1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,400 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,840 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,440 Speaker 2: Terminal and the Bloomberg Business App. Brian Gander of Stephol 10 00:00:37,680 --> 00:00:40,320 Speaker 2: writes the following, Warsh has a history of hawkish FEUs 11 00:00:40,600 --> 00:00:43,159 Speaker 2: which run contrary to Trump's goal. Brian joined us now 12 00:00:43,159 --> 00:00:45,159 Speaker 2: for more bran That begs the question how did we 13 00:00:45,159 --> 00:00:45,600 Speaker 2: get here? 14 00:00:47,479 --> 00:00:49,120 Speaker 3: You know, I think you have to tip your hat 15 00:00:49,159 --> 00:00:52,199 Speaker 3: to Kevin Walsh. I think the politics that went into this, 16 00:00:52,360 --> 00:00:55,160 Speaker 3: there was a campaign. Basically, I think he ran a 17 00:00:55,240 --> 00:00:57,880 Speaker 3: very good campaign to get the job. I mean, we've 18 00:00:57,920 --> 00:01:01,680 Speaker 3: had a series of stories and new use leaks criticizing 19 00:01:01,720 --> 00:01:04,840 Speaker 3: the other candidates, and I'm not you know, I have 20 00:01:04,920 --> 00:01:07,160 Speaker 3: no personal knowledge who was behind that, but who's the 21 00:01:07,200 --> 00:01:10,640 Speaker 3: last man standing Kevin mahsh So you would assume that 22 00:01:11,360 --> 00:01:14,600 Speaker 3: there were some fingerprints on the effort that went into 23 00:01:15,120 --> 00:01:17,760 Speaker 3: knocking down the other candidates. And let's not forget I 24 00:01:17,760 --> 00:01:22,160 Speaker 3: mean with Donald Trump, personal relations matter a lot. And 25 00:01:22,480 --> 00:01:25,639 Speaker 3: Walsh's father in law and Trump went to college together 26 00:01:25,880 --> 00:01:30,559 Speaker 3: and or have business relationships going back decades. So there's 27 00:01:30,560 --> 00:01:33,440 Speaker 3: always that angle that I think people overlook. You know, 28 00:01:33,680 --> 00:01:37,560 Speaker 3: personality matters for Trump. Remember a lot of the nominees 29 00:01:37,600 --> 00:01:40,319 Speaker 3: that have not worked out for him. Over time, he 30 00:01:40,360 --> 00:01:43,440 Speaker 3: will turn and afterwards I'll say, well that person interviewed great. 31 00:01:43,800 --> 00:01:45,600 Speaker 3: I think Kevin Walsh interviewed great. 32 00:01:46,440 --> 00:01:48,120 Speaker 4: You know, Brian, I'm glad you brought that up because 33 00:01:48,160 --> 00:01:51,000 Speaker 4: also there was a recent story about how Ron Lauder 34 00:01:51,080 --> 00:01:53,360 Speaker 4: had this deal with Ukraine. Of course, as the Trump 35 00:01:53,360 --> 00:01:55,960 Speaker 4: administration is trying to make sure that investors are there 36 00:01:56,240 --> 00:01:58,800 Speaker 4: if they get a peace deal to rebuild that country. 37 00:01:59,120 --> 00:02:01,360 Speaker 4: Are you saying potential Kevin Walsh is in this position 38 00:02:01,440 --> 00:02:04,280 Speaker 4: because his proximity to power, not exactly how he thinks 39 00:02:04,280 --> 00:02:05,120 Speaker 4: about the Federal Reserve. 40 00:02:06,680 --> 00:02:07,640 Speaker 5: I think it's a factor. 41 00:02:08,040 --> 00:02:10,880 Speaker 3: I mean, I can't rank what the factors are, but 42 00:02:11,480 --> 00:02:14,359 Speaker 3: you know, kind of reiterating my earlier point with Donald Trump, 43 00:02:14,400 --> 00:02:17,960 Speaker 3: personal relations matter. He wants to trust you, he wants 44 00:02:18,000 --> 00:02:20,680 Speaker 3: to know you, and he just wants to feel good 45 00:02:20,720 --> 00:02:24,760 Speaker 3: about you. And that personal connection that he has through laughter, 46 00:02:25,280 --> 00:02:27,639 Speaker 3: I think matters. I think mattered in the process. I 47 00:02:27,680 --> 00:02:30,920 Speaker 3: think it gave Wash and you know, an advantage that 48 00:02:31,120 --> 00:02:33,400 Speaker 3: some other candidate. It's like a Rick Reader who did 49 00:02:33,440 --> 00:02:36,600 Speaker 3: not have personal connections to the White House and to 50 00:02:36,600 --> 00:02:39,000 Speaker 3: the President, does not have a long history with the president. 51 00:02:39,600 --> 00:02:42,400 Speaker 3: I think that helped Wash hurt Reader. 52 00:02:42,440 --> 00:02:42,960 Speaker 5: I think it. 53 00:02:42,960 --> 00:02:44,600 Speaker 3: Hurt Christopher Waller a little bit. 54 00:02:44,800 --> 00:02:46,200 Speaker 5: Quite frankly, Again, I have. 55 00:02:46,160 --> 00:02:48,640 Speaker 3: No personal knowledge of this, but there doesn't seem to 56 00:02:48,639 --> 00:02:52,680 Speaker 3: be a close personal connection with Waller and the President, 57 00:02:52,680 --> 00:02:55,160 Speaker 3: and I think that hurt. There was a personal connection 58 00:02:55,360 --> 00:02:59,600 Speaker 3: is a personal connection with Kevin Hassett. But you know, again, 59 00:03:00,000 --> 00:03:01,680 Speaker 3: some of the some of the stories that came out 60 00:03:01,720 --> 00:03:04,360 Speaker 3: were less than flattering about what how the FED may 61 00:03:04,400 --> 00:03:08,080 Speaker 3: operate under Hassett, how the markets react, and maybe Trump 62 00:03:08,200 --> 00:03:09,520 Speaker 3: took took a note of that. 63 00:03:09,720 --> 00:03:10,959 Speaker 5: He said, how the market reacts? 