on iPhone sixteen and what's happening then Della in Redmond. 0:06:18.480 --> 0:06:21.960 Well, okay, in fairness to the bears, because the bears 0:06:22.000 --> 0:06:24.840 weren't exactly coming out and saying this stock is going 0:06:24.880 --> 0:06:27.440 to tank. They're saying, maybe, you know, just cash in 0:06:27.480 --> 0:06:29.880 a few chips after one thousand percent rallies going back 0:06:29.920 --> 0:06:32.440 to October of twenty twenty two, a real question here 0:06:32.720 --> 0:06:35.320 of how big the addressable market is, and a question 0:06:35.360 --> 0:06:37.720 about whether they can essentially go into some of the 0:06:37.800 --> 0:06:41.440 data centers that their buyer base are trying to fund 0:06:41.680 --> 0:06:44.599 and create. Basically, how much do they become competitors with 0:06:44.640 --> 0:06:48.320 their main customers, And a real question about cannibalization At 0:06:48.320 --> 0:06:52.200 a time where big and bigger companies are increasingly getting 0:06:52.200 --> 0:06:54.039 the scrutiny of regulators, how much are you sort of 0:06:54.040 --> 0:06:57.320 factoring that in as a ceiling for how far this 0:06:57.400 --> 0:06:58.560 godfather of AI can go. 0:06:58.680 --> 0:07:02.159 Yeah, and it's abound even look where Microsoft's going, where 0:07:02.160 --> 0:07:05.440 Google and Clouds and Amazon. So definitely like it's a 0:07:05.480 --> 0:07:08.720 little bit of a coappetition that's happening here. Look from 0:07:08.760 --> 0:07:12.000 a regulatory regulatory is forty miles an hour in the 0:07:12.040 --> 0:07:15.119 right lane in a minivan. The technology is one hundred 0:07:15.200 --> 0:07:17.640 miles an hour in a Ferrari in the left lane, 0:07:17.960 --> 0:07:21.080 and I just think this will be self regulation. You'll 0:07:21.080 --> 0:07:22.880 have a lot of em and look at open AI 0:07:23.000 --> 0:07:25.160 in terms of you know what looks like that next 0:07:25.240 --> 0:07:28.880 round of funding is it's a scarcity value. You will 0:07:28.920 --> 0:07:33.160 start to see those eventually, you know, some more competition 0:07:33.360 --> 0:07:37.280 bill butt heads. But this market it's the first second 0:07:37.280 --> 0:07:39.080 inning of a nine inning game. That sort of our 0:07:39.200 --> 0:07:41.800 view in terms of where you know, where we are 0:07:41.840 --> 0:07:42.600 from an AI. 0:07:42.440 --> 0:07:45.240 Revolution months of this weekend right from the one yes, 0:07:45.560 --> 0:07:47.800 Big Rice is going to say it, Yeah to see it, 0:07:47.840 --> 0:08:01.440 thank you. One question. Let's talk about the politics. Comla 0:08:01.480 --> 0:08:04.280 harrisonton Well sitting down with CNN this afternoon. Top of 0:08:04.360 --> 0:08:08.480 Mind Policy Haidi Creeber Retica of the Council on Foreign Relations, 0:08:08.480 --> 0:08:11.240 saying it's likelier than not that a Harris white House 0:08:11.320 --> 0:08:15.280 would build out foreign policy with a focus on international leadership, 0:08:15.720 --> 0:08:19.720 nurturing ties with allies and partners, including NATO, new minilaterals 0:08:20.120 --> 0:08:24.880 like trilateral with Japan and Korea, and critical minerals partnerships 0:08:25.480 --> 0:08:27.920 and the G seven. Heidi Creeper Retica of the Council 0:08:27.960 --> 0:08:30.680 on Foreign Relations joined us. Now, Heidi, let's build on 0:08:30.720 --> 0:08:32.640 that if we can, and welcome back to the program. 