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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

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Speaker 1: with Jonathan Faroe and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best and economics, geopolitics, financing, investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts and always I'm Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. Right now,

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Speaker 1: and we're going to do this quickly because every second matters.

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Speaker 1: With Susan Collins, it's very simple. She is associated with

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Speaker 1: the University of Michigan, but far more her sterling academics

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Speaker 1: that we've seen from Susan Collins at Harvard and then

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Speaker 1: deep down the Charles River to Mit and of course,

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Speaker 1: as Michael mckeeg goes plunging across to near South Station

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Speaker 1: and the Federal Reserve Bank of Boston, Michael McKee was

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Speaker 1: Susan Collins. Thank you very much. Time. We have the

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Speaker 1: Boston Fed President here with us in Washington, and we'd

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Speaker 1: like to thank you for joining us today here at

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Speaker 1: Bloomberg and to our audience around the world on Bloomberg

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Speaker 1: Radio and television. Thank you for joining us. Let's start

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Speaker 1: with the numbers, because they just came out. Personal income

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Speaker 1: up three tenths, personal spending two tenths, and then the

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Speaker 1: PC indicator, which of course is the Fed's favorite. Three

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Speaker 1: tenths for the headline, three tenths for the core. What

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Speaker 1: does this tell you about the state of the economy

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Speaker 1: and where the FED is in its inflation fight? So

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Speaker 1: let me start by saying, just absolutely delighted to be

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Speaker 1: here with you. Look forward to our conversation, and of

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Speaker 1: course I haven't had a chance to dig deeply into

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Speaker 1: the numbers yet, and sometimes the you know, the details

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Speaker 1: actually are important in terms of understanding the story. But

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Speaker 1: starting with the PC inflation, that's about what was expected,

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Speaker 1: and so that is some positive news. At the same time,

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Speaker 1: let me say two things about that. Once, that the

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Speaker 1: monthly data really noisy. We've seen that, and so one

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Speaker 1: month of move in a kind of more helpful direction

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Speaker 1: is not something that really indicates a sustained change. And

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Speaker 1: the other thing I'll say is that if you recognizing

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Speaker 1: the high the elevated numbers we saw in December and January,

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Speaker 1: this a bit lower number that we expected just means

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Speaker 1: that the three month average is about what the twelve

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Speaker 1: month average is, and so that's not a lot of progress.

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Speaker 1: We still do have more work to do and more

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Speaker 1: to see to know that inflation is really on a

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Speaker 1: sustained downward path. Well, you're on record is saying your

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Speaker 1: favorite at least one more move by the Fed. Does

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Speaker 1: this sort of lock it in for May, that you

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Speaker 1: do it because inflation is still at a high level,

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Speaker 1: and you don't pause for a month to see how

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Speaker 1: things are going. Well. Actually, what I think I'm on

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Speaker 1: record as saying is that I'm highly data dependent, and

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Speaker 1: so my assessment at the last meeting just last week

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Speaker 1: with the summary of economic projections did suggest an additional

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Speaker 1: rate hike and then pausing and holding over the year.

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Speaker 1: But I need to assess all of the data that's

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Speaker 1: going to come in between now and when our next

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Speaker 1: meeting is in early May. And you know where I

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Speaker 1: am at the moment. The new data that I've seen

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Speaker 1: just in the past week has not materially changed how

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Speaker 1: I'm thinking about things. But I certainly don't make a

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Speaker 1: decision this far in advance about what I'm going to

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Speaker 1: think is the right thing to do. Well, the markets

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Speaker 1: have looked at all the data and they're pricing in

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Speaker 1: four rate cuts this year. Are traders crazy? What I

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Speaker 1: would say is obviously there's a range of views about

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Speaker 1: these things. I mean, look, inflation is just really too

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Speaker 1: high when we talk about price stability. To me, what

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Speaker 1: that means is a level of low stable inflation. When

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Speaker 1: I was thinking about inflation, well, everybody is thinking about inflation,

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Speaker 1: and that really does mean we have more work to do.

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Speaker 1: And what history has told us is that you need

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Speaker 1: to have conditions sufficiently tight and then really hold the

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Speaker 1: course in order to know that you have in a

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Speaker 1: sustainable way gotten inflation. Going back to what the target is, well,

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Speaker 1: spending was down during not down, but decelerated significantly during

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Speaker 1: the month of February according to this report. Do you

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Speaker 1: worry about going too far and tipping the country into recession?

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Speaker 1: That's the standard view of what the FED does. It

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Speaker 1: is absolutely a balance, and I think it's important to

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Speaker 1: recognize that there are uncertainties, there are risks, and in particular,

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Speaker 1: we do need to balance the risk that we don't

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Speaker 1: do enough, that we're not sustained, don't hold the course

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Speaker 1: and don't bring inflation down. And again, as I mentioned before,

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Speaker 1: inflation is really costly to businesses and households, and so

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Speaker 1: that's important. At the same time, you're absolut right. I

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Speaker 1: do monitor the data looking at the when we might

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Speaker 1: see the economy turning, and some of the slower data

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Speaker 1: I think is helpful in that context. That's what we

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Speaker 1: would help to hope to see at the same time

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Speaker 1: early days. Yet in terms of assessing whether we really

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Speaker 1: have gone as far as we need to go, well,

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Speaker 1: in terms of assessing, have you got any assessment of

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Speaker 1: what impact the recent banking issues will have on the economy.

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Speaker 1: There's a theory out there thanks are going to tighten

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Speaker 1: credit and do some of your work for you, and

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Speaker 1: that could also send us into recession. That is certainly

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Speaker 1: an important factor. There's absolutely a theory out there, and

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Speaker 1: we could see some of that. My expectation is that

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Speaker 1: we're likely to see at least some, but we'll have

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Speaker 1: to continue to really monitor the data and see what

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Speaker 1: happens in terms of how things evolve. But you knows.

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Speaker 1: As I've said, I had expected early in March that

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Speaker 1: I might think we would need to do more work

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Speaker 1: and the banking stresses and what I think is at

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Speaker 1: least a possible response of banks in terms of their

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Speaker 1: own liquidity needs has influenced that, and so it's certainly

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Speaker 1: one of the important things to factor. You know, one

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Speaker 1: of the things I do want to just emphasize is

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Speaker 1: I continue to see, given the resilience in our economy,

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Speaker 1: that there's a pathway that we can bring inflation down

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Speaker 1: without a significant downturn, and so monitoring holistically the range

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Speaker 1: of data and that balance that we just talked about

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Speaker 1: is a really important factor in that outlook. Do you

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Speaker 1: think the FED bears any responsibility for what happened with

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Speaker 1: the banks because they raise rates interest rates so fast

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Speaker 1: and so far. I think that there were a number

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Speaker 1: of mistakes and challenges that were made. I also think

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Speaker 1: it's really important that the review that Vice share Bar

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Speaker 1: is conducting that's underway be thorough unfettered, and that we

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Speaker 1: not kind of prejudge what lessons and findings from that

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Speaker 1: report are going to be, but we commit with a

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Speaker 1: bit of a sense of humility, that we will take

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Speaker 1: those findings really seriously and act on them to continue

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Speaker 1: to strengthen what I see as already a sound and

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Speaker 1: resilient banking system. Well, what are banks in your district

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Speaker 1: telling you about their situation. So of course we monitor

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Speaker 1: very closely and we are in close contact with the

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Speaker 1: banks throughout the first district, which is most of New England,

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Speaker 1: and what we're seeing is that they are very focused

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Speaker 1: on the their activities to really support the communities throughout

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Speaker 1: our district. The you know, as you know, small and

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Speaker 1: medium banks play a critical role in a vibrant economy,

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Speaker 1: and they also, you know, are particularly focused on what

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Speaker 1: some of the risks might be, especially in the aftermath

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Speaker 1: of some of the stresses that we've seen, and so

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Speaker 1: we very much work to support those activities and appreciate

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Speaker 1: the work that they're doing. You and your colleagues talk

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Speaker 1: a lot about the cumulative impact of your rate increases.

