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Speaker 2: We have the.
Speaker 3: Perfect guest on the state of the American economy. Francis
Speaker 3: Donald is truly a student of our holistic economy, each
Speaker 3: individual item of the algebraic equation of GDP. She is
Speaker 3: with RBC and their chief economists this morning. This could
Speaker 3: be a two hour conversation. Let's just begin with what
Speaker 3: Global Wall Street wants to know. Now, what what are
Speaker 3: they do in the speeches? What do they do in
Speaker 3: the discussions the body language when they've already modeled it
Speaker 3: in another two rate cuts.
Speaker 4: I think this is a federal Reserve that is going
Speaker 4: to have to talk their way through some increasingly painful
Speaker 4: inflation points because they have revealed their hand. I remember
Speaker 4: talking six nine months ago with you, Tom, and we
Speaker 4: were trying to figure out, oh, when there's tension on
Speaker 4: both sides of the Fed's dual mandate, which way will
Speaker 4: they lean? Very clearly, there's a wabble in the labor market,
Speaker 4: and the FED is jumping in immediately to provide support
Speaker 4: like an overprotective parent. I think is the way that
Speaker 4: I'm thinking about it. But in our view, inflation data
Speaker 4: is going to become increasingly more problematic heading into your
Speaker 4: in and not just on goods and tariffs, but also
Speaker 4: on services. So this is a FED that's going to
Speaker 4: have to explain away inflation data a lot more in
Speaker 4: the next coming months.
Speaker 3: And Paul, they just took on the Tiger Mom doctor
Speaker 3: Mirron as well.
Speaker 5: Typically speaking, how much impact do interest rates have on
Speaker 5: the labor market? If they want to address the labor market, well,
Speaker 5: cutting rates is that?
Speaker 6: Is that going to help?
Speaker 4: I love that you started with typically speaking, because typically speaking,
Speaker 4: absolutely you would ease, you would allow companies to be
Speaker 4: able to borrow more cheaply, or reduced debt burdens, they
Speaker 4: would be able to focus on labor or limit job cuts.
Speaker 4: But what do you do when the nature of the
Speaker 4: job market has changed so significantly. Job losses are predominantly
Speaker 4: in trade related sectors, and you have these big structural
Speaker 4: shifts that are pushing one in three jobs. One in
Speaker 4: three jobs right now? Are government healthcare or social assistance.
Speaker 4: That means that a third of the labor market is
Speaker 4: not particularly interest rate sensitive at all and actually not
Speaker 4: really faltering.
Speaker 3: Absolutely brilliant, and this alludes to Nancy Lazara Piper in Minneapolis,
Speaker 3: who's been absolutely brilliant on this. So we're watching Intel
Speaker 3: as well with Nvidia, Intel up eighteen percent even in
Speaker 3: Vidiot lifts here, as in Nvidia invest five billion in
Speaker 3: the beleaguered Intel. Francis Donald with US across America. Good
Speaker 3: Morning Canada. Thank you for joining us with the Royal
Speaker 3: Bank of Canada and on YouTube as well, subscribe to
Speaker 3: bloomberg A podcasts. Francis, I look at the Ballet yesterday
Speaker 3: and there was some amazing, almost surreal responses within the
Speaker 3: show that we did yesterday, and I thought Jeff Rosenberg
Speaker 3: was really good about the dynamics change, and I said,
Speaker 3: I blurted out in my clumsiness, there's a whole new
Speaker 3: data dependency given this backdrop.
Speaker 7: They stagger from data point to data point, don't they.
Speaker 4: I felt like it was more like a breakdancing than
Speaker 4: Ballet yesterday because there was a little bit more chaos
Speaker 4: and not necessarily super clear messaging. It didn't feel like
Speaker 4: it was very well choreographed in general, or at least
Speaker 4: there were dislocations within it. What I heard yesterday from
Speaker 4: Chair Powell, I know you've probably already talked about it
Speaker 4: one hundred times, was there are no risk free paths ahead.
