1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,160 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen, and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:46,320 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. 11 00:00:46,800 --> 00:00:50,360 Speaker 3: We are thrilled to Emily Rowland here with John Hancock 12 00:00:50,440 --> 00:00:53,720 Speaker 3: of Boston. And I should also point out she's got 13 00:00:53,720 --> 00:00:57,480 Speaker 3: the best call, which is just own America, own quality, 14 00:00:58,080 --> 00:00:59,880 Speaker 3: screwing around. Do you stay with? 15 00:01:01,280 --> 00:01:04,080 Speaker 4: We do, Tom, And it's really all about following the 16 00:01:04,120 --> 00:01:08,720 Speaker 4: earnings and following where the best fundamentals are, follow the 17 00:01:08,760 --> 00:01:09,440 Speaker 4: cash flow. 18 00:01:09,600 --> 00:01:10,520 Speaker 5: And not only are. 19 00:01:10,360 --> 00:01:15,080 Speaker 4: We seeing us megacap tech companies. Yes they're overvalued, but 20 00:01:15,120 --> 00:01:17,440 Speaker 4: they're doing the bulk of the heavy lifting right now 21 00:01:17,480 --> 00:01:19,080 Speaker 4: as far as earnings growth goes. 22 00:01:19,120 --> 00:01:20,000 Speaker 5: It's a key reason that. 23 00:01:19,920 --> 00:01:23,280 Speaker 4: We've had a preference for US equities. We're also following 24 00:01:23,280 --> 00:01:26,320 Speaker 4: where the money's going. We are spending like crazy in 25 00:01:26,360 --> 00:01:29,240 Speaker 4: the United States right now, and not a political opinion, 26 00:01:29,319 --> 00:01:32,800 Speaker 4: it's just happening. And it's really unusual that we're employing 27 00:01:32,840 --> 00:01:35,720 Speaker 4: fiscal stimulus and increasing the size of the deficit at 28 00:01:35,760 --> 00:01:38,920 Speaker 4: a time where the unemployment rate is less than four percent, 29 00:01:38,959 --> 00:01:43,440 Speaker 4: but it's being funneled into industrial production. There's a manufacturing 30 00:01:43,520 --> 00:01:47,360 Speaker 4: renaissance taking place across the US Midwest right now, so 31 00:01:47,360 --> 00:01:51,640 Speaker 4: we're playing that by emphasizing things like MidCap industrials and portfolios. 32 00:01:52,040 --> 00:01:55,160 Speaker 6: So we're pretty much eighty eighty five percent away through 33 00:01:55,200 --> 00:01:57,520 Speaker 6: earning share What have you seen so far that's either 34 00:01:58,000 --> 00:02:00,320 Speaker 6: giving you conviction in that call or maybe said, oh, 35 00:02:00,400 --> 00:02:01,200 Speaker 6: we got some headwinds. 36 00:02:01,360 --> 00:02:04,840 Speaker 4: Yeah, I mean, earnings have been okay. You know, they 37 00:02:04,880 --> 00:02:07,400 Speaker 4: remind me a little bit of my son's grades. He's 38 00:02:07,400 --> 00:02:10,880 Speaker 4: in eighth grade. His report cards like not very good, 39 00:02:10,960 --> 00:02:13,160 Speaker 4: but he's still on the lacrosse team right now. 40 00:02:13,080 --> 00:02:13,919 Speaker 5: Go marblehead. 41 00:02:14,960 --> 00:02:17,680 Speaker 4: So you know they've been fine, you know, but when 42 00:02:17,720 --> 00:02:19,800 Speaker 4: you look at it, it's almost like I picture like 43 00:02:19,840 --> 00:02:22,040 Speaker 4: a glacier, right, you know, how only the very top 44 00:02:22,080 --> 00:02:24,360 Speaker 4: part of it is showing and it again, it's really 45 00:02:24,760 --> 00:02:28,760 Speaker 4: those megacap tech names, Communications services, consumer discretionary. 46 00:02:28,800 --> 00:02:30,880 Speaker 5: Those sectors are up thirty forty. 47 00:02:30,520 --> 00:02:34,200 Speaker 4: Percent your over year, handily out pacing the S and 48 00:02:34,240 --> 00:02:36,760 Speaker 4: P five hundred, which broadly is up only about two 49 00:02:36,760 --> 00:02:39,680 Speaker 4: percent when you take those sectors out. So earnings has 50 00:02:39,720 --> 00:02:43,200 Speaker 4: been fine, but again they're dominated by select groups of companies. 51 00:02:43,760 --> 00:02:45,679 Speaker 6: So how do you think about valuation? 52 00:02:45,800 --> 00:02:46,200 Speaker 3: Then? Do we? 53 00:02:46,760 --> 00:02:48,600 Speaker 6: I mean, two ways to look at it. When you 54 00:02:48,600 --> 00:02:50,359 Speaker 6: just kind of look at the broad market, maybe we're 55 00:02:50,360 --> 00:02:52,160 Speaker 6: a little bit rich. A lot of folks say, hey, 56 00:02:52,160 --> 00:02:54,320 Speaker 6: pull out some of those magnificent however they are is 57 00:02:54,320 --> 00:02:56,440 Speaker 6: and it's we're okay, How do you guys think about it? 58 00:02:56,520 --> 00:02:58,519 Speaker 5: Yeah, I mean it's really about a balance. 59 00:02:58,639 --> 00:03:01,960 Speaker 4: So we have evaluation an issue with those megacab tech names. 60 00:03:02,000 --> 00:03:04,120 Speaker 4: In fact, right now the S and P five hundred 61 00:03:04,160 --> 00:03:07,080 Speaker 4: growth Index is trading at a forty five percent premium 62 00:03:07,160 --> 00:03:08,440 Speaker 4: to its twenty year average. 63 00:03:08,480 --> 00:03:09,880 Speaker 5: So we still like tech. 64 00:03:09,919 --> 00:03:12,440 Speaker 4: We're not downgrading it, but you've got to balance that 65 00:03:12,520 --> 00:03:13,880 Speaker 4: with stuff that's actually trading. 66 00:03:13,960 --> 00:03:17,880 Speaker 3: Can sales JOHNY Hancock, with its venerable tradition, actually sticks 67 00:03:17,880 --> 00:03:24,040 Speaker 3: to prospectus. Are your large cap portfolios forced to sell 68 00:03:24,120 --> 00:03:26,560 Speaker 3: big tech because it's going up so much. 69 00:03:26,639 --> 00:03:29,360 Speaker 4: Well, it's now that's a big problem for active managers 70 00:03:29,360 --> 00:03:32,200 Speaker 4: because it's hard to be overweight those stocks. So I 71 00:03:32,200 --> 00:03:35,960 Speaker 4: think there's some limitations there as far as sector construction. 72 00:03:36,800 --> 00:03:40,120 Speaker 4: What we're doing is we're balancing that with carefully. 73 00:03:39,720 --> 00:03:40,800 Speaker 5: Selected parts value. 74 00:03:40,840 --> 00:03:43,240 Speaker 4: Think of it as like quality at a reasonable price. 75 00:03:43,600 --> 00:03:45,280 Speaker 4: Those are the types of stocks we want to own, 76 00:03:45,360 --> 00:03:46,920 Speaker 4: ones with great balance. 77 00:03:46,560 --> 00:03:50,320 Speaker 3: Sheets such as these sectors. Come on. 78 00:03:50,520 --> 00:03:54,200 Speaker 4: Yeah, so we're overweight the information technology sector. We also 79 00:03:54,960 --> 00:03:57,400 Speaker 4: like things like industrials, which we talked about, which have 80 00:03:57,480 --> 00:04:00,800 Speaker 4: good earnings prospects, their high quality, great retire and on equity. 81 00:04:01,600 --> 00:04:05,200 Speaker 4: We do like healthcare sometimes I don't love talking about 82 00:04:05,240 --> 00:04:06,520 Speaker 4: it because it's been an area. 83 00:04:07,320 --> 00:04:10,080 Speaker 3: Healthcare try to go. I mean you and I were younger, Paul, 84 00:04:10,080 --> 00:04:13,720 Speaker 3: when people started talking about this, Why won't healthcare pop? 85 00:04:13,920 --> 00:04:16,400 Speaker 4: I think you just need to see that rotation into 86 00:04:16,400 --> 00:04:18,720 Speaker 4: more defensive parts of the market and think about what's 87 00:04:18,720 --> 00:04:24,160 Speaker 4: outperforming right now. You look at bitcoin, cryptomnor small cap equities, 88 00:04:24,240 --> 00:04:27,800 Speaker 4: Chinese equities, it's like there's this massive momentum trade that's 89 00:04:27,839 --> 00:04:30,640 Speaker 4: been spurred by this risk on sentiment, and it's really 90 00:04:30,680 --> 00:04:34,839 Speaker 4: been just around the FED hinting last fall that that 91 00:04:34,920 --> 00:04:36,760 Speaker 4: we were going to cut raids, and then kind of 92 00:04:36,839 --> 00:04:39,560 Speaker 4: reiterating that message a bit last week when we heard 93 00:04:39,560 --> 00:04:41,760 