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Speaker 1: Is that hitting now? Has that hit? When do we

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Speaker 1: really see five percent fed funds rate have an impact? Yeah,

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Speaker 1: so that's a really important question. And the way that

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Speaker 1: I think about it is that there are absolutely lags.

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Speaker 1: There's some sectors, some parts of the economy that see

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Speaker 1: the increase in rates and they respond relatively quickly, and

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Speaker 1: I would put housing markets there. We certainly saw responses

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Speaker 1: in housing markets to tighter financial conditions relatively quickly, and

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Speaker 1: that's what we would expect at the same time, other markets,

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Speaker 1: such as labor markets often are impacted over time, and

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Speaker 1: it really is only in the second half of twenty

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Speaker 1: twenty two that our interest rates got to a broader

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Speaker 1: range that we're quite restrictive, and so my assessment is

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Speaker 1: that it will still be some time, but over the

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Speaker 1: coming quarters we really should see other sectors of the

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Speaker 1: economy respond to the tightening that is already kind of

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Speaker 1: factoring through the system. Well, I guess we'll check back

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Speaker 1: with you with the fall. One last question, Tom Kane,

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Speaker 1: Since I know the Red Sox lost yesterday and uron

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Speaker 1: record is saying that the season is over, let me

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Speaker 1: ask the Boston Fedbank president one loss? Is the season

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Speaker 1: over for the resolutely not? And we look forward to

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Speaker 1: our Red Sox and our other teams having a wonderful

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Speaker 1: season and many exciting games ahead. All right, Tom, Somebody

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Speaker 1: she absolutely nailed that. Michael Zelden is described by that

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Speaker 1: adjunct professor at American University Washington College of Law. Michael,

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Speaker 1: thank you so much for joining us. What was your

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Speaker 1: first day at Justice? Like ages ago? Is a Justice

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Speaker 1: department now? The same Justice department where you walked in

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Speaker 1: out of Binghamton in your legal practice years ago. I

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Speaker 1: believe it is. I believe that under Merrick Garland they

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Speaker 1: are committed to the rule of law and to following

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Speaker 1: the facts and the law, and to dispense justice even handedly.

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Speaker 1: So yes, I think they are. What will we see Tuesday?

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Speaker 1: If we have a presumed arrayment of X number of items?

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Speaker 1: Can you prejudge that or pre analyze that? Well, we

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Speaker 1: can guess that Trump is going to be charged with

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Speaker 1: a campaign violation, campaign law violation, and the business records violation.

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Speaker 1: The business records will probably be ten or twelve different

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Speaker 1: business entries that reflect payment to Michael Cohen as legal fees,

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Speaker 1: which were in fact repayment of the Stormy Daniels thirty

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Speaker 1: thousand dollars hush money payment. So we might see a

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Speaker 1: ten or twelve count entitement, but really it boils down

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Speaker 1: to one hush money payment by Cohen to Stormy Daniels,

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Speaker 1: and that a ten part or twelve part reimbursement of

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Speaker 1: Cohen for that. That is a business crimes offense in

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Speaker 1: New York and it is a misdemeanor. They can make

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Speaker 1: it a felony if they say that those payments were

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Speaker 1: made as part of a other crime, and that other

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Speaker 1: crime is a federal campaign elections crime, a theory not

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Speaker 1: previously tested in New York. So it's not a simple case,

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Speaker 1: but that I think will be the outline of what

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Speaker 1: we'll see on Tuesday, Michael. There are people who are watching,

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Speaker 1: those who are frustrated to be dragged back into wall

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Speaker 1: to all circus coverage of this question of you know,

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Speaker 1: hush money paid to people who may or may not

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Speaker 1: have had affairs. This is really one consequence of an

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Speaker 1: era that a lot of people want to perhaps move on,

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Speaker 1: move forward, and yet the erosion of the trust in

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Speaker 1: the judicial system continues. How much do prosecutors away this

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Speaker 1: type of social response when deciding whether to go forward.

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Speaker 1: It's part of the calculus, but it shouldn't be the

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Speaker 1: primary calculus. The primary aunt calculus has to be war

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Speaker 1: laws violated and is accountability required for that law violation?

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Speaker 1: And I think that in this case, though it's an

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Speaker 1: old case by current standards, it is a case that

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Speaker 1: I think the Manhattan disc Aturney's office felt accountability was

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Speaker 1: required and therefore they brought it. Now. Yes, it's true

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Speaker 1: that people would like to move on from this, but

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Speaker 1: people would like to move on from January sixth, and

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Speaker 1: there needs to be accountability there and people want to

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Speaker 1: be moving on from all sorts of things in the

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Speaker 1: Trump error, but we still need a reconciliation with what

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Speaker 1: occurred so that we can learn from it and move

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Speaker 1: forward as a country away from it. Given the fact

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Speaker 1: that you just talked about the nature of this particular crime,

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Speaker 1: do you think that there will be blowback The New

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Speaker 1: York prosecutor is going forward with us there already is.

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Speaker 1: I mean, he's already been labeled as a sorrows funded

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Speaker 1: liberal and a racist by the former president. So yes,

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Speaker 1: I think that part of the strategy in the court

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Speaker 1: of public opinion is going to be to demonize Bragg

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Speaker 1: and try to delegitimize the prosecution. Oh, Michael, and the

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Speaker 1: honest thing, folks, I remember exactly where I was standing

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Speaker 1: on the oj decision years ago, and you provided the

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Speaker 1: nation with legal coverage at that time, Michael Zelda and

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Speaker 1: Donald Trump was twenty seven, twenty eight years old in

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Speaker 1: nineteen seventy four, were Wilbe Mills, and you know it

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Speaker 1: was in the Jefferson title basin and the scandal and

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Speaker 1: or then and the fourteen other scandals you've followed. Is

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Speaker 1: the job change for federal prosecutors because of the cultural

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Speaker 1: acceptance of this or that vice along the way? Is

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Speaker 1: a job now of your world totally different than it

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Speaker 1: was in nineteen seventy four, Well, yes and no. So

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Speaker 1: when Wilbur Mills and Fanny Fox fall into the title basin,

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Speaker 1: I don't think people were talking then in me too terms.

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Speaker 1: I think that was thought of as well. That's just

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Speaker 1: the way the system works now in the aftermath of

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Speaker 1: the me too movement. I think that sort of behavior

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Speaker 1: is intolerable and that's good, and so I think, for example,

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Speaker 1: had Bill Clinton done what he did with Monica Lewinsky now,

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Speaker 1: he would have been removed from the office of president.

