1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,400 --> 00:00:39,000 Speaker 1: Stocks and bonds rising. After an interim agreement between the 11 00:00:39,080 --> 00:00:41,960 Speaker 1: US and iron was reached, the raid through coming ahead 12 00:00:41,960 --> 00:00:44,840 Speaker 1: of fed'st June meeting, the first under new chair Kevin Walsh. 13 00:00:45,040 --> 00:00:47,960 Speaker 1: Seth Carpenter of Morgan Stanley writing this, while the tariff 14 00:00:48,040 --> 00:00:52,400 Speaker 1: impulse appears to be nearing completion, sustained disinflation ahead depends 15 00:00:52,440 --> 00:00:54,920 Speaker 1: on the resolution of the conflict. We expect the FED 16 00:00:54,960 --> 00:00:57,960 Speaker 1: to hold rates unchanged. Seth joins us now here in studio, 17 00:00:58,000 --> 00:01:00,760 Speaker 1: which is a wonderful thing. Hey, good morning, So is 18 00:01:00,760 --> 00:01:03,440 Speaker 1: this enough for you to think that the inflationary pressure 19 00:01:03,640 --> 00:01:06,479 Speaker 1: is probably going to be on a downward trajectory or 20 00:01:06,640 --> 00:01:08,000 Speaker 1: is there something else to play here? 21 00:01:09,040 --> 00:01:12,720 Speaker 3: So probably how's that for an economist answer? Yes, Look, 22 00:01:12,760 --> 00:01:16,000 Speaker 3: the path to a FED rate hike, in our view, 23 00:01:16,080 --> 00:01:19,120 Speaker 3: was never going to be just about inflation, and absolutely 24 00:01:19,120 --> 00:01:22,400 Speaker 3: not just about oil driven inflation. So historically in the 25 00:01:22,520 --> 00:01:26,280 Speaker 3: US oil driven inflation it pushes up headline, but not 26 00:01:26,480 --> 00:01:29,520 Speaker 3: that much typically passed through to core. This time could 27 00:01:29,520 --> 00:01:31,680 Speaker 3: have been different. We'll still have to see how everything 28 00:01:31,880 --> 00:01:35,319 Speaker 3: plays out. But we were thinking if the FED was 29 00:01:35,319 --> 00:01:37,840 Speaker 3: going to hike, it would be a combination of inflation, 30 00:01:38,160 --> 00:01:42,280 Speaker 3: especially core inflation staying sustained, staying above three percent or so, 31 00:01:42,800 --> 00:01:45,399 Speaker 3: and the underlying momentum of the real side of the 32 00:01:45,440 --> 00:01:48,600 Speaker 3: economy broadening out, firming up and keeping going. And if 33 00:01:48,600 --> 00:01:52,080 Speaker 3: we look at say the last several jobs reports, something 34 00:01:52,120 --> 00:01:54,040 Speaker 3: that we have been talking about so much, with oil 35 00:01:54,080 --> 00:01:57,240 Speaker 3: prices being front and center, they've shown that the fall 36 00:01:57,280 --> 00:02:00,320 Speaker 3: and hiring bottomed out, things are starting to pick up again. 37 00:02:00,360 --> 00:02:02,120 Speaker 3: And so I think the real key here is going 38 00:02:02,160 --> 00:02:05,160 Speaker 3: to be where is that underlying strength in the economy 39 00:02:05,200 --> 00:02:09,760 Speaker 3: and is there more inflation momentum outside of oil prices. 40 00:02:09,840 --> 00:02:12,160 Speaker 3: We know that the path through from tariffs has essentially 41 00:02:12,200 --> 00:02:14,640 Speaker 3: run its course, that's going to be a disinflationary force. 42 00:02:14,960 --> 00:02:19,000 Speaker 3: Is there actually that much more fundamental, broad based inflationary 43 00:02:19,000 --> 00:02:22,280 Speaker 3: pressure to overcome that terraff Disinflation. 44 00:02:21,840 --> 00:02:25,680 Speaker 1: On a certain level doesn't lower oil prices help the 45 00:02:25,800 --> 00:02:29,520 Speaker 1: idea of broadening out and strength, they could potentially feed 46 00:02:29,639 --> 00:02:32,840 Speaker 1: some of the other parts of inflation that can make 47 00:02:32,840 --> 00:02:33,520 Speaker 1: the fed on easy. 48 00:02:33,600 --> 00:02:34,960 Speaker 3: Well, I mean it is a bit of a double 49 00:02:35,040 --> 00:02:38,280 Speaker 3: edged sword that way, because if consumers in general feel 50 00:02:38,600 --> 00:02:41,280 Speaker 3: freer to spend, they have more disposable income to spend 51 00:02:41,280 --> 00:02:44,520 Speaker 3: on everything but gasoline, then just maybe there's a bit 52 00:02:44,560 --> 00:02:47,359 Speaker 3: more resilience than to that aggregate demand. So I think 53 00:02:47,360 --> 00:02:49,120 Speaker 3: that's a real risk. We just have to see how 54 00:02:49,160 --> 00:02:51,399 Speaker 3: all of this plays out. And I have to say 55 00:02:51,440 --> 00:02:55,160 Speaker 3: that the agreement's been announced, we haven't seen things signed, 56 00:02:55,200 --> 00:02:57,760 Speaker 3: we haven't seen the increase in the flow of oil 57 00:02:57,880 --> 00:03:01,480 Speaker 3: actually happen. Yet, we haven't got to that critical point 58 00:03:01,480 --> 00:03:03,320 Speaker 3: where there has to be an agreement on all the 59 00:03:03,320 --> 00:03:05,560 Speaker 3: rest of the tricky details, as you were saying before. 