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Speaker 1: If you enjoy the Bloomberg Surveillance podcast, check out our

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Speaker 1: of today's edition of Bloomberg Daybreak at the very end

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Speaker 1: of this podcast. This is the Bloomberg Surveillance Podcast. I'm

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Speaker 1: Tom Keene, along with Jonathan Ferroll and Lisa Abramowitz. Join

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Speaker 1: us each day for insight from the best and economics, geopolitics,

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Speaker 2: At what point does it either lean into banking crisis,

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Speaker 2: credit contraction, some sort of significant lag versus this feeling,

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Speaker 2: Perhaps we need to revisit the belief in that dreaded

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Speaker 2: six handle are potentially much more restrictive rates something to

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Speaker 2: worry about.

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Speaker 1: And if you want to worry, you can look at

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Speaker 1: a bull market effort. Right now, we're seeing many houses

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Speaker 1: just higher at the Morgan Stanley shop.

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Speaker 3: They are not.

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Speaker 1: Michael Wilson's CIO, chief US equity strategist at Morgan Stanley.

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Speaker 1: And one of your themes, Mike Wilson is there's a

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Speaker 1: complete misguess on the interstate game. As addressed by the

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Speaker 1: Fed today and followed by your Ellen Zettner Wayley, there

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Speaker 1: are black Rock says persistent inflation.

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Speaker 3: Is that a core reason for your caution in the

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Speaker 3: equity market, No, it's actually not.

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Speaker 4: Tom.

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Speaker 5: In fact, our views and inflation is going to come down,

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Speaker 5: and while that potentially is very good for bonds, it's

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Speaker 5: not going to be it for stocks because that's where

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Speaker 5: the earnings power has been coming from. Right This is

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Speaker 5: really our Boombus thesis. The reason we were so bullish

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Speaker 5: in twenty twenty and twenty twenty one is because we

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Speaker 5: expected inflation to drive a profits boom, and now when

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Speaker 5: inflation comes down, you're going to have a profits recession.

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Speaker 5: So that's really where we're differentiated from an equity standpoint.

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Speaker 5: You know, Ellen, as you know, he's looking for a

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Speaker 5: pause today too. She's not looking for you know, any

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Speaker 5: more hikes really the rest of this year, but a

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Speaker 5: very slow path in terms of cutting next year.

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Speaker 2: We look we already looking at going forward in terms

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Speaker 2: of client responses, how they push back against the parishness

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Speaker 2: that you've been expressing.

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Speaker 5: Yeah, look, I mean it's we're in a weird situation

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Speaker 5: now because I feel like on the fundamental side, our

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Speaker 5: earnings call has been spot on. So a year ago,

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Speaker 5: just to kind of remind listeners, you know, we were

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Speaker 5: calling for an earnings recession and we were somewhat dismissed,

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Speaker 5: but of course now we're in one. And the only

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Speaker 5: difference now is that we're just saying it's going to persist,

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Speaker 5: whereas I think most people the pushback is, no, the

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Speaker 5: earnings recession is over and we're going to see a

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Speaker 5: reacceleration and growth in the second half of the year,

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Speaker 5: and that's what the consensus is forecasting.

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Speaker 6: So that's what the pushback is.

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Speaker 2: So in other words, you're saying that you got it

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Speaker 2: right if you strip out some of the big tech names,

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Speaker 2: and that there was an earnings recession that played out

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Speaker 2: in lower valuations of some of these shares, and you're

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Speaker 2: saying it's going to continue. Not necessarily talking about the

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Speaker 2: headline level of the S and P as much as

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Speaker 2: these particular stocks fighting against the idea of a broadening

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Speaker 2: out of the AI rally.

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Speaker 7: Is that correct?

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Speaker 5: Well, actually, the technology stacks had the biggest earnings recession.

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Speaker 5: I mean, you know, you look at the communication services

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Speaker 5: and some of the technology stocks they had, they were

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Speaker 5: their earnings were down significantly in the fourth quarter. That's

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Speaker 5: why they sold off so sharply in the fourth quarter.

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Speaker 5: So they had an earning's recession last year. And the

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Speaker 5: presumption is is that's over and now that's going to reaccelerate.

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Speaker 5: And that's where we disagree. We think that including tech,

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Speaker 5: not just tech, but overall, the earnings recession is going

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Speaker 5: to persist into the second half of year. It's going

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Speaker 5: to get worse before it actually improved next year.

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Speaker 1: If we get a center economy or ed Heiman moving

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Speaker 1: down to three percent dare I say under three percent inflation?

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Speaker 1: David Rosenberg up in Toronto clearly in that camp as well.

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Speaker 1: I'm thinking of the partial differentials on the income statement

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Speaker 1: to get to the Wilson earnings call, to get the

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Speaker 1: thirty nine hundred or whatever on SPX, and to me,

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Speaker 1: it's all at the revenue line, and that is the

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Speaker 1: core of your call with your security analysts, that revenue

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Speaker 1: growth will disappoint.

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Speaker 6: That's exactly right.

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Speaker 5: So last year, the earnings recession I just referred to

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Speaker 5: was all a cost issue, right, These big tech companies

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Speaker 5: over invested thinking the pandemic boom was going to continue

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Speaker 5: at the same pace. Of course it did not, and

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Speaker 5: that was a problem for discretionary consumer discretionary as well

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Speaker 5: as some of the financial companies, et cetera. Companies that overinvested.

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Speaker 5: Now what we're going to see is the top line disappointment. Okay,

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Speaker 5: maybe it's not a recession, but like Ellen's forecast is

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Speaker 5: zero percent GDP growth. Effectively, that's going to feel like

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Speaker 5: a recession because you're pricing is going to evaporate and

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Speaker 5: we're seeing that now and good So there's this big

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Speaker 5: economy between goods inflation and services inflation. I mean, goods

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Speaker 5: inflation is back to the two percent level. In fact,

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Speaker 5: it's probably going to go deflationary for a lot of businesses.

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Speaker 5: That's your revenue growth disappointing.

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Speaker 1: How do you allocate your do you participate in the

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Speaker 1: market or is cash very.

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Speaker 3: Comfortable place to be both. So you know, and let's

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Speaker 3: see that's strategy.

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Speaker 5: Yeah, on one hand. On the other hand, right, so

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Speaker 5: I take my economist, but I mean, in all seriousness,

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Speaker 5: I mean cash offers you a great risk adjusted return.

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Speaker 5: We're overweight cash, Okay, it's nothing wrong with that. But

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Speaker 5: we still are fully invested in equities too. We're just

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Speaker 5: underweight our normal allocation and we've been that way for

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Speaker 5: the last eighteen twenty four months.

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Speaker 1: I think this is misunderstood, Lisa. I think people look

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Speaker 1: at will something go get out of the market, and

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Speaker 1: this is hugely important.

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Speaker 2: Yeah, every time it comes on, he says, I'm fully invested.

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Speaker 2: It's not a matter of just simply hiding under a mattress.

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Speaker 2: My question is what happens if there's a recession and

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Speaker 2: nobody cares. What happens if there's an earnings decline and

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Speaker 2: people shrug it off and say, well, look to the

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Speaker 2: future and there's going to be this incredible American exceptionalism

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Speaker 2: and where else are you going to put your money?

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Speaker 5: Well, this is our story for twenty four and twenty five, right.

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Speaker 5: This is why we're in a different difficult situation right now,

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Speaker 5: where we see the near term risk reward as lousy.

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Speaker 5: But if we look out twenty four to twenty five,

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Speaker 5: and this is what people are getting excited about, capital

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Speaker 5: expenditure boom for things like reshoring, green energy, traditional energy,

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Speaker 5: retrofitting buildings, etc. And now of course AI, so this

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Speaker 5: is exciting. The problem is is it's a cost first

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Speaker 5: and then it's a productivity benefit.

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Speaker 2: What people are looking past it. I mean, this is

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Speaker 2: sort of the frustration when people say that there's a

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Speaker 2: divergence between bond markets and stock markets. They say, well,

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Speaker 2: the bond market's looking at the now it says, look

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Speaker 2: very good, and stock markets are looking to twenty four

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Speaker 2: to twenty five. What's to make them look at now right?

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Speaker 2: What's the catalyst to bring them down at a time

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Speaker 2: when people can look past near term pain and see

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Speaker 2: what you're seeing?

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Speaker 5: Well, typically it's price. Okay, So we were very disciplined

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Speaker 5: on price, you know. You know, we always get kind

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Speaker 5: of categorized as a perma bear. But I remember, you know,

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Speaker 5: calling the low in October, we call the low in

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Speaker 5: March of twenty twenty because of price, you know, so

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Speaker 5: we're very disciplined. Most people are not disciplined because of

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Speaker 5: FOMO and that's just the nature of markets. Markets are

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Speaker 5: momentum driven. It feels better when they're going up. It

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Speaker 5: feels better to buy things when they're going up, and

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Speaker 5: that's where we are now. So the risk reward in

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Speaker 5: the short term is lousy. So I think it's going

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Speaker 5: to be price Lisa, which will change people's minds. Now,

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Speaker 5: we could be wrong, maybe we don't get a fatter

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Speaker 5: pitch that we're hoping for, but we're also not worried

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Speaker 5: it's going to run away from us, and we can

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Speaker 5: buy the stock market kind of right here, probably twelve

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Speaker 5: months from now.

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Speaker 3: What's the market bet right now?

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Speaker 1: Because I see a lot of indicators that say people

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Speaker 1: are comfortable with Mike Wilson's calls. They're really a fight

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Speaker 1: of this bull market and they're cautious. What is the

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Speaker 1: bet that Morgan Stanley sees by the investment in public

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Speaker 1: by the hedge funds, by long only by side institutions.

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Speaker 5: Well, I mean, I think our once again our view

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Speaker 5: is that we're we're I'm in.

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Speaker 6: A position of luxury.

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Speaker 5: I don't have to put capital to work every day

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Speaker 5: for MUNTHI performance. We have asset allocation, which is kind

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Speaker 5: of measured on a longer term basis. So I have

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Speaker 5: the luxury of time, right, So our asset owner clients

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Speaker 5: had that advantage, and that's what we try to take

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Speaker 5: advantage of. Folks who don't have the advantage of time

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Speaker 5: have to kind of participate at the worst possible moment,

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Speaker 5: and that, by the way, it also includes at the lows.

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Speaker 4: Right.

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Speaker 5: So the opportunity that was created in March of twenty

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Speaker 5: twenty is because people were being forced to divest and

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Speaker 5: we were happy to pick up those shares at cheap prices.

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Speaker 2: What do you think is the most overpriced aspect of

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Speaker 2: the S ANDP right now?

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Speaker 5: Well, I think this is an interesting question because most

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Speaker 5: people assume it's only ten stocks. That's actually not true.

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Speaker 5: The media in multiple for the S and P five

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Speaker 5: hundred today is the same as the market capvoid in multiple.

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Speaker 5: It's close to nineteen times eighteen and a half nineteen times,

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Speaker 5: so it's a very broad over evaluation. Now we say

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Speaker 5: the sectors that are cheap, okay, the only ones that

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Speaker 5: are pearing cheap now are energy and financials. The question there,

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Speaker 5: of course is what are the orangin going to do?

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Speaker 5: You know, because there are cyclical businesses well.

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Speaker 3: Focus on energy. There you got twenty seconds of energy.

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Speaker 3: There is that the place to.

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Speaker 5: Be well, I think energy at the stock level, there's

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Speaker 5: there's definitely opportunities and in financials too, right so like

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Speaker 5: the regional banking crisis created opportunity and individual financial services stocks.

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Speaker 5: And I think that's what we're trying to do now,

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Speaker 5: We're trying to find these one off opportunities as opposed

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Speaker 5: to worry about the stock market overall.

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Speaker 3: Mike Wilson, thank you so much.

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Speaker 1: With Morgan Stanley here, what they called thirty nine hundred

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Speaker 1: is where you are, not you want to make.

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Speaker 3: Some news here hundred year and yes, sir, we're still there. Okay,

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Speaker 3: I'm gonna let us know if we'll change in the

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Speaker 3: first car. That's Michae Wilson.

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Speaker 1: I'm Morgan Stanley here. Now we take a bigger, broader

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Speaker 1: picture with Bruce Kasman of Chiefs of Economists and a

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Speaker 1: head of Global economic research at JP Morgan and we

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Speaker 1: do this with Columbia heritage of in the modern day,

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Speaker 1: Jeffrey Sachs, Richard Clarita, and of course the foundational efforts

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Speaker 1: of Robert Mundel Doctor Casman. I want to cut to

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Speaker 1: the Chase here and talk of Jerome Powell, central Banker

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Speaker 1: to the world. Your focus is on continental Europe.