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Speaker 1: I think that we're in a better time now than

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Speaker 1: we were then with respect to this misogynistic behavior. Michael Zelden,

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Speaker 1: for our audience international, what should they look for on

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Speaker 1: Tuesday when we get this arrayment? How should we approach

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Speaker 1: the news frenzy that we're going to see. I really

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Speaker 1: think that a lot of that depends on how Donald

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Speaker 1: Trump wants to play this. That is to say, if

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Speaker 1: he wants to do what the Justice Department would like

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Speaker 1: to do, or the Department the Manhattan disc Attorney's Office

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Speaker 1: would like to do. He'll come in through a private

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Speaker 1: entrance in a car. He'll go up in the judge's elevator.

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Speaker 1: He'll go into the courtroom, he'll make his not guilty plea,

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Speaker 1: He'll be fingerprinted and mugshot. He'll go back down that

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Speaker 1: elevator and leave, and that will be the end of

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Speaker 1: the day, a one hour process. If he elects to

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Speaker 1: make a spectacle of it, wanting to be handcuffed or

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Speaker 1: go out in front of the court and talk about

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Speaker 1: how he's the most persecuted person in the history of America,

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Speaker 1: then you'll have a street scene that really won't be

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Speaker 1: controllable as easily. So hopefully he'll do the right thing

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Speaker 1: and just try this case in the court of law.

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Speaker 1: But you know, Donald Trump is Donald Trump, and he'll

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Speaker 1: do what he thinks is in his best interest, irrespective

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Speaker 1: of whether it's in the national or the city's best interest.

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Speaker 1: Michael Zolden, thank you for joining Bloomberg Surveillance this morning.

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Speaker 1: He is a former federal prosecutor years of public service

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Speaker 1: in our Department of Justice. Elon Musk meet Jim Bianco

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Speaker 1: Jim Bianco is what Twitter is all about, and he

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Speaker 1: is definitively led on Twitter in this banking crisis with

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Speaker 1: intelligence threads. He joins us, right now, have the flows stopped,

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Speaker 1: the deposit flows, the money market flows? Where are we

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Speaker 1: right now? It hasn't stopped, but it has slowed down

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Speaker 1: a little bit, but it is still If you go

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Speaker 1: back to prior to Marches, a huge number of money

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Speaker 1: is moving from the banks to higher yielding alternatives, whether

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Speaker 1: it's money market funds or it's treasury bills or ETFs

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Speaker 1: that are a very short term. The public has woken up.

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Speaker 1: They've found out that I'm getting zero at the bank,

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Speaker 1: I can get four and a half in something else.

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Speaker 1: If you have two or fifty thousand dollars that's in

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Speaker 1: the bank, that's like fifteen grand a year or fourteen

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Speaker 1: grand a year. And they're making that move. They have been,

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Speaker 1: and they're not stopping. Is it still destabilizing? There seems

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Speaker 1: to be a zeitgeist out there that well, that was harsh,

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Speaker 1: silicon veil and all that, But we're through that and

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Speaker 1: now there'll be a lesser instability. Do you buy it?

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Speaker 1: Yes and no? Yes. The initial response that is another

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Speaker 1: bank going to fail, Probably not at this point. Is

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Speaker 1: there gonna be another hemorrhage? Hopefully not? But is the

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Speaker 1: public going to slow down? Are they gonna say, I'm

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Speaker 1: fine with two basis points literally at my Chase account,

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Speaker 1: and now'll just leave my money there. No, they're not

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Speaker 1: going to do that either. So the flow I think

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Speaker 1: away from the low yielding bank deposits to high yielding

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Speaker 1: alternatives will continue. That will continue to press your banks

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Speaker 1: as they struggle to understand their deposit base. So let's

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Speaker 1: talk about those money market funds, which reached five point

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Speaker 1: two trillion dollars is the latest data from ICI that

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Speaker 1: came out on Wednesday. We have seen it increase at

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Speaker 1: an astronomical pace over the past two weeks, with one

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Speaker 1: hundred billion dollars alone. Over the past four weeks, more

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Speaker 1: than three hundred billion dollars of inflows, which is taking

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Speaker 1: us back to the pandemic era. Where do you expect

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Speaker 1: this to go? What are you looking for for when

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Speaker 1: this hits the breaking point at a time when you're

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Speaker 1: also starting potentially to see the ramifications of the rate

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Speaker 1: hikes and other capacities. I think once you see the

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Speaker 1: spread between deposit rates and market rates collapse and basically

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Speaker 1: offer the same deal as long as I said, as

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Speaker 1: long as you get one percent or less in the bank,

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Speaker 1: and you can get four more than four in a

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Speaker 1: money market fund, that is going to continue. Also keep

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Speaker 1: in mind, in the post financial crisis era, seventy five

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Speaker 1: percent of the money that is invested by a money

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Speaker 1: market fund is either in a T bill or FED

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Speaker 1: reverse repo. So in the old days, pre two thousand

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Speaker 1: and nine, you say, well, the money's going to money

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Speaker 1: market funds, they buy commercial paper, and they still fund

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Speaker 1: Corporate America and they still do that, but not nearly

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Speaker 1: to the degree that they used to. They're funding the

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Speaker 1: government and they're funding the FED now. So translate this

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Speaker 1: into six months from now, and what this means in

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Speaker 1: terms of access to credit either defaults or simply firings

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Speaker 1: and sort of straint a restraint with respect to business plans.

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Speaker 1: How much more do you see that than perhaps is

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Speaker 1: getting priced in. Well, I do worry about that. Collectively,

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Speaker 1: the regional banks are six point eight trillion in assets. Collectively,

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Speaker 1: they're larger than JP Morgan and Bank of America combined,

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Speaker 1: so collectively they matter. They fund eighty percent of commercial

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Speaker 1: real estate, fifty percent of personal loans, forty of commercial

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Speaker 1: industrial loans. If they've lost visibility on their deposit base

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Speaker 1: and they don't know what striving their depositors, and their

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Speaker 1: positors are leaving and going somewhere else, they're going to

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Speaker 1: pull back on their lending. A quick point when you

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Speaker 1: ask whe we talk about banks, I would like to

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Speaker 1: ask people what do you think a bank is? And

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Speaker 1: most people would say, it's a warehouse where I keep

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Speaker 1: my money and I get an interest rate. Okay, that

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Speaker 1: is a definition of a bank. But for regulators and

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Speaker 1: bankers and everybody else's it's a credit intermediation. It's a

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Speaker 1: way to get a loan, it's a way to extend

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Speaker 1: a business. And if the warehouse of money is going

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Speaker 1: somewhere else, that lending action is going to really change.

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Speaker 1: We're seeing in the price of bank stocks. Where are

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Speaker 1: we not seeing this priced in? Well? The thing about

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Speaker 1: bank stocks is there's two things about them. Is it

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Speaker 1: are they pricing in potential more defaults or to failure,

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Speaker 1: or what I think they're pricing in is a squeeze

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Speaker 1: of their margins because they're going to have to raise

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Speaker 1: deposit rates and their profitability is going to be under pressure.

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Speaker 1: That's why the bank stocks have not really recovered, because

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Speaker 1: there's a worry that in order to get past this

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Speaker 1: problem they have to start making less money. Let's bring

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Speaker 1: them back to the FED economic data here. In seven minutes,

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Speaker 1: Michael mckew will join us with a Jim beyond the

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Speaker 1: Fed here, and we had no landing. This landing dot

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Speaker 1: dot dot hair landing, whatever the landing is. What's the

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Speaker 1: efficacy of a pause right now? Or as I mentioned

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Speaker 1: earlier in the show, how about three pauses? Pause, pause, pause,

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Speaker 1: just to wait to see to get to July, to

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Speaker 1: see where we are. Is a pause a good thing

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Speaker 1: if if we continue to have a credit crisis or

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Speaker 1: credit problem. Yes, but the Fed is not thinking pause

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Speaker 1: right now. They're thinking about inflation. They're thinking about a

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Speaker 1: pre March eighth world and whether or not we are

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Speaker 1: going to continue to see you know, high inflation, persistent inflation,

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Speaker 1: a no landing, a strong economy. If that's what they believe,

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Speaker 1: they're going to continue to move forward with their rate hikes.

