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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
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Speaker 3: We are thrilled to Emily Rowland here with John Hancock
Speaker 3: of Boston. And I should also point out she's got
Speaker 3: the best call, which is just own America, own quality,
Speaker 3: screwing around. Do you stay with?
Speaker 4: We do, Tom, And it's really all about following the
Speaker 4: earnings and following where the best fundamentals are, follow the
Speaker 4: cash flow.
Speaker 5: And not only are.
Speaker 4: We seeing us megacap tech companies. Yes they're overvalued, but
Speaker 4: they're doing the bulk of the heavy lifting right now
Speaker 4: as far as earnings growth goes.
Speaker 5: It's a key reason that.
Speaker 4: We've had a preference for US equities. We're also following
Speaker 4: where the money's going. We are spending like crazy in
Speaker 4: the United States right now, and not a political opinion,
Speaker 4: it's just happening. And it's really unusual that we're employing
Speaker 4: fiscal stimulus and increasing the size of the deficit at
Speaker 4: a time where the unemployment rate is less than four percent,
Speaker 4: but it's being funneled into industrial production. There's a manufacturing
Speaker 4: renaissance taking place across the US Midwest right now, so
Speaker 4: we're playing that by emphasizing things like MidCap industrials and portfolios.
Speaker 6: So we're pretty much eighty eighty five percent away through
Speaker 6: earning share What have you seen so far that's either
Speaker 6: giving you conviction in that call or maybe said, oh,
Speaker 6: we got some headwinds.
Speaker 4: Yeah, I mean, earnings have been okay. You know, they
Speaker 4: remind me a little bit of my son's grades. He's
Speaker 4: in eighth grade. His report cards like not very good,
Speaker 4: but he's still on the lacrosse team right now.
Speaker 5: Go marblehead.
Speaker 4: So you know they've been fine, you know, but when
Speaker 4: you look at it, it's almost like I picture like
Speaker 4: a glacier, right, you know, how only the very top
Speaker 4: part of it is showing and it again, it's really
Speaker 4: those megacap tech names, Communications services, consumer discretionary.
Speaker 5: Those sectors are up thirty forty.
Speaker 4: Percent your over year, handily out pacing the S and
Speaker 4: P five hundred, which broadly is up only about two
Speaker 4: percent when you take those sectors out. So earnings has
Speaker 4: been fine, but again they're dominated by select groups of companies.
Speaker 6: So how do you think about valuation?
Speaker 3: Then? Do we?
Speaker 6: I mean, two ways to look at it. When you
Speaker 6: just kind of look at the broad market, maybe we're
Speaker 6: a little bit rich. A lot of folks say, hey,
Speaker 6: pull out some of those magnificent however they are is
Speaker 6: and it's we're okay, How do you guys think about it?
Speaker 5: Yeah, I mean it's really about a balance.
Speaker 4: So we have evaluation an issue with those megacab tech names.
Speaker 4: In fact, right now the S and P five hundred
Speaker 4: growth Index is trading at a forty five percent premium
Speaker 4: to its twenty year average.
Speaker 5: So we still like tech.
Speaker 4: We're not downgrading it, but you've got to balance that
Speaker 4: with stuff that's actually trading.
Speaker 3: Can sales JOHNY Hancock, with its venerable tradition, actually sticks
Speaker 3: to prospectus. Are your large cap portfolios forced to sell
Speaker 3: big tech because it's going up so much.
Speaker 4: Well, it's now that's a big problem for active managers
Speaker 4: because it's hard to be overweight those stocks. So I
Speaker 4: think there's some limitations there as far as sector construction.
Speaker 4: What we're doing is we're balancing that with carefully.
Speaker 5: Selected parts value.
Speaker 4: Think of it as like quality at a reasonable price.
Speaker 4: Those are the types of stocks we want to own,
Speaker 4: ones with great balance.
Speaker 3: Sheets such as these sectors. Come on.
Speaker 4: Yeah, so we're overweight the information technology sector. We also
Speaker 4: like things like industrials, which we talked about, which have
Speaker 4: good earnings prospects, their high quality, great retire and on equity.
Speaker 4: We do like healthcare sometimes I don't love talking about
Speaker 4: it because it's been an area.
Speaker 3: Healthcare try to go. I mean you and I were younger, Paul,
Speaker 3: when people started talking about this, Why won't healthcare pop?