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Speaker 6: What is drama for Europe.

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Speaker 1: Today and the decision making of Jerome Powell and the FED.

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Speaker 8: So, as you've already mentioned, it looks like the FED

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Speaker 8: is going to pause. The ECB is also meeting this

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Speaker 8: week and is likely to tighten and also single that

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Speaker 8: they have more work to do. I think one of

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Speaker 8: the big issues as we look at transmission here is

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Speaker 8: about synchronization. There's obviously a lot of concern about a

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Speaker 8: US recession. We don't think the US is falling into

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Speaker 8: recession right now, but Europe is showing very strong divergence

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Speaker 8: in performance. The service sector is doing well, the manufacturing

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Speaker 8: sector is doing poorly. It has the same issues around

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Speaker 8: bank credit tightening is the US. How the European economy

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Speaker 8: plays out here is going to be a very important

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Speaker 8: factor in determining both the overall global picture and certainly

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Speaker 8: have some impact on the US as we go through

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Speaker 8: the rest of the year.

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Speaker 1: You and I Bruce have read Duley Garber, folkerts Landau

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Speaker 1: and all the different macroeconomics coming out of David fulkerts

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Speaker 1: Lando's work, and one of his great comments is there

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Speaker 1: will be fiscal stimulus in Europe that will come to

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Speaker 1: the rescue of Europe. It's a different fiscal calculation than

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Speaker 1: Jerome Powell has. How does that play into what Europe

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Speaker 1: will do off of this meeting today?

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Speaker 8: So, I mean, the simple point here is I think

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Speaker 8: there's more work to do for the ECB. Personally, I

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Speaker 8: think the FED will ultimately have more work to do here.

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Speaker 8: It's taking a pause, but I don't think it's going

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Speaker 8: to get inflation under control. And I think one of

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Speaker 8: the things that people who are looking for an immediate

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Speaker 8: recession are missing is that while Monte policy is tightened,

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Speaker 8: a lot of fiscal policies moving in the other direction.

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Speaker 8: That's there in Europe, the Recovery Fund, as well as

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Speaker 8: some of the emergency measures around last year's crisis as

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Speaker 8: a factor. In the US, look at what's happening on

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Speaker 8: defense spending, look at what's happening in government hiring, state

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Speaker 8: local spending is high. This is a very different picture

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Speaker 8: than we've seen over the last two cycles. Were early

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Speaker 8: in the cycle, fiscal policy in the and Western Europe.

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Speaker 2: Titan materially Bruce, this is really interesting the idea that

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Speaker 2: fiscal stimulus, on one hand, will force central bankers around

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Speaker 2: the world to tighten much more than people currently expect.

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Speaker 2: Is that what's going on? Do you think that people

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Speaker 2: are misguided and thinking that the FED is done pretty

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Speaker 2: much around here and is going to hold rates where

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Speaker 2: they are because of the fiscal impulse.

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Speaker 8: I don't want to put too much weight on the stimulus.

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Speaker 8: I think it's one factor among two or three which

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Speaker 8: is promoting resiliency here. And I do think the most

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Speaker 8: important factor in terms of what's going to drive more

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Speaker 8: central bank tightening as we get it is the persistence

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Speaker 8: of inflation, the underlying shift that's taken place in the

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Speaker 8: inflation process, how that's plagued through in a world in

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Speaker 8: which we still have damage done to labor supply and

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Speaker 8: tight labor markets. That's the ultimate problem. And just from

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Speaker 8: the point of view of the FED today, it's reasonable

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Speaker 8: to take a pause. But what a pause is doing here.

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Speaker 8: It's promoting risk, appetite and financial markets, which is undermining

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Speaker 8: monetary transmission. And it is I think signaling to the

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Speaker 8: market that the FED is gradualist on lowering inflation. And

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Speaker 8: that works against the idea that there's some inflation that's

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Speaker 8: becoming embedded in expectations and wage and price setting. This

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Speaker 8: is the problem the FED has today, and that's one

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Speaker 8: of the reasons why they're going to signal to us

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Speaker 8: that they're not done. But it's going to be hard

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Speaker 8: to find that balance.

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Speaker 3: Here.

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Speaker 2: I'm going to say something kind of sacrilegious. Let's say

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Speaker 2: it's actually worse for risk markets right now if the

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Speaker 2: FED doesn't hike further and keeps rates where they are

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Speaker 2: for a very long time. Isn't that worse than potentially

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Speaker 2: breaking something and then having to come in with rate

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Speaker 2: cuts and sort of doing a full reversal, the sort

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Speaker 2: of slow bleed, this sort of boiling of the frog

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Speaker 2: that a lot of people are anticipating.

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Speaker 8: Ultimately it might be, but right now, I think if

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Speaker 8: there's anything we should appreciate as economists and more generally,

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Speaker 8: is that it's a lot it's very difficult to actually

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Speaker 8: forecast exactly where we're going to be in six to

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Speaker 8: nine months. There is a risk the economy is going

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Speaker 8: to slide into the session. The fact that the FED

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Speaker 8: is pausing, the fact that the FED is telling us

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Speaker 8: it's going to be gradualist on inflation in terms of

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Speaker 8: bringing it down is a constructive signal that promotes resiliency.

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Speaker 8: I think there is, on my mind, a likely scenario

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Speaker 8: where inflation doesn't come all the way down and the

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Speaker 8: bed has to come back, But there is still some

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Speaker 8: possibility that we have a soft landing. So I think

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Speaker 8: for the near term it is certainly a reasonable thing

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Speaker 8: for the FED to do, and it is certainly going

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Speaker 8: to promote resilience in the economy. I do think more

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Speaker 8: likely than not, it's not going to prove successful, and

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Speaker 8: I think, as you say, we're going to pay a

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Speaker 8: price for that.

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Speaker 2: When you talk about the potential for inflation to come

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Speaker 2: back or not come down all the way to where

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Speaker 2: they'd like, is that driven by wages and some sort

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Speaker 2: of wage price spiral that people are underappreciating.

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Speaker 8: I think it's a bit of a mistake to put

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Speaker 8: it on tight labor markets, to focus particularly on what

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Speaker 8: we call a Phillips curve relationship. I think what you've

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Speaker 8: had happen here is two things. One is we've damaged

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Speaker 8: supply in a way that it's not fully recovering, and

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Speaker 8: particularly in the US and Western Europe, it's about labor

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Speaker 8: markets in that regard. But I think the bigger issue

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Speaker 8: here right now is that we've started to embed psychology

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Speaker 8: in which wage and price gains are linked, which wasn't

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Speaker 8: the case over the last thirty years. Interesting, and I

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Speaker 8: think in order to bring down inflation you need to

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Speaker 8: compress pricing power on the corporate sector side. Unfortunately, when

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Speaker 8: you do that, that does hit labor markets. But it's

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Speaker 8: a pricing power story. It's changing the behavior of businesses,

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Speaker 8: removing that price pressure that's coming through the system, which

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Speaker 8: is something which is a break from what we've seen

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Speaker 8: over the last three decades.

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Speaker 3: Bruce, it's JP Morgan's fault.

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Speaker 1: I'm going to go to Richard Clara, the former vice chair,

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Speaker 1: and of course all his work in Columbia and in

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Speaker 1: an essay and the Economist. I'm going to say a

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Speaker 1: month and a half ago, he really made a case

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Speaker 1: that we're not going back to two percent, and this

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Speaker 1: is a fad that has to find two point x percent.

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Speaker 1: Whatever the number is going to be your Michael, change

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Speaker 1: the debate single handedly. We're gonna blame Feroli by coming

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Speaker 1: up with a potential GDP statistic that was well under

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Speaker 1: two percent as well.

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Speaker 3: Do we have to adjust that.

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Speaker 1: Now, after all of this this imputed inflation into the system,

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Speaker 1: what the Biden stimulus is wrought? Do you have to

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Speaker 1: adjust the Ferole potential GDP up which makes it more

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Speaker 1: comfortable to get to a clarity statistic.

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Speaker 8: So we've been running with a potential growth rate for

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Speaker 8: the US of about one and a half really, as

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Speaker 8: you as you're mentioning for almost a decade now, and

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Speaker 8: I think you're raising a very important point, which is

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Speaker 8: there's a lot of stuff going on here that could

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Speaker 8: have an influence on potential growth going forward, and specifically

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Speaker 8: productivity growth, which is a key to the to the

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Speaker 8: inflation outlook. I'm agnostic here. There's a lot of cross currents.

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Speaker 8: I haven't seen anything that convinces me we're either materially

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Speaker 8: raising or materially depressing a potential growth. I think we've

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Speaker 8: done damage to supply and that we now have probably

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Speaker 8: two and a half percentage points less of people in

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Speaker 8: the workforce than we had on the pre pandemic path

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Speaker 8: we were on. That's the immediate problem and how that

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Speaker 8: is interacting with underlying inflation psychology. If we get better

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Speaker 8: for the potential, that'll help us. If we get worse.

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Speaker 8: That'll make the trade off worse. I'm agnostic on how

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Speaker 8: that's going to play out, at least at this moment.

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Speaker 1: I look, Verus, you know, let's bring it back to

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Speaker 1: the festivities today at two pm. I hate the skip

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Speaker 1: in the pause chat John bust My chops on it

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Speaker 1: non stop, Bruce Chasmin. Are we just debating an asymmetric

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Speaker 1: or symmetric outcome here? I'm clearly in the camp that

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Speaker 1: it can be an asymmetric decision, are you well?

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Speaker 8: First of all, it's a divided decision. Keep in mind

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Speaker 8: that probably close to half of this committee would vote

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Speaker 8: for a rate hike, so it's going to be a

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Speaker 8: pretty contentious debate. I also think it's hard to talk

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Speaker 8: about a skip. It's possible, but it's not our view.

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Speaker 8: I think the FED has six weeks to the next meeting.

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Speaker 8: It is actually trying to take stock of what actually

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Speaker 8: is happening in terms of banking sector stress, monetary transmission.

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Speaker 8: It's going to take more time to see that. But

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Speaker 8: at the same time, I think they have to tell

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Speaker 8: us that they have not declared victory on getting inflation down,

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Speaker 8: that there is pressure for them to move more, and

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Speaker 8: that the likely scenario, and I think it'll be in

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Speaker 8: the statement, It'll be in the dots where we'll see

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Speaker 8: an extra rate hike being pushed in, and it'll certainly

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Speaker 8: be in more detail and more color in Pala's press

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Speaker 8: conference that they're more likely than not to continue raising

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Speaker 8: raids sometime later this year.

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Speaker 9: Bruce, do you think no cava equities of rallying.

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Speaker 8: I don't think the FED is very sensitive to equities rallying,

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Speaker 8: But I do think the broadest picture here is that

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Speaker 8: financial markets are showing very little stress. They've improved, risk

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Speaker 8: appetite has increased, credit conditions have improved in the last

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Speaker 8: two or three months, and is a significant offset to

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Speaker 8: the tightening that's going on in bank credit. And I

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Speaker 8: think that does matter to the FED, and they're trying

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Speaker 8: to manage that in a way that they don't unl

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Speaker 8: leash unwanted exuberant here that they're going to have to

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Speaker 8: deal with later on down the road.

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Speaker 9: Interesting, Bruce wanted for to get your perspectives looking for

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Speaker 9: a divided pause. A little bit later on this afternoon,

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Speaker 9: Bruce Camsman and JP Morgan whe us around a table

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Speaker 9: Anastagia Amaroso chief and messment strategist over I Capital Anastagia.

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Speaker 10: Good to see you.

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Speaker 9: I remember you sitting around this table with Tom and

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Speaker 9: I maybe several months ago, I think early April. I

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Speaker 9: think it was good Friday, payrolls Friday, good memory, and

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Speaker 9: you made the call that we would break out to

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Speaker 9: the upside on the S and P five hundred. Do

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Speaker 9: you forget everything had a really tight trading range up

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Speaker 9: until that point. We've broken out. Everyone's on board with

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Speaker 9: that move. Now seemingly, or at least slowly, they're capitulating.

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Speaker 9: Where are you now, Do you have this view that

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Speaker 9: we brought it out or do you want to de

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Speaker 9: risk and take some of those profits.

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Speaker 11: I do think we're brought now, John, and I think

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Speaker 11: we have been doing that for the last couple of weeks.