60 00:03:06,280 --> 00:03:08,200 Speaker 3: So I think it's too soon to have any conviction 61 00:03:08,360 --> 00:03:09,839 Speaker 3: that we know exactly where things are going. 62 00:03:09,960 --> 00:03:11,640 Speaker 4: What would it take for you to have conviction? What 63 00:03:11,680 --> 00:03:13,919 Speaker 4: do you want to hear out of this agreement where 64 00:03:13,960 --> 00:03:15,200 Speaker 4: the two sides agree. 65 00:03:14,919 --> 00:03:17,960 Speaker 3: On Oh, well, I think there, I just want to 66 00:03:18,000 --> 00:03:20,400 Speaker 3: see the actual flow of oil happen, and then I 67 00:03:20,440 --> 00:03:23,040 Speaker 3: think there are a lot of questions that happen after that. 68 00:03:23,080 --> 00:03:26,079 Speaker 3: What happens to the rebuilding of inventories around the world. 69 00:03:26,120 --> 00:03:29,200 Speaker 3: If people were happy with their stock of inventories before 70 00:03:29,320 --> 00:03:31,640 Speaker 3: this conflict started, are they going to look at that 71 00:03:31,760 --> 00:03:34,920 Speaker 3: level and go in case this ever happens again, we 72 00:03:35,000 --> 00:03:37,000 Speaker 3: need to have an even bigger inventory, in which case 73 00:03:37,040 --> 00:03:39,760 Speaker 3: you can see a much greater surgeon demand once things 74 00:03:39,760 --> 00:03:43,280 Speaker 3: start flowing. We'll be looking at a natural gas how 75 00:03:43,320 --> 00:03:45,240 Speaker 3: long will it take for the flow of the supply 76 00:03:45,280 --> 00:03:47,880 Speaker 3: of natural gas to filter out around the world. The 77 00:03:47,920 --> 00:03:50,520 Speaker 3: rebuild of inventories in lots of places there that's pretty 78 00:03:50,600 --> 00:03:53,320 Speaker 3: seasonal can be pushed off for a while. It can't 79 00:03:53,320 --> 00:03:55,640 Speaker 3: be pushed off forever. And we know that there was 80 00:03:55,680 --> 00:03:59,160 Speaker 3: some damage sustained to cuttery production, and so I think 81 00:03:59,200 --> 00:04:01,720 Speaker 3: there is a question about where will the market settle 82 00:04:01,720 --> 00:04:04,960 Speaker 3: out once we have a clearer idea of supply and 83 00:04:05,040 --> 00:04:05,960 Speaker 3: demand coming together. 84 00:04:06,000 --> 00:04:07,640 Speaker 4: How do you expect the new fetcher to talk about 85 00:04:07,640 --> 00:04:07,960 Speaker 4: all of. 86 00:04:07,880 --> 00:04:11,920 Speaker 3: This Very cautiously. I don't think there is a lot 87 00:04:12,760 --> 00:04:17,240 Speaker 3: for Kevin worsh to get out of being overly definitive here. 88 00:04:17,680 --> 00:04:20,560 Speaker 3: It is a very fluid situation, and so him acknowledging that, 89 00:04:20,600 --> 00:04:23,560 Speaker 3: I think makes it easier. He's been clear that too 90 00:04:23,640 --> 00:04:26,719 Speaker 3: much forward guidance is probably not a good thing, and 91 00:04:26,800 --> 00:04:29,000 Speaker 3: if ever that statement was true, it is right now 92 00:04:29,680 --> 00:04:33,080 Speaker 3: watching all the different paths come together. Coming into this year, 93 00:04:33,120 --> 00:04:36,760 Speaker 3: we were pretty constructive on the underlying momentum of the economy, 94 00:04:36,760 --> 00:04:40,880 Speaker 3: and then everything, the whole discussion was overtaken by what 95 00:04:40,960 --> 00:04:43,640 Speaker 3: was going on with oil markets. I think we really 96 00:04:43,680 --> 00:04:46,320 Speaker 3: do need to have some really close focus on that 97 00:04:46,440 --> 00:04:49,880 Speaker 3: underlying momentum before they can decide is policy really in 98 00:04:49,880 --> 00:04:50,440 Speaker 3: the right place. 99 00:04:50,640 --> 00:04:52,960 Speaker 1: It is Monday, which means it's marger Monday, and it 100 00:04:52,960 --> 00:04:55,600 Speaker 1: comes at a time or despite some of the uncertain too, 101 00:04:55,600 --> 00:04:59,960 Speaker 1: we've seen capital markets incredibly robust. Fox The latest news 102 00:05:00,120 --> 00:05:02,240 Speaker 1: Fox is playing to buy Roku for one hundred and 103 00:05:02,240 --> 00:05:04,640 Speaker 1: sixty dollars to share in a cash and stock deal. 104 00:05:05,000 --> 00:05:07,040 Speaker 1: Goes on to say that Fox expects the deal to 105 00:05:07,080 --> 00:05:09,320 Speaker 1: close the first half of twenty twenty seven, and Fox 106 00:05:09,360 --> 00:05:11,200 Speaker 1: will re chain and believe about a seventy three percent 107 00:05:11,480 --> 00:05:14,920 Speaker 1: control of the combined company. It comes after the SPACEXIPO, 108 00:05:15,040 --> 00:05:17,359 Speaker 1: It comes ahead of a whole host of deals that 109 00:05:17,400 --> 00:05:20,880 Speaker 1: people are expecting. You see bankers incredibly enthusiastic talking about 110 00:05:20,920 --> 00:05:23,880 Speaker 1: how this might be a record year, a banner year 111 00:05:23,920 --> 00:05:27,000 Speaker 1: in all sorts of different areas. How much does that 112 00:05:27,240 --> 00:05:30,080 Speaker 1: potentially affect the feasual reserve in how they look at Marcus, 113 00:05:30,160 --> 00:05:33,000 Speaker 1: how they look at financial conditions, how they look at 114 00:05:33,200 --> 00:05:35,000 Speaker 1: whether they truly are restrictive. 