Speaker 4: I think you just need to see that rotation into
Speaker 4: more defensive parts of the market and think about what's
Speaker 4: outperforming right now. You look at bitcoin, cryptomnor small cap equities,
Speaker 4: Chinese equities, it's like there's this massive momentum trade that's
Speaker 4: been spurred by this risk on sentiment, and it's really
Speaker 4: been just around the FED hinting last fall that that
Speaker 4: we were going to cut raids, and then kind of
Speaker 4: reiterating that message a bit last week when we heard
Speaker 4: that we're going to you know, kind of start reducing
Speaker 4: quantitative tightening and those other, you know, measures that are
Speaker 4: more dubvish. So I think it's we've been thinking about
Speaker 4: this environment like a phase, and I've been thinking about
Speaker 4: I don't know if anybody's ever had teenagers in their
Speaker 4: house can go through these like phases, which can be
Speaker 4: weird and erratic and hard to un understand. And that's
Speaker 4: kind of what it feels like right now in markets,
Speaker 4: is you're having decelerating economic growth. The April data are
Speaker 4: not that great, but markets are rejoicing because it's reviving
Speaker 4: hopes that the FED can start cutting. So we're in
Speaker 4: a phase that we're trying to get through and kind
Speaker 4: of ride out right now with those higher quality stocks.
Speaker 6: How about on the fixed income side, do I sit
Speaker 6: in my two year treasury at four point eight four
Speaker 6: percent or do I take some credit risk out there.
Speaker 4: I'm so glad you asked that Bloomberg is the place
Speaker 4: to talk about bonds, and I love that you know,
Speaker 4: it's pretty remarkable to see some of the volatility and rates.
Speaker 5: I don't think it's been talked about much.
Speaker 4: We just saw the ten year treasury yield fall by
Speaker 4: about twenty twenty five basis points in just over a week.
Speaker 4: We look at any backup in bond yields is really attractive.
Speaker 5: Right now, you think about.
Speaker 4: The aggregate bond indext yielding five point three percent, that's
Speaker 4: pretty awesome. I mean that's actually close to the twenty
Speaker 4: year high of about five point nine percent, and well
Speaker 4: above the twenty year average of three and a quarter.
Speaker 5: We like income.
Speaker 3: Now you're doing a lacrosse at Marblehead? Is that what
Speaker 3: is just right? Yeah? How many summer camps? Is a
Speaker 3: child going to? What a racket?
Speaker 7: Yeah?
Speaker 3: They got to walk diusy? Are they going to Dartmouth
Speaker 3: to the mountain dog?
Speaker 5: We are looking at some lacrosse camp.
Speaker 3: We're looking do you have a consultant?
Speaker 5: I know, right, it's unbelievable. I need another job.
Speaker 3: You do, yes, you do, trust me? Yeah, But you're
Speaker 3: looking at you know, three or four camps.
Speaker 4: Yes, all the elite colleges of course, will take your
Speaker 4: children for a week of lacrosse instruction.
Speaker 5: Doesn't even matter if they're good by.
Speaker 3: Textbooks not included.
Speaker 5: Exactly does this.
Speaker 6: Marnsball does it? They all do it? Yeah, yeah, got
Speaker 6: to keep it.
Speaker 3: I looked up Taber. I figure the track from marble
Speaker 3: Head down to Tabor in your cape. God, wouldn't be
Speaker 3: too much. They don't have a lex cap. They take
Speaker 3: your money in ice hockey.
Speaker 6: Exactly, so Marblehead that it was only forty five minute
Speaker 6: drive hour drive to the Boston.
Speaker 4: Well and on a Sunday morning it's about twenty minutes.
Speaker 4: But on a Monday morning it's a different story.
Speaker 3: They got to agree. Folky coffeehouse up there, it's up there, like, yeah,
Speaker 3: exactly it gets warm about July exact.
Speaker 5: For the sailing capital of the world.
Speaker 3: Is that right?
Speaker 5: Well, some people say Newport.
Speaker 3: But mar it's like the real you know, Hankly and
Speaker 3: all that.
Speaker 8: You know.
Speaker 3: Do you have the picnic boat?
Speaker 5: I mean that's like my dream boat. Picnic boat.
Speaker 3: Yeah. Tom Purcelly when he took his job at Pigeon,
Speaker 3: he demands. He didn't demand, he asked, and they give.
Speaker 3: He takes a picnic boat down the Hudson.
Speaker 5: River every morning, every day to the fisherman. Then so
Speaker 5: he can't have that.
Speaker 3: Okay, well yeah, but for the picnic boat, I could
Speaker 3: see you when right, Yeah, you.
Speaker 7: Know Augusto.
Speaker 5: Broadcast.
Speaker 3: Yes, yeah, Emily Rowland, Johnny Hancock road trip, thank you
Speaker 3: so much showing us now the former vice chairman of
Speaker 3: the Federal Reserve System with pimcoh and of course forever
Speaker 3: herder of cats at Columbia University within their Department of Economics.
Speaker 3: I've got it's going to be a four hour conversation
Speaker 3: and we're only doing it a short block this time
Speaker 3: with the Vice Chairman Clarita, but we'll make it a
Speaker 3: much longer conversation next time. I want you to reaffirm,
Speaker 3: recapitulate your Economist article of seven eight, nine months ago
Speaker 3: where you shook the industry by saying, forget about two
Speaker 3: point zero zero percent, it's going to be some number higher.
Speaker 3: Revisit that right now.
Speaker 9: Well, thank you, Tom, and always great to be on
Speaker 9: the show, especially in studio.