Speaker 4: that we're going to you know, kind of start reducing 94 00:04:42,240 --> 00:04:45,880 Speaker 4: quantitative tightening and those other, you know, measures that are 95 00:04:45,880 --> 00:04:49,039 Speaker 4: more dubvish. So I think it's we've been thinking about 96 00:04:49,080 --> 00:04:51,920 Speaker 4: this environment like a phase, and I've been thinking about 97 00:04:51,920 --> 00:04:54,040 Speaker 4: I don't know if anybody's ever had teenagers in their 98 00:04:54,040 --> 00:04:58,240 Speaker 4: house can go through these like phases, which can be 99 00:04:58,320 --> 00:05:01,560 Speaker 4: weird and erratic and hard to un understand. And that's 100 00:05:01,640 --> 00:05:03,680 Speaker 4: kind of what it feels like right now in markets, 101 00:05:03,800 --> 00:05:07,560 Speaker 4: is you're having decelerating economic growth. The April data are 102 00:05:07,600 --> 00:05:11,599 Speaker 4: not that great, but markets are rejoicing because it's reviving 103 00:05:11,720 --> 00:05:14,520 Speaker 4: hopes that the FED can start cutting. So we're in 104 00:05:14,600 --> 00:05:18,080 Speaker 4: a phase that we're trying to get through and kind 105 00:05:18,080 --> 00:05:20,440 Speaker 4: of ride out right now with those higher quality stocks. 106 00:05:20,440 --> 00:05:22,120 Speaker 6: How about on the fixed income side, do I sit 107 00:05:22,160 --> 00:05:24,719 Speaker 6: in my two year treasury at four point eight four 108 00:05:24,720 --> 00:05:26,560 Speaker 6: percent or do I take some credit risk out there. 109 00:05:26,600 --> 00:05:29,200 Speaker 4: I'm so glad you asked that Bloomberg is the place 110 00:05:29,240 --> 00:05:32,520 Speaker 4: to talk about bonds, and I love that you know, 111 00:05:32,520 --> 00:05:35,719 Speaker 4: it's pretty remarkable to see some of the volatility and rates. 112 00:05:35,760 --> 00:05:37,440 Speaker 5: I don't think it's been talked about much. 113 00:05:37,480 --> 00:05:39,720 Speaker 4: We just saw the ten year treasury yield fall by 114 00:05:39,720 --> 00:05:43,360 Speaker 4: about twenty twenty five basis points in just over a week. 115 00:05:44,040 --> 00:05:47,480 Speaker 4: We look at any backup in bond yields is really attractive. 116 00:05:47,600 --> 00:05:49,320 Speaker 5: Right now, you think about. 117 00:05:49,160 --> 00:05:52,720 Speaker 4: The aggregate bond indext yielding five point three percent, that's 118 00:05:52,839 --> 00:05:55,640 Speaker 4: pretty awesome. I mean that's actually close to the twenty 119 00:05:55,680 --> 00:05:58,760 Speaker 4: year high of about five point nine percent, and well 120 00:05:58,800 --> 00:06:00,800 Speaker 4: above the twenty year average of three and a quarter. 121 00:06:00,880 --> 00:06:01,720 Speaker 5: We like income. 122 00:06:01,839 --> 00:06:03,880 Speaker 3: Now you're doing a lacrosse at Marblehead? Is that what 123 00:06:03,920 --> 00:06:07,680 Speaker 3: is just right? Yeah? How many summer camps? Is a 124 00:06:07,760 --> 00:06:09,680 Speaker 3: child going to? What a racket? 125 00:06:09,760 --> 00:06:09,960 Speaker 7: Yeah? 126 00:06:10,080 --> 00:06:12,200 Speaker 3: They got to walk diusy? Are they going to Dartmouth 127 00:06:12,240 --> 00:06:13,120 Speaker 3: to the mountain dog? 128 00:06:13,520 --> 00:06:15,520 Speaker 5: We are looking at some lacrosse camp. 129 00:06:15,560 --> 00:06:17,360 Speaker 3: We're looking do you have a consultant? 130 00:06:17,839 --> 00:06:21,039 Speaker 5: I know, right, it's unbelievable. I need another job. 131 00:06:21,440 --> 00:06:24,840 Speaker 3: You do, yes, you do, trust me? Yeah, But you're 132 00:06:24,880 --> 00:06:27,159 Speaker 3: looking at you know, three or four camps. 133 00:06:27,240 --> 00:06:29,880 Speaker 4: Yes, all the elite colleges of course, will take your 134 00:06:29,920 --> 00:06:31,679 Speaker 4: children for a week of lacrosse instruction. 135 00:06:31,760 --> 00:06:32,960 Speaker 5: Doesn't even matter if they're good by. 136 00:06:33,080 --> 00:06:34,400 Speaker 3: Textbooks not included. 137 00:06:34,800 --> 00:06:35,960 Speaker 5: Exactly does this. 138 00:06:37,760 --> 00:06:40,159 Speaker 6: Marnsball does it? They all do it? Yeah, yeah, got 139 00:06:40,160 --> 00:06:40,600 Speaker 6: to keep it. 140 00:06:40,760 --> 00:06:42,880 Speaker 3: I looked up Taber. I figure the track from marble 141 00:06:42,920 --> 00:06:45,000 Speaker 3: Head down to Tabor in your cape. God, wouldn't be 142 00:06:45,000 --> 00:06:47,039 Speaker 3: too much. They don't have a lex cap. They take 143 00:06:47,040 --> 00:06:49,360 Speaker 3: your money in ice hockey. 144 00:06:48,680 --> 00:06:51,680 Speaker 6: Exactly, so Marblehead that it was only forty five minute 145 00:06:51,760 --> 00:06:53,640 Speaker 6: drive hour drive to the Boston. 146 00:06:53,440 --> 00:06:56,120 Speaker 4: Well and on a Sunday morning it's about twenty minutes. 147 00:06:56,240 --> 00:06:59,080 Speaker 4: But on a Monday morning it's a different story. 148 00:06:59,160 --> 00:07:05,560 Speaker 3: They got to agree. Folky coffeehouse up there, it's up there, like, yeah, 149 00:07:05,600 --> 00:07:08,760 Speaker 3: exactly it gets warm about July exact. 150 00:07:08,960 --> 00:07:10,600 Speaker 5: For the sailing capital of the world. 151 00:07:10,720 --> 00:07:11,240 Speaker 3: Is that right? 152 00:07:11,280 --> 00:07:13,080 Speaker 5: Well, some people say Newport. 153 00:07:12,760 --> 00:07:18,000 Speaker 3: But mar it's like the real you know, Hankly and 154 00:07:18,040 --> 00:07:18,360 Speaker 3: all that. 155 00:07:18,480 --> 00:07:18,720 Speaker 8: You know. 156 00:07:20,160 --> 00:07:21,360 Speaker 3: Do you have the picnic boat? 157 00:07:21,640 --> 00:07:25,239 Speaker 5: I mean that's like my dream boat. Picnic boat. 158 00:07:25,520 --> 00:07:28,320 Speaker 3: Yeah. Tom Purcelly when he took his job at Pigeon, 159 00:07:28,920 --> 00:07:31,520 Speaker 3: he demands. He didn't demand, he asked, and they give. 160 00:07:31,600 --> 00:07:33,680 Speaker 3: He takes a picnic boat down the Hudson. 161 00:07:33,400 --> 00:07:36,240 Speaker 5: River every morning, every day to the fisherman. Then so 162 00:07:36,320 --> 00:07:37,120 Speaker 5: he can't have that. 163 00:07:37,480 --> 00:07:40,320 Speaker 3: Okay, well yeah, but for the picnic boat, I could 164 00:07:40,360 --> 00:07:42,760 Speaker 3: see you when right, Yeah, you. 165 00:07:42,720 --> 00:07:45,800 Speaker 7: Know Augusto. 166 00:07:46,720 --> 00:07:47,280 Speaker 5: Broadcast. 167 00:07:47,480 --> 00:07:51,000 Speaker 3: Yes, yeah, Emily Rowland, Johnny Hancock road trip, thank you 168 00:07:51,080 --> 00:08:03,840 Speaker 3: so much showing us now the former vice chairman of 169 00:08:03,840 --> 00:08:07,720 Speaker 3: the Federal Reserve System with pimcoh and of course forever 170 00:08:08,440 --> 00:08:13,320 Speaker 3: herder of cats at Columbia University within their Department of Economics. 171 00:08:14,040 --> 00:08:16,360 Speaker 3: I've got it's going to be a four hour conversation 172 00:08:16,480 --> 00:08:18,440 Speaker 3: and we're only doing it a short block this time 173 00:08:18,480 --> 00:08:20,600 Speaker 3: with the Vice Chairman Clarita, but we'll make it a 174 00:08:20,640 --> 00:08:24,040 Speaker 3: much longer conversation next time. I want you to reaffirm, 175 00:08:24,160 --> 00:08:28,200 Speaker 3: recapitulate your Economist article of seven eight, nine months ago 176 00:08:28,280 --> 00:08:31,960 Speaker 3: where you shook the industry by saying, forget about two 177 00:08:31,960 --> 00:08:35,640 Speaker 3: point zero zero percent, it's going to be some number higher. 178 00:08:35,760 --> 00:08:36,960 Speaker 3: Revisit that right now. 179 00:08:37,760 --> 00:08:39,439 Speaker 9: Well, thank you, Tom, and always great to be on 180 00:08:39,559 --> 00:08:41,400 Speaker 9: the show, especially in studio. 