115 00:05:35,400 --> 00:05:37,240 Speaker 3: I mean, I think that's a great question, and this 116 00:05:37,279 --> 00:05:40,240 Speaker 3: could be part of the shift in personnel and thinking. 117 00:05:40,279 --> 00:05:43,320 Speaker 3: With Kevin Warsh as chair, you know, I would say 118 00:05:43,320 --> 00:05:47,120 Speaker 3: in standard academically trained economists, somebody like Ben BERNANKI would 119 00:05:47,120 --> 00:05:49,400 Speaker 3: look at everything that's going on with mergers and see 120 00:05:49,400 --> 00:05:52,920 Speaker 3: that as a result of the economy and other things 121 00:05:52,920 --> 00:05:55,080 Speaker 3: going on in the economy. You know, Kevin spent a 122 00:05:55,080 --> 00:05:57,840 Speaker 3: lot of time talking to investors, talking to people in markets, 123 00:05:57,880 --> 00:06:00,600 Speaker 3: and so could think of that overall sentiment, that the 124 00:06:01,400 --> 00:06:03,279 Speaker 3: wave of M and A and that sort of thing 125 00:06:03,320 --> 00:06:05,560 Speaker 3: as part of the sentiment that's going on that might 126 00:06:05,640 --> 00:06:10,120 Speaker 3: be driving some of the momentum in the economy. I 127 00:06:10,120 --> 00:06:12,400 Speaker 3: don't think it's going to be a watershed where it's 128 00:06:12,480 --> 00:06:14,000 Speaker 3: sort of going to be all in one direction or 129 00:06:14,000 --> 00:06:16,720 Speaker 3: the other. But it does come down to at times 130 00:06:16,720 --> 00:06:19,000 Speaker 3: like this where you're trying to get the signal tease out, 131 00:06:19,000 --> 00:06:21,520 Speaker 3: the signal of where the economy is going. Do you 132 00:06:21,560 --> 00:06:23,200 Speaker 3: lean a little bit more on some data, do you 133 00:06:23,240 --> 00:06:24,920 Speaker 3: lean a little bit more on other data. I think 134 00:06:25,000 --> 00:06:27,240 Speaker 3: that's part of what we need to learn as we 135 00:06:27,320 --> 00:06:29,080 Speaker 3: see this turnover in leadership at the FED. 136 00:06:29,200 --> 00:06:31,800 Speaker 1: How much just AI driving some of the inflationary impulse, 137 00:06:31,839 --> 00:06:35,120 Speaker 1: given that they are able to raise trillions of dollars 138 00:06:35,160 --> 00:06:38,640 Speaker 1: of capital and invest it in assets that seem to 139 00:06:38,680 --> 00:06:41,320 Speaker 1: be endlessly increasing in prices. 140 00:06:41,839 --> 00:06:44,840 Speaker 3: I mean, I think there we're seeing lots of measurement 141 00:06:44,960 --> 00:06:47,960 Speaker 3: questions coming up. There's this discussion of so called chipflation, 142 00:06:48,560 --> 00:06:51,240 Speaker 3: but even within that, the question has the BLS always 143 00:06:51,240 --> 00:06:54,479 Speaker 3: got things right between software chips in terms of the 144 00:06:54,480 --> 00:06:57,800 Speaker 3: price indexes. I think the real key here for the 145 00:06:57,839 --> 00:07:01,359 Speaker 3: inflationary side of things is more that overall momentum in 146 00:07:01,360 --> 00:07:06,080 Speaker 3: the economy, it is undeniable how much capex spending there 147 00:07:06,160 --> 00:07:08,440 Speaker 3: is going on from AI, and I think that's leading 148 00:07:08,480 --> 00:07:11,520 Speaker 3: to things like more construction that's leading to a lot 149 00:07:11,560 --> 00:07:14,600 Speaker 3: of imports for the chips and things like that, but 150 00:07:14,680 --> 00:07:17,600 Speaker 3: it is helping to sustain the momentum of the economy. 151 00:07:17,600 --> 00:07:19,840 Speaker 3: And for me, the real staying power for the inflation 152 00:07:19,960 --> 00:07:21,960 Speaker 3: isn't going to be our chips price is going up. 153 00:07:22,000 --> 00:07:24,240 Speaker 3: It is going to be is that momentum in the 154 00:07:24,280 --> 00:07:27,640 Speaker 3: economy with a fairly low unemployment rate. Is that thing 155 00:07:27,680 --> 00:07:30,720 Speaker 3: that's going to sort of keep inflation core inflation at 156 00:07:30,720 --> 00:07:31,680 Speaker 3: three percent or higher. 157 00:07:31,720 --> 00:07:33,760 Speaker 1: Something I was thinking about this weekend, especially as a 158 00:07:33,800 --> 00:07:35,960 Speaker 1: number of the tie ups start coming to the foreign 159 00:07:35,960 --> 00:07:40,320 Speaker 1: companies get bigger and bigger. Are more consolidated companies. Bigger 160 00:07:40,360 --> 00:07:43,880 Speaker 1: companies good for the inflationary backdrop or bad for the 161 00:07:43,920 --> 00:07:47,320 Speaker 1: inflationary path drop? Do they have greater pricing power or 162 00:07:47,320 --> 00:07:50,120 Speaker 1: do they have greater efficiencies of scale they could potentially 163 00:07:50,200 --> 00:07:51,480 Speaker 1: lower prices for consumer. 