1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:35,840 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. 10 00:00:36,560 --> 00:00:39,440 Speaker 1: Joining us now is someone with tons of contexts, both 11 00:00:39,560 --> 00:00:41,960 Speaker 1: when it comes to strategy as well as when it 12 00:00:42,000 --> 00:00:44,240 Speaker 1: comes to the economy in China. Leland Miller of the 13 00:00:44,320 --> 00:00:46,400 Speaker 1: China Paige Book. Leland, great to see you, Thank you 14 00:00:46,440 --> 00:00:49,080 Speaker 1: for being here. I want to start with this question 15 00:00:49,280 --> 00:00:52,120 Speaker 1: of what is at stake in order to even get 16 00:00:52,159 --> 00:00:54,840 Speaker 1: a phone call between Jijinping and Donald Trump, something that 17 00:00:54,880 --> 00:00:57,320 Speaker 1: we've heard a couple times before, but that from what 18 00:00:57,320 --> 00:00:58,800 Speaker 1: we understand, hasn't yet happened. 19 00:01:01,240 --> 00:01:03,080 Speaker 3: A phone call should be very easy, but I think 20 00:01:03,120 --> 00:01:07,119 Speaker 3: the reality is that the Chinese side is very skeptical 21 00:01:07,280 --> 00:01:10,080 Speaker 3: that the US side will keep whatever commitments that it 22 00:01:10,680 --> 00:01:13,119 Speaker 3: that it that it's that it asks for, and that 23 00:01:13,319 --> 00:01:16,320 Speaker 3: it will convey exactly what it wants, and that it 24 00:01:16,360 --> 00:01:18,200 Speaker 3: will have a point person that will be able to 25 00:01:18,240 --> 00:01:20,039 Speaker 3: have the authority to be able to make a deal 26 00:01:20,120 --> 00:01:22,600 Speaker 3: for what, you know, for whatever the us I want. So, 27 00:01:23,240 --> 00:01:25,680 Speaker 3: you know, a call is easy, a meeting is easy. 28 00:01:25,680 --> 00:01:27,120 Speaker 3: There's nothing that you really have to give away in 29 00:01:27,200 --> 00:01:29,080 Speaker 3: order to do that. But I think that the in 30 00:01:29,160 --> 00:01:32,000 Speaker 3: Beijing right now there's a worry that if they come 31 00:01:32,040 --> 00:01:35,640 Speaker 3: to the table and and President she looks bad, then 32 00:01:35,680 --> 00:01:37,200 Speaker 3: this this will uh, you know, this will be a 33 00:01:37,200 --> 00:01:39,440 Speaker 3: net negative for the for the for the relationship, and 34 00:01:39,480 --> 00:01:42,800 Speaker 3: for for China's leverage. So they're holding off on that 35 00:01:42,880 --> 00:01:44,720 Speaker 3: until they think that they have a have a better hand. 36 00:01:44,760 --> 00:01:45,520 Speaker 4: We'll see if it happens. 37 00:01:45,600 --> 00:01:47,680 Speaker 5: Is week Leland, the ranimbee is up one and a 38 00:01:47,680 --> 00:01:49,560 Speaker 5: half percent this year versus a dollar, yet it's fallen 39 00:01:49,560 --> 00:01:51,440 Speaker 5: in each of the last three years. I had a 40 00:01:51,520 --> 00:01:54,320 Speaker 5: number of friends and attendance at the JP Morgan Global 41 00:01:54,400 --> 00:01:56,200 Speaker 5: China Summit last week and they all came away with 42 00:01:56,240 --> 00:01:59,200 Speaker 5: this bias toward a weaker dollar. Does that mean a 43 00:01:59,200 --> 00:02:00,320 Speaker 5: weaker dollar relative. 44 00:02:00,240 --> 00:02:00,640 Speaker 4: To the yuon. 45 00:02:02,880 --> 00:02:05,200 Speaker 3: Well, the dollar and the yu wan are tied very 46 00:02:05,240 --> 00:02:07,720 Speaker 3: closely together. I mean, you know, we pretend like the 47 00:02:07,760 --> 00:02:10,080 Speaker 3: yuan is a free floating currency. 48 00:02:10,080 --> 00:02:11,560 Speaker 4: It's not. It's pegged to the dollars. 49 00:02:11,600 --> 00:02:13,760 Speaker 3: So if you have a weaker dollar, you're going to 50 00:02:13,840 --> 00:02:16,280 Speaker 3: have pressure on the yuan to fall. But I think 51 00:02:16,320 --> 00:02:18,120 Speaker 3: that China will want to keep it a little bit 52 00:02:18,280 --> 00:02:21,000 Speaker 3: up relative to that, because their bias is for a 53 00:02:21,040 --> 00:02:23,760 Speaker 3: little bit of upside appreciation in a falling dollar world. 54 00:02:23,880 --> 00:02:27,320 Speaker 3: So yeah, if you have reciprocal tariffs and the US 55 00:02:27,400 --> 00:02:29,160 Speaker 3: China relationship and all these other things weighing on the 56 00:02:29,200 --> 00:02:32,440 Speaker 3: dollar and the dollars falling, then then the yuan will 57 00:02:32,480 --> 00:02:34,519 Speaker 3: be pulled down a little bit, but it will They'll 58 00:02:34,560 --> 00:02:36,000 Speaker 3: want to have a little bit of an upward bias 59 00:02:36,040 --> 00:02:39,400 Speaker 3: for it. So yeah, you should expect upward, some mild 60 00:02:39,600 --> 00:02:43,519 Speaker 3: modest upward appreciation in a falling dollar world. 