64 00:03:11,000 --> 00:03:13,359 Speaker 1: Brian, do you think that the move that we're seeing 65 00:03:13,400 --> 00:03:16,120 Speaker 1: this morning is enough to make President Trump start to 66 00:03:16,160 --> 00:03:17,799 Speaker 1: think did I make the right choice? 67 00:03:19,000 --> 00:03:19,160 Speaker 5: No? 68 00:03:19,800 --> 00:03:24,720 Speaker 3: I mean unless something changes during the confirmation process, but 69 00:03:25,200 --> 00:03:27,080 Speaker 3: the immediate market reaction is not. 70 00:03:28,040 --> 00:03:29,520 Speaker 5: As if the immediate. 71 00:03:29,160 --> 00:03:33,280 Speaker 3: Market reaction was enough, we'd have, you know, policy whip 72 00:03:33,360 --> 00:03:36,000 Speaker 3: song all over the place. Yes, the White House clearly 73 00:03:36,040 --> 00:03:38,200 Speaker 3: looks at the markets, but I don't think there's always 74 00:03:38,200 --> 00:03:40,840 Speaker 3: a knee jerk reaction to it. Let's see what happens 75 00:03:40,840 --> 00:03:42,600 Speaker 3: over the next couple of months. Let's see what happens 76 00:03:42,600 --> 00:03:45,600 Speaker 3: with the confirmation process, how that plays out. You know, 77 00:03:45,760 --> 00:03:48,480 Speaker 3: as it has been discussed, it could be lengthy. There's 78 00:03:48,520 --> 00:03:51,200 Speaker 3: going to be some political drama around it. It's not 79 00:03:51,280 --> 00:03:53,680 Speaker 3: just Tom Tellis. Rampaul is going to have a problem 80 00:03:53,720 --> 00:03:55,120 Speaker 3: on the Center floor if we get there. 81 00:03:56,080 --> 00:03:57,840 Speaker 5: This is going to be a very. 82 00:03:57,600 --> 00:04:03,400 Speaker 3: Interesting confirmation process. And maybe something during that time pops 83 00:04:03,480 --> 00:04:09,240 Speaker 3: up that gives the President time to pause, reconsider again. 84 00:04:09,280 --> 00:04:12,440 Speaker 3: That's highly, highly speculative, but it's highly unlikely, but it's 85 00:04:12,440 --> 00:04:13,200 Speaker 3: not impossible. 86 00:04:14,040 --> 00:04:14,680 Speaker 5: Stay with us. 87 00:04:15,000 --> 00:04:27,960 Speaker 2: More Bloomberg surveillance coming up after this. Senator Tom Taillis 88 00:04:27,960 --> 00:04:30,760 Speaker 2: from North Carolina joins US small for more. Senator, welcome 89 00:04:30,760 --> 00:04:32,799 Speaker 2: to the program. So you have been vowing to block 90 00:04:32,839 --> 00:04:36,279 Speaker 2: any nomination to the Federal Reserve until the DJ wraps 91 00:04:36,360 --> 00:04:39,360 Speaker 2: up its investigation. We have some news this morning. As 92 00:04:39,400 --> 00:04:42,120 Speaker 2: you know, Kevin Walsh has been nominated by the President 93 00:04:42,160 --> 00:04:45,000 Speaker 2: of the United States to succeed chair and power. Does 94 00:04:45,000 --> 00:04:46,080 Speaker 2: it change anything for you. 95 00:04:46,120 --> 00:04:50,120 Speaker 6: Sir, No, it does. I am pleased with the nominee. 96 00:04:50,200 --> 00:04:53,480 Speaker 6: I think that by most accounts he is well regarded. 97 00:04:53,640 --> 00:04:57,760 Speaker 6: But we still have to clear the current matter. They're 98 00:04:57,839 --> 00:05:03,320 Speaker 6: pursuing a on the basis of criminal intent testimony and 99 00:05:03,360 --> 00:05:08,039 Speaker 6: a banking committee hearing that clearly had no criminal intent. 100 00:05:08,240 --> 00:05:12,880 Speaker 6: So to me, you got some assistant US attorney with 101 00:05:12,960 --> 00:05:18,040 Speaker 6: a dream in the DC district that should really determine 102 00:05:18,040 --> 00:05:22,160 Speaker 6: whether or not this frivolous prosecution is worth holding up 103 00:05:22,600 --> 00:05:23,559 Speaker 6: a fed born seat. 104 00:05:23,760 --> 00:05:26,279 Speaker 2: Senator, we have some time between now and May four 105 00:05:26,400 --> 00:05:29,320 Speaker 2: that investigation to go away and for the confirmation process 106 00:05:29,320 --> 00:05:31,559 Speaker 2: to open up. Have you given thoughts to what would 107 00:05:31,560 --> 00:05:34,320 Speaker 2: happen if we don't have that time we get to 108 00:05:34,320 --> 00:05:37,760 Speaker 2: May this is still lingering and the chairman steps away. 109 00:05:37,920 --> 00:05:39,680 Speaker 2: What happens at it's help of the feder Reserve. 