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Speaker 1: But if we start to see a slowdown in credit,

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Speaker 1: that should lead them to a pause. Cubs, white socks,

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Speaker 1: what do you think, what's the story in Chicago this year?

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Speaker 1: And now they're both one hundred percent right now one

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Speaker 1: and oh, and we're at the Cody Bellinger era in

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Speaker 1: the in the north side of town, and we're still

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Speaker 1: in the Tim Anderson era outside of town. Which way

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Speaker 1: are you, Tilton? I mean, who are you going to see?

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Speaker 1: This is a hugely important Midwest thing. It really is

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Speaker 1: at this point. I hate to say it, but I'm

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Speaker 1: kind of leaning towards the Cubs. I've always kind of

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Speaker 1: had a bias for the white side of what. The

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Speaker 1: Cubs are the more interesting team right now. So we've

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Speaker 1: got news we can use there. You see that South Side.

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Speaker 1: Let's go Jim beyond can think and Jim congratulations on

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Speaker 1: being definitive on Twitter. I mean, if Elon Musk needs

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Speaker 1: to know anything about the communicative thrust in the crisis

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Speaker 1: of Twitter, there's other people out there as well. But

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Speaker 1: Bianco's doing these threads. You can just feel all of

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Speaker 1: Twitter just stops. He goes, I've got another block. I

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Speaker 1: got to read it. It's a continuation of the amazing

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Speaker 1: notes and the amazing reports that he's put out for decades.

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Speaker 1: Joining us now and all timely as Matt Luzatti's chief

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Speaker 1: yours economist at Deutsche Bank, who had a shocking call

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Speaker 1: long ago and far away of economic slow down, but

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Speaker 1: was emphasizing it would be out there somewhere where so

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Speaker 1: many others we're looking for immediate economic slowdown. We could

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Speaker 1: recalibrate this morning with Matt Lozzetti. I guess we see

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Speaker 1: disinflation out there. Can you establish off this data disinflationary

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Speaker 1: vectors and goods and services? Yeah, I think we need

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Speaker 1: to put the disinflation into context. It's still a point

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Speaker 1: three percent core PC month on month print, still well

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Speaker 1: above the FED subjective. Four point six percent year on

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Speaker 1: year is well above the FEDS objective. We were expecting

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Speaker 1: this to be a bit softer than CPI, in part

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Speaker 1: because airfares were much weaker in the PC data. We'll

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Speaker 1: have to see, you know, what we get in the

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Speaker 1: core services X shelter, which has been Chairpal's main focus.

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Speaker 1: But I think what we'd see from this data is

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Speaker 1: a little bit softer than expected, but still well above

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Speaker 1: the FEDS objective. Still to Mike's point, I mean, this

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Speaker 1: is basically inflation, perhaps not as hot, but growth also slowing,

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Speaker 1: perhaps more than people had expected. At what point does

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Speaker 1: that story start to get priced in more In other words,

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Speaker 1: not exactly supportive of this robust we can make it

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Speaker 1: through anything kind of narrative. Yeah, we saw it yesterday

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Speaker 1: with the GDP revisions. Consumer spending revised down. Basically the

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Speaker 1: domestic economy didn't grow in Q four. We have an

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Speaker 1: alternative version. GDI was actually negative in Q four. So

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Speaker 1: I do think you have some evidence of slowing in

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Speaker 1: the economy. We have to be cognizant. Yet a lot

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Speaker 1: of strength in January, and so a lot of this

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Speaker 1: is a give back to that. I think it all

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Speaker 1: comes down to the labor market. You know, do we

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Speaker 1: eventually begin to see that to soften. Do we eventually

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Speaker 1: begin to see employment games slowing, unemployment atsurance roles picking up.

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Speaker 1: I think that's the key question from the FT's perspective.

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Speaker 1: A lot of people are wondering whether the Fed's going

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Speaker 1: to cut rates later this year the face of whatever

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Speaker 1: weakness right now materializes later as a greater weakness. How

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Speaker 1: is the response going to be at a time when

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Speaker 1: you do say that inflation is well above their targets,

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Speaker 1: they need to bring it down, but it is going

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Speaker 1: down and a lot of people think it will continue

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00:24:54,359 --> 00:24:57,000
Speaker 1: to do so as time crimes on. Yeah, I think

432
00:24:57,119 --> 00:24:59,240
Speaker 1: you know, inflation is obviously well above the rejective. The

433
00:24:59,240 --> 00:25:01,760
Speaker 1: way that Chapou has been talking about the labor markets,

434
00:25:01,800 --> 00:25:04,600
Speaker 1: it's either extremely tight or tight to one unhealthy degree,

435
00:25:04,640 --> 00:25:08,040
Speaker 1: and so there's no difference in the tension in their

436
00:25:08,040 --> 00:25:10,359
Speaker 1: demand data at this point. I think the real issue

437
00:25:10,440 --> 00:25:13,360
Speaker 1: comes when that tension arises. We think it begins to

438
00:25:13,560 --> 00:25:16,000
Speaker 1: arise this year as you see the unemployment rate begin

439
00:25:16,080 --> 00:25:18,679
Speaker 1: to increase at a time where inflation is still well

440
00:25:18,720 --> 00:25:20,760
Speaker 1: above their objectives. You know, their own forecast at the

441
00:25:20,840 --> 00:25:23,000
Speaker 1: end of this year have four point six percent on

442
00:25:23,000 --> 00:25:25,920
Speaker 1: the unemployment rate, about three point six percent on core

443
00:25:26,000 --> 00:25:29,280
Speaker 1: PC and them not cutting at this point. We expect

444
00:25:29,320 --> 00:25:31,399
Speaker 1: that the cut rates in January, but a lot of

445
00:25:31,440 --> 00:25:33,840
Speaker 1: it depends on how this credit chuck plays out. You know,

446
00:25:33,880 --> 00:25:36,600
Speaker 1: certainly it could mean that the recessions earlier, labor market

447
00:25:36,600 --> 00:25:39,160
Speaker 1: weekends earlier in the FED has to cut earlier. Susan

448
00:25:39,320 --> 00:25:42,359
Speaker 1: Collins will be with us in ten minutes with Michael McKee.

