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 Ameri Hordernt. 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 --> 00:00:37,440 Speaker 2: Terminal and the Bloomberg Business app at Denny. Have you 10 00:00:37,440 --> 00:00:40,360 Speaker 2: had any research writing this? Our concern is that lowering 11 00:00:40,400 --> 00:00:44,480 Speaker 2: interest rates will lead to financial instability, solid productivity, lad 12 00:00:44,520 --> 00:00:48,000 Speaker 2: growth in real GDP implies that current interest rates are 13 00:00:48,120 --> 00:00:51,040 Speaker 2: just fine where they are at. Joined us now for 14 00:00:51,120 --> 00:00:53,920 Speaker 2: more at good Morning, sir. Is this a prankt then 15 00:00:54,200 --> 00:00:55,400 Speaker 2: that you want to lean into? 16 00:00:56,720 --> 00:01:00,960 Speaker 3: Absolutely, It's a bullmarket. It's been actually a bullmark since 17 00:01:01,000 --> 00:01:05,000 Speaker 3: the last recession. The last recession was a two month 18 00:01:05,120 --> 00:01:09,679 Speaker 3: recession back in twenty twenty, remember with the lockdowns. We 19 00:01:09,760 --> 00:01:12,760 Speaker 3: made a low on March twenty third, twenty twenty, and 20 00:01:12,880 --> 00:01:16,559 Speaker 3: it's been the market's basically one hundred percent since then, 21 00:01:17,200 --> 00:01:21,120 Speaker 3: and almost all of that can be accounted for by earnings. 22 00:01:21,200 --> 00:01:25,479 Speaker 3: I mean, once the market recovered from the pandemic sell 23 00:01:25,520 --> 00:01:27,880 Speaker 3: off and we went back to where we were in 24 00:01:27,959 --> 00:01:32,680 Speaker 3: February of twenty twenty, we're up one hundred percent since then, 25 00:01:33,240 --> 00:01:35,960 Speaker 3: and forward earnings are up one hundred percent since then. 26 00:01:36,040 --> 00:01:38,880 Speaker 3: So it's been actually an earnings led market with a 27 00:01:38,959 --> 00:01:40,360 Speaker 3: multiple of around twenty two. 28 00:01:40,800 --> 00:01:43,240 Speaker 2: At your line, our concern is that a lowering interest 29 00:01:43,319 --> 00:01:46,600 Speaker 2: rates will lead to financial instability. What might that instability 30 00:01:46,640 --> 00:01:47,000 Speaker 2: look like? 31 00:01:47,040 --> 00:01:50,880 Speaker 3: Then, well, we're just talking about a plain old vanilla Malta, 32 00:01:52,080 --> 00:01:55,760 Speaker 3: you know. I mean, twenty twenty two is a very 33 00:01:55,880 --> 00:02:00,600 Speaker 3: elevated evaluation multiple. It can be justified the fact that 34 00:02:00,640 --> 00:02:04,040 Speaker 3: the economy is growing. It can be justified by the 35 00:02:04,040 --> 00:02:11,160 Speaker 3: fact that the Magnificent seven account for thirty percent of 36 00:02:11,160 --> 00:02:13,440 Speaker 3: the S and P five hundred and they have a 37 00:02:13,520 --> 00:02:17,760 Speaker 3: multiple of what about thirty right now, and the rest 38 00:02:17,760 --> 00:02:21,200 Speaker 3: of the market's got evaluation multiple of nineteen. Not cheap, 39 00:02:21,360 --> 00:02:24,000 Speaker 3: but you know that it's the impress of four hundred 40 00:02:24,000 --> 00:02:27,800 Speaker 3: and ninety three. They're doing pretty well. It's just by 41 00:02:27,880 --> 00:02:31,000 Speaker 3: comparison to the Magnificent seven, they look a little punky, 42 00:02:31,080 --> 00:02:33,480 Speaker 3: But all in all, I think we're still looking at 43 00:02:33,480 --> 00:02:37,280 Speaker 3: a at a bull market that continues to maybe sixty 44 00:02:37,320 --> 00:02:39,680 Speaker 3: six hundred and sixty eight hundred by the end of 45 00:02:39,720 --> 00:02:43,200 Speaker 3: the year and seventy seven hundred or higher by the 46 00:02:43,280 --> 00:02:44,040 Speaker 3: end of next year. 47 00:02:44,639 --> 00:02:47,200 Speaker 1: A melta doesn't sound so scary. In fact, Max Cutner 48 00:02:47,200 --> 00:02:49,840 Speaker 1: would absolutely embrace it and say, let's go. Just like 49 00:02:49,919 --> 00:02:53,600 Speaker 1: you said, you actually see bigger returns. Where is the 50 00:02:53,639 --> 00:02:56,280 Speaker 1: pain then? Where is the negative consequence of if it 51 00:02:56,320 --> 00:02:58,280 Speaker 1: doesn't need to cut, does it come with higher long 52 00:02:58,360 --> 00:02:59,880 Speaker 1: end yields that we just aren't seeing? 53 00:03:01,400 --> 00:03:01,680 Speaker 4: Well? 54 00:03:01,720 --> 00:03:06,239 Speaker 3: I think the as I said in the quote you 55 00:03:06,320 --> 00:03:09,440 Speaker 3: picked up, we don't really need a rate cut here, 56 00:03:09,480 --> 00:03:12,160 Speaker 3: and if we get a rate cut, that increases the 57 00:03:12,160 --> 00:03:15,839 Speaker 3: odds of a melt up. So whatever targets I gave you, 58 00:03:16,480 --> 00:03:20,799 Speaker 3: we'd surpassed them sooner rather than later. And then the 59 00:03:20,800 --> 00:03:25,120 Speaker 3: evaluation multiple suddenly at twenty five twenty five is where 60 00:03:25,120 --> 00:03:28,920 Speaker 3: the tech bubble bursts back in the late nineteen nineties 61 00:03:28,919 --> 00:03:33,320 Speaker 3: early two thousand. We don't want to go there. And 62 00:03:33,720 --> 00:03:37,760 Speaker 3: I think that what really is important to understand here 63 00:03:37,840 --> 00:03:41,840 Speaker 3: is it cutting interest rates isn't necessarily all that liquidity 64 00:03:41,960 --> 00:03:45,360 Speaker 3: is not necessarily going to go and create more jobs. 65 00:03:45,480 --> 00:03:48,400 Speaker 3: I think, you know, we've lost one point five million 66 00:03:48,880 --> 00:03:53,440 Speaker 3: people in the labor force who are foreign born since 67 00:03:54,680 --> 00:03:59,520 Speaker 3: I think that since March of this year. So obviously 68 00:03:59,600 --> 00:04:04,240 Speaker 3: the shutting off of the border and the elevated deportations 69 00:04:04,240 --> 00:04:07,680 Speaker 3: have reduced the supply of labor and that's not going 70 00:04:07,720 --> 00:04:10,800 Speaker 3: to change if the FED cuts interest rates. And by 71 00:04:10,840 --> 00:04:15,480 Speaker 3: the way, the job openings have been declining in areas 72 00:04:15,480 --> 00:04:20,520 Speaker 3: that benefited from the inflow of migrants, and that was 73 00:04:20,560 --> 00:04:24,960 Speaker 3: state and local government. Job openings really have declined sharply 74 00:04:25,400 --> 00:04:27,680 Speaker 3: because we don't need as many teachers, we don't need 75 00:04:27,720 --> 00:04:31,240 Speaker 3: as much as many social workers, and that's where some 76 00:04:31,320 --> 00:04:33,320 Speaker 3: of the job losses have been. And that's not going 77 00:04:33,360 --> 00:04:36,280 Speaker 3: to change just because of the FED lowers interest rates. 