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Speaker 11: And you know the reason for that is, Tom, you

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Speaker 11: were just talking about, is this US economy has been

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Speaker 11: so much more resilient that anybody has expected, and so

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Speaker 11: as a result, we've gone through the earnings down great cycle,

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Speaker 11: and if you look at the earnings revision ratio, it

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Speaker 11: is actually now positive for the last few weeks or

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Speaker 11: for the last month or so, and so that instills

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Speaker 11: a lot more confidence in the EPs part of this equation,

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Speaker 11: and then you know at the same time the FED,

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Speaker 11: whether it's a skip, whether it's a pause. The reality

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Speaker 11: is they're not going to go seventy five basis points

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Speaker 11: for consecutive more meetings, so we're done with that, so

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Speaker 11: we can have some stability and valuations as well. So

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Speaker 11: that's why I think this rally does broaden out.

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Speaker 1: The simple question is is Apple under owned? But far

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Speaker 1: more than that is your take at the institutional money.

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Speaker 1: Typical fundamental buy hold for three year money has missed

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Speaker 1: this market move, and there's a general statement under.

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Speaker 11: Owned, massively under owned. Tom and a lot of investors

436
00:19:46,480 --> 00:19:49,159
Speaker 11: found themselves in chasing mode. And first it's kind of

437
00:19:49,200 --> 00:19:52,200
Speaker 11: the high velocity money, the systematic traders, the hedge funds,

438
00:19:52,240 --> 00:19:54,439
Speaker 11: and guess what they all piled into this market and

439
00:19:54,480 --> 00:19:56,520
Speaker 11: that's what propped it up higher. But then you look

440
00:19:56,560 --> 00:19:59,359
Speaker 11: at the bond and cash flows and what they have

441
00:19:59,440 --> 00:20:02,399
Speaker 11: done versus the equity outflows. There's a massive amount of

442
00:20:02,440 --> 00:20:05,159
Speaker 11: capital that could potentially pivot here. And I think this

443
00:20:05,280 --> 00:20:08,240
Speaker 11: capital is going to be looking at valuations and say, well,

444
00:20:08,440 --> 00:20:11,120
Speaker 11: technology has had its run by the way, I still

445
00:20:11,160 --> 00:20:12,600
Speaker 11: want to be a tech investor. I just want to

446
00:20:12,640 --> 00:20:15,240
Speaker 11: be a little bit prudent about taking some tactical trade,

447
00:20:15,280 --> 00:20:17,840
Speaker 11: you know, tactical trades off. But the money is going

448
00:20:17,880 --> 00:20:21,600
Speaker 11: to look at valuations and say X technology. The multiple

449
00:20:21,680 --> 00:20:24,639
Speaker 11: on the SMPS actually in line with its ten year average.

450
00:20:24,800 --> 00:20:27,560
Speaker 11: So that's why John, I also think this rotation can

451
00:20:27,640 --> 00:20:30,520
Speaker 11: broaden out. And I also want to bring China into

452
00:20:30,560 --> 00:20:35,159
Speaker 11: the equation as well, because as pessimistic as everyone is

453
00:20:35,240 --> 00:20:38,880
Speaker 11: on China, the great news there is China CPI inflation

454
00:20:38,960 --> 00:20:42,320
Speaker 11: is zero. You know, policy rates are higher, there's room

455
00:20:42,440 --> 00:20:45,359
Speaker 11: to cut rates, there's room to stimulate in China. In

456
00:20:45,400 --> 00:20:47,639
Speaker 11: the last few weeks we've really seen the willingness of

457
00:20:47,680 --> 00:20:50,640
Speaker 11: the policymakers to step up the stimulus at least for now.

458
00:20:50,720 --> 00:20:52,240
Speaker 11: Talk but I think measures as well.

459
00:20:52,520 --> 00:20:55,639
Speaker 2: Given that backdrop, if the FED does have a skip,

460
00:20:55,720 --> 00:20:58,679
Speaker 2: hawkish whatever you want to call it, well that unleash

461
00:20:58,800 --> 00:21:01,399
Speaker 2: unwarranted exuberance in risk assets in the US.

462
00:21:02,280 --> 00:21:05,600
Speaker 11: I mean it already has right sort of pre traded

463
00:21:05,760 --> 00:21:08,760
Speaker 11: the pause, the skip, and you know, I think this

464
00:21:08,880 --> 00:21:11,879
Speaker 11: exuberance is somewhat warranted. And by the way, if you

465
00:21:11,920 --> 00:21:14,639
Speaker 11: go back in history and if you look at rate hikes,

466
00:21:14,680 --> 00:21:16,840
Speaker 11: you know, the FED hikes rates, but it doesn't cause

467
00:21:16,880 --> 00:21:20,640
Speaker 11: an imminent recession. There's typically a period of time before

468
00:21:20,720 --> 00:21:24,160
Speaker 11: their session on sets and there is this exuberance face.

469
00:21:24,240 --> 00:21:26,840
Speaker 11: I think some call it euphoria, or the market rallies

470
00:21:27,119 --> 00:21:29,920
Speaker 11: for the twelve months after the Fed actually ends its

471
00:21:30,000 --> 00:21:33,120
Speaker 11: hiking cycle. But the reason it rallies, Lisa, the reason

472
00:21:33,160 --> 00:21:35,520
Speaker 11: I say it's warrant is because the economy is still

473
00:21:35,520 --> 00:21:38,160
Speaker 11: hanging in there and the earnings still hang in there.

474
00:21:38,280 --> 00:21:40,960
Speaker 11: So I think this exuberance might be justified.

475
00:21:41,080 --> 00:21:43,520
Speaker 2: What's the tipping point? Let's say the FED does hold

476
00:21:43,600 --> 00:21:47,040
Speaker 2: rates here for a long period of time. When does

477
00:21:47,040 --> 00:21:50,560
Speaker 2: a tipping point come when perhaps the pain starts to

478
00:21:50,560 --> 00:21:54,120
Speaker 2: get felt, when perhaps this exuberance starts to wear out.

479
00:21:54,680 --> 00:21:57,439
Speaker 11: I think the Fed we'd need to go higher, and

480
00:21:57,480 --> 00:22:01,919
Speaker 11: potentially much higher, to really crack this economy. And you know,

481
00:22:01,960 --> 00:22:04,400
Speaker 11: I say that because if you look at this economy

482
00:22:04,440 --> 00:22:08,120
Speaker 11: with five percent rates, yes, we're feeling strains here and there,

483
00:22:08,160 --> 00:22:10,560
Speaker 11: and there's pockets of dislocation that are to come. By

484
00:22:10,560 --> 00:22:13,240
Speaker 11: by and large, this economy is doing just fine with

485
00:22:13,320 --> 00:22:15,840
Speaker 11: five percent rates, So I think you need to raise

486
00:22:15,920 --> 00:22:18,879
Speaker 11: rates to a much more restrictive level for something to

487
00:22:18,960 --> 00:22:21,919
Speaker 11: really crack that would cause the crack in the unemployment rate.

488
00:22:22,080 --> 00:22:26,520
Speaker 1: Within your macro view, does a sixty forty allocation work?

489
00:22:26,600 --> 00:22:28,639
Speaker 1: I can't make the math work in my head. Are

490
00:22:28,680 --> 00:22:30,480
Speaker 1: you a sixty forty type or do you have to

491
00:22:30,480 --> 00:22:31,480
Speaker 1: go to a different mix.

492
00:22:31,800 --> 00:22:35,000
Speaker 11: Well, this year, anybody who's declared sixty forty to be

493
00:22:35,040 --> 00:22:37,560
Speaker 11: dead obviously has been wrong. Sixty forty is one of

494
00:22:37,600 --> 00:22:42,919
Speaker 11: the top performing things out Yeah, exactly. But if you

495
00:22:43,000 --> 00:22:45,639
Speaker 11: look tom over the last three year, five year, ten

496
00:22:45,760 --> 00:22:48,639
Speaker 11: or fifteen year period, and if we expand beyond the

497
00:22:48,680 --> 00:22:51,560
Speaker 11: sixty forty, and if I brought that out to private

498
00:22:51,560 --> 00:22:55,960
Speaker 11: market strategies like growth equity, like venture capital, like private equity,

499
00:22:56,000 --> 00:22:58,480
Speaker 11: buy out, like private credit, all of those things have

500
00:22:58,560 --> 00:23:02,520
Speaker 11: actually outperformed the sixty. So we want to look beyond

501
00:23:02,600 --> 00:23:04,679
Speaker 11: the sixty forty and then it's not just something that

502
00:23:04,760 --> 00:23:06,919
Speaker 11: worked last year. I think that's something that works for

503
00:23:06,960 --> 00:23:07,880
Speaker 11: the next several years.

504
00:23:08,000 --> 00:23:09,600
Speaker 9: Just to build on something you said about the labor

505
00:23:09,640 --> 00:23:11,800
Speaker 9: market and how far fed funds would need to go,

506
00:23:12,480 --> 00:23:14,879
Speaker 9: where does that leave the bond market? Never mind equities,

507
00:23:14,920 --> 00:23:16,960
Speaker 9: let's put stocks to one side. What does that leave

508
00:23:16,960 --> 00:23:18,880
Speaker 9: fixed income? Try to rease what does a ten year

509
00:23:18,920 --> 00:23:20,800
Speaker 9: look like over the next twelve months.

510
00:23:21,040 --> 00:23:23,320
Speaker 11: Yeah, I mean, I think the ten year is supported

511
00:23:23,359 --> 00:23:26,480
Speaker 11: around these current levels because you know, if the FED

512
00:23:26,680 --> 00:23:28,960
Speaker 11: needs to go much higher, the front end of the

513
00:23:28,960 --> 00:23:32,120
Speaker 11: curve rises, but the back end really doesn't because it's

514
00:23:32,119 --> 00:23:35,080
Speaker 11: a function of the forward growth expectations. But if the

515
00:23:35,119 --> 00:23:38,400
Speaker 11: FED continues to high grades, that means the recession probabilities

516
00:23:38,560 --> 00:23:41,400
Speaker 11: likely rise. So I actually think the ten year offers

517
00:23:41,960 --> 00:23:45,080
Speaker 11: decent value around these current levels. And also if we

518
00:23:45,440 --> 00:23:48,360
Speaker 11: are wanting to prepare for a twenty twenty four recession,

519
00:23:48,680 --> 00:23:51,320
Speaker 11: that's what you buy. You buy the ten year, you

520
00:23:51,320 --> 00:23:54,560
Speaker 11: buy the thirty year, And I think that's a great

521
00:23:55,040 --> 00:23:57,880
Speaker 11: balance to maybe some of the cyclical stuff into portfolio.

522
00:23:57,880 --> 00:23:59,679
Speaker 9: You think we're in that point now to make that

523
00:23:59,720 --> 00:24:02,440
Speaker 9: move currently, I think you can.

524
00:24:02,640 --> 00:24:04,800
Speaker 11: You know, I don't think you have to imminently hedge

525
00:24:04,960 --> 00:24:08,119
Speaker 11: a recession, but I think if you're buying some tenure

526
00:24:08,160 --> 00:24:11,280
Speaker 11: treasuries into your portfolio, I think they can provide some

527
00:24:11,320 --> 00:24:15,600
Speaker 11: stable value because again, the growth expectations are not likely

528
00:24:15,640 --> 00:24:18,800
Speaker 11: to speke materially higher, inflation expectations are not likely to

529
00:24:18,800 --> 00:24:20,720
Speaker 11: move materially higher. So I think that's going to keep

530
00:24:20,760 --> 00:24:22,200
Speaker 11: the tenure anchored.

531
00:24:21,880 --> 00:24:24,520
Speaker 9: Anastasia awesome coal on the equity market for the US

532
00:24:24,560 --> 00:24:26,920
Speaker 9: so far, thank you, and at stage Amoso there the

533
00:24:27,000 --> 00:24:27,919
Speaker 9: last drill.

534
00:24:38,080 --> 00:24:40,679
Speaker 10: And I talk about Disney quickly, please talk about this.

535
00:24:40,680 --> 00:24:42,800
Speaker 3: So Schoemaker's like is on the edge of the seats

536
00:24:42,800 --> 00:24:44,000
Speaker 3: is little mermaidery.

537
00:24:44,080 --> 00:24:48,520
Speaker 9: When companies start throwing out dates like twenty thirty, twenty

538
00:24:48,600 --> 00:24:52,679
Speaker 9: thirty one, drug usc it's amazing. The third installment of

539
00:24:52,680 --> 00:24:56,040
Speaker 9: Avatar is going to come out December twenty twenty five

540
00:24:56,320 --> 00:24:59,000
Speaker 9: instead of December twenty twenty four. Here we got tom

541
00:24:59,160 --> 00:25:01,440
Speaker 9: The two other avat Pass sequel was pushed back by

542
00:25:01,440 --> 00:25:03,639
Speaker 9: three years. They'll come out in twenty twenty nine and

543
00:25:03,680 --> 00:25:05,960
Speaker 9: twenty thirty one. Doesn't that feel like a lifetime away?