449
00:25:42,440 --> 00:25:46,720
Speaker 1: She's absolutely definitive academics, as are you from UCLA and

450
00:25:47,080 --> 00:25:51,280
Speaker 1: who has a Harvard mit heritage, and she's been at Michigan,

451
00:25:51,520 --> 00:25:56,439
Speaker 1: and Michigan has a cottage industry of studying inflation in

452
00:25:56,560 --> 00:25:59,840
Speaker 1: price change when they debate at the FED and whether

453
00:26:00,040 --> 00:26:03,320
Speaker 1: voting or non voting. When Susan Collins leaned forward and

454
00:26:03,359 --> 00:26:07,159
Speaker 1: talks about inflation, does she talk about the same inflation

455
00:26:07,200 --> 00:26:11,000
Speaker 1: that Peter Hooper talks about, or that Muhammad Alarian talks about,

456
00:26:11,359 --> 00:26:13,919
Speaker 1: or that Law Brainerd talks about. Does everybody on the

457
00:26:13,960 --> 00:26:15,880
Speaker 1: same page on what to look at? Yeah? I think

458
00:26:15,880 --> 00:26:18,760
Speaker 1: her speech yesterday was very clear. She broke down the

459
00:26:18,760 --> 00:26:21,640
Speaker 1: baskett of the three components that Cherpal has been emphasizing,

460
00:26:21,680 --> 00:26:24,680
Speaker 1: core goods shelter and core services at shelter. I thought

461
00:26:24,720 --> 00:26:26,959
Speaker 1: it was most interesting from our comments yesterday, she used

462
00:26:27,000 --> 00:26:28,720
Speaker 1: a language about rate hikes that was a bit different

463
00:26:28,720 --> 00:26:31,720
Speaker 1: than the statement. She said that additional tending will likely

464
00:26:31,800 --> 00:26:33,919
Speaker 1: be necessary, you know, not May, which is what the

465
00:26:33,960 --> 00:26:36,959
Speaker 1: statement indicated. I thought that was a firmer indication of

466
00:26:37,040 --> 00:26:39,520
Speaker 1: another rate hike, at least at the MAYFIMC meeting. That's

467
00:26:39,520 --> 00:26:41,399
Speaker 1: our bait based case at the moment. But I was

468
00:26:41,440 --> 00:26:44,879
Speaker 1: surprised about that. I opened the Quentin Pa game for

469
00:26:44,960 --> 00:26:48,040
Speaker 1: him yesterday with the slew rate of this rate rise.

470
00:26:48,080 --> 00:26:51,680
Speaker 1: It's just incredible how quick we got here, and in hindsight,

471
00:26:52,080 --> 00:26:55,480
Speaker 1: maybe too quick. What's the efficacy of a pause when

472
00:26:55,520 --> 00:26:58,600
Speaker 1: you aditt your banks sit around and say lift, cut

473
00:26:58,920 --> 00:27:02,040
Speaker 1: or pause? To me, a pause gives you optionality? Am

474
00:27:02,040 --> 00:27:05,000
Speaker 1: I wrong on that? No doubt it can. But I

475
00:27:05,040 --> 00:27:08,159
Speaker 1: think it's a multifaceted question. You know, if they pause,

476
00:27:08,400 --> 00:27:10,199
Speaker 1: what does the market do in response to that? You know,

477
00:27:10,200 --> 00:27:12,359
Speaker 1: we have a market that has been pricing race cuts

478
00:27:12,359 --> 00:27:14,879
Speaker 1: earlier than the FED has wanted. If they pause, what

479
00:27:14,960 --> 00:27:17,680
Speaker 1: happens with that? I think ray cuts come much sooner

480
00:27:17,720 --> 00:27:19,880
Speaker 1: and earlier. And I think that's a difficult Really. They

481
00:27:19,920 --> 00:27:22,920
Speaker 1: can't pause and say we're just pausing to see the data,

482
00:27:23,040 --> 00:27:24,800
Speaker 1: even if we think it's going up. I think it's

483
00:27:24,880 --> 00:27:27,120
Speaker 1: very difficult for them to pause and not pull forward

484
00:27:27,280 --> 00:27:30,760
Speaker 1: the markets. Pissy. I'm a bit distracted over here because

485
00:27:30,760 --> 00:27:33,440
Speaker 1: I'm trying to understand this market movement, and it basically

486
00:27:33,520 --> 00:27:37,000
Speaker 1: seems to say a soft landing looks more certain after

487
00:27:37,040 --> 00:27:40,040
Speaker 1: this data comes out. What's your take on that? I mean,

488
00:27:40,080 --> 00:27:42,560
Speaker 1: do you think that what we have seen from the data,

489
00:27:42,800 --> 00:27:46,440
Speaker 1: from the response mechanism from central bankers that we're heading

490
00:27:46,520 --> 00:27:49,520
Speaker 1: closer or further away from a soft landing. So I

491
00:27:49,560 --> 00:27:52,080
Speaker 1: think it all depends on how you're viewing this credit, Chuck.

492
00:27:52,920 --> 00:27:56,000
Speaker 1: We think it can be material, but to be quite honest,

493
00:27:56,040 --> 00:27:58,199
Speaker 1: at the moment, it's it's speculative because we don't have

494
00:27:58,320 --> 00:28:00,160
Speaker 1: data on how it's playing out. You know, we're we're

495
00:28:00,160 --> 00:28:03,240
Speaker 1: looking towards the FED Senior Loan Officer Survey in early May.

496
00:28:03,280 --> 00:28:05,600
Speaker 1: Everybody is. We're looking at the H eight data LA

497
00:28:05,960 --> 00:28:08,639
Speaker 1: later today to see what's happening with CNI loan cer loans.

498
00:28:08,880 --> 00:28:10,520
Speaker 1: What we saw that at the Fed's balance sheet data

499
00:28:10,600 --> 00:28:13,200
Speaker 1: yesterday was supportive. It's you know, things are not getting worse.

500
00:28:13,240 --> 00:28:16,880
Speaker 1: We saw an aggregate reduction in their lending facilities so far.

501
00:28:17,680 --> 00:28:19,439
Speaker 1: But we do think that credit conditions are going to

502
00:28:19,440 --> 00:28:22,160
Speaker 1: tighten the way that we've tried to quantify it suggested

503
00:28:22,160 --> 00:28:24,040
Speaker 1: could be anywhere from half a percent on growth to

504
00:28:24,320 --> 00:28:26,760
Speaker 1: certainly more than one percent, but at this point it's

505
00:28:26,760 --> 00:28:29,399
Speaker 1: difficult to gauge if that does Titan, I think it

506
00:28:29,400 --> 00:28:32,800
Speaker 1: certainly means hard landing is more more likely than even

507
00:28:32,800 --> 00:28:36,560
Speaker 1: we were intense moments ago. Lisa Oil seventy five dollars

508
00:28:36,560 --> 00:28:39,760
Speaker 1: a barrel American oil from that sixty nine level up

509
00:28:39,800 --> 00:28:44,120
Speaker 1: to seventy five. Just an example of this correlated lift

510
00:28:44,160 --> 00:28:46,520
Speaker 1: away from all the gloom, this feeling we're gonna make

511
00:28:46,600 --> 00:28:48,680
Speaker 1: it through. I mean, oil has been its own animal,

512
00:28:48,720 --> 00:28:50,760
Speaker 1: with a lot of other specific stories, but there has

513
00:28:50,800 --> 00:28:53,000
Speaker 1: been this feeling we will get through, and if there

514
00:28:53,040 --> 00:28:54,720
Speaker 1: is some sort of downturn, it would be short and

515
00:28:54,760 --> 00:28:56,880
Speaker 1: shallow as the theme. And now it's maybe we won't

516
00:28:56,880 --> 00:28:59,440
Speaker 1: get one, the no landing, and maybe we're back to that.

517
00:29:00,040 --> 00:29:03,560
Speaker 1: Do you still believe that if we prolong some sort

518
00:29:03,560 --> 00:29:08,840
Speaker 1: of recession it will be a worse recession? Not necessarily.