78 00:04:36,440 --> 00:04:38,760 Speaker 3: But we could get more inflation out of it in 79 00:04:38,880 --> 00:04:42,320 Speaker 3: terms of consumer prices, and we could get higher asset prices, 80 00:04:42,320 --> 00:04:43,960 Speaker 3: which is fine unless it's a melt up. 81 00:04:44,480 --> 00:04:46,599 Speaker 1: So what do you think when you take a look 82 00:04:46,600 --> 00:04:49,240 Speaker 1: at some of these consumer surveys that show that individuals 83 00:04:49,279 --> 00:04:52,559 Speaker 1: in the United States think that it's the hardest time 84 00:04:52,640 --> 00:04:54,400 Speaker 1: to get a new job, going back to at least 85 00:04:54,440 --> 00:04:57,680 Speaker 1: twenty thirteen. This idea that you do see a real 86 00:04:57,720 --> 00:05:01,960 Speaker 1: sense of deterioration in consumer confidence about the labor market. 87 00:05:02,279 --> 00:05:04,839 Speaker 1: Does that raise alarm bells or are you saying that 88 00:05:04,880 --> 00:05:07,919 Speaker 1: this is a structural sea change that cannot be affected 89 00:05:07,920 --> 00:05:09,080 Speaker 1: by monetary policy. 90 00:05:09,800 --> 00:05:12,080 Speaker 3: Well, if we kind of drill down and look at 91 00:05:12,080 --> 00:05:16,920 Speaker 3: the labor market report that came out recently, what we 92 00:05:17,040 --> 00:05:21,320 Speaker 3: know is that where it is very hard to getting 93 00:05:21,400 --> 00:05:24,400 Speaker 3: harder and harder to get a job is for teenagers 94 00:05:24,640 --> 00:05:28,680 Speaker 3: and would be workers who are twenty to twenty four, 95 00:05:29,200 --> 00:05:32,520 Speaker 3: mostly people who are coming out of college, so entry 96 00:05:32,640 --> 00:05:36,159 Speaker 3: level jobs have become more difficult to obtain. Some of 97 00:05:36,160 --> 00:05:40,200 Speaker 3: that may be related to productivity some of those younger people, 98 00:05:40,240 --> 00:05:43,279 Speaker 3: you know, you have you know a lot of people 99 00:05:43,320 --> 00:05:46,479 Speaker 3: across the border, and they weren't old people. They were 100 00:05:46,600 --> 00:05:49,520 Speaker 3: mostly young people and they're going back. So I think 101 00:05:50,520 --> 00:05:56,680 Speaker 3: that's an issue. But for anybody above twenty five, not anybody, 102 00:05:56,720 --> 00:06:00,120 Speaker 3: but for people in that category about twenty five, the 103 00:06:00,200 --> 00:06:03,159 Speaker 3: unemployment rates are below four percent. They've been there for 104 00:06:03,160 --> 00:06:06,880 Speaker 3: a while. That hasn't really changed. So very bifurcated labor 105 00:06:06,920 --> 00:06:08,000 Speaker 3: market ed. 106 00:06:07,960 --> 00:06:09,920 Speaker 5: When it comes to what's going on in the stock market, though, 107 00:06:09,960 --> 00:06:12,080 Speaker 5: you have all these tech companies spending a ton on 108 00:06:12,160 --> 00:06:14,160 Speaker 5: cap backs, it doesn't mean when it comes to these 109 00:06:14,240 --> 00:06:17,440 Speaker 5: data centers that it's actually creating new jobs. So can 110 00:06:17,440 --> 00:06:20,000 Speaker 5: we see a melt up in the stock market but 111 00:06:20,080 --> 00:06:21,920 Speaker 5: a recession in the real economy. 112 00:06:22,920 --> 00:06:26,800 Speaker 3: Well, I think the economy is evolving very rapidly into 113 00:06:27,400 --> 00:06:29,680 Speaker 3: something different than we're used to. I think we're still 114 00:06:29,720 --> 00:06:33,080 Speaker 3: kind of looking at the old fashioned business cycle model 115 00:06:33,120 --> 00:06:39,279 Speaker 3: where manufacturing of goods is important. Le's the case that 116 00:06:39,360 --> 00:06:43,039 Speaker 3: everybody recognizes as services have become bigger, But I think 117 00:06:43,080 --> 00:06:46,440 Speaker 3: people still don't haven't wrapped their arms around the fact 118 00:06:46,480 --> 00:06:50,400 Speaker 3: that we've been in a digital revolution that actually started 119 00:06:50,400 --> 00:06:53,919 Speaker 3: in the mid nineteen sixties with the IBM mainframes, and 120 00:06:53,960 --> 00:06:57,920 Speaker 3: here we are now with artificial intelligence. And this revolution 121 00:06:58,120 --> 00:07:01,680 Speaker 3: is all about processing more more data, faster and faster, 122 00:07:02,520 --> 00:07:05,000 Speaker 3: more cheaply. And that's what AI is doing, that's what 123 00:07:05,040 --> 00:07:09,240 Speaker 3: the cloud is doing, and that's a whole new economy 124 00:07:10,000 --> 00:07:15,040 Speaker 3: and it has tremendous implications for the future. I've called 125 00:07:15,040 --> 00:07:18,240 Speaker 3: this the Roaring twenty twenties, and I think it could 126 00:07:18,280 --> 00:07:21,920 Speaker 3: go into the Roaring twenty thirties because of this digital 127 00:07:21,960 --> 00:07:26,640 Speaker 3: revolution that we're in. This seems to be actually accelerating. 128 00:07:26,880 --> 00:07:29,640 Speaker 2: So Agie went there, I'm worried about the thirties, so 129 00:07:29,680 --> 00:07:32,560 Speaker 2: you help me. This is a situation at the moment, 130 00:07:32,880 --> 00:07:36,280 Speaker 2: a lot of the gains are concentrated in asset price appreciation, 131 00:07:36,600 --> 00:07:40,080 Speaker 2: the labor markets. Weeknic, you've got the far left waiting 132 00:07:40,120 --> 00:07:42,840 Speaker 2: in the wings making a pitch to this country that 133 00:07:42,880 --> 00:07:45,200 Speaker 2: they should be running things. And if we see gain 134 00:07:45,240 --> 00:07:47,600 Speaker 2: to the stock market but not gain to the real economy, 135 00:07:47,800 --> 00:07:49,400 Speaker 2: I think capital gains is going to be a big 136 00:07:49,440 --> 00:07:52,240 Speaker 2: story in the next ten years. And why should we 137 00:07:52,280 --> 00:07:55,200 Speaker 2: be optimistic and constructive for capital market to the twenty 138 00:07:55,240 --> 00:07:58,520 Speaker 2: thirties given the dynamics that are starting to build already. 