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 a 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 00:00:36,440 --> 00:00:37,560 Speaker 3: Let's turn to the Federal Reserve. 11 00:00:37,640 --> 00:00:41,440 Speaker 2: The Trump administration parling the pressure on FED share Jpowell. 12 00:00:41,920 --> 00:00:45,240 Speaker 4: The President said he is not going to fire Chair Powell. 13 00:00:45,280 --> 00:00:48,280 Speaker 4: It would do Chair Powell a favor, and he would 14 00:00:48,320 --> 00:00:54,040 Speaker 4: be doing the Institution of favor if if he did 15 00:00:54,160 --> 00:00:58,880 Speaker 4: an internal review. This mission creep from the FED is 16 00:00:59,000 --> 00:01:01,720 Speaker 4: endangering their independence and monetary policy. 17 00:01:02,000 --> 00:01:04,400 Speaker 2: President Trump making a rev visit to the Federal Serve 18 00:01:04,440 --> 00:01:07,360 Speaker 2: this afternoon to see the two point five billion dollar renovation. 19 00:01:07,720 --> 00:01:10,640 Speaker 2: A Chi Raja Yaksha of Barclay's writes and concerns about 20 00:01:10,680 --> 00:01:14,600 Speaker 2: FED independence persists, but we expect status quo to prevail 21 00:01:14,920 --> 00:01:16,920 Speaker 2: actually joins us now for more a j E goodmonic, 22 00:01:17,040 --> 00:01:20,520 Speaker 2: Good morning. This market is shaken off a lot, threats 23 00:01:20,560 --> 00:01:24,479 Speaker 2: to fed independence, trade tariffs, threats actual tariffs. 24 00:01:24,720 --> 00:01:26,839 Speaker 3: Can this economy keep shaking it off? 25 00:01:27,040 --> 00:01:27,680 Speaker 5: Yeah? 26 00:01:27,760 --> 00:01:29,480 Speaker 6: I think as long as you don't get a polysym 27 00:01:29,480 --> 00:01:32,800 Speaker 6: mistake out of Washington on the magnitude of actually trying 28 00:01:32,800 --> 00:01:34,720 Speaker 6: to fire the fetchure, which I don't think will happen. 29 00:01:35,280 --> 00:01:37,039 Speaker 6: I think we are past the worst of it and 30 00:01:37,080 --> 00:01:39,400 Speaker 6: we are looking forward to a big, you know, big 31 00:01:39,720 --> 00:01:41,360 Speaker 6: boost and growth over the next few concert. 32 00:01:41,440 --> 00:01:43,600 Speaker 2: This is really important because some people still fear that 33 00:01:43,640 --> 00:01:45,520 Speaker 2: the worst of the data is ahead of us. 34 00:01:45,600 --> 00:01:48,120 Speaker 6: What gives you confidence the fact that that I've been 35 00:01:48,200 --> 00:01:51,400 Speaker 6: virtually no second order effects. Remember I agree with your 36 00:01:51,400 --> 00:01:53,760 Speaker 6: Plivi's gust living made the point to that there have 37 00:01:53,880 --> 00:01:55,720 Speaker 6: been substantial talis. If you told me we are a 38 00:01:55,760 --> 00:01:57,880 Speaker 6: two and a half percent during the year we finished 39 00:01:57,880 --> 00:02:01,240 Speaker 6: at seventeen eighteen, I would have been But part of 40 00:02:01,280 --> 00:02:02,840 Speaker 6: the reason I would have been shaken is that because 41 00:02:02,840 --> 00:02:05,000 Speaker 6: I would have expected business investment to pull back, I 42 00:02:05,040 --> 00:02:07,680 Speaker 6: would have expected consumer precautionary savings to go up. 43 00:02:08,000 --> 00:02:10,000 Speaker 5: Factors matters, John, None of those things. 44 00:02:09,880 --> 00:02:12,520 Speaker 6: Have happened, and that's to do with the You know, 45 00:02:12,600 --> 00:02:13,919 Speaker 6: if they were going to happen, they were going to 46 00:02:13,919 --> 00:02:15,920 Speaker 6: happen with the headlines, they were not going to happen. 47 00:02:15,919 --> 00:02:18,040 Speaker 5: When it actually plays out, it's. 48 00:02:18,040 --> 00:02:20,919 Speaker 6: Very very hard for me to see big new second 49 00:02:21,000 --> 00:02:24,639 Speaker 6: order effects now the consumer pulling back hard, and without that, 50 00:02:24,800 --> 00:02:28,200 Speaker 6: you do not get a lusting like a recession, a 51 00:02:28,320 --> 00:02:29,480 Speaker 6: lusting hit two years growth. 52 00:02:29,520 --> 00:02:32,160 Speaker 1: Are we measuring the economy correctly? And I asked that 53 00:02:32,240 --> 00:02:36,480 Speaker 1: because there is. There are pockets that are clearly suffering, 54 00:02:36,840 --> 00:02:40,280 Speaker 1: and you're seeing that in numbers like from Southwest where 55 00:02:40,400 --> 00:02:42,640 Speaker 1: consumers who don't have as much money aren't able to 56 00:02:42,680 --> 00:02:45,359 Speaker 1: travel as much. But then you have this industrial revolution, 57 00:02:45,480 --> 00:02:49,160 Speaker 1: this renaissance, this huge investment AI technology that's generating efficiency 58 00:02:49,160 --> 00:02:52,720 Speaker 1: and profitability at the biggest and the most powerful companies 59 00:02:52,760 --> 00:02:53,640 Speaker 1: and individuals. 60 00:02:54,320 --> 00:02:55,240 Speaker 7: Is this showing up in. 61 00:02:55,200 --> 00:02:57,200 Speaker 1: The data or is this just changing the way we 62 00:02:57,280 --> 00:02:58,280 Speaker 1: understand our economy. 63 00:02:58,320 --> 00:02:59,840 Speaker 6: I think it's the latter. I think we are measuring 64 00:02:59,880 --> 00:03:02,359 Speaker 6: it correctly. There's no reason to believe that we've suddenly changed. 65 00:03:02,440 --> 00:03:04,440 Speaker 6: The fact of the matter is what you said, the 66 00:03:04,560 --> 00:03:07,239 Speaker 6: United States is two different economis. 67 00:03:07,520 --> 00:03:08,679 Speaker 5: One is the old economy. 68 00:03:08,720 --> 00:03:10,720 Speaker 6: You know, we all grow up believing housing is a 69 00:03:10,720 --> 00:03:13,600 Speaker 6: business cycle, for example, and you know housing is struggling 70 00:03:13,600 --> 00:03:14,840 Speaker 6: with mortgage rates staying. 71 00:03:14,600 --> 00:03:15,160 Speaker 5: Where they are. 72 00:03:16,080 --> 00:03:18,640 Speaker 6: The durable goods sector, you know, you mentioned airlines, they 73 00:03:18,639 --> 00:03:19,280 Speaker 6: are struggling. 74 00:03:19,520 --> 00:03:20,160 Speaker 5: Doesn't matter. 75 00:03:20,600 --> 00:03:24,240 Speaker 6: You have the large tech side and the AI dividends 76 00:03:24,280 --> 00:03:27,440 Speaker 6: starting to kick in, and I think that matters far 77 00:03:27,560 --> 00:03:30,000 Speaker 6: more at an index level, at an economy white level. 78 00:03:30,000 --> 00:03:32,400 Speaker 6: The fact that the hyperscaler is just never pulled back 79 00:03:32,440 --> 00:03:35,000 Speaker 6: on spending. You know, you might have worried as an 80 00:03:35,040 --> 00:03:38,240 Speaker 6: important into the United States about Mexico Canada, where I 81 00:03:38,280 --> 00:03:40,480 Speaker 6: can make my business work or not. Who cares when 82 00:03:40,480 --> 00:03:42,360 Speaker 6: Google is spending on the eighty five million dollars at 83 00:03:42,400 --> 00:03:43,080 Speaker 6: a macro level. 