Speaker 4: This was a haunting comment from a central banker, but
Speaker 4: it also reflects the underlying US economy, which is that
Speaker 4: we are still in the air pocket before we will
Speaker 4: know the impact of this once in one hundred year
Speaker 4: trade shock that has hit the US economy. It is
Speaker 4: our view that there are still significant inventories in the
Speaker 4: United States, and we don't know whether companies will truly
Speaker 4: pass on those costs to inflation or whether they will
Speaker 4: have to cut their own costs, and that will come
Speaker 4: down to labor. So when you talk about data dependency, Tom,
Speaker 4: what I'm looking at is one single data point, which
Speaker 4: is how many inventories are left in the United States
Speaker 4: and how long until we answer that question? Because neither
Speaker 4: of those paths are good, but they result in very
Speaker 4: different focuses from a central bank.
Speaker 3: Well, we started the show at one thirty. Tariffs wasn't
Speaker 3: mentioned until two sixteen. Okay, very good, Wow, odd, Yeah,
Speaker 3: I mean teriffs is everything right now?
Speaker 6: It's the Fed day. You guys are on top of it.
Speaker 5: So the we had mister Myron, the new appointee to
Speaker 5: the FED. He dissented and argued for more rate cuts.
Speaker 5: As I guess one it would expect that's in line
Speaker 5: with what President Trump would like to see. Other than
Speaker 5: that it was unanimous here. We had some outllyers before,
Speaker 5: but it's unanimous today. Was that important to you, well.
Speaker 4: Miss in the sense that no one else formally dissented,
Speaker 4: but there were some silent descents in there. There's certainly
Speaker 4: plenty of folks that do not see more rate cuts
Speaker 4: this year, one that sees a hike coming through. So
Speaker 4: there's a divergence of opinions on the cover reserve, and
Speaker 4: you know what, that's appropriate. It's appropriate for a range
Speaker 4: of reasons. One is that we have an incredibly fragmented
Speaker 4: US economy and this trade shock, the interest rate shock
Speaker 4: of the early twenty twenties has created. We've talked about
Speaker 4: it on this show, Haves and have Not. It's a
Speaker 4: K shaped economy. But the trade shock is also a
Speaker 4: fragmentation in the United States. There are sectors that are
Speaker 4: feeling significantly more pain than others, and depending on which
Speaker 4: region you represent, it's appropriate to perhaps have a different
Speaker 4: view on what the appropriate path ahead is. So when
Speaker 4: I see that divergence happening between opinions's opinions, it's a
Speaker 4: reflection to me of the fragmentation and the spread that's
Speaker 4: occurring in the real US economy as well. And maybe
Speaker 4: that's not such a bad thing that there's different perspectives
Speaker 4: about how to think about it and how to measure it.
Speaker 3: Francis, thank you so much. This morning, Francis Donald's gets
Speaker 3: a start and strowing here. This hour Real focused on
Speaker 3: the FED the effect on global walls to Ian Lincoln's
Speaker 3: schedule to be with us as well. Stay with us
Speaker 3: more from Bloomberg Surveillance coming up after this.
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Speaker 3: We are pleased to bring you moments after He's published
Speaker 3: a detailed note Ian Lincoln of BEMO Capital Markets, and
Speaker 3: within the many paragraphs of a Lincoln Hartman note, there
Speaker 3: is a phrase. I've never seen this from the FED,
Speaker 3: tone refining. What is the paths forward from mister Powell
Speaker 3: and company? Is they tone refine the message?
Speaker 2: Well, I think that yesterday was a very good example
Speaker 2: of the committee having one opinion and Powell choosing to
Speaker 2: offer a tone refining more hawkish spin. So the market
Speaker 2: rallied following the statement because we saw a lower twenty
Speaker 2: twenty five FED projection FED funds projection. And then Powell
Speaker 2: came out and said, think of it as a risk
Speaker 2: management cut, and I think that that's why we saw
Speaker 2: the market whip sought around a bit in here.
Speaker 3: We talked to bond people yesterday and folks, I want
Speaker 3: to get away from the jargonair Lingcoln's brilliant and avoiding
Speaker 3: the jargon. But when spreads narrow, that means bonds are
Speaker 3: bid price up, yield down is compared to full faith
Speaker 3: and credit American paper. So I we're price to perfection
Speaker 3: in the bond market. And your theory is we even
Speaker 3: get lower rates from here. How do we go from
Speaker 3: price to perfection to price to perfection squared?