139 00:08:00,040 --> 00:08:03,920 Speaker 3: In a word, productivity. So, for example, today we may 140 00:08:04,000 --> 00:08:07,480 Speaker 3: very well see that the beer of labor statistics slowers 141 00:08:08,200 --> 00:08:12,000 Speaker 3: the level of employment over the past year or so, 142 00:08:12,760 --> 00:08:16,360 Speaker 3: at least on a preliminary basis, by four hundred and 143 00:08:16,360 --> 00:08:19,720 Speaker 3: fifty thousand to seven hundred and fifty thousand jobs, and 144 00:08:20,440 --> 00:08:22,760 Speaker 3: everybody's going to interpret that as being a sign that 145 00:08:23,120 --> 00:08:27,560 Speaker 3: labor market was actually weaker than we thought. Actually, I 146 00:08:27,600 --> 00:08:31,480 Speaker 3: think it indicates that productivity is increasing. So what do 147 00:08:31,520 --> 00:08:36,000 Speaker 3: we we sort of lose on the head count side, 148 00:08:36,240 --> 00:08:38,880 Speaker 3: we gain on the productivity side. And if that's the case, 149 00:08:39,200 --> 00:08:42,680 Speaker 3: then real wages go up. So all the workers that 150 00:08:42,720 --> 00:08:45,800 Speaker 3: are out there are going to on balance, on average 151 00:08:46,120 --> 00:08:49,600 Speaker 3: get an increase in their inflation adjusted wages. And that's 152 00:08:49,640 --> 00:08:51,920 Speaker 3: where the growth and real incomes are going to be, 153 00:08:51,960 --> 00:08:54,440 Speaker 3: and that's where the growth in consumption is going to 154 00:08:54,440 --> 00:08:58,359 Speaker 3: be fueled. And then we've got capital spending, particularly in technology. 155 00:08:58,480 --> 00:09:01,719 Speaker 3: It counts for over fifty per Technology account for over 156 00:09:01,760 --> 00:09:04,920 Speaker 3: fifty percent of capital spending. Now is that's only going 157 00:09:05,000 --> 00:09:08,600 Speaker 3: to go higher? And so again I think the economy's 158 00:09:08,720 --> 00:09:12,280 Speaker 3: nature has changed pretty dramatically. I think the stock market 159 00:09:12,280 --> 00:09:15,280 Speaker 3: has figured it out, and I think it's all good. 160 00:09:15,280 --> 00:09:17,800 Speaker 3: If I'm writing about the productivity story. 161 00:09:19,080 --> 00:09:22,560 Speaker 2: Stay with US multil imperg surveillance coming up after this, 162 00:09:31,600 --> 00:09:33,520 Speaker 2: I want to bring in Henrit to trace a da 163 00:09:33,600 --> 00:09:35,680 Speaker 2: Palmas Henritt. So I just want to stick on these 164 00:09:35,720 --> 00:09:38,920 Speaker 2: pictures and I want your perspective on how these kind 165 00:09:38,960 --> 00:09:42,000 Speaker 2: of pitches play out in places like South Korea when 166 00:09:42,040 --> 00:09:45,320 Speaker 2: that government is getting together in negotiating with Washington to 167 00:09:45,360 --> 00:09:48,840 Speaker 2: come up with three hundred and fifty billion dollar investment deals, 168 00:09:49,200 --> 00:09:52,520 Speaker 2: what do the people these countries think well, I think. 169 00:09:52,400 --> 00:09:54,320 Speaker 4: The first question that it always needs to be is 170 00:09:54,320 --> 00:09:57,800 Speaker 4: one of the political ramifications of continuing to side with 171 00:09:57,920 --> 00:10:00,680 Speaker 4: the United States when they're, you know, trying to forcefully 172 00:10:00,960 --> 00:10:02,959 Speaker 4: kick out three hundred skilled laborers. 173 00:10:03,000 --> 00:10:03,719 Speaker 6: And that's what it is. 174 00:10:04,000 --> 00:10:06,439 Speaker 4: So South Korea is doing exactly what President Trump is 175 00:10:06,480 --> 00:10:08,840 Speaker 4: asked for, investing three hundred and fifty billion dollars in 176 00:10:08,840 --> 00:10:12,319 Speaker 4: the United States across these Hyundai plants, electric vehicle plants, 177 00:10:12,320 --> 00:10:12,840 Speaker 4: et cetera. 178 00:10:13,120 --> 00:10:15,199 Speaker 6: And then you're simultaneously. 179 00:10:14,520 --> 00:10:16,600 Speaker 4: Kicking out the very employees that they need to run 180 00:10:16,720 --> 00:10:19,360 Speaker 4: said plant. So it's a thumb in the eye across 181 00:10:19,360 --> 00:10:21,600 Speaker 4: the board. I think it really gets to the heart 182 00:10:21,800 --> 00:10:25,040 Speaker 4: of the matter that these trade deals the President has 183 00:10:25,080 --> 00:10:29,520 Speaker 4: announced with various nations, including the EU, Japan, South Korea, 184 00:10:29,880 --> 00:10:32,840 Speaker 4: none of them have legal text, none of them are finalized, 185 00:10:33,120 --> 00:10:37,040 Speaker 4: and pending the Supreme Court ruling on AIPA, I anticipate 186 00:10:37,080 --> 00:10:38,480 Speaker 4: that most of them are going to get up ended 187 00:10:38,520 --> 00:10:41,360 Speaker 4: in the next couple of weeks anyway, So basically, we 188 00:10:41,400 --> 00:10:42,920 Speaker 4: do not have a deal with South Korea, we do 189 00:10:42,960 --> 00:10:44,000 Speaker 4: not have a free trade agreement. 190 00:10:44,080 --> 00:10:46,679 Speaker 6: Taris are exponentially higher than they were when Trump. 191 00:10:46,559 --> 00:10:50,839 Speaker 4: Took office, and we had a congressionally passed zero percent 192 00:10:50,920 --> 00:10:53,280 Speaker 4: tariff rate on like ninety five percent of goods coming 193 00:10:53,280 --> 00:10:55,560 Speaker 4: in from South Korea before this administration took office. 194 00:10:55,600 --> 00:10:58,560 Speaker 6: So I don't see any material good news here. 195 00:10:58,520 --> 00:11:01,120 Speaker 5: And local present South Korea. At the same time, the 196 00:11:01,240 --> 00:11:04,280 Speaker 5: US and South Korea are holding working level talks when 197 00:11:04,320 --> 00:11:06,200 Speaker 5: it comes to the trade deal. But how can what's 198 00:11:06,240 --> 00:11:10,439 Speaker 5: happening at Hyundai and this plant impact those negotiations. 