84 00:03:43,160 --> 00:03:45,600 Speaker 1: Well, at the same time, back during the pandemic, it 85 00:03:45,640 --> 00:03:47,200 Speaker 1: was sort of the revenge of the physical world. That 86 00:03:47,280 --> 00:03:49,200 Speaker 1: was something that John said every morning as we walked in, 87 00:03:49,240 --> 00:03:51,480 Speaker 1: and it was sort of the reality of trying to 88 00:03:51,480 --> 00:03:53,440 Speaker 1: get toilet paper. Although he is tacked up, I am 89 00:03:53,480 --> 00:03:55,840 Speaker 1: just wondering whether we're going to end up with revenge 90 00:03:55,840 --> 00:03:58,600 Speaker 1: of the physical world once more. We're talking about investment 91 00:03:58,960 --> 00:04:03,320 Speaker 1: in the cloud, all of this sort of technology that's 92 00:04:03,360 --> 00:04:05,440 Speaker 1: for companies, the way we think, the way we do 93 00:04:05,680 --> 00:04:08,400 Speaker 1: work in white collar businesses. What about the goods and 94 00:04:08,440 --> 00:04:10,680 Speaker 1: services that have to go overroun on ships. 95 00:04:10,760 --> 00:04:12,760 Speaker 6: I don't think there's going to be a revenge of 96 00:04:12,760 --> 00:04:15,200 Speaker 6: the physical world. I almost think it's the other way around, 97 00:04:15,200 --> 00:04:18,239 Speaker 6: meaning that right now we are all focused on llm's. 98 00:04:18,320 --> 00:04:19,840 Speaker 6: You know, you put in text and you get out 99 00:04:19,880 --> 00:04:21,880 Speaker 6: a bunch of information that is the AI models and 100 00:04:21,920 --> 00:04:23,880 Speaker 6: that we think will hit services jobs. 101 00:04:24,160 --> 00:04:25,159 Speaker 5: The fact of the matter is. 102 00:04:25,160 --> 00:04:27,840 Speaker 6: I think there are three four five years away from 103 00:04:27,880 --> 00:04:30,559 Speaker 6: the same thing happening where you put in a bunch 104 00:04:30,560 --> 00:04:33,120 Speaker 6: of texts and you have a robot doing subtasks. I'm 105 00:04:33,120 --> 00:04:35,680 Speaker 6: not kidding. This is not sci fi. It's you know, 106 00:04:35,720 --> 00:04:37,760 Speaker 6: this is I feel the way I did about NVDA 107 00:04:37,760 --> 00:04:38,400 Speaker 6: five years ago. 108 00:04:38,600 --> 00:04:40,160 Speaker 5: You know, none of us thought it would get as 109 00:04:40,160 --> 00:04:40,800 Speaker 5: big as it is. 110 00:04:41,120 --> 00:04:42,960 Speaker 6: But the fact of the matter is, you know that 111 00:04:43,640 --> 00:04:46,080 Speaker 6: Moore's law, you know the fact that things are twice 112 00:04:46,080 --> 00:04:49,200 Speaker 6: as cheap every eighteen months or twice as powerful does 113 00:04:49,320 --> 00:04:52,200 Speaker 6: work in the semiconductor world, doesn't work in the physical world. 114 00:04:52,640 --> 00:04:56,080 Speaker 6: Fusing air and robotics is powerful, and I almost worry 115 00:04:56,080 --> 00:04:57,720 Speaker 6: that you're going to have more of the. 116 00:04:57,680 --> 00:04:59,440 Speaker 5: Profits continue to go to capital. 117 00:05:00,120 --> 00:05:03,080 Speaker 6: We always go believing, you know, plumbers, you'll always need plumbers. 118 00:05:03,080 --> 00:05:05,120 Speaker 5: Well you might not five seven, eight. 119 00:05:05,040 --> 00:05:08,800 Speaker 2: Years from what you're saying could relatively mean the market 120 00:05:08,880 --> 00:05:11,679 Speaker 2: is okay, but the employment market gets a whole lot worse. 121 00:05:12,520 --> 00:05:16,640 Speaker 6: It does, and with our limits to that. The limits 122 00:05:16,680 --> 00:05:17,960 Speaker 6: are put in by society. 123 00:05:18,000 --> 00:05:18,679 Speaker 5: At some point. 124 00:05:18,880 --> 00:05:21,400 Speaker 6: If there's seventy million knowledge workers in the United States, 125 00:05:21,440 --> 00:05:24,200 Speaker 6: you know, I've had this A person I considered the 126 00:05:24,240 --> 00:05:26,800 Speaker 6: single best investor of all time make the argument to 127 00:05:26,839 --> 00:05:29,120 Speaker 6: me that he's looked at this upwards downwards five years 128 00:05:29,160 --> 00:05:31,680 Speaker 6: from side, you know, Sunday, and he's telling me that 129 00:05:31,839 --> 00:05:34,400 Speaker 6: ten million of these workers will not be needed in 130 00:05:34,440 --> 00:05:35,120 Speaker 6: five to seven years. 131 00:05:35,160 --> 00:05:36,360 Speaker 5: He's not saying they want have jobs. 132 00:05:36,680 --> 00:05:38,800 Speaker 6: The economic activity that they do now, the value add 133 00:05:38,839 --> 00:05:40,760 Speaker 6: will be done by machines. We see it in big tech, right, 134 00:05:40,800 --> 00:05:43,839 Speaker 6: forty percent of coding. You realize Microsoft's let go of 135 00:05:43,880 --> 00:05:46,200 Speaker 6: twenty thousand people. They have money coming out of the years. 136 00:05:46,440 --> 00:05:49,800 Speaker 6: There's a reason why that this is happening. Eventually society 137 00:05:49,800 --> 00:05:53,479 Speaker 6: pushes back. It's happened in every technological revolution. But the 138 00:05:53,600 --> 00:05:56,039 Speaker 6: difference now, John, is that in the past, when you 139 00:05:56,120 --> 00:05:59,560 Speaker 6: had had this right. We were okay with Debtor's prisons 140 00:05:59,560 --> 00:06:01,640 Speaker 6: were ok which I one hundred years ago, you know, 141 00:06:01,960 --> 00:06:04,120 Speaker 6: the transition that we didn't make noise this time it 142 00:06:04,160 --> 00:06:04,920 Speaker 6: will make a lot of. 143 00:06:04,839 --> 00:06:06,840 Speaker 2: Fun share with you are concerns mean, and I'll be 144 00:06:06,920 --> 00:06:10,280 Speaker 2: open and personal abouts here for children of Thatcher and Reagan. 145 00:06:11,000 --> 00:06:14,159 Speaker 2: I am highly concerned that if you concentrate capital and 146 00:06:14,200 --> 00:06:16,159 Speaker 2: wealth in the hands of just a few, that the 147 00:06:16,160 --> 00:06:19,039 Speaker 2: political movement, the corrective course of action on behalf of 148 00:06:19,040 --> 00:06:20,480 Speaker 2: the paper, will be for the state to get a 149 00:06:20,520 --> 00:06:24,080 Speaker 2: whole lot bigger, to go forward with higher taxes, universal 150 00:06:24,120 --> 00:06:27,119 Speaker 2: basic income. And for people like me who don't really 151 00:06:27,120 --> 00:06:30,960 Speaker 2: believe ideologically in that view of the world, that's scarce 152 00:06:31,000 --> 00:06:32,159 Speaker 2: they live in daylight sadamy. 