544
00:25:06,440 --> 00:25:08,520
Speaker 9: Twenty thirty one. Aren't we all going to be flying?

545
00:25:08,560 --> 00:25:08,720
Speaker 12: Then?

546
00:25:09,280 --> 00:25:09,680
Speaker 10: Exactly?

547
00:25:09,680 --> 00:25:12,960
Speaker 2: What in augmented reality? Although did you see the Way

548
00:25:12,960 --> 00:25:15,359
Speaker 2: of Water? I mean it was pretty technologically amazing. It

549
00:25:15,440 --> 00:25:17,199
Speaker 2: was very cool, right, so imagine that they have to

550
00:25:17,200 --> 00:25:18,120
Speaker 2: then add on to that.

551
00:25:18,160 --> 00:25:20,439
Speaker 9: But yeah, it seems like Avengers Movies the layed a

552
00:25:20,520 --> 00:25:24,640
Speaker 9: year to May of twenty six from May and May

553
00:25:24,680 --> 00:25:28,440
Speaker 9: of twenty seven. Star Wars pushback a year twenty twenty six.

554
00:25:29,320 --> 00:25:31,320
Speaker 9: It's all getting pushed back at what's Bob I ger

555
00:25:31,440 --> 00:25:34,639
Speaker 9: up to for at Disney. Can you imagine being in

556
00:25:34,680 --> 00:25:37,040
Speaker 9: the theater business and you hear this in the last

557
00:25:37,040 --> 00:25:39,600
Speaker 9: twenty four as you want those movies like now.

558
00:25:39,400 --> 00:25:41,080
Speaker 3: Well this is is it the writer's strike?

559
00:25:41,160 --> 00:25:43,320
Speaker 1: No, it's got to be something bigger, like budgeting or

560
00:25:43,359 --> 00:25:44,159
Speaker 1: just the complexity.

561
00:25:44,440 --> 00:25:46,320
Speaker 2: How much is content no longer king and you don't

562
00:25:46,320 --> 00:25:48,240
Speaker 2: necessarily have the same kind of budget and throw at

563
00:25:48,240 --> 00:25:49,160
Speaker 2: it the same kind of way.

564
00:25:49,800 --> 00:25:51,840
Speaker 3: Michael Schumacher saying, did I sign up for this?

565
00:25:52,000 --> 00:25:54,879
Speaker 1: Michael Schumacher joins us in our global head of macro

566
00:25:54,960 --> 00:25:56,440
Speaker 1: Strategy at Wells Fargo.

567
00:25:56,640 --> 00:25:58,520
Speaker 3: We're not going to look for a little Mermaid review

568
00:25:59,080 --> 00:26:00,000
Speaker 3: from him. Michael.

569
00:26:00,080 --> 00:26:02,320
Speaker 1: I want to talk about the challenge of Jerome Powell

570
00:26:02,400 --> 00:26:04,480
Speaker 1: and the way I do it is what Michael Rosenberg

571
00:26:04,520 --> 00:26:07,480
Speaker 1: invented with his team at Bloomberg, which is the Bloomberg

572
00:26:07,560 --> 00:26:09,600
Speaker 1: Financial Conditions Index.

573
00:26:09,760 --> 00:26:11,080
Speaker 3: It is eleven ratios.

574
00:26:11,119 --> 00:26:15,320
Speaker 1: It is so wonderfully complex and it shows an accommodation.

575
00:26:15,440 --> 00:26:17,480
Speaker 3: I'm not going to go to the math now, folks, but.

576
00:26:17,480 --> 00:26:20,200
Speaker 1: All you got to know is a positive number is accommodative.

577
00:26:20,200 --> 00:26:22,280
Speaker 3: And a negative is a tilt towards restriction.

578
00:26:23,280 --> 00:26:28,359
Speaker 1: Is the stock market hindering Jerome Powell's choice set, his

579
00:26:28,480 --> 00:26:33,160
Speaker 1: degrees of freedom, have we become accommodative? Is seen by

580
00:26:33,160 --> 00:26:36,000
Speaker 1: the BFCI at I think it's a point zero seven

581
00:26:36,520 --> 00:26:40,360
Speaker 1: nine that he has fewer choices that he can make,

582
00:26:40,520 --> 00:26:43,960
Speaker 1: fewer options that he can make today.

583
00:26:45,200 --> 00:26:47,760
Speaker 13: Sure, it's a tightening cycle. I mean, these conditions are

584
00:26:47,760 --> 00:26:50,440
Speaker 13: supposed to tighten. And you look at the stock market

585
00:26:50,520 --> 00:26:52,560
Speaker 13: up what thirteen percent really since March.

586
00:26:52,760 --> 00:26:54,280
Speaker 3: Granted, I know regional banks, et.

587
00:26:54,280 --> 00:26:58,280
Speaker 13: Cetera bad news, but still equities have ripped, corporate credits

588
00:26:58,280 --> 00:27:01,520
Speaker 13: doing really well. This flies the face of banking credit

589
00:27:01,520 --> 00:27:04,320
Speaker 13: conditions tightening. That doesn't really seem to add up. So

590
00:27:04,400 --> 00:27:07,800
Speaker 13: I think Jerome Powell, you're right, Tom, he's got less flexibility. Yes,

591
00:27:07,880 --> 00:27:10,200
Speaker 13: he somehow has to convey to the market this is bad.

592
00:27:10,240 --> 00:27:11,120
Speaker 13: But how does he do that?

593
00:27:11,400 --> 00:27:13,080
Speaker 3: Tough? The only way he can do it.

594
00:27:13,119 --> 00:27:16,880
Speaker 1: Mike Schumacher, based on Myriada history, is to delay, pretended,

595
00:27:16,920 --> 00:27:19,080
Speaker 1: and delay. So we're going to go through today. He's

596
00:27:19,080 --> 00:27:21,320
Speaker 1: going to read all sorts of statements. They're going to

597
00:27:21,320 --> 00:27:22,960
Speaker 1: be you know, the answers are going to be written

598
00:27:22,960 --> 00:27:26,080
Speaker 1: out in advance. Is this a meeting in preparation for

599
00:27:26,200 --> 00:27:36,160
Speaker 1: July hoping the facts change for Jerome Powell.

600
00:27:32,840 --> 00:27:35,040
Speaker 13: Well, they could change the one big thing between now

601
00:27:35,040 --> 00:27:38,040
Speaker 13: and the July meeting. Granted, the economic data flow pretty light,

602
00:27:38,160 --> 00:27:40,679
Speaker 13: but you think about regional bank earnings, they start to

603
00:27:40,720 --> 00:27:43,720
Speaker 13: report the regionals. This is I think July nineteenth is

604
00:27:43,760 --> 00:27:45,399
Speaker 13: the first big day and the next FED meetings of

605
00:27:45,440 --> 00:27:49,320
Speaker 13: twenty sixth, So it's possible you get lots of noise,

606
00:27:49,480 --> 00:27:51,359
Speaker 13: let's say, in the week or so the ahead of

607
00:27:51,359 --> 00:27:53,680
Speaker 13: the July meeting. But that seems like a long time away.

608
00:27:53,760 --> 00:27:56,240
Speaker 13: I mean, heck of Disney is delaying Star Wars three years.

609
00:27:56,280 --> 00:27:59,000
Speaker 13: Maybe the fat can look out six seven weeks into

610
00:27:59,000 --> 00:28:00,320
Speaker 13: the future like.

611
00:28:00,280 --> 00:28:03,320
Speaker 2: A stretch, especially because perhaps their budget is a little

612
00:28:03,320 --> 00:28:05,800
Speaker 2: bit less than the Avatar sequels. I am curious, Mike,

613
00:28:06,000 --> 00:28:07,160
Speaker 2: how much we have a little?

614
00:28:07,720 --> 00:28:08,160
Speaker 14: Just a little.

615
00:28:08,280 --> 00:28:10,960
Speaker 2: We've priced out rate cuts. That's what we've been doing

616
00:28:11,160 --> 00:28:13,800
Speaker 2: over the past couple of months, since the rate cuts

617
00:28:13,800 --> 00:28:16,520
Speaker 2: priced in during the banking crisis that happened for a

618
00:28:16,520 --> 00:28:19,320
Speaker 2: half a second in March. I'm now wondering, do you

619
00:28:19,359 --> 00:28:23,000
Speaker 2: expect the market to start pricing in materially higher rates,

620
00:28:23,280 --> 00:28:25,639
Speaker 2: as one person after another on surveillance this morning have

621
00:28:25,720 --> 00:28:27,280
Speaker 2: come out and said there is more work to do

622
00:28:27,520 --> 00:28:29,439
Speaker 2: and the dynamism of this economy is not going to

623
00:28:29,480 --> 00:28:31,320
Speaker 2: crack under five percent rates.

624
00:28:33,480 --> 00:28:33,960
Speaker 3: We think lie.

625
00:28:34,040 --> 00:28:35,879
Speaker 13: So it's really been interesting. You make a great point

626
00:28:35,920 --> 00:28:37,760
Speaker 13: when you look at the degree to which rate cuts

627
00:28:37,760 --> 00:28:40,240
Speaker 13: have been priced out for twenty twenty three. It's amazing.

628
00:28:40,400 --> 00:28:43,840
Speaker 13: So early May there was something like ninety basis points

629
00:28:43,840 --> 00:28:46,280
Speaker 13: and cuts priced for this year. Now it's fifteen or twenty,

630
00:28:46,400 --> 00:28:48,640
Speaker 13: give or take. If I look at twenty twenty four,

631
00:28:48,720 --> 00:28:50,920
Speaker 13: it's about one hundred and thirty basis points and cuts.

632
00:28:51,400 --> 00:28:53,680
Speaker 13: We think that number goes down. Does it go to zero, No,

633
00:28:53,840 --> 00:28:55,960
Speaker 13: maybe it goes to one hundred something like that. So

634
00:28:56,480 --> 00:28:58,720
Speaker 13: a decent amount of rate cutting taken out, would I

635
00:28:58,760 --> 00:29:02,000
Speaker 13: continue to be surprised? Is why the markets are pricing

636
00:29:02,120 --> 00:29:05,959
Speaker 13: so much easing by the Fed relative to other central banks.

637
00:29:06,120 --> 00:29:08,320
Speaker 13: And we're talking again about next year, or you can

638
00:29:08,360 --> 00:29:10,680
Speaker 13: even look at it this year. The relative policy pads.

639
00:29:10,720 --> 00:29:13,880
Speaker 13: Why is the ECB price to hike fifty five basis

640
00:29:13,880 --> 00:29:16,760
Speaker 13: points between now and September and the FED is priced

641
00:29:16,760 --> 00:29:18,960
Speaker 13: for twenty and why does the market price the FED

642
00:29:19,000 --> 00:29:21,520
Speaker 13: to be effectively unchanged at the end of the year

643
00:29:21,560 --> 00:29:23,800
Speaker 13: when other central banks are priced to be much higher.

644
00:29:23,840 --> 00:29:25,520
Speaker 13: That makes very little sense to us. We think the

645
00:29:25,520 --> 00:29:26,480
Speaker 13: market's got that wrong.

646
00:29:26,680 --> 00:29:29,280
Speaker 2: Well, perhaps they've got that wrong, but based on what

647
00:29:29,320 --> 00:29:31,719
Speaker 2: people are expecting from the Fed, they're only going to

648
00:29:31,760 --> 00:29:33,440
Speaker 2: confirm that if they're going to skip now, I mean,

649
00:29:33,480 --> 00:29:37,200
Speaker 2: will that necessarily feed into some of the optimism and

650
00:29:37,440 --> 00:29:40,360
Speaker 2: as we were hearing earlier from Bruce Casmen, the exuberance

651
00:29:40,680 --> 00:29:41,600
Speaker 2: in risk markets.

652
00:29:43,880 --> 00:29:45,880
Speaker 13: Yeah, the action today, Lisa, I would say, is going

653
00:29:45,920 --> 00:29:47,520
Speaker 13: to be all in the press conference and not in

654
00:29:47,560 --> 00:29:49,960
Speaker 13: the statement. If you look at really the period of

655
00:29:49,960 --> 00:29:52,440
Speaker 13: the last year, So go through the last eight FED

656
00:29:52,480 --> 00:29:55,800
Speaker 13: meetings very very consistently. Whatever the market does from what

657
00:29:55,800 --> 00:29:58,080
Speaker 13: we would call the statement period, so call it two

658
00:29:58,120 --> 00:30:00,080
Speaker 13: o'clock to two twenty five or what have you, it

659
00:30:00,680 --> 00:30:03,280
Speaker 13: goes into a u turn. Once Chairman politics to Mike,

660
00:30:03,600 --> 00:30:06,400
Speaker 13: so he walks back some of the policy moves, tries

661
00:30:06,440 --> 00:30:09,240
Speaker 13: to explain a bit, tries to amplify, maybe, talks about

662
00:30:09,280 --> 00:30:11,960
Speaker 13: the link whatever it might be. The hoops, we got

663
00:30:11,960 --> 00:30:14,760
Speaker 13: that a bit wrong. Let's go the other way. We're confused.