519
00:29:08,960 --> 00:29:10,560
Speaker 1: I think the way that we typically think about this

520
00:29:10,680 --> 00:29:13,200
Speaker 1: is imbalances can build up the longer that this goes on,

521
00:29:13,480 --> 00:29:16,760
Speaker 1: and therefore the recession can be deeper, more protracted as

522
00:29:16,760 --> 00:29:19,920
Speaker 1: you have to delever. You know, this time around, we

523
00:29:20,000 --> 00:29:23,240
Speaker 1: haven't seen the imbalances being built. You have household balance

524
00:29:23,280 --> 00:29:26,080
Speaker 1: sheets that are in very good shape. You have a

525
00:29:26,120 --> 00:29:28,400
Speaker 1: housing markets that is already going through the correction. You know,

526
00:29:28,400 --> 00:29:31,160
Speaker 1: we haven't seen overbuildings certainly take place there. So our

527
00:29:31,240 --> 00:29:33,280
Speaker 1: view is still that this is a modern recession. It

528
00:29:33,280 --> 00:29:35,520
Speaker 1: looks a lot like the early nineteen nineties. We've always

529
00:29:35,520 --> 00:29:36,960
Speaker 1: thought it happens in the second half of this year

530
00:29:36,960 --> 00:29:39,320
Speaker 1: and haven't really changed that view. I think it's consistent

531
00:29:39,360 --> 00:29:41,520
Speaker 1: with what we're seeing. I would not say that just

532
00:29:41,520 --> 00:29:43,320
Speaker 1: because we got a point three percent on core PC

533
00:29:43,960 --> 00:29:46,440
Speaker 1: that we've shifted to our soft landing type narrative here.

534
00:29:46,480 --> 00:29:48,120
Speaker 1: You know, inflation is still well too high for the

535
00:29:48,120 --> 00:29:50,160
Speaker 1: fence like equities lifting here as well, and the two

536
00:29:50,240 --> 00:29:52,480
Speaker 1: year yield comes in four point one zero. We're looking

537
00:29:52,520 --> 00:29:54,600
Speaker 1: to the two year, folks, just because of the banking crisis.

538
00:29:54,600 --> 00:29:57,320
Speaker 1: It's got some more information than three point five two

539
00:29:57,760 --> 00:30:00,560
Speaker 1: and the ten year yield. Let's review your home call.

540
00:30:00,720 --> 00:30:03,640
Speaker 1: You came out said recession. Everybody got all bent out

541
00:30:03,640 --> 00:30:06,320
Speaker 1: of shape. But what you really did and said recession

542
00:30:06,320 --> 00:30:09,840
Speaker 1: in late twenty twenty three, how do you nudge that out?

543
00:30:09,920 --> 00:30:13,959
Speaker 1: What economic data would would force you to move your

544
00:30:14,000 --> 00:30:18,800
Speaker 1: recession call that's been fabulous into twenty twenty four. Yeah,

545
00:30:18,880 --> 00:30:21,000
Speaker 1: I think it's again all about the labor market, job

546
00:30:21,040 --> 00:30:24,040
Speaker 1: and what are you seeing? And not only because it's

547
00:30:24,080 --> 00:30:26,360
Speaker 1: you know, if you if you see the unplumber rate rise,

548
00:30:26,400 --> 00:30:29,680
Speaker 1: it's always shows a recession is happening. But the labor

549
00:30:29,680 --> 00:30:31,840
Speaker 1: market tells us about the underlying strength and the consumer

550
00:30:31,840 --> 00:30:35,320
Speaker 1: and household, and so for producing strong wage gained strong

551
00:30:35,360 --> 00:30:38,240
Speaker 1: income gains. The idea that the consumer can remain resilient

552
00:30:38,280 --> 00:30:40,719
Speaker 1: in the recession further off is the key question. I mean,

553
00:30:40,760 --> 00:30:43,560
Speaker 1: it's a Lozetti statistic. I missed it yesterday because I

554
00:30:43,600 --> 00:30:48,040
Speaker 1: was doing the Quinnipiac thing claims one ninety one to

555
00:30:48,240 --> 00:30:56,200
Speaker 1: one ninety eight. We're gonna stop the show right now

556
00:30:56,440 --> 00:30:59,000
Speaker 1: and get some humility with Daniel Eyes. He's seen your

557
00:30:59,080 --> 00:31:05,640
Speaker 1: equity analyst Wedbush now, who absolutely nailed have courage stay

558
00:31:05,680 --> 00:31:08,520
Speaker 1: with Apple. You've heard me tell this story before a

559
00:31:08,680 --> 00:31:11,400
Speaker 1: cillion reasons Apple was going to blow up. Ago, Lawrence

560
00:31:11,400 --> 00:31:14,160
Speaker 1: Harty and I stood on Fifth Avenue and discussed all

561
00:31:14,200 --> 00:31:16,960
Speaker 1: the reasons the Apple game was done. It's not there

562
00:31:17,000 --> 00:31:19,880
Speaker 1: were so many reasons to sell Apple ninety days ago.

563
00:31:20,240 --> 00:31:22,640
Speaker 1: What did you see ninety days ago that gave you

564
00:31:22,760 --> 00:31:26,600
Speaker 1: confidence to be long Apple? It's the install base of

565
00:31:26,680 --> 00:31:31,000
Speaker 1: Apple is still underappreciated by investors. And I think, ultimately

566
00:31:31,000 --> 00:31:33,640
Speaker 1: what we've seen with our checks and ages that demand,

567
00:31:33,880 --> 00:31:37,200
Speaker 1: despite many yelling fire in a crowded theater, has actually

568
00:31:37,200 --> 00:31:39,800
Speaker 1: held in more rock or Gibraltar, and is that's played

569
00:31:39,840 --> 00:31:42,560
Speaker 1: out us the key. Let's get out front of Mark

570
00:31:42,600 --> 00:31:45,720
Speaker 1: German here, who owns a high ground on Apple technology

571
00:31:45,760 --> 00:31:48,480
Speaker 1: gossip and all that it is part of your calculus

572
00:31:48,520 --> 00:31:52,080
Speaker 1: of Apple higher a new chip because to me it's

573
00:31:52,120 --> 00:31:54,760
Speaker 1: the chips at the bedrock of why they do well.

574
00:31:54,880 --> 00:31:56,920
Speaker 1: Are we to see new chips with this June meeting

575
00:31:57,000 --> 00:31:59,040
Speaker 1: or sware or whatever they're I think that I think

576
00:31:59,040 --> 00:32:01,239
Speaker 1: you have and you're gonna have chips as well as

577
00:32:01,280 --> 00:32:03,840
Speaker 1: the ARVR in terms of Apple glass. And I think

578
00:32:03,880 --> 00:32:06,960
Speaker 1: it just shows that even though many say innovations in

579
00:32:06,960 --> 00:32:10,040
Speaker 1: the rear view mirror, you have the biggest install base

580
00:32:10,480 --> 00:32:14,360
Speaker 1: in consumer and now you're just further monetizing with services.