Speaker 7: Yeah.
Speaker 9: In that essay I highlighted that that I thought the
Speaker 9: pal FED and really global central banks we're really aiming
Speaker 9: to get inflation down to what I called two points something,
Speaker 9: and the idea was inflation was up to five six
Speaker 9: or seven at the peak, and the goal would be
Speaker 9: to get it in the zip code the inflation target,
Speaker 9: but in terms of dealing with the last mile, to
Speaker 9: let the economy sort of get to the last mile
Speaker 9: on its own without another leg up in rate hikes.
Speaker 9: And that's what I think we're seeing in the US
Speaker 9: and really around the world.
Speaker 3: Is the FED restrictive? Now? The polarity of market economists
Speaker 3: we speak to is there's a select group saying, you
Speaker 3: know what, they could go up further and then come down,
Speaker 3: and know those others saying stop it. They're way above
Speaker 3: the real rate, bring it down now. Which is it?
Speaker 9: They think they're restrictive. I think they're restrictive. I think
Speaker 9: there can be a debate on how restrictive the Fed's thinking,
Speaker 9: which I think makes sense, Tom, is that the longer
Speaker 9: they keep rates here, and importantly, the longer they signal
Speaker 9: they're going to keep rates here, they will become more restrictive.
Speaker 9: And so yes, I'm certainly in the camp that they've
Speaker 9: done enough and the real question is how long do
Speaker 9: they have to keep rates at this level?
Speaker 6: Richual, Tom and I will speak to people both in
Speaker 6: academia and in practice that says the FET should be
Speaker 6: cutting now. If you look at the real time data,
Speaker 6: inflation is maybe not whipped, but we're pretty darn close.
Speaker 6: We should be cutting rates now. How do you think
Speaker 6: about that?
Speaker 9: If I were still in the building, I would not
Speaker 9: be in the camp to be cutting now. It certainly
Speaker 9: looked like that was feasible coming into the year, but
Speaker 9: you know, since the beginning of the year, the inflation
Speaker 9: numbers have been going in the wrong direction. And also
Speaker 9: I think that especially, I think what's relevant here is
Speaker 9: an element of risk management. So I think there is
Speaker 9: path dependence. The fact that the last three years inflation
Speaker 9: has been well above target. I think it makes it
Speaker 9: a harder call to cut preemptively. So I do think,
Speaker 9: you know, sometimes central banks say they're data dependent, and
Speaker 9: they're not. I do think the Paler FED now is
Speaker 9: data dependent, and I think they're ready to cut if
Speaker 9: the inflation data starts to proceed as they expect.
Speaker 6: How do you think this FED is looking at the
Speaker 6: labor market? I mean, Tom and I we kind of
Speaker 6: throughout this term it feels like we're at full employment.
Speaker 6: Everybody wants a jomp kind of has job. Wages are
Speaker 6: going on at a pretty reasonable pace. How do you
Speaker 6: think the FED looks at the labor market today.
Speaker 9: I think they see a labor market that is robust
Speaker 9: by a variety of measures, not just the unemployment rate,
Speaker 9: but other indications, and that's a good thing. Indeed, I
Speaker 9: think one of the first speeches I gave is Vice chairs,
Speaker 9: I made the point, you know, the FED is not
Speaker 9: targeting wage inflation. It actually likes it when folks get
Speaker 9: a nice raise, but raises have to be consistent with
Speaker 9: the inflation target. And you know, we've gotten some good
Speaker 9: news on productivity in the last year. Productivity growth is
Speaker 9: now around two percent, and two percent productivity growth with
Speaker 9: four percent wage increases have sustained gets some pretty close
Speaker 9: to where they want to be. So I don't think
Speaker 9: there's a lot of adjustment required in the labor market.
Speaker 3: From here. You're joining us right now, Richard Clarida from
Speaker 3: a vice chairman of the FED, and of course with
Speaker 3: Columbia University, you're a certain kind of monetary economist. Of
Speaker 3: course with DSG, with DSGE, with GLLY, and I think
Speaker 3: of Megnum decigh Over at the London School of Economics
Speaker 3: coming from a totally different world. Megnan got Lord Desai
Speaker 3: got so upset about our fiction of equilibrium that he
Speaker 3: wrote a book about it two thousand and eight, two
Speaker 3: thousand and nine. In d SGE, there's a respect for
Speaker 3: vulrus in some form of normal equilibrium. How can we
Speaker 3: measure equilibrium now if we don't have a clue what
Speaker 3: productivity is doing? I just don't buy it.
Speaker 9: Well, I think we measure it with pretty big error, Tom,
Speaker 9: And you're absolutely right that not just productivity, but a
Speaker 9: lot of inputs into theoretical DSGE models are star term premium, equity,
Speaker 9: premium are all unobserved and measured with air. So I
Speaker 9: always thought, and I've said this on your show, and
Speaker 9: I've said this in the halls of the FED. You know,
Speaker 9: models are a place to start, but not to end
Speaker 9: the conversation. And in particular, you know folks would criticize
Speaker 9: say DSGE that there are three equation models. Well, I
Speaker 9: think every economy needs to have at least three equations,
Speaker 9: but they're a lot more so, Tom. It's a starting point,
Speaker 9: but it's not a destination to get to the d the.
