WEBVTT - US Bond Yields, Kevin Warsh, and Nvidia Preview 0:00:00.040 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.800 --> 0:00:17.880 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.960 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.320 --> 0:00:25.640 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.240 us live on YouTube. 0:00:27.600 --> 0:00:31.760 We start unbelievably strong for Global Wall Street. Arguably our 0:00:31.800 --> 0:00:35.160 conversation of the day, given what's going on with fixed income. 0:00:35.320 --> 0:00:39.440 Kelsey row is executive director Fixed Income at JP Morgan. 0:00:39.680 --> 0:00:44.680 She is the closest desk to Dangerous Provisions breakfast food. 0:00:44.680 --> 0:00:47.680 Oh okay, h Jpie Morgan, I walked live. Well there, 0:00:47.960 --> 0:00:51.240 it's fourteen steps away. So you and I are having 0:00:51.479 --> 0:00:55.160 breakfast at Dangerous Provisions this morning, along with your team 0:00:55.200 --> 0:00:57.480 and the great hallmark of Bob Michael's team. As you 0:00:57.520 --> 0:01:00.480 guys argue like cats and dogs and come up with 0:01:00.520 --> 0:01:04.760 a consensus on the thirty year bond. Do you have 0:01:04.840 --> 0:01:07.760 in your head a yield? It's a tipping point, a 0:01:07.840 --> 0:01:10.160 great point where things unwind. 0:01:11.080 --> 0:01:14.520 It's difficult to say exactly what that level is, but 0:01:14.640 --> 0:01:17.560 I do think that we can take some signal from 0:01:17.640 --> 0:01:20.120 the markets right now and also from the way that 0:01:20.240 --> 0:01:24.679 policy makers are reacting So when we reached five thirty 0:01:24.920 --> 0:01:28.520 a five point three percent on the thirty year treasure yield, right, 0:01:28.680 --> 0:01:33.120 that's when we saw Secretary Bessant step in with the buybacks. 0:01:33.480 --> 0:01:38.039 We saw a quick ten basis point rally lower on thirties, 0:01:38.440 --> 0:01:41.800 and then essentially all of that got wiped away, which 0:01:42.120 --> 0:01:46.039 I'm not going to say means that the whole thing was. 0:01:46.120 --> 0:01:47.520 A complete waste. 0:01:48.200 --> 0:01:51.720 There is signaling there there is more that he can do, 0:01:52.200 --> 0:01:55.400 but it does speak to the fact that to really 0:01:55.440 --> 0:01:58.520 get stabilization in the markets right now, it's not just 0:01:58.760 --> 0:02:02.720 one factor. You're going to need multiple factors to come together. 0:02:02.840 --> 0:02:05.560 So what we've been looking at is the fall of 0:02:05.600 --> 0:02:09.320 twenty twenty three experience. So that was a time where 0:02:09.360 --> 0:02:12.200 the Fed had finished hiking, but people weren't quite sure. 0:02:12.960 --> 0:02:17.119 The tenure yield tested five percent and then ultimately retraced, 0:02:17.520 --> 0:02:19.400 and there were a number of things that came together. 0:02:19.560 --> 0:02:23.240 One of them was a surprise from the Treasury at 0:02:23.240 --> 0:02:27.760 the time. Jannie Yellen, who had shifted the issue in schedule, 0:02:28.840 --> 0:02:32.480 made some surprise announcements in terms of less long end issuance, 0:02:32.520 --> 0:02:35.840 and that did help stabilize the market, but ultimately it 0:02:35.919 --> 0:02:39.560 also had to come from softer economic data and a 0:02:39.720 --> 0:02:43.160 shift in the FED. And so that's why I think 0:02:43.360 --> 0:02:45.800 while I can point to similarities between that time, there 0:02:45.800 --> 0:02:49.119 are also big differences, which is then you know there 0:02:49.240 --> 0:02:51.639 was a much greater concern of a growth slowdown. 0:02:51.960 --> 0:02:53.320 We're not seeing that now. 0:02:53.400 --> 0:02:56.560 So when we're talking about stabilization and yields, we're not 0:02:56.680 --> 0:02:59.800 talking about one hundred basis point retracement, but we are 0:03:00.000 --> 0:03:03.720 talking about the potential that term premium has rised sufficiently 0:03:04.639 --> 0:03:08.400 and we may be at a point where, you know, 0:03:08.480 --> 0:03:12.040 you can find some stabilization if the right factors come 0:03:12.040 --> 0:03:12.520 into place. 