164 00:07:51,760 --> 00:07:54,120 Speaker 3: Yeah, I think all of the above could be true 165 00:07:54,120 --> 00:07:56,440 Speaker 3: and at different points of a business cycle. Right now, 166 00:07:56,520 --> 00:08:00,160 Speaker 3: our sense is that we have we're getting back to 167 00:08:00,200 --> 00:08:01,680 Speaker 3: a point where there's going to be a little bit 168 00:08:01,720 --> 00:08:06,120 Speaker 3: more discipline with respect to the ability with all of 169 00:08:06,160 --> 00:08:08,600 Speaker 3: those sorts of things pricing power, and so I think 170 00:08:08,880 --> 00:08:12,960 Speaker 3: we are looking for some disinflationary paths through over time, 171 00:08:13,320 --> 00:08:15,800 Speaker 3: primarily as tariffs have run their course. But we think 172 00:08:15,840 --> 00:08:17,720 Speaker 3: overall we're going to settle back down to a little 173 00:08:17,720 --> 00:08:19,280 Speaker 3: bit more stable inflation. 174 00:08:21,240 --> 00:08:24,680 Speaker 2: Stay with us multiple imberg surveillance coming up after this. 175 00:08:34,160 --> 00:08:37,200 Speaker 1: Hanata Treys of Beta Partners writing, the sixty day extension 176 00:08:37,200 --> 00:08:40,480 Speaker 1: of the ceasefire with Iran is the last best chance 177 00:08:40,559 --> 00:08:44,480 Speaker 1: for quote stimulus from Washington before the election. Henrita joins 178 00:08:44,520 --> 00:08:46,720 Speaker 1: us now a more skeptical take, but this is what 179 00:08:46,760 --> 00:08:48,280 Speaker 1: a lot of people are looking at in terms of 180 00:08:48,280 --> 00:08:52,000 Speaker 1: the political backdrop and how that's influencing when this decision 181 00:08:52,080 --> 00:08:55,160 Speaker 1: was being made. Why do you say the last chance 182 00:08:55,160 --> 00:08:55,880 Speaker 1: at stimulus. 183 00:08:56,160 --> 00:08:58,800 Speaker 5: Yeah, First of all, investors are really looking for the 184 00:08:58,840 --> 00:09:01,520 Speaker 5: president to do something to use the consumer before the election. 185 00:09:01,640 --> 00:09:03,640 Speaker 5: I get that question. A lot people are thinking outside 186 00:09:03,640 --> 00:09:05,840 Speaker 5: the back. So we're going to get a payroll tax holiday, 187 00:09:06,080 --> 00:09:09,640 Speaker 5: we're going to get gas tax suspension. And Congress left 188 00:09:09,679 --> 00:09:12,760 Speaker 5: town last week and they're not coming back until the 189 00:09:12,800 --> 00:09:16,280 Speaker 5: twenty third. There are, by my count, sixteen legislative days 190 00:09:16,280 --> 00:09:19,960 Speaker 5: between now and the August recess, and effectively we're then 191 00:09:20,040 --> 00:09:22,440 Speaker 5: in the end of September. So if there's anything that's 192 00:09:22,440 --> 00:09:24,280 Speaker 5: going to happen. We've run out of time for a 193 00:09:24,320 --> 00:09:28,360 Speaker 5: reconciliation bill. There is no bipartisanship to be had, as 194 00:09:28,400 --> 00:09:30,480 Speaker 5: I'm sure y'all are very aware, and so if you 195 00:09:30,520 --> 00:09:32,800 Speaker 5: were going to do any kind of stimulus, it needed 196 00:09:32,840 --> 00:09:35,920 Speaker 5: to be in a third reconciliation bill, and Senator McConnell 197 00:09:35,960 --> 00:09:38,640 Speaker 5: and Senator Collins kicked that to the curb last. 198 00:09:38,440 --> 00:09:39,079 Speaker 2: Week as well. 199 00:09:39,120 --> 00:09:41,199 Speaker 5: So this is as good as it gets. You know, 200 00:09:41,200 --> 00:09:43,720 Speaker 5: if crude stays down in the eighty dollars range, that's great, 201 00:09:43,840 --> 00:09:45,720 Speaker 5: but this is the most relief that the consumers are 202 00:09:45,720 --> 00:09:46,559 Speaker 5: going to see. Pre election. 203 00:09:46,760 --> 00:09:49,280 Speaker 4: Speaker Mike Johnson also called them Republicans to act on 204 00:09:49,360 --> 00:09:52,920 Speaker 4: social security reform before the midterms. What is going to 205 00:09:53,000 --> 00:09:56,280 Speaker 4: do the midterm election for the Republicans, They's not exactly 206 00:09:56,280 --> 00:09:56,840 Speaker 4: going to work. 207 00:09:57,160 --> 00:09:58,920 Speaker 5: No, that is not even remotely going to work. And 208 00:09:58,960 --> 00:10:02,240 Speaker 5: also you can't touch the Social security via reconciliation, so 209 00:10:02,280 --> 00:10:04,760 Speaker 5: you need to get bipartisanship. And when I talk to 210 00:10:04,920 --> 00:10:07,920 Speaker 5: either Democratic staff on ways and Means or Republican staff 211 00:10:07,960 --> 00:10:10,520 Speaker 5: and Senate Finance, they are actually unified in the view 212 00:10:10,520 --> 00:10:12,840 Speaker 5: that nothing is going to happen. Whether that's housing, whether 213 00:10:12,840 --> 00:10:16,360 Speaker 5: that's crypto Social Security and other reconciliation bill, We've got 214 00:10:16,640 --> 00:10:17,680 Speaker 5: what we're going to get. 215 00:10:17,840 --> 00:10:21,920 Speaker 4: When it comes to the Iran deal, potentially Congress would 216 00:10:21,960 --> 00:10:24,240 Speaker 4: have to okay some of the lifting of these sanctions. 