Speaker 2: Well, I think that what we're going to learn over
Speaker 2: the core. So the next couple of months. Is that
Speaker 2: perfection in this environment means lower rates. It means a
Speaker 2: lower term premium, and it means a Fed that will
Speaker 2: deliver on an October and December rate cut and recalibrate
Speaker 2: the policy, the front end policy lower, which will ensure
Speaker 2: at least attempt to ensure a recession is avoided and
Speaker 2: that the unemployment rate doesn't spike even further. So we're
Speaker 2: still hoping for a soft landing as a real economy
Speaker 2: at this stage, and that's what Powell is trying to ensure.
Speaker 5: So Ian, you know, looking at the tenure treasure here
Speaker 5: at four point zero five percent, where does this go?
Speaker 5: I mean, are we talking sub four percent at some
Speaker 5: point in your future?
Speaker 2: Well, we were sub four percent yesterday, and I think
Speaker 2: that it's very doable to get to our year end
Speaker 2: target of three eighty five for tens. And if anything,
Speaker 2: at this stage, given where we are, I would skew
Speaker 2: that number a bit lower. Maybe we get to three
Speaker 2: seventy five or three sixty five, and that's without an
Speaker 2: economics recession or a material slowdown. It's more of a
Speaker 2: glide path.
Speaker 5: Do you think this move by the Fed yesterday suggests
Speaker 5: that maybe the labor market, maybe the economy. Maybe they're
Speaker 5: seeing something that gets them a little bit concern more
Speaker 5: so than maybe the market is should we be taking
Speaker 5: that as a signal or is this just kind of
Speaker 5: right in line with where they should be.
Speaker 2: I would say that they're responding to the recent post
Speaker 2: Liberation Day payrolls environment combined with the bitchmark revisions which
Speaker 2: took off nine hundred and eleven thousand jobs, and they're
Speaker 2: effectively saying, the labor market's not as strong as we
Speaker 2: thought it was for the last eighteen months. We need
Speaker 2: to start normalizing. What I worry about is we have
Speaker 2: another spike in initial job as claims, which we will
Speaker 2: get that data this morning, and that gets the market concerned.
Speaker 2: That defense behind the curve.
Speaker 7: And I ended the show yesterday with our heads spinning.
Speaker 3: I mean it was you and I have been doing
Speaker 3: this for every and it was absolutely extraordinary yesterday. And
Speaker 3: I said, look, whatever the outcome here, the benefits of
Speaker 3: this financial stuff are the financial elites. How does what
Speaker 3: we saw yesterday, what I'm seeing this morning with the
Speaker 3: Nasdaq up to new highs, up one point one percent,
Speaker 3: how does that benefit Americans that don't own in Nvidia.
Speaker 2: Well, on the margin, it's good for the broader equity market.
Speaker 2: So I do think that it's there is a bit
Speaker 2: of a broad based wealth effect. But you make a
Speaker 2: very good point. The bottom two quartiles of households are struggling.
Speaker 2: We see this in some of the economic reports. We
Speaker 2: certainly hear this anecdotally, and it is going to be
Speaker 2: a very interesting next couple of quarters.
Speaker 3: Until up twenty six percent. There was jargon from Ling
Speaker 3: that was up, he's in a surveillance time out here,
Speaker 3: bottom two quartiles. Paul is half of America. Yep, that's
Speaker 3: what Lisa Matteo would say.
Speaker 5: I know she wouldn't go Matthew, honest, you'll continue Ian,
Speaker 5: what do you think the cadence of rate cuts may.
Speaker 6: Be for this FED going forward?
Speaker 8: Here?
Speaker 2: So I would say that it's going to be twenty
Speaker 2: five basis points per meeting until they get to whatever
Speaker 2: version of neutral they think that they will achieve. Now
Speaker 2: there's a case to be made that it should be
Speaker 2: twenty five basis points per quarter, and that seems to
Speaker 2: be what Powell is pushing back or pushing for, suggesting
Speaker 2: that it's going to be a meeting by meeting decision,
Speaker 2: but getting back to three percent at twenty five basis
Speaker 2: points per meeting, that would actually allow Powell to hand
Speaker 2: over the reins of the FED to the incoming chair
Speaker 2: at three percent, which I think would be an interesting
Speaker 2: setup for whoever comes in next.