110 00:05:40,520 --> 00:05:43,479 Speaker 6: Well, I think that we all need to understand we 111 00:05:43,640 --> 00:05:48,440 Speaker 6: still have a working quorum of members, whether or not 112 00:05:48,480 --> 00:05:50,680 Speaker 6: they have an acting chair. As a decision that the 113 00:05:50,720 --> 00:05:55,200 Speaker 6: President and assume the Treasury Secretary and others can look at. 114 00:05:55,279 --> 00:05:57,880 Speaker 6: But that's not my problem. We're here because of them, 115 00:05:58,000 --> 00:06:00,800 Speaker 6: We're not here because of me, and so I think 116 00:06:00,800 --> 00:06:03,440 Speaker 6: they should work expeditiously if they really do. I'm not 117 00:06:03,480 --> 00:06:05,600 Speaker 6: an attorney. I watch a lot of crime shows, but 118 00:06:06,000 --> 00:06:09,320 Speaker 6: doesn't look like there was any criminal intent here. They 119 00:06:09,360 --> 00:06:12,200 Speaker 6: have to determine whether or not it's worth grinding this out. 120 00:06:12,240 --> 00:06:15,279 Speaker 6: Like I said, I didn't put us here. Some assisted 121 00:06:15,400 --> 00:06:19,720 Speaker 6: US attorney in d C District decided to put us here, 122 00:06:19,760 --> 00:06:22,280 Speaker 6: and they've got determined if they have a case it's 123 00:06:22,279 --> 00:06:23,000 Speaker 6: worth pursuing. 124 00:06:23,320 --> 00:06:26,320 Speaker 1: Senator Tillis, has anyone from the administration or the Department 125 00:06:26,360 --> 00:06:29,320 Speaker 1: of Justice reached out to you about the process of 126 00:06:29,360 --> 00:06:32,160 Speaker 1: how this could go down or giving you confidence that 127 00:06:32,400 --> 00:06:35,120 Speaker 1: this will be dropped in time for the confirmation hearing 128 00:06:35,200 --> 00:06:35,760 Speaker 1: to go forward? 129 00:06:36,520 --> 00:06:40,200 Speaker 6: Well, at LISA, I'd never talked about my conversations with 130 00:06:40,279 --> 00:06:43,760 Speaker 6: any members. People always ask me what goes on at lunch. 131 00:06:44,000 --> 00:06:46,839 Speaker 6: I just don't have those conversations, but my public statements 132 00:06:46,839 --> 00:06:47,920 Speaker 6: stand for themselves. 133 00:06:48,200 --> 00:06:50,680 Speaker 4: Is closing the investigation enough a Senator, or do you 134 00:06:50,760 --> 00:06:53,800 Speaker 4: need other assurances that you think this administration is going 135 00:06:53,800 --> 00:06:55,320 Speaker 4: to respect the FED independence. 136 00:06:56,360 --> 00:06:59,560 Speaker 6: Well, right now, I think you do that by making 137 00:06:59,600 --> 00:07:02,560 Speaker 6: a judge. Look, we've got two cases here, right, We've 138 00:07:02,600 --> 00:07:04,839 Speaker 6: got the Cook case and we have the Power case. 139 00:07:04,920 --> 00:07:10,160 Speaker 6: Both of those to me are instances of independence, and 140 00:07:10,480 --> 00:07:13,280 Speaker 6: I'm staying focused on that one goal. I'm not really 141 00:07:13,320 --> 00:07:16,760 Speaker 6: persuaded or even willing to entertain any discussions to take 142 00:07:16,800 --> 00:07:17,560 Speaker 6: me off that goal. 143 00:07:17,880 --> 00:07:20,400 Speaker 4: Okay, but you just mentioned the Lisa Cook case. Do 144 00:07:20,440 --> 00:07:23,000 Speaker 4: you also need to see that wrapped up either by 145 00:07:23,000 --> 00:07:24,800 Speaker 4: the Supreme Court in order to move forward? 146 00:07:25,680 --> 00:07:28,640 Speaker 6: Yeah? I do. I mean because look, I mean we're 147 00:07:28,720 --> 00:07:33,080 Speaker 6: talking about what looks like a paperwork error or if 148 00:07:33,120 --> 00:07:36,840 Speaker 6: there was, if there was a mistake long before she 149 00:07:37,120 --> 00:07:41,160 Speaker 6: was confirmed for the board. It's like, my goodness, guys, 150 00:07:41,320 --> 00:07:44,040 Speaker 6: I mean, I don't know. Maybe Paulty or somebody thought 151 00:07:44,080 --> 00:07:45,440 Speaker 6: that that was cute. I didn't. 152 00:07:46,160 --> 00:07:47,000 Speaker 5: So just to be. 153 00:07:47,000 --> 00:07:50,040 Speaker 4: Clear, it is not just the DOJ investigation to the 154 00:07:50,080 --> 00:07:52,440 Speaker 4: FED that you need wrapped up. You also need the 155 00:07:52,480 --> 00:07:55,720 Speaker 4: Supreme Court case wrapped up. So it's two issues right 156 00:07:55,760 --> 00:07:59,200 Speaker 4: now and blocks for you to move forward with Kevin 157 00:07:59,240 --> 00:08:00,680 Speaker 4: Warsh Yeah, well. 158 00:08:00,560 --> 00:08:04,240 Speaker 6: No, let me let me buy fartate these one is 159 00:08:04,480 --> 00:08:08,480 Speaker 6: moving forward with another that the case that will prevent 160 00:08:08,560 --> 00:08:14,080 Speaker 6: me considering any board nominee is the Powell case. Uh, 161 00:08:14,320 --> 00:08:16,840 Speaker 6: but I will not move forward. So for the for 162 00:08:16,920 --> 00:08:21,000 Speaker 6: the FED chair, which we know expiers in February. Uh. 163 00:08:21,080 --> 00:08:25,320 Speaker 6: The other case we have, you know, the Myron term 164 