217 00:10:24,240 --> 00:10:26,400 Speaker 4: And this goes back to what happened with the Obama 218 00:10:26,400 --> 00:10:29,120 Speaker 4: era and the JCPOA. Do you see Congress giving a 219 00:10:29,160 --> 00:10:32,800 Speaker 4: green light if this administration were to lift sanctions on Iran? 220 00:10:33,080 --> 00:10:37,960 Speaker 5: That's such a fascinating dynamic. Lindsay Graham is very adamant 221 00:10:38,000 --> 00:10:40,480 Speaker 5: that Congress needs to approve whatever this deal is, but 222 00:10:40,720 --> 00:10:43,400 Speaker 5: all I think of is the USMCA. There's also a 223 00:10:43,520 --> 00:10:47,680 Speaker 5: very adamant view amongst Senator widen Bringing, member of Senate 224 00:10:47,720 --> 00:10:51,000 Speaker 5: Finance that the President needs to go through Congress in 225 00:10:51,080 --> 00:10:54,320 Speaker 5: order to reaffirm the USMCA or even to withdraw, and 226 00:10:54,360 --> 00:10:57,080 Speaker 5: the administration totally disagrees. So when you speak with the 227 00:10:57,120 --> 00:11:00,000 Speaker 5: trade negotiators in Canada or the trade negotiators in Mexico, 228 00:11:00,160 --> 00:11:03,000 Speaker 5: they'll tell you that there's a disagreement between who they 229 00:11:03,000 --> 00:11:04,880 Speaker 5: talked to on the Hill and the White House. And 230 00:11:04,920 --> 00:11:07,679 Speaker 5: I think the takeaway from the last eighteen months or 231 00:11:07,720 --> 00:11:09,839 Speaker 5: whatever is the President is going to do what he 232 00:11:09,880 --> 00:11:11,800 Speaker 5: wants to do, and he's not going to ask Congress 233 00:11:12,160 --> 00:11:14,760 Speaker 5: for their approval of this deal. Yes, you will need 234 00:11:14,800 --> 00:11:16,920 Speaker 5: it for sanctions relief, but they have other ways to 235 00:11:16,920 --> 00:11:18,880 Speaker 5: get around it. You've seen them go to foreign nations 236 00:11:18,920 --> 00:11:21,440 Speaker 5: and say, well, unfree some assets that they're held overseas. 237 00:11:21,920 --> 00:11:24,240 Speaker 5: They'll find a workaround. I do not expect Congress to 238 00:11:24,240 --> 00:11:25,560 Speaker 5: get to yes on any deal. 239 00:11:25,960 --> 00:11:28,360 Speaker 1: This is the reason why I find the attendance of 240 00:11:28,400 --> 00:11:31,360 Speaker 1: the G seven meetings so interesting this year. It isn't 241 00:11:31,440 --> 00:11:34,680 Speaker 1: just the G seven leaders, it is also Middle Eastern 242 00:11:34,760 --> 00:11:37,000 Speaker 1: leaders that want to have influence over this deal in 243 00:11:37,040 --> 00:11:40,000 Speaker 1: certain capacities. And it's also the leaders of technology companies, 244 00:11:40,000 --> 00:11:43,280 Speaker 1: including Anthropic, that are discussing some of these issues that 245 00:11:43,320 --> 00:11:45,439 Speaker 1: have been circulating to the four With all of the 246 00:11:45,559 --> 00:11:48,240 Speaker 1: leaders who are going to be in those rooms, what 247 00:11:48,280 --> 00:11:51,400 Speaker 1: do you make of the recent crackdown on Anthropic in 248 00:11:51,440 --> 00:11:54,679 Speaker 1: particular over in the UK on social media and the 249 00:11:54,679 --> 00:11:56,960 Speaker 1: fact that these leaders are going to be in that 250 00:11:57,080 --> 00:11:58,199 Speaker 1: room over in France. 251 00:11:58,360 --> 00:12:01,120 Speaker 5: Well, it's just another opportunity for US, the EU, and 252 00:12:01,440 --> 00:12:04,120 Speaker 5: NATO nations to have a completely different view of how 253 00:12:04,160 --> 00:12:06,960 Speaker 5: to tax United States tech companies, how to regulate United 254 00:12:06,960 --> 00:12:09,520 Speaker 5: States tech companies what they can have access to or not. 255 00:12:10,040 --> 00:12:11,480 Speaker 5: And I think it kind of gets to the point 256 00:12:11,520 --> 00:12:13,679 Speaker 5: you were making earlier Amory, which is they get a 257 00:12:13,800 --> 00:12:17,040 Speaker 5: say here, you're not doing this in a vacuum. The 258 00:12:17,080 --> 00:12:19,679 Speaker 5: EU nations, NATO nations, they don't want to communicate with 259 00:12:19,960 --> 00:12:22,160 Speaker 5: Iran and have the straight be closed and have to 260 00:12:22,200 --> 00:12:24,040 Speaker 5: coordinate to get to the strait of hormus. And that 261 00:12:24,160 --> 00:12:27,040 Speaker 5: is what the United States has created. And with anthropic 262 00:12:27,160 --> 00:12:30,040 Speaker 5: and tech issues as well, these are parts of all 263 00:12:30,080 --> 00:12:33,640 Speaker 5: the trade agreements as well, whether there's taxation possibilities and 264 00:12:34,040 --> 00:12:36,640 Speaker 5: that puts tariffs back front and center, and of course 265 00:12:36,800 --> 00:12:39,160 Speaker 5: un July twenty third, we need to have that whole 266 00:12:39,160 --> 00:12:40,599 Speaker 5: conversation all over again. 