181 00:08:41,480 --> 00:08:41,720 Speaker 7: Yeah. 182 00:08:41,720 --> 00:08:45,280 Speaker 9: In that essay I highlighted that that I thought the 183 00:08:45,280 --> 00:08:48,880 Speaker 9: pal FED and really global central banks we're really aiming 184 00:08:48,920 --> 00:08:51,559 Speaker 9: to get inflation down to what I called two points something, 185 00:08:52,559 --> 00:08:55,280 Speaker 9: and the idea was inflation was up to five six 186 00:08:55,480 --> 00:08:57,920 Speaker 9: or seven at the peak, and the goal would be 187 00:08:57,960 --> 00:09:01,160 Speaker 9: to get it in the zip code the inflation target, 188 00:09:01,240 --> 00:09:04,160 Speaker 9: but in terms of dealing with the last mile, to 189 00:09:04,280 --> 00:09:07,040 Speaker 9: let the economy sort of get to the last mile 190 00:09:07,080 --> 00:09:09,920 Speaker 9: on its own without another leg up in rate hikes. 191 00:09:09,920 --> 00:09:12,040 Speaker 9: And that's what I think we're seeing in the US 192 00:09:12,080 --> 00:09:13,720 Speaker 9: and really around the world. 193 00:09:14,000 --> 00:09:18,000 Speaker 3: Is the FED restrictive? Now? The polarity of market economists 194 00:09:18,000 --> 00:09:20,600 Speaker 3: we speak to is there's a select group saying, you 195 00:09:20,600 --> 00:09:22,959 Speaker 3: know what, they could go up further and then come down, 196 00:09:23,400 --> 00:09:26,280 Speaker 3: and know those others saying stop it. They're way above 197 00:09:26,280 --> 00:09:29,040 Speaker 3: the real rate, bring it down now. Which is it? 198 00:09:30,160 --> 00:09:33,719 Speaker 9: They think they're restrictive. I think they're restrictive. I think 199 00:09:33,760 --> 00:09:36,760 Speaker 9: there can be a debate on how restrictive the Fed's thinking, 200 00:09:36,800 --> 00:09:39,800 Speaker 9: which I think makes sense, Tom, is that the longer 201 00:09:39,800 --> 00:09:42,640 Speaker 9: they keep rates here, and importantly, the longer they signal 202 00:09:42,679 --> 00:09:46,240 Speaker 9: they're going to keep rates here, they will become more restrictive. 203 00:09:46,280 --> 00:09:48,320 Speaker 9: And so yes, I'm certainly in the camp that they've 204 00:09:48,360 --> 00:09:50,880 Speaker 9: done enough and the real question is how long do 205 00:09:50,920 --> 00:09:52,960 Speaker 9: they have to keep rates at this level? 206 00:09:53,360 --> 00:09:55,960 Speaker 6: Richual, Tom and I will speak to people both in 207 00:09:56,000 --> 00:09:59,280 Speaker 6: academia and in practice that says the FET should be 208 00:09:59,360 --> 00:10:01,480 Speaker 6: cutting now. If you look at the real time data, 209 00:10:01,520 --> 00:10:04,880 Speaker 6: inflation is maybe not whipped, but we're pretty darn close. 210 00:10:04,920 --> 00:10:07,520 Speaker 6: We should be cutting rates now. How do you think 211 00:10:07,520 --> 00:10:07,880 Speaker 6: about that? 212 00:10:09,080 --> 00:10:11,080 Speaker 9: If I were still in the building, I would not 213 00:10:11,160 --> 00:10:13,319 Speaker 9: be in the camp to be cutting now. It certainly 214 00:10:13,360 --> 00:10:15,800 Speaker 9: looked like that was feasible coming into the year, but 215 00:10:15,880 --> 00:10:18,560 Speaker 9: you know, since the beginning of the year, the inflation 216 00:10:18,640 --> 00:10:22,240 Speaker 9: numbers have been going in the wrong direction. And also 217 00:10:23,320 --> 00:10:27,200 Speaker 9: I think that especially, I think what's relevant here is 218 00:10:27,200 --> 00:10:29,720 Speaker 9: an element of risk management. So I think there is 219 00:10:29,840 --> 00:10:33,040 Speaker 9: path dependence. The fact that the last three years inflation 220 00:10:33,160 --> 00:10:35,880 Speaker 9: has been well above target. I think it makes it 221 00:10:36,120 --> 00:10:39,440 Speaker 9: a harder call to cut preemptively. So I do think, 222 00:10:39,559 --> 00:10:42,880 Speaker 9: you know, sometimes central banks say they're data dependent, and 223 00:10:42,920 --> 00:10:45,000 Speaker 9: they're not. I do think the Paler FED now is 224 00:10:45,120 --> 00:10:48,000 Speaker 9: data dependent, and I think they're ready to cut if 225 00:10:48,000 --> 00:10:51,080 Speaker 9: the inflation data starts to proceed as they expect. 226 00:10:51,520 --> 00:10:53,760 Speaker 6: How do you think this FED is looking at the 227 00:10:53,880 --> 00:10:55,960 Speaker 6: labor market? I mean, Tom and I we kind of 228 00:10:55,960 --> 00:10:58,160 Speaker 6: throughout this term it feels like we're at full employment. 229 00:10:58,440 --> 00:11:00,880 Speaker 6: Everybody wants a jomp kind of has job. Wages are 230 00:11:00,880 --> 00:11:04,160 Speaker 6: going on at a pretty reasonable pace. How do you 231 00:11:04,160 --> 00:11:05,839 Speaker 6: think the FED looks at the labor market today. 232 00:11:06,760 --> 00:11:09,520 Speaker 9: I think they see a labor market that is robust 233 00:11:10,000 --> 00:11:13,080 Speaker 9: by a variety of measures, not just the unemployment rate, 234 00:11:13,200 --> 00:11:16,880 Speaker 9: but other indications, and that's a good thing. Indeed, I 235 00:11:16,920 --> 00:11:19,240 Speaker 9: think one of the first speeches I gave is Vice chairs, 236 00:11:19,280 --> 00:11:21,000 Speaker 9: I made the point, you know, the FED is not 237 00:11:21,040 --> 00:11:24,280 Speaker 9: targeting wage inflation. It actually likes it when folks get 238 00:11:24,280 --> 00:11:27,280 Speaker 9: a nice raise, but raises have to be consistent with 239 00:11:27,360 --> 00:11:29,640 Speaker 9: the inflation target. And you know, we've gotten some good 240 00:11:29,720 --> 00:11:33,760 Speaker 9: news on productivity in the last year. Productivity growth is 241 00:11:33,800 --> 00:11:37,360 Speaker 9: now around two percent, and two percent productivity growth with 242 00:11:37,480 --> 00:11:41,000 Speaker 9: four percent wage increases have sustained gets some pretty close 243 00:11:41,040 --> 00:11:42,480 Speaker 9: to where they want to be. So I don't think 244 00:11:42,480 --> 00:11:45,160 Speaker 9: there's a lot of adjustment required in the labor market. 245 00:11:45,200 --> 00:11:48,000 Speaker 3: From here. You're joining us right now, Richard Clarida from 246 00:11:48,000 --> 00:11:50,520 Speaker 3: a vice chairman of the FED, and of course with 247 00:11:50,640 --> 00:11:55,800 Speaker 3: Columbia University, you're a certain kind of monetary economist. Of 248 00:11:55,840 --> 00:12:01,600 Speaker 3: course with DSG, with DSGE, with GLLY, and I think 249 00:12:01,600 --> 00:12:04,439 Speaker 3: of Megnum decigh Over at the London School of Economics 250 00:12:04,440 --> 00:12:07,880 Speaker 3: coming from a totally different world. Megnan got Lord Desai 251 00:12:08,520 --> 00:12:12,040 Speaker 3: got so upset about our fiction of equilibrium that he 252 00:12:12,080 --> 00:12:13,960 Speaker 3: wrote a book about it two thousand and eight, two 253 00:12:14,000 --> 00:12:18,400 Speaker 3: thousand and nine. In d SGE, there's a respect for 254 00:12:18,600 --> 00:12:23,040 Speaker 3: vulrus in some form of normal equilibrium. How can we 255 00:12:23,160 --> 00:12:26,440 Speaker 3: measure equilibrium now if we don't have a clue what 256 00:12:26,600 --> 00:12:28,920 Speaker 3: productivity is doing? I just don't buy it. 257 00:12:29,800 --> 00:12:32,439 Speaker 9: Well, I think we measure it with pretty big error, Tom, 258 00:12:32,559 --> 00:12:35,240 Speaker 9: And you're absolutely right that not just productivity, but a 259 00:12:35,240 --> 00:12:41,000 Speaker 9: lot of inputs into theoretical DSGE models are star term premium, equity, 260 00:12:41,040 --> 00:12:45,160 Speaker 9: premium are all unobserved and measured with air. So I 261 00:12:45,200 --> 00:12:47,240 Speaker 9: always thought, and I've said this on your show, and 262 00:12:47,280 --> 00:12:49,840 Speaker 9: I've said this in the halls of the FED. You know, 263 00:12:49,960 --> 00:12:52,240 Speaker 9: models are a place to start, but not to end 264 00:12:52,240 --> 00:12:56,480 Speaker 9: the conversation. And in particular, you know folks would criticize 265 00:12:56,520 --> 00:12:59,280 Speaker 9: say DSGE that there are three equation models. Well, I 266 00:12:59,280 --> 00:13:02,520 Speaker 9: think every economy needs to have at least three equations, 267 00:13:02,520 --> 00:13:05,080 Speaker 9: but they're a lot more so, Tom. It's a starting point, 268 00:13:05,080 --> 00:13:07,600 Speaker 9: but it's not a destination to get to the d the. 269 00:13:07,559 --> 00:13:11,160 Speaker 3: Two hundred and fifty PhDs, whatever it is. Fat they've 270 00:13:11,200 --> 00:13:15,200 Speaker 3: all studied Clarida Gally Girtler and the rest of it. 271 00:13:15,640 --> 00:13:19,800 Speaker 3: I get it. They've studied this stuff. Yeah, isn't germane 272 00:13:19,880 --> 00:13:23,040 Speaker 3: right now? Our listeners say, you've got to be kidding me. 273 00:13:23,400 --> 00:13:26,960 Speaker 3: After the shock of a pandemic, Yeah, a triple stimulus? 