153 00:06:32,440 --> 00:06:35,160 Speaker 5: It should, but that is a very real risk. 154 00:06:35,279 --> 00:06:37,440 Speaker 6: Now, until we get there, you're going to have corporate 155 00:06:37,480 --> 00:06:40,120 Speaker 6: earnings flat flattened, you know, for years to come, you're 156 00:06:40,160 --> 00:06:42,600 Speaker 6: going to have operating margin leverage. And then the other 157 00:06:42,640 --> 00:06:44,479 Speaker 6: side of it will be society pushing. 158 00:06:44,520 --> 00:06:45,560 Speaker 5: But it's happened before. 159 00:06:45,839 --> 00:06:47,720 Speaker 6: I mean, you know, six of the seven big oil 160 00:06:47,720 --> 00:06:50,320 Speaker 6: majors came out of one company, Standard Oil, remember, you know, 161 00:06:50,400 --> 00:06:54,359 Speaker 6: so this is not every fifteen to twenty fifty years. 162 00:06:54,360 --> 00:06:56,760 Speaker 6: If you have a big technology change, but all of 163 00:06:56,800 --> 00:06:59,640 Speaker 6: advantages go to capital, which is what is going to happen. 164 00:07:00,320 --> 00:07:03,160 Speaker 6: I think eventually society will push back, But until it happens, 165 00:07:03,200 --> 00:07:04,960 Speaker 6: it's actually a very nice ride the building. 166 00:07:04,960 --> 00:07:07,560 Speaker 8: On John's point, should we just expect higher deficits then. 167 00:07:08,400 --> 00:07:09,720 Speaker 5: No, I think so. 168 00:07:10,560 --> 00:07:15,960 Speaker 6: The OBBA and the tariffs from revenues, the total deficit 169 00:07:16,040 --> 00:07:19,000 Speaker 6: from that is not higher than if just the trump 170 00:07:19,000 --> 00:07:21,240 Speaker 6: casks that were expiring had been extended, and we all 171 00:07:21,240 --> 00:07:24,440 Speaker 6: thought they would be extended if nothing else right. The problem, 172 00:07:24,520 --> 00:07:26,559 Speaker 6: the reason why the long bound in the United States 173 00:07:26,760 --> 00:07:29,640 Speaker 6: refuses to come below five percent is not because the 174 00:07:29,680 --> 00:07:31,000 Speaker 6: OBBA is more profligate. 175 00:07:31,040 --> 00:07:32,520 Speaker 5: It's because it locks in. 176 00:07:33,000 --> 00:07:35,040 Speaker 6: It makes it clear that we are not going to 177 00:07:35,040 --> 00:07:37,360 Speaker 6: go away from six and a half to seven percent deficits, 178 00:07:37,720 --> 00:07:39,400 Speaker 6: which is where we were this year, last. 179 00:07:39,280 --> 00:07:41,239 Speaker 5: Year, for at least ten more years. 180 00:07:41,720 --> 00:07:45,040 Speaker 6: You know, you mentioned Rachel Rees and the conversation from 181 00:07:45,040 --> 00:07:47,840 Speaker 6: three weeks ago. The significant part was not that she 182 00:07:47,880 --> 00:07:50,400 Speaker 6: got emotional in person. The significant part for me was 183 00:07:50,800 --> 00:07:55,080 Speaker 6: Labor has a big parliamentary majority and cannot pass a 184 00:07:55,280 --> 00:07:57,640 Speaker 6: simple change, a small change to the welfare build that 185 00:07:57,720 --> 00:07:58,680 Speaker 6: was the significance of it. 186 00:07:58,680 --> 00:07:59,600 Speaker 5: There's no political will. 187 00:08:00,360 --> 00:08:02,360 Speaker 2: I appreciate your time, enjoy the right of the market 188 00:08:02,400 --> 00:08:04,200 Speaker 2: right now sings for the message, and we'll catch up 189 00:08:04,200 --> 00:08:16,200 Speaker 2: in five fist time. We just around a time you 190 00:08:16,200 --> 00:08:18,920 Speaker 2: called Libby cantroll of Libby, goodmonic. 191 00:08:18,520 --> 00:08:19,560 Speaker 7: Good morning August. 192 00:08:19,560 --> 00:08:21,160 Speaker 3: First, are we going to wrap this up for it's 193 00:08:21,160 --> 00:08:22,520 Speaker 3: not in new July ninth? 194 00:08:23,520 --> 00:08:25,240 Speaker 9: Yeah, I mean, look, I think what we were been 195 00:08:25,240 --> 00:08:26,760 Speaker 9: telling our clients is that we are going to be 196 00:08:26,840 --> 00:08:29,560 Speaker 9: living with trade policy and tear policy uncertainty for the 197 00:08:29,640 --> 00:08:32,079 Speaker 9: duration of this administration. So maybe we get a little 198 00:08:32,120 --> 00:08:34,880 Speaker 9: bit more clarity. I would agree that fifteen percent is 199 00:08:34,920 --> 00:08:37,120 Speaker 9: the new ten percent, ten percent is the new zero percent. 200 00:08:37,720 --> 00:08:39,199 Speaker 7: Kind of the best. 201 00:08:39,000 --> 00:08:42,520 Speaker 9: That a country can hope for those with trade surpluses 202 00:08:42,640 --> 00:08:45,080 Speaker 9: is going to be ten percent, and then everything else 203 00:08:45,120 --> 00:08:46,760 Speaker 9: is going to be higher. I mean, Japan got I 204 00:08:46,800 --> 00:08:49,240 Speaker 9: think arguably a pretty good deal here. 205 00:08:49,280 --> 00:08:51,199 Speaker 7: But again, if you just look, if we just take a. 206 00:08:51,120 --> 00:08:53,640 Speaker 9: Step back and go back to December, right after the election, 207 00:08:54,000 --> 00:08:55,720 Speaker 9: and we were just saying we're going to be sitting 208 00:08:55,720 --> 00:08:58,120 Speaker 9: here and talking about how fifteen percent seems pretty benign 209 00:08:58,200 --> 00:09:01,520 Speaker 9: on one of our closest ally and trading partners. 210 00:09:01,520 --> 00:09:02,840 Speaker 7: I don't think anybody would believe it. 211 00:09:02,880 --> 00:09:04,880 Speaker 9: So I think that the Overton window, if you will, 212 00:09:04,960 --> 00:09:07,920 Speaker 9: has really been expanded here, kind of shattered in terms 213 00:09:08,000 --> 00:09:11,120 Speaker 9: of what is acceptable in the markets and in Washington. 214 00:09:11,480 --> 00:09:13,920 Speaker 9: And again, I think from an economic and markets perspective, 215 00:09:13,920 --> 00:09:16,320 Speaker 9: we do think this will start having a bite at 216 00:09:16,360 --> 00:09:19,800 Speaker 9: some point, even though maybe markets are just, you know, 217 00:09:19,960 --> 00:09:21,880 Speaker 9: willfully ignoring the reality here. 218 00:09:21,960 --> 00:09:23,000 Speaker 7: Well, all the market's numb. 219 00:09:23,040 --> 00:09:26,520 Speaker 8: Has Trump basically conditioned them to accept fifteen percent because 220 00:09:26,520 --> 00:09:30,160 Speaker 8: they're not as a sky high April second terraffs originally 221 00:09:30,240 --> 00:09:31,480 Speaker 8: this administration came out. 222 00:09:31,360 --> 00:09:33,079 Speaker 9: With yet and I think you know what we have 223 00:09:33,160 --> 00:09:35,240 Speaker 9: been talking to our clients are the sort of like 224 00:09:35,280 --> 00:09:38,000 Speaker 9: the taco man versus tariff man, this idea of Trump 225 00:09:38,000 --> 00:09:41,080 Speaker 9: always chickening out, And if you actually look at the 226 00:09:41,080 --> 00:09:43,800 Speaker 9: tariff level right now, it would not suggest that he 227 00:09:43,920 --> 00:09:44,640 Speaker 9: is chickening out. 228 00:09:44,720 --> 00:09:44,880 Speaker 7: Yet. 229 00:09:44,960 --> 00:09:48,840 Speaker 9: Yes, he has softened his most extreme stands. So will 230 00:09:48,840 --> 00:09:51,360 Speaker 9: the effect of average tar freight go up to thirty percent? 