00:08:25,480 --> 00:08:29,120 Speaker 6: is about to expire because he was filling up, you know, 165 00:08:30,280 --> 00:08:33,400 Speaker 6: basically six weeks or I'm sorry, six months, we've got 166 00:08:33,400 --> 00:08:37,000 Speaker 6: the Cook seat. Those are ones that are really going 167 00:08:37,040 --> 00:08:40,160 Speaker 6: to be I'll take a look at the candidate, I'll 168 00:08:40,160 --> 00:08:42,440 Speaker 6: take a look at how it would affect the board. Look, 169 00:08:42,679 --> 00:08:44,880 Speaker 6: this is all in my opinion, this is all about 170 00:08:44,960 --> 00:08:47,640 Speaker 6: sending a signal to the markets and to the business 171 00:08:47,640 --> 00:08:54,160 Speaker 6: community that FED independence is critically important. And going after 172 00:08:54,440 --> 00:08:57,920 Speaker 6: the chair I think took a stool out of the 173 00:08:58,000 --> 00:09:01,960 Speaker 6: foundation of people's confidence, a lag out of the stool 174 00:09:02,160 --> 00:09:04,600 Speaker 6: in the case of Cook, I do believe that it's 175 00:09:04,600 --> 00:09:07,640 Speaker 6: another example of a trend, and the Senate has to 176 00:09:07,679 --> 00:09:09,720 Speaker 6: stand in the breach. We have to make sure that 177 00:09:09,760 --> 00:09:13,280 Speaker 6: the FED maintains its independence, and we cannot reward any 178 00:09:13,280 --> 00:09:17,360 Speaker 6: bad behavior that seems like it's surely motivated not by 179 00:09:17,400 --> 00:09:20,480 Speaker 6: the substance of the allegations, but by the interest in 180 00:09:20,600 --> 00:09:22,280 Speaker 6: trying to undermind the Fed independence. 181 00:09:22,320 --> 00:09:24,319 Speaker 2: The Senator, what's your understanding as to whether the Federal 182 00:09:24,320 --> 00:09:28,079 Speaker 2: Reserve is cooperating with that investigation? Some conflicting reports over 183 00:09:28,120 --> 00:09:30,120 Speaker 2: the past few days. What you'll read on the situation. 184 00:09:31,120 --> 00:09:35,480 Speaker 6: I you know, I'm not really sure, Jonathan. I'm going 185 00:09:35,520 --> 00:09:37,600 Speaker 6: to leave that. That's a better question to ask the 186 00:09:37,600 --> 00:09:38,959 Speaker 6: administration of the DOJ. 187 00:09:39,320 --> 00:09:40,840 Speaker 2: What if we get the opportunity to speak to them, 188 00:09:40,840 --> 00:09:42,880 Speaker 2: I'm sure we'll ask. I've got the opportunity to ask 189 00:09:42,920 --> 00:09:45,439 Speaker 2: you about the man and not just the process. You 190 00:09:45,559 --> 00:09:47,800 Speaker 2: said this morning, and you've said it again that Kevin 191 00:09:47,920 --> 00:09:50,400 Speaker 2: wassh is a qualified nominee with a deep understanding of 192 00:09:50,440 --> 00:09:53,240 Speaker 2: monetary policy. For those familiar with Kevin Walsh in his 193 00:09:53,320 --> 00:09:56,040 Speaker 2: time at the Federal Reserve back in the financial crisis, 194 00:09:56,320 --> 00:09:58,840 Speaker 2: they have considered him to be on the more hawkish 195 00:09:58,840 --> 00:10:01,400 Speaker 2: side of the spectrum of the on the FOMC. And 196 00:10:01,440 --> 00:10:03,800 Speaker 2: there is some debate this morning, Centator about what Kevin 197 00:10:03,840 --> 00:10:06,360 Speaker 2: Walsh actually stands for, given that we know the president 198 00:10:06,400 --> 00:10:09,599 Speaker 2: wants lower interest rates, what's your understanding of what he 199 00:10:09,640 --> 00:10:10,160 Speaker 2: stands for? 200 00:10:11,000 --> 00:10:16,480 Speaker 6: Well, you know, with Chair Powell, I haven't agreed with 201 00:10:16,720 --> 00:10:20,959 Speaker 6: all of his opinions. I'm not an economist or his positions, 202 00:10:21,040 --> 00:10:24,120 Speaker 6: and sometimes I may be more hawkish than Chair Powell. 203 00:10:25,160 --> 00:10:31,719 Speaker 6: So coming in, I think Walsh is a good independent. 204 00:10:31,800 --> 00:10:36,000 Speaker 6: He's got an extraordinary reputation in a community of economists 205 00:10:36,040 --> 00:10:39,840 Speaker 6: and people focused on the FED. I don't think that 206 00:10:39,920 --> 00:10:42,920 Speaker 6: he would want to destroy his reputation by being independent. 207 00:10:43,160 --> 00:10:45,840 Speaker 6: You know, you could have hawkish members like Waller and others, 208 00:10:45,880 --> 00:10:48,840 Speaker 6: and I'm fine with them on the board to stretch 209 00:10:48,880 --> 00:10:52,199 Speaker 6: the thinking. But I don't believe he comes in is 210 00:10:52,240 --> 00:10:54,319 Speaker 6: more or less going to do the bidding of the administration, 211 00:10:54,360 --> 00:10:56,960 Speaker 6: which is critically important and incidentally, I should say it's 212 00:10:57,000 --> 00:10:59,880 Speaker 6: critically important for the health and hygiene of the administration. 