274 00:13:27,280 --> 00:13:31,160 Speaker 3: Throw the equations out. Does Chairman Paul have equations now 275 00:13:31,200 --> 00:13:34,920 Speaker 3: that are effective? Are that have some form of use? 276 00:13:36,600 --> 00:13:39,400 Speaker 9: My sense, obviously from public comments of not only the 277 00:13:39,480 --> 00:13:42,120 Speaker 9: chair but the committee, is that they've understood Tom for 278 00:13:42,200 --> 00:13:46,600 Speaker 9: some time that the shock was sufficiently unusual and substantial 279 00:13:47,600 --> 00:13:49,880 Speaker 9: that they need they can, and they are relying less 280 00:13:49,920 --> 00:13:53,840 Speaker 9: on models and more on the way the data evolves. 281 00:13:53,840 --> 00:13:55,880 Speaker 9: You know, Tom, on one hand, you know, the models 282 00:13:55,880 --> 00:13:58,240 Speaker 9: were telling them that to get inflation down from five 283 00:13:58,280 --> 00:14:00,680 Speaker 9: and a half to two points something, they need to 284 00:14:00,720 --> 00:14:03,520 Speaker 9: have a big increase in the unemployment rate. And both 285 00:14:03,600 --> 00:14:06,880 Speaker 9: Governor Waller, Sharp Pell and others said, look, the economy 286 00:14:06,880 --> 00:14:09,040 Speaker 9: may be different this time. We don't have to assume 287 00:14:09,360 --> 00:14:11,400 Speaker 9: a big cratering in the labor market. And that was 288 00:14:11,440 --> 00:14:12,600 Speaker 9: actually a positive device. 289 00:14:12,679 --> 00:14:15,360 Speaker 3: I can't say enough, Paul, how I agree with this? 290 00:14:15,600 --> 00:14:18,600 Speaker 3: And then this is Paul Powell's been hit like a pinata. 291 00:14:19,160 --> 00:14:23,760 Speaker 3: Powell led saying do we really trust these equations? And 292 00:14:23,920 --> 00:14:29,440 Speaker 3: Clarida who invented the equations in Colombia, you know, Stiglitz, 293 00:14:29,760 --> 00:14:32,160 Speaker 3: they got their equations. Some of them are real simple 294 00:14:32,240 --> 00:14:35,880 Speaker 3: like Stiglitz Engrossmen and others like Clara Edg's Greek to me. 295 00:14:36,440 --> 00:14:38,680 Speaker 3: But the answer is do they matter right now? And 296 00:14:38,760 --> 00:14:39,600 Speaker 3: Powell's let. 297 00:14:39,520 --> 00:14:42,000 Speaker 6: On this, I know, and Tom, one of the key 298 00:14:42,000 --> 00:14:44,640 Speaker 6: issues for a lot of folks is the consumer here. 299 00:14:44,720 --> 00:14:46,920 Speaker 6: I mean, you know, there's a tale of two cities, 300 00:14:46,920 --> 00:14:49,120 Speaker 6: if not more out there with the US consumer. 301 00:14:49,120 --> 00:14:51,440 Speaker 7: A lot of folks are really struggling. 302 00:14:51,040 --> 00:14:54,040 Speaker 6: Particularly they don't own assets, whether it's real estate or 303 00:14:54,280 --> 00:14:56,400 Speaker 6: you know, stocks or bonds and things like that. And 304 00:14:57,040 --> 00:14:59,480 Speaker 6: how does the FED think about the consumer here? How 305 00:14:59,520 --> 00:15:01,800 Speaker 6: did they gain how the consumer's dove? They look at 306 00:15:01,800 --> 00:15:05,400 Speaker 6: the earnings from Walmart? I mean, what do they do well? 307 00:15:05,520 --> 00:15:08,720 Speaker 9: The FED staff has devotes a lot of resources to 308 00:15:08,760 --> 00:15:11,080 Speaker 9: the consumer, not only at the aggregate level what is 309 00:15:11,120 --> 00:15:14,640 Speaker 9: total consumption, but also increasingly during the time I was there, 310 00:15:15,000 --> 00:15:18,040 Speaker 9: focusing on the on the distribution in both income and 311 00:15:18,040 --> 00:15:21,640 Speaker 9: consumption distribution across the population. And there are a lot 312 00:15:21,720 --> 00:15:24,359 Speaker 9: of things that that can you can monitor, in particular, 313 00:15:24,800 --> 00:15:27,200 Speaker 9: how many households are laid in their car payments or 314 00:15:27,240 --> 00:15:30,440 Speaker 9: credit card payments, and so certainly, certainly the FED spends 315 00:15:30,480 --> 00:15:32,600 Speaker 9: a lot of time on the bottom up analysis of 316 00:15:32,640 --> 00:15:33,320 Speaker 9: the consumer. 317 00:15:34,040 --> 00:15:36,760 Speaker 6: So again, we came into the year, Richard, I mean 318 00:15:36,800 --> 00:15:39,520 Speaker 6: the market was discounting six rate cuts. Now we're down 319 00:15:39,600 --> 00:15:41,360 Speaker 6: the lesson to I mean, the market has no idea 320 00:15:41,400 --> 00:15:45,240 Speaker 6: what's going on out there? Is the Fed? From your perspective, 321 00:15:46,280 --> 00:15:48,080 Speaker 6: are they happy to say, Hey, we've done a lot 322 00:15:48,120 --> 00:15:51,160 Speaker 6: of work here, We've raised rates, we had a major 323 00:15:51,200 --> 00:15:54,200 Speaker 6: impact on this economy. Let's just wait and see how 324 00:15:54,280 --> 00:15:56,080 Speaker 6: our work plays out. Is that kind of where we are? 325 00:15:56,160 --> 00:15:58,080 Speaker 7: Do you think that's exactly where they are? 326 00:15:58,080 --> 00:16:00,640 Speaker 9: In fact, that the chair got that quietest at the 327 00:16:00,680 --> 00:16:03,960 Speaker 9: press conference, and I'm paraphrasing that his answer was along 328 00:16:03,960 --> 00:16:07,400 Speaker 9: the lines of, we judge that policy is restrictive, and 329 00:16:07,440 --> 00:16:09,520 Speaker 9: we judge that if we keep it here long enough, 330 00:16:09,560 --> 00:16:11,600 Speaker 9: it will be sufficiently restrictive. 331 00:16:11,640 --> 00:16:13,240 Speaker 7: So that's definitely their mindset. 332 00:16:13,440 --> 00:16:16,040 Speaker 9: Their data dependent in terms of when the cut and 333 00:16:16,080 --> 00:16:19,800 Speaker 9: how many cuts are going to happen, but they certainly 334 00:16:19,880 --> 00:16:23,440 Speaker 9: judge that policy is restrictive here and they just have 335 00:16:23,520 --> 00:16:24,200 Speaker 9: to keep it here. 336 00:16:24,600 --> 00:16:28,520 Speaker 3: Well, one of the great moments now in economics, Professor 337 00:16:28,840 --> 00:16:33,400 Speaker 3: Clarita is your colleague and crime at Columbia, Joseph Stiglitz, 338 00:16:33,520 --> 00:16:36,400 Speaker 3: Nobel Prizer. He's out with a wonderful new book, very 339 00:16:36,480 --> 00:16:40,160 Speaker 3: thought provoking, should be read by conservatives, The Road to Freedom, 340 00:16:40,720 --> 00:16:44,880 Speaker 3: Economics and the Good Society. You two are both victims 341 00:16:45,000 --> 00:16:49,120 Speaker 3: of the Midwest. One of the great great advantages here 342 00:16:49,240 --> 00:16:53,800 Speaker 3: is Clarita and Stiglitz are like, what, everybody, calm down, 343 00:16:54,120 --> 00:16:57,120 Speaker 3: There's a whole other country out there. Yeah, tell me 344 00:16:57,200 --> 00:17:03,080 Speaker 3: about policing. As Dean of Colombia, Joe Stiglitz, I can't 345 00:17:03,200 --> 00:17:05,919 Speaker 3: fathom that is your day job. What was it like 346 00:17:06,040 --> 00:17:08,960 Speaker 3: telling Joe Stiglitz you will teach this course? 