231 00:09:52,040 --> 00:09:53,520 Speaker 7: Not likely, But. 232 00:09:53,640 --> 00:09:56,360 Speaker 9: Where we think it probably will Land is between fifteen 233 00:09:56,440 --> 00:09:59,000 Speaker 9: and twenty percent. Fifteen and twenty percent tariff, I mean 234 00:09:59,320 --> 00:10:02,320 Speaker 9: that's you know, that's not insignificant. So yes, I do 235 00:10:02,440 --> 00:10:05,360 Speaker 9: think that in some ways, again this idea of you know, 236 00:10:05,480 --> 00:10:08,600 Speaker 9: the Overton window sort of what's possible in Washington, he's 237 00:10:08,640 --> 00:10:12,959 Speaker 9: expanded that so much that the market is somewhat desensitized. 238 00:10:12,960 --> 00:10:14,720 Speaker 9: But we really, we do think this will start having 239 00:10:14,720 --> 00:10:16,800 Speaker 9: actually real economic effects at some point. 240 00:10:16,760 --> 00:10:18,120 Speaker 7: When it comes to these negotiations. 241 00:10:18,160 --> 00:10:20,280 Speaker 8: I was really struck by the Japanese one because of 242 00:10:20,280 --> 00:10:22,320 Speaker 8: that five hundred and fifty billion dollar fund, and I'm 243 00:10:22,360 --> 00:10:24,560 Speaker 8: still kind of confused about exactly what it is because 244 00:10:24,559 --> 00:10:27,240 Speaker 8: the Prime Minister of Japan is talking about that these 245 00:10:27,280 --> 00:10:31,280 Speaker 8: are basically loan guarantees, and Howard Lutnik, the Commerce Secretary, 246 00:10:31,360 --> 00:10:33,960 Speaker 8: is saying it's much much more than that. Almost sounds 247 00:10:33,960 --> 00:10:35,840 Speaker 8: like a bit of a slush fund. Do you understand 248 00:10:35,920 --> 00:10:37,960 Speaker 8: what the administration is looking for when it comes to 249 00:10:37,960 --> 00:10:38,760 Speaker 8: training partners? 250 00:10:39,000 --> 00:10:41,840 Speaker 9: Yeah, I think what we are, we are, like everybody else, 251 00:10:41,920 --> 00:10:44,520 Speaker 9: is waiting for the details. I mean think a couple 252 00:10:44,520 --> 00:10:47,880 Speaker 9: of things on this one is that, you know, for 253 00:10:47,880 --> 00:10:51,200 Speaker 9: for another country to be funding our industrial policy, that 254 00:10:51,240 --> 00:10:55,080 Speaker 9: could actually have some implications. So I think there's there's 255 00:10:55,120 --> 00:10:57,480 Speaker 9: one of just sort of is this sort of politically 256 00:10:57,520 --> 00:11:02,000 Speaker 9: realistic that you're actually relying on another country to actually 257 00:11:02,040 --> 00:11:04,920 Speaker 9: make investments in things that are important from a national 258 00:11:04,960 --> 00:11:08,560 Speaker 9: security or from an economic perspective for the country. The 259 00:11:08,600 --> 00:11:10,440 Speaker 9: other which is a little bit technical and a little 260 00:11:10,440 --> 00:11:12,680 Speaker 9: bit walking, but I think also important is if the 261 00:11:12,720 --> 00:11:16,280 Speaker 9: adjective for the administration is to reduce the trade deficit, 262 00:11:16,640 --> 00:11:18,880 Speaker 9: you can't reduce the trade deficit with the country and 263 00:11:19,000 --> 00:11:22,920 Speaker 9: increase the capital account. Those things are supposed to be offset. So, 264 00:11:23,880 --> 00:11:26,040 Speaker 9: you know, I think that you're trying to have kind 265 00:11:26,080 --> 00:11:27,120 Speaker 9: of both ways here. 266 00:11:26,960 --> 00:11:29,200 Speaker 7: So we'll sort of see what the details are. 267 00:11:29,880 --> 00:11:31,920 Speaker 9: I think, you know, our you know, our suggestion to 268 00:11:31,960 --> 00:11:33,640 Speaker 9: our clients is just to focus on what we do 269 00:11:33,760 --> 00:11:36,320 Speaker 9: know though, which is the fifteen percent tariffs. And again 270 00:11:36,720 --> 00:11:38,720 Speaker 9: that's that's an increase from the three percent that we 271 00:11:38,760 --> 00:11:39,360 Speaker 9: had in January. 272 00:11:39,400 --> 00:11:41,840 Speaker 1: And you have the joy on the opportunity of going 273 00:11:41,880 --> 00:11:44,520 Speaker 1: around the world and explaining this to everybody. And I'm 274 00:11:44,520 --> 00:11:48,080 Speaker 1: curious how different the reaction is for people not in 275 00:11:48,080 --> 00:11:51,160 Speaker 1: the US versus the United States and how they plan 276 00:11:51,280 --> 00:11:52,480 Speaker 1: to sort of operate around that. 277 00:11:52,960 --> 00:11:55,120 Speaker 9: Yeah, I was just I was just saying before before 278 00:11:55,120 --> 00:11:57,480 Speaker 9: the before the segment, that I was in Canada yesterday 279 00:11:57,520 --> 00:11:59,480 Speaker 9: meeting with some of our large institutional clients. 280 00:11:59,480 --> 00:12:01,000 Speaker 7: I've been all, you know, all over the world. 281 00:12:01,240 --> 00:12:04,280 Speaker 9: We have the benefit of having long standing relationships with clients, 282 00:12:04,720 --> 00:12:06,720 Speaker 9: you know, again outside of the US and inside the US, 283 00:12:06,840 --> 00:12:08,760 Speaker 9: and then the perspective is different, you know. I think 284 00:12:08,760 --> 00:12:12,120 Speaker 9: that you know, in some ways, there's there's asymmetry around 285 00:12:12,160 --> 00:12:15,120 Speaker 9: the information. So I think there's some assumptions that are 286 00:12:15,160 --> 00:12:19,640 Speaker 9: made that maybe are not necessarily right for our for 287 00:12:19,679 --> 00:12:22,160 Speaker 9: our foreign clients. But I think more importantly, you know, 288 00:12:22,240 --> 00:12:25,200 Speaker 9: our clients were already over index to sort of US 289 00:12:25,200 --> 00:12:28,720 Speaker 9: equities to US dollar based assets coming into this year, right, 290 00:12:28,720 --> 00:12:32,440 Speaker 9: the sort of the narrative of American exceptionalism, the expectation 291 00:12:32,600 --> 00:12:35,240 Speaker 9: for you know, just blockbuster growth in the US and 292 00:12:35,320 --> 00:12:38,880 Speaker 9: sort of languishing growth elsewhere come you know, in January, 293 00:12:39,280 --> 00:12:42,600 Speaker 9: that obviously has changed. Those expectations have changed. So our 294 00:12:42,679 --> 00:12:45,600 Speaker 9: clients in some ways, we're already reevaluating some of their 295 00:12:45,679 --> 00:12:47,679 Speaker 9: dollar based asset allocation. 