1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,440 --> 00:00:27,880 Speaker 2: We have the. 7 00:00:27,840 --> 00:00:31,240 Speaker 3: Perfect guest on the state of the American economy. Francis 8 00:00:31,320 --> 00:00:35,720 Speaker 3: Donald is truly a student of our holistic economy, each 9 00:00:35,800 --> 00:00:40,400 Speaker 3: individual item of the algebraic equation of GDP. She is 10 00:00:40,520 --> 00:00:44,360 Speaker 3: with RBC and their chief economists this morning. This could 11 00:00:44,360 --> 00:00:47,839 Speaker 3: be a two hour conversation. Let's just begin with what 12 00:00:47,880 --> 00:00:51,639 Speaker 3: Global Wall Street wants to know. Now, what what are 13 00:00:51,640 --> 00:00:54,400 Speaker 3: they do in the speeches? What do they do in 14 00:00:54,440 --> 00:00:58,240 Speaker 3: the discussions the body language when they've already modeled it 15 00:00:58,320 --> 00:00:59,560 Speaker 3: in another two rate cuts. 16 00:01:00,360 --> 00:01:02,120 Speaker 4: I think this is a federal Reserve that is going 17 00:01:02,160 --> 00:01:04,840 Speaker 4: to have to talk their way through some increasingly painful 18 00:01:04,880 --> 00:01:09,600 Speaker 4: inflation points because they have revealed their hand. I remember 19 00:01:09,640 --> 00:01:13,319 Speaker 4: talking six nine months ago with you, Tom, and we 20 00:01:13,319 --> 00:01:15,399 Speaker 4: were trying to figure out, oh, when there's tension on 21 00:01:15,440 --> 00:01:17,679 Speaker 4: both sides of the Fed's dual mandate, which way will 22 00:01:17,720 --> 00:01:22,040 Speaker 4: they lean? Very clearly, there's a wabble in the labor market, 23 00:01:22,160 --> 00:01:25,240 Speaker 4: and the FED is jumping in immediately to provide support 24 00:01:25,319 --> 00:01:28,000 Speaker 4: like an overprotective parent. I think is the way that 25 00:01:28,040 --> 00:01:31,039 Speaker 4: I'm thinking about it. But in our view, inflation data 26 00:01:31,080 --> 00:01:33,880 Speaker 4: is going to become increasingly more problematic heading into your 27 00:01:33,959 --> 00:01:37,120 Speaker 4: in and not just on goods and tariffs, but also 28 00:01:37,200 --> 00:01:39,360 Speaker 4: on services. So this is a FED that's going to 29 00:01:39,400 --> 00:01:42,039 Speaker 4: have to explain away inflation data a lot more in 30 00:01:42,040 --> 00:01:42,839 Speaker 4: the next coming months. 31 00:01:42,880 --> 00:01:45,240 Speaker 3: And Paul, they just took on the Tiger Mom doctor 32 00:01:45,280 --> 00:01:46,520 Speaker 3: Mirron as well. 33 00:01:47,040 --> 00:01:50,720 Speaker 5: Typically speaking, how much impact do interest rates have on 34 00:01:50,880 --> 00:01:53,480 Speaker 5: the labor market? If they want to address the labor market, well, 35 00:01:53,520 --> 00:01:54,320 Speaker 5: cutting rates is that? 36 00:01:54,520 --> 00:01:55,080 Speaker 6: Is that going to help? 37 00:01:55,320 --> 00:01:59,240 Speaker 4: I love that you started with typically speaking, because typically speaking, 38 00:01:59,560 --> 00:02:02,640 Speaker 4: absolutely you would ease, you would allow companies to be 39 00:02:02,680 --> 00:02:05,800 Speaker 4: able to borrow more cheaply, or reduced debt burdens, they 40 00:02:05,800 --> 00:02:08,679 Speaker 4: would be able to focus on labor or limit job cuts. 41 00:02:08,840 --> 00:02:10,480 Speaker 4: But what do you do when the nature of the 42 00:02:10,560 --> 00:02:14,480 Speaker 4: job market has changed so significantly. Job losses are predominantly 43 00:02:14,560 --> 00:02:17,680 Speaker 4: in trade related sectors, and you have these big structural 44 00:02:17,720 --> 00:02:20,280 Speaker 4: shifts that are pushing one in three jobs. One in 45 00:02:20,360 --> 00:02:23,920 Speaker 4: three jobs right now? Are government healthcare or social assistance. 46 00:02:24,160 --> 00:02:26,080 Speaker 4: That means that a third of the labor market is 47 00:02:26,120 --> 00:02:28,880 Speaker 4: not particularly interest rate sensitive at all and actually not 48 00:02:28,960 --> 00:02:30,000 Speaker 4: really faltering. 49 00:02:29,680 --> 00:02:33,840 Speaker 3: Absolutely brilliant, and this alludes to Nancy Lazara Piper in Minneapolis, 50 00:02:33,880 --> 00:02:37,880 Speaker 3: who's been absolutely brilliant on this. So we're watching Intel 51 00:02:38,520 --> 00:02:41,280 Speaker 3: as well with Nvidia, Intel up eighteen percent even in 52 00:02:41,440 --> 00:02:44,440 Speaker 3: Vidiot lifts here, as in Nvidia invest five billion in 53 00:02:44,520 --> 00:02:48,399 Speaker 3: the beleaguered Intel. Francis Donald with US across America. Good 54 00:02:48,400 --> 00:02:51,240 Speaker 3: Morning Canada. Thank you for joining us with the Royal 55 00:02:51,280 --> 00:02:55,000 Speaker 3: Bank of Canada and on YouTube as well, subscribe to 56 00:02:55,040 --> 00:02:59,320 Speaker 3: bloomberg A podcasts. Francis, I look at the Ballet yesterday 57 00:03:00,120 --> 00:03:04,120 Speaker 3: and there was some amazing, almost surreal responses within the 58 00:03:04,160 --> 00:03:07,400 Speaker 3: show that we did yesterday, and I thought Jeff Rosenberg 59 00:03:07,520 --> 00:03:12,239 Speaker 3: was really good about the dynamics change, and I said, 60 00:03:12,280 --> 00:03:16,280 Speaker 3: I blurted out in my clumsiness, there's a whole new 61 00:03:16,400 --> 00:03:19,560 Speaker 3: data dependency given this backdrop. 62 00:03:20,120 --> 00:03:23,520 Speaker 7: They stagger from data point to data point, don't they. 63 00:03:23,680 --> 00:03:26,000 Speaker 4: I felt like it was more like a breakdancing than 64 00:03:26,120 --> 00:03:29,320 Speaker 4: Ballet yesterday because there was a little bit more chaos 65 00:03:29,360 --> 00:03:33,280 Speaker 4: and not necessarily super clear messaging. It didn't feel like 66 00:03:33,360 --> 00:03:36,600 Speaker 4: it was very well choreographed in general, or at least 67 00:03:36,600 --> 00:03:40,280 Speaker 4: there were dislocations within it. What I heard yesterday from 68 00:03:40,440 --> 00:03:43,000 Speaker 4: Chair Powell, I know you've probably already talked about it 69 00:03:43,040 --> 00:03:46,560 Speaker 4: one hundred times, was there are no risk free paths ahead. 