347 00:17:09,160 --> 00:17:11,879 Speaker 9: Well, no, Joe is a treasure and I'm actually proud 348 00:17:11,880 --> 00:17:13,960 Speaker 9: of the fact that when I was department chair back 349 00:17:14,000 --> 00:17:18,359 Speaker 9: in two thousand and one, I recruited Joe to Columbia. 350 00:17:18,800 --> 00:17:22,080 Speaker 9: It was one of my big, big accomplishments. I'm an 351 00:17:22,200 --> 00:17:27,639 Speaker 9: enormous fan of his research. He's an incredible colleague, incredibly creative, 352 00:17:28,320 --> 00:17:30,360 Speaker 9: and you know, I just wish we had fifty more 353 00:17:30,440 --> 00:17:33,320 Speaker 9: Joe Stiglitz. Whether without the Nobel problem. 354 00:17:33,040 --> 00:17:37,400 Speaker 3: Why should conservatives read Stiglitz The Road to Freedom. 355 00:17:37,720 --> 00:17:40,960 Speaker 9: Well, I'm reading it now. I listened to a podcast 356 00:17:41,200 --> 00:17:44,800 Speaker 9: the other day. Look it's It gives I think, an 357 00:17:44,800 --> 00:17:49,720 Speaker 9: informed and nuanced assessment of the power that economics can 358 00:17:49,800 --> 00:17:52,240 Speaker 9: have about thinking about the world if you're willing to 359 00:17:52,320 --> 00:17:55,960 Speaker 9: step away from the oversimplifying assumptions. And much of Joe's 360 00:17:56,000 --> 00:17:59,000 Speaker 9: career has been driven by a curiosity about the world 361 00:17:59,040 --> 00:18:02,040 Speaker 9: and providing a structure to think about it. 362 00:18:02,760 --> 00:18:05,640 Speaker 6: How do you think about this US economy? A lot 363 00:18:05,680 --> 00:18:09,360 Speaker 6: of we hear recently about the exceptionalism of the US 364 00:18:09,440 --> 00:18:13,320 Speaker 6: economy vis a vis Europe. Let's think Germany or Asia, 365 00:18:13,359 --> 00:18:18,200 Speaker 6: Let's think China. Is this something as unusual, this kind 366 00:18:18,200 --> 00:18:21,280 Speaker 6: of decoupling, if you will, in terms of performance. 367 00:18:22,040 --> 00:18:24,240 Speaker 9: You know that term means different things to different people. 368 00:18:24,280 --> 00:18:26,920 Speaker 9: What is clear, I think is through the rear view 369 00:18:26,920 --> 00:18:31,560 Speaker 9: mirror last year many predictions of a recession. Not only 370 00:18:31,600 --> 00:18:34,600 Speaker 9: did a recession not happen, but growth was a point 371 00:18:34,600 --> 00:18:38,880 Speaker 9: above a trend, a very hot labor market. I think 372 00:18:38,920 --> 00:18:42,399 Speaker 9: part of the exceptionalism theme relates to excitement about AI. 373 00:18:42,880 --> 00:18:44,760 Speaker 7: AI is a big deal. 374 00:18:44,920 --> 00:18:46,520 Speaker 9: It's not clear if it'll be a big deal in 375 00:18:46,520 --> 00:18:48,359 Speaker 9: the next six months or six years, but it is 376 00:18:48,400 --> 00:18:52,000 Speaker 9: a big deal, and obviously US companies in US innovation 377 00:18:52,160 --> 00:18:55,720 Speaker 9: are poised to benefit from that. But there's another dimension 378 00:18:55,760 --> 00:18:58,959 Speaker 9: I would argue in which the US is exceptional, exceptional 379 00:18:59,040 --> 00:19:01,520 Speaker 9: but in a poor direction, which is that we have 380 00:19:01,560 --> 00:19:06,359 Speaker 9: an exceptionally irresponsible fiscal policy. And if you look at 381 00:19:06,359 --> 00:19:11,400 Speaker 9: the CBO numbers, they are they are frightening, essentially deficits 382 00:19:11,760 --> 00:19:14,120 Speaker 9: of five six seven percent of GDP as far as 383 00:19:14,160 --> 00:19:15,520 Speaker 9: the I can see, so. 384 00:19:15,600 --> 00:19:18,640 Speaker 7: Exceptional in multiple directions. I would say. 385 00:19:18,560 --> 00:19:22,560 Speaker 3: One final question, Yeah, we have a presidential candidate, a 386 00:19:22,640 --> 00:19:26,280 Speaker 3: former president who basically wants to take the independence of 387 00:19:26,280 --> 00:19:29,960 Speaker 3: the FED away from your reading of our political economy. 388 00:19:30,040 --> 00:19:34,600 Speaker 3: Can an individual Can a single president remove FED independence? 389 00:19:35,240 --> 00:19:38,439 Speaker 9: Certainly not, I think I think the legal standing of 390 00:19:38,480 --> 00:19:42,920 Speaker 9: that issue is clear and decided, and I would coup 391 00:19:42,960 --> 00:19:45,480 Speaker 9: points one. Jerome Powell will serve out his term, which 392 00:19:45,480 --> 00:19:47,480 Speaker 9: goes through May of twenty six. Secondly, there are no 393 00:19:47,600 --> 00:19:52,639 Speaker 9: vacancies on the federal reserve right now, so for the 394 00:19:52,680 --> 00:19:56,560 Speaker 9: foreseeable future, there's there's no nothing for a future president 395 00:19:56,600 --> 00:19:58,080 Speaker 9: to do on that account. 396 00:19:58,240 --> 00:19:59,680 Speaker 3: This is this has been fun. 397 00:20:00,280 --> 00:20:04,840 Speaker 6: Okay, yeah, you know quality c Yeah, yeah, gentlemanly see 398 00:20:04,840 --> 00:20:05,399 Speaker 6: I'll take that. 399 00:20:05,680 --> 00:20:08,960 Speaker 3: Richard Claridath, thank you so much of Columbia University and 400 00:20:09,000 --> 00:20:17,359 Speaker 3: of course the FED and with Pimco as well joining 401 00:20:17,440 --> 00:20:21,080 Speaker 3: us right now Mandy Singh to straighten out fifteen iPads? 402 00:20:21,280 --> 00:20:24,120 Speaker 3: Was this a plus day for Apple yesterday? I sort 403 00:20:24,119 --> 00:20:28,439 Speaker 3: of get this Nascon feel even x Ai chat. This 404 00:20:28,600 --> 00:20:31,200 Speaker 3: is going pretty well for Tim Cook, right or wrong? 405 00:20:31,640 --> 00:20:34,760 Speaker 8: Well, the China numbers I think that came out were 406 00:20:34,800 --> 00:20:39,120 Speaker 8: a positive. Everyone was really thinking, oh, for worst case scenario, 407 00:20:39,280 --> 00:20:42,280 Speaker 8: so that obviously is not the case. And in terms 408 00:20:42,280 --> 00:20:46,000 Speaker 8: of their iPad launch, Look, I'm a software guy. I 409 00:20:46,040 --> 00:20:49,480 Speaker 8: get excited when I see new apps that leverage. 410 00:20:49,600 --> 00:20:52,800 Speaker 3: Come on, you're so excited about three nanometers for chat? 411 00:20:52,920 --> 00:20:55,040 Speaker 3: I am. I mean, it's what you and I talk about, 412 00:20:55,040 --> 00:20:55,920 Speaker 3: We speak out on that. 413 00:20:56,520 --> 00:20:59,199 Speaker 8: Google has already shown that as well as they have 414 00:20:59,440 --> 00:21:02,639 Speaker 8: incorporated a large ANGLID model that takes advantage of that 415 00:21:02,720 --> 00:21:05,840 Speaker 8: three nanometer chip. Apple didn't do that, So that's the 416 00:21:05,920 --> 00:21:08,520 Speaker 8: gap they got to plug in their developer conference. 417 00:21:08,960 --> 00:21:11,239 Speaker 3: Everyone knows, you know, the guy that tells me what 418 00:21:11,280 --> 00:21:13,520 Speaker 3: to do, Mike Bloomberg. He's gonna get the new iPad. 419 00:21:13,520 --> 00:21:16,920 Speaker 3: He's the best one, so will John Tucker because Mike 420 00:21:16,960 --> 00:21:19,879 Speaker 3: gets one. So John Tucker is gonna have the fanciest 421 00:21:19,880 --> 00:21:24,280 Speaker 3: iPad out there, and it's going to say, let's do AI. 422 00:21:24,640 --> 00:21:27,960 Speaker 3: What is John Tucker going to do on his fancy 423 00:21:28,000 --> 00:21:29,479 Speaker 3: new iPad with AI? 424 00:21:30,160 --> 00:21:33,200 Speaker 8: The first thing he will do is to engage with Siri, 425 00:21:34,560 --> 00:21:37,439 Speaker 8: the one product that Apple has done something. 426 00:21:37,520 --> 00:21:38,600 Speaker 7: He doesn't know what that is. 427 00:21:40,960 --> 00:21:44,359 Speaker 8: So look, I think that's the biggest use case for AI. 428 00:21:44,480 --> 00:21:46,880 Speaker 8: If this thing is real and you can, you know, 429 00:21:47,000 --> 00:21:49,760 Speaker 8: engage with it in a productive way, it has to 430 00:21:49,840 --> 00:21:51,480 Speaker 8: manifest in a voice assistant. 