Speaker 3: Two hundred and fifty PhDs, whatever it is. Fat they've
Speaker 3: all studied Clarida Gally Girtler and the rest of it.
Speaker 3: I get it. They've studied this stuff. Yeah, isn't germane
Speaker 3: right now? Our listeners say, you've got to be kidding me.
Speaker 3: After the shock of a pandemic, Yeah, a triple stimulus?
Speaker 3: Throw the equations out. Does Chairman Paul have equations now
Speaker 3: that are effective? Are that have some form of use?
Speaker 9: My sense, obviously from public comments of not only the
Speaker 9: chair but the committee, is that they've understood Tom for
Speaker 9: some time that the shock was sufficiently unusual and substantial
Speaker 9: that they need they can, and they are relying less
Speaker 9: on models and more on the way the data evolves.
Speaker 9: You know, Tom, on one hand, you know, the models
Speaker 9: were telling them that to get inflation down from five
Speaker 9: and a half to two points something, they need to
Speaker 9: have a big increase in the unemployment rate. And both
Speaker 9: Governor Waller, Sharp Pell and others said, look, the economy
Speaker 9: may be different this time. We don't have to assume
Speaker 9: a big cratering in the labor market. And that was
Speaker 9: actually a positive device.
Speaker 3: I can't say enough, Paul, how I agree with this?
Speaker 3: And then this is Paul Powell's been hit like a pinata.
Speaker 3: Powell led saying do we really trust these equations? And
Speaker 3: Clarida who invented the equations in Colombia, you know, Stiglitz,
Speaker 3: they got their equations. Some of them are real simple
Speaker 3: like Stiglitz Engrossmen and others like Clara Edg's Greek to me.
Speaker 3: But the answer is do they matter right now? And
Speaker 3: Powell's let.
Speaker 6: On this, I know, and Tom, one of the key
Speaker 6: issues for a lot of folks is the consumer here.
Speaker 6: I mean, you know, there's a tale of two cities,
Speaker 6: if not more out there with the US consumer.
Speaker 7: A lot of folks are really struggling.
Speaker 6: Particularly they don't own assets, whether it's real estate or
Speaker 6: you know, stocks or bonds and things like that. And
Speaker 6: how does the FED think about the consumer here? How
Speaker 6: did they gain how the consumer's dove? They look at
Speaker 6: the earnings from Walmart? I mean, what do they do well?
Speaker 9: The FED staff has devotes a lot of resources to
Speaker 9: the consumer, not only at the aggregate level what is
Speaker 9: total consumption, but also increasingly during the time I was there,
Speaker 9: focusing on the on the distribution in both income and
Speaker 9: consumption distribution across the population. And there are a lot
Speaker 9: of things that that can you can monitor, in particular,
Speaker 9: how many households are laid in their car payments or
Speaker 9: credit card payments, and so certainly, certainly the FED spends
Speaker 9: a lot of time on the bottom up analysis of
Speaker 9: the consumer.
Speaker 6: So again, we came into the year, Richard, I mean
Speaker 6: the market was discounting six rate cuts. Now we're down
Speaker 6: the lesson to I mean, the market has no idea
Speaker 6: what's going on out there? Is the Fed? From your perspective,
Speaker 6: are they happy to say, Hey, we've done a lot
Speaker 6: of work here, We've raised rates, we had a major
Speaker 6: impact on this economy. Let's just wait and see how
Speaker 6: our work plays out. Is that kind of where we are?
Speaker 7: Do you think that's exactly where they are?
Speaker 9: In fact, that the chair got that quietest at the
Speaker 9: press conference, and I'm paraphrasing that his answer was along
Speaker 9: the lines of, we judge that policy is restrictive, and
Speaker 9: we judge that if we keep it here long enough,
Speaker 9: it will be sufficiently restrictive.
Speaker 7: So that's definitely their mindset.
Speaker 9: Their data dependent in terms of when the cut and
Speaker 9: how many cuts are going to happen, but they certainly
Speaker 9: judge that policy is restrictive here and they just have
Speaker 9: to keep it here.
Speaker 3: Well, one of the great moments now in economics, Professor
Speaker 3: Clarita is your colleague and crime at Columbia, Joseph Stiglitz,
Speaker 3: Nobel Prizer. He's out with a wonderful new book, very
Speaker 3: thought provoking, should be read by conservatives, The Road to Freedom,
Speaker 3: Economics and the Good Society. You two are both victims
Speaker 3: of the Midwest. One of the great great advantages here
Speaker 3: is Clarita and Stiglitz are like, what, everybody, calm down,
Speaker 3: There's a whole other country out there. Yeah, tell me
Speaker 3: about policing. As Dean of Colombia, Joe Stiglitz, I can't
Speaker 3: fathom that is your day job. What was it like
Speaker 3: telling Joe Stiglitz you will teach this course?