199 00:11:10,920 --> 00:11:14,319 Speaker 4: Well, I think the issue, as we're seeing in countries 200 00:11:14,600 --> 00:11:18,199 Speaker 4: across the world now, is that their political leaders cannot 201 00:11:18,360 --> 00:11:21,640 Speaker 4: enter into binding agreements with the United States for their 202 00:11:21,679 --> 00:11:23,160 Speaker 4: own domestic political purposes. 203 00:11:23,440 --> 00:11:24,800 Speaker 6: So it really just. 204 00:11:24,800 --> 00:11:27,800 Speaker 4: Is that, you know, thumb in the eye situation that 205 00:11:27,880 --> 00:11:32,520 Speaker 4: creates an impossible, intractable path for the United States and 206 00:11:32,559 --> 00:11:34,720 Speaker 4: these nations to come to an agreement, and their political 207 00:11:34,800 --> 00:11:36,680 Speaker 4: leaders can't have it, just like Trump can't have it. 208 00:11:36,720 --> 00:11:38,920 Speaker 5: Does it mean that potentially the United States won't get 209 00:11:38,920 --> 00:11:42,320 Speaker 5: this two hundred and fifty billion dollars worth of investments. 210 00:11:41,760 --> 00:11:44,120 Speaker 6: From Soul, Absolutely, no question. 211 00:11:44,760 --> 00:11:46,920 Speaker 5: So where does this leave the trading relationship? 212 00:11:47,480 --> 00:11:49,640 Speaker 4: I don't think that there is a trade deal, and 213 00:11:49,679 --> 00:11:52,640 Speaker 4: we've already undermined the free trade agreement and overridden it with. 214 00:11:52,600 --> 00:11:53,440 Speaker 6: The IEPA terris. 215 00:11:53,880 --> 00:11:58,559 Speaker 4: So we have these tacit commitments on things like sectoral 216 00:11:58,600 --> 00:12:01,920 Speaker 4: tiras for two thirty twos, on pharma on Semi's critical 217 00:12:01,920 --> 00:12:04,040 Speaker 4: one for South Korea is one that hasn't emerged yet. 218 00:12:04,080 --> 00:12:06,600 Speaker 4: That's the lumber and timber tires, which President Trump tweeted 219 00:12:06,600 --> 00:12:09,319 Speaker 4: about being the furniture tires a few weeks back. Those 220 00:12:09,360 --> 00:12:12,600 Speaker 4: are directly targeted at South Korea and Canada. So I 221 00:12:12,640 --> 00:12:16,200 Speaker 4: don't see an opportunity for this trade deal that they 222 00:12:16,280 --> 00:12:18,920 Speaker 4: have that allows South Korea to commit to the SAEPA 223 00:12:19,040 --> 00:12:22,200 Speaker 4: rate holding water and certainly that three hundred and fifty 224 00:12:22,200 --> 00:12:25,199 Speaker 4: billion dollars in investment materializing. When South Korea can't put 225 00:12:25,200 --> 00:12:28,000 Speaker 4: its own skilled laborers that the United States does not 226 00:12:28,200 --> 00:12:32,920 Speaker 4: have in plants in purple states like Georgia, it's unsustainable. 227 00:12:33,160 --> 00:12:36,440 Speaker 1: Any Does this Georgia situation tell us anything about what 228 00:12:36,520 --> 00:12:39,600 Speaker 1: a bigger priority is for Trump domestically, whether it's limiting 229 00:12:39,640 --> 00:12:42,080 Speaker 1: immigration or whether it's getting these trade deals done. 230 00:12:43,440 --> 00:12:44,840 Speaker 6: Yeah, I think that's fair. 231 00:12:45,040 --> 00:12:47,800 Speaker 4: Immigration is one where we can say, you know, objectively, 232 00:12:47,840 --> 00:12:51,080 Speaker 4: the president has succeeded beyond all of his measures, even 233 00:12:51,160 --> 00:12:53,320 Speaker 4: so much to say that he did it too fast, 234 00:12:53,559 --> 00:12:57,400 Speaker 4: and now they're targeting these areas where it's job creation 235 00:12:57,600 --> 00:13:00,160 Speaker 4: and hitting the trade agenda and the investment that you 236 00:13:00,200 --> 00:13:02,640 Speaker 4: said he wants to see in the United States. But 237 00:13:02,679 --> 00:13:05,120 Speaker 4: as I mentioned at the outset, these trade deals that 238 00:13:05,160 --> 00:13:09,640 Speaker 4: we have reached with the EU, with Japan, with South Korea, Vietnam, 239 00:13:09,679 --> 00:13:12,800 Speaker 4: the Philippines, Indonesia, they do not exist in legal text, 240 00:13:13,200 --> 00:13:17,040 Speaker 4: and the fundamental underpinning is the fifteen to sixty percent 241 00:13:17,280 --> 00:13:20,880 Speaker 4: IEPA tyruffs that are in effect across these deals that 242 00:13:20,880 --> 00:13:23,840 Speaker 4: the President indicates he got these nations to agree with. 243 00:13:24,200 --> 00:13:26,840 Speaker 4: When the Supreme Court rules that they're unconstitutional, which is 244 00:13:26,840 --> 00:13:30,000 Speaker 4: something that is entirely possible, we'll get an announcement about 245 00:13:30,000 --> 00:13:32,120 Speaker 4: when they're going to take up the case as early 246 00:13:32,120 --> 00:13:35,079 Speaker 4: as today or tomorrow. Then you really have the question 247 00:13:35,160 --> 00:13:37,679 Speaker 4: of what matters more the immigration stuff that we've delivered 248 00:13:37,720 --> 00:13:39,600 Speaker 4: on or the trade deals that don't exist. 249 00:13:39,720 --> 00:13:41,439 Speaker 1: And one thing that we were talking about yesterday is 250 00:13:41,480 --> 00:13:44,080 Speaker 1: it seems like these goals are in conflict, the idea 251 00:13:44,120 --> 00:13:48,439 Speaker 1: of limiting immigration while also getting certain investments and getting 252 00:13:48,480 --> 00:13:52,079 Speaker 1: certain trade deals across and wondering if this really speaks 253 00:13:52,080 --> 00:13:54,880 Speaker 1: to how this is being perceived politically. Whether trade deals 254 00:13:54,880 --> 00:13:59,120 Speaker 1: are complicated politically, but limiting immigration caters to a certain 255 00:13:59,160 --> 00:14:02,720 Speaker 1: base of isident Trump that he will continue to dobble 256 00:14:02,760 --> 00:14:04,800 Speaker 1: down on and will come at the behest of whatever 257 00:14:04,840 --> 00:14:07,120 Speaker 1: trade deals might get through. I'm just speculating. I'm wondering 258 00:14:07,160 --> 00:14:09,440 Speaker 1: if that's a message or if this is a little 259 00:14:09,480 --> 00:14:13,120 Speaker 1: bit mess here, then it's then being stated. 