431 00:21:51,640 --> 00:21:56,800 Speaker 3: Let's be clear, Tucker doesn't engage with his next door neighbors. 432 00:21:56,920 --> 00:21:58,320 Speaker 7: How much less Siri? 433 00:21:58,760 --> 00:22:01,160 Speaker 6: So all right, man, deep, But I did not hear 434 00:22:01,280 --> 00:22:06,240 Speaker 6: yesterday with the iPad was really anything AI. I'm banking 435 00:22:06,280 --> 00:22:10,760 Speaker 6: on this June developer conference and I need to see 436 00:22:10,800 --> 00:22:14,360 Speaker 6: something that says Apple is in the AI game. 437 00:22:14,400 --> 00:22:15,480 Speaker 5: Am I going to get that in June? 438 00:22:15,520 --> 00:22:15,920 Speaker 6: Do you think? 439 00:22:16,040 --> 00:22:16,560 Speaker 7: I think so? 440 00:22:16,680 --> 00:22:19,600 Speaker 8: And the pressure is on them to incorporate it in 441 00:22:19,680 --> 00:22:22,919 Speaker 8: the next version of their operating system. Google has already 442 00:22:22,920 --> 00:22:26,320 Speaker 8: done that in terms of integrating their smallest LM with 443 00:22:26,400 --> 00:22:30,280 Speaker 8: their Android operating system. That's what developers want because then 444 00:22:30,320 --> 00:22:32,960 Speaker 8: you can build new functionality on top of it, roll 445 00:22:32,960 --> 00:22:35,159 Speaker 8: it out in apps, but if it's not there in 446 00:22:35,200 --> 00:22:38,560 Speaker 8: the development kit that Apple has with their operating system, 447 00:22:38,560 --> 00:22:39,040 Speaker 8: it's so hard. 448 00:22:39,040 --> 00:22:42,280 Speaker 3: Okay, So to Paul's perfect question about what happens in junior, 449 00:22:42,720 --> 00:22:45,440 Speaker 3: the bottom line is, yesterday they brought out Logical leven, 450 00:22:45,480 --> 00:22:48,639 Speaker 3: the music software, and it has three new things that 451 00:22:48,680 --> 00:22:51,680 Speaker 3: are what I'm going to call ai ish. I still 452 00:22:51,760 --> 00:22:55,119 Speaker 3: don't understand, you know how many iPhones are in my 453 00:22:55,200 --> 00:23:00,560 Speaker 3: family seven with that bill, I don't understand what it's 454 00:23:00,600 --> 00:23:04,720 Speaker 3: gonna do to various and sundry children's iPhone. Is it 455 00:23:04,760 --> 00:23:09,399 Speaker 3: gonna have them spend less at the department store? Well 456 00:23:09,600 --> 00:23:10,040 Speaker 3: it could. 457 00:23:10,119 --> 00:23:13,679 Speaker 8: I mean, look, the use cases of this are pervasive. 458 00:23:13,720 --> 00:23:16,560 Speaker 8: That's what we are learning in terms of the companies 459 00:23:16,600 --> 00:23:20,040 Speaker 8: trying to pilot new applications. How it's going to drive 460 00:23:20,119 --> 00:23:24,800 Speaker 8: that seven. You know, people upgrade in your family. It's 461 00:23:24,880 --> 00:23:27,720 Speaker 8: gonna be a function of can I run this operating 462 00:23:27,720 --> 00:23:31,160 Speaker 8: system just on that latest iPhone or iPad, or can 463 00:23:31,200 --> 00:23:34,560 Speaker 8: I run it on that all iPhone right now? All 464 00:23:34,600 --> 00:23:37,119 Speaker 8: the operating system upgrades that Apple rolls out, I can 465 00:23:37,200 --> 00:23:39,679 Speaker 8: run it on my iPhone eleven or twelve. Why do 466 00:23:39,760 --> 00:23:42,840 Speaker 8: I need to go to iPhone fifteen or sixteen because. 467 00:23:42,560 --> 00:23:43,639 Speaker 3: You come over for dinner? 468 00:23:44,840 --> 00:23:46,080 Speaker 6: Explain that to the troops? 469 00:23:46,200 --> 00:23:47,080 Speaker 3: All right, I need it. 470 00:23:47,119 --> 00:23:51,080 Speaker 6: When I'm talking Apple, if I'm a shareholder or prospective shareholder, 471 00:23:51,160 --> 00:23:54,200 Speaker 6: I have to have a call on China. I don't 472 00:23:54,200 --> 00:23:56,280 Speaker 6: have a call on China. I don't think this is 473 00:23:56,280 --> 00:23:58,920 Speaker 6: a good story for Apple. It's twenty percent of their revenue. 474 00:23:59,200 --> 00:24:01,320 Speaker 6: It's a big part to their supply chain. 475 00:24:02,440 --> 00:24:03,360 Speaker 5: I don't have a call there. 476 00:24:03,400 --> 00:24:05,480 Speaker 6: What's what do you think the call is on China 477 00:24:05,520 --> 00:24:06,119 Speaker 6: for Apple? 478 00:24:06,280 --> 00:24:09,520 Speaker 8: I mean, there's no doubt it will be, you know, 479 00:24:09,640 --> 00:24:12,960 Speaker 8: a decelerating business to the extent that right now it's 480 00:24:13,000 --> 00:24:15,960 Speaker 8: twenty percent, it's going to be fifteen percent a year 481 00:24:16,000 --> 00:24:18,960 Speaker 8: from now or two years from now. No it I 482 00:24:18,960 --> 00:24:22,560 Speaker 8: mean think about it. Five percent of a four hundred 483 00:24:22,560 --> 00:24:25,679 Speaker 8: billion dollar revenue base. That's a pretty sizable number. And 484 00:24:25,800 --> 00:24:28,399 Speaker 8: where do you make up. Even if Apple is gaining 485 00:24:28,400 --> 00:24:31,360 Speaker 8: share in India or in other markets, it can make 486 00:24:31,440 --> 00:24:35,240 Speaker 8: up for that five percent. So we're talking about big 487 00:24:35,359 --> 00:24:39,520 Speaker 8: chunk of revenue leaving just because you know you don't 488 00:24:39,560 --> 00:24:40,640 Speaker 8: have that market anymore. 489 00:24:40,760 --> 00:24:43,080 Speaker 6: So what do the bulls say about that? I mean, 490 00:24:43,119 --> 00:24:44,800 Speaker 6: what's we had Dan ives in here, what would you 491 00:24:44,800 --> 00:24:46,639 Speaker 6: say about I'm going to love that's twenty million revenue, 492 00:24:46,680 --> 00:24:48,359 Speaker 6: twenty billion in revenue. That's just going poof. 493 00:24:48,920 --> 00:24:51,480 Speaker 8: Well, so the bulls would argue, you know, it's going 494 00:24:51,560 --> 00:24:54,360 Speaker 8: to happen at a much lower pace and Apple. 495 00:24:54,119 --> 00:24:56,160 Speaker 3: Will continue to launch, you know. 496 00:24:56,160 --> 00:24:59,439 Speaker 8: New products where they will have higher sp growth is 497 00:24:59,480 --> 00:25:01,719 Speaker 8: still the bullcase for Apple. 498 00:25:03,040 --> 00:25:04,639 Speaker 3: We got to go on this breaking news and we're 499 00:25:04,720 --> 00:25:06,879 Speaker 3: thrilled to have men deep sing with this expert on 500 00:25:06,960 --> 00:25:10,440 Speaker 3: this da da da D. Intel misses for the four 501 00:25:10,520 --> 00:25:14,800 Speaker 3: thousandth time. Intel sees second quarter revenue below midpoint of 502 00:25:14,840 --> 00:25:18,800 Speaker 3: blah blah blah, still sees fiscal year revenue to grow 503 00:25:18,920 --> 00:25:21,960 Speaker 3: year over year. Is there a new Intel or is 504 00:25:22,000 --> 00:25:24,240 Speaker 3: it the same train wreck you and I have covered 505 00:25:24,240 --> 00:25:25,080 Speaker 3: for a decade. 506 00:25:25,520 --> 00:25:29,399 Speaker 8: I mean, we're talking about a company that is going 507 00:25:29,440 --> 00:25:33,160 Speaker 8: through a transformation, and we know transformations are tough when 508 00:25:33,160 --> 00:25:34,200 Speaker 8: it comes to technology. 509 00:25:34,440 --> 00:25:37,840 Speaker 3: Soci Republican Party, Come on, when do they need a 510 00:25:37,880 --> 00:25:39,840 Speaker 3: new CEO to fix this thing next? 511 00:25:39,840 --> 00:25:42,719 Speaker 8: Now, I think he's pulling all strings in terms of 512 00:25:42,760 --> 00:25:47,639 Speaker 8: trying to revive the company through different aspects foundry chip making. 513 00:25:48,040 --> 00:25:51,240 Speaker 8: It's just when you are behind in the chip business, 514 00:25:51,480 --> 00:25:54,240 Speaker 8: it's very hard to catch up. And that's what I 515 00:25:54,359 --> 00:25:56,719 Speaker 8: really wrote on for the twenty five years they were 516 00:25:56,760 --> 00:25:57,360 Speaker 8: at the pinnacle. 517 00:25:57,520 --> 00:26:00,760 Speaker 3: Is Joe Biden helping or hurting in Intel by his 518 00:26:00,920 --> 00:26:02,560 Speaker 3: semiconductor expansion? 