Speaker 5: So what do you think is next here ian for
Speaker 5: this better reserve? Are they going to sit back and
Speaker 5: kind of be consistent I eat where data dependent, We
Speaker 5: in fact will look at this data going forward. Or
Speaker 5: do you think they have something predetermined.
Speaker 2: I expect that if the data plays out the way
Speaker 2: that they assume that it's going to play out, that
Speaker 2: they have predetermined in their mind that they want to
Speaker 2: deliver a couple more cuts, maybe a total of one
Speaker 2: hundred basis points between now and the end of the
Speaker 2: first quarter, and it's up to the data to derail that.
Speaker 2: So they don't need confirmation from the data. They just
Speaker 2: need not to see a spike in goods inflation or
Speaker 2: not to see a quick reversal back to a stronger
Speaker 2: labor market. So it is a bit of both.
Speaker 3: Frankly, Brandman brought up forward guidance yesterday, dead on arrival,
Speaker 3: I brought up a new data dependency. Take those trite
Speaker 3: phrases Ian and translate. Where we are on the death
Speaker 3: of forward guidance on a whole new world after all
Speaker 3: for data dependency.
Speaker 2: I think that the reality is the more that the
Speaker 2: FED is transparent, the more differing opinions that we hear,
Speaker 2: the more difficult that is from the market to know
Speaker 2: what the FED is going to do. And so too
Speaker 2: many talking Feds can complicate things, and I worry that
Speaker 2: that's precisely what we're experiencing at the moment.
Speaker 8: Ian.
Speaker 7: Thank you so much, Ian Lingoln.
Speaker 3: This was Vimont Capital Markets in this hour for Global
Speaker 3: Wall Street. All sorts of newsflow right now. We need
Speaker 3: to bring that to you, but we're really trying to
Speaker 3: bring you pros on the street picking up the debris
Speaker 3: of the FED meeting. Thank you, Francistano, Thank you, Ian
Speaker 3: Lingoenn will stay with us. More from Bloomberg Surveillance coming
Speaker 3: up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: say Alexa Play Bloomberg eleven thirty.
Speaker 3: Joining us now forever with his gold and sacks, but
Speaker 3: also a tour dude with the Dallas fed Robert Keplin
Speaker 3: joins us, and I really can't say enough, folks. The
Speaker 3: timeliness is technology elites meet with the Prime Minister and
Speaker 3: the president of this specific president. He is, without question,
Speaker 3: the most innovation, most business process president in modern history.
Speaker 3: Wonderful to have you here, Robert this morning. What do
Speaker 3: we underestimate right now about this technology juggernaut? With a question,
Speaker 3: it's technology to the rescue. With all of your experience
Speaker 3: at HBS and all, what are we missing in this
Speaker 3: place forward a decade?
Speaker 9: Well, I don't think the stock market is missing it.
Speaker 9: And this is why people are saying, gee, the economy
Speaker 9: appears sluggish. Why is the stock market at record levels?
Speaker 9: Credit spreads so tied. I think the stock market is seen.
Speaker 9: We are in the early ages of an AI data
Speaker 9: center power boom, and it will It'll take a few years.
Speaker 9: But is this technology gets adopted across industries which were
Speaker 9: in the early stages of I think the market is
Speaker 9: anticipating it will create productivity improvements, margin improvements, SMP earnings
Speaker 9: improvements that will be transformative. The part we'll have to
Speaker 9: struggle with is how do we redeploy workers who lose
Speaker 9: their jobs in one area and go to another. But
Speaker 9: I think we will eventually, we will figure that out.
Speaker 9: But I think the market, the market's on this.
Speaker 7: Okay, Robert, you were at Goldman Sachs.
Speaker 3: This is just a really storied career and innovation linking
Speaker 3: finance into America.
Speaker 7: You were at Goldman Sachs in.