260 00:14:13,480 --> 00:14:15,760 Speaker 4: I would say, let's go straight to the numbers, because 261 00:14:15,920 --> 00:14:17,760 Speaker 4: I totally agree with you. You know, where is the American 262 00:14:17,800 --> 00:14:19,680 Speaker 4: public on this. The stock market is reacting in one 263 00:14:19,720 --> 00:14:22,640 Speaker 4: way to all these tariffs, but the American public, and 264 00:14:22,680 --> 00:14:23,920 Speaker 4: I've said this to you all for a while, and 265 00:14:23,960 --> 00:14:26,880 Speaker 4: the polling continues to support it. This is a sixty 266 00:14:26,920 --> 00:14:29,480 Speaker 4: to forty issue, a seventy thirty issue that the President 267 00:14:29,520 --> 00:14:32,320 Speaker 4: is on the wrong side of. Seventy seven percent of 268 00:14:32,320 --> 00:14:35,600 Speaker 4: Americans believe inflation is the number one problem as an 269 00:14:35,640 --> 00:14:40,080 Speaker 4: overall scale of what their most important issue is. All voters, Democrats, Republicans, 270 00:14:40,080 --> 00:14:43,880 Speaker 4: and independents, Predominantly independents, believe that inflation and high prices 271 00:14:43,920 --> 00:14:46,520 Speaker 4: are the problem, and they think the President has gone 272 00:14:46,520 --> 00:14:47,040 Speaker 4: too far. 273 00:14:47,240 --> 00:14:49,000 Speaker 6: That's the exact economists you got. 274 00:14:49,000 --> 00:14:52,240 Speaker 4: Wording of their polling on tariffs, and that's a fifty 275 00:14:52,240 --> 00:14:53,200 Speaker 4: four percent number. 276 00:14:53,080 --> 00:14:54,280 Speaker 6: As of the latest data. 277 00:14:54,360 --> 00:14:59,320 Speaker 4: So American voters are incredibly aware of the fact that 278 00:14:59,440 --> 00:15:04,080 Speaker 4: tariff's are taxes, prices are higher at grocery stores and 279 00:15:04,120 --> 00:15:07,080 Speaker 4: at big box retailers, and they do not like it. 280 00:15:07,120 --> 00:15:09,200 Speaker 4: And that's why you're seeing the president's approval readings so 281 00:15:09,280 --> 00:15:11,520 Speaker 4: far underwater, so you can get distracted with some of 282 00:15:11,560 --> 00:15:14,440 Speaker 4: the other components. And of course there's a healthy population 283 00:15:14,520 --> 00:15:17,200 Speaker 4: of Americans who very much support the President's immigration agenda, 284 00:15:17,440 --> 00:15:20,880 Speaker 4: but the economy wins all day every day, and inflation 285 00:15:21,440 --> 00:15:23,720 Speaker 4: and prices continue to be their number one issue and 286 00:15:23,720 --> 00:15:24,920 Speaker 4: they don't like the tariffs. 287 00:15:26,080 --> 00:15:29,560 Speaker 2: Stay with us more Bloomberg surveillance coming up after this. 288 00:15:38,800 --> 00:15:41,320 Speaker 2: Auxana are'n off, the head of market strategy at JP 289 00:15:41,440 --> 00:15:44,680 Speaker 2: Morgan Asset Management, raising concerns writing if the Fed thinks 290 00:15:44,720 --> 00:15:46,880 Speaker 2: the economy should be churning down over one hundred and 291 00:15:46,920 --> 00:15:49,160 Speaker 2: fifty p a month, that's going to guide them into 292 00:15:49,200 --> 00:15:52,240 Speaker 2: cumming short term rates, which is stimulatory for the higher 293 00:15:52,240 --> 00:15:55,400 Speaker 2: inflation environment we're in. Auxana has made it into the 294 00:15:55,480 --> 00:15:58,720 Speaker 2: studio navigating sinkholes of our own from Westchester it's going 295 00:15:58,760 --> 00:15:59,080 Speaker 2: to see you. 296 00:15:59,040 --> 00:16:01,560 Speaker 7: Waxana literal and figurative ones. 297 00:16:01,880 --> 00:16:04,200 Speaker 2: Thank you for making it. Let's start with this Feder reserve. 298 00:16:04,440 --> 00:16:06,920 Speaker 2: What are you actually expecting? So let's make a divide, 299 00:16:06,920 --> 00:16:09,120 Speaker 2: a big distinction between what you think the FED will 300 00:16:09,120 --> 00:16:11,600 Speaker 2: do versus what you think the FED should do good do. 301 00:16:12,560 --> 00:16:15,280 Speaker 7: There's that has been a divide for over a year now. 302 00:16:15,400 --> 00:16:17,880 Speaker 7: We did not believe they should have been cutting last year. 303 00:16:17,880 --> 00:16:20,360 Speaker 7: When they did, we saw the long end react in 304 00:16:20,840 --> 00:16:23,640 Speaker 7: a way that I don't think anyone anticipated. We anticipated 305 00:16:23,640 --> 00:16:25,840 Speaker 7: it because of course, the long end was reacting to 306 00:16:26,480 --> 00:16:30,240 Speaker 7: realities around technical you know, supply of treasuries and long 307 00:16:30,280 --> 00:16:34,000 Speaker 7: term inflation expectations, and that is the reality. I think 308 00:16:34,040 --> 00:16:37,600 Speaker 7: that the FED will continue to grapple with this time around. 309 00:16:37,680 --> 00:16:40,200 Speaker 7: Nothing is likely going to stop them from this cut 310 00:16:40,200 --> 00:16:44,080 Speaker 7: that's coming up this month, even a higher than expected 311 00:16:44,080 --> 00:16:48,600 Speaker 7: inflation print. And that's unfortunate because I think they would 312 00:16:48,640 --> 00:16:53,400 Speaker 7: probably benefit from standing still here looking at what's actually 313 00:16:53,440 --> 00:16:57,040 Speaker 7: happening in the economy, looking at you know, variables like 314 00:16:57,160 --> 00:17:01,080 Speaker 7: what's happening with population growth, for example, Not sure given 315 00:17:01,120 --> 00:17:04,680 Speaker 7: that you know the border is tighter, there are deportations, right, 316 00:17:04,800 --> 00:17:09,840 Speaker 7: population growth is a tremendous driver to jobs, and that 317 00:17:10,000 --> 00:17:12,600 Speaker 7: is changing and we're not entirely sure how that's changing. 318 00:17:12,680 --> 00:17:15,240 Speaker 7: And to the comments you quoted earlier, for me, you know, 319 00:17:15,240 --> 00:17:18,000 Speaker 7: if the FED is still being guided by the economy 320 00:17:18,000 --> 00:17:19,840 Speaker 7: needs to be churning out one hundred hundred and fifty 321 00:17:19,840 --> 00:17:24,080 Speaker 7: two two hundred thousand jobs a month, then that's going 322 00:17:24,119 --> 00:17:25,760 Speaker 7: to guide them in a direction that's going to be 323 00:17:25,760 --> 00:17:26,560 Speaker 7: pro inflationary. 