267 00:12:40,559 --> 00:12:42,800 Speaker 1: Specifically with anthropic Do you think this is the first 268 00:12:42,800 --> 00:12:46,520 Speaker 1: salvo in a true crackdown or a true enforcement push 269 00:12:46,679 --> 00:12:49,040 Speaker 1: when it comes to the AI build out from President 270 00:12:49,080 --> 00:12:50,160 Speaker 1: Trump in this administration. 271 00:12:50,440 --> 00:12:52,320 Speaker 5: Yeah, I think we're just at the very start of 272 00:12:52,360 --> 00:12:55,080 Speaker 5: AI regulation right now. The way I think about it 273 00:12:55,120 --> 00:12:58,480 Speaker 5: is pre election and post going between now and November three, 274 00:12:58,920 --> 00:13:02,240 Speaker 5: the United States public and therefore the political parties are 275 00:13:02,280 --> 00:13:05,680 Speaker 5: just going to talk about affordability immediately. Thereafter all the 276 00:13:05,720 --> 00:13:08,240 Speaker 5: new surge of lawmakers, of which there are sixty three. 277 00:13:08,320 --> 00:13:11,320 Speaker 5: I think they are AI focused. They are regulation focused. 278 00:13:11,320 --> 00:13:13,200 Speaker 5: They're going to start with the consumer and children and 279 00:13:13,320 --> 00:13:16,720 Speaker 5: use that to carry a much heavier regulatory weight that 280 00:13:16,760 --> 00:13:18,520 Speaker 5: I think will be the topic of the twenty twenty 281 00:13:18,559 --> 00:13:19,040 Speaker 5: eight election. 282 00:13:19,200 --> 00:13:22,520 Speaker 4: Were you surprised on the export controls on anthropic that 283 00:13:22,600 --> 00:13:24,959 Speaker 4: we had over the weekend, Given the fact that this administration, 284 00:13:25,040 --> 00:13:28,720 Speaker 4: for the most part, wanted to let AI companies have 285 00:13:28,920 --> 00:13:32,320 Speaker 4: intense competition and really let the sector rip. 286 00:13:32,559 --> 00:13:35,000 Speaker 5: It seems very extreme. I know that the industry is 287 00:13:35,000 --> 00:13:37,720 Speaker 5: treating it's very extreme. When you have those late night, 288 00:13:37,880 --> 00:13:41,480 Speaker 5: very muted details and no leaks, that's how you know. 289 00:13:41,600 --> 00:13:44,080 Speaker 5: I think that something very serious is going on. But 290 00:13:44,120 --> 00:13:45,720 Speaker 5: Congress is going to want a way in there. They 291 00:13:45,760 --> 00:13:47,840 Speaker 5: will not at all this summer in pre election, but 292 00:13:47,840 --> 00:13:49,480 Speaker 5: I think as soon as we get to November fourth, 293 00:13:49,840 --> 00:13:51,480 Speaker 5: they're going to want all the information there. 294 00:13:52,600 --> 00:13:56,040 Speaker 2: Stay with us. Multilemberg Savannah's coming up off to this. 295 00:14:05,559 --> 00:14:08,360 Speaker 1: Liz Thomas is so far writing this. We are still 296 00:14:08,360 --> 00:14:12,080 Speaker 1: in a bull market. Investors are still hungry for growth opportunities, 297 00:14:12,120 --> 00:14:14,840 Speaker 1: and companies are still willing to spend to create it. 298 00:14:15,160 --> 00:14:18,559 Speaker 1: Rotations can be healthy, but they are rarely smooth. Liz 299 00:14:18,640 --> 00:14:20,840 Speaker 1: joins us. Now for more, Liz, great to see you, 300 00:14:20,920 --> 00:14:23,560 Speaker 1: Thank you for being with us. Let's start with the 301 00:14:23,640 --> 00:14:27,080 Speaker 1: concept of lower oil prices and whether that portends some 302 00:14:27,160 --> 00:14:29,840 Speaker 1: sort of rotation into the areas that haven't been gaining 303 00:14:29,960 --> 00:14:33,440 Speaker 1: i e. Everything other than tech, or whether this really 304 00:14:33,480 --> 00:14:36,280 Speaker 1: just causes people to double down on the AI trade. 