0:08:32.760 --> 0:08:35.640 Can I start with this one. You're incredibly well connected 0:08:35.679 --> 0:08:38.320 in Washington, d C. I'll say that for you. How 0:08:38.400 --> 0:08:41.480 much daylight is there between Harris and Biden? 0:08:42.920 --> 0:08:45.640 Well, I think I think you're likely to see quite 0:08:45.640 --> 0:08:49.880 a bit of continuation in the foreign policy agenda of 0:08:50.559 --> 0:08:55.080 a Harris presidency. And I think probably the most important 0:08:55.080 --> 0:09:00.560 area would be the relationship with allies and partners, because 0:09:00.559 --> 0:09:04.160 Trump has really shown that he's a go tolone president 0:09:04.760 --> 0:09:06.840 and so you know, in this day and age, the 0:09:06.880 --> 0:09:10.080 world is far more complicated than when Trump was president. 0:09:10.160 --> 0:09:12.880 You have an alignment with China, Russia, Iran, and. 0:09:12.960 --> 0:09:16.440 North Korea in a world where America really needs to lead, 0:09:16.480 --> 0:09:19.839 but we have to do it with friends and partners, 0:09:19.920 --> 0:09:24.559 and that includes bolstering supply chains and resilience. 0:09:24.679 --> 0:09:25.920 You can't do that alone. 0:09:26.679 --> 0:09:28.760 So I think, you know, just the in the in 0:09:28.800 --> 0:09:32.840 the broadest sense, you would see a continuation of. 0:09:34.559 --> 0:09:36.640 Many of the features you've seen in Biden Adi. 0:09:36.679 --> 0:09:40.239 When it comes to Chinese specifically and the issues in China. 0:09:40.400 --> 0:09:41.920 Do you think they can make the case that a 0:09:42.000 --> 0:09:45.000 multilateral approach has been more effective in the last few 0:09:45.080 --> 0:09:47.360 years than what we saw under President Trump. 0:09:48.640 --> 0:09:51.560 Absolutely, I mean, I think you know you do have 0:09:52.559 --> 0:09:57.120 you have a more complicated geopolitical backdrop where you have 0:09:57.280 --> 0:10:01.400 China actually helping Russia's war econ it me, where you 0:10:01.480 --> 0:10:04.920 have a much more cooperation across as I mentioned, those 0:10:04.960 --> 0:10:11.360 four those four key countries who are geopolitical rivals right now, 0:10:11.760 --> 0:10:14.160 and so you need to have friends, you need to 0:10:14.160 --> 0:10:18.440 have allies, you need to have doubling down on the 0:10:18.520 --> 0:10:25.320 existing mini laterals, the new minilateral between the US, Japan, Korea, 0:10:26.400 --> 0:10:31.280 building on the quad relationship with Australia, Japan, India, and 0:10:31.320 --> 0:10:34.960 the United States, and also building out the critical minerals 0:10:35.000 --> 0:10:39.120 partnerships and what we're going to need for energy transition 0:10:39.320 --> 0:10:44.640 and for defense. And I think also the traditional forums 0:10:44.640 --> 0:10:47.679 like the G seven take a lot of work, They 0:10:47.679 --> 0:10:50.000 take a lot of nurturing, and we did not see 0:10:50.000 --> 0:10:51.280 that during the Trump administration. 0:10:51.640 --> 0:10:53.680 Hidie, we were just talking about how unusual it is 0:10:53.720 --> 0:10:56.280 that Jake Sullivan went to China and got such a 0:10:56.320 --> 0:10:59.240 high audience at a time where Joe Biden is a 0:10:59.320 --> 0:11:00.959 lame duck press it in and there's a lot of 0:11:01.040 --> 0:11:05.080 questions around who's actually going to be the head of 0:11:05.120 --> 0:11:08.800 this country come early next year. Heidi, Why do you 0:11:08.840 --> 0:11:11.360 think he went now and got such an audience. 