213 00:11:00,760 --> 00:11:02,720 Speaker 1: Senator tell Us, does this give you any more confidence 214 00:11:03,000 --> 00:11:05,480 Speaker 1: that actually the independence of the Federal Reserve will not 215 00:11:05,600 --> 00:11:08,960 Speaker 1: be undermined, that this actually is going to be a 216 00:11:09,000 --> 00:11:11,960 Speaker 1: proper process once some of the roadblocks you're talking about 217 00:11:12,400 --> 00:11:13,480 Speaker 1: are going to be cleared. 218 00:11:14,400 --> 00:11:17,240 Speaker 6: Yeah, I think so, Lisa. And look, this is actually 219 00:11:17,400 --> 00:11:22,240 Speaker 6: democracy and institutional separation at its finest. We have a disagreement, 220 00:11:22,320 --> 00:11:24,760 Speaker 6: and we have a mechanism in place for resolving this 221 00:11:24,880 --> 00:11:27,360 Speaker 6: and moving on. I hope that no one in the 222 00:11:27,400 --> 00:11:30,880 Speaker 6: administration takes personal offense to this. I'm doing my job. 223 00:11:31,559 --> 00:11:34,439 Speaker 4: Senator, do you have any understanding of the timeline? 224 00:11:36,080 --> 00:11:39,840 Speaker 6: Well, you know, the investigations can go on forever. I mean, 225 00:11:40,080 --> 00:11:42,679 Speaker 6: you could see one scenario where Chair Powell has two 226 00:11:42,720 --> 00:11:46,079 Speaker 6: years left on his term even after he comes off 227 00:11:46,120 --> 00:11:48,360 Speaker 6: the board. So I mean you could see this going 228 00:11:48,400 --> 00:11:50,840 Speaker 6: on for two years or in my case, three hundred 229 00:11:50,880 --> 00:11:52,199 Speaker 6: and thirty nine days. 230 00:11:52,080 --> 00:11:55,200 Speaker 4: Because three hundred and thirty nine days that's when you're 231 00:11:55,240 --> 00:11:58,720 Speaker 4: going to be retiring. And I know, Lisa ash you 232 00:11:58,720 --> 00:12:00,640 Speaker 4: have had any conversation, and I want to ask you 233 00:12:00,679 --> 00:12:04,120 Speaker 4: about those conversations, But have you, guys seen any indications 234 00:12:04,120 --> 00:12:06,240 Speaker 4: from anyone that they do want to wrap up the 235 00:12:06,320 --> 00:12:08,679 Speaker 4: DOJ investigation as soon as possible? 236 00:12:09,400 --> 00:12:13,719 Speaker 6: Well, you know, I think and I think that the 237 00:12:15,800 --> 00:12:20,080 Speaker 6: fact that they're putting forward this nominee knowing that it 238 00:12:20,120 --> 00:12:23,400 Speaker 6: would be impossible to get helm through with the current 239 00:12:23,400 --> 00:12:26,640 Speaker 6: position that I've taken, it suggests to me that maybe 240 00:12:26,679 --> 00:12:29,160 Speaker 6: they are trying to find a way to deal with this. 241 00:12:29,480 --> 00:12:32,880 Speaker 6: It could be adjudicated expeditiously, or it could be just 242 00:12:32,880 --> 00:12:35,560 Speaker 6: determining that they also agree that there was no criminal 243 00:12:35,559 --> 00:12:38,599 Speaker 6: intent and the chairs testimony and the Banking committee that 244 00:12:38,640 --> 00:12:39,520 Speaker 6: I participated in. 245 00:12:39,600 --> 00:12:41,200 Speaker 2: As soon as you just quickly, have you spoken to 246 00:12:41,200 --> 00:12:42,800 Speaker 2: the White House as they reached out? 247 00:12:44,240 --> 00:12:47,840 Speaker 6: You know, like I said, I have ongoing discussions. So 248 00:12:48,000 --> 00:12:51,200 Speaker 6: the President I probably communicate once or twice a week 249 00:12:51,240 --> 00:12:53,959 Speaker 6: at least through texts. So I have ongoing discussions. I'm 250 00:12:53,960 --> 00:12:56,200 Speaker 6: not going to talk about the content of them. Jonathan, 251 00:12:57,000 --> 00:12:58,840 Speaker 6: kind of groundhog Day. I'm going to answer the same 252 00:12:58,920 --> 00:13:00,439 Speaker 6: question every day. 253 00:13:01,480 --> 00:13:02,920 Speaker 5: Good movie I heard, Senator. 254 00:13:03,040 --> 00:13:04,080 Speaker 2: We appreciate it's time. 255 00:13:04,200 --> 00:13:07,079 Speaker 5: Thanks for jumping on the code. Stay with us. 256 00:13:07,400 --> 00:13:20,320 Speaker 2: Multil Index Savannans coming up after this. Apple Shafes, Parent 257 00:13:20,400 --> 00:13:23,520 Speaker 2: Gang sound study. Tech Giant posted best It's best ever 258 00:13:23,520 --> 00:13:25,880 Speaker 2: a quarter of sales and a forecast one of our 259 00:13:26,000 --> 00:13:28,600 Speaker 2: estimates thanks to record I find sales. Joining us now 260 00:13:28,640 --> 00:13:30,880 Speaker 2: to discuss is down Ice of wet Bush. Thank good morning. 261 00:13:30,920 --> 00:13:33,160 Speaker 2: Get to say it numbers a phenomenal Let's just start 262 00:13:33,200 --> 00:13:35,040 Speaker 2: with the numbers of themselves. Where else did that growth 263 00:13:35,080 --> 00:13:35,840 Speaker 2: in China come from? 264 00:13:35,920 --> 00:13:38,480 Speaker 7: I mean, look, that's you know, it's pin up demand 265 00:13:38,640 --> 00:13:41,199 Speaker 7: and then they're having success. I mean I found seventeen 266 00:13:41,760 --> 00:13:44,640 Speaker 7: it's kind of you know, it's been sleepy, but actually 267 00:13:44,720 --> 00:13:46,760 Speaker 7: a pretty huge upgrade. Second, I think you see in 268 00:13:46,800 --> 00:13:47,840 Speaker 7: the numbers. 