305 00:14:37,520 --> 00:14:40,320 Speaker 6: Well, I think it supports the rotation that we started 306 00:14:40,320 --> 00:14:42,920 Speaker 6: to see on or around June second, when we started 307 00:14:42,920 --> 00:14:46,240 Speaker 6: to see the pullback in many of those big tech sectors, 308 00:14:46,560 --> 00:14:49,200 Speaker 6: semiconductors in particular, and a lot of the stocks that 309 00:14:49,240 --> 00:14:51,680 Speaker 6: had done so well in the three to four weeks 310 00:14:51,760 --> 00:14:55,080 Speaker 6: leading up to that point. So I think lower oil 311 00:14:55,120 --> 00:15:00,720 Speaker 6: prices and lower inflation expectations with emphasis on the wordecations, 312 00:15:01,480 --> 00:15:04,960 Speaker 6: is going to fuel hopefully more of a rotation into 313 00:15:05,000 --> 00:15:09,040 Speaker 6: some other places. That being said, obviously, the SpaceX IPO 314 00:15:09,240 --> 00:15:11,560 Speaker 6: and the excitement that we saw around at, the hype 315 00:15:11,560 --> 00:15:13,560 Speaker 6: that we saw around it, and frankly the success of 316 00:15:13,600 --> 00:15:17,240 Speaker 6: it on Friday is driving a lot of a rebound 317 00:15:17,320 --> 00:15:20,640 Speaker 6: in tech stocks today and what we'll probably see for 318 00:15:20,800 --> 00:15:23,600 Speaker 6: the remainder of the week, barring any big surprises from 319 00:15:23,640 --> 00:15:24,360 Speaker 6: the Federal Reserve. 320 00:15:24,440 --> 00:15:27,000 Speaker 1: Lis, are you surprised that we aren't seeing a greater 321 00:15:27,160 --> 00:15:29,680 Speaker 1: rally on the heels of the truce that was announced 322 00:15:29,720 --> 00:15:30,800 Speaker 1: between Aroun in the US. 323 00:15:32,120 --> 00:15:34,240 Speaker 6: Well, I don't think we've really had a chance yet. 324 00:15:34,320 --> 00:15:37,040 Speaker 6: So it's possible that once the market opens today and 325 00:15:37,080 --> 00:15:40,920 Speaker 6: if we get confirmation that this will actually reopen, the 326 00:15:40,920 --> 00:15:42,720 Speaker 6: strait of horror moves because we still have to wait 327 00:15:42,760 --> 00:15:44,800 Speaker 6: a few days to see that that's going to happen. 328 00:15:45,200 --> 00:15:47,120 Speaker 6: I think towards the end of this week and even 329 00:15:47,200 --> 00:15:49,960 Speaker 6: leading up to it, if things continue to fall in place, 330 00:15:50,280 --> 00:15:52,720 Speaker 6: we will see relief in certain areas that have been 331 00:15:52,840 --> 00:15:56,400 Speaker 6: struck by inflation fears, and we'll probably start to hear 332 00:15:56,520 --> 00:16:01,120 Speaker 6: commentary about businesses being less concerned about inflation. But I 333 00:16:01,120 --> 00:16:02,720 Speaker 6: want to make a point that I alluded to in 334 00:16:02,760 --> 00:16:05,760 Speaker 6: the first statement, is that the Federal Reserve is concerned 335 00:16:05,760 --> 00:16:09,400 Speaker 6: with inflation expectations. Yes, of course they look at the 336 00:16:09,480 --> 00:16:12,360 Speaker 6: data as it's reported, which is backward looking, but they 337 00:16:12,360 --> 00:16:15,400 Speaker 6: are also very concerned with expectations and making sure that 338 00:16:15,440 --> 00:16:20,280 Speaker 6: those expectations remain anchored. So oil prices coming down certainly 339 00:16:20,320 --> 00:16:23,560 Speaker 6: helps that cause and makes Kevin Worsh's job on Wednesday, 340 00:16:23,680 --> 00:16:27,440 Speaker 6: slightly easier than it was without this piece deal. 341 00:16:27,680 --> 00:16:29,520 Speaker 4: Yeah, it brings down the temperature just a little bit. 342 00:16:29,560 --> 00:16:31,680 Speaker 4: At the same time, MRSK is saying at this stage 343 00:16:31,760 --> 00:16:35,680 Speaker 4: no change is to their operations. Then the announced agreement 344 00:16:35,760 --> 00:16:38,800 Speaker 4: is welcome, but they need to wait before they start 345 00:16:38,920 --> 00:16:42,480 Speaker 4: moving some of these vessels through. What is going to 346 00:16:42,520 --> 00:16:45,880 Speaker 4: be for you, the most important aspect of this deal 347 00:16:46,000 --> 00:16:49,400 Speaker 4: to learn and you think potentially could be very bullish 348 00:16:49,440 --> 00:16:50,000 Speaker 4: for the market. 349 00:16:51,400 --> 00:16:53,600 Speaker 6: Well, when you look at what's most important, I think 350 00:16:53,640 --> 00:16:56,120 Speaker 6: the obvious answer here is that the Strait is reopened, 351 00:16:56,160 --> 00:16:59,160 Speaker 6: that oil starts to move closer to a volume that 352 00:16:59,240 --> 00:17:01,600 Speaker 6: it was pre war. Yes, there have been some more 353 00:17:01,640 --> 00:17:04,639 Speaker 6: barrels moving through the strait, but not nearly what the 354 00:17:04,640 --> 00:17:08,200 Speaker 6: world needs. And there have been now fifteen weeks of 355 00:17:08,240 --> 00:17:12,560 Speaker 6: an oil supplied disruption. It doesn't necessarily start flowing and 356 00:17:12,600 --> 00:17:15,880 Speaker 6: reach its final destination very quickly. So that's why I'm 357 00:17:15,920 --> 00:17:18,400 Speaker 6: sort of hedging the commentary because it's going to take 358 00:17:18,440 --> 00:17:21,720 Speaker 6: a while for that supply to come back online, and 359 00:17:21,800 --> 00:17:25,760 Speaker 6: there will still undoubtedly be some disruption in prices, some 360 00:17:25,920 --> 00:17:30,280 Speaker 6: disruption in operations for certain businesses. MRSK