0:11:12.880 --> 0:11:15.720 Well, I think I think it's important to make sure 0:11:15.760 --> 0:11:18.680 that there is a channel of communication when there is 0:11:18.720 --> 0:11:24.640 any when there is any change, when there is UH, 0:11:24.920 --> 0:11:29.280 when there is uh uh you know, uncertainty, which is 0:11:29.360 --> 0:11:32.280 you know, pretty you know, running pretty rampant in in 0:11:32.320 --> 0:11:36.600 the global geopolitical uh space right now as well as 0:11:36.640 --> 0:11:41.400 in the global economic space. So knowing directly from the 0:11:41.480 --> 0:11:45.719 National Security Advisor, what is uh, you know, what is 0:11:45.840 --> 0:11:50.640 the the likely Harris agenda, what is coming potentially down 0:11:50.640 --> 0:11:55.560 the pike before before the election or after the election. 0:11:55.280 --> 0:11:58.120 With regard to any rumored. 0:11:59.200 --> 0:12:04.160 Expansion of of export controls, How to manage manage the 0:12:04.960 --> 0:12:10.480 managed competition in a way that sustains sort of strategic 0:12:11.200 --> 0:12:16.240 balance and and and safety. We have had a number 0:12:16.320 --> 0:12:20.600 of run ins with with China in the South China season, 0:12:20.679 --> 0:12:24.880 trying to make sure that we don't have any any 0:12:24.960 --> 0:12:30.720 unintended consequences from some of China's more aggressive military actions 0:12:30.760 --> 0:12:33.280 of late. So I think, you know, just maintaining a 0:12:33.360 --> 0:12:37.680 senior dialogue at this critical juncture is crucial. 0:12:38.320 --> 0:12:38.600 Heidi. 0:12:38.640 --> 0:12:40.000 I think that a lot of people are going to 0:12:40.040 --> 0:12:43.600 be watching tonight when we hear the first televised interview 0:12:43.800 --> 0:12:47.080 with a major media outlet of Kamala Harris and her 0:12:47.160 --> 0:12:50.400 running mate Tim Waltzon. I'm wondering. I'm sure China will 0:12:50.400 --> 0:12:52.679 also be watching to understand exactly what some of these 0:12:52.679 --> 0:12:56.040 policies may be, as well as many other international partners 0:12:56.080 --> 0:12:58.120 of the United States. Heidi, what are you expecting to 0:12:58.120 --> 0:13:00.240 hear tonight or not? Does it matter if we hear 0:13:00.320 --> 0:13:04.280 nothing in terms of policy. 0:13:02.840 --> 0:13:05.920 So I think this is about politics as well as policy. 0:13:06.320 --> 0:13:10.400 You have. You know, we're seventy odd days out. Harris 0:13:10.440 --> 0:13:11.520 is sitting on momentum. 0:13:12.280 --> 0:13:14.000 She said she'd do an interview before the end of 0:13:14.000 --> 0:13:16.640 the month, and I don't expect her to really break 0:13:16.679 --> 0:13:18.920 any new news in this interview, but I think it's 0:13:18.960 --> 0:13:21.600 an important one to watch. And you are absolutely right, 0:13:21.679 --> 0:13:26.360 everybody outside of the US will be watching this to 0:13:26.400 --> 0:13:31.280 see you for any policy insights, and I think she 0:13:31.559 --> 0:13:33.760 you know, this has been a sort of a policy 0:13:33.960 --> 0:13:37.240 light campaign on both sides. 0:13:37.320 --> 0:13:37.600 You have. 0:13:37.800 --> 0:13:40.960 You know, Trump has had this project twenty five you know, 0:13:41.240 --> 0:13:46.959 home Outside Holmes made by others and not himself on 0:13:47.400 --> 0:13:50.960 many many issues. And then you know she's not is 0:13:51.000 --> 0:13:53.520 the first candidate to be light on specifics. I mean 0:13:53.520 --> 0:13:58.679 Bill Clinton was criticized for far too little on specific 0:13:58.720 --> 0:14:02.880 policy issues, and then Secretary Clinton when she ran for president, 0:14:03.040 --> 0:14:04.400 was far too specific. 