296 00:12:47,760 --> 00:12:50,080 Speaker 7: And I think this probably has accelerated that. 297 00:12:50,760 --> 00:12:53,520 Speaker 9: Certainly, the tariffs, I think again maybe they're impervious to that, 298 00:12:53,559 --> 00:12:56,160 Speaker 9: maybe a little bit more desensitized some of the knocks 299 00:12:56,160 --> 00:12:57,800 Speaker 9: on the FED, some of the cut questions about the 300 00:12:57,800 --> 00:13:00,800 Speaker 9: in strength of the institutions, sort of the you know, 301 00:13:00,840 --> 00:13:05,120 Speaker 9: the political, you know, functionality of Washington. I think those 302 00:13:05,160 --> 00:13:08,040 Speaker 9: all are still questioned. The questions are front in terms 303 00:13:08,040 --> 00:13:08,880 Speaker 9: of their in their minds. 304 00:13:08,960 --> 00:13:09,120 Speaker 7: You know. 305 00:13:09,240 --> 00:13:11,760 Speaker 1: Sam Zef of jpm Worgan Private Bank was on earlier 306 00:13:11,800 --> 00:13:14,720 Speaker 1: and he said, initially people just work in the derivatives 307 00:13:14,760 --> 00:13:19,640 Speaker 1: market to hedge their dollar exposure, but the actual reallocation 308 00:13:19,880 --> 00:13:22,800 Speaker 1: happens over time. Is that something that you're seeing too, 309 00:13:22,840 --> 00:13:25,080 Speaker 1: that there's a lot of reallocation away from dollar to 310 00:13:25,120 --> 00:13:28,120 Speaker 1: dominated assets in the pipeline that hasn't fully come to 311 00:13:28,120 --> 00:13:28,680 Speaker 1: the four yet. 312 00:13:28,920 --> 00:13:29,120 Speaker 7: Yeah. 313 00:13:29,120 --> 00:13:30,960 Speaker 9: I would say with our clients, we are seeing exactly 314 00:13:31,000 --> 00:13:33,120 Speaker 9: that we were seeing them this sort of being taken 315 00:13:33,120 --> 00:13:35,640 Speaker 9: out in the FX market, you know, hedging their dollar 316 00:13:35,720 --> 00:13:39,400 Speaker 9: based exposure, and you know, you know, broadly speaking, there 317 00:13:39,520 --> 00:13:41,920 Speaker 9: was some discussion around the tax bill. There was a 318 00:13:41,960 --> 00:13:45,040 Speaker 9: section eight ninety nine, the revenge tax, which was definitely 319 00:13:45,360 --> 00:13:48,199 Speaker 9: I think would have had some significant implications on actual 320 00:13:48,240 --> 00:13:53,040 Speaker 9: asset allocation. I think now they are maybe sort of 321 00:13:53,040 --> 00:13:56,760 Speaker 9: taking a step back and not necessarily divesting from the US, 322 00:13:56,800 --> 00:13:58,640 Speaker 9: but I think sort of maybe hitting the hitting in 323 00:13:58,760 --> 00:14:00,760 Speaker 9: a little bit more of the pose. But in terms 324 00:14:00,760 --> 00:14:03,400 Speaker 9: of your new allocation new allocations, yes, but of course 325 00:14:03,400 --> 00:14:05,120 Speaker 9: it's different for every client, so I don't want to 326 00:14:05,160 --> 00:14:07,760 Speaker 9: sort of generalize, but I do think that there is, 327 00:14:08,040 --> 00:14:09,880 Speaker 9: you know, more of which is a reevaluation of some 328 00:14:09,920 --> 00:14:11,000 Speaker 9: of their dollar based assets. 329 00:14:11,360 --> 00:14:13,480 Speaker 2: It's going to say thanks for being here. Let me 330 00:14:13,480 --> 00:14:14,520 Speaker 2: cancher that a thin. 331 00:14:24,120 --> 00:14:25,080 Speaker 3: Dan, I's of wet Bush. 332 00:14:25,120 --> 00:14:27,120 Speaker 2: It's the biggest Tesla bull on the street with a 333 00:14:27,160 --> 00:14:30,280 Speaker 2: price target of five hundred and an outperform rating. Dan 334 00:14:30,400 --> 00:14:31,840 Speaker 2: joins us now for more, Dank and Mornic. 335 00:14:32,120 --> 00:14:32,720 Speaker 5: Great to be here. 336 00:14:32,840 --> 00:14:36,680 Speaker 2: Revenue down twelve percent, vehicles deliver down, average sunning, price down, 337 00:14:37,200 --> 00:14:38,920 Speaker 2: and yet you're at five hundred dollars. 338 00:14:39,320 --> 00:14:39,920 Speaker 3: Tell me why? 339 00:14:40,000 --> 00:14:42,880 Speaker 10: Yeah, I mean, look the quarter itself nothing right home about, 340 00:14:42,880 --> 00:14:47,320 Speaker 10: But I mean our view, it's about autonomous robotics. AI 341 00:14:47,440 --> 00:14:50,040 Speaker 10: is the future for Tesla. So to me, yeah, it's 342 00:14:50,040 --> 00:14:53,760 Speaker 10: a rough few quarters ahead, but I believe autonomous we 343 00:14:53,840 --> 00:14:55,520 Speaker 10: are in the beginning what's going to be a trillion 344 00:14:55,560 --> 00:14:59,560 Speaker 10: dollar valuation alone for a Tesla. So that's why I 345 00:14:59,560 --> 00:15:03,200 Speaker 10: don't get so concern. We talk about deliveries which actually 346 00:15:03,200 --> 00:15:05,280 Speaker 10: were kind of in line, you know, when we look 347 00:15:05,280 --> 00:15:07,760 Speaker 10: at what's gonna happen the second half the story here 348 00:15:07,880 --> 00:15:11,240 Speaker 10: when it comes to physical AI. Two best ones out there, 349 00:15:11,400 --> 00:15:13,160 Speaker 10: it's gonna be Tessa and then video. 350 00:15:13,400 --> 00:15:16,280 Speaker 2: Moving from a pre autonomy to a post autonomy world. 351 00:15:16,640 --> 00:15:18,240 Speaker 2: Did he do enough on the call last night to 352 00:15:18,240 --> 00:15:20,920 Speaker 2: convince investors that it's going to be smooth sigbink. 353 00:15:21,160 --> 00:15:23,720 Speaker 10: Look, I mean obviously the call, you know, definitely some 354 00:15:23,840 --> 00:15:26,680 Speaker 10: could have criticism in terms of you promising so much. 355 00:15:26,800 --> 00:15:29,720 Speaker 7: Well, my view is if twenty to thirty. 356 00:15:29,440 --> 00:15:32,320 Speaker 10: Percent of what he promised, you see in the next year, 357 00:15:32,880 --> 00:15:36,320 Speaker 10: this is a stock that's up seventy eighty percent from here. 358 00:15:36,440 --> 00:15:39,480 Speaker 10: So that's that's why when I look at Tesla, I 359 00:15:39,480 --> 00:15:41,440 Speaker 10: don't focus, and we've talked about so much in the 360 00:15:41,480 --> 00:15:44,920 Speaker 10: show over the years, I don't focus near term deliveries 361 00:15:45,040 --> 00:15:47,840 Speaker 10: what that means in terms of you know, ev tax credits. 362 00:15:48,080 --> 00:15:50,840 Speaker 10: This is an autonomous robotics story, and I think, look 363 00:15:50,880 --> 00:15:54,240 Speaker 10: the AI revolutions we saw from you know, from from Alphabet. 