Speaker 3: Nineteen ninety you wandered and as a partner, and four
Speaker 3: years later our world was to and upside down. I
Speaker 3: remember late ninety four, early ninety five in the advent
Speaker 3: of the Internet.
Speaker 7: Is this as ginormous as that moment?
Speaker 9: Probably in a different way. Yeah, it'll be as significant
Speaker 9: for companies. The Internet was very significant. I think this
Speaker 9: may be more significant for increasing the rate of disruption.
Speaker 9: Every company needs to be on their front foot on this,
Speaker 9: because you need to find ways to be more efficient,
Speaker 9: to be more nimble, to do more with less, and
Speaker 9: so I think in terms of the breadth of this,
Speaker 9: I think the breadth in terms of affecting every company
Speaker 9: is more significant.
Speaker 5: Yeah, Robert, when you talk to your bankers of Goldzacs
Speaker 5: as they talk to their clients around the world. Are
Speaker 5: there are your clients feeling the same sense of urgency
Speaker 5: as it relates to AI, the same sense of opportunity
Speaker 5: in AI?
Speaker 8: They are.
Speaker 9: It is a mix of anxiety and opportunity in that.
Speaker 9: Across every industry, people know they've got to be investing.
Speaker 8: It's not an option not to invest.
Speaker 9: And many companies are worried that they're not big enough,
Speaker 9: they don't have enough heft to afford the investment, because
Speaker 9: the first impact of AI investment may.
Speaker 8: Be lower margins.
Speaker 9: But you've got to make the investment because over the
Speaker 9: next few years, your competitors are doing it, and if
Speaker 9: you don't, you're going to get disrupted out of existence.
Speaker 9: And that is why we're seeing a lot of merger
Speaker 9: activity as a result of it.
Speaker 8: But yes, every.
Speaker 9: CEO I talk to is trying to figure out which
Speaker 9: use case they have to get adoption. They're trying use cases.
Speaker 9: The thing leaders don't yet know and they're working through
Speaker 9: is which use cases will work and which won't. We'll
Speaker 9: know over the next few years, but you're going to
Speaker 9: have to go through this journey and we'll try some
Speaker 9: things that don't work well. There'll be a number th
Speaker 9: number of things that do work, and the net of
Speaker 9: it all will be a dramatic improvement I think in productivity,
Speaker 9: but it may be unpredictable in which areas Robert.
Speaker 5: One of the top news stories this morning we woke
Speaker 5: to was in Nvidiot taking a five billion dollar stake
Speaker 5: in Intel after the United States government.
Speaker 6: It's ten percent investment.
Speaker 5: That's really something that we haven't seen too often in
Speaker 5: corporate America.
Speaker 6: How do you view what's happening at Intel?
Speaker 8: So it's part of a larger picture.
Speaker 9: So there's the AI boom that we can agree on. Okay,
Speaker 9: so what do you need to power? You need semiconductors,
Speaker 9: You need sophisticated semitectors, We need more semiconductor production capacity.
Speaker 9: We also, by the way, need more power, and we
Speaker 9: need more power capacity, and all this takes investment and collaboration.
Speaker 9: So I thought this is a positive development and that
Speaker 9: we need to beef up our semiconductor capability to power
Speaker 9: to a lot of these developments, I think you're going
Speaker 9: to see more of these kinds of things and a
Speaker 9: lot of investment in the power sector, just the basical
Speaker 9: power sector too, to drive data centers. But semiconductors are
Speaker 9: a key part of it, and I think it's indicative
Speaker 9: of this deal is indicative of.
Speaker 3: That, Robert Kaplin. With this, we continue with the vice
Speaker 3: chairman of Golden SAX. Of course, all of us work
Speaker 3: at the Dallas FED.
Speaker 7: And so many email men. Are you going to ask
Speaker 7: him about DFW?
Speaker 3: No, I'm not going to ask Robert Kaplan to fix
Speaker 3: Dallas Fort Worth and all the huge success of it.
Speaker 3: I should say, we welcome all of you in Texas.
Speaker 3: We welcome you across America, including doctor Kaplan's Kansas good
Speaker 3: Morning in Canada good Morning on YouTube world wide as well.