581
00:32:14,400 --> 00:32:18,440
Speaker 1: And I think in these environments you can never underestimate

582
00:32:18,520 --> 00:32:22,360
Speaker 1: how bad Imagine team is or just how good the tactician,

583
00:32:22,440 --> 00:32:24,560
Speaker 1: the Hall of Famer Cook, I think, is again going

584
00:32:24,600 --> 00:32:27,280
Speaker 1: to navigate Apple, in our opinion, back to a three

585
00:32:27,280 --> 00:32:29,800
Speaker 1: trillion dollar market. When can we stop calling it big

586
00:32:29,840 --> 00:32:34,920
Speaker 1: tech and talk about communication companies and hardware companies and

587
00:32:35,120 --> 00:32:38,640
Speaker 1: cloud companies and something much more specific. The caters to

588
00:32:38,800 --> 00:32:41,640
Speaker 1: a very different cycle than perhaps each of the company

589
00:32:41,760 --> 00:32:44,400
Speaker 1: is combined well I think that's starting to happen. I mean,

590
00:32:44,440 --> 00:32:46,920
Speaker 1: if you look at like Cloud, you look at Microsoft

591
00:32:46,920 --> 00:32:49,920
Speaker 1: and what the Dell is doing in Redman, that demands

592
00:32:49,960 --> 00:32:52,880
Speaker 1: held up and that started to seep in what we've

593
00:32:52,920 --> 00:32:55,840
Speaker 1: seen with bending off at Salesforce and the broader group.

594
00:32:56,360 --> 00:32:59,600
Speaker 1: Cybersecurity I think is a pocket of strength. But I

595
00:32:59,640 --> 00:33:01,640
Speaker 1: think overall, at least you hit it on a great

596
00:33:01,920 --> 00:33:05,080
Speaker 1: in terms of big tech the cost cutting. Once that

597
00:33:05,240 --> 00:33:08,480
Speaker 1: started to happen, the bottom and tech, in my opinion,

598
00:33:08,560 --> 00:33:11,400
Speaker 1: was done. And that's why I believe there's still another

599
00:33:11,480 --> 00:33:14,040
Speaker 1: ten to fifteen percent upside and tech. But there's a

600
00:33:14,080 --> 00:33:15,840
Speaker 1: ten to fifteen percent upside at a time, and a

601
00:33:15,880 --> 00:33:18,920
Speaker 1: lot of people think that it's already gotten overblown. That said,

602
00:33:18,920 --> 00:33:21,560
Speaker 1: they're different kinds of job cuts. They're job cuts because

603
00:33:21,600 --> 00:33:24,280
Speaker 1: you have excess because you overhired, and because you have

604
00:33:24,360 --> 00:33:27,800
Speaker 1: a lot of perhaps excess weight. There's also the kind

605
00:33:27,840 --> 00:33:30,000
Speaker 1: of cuts that come because you see the potential for

606
00:33:30,040 --> 00:33:33,240
Speaker 1: growth diminishing at a time when possibly you cannot borrow

607
00:33:33,280 --> 00:33:35,440
Speaker 1: the same kind of way and the potentially is less demand.

608
00:33:35,520 --> 00:33:38,360
Speaker 1: And oh yeah, people already loaded up on devices and

609
00:33:38,440 --> 00:33:41,880
Speaker 1: on services during the pandemic. How do you distinguish between

610
00:33:41,920 --> 00:33:43,840
Speaker 1: the two. Yeah, and well, I think you see it

611
00:33:43,880 --> 00:33:46,760
Speaker 1: in terms of profitless tech and frafit tach oh ah,

612
00:33:46,800 --> 00:33:49,040
Speaker 1: that really hasn't come back. But I think what you're

613
00:33:49,040 --> 00:33:51,480
Speaker 1: seeing with a lot of bigger tech or i'll say

614
00:33:51,520 --> 00:33:54,960
Speaker 1: like high quality tech, you know they've cut costs they

615
00:33:54,960 --> 00:33:58,120
Speaker 1: were spending like nineteen eights rock stars that stopped, and

616
00:33:58,280 --> 00:34:01,240
Speaker 1: now numbers of stave wise and also on the other

617
00:34:01,280 --> 00:34:05,160
Speaker 1: side of this, now you are seeing strong demand that's

618
00:34:05,200 --> 00:34:08,560
Speaker 1: really starting to come back despite this macro and I

619
00:34:08,560 --> 00:34:10,880
Speaker 1: think that's what we've seen with Apple specifically in China

620
00:34:11,040 --> 00:34:12,960
Speaker 1: when you talk about and talk about China. We'll get

621
00:34:12,960 --> 00:34:15,920
Speaker 1: there in a second. But just going forward, are there

622
00:34:15,920 --> 00:34:18,440
Speaker 1: any tech names that you do not think will participate

623
00:34:18,520 --> 00:34:21,200
Speaker 1: in this game of fifteen to twenty percent as you predicted? Look,

624
00:34:21,280 --> 00:34:23,520
Speaker 1: I think when you look at I Share donors, and

625
00:34:23,560 --> 00:34:26,400
Speaker 1: when you look at the ciscos, some of the hardware players,

626
00:34:26,719 --> 00:34:30,240
Speaker 1: but what's really ultimately happening is the likes of Microsoft.

627
00:34:31,120 --> 00:34:34,200
Speaker 1: You're seeing some bigger attack players more and more like

628
00:34:34,239 --> 00:34:38,120
Speaker 1: a pal out though, and cybersecurity further expand. And I

629
00:34:38,160 --> 00:34:41,239
Speaker 1: think that's I think that the ultimate headline of one

630
00:34:41,320 --> 00:34:44,359
Speaker 1: Q earnings is going to be Wow, didn't fall off

631
00:34:44,400 --> 00:34:46,360
Speaker 1: a cliff, And I view that as more something I

632
00:34:46,440 --> 00:34:49,239
Speaker 1: embrace rather than fear in terms of one que and

633
00:34:49,320 --> 00:34:51,960
Speaker 1: right now, look the New York City cab drivers barrash on'

634
00:34:51,960 --> 00:34:55,319
Speaker 1: at tech and I continue to like that dynamic as

635
00:34:55,360 --> 00:34:58,759
Speaker 1: it plays out. Oh, it's time for the gossip ower

636
00:34:58,840 --> 00:35:01,319
Speaker 1: here at Bloomberg Surveillance and we can always do that

637
00:35:01,360 --> 00:35:06,440
Speaker 1: with a well dressed Dan ives a Disney Apple mating

638
00:35:08,000 --> 00:35:10,640
Speaker 1: that to me is just like an ib frenzy there.

639
00:35:10,760 --> 00:35:13,400
Speaker 1: I mean, the lunch is at the Sunset Tower Hotel,

640
00:35:13,800 --> 00:35:16,400
Speaker 1: Mister Cook's hanging out with mister Eiger, and they're at

641
00:35:16,440 --> 00:35:19,480
Speaker 1: the Sunset Tower. Ives is over a couple of tables,

642
00:35:19,560 --> 00:35:24,959
Speaker 1: the bankers are surrounded. Any ability for Apple to acquire Disney, look,

643
00:35:25,040 --> 00:35:27,960
Speaker 1: I think it's a possibility. I think that the difference

644
00:35:28,000 --> 00:35:31,440
Speaker 1: now for Apple is that this is the first time

645
00:35:31,520 --> 00:35:33,680
Speaker 1: I think brilliant that their history that they're going to

646
00:35:33,760 --> 00:35:36,080
Speaker 1: have to significantly look at m and A. You know,

647
00:35:36,120 --> 00:35:38,319
Speaker 1: I think when you look at Disney, I think if

648
00:35:38,360 --> 00:35:41,279
Speaker 1: TikTok's potentially on the table, depending on what happens with

649
00:35:41,320 --> 00:35:44,160
Speaker 1: Cepheus in terms of a forced deal, I think this