664
00:30:14,880 --> 00:30:16,640
Speaker 13: So I think you'll get more of that today, So

665
00:30:16,720 --> 00:30:19,760
Speaker 13: look at the press conference and focus less on a statement.

666
00:30:19,760 --> 00:30:22,320
Speaker 9: That's my recommendation and looking forward to it. Great recommendation

667
00:30:22,400 --> 00:30:25,600
Speaker 9: as well. Mike Schumacher of wels FAG Mike, thank you

668
00:30:25,680 --> 00:30:25,880
Speaker 9: for that.

669
00:30:29,720 --> 00:30:31,680
Speaker 1: Let's get to a three trillion dollar question. We do

670
00:30:31,760 --> 00:30:34,800
Speaker 1: that with Tom for the expert at Senior Research Analysis

671
00:30:34,800 --> 00:30:38,520
Speaker 1: at DA Davidson. He got an ATARI place that years

672
00:30:38,560 --> 00:30:40,360
Speaker 1: ago and now he's turned it into a Mac pro

673
00:30:40,440 --> 00:30:43,520
Speaker 1: and a study of Apple Apple Apple, Tom, we need

674
00:30:43,520 --> 00:30:46,120
Speaker 1: an update here on the vector of Apple up forty

675
00:30:46,360 --> 00:30:49,920
Speaker 1: x percent off the January beginning of the year. There's

676
00:30:49,960 --> 00:30:53,240
Speaker 1: a persistency to the trend. What's your target as a

677
00:30:53,280 --> 00:30:57,280
Speaker 1: trend continues, do they blow through a three trillion dollar valuation?

678
00:30:58,040 --> 00:31:00,160
Speaker 15: Yeah, so maybe the word of the day is pop. Yes,

679
00:31:00,680 --> 00:31:02,440
Speaker 15: So I think Apple shares are going to take a

680
00:31:02,480 --> 00:31:05,560
Speaker 15: pause here. I think the good news from the new

681
00:31:05,600 --> 00:31:09,360
Speaker 15: product launch, the Vision Pro, which is the most significant

682
00:31:09,400 --> 00:31:12,600
Speaker 15: new product launch since the iPhone in two thousand and seven,

683
00:31:13,120 --> 00:31:15,600
Speaker 15: is priced into the stock. The stock's trading in a

684
00:31:15,640 --> 00:31:19,480
Speaker 15: premium on an enterprise valued EBITDA basis, on a PE basis,

685
00:31:19,760 --> 00:31:22,520
Speaker 15: and on a sales EBITDA basis. So I think the

686
00:31:22,560 --> 00:31:25,200
Speaker 15: good news is priced into the stock. I'm looking for

687
00:31:25,280 --> 00:31:26,360
Speaker 15: shares to take a breather.

688
00:31:27,120 --> 00:31:31,360
Speaker 1: The core unit thing is the iPhone. I believe there's

689
00:31:31,360 --> 00:31:34,600
Speaker 1: a new iPhone language coming out, maybe a new iPhone chip.

690
00:31:34,960 --> 00:31:38,120
Speaker 1: Can they keep innovating the iPhone to keep the unit

691
00:31:38,240 --> 00:31:39,760
Speaker 1: sale persistency going?

692
00:31:40,880 --> 00:31:43,480
Speaker 15: The answer is yes, But on a near term basis,

693
00:31:43,560 --> 00:31:46,640
Speaker 15: what does success look like for Apple? And it looks

694
00:31:46,720 --> 00:31:51,920
Speaker 15: like low single digit sales growth, definitely not double digit

695
00:31:52,040 --> 00:31:54,640
Speaker 15: sales growth. So you have a stock trading in a

696
00:31:54,680 --> 00:31:59,680
Speaker 15: premium multiple relative to its history. The iPhone's doing amazingly

697
00:31:59,720 --> 00:32:05,520
Speaker 15: well in a challenging macroeconomic environment, taking advantage of the networks,

698
00:32:05,600 --> 00:32:09,680
Speaker 15: leveraging their five G networks of Verizon and such, and

699
00:32:10,160 --> 00:32:14,080
Speaker 15: helping consumers buy the phones, subsidizing them, Apple offering buy now,

700
00:32:14,160 --> 00:32:17,160
Speaker 15: pay later, all these different things. So yes, iPhone can

701
00:32:17,200 --> 00:32:19,800
Speaker 15: carry the day. But again, I think a lot of

702
00:32:19,800 --> 00:32:21,360
Speaker 15: this good news is already priced.

703
00:32:21,080 --> 00:32:21,800
Speaker 16: Into the side.

704
00:32:21,880 --> 00:32:26,000
Speaker 2: Tom Well, Apple use artificial intelligence and chat GPT type

705
00:32:26,280 --> 00:32:29,320
Speaker 2: of technology to make serri better and to make it

706
00:32:29,400 --> 00:32:33,120
Speaker 2: a more sort of intertwined aspect of the iPhone.

707
00:32:33,480 --> 00:32:36,480
Speaker 15: The answer is yes, And I think that when we

708
00:32:36,560 --> 00:32:40,240
Speaker 15: started the discussion of artificial intelligence. So I've published twenty

709
00:32:40,240 --> 00:32:43,000
Speaker 15: five papers on the convergence of tech and retail. One

710
00:32:43,040 --> 00:32:44,800
Speaker 15: a couple of years back was on the power of

711
00:32:44,880 --> 00:32:49,360
Speaker 15: artificial intelligence. Apple, I think appropriately discussed that it was

712
00:32:49,400 --> 00:32:52,560
Speaker 15: a horizontal technology, not a vertical one, and makes all

713
00:32:52,600 --> 00:32:53,600
Speaker 15: of its products better.

714
00:32:54,080 --> 00:32:55,320
Speaker 16: Hopefully it'll make sery better.

715
00:32:55,840 --> 00:32:58,360
Speaker 2: We're also talking about augmented reality, and you talked about

716
00:32:58,360 --> 00:33:01,160
Speaker 2: the vision pro, the thirty five one hundred dollar goggles

717
00:33:01,160 --> 00:33:04,800
Speaker 2: that people can put on and experience a new and

718
00:33:04,880 --> 00:33:05,800
Speaker 2: improved world.

719
00:33:05,840 --> 00:33:06,920
Speaker 7: What is the future of this?

720
00:33:06,960 --> 00:33:09,160
Speaker 2: Is this the future of computing? Everyone talks about how

721
00:33:09,160 --> 00:33:12,320
Speaker 2: this is revolutionizing things in a way that the iPhone did,

722
00:33:12,560 --> 00:33:15,840
Speaker 2: but we're not really understanding the implications. Can you give

723
00:33:15,920 --> 00:33:19,080
Speaker 2: us the sort of market case who wins and who loses?

724
00:33:19,960 --> 00:33:21,760
Speaker 15: So I'd like to think about it in the view

725
00:33:21,760 --> 00:33:23,920
Speaker 15: of the metaverse, and our view is the metaverse will

726
00:33:23,920 --> 00:33:26,880
Speaker 15: be a thing, not the thing. So ten years from now,

727
00:33:26,920 --> 00:33:29,440
Speaker 15: consumers will be accessing the Internet in many different ways.

728
00:33:29,840 --> 00:33:32,400
Speaker 15: They could have implanted chips, which is something Elon Musk

729
00:33:32,520 --> 00:33:35,440
Speaker 15: is working on. ARVR will be one of many ways

730
00:33:35,440 --> 00:33:37,360
Speaker 15: that consumers will access the Internet.

731
00:33:37,360 --> 00:33:39,040
Speaker 16: But we don't think it will be the dominant way.

732
00:33:39,560 --> 00:33:41,600
Speaker 15: I do think the winner on the thirty four to

733
00:33:41,680 --> 00:33:45,080
Speaker 15: ninety nine vision pro is Meta Platforms, which is offering

734
00:33:45,080 --> 00:33:47,440
Speaker 15: a device for four ninety nine. So to the extent

735
00:33:47,480 --> 00:33:51,240
Speaker 15: that Apple gets people excited about ARVR, I think Meta

736
00:33:51,280 --> 00:33:54,280
Speaker 15: platform stands the benefit with a much lower price point item.

737
00:33:54,840 --> 00:33:57,600
Speaker 2: We had on Abby Joseph Cohen from Columbia University, formerly

738
00:33:57,600 --> 00:33:59,960
Speaker 2: a partner of gomet SAX yesterday and she said she's

739
00:34:00,120 --> 00:34:03,000
Speaker 2: been talking to computer scientists and her sense is that

740
00:34:03,120 --> 00:34:06,960
Speaker 2: perhaps people are overly optimistic about the future of artificial

741
00:34:06,960 --> 00:34:10,120
Speaker 2: intelligence and what some of these chat GPT technologies can

742
00:34:10,200 --> 00:34:12,480
Speaker 2: actually achieve reliably. Do you agree with that? Do you

743
00:34:12,480 --> 00:34:14,880
Speaker 2: feel like it's been sort of overplayed at least to

744
00:34:14,880 --> 00:34:15,440
Speaker 2: this point.

745
00:34:16,120 --> 00:34:18,840
Speaker 15: So my concern about it is, you know, as a

746
00:34:18,880 --> 00:34:22,200
Speaker 15: consumer who grew up with skynet, But my primary concern

747
00:34:22,400 --> 00:34:26,120
Speaker 15: is what happens to all the displaced workers if we

748
00:34:26,200 --> 00:34:29,920
Speaker 15: truly become a fully automated or much more automated society.

749
00:34:30,239 --> 00:34:32,800
Speaker 15: So what's going to happen to the economy if twenty

750
00:34:32,800 --> 00:34:36,799
Speaker 15: five percent of the workforce is displaced by automation. So, yes,

751
00:34:36,880 --> 00:34:40,480
Speaker 15: I think that there's way too much hype on what

752
00:34:40,520 --> 00:34:43,000
Speaker 15: it can mean. I simply think of, you know, machine

753
00:34:43,080 --> 00:34:45,680
Speaker 15: learning as the ability to cipher what is a cat,

754
00:34:45,719 --> 00:34:48,560
Speaker 15: what is a dog? Things of that nature. I think

755
00:34:48,680 --> 00:34:52,080
Speaker 15: the uh, you know, chat for customer service is flawed.

756
00:34:52,120 --> 00:34:54,600
Speaker 15: It may always be flawed. A chat for search has

757
00:34:54,680 --> 00:34:55,600
Speaker 15: elements that are flawed.

758
00:34:55,600 --> 00:34:56,600
Speaker 16: It may always be flawed.

759
00:34:56,880 --> 00:35:00,799
Speaker 15: So I think artificial intelligence is a very important technology responsibly,

760
00:35:01,120 --> 00:35:03,080
Speaker 15: but I think there's going to be a lot of challenges,

761
00:35:03,400 --> 00:35:06,600
Speaker 15: including an increase in automation and the displaced workforce.

762
00:35:06,840 --> 00:35:10,040
Speaker 9: Thirty four ninety nine makes it sound cheap. Thirty four

763
00:35:10,160 --> 00:35:13,360
Speaker 9: nine three and a half thousand dollars, Tom, how are

764
00:35:13,360 --> 00:35:14,359
Speaker 9: people going to pay for this?

765
00:35:15,000 --> 00:35:16,879
Speaker 16: Three point five large? How about that? John?

766
00:35:17,200 --> 00:35:22,120
Speaker 15: So basically, if you look backwards, we could see why

767
00:35:22,160 --> 00:35:26,200
Speaker 15: Apple's done the credit card, buy now, pay later, things

768
00:35:26,200 --> 00:35:28,560
Speaker 15: of that nature. I'm of the belief in the future

769
00:35:28,640 --> 00:35:31,799
Speaker 15: Apple offer will offer you a pure subscription for two

770
00:35:31,840 --> 00:35:32,919
Speaker 15: hundred fifty dollars a month.

771
00:35:32,960 --> 00:35:34,839
Speaker 16: You get Apple. What does that mean?

772
00:35:34,920 --> 00:35:37,080
Speaker 15: You might get a vision pro headset, you might get

773
00:35:37,120 --> 00:35:38,160
Speaker 15: the latest iPhone.

774
00:35:38,480 --> 00:35:40,200
Speaker 16: And then if you're paying two fifty.

