1 00:00:02,759 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,960 --> 00:00:21,080 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,120 Speaker 1: or watch us live on YouTube. 6 00:00:23,680 --> 00:00:26,920 Speaker 2: Big Big Week four Tech earnings here. The Apple numbers 7 00:00:26,960 --> 00:00:29,880 Speaker 2: came out last night. I thought they were like, really good. 8 00:00:30,400 --> 00:00:33,080 Speaker 2: So what does the stock market do? Down one percent 9 00:00:33,080 --> 00:00:35,040 Speaker 2: in the stock here today. I've been doing this stock 10 00:00:35,040 --> 00:00:37,240 Speaker 2: market thing for forty years. No idea how it works. 11 00:00:37,440 --> 00:00:40,720 Speaker 2: Dan Ives does the globalhead of Technology Research Weber Securities Joints. 12 00:00:40,720 --> 00:00:43,239 Speaker 2: It's live here in our Bloomberg Interactive Broker studio. Dan, 13 00:00:43,240 --> 00:00:44,360 Speaker 2: what did you make of the quarter last night? 14 00:00:44,400 --> 00:00:46,920 Speaker 3: For I mean now is a staggering quarter in terms 15 00:00:46,960 --> 00:00:49,680 Speaker 3: of what you saw on iPhone, specifically in terms of China, 16 00:00:49,680 --> 00:00:53,080 Speaker 3: I mean chininga massive towwind services strong. 17 00:00:53,360 --> 00:00:55,400 Speaker 4: I don't miss say best case. 18 00:00:55,200 --> 00:00:59,400 Speaker 3: Scenario that you could have seen the stock performance today, 19 00:00:59,520 --> 00:01:01,920 Speaker 3: I'd say it's a massive head scratcher. I mean this 20 00:01:01,960 --> 00:01:04,480 Speaker 3: is look, this is one where I think this stock 21 00:01:04,520 --> 00:01:07,960 Speaker 3: should be up five to eight percent relative you know 22 00:01:08,040 --> 00:01:09,880 Speaker 3: to what they perform and the guidance. 23 00:01:10,200 --> 00:01:11,800 Speaker 4: But I think it also just comes down to the 24 00:01:11,920 --> 00:01:12,399 Speaker 4: we've talked. 25 00:01:12,240 --> 00:01:14,399 Speaker 3: About so much in the show, right, is that, what's 26 00:01:14,440 --> 00:01:18,440 Speaker 3: the AI strategy, what's the monization? Show us the playbook. 27 00:01:18,680 --> 00:01:21,720 Speaker 3: That's not Cooper Tino, that's not their DNA. And I 28 00:01:21,720 --> 00:01:24,399 Speaker 3: think that's why the stock's kind of to little Larry 29 00:01:24,480 --> 00:01:26,480 Speaker 3: David in terms of the reaction. 30 00:01:26,920 --> 00:01:29,080 Speaker 5: So, how has it been their AI push because they 31 00:01:29,080 --> 00:01:31,959 Speaker 5: have face concerns and they've really lagged behind their megacap 32 00:01:32,000 --> 00:01:32,760 Speaker 5: tech peers. 33 00:01:33,240 --> 00:01:36,399 Speaker 3: Look, I mean they they've watched AI from the stands, 34 00:01:36,560 --> 00:01:39,440 Speaker 3: and I think that's been disappointing to many, including us, 35 00:01:39,640 --> 00:01:41,839 Speaker 3: because you have the biggest install based in the world, 36 00:01:42,160 --> 00:01:44,720 Speaker 3: you have one point five million iPhones. But now it 37 00:01:44,720 --> 00:01:47,440 Speaker 3: comes down to the Google Gemini partnership is the first 38 00:01:47,440 --> 00:01:51,360 Speaker 3: big step. They're bringing an outside talent, which is I 39 00:01:51,400 --> 00:01:54,600 Speaker 3: think unique to what we've seen there. And then this 40 00:01:54,680 --> 00:01:56,920 Speaker 3: is what I believe is going to build into a 41 00:01:57,000 --> 00:02:01,400 Speaker 3: subscription service. I mean that is not being factored into 42 00:02:01,440 --> 00:02:03,320 Speaker 3: the stock. And just I just go back to like 43 00:02:03,400 --> 00:02:06,200 Speaker 3: a year ago, look at Google New York City cab 44 00:02:06,280 --> 00:02:08,920 Speaker 3: drivers parish on it. Now today they're doing you know, 45 00:02:08,960 --> 00:02:11,400 Speaker 3: tick er Tate parades for it. You go back to 46 00:02:11,480 --> 00:02:14,640 Speaker 3: Meta a quarter ago. Now look at in this court. 47 00:02:14,720 --> 00:02:17,320 Speaker 3: So we're just going to go through this just very 48 00:02:17,360 --> 00:02:19,359 Speaker 3: sensitive time for tech investors. 49 00:02:19,560 --> 00:02:22,280 Speaker 2: Looking at the Mark German Bloomberg News his reporting today, 50 00:02:22,480 --> 00:02:25,000 Speaker 2: maybe some concerns he's calling out about gross margins in 51 00:02:25,040 --> 00:02:28,720 Speaker 2: the current period due to rising memory prices, also some 52 00:02:28,800 --> 00:02:32,720 Speaker 2: supply chain constraints with the iPhones three nanometer processor. Are 53 00:02:32,760 --> 00:02:35,160 Speaker 2: all those things kind of suggesting to investors maybe we're 54 00:02:35,160 --> 00:02:37,519 Speaker 2: going to have great sales, but maybe not the margins 55 00:02:37,560 --> 00:02:39,400 Speaker 2: were looking forth, Yeah, I. 56 00:02:39,280 --> 00:02:42,320 Speaker 3: Think that's I mean, I think that's in telegraph. But 57 00:02:42,440 --> 00:02:44,520 Speaker 3: I do believe you have pricing increases when it comes 58 00:02:44,560 --> 00:02:48,079 Speaker 3: to iPhone eighteen called one hundred hundred and fifty dollars. 