324 00:17:26,680 --> 00:17:28,600 Speaker 1: It might not be one hundred and fifty thousand jobs 325 00:17:28,640 --> 00:17:30,800 Speaker 1: a month, but it's not a contraction like what we 326 00:17:30,880 --> 00:17:34,159 Speaker 1: saw in June for the first time since December twenty twenty. 327 00:17:34,359 --> 00:17:36,880 Speaker 1: It's not these surveys indicating that people don't feel good 328 00:17:36,960 --> 00:17:41,280 Speaker 1: about getting jobs. Why won't that curtail inflation on its own? 329 00:17:41,560 --> 00:17:44,119 Speaker 1: Why doesn't that suggest maybe the FED has some room 330 00:17:44,520 --> 00:17:48,480 Speaker 1: to normalize policy from what might be considered restrictive. 331 00:17:49,040 --> 00:17:51,520 Speaker 7: Well, this is really the issue, is that the FED 332 00:17:51,600 --> 00:17:55,240 Speaker 7: keeps calling this level of rate it's mildly restrictive or 333 00:17:55,320 --> 00:17:58,639 Speaker 7: restrictive is continuing to be part of their rhetoric, and 334 00:17:58,840 --> 00:18:02,760 Speaker 7: it's hard to see where is it restrictive because financial 335 00:18:02,760 --> 00:18:05,359 Speaker 7: conditions continue to loosen, their looser now than when the 336 00:18:05,359 --> 00:18:09,280 Speaker 7: Feds started, they're hiking cycle, you know, three four years ago, 337 00:18:09,560 --> 00:18:12,720 Speaker 7: and so yes, the jobs backdrop is moderating, but the 338 00:18:12,800 --> 00:18:15,480 Speaker 7: unemployment rate is still you know, four point three percent 339 00:18:15,560 --> 00:18:18,000 Speaker 7: versus four point two percent a year ago. Is there 340 00:18:18,040 --> 00:18:20,840 Speaker 7: some slowing? Without a doubt, that is a natural kind 341 00:18:20,840 --> 00:18:23,359 Speaker 7: of ebb and flow off the markets and the economy. 342 00:18:23,720 --> 00:18:26,920 Speaker 7: I don't think this calls for the kind of sort 343 00:18:26,920 --> 00:18:30,000 Speaker 7: of fever pitch around. Cut. Let's cut, And I'm not 344 00:18:30,000 --> 00:18:32,560 Speaker 7: sure what cutting is going to ultimately do because when 345 00:18:32,560 --> 00:18:34,280 Speaker 7: we cut rates, what are we trying to do. We're 346 00:18:34,280 --> 00:18:37,320 Speaker 7: trying to improve borrowing costs for small businesses. We're trying 347 00:18:37,320 --> 00:18:41,439 Speaker 7: to improve borrowing costs for mortgage borrowers. And that's just 348 00:18:41,600 --> 00:18:44,320 Speaker 7: not really been the case. I mean, mortgages are still 349 00:18:44,400 --> 00:18:47,200 Speaker 7: kind of stuck in the mid six high six level, 350 00:18:47,240 --> 00:18:51,520 Speaker 7: which is not really unlocking tremendous amount of activity. And frankly, 351 00:18:52,080 --> 00:18:54,040 Speaker 7: even if we give the benefit of the doubt to 352 00:18:54,119 --> 00:18:56,080 Speaker 7: this policy and say, you know what, it's going to 353 00:18:56,119 --> 00:19:00,000 Speaker 7: improve the mortgage rate, is that really going to yield 354 00:19:00,320 --> 00:19:03,520 Speaker 7: better home affordability? What is your average homeowner going to 355 00:19:03,560 --> 00:19:05,800 Speaker 7: do if they know money's cheaper, They're going to raise 356 00:19:05,840 --> 00:19:09,160 Speaker 7: their home price. Further, we saw some of the lowest 357 00:19:09,480 --> 00:19:12,520 Speaker 7: mortgage rates over the last decade, bottom, you know, rock 358 00:19:12,560 --> 00:19:15,520 Speaker 7: bottom lower mortgage rates, and all we saw was tremendous 359 00:19:15,520 --> 00:19:16,399 Speaker 7: price appreciation. 360 00:19:16,640 --> 00:19:18,760 Speaker 1: Are you saying that rate cuts here, even if there 361 00:19:18,840 --> 00:19:21,760 Speaker 1: is some degree of weakness in the labor market, would 362 00:19:21,760 --> 00:19:25,159 Speaker 1: only inflate acid prices, create long term inflation, and do 363 00:19:25,280 --> 00:19:27,920 Speaker 1: nothing essentially for any of those underlying issues. 364 00:19:28,040 --> 00:19:31,320 Speaker 7: Unfortunately, I think there's a very significant risk of that happening. 365 00:19:31,400 --> 00:19:36,280 Speaker 7: It is going to probably stoke asset price appreciation, which 366 00:19:36,320 --> 00:19:39,080 Speaker 7: is already at a very rich level. You know, we 367 00:19:39,160 --> 00:19:41,800 Speaker 7: know that credit and I've talked about this before here 368 00:19:41,920 --> 00:19:44,920 Speaker 7: credit has never been more expensive. If credit has been 369 00:19:44,960 --> 00:19:48,120 Speaker 7: more expensive, you know, one percent of the time historically 370 00:19:48,240 --> 00:19:50,760 Speaker 7: ninety nine percent of readings and credit over the last 371 00:19:50,840 --> 00:19:54,400 Speaker 7: number of decades have been less expensive than where it 372 00:19:54,440 --> 00:19:57,840 Speaker 7: is today. So price appreciation, although I will say if 373 00:19:57,880 --> 00:20:01,800 Speaker 7: the FED is aggressive round price cuts, that may actually 374 00:20:01,840 --> 00:20:04,480 Speaker 7: spook markets where markets may be like, well, what do 375 00:20:04,520 --> 00:20:06,680 Speaker 7: they know that we don't know, and that can actually 376 00:20:06,720 --> 00:20:10,400 Speaker 7: spark as selloff in in credit or in risk assets, 377 00:20:10,440 --> 00:20:13,800 Speaker 7: which look risk assets are definitely pushing some boundaries there, 378 00:20:14,040 --> 00:20:17,120 Speaker 7: and a correction is not outside the realm of reasonable 379 00:20:17,400 --> 00:20:20,800 Speaker 7: reasonableness or possibility. But I just don't think the FED 380 00:20:21,000 --> 00:20:25,480 Speaker 7: has enough here to really be as aggressive as everyone 381 00:20:25,720 --> 00:20:29,640 Speaker 7: is asking it to be. However, the FED has done 382 00:20:29,680 --> 00:20:32,240 Speaker 7: no favorites in itself right over the last eighteen months 383 00:20:32,359 --> 00:20:35,720 Speaker 7: or so. They looked political, whether they wanted to or 384 00:20:35,800 --> 00:20:39,440 Speaker 7: not when they for the first time ever changed policy 385 00:20:39,480 --> 00:20:42,400 Speaker 7: within a couple of months of an election last year, 386 00:20:42,960 --> 00:20:45,280 Speaker 7: and that made them look politicized, whether they were or 387 00:20:45,320 --> 00:20:48,240 Speaker 7: were not. And so that's why I think the market 388 00:20:48,240 --> 00:20:52,560 Speaker 7: is generally sanguine around this question of you know, FED independence. 