775
00:35:39,960 --> 00:35:42,480
Speaker 15: A month or whatever it is monthly, you may not

776
00:35:42,560 --> 00:35:44,720
Speaker 15: think about the two grand you're paying for the iPhone,

777
00:35:45,080 --> 00:35:47,600
Speaker 15: the three point five K, you're paying for the Vision pro.

778
00:35:48,160 --> 00:35:51,319
Speaker 15: So Apple as a monthly bill, it'll be a big bill.

779
00:35:51,840 --> 00:35:53,440
Speaker 15: But then I think it'll be easier for them to

780
00:35:53,440 --> 00:35:54,840
Speaker 15: sell some of these higher price products.

781
00:35:54,880 --> 00:35:56,960
Speaker 9: Tell I got to squeeze it in that's been developing

782
00:35:57,000 --> 00:35:59,279
Speaker 9: with the handset already. What does that mean for the

783
00:35:59,320 --> 00:36:01,359
Speaker 9: valuation of the Case company as you start to get

784
00:36:01,360 --> 00:36:03,760
Speaker 9: more recur and revenue in that fashion.

785
00:36:04,120 --> 00:36:06,320
Speaker 16: Well, and that's higher multiple.

786
00:36:06,719 --> 00:36:09,960
Speaker 15: So the beauty of Tim Cook's leadership has been the

787
00:36:10,040 --> 00:36:13,760
Speaker 15: higher multiple he's achieved by adding services to a strong

788
00:36:13,800 --> 00:36:16,600
Speaker 15: base of hardware. The question is will they be able

789
00:36:16,640 --> 00:36:22,240
Speaker 15: to compliment future hardware and services offerings to massively increase

790
00:36:22,320 --> 00:36:26,160
Speaker 15: the sales base and then on a higher multiple, increase

791
00:36:26,200 --> 00:36:26,640
Speaker 15: the stock.

792
00:36:26,920 --> 00:36:29,400
Speaker 16: And right now we're taking away and see attitude.

793
00:36:28,920 --> 00:36:31,920
Speaker 9: Being guy some Thank you some for f I Davidson

794
00:36:32,080 --> 00:36:32,719
Speaker 9: at the end there.

795
00:36:33,080 --> 00:36:36,920
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and

796
00:36:37,080 --> 00:36:41,280
Speaker 1: anywhere else you get your podcasts. Listen live every weekday

797
00:36:41,520 --> 00:36:45,040
Speaker 1: starting at seven am Eastern on Bloomberg dot com, the

798
00:36:45,160 --> 00:36:47,480
Speaker 1: iHeartRadio app tune.

799
00:36:47,200 --> 00:36:49,120
Speaker 3: In, and the Bloomberg Business app.

800
00:36:49,560 --> 00:36:53,320
Speaker 1: You can watch us live on Bloomberg Television and always

801
00:36:53,600 --> 00:36:57,439
Speaker 1: on the Bloomberg Terminal. Thanks for listening. I'm Tom Keen,

802
00:36:57,680 --> 00:37:08,040
Speaker 1: and this is Bloomberg. Thanks for listening to the Bloomberg

803
00:37:08,080 --> 00:37:12,720
Speaker 1: Savannahs podcast. Now, stay tuned for today's edition of Bloomberg Daybreak.

804
00:37:12,719 --> 00:37:16,560
Speaker 1: It's your daily news podcast, delivering today's top stories to

805
00:37:16,600 --> 00:37:20,040
Speaker 1: your podcast feed by six am Eastern. It's all the

806
00:37:20,080 --> 00:37:25,040
Speaker 1: news you need in just fifteen minutes. The Bloomberg Daybreak podcast.

807
00:37:25,239 --> 00:37:27,000
Speaker 1: It starts right now.

808
00:37:27,600 --> 00:37:31,360
Speaker 7: Boom from the Bloomberg Interactive Brokers Studios. This is Bloomberg

809
00:37:31,400 --> 00:37:34,240
Speaker 7: Daybreak or Wednesday, June fourteenth. Coming up today.

810
00:37:34,320 --> 00:37:36,520
Speaker 17: Former President Trump calls it a day that will go

811
00:37:36,640 --> 00:37:40,040
Speaker 17: down in infamy after pleading not guilty to federal charges.

812
00:37:40,160 --> 00:37:42,359
Speaker 7: All eyes are on the Fed as the Central Bank

813
00:37:42,400 --> 00:37:44,640
Speaker 7: prepares to issue its latest policy decision.

814
00:37:44,719 --> 00:37:47,719
Speaker 17: Shell gets a boost, the oil giant upsits dividend and

815
00:37:47,800 --> 00:37:50,040
Speaker 17: pivots back to fossil fuels, and more.

816
00:37:50,120 --> 00:37:53,480
Speaker 7: Legal trouble hits Microsoft's bid, poor activision blizzard.

817
00:37:53,560 --> 00:37:57,919
Speaker 4: Russian President Putin admits shortcomings fighting Ukraine's counter defensive, plus

818
00:37:57,960 --> 00:38:00,160
Speaker 4: a federal judge he consider as a takeover a New

819
00:38:00,239 --> 00:38:01,280
Speaker 4: York's Bikers Island.

820
00:38:01,320 --> 00:38:04,640
Speaker 18: I'm Michael dar John stash Eron's Worth, the Yankees meet

821
00:38:04,640 --> 00:38:06,520
Speaker 18: the Mets, a new coach for the Rangers, and the

822
00:38:06,600 --> 00:38:09,040
Speaker 18: Vegas Golden Knights have won this Family Cup.

823
00:38:10,640 --> 00:38:14,080
Speaker 12: That's all straight ahead on Bloomberg day Break, the Business

824
00:38:14,080 --> 00:38:16,560
Speaker 12: news you need to starn your day in just one

825
00:38:16,680 --> 00:38:21,839
Speaker 12: fifteen minute podcast each morning on Apples, Spotify, the Bloomberg Business.

826
00:38:21,600 --> 00:38:23,839
Speaker 6: App, and everywhere you get your podcasts.

827
00:38:26,840 --> 00:38:30,040
Speaker 7: Good morning, I'm Nathan Hager and I'm Amy Morris. Here

828
00:38:30,120 --> 00:38:32,040
Speaker 7: are the stories we're following today.

829
00:38:32,560 --> 00:38:35,240
Speaker 17: We begin with the major story in politics this morning,

830
00:38:35,239 --> 00:38:39,040
Speaker 17: the arraignment of former President Donald Trump. The Republican front runner,

831
00:38:39,040 --> 00:38:42,279
Speaker 17: pleaded not guilty to thirty seven federal counts accusing him

832
00:38:42,320 --> 00:38:45,680
Speaker 17: of willfully retaining top secret documents. After court, he flew

833
00:38:45,719 --> 00:38:49,000
Speaker 17: from Miami to Bedminster, New Jersey, where he told supporters

834
00:38:49,000 --> 00:38:51,360
Speaker 17: he had every right to keep those records.

835
00:38:51,440 --> 00:38:55,879
Speaker 19: Threatening me with four hundred years in prison for possessing

836
00:38:55,960 --> 00:38:59,720
Speaker 19: my own presidential papers, which just about every other president

837
00:38:59,719 --> 00:39:03,480
Speaker 19: has done, is one of the most outrageous and vicious

838
00:39:03,560 --> 00:39:07,080
Speaker 19: legal theories ever put forward in an American court of law.

839
00:39:07,320 --> 00:39:10,440
Speaker 17: The former president spoke at a fundraiser that was planned

840
00:39:10,480 --> 00:39:12,120
Speaker 17: before the indictment.

841
00:39:12,000 --> 00:39:14,360
Speaker 7: And it was a historic day, making Trump the first

842
00:39:14,360 --> 00:39:17,080
Speaker 7: ex president to face federal charges. It all started at

843
00:39:17,080 --> 00:39:20,279
Speaker 7: a courthouse in Miami. That's where we find Bloomberg's at

844
00:39:20,360 --> 00:39:21,040
Speaker 7: Kaylee Lines.

845
00:39:21,400 --> 00:39:23,920
Speaker 20: There were hundreds of pro Trump supporters that were at

846
00:39:24,040 --> 00:39:26,920
Speaker 20: the courthouse. Police that I spoke with indicated that there

847
00:39:26,960 --> 00:39:29,560
Speaker 20: had been no violent incidents that they were aware of,

848
00:39:29,760 --> 00:39:32,480
Speaker 20: and President Trump, after leaving the courthouse, went to a

849
00:39:32,520 --> 00:39:35,800
Speaker 20: popular Cuban restaurant here in Miami, Cafe Verside, to speak

850
00:39:35,920 --> 00:39:38,160
Speaker 20: with some of the reporters. As for where the legal

851
00:39:38,200 --> 00:39:40,840
Speaker 20: proceedings go from here, this case will move from Miami

852
00:39:40,960 --> 00:39:43,800
Speaker 20: to West Palm Beach, Florida, where Judge Eileen Cannon, a

853
00:39:43,840 --> 00:39:46,920
Speaker 20: Trump appointee, will be overseeing it. It then becomes a

854
00:39:47,000 --> 00:39:50,040
Speaker 20: question of the timeline. President Trump has a reputation for

855
00:39:50,120 --> 00:39:53,360
Speaker 20: dragging legal proceedings out for quite some time, so we

856
00:39:53,400 --> 00:39:56,240
Speaker 20: could see this fight going well up to the November

857
00:39:56,239 --> 00:39:59,960
Speaker 20: twenty twenty four election or perhaps even beyond it. In Miami,

858
00:40:00,239 --> 00:40:02,080
Speaker 20: Kaylee Lines Bloomberg.

859
00:40:01,680 --> 00:40:03,520
Speaker 6: Names Okay Kaylee, thank you know.

860
00:40:03,960 --> 00:40:06,680
Speaker 17: Legal analysts say drawing out the case could have benefits

861
00:40:06,680 --> 00:40:09,000
Speaker 17: for the former president. We caught up with Palm Beach

862
00:40:09,040 --> 00:40:10,800
Speaker 17: County State Attorney Dave Ehrenberg.

863
00:40:11,040 --> 00:40:13,239
Speaker 21: The one advantage for Trump is that it gives him

864
00:40:13,280 --> 00:40:14,840
Speaker 21: a chance to delay matters further.

865
00:40:14,920 --> 00:40:18,160
Speaker 22: You can challenge the ruling down here, but he's not.

866
00:40:18,120 --> 00:40:18,760
Speaker 7: Going to succeed.

867
00:40:18,800 --> 00:40:20,879
Speaker 6: But in a way, he wins by losing, because by

868
00:40:20,880 --> 00:40:23,799
Speaker 6: losing in court, he's going to have those delays that

869
00:40:23,880 --> 00:40:25,960
Speaker 6: he loves because it can push this case beyond the

870
00:40:26,000 --> 00:40:26,960
Speaker 6: twenty twenty four election.

871
00:40:27,160 --> 00:40:29,840
Speaker 17: Palm Beach State Attorney Dave Ahrenberg spoke with Joe Matthew

872
00:40:29,880 --> 00:40:32,120
Speaker 17: on Bloomberg's Sound On. You can catch the program at

873
00:40:32,160 --> 00:40:35,160
Speaker 17: one pm Eastern on Bloomberg Radio or listen on demand

874
00:40:35,160 --> 00:40:36,760
Speaker 17: wherever you get your podcasts.

875
00:40:37,040 --> 00:40:39,719
Speaker 7: We'll have more on Donald Trump's case in just a

876
00:40:39,760 --> 00:40:42,480
Speaker 7: few minutes. But now it's turned to Wall Street traders

877
00:40:42,600 --> 00:40:45,840
Speaker 7: looking to today's policy decision from the Federal Reserve. The

878
00:40:45,920 --> 00:40:49,600
Speaker 7: majority of economists expect the Fed to pause and not

879
00:40:49,800 --> 00:40:52,520
Speaker 7: raise rates for the first time since March of last year.

880
00:40:52,840 --> 00:40:55,520
Speaker 7: Let's get those details from Bloomberg's Michael McKee.

881
00:40:55,640 --> 00:40:58,319
Speaker 23: Fed officials went into their two day meeting divided over

882
00:40:58,360 --> 00:41:02,839
Speaker 23: whether inflation remains so stubborn that additional rate increases are necessary.

883
00:41:02,960 --> 00:41:06,320
Speaker 23: Tuesday's benign CPI report likely tips the balance of the

884
00:41:06,440 --> 00:41:09,600
Speaker 23: argument to those who would put a further move on hold.

885
00:41:10,000 --> 00:41:12,919
Speaker 23: The central Bank has raised the nation's benchmark borrowing rate

886
00:41:12,960 --> 00:41:16,680
Speaker 23: by more than five percentage points and inflation is coming down.