Speaker 9: Well, no, Joe is a treasure and I'm actually proud
Speaker 9: of the fact that when I was department chair back
Speaker 9: in two thousand and one, I recruited Joe to Columbia.
Speaker 9: It was one of my big, big accomplishments. I'm an
Speaker 9: enormous fan of his research. He's an incredible colleague, incredibly creative,
Speaker 9: and you know, I just wish we had fifty more
Speaker 9: Joe Stiglitz. Whether without the Nobel problem.
Speaker 3: Why should conservatives read Stiglitz The Road to Freedom.
Speaker 9: Well, I'm reading it now. I listened to a podcast
Speaker 9: the other day. Look it's It gives I think, an
Speaker 9: informed and nuanced assessment of the power that economics can
Speaker 9: have about thinking about the world if you're willing to
Speaker 9: step away from the oversimplifying assumptions. And much of Joe's
Speaker 9: career has been driven by a curiosity about the world
Speaker 9: and providing a structure to think about it.
Speaker 6: How do you think about this US economy? A lot
Speaker 6: of we hear recently about the exceptionalism of the US
Speaker 6: economy vis a vis Europe. Let's think Germany or Asia,
Speaker 6: Let's think China. Is this something as unusual, this kind
Speaker 6: of decoupling, if you will, in terms of performance.
Speaker 9: You know that term means different things to different people.
Speaker 9: What is clear, I think is through the rear view
Speaker 9: mirror last year many predictions of a recession. Not only
Speaker 9: did a recession not happen, but growth was a point
Speaker 9: above a trend, a very hot labor market. I think
Speaker 9: part of the exceptionalism theme relates to excitement about AI.
Speaker 7: AI is a big deal.
Speaker 9: It's not clear if it'll be a big deal in
Speaker 9: the next six months or six years, but it is
Speaker 9: a big deal, and obviously US companies in US innovation
Speaker 9: are poised to benefit from that. But there's another dimension
Speaker 9: I would argue in which the US is exceptional, exceptional
Speaker 9: but in a poor direction, which is that we have
Speaker 9: an exceptionally irresponsible fiscal policy. And if you look at
Speaker 9: the CBO numbers, they are they are frightening, essentially deficits
Speaker 9: of five six seven percent of GDP as far as
Speaker 9: the I can see, so.
Speaker 7: Exceptional in multiple directions. I would say.
Speaker 3: One final question, Yeah, we have a presidential candidate, a
Speaker 3: former president who basically wants to take the independence of
Speaker 3: the FED away from your reading of our political economy.
Speaker 3: Can an individual Can a single president remove FED independence?
Speaker 9: Certainly not, I think I think the legal standing of
Speaker 9: that issue is clear and decided, and I would coup
Speaker 9: points one. Jerome Powell will serve out his term, which
Speaker 9: goes through May of twenty six. Secondly, there are no
Speaker 9: vacancies on the federal reserve right now, so for the
Speaker 9: foreseeable future, there's there's no nothing for a future president
Speaker 9: to do on that account.
Speaker 3: This is this has been fun.
Speaker 6: Okay, yeah, you know quality c Yeah, yeah, gentlemanly see
Speaker 6: I'll take that.
Speaker 3: Richard Claridath, thank you so much of Columbia University and
Speaker 3: of course the FED and with Pimco as well joining
Speaker 3: us right now Mandy Singh to straighten out fifteen iPads?
Speaker 3: Was this a plus day for Apple yesterday? I sort
Speaker 3: of get this Nascon feel even x Ai chat. This
Speaker 3: is going pretty well for Tim Cook, right or wrong?
Speaker 8: Well, the China numbers I think that came out were
Speaker 8: a positive. Everyone was really thinking, oh, for worst case scenario,
Speaker 8: so that obviously is not the case. And in terms
Speaker 8: of their iPad launch, Look, I'm a software guy. I
Speaker 8: get excited when I see new apps that leverage.
Speaker 3: Come on, you're so excited about three nanometers for chat?
Speaker 3: I am. I mean, it's what you and I talk about,
Speaker 3: We speak out on that.
Speaker 8: Google has already shown that as well as they have
Speaker 8: incorporated a large ANGLID model that takes advantage of that
Speaker 8: three nanometer chip. Apple didn't do that, So that's the
Speaker 8: gap they got to plug in their developer conference.
Speaker 3: Everyone knows, you know, the guy that tells me what
Speaker 3: to do, Mike Bloomberg. He's gonna get the new iPad.
Speaker 3: He's the best one, so will John Tucker because Mike
Speaker 3: gets one. So John Tucker is gonna have the fanciest
Speaker 3: iPad out there, and it's going to say, let's do AI.