61 00:02:43,960 --> 00:02:46,359 Speaker 5: Leland, it was only a few years ago when multinationals 62 00:02:46,520 --> 00:02:49,360 Speaker 5: claimed that they couldn't afford to pull out of China 63 00:02:49,400 --> 00:02:52,800 Speaker 5: given the economy size, its overall influence. What are your 64 00:02:52,800 --> 00:02:56,320 Speaker 5: thoughts on China as an investment destination from the perspective 65 00:02:56,320 --> 00:02:59,480 Speaker 5: of a US institutional investor, is China investable now? 66 00:03:01,280 --> 00:03:03,520 Speaker 3: Well, I think you made a nice distinction between you know, 67 00:03:03,600 --> 00:03:06,959 Speaker 3: institutional investors and those companies that are in there with 68 00:03:07,080 --> 00:03:10,639 Speaker 3: hard assets and a presence throughout China very difficult to 69 00:03:10,680 --> 00:03:13,880 Speaker 3: extricate themselves at that point. If you're an institutional investor 70 00:03:13,919 --> 00:03:15,560 Speaker 3: and you're looking at China, then you have to be 71 00:03:15,560 --> 00:03:17,680 Speaker 3: asking yourself, what edge do I have here? 72 00:03:17,880 --> 00:03:19,280 Speaker 4: Am I just waiting for. 73 00:03:19,200 --> 00:03:21,720 Speaker 3: This ridiculous thesis of you know, things have been down 74 00:03:21,760 --> 00:03:24,520 Speaker 3: for eleven years, but now they're going to bounce back 75 00:03:24,520 --> 00:03:26,720 Speaker 3: in the stock market? Do you have an edge in 76 00:03:26,800 --> 00:03:28,880 Speaker 3: a technology sector but that it's going to be closed 77 00:03:28,880 --> 00:03:32,000 Speaker 3: off by export controls or by teriffs in the near future. 78 00:03:32,200 --> 00:03:35,320 Speaker 3: You know, it's not impossible to trade in China, but 79 00:03:35,440 --> 00:03:37,840 Speaker 3: it's getting very dangerous. And most of the people who 80 00:03:37,920 --> 00:03:41,200 Speaker 3: have traditionally done this have done this very lackadaisically. They 81 00:03:41,200 --> 00:03:43,640 Speaker 3: look at, you know, Chinese data, they've got a DC 82 00:03:43,800 --> 00:03:46,160 Speaker 3: consultant that tells them a little bit about China, and 83 00:03:46,200 --> 00:03:47,440 Speaker 3: then they, you know, they buy. 84 00:03:47,280 --> 00:03:49,800 Speaker 4: A bunch of Chinese tech companies. You can't do that anymore. 85 00:03:49,840 --> 00:03:51,720 Speaker 3: So if you're still in China, then you better have 86 00:03:51,760 --> 00:03:54,000 Speaker 3: a tremendous edge in terms of investing. 87 00:03:53,640 --> 00:03:56,560 Speaker 6: There Leilan, the Chinese tenure rate is a near one 88 00:03:56,560 --> 00:04:00,000 Speaker 6: point seven percent, near multi decade lows. Is there any 89 00:04:00,120 --> 00:04:03,840 Speaker 6: ignoaled to take from that about underlying Chinese economic health, 90 00:04:03,880 --> 00:04:05,800 Speaker 6: mostly as we consider the rest of the world where 91 00:04:05,840 --> 00:04:07,680 Speaker 6: long and yields are screaming higher. 92 00:04:09,120 --> 00:04:10,680 Speaker 4: Yeah, absolutely, there is a signals. 93 00:04:10,720 --> 00:04:13,560 Speaker 3: If you look at our credit data, China Basebook credit data, 94 00:04:13,680 --> 00:04:16,479 Speaker 3: it's remarkable what's happening on the monetary easing side, and 95 00:04:16,480 --> 00:04:19,559 Speaker 3: we've seen rates continue to go down, down, down, down down, 96 00:04:19,920 --> 00:04:21,400 Speaker 3: and this is a this is a time in which 97 00:04:21,440 --> 00:04:25,039 Speaker 3: there's elevated inflation elsewhere. So what they're trying to do is, 98 00:04:25,080 --> 00:04:27,120 Speaker 3: you know, on the fiscal front there they're manning the 99 00:04:27,200 --> 00:04:30,599 Speaker 3: you know, the army, the cannons. On the monetary side, 100 00:04:30,640 --> 00:04:33,520 Speaker 3: they continue to cut rates. There's a downside to doing 101 00:04:33,560 --> 00:04:35,640 Speaker 3: that because you're hitting the profitability of banks and. 102 00:04:35,640 --> 00:04:37,400 Speaker 4: You're you're you're hurting savers. 103 00:04:37,839 --> 00:04:39,800 Speaker 3: But right now they're just trying to keep the economy 104 00:04:39,839 --> 00:04:42,479 Speaker 3: going during during the early onset of this of these 105 00:04:42,520 --> 00:04:44,839 Speaker 3: trade tensions, you know, trade War two point zero. 106 00:04:45,400 --> 00:04:46,599 Speaker 4: So they're cutting. 107 00:04:46,320 --> 00:04:48,840 Speaker 3: Rates, but it has a lot of a detrimental effect, 108 00:04:49,160 --> 00:04:50,880 Speaker 3: you know, down downstreaming the economy. 109 00:04:51,040 --> 00:04:54,080 Speaker 6: How much fiscal firepower do you think that China has. 110 00:04:54,120 --> 00:04:56,000 Speaker 6: There seems to be an assumption that China has a 111 00:04:56,080 --> 00:04:58,520 Speaker 6: lot more room than other countries around the world. 112 00:04:58,880 --> 00:05:02,279 Speaker 4: Is that the case, It is the case. 113 00:05:02,960 --> 00:05:06,159 Speaker 3: What's interesting is that for several years, while every headline, 114 00:05:06,240 --> 00:05:08,880 Speaker 3: you know, we'd see every day was, you know, China stimulus, 115 00:05:08,880 --> 00:05:10,880 Speaker 3: promising stimulus, pledging stimulus, it. 116 00:05:10,800 --> 00:05:11,480 Speaker 4: Was never happening. 