364 00:15:54,280 --> 00:15:56,640 Speaker 10: I mean, we are just in the early days of 365 00:15:56,720 --> 00:15:57,440 Speaker 10: this playing out. 366 00:15:57,760 --> 00:15:59,600 Speaker 1: Maybe I'm chicken little, but I was looking at this 367 00:15:59,640 --> 00:16:01,800 Speaker 1: press call, diference. I was reading this and I was thinking, 368 00:16:01,800 --> 00:16:03,880 Speaker 1: this is a disaster. I mean, Essentially this was a 369 00:16:03,960 --> 00:16:06,800 Speaker 1: dreamstock and suddenly they're talking about tax credits and things 370 00:16:06,800 --> 00:16:09,040 Speaker 1: of that nature. They used to talk about an affordable vehicle. 371 00:16:09,080 --> 00:16:11,400 Speaker 1: Now they're talking about a stripped down model hy that 372 00:16:11,400 --> 00:16:13,080 Speaker 1: doesn't sound that sexy at all, and they're going to 373 00:16:13,120 --> 00:16:17,000 Speaker 1: expedite production of pre of other vehicles and put that 374 00:16:17,080 --> 00:16:19,200 Speaker 1: on hold. What would it take for you to get barished? 375 00:16:19,240 --> 00:16:19,520 Speaker 5: Yeah? 376 00:16:19,560 --> 00:16:21,520 Speaker 10: Look, I mean you bring up great points and that 377 00:16:21,680 --> 00:16:23,640 Speaker 10: will be the bearish points. And when it comes to 378 00:16:23,680 --> 00:16:27,760 Speaker 10: the affordable next vehicle, is that just a stripped down version. Look, 379 00:16:28,440 --> 00:16:31,880 Speaker 10: my view is that it comes down to like ROBOTAXI. 380 00:16:32,080 --> 00:16:34,200 Speaker 10: If you're in twenty five cities in the next year 381 00:16:35,120 --> 00:16:38,200 Speaker 10: and you should actually start to get volume production of optimists. 382 00:16:38,200 --> 00:16:40,920 Speaker 10: When it comes to robotics, I think ninety percent of 383 00:16:40,960 --> 00:16:43,960 Speaker 10: the future value is going to be in the AI story, 384 00:16:44,040 --> 00:16:45,720 Speaker 10: not on the actual deliveries. 385 00:16:45,760 --> 00:16:46,920 Speaker 5: In terms of cars out there. 386 00:16:46,920 --> 00:16:50,000 Speaker 10: You have ten million vehicles in terms of teslas out there. 387 00:16:50,000 --> 00:16:52,760 Speaker 10: It's all about the data and I believe the big 388 00:16:52,800 --> 00:16:55,160 Speaker 10: thing is going to be the Sherelder mean where they'll 389 00:16:55,160 --> 00:16:58,520 Speaker 10: have a significant investment XAI and I think that's where 390 00:16:58,520 --> 00:17:02,080 Speaker 10: you get more of a wartime CEO in Musk, and 391 00:17:02,120 --> 00:17:03,560 Speaker 10: I think that's really going to be the difference. 392 00:17:03,600 --> 00:17:07,480 Speaker 1: Re satisfied by his answers about Xai, about the investments there, 393 00:17:07,520 --> 00:17:09,639 Speaker 1: the crossover with Tesla, because there was a lot of 394 00:17:09,720 --> 00:17:12,400 Speaker 1: ambiguity and he was asked that directly and he wasn't 395 00:17:12,440 --> 00:17:14,760 Speaker 1: able to explain that connection and how it really does 396 00:17:14,840 --> 00:17:17,000 Speaker 1: rebound over other than some people who are in this 397 00:17:17,040 --> 00:17:18,639 Speaker 1: industry don't really want to work at a car company. 398 00:17:18,680 --> 00:17:20,200 Speaker 1: I want to offer them an opportunity to. 399 00:17:20,320 --> 00:17:22,359 Speaker 10: Yeah, I wouldn't say like that conference call is not 400 00:17:22,480 --> 00:17:24,840 Speaker 10: you wouldn't put him in the Neery Hall of Fame 401 00:17:25,080 --> 00:17:28,600 Speaker 10: that conference call. Okay, But but again we know, like 402 00:17:28,640 --> 00:17:30,760 Speaker 10: with Musk, it's never going to be you know, it's 403 00:17:30,760 --> 00:17:33,639 Speaker 10: not going to be Microsoft like. But my view is, 404 00:17:34,359 --> 00:17:36,760 Speaker 10: and we've talked about it, like the board, they need 405 00:17:36,760 --> 00:17:37,080 Speaker 10: to get. 406 00:17:37,040 --> 00:17:39,639 Speaker 5: Him twenty five percent voted. I think that's key. 407 00:17:40,119 --> 00:17:42,800 Speaker 10: Then that starts what's going to be a significant investment 408 00:17:42,800 --> 00:17:45,840 Speaker 10: in Xai. But we've said also, are there guard rails 409 00:17:45,880 --> 00:17:47,199 Speaker 10: there that they need to put on. 410 00:17:47,560 --> 00:17:49,920 Speaker 5: You've seen him become less political since the. 411 00:17:49,920 --> 00:17:52,280 Speaker 3: July fourth third party you know. 412 00:17:52,240 --> 00:17:54,439 Speaker 10: Too, so I think, look, you want to seem less 413 00:17:54,440 --> 00:17:57,439 Speaker 10: focused on that more focused on being CeAl because it 414 00:17:57,440 --> 00:18:00,520 Speaker 10: comes down to the biggest asset for Tessa is Musk. 415 00:18:00,760 --> 00:18:03,359 Speaker 8: The Press secretary yet yesterday was asked does the president 416 00:18:03,359 --> 00:18:08,080 Speaker 8: support federal agencies contracting with Elon Musk's AI company. 417 00:18:08,119 --> 00:18:10,639 Speaker 7: Her answer, I don't think so. No, can he do 418 00:18:10,720 --> 00:18:11,920 Speaker 7: this about contracts? 419 00:18:12,119 --> 00:18:13,919 Speaker 10: Look, I think, but then it comes out look at 420 00:18:13,920 --> 00:18:16,240 Speaker 10: Groan when it comes to groc in the huge part 421 00:18:16,240 --> 00:18:19,119 Speaker 10: of the do O D deal. Look, the reality is 422 00:18:19,160 --> 00:18:21,600 Speaker 10: that Trump administration could say what they're going to say, 423 00:18:22,000 --> 00:18:26,000 Speaker 10: but they need Musk. Of course they need Jensen. I 424 00:18:26,080 --> 00:18:29,359 Speaker 10: mean they're gonna need leaders when it comes to you. 425 00:18:29,359 --> 00:18:30,840 Speaker 3: Know, of what this AI revolution. 426 00:18:31,040 --> 00:18:31,439 Speaker 5: I think. 427 00:18:31,480 --> 00:18:34,240 Speaker 10: Look, that's the reality, and I do think at one 428 00:18:34,280 --> 00:18:37,040 Speaker 10: point you'll start to see them. You know, I wouldn't 429 00:18:37,040 --> 00:18:39,960 Speaker 10: say this I become friends again, but sort of men 430 00:18:40,119 --> 00:18:43,000 Speaker 10: fences given what must needs. 431 00:18:42,840 --> 00:18:45,879 Speaker 8: To do going to Elon Musk, Sam Altman were not 432 00:18:46,000 --> 00:18:48,280 Speaker 8: called out yesterday when the President was giving shoutouts at 433 00:18:48,280 --> 00:18:49,240 Speaker 8: this AI summit. 434 00:18:49,640 --> 00:18:51,200 Speaker 7: Is Jensen Wang the new first buddy? 435 00:18:51,640 --> 00:18:53,119 Speaker 5: Look, he's the cool kids table. 