70 00:03:46,960 --> 00:03:50,120 Speaker 4: This was a haunting comment from a central banker, but 71 00:03:50,160 --> 00:03:54,080 Speaker 4: it also reflects the underlying US economy, which is that 72 00:03:54,280 --> 00:03:57,280 Speaker 4: we are still in the air pocket before we will 73 00:03:57,320 --> 00:04:00,280 Speaker 4: know the impact of this once in one hundred year 74 00:04:00,560 --> 00:04:03,240 Speaker 4: trade shock that has hit the US economy. It is 75 00:04:03,280 --> 00:04:05,800 Speaker 4: our view that there are still significant inventories in the 76 00:04:05,920 --> 00:04:08,720 Speaker 4: United States, and we don't know whether companies will truly 77 00:04:08,800 --> 00:04:12,000 Speaker 4: pass on those costs to inflation or whether they will 78 00:04:12,040 --> 00:04:14,760 Speaker 4: have to cut their own costs, and that will come 79 00:04:14,800 --> 00:04:17,760 Speaker 4: down to labor. So when you talk about data dependency, Tom, 80 00:04:18,320 --> 00:04:20,800 Speaker 4: what I'm looking at is one single data point, which 81 00:04:20,839 --> 00:04:23,240 Speaker 4: is how many inventories are left in the United States 82 00:04:23,440 --> 00:04:26,080 Speaker 4: and how long until we answer that question? Because neither 83 00:04:26,120 --> 00:04:28,840 Speaker 4: of those paths are good, but they result in very 84 00:04:28,839 --> 00:04:30,400 Speaker 4: different focuses from a central bank. 85 00:04:30,400 --> 00:04:33,720 Speaker 3: Well, we started the show at one thirty. Tariffs wasn't 86 00:04:33,720 --> 00:04:37,719 Speaker 3: mentioned until two sixteen. Okay, very good, Wow, odd, Yeah, 87 00:04:37,720 --> 00:04:39,360 Speaker 3: I mean teriffs is everything right now? 88 00:04:39,800 --> 00:04:41,840 Speaker 6: It's the Fed day. You guys are on top of it. 89 00:04:41,920 --> 00:04:45,720 Speaker 5: So the we had mister Myron, the new appointee to 90 00:04:45,760 --> 00:04:49,120 Speaker 5: the FED. He dissented and argued for more rate cuts. 91 00:04:49,160 --> 00:04:51,360 Speaker 5: As I guess one it would expect that's in line 92 00:04:51,400 --> 00:04:53,640 Speaker 5: with what President Trump would like to see. Other than 93 00:04:53,640 --> 00:04:57,359 Speaker 5: that it was unanimous here. We had some outllyers before, 94 00:04:57,360 --> 00:04:59,719 Speaker 5: but it's unanimous today. Was that important to you, well. 95 00:05:00,040 --> 00:05:02,440 Speaker 4: Miss in the sense that no one else formally dissented, 96 00:05:02,440 --> 00:05:04,760 Speaker 4: but there were some silent descents in there. There's certainly 97 00:05:04,800 --> 00:05:07,359 Speaker 4: plenty of folks that do not see more rate cuts 98 00:05:07,360 --> 00:05:09,840 Speaker 4: this year, one that sees a hike coming through. So 99 00:05:09,839 --> 00:05:12,159 Speaker 4: there's a divergence of opinions on the cover reserve, and 100 00:05:12,200 --> 00:05:15,360 Speaker 4: you know what, that's appropriate. It's appropriate for a range 101 00:05:15,360 --> 00:05:17,960 Speaker 4: of reasons. One is that we have an incredibly fragmented 102 00:05:18,080 --> 00:05:20,880 Speaker 4: US economy and this trade shock, the interest rate shock 103 00:05:21,000 --> 00:05:24,320 Speaker 4: of the early twenty twenties has created. We've talked about 104 00:05:24,320 --> 00:05:26,320 Speaker 4: it on this show, Haves and have Not. It's a 105 00:05:26,360 --> 00:05:28,960 Speaker 4: K shaped economy. But the trade shock is also a 106 00:05:29,000 --> 00:05:31,760 Speaker 4: fragmentation in the United States. There are sectors that are 107 00:05:31,760 --> 00:05:34,960 Speaker 4: feeling significantly more pain than others, and depending on which 108 00:05:35,000 --> 00:05:38,400 Speaker 4: region you represent, it's appropriate to perhaps have a different 109 00:05:38,480 --> 00:05:41,120 Speaker 4: view on what the appropriate path ahead is. So when 110 00:05:41,120 --> 00:05:44,880 Speaker 4: I see that divergence happening between opinions's opinions, it's a 111 00:05:44,920 --> 00:05:47,960 Speaker 4: reflection to me of the fragmentation and the spread that's 112 00:05:48,000 --> 00:05:50,640 Speaker 4: occurring in the real US economy as well. And maybe 113 00:05:50,640 --> 00:05:53,280 Speaker 4: that's not such a bad thing that there's different perspectives 114 00:05:53,279 --> 00:05:55,160 Speaker 4: about how to think about it and how to measure it. 115 00:05:55,240 --> 00:05:58,360 Speaker 3: Francis, thank you so much. This morning, Francis Donald's gets 116 00:05:58,360 --> 00:06:01,200 Speaker 3: a start and strowing here. This hour Real focused on 117 00:06:01,400 --> 00:06:04,320 Speaker 3: the FED the effect on global walls to Ian Lincoln's 118 00:06:04,320 --> 00:06:07,320 Speaker 3: schedule to be with us as well. Stay with us 119 00:06:07,560 --> 00:06:10,800 Speaker 3: more from Bloomberg Surveillance coming up after this. 120 00:06:18,040 --> 00:06:21,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 121 00:06:21,680 --> 00:06:24,880 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 122 00:06:24,920 --> 00:06:28,599 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 123 00:06:28,760 --> 00:06:30,240 Speaker 1: watch us live on YouTube. 124 00:06:30,440 --> 00:06:33,400 Speaker 3: We are pleased to bring you moments after He's published 125 00:06:33,400 --> 00:06:38,479 Speaker 3: a detailed note Ian Lincoln of BEMO Capital Markets, and 126 00:06:38,520 --> 00:06:42,440 Speaker 3: within the many paragraphs of a Lincoln Hartman note, there 127 00:06:42,600 --> 00:06:45,520 Speaker 3: is a phrase. I've never seen this from the FED, 128 00:06:46,160 --> 00:06:51,240 Speaker 3: tone refining. What is the paths forward from mister Powell 129 00:06:51,600 --> 00:06:56,000 Speaker 3: and company? Is they tone refine the message? 130 00:06:56,760 --> 00:06:59,280 Speaker 2: Well, I think that yesterday was a very good example 131 00:06:59,600 --> 00:07:04,920 Speaker 2: of the committee having one opinion and Powell choosing to 132 00:07:05,560 --> 00:07:09,640 Speaker 2: offer a tone refining more hawkish spin. So the market 133 00:07:09,760 --> 00:07:12,960 Speaker 2: rallied following the statement because we saw a lower twenty 134 00:07:13,040 --> 00:07:19,240 Speaker 2: twenty five FED projection FED funds projection. And then Powell 135 00:07:19,240 --> 00:07:21,560 Speaker 2: came out and said, think of it as a risk 136 00:07:21,640 --> 00:07:23,880 Speaker 2: management cut, and I think that that's why we saw 137 00:07:23,920 --> 00:07:25,680 Speaker 2: the market whip sought around a bit in here. 138 00:07:25,840 --> 00:07:28,320 Speaker 3: We talked to bond people yesterday and folks, I want 139 00:07:28,320 --> 00:07:31,680 Speaker 3: to get away from the jargonair Lingcoln's brilliant and avoiding 140 00:07:32,080 --> 00:07:36,240 Speaker 3: the jargon. But when spreads narrow, that means bonds are 141 00:07:36,240 --> 00:07:40,480 Speaker 3: bid price up, yield down is compared to full faith 142 00:07:40,480 --> 00:07:45,480 Speaker 3: and credit American paper. So I we're price to perfection 143 00:07:45,760 --> 00:07:48,760 Speaker 3: in the bond market. And your theory is we even 144 00:07:48,800 --> 00:07:51,920 Speaker 3: get lower rates from here. How do we go from 145 00:07:51,960 --> 00:07:55,720 Speaker 3: price to perfection to price to perfection squared? 