117 00:05:11,480 --> 00:05:13,760 Speaker 3: In twenty twenty two, twenty three, twenty four, we got 118 00:05:13,760 --> 00:05:15,279 Speaker 3: to the very end of twenty twenty four and early 119 00:05:15,320 --> 00:05:17,680 Speaker 3: twenty twenty five, you know, we have a fiscal activity index. 120 00:05:17,760 --> 00:05:21,520 Speaker 3: It showed significant things were happening and a significant borrowing 121 00:05:21,560 --> 00:05:24,600 Speaker 3: and bond issuance by transportation construction firms. So they were 122 00:05:24,640 --> 00:05:27,600 Speaker 3: really getting ready for what might be a real downside scenario. 123 00:05:28,120 --> 00:05:29,919 Speaker 3: We've seen that eb off a little bit, so we 124 00:05:30,000 --> 00:05:32,160 Speaker 3: have not seen the blast to any type of canon, 125 00:05:32,360 --> 00:05:34,640 Speaker 3: but they are preparing in a way very differently than 126 00:05:34,680 --> 00:05:35,120 Speaker 3: they did. 127 00:05:34,960 --> 00:05:37,239 Speaker 4: The last three years. This this should have been expected. 128 00:05:37,320 --> 00:05:40,560 Speaker 3: China does not want to do big stimulus, but at 129 00:05:40,600 --> 00:05:41,720 Speaker 3: the end of the day, they're going to have to 130 00:05:41,760 --> 00:05:44,159 Speaker 3: batten down the hatches their economy if they get a 131 00:05:44,240 --> 00:05:46,039 Speaker 3: larger trade tip with the United States, which is. 132 00:05:46,040 --> 00:05:47,400 Speaker 1: The reason why le Lynn and I think that all 133 00:05:47,480 --> 00:05:49,279 Speaker 1: of us are trying to get at the ultimate question, 134 00:05:49,320 --> 00:05:51,719 Speaker 1: which is who has the most leverage, who's in the 135 00:05:51,720 --> 00:05:55,000 Speaker 1: better position economically right now as a US and China 136 00:05:55,040 --> 00:05:57,560 Speaker 1: go head to head. We got this data overnight that 137 00:05:57,680 --> 00:06:00,680 Speaker 1: China's private factory gauge punched the weeks going back to 138 00:06:00,680 --> 00:06:03,919 Speaker 1: twenty twenty two. It went against some of the official data. 139 00:06:03,960 --> 00:06:07,080 Speaker 1: Some people are saying it's messier, it's a smaller sample size. 140 00:06:07,360 --> 00:06:09,839 Speaker 1: Do you think that China is hurting more or the 141 00:06:09,960 --> 00:06:12,360 Speaker 1: US is hurting more? Is it possible to even make 142 00:06:12,400 --> 00:06:13,400 Speaker 1: that equation? 143 00:06:15,720 --> 00:06:18,840 Speaker 3: Well, look, first, on the Sisheen survey, I mean, we 144 00:06:18,920 --> 00:06:22,159 Speaker 3: agree with the official data here. We're much much bigger 145 00:06:22,200 --> 00:06:24,480 Speaker 3: than Serve Hall, a lot more companies than Saisheen does, 146 00:06:24,680 --> 00:06:27,680 Speaker 3: and we actually saw it improvement in manufacturing activity. 147 00:06:27,960 --> 00:06:28,479 Speaker 4: Not great. 148 00:06:28,600 --> 00:06:30,599 Speaker 3: It's down from a year ago, but it's up from 149 00:06:30,680 --> 00:06:32,560 Speaker 3: the lows that we've seen in the last couple of months, 150 00:06:32,680 --> 00:06:35,400 Speaker 3: so there's something there. There's a lot more resilience both 151 00:06:35,480 --> 00:06:38,440 Speaker 3: in the consumption side, which is surprising, and the manufacturing side, 152 00:06:38,440 --> 00:06:41,440 Speaker 3: which is not in China right now, so I would 153 00:06:41,520 --> 00:06:44,000 Speaker 3: take that away from the economic data. 154 00:06:44,520 --> 00:06:46,159 Speaker 4: So I think at this point, you. 155 00:06:46,200 --> 00:06:49,600 Speaker 3: Know, look, we have to be watching the data closely, 156 00:06:49,680 --> 00:06:52,480 Speaker 3: but also keeping in mind that China is looking a 157 00:06:52,520 --> 00:06:54,640 Speaker 3: little bit more resilient than we thought going into the 158 00:06:54,640 --> 00:06:55,760 Speaker 3: Geneva talks and beyond. 159 00:06:56,200 --> 00:06:58,280 Speaker 1: Leilan Miller of China Page Book, thank you so much 160 00:06:58,320 --> 00:07:10,440 Speaker 1: for your insight. It's really helpful. Meta signing a twenty 161 00:07:10,520 --> 00:07:13,200 Speaker 1: year contract with Constellation and Energy to buy power from 162 00:07:13,240 --> 00:07:17,240 Speaker 1: an Illinois nuclear plant more evidence of technology companies appetite 163 00:07:17,240 --> 00:07:20,160 Speaker 1: for energy to run data centers, and AI is the 164 00:07:20,200 --> 00:07:24,480 Speaker 1: promise of that technology potentially transforms the world we live in. 165 00:07:24,520 --> 00:07:28,440 Speaker 1: PwC out with its twenty twenty five AI Jobs Barometer, 166 00:07:28,680 --> 00:07:31,600 Speaker 1: which was a link between AI adoption and productivity growth. 167 00:07:31,760 --> 00:07:34,360 Speaker 1: Matt Wood of PwC joins us now and Matt, you're 168 00:07:34,400 --> 00:07:36,480 Speaker 1: answering the questions that a lot of people have been asking, 169 00:07:36,760 --> 00:07:38,080 Speaker 1: which is basically, how many of us are going to 170 00:07:38,120 --> 00:07:39,840 Speaker 1: lose our jobs and become irrelevant because of some of 171 00:07:39,880 --> 00:07:40,800 Speaker 1: this new technology. 