59 00:02:48,639 --> 00:02:50,639 Speaker 3: But Paul, I think, like what ultimately is going to 60 00:02:50,720 --> 00:02:53,680 Speaker 3: move the stock, Like when investors are focusing on how 61 00:02:53,680 --> 00:02:56,200 Speaker 3: do you get to three twenty five, three to fifty, 62 00:02:56,200 --> 00:02:57,200 Speaker 3: how do you have a stock with. 63 00:02:57,200 --> 00:02:59,440 Speaker 4: A three in front of it? It's not going to 64 00:02:59,560 --> 00:03:01,560 Speaker 4: be sales margins. 65 00:03:01,680 --> 00:03:05,600 Speaker 3: It comes down to lay out the AI strategy, show 66 00:03:05,720 --> 00:03:09,880 Speaker 3: us the playbook, and that's why like Cook's gonna stay CEO. 67 00:03:09,880 --> 00:03:13,680 Speaker 3: In my opinion, till that baton's handed because this is 68 00:03:13,760 --> 00:03:16,160 Speaker 3: so important, I think to his legacy. 69 00:03:16,320 --> 00:03:18,720 Speaker 5: And what about how it's coping with tariffs. The company 70 00:03:18,760 --> 00:03:21,720 Speaker 5: said that it created a one point for billion dollar headwind. 71 00:03:21,880 --> 00:03:23,280 Speaker 6: Have we reached the worst? 72 00:03:23,600 --> 00:03:23,799 Speaker 4: Yeah? 73 00:03:23,840 --> 00:03:26,200 Speaker 3: I think worst is probably in the rearview mirror network. 74 00:03:26,240 --> 00:03:28,799 Speaker 3: That's why I also play nice in the sandbox in DC, 75 00:03:29,440 --> 00:03:32,359 Speaker 3: which Trump has been huge positive but it goes back 76 00:03:32,360 --> 00:03:35,960 Speaker 3: to cook ten percent politician ninety percent CEO. So he's 77 00:03:35,960 --> 00:03:39,440 Speaker 3: been able to navigate that extremely well. Now investors are okay, 78 00:03:39,440 --> 00:03:43,520 Speaker 3: it's good time. What should the growth catalyst? It was 79 00:03:43,560 --> 00:03:45,720 Speaker 3: a huge step in the right direction last night, but 80 00:03:45,840 --> 00:03:48,080 Speaker 3: you see, like investors and this is going to be 81 00:03:48,120 --> 00:03:52,400 Speaker 3: a narrow in this tech earning season. Any blemish anything 82 00:03:52,480 --> 00:03:55,040 Speaker 3: investors don't like, they're going to take these stocks down. 83 00:03:55,120 --> 00:03:56,880 Speaker 4: And we saw that with Microsoft and others. 84 00:03:57,640 --> 00:03:59,600 Speaker 2: Talks about trying to hear because that's been a big 85 00:04:00,280 --> 00:04:03,440 Speaker 2: and overhang for this company for the last couple of years, 86 00:04:03,440 --> 00:04:05,560 Speaker 2: if not more. What do you think the status is 87 00:04:05,640 --> 00:04:06,800 Speaker 2: right there about China and Apple? 88 00:04:06,840 --> 00:04:08,480 Speaker 4: Well, I think it's a lot more positive today. 89 00:04:08,480 --> 00:04:10,280 Speaker 3: I mean, go back, they were kind of in the 90 00:04:10,280 --> 00:04:12,960 Speaker 3: middle of a sort of old Western fight between US 91 00:04:13,000 --> 00:04:16,920 Speaker 3: and China now is those tensions have come down. That's 92 00:04:16,960 --> 00:04:19,080 Speaker 3: how that's been a huge positive for Apple. That's why 93 00:04:19,560 --> 00:04:22,839 Speaker 3: Apple and Tasla are the two tech companies are always 94 00:04:22,920 --> 00:04:26,320 Speaker 3: caught in there. I think you've seen those talents. Look, 95 00:04:26,360 --> 00:04:30,200 Speaker 3: it's so important twenty percent iPhone sales. You need that 96 00:04:30,440 --> 00:04:33,200 Speaker 3: to be a market that's showing growth. And that's why 97 00:04:33,240 --> 00:04:36,400 Speaker 3: you're seeing it. They're delivering everything you want to see. 98 00:04:36,400 --> 00:04:37,680 Speaker 3: But the one thing that's. 99 00:04:37,480 --> 00:04:40,320 Speaker 4: Missing, it's the AI strategy. 100 00:04:39,760 --> 00:04:43,440 Speaker 3: And that ultimately, that's that's really the hearts and lungs 101 00:04:43,480 --> 00:04:45,440 Speaker 3: of what's gonna Haven't. 102 00:04:45,120 --> 00:04:46,960 Speaker 4: They articulated a strategy and maybe. 103 00:04:46,800 --> 00:04:49,640 Speaker 2: That strategy is we're just gonna wait and we're gonna 104 00:04:49,680 --> 00:04:51,479 Speaker 2: partner with whoever we need to partner with, and that 105 00:04:51,560 --> 00:04:52,280 Speaker 2: is our strategy. 106 00:04:52,360 --> 00:04:54,440 Speaker 4: Have they said that or is that not enough? 107 00:04:54,520 --> 00:05:00,360 Speaker 3: Look, they've been it's essentially the last few wwdcs. 108 00:04:59,279 --> 00:05:02,200 Speaker 4: It's been about to the future. Michael J. Fox moment right. 