436 00:18:53,280 --> 00:18:55,639 Speaker 10: I mean right now, like if you look where Jensen is, 437 00:18:55,680 --> 00:18:57,760 Speaker 10: like he is the first buddy for. 438 00:18:57,800 --> 00:19:00,560 Speaker 7: Trump because he's almost running Dan. 439 00:19:00,640 --> 00:19:02,879 Speaker 10: Look, and the reality is there's one chip in the 440 00:19:02,920 --> 00:19:06,240 Speaker 10: world fueling the AI revolution. And that's why when it 441 00:19:06,280 --> 00:19:08,560 Speaker 10: comes to the Middle East trip, who's the right of him? 442 00:19:08,640 --> 00:19:09,040 Speaker 5: Jensen? 443 00:19:09,080 --> 00:19:11,119 Speaker 10: When it comes in that he's when it comes to 444 00:19:11,200 --> 00:19:15,960 Speaker 10: China negotiation, the biggest poker chip that you have is 445 00:19:16,000 --> 00:19:16,440 Speaker 10: a video. 446 00:19:16,840 --> 00:19:18,760 Speaker 5: I mean when it comes down. So yeah, So. 447 00:19:18,840 --> 00:19:21,600 Speaker 10: First Buddy is wearing a black leather jackets names Jensen. 448 00:19:21,880 --> 00:19:24,280 Speaker 3: Final word, Alphabet. What do you think the numbers? 449 00:19:24,880 --> 00:19:27,160 Speaker 10: I thought this was as bullish as you could see 450 00:19:27,160 --> 00:19:29,960 Speaker 10: in terms of the action numbers from search, from YouTube. 451 00:19:30,359 --> 00:19:33,400 Speaker 10: And this is no longer an alphabet in the corners 452 00:19:33,480 --> 00:19:36,879 Speaker 10: say they crying, this is one coming out being like 453 00:19:36,920 --> 00:19:37,800 Speaker 10: we're on the offense. 454 00:19:37,920 --> 00:19:39,840 Speaker 2: You say, they can make the transition from that app 455 00:19:39,840 --> 00:19:43,280 Speaker 2: model that's dominated the last several decades in Silicon Valley. 456 00:19:43,400 --> 00:19:44,880 Speaker 3: We can make the transition away from them. 457 00:19:44,920 --> 00:19:48,000 Speaker 10: I think it's going to be a renaissance for Alphabet. 458 00:19:48,080 --> 00:19:50,399 Speaker 10: I still I believe from a large cap prosductive it's 459 00:19:50,440 --> 00:19:52,560 Speaker 10: one of the best rest awards out there. That's why 460 00:19:52,560 --> 00:19:54,720 Speaker 10: it's a table pounder. We went to twenty five in 461 00:19:54,760 --> 00:19:57,359 Speaker 10: the price target and look, haters hate on this and 462 00:19:57,440 --> 00:20:00,800 Speaker 10: I get it, but the Bears in hibernation mood, there 463 00:20:00,840 --> 00:20:03,359 Speaker 10: was nothing on their call that they're going to grasp 464 00:20:03,400 --> 00:20:05,880 Speaker 10: on to it. I want to see them increase cappex. 465 00:20:06,119 --> 00:20:08,040 Speaker 10: It's an arms race of that right now in AI. 466 00:20:08,040 --> 00:20:09,199 Speaker 10: You want to see them in the Lefley. 467 00:20:09,320 --> 00:20:11,040 Speaker 2: The good news is the markets wanting to support them. 468 00:20:11,080 --> 00:20:12,960 Speaker 2: Bremo that the stock is up off the back of 469 00:20:13,000 --> 00:20:14,920 Speaker 2: this capex space and it's not down because then they 470 00:20:14,920 --> 00:20:16,040 Speaker 2: have very different problems. 471 00:20:16,080 --> 00:20:18,440 Speaker 1: Well, initially it was down, and that was interesting because 472 00:20:18,440 --> 00:20:20,320 Speaker 1: people had the knee jerk reaction of stop spending so 473 00:20:20,440 --> 00:20:22,080 Speaker 1: much before you can give us a sense of how 474 00:20:22,080 --> 00:20:24,119 Speaker 1: you're going to monetize it. But as he spoke, and 475 00:20:24,160 --> 00:20:26,800 Speaker 1: he talked about customer demand to change. Right now, I 476 00:20:26,840 --> 00:20:31,439 Speaker 1: am chat cheepyteeing. Is Google Search in its decline and 477 00:20:31,480 --> 00:20:33,000 Speaker 1: I will let you know what it says. 478 00:20:33,280 --> 00:20:35,440 Speaker 10: But I also see the bears when they're in the 479 00:20:35,520 --> 00:20:38,879 Speaker 10: hibernation mood, in the caves. They can find AI in 480 00:20:38,880 --> 00:20:41,280 Speaker 10: the spreadsheets, and that's part of what I think how 481 00:20:41,320 --> 00:20:43,680 Speaker 10: they've missed so much of the AI revolution. 482 00:20:43,800 --> 00:20:45,119 Speaker 5: Look, get the popcorn out. 483 00:20:45,280 --> 00:20:47,159 Speaker 10: This is just a precursor of what's going to be 484 00:20:47,200 --> 00:20:51,160 Speaker 10: a bullsh Tecker, Microsoft, Meta Volunteer and others. 485 00:20:51,200 --> 00:20:52,840 Speaker 3: Then I a Weber Standard Frey chet. 486 00:20:52,880 --> 00:21:03,720 Speaker 2: Here, what's around a cycle? 487 00:21:03,840 --> 00:21:06,000 Speaker 3: Native Richardson of IDP, Native of Monic. 488 00:21:06,240 --> 00:21:07,240 Speaker 7: It's great to be here with you. 489 00:21:07,320 --> 00:21:07,879 Speaker 3: It's good to see it. 490 00:21:07,960 --> 00:21:10,000 Speaker 2: Let's talk about this job states. We've had a lot 491 00:21:10,040 --> 00:21:11,639 Speaker 2: from a lot of people who say this lip of 492 00:21:11,680 --> 00:21:14,000 Speaker 2: banka is no longer a reason to be holkish. Is 493 00:21:14,040 --> 00:21:15,840 Speaker 2: it becoming a reason to be dubbish. 494 00:21:17,160 --> 00:21:19,760 Speaker 11: I think you can't say that this labor market's not 495 00:21:19,880 --> 00:21:22,280 Speaker 11: in transition. If you look at the last three months 496 00:21:22,280 --> 00:21:27,440 Speaker 11: of hiring, they're slowing. It's clear. And so whether hawkish 497 00:21:27,520 --> 00:21:30,119 Speaker 11: or dubbish, the l l labor market is an issue 498 00:21:30,160 --> 00:21:33,880 Speaker 11: on the table to consider. And I think when we 499 00:21:33,920 --> 00:21:37,480 Speaker 11: look at next week, which will be jobs week, uh, 500 00:21:37,520 --> 00:21:40,359 Speaker 11: we'll see a continuation of a slowing trend. And I'd 501 00:21:40,480 --> 00:21:43,240 Speaker 11: like to mark that trend with something that you can 502 00:21:43,280 --> 00:21:46,359 Speaker 11: see clearly in the ADP data. The slowdown isn't coming 503 00:21:46,359 --> 00:21:50,520 Speaker 11: from goods. It's coming from services, and that is the 504 00:21:50,560 --> 00:21:54,080 Speaker 11: turnaround in the labor market. It has been that services 505 00:21:54,119 --> 00:21:57,359 Speaker 11: have held the water for the labor market. It's really 506 00:21:57,400 --> 00:22:01,720 Speaker 11: the goods sector that's suffered. And with terra in play. Still, 507 00:22:01,920 --> 00:22:03,879 Speaker 11: you would think it would be the goods sector that 508 00:22:04,040 --> 00:22:06,159 Speaker 11: is bringing down the momentum. 