Speaker 3: What is John Tucker going to do on his fancy
Speaker 3: new iPad with AI?
Speaker 8: The first thing he will do is to engage with Siri,
Speaker 8: the one product that Apple has done something.
Speaker 7: He doesn't know what that is.
Speaker 8: So look, I think that's the biggest use case for AI.
Speaker 8: If this thing is real and you can, you know,
Speaker 8: engage with it in a productive way, it has to
Speaker 8: manifest in a voice assistant.
Speaker 3: Let's be clear, Tucker doesn't engage with his next door neighbors.
Speaker 7: How much less Siri?
Speaker 6: So all right, man, deep, But I did not hear
Speaker 6: yesterday with the iPad was really anything AI. I'm banking
Speaker 6: on this June developer conference and I need to see
Speaker 6: something that says Apple is in the AI game.
Speaker 5: Am I going to get that in June?
Speaker 6: Do you think?
Speaker 7: I think so?
Speaker 8: And the pressure is on them to incorporate it in
Speaker 8: the next version of their operating system. Google has already
Speaker 8: done that in terms of integrating their smallest LM with
Speaker 8: their Android operating system. That's what developers want because then
Speaker 8: you can build new functionality on top of it, roll
Speaker 8: it out in apps, but if it's not there in
Speaker 8: the development kit that Apple has with their operating system,
Speaker 8: it's so hard.
Speaker 3: Okay, So to Paul's perfect question about what happens in junior,
Speaker 3: the bottom line is, yesterday they brought out Logical leven,
Speaker 3: the music software, and it has three new things that
Speaker 3: are what I'm going to call ai ish. I still
Speaker 3: don't understand, you know how many iPhones are in my
Speaker 3: family seven with that bill, I don't understand what it's
Speaker 3: gonna do to various and sundry children's iPhone. Is it
Speaker 3: gonna have them spend less at the department store? Well
Speaker 3: it could.
Speaker 8: I mean, look, the use cases of this are pervasive.
Speaker 8: That's what we are learning in terms of the companies
Speaker 8: trying to pilot new applications. How it's going to drive
Speaker 8: that seven. You know, people upgrade in your family. It's
Speaker 8: gonna be a function of can I run this operating
Speaker 8: system just on that latest iPhone or iPad, or can
Speaker 8: I run it on that all iPhone right now? All
Speaker 8: the operating system upgrades that Apple rolls out, I can
Speaker 8: run it on my iPhone eleven or twelve. Why do
Speaker 8: I need to go to iPhone fifteen or sixteen because.
Speaker 3: You come over for dinner?
Speaker 6: Explain that to the troops?
Speaker 3: All right, I need it.
Speaker 6: When I'm talking Apple, if I'm a shareholder or prospective shareholder,
Speaker 6: I have to have a call on China. I don't
Speaker 6: have a call on China. I don't think this is
Speaker 6: a good story for Apple. It's twenty percent of their revenue.
Speaker 6: It's a big part to their supply chain.
Speaker 5: I don't have a call there.
Speaker 6: What's what do you think the call is on China
Speaker 6: for Apple?
Speaker 8: I mean, there's no doubt it will be, you know,
Speaker 8: a decelerating business to the extent that right now it's
Speaker 8: twenty percent, it's going to be fifteen percent a year
Speaker 8: from now or two years from now. No it I
Speaker 8: mean think about it. Five percent of a four hundred
Speaker 8: billion dollar revenue base. That's a pretty sizable number. And
Speaker 8: where do you make up. Even if Apple is gaining
Speaker 8: share in India or in other markets, it can make
Speaker 8: up for that five percent. So we're talking about big
Speaker 8: chunk of revenue leaving just because you know you don't
Speaker 8: have that market anymore.
Speaker 6: So what do the bulls say about that? I mean,
Speaker 6: what's we had Dan ives in here, what would you
Speaker 6: say about I'm going to love that's twenty million revenue,
Speaker 6: twenty billion in revenue. That's just going poof.
Speaker 8: Well, so the bulls would argue, you know, it's going
Speaker 8: to happen at a much lower pace and Apple.
Speaker 3: Will continue to launch, you know.
Speaker 8: New products where they will have higher sp growth is
Speaker 8: still the bullcase for Apple.
Speaker 3: We got to go on this breaking news and we're
Speaker 3: thrilled to have men deep sing with this expert on
Speaker 3: this da da da D. Intel misses for the four
Speaker 3: thousandth time. Intel sees second quarter revenue below midpoint of
Speaker 3: blah blah blah, still sees fiscal year revenue to grow
Speaker 3: year over year. Is there a new Intel or is
Speaker 3: it the same train wreck you and I have covered
Speaker 3: for a decade.
Speaker 8: I mean, we're talking about a company that is going
Speaker 8: through a transformation, and we know transformations are tough when
Speaker 8: it comes to technology.
Speaker 3: Soci Republican Party, Come on, when do they need a
Speaker 3: new CEO to fix this thing next?