172 00:07:41,040 --> 00:07:45,040 Speaker 7: Well, it's looking like right now none of us. In fact, counterintuitively, 173 00:07:45,320 --> 00:07:48,000 Speaker 7: the number of jobs and the wages associated to them 174 00:07:48,040 --> 00:07:50,880 Speaker 7: are actually going up, not going down. So we looked 175 00:07:50,920 --> 00:07:54,120 Speaker 7: at over a billion job postings globally from twenty four 176 00:07:54,160 --> 00:07:57,880 Speaker 7: different countries, and we found that for organizations, whether they 177 00:07:57,920 --> 00:08:00,800 Speaker 7: were advanced in their aiuse or early in the AIR use, 178 00:08:00,880 --> 00:08:03,480 Speaker 7: they had more job hostings than they had before. We 179 00:08:03,600 --> 00:08:07,240 Speaker 7: found that the productivity of people working inside those organizations 180 00:08:07,360 --> 00:08:10,640 Speaker 7: was up. We found that the revenue generation for those 181 00:08:10,840 --> 00:08:13,640 Speaker 7: workers was three x higher than it's ever been before, 182 00:08:13,960 --> 00:08:17,080 Speaker 7: and that the wages associated with those workers were also 183 00:08:17,120 --> 00:08:19,680 Speaker 7: going up. And so it's a little canterintuitive to what 184 00:08:19,840 --> 00:08:22,400 Speaker 7: maybe some other folks are seen, but our barometer shows 185 00:08:22,520 --> 00:08:23,880 Speaker 7: a very very different picture, a. 186 00:08:23,840 --> 00:08:26,840 Speaker 1: Really optimistic look for people who have the tools, have 187 00:08:26,960 --> 00:08:30,160 Speaker 1: the capability of using artificial intelligence and machine learning to 188 00:08:30,240 --> 00:08:33,440 Speaker 1: actually become more efficient, become more relevant. At a time 189 00:08:33,440 --> 00:08:36,360 Speaker 1: where Microsoft is cutting hundreds of jobs because a number 190 00:08:36,400 --> 00:08:38,760 Speaker 1: of people currently own their roles can be replaced by 191 00:08:38,880 --> 00:08:42,280 Speaker 1: artificial intelligence, how messy would this transition be? Because even 192 00:08:42,320 --> 00:08:44,160 Speaker 1: though there are some people who get paid more, be 193 00:08:44,240 --> 00:08:47,080 Speaker 1: more productive, and be more in demand if they have 194 00:08:47,160 --> 00:08:49,319 Speaker 1: those skills, they're going to be even more people potentially 195 00:08:49,600 --> 00:08:52,040 Speaker 1: who lag behind that and can't catch up quickly. 196 00:08:52,160 --> 00:08:52,400 Speaker 4: Enough. 197 00:08:52,559 --> 00:08:54,760 Speaker 7: Well, for sure, the way that we are going to 198 00:08:54,800 --> 00:08:58,440 Speaker 7: work is going to change. And for those organizations that 199 00:08:58,440 --> 00:09:01,760 Speaker 7: are furthest a head on the AI journey, these skills 200 00:09:01,800 --> 00:09:04,480 Speaker 7: are changing the fastest. And this is a this is 201 00:09:04,520 --> 00:09:07,200 Speaker 7: a very humane problem. This is not a technical problem. 202 00:09:07,240 --> 00:09:09,240 Speaker 7: This is a problem that we have to work through 203 00:09:09,240 --> 00:09:11,280 Speaker 7: with all of our workers, with all of our staff, 204 00:09:11,480 --> 00:09:13,400 Speaker 7: and as leaders, we need to really sure that we're 205 00:09:13,440 --> 00:09:15,840 Speaker 7: investing to make sure that all of our workers in 206 00:09:15,880 --> 00:09:18,840 Speaker 7: every industry have the access to the skills and the 207 00:09:18,960 --> 00:09:21,320 Speaker 7: education and upskilling to be able to take advantage of 208 00:09:21,320 --> 00:09:22,720 Speaker 7: this dramatic productivity game. 209 00:09:22,800 --> 00:09:25,000 Speaker 5: Matt, the courts are going to they just gave Donald 210 00:09:25,040 --> 00:09:27,920 Speaker 5: Trump approval to take away half a million visas here 211 00:09:27,960 --> 00:09:29,920 Speaker 5: in the US. What impact is that going to have 212 00:09:30,040 --> 00:09:30,920 Speaker 5: on the AI sector. 213 00:09:31,440 --> 00:09:36,960 Speaker 7: Well, education is remarkably vibrant place for AI to not 214 00:09:37,040 --> 00:09:40,160 Speaker 7: just be used, but also to be created. AI is 215 00:09:40,360 --> 00:09:42,800 Speaker 7: very very very early, and a lot of the research 216 00:09:42,840 --> 00:09:44,800 Speaker 7: that we need to do to advance the state of 217 00:09:44,840 --> 00:09:46,480 Speaker 7: the art is going to come out of those sorts 218 00:09:46,520 --> 00:09:49,800 Speaker 7: of organizations, those sort of institutions super important that they 219 00:09:49,960 --> 00:09:53,000 Speaker 7: remain funded and remain active. 