887
00:41:16,920 --> 00:41:19,480
Speaker 23: While investors have priced out a rate move for this meeting,

888
00:41:19,680 --> 00:41:23,040
Speaker 23: July and future meetings remain on the table, at least

889
00:41:23,080 --> 00:41:26,400
Speaker 23: for now, markets will price those odds after today a

890
00:41:26,480 --> 00:41:29,320
Speaker 23: new forecast from Fed officials and a new dot plot

891
00:41:29,360 --> 00:41:32,440
Speaker 23: outlining their rate views, coupled with what Fed chair j

892
00:41:32,600 --> 00:41:36,040
Speaker 23: Powell says about the outlook. Michael McKee Bloomberg Daybreak.

893
00:41:36,080 --> 00:41:38,160
Speaker 17: Okay, Mike, thanks to join us for live coverage of

894
00:41:38,160 --> 00:41:41,399
Speaker 17: the FED decision on a special edition of Bloomberg Surveillance.

895
00:41:41,440 --> 00:41:44,520
Speaker 17: It starts at one thirty pm Eastern on Bloomberg Radio

896
00:41:44,560 --> 00:41:47,800
Speaker 17: and Television. Plus stay tuned for another reading on inflation.

897
00:41:47,920 --> 00:41:50,799
Speaker 17: We get that latest Street on US producer prices at

898
00:41:50,840 --> 00:41:52,400
Speaker 17: eight thirty this morning.

899
00:41:52,719 --> 00:41:56,080
Speaker 7: And turning overseas, the economy is also in focus in

900
00:41:56,120 --> 00:41:59,320
Speaker 7: the UK today. Growth in Britain bounced back in April.

901
00:41:59,320 --> 00:42:02,560
Speaker 7: Bloombergs up Uwan Pots joins us from London. With the details.

902
00:42:02,840 --> 00:42:05,720
Speaker 7: Good morning Ewan, Good morning Amy and Nathan. A strong

903
00:42:05,840 --> 00:42:08,880
Speaker 7: start to the second quarter for the UK economy. GDP

904
00:42:09,080 --> 00:42:11,960
Speaker 7: grew by zero point two percent in April, following a

905
00:42:12,040 --> 00:42:15,080
Speaker 7: negative reading in the previous month. The positive data, in

906
00:42:15,200 --> 00:42:17,759
Speaker 7: line with estimates, means the British economy dodges the risk

907
00:42:17,880 --> 00:42:21,200
Speaker 7: of recession. But after hot employment numbers this week, traders

908
00:42:21,239 --> 00:42:23,160
Speaker 7: have been ramping up bets at the Bank of England

909
00:42:23,160 --> 00:42:25,800
Speaker 7: will be forced to continue hiking rates throughout the summer.

910
00:42:26,080 --> 00:42:27,919
Speaker 10: In London, I'm you in pot'spoon bag day break.

911
00:42:28,000 --> 00:42:30,000
Speaker 6: Okay you and thanks. Let's stay in Europe, where big

912
00:42:30,080 --> 00:42:31,520
Speaker 6: oil is making news. This morning.

913
00:42:31,840 --> 00:42:34,640
Speaker 17: Shell says it will increase its dividend by fifteen percent.

914
00:42:35,200 --> 00:42:37,799
Speaker 17: It's also pivoting back to oil and gas. It's part

915
00:42:37,840 --> 00:42:40,320
Speaker 17: of Shell's pivot to expand the most profitable parts of

916
00:42:40,360 --> 00:42:42,640
Speaker 17: its business, even if they are carbon intensive.

917
00:42:43,400 --> 00:42:46,400
Speaker 7: And oil demand is set to slow dramatically. That's the

918
00:42:46,480 --> 00:42:49,960
Speaker 7: word from the International Energy Agency. The IEA says consumption

919
00:42:50,080 --> 00:42:52,520
Speaker 7: in twenty twenty four will grow at half the rate

920
00:42:52,600 --> 00:42:55,600
Speaker 7: scene in the prior two years. The agency says high

921
00:42:55,680 --> 00:42:58,480
Speaker 7: prices and Russia's invasion of Ukraine will speed up the

922
00:42:58,520 --> 00:43:00,960
Speaker 7: transition away from far feels.

923
00:43:00,960 --> 00:43:01,919
Speaker 6: Okay, Amy. Thanks.

924
00:43:01,960 --> 00:43:04,280
Speaker 17: Back here in the US, Microsoft is in the spotlight.

925
00:43:04,360 --> 00:43:07,880
Speaker 17: The company's acquisition of Activision Blizzard has been temporarily blocked

926
00:43:07,920 --> 00:43:09,640
Speaker 17: by a federal judge, and we get the story from

927
00:43:09,680 --> 00:43:10,800
Speaker 17: Bloomberg's John Tucker.

928
00:43:11,120 --> 00:43:14,120
Speaker 22: The judge issued a temporary restraining order to maintain what

929
00:43:14,239 --> 00:43:16,760
Speaker 22: he called the status quo while the Federal Trade Commission

930
00:43:16,840 --> 00:43:20,680
Speaker 22: challenges the deal. The FTC itself filed an emergency motion

931
00:43:20,800 --> 00:43:23,520
Speaker 22: to halt the merger on Monday. This ruling holds the

932
00:43:23,600 --> 00:43:26,919
Speaker 22: two companies apart until five days after the court rules

933
00:43:26,960 --> 00:43:29,960
Speaker 22: on a more permanent pause in the deal, and evidentiary

934
00:43:30,040 --> 00:43:31,840
Speaker 22: hearing of the longer term in junction is set to

935
00:43:31,880 --> 00:43:35,000
Speaker 22: be held in San Francisco later this month. US authorities

936
00:43:35,000 --> 00:43:37,000
Speaker 22: are not the only ones who've challenged the deal. UK

937
00:43:37,200 --> 00:43:41,960
Speaker 22: competition regulators also vetoed the merger. John Tucker Bloomberg Daybreak.

938
00:43:45,360 --> 00:43:46,560
Speaker 17: Time now to take a look at some of the

939
00:43:46,600 --> 00:43:48,839
Speaker 17: other stories making news in New York and around the world.

940
00:43:48,880 --> 00:43:51,440
Speaker 17: For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael,

941
00:43:51,520 --> 00:43:55,560
Speaker 17: Good morning, Nathan. President Vladimir Putin acknowledged that Russian forces

942
00:43:55,680 --> 00:43:59,879
Speaker 17: fighting in Ukraine lacks efficient advanced weapons. Despite a trip

943
00:44:00,280 --> 00:44:04,680
Speaker 17: of arms output, Kieves forces pressed the counter offensive. However,

944
00:44:04,800 --> 00:44:08,920
Speaker 17: regional authorities say Russian forces fired cruise missiles at the

945
00:44:09,000 --> 00:44:13,800
Speaker 17: southern Ukrainian city of Odessa overnight, killing three people. Meanwhile,

946
00:44:13,880 --> 00:44:17,120
Speaker 17: President Biden met yesterday with the NATO Secretary General Yen

947
00:44:17,239 --> 00:44:20,759
Speaker 17: Stoltenberg in the Oval Office. President Biden said that the

948
00:44:20,880 --> 00:44:26,560
Speaker 17: US remains committed to supporting Ukraine and defending NATO territory. Stoltenberg,

949
00:44:26,680 --> 00:44:30,000
Speaker 17: in knowledge the latest US military a to Ukraine three

950
00:44:30,120 --> 00:44:32,680
Speaker 17: hundred and twenty five million dollars, thank you.

951
00:44:32,760 --> 00:44:36,160
Speaker 24: For your leadership, for your strong personal commitment to the

952
00:44:36,239 --> 00:44:41,320
Speaker 24: Transatlantic Bond, to Europe and North American standing together. And

953
00:44:41,440 --> 00:44:45,160
Speaker 24: then may also thank the US Congress and the people

954
00:44:45,200 --> 00:44:48,480
Speaker 24: of America for the strong support to Ukraine.

955
00:44:48,920 --> 00:44:53,560
Speaker 4: Monday's scheduled meeting with Stoltenberg was postponed to Tuesday because

956
00:44:53,600 --> 00:44:55,720
Speaker 4: the President had to get treatment for a root canal.

957
00:44:56,400 --> 00:44:59,040
Speaker 4: A federal judge is once again weighing a takeover of

958
00:44:59,160 --> 00:45:02,920
Speaker 4: New York City's t troubled Rikers Island Jail Complex. Judge

959
00:45:03,040 --> 00:45:06,840
Speaker 4: Laura Taylor described her faith in its leadership as shaken

960
00:45:07,000 --> 00:45:11,200
Speaker 4: following recent reports of violence, grewsome injuries, and a lack

961
00:45:11,280 --> 00:45:15,600
Speaker 4: of cooperation that has thwarted court oversight. Travelers are catching

962
00:45:15,640 --> 00:45:19,280
Speaker 4: a break as US airfares and rental car prices have fallen.

963
00:45:19,600 --> 00:45:21,640
Speaker 4: Bloomberg's at Maxter reports.

964
00:45:21,480 --> 00:45:24,240
Speaker 25: There is a white hot demand for travel, and travelers

965
00:45:24,239 --> 00:45:27,000
Speaker 25: saw the lowest prices for airline tickets and rental cars

966
00:45:27,040 --> 00:45:30,560
Speaker 25: since March of twenty twenty one. Prices in May fell

967
00:45:30,680 --> 00:45:34,040
Speaker 25: thirteen percent year over year. Prices for rental cars and

968
00:45:34,160 --> 00:45:37,880
Speaker 25: trucks sank twelve percent, the most since May of twenty twenty,

969
00:45:38,200 --> 00:45:42,760
Speaker 25: when the pandemic drastically curtailed travel. United CEO Scott Kirby

970
00:45:42,800 --> 00:45:45,680
Speaker 25: says flight costs are now comparable to what consumers paid

971
00:45:45,760 --> 00:45:48,560
Speaker 25: a decade ago. He says, we're just coming back to

972
00:45:48,760 --> 00:45:53,080
Speaker 25: normalcy in pricing. In San Francisco, I'm at Baxter Bloomberg

973
00:45:53,160 --> 00:45:53,879
Speaker 25: daybreak House.

974
00:45:53,920 --> 00:45:58,800
Speaker 4: Republicans passed legislation to preemptively block future attempts to restrict

975
00:45:58,960 --> 00:46:03,360
Speaker 4: gas stoves after overcoming a revolt by the party's conservative members.

976
00:46:03,719 --> 00:46:06,880
Speaker 4: The bill would prohibit the independent Consumer Product Safety Commission

977
00:46:07,120 --> 00:46:11,400
Speaker 4: from using federal funds to ban the appliances as hazardous products.

978
00:46:11,800 --> 00:46:14,520
Speaker 4: Global News twenty four hours a day, powered by more

979
00:46:14,880 --> 00:46:17,759
Speaker 4: than twenty seven hundred journalists, nanalysts, and over one hundred

980
00:46:17,800 --> 00:46:21,040
Speaker 4: twenty countries. I'm Michael Barren. This is Bloomberg Nathan.

981
00:46:21,160 --> 00:46:21,760
Speaker 6: Thanks Michael.

982
00:46:26,360 --> 00:46:28,760
Speaker 17: Time out for the Bloomberg Sports Update FRONTI by Trice

983
00:46:28,880 --> 00:46:29,319
Speaker 17: Date Outy.

984
00:46:29,360 --> 00:46:30,560
Speaker 6: Here's John Stanshauer.

985
00:46:30,920 --> 00:46:33,760
Speaker 18: All right, Nathan Wild started the Subway series. The second

986
00:46:33,920 --> 00:46:37,040
Speaker 18: batter was John Carlos Stanton his twenty fourth home run

987
00:46:37,120 --> 00:46:40,160
Speaker 18: at City Field. That's ten more than any other opposing player.

988
00:46:40,280 --> 00:46:44,359
Speaker 18: Luis Severino's second pitch was a Brandon Nimo homer. Sever

989
00:46:44,400 --> 00:46:46,200
Speaker 18: Reno gave up two runs in the first and name

990
00:46:46,280 --> 00:46:48,520
Speaker 18: two more in the second, an other than the third,

991
00:46:48,600 --> 00:46:51,319
Speaker 18: but the Yankees with five runs in the fourth off

992
00:46:51,440 --> 00:46:54,479
Speaker 18: Max schurz Or, who got booed by the Cityfield crowd

993
00:46:54,520 --> 00:46:56,600
Speaker 18: when he was taken out. The Yanks sent the Mets

994
00:46:56,640 --> 00:46:59,280
Speaker 18: to their ninth loss in the last ten games, seven

995
00:46:59,360 --> 00:47:01,960
Speaker 18: to six. Vicky bullpen has been a strength all season.