Speaker 3: I love to do this, Robert, when you're with me,
Speaker 3: I go to the Dallas Fed, which folks check it out.
Speaker 7: That's brilliant.
Speaker 3: Immediate economics, the Texas juggernaut and even with the slow
Speaker 3: in June right now, and I got a great article
Speaker 3: on a relatively quiescent inflation in Texas is by Luis
Speaker 3: Torres and Diego Moreles Burnett, Robert Kaplan, what's the pixie
Speaker 3: dust in Texas? That Montana, Mississippi in main need.
Speaker 9: Okay, So the story of Texas over the last ten
Speaker 9: to fifteen years is migration of people and firms to
Speaker 9: the state. You know, about twelve thirteen years ago, I
Speaker 9: think population was around twenty two tuish million. We're now
Speaker 9: pushing thirty million, and we're heading north wy So. Pro
Speaker 9: business culture, very welcoming culture. Yes, no state taxes, and
Speaker 9: the reason the state is able to do no state
Speaker 9: income taxes, that is, has a sales tax and property tax.
Speaker 9: But the reason it's able to do that has a
Speaker 9: very large oil and gas industry that produces a lot
Speaker 9: of excess funds go into the state's rainy day funds.
Speaker 9: We're the largest exporting state in the country, and so
Speaker 9: we've got a lot of features that create that make
Speaker 9: Texas a magnet in Dallas, Houston, Austin, San Antonio, a
Speaker 9: magnet for people and firms that are moving here and
Speaker 9: believe it's a better place to domicile.
Speaker 3: I'm honored to say I'll be with the Houston CFA
Speaker 3: Institute next month.
Speaker 7: So are you going downward?
Speaker 8: Very good? Do something?
Speaker 7: Do something as well?
Speaker 8: Very good.
Speaker 7: They don't know that my father was a fight in
Speaker 7: Texas aggy. If they'd known that, they probably would have
Speaker 7: resented the invitation.
Speaker 5: Please, Robert, what did you hear from our Feederal Reserve
Speaker 5: yesterday that maybe kind of got your your sense going.
Speaker 9: Well, I expected diversions and you saw diversions. What I
Speaker 9: mean by that you got You got I think six
Speaker 9: or seven, which I kind of expected, who said we're
Speaker 9: done for the year, we don't want more rate cuts.
Speaker 9: You have that a nine or ten who said we're
Speaker 9: going to do two more rate cuts. So there's and
Speaker 9: there are cross currents, and it doesn't surprise me there's disagreement.
Speaker 9: But what you also saw yesterday, I think is support
Speaker 9: and the desire to work as a team and work
Speaker 9: with the chair. And so you could have gotten more
Speaker 9: descents yesterday, you didn't. And so it tells me that
Speaker 9: there's hefty debate and disagreement. That's great, But you also
Speaker 9: told me when it's kind of make a decision. They
Speaker 9: came together and they made a decision. And so I
Speaker 9: think the FED functioning FED independence without regard to politics,
Speaker 9: is still alive and well.
Speaker 8: And I think that's what I saw yesterday.
Speaker 6: It's kind of where I wanted to go, Robert.
Speaker 5: This is a FED that's had to deal with arguably
Speaker 5: more political pressure. I guess you could say on various
Speaker 5: members of the FED. Do you think that impacts their
Speaker 5: work in any way? Do you think that impacts their
Speaker 5: policy in any way? Or are they able to maintain
Speaker 5: their independence?
Speaker 9: Well, so, there's a very very strong culture inside the
Speaker 9: FED that demands you, to the extent humanly possible, and
Speaker 9: they are human beings, but to the extent humanly possible,
Speaker 9: you make decisions without regard to political influencer, book, political
Speaker 9: pressure considerations, and the peer pressure to do that is strong.
Speaker 9: Every statement I ever made at the FED I have
Speaker 9: to defend. If a colleague makes a statement, even if
Speaker 9: it's the chair, they've got to defend it, otherwise you're
Speaker 9: going to question them. People there have to stand on
Speaker 9: their two feet and make merit based arguments. And so
Speaker 9: I think that culture is still alive and well there.
Speaker 3: Robert Kappan, I want to discuss with you the mandates.