109 00:05:02,400 --> 00:05:04,800 Speaker 3: The point is like they've really been on a treadmill 110 00:05:04,839 --> 00:05:07,760 Speaker 3: at two point five speed. I think part of it 111 00:05:07,800 --> 00:05:09,160 Speaker 3: was like they were hoping it was going to be 112 00:05:09,240 --> 00:05:13,360 Speaker 3: internally developed that wasn't going to happen. They've probably been 113 00:05:13,480 --> 00:05:17,479 Speaker 3: I think slow and culturally it's actually hurt them. That's 114 00:05:17,520 --> 00:05:21,440 Speaker 3: why you start to see changes. And ultimately they needed 115 00:05:21,480 --> 00:05:24,240 Speaker 3: Google win the DOJ suit for this to happen. If 116 00:05:24,560 --> 00:05:28,040 Speaker 3: Google don't win dojsuit, this can this partnership can happen. 117 00:05:28,480 --> 00:05:31,239 Speaker 3: Should they have bought Perplexity, should they have done others? 118 00:05:31,279 --> 00:05:34,279 Speaker 3: Of course, But that's why this is go time for Apple, 119 00:05:34,640 --> 00:05:38,120 Speaker 3: and that's what the stocks reflecting investors like, should give 120 00:05:38,200 --> 00:05:38,799 Speaker 3: me something? 121 00:05:39,160 --> 00:05:40,880 Speaker 5: And do you say that they have a chance in 122 00:05:40,920 --> 00:05:42,160 Speaker 5: overtaking their peers. 123 00:05:42,600 --> 00:05:44,680 Speaker 3: Look, I think when you have the biggest install based 124 00:05:44,680 --> 00:05:46,320 Speaker 3: in the world and you have a Hall of Fame 125 00:05:46,400 --> 00:05:50,159 Speaker 3: Mount Rushmore CEO like Cook, you could be late to 126 00:05:50,240 --> 00:05:54,719 Speaker 3: the game, but twenty twenty six, they can't fumble the football. 127 00:05:54,880 --> 00:05:57,960 Speaker 3: This this has to sort of be their moment. I 128 00:05:57,960 --> 00:06:00,240 Speaker 3: think it's off to a strong start, but as we're 129 00:06:00,279 --> 00:06:04,040 Speaker 3: seeing in tech, this is gonna be much more highly screwtinized. 130 00:06:04,040 --> 00:06:06,359 Speaker 3: You're not going to get be given the sort of 131 00:06:06,400 --> 00:06:07,440 Speaker 3: maybe latitude. 132 00:06:07,960 --> 00:06:10,240 Speaker 4: Just give them this market thirty seconds left before we 133 00:06:10,320 --> 00:06:11,800 Speaker 4: let you go. Can you give us your call on 134 00:06:11,880 --> 00:06:12,560 Speaker 4: Tesla right here? 135 00:06:13,000 --> 00:06:15,000 Speaker 3: I mean, I think it's going to be a historical 136 00:06:15,080 --> 00:06:18,960 Speaker 3: year for Tesla. It's the autonomous and robotics error that's 137 00:06:19,000 --> 00:06:22,000 Speaker 3: now taking place, plus thing about SpaceX and XAI. What 138 00:06:22,120 --> 00:06:26,560 Speaker 3: that's doing the musk ecosystem, Muscu's wartime CEO, and it 139 00:06:26,600 --> 00:06:29,719 Speaker 3: comes down that's why six hundred spase case, eight hundreds 140 00:06:29,720 --> 00:06:34,480 Speaker 3: bowl case, and this now starts the AI revolution at Tesla. 141 00:06:34,400 --> 00:06:38,000 Speaker 2: SpaceX that I feel happens that that's gonna lift just 142 00:06:38,040 --> 00:06:40,000 Speaker 2: the whole feeling about Elon in general. 143 00:06:40,000 --> 00:06:42,560 Speaker 3: I would think, Look, it goes back to like he's 144 00:06:42,760 --> 00:06:45,960 Speaker 3: playing you know, he's playing like chess, others playing checkers 145 00:06:45,960 --> 00:06:49,000 Speaker 3: when it comes to what he's navigating here, and that's 146 00:06:49,040 --> 00:06:52,440 Speaker 3: what haters will hate. But when SpaceX comes out, I mean, 147 00:06:52,480 --> 00:06:54,679 Speaker 3: you know you're talking about we're basically make some amost 148 00:06:54,720 --> 00:06:55,360 Speaker 3: a trillion. 149 00:06:55,120 --> 00:06:57,560 Speaker 4: Biggest listing every I mean one and a half trillion 150 00:06:57,600 --> 00:07:00,160 Speaker 4: dollar evaluation. That would be just extraordinary to see with 151 00:07:00,240 --> 00:07:02,920 Speaker 4: us more from Bloomberg Intelligence coming up after this. 152 00:07:06,760 --> 00:07:10,480 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 153 00:07:10,560 --> 00:07:13,640 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 154 00:07:13,640 --> 00:07:16,960 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 155 00:07:17,040 --> 00:07:20,120 Speaker 1: you get your podcasts, or watch us live on YouTube. 156 00:07:21,000 --> 00:07:24,240 Speaker 2: We've spoken to I don't know many many voices on 157 00:07:24,360 --> 00:07:27,520 Speaker 2: this pick of mister Walsh for the FED chair. We've 158 00:07:27,560 --> 00:07:31,240 Speaker 2: had people like Neil Dudda very negative. We've had people 159 00:07:31,280 --> 00:07:34,840 Speaker 2: like Terry Haynes a Pangaea quite positive. Yes, so there 160 00:07:34,840 --> 00:07:37,800 Speaker 2: seems to be a wide range of views out there. 