Speaker 8: Now, I think he's pulling all strings in terms of
Speaker 8: trying to revive the company through different aspects foundry chip making.
Speaker 8: It's just when you are behind in the chip business,
Speaker 8: it's very hard to catch up. And that's what I
Speaker 8: really wrote on for the twenty five years they were
Speaker 8: at the pinnacle.
Speaker 3: Is Joe Biden helping or hurting in Intel by his
Speaker 3: semiconductor expansion?
Speaker 8: I mean, clearly the government is helping Intel here in
Speaker 8: every possible way in terms of the Chips Act, dispersements
Speaker 8: and just allowing them to, you know, do what they
Speaker 8: can in terms of catching up. Intel getting the ASML
Speaker 8: equipment that being the latest news. That's a huge deal
Speaker 8: because they missed on that.
Speaker 3: Que's yeah, we were out of time. Yeah, Chris Miller
Speaker 3: chip war. Okay, ASML's over the Netherlands. They got to
Speaker 3: sell to everybody. How does Intel use ASML stuff versus
Speaker 3: our Taiwan's Semiconductor uses ASML stuff. There's got to be
Speaker 3: a difference.
Speaker 8: I mean, ASML is coming up with a new and
Speaker 8: better machine every three months or every six months.
Speaker 3: Who do they give those machines to?
Speaker 8: Obviously they're going to sell it. If Intel gets a preference,
Speaker 8: that helps them narrow some of that lead that TSMC
Speaker 8: and other fab makers have. So clearly getting hold off
Speaker 8: that machine which is in hot demand.
Speaker 7: Clearly makes a difference.
Speaker 3: You impressed my questionnaire. I got it from John Tucker.
Speaker 6: Nice saying thank you so much.
Speaker 3: Mc moreroy joins us. Molroy joins us right now a
Speaker 3: senior fellow of the Middle East Institute and not an
Speaker 3: acquaintance with public service to the country, former Deputy Assistant
Speaker 3: Secretary of Defense for the Middle East at Defense and
Speaker 3: also his effort with the Marines over many a year. Nick,
Speaker 3: thank you so much for joining again. I believe the
Speaker 3: way they do it in the Marines is they say
Speaker 3: get out the map. I don't think enough Americans have
Speaker 3: gotten out the map of southern Gaza, three miles from
Speaker 3: Rafa up to a Mediterranean sea as a constraint in
Speaker 3: maybe nine miles south to the tip of Gaza into
Speaker 3: a desert in the middle of nowhere. If your world
Speaker 3: is there's the study of degrees of freedom? Where do
Speaker 3: those people move in Gaza?
Speaker 1: So it is very good to be with you guys.
Speaker 1: As usual, It's very difficult, there's no doubt about it.
Speaker 1: The population that we're talking about inside Rapa over a million,
Speaker 1: so about one point three million are largely there because
Speaker 1: they've relocated from other areas of Gaza. Including all the
Speaker 1: way up to Gaza City Communis and now I think
Speaker 1: where they're looking is a coastal area, predominantly because Hamas
Speaker 1: isn't in the coastal areas because you can't dig tunnels there.
Speaker 1: So they're trying to move this large population. I think
Speaker 1: around fifty thousand have already moved in the last two
Speaker 1: days to this area to get them out of the
Speaker 1: path of either a full scale or limited ground operation
Speaker 1: to basically address the last four battalions of Hamas terraces
Speaker 1: in that region.
Speaker 3: You mentioned a million people, take away fifty thousand. Let
Speaker 3: McK molroy do the math. But the answer is in
Speaker 3: the next coming days, how do you move that many people.
Speaker 3: I can't visualize it, make help me.
Speaker 1: So it will be difficult. I've seen some assessments that
Speaker 1: would take up to twelve days, but if you do
Speaker 1: your math, it doesn't seem to add up right now.
Speaker 1: But the other thing I'd point out is Israel doesn't
Speaker 1: have to set an arbitrary timeline. Their timeline could be
Speaker 1: if they elect to do their off offensive, and there's
Speaker 1: certainly some serious opposition to this, but if they're going
Speaker 1: to go ahead, they could base it off of when
Speaker 1: civilians are out of harm's way, because it does look
Speaker 1: like they are voluntarily moving, and some quite frankly, really quickly.
Speaker 1: So I hope that if they do go ahead, and
Speaker 1: that's obviously a choice that they're going to make, that
Speaker 1: they do allow all the civilians that they can get
Speaker 1: out to get out to a location where they can
Speaker 1: also receive humanitarian aid. It's obviously difficult to convince people
Speaker 1: to move to a place where there's no food, clean water,
Speaker 1: or the medicine they might need. So it is a
Speaker 1: very complicated situation point of your first question, but it
Speaker 1: needs to be done if this offensive is going to
Speaker 1: take place.