Speaker 3: You are our most business, our most MBA, Richard Fisher
Speaker 3: and others. But I mean you own the high ground
Speaker 3: on this. I guess we have it in flesh inflation mandate.
Speaker 3: I guess we have a jobs mandate. Stephen Roach and
Speaker 3: Morgan Stanley iconic for saying we have an asset bubble
Speaker 3: mandate as well. Are we getting towards Stephen Roach's asset
Speaker 3: bubble when we see bonds priced to perfection and an
Speaker 3: equity market with Walmart a pe forty.
Speaker 9: I think that the FED pays attention to financial markets,
Speaker 9: but it's got to set monetary policy based on the economy.
Speaker 8: And right now you have a divergence.
Speaker 9: You've got regulatory review reform coming, you've got tax incentives coming,
Speaker 9: accelerated appreciation, you got.
Speaker 8: An AI boom.
Speaker 9: Those three things are not really in the economy quite yet,
Speaker 9: and so you got a sluggish economy and you have
Speaker 9: a booming financial markets. I actually think the tailwinds are
Speaker 9: significant head and so if you're at the FED, on
Speaker 9: the one hand, you pay attention to it, but you
Speaker 9: got to set monetary policy based on the underlying economy,
Speaker 9: and I think that's I think that's the right thing
Speaker 9: to do right now, and that's what they're doing. This
Speaker 9: is not one of those stock markets that's being fueled
Speaker 9: by excess monetary policy, in my opinion, It's being fueled
Speaker 9: by other structural drivers, and the FED would do well
Speaker 9: to recognize that.
Speaker 8: Robert.
Speaker 5: One of the key themes coming into this year has
Speaker 5: been a new tariff regime regime on a global basis.
Speaker 5: As you and your bankers a Goldman work with your clients,
Speaker 5: are they feel like they're navigating their way through it
Speaker 5: or is there maybe still some more pain in terms
Speaker 5: of higher inflation slower growth?
Speaker 6: What are you hearing from your clients?
Speaker 9: So big, bigger businesses are navigating through The April announcements
Speaker 9: were abrupt, and they weren't. They weren't prepared yet how
Speaker 9: to adapt. Since then, they've had time, and also the
Speaker 9: tariffs have settled out closer to high teens. I think
Speaker 9: they were hoping for low teens. Fine, they can work
Speaker 9: with high teens. You're seeing some margin erosion, You're seeing
Speaker 9: relooking at supply chains. The area that I'm seeing is
Speaker 9: struggling the most with it is smaller business. Smaller businesses
Speaker 9: don't have the levers that big businesses do.
Speaker 8: And I do hear.
Speaker 9: From more business people, especially if they import goods. Boy,
Speaker 9: I don't know if we can stay in business's the
Speaker 9: end of the year, so there's a divergence there.
Speaker 3: Doctor Kevin, thanks so Much's a generous time this morning
Speaker 3: with Golden Sech's former president of the Dallas Fed. Stay
Speaker 3: with us more from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
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Speaker 10: The newspapers here is yes, we have to okay, So
Speaker 10: there were different approaches, right. It was the white tie
Speaker 10: fashion event last night's banquet at Windsor Castle. So it
Speaker 10: was the first Lady and the Princess of Wales. They
Speaker 10: were the ones that were kind of the center of attention.
Speaker 10: Everybody was wondering what they're gonna wear. Okay, So you
Speaker 10: have Kate Middleton, two completely different looks.
Speaker 6: Okay.
Speaker 10: So she went for this full length of felipa lepley gown. Yes,
Speaker 10: I had a call. We called the company this morning
Speaker 10: to make sure that was the way that you pronounced it.
Speaker 7: Yeah, it was very Queen Mary.
Speaker 10: Was very lace, full length up to the neck, long sleeves.
Speaker 10: She had the blue slash would have approved tiara. Yes,
Speaker 10: the tiara actually belonged to Queen Mary that she was wearing.