509 00:22:06,240 --> 00:22:06,600 Speaker 7: It's not. 510 00:22:06,920 --> 00:22:10,000 Speaker 11: It's services, which points to a whole different case study 511 00:22:10,160 --> 00:22:12,520 Speaker 11: on what's really going on in the US economy. So 512 00:22:12,720 --> 00:22:14,959 Speaker 11: talk us through what that case study is in terms 513 00:22:15,000 --> 00:22:18,040 Speaker 11: of are we just seeing the cycle shift from goods 514 00:22:18,040 --> 00:22:22,440 Speaker 11: to services, but goods goods hiring will pick up significantly, 515 00:22:22,760 --> 00:22:24,399 Speaker 11: or does it speak to a broader. 516 00:22:24,080 --> 00:22:24,800 Speaker 7: Type of trend. 517 00:22:25,080 --> 00:22:27,679 Speaker 11: You know, there's so many megatrons right now, and I 518 00:22:27,880 --> 00:22:29,720 Speaker 11: like to look at the first six months of twenty 519 00:22:29,760 --> 00:22:32,800 Speaker 11: twenty five and compare it to the first six months 520 00:22:32,800 --> 00:22:35,800 Speaker 11: of twenty nineteen before the pandemic. This was actually inspired 521 00:22:35,840 --> 00:22:39,720 Speaker 11: by something Johnathan said about getting a pay raise, because 522 00:22:39,760 --> 00:22:42,200 Speaker 11: if you look, I thought it was a great question. 523 00:22:42,280 --> 00:22:44,919 Speaker 11: I wasn't satisfied with my answer, so I went to 524 00:22:44,960 --> 00:22:48,680 Speaker 11: the data, and it turns out that there hasn't been 525 00:22:48,720 --> 00:22:51,919 Speaker 11: an increase in new higher average pay and over a 526 00:22:52,040 --> 00:22:56,280 Speaker 11: year eighteen dollars it's been and that's because the supply 527 00:22:56,359 --> 00:22:59,960 Speaker 11: and demand dynamics have held firm. It's a really bound 528 00:23:00,240 --> 00:23:03,719 Speaker 11: labor market. I think it breaks because we're seeing lower supply. 529 00:23:03,880 --> 00:23:07,440 Speaker 11: The labor force participation rate now is lower than it was. 530 00:23:07,480 --> 00:23:08,160 Speaker 7: Six years ago. 531 00:23:08,240 --> 00:23:11,040 Speaker 11: There are fewer people working and looking for work, and 532 00:23:11,080 --> 00:23:13,320 Speaker 11: that's what's going to keep pay a little bit higher 533 00:23:13,760 --> 00:23:16,320 Speaker 11: or a little bit more stable for new hires than 534 00:23:16,359 --> 00:23:18,160 Speaker 11: it was six years ago. 535 00:23:18,200 --> 00:23:21,160 Speaker 1: So this rice is a really good, interesting question. Even 536 00:23:21,200 --> 00:23:23,359 Speaker 1: if we get numbers that look pretty good on the 537 00:23:23,440 --> 00:23:26,560 Speaker 1: jobless front, not that many jobless claims on the job 538 00:23:26,600 --> 00:23:29,760 Speaker 1: creation front, more than some people would expect, is there 539 00:23:29,800 --> 00:23:33,760 Speaker 1: anything about this labor market that's inflationary with wages increasing. 540 00:23:34,560 --> 00:23:37,640 Speaker 11: Well, this is a very deep labor market. We talked 541 00:23:37,640 --> 00:23:40,240 Speaker 11: about whether it's stock solid. I think of it as deep. 542 00:23:40,280 --> 00:23:44,120 Speaker 11: Still waters run deep, and what you're seeing is that, yes, 543 00:23:44,200 --> 00:23:47,040 Speaker 11: if you look at job stayers and job switchers, which 544 00:23:47,200 --> 00:23:49,080 Speaker 11: we look at all the time at ADP. 545 00:23:49,520 --> 00:23:50,639 Speaker 7: Pay growth is elevated. 546 00:23:50,760 --> 00:23:54,640 Speaker 11: But when you look at those new hires they're pretty stagnant. 547 00:23:54,760 --> 00:23:56,960 Speaker 11: And I also look at the job openings by the 548 00:23:57,080 --> 00:24:01,040 Speaker 11: US government, which shows five hundred thousand more jobs now 549 00:24:01,119 --> 00:24:03,800 Speaker 11: than and there were six years ago. But the hiring rate, 550 00:24:04,200 --> 00:24:07,280 Speaker 11: the rate at which employers are hiring is lower three 551 00:24:07,320 --> 00:24:10,920 Speaker 11: point four in May compared to May twenty nineteen three 552 00:24:10,960 --> 00:24:15,240 Speaker 11: point eight. There is less urgency to fill those positions, 553 00:24:15,440 --> 00:24:18,280 Speaker 11: and that's what's leading to this no higher, no fire 554 00:24:18,640 --> 00:24:22,200 Speaker 11: stasis in the jobs market. I think it breaks because 555 00:24:22,520 --> 00:24:26,280 Speaker 11: of labor supply issues, not necessarily labor demand issues. 556 00:24:26,359 --> 00:24:28,840 Speaker 8: Governor Waller was sitting in your seat last week and 557 00:24:29,000 --> 00:24:32,040 Speaker 8: it seemed to really weigh on him. The unemployment rate 558 00:24:32,200 --> 00:24:34,800 Speaker 8: on recent college grads seven percent. 559 00:24:35,119 --> 00:24:37,000 Speaker 7: What's going on? Why are they not able to get 560 00:24:37,040 --> 00:24:37,400 Speaker 7: a job? 561 00:24:37,640 --> 00:24:39,760 Speaker 11: Well, I think it bends back to the data we 562 00:24:39,840 --> 00:24:44,120 Speaker 11: just saw continuing claims. It's harder to get a job 563 00:24:44,160 --> 00:24:47,280 Speaker 11: in this labor market where supply and demand are in balance, 564 00:24:47,520 --> 00:24:50,080 Speaker 11: and for young people coming out into the market, this 565 00:24:50,240 --> 00:24:53,000 Speaker 11: is not their older brothers or sister's labor market in 566 00:24:53,040 --> 00:24:55,359 Speaker 11: twenty twenty two. They were snatched right up. They have 567 00:24:55,520 --> 00:24:58,479 Speaker 11: that expectation. Their older sister told them that they were 568 00:24:58,480 --> 00:25:01,000 Speaker 11: snatched right up, and that was the ex expectation. It's 569 00:25:01,040 --> 00:25:03,240 Speaker 11: not that labor market anymore. To a labor market that 570 00:25:03,320 --> 00:25:06,680 Speaker 11: requires patients in networking, it's gen z. It's going to 571 00:25:06,720 --> 00:25:10,679 Speaker 11: take a little bit longer. And where these college grads 572 00:25:10,680 --> 00:25:15,720 Speaker 11: are coming out is what exactly is slowing Professional businesses. 573 00:25:15,920 --> 00:25:19,000 Speaker 11: Services are slowing down, finance is slowing down. If they 574 00:25:19,000 --> 00:25:22,160 Speaker 11: were coming out in construction, I think they would see 575 00:25:22,160 --> 00:25:24,119 Speaker 11: that kind of snatch up in the labor market, but 576 00:25:24,160 --> 00:25:25,200 Speaker 11: they're not seeing it now. 577 00:25:25,600 --> 00:25:25,879 Speaker 3: Nyla. 578 00:25:25,920 --> 00:25:27,520 Speaker 2: It's great to see you. Thanks for writing it down. 579 00:25:27,560 --> 00:25:31,239 Speaker 2: Appreciate it. Nia Riches and there of ADP. 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