0:03:12.639 --> 0:03:15.720 Stabilization stabilization, I mean a five handle in the thirty 0:03:15.800 --> 0:03:16.800 year Should we get used to that? 0:03:16.840 --> 0:03:18.600 Do you think we could? 0:03:19.000 --> 0:03:22.520 And I think these are levels that are really more normal, 0:03:22.560 --> 0:03:24.359 That's what we want to be thinking about them as 0:03:24.360 --> 0:03:26.440 their normal relative to. 0:03:26.680 --> 0:03:27.880 The growth backdrop. 0:03:27.919 --> 0:03:30.040 When you look at nominal GDP, when you look at 0:03:30.040 --> 0:03:32.640 real GDP, you know, these these. 0:03:32.480 --> 0:03:34.840 Are levels that are are normal to those. 0:03:34.920 --> 0:03:38.200 And also this is an environment where the curve is 0:03:38.320 --> 0:03:41.600 very steep to cash. So thinking about it as a 0:03:41.640 --> 0:03:45.400 bond investor, we've been through a lot of periods in 0:03:45.440 --> 0:03:49.320 the last few years where nobody looked at bonds because 0:03:49.480 --> 0:03:53.480 cash had a higher yield than bonds and we had 0:03:53.480 --> 0:03:56.040 inverted yield curves and those that was not a good 0:03:56.120 --> 0:03:57.840 environment for fixing come demand. 0:03:58.320 --> 0:04:00.560 Right now, we actually have the opp that we have. 0:04:00.680 --> 0:04:03.600 Very steep curves. There's a significant me oald to pick 0:04:03.680 --> 0:04:07.560 up to cash. There's roll down when you extend beyond 0:04:07.680 --> 0:04:09.800 the curve. So there's actually a lot of opportunity. And 0:04:09.840 --> 0:04:12.840 so the thing that I've been focused on. Everybody talks 0:04:12.840 --> 0:04:16.480 about record growth supply. You know, in September in investment 0:04:16.520 --> 0:04:19.760 grade we're looking at anywhere between one hundred and seventy 0:04:19.760 --> 0:04:22.040 five billion and two hundred and fifty billion of supply. 0:04:22.640 --> 0:04:26.120 But also what's been forgotten is that you've also seen 0:04:26.200 --> 0:04:30.240 record demand for high grade funds. So this year so far, 0:04:30.360 --> 0:04:33.200 year to date, it's the largest in terms of flows 0:04:33.240 --> 0:04:36.920 into high grade funds compared to every cumulative you're back 0:04:36.960 --> 0:04:37.600 to twenty ten. 0:04:37.720 --> 0:04:39.560 Would you say in this and I was grilled on 0:04:39.680 --> 0:04:42.240 this this weekend by everyone. I mean, these two multuous 0:04:42.279 --> 0:04:46.120 times that we're in, you make the distinction that late nine, 0:04:46.360 --> 0:04:51.800 late twenty twenty three was about a slower economic growth. 0:04:52.279 --> 0:04:54.880 To me, the most important person in this debate is 0:04:54.960 --> 0:04:57.760 Michael Feroli and that we have to figure out what 0:04:57.960 --> 0:05:01.440 nominal GDP's going to do, what real GDP is going 0:05:01.480 --> 0:05:04.039 to do, And isn't the solution here to get away 0:05:04.080 --> 0:05:08.640 from a ridiculous banana republic boom economy statistic. 0:05:09.839 --> 0:05:13.400 So I'm not sure that I agree with that because 0:05:13.520 --> 0:05:19.200 it really depends on what the neutral rate is and 0:05:19.440 --> 0:05:21.120 if this is causing inflation. 0:05:21.760 --> 0:05:23.960 So when you talk about concerns. 0:05:23.520 --> 0:05:26.400 About deficits, when you talk about concerns around running the 0:05:26.400 --> 0:05:30.960 economy too hot, the reason that those are unsustainable is 0:05:31.000 --> 0:05:34.280 because they cause too much inflation. But the reality is 0:05:34.320 --> 0:05:40.480 that we're not actually seeing signs of inflation or runaway 0:05:40.520 --> 0:05:43.240 inflation in the data or in the markets. So if 0:05:43.240 --> 0:05:47.000 you look at inflation expectations, those have remained really well anchored. 