161 00:07:37,920 --> 00:07:41,800 Speaker 2: A about mister Walsh as a nominee number one and 162 00:07:41,880 --> 00:07:45,160 Speaker 2: number two just kind of about you know, policies in general. 163 00:07:45,400 --> 00:07:47,720 Speaker 2: So we'll have to see how that plays out. One 164 00:07:47,760 --> 00:07:51,480 Speaker 2: voice we absolutely wanted to get to hear from is 165 00:07:51,560 --> 00:07:54,240 Speaker 2: Danielle di Martino Boo. She's the CEO and chief strategistic 166 00:07:54,320 --> 00:07:57,400 Speaker 2: QI Research and she spent a good stretch at the 167 00:07:57,480 --> 00:08:00,800 Speaker 2: Dallas Fed, so she knows how all this stuff works. Danielle, 168 00:08:00,960 --> 00:08:03,400 Speaker 2: love to get your opinion on the nomination of mister 169 00:08:03,480 --> 00:08:04,880 Speaker 2: Kevin Walsh. 170 00:08:04,920 --> 00:08:06,920 Speaker 6: Well, I'm I'm cautiously hopeful. 171 00:08:07,320 --> 00:08:11,360 Speaker 7: UH President Richard Fisher served when worsh was on the board, 172 00:08:11,680 --> 00:08:16,040 Speaker 7: and they were two large deterrens of quantitative easing UH 173 00:08:16,680 --> 00:08:21,360 Speaker 7: worse famously called QE reverse Robin Hood. He and I 174 00:08:21,400 --> 00:08:24,120 Speaker 7: said on a panel when he was at Stanford a 175 00:08:24,160 --> 00:08:27,920 Speaker 7: few years ago, and we share the same views that 176 00:08:28,160 --> 00:08:33,319 Speaker 7: going as far out on the easing spectrum as QE 177 00:08:34,120 --> 00:08:36,960 Speaker 7: was not good for the financial markets, was not good 178 00:08:37,000 --> 00:08:42,240 Speaker 7: for the for the overall US public. And I'm hoping 179 00:08:42,840 --> 00:08:45,200 Speaker 7: that he doesn't go in that direction, that he's not 180 00:08:45,360 --> 00:08:48,880 Speaker 7: tempted to go to zero interest rate policy again, and 181 00:08:48,880 --> 00:08:51,439 Speaker 7: that we steer clear of QE and continue to shrink 182 00:08:51,480 --> 00:08:53,679 Speaker 7: the size of the Fed's balance sheet. These are all 183 00:08:53,720 --> 00:08:57,120 Speaker 7: things that worsh has indicated that he would advocate for doing, 184 00:08:57,200 --> 00:08:59,040 Speaker 7: and I hope that he follows through with that. 185 00:09:00,080 --> 00:09:02,720 Speaker 5: After the nomination there will be the confirmation, and we've 186 00:09:02,840 --> 00:09:05,240 Speaker 5: had some of the sources telling us that it may 187 00:09:05,280 --> 00:09:07,600 Speaker 5: not be as smooth. What is your projection for that? 188 00:09:09,120 --> 00:09:13,240 Speaker 6: Well, you know, I listened live when Senator Tom Tillis. 189 00:09:12,920 --> 00:09:17,040 Speaker 7: Was interviewed earlier this morning on Bloomberg and he has 190 00:09:17,080 --> 00:09:20,160 Speaker 7: a very good point. And it's not that he's philosophically 191 00:09:20,200 --> 00:09:22,600 Speaker 7: misaligned with Kevin Walsh. In fact, I think he thinks 192 00:09:22,600 --> 00:09:25,360 Speaker 7: he's a great candidate, But he was He used the 193 00:09:25,360 --> 00:09:28,800 Speaker 7: word frivolous as it pertained to the lawsuit that he 194 00:09:29,000 --> 00:09:32,439 Speaker 7: was waiting until the Department of Justice's frivolous lawsuit was. 195 00:09:34,400 --> 00:09:34,880 Speaker 4: Frivolous. 196 00:09:34,960 --> 00:09:40,439 Speaker 7: Charges were dropped against Chair Powell before proceeding with any nominee. 197 00:09:40,440 --> 00:09:43,880 Speaker 7: I think Senator Thune, Senator Majority Leader Thune has backed 198 00:09:43,960 --> 00:09:46,560 Speaker 7: that this will not be possible. You will not be 199 00:09:46,600 --> 00:09:51,400 Speaker 7: able to progress Worsh through the nomination process, unt build 200 00:09:51,440 --> 00:09:55,640 Speaker 7: the Department of Justice releases Durrum Pale from these criminal charges. 201 00:09:56,400 --> 00:10:00,600 Speaker 2: Danielle, how do you think mister wash will move as 202 00:10:00,600 --> 00:10:02,760 Speaker 2: it relates to interest rate policy? There are you know 203 00:10:02,880 --> 00:10:04,640 Speaker 2: a lot of folks have pointed out that he's become 204 00:10:04,720 --> 00:10:09,080 Speaker 2: maybe even more dubvish, less hawkish with time in most 205 00:10:09,080 --> 00:10:11,600 Speaker 2: recent times, and that may or may not have some 206 00:10:12,520 --> 00:10:15,160 Speaker 2: political ramifications. 