Speaker 6: Nick after the October seven attacks, the Israeli government said
Speaker 6: their strategy was to basically eradicate Hamas or seven plus
Speaker 6: months into this, is that even possible? I mean, we
Speaker 6: asked that question seven months ago, is that possible? Seven
Speaker 6: months into it now, is that even possible?
Speaker 3: So that is a good question.
Speaker 1: You can never really eradicate a philosophy which means people
Speaker 1: can join Hamas or whatever comes after it. I think
Speaker 1: they should have been more specific and certainly given the
Speaker 1: IDF more reasonable objectives, which is to the military destruction
Speaker 1: of Hamas, which means obviously taking out the military leadership,
Speaker 1: depleting basically their soldiers if you will, they're terrorists, but
Speaker 1: also just running the weapon systems that are so dangerous
Speaker 1: to Israel and these tunnels, which are a strategic problem
Speaker 1: that most militaries have not faced at this scale in
Speaker 1: this type of operation. But if they could degrade those significantly,
Speaker 1: then I would think that would be a reasonable objective
Speaker 1: for the IDF. Destruction of a philosophy, a terrorist organization.
Speaker 1: We've seen it with our efforts in twenty years. We
Speaker 1: have not done that, so that is not likely to
Speaker 1: have it.
Speaker 3: Make Peter Baker in the New York Times and among
Speaker 3: many many other headlines, including Bloomberg, the President of the
Speaker 3: United States puts arm shipment to Israel on hold. What
Speaker 3: does it actually mean?
Speaker 1: So if you look at the growing I think concerned,
Speaker 1: but not just the White House, but even in the Pentagon,
Speaker 1: about how the war was being prosecuted. A lot of
Speaker 1: it has to do with the use of use of
Speaker 1: large diameter bombs in urban areas. So two thousand pounds
Speaker 1: jade ams has a kill radius that is substantial. So
Speaker 1: even if you're targeting militants in one particular block, you
Speaker 1: could be taken out two or three blocks, and I
Speaker 1: think that has been some of the major concern Those
Speaker 1: are what the weapon systems I think that have been
Speaker 1: stopped from going to Israel right now because of this
Speaker 1: rough offens it. It may be in the future they
Speaker 1: condition it you can't use these weapons, but not in Gaza.
Speaker 1: I don't know if we're there yet. The quickest way
Speaker 1: to do that is simply stop those weapons from being
Speaker 1: shipped to Israel right now, right before they're off with all.
Speaker 6: Right, Mick, just strictly from a military perspective, how do
Speaker 6: you think this plays out? I mean, if your goal
Speaker 6: is to get every last Timas fighter, you can argue
Speaker 6: no end insight here. How do you think this plays
Speaker 6: out from a military perspective? Because he's really Defense fund
Speaker 6: they know what they're doing.
Speaker 3: They do absolutely true.
Speaker 1: But you're right, you're never going to get every Hamas
Speaker 1: fighter because every day there's new Hamas fighters, and as
Speaker 1: soon as you leave, they'll be new. So I think
Speaker 1: it is really to go after their capability to wage
Speaker 1: violence against Israel. So major weapon systems and every other
Speaker 1: weapon systems you can the leadership because leadership really matters.
Speaker 1: I mean, we can see that on October seven, unfortunately,
Speaker 1: and these tunnels, these tunnels do give them a capability
Speaker 1: that is unlike most terrorist organizations. So I think if
Speaker 1: you can degrade that to a point and then you
Speaker 1: have to come up with a plan that is attainable
Speaker 1: and sustainable when it comes to ceasefire, because everybody's talking
Speaker 1: about it now as this is what Israel needs to do.
Speaker 1: But the question is, as soon as they signed the agreement,
Speaker 1: how long is it going to take for Hamas to
Speaker 1: then violate that agree because their purpose in life is
Speaker 1: to attack Israel.
Speaker 3: MG, I gotta squeeze this in your effort. Is my
Speaker 3: star in the sky about children forced into soldiering in Africa?
Speaker 3: This is something you've really let on worldwide. Just quickly
Speaker 3: hear how big is this issue?
Speaker 1: Well, thank you for bringing up It is a big
Speaker 1: and growing issue. In the last few years, it's doubled
Speaker 1: with the amount of children being forced to fight in
Speaker 1: the Middle East. The issue you're talking about is a
Speaker 1: documentary that me and my partner Eric hollerpeople all Rich
Speaker 1: did on the Lord's Resistance Army. It's being made into
Speaker 1: a book. It is made into a book and it's
Speaker 1: kind of came out yesterday, so I really appreciate you
Speaker 1: bringing that up because a portion of the proceeds goes
Speaker 1: to our NGO in Child Soldiering, which really addresses issue
Speaker 1: not only to stop it, but to help rehabilitate those
Speaker 1: children that have been forced to fight, and that needs to
Speaker 1: stop immediately.
Speaker 3: Mick, Thank you. Mick mulroy with us there on Gaza
Speaker 3: and what we see in Rulfia. Mark Sullivan's All the
Speaker 3: Glimmering Stars is the book.
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