0:05:47.040 --> 0:05:49.560 If you look at CPI, which I know is not 0:05:49.600 --> 0:05:52.000 the FEDS metric, but the three month run rate is 0:05:52.040 --> 0:05:54.600 below two percent, and the sixth month in the year 0:05:54.600 --> 0:05:56.280 over year at two point four and two and a 0:05:56.320 --> 0:05:59.640 half percent. Core PCE, the FEDS preferred measure, is actually 0:05:59.760 --> 0:06:02.680 the inflation outlier. Now I'm not saying inflation is low, 0:06:02.760 --> 0:06:06.239 it is running somewhat above the Fed's target. 0:06:06.560 --> 0:06:09.240 But that being said, I'm not seeing the signs that 0:06:09.279 --> 0:06:11.400 this is unsustainable. 0:06:10.600 --> 0:06:14.920 As it relates to creating excess inflation pressure that people 0:06:14.920 --> 0:06:16.080 should be concerned about. 0:06:16.839 --> 0:06:17.760 FED Chairman Walsh. 0:06:17.880 --> 0:06:19.680 He's going to be out in Jackson Hole later this week. 0:06:19.760 --> 0:06:20.920 What do you expect to hear from him? 0:06:21.279 --> 0:06:23.000 That is a really good question. 0:06:23.120 --> 0:06:24.800 So one of the things that I have been doing 0:06:25.000 --> 0:06:28.839 is going around and asking what do you want out 0:06:28.839 --> 0:06:29.360 of Worsh. 0:06:29.400 --> 0:06:31.599 Everybody agrees that they want to. 0:06:31.600 --> 0:06:34.719 Hear something good out of Worsh, that this is a 0:06:34.760 --> 0:06:38.000 great opportunity for him to maybe clean up his messaging, 0:06:38.320 --> 0:06:40.520 to create some clarity, to create some stability. 0:06:40.520 --> 0:06:43.320 But then when you ask people, well, what actually does 0:06:43.360 --> 0:06:44.000 he need to. 0:06:43.960 --> 0:06:47.960 Say to get that outcome, that's where the range of 0:06:48.040 --> 0:06:51.039 views is actually very wide. So there is a camp 0:06:51.080 --> 0:06:53.680 out there that thinks that the only way to get 0:06:53.680 --> 0:06:56.279 the long end the under control is for him to 0:06:56.320 --> 0:07:00.000 sound very hawkish, to hint at a hike in septem 0:07:00.360 --> 0:07:02.040 That's not what the bond market is pricing. 0:07:02.560 --> 0:07:04.279 I'm not necessarily in that camp. 0:07:04.360 --> 0:07:06.560 I don't think that you need to be hawkish to 0:07:06.600 --> 0:07:09.600 be credible, but to be credible, you do need to 0:07:09.640 --> 0:07:14.160 point to what data you're looking at and create a 0:07:14.160 --> 0:07:17.360 allow the market to understand why there is a case 0:07:17.400 --> 0:07:19.280 to stay on hold and not for the future. 0:07:19.440 --> 0:07:21.480 Why not just explain why you did what you did 0:07:21.480 --> 0:07:21.880 in July. 0:07:22.640 --> 0:07:25.680 Listen to her, She's like she's hot, fush, I know 0:07:25.800 --> 0:07:28.720 she's on fire. Kelsey Baro, thank us so much with 0:07:28.840 --> 0:07:34.559 JP Margaret stay with us. More from Bloomberg Surveillance coming 0:07:34.640 --> 0:07:35.640 up after this. 0:07:42.880 --> 0:07:46.480 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:07:46.520 --> 0:07:49.680 weekday afternoons from seven to ten am Eastern Listen on 0:07:49.760 --> 0:07:53.440 Applecarplay and Android Otto with the Bloomberg Business app, or 0:07:53.560 --> 0:07:55.080 watch us live on YouTube. 0:07:55.680 --> 0:07:59.240 Sarah House chewin just right now with Wells Fargo, which 0:07:59.280 --> 0:08:02.440 is a good thing. Working with Thomas Purcelli down there 0:08:02.640 --> 0:08:04.800 and I love buried in your notes, Sarah, how you're 0:08:04.800 --> 0:08:07.800 saying Jackson hole could be a you? Honor? Are you 0:08:07.880 --> 0:08:11.920 telling me with this anticipation? Chairman Walsh is only going 0:08:12.000 --> 0:08:13.640 to talk about task forces? 