207 00:10:15,640 --> 00:10:17,920 Speaker 4: How do you think he'll try to proceed with this FED? 208 00:10:19,200 --> 00:10:20,040 Speaker 4: So you know, of. 209 00:10:19,960 --> 00:10:23,480 Speaker 7: Course that is going to be the perception. I've seen 210 00:10:23,520 --> 00:10:26,199 Speaker 7: a lot of the comments that he's made, but. 211 00:10:26,200 --> 00:10:27,480 Speaker 6: I would I would just say this. 212 00:10:27,600 --> 00:10:30,440 Speaker 7: I think that coming in that Worsh will be more 213 00:10:30,480 --> 00:10:34,080 Speaker 7: aligned with Christopher Waller and that he will recognize that 214 00:10:34,080 --> 00:10:36,840 Speaker 7: the FED is failing on its employment mandate and use 215 00:10:37,400 --> 00:10:43,199 Speaker 7: research and data and alternative data sets to justify continuing 216 00:10:43,240 --> 00:10:45,360 Speaker 7: to bring the FED funds rate down. And I think 217 00:10:45,360 --> 00:10:49,160 Speaker 7: that that's entirely appropriate. But again I'm hoping that that 218 00:10:49,280 --> 00:10:54,160 Speaker 7: he aligns back with his original thinking that zero interest 219 00:10:54,240 --> 00:10:56,960 Speaker 7: rate policy is not the way to go, and that 220 00:10:57,000 --> 00:10:59,920 Speaker 7: he finds a more reasonable FED funds floor somewhere around 221 00:11:00,160 --> 00:11:00,800 Speaker 7: two percent. 222 00:11:01,600 --> 00:11:03,920 Speaker 5: So if Worsh does become the FED chair, what changes 223 00:11:03,960 --> 00:11:09,800 Speaker 5: first for markets? Policy direction, communication, or maybe reaction function. 224 00:11:11,840 --> 00:11:13,880 Speaker 6: I think reaction function becomes critical. 225 00:11:13,880 --> 00:11:16,319 Speaker 7: We have to remember that Worsh was he was a 226 00:11:16,360 --> 00:11:20,360 Speaker 7: critical player during the global financial crisis. He has deep 227 00:11:20,440 --> 00:11:24,120 Speaker 7: understandings of financial markets. We've seen some movement and leverage 228 00:11:24,160 --> 00:11:26,800 Speaker 7: loans this week, We've seen a lot. 229 00:11:26,640 --> 00:11:29,120 Speaker 6: Of activity in private credit. 230 00:11:29,679 --> 00:11:32,120 Speaker 7: The good news is we need somebody who has a 231 00:11:32,200 --> 00:11:35,360 Speaker 7: deep understanding of the banking system and the financial system, 232 00:11:35,559 --> 00:11:38,880 Speaker 7: their linkages, and I think he'll be able to be 233 00:11:39,000 --> 00:11:45,600 Speaker 7: a good steward at the FED given the extended valuations 234 00:11:45,640 --> 00:11:48,280 Speaker 7: we've seen in some of the kind of risks and 235 00:11:48,320 --> 00:11:51,240 Speaker 7: threats of financial instability that are percolating out there. 236 00:11:52,200 --> 00:11:55,920 Speaker 2: Danielle, he has a remit or he's talking about a 237 00:11:55,920 --> 00:12:00,160 Speaker 2: remit to narrow the focus of the FED here. Do 238 00:12:00,200 --> 00:12:02,680 Speaker 2: you think that's widely shared at the FED? 239 00:12:04,760 --> 00:12:07,520 Speaker 6: Well, I wish it was more widely shared. 240 00:12:07,600 --> 00:12:09,679 Speaker 7: I've long said that we need to go back to 241 00:12:09,720 --> 00:12:12,599 Speaker 7: having just the inflation mandate, and that the inflation and 242 00:12:12,720 --> 00:12:16,440 Speaker 7: labor mandates are inherently in conflict with one another. He's 243 00:12:16,480 --> 00:12:19,840 Speaker 7: also advocated to continue shrinking the Fed's balance sheet even 244 00:12:19,880 --> 00:12:22,880 Speaker 7: if he brings interest rates down, and I hope he 245 00:12:22,920 --> 00:12:25,440 Speaker 7: goes forward with that as well. But you're right he 246 00:12:25,440 --> 00:12:28,400 Speaker 7: would have an uphill battle with a lot of the 247 00:12:28,720 --> 00:12:31,720 Speaker 7: more dubbish members of the board, but he would certainly 248 00:12:31,760 --> 00:12:35,240 Speaker 7: be more aligned with individuals who are Federal Reserve district 249 00:12:35,240 --> 00:12:39,280 Speaker 7: presidents who do not advocate for a larger balance sheet. 250 00:12:39,400 --> 00:12:41,000 Speaker 2: What do you think FED Chairman j Powell will do 251 00:12:41,000 --> 00:12:43,120 Speaker 2: when he steps down from his leadership position. Do you 252 00:12:43,120 --> 00:12:44,920 Speaker 2: think he'll stay on the board or who just sail 253 00:12:44,960 --> 00:12:46,200 Speaker 2: off into the sunset? 254 00:12:47,200 --> 00:12:49,840 Speaker 7: I think it was very I think was very telling 255 00:12:50,280 --> 00:12:52,200 Speaker 7: two markets, and it was very telling to the current 256 00:12:52,240 --> 00:12:54,920 Speaker 7: administration that he refused to answer the question at the 257 00:12:54,920 --> 00:12:59,600 Speaker 7: press conference. And I would encourage Jerome Powell to stay 258 00:12:59,640 --> 00:13:03,480 Speaker 7: on through January of twenty twenty eight. Philosophically, at least 259 00:13:03,720 --> 00:13:05,400 Speaker 7: we know that the two are aligned. 260 00:13:05,440 --> 00:13:07,320 Speaker 6: The two do not like, or at least I. 261 00:13:07,320 --> 00:13:10,520 Speaker 7: Should say, Jerome Palell back when he was first appointed 262 00:13:10,880 --> 00:13:15,400 Speaker 7: to the FED came very close to dissenting against QE three. 