Speaker 10: She had this pearl encrusted clutch. She looked like a
Speaker 10: princess basically, that was she nailed it. Then you go
Speaker 10: to Malania Trump. She had this boulder approach, the yellow
Speaker 10: yes Carolina Herrera, sleek silhouette, you know, with a slit
Speaker 10: up the side. It was an over the shoulder, chunky
Speaker 10: like purple silk belt around here. And then she had
Speaker 10: these long, dangly green earrings.
Speaker 6: Yeah, so different.
Speaker 10: Going to say, you go from the you know, the
Speaker 10: plane lace to like this old yellow and so they
Speaker 10: were saying it was.
Speaker 7: When I saw it, I was constructed.
Speaker 3: I'll say diplomatically, I was constructively shocked.
Speaker 7: You were it was what a statement?
Speaker 10: Well, it was completely different from how she arrived in
Speaker 10: the UK.
Speaker 3: So the next dinner at two hundred people in the
Speaker 3: two hundred people in the ballroom at mar Lago, how
Speaker 3: many people, and they'll be like, in eight different colors,
Speaker 3: it looked like fur loose.
Speaker 10: Next, okay, here we go from high fashion to what
Speaker 10: Starbucks employees can wear. Okay, because there are employees who
Speaker 10: were in file in three states who were taking legal
Speaker 10: actions in the company. Right so before they have his
Speaker 10: new dress code, he wanted to effect this is what
Speaker 10: it's going under. But before they were were allowed to
Speaker 10: wear things like patterned shirts and colors and express themselves. Okay,
Speaker 10: but now they have to wear in North America these
Speaker 10: solid black shirts long you know, dark sleeves. They have
Speaker 10: to wear certain color pants and shoes. They can't have
Speaker 10: certain tattoos on their face or certain piercings. They change,
Speaker 10: they change and everything. Do not know who buys the clothes,
Speaker 10: the employees by the clothes, but they have to be
Speaker 10: of a certain color.
Speaker 6: Now, yes, is that legal?
Speaker 7: Yeah?
Speaker 10: Yeah, I used when I was waiting tables. I know
Speaker 10: they wear wear the uniform. McDonald's buys a uniform, right, correct,
Speaker 10: But they're telling them what colors. You know they can
Speaker 10: wear pants? Oh gosh, it's probably about bucks. Yes, it's
Speaker 10: called the if you get the super large one.
Speaker 6: Exactly.
Speaker 10: I'm still on I still say large. I don't say eventy,
Speaker 10: I have any thank you.
Speaker 5: It's Italy by the way right now.
Speaker 3: So out of Saint Mark's in Venice with a big
Speaker 3: square shore, you go to the place over on the
Speaker 3: left that's like world famous.
Speaker 8: Yet every movie.
Speaker 6: There, and they triple the prices for everything we had
Speaker 6: life here.
Speaker 7: Sweeney walked in.
Speaker 10: Next Okay, this next story in the Wall Street Drill,
Speaker 10: you have to actually give it a good read.
Speaker 6: Okay.
Speaker 10: So it's about AI agents getting ready to handle your
Speaker 10: whole financial life. Okay, what could go wrong?
Speaker 3: Right?
Speaker 10: Okay? So yeah, okay, So people who manage their finances,
Speaker 10: you have a lot, you have a different apps, you
Speaker 10: have a number of loggins that you have to remember.
Speaker 10: You're trying to track all these different things. So tech
Speaker 10: and finance executives they've been investing billions of dollars in
Speaker 10: these AI tools agentic AI. I was just talking to
Speaker 10: someone yesterday because we have a conference coming up from
Speaker 10: Bloomberry about this specifically. So they're saying, researchers saying AI
Speaker 10: assistants are going to basically examine your whole portfolio, give
Speaker 10: you advice on it. They're going to be key for
Speaker 10: financial who can't afford financial advisors. People are going to
Speaker 10: turn to this now. But they are saying that, you
Speaker 10: know what, it's not going to replace financial advisors. It's
Speaker 10: going to be kind of a hand in hand tool.
Speaker 6: I'm not buying this whole thing. I think AIS can
Speaker 6: take a lot of jobs. Oh got it.
Speaker 10: It's tough. So they talk about a lot of the
Speaker 10: things in there. You gotta read it.
Speaker 7: You get the newspapers. Lisa Matteo, thank you so much.
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