0:08:15.160 --> 0:08:17.360 Yeah, So obviously we all have to pay attention to 0:08:17.400 --> 0:08:19.960 this speech because at times it has been used to 0:08:20.400 --> 0:08:24.080 give some pretty important policy hints, but more often than not, 0:08:24.360 --> 0:08:27.280 it's used to address some of the bigger questions out there. 0:08:27.320 --> 0:08:30.560 And while I think there has been some pushback about 0:08:30.760 --> 0:08:34.760 Chairworsh's communication so far, he's a lesson more guy when 0:08:34.760 --> 0:08:38.640 it comes to laying out his reaction function. And we're 0:08:38.679 --> 0:08:41.000 still only three months in, so I don't think he's 0:08:41.040 --> 0:08:45.000 going to abandon that strategy and I think if anything, it'll. 0:08:44.720 --> 0:08:47.640 Probably be used to lay out some more of what the. 0:08:47.600 --> 0:08:50.400 Task forces are trying to solve for maybe what some 0:08:50.440 --> 0:08:53.679 of the potential options are around size and composition and 0:08:53.800 --> 0:08:57.360 balance sheet, how they use the SEP. But they're not 0:08:57.400 --> 0:09:00.280 going to commit to anything, but I think ultimately it's 0:09:00.280 --> 0:09:03.440 going to be used to buy some time until those 0:09:03.480 --> 0:09:05.760 task forces are complete with their findings. 0:09:06.040 --> 0:09:07.679 Sir, I think one of the task force is that 0:09:07.720 --> 0:09:09.959 a lot of folks are really focusing on is kind 0:09:09.960 --> 0:09:14.000 of what data might the FED look at that's maybe 0:09:14.000 --> 0:09:16.840 something different than what they've done in the past. What 0:09:16.840 --> 0:09:18.040 do you expect to hear on that front? 0:09:19.280 --> 0:09:20.040 Yeah, so I think. 0:09:19.880 --> 0:09:23.840 We'll hear more in terms of the different alternative data sources, 0:09:23.920 --> 0:09:26.480 So particularly when it comes to the labor market, there's 0:09:26.520 --> 0:09:29.040 a lot of other options for the FED to look 0:09:29.080 --> 0:09:32.560 at in addition to the monthly Employment Report, some of 0:09:32.559 --> 0:09:35.160 the other BLS data like the Jobs Opening and Labor 0:09:35.480 --> 0:09:38.920 and Labor Turnover Survey. But I think ultimately, even as 0:09:39.320 --> 0:09:41.840 I think the FED is going to try to leverage 0:09:41.880 --> 0:09:45.120 some of these alternative data sources that do leverage the 0:09:45.120 --> 0:09:47.800 big data that we have so much access to now 0:09:48.040 --> 0:09:50.880 in the economy, it would really be more about how 0:09:50.960 --> 0:09:54.560 those data sources are going to complement the government data, 0:09:54.600 --> 0:09:56.760 which still remains the gold standard I think, for all 0:09:57.040 --> 0:10:00.160 the different issues it's had in terms of survey responses. 0:09:59.679 --> 0:10:00.920 Fund et cetera. 0:10:01.160 --> 0:10:03.959 It's the one thing that's designed to really mimic the 0:10:04.360 --> 0:10:05.319 broader economy. 0:10:05.480 --> 0:10:06.440 So I would. 0:10:06.200 --> 0:10:08.400 Expect a task force like that, or it'll highlight a 0:10:08.400 --> 0:10:11.160 lot of the other options available, But it all comes 0:10:11.200 --> 0:10:13.360 down to what do they say together in concert. You 0:10:13.360 --> 0:10:16.240 can't just switch from just going from some of the 0:10:16.240 --> 0:10:19.920 government data to these alternative sources, but it's all about 0:10:19.960 --> 0:10:23.360 what do they say together and leveraging that additional information. 0:10:24.440 --> 0:10:26.680 Sarah, we've had now, you know, four or five days 0:10:26.679 --> 0:10:30.320 to kind of digest Treasury Secretary Vesent and is bond 0:10:30.520 --> 0:10:33.760 buying efforts last week. How do you guys at Wells 0:10:33.840 --> 0:10:35.240 Fargo think about that going forward. 