146 00:07:57,520 --> 00:07:59,680 Speaker 2: Well, I think that what we're going to learn over 147 00:07:59,680 --> 00:08:01,920 Speaker 2: the core. So the next couple of months. Is that 148 00:08:02,040 --> 00:08:06,040 Speaker 2: perfection in this environment means lower rates. It means a 149 00:08:06,080 --> 00:08:09,080 Speaker 2: lower term premium, and it means a Fed that will 150 00:08:09,120 --> 00:08:13,080 Speaker 2: deliver on an October and December rate cut and recalibrate 151 00:08:13,200 --> 00:08:17,720 Speaker 2: the policy, the front end policy lower, which will ensure 152 00:08:17,800 --> 00:08:21,600 Speaker 2: at least attempt to ensure a recession is avoided and 153 00:08:21,640 --> 00:08:25,000 Speaker 2: that the unemployment rate doesn't spike even further. So we're 154 00:08:25,040 --> 00:08:27,920 Speaker 2: still hoping for a soft landing as a real economy 155 00:08:27,960 --> 00:08:30,280 Speaker 2: at this stage, and that's what Powell is trying to ensure. 156 00:08:31,000 --> 00:08:33,480 Speaker 5: So Ian, you know, looking at the tenure treasure here 157 00:08:33,480 --> 00:08:36,679 Speaker 5: at four point zero five percent, where does this go? 158 00:08:36,800 --> 00:08:39,160 Speaker 5: I mean, are we talking sub four percent at some 159 00:08:39,200 --> 00:08:40,080 Speaker 5: point in your future? 160 00:08:41,760 --> 00:08:44,480 Speaker 2: Well, we were sub four percent yesterday, and I think 161 00:08:44,520 --> 00:08:47,800 Speaker 2: that it's very doable to get to our year end 162 00:08:47,800 --> 00:08:50,800 Speaker 2: target of three eighty five for tens. And if anything, 163 00:08:50,840 --> 00:08:53,600 Speaker 2: at this stage, given where we are, I would skew 164 00:08:53,720 --> 00:08:55,880 Speaker 2: that number a bit lower. Maybe we get to three 165 00:08:55,960 --> 00:08:59,319 Speaker 2: seventy five or three sixty five, and that's without an 166 00:08:59,360 --> 00:09:03,600 Speaker 2: economics recession or a material slowdown. It's more of a 167 00:09:03,640 --> 00:09:04,280 Speaker 2: glide path. 168 00:09:04,760 --> 00:09:07,440 Speaker 5: Do you think this move by the Fed yesterday suggests 169 00:09:07,440 --> 00:09:11,920 Speaker 5: that maybe the labor market, maybe the economy. Maybe they're 170 00:09:11,920 --> 00:09:14,400 Speaker 5: seeing something that gets them a little bit concern more 171 00:09:14,440 --> 00:09:16,760 Speaker 5: so than maybe the market is should we be taking 172 00:09:16,760 --> 00:09:18,360 Speaker 5: that as a signal or is this just kind of 173 00:09:18,720 --> 00:09:19,960 Speaker 5: right in line with where they should be. 174 00:09:21,800 --> 00:09:25,679 Speaker 2: I would say that they're responding to the recent post 175 00:09:25,760 --> 00:09:30,320 Speaker 2: Liberation Day payrolls environment combined with the bitchmark revisions which 176 00:09:30,400 --> 00:09:33,959 Speaker 2: took off nine hundred and eleven thousand jobs, and they're 177 00:09:34,120 --> 00:09:36,960 Speaker 2: effectively saying, the labor market's not as strong as we 178 00:09:36,960 --> 00:09:39,000 Speaker 2: thought it was for the last eighteen months. We need 179 00:09:39,040 --> 00:09:42,160 Speaker 2: to start normalizing. What I worry about is we have 180 00:09:42,840 --> 00:09:46,960 Speaker 2: another spike in initial job as claims, which we will 181 00:09:46,960 --> 00:09:49,880 Speaker 2: get that data this morning, and that gets the market concerned. 182 00:09:49,960 --> 00:09:51,079 Speaker 2: That defense behind the curve. 183 00:09:51,280 --> 00:09:54,640 Speaker 7: And I ended the show yesterday with our heads spinning. 184 00:09:54,760 --> 00:09:56,800 Speaker 3: I mean it was you and I have been doing 185 00:09:56,800 --> 00:10:01,120 Speaker 3: this for every and it was absolutely extraordinary yesterday. And 186 00:10:01,160 --> 00:10:06,000 Speaker 3: I said, look, whatever the outcome here, the benefits of 187 00:10:06,080 --> 00:10:11,319 Speaker 3: this financial stuff are the financial elites. How does what 188 00:10:11,360 --> 00:10:14,280 Speaker 3: we saw yesterday, what I'm seeing this morning with the 189 00:10:14,360 --> 00:10:17,600 Speaker 3: Nasdaq up to new highs, up one point one percent, 190 00:10:18,080 --> 00:10:23,760 Speaker 3: how does that benefit Americans that don't own in Nvidia. 191 00:10:23,840 --> 00:10:28,079 Speaker 2: Well, on the margin, it's good for the broader equity market. 192 00:10:28,320 --> 00:10:31,360 Speaker 2: So I do think that it's there is a bit 193 00:10:31,400 --> 00:10:34,280 Speaker 2: of a broad based wealth effect. But you make a 194 00:10:34,360 --> 00:10:38,679 Speaker 2: very good point. The bottom two quartiles of households are struggling. 195 00:10:38,840 --> 00:10:41,280 Speaker 2: We see this in some of the economic reports. We 196 00:10:41,400 --> 00:10:43,840 Speaker 2: certainly hear this anecdotally, and it is going to be 197 00:10:43,840 --> 00:10:46,719 Speaker 2: a very interesting next couple of quarters. 198 00:10:46,480 --> 00:10:49,240 Speaker 3: Until up twenty six percent. There was jargon from Ling 199 00:10:49,320 --> 00:10:51,480 Speaker 3: that was up, he's in a surveillance time out here, 200 00:10:51,960 --> 00:10:56,240 Speaker 3: bottom two quartiles. Paul is half of America. Yep, that's 201 00:10:56,280 --> 00:10:57,760 Speaker 3: what Lisa Matteo would say. 202 00:10:57,840 --> 00:11:01,400 Speaker 5: I know she wouldn't go Matthew, honest, you'll continue Ian, 203 00:11:01,440 --> 00:11:04,480 Speaker 5: what do you think the cadence of rate cuts may. 204 00:11:04,360 --> 00:11:06,400 Speaker 6: Be for this FED going forward? 205 00:11:06,559 --> 00:11:06,800 Speaker 8: Here? 206 00:11:08,640 --> 00:11:11,080 Speaker 2: So I would say that it's going to be twenty 207 00:11:11,080 --> 00:11:14,840 Speaker 2: five basis points per meeting until they get to whatever 208 00:11:14,960 --> 00:11:18,240 Speaker 2: version of neutral they think that they will achieve. Now 209 00:11:18,320 --> 00:11:20,160 Speaker 2: there's a case to be made that it should be 210 00:11:20,160 --> 00:11:23,080 Speaker 2: twenty five basis points per quarter, and that seems to 211 00:11:23,080 --> 00:11:26,840 Speaker 2: be what Powell is pushing back or pushing for, suggesting 212 00:11:26,920 --> 00:11:29,640 Speaker 2: that it's going to be a meeting by meeting decision, 213 00:11:30,040 --> 00:11:33,000 Speaker 2: but getting back to three percent at twenty five basis 214 00:11:33,000 --> 00:11:36,800 Speaker 2: points per meeting, that would actually allow Powell to hand 215 00:11:36,800 --> 00:11:40,440 Speaker 2: over the reins of the FED to the incoming chair 216 00:11:40,840 --> 00:11:43,640 Speaker 2: at three percent, which I think would be an interesting 217 00:11:43,640 --> 00:11:45,199 Speaker 2: setup for whoever comes in next. 218 00:11:46,200 --> 00:11:49,600 Speaker 5: So what do you think is next here ian for 219 00:11:49,800 --> 00:11:52,199 Speaker 5: this better reserve? Are they going to sit back and 220 00:11:52,320 --> 00:11:55,000 Speaker 5: kind of be consistent I eat where data dependent, We 221 00:11:55,120 --> 00:11:57,760 Speaker 5: in fact will look at this data going forward. Or 222 00:11:57,760 --> 00:11:59,120 Speaker 5: do you think they have something predetermined. 