269 00:13:47,880 --> 00:13:49,520 Speaker 5: You know obviously the stock reaction. 270 00:13:50,040 --> 00:13:54,160 Speaker 7: Look, I'd say it's it's a yawner because investors are 271 00:13:54,280 --> 00:13:57,240 Speaker 7: just so laser focused on AI. 272 00:13:57,400 --> 00:13:57,559 Speaker 5: Right. 273 00:13:57,600 --> 00:13:59,720 Speaker 7: And then there was like how they're gonna monetize what's 274 00:13:59,760 --> 00:14:02,600 Speaker 7: that strategy? Cook talked about it a little, but in 275 00:14:02,679 --> 00:14:06,320 Speaker 7: terms of the actual numbers and services and iPhone, Look, 276 00:14:06,400 --> 00:14:08,320 Speaker 7: it was sort of a best case scenario. And I 277 00:14:08,320 --> 00:14:11,079 Speaker 7: think now it's really about showing how they're going to 278 00:14:11,200 --> 00:14:14,120 Speaker 7: monetize on AI. That's going to be their story for 279 00:14:14,160 --> 00:14:15,240 Speaker 7: twenty twenty six. 280 00:14:15,320 --> 00:14:15,600 Speaker 5: Cost. 281 00:14:15,880 --> 00:14:17,559 Speaker 2: We need to talk about cost this well, something the 282 00:14:17,640 --> 00:14:20,160 Speaker 2: typically doesn't come up, but it was anticipated this time around. 283 00:14:20,360 --> 00:14:21,680 Speaker 2: One thing's getting more expensive. 284 00:14:21,840 --> 00:14:23,680 Speaker 7: Yeah, just memory, right, I mean if you look at 285 00:14:23,880 --> 00:14:26,920 Speaker 7: everything as you sand disk and what's happening on chips, 286 00:14:26,920 --> 00:14:30,520 Speaker 7: it's supplied dram pricing everything that's happened across the board. 287 00:14:31,040 --> 00:14:33,000 Speaker 7: But our view is like, ultimately when it comes to 288 00:14:33,040 --> 00:14:35,240 Speaker 7: iPhone eighteen, they're going to have to raise prices probably 289 00:14:35,240 --> 00:14:38,040 Speaker 7: by one hundred, one hundred and fifty dollars. So it's 290 00:14:38,080 --> 00:14:41,160 Speaker 7: something that we worry about less from a margin perspective, 291 00:14:41,760 --> 00:14:45,040 Speaker 7: but look, the reality is is that this stock being 292 00:14:45,400 --> 00:14:48,000 Speaker 7: three twenty five, three fifty or where it is today. 293 00:14:48,080 --> 00:14:51,320 Speaker 7: It's not going to be because of margins, because of iPhone, 294 00:14:51,440 --> 00:14:55,160 Speaker 7: because it's served. It's about showing, truly that they have 295 00:14:55,200 --> 00:14:58,040 Speaker 7: an AI strategy they're going to actually roll out that 296 00:14:58,040 --> 00:14:58,960 Speaker 7: they can montize. 297 00:14:58,960 --> 00:14:59,080 Speaker 6: Well. 298 00:14:59,120 --> 00:15:01,440 Speaker 1: Part one of the pig skepticism behind Apple and the 299 00:15:01,440 --> 00:15:05,160 Speaker 1: reason why it's underperformed since December since it hit a record, 300 00:15:05,640 --> 00:15:08,200 Speaker 1: has been this question around is it just an iPhone company? 301 00:15:08,320 --> 00:15:10,200 Speaker 5: Has it been able to diversify in a meaningful way. 302 00:15:10,280 --> 00:15:13,240 Speaker 1: Yes, you did see that thirty billion dollars coming from services, 303 00:15:13,240 --> 00:15:16,720 Speaker 1: but wearables the macline not seeing that same kind of growth. 304 00:15:16,800 --> 00:15:19,480 Speaker 1: And I just wonder whether it's enough to just say 305 00:15:19,520 --> 00:15:21,360 Speaker 1: that iPhone eighteen is going to come out with some 306 00:15:21,400 --> 00:15:24,880 Speaker 1: incredible AI innovation and that's going to change the trajectory 307 00:15:25,040 --> 00:15:27,920 Speaker 1: and some of the concerns that they can't move away 308 00:15:28,080 --> 00:15:29,000 Speaker 1: from this one product. 309 00:15:29,160 --> 00:15:31,840 Speaker 7: Yeah, I mean, look to your point, like, the reality is, 310 00:15:31,880 --> 00:15:35,400 Speaker 7: like the core, the ingredients, the hearts and lungs of 311 00:15:35,440 --> 00:15:38,400 Speaker 7: Apple are always going to be iPhone relative to as 312 00:15:38,440 --> 00:15:41,800 Speaker 7: a percent of revenue. But I think their culture has 313 00:15:41,840 --> 00:15:44,840 Speaker 7: definitely hurt them the last few years, especially because Ai'm 314 00:15:44,840 --> 00:15:47,720 Speaker 7: not doing acquisitions and maybe they've done you know, like 315 00:15:47,920 --> 00:15:51,240 Speaker 7: recently that they've done one a smart one. But the 316 00:15:51,360 --> 00:15:54,320 Speaker 7: problem is that investors they're not going to give them credit, 317 00:15:54,480 --> 00:15:56,680 Speaker 7: which speaks to our point like this is the year 318 00:15:56,800 --> 00:15:59,960 Speaker 7: from Google to Siri to WWDC to Role. 319 00:16:00,400 --> 00:16:01,800 Speaker 5: It's not gonna be on the hardware side. 320 00:16:01,800 --> 00:16:04,960 Speaker 7: It's going to be how they monetize subscription in AI 321 00:16:05,240 --> 00:16:07,400 Speaker 7: for the two point five billion iOS devices. 