0:10:36.360 --> 0:10:37.880 Yeah, so I think, I mean, in some ways this 0:10:38.000 --> 0:10:41.480 is just a short term play to help bring those 0:10:41.480 --> 0:10:45.520 longer and yields down, and it's not going to address 0:10:45.720 --> 0:10:49.439 what we think is the underlying issue, which is really 0:10:49.480 --> 0:10:53.319 these unsustainable fiscal deficits. So yes, there's been other factors 0:10:53.360 --> 0:10:58.559 at play, like increase competition from corporate borrowers, additional uncertainty 0:10:58.760 --> 0:11:02.280 or around the geopolitical inflation, how the Fed's going to 0:11:02.360 --> 0:11:04.880 handle that, But so much of this comes down to 0:11:05.559 --> 0:11:07.559 that we have six percent deficits at a time of 0:11:07.600 --> 0:11:12.080 full employment with I think neither party willing to address that. 0:11:12.400 --> 0:11:16.240 And so I think this doesn't get away that you know, 0:11:16.320 --> 0:11:19.000 this isn't going to bring great sustainably lower Sarah. 0:11:19.000 --> 0:11:20.679 I was thinking about this this weekend with all the 0:11:20.880 --> 0:11:24.440 hysteria Thursday, Friday, and we're living in it right now, folks. 0:11:24.440 --> 0:11:27.520 Future is negative twenty, the VICS sixteen. Again, you know, 0:11:27.840 --> 0:11:30.839 it's not like a Vixa thirty. But there's a lot 0:11:30.840 --> 0:11:34.600 of emotion out there, Sarah. What's the likelihood and wells 0:11:34.679 --> 0:11:38.920 Fargo's really good at this. What's the likelihood that in 0:11:38.960 --> 0:11:44.920 set us some drama? We just keep moving forward with 0:11:45.040 --> 0:11:47.760 this successful American economy. 0:11:48.280 --> 0:11:49.959 Yeah, I mean, I think that's what we've been seeing 0:11:50.000 --> 0:11:50.920 these past few years. 0:11:51.000 --> 0:11:53.920 You've thrown so much at the US economy, everything from 0:11:54.120 --> 0:11:57.680 that aggressive fat hiking cycle to some of them some 0:11:57.760 --> 0:12:00.040 of the biggest changes in trade, Paul. 0:12:00.200 --> 0:12:03.160 See that we've seen in decades. 0:12:03.240 --> 0:12:07.600 You've had some questions around fiscal we've had now higher 0:12:07.600 --> 0:12:11.600 gas prices back above four dollars. But as we've seen 0:12:11.880 --> 0:12:14.600 all these different challenges thrown out the US economy, the 0:12:14.640 --> 0:12:18.000 consumer continues to spend, and of course we've also had 0:12:18.120 --> 0:12:23.040 this very positive secular shock coming from the AI investment. 0:12:23.240 --> 0:12:26.120 So our expectation is that we continue to see pretty 0:12:26.160 --> 0:12:28.520 decent growth through the back half of the year, so 0:12:28.520 --> 0:12:31.680 somewhere a little over over two percent. Maybe consumer not 0:12:31.760 --> 0:12:35.680 quite as strong, but that business investment still booing overall 0:12:35.720 --> 0:12:40.000 growth and also supporting lending some indirect support through through 0:12:40.040 --> 0:12:42.439 the consumer that offsets some of those challenges like higher 0:12:42.440 --> 0:12:46.160 gas prices, the fading boost from tax refunds for example. 0:12:46.360 --> 0:12:48.400 Like Paul, I'm thinking about this, like what are the 0:12:48.480 --> 0:12:51.240 outcomes here out of Jackson Hole and you know, per 0:12:51.320 --> 0:12:54.120 selling the house, play it down at Wills Fargo. But 0:12:54.160 --> 0:12:57.920 to be the basic idea is the juggernaut just keeps going. Yeah. 0:12:58.120 --> 0:13:01.080 I mean Europe looks at Ai says we got to play. 0:13:01.240 --> 0:13:04.679 Yeah, that's interesting. So I mean, Sarah to that end 0:13:04.720 --> 0:13:07.120 of the economy just keep chugging along. Talk to us 0:13:07.120 --> 0:13:09.800 about the labor market. How strong is it or should 0:13:09.800 --> 0:13:12.160 we be concerned that there may not be as strong 0:13:12.200 --> 0:13:13.960 as we think it is. How do you guys view that? 0:13:15.240 --> 0:13:17.480 Yeah, so I'd say overall the labor