389 00:20:53,480 --> 00:20:56,359 Speaker 7: We're seeing markets kind of look through that. Yes, maybe 390 00:20:56,400 --> 00:20:59,359 Speaker 7: it's a red flag, but until we see, you know, 391 00:20:59,400 --> 00:21:02,879 Speaker 7: the White House sexually set monetary policy, I think the 392 00:21:02,920 --> 00:21:04,479 Speaker 7: markets are going to continue looking through that. 393 00:21:04,520 --> 00:21:06,520 Speaker 2: In the sety seconds we have left, how would you 394 00:21:06,560 --> 00:21:08,680 Speaker 2: deploy capital? Why would you like to put it in 395 00:21:08,720 --> 00:21:09,200 Speaker 2: fixed income? 396 00:21:09,200 --> 00:21:11,400 Speaker 7: At the moment, so this is the most important question 397 00:21:11,440 --> 00:21:13,960 Speaker 7: because everyone kind of sits here and talks about what's 398 00:21:13,960 --> 00:21:16,320 Speaker 7: going to happen with the economy, what's going to happen 399 00:21:16,320 --> 00:21:18,000 Speaker 7: with fat policy. But at the end of the day, 400 00:21:18,640 --> 00:21:21,159 Speaker 7: fixed income specifically, which is the world I live in, 401 00:21:21,560 --> 00:21:24,040 Speaker 7: is meant to be a balanced in your portfolio. And 402 00:21:24,280 --> 00:21:27,320 Speaker 7: the problem that investors continue to have, whether they realize 403 00:21:27,320 --> 00:21:29,720 Speaker 7: it or not, is that bonds and stocks have become 404 00:21:29,920 --> 00:21:33,840 Speaker 7: highly positively correlated. And so what I think investors need 405 00:21:33,880 --> 00:21:36,399 Speaker 7: to do is look at their fixed income portfolio and 406 00:21:36,560 --> 00:21:39,320 Speaker 7: think about, Okay, well, rates foul. Maybe I did well, 407 00:21:39,480 --> 00:21:42,840 Speaker 7: but when raised road arose, did I do just as well? 408 00:21:43,200 --> 00:21:43,760 Speaker 6: Just as well? 409 00:21:43,880 --> 00:21:46,520 Speaker 7: Or was my portfolio positive? And I think they need 410 00:21:46,560 --> 00:21:50,320 Speaker 7: to really think about that kind of diversification with investors 411 00:21:50,320 --> 00:21:53,399 Speaker 7: that can generate returns regardless of whether the environment is 412 00:21:53,440 --> 00:21:54,760 Speaker 7: a good one for bonds or not. 413 00:21:56,080 --> 00:21:59,480 Speaker 2: Stay with us more Bloomberg Surveillance coming up after this, 414 00:22:08,720 --> 00:22:11,120 Speaker 2: telling us out for the big unveil later on this afternoon, 415 00:22:11,200 --> 00:22:12,840 Speaker 2: Joining us now to discuss this world PI sick of 416 00:22:12,880 --> 00:22:15,320 Speaker 2: lightshed partners, Well, welcome to the program, sir. In the 417 00:22:15,320 --> 00:22:17,199 Speaker 2: bottom market, for a long long time, they used to 418 00:22:17,200 --> 00:22:19,640 Speaker 2: call a certain trade the widow maker. It was shorting 419 00:22:19,720 --> 00:22:23,480 Speaker 2: jgb's and ultimately at some point things do change. Well, 420 00:22:23,520 --> 00:22:25,720 Speaker 2: it was the same story for technology for a long 421 00:22:25,720 --> 00:22:29,359 Speaker 2: long time. People betting against Apple were wrong. Are they 422 00:22:29,440 --> 00:22:31,000 Speaker 2: right to bet against this company? Now? 423 00:22:32,040 --> 00:22:34,320 Speaker 8: I mean I also heard in your earlier segment talking 424 00:22:34,320 --> 00:22:36,919 Speaker 8: about these top ten stocks being dominant, and I remember 425 00:22:37,000 --> 00:22:39,800 Speaker 8: people telling me that, like, you can't bet against Apple 426 00:22:39,840 --> 00:22:42,439 Speaker 8: because the money flows into the top ten stocks are 427 00:22:42,480 --> 00:22:45,120 Speaker 8: always going to keep it up, And that obviously didn't work. 428 00:22:45,480 --> 00:22:48,880 Speaker 8: And to your point, you know, there are leaders, historical 429 00:22:48,960 --> 00:22:52,000 Speaker 8: leaders like Ge that for a variety of reasons, are 430 00:22:52,080 --> 00:22:55,200 Speaker 8: no longer leaders. Obviously not putting Apple in the scene 431 00:22:55,240 --> 00:22:58,080 Speaker 8: camp there. But the bottom line is they're trading in 432 00:22:58,080 --> 00:23:02,280 Speaker 8: an above market multiple thirty times, not the highest they've 433 00:23:02,280 --> 00:23:05,800 Speaker 8: ever traded at, but above market, and growth has slowed down, 434 00:23:05,920 --> 00:23:09,080 Speaker 8: and there has been obviously a lack of innovation. You know, 435 00:23:09,320 --> 00:23:12,360 Speaker 8: you were just talking about thinner phones and longer batteries. 436 00:23:12,600 --> 00:23:16,080 Speaker 8: Is that really innovation in twenty twenty five, when when 437 00:23:16,160 --> 00:23:20,879 Speaker 8: Google obviously is pushing forward with AI and agentic AI 438 00:23:20,960 --> 00:23:22,159 Speaker 8: and a lot of their products. 439 00:23:22,359 --> 00:23:25,040 Speaker 1: Yeah, so Heroin, she phone does have phones. Don't get 440 00:23:25,080 --> 00:23:26,840 Speaker 1: it done for you. I just wonder going forward, what 441 00:23:26,960 --> 00:23:29,160 Speaker 1: could get it done for you for them to announce. 442 00:23:30,600 --> 00:23:33,520 Speaker 8: I mean, this is not really an event that matters 443 00:23:33,560 --> 00:23:36,439 Speaker 8: as much for Apple anymore, as crazy as that sounds. 