220 00:09:53,320 --> 00:09:55,200 Speaker 5: Well, Matt, let's talk data centers. For a second, because 221 00:09:55,200 --> 00:09:56,720 Speaker 5: we've got this big news in the market with MATA. 222 00:09:56,800 --> 00:09:58,839 Speaker 5: You know, I've seen some statistics that last year, for 223 00:09:58,880 --> 00:10:00,679 Speaker 5: the four year twenty twenty four, you're in the US 224 00:10:01,000 --> 00:10:03,719 Speaker 5: data center build out accounted for roughly or more than 225 00:10:03,840 --> 00:10:07,520 Speaker 5: eighty percent of the entire US economy's capital expenditures for 226 00:10:07,559 --> 00:10:09,959 Speaker 5: the full year. You know, first we had Microsoft scaling 227 00:10:10,000 --> 00:10:13,040 Speaker 5: backets plans following Deep Seek. Now we have Meta, you know, 228 00:10:13,240 --> 00:10:16,920 Speaker 5: buying it or leasing a nuclear plant. Who are today's investors, 229 00:10:16,960 --> 00:10:19,320 Speaker 5: who are like, who's going to provide the long term 230 00:10:19,360 --> 00:10:22,360 Speaker 5: takeout capital for these data centers after all is said 231 00:10:22,400 --> 00:10:23,200 Speaker 5: and done here. 232 00:10:23,160 --> 00:10:26,200 Speaker 7: Well, data center is super interesting because they're not just 233 00:10:26,320 --> 00:10:29,800 Speaker 7: data centers. It's actually more of a full vertically integrated 234 00:10:29,840 --> 00:10:33,800 Speaker 7: stack of investment that covers just an entirely new ecosystem 235 00:10:34,080 --> 00:10:37,199 Speaker 7: that is being built out across industries because of AI. 236 00:10:37,679 --> 00:10:40,520 Speaker 7: So if you think of just the real estate that 237 00:10:40,559 --> 00:10:43,760 Speaker 7: those data centers have to sit on, the energy infrastructure 238 00:10:43,800 --> 00:10:46,280 Speaker 7: that has to surround those data centers, the data centers 239 00:10:46,320 --> 00:10:49,880 Speaker 7: themselves with all of their discs and their GPUs and 240 00:10:49,920 --> 00:10:53,160 Speaker 7: all of the infrastructure required to house and cool them, 241 00:10:53,400 --> 00:10:56,199 Speaker 7: then you've got the large language models that sit inside 242 00:10:56,200 --> 00:10:59,280 Speaker 7: that infrastructure. You've got the applications that sit on top 243 00:10:59,360 --> 00:11:02,560 Speaker 7: of those language model. So there's a full ecosystem that 244 00:11:02,679 --> 00:11:06,520 Speaker 7: bleeds from real estate to energy, to computer science to 245 00:11:06,600 --> 00:11:09,959 Speaker 7: big tech, which just didn't exist before. And this blurring 246 00:11:10,080 --> 00:11:13,840 Speaker 7: of industries into new ecosystems is happening around data centers 247 00:11:14,200 --> 00:11:16,319 Speaker 7: because of AI, and I think we expect to see 248 00:11:16,360 --> 00:11:18,679 Speaker 7: it across multiple different industries going forward. 249 00:11:18,880 --> 00:11:21,720 Speaker 6: Given the massive investment we've seen from all these companies 250 00:11:21,720 --> 00:11:25,560 Speaker 6: into AI infrastructure, how are you thinking about monetization, mostly 251 00:11:25,600 --> 00:11:28,480 Speaker 6: as you've seen competition pick up, What will the returns 252 00:11:28,520 --> 00:11:30,320 Speaker 6: look like for all of this investment? 253 00:11:31,120 --> 00:11:34,080 Speaker 7: I think it's I think it's an interesting question. I 254 00:11:34,120 --> 00:11:38,160 Speaker 7: don't personally see it as an investment that most organizations 255 00:11:38,160 --> 00:11:39,480 Speaker 7: should be seeking a return from. 256 00:11:39,520 --> 00:11:39,840 Speaker 4: Today. 257 00:11:40,640 --> 00:11:44,640 Speaker 7: AI is more like intellectual infrastructure for your organization. We 258 00:11:44,679 --> 00:11:47,800 Speaker 7: don't look at internet access inside an organization and say, hey, 259 00:11:47,840 --> 00:11:52,440 Speaker 7: what's the return on investment of my bandwidth? Instead, you say, well, 260 00:11:52,520 --> 00:11:54,840 Speaker 7: all of my work is done in a completely different way, 261 00:11:54,840 --> 00:11:56,280 Speaker 7: and in a much more efficient way, in a much 262 00:11:56,320 --> 00:11:59,160 Speaker 7: more productive way, three times more productive in the case 263 00:11:59,160 --> 00:12:02,240 Speaker 7: of AI. What is the impact of not doing that? 264 00:12:02,679 --> 00:12:05,160 Speaker 7: And so you see very very few organizations today that 265 00:12:05,240 --> 00:12:09,360 Speaker 7: don't enable broad fast internet access to their organizations and 266 00:12:09,400 --> 00:12:11,440 Speaker 7: to their teams. We'll see the same thing with AI. 267 00:12:11,920 --> 00:12:16,440 Speaker 7: Most organizations will want for upskilling and retention and for 268 00:12:16,760 --> 00:12:19,480 Speaker 7: hiring the very best people and keeping productive the people 269 00:12:19,520 --> 00:12:22,079 Speaker 7: they've already got. They're going to want the most robust 270 00:12:22,360 --> 00:12:25,920 Speaker 7: AI intellectual infrastructure inside their organization, similar to networking. 271 00:12:25,960 --> 00:12:28,160 Speaker 1: How advanced of companies been in the US and adopt 272 00:12:28,320 --> 00:12:31,160 Speaker 1: adapting to some of these new tools Given the fact 273 00:12:31,200 --> 00:12:34,280 Speaker 1: that it is quickly evolving, the bigger have an advantage 274 00:12:34,440 --> 00:12:37,360 Speaker 1: with respect to data, with respect to resources. How much 275 00:12:37,440 --> 00:12:40,960 Speaker 1: is this really bifurcated this sphere from big to small companies, 276 00:12:41,200 --> 00:12:41,559 Speaker 1: it's not. 277 00:12:41,559 --> 00:12:44,760 Speaker 7: So much big to small. It's actually again the little counterintuitive. 