markets stable, but 0:13:17.520 --> 0:13:18.400 I wouldn't. 0:13:18.040 --> 0:13:21.040 Say it's as strong as as certainly I think what 0:13:21.400 --> 0:13:24.280 the job and the unemployment rate this year would imply 0:13:24.440 --> 0:13:26.520 in terms of that pointing to at. 0:13:26.480 --> 0:13:28.800 Least some modest tightening, we just don't see that. 0:13:28.880 --> 0:13:30.880 I think when you step back and look at okay, 0:13:30.960 --> 0:13:33.439 the unemployment rate is down a couple of tenthsince the 0:13:33.480 --> 0:13:34.120 start of the year. 0:13:34.200 --> 0:13:35.760 Well, the participation rates. 0:13:35.559 --> 0:13:38.720 Down seven tenths, and so this isn't nearly as strong. 0:13:38.440 --> 0:13:40.440 As as first meets the eye. 0:13:40.600 --> 0:13:43.000 You saw some weakness and payrolls there with the July 0:13:43.160 --> 0:13:46.280 report still looking a little bit better, you're to date, 0:13:46.800 --> 0:13:49.920 But I think when you still scratch underneath the surface, 0:13:50.120 --> 0:13:53.520 hiring still remains very very narrow, still a very low 0:13:53.559 --> 0:13:55.920 turnover environment because there just aren't a lot of job 0:13:55.960 --> 0:13:59.640 opportunities out there, and so it's fine if you have 0:13:59.679 --> 0:14:02.280 a job right now, you're at low risk of losing that. 0:14:02.360 --> 0:14:04.760 And that's been another support, I think, to consumer spending. 0:14:05.120 --> 0:14:08.240 But it's very different for a segment of American workers 0:14:08.280 --> 0:14:11.520 to crack into that jobs market. And so when we 0:14:11.880 --> 0:14:13.320 I think, when we step back and we look at 0:14:13.360 --> 0:14:16.600 it in its totality, I say, the labor market's just okay. 0:14:17.200 --> 0:14:19.760 Sarah, Thank you so much. Sarah House with Wells Fargo. 0:14:21.520 --> 0:14:25.720 Stay with us. More from Bloomberg Surveillance coming up after this. 0:14:32.960 --> 0:14:36.560 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:14:36.640 --> 0:14:39.760 weekday afternoons from seven to ten am Eastern. Listen on 0:14:39.880 --> 0:14:43.520 Applecarplay and Android Atto with the Bloomberg Business Up, or 0:14:43.680 --> 0:14:45.360 watch us live on YouTube. 0:14:45.720 --> 0:14:49.000 Joining us now, Sir Dana Ives joins us here with 0:14:49.120 --> 0:14:52.720 Yorkville and I let's start with this because Tom Sekunda, 0:14:52.800 --> 0:14:55.840 founder of Bloomberg, cornered me one day in a food court, 0:14:56.320 --> 0:14:59.080 you know, over the cheeses and he said, hey, stupid, 0:14:59.160 --> 0:15:05.680 get perplexed. It changed my life. Dana. What is perplexity? 0:15:05.840 --> 0:15:08.360 Yeah, when you think about from a model perspective, I 0:15:08.360 --> 0:15:11.480 think perplexity is one of the best out there, especially 0:15:11.640 --> 0:15:14.360 for someone like can't you know when it comes down 0:15:14.400 --> 0:15:17.640 to like heavy analytics a lot of sort of numbers. 0:15:17.680 --> 0:15:20.080 I think perplexity is probably one of the best out there. 0:15:20.320 --> 0:15:22.000 And that's why when you look at what Nvidia is 0:15:22.040 --> 0:15:24.720 potentially doing, it would make actually a lot of sense 0:15:24.880 --> 0:15:27.680 relative to where we see this AI revolutionary. 0:15:27.760 --> 0:15:30.400 In what way would perplexity help in video? 0:15:31.280 --> 0:15:35.080 Well for them, Look, they're essentially taking stakes across the 0:15:35.120 --> 0:15:38.920 whole ecosystem, whether it's infrastructure on the model side, and 0:15:38.960 --> 0:15:41.680 it's a way given anthropic and open AI that I 0:15:41.800 --> 0:15:44.880 really had to dooperly to some extent in terms of AI. 0:15:45.640 --> 0:15:49.560 This would enable them to diversify because in video and 0:15:49.720 --> 0:15:52.320 gen has talked about it even from an open source 0:15:52.320 --> 0:15:56.520 for other models. The cheaper the models get, the more 0:15:56.720 --> 0:16:00.880 pervasive that gets, it's better for AI I spend because 0:16:00.920 --> 0:16:03.920 the cheaper acats you're going to have more and more demand. 