444 00:23:36,480 --> 00:23:39,680 Speaker 8: And frankly, if you look at the stock performance around 445 00:23:39,760 --> 00:23:43,760 Speaker 8: product announcements the day after the month. It's the day 446 00:23:43,760 --> 00:23:46,000 Speaker 8: of day after month after. It doesn't really move when 447 00:23:46,040 --> 00:23:48,720 Speaker 8: it moves is WWDC. Remember the last time the stock 448 00:23:48,800 --> 00:23:52,240 Speaker 8: really moved was when they promised all these AI features 449 00:23:52,280 --> 00:23:55,000 Speaker 8: a year or two ago. Obviously, none of those AI 450 00:23:55,119 --> 00:23:58,439 Speaker 8: features actually materialize, But that's what people care about the 451 00:23:58,480 --> 00:24:01,639 Speaker 8: services side of the business and what the progress is 452 00:24:01,680 --> 00:24:04,600 Speaker 8: on AI, because in the meantime, unless they announce an 453 00:24:04,640 --> 00:24:07,880 Speaker 8: autonomous car or some new product category they can give 454 00:24:07,880 --> 00:24:12,480 Speaker 8: them ten twenty thirty billion dollars of revenue opportunity. Giving 455 00:24:12,520 --> 00:24:16,680 Speaker 8: us a thinner phone or something with longer battery probably 456 00:24:16,800 --> 00:24:19,000 Speaker 8: is not enough to have an impact in the market 457 00:24:19,000 --> 00:24:19,720 Speaker 8: in the near term. 458 00:24:19,920 --> 00:24:21,560 Speaker 1: Well, you've come on the show before and said you 459 00:24:21,600 --> 00:24:23,440 Speaker 1: think that there needs to be a change in leadership, 460 00:24:23,520 --> 00:24:26,600 Speaker 1: something that is significant to really show some sort of 461 00:24:26,800 --> 00:24:28,520 Speaker 1: different pathway ahead. 462 00:24:29,040 --> 00:24:31,240 Speaker 6: What's your outlook? How do you see this developing? 463 00:24:31,320 --> 00:24:33,840 Speaker 1: Since they are losing some of their AI personnel to 464 00:24:33,840 --> 00:24:36,800 Speaker 1: the likes of Meta, they have been lagging behind the 465 00:24:36,880 --> 00:24:38,520 Speaker 1: likes of Google when it comes to some of these 466 00:24:38,520 --> 00:24:42,119 Speaker 1: agentic features. What do you think the evolution is going 467 00:24:42,160 --> 00:24:43,920 Speaker 1: to be for the likes of Apple. 468 00:24:44,760 --> 00:24:45,960 Speaker 8: I mean and this is, by the way, this is 469 00:24:45,960 --> 00:24:47,840 Speaker 8: not a new topic, and this is certainly not I've 470 00:24:47,880 --> 00:24:50,199 Speaker 8: covered the stock for a long time, and it's not 471 00:24:50,600 --> 00:24:52,760 Speaker 8: something that I've been harping on from the beginning. I've 472 00:24:52,800 --> 00:24:56,280 Speaker 8: been a Tim Cook fan over the years. I think 473 00:24:56,400 --> 00:24:58,280 Speaker 8: there's a Wall Street General reporter that wrote a book 474 00:24:58,320 --> 00:25:00,720 Speaker 8: about the pressure that the come but he even felt 475 00:25:00,760 --> 00:25:06,080 Speaker 8: internally about the lack of excuse me, innovation, you know. 476 00:25:06,119 --> 00:25:08,119 Speaker 8: So what they the problem is now is you have 477 00:25:08,200 --> 00:25:11,919 Speaker 8: this massive transition to AI, so the ability for others 478 00:25:11,960 --> 00:25:15,320 Speaker 8: to disrupt, whether it's in this product category of phones 479 00:25:15,960 --> 00:25:19,880 Speaker 8: or a product category that disrupts phones altogether, in terms 480 00:25:19,920 --> 00:25:23,639 Speaker 8: of how we interact with our data. There's obviously real risk. 481 00:25:23,880 --> 00:25:27,600 Speaker 8: And at the same time, there is not just innovation 482 00:25:28,200 --> 00:25:30,640 Speaker 8: coming out of the company in terms of new products, 483 00:25:30,640 --> 00:25:34,199 Speaker 8: and there's no no one can suggest evidence otherwise. In 484 00:25:34,280 --> 00:25:37,680 Speaker 8: recent years the last great products obviously Watch and even 485 00:25:37,720 --> 00:25:41,280 Speaker 8: the car project, where with Johnny Eyes, who's ironically now 486 00:25:41,320 --> 00:25:45,040 Speaker 8: working on what possibly could be a competing product with 487 00:25:45,160 --> 00:25:45,720 Speaker 8: open AI. 488 00:25:46,160 --> 00:25:47,640 Speaker 6: So what do you think they need to do Weld? 489 00:25:49,400 --> 00:25:52,240 Speaker 8: I mean, if they're in a tough spot, probably not 490 00:25:52,520 --> 00:25:56,440 Speaker 8: allowing or enabling their AI engineers to be poached by 491 00:25:56,480 --> 00:25:58,960 Speaker 8: Facebook and others would be a good start. 492 00:25:59,480 --> 00:25:59,679 Speaker 1: You know. 493 00:26:00,040 --> 00:26:03,560 Speaker 8: Positions can obviously be a way to jumpstart your you know, 494 00:26:03,600 --> 00:26:07,200 Speaker 8: yourself in the area. But again, you started this segment 495 00:26:07,440 --> 00:26:10,280 Speaker 8: or this portion asking about management change. Sometimes you just 496 00:26:10,440 --> 00:26:13,919 Speaker 8: need a senior leader that is more product focused, that 497 00:26:13,960 --> 00:26:16,560 Speaker 8: can drive you to new products that might be less 498 00:26:16,600 --> 00:26:21,360 Speaker 8: focused on you know, maximizing taxes right keeping cash in hireland, 499 00:26:21,800 --> 00:26:26,280 Speaker 8: or maximizing gross margin by you know, all the manufacturing 500 00:26:26,320 --> 00:26:29,400 Speaker 8: stuff that they've done in China, and someone that can 501 00:26:29,400 --> 00:26:33,040 Speaker 8: take those chances and push forward and invest the money 502 00:26:33,480 --> 00:26:36,240 Speaker 8: to get yourself into new products. This is a mega company. 503 00:26:36,280 --> 00:26:39,280 Speaker 8: I mentioned autonomous cars as an opportunity. There's plenty of 504 00:26:39,320 --> 00:26:44,240 Speaker 8: other product categories out there that a company with Apple's brand, 505 00:26:44,680 --> 00:26:48,000 Speaker 8: you know, staff of expertise, right, great people within the 506 00:26:48,000 --> 00:26:50,680 Speaker 8: company of Apple, and the balance sheet that they can 507 00:26:50,800 --> 00:26:53,080 Speaker 8: I think, you know, get into some new markets. 508 00:26:54,119 --> 00:26:57,720 Speaker 2: This is the Bloomberg Sevendments podcast, bringing you the best 509 00:26:57,720 --> 00:27:00,800 Speaker 2: in markets, economics, an gio politics. You can watch the 510 00:27:00,800 --> 00:27:03,840 Speaker 2: show live on Bloomberg TV weekday mornings from six am 511 00:27:03,960 --> 00:27:07,920 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 512 00:27:08,080 --> 00:27:10,320 Speaker 2: or anywhere else you listen, and, as always on the 513 00:27:10,320 --> 00:27:12,760 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.