650
00:35:44,280 --> 00:35:47,719
Speaker 1: is the time that Cooper Tino, you know, that's really

651
00:35:47,760 --> 00:35:49,080
Speaker 1: never done. M and A is going to have to

652
00:35:49,120 --> 00:35:51,879
Speaker 1: look at this and look at Disney comes that something

653
00:35:51,960 --> 00:35:55,120
Speaker 1: that strategically is a marriage makes a ton of sense

654
00:35:55,160 --> 00:35:57,560
Speaker 1: and their creative My take on this, and I'm not

655
00:35:57,600 --> 00:35:59,959
Speaker 1: going to try to be Moffatt Nathanson here or Dane

656
00:36:00,200 --> 00:36:05,000
Speaker 1: lives is these mergers always fall apart when non creatives

657
00:36:05,080 --> 00:36:08,279
Speaker 1: take over the creative process. Do you have the confidence

658
00:36:08,320 --> 00:36:11,880
Speaker 1: that Apple management can be humble enough to let Disney

659
00:36:11,880 --> 00:36:15,040
Speaker 1: and the creatives like mister Iger be creative. Yeah, I

660
00:36:15,040 --> 00:36:19,120
Speaker 1: think that's something that I think uniquely they could balance

661
00:36:19,200 --> 00:36:21,880
Speaker 1: that because ultimately, if you look at that marriage, what

662
00:36:22,040 --> 00:36:24,799
Speaker 1: that could do Apple and Disney, that would really be

663
00:36:24,840 --> 00:36:27,120
Speaker 1: the golden goose. And I think something that Apple has

664
00:36:27,120 --> 00:36:30,800
Speaker 1: been missing is we know is content and that's something

665
00:36:30,840 --> 00:36:33,080
Speaker 1: in terms of streaming services that's gonna be a one

666
00:36:33,120 --> 00:36:36,359
Speaker 1: hundred billion dollar business terms of services, I think that's

667
00:36:36,400 --> 00:36:38,640
Speaker 1: going to be the next the stool German talks about

668
00:36:38,680 --> 00:36:42,200
Speaker 1: us all the time. Services. That is the really jewel

669
00:36:42,280 --> 00:36:45,240
Speaker 1: that I think has been the key rerating here in Apple.

670
00:36:45,400 --> 00:36:49,200
Speaker 1: You mentioned TikTok, you mentioned China and with respect to Apple,

671
00:36:49,440 --> 00:36:51,080
Speaker 1: and how much is this the fly in the ointment?

672
00:36:51,200 --> 00:36:54,280
Speaker 1: We hear that Tim Cook is heading to China potentially

673
00:36:54,320 --> 00:36:57,200
Speaker 1: in April, this being reported by Reuters this morning. Is

674
00:36:57,239 --> 00:36:59,520
Speaker 1: this going to become a liability for companies at a

675
00:36:59,560 --> 00:37:02,080
Speaker 1: time of increasing tensions between the US and China. Well,

676
00:37:02,160 --> 00:37:05,439
Speaker 1: Cook's part politician, part CEO, and I think what he's

677
00:37:05,440 --> 00:37:07,960
Speaker 1: been able to do is a tactician better than anyone

678
00:37:08,000 --> 00:37:12,000
Speaker 1: out there. Is tight rope because ultimately Apple it's basically

679
00:37:12,000 --> 00:37:15,400
Speaker 1: one hundred percent iPhone production, twenty percent demand, but that

680
00:37:15,719 --> 00:37:19,160
Speaker 1: ultimately continues to be part of their success. Slow news day,

681
00:37:19,200 --> 00:37:21,839
Speaker 1: you're one ninety on Apple up seventeen percent? What are

682
00:37:21,880 --> 00:37:25,000
Speaker 1: we get an ivesy and lift above two hundred dollars? Look,

683
00:37:25,040 --> 00:37:28,920
Speaker 1: I think right now, in terms of our check this

684
00:37:29,400 --> 00:37:31,799
Speaker 1: this is a stock that I believe is gonna you know,

685
00:37:31,920 --> 00:37:34,359
Speaker 1: have I believe back to the three trillion dollars mark

686
00:37:34,440 --> 00:37:37,759
Speaker 1: cap over the look, I think you start to look

687
00:37:37,800 --> 00:37:40,960
Speaker 1: at you know, ultimately you start to look now what

688
00:37:41,160 --> 00:37:44,120
Speaker 1: I believe fifteen twenty hour upside from here we start

689
00:37:44,160 --> 00:37:47,719
Speaker 1: to approach three trillion. I didn't get it out of him.

690
00:37:47,760 --> 00:37:50,640
Speaker 1: He's you know, he's got compliance on him, Dan ives,

691
00:37:50,680 --> 00:37:53,800
Speaker 1: thank you, that was wonderful. Thought that that was really interesting,

692
00:37:53,920 --> 00:37:56,799
Speaker 1: especially given that so many people are shrugging off the

693
00:37:56,840 --> 00:37:59,719
Speaker 1: story of tech pre eminence right now is simply people

694
00:38:00,080 --> 00:38:02,359
Speaker 1: sing in lower rates and that pulling the story right back,

695
00:38:02,400 --> 00:38:06,240
Speaker 1: and it seems like the efficiency story coming in, perhaps

696
00:38:06,400 --> 00:38:09,360
Speaker 1: in a more significant way. I'm so this is I

697
00:38:09,400 --> 00:38:13,279
Speaker 1: can't get it. Wait a minute, quantests, I'm surrounded by

698
00:38:13,400 --> 00:38:16,960
Speaker 1: Mets fans. I just figured, look at this, let's go.

699
00:38:17,400 --> 00:38:20,200
Speaker 1: It's a Mets than for lander looked pretty good there. Well,

700
00:38:20,239 --> 00:38:21,960
Speaker 1: here's easy. I think this is the year for the

701
00:38:22,000 --> 00:38:24,319
Speaker 1: match sides. Are you going? Are you going? You know,

702
00:38:24,360 --> 00:38:26,719
Speaker 1: like this weekend or soon with a horde. I'm gonna

703
00:38:26,800 --> 00:38:28,840
Speaker 1: go crawling to Ben and stay there for the whole weekend,

704
00:38:28,840 --> 00:38:30,440
Speaker 1: like I think everybody in the market is. Because I

705
00:38:30,440 --> 00:38:32,279
Speaker 1: think it's been an exhausting couple of weeks and I

706
00:38:32,320 --> 00:38:34,520
Speaker 1: think that I'm looking for, you know, just a dark,

707
00:38:34,880 --> 00:38:38,600
Speaker 1: quiet space. We call that the land of the bust

708
00:38:38,640 --> 00:38:43,839
Speaker 1: and red sicks go away. Thank you for what Bush.

709
00:38:43,880 --> 00:38:47,719
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and

710
00:38:47,880 --> 00:38:52,040
Speaker 1: anywhere else you get your podcasts. Listen live every weekday,

711
00:38:52,320 --> 00:38:55,800
Speaker 1: starting at seven am Eastern. I'm Bloomberg dot Com, the

712
00:38:55,920 --> 00:39:00,440
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business App. You

713
00:39:00,520 --> 00:39:04,560
Speaker 1: can watch us live on Bloomberg Television and always I'm

714
00:39:04,560 --> 00:39:08,520
Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keene, and

715
00:39:08,680 --> 00:39:10,239
Speaker 1: this is Bloomberg