0:16:04.400 --> 0:16:06.040 So we are going to hear from Nvidio after the 0:16:06.080 --> 0:16:08.840 closed Wednesday, what should the market be listening for. 0:16:09.400 --> 0:16:12.800 No one has a better perch around demand than the 0:16:12.840 --> 0:16:15.400 god father of AI, Jensen a video. I think it's 0:16:15.440 --> 0:16:18.480 really about when you look, they'll talk. They'll probably talk 0:16:18.520 --> 0:16:22.200 about that price increase that you report over the weekend 0:16:22.240 --> 0:16:25.440 from memory perspective driven, But I think it's really about 0:16:25.440 --> 0:16:28.760 what they're seeing from customers in terms of acceleration. We 0:16:28.880 --> 0:16:35.000 think overall AI demand, we've seen acceleration twenty percent the 0:16:35.120 --> 0:16:37.880 last few months, and there's one chip in the world 0:16:37.920 --> 0:16:40.760 fueling the AI revolution. So I think that this is 0:16:40.800 --> 0:16:44.400 a huge piece of the puzzle when you're thinking about demand, 0:16:44.600 --> 0:16:47.560 especially after what we saw from an earning season that 0:16:47.680 --> 0:16:50.040 was extremely strong, especially from the hyper scours. 0:16:50.640 --> 0:16:52.600 You write down that the biggest tug of war in 0:16:52.640 --> 0:16:55.360 the tech space is around AI sovereignty. What do you 0:16:55.360 --> 0:16:55.840 mean by that? 0:16:56.280 --> 0:16:59.680 What that means is and it's becoming more and more 0:17:00.080 --> 0:17:05.520 of a debate. Really hot button issue is that the data. 0:17:05.960 --> 0:17:08.000 I'm not going to give that data. If I'm a 0:17:08.040 --> 0:17:11.080 company to the model player, to an open AI, to 0:17:11.119 --> 0:17:14.040 an anthropic I can maybe use them, but there's going 0:17:14.080 --> 0:17:16.360 to be a sort of cording off where I won 0:17:16.520 --> 0:17:20.360 control as a company over that data. And that's something 0:17:20.400 --> 0:17:25.040 where in Nvidia Pollunteer there's a big focus specially from 0:17:25.160 --> 0:17:29.320 Carton Pollenteer on sovereign AI data because the view is 0:17:29.359 --> 0:17:35.000 that eventually, if you have my data, then ultimately competitive wise, 0:17:35.359 --> 0:17:38.760 could I marginalize your model? So I think it speaks 0:17:38.760 --> 0:17:41.000 to what's starting to happen is as you're hearing more 0:17:41.040 --> 0:17:45.800 maturity now in the AI space, where enterprises are focused 0:17:45.840 --> 0:17:49.399 more on who has access to their data and should 0:17:49.400 --> 0:17:50.360 they have more control? 0:17:50.520 --> 0:17:52.840 Danna answer this, folks for a quick tech brief here 0:17:53.359 --> 0:17:55.639 we'll talk can to here in a moment. Good Morning 0:17:55.640 --> 0:17:59.840 across America on Serious XM Channel one Morning across all 0:17:59.840 --> 0:18:04.959 of Canada is well, the house is fired up about 0:18:05.119 --> 0:18:09.720 Apple announcements after I believe Labor Day. What will we 0:18:09.840 --> 0:18:12.960 see from Apple and what's it mean for their free 0:18:13.000 --> 0:18:14.439 cash flow and stock price? 