263 00:13:15,600 --> 00:13:17,160 Speaker 7: So I would hope that the two would be able 264 00:13:17,240 --> 00:13:19,960 Speaker 7: to work together and that Jay Powell would stick around 265 00:13:20,160 --> 00:13:21,440 Speaker 7: until his term ends. 266 00:13:22,280 --> 00:13:25,439 Speaker 5: And if Warsh really is committed to the wearing rates 267 00:13:25,559 --> 00:13:28,000 Speaker 5: very quickly, how much influence does the chair really have 268 00:13:28,200 --> 00:13:30,960 Speaker 5: in persuading other governors Because it's not just his one vote, 269 00:13:31,000 --> 00:13:33,120 Speaker 5: as everyone has repeatedly said. 270 00:13:34,040 --> 00:13:37,520 Speaker 6: That is absolutely the case. He could be looking at 271 00:13:37,520 --> 00:13:38,360 Speaker 6: a number. 272 00:13:38,080 --> 00:13:43,080 Speaker 7: Of descents on day one. However, I think with the 273 00:13:43,160 --> 00:13:46,840 Speaker 7: messages coming out, with just the clear data that we're seeing, 274 00:13:46,880 --> 00:13:50,160 Speaker 7: whether it's Conference Board or University of Michigan, or the 275 00:13:50,200 --> 00:13:53,280 Speaker 7: fact that so many Americans are not filing for unemployment 276 00:13:53,320 --> 00:13:56,600 Speaker 7: insurance and yet Google Trends shows you that we've got 277 00:13:56,640 --> 00:13:59,719 Speaker 7: an almost record level of American searching for file unemployment, 278 00:14:00,160 --> 00:14:02,960 Speaker 7: I think that data will speak for itself and that 279 00:14:03,240 --> 00:14:06,320 Speaker 7: many will be on board with lowering rates. If we 280 00:14:06,440 --> 00:14:09,480 Speaker 7: have to wait to do so until June, I certainly 281 00:14:09,480 --> 00:14:10,679 Speaker 7: hope that is not the case. 282 00:14:11,080 --> 00:14:14,160 Speaker 4: Stay with us more from Bloomberg Intelligence coming up after this. 283 00:14:18,120 --> 00:14:21,840 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 284 00:14:21,920 --> 00:14:24,960 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 285 00:14:25,000 --> 00:14:28,320 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 286 00:14:28,360 --> 00:14:31,480 Speaker 1: you get your podcasts, or watch us live on YouTube. 287 00:14:32,240 --> 00:14:34,680 Speaker 4: Here's another group of stocks I totally missed. You're to date. 288 00:14:35,200 --> 00:14:37,840 Speaker 4: These big energy oil companies are just ripping here. 289 00:14:37,840 --> 00:14:41,000 Speaker 2: Excellent up sixteen percent year to date, Chevron up fourteen percent. 290 00:14:41,120 --> 00:14:41,920 Speaker 4: Nice moves there. 291 00:14:42,440 --> 00:14:45,920 Speaker 2: The company's reported earnings and some pretty good numbers, I thought, 292 00:14:45,960 --> 00:14:46,480 Speaker 2: But what do I know? 293 00:14:46,560 --> 00:14:49,240 Speaker 4: Vince Piazza, he's the expert senior equity research channels. 294 00:14:49,240 --> 00:14:51,920 Speaker 2: He covers all the oil and guests stuff for Bloomberg Intelligence. 295 00:14:52,200 --> 00:14:55,040 Speaker 2: Joining us live here in our Bloomberg Interactive Broker studio. 296 00:14:55,080 --> 00:14:56,920 Speaker 2: This may be the one, two, maybe three days he 297 00:14:56,920 --> 00:14:58,400 Speaker 2: spends in the Big Apple we got him. 298 00:14:58,400 --> 00:14:59,520 Speaker 4: Folks in studio. 299 00:15:00,160 --> 00:15:02,240 Speaker 2: Talk to us about what you heard, what you learned 300 00:15:02,240 --> 00:15:04,880 Speaker 2: from Exon Mobile, from Chevron, from the most recent earnings. 301 00:15:04,960 --> 00:15:07,080 Speaker 8: Yeah, well, well, I think for the most part what 302 00:15:07,160 --> 00:15:09,720 Speaker 8: you've seen the last couple of days is really the 303 00:15:09,760 --> 00:15:14,560 Speaker 8: after effects of the storm, right, especially helping natural gas 304 00:15:15,880 --> 00:15:20,640 Speaker 8: and really the the underlying benchmarks for oil. But for 305 00:15:20,720 --> 00:15:24,240 Speaker 8: the for the four q sherm on Exxon, you know, 306 00:15:24,320 --> 00:15:29,760 Speaker 8: down sequentially on earnings, pretty much as expected though, right, 307 00:15:29,840 --> 00:15:33,360 Speaker 8: because of the realization's quarter over quarter on the lower 308 00:15:34,560 --> 00:15:35,840 Speaker 8: on lower oil prices. 309 00:15:36,080 --> 00:15:38,600 Speaker 4: You know, going forward, it's steady, it's steady as she goes. 310 00:15:38,960 --> 00:15:43,560 Speaker 8: Really, it's really about disciplined investing in the business, allowing 311 00:15:43,600 --> 00:15:48,600 Speaker 8: the Permian and also Guyana uh uh to provide that upside. 312 00:15:48,680 --> 00:15:50,800 Speaker 8: And really it's about the upstream side of the business, 313 00:15:50,920 --> 00:15:55,280 Speaker 8: because the downstream is in a secular decline, a structural 314 00:15:55,320 --> 00:15:58,160 Speaker 8: decline with the headwinds. But it's really about the upstream. 