0:14:04.640 --> 0:14:06.120 And so I think at the. 0:14:06.080 --> 0:14:08.600 Stage in the game we're close, you know, we're really 0:14:08.640 --> 0:14:12.920 close to election day, she has an advantage. Harris has 0:14:12.960 --> 0:14:15.760 an advantage that she did not have to go through 0:14:15.800 --> 0:14:18.880 a primary process. She did not have to define her 0:14:19.000 --> 0:14:23.320 views and take some hot like harder policy positions. So's 0:14:23.560 --> 0:14:26.440 she has an advantage right now, and I think she's 0:14:26.440 --> 0:14:28.920 not going to squander it. So and I think I 0:14:29.240 --> 0:14:32.200 like the fact that she's doing it together with Governor Wallas. 0:14:32.240 --> 0:14:33.320 I think this is going to. 0:14:33.280 --> 0:14:37.080 Be an attempt to really show their personalities, human. 0:14:36.920 --> 0:14:38.280 Side, the way they interact. 0:14:39.200 --> 0:14:42.320 And he also gives her the out of not getting 0:14:42.400 --> 0:14:48.880 cornered by somebody that not pointing fingers but looking at 0:14:48.920 --> 0:14:51.360 an oppressed desperate to figure out specifics. 0:14:52.080 --> 0:14:53.840 She's going to try not to get cornered, and I 0:14:53.840 --> 0:14:54.520 think that's smart. 0:14:55.120 --> 0:14:57.520 Said that a lot of people are watching internationally in 0:14:57.600 --> 0:15:02.280 terms of trying to understand what Harris presidency would look like. 0:15:02.840 --> 0:15:04.240 Do you think it will bother them. 0:15:04.400 --> 0:15:05.800 If they get no specifics. 0:15:07.680 --> 0:15:10.000 I don't. I don't think so. I think, you know, 0:15:10.080 --> 0:15:13.880 she she wants to win. I think that that there's 0:15:13.920 --> 0:15:19.840 been a lot of a lot of criticism of not 0:15:20.080 --> 0:15:25.520 having the not having drilled down on specifics. And I 0:15:25.600 --> 0:15:27.840 don't really think that she's trying to play to an 0:15:27.880 --> 0:15:31.120 international audience in this interview. I think she really this 0:15:31.200 --> 0:15:34.360 is really a chance for her to talk to the 0:15:34.360 --> 0:15:37.480 American people and to voters, and so you might hear 0:15:37.920 --> 0:15:42.120 less on international and maybe more on on domestic and 0:15:42.160 --> 0:15:46.880 what and what she and Governor Waltz would mean for 0:15:46.880 --> 0:15:50.480 for some of her domestic economic agenda. 0:15:50.120 --> 0:15:52.080 Atoms, How do we got to leave it there? Come 0:15:52.080 --> 0:15:53.920 by soon? It's been too long. It's going to catch up. 0:15:54.000 --> 0:16:06.880 HAIDI crew by Redeka, the Council on Farm Relations. Oh, 0:16:07.000 --> 0:16:09.440 Dave Sabina joined us some more on that, Oh Davis 0:16:09.600 --> 0:16:13.040 unequivocally dubvish your view of chairman power last week. It's 0:16:13.080 --> 0:16:16.240 time to go long anywhere on the curve? Oh can 0:16:16.280 --> 0:16:18.320 you build on that? Why anywhere on the curve? 0:16:20.360 --> 0:16:23.200 Because what will experience actually is going to be a 0:16:23.240 --> 0:16:25.840 bull steepener, which means you know you're two years while 0:16:25.880 --> 0:16:29.200 perform your tens and thirties. But it's actually our preference 0:16:29.240 --> 0:16:32.280 to go long tens and thirties because the volatility in 0:16:32.360 --> 0:16:35.040 tens and thirties will be lower. So from a sharp 0:16:35.120 --> 0:16:38.640 racial or a risk adjusted racial, makes more sense to 0:16:38.680 --> 0:16:40.000 go long tens and thirties. 