519 00:26:02,800 --> 00:26:06,080 Speaker 8: I mean, clearly the government is helping Intel here in 520 00:26:06,200 --> 00:26:09,560 Speaker 8: every possible way in terms of the Chips Act, dispersements 521 00:26:09,600 --> 00:26:13,960 Speaker 8: and just allowing them to, you know, do what they 522 00:26:14,000 --> 00:26:17,000 Speaker 8: can in terms of catching up. Intel getting the ASML 523 00:26:17,119 --> 00:26:20,280 Speaker 8: equipment that being the latest news. That's a huge deal 524 00:26:20,320 --> 00:26:21,280 Speaker 8: because they missed on that. 525 00:26:21,440 --> 00:26:25,159 Speaker 3: Que's yeah, we were out of time. Yeah, Chris Miller 526 00:26:25,320 --> 00:26:28,520 Speaker 3: chip war. Okay, ASML's over the Netherlands. They got to 527 00:26:28,560 --> 00:26:32,560 Speaker 3: sell to everybody. How does Intel use ASML stuff versus 528 00:26:32,560 --> 00:26:36,119 Speaker 3: our Taiwan's Semiconductor uses ASML stuff. There's got to be 529 00:26:36,160 --> 00:26:36,640 Speaker 3: a difference. 530 00:26:36,720 --> 00:26:38,879 Speaker 8: I mean, ASML is coming up with a new and 531 00:26:38,960 --> 00:26:41,960 Speaker 8: better machine every three months or every six months. 532 00:26:42,160 --> 00:26:43,760 Speaker 3: Who do they give those machines to? 533 00:26:43,880 --> 00:26:46,960 Speaker 8: Obviously they're going to sell it. If Intel gets a preference, 534 00:26:47,359 --> 00:26:50,080 Speaker 8: that helps them narrow some of that lead that TSMC 535 00:26:50,680 --> 00:26:54,720 Speaker 8: and other fab makers have. So clearly getting hold off 536 00:26:54,800 --> 00:26:56,960 Speaker 8: that machine which is in hot demand. 537 00:26:57,200 --> 00:26:58,199 Speaker 7: Clearly makes a difference. 538 00:26:58,200 --> 00:27:01,600 Speaker 3: You impressed my questionnaire. I got it from John Tucker. 539 00:27:01,720 --> 00:27:04,880 Speaker 6: Nice saying thank you so much. 540 00:27:15,680 --> 00:27:19,679 Speaker 3: Mc moreroy joins us. Molroy joins us right now a 541 00:27:19,720 --> 00:27:22,080 Speaker 3: senior fellow of the Middle East Institute and not an 542 00:27:22,119 --> 00:27:25,840 Speaker 3: acquaintance with public service to the country, former Deputy Assistant 543 00:27:25,920 --> 00:27:29,560 Speaker 3: Secretary of Defense for the Middle East at Defense and 544 00:27:29,720 --> 00:27:35,200 Speaker 3: also his effort with the Marines over many a year. Nick, 545 00:27:35,320 --> 00:27:39,119 Speaker 3: thank you so much for joining again. I believe the 546 00:27:39,160 --> 00:27:40,920 Speaker 3: way they do it in the Marines is they say 547 00:27:40,960 --> 00:27:43,840 Speaker 3: get out the map. I don't think enough Americans have 548 00:27:43,920 --> 00:27:48,440 Speaker 3: gotten out the map of southern Gaza, three miles from 549 00:27:48,560 --> 00:27:52,320 Speaker 3: Rafa up to a Mediterranean sea as a constraint in 550 00:27:52,480 --> 00:27:56,320 Speaker 3: maybe nine miles south to the tip of Gaza into 551 00:27:56,359 --> 00:27:59,840 Speaker 3: a desert in the middle of nowhere. If your world 552 00:27:59,880 --> 00:28:03,160 Speaker 3: is there's the study of degrees of freedom? Where do 553 00:28:03,240 --> 00:28:05,600 Speaker 3: those people move in Gaza? 554 00:28:08,000 --> 00:28:09,680 Speaker 1: So it is very good to be with you guys. 555 00:28:09,720 --> 00:28:13,000 Speaker 1: As usual, It's very difficult, there's no doubt about it. 556 00:28:13,040 --> 00:28:17,119 Speaker 1: The population that we're talking about inside Rapa over a million, 557 00:28:17,200 --> 00:28:19,920 Speaker 1: so about one point three million are largely there because 558 00:28:19,920 --> 00:28:22,920 Speaker 1: they've relocated from other areas of Gaza. Including all the 559 00:28:22,960 --> 00:28:26,240 Speaker 1: way up to Gaza City Communis and now I think 560 00:28:26,640 --> 00:28:31,440 Speaker 1: where they're looking is a coastal area, predominantly because Hamas 561 00:28:31,520 --> 00:28:34,320 Speaker 1: isn't in the coastal areas because you can't dig tunnels there. 562 00:28:34,359 --> 00:28:37,480 Speaker 1: So they're trying to move this large population. I think 563 00:28:37,520 --> 00:28:40,680 Speaker 1: around fifty thousand have already moved in the last two 564 00:28:40,760 --> 00:28:44,400 Speaker 1: days to this area to get them out of the 565 00:28:44,440 --> 00:28:48,760 Speaker 1: path of either a full scale or limited ground operation 566 00:28:49,640 --> 00:28:54,640 Speaker 1: to basically address the last four battalions of Hamas terraces 567 00:28:54,760 --> 00:28:55,920 Speaker 1: in that region. 568 00:28:56,120 --> 00:29:00,280 Speaker 3: You mentioned a million people, take away fifty thousand. Let 569 00:29:00,480 --> 00:29:04,800 Speaker 3: McK molroy do the math. But the answer is in 570 00:29:04,880 --> 00:29:08,920 Speaker 3: the next coming days, how do you move that many people. 571 00:29:09,680 --> 00:29:11,560 Speaker 3: I can't visualize it, make help me. 572 00:29:13,720 --> 00:29:16,160 Speaker 1: So it will be difficult. I've seen some assessments that 573 00:29:16,160 --> 00:29:17,880 Speaker 1: would take up to twelve days, but if you do 574 00:29:17,960 --> 00:29:20,400 Speaker 1: your math, it doesn't seem to add up right now. 575 00:29:21,120 --> 00:29:23,520 Speaker 1: But the other thing I'd point out is Israel doesn't 576 00:29:23,560 --> 00:29:28,440 Speaker 1: have to set an arbitrary timeline. Their timeline could be 577 00:29:28,480 --> 00:29:30,480 Speaker 1: if they elect to do their off offensive, and there's 578 00:29:30,520 --> 00:29:33,360 Speaker 1: certainly some serious opposition to this, but if they're going 579 00:29:33,360 --> 00:29:35,640 Speaker 1: to go ahead, they could base it off of when 580 00:29:36,040 --> 00:29:38,760 Speaker 1: civilians are out of harm's way, because it does look 581 00:29:38,800 --> 00:29:43,920 Speaker 1: like they are voluntarily moving, and some quite frankly, really quickly. 582 00:29:44,520 --> 00:29:46,560 Speaker 1: So I hope that if they do go ahead, and 583 00:29:46,600 --> 00:29:48,920 Speaker 1: that's obviously a choice that they're going to make, that 584 00:29:49,000 --> 00:29:51,840 Speaker 1: they do allow all the civilians that they can get 585 00:29:51,840 --> 00:29:54,320 Speaker 1: out to get out to a location where they can 586 00:29:54,360 --> 00:29:59,760 Speaker 1: also receive humanitarian aid. It's obviously difficult to convince people 587 00:29:59,760 --> 00:30:02,440 Speaker 1: to move to a place where there's no food, clean water, 588 00:30:03,000 --> 00:30:05,320 Speaker 1: or the medicine they might need. So it is a 589 00:30:05,400 --> 00:30:10,600 Speaker 1: very complicated situation point of your first question, but it 590 00:30:10,680 --> 00:30:12,680 Speaker 1: needs to be done if this offensive is going to 591 00:30:12,720 --> 00:30:13,200 Speaker 1: take place. 592 00:30:13,760 --> 00:30:18,040 Speaker 6: Nick after the October seven attacks, the Israeli government said 593 00:30:18,040 --> 00:30:22,960 Speaker 6: their strategy was to basically eradicate Hamas or seven plus 594 00:30:23,040 --> 00:30:27,480 Speaker 6: months into this, is that even possible? I mean, we 595 00:30:27,520 --> 00:30:30,440 Speaker 6: asked that question seven months ago, is that possible? Seven 596 00:30:30,480 --> 00:30:32,440 Speaker 6: months into it now, is that even possible? 597 00:30:34,320 --> 00:30:35,320 Speaker 3: So that is a good question. 