315 00:15:58,400 --> 00:16:00,280 Speaker 8: It's really about the Permian. And you know about the 316 00:16:00,280 --> 00:16:04,640 Speaker 8: Permian why because we watch Landman, that's right. So, but 317 00:16:05,480 --> 00:16:08,120 Speaker 8: what we're going to see in twenty twenty six, really 318 00:16:08,120 --> 00:16:11,600 Speaker 8: not only from the big integrates, but also from the 319 00:16:11,640 --> 00:16:14,560 Speaker 8: other companies are going to reporting, is what do you 320 00:16:14,560 --> 00:16:16,000 Speaker 8: think about natural gas. 321 00:16:15,760 --> 00:16:16,960 Speaker 4: Here at these levels? 322 00:16:17,080 --> 00:16:18,960 Speaker 8: And are they going to turn off the spig and 323 00:16:19,000 --> 00:16:21,720 Speaker 8: on production, which we really don't view it as such. 324 00:16:21,800 --> 00:16:26,000 Speaker 8: We think the capital discipline will be maintained. We don't 325 00:16:26,000 --> 00:16:28,800 Speaker 8: think there'll be a great deal of production growth coming 326 00:16:28,800 --> 00:16:31,040 Speaker 8: in twenty twenty six. And what you're going to get 327 00:16:31,320 --> 00:16:33,000 Speaker 8: is a return of excess cash. 328 00:16:33,520 --> 00:16:36,560 Speaker 5: So both Chevron and Exon beat earnings expectations this quarter. 329 00:16:36,680 --> 00:16:39,720 Speaker 5: But Exon managed to grow profit and Chevron's profit declined 330 00:16:40,160 --> 00:16:44,760 Speaker 5: despite the beat. What did Exon do correctly from an 331 00:16:44,800 --> 00:16:48,160 Speaker 5: operational and strategic standpoint that maybe Chevron didn't. 332 00:16:48,440 --> 00:16:52,960 Speaker 8: Yeah, so you know, Exon has a pioneer and that's Permian. 333 00:16:53,400 --> 00:16:59,000 Speaker 8: So the Permian and the Guiana has worked out quite well. 334 00:16:59,480 --> 00:17:02,440 Speaker 4: The usually the driver for Exxon. 335 00:17:02,840 --> 00:17:05,480 Speaker 8: What's interesting though, when you think about the free cash 336 00:17:05,520 --> 00:17:10,560 Speaker 8: flow that both Exon and Chevron generate. Exon somewhere around 337 00:17:10,600 --> 00:17:12,880 Speaker 8: five and a half billion dollars, yet they paid out 338 00:17:12,920 --> 00:17:18,080 Speaker 8: almost ten billion in distributions via share buybacks and dividends, 339 00:17:18,680 --> 00:17:22,000 Speaker 8: and you know that can be done because of because 340 00:17:22,440 --> 00:17:26,760 Speaker 8: because of Exon's financial flexibility, big cash hoard, so they 341 00:17:26,760 --> 00:17:31,680 Speaker 8: can support those distributions and their shareholder engagement. Similar for Chevron, 342 00:17:31,760 --> 00:17:34,639 Speaker 8: but Chevron a little bit lagging because of you know, 343 00:17:34,840 --> 00:17:38,399 Speaker 8: they just acquired Hess. They're integrating Hess, so they're a 344 00:17:38,440 --> 00:17:41,920 Speaker 8: little bit further behind the process. But also for them, 345 00:17:42,040 --> 00:17:44,840 Speaker 8: they also have Guyana via HES and they also have 346 00:17:44,920 --> 00:17:48,200 Speaker 8: the Permian as well, So somewhat smaller, some a little 347 00:17:48,200 --> 00:17:50,920 Speaker 8: bit behind where Exon is, but they're catching up as well. 348 00:17:51,600 --> 00:17:54,879 Speaker 2: Chevron's in Venezuela has been in Venezuela for a long time. 349 00:17:55,119 --> 00:17:57,560 Speaker 4: Yes, lieperally the only ones. Everybody else said, the heck 350 00:17:57,600 --> 00:17:59,399 Speaker 4: with this, what do you think is going to happen 351 00:17:59,440 --> 00:18:01,840 Speaker 4: going forward with the change in regime? 352 00:18:01,920 --> 00:18:05,640 Speaker 8: Change in Venezuela very slow, It'll be a very slow 353 00:18:05,880 --> 00:18:09,720 Speaker 8: uptick in output. They're roughly around two hundred and fifty 354 00:18:09,720 --> 00:18:13,199 Speaker 8: thousand barrels per day right now. You could see that 355 00:18:13,359 --> 00:18:16,200 Speaker 8: doubling in about two years. But this is about sourcing 356 00:18:16,320 --> 00:18:21,359 Speaker 8: in country, don't see. We don't see the backdrop for 357 00:18:21,800 --> 00:18:27,399 Speaker 8: incremental higher investment in country to grow that output. We 358 00:18:27,560 --> 00:18:30,800 Speaker 8: just see them reallocating within the country to get that 359 00:18:30,920 --> 00:18:34,280 Speaker 8: output going. And two hundred and fifty thousand barrels over 360 00:18:34,359 --> 00:18:37,840 Speaker 8: the next call twenty four months isn't really that big 361 00:18:38,520 --> 00:18:41,040 Speaker 8: of a production boost. When you think about the global 362 00:18:41,119 --> 00:18:44,040 Speaker 8: franchise and roughly four million barrels a day of output. 