0:16:40.040 --> 0:16:41.440 Despite our steepening by us. 0:16:41.800 --> 0:16:44.840 This time yesterday we caught it with chow Swab Colin Martin. 0:16:45.000 --> 0:16:47.640 He said, the treasury yield plunge more recently makes extending 0:16:47.720 --> 0:16:51.000 duration less attractive. Oh, how do you think about that? 0:16:51.080 --> 0:16:52.359 Just the valuation proposition? 0:16:53.280 --> 0:16:55.840 Yeah, you know what, I fully agree with that statement. 0:16:55.840 --> 0:16:57.760 That's why we're only to call it a five on 0:16:57.920 --> 0:17:01.280 ten long the market. But the thing with this market, 0:17:01.280 --> 0:17:05.160 all the valuations have gotten arguably ahead of themselves for now. 0:17:05.520 --> 0:17:08.159 You never know when the next spike lower will be. 0:17:08.560 --> 0:17:10.040 As I like to say, I've been in the market 0:17:10.080 --> 0:17:12.240 for thirty years, and you know what, if timing was 0:17:12.320 --> 0:17:14.360 my strongest suit, I wouldn't even be on the show 0:17:14.440 --> 0:17:18.240 right now, be on the beach somewhere. But I always 0:17:18.280 --> 0:17:21.720 want to make sure I'm in the position I want 0:17:21.720 --> 0:17:24.199 to be. But we're looking towards four percent, where we 0:17:24.359 --> 0:17:26.639 really add to our longs and go full in long 0:17:26.960 --> 0:17:27.880 in tenure yields. 0:17:28.240 --> 0:17:29.679 You'd be calling us from the beach. 0:17:29.880 --> 0:17:31.560 I know you'd be calling in. 0:17:33.600 --> 0:17:38.040 I wouldn't be here either, all right, Moving on. 0:17:38.080 --> 0:17:41.360 You said something that volatility is less in tens and thirties, 0:17:41.400 --> 0:17:43.280 and that's one argument for going into them. 0:17:43.600 --> 0:17:45.439 Is that true? I mean at a time when a. 0:17:45.400 --> 0:17:47.600 Lot of people are talking about a sort of new 0:17:47.760 --> 0:17:52.360 environment for yields more broadly, but especially duration of more 0:17:52.480 --> 0:17:55.320 volatility there, especially with the election coming up. 0:17:56.359 --> 0:17:58.159 Yeah, you know what, I didn't say there's going to 0:17:58.200 --> 0:18:00.840 be no volatility. There's going to be volatile everywhere. But 0:18:00.920 --> 0:18:03.119 this is why I love being an active manager. This 0:18:03.160 --> 0:18:05.000 is why it's perfect time to be in the shoes 0:18:05.040 --> 0:18:08.159 that we're in. You know, we have our expectations. You know, 0:18:08.200 --> 0:18:11.120 as I said, we do expect yields to go lower, 0:18:11.560 --> 0:18:13.440 but the market we also expected to go higher. 0:18:13.480 --> 0:18:16.000 But that allows us opportunity to get long. 0:18:17.119 --> 0:18:19.840 This is the difference between passive and active and it's 0:18:19.880 --> 0:18:23.359 the perfect time from an active manager perspective to monetize 0:18:23.359 --> 0:18:25.800 that volatility. And our team has been doing that for 0:18:25.840 --> 0:18:27.960 the past two years. You've heard us with the two 0:18:28.000 --> 0:18:30.560 years trade before that was an example of volatility in 0:18:30.600 --> 0:18:32.560 the two years now, we think we'll see it in 0:18:32.680 --> 0:18:34.359 ten years and we can monetize it. 0:18:34.400 --> 0:18:37.919 There is there a contradiction in this foolishness across the 0:18:38.000 --> 0:18:41.520 curve in bond markets. Is there a contradiction with the 0:18:41.520 --> 0:18:43.040 strength of the economy that we're seeing. 