223 00:12:01,440 --> 00:12:04,640 Speaker 2: I expect that if the data plays out the way 224 00:12:04,679 --> 00:12:07,600 Speaker 2: that they assume that it's going to play out, that 225 00:12:07,640 --> 00:12:10,880 Speaker 2: they have predetermined in their mind that they want to 226 00:12:10,920 --> 00:12:13,520 Speaker 2: deliver a couple more cuts, maybe a total of one 227 00:12:13,559 --> 00:12:16,040 Speaker 2: hundred basis points between now and the end of the 228 00:12:16,040 --> 00:12:20,200 Speaker 2: first quarter, and it's up to the data to derail that. 229 00:12:20,640 --> 00:12:23,240 Speaker 2: So they don't need confirmation from the data. They just 230 00:12:23,360 --> 00:12:26,559 Speaker 2: need not to see a spike in goods inflation or 231 00:12:26,640 --> 00:12:29,400 Speaker 2: not to see a quick reversal back to a stronger 232 00:12:29,480 --> 00:12:32,120 Speaker 2: labor market. So it is a bit of both. 233 00:12:32,160 --> 00:12:36,080 Speaker 3: Frankly, Brandman brought up forward guidance yesterday, dead on arrival, 234 00:12:36,160 --> 00:12:39,680 Speaker 3: I brought up a new data dependency. Take those trite 235 00:12:39,720 --> 00:12:43,760 Speaker 3: phrases Ian and translate. Where we are on the death 236 00:12:43,840 --> 00:12:47,719 Speaker 3: of forward guidance on a whole new world after all 237 00:12:47,840 --> 00:12:49,760 Speaker 3: for data dependency. 238 00:12:50,920 --> 00:12:53,679 Speaker 2: I think that the reality is the more that the 239 00:12:53,720 --> 00:12:58,679 Speaker 2: FED is transparent, the more differing opinions that we hear, 240 00:12:59,160 --> 00:13:01,120 Speaker 2: the more difficult that is from the market to know 241 00:13:01,160 --> 00:13:03,320 Speaker 2: what the FED is going to do. And so too 242 00:13:03,400 --> 00:13:06,800 Speaker 2: many talking Feds can complicate things, and I worry that 243 00:13:06,800 --> 00:13:09,959 Speaker 2: that's precisely what we're experiencing at the moment. 244 00:13:10,520 --> 00:13:10,800 Speaker 8: Ian. 245 00:13:10,840 --> 00:13:12,240 Speaker 7: Thank you so much, Ian Lingoln. 246 00:13:12,440 --> 00:13:15,600 Speaker 3: This was Vimont Capital Markets in this hour for Global 247 00:13:15,640 --> 00:13:18,719 Speaker 3: Wall Street. All sorts of newsflow right now. We need 248 00:13:18,760 --> 00:13:20,559 Speaker 3: to bring that to you, but we're really trying to 249 00:13:20,600 --> 00:13:23,400 Speaker 3: bring you pros on the street picking up the debris 250 00:13:23,400 --> 00:13:26,560 Speaker 3: of the FED meeting. Thank you, Francistano, Thank you, Ian 251 00:13:26,640 --> 00:13:30,240 Speaker 3: Lingoenn will stay with us. More from Bloomberg Surveillance coming 252 00:13:30,320 --> 00:13:38,400 Speaker 3: up after this. 253 00:13:38,400 --> 00:13:42,319 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 254 00:13:42,320 --> 00:13:45,640 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 255 00:13:45,760 --> 00:13:48,720 Speaker 1: with the Bloomberg Business app. You can also listen live 256 00:13:48,800 --> 00:13:52,360 Speaker 1: on Amazon Alexa from our flagship New York station, Just 257 00:13:52,440 --> 00:13:55,239 Speaker 1: say Alexa Play Bloomberg eleven thirty. 258 00:13:55,320 --> 00:13:58,760 Speaker 3: Joining us now forever with his gold and sacks, but 259 00:13:58,880 --> 00:14:02,120 Speaker 3: also a tour dude with the Dallas fed Robert Keplin 260 00:14:02,600 --> 00:14:05,440 Speaker 3: joins us, and I really can't say enough, folks. The 261 00:14:05,600 --> 00:14:10,600 Speaker 3: timeliness is technology elites meet with the Prime Minister and 262 00:14:10,640 --> 00:14:16,360 Speaker 3: the president of this specific president. He is, without question, 263 00:14:16,960 --> 00:14:22,560 Speaker 3: the most innovation, most business process president in modern history. 264 00:14:23,240 --> 00:14:26,760 Speaker 3: Wonderful to have you here, Robert this morning. What do 265 00:14:26,840 --> 00:14:33,400 Speaker 3: we underestimate right now about this technology juggernaut? With a question, 266 00:14:33,880 --> 00:14:37,880 Speaker 3: it's technology to the rescue. With all of your experience 267 00:14:37,960 --> 00:14:41,320 Speaker 3: at HBS and all, what are we missing in this 268 00:14:42,360 --> 00:14:44,840 Speaker 3: place forward a decade? 269 00:14:45,600 --> 00:14:48,000 Speaker 9: Well, I don't think the stock market is missing it. 270 00:14:48,520 --> 00:14:51,200 Speaker 9: And this is why people are saying, gee, the economy 271 00:14:51,200 --> 00:14:54,480 Speaker 9: appears sluggish. Why is the stock market at record levels? 272 00:14:54,560 --> 00:14:57,880 Speaker 9: Credit spreads so tied. I think the stock market is seen. 273 00:14:58,480 --> 00:15:02,640 Speaker 9: We are in the early ages of an AI data 274 00:15:02,720 --> 00:15:08,560 Speaker 9: center power boom, and it will It'll take a few years. 275 00:15:09,000 --> 00:15:14,600 Speaker 9: But is this technology gets adopted across industries which were 276 00:15:14,640 --> 00:15:18,840 Speaker 9: in the early stages of I think the market is 277 00:15:18,880 --> 00:15:25,480 Speaker 9: anticipating it will create productivity improvements, margin improvements, SMP earnings 278 00:15:25,560 --> 00:15:31,440 Speaker 9: improvements that will be transformative. The part we'll have to 279 00:15:31,480 --> 00:15:34,800 Speaker 9: struggle with is how do we redeploy workers who lose 280 00:15:34,840 --> 00:15:37,840 Speaker 9: their jobs in one area and go to another. But 281 00:15:37,920 --> 00:15:41,480 Speaker 9: I think we will eventually, we will figure that out. 282 00:15:41,280 --> 00:15:43,920 Speaker 9: But I think the market, the market's on this. 283 00:15:44,760 --> 00:15:47,080 Speaker 7: Okay, Robert, you were at Goldman Sachs. 284 00:15:47,200 --> 00:15:50,520 Speaker 3: This is just a really storied career and innovation linking 285 00:15:50,640 --> 00:15:53,600 Speaker 3: finance into America. 286 00:15:53,720 --> 00:15:55,040 Speaker 7: You were at Goldman Sachs in. 287 00:15:55,080 --> 00:15:58,200 Speaker 3: Nineteen ninety you wandered and as a partner, and four 288 00:15:58,280 --> 00:16:01,080 Speaker 3: years later our world was to and upside down. I 289 00:16:01,120 --> 00:16:05,200 Speaker 3: remember late ninety four, early ninety five in the advent 290 00:16:05,280 --> 00:16:06,160 Speaker 3: of the Internet. 