0:18:15.119 --> 0:18:18.120 I think for Apple and I think investors now are 0:18:18.160 --> 0:18:20.480 starting more and more to reconneen we've talked about a 0:18:20.480 --> 0:18:23.480 lot on the show. Is that the consumer AI revolution 0:18:23.920 --> 0:18:26.240 that highway. They're a toll collector on that and that's 0:18:26.280 --> 0:18:28.840 going to continue to go through them. I think it's 0:18:28.880 --> 0:18:32.120 really it's about not just the AI strategy, but now 0:18:32.119 --> 0:18:35.040 as you get to the latest iPhone that they release, 0:18:35.920 --> 0:18:38.439 what that's going to do to ultimate demand? Because it 0:18:38.560 --> 0:18:42.639 LEAs out the foundation for everything we're talking about in 0:18:42.680 --> 0:18:46.720 AI is about enterprise comes down to consumer. What are 0:18:46.720 --> 0:18:49.200 device is going to look like? Where is most of 0:18:49.200 --> 0:18:51.719 that going to go through Apple? As when you think 0:18:51.720 --> 0:18:54.160 about one point five billion iPhones. So that's why there's 0:18:54.200 --> 0:18:57.480 such a focus to see as they come out with 0:18:57.560 --> 0:19:00.600 their latest iPhone. Not necessarily there's going to be so 0:19:00.600 --> 0:19:03.680 many changes from a hardware perspective, but tom it's really 0:19:03.720 --> 0:19:06.640 also related more of the AI strategy that they finally 0:19:06.720 --> 0:19:09.960 actually have one now with Gemini. 0:19:10.640 --> 0:19:13.800 So software, earlier in the year, we saw a soft 0:19:13.880 --> 0:19:16.639 and software that I don't think I've seen I can't remember. 0:19:16.840 --> 0:19:18.680 I mean, it's just software, you just own it because 0:19:18.680 --> 0:19:21.080 of the recurring revenue, the high margins, a free cash flow. 0:19:21.560 --> 0:19:23.879 What is the software call. 0:19:23.760 --> 0:19:26.080 On the street these days? Are we trying to pick 0:19:26.119 --> 0:19:29.200 winners and losers? I mean Microsoft was down twenty five 0:19:29.200 --> 0:19:31.560 percent year data one point this year, but now it's 0:19:31.640 --> 0:19:32.639 rallied back to flat. 0:19:32.760 --> 0:19:33.720 What's the software call? 0:19:34.000 --> 0:19:36.480 Well, Paul, I, first of all, I always thought that 0:19:36.480 --> 0:19:41.359 that was a fictional thesis that Anthropic was going to 0:19:41.480 --> 0:19:46.159 eat software companies lunch, that these models were essentially you know, 0:19:46.480 --> 0:19:49.000 going to be destructed. I think what's starting to happen 0:19:49.080 --> 0:19:51.800 now more and more is the use cases get deputed. 0:19:51.840 --> 0:19:55.240 Software is playing a bigger, bigger role. That's what's happling Microsoft. 0:19:55.280 --> 0:19:57.880 You've seen and Pallenteer, and you've seen with service Now 0:19:57.920 --> 0:20:01.840 and a bunch of others. I think it's idiosyncratic to 0:20:01.880 --> 0:20:07.000 the point that there will be software companies disintermediate. And 0:20:07.080 --> 0:20:10.840 you look at companies, maybe the view back against you know, 0:20:11.680 --> 0:20:14.160 when you look in names like Adobe is a good example. 0:20:14.520 --> 0:20:17.520 That's a good example of one where it's okay, Adobe 0:20:17.560 --> 0:20:19.639 into it? How they how is their business not going 0:20:19.720 --> 0:20:23.000 to adjust? But it's a much different narrative today than 0:20:23.040 --> 0:20:24.240 it was six months ago. 0:20:24.440 --> 0:20:26.760 Nobody cares. Alexis here, wants to know who are you 0:20:26.800 --> 0:20:28.960 wearing today? I love this? 0:20:29.040 --> 0:20:30.040 What's what's on your ship? 0:20:30.200 --> 0:20:36.239 For these penguins? So these are penguin penguins. These are 0:20:37.240 --> 0:20:38.600 the parrots. 0:20:39.280 --> 0:20:41.040 And then here this is a duck hat. 0:20:41.280 --> 0:20:43.959 You're very bird today. Who in God's name shirt are 0:20:43.960 --> 0:20:46.000 you wearing? So many emails in they go, is Dan 0:20:46.040 --> 0:20:46.760 wearing Pucci? 0:20:47.200 --> 0:20:50.439 No? This is actually it's a company out of Bali. 0:20:51.240 --> 0:20:54.720 Kenny Matthews, Kenny Flowers. 0:20:54.800 --> 0:20:56.760 I can see it on your show, Kenny Flowers. They're 0:20:56.800 --> 0:20:59.920 out of Bali people wild. I want to know dan Ice, 0:21:00.040 --> 0:21:02.840 thank you so much greatly appreciate it with all of 0:21:02.880 --> 0:21:06.680 his work as well. Here and looking for that Apple 0:21:06.760 --> 0:21:11.200