322 00:16:07,520 --> 00:16:09,240 Speaker 1: So we've already seen this. With respect to the earnings 323 00:16:09,240 --> 00:16:11,640 Speaker 1: from Microsoft and from Meta, Meta was rewarded because they 324 00:16:11,640 --> 00:16:14,400 Speaker 1: showed how they were deploying this in terms of their advertising. 325 00:16:14,440 --> 00:16:17,160 Speaker 1: Microsoft was penalized because guess what, they have to spend 326 00:16:17,160 --> 00:16:18,880 Speaker 1: that much more and they're not seeing the benefits as 327 00:16:18,960 --> 00:16:21,640 Speaker 1: quickly as people were expecting. What do you think investors 328 00:16:21,640 --> 00:16:23,120 Speaker 1: are getting wrong? So I know you're really bullish and 329 00:16:23,200 --> 00:16:25,520 Speaker 1: you think that people are underappreciating how quickly this can 330 00:16:25,560 --> 00:16:28,320 Speaker 1: be rolled out? What are people getting wrong about what 331 00:16:28,360 --> 00:16:30,800 Speaker 1: they're seeing in those numbers from say Microsoft or some 332 00:16:30,840 --> 00:16:33,280 Speaker 1: of the skepticism around Apple about how quickly this can 333 00:16:33,320 --> 00:16:33,760 Speaker 1: be deployed. 334 00:16:34,000 --> 00:16:34,800 Speaker 5: It's a great question. 335 00:16:34,840 --> 00:16:38,160 Speaker 7: Look, I mean Microsoft is almost meadow last quarter you know, 336 00:16:38,200 --> 00:16:41,400 Speaker 7: in terms of the cap aacs and then now they're 337 00:16:41,520 --> 00:16:44,640 Speaker 7: doing a you know, a ticket take perode for Zuckerberg 338 00:16:44,680 --> 00:16:47,080 Speaker 7: and Meta, right. So I think it just comes down 339 00:16:47,120 --> 00:16:50,000 Speaker 7: that for these companies, the challenge is like you have 340 00:16:50,080 --> 00:16:53,480 Speaker 7: a fourth indust revolution. There's no anyone says AI bubble 341 00:16:54,120 --> 00:16:56,880 Speaker 7: is not I don't think plugged into what's happening in 342 00:16:56,960 --> 00:16:59,160 Speaker 7: terms of overall spending on what we're seeing, even on 343 00:16:59,280 --> 00:16:59,880 Speaker 7: physical AI. 344 00:17:00,040 --> 00:17:01,520 Speaker 5: Roboducts, autonomous and everything. 345 00:17:02,000 --> 00:17:04,399 Speaker 7: But the reality is that for these companies it's a 346 00:17:04,480 --> 00:17:07,240 Speaker 7: balancing act and if you just manage it by a 347 00:17:07,440 --> 00:17:10,520 Speaker 7: quarter or two quarters, they'll lose out. And I think 348 00:17:10,560 --> 00:17:13,600 Speaker 7: for Nadella and Microsoft that they got to spend on cabacs. 349 00:17:13,720 --> 00:17:16,879 Speaker 7: Now do I think that conference call is probably a 350 00:17:17,000 --> 00:17:21,879 Speaker 7: C plus relative to communication. I think that was disappointing 351 00:17:22,080 --> 00:17:22,639 Speaker 7: and I think. 352 00:17:22,520 --> 00:17:23,440 Speaker 5: That that really calls. 353 00:17:23,520 --> 00:17:25,679 Speaker 2: I can't just ask it about conference calle Now it's 354 00:17:25,720 --> 00:17:28,320 Speaker 2: worth three hundred and seventy five billion dollars to a company. 355 00:17:28,960 --> 00:17:31,560 Speaker 2: I mean seriously, doesn't that how you use something about 356 00:17:31,680 --> 00:17:32,560 Speaker 2: the price of something? 357 00:17:33,119 --> 00:17:35,720 Speaker 7: Yeah, And I think what it does it shows the 358 00:17:35,960 --> 00:17:39,440 Speaker 7: sensitivity from investors and you see the software self look 359 00:17:39,440 --> 00:17:43,359 Speaker 7: at service now and software right now? Is that investors 360 00:17:43,640 --> 00:17:46,200 Speaker 7: are so hygh percent you obviously talk about in the 361 00:17:46,240 --> 00:17:49,199 Speaker 7: show all the time. Is that is capbacks? When am 362 00:17:49,200 --> 00:17:51,320 Speaker 7: I going to see the modernization? When are we going 363 00:17:51,359 --> 00:17:53,760 Speaker 7: to see the growth Azure? Is it forty percent? 364 00:17:53,840 --> 00:17:57,560 Speaker 5: Growth? Is it thirty nine percent? Okay, what's the whisper number? 