291 00:16:06,800 --> 00:16:08,880 Speaker 7: Is this as ginormous as that moment? 292 00:16:13,000 --> 00:16:16,479 Speaker 9: Probably in a different way. Yeah, it'll be as significant 293 00:16:16,520 --> 00:16:21,960 Speaker 9: for companies. The Internet was very significant. I think this 294 00:16:22,040 --> 00:16:28,400 Speaker 9: may be more significant for increasing the rate of disruption. 295 00:16:29,800 --> 00:16:33,800 Speaker 9: Every company needs to be on their front foot on this, 296 00:16:34,400 --> 00:16:38,280 Speaker 9: because you need to find ways to be more efficient, 297 00:16:38,760 --> 00:16:42,640 Speaker 9: to be more nimble, to do more with less, and 298 00:16:42,720 --> 00:16:44,920 Speaker 9: so I think in terms of the breadth of this, 299 00:16:45,000 --> 00:16:48,000 Speaker 9: I think the breadth in terms of affecting every company 300 00:16:48,120 --> 00:16:49,119 Speaker 9: is more significant. 301 00:16:49,200 --> 00:16:52,280 Speaker 5: Yeah, Robert, when you talk to your bankers of Goldzacs 302 00:16:52,280 --> 00:16:54,880 Speaker 5: as they talk to their clients around the world. Are 303 00:16:54,960 --> 00:16:58,280 Speaker 5: there are your clients feeling the same sense of urgency 304 00:16:58,320 --> 00:17:01,640 Speaker 5: as it relates to AI, the same sense of opportunity 305 00:17:01,680 --> 00:17:02,120 Speaker 5: in AI? 306 00:17:03,040 --> 00:17:04,280 Speaker 8: They are. 307 00:17:04,720 --> 00:17:07,960 Speaker 9: It is a mix of anxiety and opportunity in that. 308 00:17:08,080 --> 00:17:11,920 Speaker 9: Across every industry, people know they've got to be investing. 309 00:17:12,040 --> 00:17:14,520 Speaker 8: It's not an option not to invest. 310 00:17:15,760 --> 00:17:18,320 Speaker 9: And many companies are worried that they're not big enough, 311 00:17:18,359 --> 00:17:21,760 Speaker 9: they don't have enough heft to afford the investment, because 312 00:17:22,040 --> 00:17:24,520 Speaker 9: the first impact of AI investment may. 313 00:17:24,359 --> 00:17:25,560 Speaker 8: Be lower margins. 314 00:17:26,320 --> 00:17:29,040 Speaker 9: But you've got to make the investment because over the 315 00:17:29,040 --> 00:17:31,560 Speaker 9: next few years, your competitors are doing it, and if 316 00:17:31,560 --> 00:17:33,879 Speaker 9: you don't, you're going to get disrupted out of existence. 317 00:17:33,960 --> 00:17:35,520 Speaker 9: And that is why we're seeing a lot of merger 318 00:17:35,560 --> 00:17:37,199 Speaker 9: activity as a result of it. 319 00:17:37,280 --> 00:17:38,600 Speaker 8: But yes, every. 320 00:17:38,359 --> 00:17:41,000 Speaker 9: CEO I talk to is trying to figure out which 321 00:17:41,080 --> 00:17:44,160 Speaker 9: use case they have to get adoption. They're trying use cases. 322 00:17:44,200 --> 00:17:48,600 Speaker 9: The thing leaders don't yet know and they're working through 323 00:17:49,160 --> 00:17:52,040 Speaker 9: is which use cases will work and which won't. We'll 324 00:17:52,160 --> 00:17:53,879 Speaker 9: know over the next few years, but you're going to 325 00:17:53,920 --> 00:17:58,119 Speaker 9: have to go through this journey and we'll try some 326 00:17:58,160 --> 00:17:59,920 Speaker 9: things that don't work well. There'll be a number th 327 00:18:00,119 --> 00:18:02,879 Speaker 9: number of things that do work, and the net of 328 00:18:02,920 --> 00:18:06,320 Speaker 9: it all will be a dramatic improvement I think in productivity, 329 00:18:06,720 --> 00:18:10,879 Speaker 9: but it may be unpredictable in which areas Robert. 330 00:18:10,880 --> 00:18:12,920 Speaker 5: One of the top news stories this morning we woke 331 00:18:12,960 --> 00:18:16,560 Speaker 5: to was in Nvidiot taking a five billion dollar stake 332 00:18:16,680 --> 00:18:19,160 Speaker 5: in Intel after the United States government. 333 00:18:19,200 --> 00:18:20,199 Speaker 6: It's ten percent investment. 334 00:18:20,240 --> 00:18:22,959 Speaker 5: That's really something that we haven't seen too often in 335 00:18:23,119 --> 00:18:24,440 Speaker 5: corporate America. 336 00:18:24,800 --> 00:18:26,600 Speaker 6: How do you view what's happening at Intel? 337 00:18:27,680 --> 00:18:30,320 Speaker 8: So it's part of a larger picture. 338 00:18:30,400 --> 00:18:33,840 Speaker 9: So there's the AI boom that we can agree on. Okay, 339 00:18:33,880 --> 00:18:36,399 Speaker 9: so what do you need to power? You need semiconductors, 340 00:18:36,440 --> 00:18:41,560 Speaker 9: You need sophisticated semitectors, We need more semiconductor production capacity. 341 00:18:41,840 --> 00:18:44,959 Speaker 9: We also, by the way, need more power, and we 342 00:18:45,000 --> 00:18:49,480 Speaker 9: need more power capacity, and all this takes investment and collaboration. 343 00:18:49,760 --> 00:18:53,080 Speaker 9: So I thought this is a positive development and that 344 00:18:53,160 --> 00:18:58,679 Speaker 9: we need to beef up our semiconductor capability to power 345 00:18:59,200 --> 00:19:02,679 Speaker 9: to a lot of these developments, I think you're going 346 00:19:02,720 --> 00:19:05,919 Speaker 9: to see more of these kinds of things and a 347 00:19:06,040 --> 00:19:09,040 Speaker 9: lot of investment in the power sector, just the basical 348 00:19:09,160 --> 00:19:13,840 Speaker 9: power sector too, to drive data centers. But semiconductors are 349 00:19:13,840 --> 00:19:15,800 Speaker 9: a key part of it, and I think it's indicative 350 00:19:15,880 --> 00:19:17,840 Speaker 9: of this deal is indicative of. 351 00:19:17,760 --> 00:19:20,320 Speaker 3: That, Robert Kaplin. With this, we continue with the vice 352 00:19:20,400 --> 00:19:22,640 Speaker 3: chairman of Golden SAX. Of course, all of us work 353 00:19:23,040 --> 00:19:24,120 Speaker 3: at the Dallas FED. 354 00:19:24,000 --> 00:19:25,600 Speaker 7: And so many email men. Are you going to ask 355 00:19:25,640 --> 00:19:26,800 Speaker 7: him about DFW? 356 00:19:27,080 --> 00:19:29,879 Speaker 3: No, I'm not going to ask Robert Kaplan to fix 357 00:19:29,960 --> 00:19:33,760 Speaker 3: Dallas Fort Worth and all the huge success of it. 358 00:19:33,800 --> 00:19:36,520 Speaker 3: I should say, we welcome all of you in Texas. 359 00:19:36,560 --> 00:19:41,040 Speaker 3: We welcome you across America, including doctor Kaplan's Kansas good 360 00:19:41,080 --> 00:19:46,840 Speaker 3: Morning in Canada good Morning on YouTube world wide as well. 361 00:19:47,480 --> 00:19:49,600 Speaker 3: I love to do this, Robert, when you're with me, 362 00:19:49,720 --> 00:19:52,480 Speaker 3: I go to the Dallas Fed, which folks check it out. 363 00:19:52,960 --> 00:19:54,080 Speaker 7: That's brilliant. 