being an example 361 00:17:30,320 --> 00:17:32,600 Speaker 6: of a business that might be disrupted by that, at 362 00:17:32,680 --> 00:17:36,560 Speaker 6: least in a short term period. So I think companies 363 00:17:36,600 --> 00:17:40,040 Speaker 6: are being careful to hedge their commentary as well and 364 00:17:40,080 --> 00:17:42,919 Speaker 6: make sure that they're allowing for what still could last 365 00:17:42,960 --> 00:17:45,880 Speaker 6: as a price disruption for a couple months to come. 366 00:17:46,119 --> 00:17:49,280 Speaker 4: As the market though, starts to put this behind behind us, 367 00:17:49,320 --> 00:17:51,360 Speaker 4: and they almost have been for a few weeks now, 368 00:17:51,520 --> 00:17:53,399 Speaker 4: what's kind of the biggest risk for you going to 369 00:17:53,520 --> 00:17:53,960 Speaker 4: your end? 370 00:17:55,600 --> 00:17:58,440 Speaker 6: The biggest risk here is that we hear some sort 371 00:17:58,520 --> 00:18:02,520 Speaker 6: of commentary from tech companies that they're slowing down capex. 372 00:18:02,600 --> 00:18:06,000 Speaker 6: I don't see that coming as a likely scenario. But 373 00:18:06,400 --> 00:18:09,679 Speaker 6: regardless of a rotation in the market and cyclicality that 374 00:18:09,760 --> 00:18:13,600 Speaker 6: might return, this market is still very dependent on the 375 00:18:13,680 --> 00:18:17,159 Speaker 6: AI trade, and particularly now at this phase, on the 376 00:18:17,200 --> 00:18:21,520 Speaker 6: AI trade proving productivity, proving earnings, and proving that it 377 00:18:21,560 --> 00:18:25,880 Speaker 6: can start to reach into other sectors and increase productivity there. 378 00:18:26,040 --> 00:18:29,000 Speaker 6: So not just benefiting the tech sector, and that's one 379 00:18:29,040 --> 00:18:31,920 Speaker 6: of the reasons I've been talking about healthcare this still 380 00:18:31,960 --> 00:18:35,080 Speaker 6: being a good entry point. Healthcare has seen decent return 381 00:18:35,200 --> 00:18:37,520 Speaker 6: since that June second time that I talked about where 382 00:18:37,680 --> 00:18:40,600 Speaker 6: technology started to pull back, But I do think healthcare 383 00:18:40,640 --> 00:18:43,000 Speaker 6: can do well through the end of the year looking 384 00:18:43,080 --> 00:18:46,399 Speaker 6: forward to that productivity gain, and it serves as a 385 00:18:46,440 --> 00:18:50,080 Speaker 6: defensive growth sector, particularly in a time when midterm elections 386 00:18:50,080 --> 00:18:50,680 Speaker 6: are coming up. 387 00:18:50,880 --> 00:18:52,800 Speaker 1: Liz, how concerned would you be if there was a 388 00:18:52,800 --> 00:18:55,000 Speaker 1: hawk as shift at the Fed this week on Wednesday, 389 00:18:55,080 --> 00:18:57,800 Speaker 1: despite the expectation that Kevin Warrish will try to take 390 00:18:58,119 --> 00:19:01,000 Speaker 1: the most devish approach to maybe each dropping the easing bias. 391 00:19:02,240 --> 00:19:05,439 Speaker 6: Well, with one hike already priced into the market, I 392 00:19:05,480 --> 00:19:07,440 Speaker 6: don't think that there would be too much of an 393 00:19:07,440 --> 00:19:10,400 Speaker 6: overreaction in the market. I think that the Fed will 394 00:19:10,440 --> 00:19:14,160 Speaker 6: do what they can to leave flexibility in the statements, 395 00:19:14,240 --> 00:19:17,200 Speaker 6: much like Jerome Powell did on different occasions, trying to 396 00:19:17,320 --> 00:19:20,520 Speaker 6: leave the door open to we will react however we 397 00:19:20,600 --> 00:19:23,240 Speaker 6: need to given the data. I think there's actually a 398 00:19:23,320 --> 00:19:26,119 Speaker 6: higher chance that Kevin Walsh has already been expected to 399 00:19:26,160 --> 00:19:29,480 Speaker 6: say something hawkish, but he comes out and actually says 400 00:19:29,520 --> 00:19:32,000 Speaker 6: a few things that are more dubvish. The other thing 401 00:19:32,040 --> 00:19:34,560 Speaker 6: that I would be listening for on Wednesday is for 402 00:19:34,640 --> 00:19:36,720 Speaker 6: him to make note of the fact that it's not 403 00:19:37,080 --> 00:19:40,439 Speaker 6: just interest rate policy that they plan to affect. He 404 00:19:40,520 --> 00:19:42,840 Speaker 6: has been very clear that he wants the FED balance 405 00:19:42,880 --> 00:19:45,600 Speaker 6: sheet to be lower, and there is a chance that 406 00:19:45,680 --> 00:19:48,479 Speaker 6: maybe they use some of those tools rather than interest 407 00:19:48,560 --> 00:19:51,480 Speaker 6: rates to affect the market, So that may even be 408 00:19:51,600 --> 00:19:55,359 Speaker 6: seen as a dubvish comment. If people start to price 409 00:19:55,440 --> 00:19:57,160 Speaker 6: out the idea of a rate hike. 410 00:19:58,160 --> 00:20:00,840 Speaker 2: They say. 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