365 00:17:57,640 --> 00:18:01,480 Speaker 7: So and I think on the conference call, investors want 366 00:18:01,520 --> 00:18:05,959 Speaker 7: to see that cap bax toward Azure, toward toward cloud now. 367 00:18:06,000 --> 00:18:08,479 Speaker 7: I think, on the other hand, like when you listenay, 368 00:18:08,560 --> 00:18:11,600 Speaker 7: like when we see like alphabet next week, I think 369 00:18:11,720 --> 00:18:13,800 Speaker 7: that's one Like they're now in a more of a 370 00:18:13,920 --> 00:18:16,880 Speaker 7: pole position. But a year ago right in New York City, 371 00:18:16,960 --> 00:18:19,159 Speaker 7: cab driver one touch, it was Barish on it. So 372 00:18:19,240 --> 00:18:22,080 Speaker 7: I think that's that's the reality of what we've seen 373 00:18:22,119 --> 00:18:22,680 Speaker 7: in big tech. 374 00:18:22,800 --> 00:18:22,919 Speaker 6: Dan. 375 00:18:23,000 --> 00:18:24,879 Speaker 4: When it comes to Tesla, do you think they merged 376 00:18:24,920 --> 00:18:28,960 Speaker 4: with SpaceX or do you think it's XAI and SpaceX. 377 00:18:29,040 --> 00:18:32,159 Speaker 7: So, I think it's SpaceX and x AI, But I 378 00:18:32,240 --> 00:18:35,119 Speaker 7: believe Tesla is going to own a piece of that. 379 00:18:35,359 --> 00:18:36,520 Speaker 5: I think that's sort of our view. 380 00:18:36,600 --> 00:18:39,480 Speaker 7: And you made a great point because the reality is 381 00:18:39,600 --> 00:18:42,760 Speaker 7: like the future from USK, it's not it's not delivery 382 00:18:43,000 --> 00:18:45,520 Speaker 7: it's not call the future and we talk about all times. 383 00:18:45,720 --> 00:18:51,240 Speaker 7: It's autonomous, it's robotics. And this is really slowly, piece 384 00:18:51,359 --> 00:18:55,240 Speaker 7: by piece, brick by brick, him building what's essentially like 385 00:18:55,440 --> 00:18:59,159 Speaker 7: the AI sort of ecosystem. And it just that's essential, 386 00:18:59,240 --> 00:19:00,880 Speaker 7: I think, the step by step process. 387 00:19:00,960 --> 00:19:03,879 Speaker 4: But if he's eyeing an IPO in June, how quickly 388 00:19:03,960 --> 00:19:04,199 Speaker 4: does this. 389 00:19:04,280 --> 00:19:04,920 Speaker 5: Need to get done? 390 00:19:05,320 --> 00:19:05,399 Speaker 6: Oh? 391 00:19:05,440 --> 00:19:07,640 Speaker 5: I think in the next few months. In other words, 392 00:19:07,680 --> 00:19:10,040 Speaker 5: like this is something like before March madness. 393 00:19:10,440 --> 00:19:12,440 Speaker 7: This is going to have to hit to give some 394 00:19:12,600 --> 00:19:16,119 Speaker 7: time like before March, because especially with an IPO, you 395 00:19:16,200 --> 00:19:16,960 Speaker 7: know in the summer. 396 00:19:17,280 --> 00:19:18,120 Speaker 5: How much is it being. 397 00:19:18,080 --> 00:19:20,600 Speaker 1: Driven by the fact that he is the underdog based 398 00:19:20,640 --> 00:19:22,960 Speaker 1: on China's development of electric vehicles? How much is this 399 00:19:23,359 --> 00:19:25,359 Speaker 1: not a failed bet but an idea that he cannot 400 00:19:25,400 --> 00:19:27,800 Speaker 1: get dominance in the way that he once envisioned in 401 00:19:27,920 --> 00:19:28,879 Speaker 1: this particular industry. 402 00:19:28,880 --> 00:19:31,280 Speaker 7: Well, it speaks to like, look the trial with all 403 00:19:31,400 --> 00:19:33,320 Speaker 7: men and open AI, that will happen. I think it 404 00:19:33,400 --> 00:19:36,800 Speaker 7: speaks to like there's a view like maybe from behind 405 00:19:36,920 --> 00:19:39,879 Speaker 7: from the AI perspective, now they have to go more aggressive. 406 00:19:40,240 --> 00:19:43,320 Speaker 7: Xai's been a huge offensive bet. You look what's happened 407 00:19:43,400 --> 00:19:47,040 Speaker 7: trying with buid and you know with the domestic competition. 408 00:19:47,480 --> 00:19:50,159 Speaker 7: I think Musk is like he's read the room, but 409 00:19:50,280 --> 00:19:52,359 Speaker 7: it speaks to argue like he is now more of 410 00:19:52,440 --> 00:19:56,040 Speaker 7: like a wartime CEO in terms of what he's navigating. 411 00:19:56,680 --> 00:20:00,400 Speaker 7: But look to put this all together for investors, it's 412 00:20:01,400 --> 00:20:03,240 Speaker 7: it's a week of faith and we've talked about it, 413 00:20:03,320 --> 00:20:05,280 Speaker 7: but the reality is like for Tesla would be a 414 00:20:05,520 --> 00:20:07,760 Speaker 7: six hundreds of de Bees, eight hundreds of bold kids. 415 00:20:07,800 --> 00:20:11,480 Speaker 7: For TASA, that's not going to get there on deliveries 416 00:20:11,880 --> 00:20:16,280 Speaker 7: and gross margins. It's getting there on autonomous optimists and 417 00:20:16,520 --> 00:20:17,560 Speaker 7: FSD penetration. 418 00:20:18,600 --> 00:20:22,120 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 419 00:20:22,160 --> 00:20:25,480 Speaker 2: in markets, economics, anchient politics. You can watch the show 420 00:20:25,560 --> 00:20:28,480 Speaker 2: live on Bloomberg TV weekday mornings from six am to 421 00:20:28,640 --> 00:20:32,320 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 422 00:20:32,520 --> 00:20:34,760 Speaker 2: or anywhere else you listen, and as always on the 423 00:20:34,760 --> 00:20:37,160 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.