364 00:19:54,359 --> 00:20:00,159 Speaker 3: Immediate economics, the Texas juggernaut and even with the slow 365 00:20:00,280 --> 00:20:02,879 Speaker 3: in June right now, and I got a great article 366 00:20:02,920 --> 00:20:08,040 Speaker 3: on a relatively quiescent inflation in Texas is by Luis 367 00:20:08,080 --> 00:20:13,400 Speaker 3: Torres and Diego Moreles Burnett, Robert Kaplan, what's the pixie 368 00:20:13,480 --> 00:20:19,760 Speaker 3: dust in Texas? That Montana, Mississippi in main need. 369 00:20:20,800 --> 00:20:23,919 Speaker 9: Okay, So the story of Texas over the last ten 370 00:20:23,920 --> 00:20:28,199 Speaker 9: to fifteen years is migration of people and firms to 371 00:20:28,280 --> 00:20:31,560 Speaker 9: the state. You know, about twelve thirteen years ago, I 372 00:20:31,600 --> 00:20:35,120 Speaker 9: think population was around twenty two tuish million. We're now 373 00:20:35,480 --> 00:20:39,359 Speaker 9: pushing thirty million, and we're heading north wy So. Pro 374 00:20:39,520 --> 00:20:47,239 Speaker 9: business culture, very welcoming culture. Yes, no state taxes, and 375 00:20:47,280 --> 00:20:49,840 Speaker 9: the reason the state is able to do no state 376 00:20:49,880 --> 00:20:53,160 Speaker 9: income taxes, that is, has a sales tax and property tax. 377 00:20:53,240 --> 00:20:55,280 Speaker 9: But the reason it's able to do that has a 378 00:20:55,400 --> 00:20:58,760 Speaker 9: very large oil and gas industry that produces a lot 379 00:20:58,800 --> 00:21:03,680 Speaker 9: of excess funds go into the state's rainy day funds. 380 00:21:04,320 --> 00:21:08,520 Speaker 9: We're the largest exporting state in the country, and so 381 00:21:09,080 --> 00:21:12,560 Speaker 9: we've got a lot of features that create that make 382 00:21:12,640 --> 00:21:18,199 Speaker 9: Texas a magnet in Dallas, Houston, Austin, San Antonio, a 383 00:21:18,400 --> 00:21:22,920 Speaker 9: magnet for people and firms that are moving here and 384 00:21:23,600 --> 00:21:25,840 Speaker 9: believe it's a better place to domicile. 385 00:21:26,080 --> 00:21:28,520 Speaker 3: I'm honored to say I'll be with the Houston CFA 386 00:21:28,640 --> 00:21:29,920 Speaker 3: Institute next month. 387 00:21:29,920 --> 00:21:31,000 Speaker 7: So are you going downward? 388 00:21:31,280 --> 00:21:32,280 Speaker 8: Very good? Do something? 389 00:21:33,160 --> 00:21:34,240 Speaker 7: Do something as well? 390 00:21:34,440 --> 00:21:34,800 Speaker 8: Very good. 391 00:21:35,119 --> 00:21:36,919 Speaker 7: They don't know that my father was a fight in 392 00:21:36,960 --> 00:21:39,840 Speaker 7: Texas aggy. If they'd known that, they probably would have 393 00:21:39,920 --> 00:21:41,040 Speaker 7: resented the invitation. 394 00:21:42,640 --> 00:21:45,040 Speaker 5: Please, Robert, what did you hear from our Feederal Reserve 395 00:21:45,119 --> 00:21:49,280 Speaker 5: yesterday that maybe kind of got your your sense going. 396 00:21:50,720 --> 00:21:53,800 Speaker 9: Well, I expected diversions and you saw diversions. What I 397 00:21:53,800 --> 00:21:56,800 Speaker 9: mean by that you got You got I think six 398 00:21:56,920 --> 00:21:59,320 Speaker 9: or seven, which I kind of expected, who said we're 399 00:21:59,320 --> 00:22:01,600 Speaker 9: done for the year, we don't want more rate cuts. 400 00:22:01,840 --> 00:22:03,840 Speaker 9: You have that a nine or ten who said we're 401 00:22:03,840 --> 00:22:06,879 Speaker 9: going to do two more rate cuts. So there's and 402 00:22:06,960 --> 00:22:10,240 Speaker 9: there are cross currents, and it doesn't surprise me there's disagreement. 403 00:22:10,359 --> 00:22:14,680 Speaker 9: But what you also saw yesterday, I think is support 404 00:22:15,240 --> 00:22:19,480 Speaker 9: and the desire to work as a team and work 405 00:22:19,520 --> 00:22:22,440 Speaker 9: with the chair. And so you could have gotten more 406 00:22:22,440 --> 00:22:26,359 Speaker 9: descents yesterday, you didn't. And so it tells me that 407 00:22:26,440 --> 00:22:31,000 Speaker 9: there's hefty debate and disagreement. That's great, But you also 408 00:22:31,040 --> 00:22:32,880 Speaker 9: told me when it's kind of make a decision. They 409 00:22:32,920 --> 00:22:36,479 Speaker 9: came together and they made a decision. And so I 410 00:22:36,520 --> 00:22:41,720 Speaker 9: think the FED functioning FED independence without regard to politics, 411 00:22:42,320 --> 00:22:43,480 Speaker 9: is still alive and well. 412 00:22:43,520 --> 00:22:45,480 Speaker 8: And I think that's what I saw yesterday. 413 00:22:45,640 --> 00:22:47,119 Speaker 6: It's kind of where I wanted to go, Robert. 414 00:22:47,119 --> 00:22:49,080 Speaker 5: This is a FED that's had to deal with arguably 415 00:22:49,119 --> 00:22:53,119 Speaker 5: more political pressure. I guess you could say on various 416 00:22:53,200 --> 00:22:57,560 Speaker 5: members of the FED. Do you think that impacts their 417 00:22:57,640 --> 00:22:59,440 Speaker 5: work in any way? Do you think that impacts their 418 00:22:59,480 --> 00:23:02,080 Speaker 5: policy in any way? Or are they able to maintain 419 00:23:02,119 --> 00:23:02,800 Speaker 5: their independence? 420 00:23:03,359 --> 00:23:07,080 Speaker 9: Well, so, there's a very very strong culture inside the 421 00:23:07,080 --> 00:23:13,879 Speaker 9: FED that demands you, to the extent humanly possible, and 422 00:23:13,960 --> 00:23:16,639 Speaker 9: they are human beings, but to the extent humanly possible, 423 00:23:17,080 --> 00:23:20,840 Speaker 9: you make decisions without regard to political influencer, book, political 424 00:23:20,880 --> 00:23:26,400 Speaker 9: pressure considerations, and the peer pressure to do that is strong. 425 00:23:26,960 --> 00:23:29,880 Speaker 9: Every statement I ever made at the FED I have 426 00:23:30,000 --> 00:23:33,040 Speaker 9: to defend. If a colleague makes a statement, even if 427 00:23:33,080 --> 00:23:36,080 Speaker 9: it's the chair, they've got to defend it, otherwise you're 428 00:23:36,080 --> 00:23:39,119 Speaker 9: going to question them. People there have to stand on 429 00:23:39,160 --> 00:23:43,080 Speaker 9: their two feet and make merit based arguments. And so 430 00:23:43,359 --> 00:23:47,560 Speaker 9: I think that culture is still alive and well there. 431 00:23:47,680 --> 00:23:51,840 Speaker 3: Robert Kappan, I want to discuss with you the mandates. 432 00:23:52,520 --> 00:23:56,760 Speaker 3: You are our most business, our most MBA, Richard Fisher 433 00:23:56,800 --> 00:23:59,080 Speaker 3: and others. But I mean you own the high ground 434 00:23:59,240 --> 00:24:02,560 Speaker 3: on this. I guess we have it in flesh inflation mandate. 