363 00:18:44,080 --> 00:18:46,719 Speaker 5: It does seem like international opportunities are the way to go, 364 00:18:46,800 --> 00:18:49,520 Speaker 5: at least for them. But in your view, which companies 365 00:18:49,600 --> 00:18:53,879 Speaker 5: portfolio and growth investments, maybe our better position to deliver 366 00:18:54,040 --> 00:18:56,960 Speaker 5: growth in the longer term for the price of oil. 367 00:18:57,200 --> 00:18:57,960 Speaker 4: Oh. 368 00:18:58,000 --> 00:19:01,000 Speaker 8: In my view, and we've said this in a lot 369 00:19:01,040 --> 00:19:03,600 Speaker 8: of what we've published in the last year or so. 370 00:19:03,800 --> 00:19:08,199 Speaker 4: Exon definitely because of the franchise in the Permian. Because 371 00:19:08,240 --> 00:19:11,560 Speaker 4: of Guyana, Chevron will get there. 372 00:19:12,200 --> 00:19:16,520 Speaker 8: They're lagging somewhat only because of the length the delayed 373 00:19:16,640 --> 00:19:20,639 Speaker 8: arbitration over Hess, but now they have the Guyana piece 374 00:19:20,640 --> 00:19:24,879 Speaker 8: as well, the participation with Exon in Guyana. They also 375 00:19:25,320 --> 00:19:28,920 Speaker 8: have the Permian as well, So both of these enterprises 376 00:19:29,080 --> 00:19:32,640 Speaker 8: have those key pillars for growth. For twenty twenty six, 377 00:19:32,720 --> 00:19:36,760 Speaker 8: even out to twenty thirty, both have provided very reasonable 378 00:19:36,840 --> 00:19:38,280 Speaker 8: growth expectations. 379 00:19:39,280 --> 00:19:41,440 Speaker 4: A lot of those expectations a lot. 380 00:19:41,280 --> 00:19:45,360 Speaker 8: Of that that the theme is really on the upstream 381 00:19:45,480 --> 00:19:47,720 Speaker 8: side of the business. That's what we're going to drive 382 00:19:48,240 --> 00:19:51,879 Speaker 8: the business for Exon. The downstream investments and the energy 383 00:19:52,240 --> 00:19:55,600 Speaker 8: products that will also be a positive for them. But 384 00:19:55,960 --> 00:19:59,760 Speaker 8: at this point Exon does seem to have the upper 385 00:19:59,800 --> 00:20:03,600 Speaker 8: hand and in terms of the scale in the Permian 386 00:20:03,840 --> 00:20:07,840 Speaker 8: and also Guyana as well, I will say that I 387 00:20:07,840 --> 00:20:10,880 Speaker 8: wouldn't be surprised if more is done on the upstream 388 00:20:10,920 --> 00:20:14,359 Speaker 8: side because this is a maturing industry, right and so 389 00:20:15,480 --> 00:20:18,639 Speaker 8: consolidation is the key. What we have said in what 390 00:20:18,680 --> 00:20:22,000 Speaker 8: we've published over the last several years is this industry 391 00:20:22,040 --> 00:20:26,480 Speaker 8: needs to consolidate. We will have fewer but much larger 392 00:20:26,520 --> 00:20:30,119 Speaker 8: players in the upstream business here in the lower forty 393 00:20:30,160 --> 00:20:32,560 Speaker 8: eight that gas. But I'm just going over the last 394 00:20:32,600 --> 00:20:34,560 Speaker 8: couple of months. We went from four dollars down to 395 00:20:34,680 --> 00:20:36,720 Speaker 8: almost two and a half dollars. Now we're above four 396 00:20:36,720 --> 00:20:38,520 Speaker 8: dollars for nat gas. It's been all over the place. 397 00:20:38,720 --> 00:20:42,080 Speaker 8: How are investors playing that gas these days? So in 398 00:20:42,160 --> 00:20:46,760 Speaker 8: our twenty twenty six outlook, we focused on NAC gas 399 00:20:47,119 --> 00:20:48,720 Speaker 8: over WTI oil. 400 00:20:49,200 --> 00:20:51,080 Speaker 4: There are structural. 401 00:20:50,520 --> 00:20:53,639 Speaker 8: Advantages that natural gas has number one, not only on 402 00:20:53,680 --> 00:20:57,280 Speaker 8: the LNG side, but also in the build out for 403 00:20:57,359 --> 00:21:02,879 Speaker 8: the tech data centers. These are structural growth opportunities for 404 00:21:03,119 --> 00:21:09,480 Speaker 8: natural gas that crude oil does not enjoy. And natural 405 00:21:09,600 --> 00:21:13,720 Speaker 8: gas remains in the process of consolidation as well, whether 406 00:21:13,760 --> 00:21:16,760 Speaker 8: it's in Appalachia or in the Hainesville. So once again 407 00:21:16,800 --> 00:21:21,920 Speaker 8: you will have fewer operators, but larger operators. Stronger operators 408 00:21:22,400 --> 00:21:26,080 Speaker 8: molecules in the hands of much larger operators with better 409 00:21:26,160 --> 00:21:29,280 Speaker 8: balance sheets able to manage these businesses going forward. 410 00:21:29,560 --> 00:21:34,240 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 411 00:21:34,440 --> 00:21:37,920 Speaker 1: and anywhere else you get your podcasts. Listen live each 412 00:21:37,920 --> 00:21:41,680 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 413 00:21:41,800 --> 00:21:45,359 Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app. 414 00:21:45,760 --> 00:21:48,720 Speaker 1: You can also watch us live every weekday on YouTube 415 00:21:49,080 --> 00:21:51,320 Speaker 1: and always on the Bloomberg terminal