278 00:12:44,840 --> 00:12:47,839 Speaker 7: So those organizations that we see moving the quickest are 279 00:12:47,880 --> 00:12:53,359 Speaker 7: actually the regulated industries, so financial services, insurance, healthcare, manufacturing, 280 00:12:53,400 --> 00:12:57,640 Speaker 7: those sorts of domains where the compliance with the regulations 281 00:12:57,679 --> 00:13:00,560 Speaker 7: around that they've had to live with the past twenty 282 00:13:00,640 --> 00:13:02,640 Speaker 7: years and maybe have felt like a bit of a headwind, 283 00:13:02,880 --> 00:13:06,839 Speaker 7: particularly around data governance and data quality. Those are all 284 00:13:06,880 --> 00:13:08,560 Speaker 7: the things that you need to get right to be 285 00:13:08,600 --> 00:13:12,160 Speaker 7: successful in artificial intelligence, and so whilst that headwind has 286 00:13:12,200 --> 00:13:14,560 Speaker 7: been there, it's actually driven all the right investments for 287 00:13:14,600 --> 00:13:18,160 Speaker 7: those organizations to be successful with artificial intelligence. And as 288 00:13:18,200 --> 00:13:21,400 Speaker 7: a result, the aipiece is just a small incremental lift 289 00:13:21,400 --> 00:13:23,000 Speaker 7: on top of that and they're able to move much 290 00:13:23,000 --> 00:13:23,520 Speaker 7: more quickly. 291 00:13:23,720 --> 00:13:25,640 Speaker 1: Matt Word of PwC, thank you so much for being 292 00:13:25,679 --> 00:13:25,960 Speaker 1: with us. 293 00:13:26,040 --> 00:13:26,319 Speaker 4: Welcome. 294 00:13:35,440 --> 00:13:38,720 Speaker 1: Republican Congressman Andy Barr of Kentucky voted in favor of 295 00:13:38,760 --> 00:13:42,079 Speaker 1: the President's bill last month, and he joins us now. Congressman, 296 00:13:42,120 --> 00:13:43,840 Speaker 1: thank you so much for being with us today. 297 00:13:43,920 --> 00:13:45,080 Speaker 4: Morning, Lisa, Good morning. 298 00:13:45,200 --> 00:13:47,920 Speaker 1: So I want to start with asking about the deficit, 299 00:13:48,000 --> 00:13:50,520 Speaker 1: and I'm watching that thirty year bond yield as everyone 300 00:13:50,559 --> 00:13:55,079 Speaker 1: on Washington in Washington, DC is do you believe what 301 00:13:55,160 --> 00:13:58,120 Speaker 1: President Trump said on his truth social posts last night 302 00:13:58,600 --> 00:14:01,040 Speaker 1: that this doesn't add to the deficit, even though you 303 00:14:01,120 --> 00:14:03,839 Speaker 1: have a whole host of different estimates saying that it 304 00:14:03,880 --> 00:14:06,040 Speaker 1: will add three trillion dollars to the deficit over the 305 00:14:06,080 --> 00:14:07,040 Speaker 1: next ten years. 306 00:14:07,559 --> 00:14:11,440 Speaker 8: Well, Republicans are also watching the thirty year We're watching 307 00:14:11,480 --> 00:14:14,640 Speaker 8: the tenure, We're watching instability in the bond market. We're 308 00:14:14,679 --> 00:14:20,520 Speaker 8: looking at weakness in demand for treasuries, but blaming the 309 00:14:20,560 --> 00:14:24,720 Speaker 8: Big Beautiful Bill for weakness in the treasury market or 310 00:14:24,760 --> 00:14:28,920 Speaker 8: instability in the treasury market is like blaming the firefighter. 311 00:14:29,520 --> 00:14:34,480 Speaker 8: The arsonists blaming the firefighter for the inferno. We just 312 00:14:34,560 --> 00:14:38,440 Speaker 8: went through four years of a drunken sailor spending spree 313 00:14:38,520 --> 00:14:40,760 Speaker 8: by the Democrats that put. 314 00:14:40,640 --> 00:14:43,120 Speaker 4: Us way behind the eight ball. 315 00:14:43,160 --> 00:14:47,200 Speaker 8: Also COVID, and there was some bipartisan spending associated with COVID, 316 00:14:47,520 --> 00:14:52,240 Speaker 8: But it's very rich for Democrats to accuse Republicans of 317 00:14:52,240 --> 00:14:56,560 Speaker 8: fiscal irresponsibility when we just went through this spending binge 318 00:14:56,600 --> 00:14:59,960 Speaker 8: that produced forty year high inflation, twenty percent increase in price. 319 00:15:00,880 --> 00:15:02,920 Speaker 4: Look, the bottom line is, we know we have to. 320 00:15:03,080 --> 00:15:06,720 Speaker 8: Achieve a greater fiscal discipline and frankly, we need some 321 00:15:06,760 --> 00:15:10,760 Speaker 8: bipartisan work on mandatory spending reform. But we also need 322 00:15:10,880 --> 00:15:13,880 Speaker 8: is economic growth. We will never balance the budget, we 323 00:15:13,920 --> 00:15:16,920 Speaker 8: will never get our fiscal house in order without robust 324 00:15:16,920 --> 00:15:17,680 Speaker 8: economic growth. 325 00:15:17,760 --> 00:15:19,400 Speaker 4: I believe, as Kevin. 326 00:15:19,160 --> 00:15:22,680 Speaker 8: Hassett has argued, that this legislation, this one big beautiful 327 00:15:22,720 --> 00:15:27,080 Speaker 8: bill could produce, along with the deregulatory project, along with 328 00:15:27,120 --> 00:15:30,000 Speaker 8: more energy production in the United States, that we could 329 00:15:30,080 --> 00:15:33,360 Speaker 8: achieve that three to four percent GDP growth. That's the 330 00:15:33,480 --> 00:15:36,200 Speaker 8: kind of dynamism that is not accounted for by the 331 00:15:36,240 --> 00:15:38,840 Speaker 8: Congressional Budget Office and some of these static scores. 