435 00:24:03,280 --> 00:24:07,359 Speaker 3: I guess we have a jobs mandate. Stephen Roach and 436 00:24:07,400 --> 00:24:10,920 Speaker 3: Morgan Stanley iconic for saying we have an asset bubble 437 00:24:10,960 --> 00:24:16,520 Speaker 3: mandate as well. Are we getting towards Stephen Roach's asset 438 00:24:16,600 --> 00:24:20,040 Speaker 3: bubble when we see bonds priced to perfection and an 439 00:24:20,119 --> 00:24:24,160 Speaker 3: equity market with Walmart a pe forty. 440 00:24:24,280 --> 00:24:27,280 Speaker 9: I think that the FED pays attention to financial markets, 441 00:24:27,280 --> 00:24:32,000 Speaker 9: but it's got to set monetary policy based on the economy. 442 00:24:32,440 --> 00:24:35,119 Speaker 8: And right now you have a divergence. 443 00:24:36,200 --> 00:24:43,320 Speaker 9: You've got regulatory review reform coming, you've got tax incentives coming, 444 00:24:43,359 --> 00:24:45,000 Speaker 9: accelerated appreciation, you got. 445 00:24:44,880 --> 00:24:46,000 Speaker 8: An AI boom. 446 00:24:46,680 --> 00:24:51,199 Speaker 9: Those three things are not really in the economy quite yet, 447 00:24:51,920 --> 00:24:54,840 Speaker 9: and so you got a sluggish economy and you have 448 00:24:54,880 --> 00:24:59,200 Speaker 9: a booming financial markets. I actually think the tailwinds are 449 00:24:59,359 --> 00:25:02,960 Speaker 9: significant head and so if you're at the FED, on 450 00:25:03,000 --> 00:25:05,760 Speaker 9: the one hand, you pay attention to it, but you 451 00:25:06,400 --> 00:25:09,640 Speaker 9: got to set monetary policy based on the underlying economy, 452 00:25:09,640 --> 00:25:11,520 Speaker 9: and I think that's I think that's the right thing 453 00:25:11,560 --> 00:25:13,720 Speaker 9: to do right now, and that's what they're doing. This 454 00:25:13,800 --> 00:25:16,840 Speaker 9: is not one of those stock markets that's being fueled 455 00:25:16,840 --> 00:25:20,479 Speaker 9: by excess monetary policy, in my opinion, It's being fueled 456 00:25:20,480 --> 00:25:23,600 Speaker 9: by other structural drivers, and the FED would do well 457 00:25:23,640 --> 00:25:24,520 Speaker 9: to recognize that. 458 00:25:25,080 --> 00:25:25,359 Speaker 8: Robert. 459 00:25:25,400 --> 00:25:27,480 Speaker 5: One of the key themes coming into this year has 460 00:25:27,520 --> 00:25:30,800 Speaker 5: been a new tariff regime regime on a global basis. 461 00:25:30,800 --> 00:25:33,400 Speaker 5: As you and your bankers a Goldman work with your clients, 462 00:25:34,119 --> 00:25:36,920 Speaker 5: are they feel like they're navigating their way through it 463 00:25:37,080 --> 00:25:38,879 Speaker 5: or is there maybe still some more pain in terms 464 00:25:38,880 --> 00:25:40,560 Speaker 5: of higher inflation slower growth? 465 00:25:40,560 --> 00:25:41,639 Speaker 6: What are you hearing from your clients? 466 00:25:42,160 --> 00:25:47,960 Speaker 9: So big, bigger businesses are navigating through The April announcements 467 00:25:47,960 --> 00:25:52,119 Speaker 9: were abrupt, and they weren't. They weren't prepared yet how 468 00:25:52,200 --> 00:25:55,000 Speaker 9: to adapt. Since then, they've had time, and also the 469 00:25:55,040 --> 00:25:58,400 Speaker 9: tariffs have settled out closer to high teens. I think 470 00:25:58,400 --> 00:26:01,160 Speaker 9: they were hoping for low teens. Fine, they can work 471 00:26:01,200 --> 00:26:04,680 Speaker 9: with high teens. You're seeing some margin erosion, You're seeing 472 00:26:04,760 --> 00:26:08,399 Speaker 9: relooking at supply chains. The area that I'm seeing is 473 00:26:08,480 --> 00:26:11,919 Speaker 9: struggling the most with it is smaller business. Smaller businesses 474 00:26:12,080 --> 00:26:14,960 Speaker 9: don't have the levers that big businesses do. 475 00:26:15,119 --> 00:26:16,000 Speaker 8: And I do hear. 476 00:26:15,920 --> 00:26:19,880 Speaker 9: From more business people, especially if they import goods. Boy, 477 00:26:20,080 --> 00:26:22,119 Speaker 9: I don't know if we can stay in business's the 478 00:26:22,160 --> 00:26:24,760 Speaker 9: end of the year, so there's a divergence there. 479 00:26:24,840 --> 00:26:27,439 Speaker 3: Doctor Kevin, thanks so Much's a generous time this morning 480 00:26:27,440 --> 00:26:32,200 Speaker 3: with Golden Sech's former president of the Dallas Fed. Stay 481 00:26:32,240 --> 00:26:43,520 Speaker 3: with us more from Bloomberg Surveillance coming up after this. 482 00:26:43,520 --> 00:26:47,440 Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday 483 00:26:47,480 --> 00:26:50,879 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 484 00:26:50,920 --> 00:26:53,760 Speaker 1: with the Bloomberg Business app. You can also watch us 485 00:26:53,760 --> 00:26:57,640 Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal. 486 00:26:57,880 --> 00:27:02,840 Speaker 10: The newspapers here is yes, we have to okay, So 487 00:27:02,880 --> 00:27:05,040 Speaker 10: there were different approaches, right. It was the white tie 488 00:27:05,119 --> 00:27:08,680 Speaker 10: fashion event last night's banquet at Windsor Castle. So it 489 00:27:08,720 --> 00:27:10,600 Speaker 10: was the first Lady and the Princess of Wales. They 490 00:27:10,640 --> 00:27:12,600 Speaker 10: were the ones that were kind of the center of attention. 491 00:27:12,640 --> 00:27:15,040 Speaker 10: Everybody was wondering what they're gonna wear. Okay, So you 492 00:27:15,080 --> 00:27:17,920 Speaker 10: have Kate Middleton, two completely different looks. 493 00:27:17,960 --> 00:27:18,200 Speaker 6: Okay. 494 00:27:18,240 --> 00:27:23,600 Speaker 10: So she went for this full length of felipa lepley gown. Yes, 495 00:27:23,720 --> 00:27:25,560 Speaker 10: I had a call. We called the company this morning 496 00:27:25,560 --> 00:27:28,320 Speaker 10: to make sure that was the way that you pronounced it. 497 00:27:28,480 --> 00:27:33,840 Speaker 7: Yeah, it was very Queen Mary. 498 00:27:30,119 --> 00:27:35,560 Speaker 10: Was very lace, full length up to the neck, long sleeves. 499 00:27:36,040 --> 00:27:39,520 Speaker 10: She had the blue slash would have approved tiara. Yes, 500 00:27:39,600 --> 00:27:43,600 Speaker 10: the tiara actually belonged to Queen Mary that she was wearing. 501 00:27:44,320 --> 00:27:47,600 Speaker 10: She had this pearl encrusted clutch. She looked like a 502 00:27:47,600 --> 00:27:50,440 Speaker 10: princess basically, that was she nailed it. Then you go 503 00:27:50,480 --> 00:27:53,720 Speaker 10: to Malania Trump. She had this boulder approach, the yellow 504 00:27:54,200 --> 00:27:58,200 Speaker 10: yes Carolina Herrera, sleek silhouette, you know, with a slit 505 00:27:58,320 --> 00:28:02,080 Speaker 10: up the side. It was an over the shoulder, chunky 506 00:28:02,160 --> 00:28:04,919 Speaker 10: like purple silk belt around here. And then she had 507 00:28:04,960 --> 00:28:06,720 Speaker 10: these long, dangly green earrings. 