598 00:30:35,400 --> 00:30:38,480 Speaker 1: You can never really eradicate a philosophy which means people 599 00:30:38,520 --> 00:30:42,360 Speaker 1: can join Hamas or whatever comes after it. I think 600 00:30:42,400 --> 00:30:44,880 Speaker 1: they should have been more specific and certainly given the 601 00:30:44,920 --> 00:30:50,080 Speaker 1: IDF more reasonable objectives, which is to the military destruction 602 00:30:50,200 --> 00:30:54,360 Speaker 1: of Hamas, which means obviously taking out the military leadership, 603 00:30:54,720 --> 00:30:59,480 Speaker 1: depleting basically their soldiers if you will, they're terrorists, but 604 00:30:59,520 --> 00:31:02,040 Speaker 1: also just running the weapon systems that are so dangerous 605 00:31:02,080 --> 00:31:06,000 Speaker 1: to Israel and these tunnels, which are a strategic problem 606 00:31:06,520 --> 00:31:10,000 Speaker 1: that most militaries have not faced at this scale in 607 00:31:10,040 --> 00:31:13,760 Speaker 1: this type of operation. But if they could degrade those significantly, 608 00:31:14,040 --> 00:31:16,720 Speaker 1: then I would think that would be a reasonable objective 609 00:31:16,720 --> 00:31:20,480 Speaker 1: for the IDF. Destruction of a philosophy, a terrorist organization. 610 00:31:20,840 --> 00:31:23,680 Speaker 1: We've seen it with our efforts in twenty years. We 611 00:31:23,760 --> 00:31:26,440 Speaker 1: have not done that, so that is not likely to 612 00:31:26,440 --> 00:31:26,800 Speaker 1: have it. 613 00:31:26,880 --> 00:31:29,200 Speaker 3: Make Peter Baker in the New York Times and among 614 00:31:29,400 --> 00:31:32,480 Speaker 3: many many other headlines, including Bloomberg, the President of the 615 00:31:32,520 --> 00:31:36,520 Speaker 3: United States puts arm shipment to Israel on hold. What 616 00:31:36,520 --> 00:31:37,560 Speaker 3: does it actually mean? 617 00:31:39,760 --> 00:31:43,240 Speaker 1: So if you look at the growing I think concerned, 618 00:31:43,480 --> 00:31:45,840 Speaker 1: but not just the White House, but even in the Pentagon, 619 00:31:46,200 --> 00:31:48,840 Speaker 1: about how the war was being prosecuted. A lot of 620 00:31:48,880 --> 00:31:50,720 Speaker 1: it has to do with the use of use of 621 00:31:50,800 --> 00:31:55,360 Speaker 1: large diameter bombs in urban areas. So two thousand pounds 622 00:31:55,440 --> 00:32:00,200 Speaker 1: jade ams has a kill radius that is substantial. So 623 00:32:00,240 --> 00:32:04,280 Speaker 1: even if you're targeting militants in one particular block, you 624 00:32:04,320 --> 00:32:06,480 Speaker 1: could be taken out two or three blocks, and I 625 00:32:06,480 --> 00:32:09,040 Speaker 1: think that has been some of the major concern Those 626 00:32:09,080 --> 00:32:11,320 Speaker 1: are what the weapon systems I think that have been 627 00:32:12,800 --> 00:32:16,320 Speaker 1: stopped from going to Israel right now because of this 628 00:32:16,440 --> 00:32:19,160 Speaker 1: rough offens it. It may be in the future they 629 00:32:19,160 --> 00:32:22,160 Speaker 1: condition it you can't use these weapons, but not in Gaza. 630 00:32:22,200 --> 00:32:24,120 Speaker 1: I don't know if we're there yet. The quickest way 631 00:32:24,120 --> 00:32:27,040 Speaker 1: to do that is simply stop those weapons from being 632 00:32:27,760 --> 00:32:32,240 Speaker 1: shipped to Israel right now, right before they're off with all. 633 00:32:32,200 --> 00:32:35,920 Speaker 6: Right, Mick, just strictly from a military perspective, how do 634 00:32:35,960 --> 00:32:38,640 Speaker 6: you think this plays out? I mean, if your goal 635 00:32:38,720 --> 00:32:41,800 Speaker 6: is to get every last Timas fighter, you can argue 636 00:32:41,840 --> 00:32:43,920 Speaker 6: no end insight here. How do you think this plays 637 00:32:43,960 --> 00:32:47,440 Speaker 6: out from a military perspective? Because he's really Defense fund 638 00:32:47,680 --> 00:32:48,520 Speaker 6: they know what they're doing. 639 00:32:51,040 --> 00:32:52,320 Speaker 3: They do absolutely true. 640 00:32:52,320 --> 00:32:54,400 Speaker 1: But you're right, you're never going to get every Hamas 641 00:32:54,480 --> 00:32:57,400 Speaker 1: fighter because every day there's new Hamas fighters, and as 642 00:32:57,440 --> 00:32:59,560 Speaker 1: soon as you leave, they'll be new. So I think 643 00:32:59,600 --> 00:33:02,720 Speaker 1: it is really to go after their capability to wage 644 00:33:03,720 --> 00:33:07,360 Speaker 1: violence against Israel. So major weapon systems and every other 645 00:33:07,400 --> 00:33:11,600 Speaker 1: weapon systems you can the leadership because leadership really matters. 646 00:33:11,640 --> 00:33:14,360 Speaker 1: I mean, we can see that on October seven, unfortunately, 647 00:33:15,040 --> 00:33:18,200 Speaker 1: and these tunnels, these tunnels do give them a capability 648 00:33:18,720 --> 00:33:22,120 Speaker 1: that is unlike most terrorist organizations. So I think if 649 00:33:22,160 --> 00:33:24,200 Speaker 1: you can degrade that to a point and then you 650 00:33:24,280 --> 00:33:28,320 Speaker 1: have to come up with a plan that is attainable 651 00:33:28,840 --> 00:33:32,960 Speaker 1: and sustainable when it comes to ceasefire, because everybody's talking 652 00:33:32,960 --> 00:33:35,600 Speaker 1: about it now as this is what Israel needs to do. 653 00:33:35,920 --> 00:33:37,880 Speaker 1: But the question is, as soon as they signed the agreement, 654 00:33:37,960 --> 00:33:39,600 Speaker 1: how long is it going to take for Hamas to 655 00:33:39,640 --> 00:33:42,480 Speaker 1: then violate that agree because their purpose in life is 656 00:33:42,520 --> 00:33:43,240 Speaker 1: to attack Israel. 657 00:33:43,280 --> 00:33:45,880 Speaker 3: MG, I gotta squeeze this in your effort. Is my 658 00:33:46,080 --> 00:33:51,160 Speaker 3: star in the sky about children forced into soldiering in Africa? 659 00:33:51,680 --> 00:33:54,880 Speaker 3: This is something you've really let on worldwide. Just quickly 660 00:33:54,960 --> 00:33:56,760 Speaker 3: hear how big is this issue? 661 00:33:58,360 --> 00:34:00,440 Speaker 1: Well, thank you for bringing up It is a big 662 00:34:00,480 --> 00:34:03,680 Speaker 1: and growing issue. In the last few years, it's doubled 663 00:34:04,400 --> 00:34:06,480 Speaker 1: with the amount of children being forced to fight in 664 00:34:06,520 --> 00:34:10,520 Speaker 1: the Middle East. The issue you're talking about is a 665 00:34:10,560 --> 00:34:13,719 Speaker 1: documentary that me and my partner Eric hollerpeople all Rich 666 00:34:13,800 --> 00:34:17,640 Speaker 1: did on the Lord's Resistance Army. It's being made into 667 00:34:17,640 --> 00:34:19,239 Speaker 1: a book. It is made into a book and it's 668 00:34:19,320 --> 00:34:21,799 Speaker 1: kind of came out yesterday, so I really appreciate you 669 00:34:21,880 --> 00:34:24,800 Speaker 1: bringing that up because a portion of the proceeds goes 670 00:34:24,840 --> 00:34:29,640 Speaker 1: to our NGO in Child Soldiering, which really addresses issue 671 00:34:29,920 --> 00:34:33,319 Speaker 1: not only to stop it, but to help rehabilitate those 672 00:34:33,400 --> 00:34:35,880 Speaker 1: children that have been forced to fight, and that needs to 673 00:34:35,880 --> 00:34:37,400 Speaker 1: stop immediately. 674 00:34:37,600 --> 00:34:40,880 Speaker 3: Mick, Thank you. Mick mulroy with us there on Gaza 675 00:34:40,920 --> 00:34:43,359 Speaker 3: and what we see in Rulfia. Mark Sullivan's All the 676 00:34:43,360 --> 00:34:46,640 Speaker 3: Glimmering Stars is the book. 677 00:34:47,040 --> 00:34:50,280 Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best 678 00:34:50,280 --> 00:34:55,080 Speaker 2: in economics, finance, investment, and international relations. You can also 679 00:34:55,120 --> 00:34:59,160 Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast 680 00:34:59,280 --> 00:35:03,319 Speaker 2: channel on YouTube to see the show weekday mornings from 681 00:35:03,360 --> 00:35:06,640 Speaker 2: seven to ten am Eastern from our global headquarters in 682 00:35:06,719 --> 00:35:10,400 Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify, 683 00:35:10,760 --> 00:35:14,320 Speaker 2: or anywhere else you listen, and always on Bloomberg Radio, 684 00:35:14,480 --> 00:35:17,680 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.