0:18:44.480 --> 0:18:45.680 No, there's no contradiction. 0:18:45.800 --> 0:18:48.520 Actually, it's very similar to the weather argument that you 0:18:48.560 --> 0:18:51.200 brought up before in regards to the employment number. I 0:18:51.240 --> 0:18:54.080 would expand that weather argument to the markets. There's so 0:18:54.200 --> 0:19:00.200 many credible, plausible outcomes in this market in regards to rates, higher, 0:19:00.560 --> 0:19:03.600 rates lower. But this is why it's important from our 0:19:03.680 --> 0:19:06.480 perspective as an active manager, don't get caught on where 0:19:06.480 --> 0:19:08.600 do you think rates will go, because you're going to 0:19:08.600 --> 0:19:11.359 miss the volatility and that's where you can monetize. So 0:19:11.760 --> 0:19:14.639 I think all the arguments are credible. Our team we 0:19:14.720 --> 0:19:17.359 have a process where you know what it's been validated 0:19:17.359 --> 0:19:20.439 in regards to outlooks and views, and that's why we 0:19:20.520 --> 0:19:23.639 do see lower rates from here, but it's not going 0:19:23.720 --> 0:19:25.639 to be as straight line lower as we're seeing. It 0:19:25.680 --> 0:19:27.800 would not surprise us if we see four percent ten 0:19:27.880 --> 0:19:30.240 year yields, but we feel that's the level where you 0:19:30.280 --> 0:19:31.080 start backing. 0:19:30.840 --> 0:19:31.320 Up the trump. 0:19:31.440 --> 0:19:33.920 You have made some assumptions about the destination for FED 0:19:33.960 --> 0:19:36.920 funds though, and it stood out for me after the 0:19:37.000 --> 0:19:40.440 Chairman Poal speech of Friday, you said, once easing starts, 0:19:40.720 --> 0:19:44.399 you believe the target is neutral at a minimum. What 0:19:44.560 --> 0:19:46.680 is neutral to you? I guess would be my question. 0:19:46.720 --> 0:19:48.159 What do you think the FED thinks it is? And 0:19:48.400 --> 0:19:50.720 are we talking about twohundred basis points of cuts over 0:19:50.760 --> 0:19:53.280 the next I don't know, twelve months, eighteen months. 0:19:54.320 --> 0:19:55.960 Yeah, you know, it's a good question. 0:19:56.040 --> 0:19:58.120 I would argue that neutral to me doesn't count because 0:19:58.119 --> 0:19:59.920 I'm not the one doing the eases. So I try 0:20:00.080 --> 0:20:02.760 to listen to the FED governor's speak. We heard Hawker 0:20:02.840 --> 0:20:04.840 last week say it's three percent. I would say it's 0:20:04.880 --> 0:20:08.160 somewhere in and around three percent, but says there's two 0:20:08.200 --> 0:20:11.000 hundred basis points of cuts coming over the next couple 0:20:11.000 --> 0:20:14.280 of years, all else equal. The market's only discounting one 0:20:14.359 --> 0:20:17.000 hundred right now. That is why we were and we 0:20:17.040 --> 0:20:20.200 saw the speech as unequivocally dubvish. You know, the path 0:20:20.240 --> 0:20:22.520 and timing to lower rates, that's the uncertain part. But 0:20:22.560 --> 0:20:26.240 we definitely see a move towards neutral The interesting thing 0:20:26.280 --> 0:20:28.240 about this, there's three things we're looking at in the 0:20:28.280 --> 0:20:31.720 market that will add to volatility impact our positioning. One is, 0:20:31.760 --> 0:20:34.000 as we've spoken about the employment rate. We think that's 0:20:34.119 --> 0:20:37.119 very important. The second one is the election and that 0:20:37.160 --> 0:20:40.480 will take on more and more be more amplified as 0:20:40.480 --> 0:20:43.119 we get towards November. And then the third one, this 0:20:43.160 --> 0:20:45.439