508 00:28:06,840 --> 00:28:08,639 Speaker 6: Yeah, so different. 509 00:28:09,200 --> 00:28:10,639 Speaker 10: Going to say, you go from the you know, the 510 00:28:10,680 --> 00:28:13,280 Speaker 10: plane lace to like this old yellow and so they 511 00:28:13,280 --> 00:28:13,920 Speaker 10: were saying it was. 512 00:28:15,160 --> 00:28:17,840 Speaker 7: When I saw it, I was constructed. 513 00:28:17,840 --> 00:28:21,120 Speaker 3: I'll say diplomatically, I was constructively shocked. 514 00:28:21,280 --> 00:28:24,160 Speaker 7: You were it was what a statement? 515 00:28:24,240 --> 00:28:26,080 Speaker 10: Well, it was completely different from how she arrived in 516 00:28:26,119 --> 00:28:26,399 Speaker 10: the UK. 517 00:28:26,720 --> 00:28:29,679 Speaker 3: So the next dinner at two hundred people in the 518 00:28:30,040 --> 00:28:32,640 Speaker 3: two hundred people in the ballroom at mar Lago, how 519 00:28:32,680 --> 00:28:37,440 Speaker 3: many people, and they'll be like, in eight different colors, 520 00:28:37,440 --> 00:28:38,640 Speaker 3: it looked like fur loose. 521 00:28:40,080 --> 00:28:43,360 Speaker 10: Next, okay, here we go from high fashion to what 522 00:28:43,560 --> 00:28:48,480 Speaker 10: Starbucks employees can wear. Okay, because there are employees who 523 00:28:48,480 --> 00:28:50,640 Speaker 10: were in file in three states who were taking legal 524 00:28:50,640 --> 00:28:53,680 Speaker 10: actions in the company. Right so before they have his 525 00:28:53,800 --> 00:28:55,520 Speaker 10: new dress code, he wanted to effect this is what 526 00:28:55,560 --> 00:28:58,240 Speaker 10: it's going under. But before they were were allowed to 527 00:28:58,280 --> 00:29:02,080 Speaker 10: wear things like patterned shirts and colors and express themselves. Okay, 528 00:29:02,120 --> 00:29:05,280 Speaker 10: but now they have to wear in North America these 529 00:29:05,480 --> 00:29:09,240 Speaker 10: solid black shirts long you know, dark sleeves. They have 530 00:29:09,280 --> 00:29:12,680 Speaker 10: to wear certain color pants and shoes. They can't have 531 00:29:12,800 --> 00:29:17,640 Speaker 10: certain tattoos on their face or certain piercings. They change, 532 00:29:17,720 --> 00:29:20,880 Speaker 10: they change and everything. Do not know who buys the clothes, 533 00:29:21,200 --> 00:29:23,800 Speaker 10: the employees by the clothes, but they have to be 534 00:29:23,840 --> 00:29:24,720 Speaker 10: of a certain color. 535 00:29:24,760 --> 00:29:26,920 Speaker 6: Now, yes, is that legal? 536 00:29:27,680 --> 00:29:27,920 Speaker 7: Yeah? 537 00:29:28,200 --> 00:29:30,080 Speaker 10: Yeah, I used when I was waiting tables. I know 538 00:29:30,160 --> 00:29:35,160 Speaker 10: they wear wear the uniform. McDonald's buys a uniform, right, correct, 539 00:29:35,320 --> 00:29:37,920 Speaker 10: But they're telling them what colors. You know they can 540 00:29:37,960 --> 00:29:44,360 Speaker 10: wear pants? Oh gosh, it's probably about bucks. Yes, it's 541 00:29:44,400 --> 00:29:46,800 Speaker 10: called the if you get the super large one. 542 00:29:48,520 --> 00:29:49,040 Speaker 6: Exactly. 543 00:29:49,720 --> 00:29:52,320 Speaker 10: I'm still on I still say large. I don't say eventy, 544 00:29:52,560 --> 00:29:53,960 Speaker 10: I have any thank you. 545 00:29:54,280 --> 00:30:00,640 Speaker 5: It's Italy by the way right now. 546 00:30:01,440 --> 00:30:04,080 Speaker 3: So out of Saint Mark's in Venice with a big 547 00:30:04,120 --> 00:30:06,040 Speaker 3: square shore, you go to the place over on the 548 00:30:06,120 --> 00:30:07,600 Speaker 3: left that's like world famous. 549 00:30:08,200 --> 00:30:09,720 Speaker 8: Yet every movie. 550 00:30:09,440 --> 00:30:11,120 Speaker 6: There, and they triple the prices for everything we had 551 00:30:11,160 --> 00:30:11,560 Speaker 6: life here. 552 00:30:11,640 --> 00:30:12,440 Speaker 7: Sweeney walked in. 553 00:30:14,400 --> 00:30:17,640 Speaker 10: Next Okay, this next story in the Wall Street Drill, 554 00:30:17,760 --> 00:30:19,280 Speaker 10: you have to actually give it a good read. 555 00:30:19,320 --> 00:30:19,600 Speaker 6: Okay. 556 00:30:19,600 --> 00:30:22,840 Speaker 10: So it's about AI agents getting ready to handle your 557 00:30:22,920 --> 00:30:25,760 Speaker 10: whole financial life. Okay, what could go wrong? 558 00:30:25,880 --> 00:30:26,040 Speaker 3: Right? 559 00:30:26,120 --> 00:30:29,000 Speaker 10: Okay? So yeah, okay, So people who manage their finances, 560 00:30:29,120 --> 00:30:30,920 Speaker 10: you have a lot, you have a different apps, you 561 00:30:30,960 --> 00:30:32,960 Speaker 10: have a number of loggins that you have to remember. 562 00:30:32,960 --> 00:30:35,240 Speaker 10: You're trying to track all these different things. So tech 563 00:30:35,240 --> 00:30:37,680 Speaker 10: and finance executives they've been investing billions of dollars in 564 00:30:37,720 --> 00:30:41,440 Speaker 10: these AI tools agentic AI. I was just talking to 565 00:30:41,480 --> 00:30:43,600 Speaker 10: someone yesterday because we have a conference coming up from 566 00:30:43,600 --> 00:30:48,840 Speaker 10: Bloomberry about this specifically. So they're saying, researchers saying AI 567 00:30:48,840 --> 00:30:52,920 Speaker 10: assistants are going to basically examine your whole portfolio, give 568 00:30:52,960 --> 00:30:55,400 Speaker 10: you advice on it. They're going to be key for 569 00:30:55,640 --> 00:30:59,320 Speaker 10: financial who can't afford financial advisors. People are going to 570 00:30:59,360 --> 00:31:02,360 Speaker 10: turn to this now. But they are saying that, you 571 00:31:02,440 --> 00:31:06,000 Speaker 10: know what, it's not going to replace financial advisors. It's 572 00:31:06,040 --> 00:31:08,840 Speaker 10: going to be kind of a hand in hand tool. 573 00:31:09,960 --> 00:31:11,880 Speaker 6: I'm not buying this whole thing. I think AIS can 574 00:31:11,960 --> 00:31:14,480 Speaker 6: take a lot of jobs. Oh got it. 575 00:31:14,480 --> 00:31:16,280 Speaker 10: It's tough. So they talk about a lot of the 576 00:31:16,320 --> 00:31:17,880 Speaker 10: things in there. You gotta read it. 577 00:31:17,880 --> 00:31:21,160 Speaker 7: You get the newspapers. Lisa Matteo, thank you so much. 578 00:31:21,360 --> 00:31:26,160 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 579 00:31:26,280 --> 00:31:30,560 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 580 00:31:30,680 --> 00:31:34,160 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 581 00:31:34,240 --> 00:31:38,280 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 582 00:31:38,280 --> 00:31:41,640 Speaker 1: can also watch us live every weekday on YouTube and 583 00:31:41,880 --> 00:31:43,600 Speaker 1: always on the Bloomberg terminal.