332 00:15:38,880 --> 00:15:41,320 Speaker 1: So let's talk about that why it's not being accounted 333 00:15:41,320 --> 00:15:44,520 Speaker 1: for that in places like the Committee for a Responsible 334 00:15:44,560 --> 00:15:47,760 Speaker 1: Federal Budget that expects us to increase the deficit and 335 00:15:47,920 --> 00:15:51,240 Speaker 1: says it only cut spending by zero point eight percent 336 00:15:51,320 --> 00:15:55,640 Speaker 1: of GDP. Where are people not including growth that you 337 00:15:55,720 --> 00:15:57,560 Speaker 1: see as being part of this bill. 338 00:15:57,720 --> 00:15:59,520 Speaker 4: Well, I mean, the CBO just doesn't. 339 00:15:59,560 --> 00:16:04,400 Speaker 8: They were off a trillion dollars underestimating revenue reflow that 340 00:16:04,440 --> 00:16:06,400 Speaker 8: came as a result of growth from the Tax Cuts 341 00:16:06,440 --> 00:16:08,920 Speaker 8: and Jobs Act in twenty seventeen. The CBO has a 342 00:16:09,040 --> 00:16:12,840 Speaker 8: terrible track record of not including the dynamic impacts of 343 00:16:13,640 --> 00:16:16,160 Speaker 8: these tax cuts. And in this bill, not only does 344 00:16:16,200 --> 00:16:20,040 Speaker 8: it make key features permanent, providing that certainty instability for 345 00:16:20,200 --> 00:16:23,720 Speaker 8: private sector investors, but the business tax cuts are really 346 00:16:23,760 --> 00:16:26,960 Speaker 8: the rocket fuel that are included in the bill. So 347 00:16:27,520 --> 00:16:31,000 Speaker 8: bonus appreciation for five years pulling forward all that capex. 348 00:16:32,360 --> 00:16:35,200 Speaker 8: There's a reason why the Atlanta Fed is projecting four 349 00:16:35,280 --> 00:16:39,680 Speaker 8: percent GDP in the second quarter because business businesses and 350 00:16:39,800 --> 00:16:44,640 Speaker 8: business optimism is increasing because of anticipation of R and 351 00:16:44,720 --> 00:16:50,040 Speaker 8: D interest deductibility, increasing the small business pass through deduction 352 00:16:50,120 --> 00:16:53,160 Speaker 8: from twenty to twenty three percent, making that permanent. So 353 00:16:53,360 --> 00:16:59,200 Speaker 8: these business tax cuts are really increasing business sentiment and 354 00:16:59,360 --> 00:17:02,440 Speaker 8: I think again pulling forward that investment that can really 355 00:17:03,720 --> 00:17:05,280 Speaker 8: allow this economy. 356 00:17:04,840 --> 00:17:05,400 Speaker 4: To take off. 357 00:17:05,520 --> 00:17:08,360 Speaker 5: Congressman Eastid on the House Select Committee on the Strategic 358 00:17:08,400 --> 00:17:11,679 Speaker 5: competition between the US and Chinese Communist Party, what is 359 00:17:11,720 --> 00:17:14,800 Speaker 5: going on between President she and President Trump? Where are 360 00:17:14,800 --> 00:17:16,160 Speaker 5: we with that relationship right now? 361 00:17:16,359 --> 00:17:19,199 Speaker 8: I think President Trump is the first president Republican or 362 00:17:19,240 --> 00:17:22,680 Speaker 8: Democrat in our lifetime who has taken the threat from 363 00:17:22,760 --> 00:17:26,280 Speaker 8: China seriously. Under this president, no more unfair trade deals, 364 00:17:26,560 --> 00:17:30,119 Speaker 8: no more Chinese fentanyl poisoning our people through the southern border, 365 00:17:30,760 --> 00:17:34,440 Speaker 8: and no more spy balloons coming across the continental United 366 00:17:34,480 --> 00:17:39,399 Speaker 8: States deterrence, peace through strength, that is the idea the 367 00:17:39,800 --> 00:17:42,760 Speaker 8: Big Beautiful Bill. To the extent we increase spending in there, 368 00:17:42,800 --> 00:17:47,040 Speaker 8: there's more military modernization dedicated for the Western Pacific theater. 369 00:17:47,880 --> 00:17:51,439 Speaker 4: That's what we need. We need to win this competition. 370 00:17:51,560 --> 00:17:53,320 Speaker 8: We need to be the best version of ourselves. We 371 00:17:53,359 --> 00:17:57,280 Speaker 8: need to enhance, of course, our investment in defense, but 372 00:17:57,320 --> 00:18:01,040 Speaker 8: we also have to be strong economically, and we have 373 00:18:01,080 --> 00:18:04,600 Speaker 8: to grow. China has its problems, we have a debt problem, 374 00:18:04,960 --> 00:18:08,800 Speaker 8: but we can produce growth by being free market capitalists. 