996
00:47:02,360 --> 00:47:06,280
Speaker 18: Six Yankee relievers team for four plus scoreless innings of releave.

997
00:47:06,360 --> 00:47:09,640
Speaker 18: Tonight it's Garrett Cole against Justin Verlander. They don't really

998
00:47:09,719 --> 00:47:12,160
Speaker 18: need a reason to have a party in Las Vegas,

999
00:47:12,239 --> 00:47:12,960
Speaker 18: but they got one.

1000
00:47:13,120 --> 00:47:18,520
Speaker 14: First Stanley Cup championship in Golden Knight's history comes in

1001
00:47:18,640 --> 00:47:24,120
Speaker 14: their sixth season. The Silver State is home to their

1002
00:47:24,160 --> 00:47:26,200
Speaker 14: greatest silver trophy at all of sports.

1003
00:47:26,320 --> 00:47:29,080
Speaker 18: JK GK the call Game five and a Cup Final,

1004
00:47:29,200 --> 00:47:32,480
Speaker 18: a blowout win for Vegas nine to three over Florida.

1005
00:47:32,480 --> 00:47:34,920
Speaker 18: Though the game was only two to one midway through

1006
00:47:34,960 --> 00:47:36,440
Speaker 18: the second period, the next thing you knew, it was

1007
00:47:36,520 --> 00:47:39,040
Speaker 18: seven to one. Hat trick for Vegas captain Mark Stone.

1008
00:47:39,440 --> 00:47:42,040
Speaker 18: Jonathan marsh So won the Consul Mike Trophy and playoff

1009
00:47:42,120 --> 00:47:45,400
Speaker 18: MVP and the surprising run by the Panthers as the

1010
00:47:45,480 --> 00:47:46,879
Speaker 18: eighth seed comes to an end. They had to play

1011
00:47:46,880 --> 00:47:49,280
Speaker 18: without their best player, the injured Matthew could Chuck. Meanwhile,

1012
00:47:49,280 --> 00:47:51,359
Speaker 18: the Rangers have their new coach, fifty eight year old

1013
00:47:51,640 --> 00:47:54,880
Speaker 18: Peter Loveolet, continuing his tour of the Metropolitan Division. The

1014
00:47:54,960 --> 00:47:57,360
Speaker 18: Rangers will be the fifth team in the division that

1015
00:47:57,440 --> 00:48:00,760
Speaker 18: he's coached, most recently with Washington. Lovey Let briefly played

1016
00:48:00,800 --> 00:48:02,640
Speaker 18: for the Rangers in the late nineteen eighties. He's the

1017
00:48:02,719 --> 00:48:07,279
Speaker 18: eighth winningest coach in NHL history. John Stashiewer, Bloomberg Sports.

1018
00:48:09,440 --> 00:48:12,400
Speaker 26: From coast to coast, from New York to San Francisco,

1019
00:48:12,760 --> 00:48:17,760
Speaker 26: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business

1020
00:48:17,840 --> 00:48:23,160
Speaker 26: app in Bloomberg dot Com. This is Bloomberg Daybreak. Good morning.

1021
00:48:23,200 --> 00:48:24,000
Speaker 26: I'm Nathan Hager.

1022
00:48:24,080 --> 00:48:25,759
Speaker 17: He is calling it a day that will go down

1023
00:48:25,960 --> 00:48:29,440
Speaker 17: in infamy, but rather than a sneak attack, former President

1024
00:48:29,520 --> 00:48:32,360
Speaker 17: Donald Trump is going after the Justice Department head on,

1025
00:48:32,640 --> 00:48:36,600
Speaker 17: hinting at his defense after pleading not guilty yesterday to

1026
00:48:36,680 --> 00:48:40,800
Speaker 17: federal charges over his handling of classified documents at mar Lago.

1027
00:48:40,920 --> 00:48:42,799
Speaker 6: For more, we are joined live this morning.

1028
00:48:42,560 --> 00:48:46,719
Speaker 17: By Greg Valiere, the chief US policy strategist at AGF Investments.

1029
00:48:47,120 --> 00:48:47,880
Speaker 6: Greg. Good morning.

1030
00:48:47,960 --> 00:48:50,080
Speaker 17: It's not every day that you see a defendant in

1031
00:48:50,160 --> 00:48:54,319
Speaker 17: a criminal trial of speaking out as forcefully as former

1032
00:48:54,400 --> 00:48:56,320
Speaker 17: President Trump did last night at Bedminster.

1033
00:48:56,400 --> 00:48:59,680
Speaker 6: But of course this is no ordinary criminal defendant.

1034
00:49:00,719 --> 00:49:03,840
Speaker 21: Yeah, good morning, Nathan. I make two quick points. Initially,

1035
00:49:03,920 --> 00:49:07,080
Speaker 21: first of all, good editorial lead editorial in this morning's

1036
00:49:07,080 --> 00:49:09,919
Speaker 21: Wall Street Journal talking about how Trump is his own

1037
00:49:10,000 --> 00:49:13,680
Speaker 21: worst enemy, saying and doing reckless things that come back

1038
00:49:13,760 --> 00:49:16,520
Speaker 21: to bite him. And then I think you've got to

1039
00:49:16,560 --> 00:49:19,719
Speaker 21: say I watched the whole talk he gave last night

1040
00:49:19,760 --> 00:49:22,480
Speaker 21: from Dedminster. He didn't say anything new. I mean, it's

1041
00:49:22,520 --> 00:49:27,239
Speaker 21: the same old stuff, like my detractors are deranged.

1042
00:49:27,000 --> 00:49:28,960
Speaker 12: There on and on and on.

1043
00:49:29,160 --> 00:49:33,200
Speaker 21: All of these words that he uses against his detractors,

1044
00:49:33,360 --> 00:49:35,880
Speaker 21: I think have lost a lot of their potency.

1045
00:49:36,280 --> 00:49:39,080
Speaker 17: But some of the words that he also used sounded

1046
00:49:39,160 --> 00:49:41,719
Speaker 17: like he was reading directly from the Presidential Records Act,

1047
00:49:41,760 --> 00:49:44,080
Speaker 17: which says you allude to he's talked about before. That

1048
00:49:44,120 --> 00:49:46,360
Speaker 17: would potentially be his defense if he does go to

1049
00:49:46,480 --> 00:49:49,960
Speaker 17: trial here. What does that say about how the former

1050
00:49:50,040 --> 00:49:52,760
Speaker 17: president is going to be pursuing this and the potential

1051
00:49:52,880 --> 00:49:53,840
Speaker 17: political impact.

1052
00:49:54,239 --> 00:49:57,600
Speaker 21: Yeah, very very aggressively, but at the same time, not

1053
00:49:57,840 --> 00:50:00,239
Speaker 21: in any great rush. I think he'd loved to see

1054
00:50:00,280 --> 00:50:05,879
Speaker 21: this coincide with the election campaign of next year. Even

1055
00:50:05,960 --> 00:50:09,600
Speaker 21: though people like Bill Barr, the former Attorney General, has

1056
00:50:09,680 --> 00:50:12,440
Speaker 21: said that this is outrageous. Even Nikki Haley said that

1057
00:50:12,760 --> 00:50:18,040
Speaker 21: it endangers national security. Trump's conviction in Florida is not certain.

1058
00:50:18,400 --> 00:50:20,000
Speaker 21: I mean, you've got a state where it's going to

1059
00:50:20,040 --> 00:50:23,520
Speaker 21: be difficult to get a jury where everybody agrees that

1060
00:50:23,600 --> 00:50:24,759
Speaker 21: Trump did something wrong.

1061
00:50:25,320 --> 00:50:28,719
Speaker 17: Does this put an onus on the Justice Department or

1062
00:50:28,800 --> 00:50:32,000
Speaker 17: even President Biden to put out more of a public

1063
00:50:32,080 --> 00:50:34,880
Speaker 17: response since the former president is coming out so publicly

1064
00:50:35,000 --> 00:50:35,880
Speaker 17: like this, that's.

1065
00:50:35,800 --> 00:50:38,640
Speaker 21: A really interesting angle, Nathan. All of a sudden, there's

1066
00:50:38,719 --> 00:50:42,280
Speaker 21: focus on why the Biden Whitehouse has been so passive

1067
00:50:43,120 --> 00:50:47,080
Speaker 21: instructing Democrats not to go after Trump, not inciting him,

1068
00:50:47,200 --> 00:50:52,000
Speaker 21: not leading to suspicion that there's a collusion between the

1069
00:50:52,040 --> 00:50:54,520
Speaker 21: White House and the Justice Department. But there are a

1070
00:50:54,560 --> 00:50:57,160
Speaker 21: lot of Democrats in this town who I think will

1071
00:50:57,360 --> 00:51:00,920
Speaker 21: very soon begin to really rip into tru for what

1072
00:51:01,040 --> 00:51:01,480
Speaker 21: he's done.

1073
00:51:02,320 --> 00:51:07,160
Speaker 17: Interesting, are you thinking of any names in particular? I

1074
00:51:07,280 --> 00:51:09,560
Speaker 17: wouldn't think that President Biden would be coming out, at

1075
00:51:09,640 --> 00:51:12,359
Speaker 17: least in the short term, more forcefully than he has.

1076
00:51:12,600 --> 00:51:15,200
Speaker 21: Yeah, I don't see Joe Biden. Actually, Jill Biden last

1077
00:51:15,280 --> 00:51:19,279
Speaker 21: night had a fairly critical comment about Trump. But I

1078
00:51:19,360 --> 00:51:22,880
Speaker 21: do think there will be other Democrats, Democrats would like

1079
00:51:22,960 --> 00:51:25,520
Speaker 21: to run for president in four years who start to

1080
00:51:25,600 --> 00:51:27,120
Speaker 21: talk pretty aggressively.

1081
00:51:27,600 --> 00:51:32,280
Speaker 17: Okay, what about the former president's primary opponents who started

1082
00:51:32,320 --> 00:51:34,319
Speaker 17: to see a little bit of a shift for them

1083
00:51:34,480 --> 00:51:37,759
Speaker 17: as well, particularly Nikki Haley and Tim Scott, both out

1084
00:51:37,760 --> 00:51:40,279
Speaker 17: of South Carolina, getting a little bit more forceful in

1085
00:51:40,280 --> 00:51:40,800
Speaker 17: their rhetoric.

1086
00:51:40,840 --> 00:51:42,000
Speaker 6: Do you see that continuing?

1087
00:51:42,600 --> 00:51:45,080
Speaker 21: But maybe I think a lot of these politicians will

1088
00:51:45,160 --> 00:51:48,680
Speaker 21: carefully read the polls, and the poll show, at least initially,

1089
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Speaker 21: the American public, not just Republicans, feel that this is

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Speaker 21: a political you know, they're ganging up on Donald Trump.

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Speaker 21: I think the key politician to watch, obviously is Ron Desantus.

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Speaker 21: If Desantas starts to move away, and their signs that

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Speaker 21: he might, that would be significant.

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Speaker 17: Now it goes back to the point I guess that

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Speaker 17: you were making earlier about the former president's words sort

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Speaker 17: of losing their luster a little bit as he continues

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Speaker 17: to hammer out a lot of the same forceful points

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Speaker 17: he has before. How do you see the long term

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Speaker 17: effects of this case playing out as it does get

1100
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Speaker 17: closer to a November twenty twenty four election, and potentially

1101
00:52:29,400 --> 00:52:32,279
Speaker 17: the case bleeding even after election day.

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Speaker 21: Yeah, you got to sustain the momentum. How many times

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Speaker 21: can you call someone a deranged lunatic before it starts

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Speaker 21: to lose its impact? And I do think that while

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Speaker 21: Trump will maintain his base, there's no question in my

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00:52:46,200 --> 00:52:48,960
Speaker 21: mind on that. I just don't see Donald Trump having

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Speaker 21: enough support among moderates to win in a general election.

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Speaker 17: Does this case sustain itself even with some of the

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Speaker 17: other legal pressure that the former president is facing in

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Speaker 17: potential further charges not just from this Special Council, but

1111
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Speaker 17: from Georgia as well.

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Speaker 21: A good point. There are still two huge cases to go.

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Speaker 21: I think Georgia may be in the news by later

1114
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Speaker 21: in the summer. It looks like that case will be brought,

1115
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Speaker 21: And of course the big one of all is January sixth.

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00:53:17,160 --> 00:53:21,000
Speaker 21: And I do think that Trump is quite vulnerable because

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00:53:21,040 --> 00:53:25,640
Speaker 21: of an extensive record that shows that he encouraged the

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00:53:25,719 --> 00:53:27,399
Speaker 21: riots and did nothing to stop them.

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00:53:33,200 --> 00:53:36,560
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