375 00:18:08,920 --> 00:18:11,000 Speaker 1: There is a question, though, in your quest to be 376 00:18:11,040 --> 00:18:15,359 Speaker 1: free market capitalists of both getting revenue from tariffs that 377 00:18:15,520 --> 00:18:20,480 Speaker 1: have to do with continued trade, albeit with something of attacks, 378 00:18:21,160 --> 00:18:24,320 Speaker 1: versus decoupling in its entirety. And what you see from 379 00:18:24,359 --> 00:18:26,320 Speaker 1: a lot of the data right now is that trade 380 00:18:26,359 --> 00:18:28,960 Speaker 1: is going down quite considerably and exports from the US 381 00:18:29,000 --> 00:18:31,360 Speaker 1: are going down quite considerably. So how do you account 382 00:18:31,440 --> 00:18:34,359 Speaker 1: for some of the revenue and the growth from some 383 00:18:34,440 --> 00:18:38,440 Speaker 1: of these tariffs if you're also talking about potentially decoupling 384 00:18:38,520 --> 00:18:41,400 Speaker 1: in certain key industries between some of the biggest economies 385 00:18:41,400 --> 00:18:41,760 Speaker 1: out there. 386 00:18:42,320 --> 00:18:45,400 Speaker 8: I liked what Jamie Diamond said at the Reagan Economic 387 00:18:45,440 --> 00:18:47,760 Speaker 8: Forum in California. 388 00:18:47,160 --> 00:18:48,000 Speaker 4: When he's said. 389 00:18:50,320 --> 00:18:53,800 Speaker 8: When he talked about, you know, strategic de risking from 390 00:18:53,920 --> 00:18:58,480 Speaker 8: China on those national security sensitive industries, not complete decoupling 391 00:18:58,520 --> 00:19:02,040 Speaker 8: on things like tennisuees or basketball shoes or apparel or 392 00:19:02,119 --> 00:19:05,040 Speaker 8: things that do not implicate national security. What I would 393 00:19:05,080 --> 00:19:08,040 Speaker 8: say about that in general as a free trader, why 394 00:19:08,160 --> 00:19:12,639 Speaker 8: I support President Trump's agenda is because of the enormous 395 00:19:12,680 --> 00:19:16,199 Speaker 8: potential that this has to actually open up markets for 396 00:19:16,320 --> 00:19:19,440 Speaker 8: American exporters. If we can open up India, for example, 397 00:19:19,440 --> 00:19:24,359 Speaker 8: and reduce their protectionism and their trade barriers against our exporters, 398 00:19:24,480 --> 00:19:27,119 Speaker 8: that is massive. And if you think about it, from 399 00:19:27,160 --> 00:19:30,159 Speaker 8: where we were on liberation data, now we're back in 400 00:19:30,320 --> 00:19:31,960 Speaker 8: basically a bull market. 401 00:19:31,680 --> 00:19:33,000 Speaker 4: With a correction embedded. 402 00:19:33,280 --> 00:19:36,040 Speaker 8: Every trade deal that is inked from here on out 403 00:19:36,280 --> 00:19:38,560 Speaker 8: is again jet fuel for the economy. We get the 404 00:19:38,600 --> 00:19:41,959 Speaker 8: certainty of trade deals in place with more market access 405 00:19:41,960 --> 00:19:45,840 Speaker 8: for American exporters, plus deregulation, plus the tax cuts. 406 00:19:46,119 --> 00:19:47,520 Speaker 4: I do see four percent GDP. 407 00:19:47,800 --> 00:19:49,720 Speaker 1: What do you think the Senate is going to do 408 00:19:49,960 --> 00:19:52,000 Speaker 1: to change the bill that you would be okay with 409 00:19:52,080 --> 00:19:56,840 Speaker 1: in terms of cutting salt tax deductions, potentially adding back 410 00:19:56,960 --> 00:20:00,159 Speaker 1: and potentially even increasing some of the CBO's score for 411 00:20:00,160 --> 00:20:03,199 Speaker 1: the deficits with respect to medicaid. What are you going 412 00:20:03,240 --> 00:20:03,919 Speaker 1: to be okay with? 413 00:20:04,480 --> 00:20:07,360 Speaker 8: Well, look, we've got to get this done. I think 414 00:20:08,080 --> 00:20:10,800 Speaker 8: we have to have an ability to compromise on some 415 00:20:10,840 --> 00:20:13,560 Speaker 8: of these details, whether it's salt, whether it's Medicaid. 416 00:20:14,240 --> 00:20:16,440 Speaker 4: I welcome fiscal. 417 00:20:16,480 --> 00:20:18,399 Speaker 8: Hawks in the Senate saying hey, we need to do 418 00:20:18,480 --> 00:20:22,439 Speaker 8: more on the spending restraint side. So Ron Johnson, my 419 00:20:22,600 --> 00:20:26,320 Speaker 8: colleague Ran Paul from Kentucky. Good for them for asking 420 00:20:26,359 --> 00:20:29,560 Speaker 8: for a reduced size and scope of the federal bureaucracy. 421 00:20:29,600 --> 00:20:32,680 Speaker 8: I like that, let's codify some of the doughe savings. 422 00:20:33,440 --> 00:20:35,119 Speaker 8: But at the end of the day, we have to 423 00:20:35,160 --> 00:20:39,120 Speaker 8: get this done and deliver this. Seventy seven million Americans 424 00:20:39,280 --> 00:20:42,439 Speaker 8: voted for this pro growth agenda. I think at the 425 00:20:42,480 --> 00:20:44,440 Speaker 8: end of the day, we'll come together, we'll get it done. 426 00:20:44,520 --> 00:20:46,359 Speaker 1: Congresspin, thank you so much for being here. Great to 427 00:20:46,359 --> 00:20:49,200 Speaker 1: do with Congressman Andy Barr here in New York. 428 00:20:49,880 --> 00:20:53,440 Speaker 2: This is the Bloomberg Seventans podcast, bringing you the best 429 00:20:53,440 --> 00:20:56,800 Speaker 2: in markets, economics, angiet politics. You can watch the show 430 00:20:56,840 --> 00:20:59,680 Speaker 2: live on Bloomberg TV weekday mornings from six am to 431 00:20:59,800 --> 00:21:03,679 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 432 00:21:03,800 --> 00:21:06,040 Speaker 2: or anywhere else you listen, and as always, on the 433 00:21:06,040 --> 00:21:08,440 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. 434 00:21:12,359 --> 00:21:12,840 Speaker 1: Mm hmm.