WEBVTT - Markets Face Clouded Rate Outlook as Record US Shutdown Ends 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.320 --> 0:00:31.840 Tiffany wild joins US managing director and economist at Pimco. 0:00:32.479 --> 0:00:37.159 At Tiffany, I look at the Wilding Excel spreadsheet and 0:00:37.240 --> 0:00:40.640 I guess it needs readjustment. Do you have a vision 0:00:41.120 --> 0:00:44.559 out past Q four of what the American economy is 0:00:44.840 --> 0:00:45.239 gonna do? 0:00:45.360 --> 0:00:46.360 Or you just have to wait? 0:00:49.640 --> 0:00:52.800 Yeah, I mean it's been obviously very difficult or more 0:00:52.840 --> 0:00:55.279 difficult to get a sense on what's going on in 0:00:55.280 --> 0:00:58.400 the economy just with the data that hasn't been released, 0:00:59.120 --> 0:01:01.680 you know, but never the less, with private sector sources 0:01:01.720 --> 0:01:05.160 of data, you know, we can get some insight, you know, 0:01:05.200 --> 0:01:08.200 and it does look like things are pretty stable. We 0:01:08.240 --> 0:01:10.640 think the economy is kind of a story of winners 0:01:10.640 --> 0:01:14.120 and losers right now. Where you have, you know, obviously 0:01:14.120 --> 0:01:17.240 the big tech companies, the AI build out, that's that's 0:01:17.319 --> 0:01:19.360 very strong. But on the other side of that, you 0:01:19.360 --> 0:01:22.160 have various factors that have hit the labor market, you know, 0:01:22.200 --> 0:01:24.840 including the immigration story. We think lower demand is a 0:01:24.840 --> 0:01:28.160 result of tariffs and of course some AI related displacement 0:01:28.800 --> 0:01:31.760 that's resulting in you know, some loss of tech related 0:01:31.800 --> 0:01:35.319 jobs is the other piece of that that looks weaker, 0:01:35.400 --> 0:01:37.240 you know. I think in terms of monetary policy and 0:01:37.280 --> 0:01:39.399 the FED, the fact that we haven't gotten the labor 0:01:39.440 --> 0:01:43.000 market data, you know, is it makes it more difficult 0:01:43.000 --> 0:01:45.360 for monetary policy go ahead. 0:01:45.520 --> 0:01:48.800 Surprise that the UK today have a negative statistic on GDP. 0:01:49.600 --> 0:01:52.600 Are you like a sub one percent GDP? Could that 0:01:52.640 --> 0:01:55.120 be the shock of the shutdown we just lived? 0:01:57.040 --> 0:02:00.120 Yeah, I mean, okay, yeah, so the shutdown will absolutely 0:02:00.160 --> 0:02:03.760 impact fourth quarter growth. We think that one one to 0:02:03.840 --> 0:02:05.600 one and a half percent is what it could shave 0:02:05.680 --> 0:02:08.760 off of the fourth quarter. So we absolutely could see 0:02:09.080 --> 0:02:12.960 a negative fourth quarter GDP print. But nevertheless, as you know, 0:02:12.960 --> 0:02:16.520 as the government has already reopened, that activity will come 0:02:16.560 --> 0:02:20.120 back online and you'll see an offsetting pickup in the 0:02:20.160 --> 0:02:22.840 first quarter of next year. I think the other thing 0:02:22.880 --> 0:02:24.240 to keep in mind in the first quarter is that 0:02:24.240 --> 0:02:26.959 you're also going to get refund checks to households that 0:02:27.080 --> 0:02:29.680 are quite large this year, so that will provide also 0:02:30.080 --> 0:02:33.600 some support to the economy and to consumption in the 0:02:33.639 --> 0:02:34.560 first part of next year. 0:02:35.200 --> 0:02:37.959 Bet on the inflation front, tiffany A lot of folks 0:02:38.040 --> 0:02:42.079 in the beginning of this tariff discussion, we're warning against 0:02:42.760 --> 0:02:45.760 higher inflation, maybe materially higher inflation's resulting from terrorists. 0:02:45.760 --> 0:02:46.760 But we haven't seen it, have we. 0:02:48.760 --> 0:02:51.560 Yeah, we certainly haven't seen it to the extent that 0:02:51.720 --> 0:02:54.400 many thought we would earlier this year. And I think 0:02:54.400 --> 0:02:57.000 what we're learning as we are, as we have seen 0:02:57.080 --> 0:03:00.440 some data, you know, is that companies are dealing with 0:03:00.480 --> 0:03:03.440 the tariffs in different ways, and and one of those 0:03:03.480 --> 0:03:06.720 ways is trying to cut costs to you know, to 0:03:06.800 --> 0:03:10.200 defend margins as well as passing some of it along. 0:03:10.280 --> 0:03:12.560 But I think the big surprise for this year is 0:03:12.760 --> 0:03:16.160 the you know, is basically the management of labor costs 0:03:16.680 --> 0:03:19.720 that the companies appear to be doing associated with the tariffs. 0:03:19.680 --> 0:03:22.079 So we have seen the labor market really grind to 0:03:22.080 --> 0:03:25.720 a halt this year. Labor demand and labor supply decelerate, 0:03:26.000 --> 0:03:28.720 and we think that's directly related to companies trying to 0:03:28.720 --> 0:03:30.440 cut costs in the face of tariffs. 0:03:30.800 --> 0:03:33.079 And on the labor front, as you bring up here, 0:03:33.160 --> 0:03:36.760 the closing of the southern border has really been effective here, 0:03:36.840 --> 0:03:40.080 and there's also been some deportation has been reported. How's 0:03:40.120 --> 0:03:42.720 that impacted kind of the labor market here, particularly some 0:03:42.760 --> 0:03:44.840 of the areas that we've you know, we're led to 0:03:44.840 --> 0:03:48.920 believe would be really impacted, like agricultural, housing, construction, things 0:03:48.920 --> 0:03:49.240 like that. 0:03:51.280 --> 0:03:53.280 Yeah, I mean so so so far. I mean, I 0:03:53.280 --> 0:03:54.720 mean the way that we would would kind of think 0:03:54.760 --> 0:03:58.119 about it is is, you know, is supply the decline 0:03:58.120 --> 0:04:00.760 and labor supply is it sort of out stripping the 0:04:00.800 --> 0:04:04.000 decline in labor demand. And one way that we can 0:04:04.040 --> 0:04:06.520 get a sense for that is to look at wages 0:04:06.600 --> 0:04:09.680 and wage inflation. And when we look at wage inflation 0:04:10.560 --> 0:04:16.040 in those particular sectors, we're not really seeing them accelerate 0:04:16.160 --> 0:04:19.960 or reaccelerate, at least not yet. And the latest labor 0:04:20.000 --> 0:04:23.560 market official labor market data that we did get actually 0:04:23.600 --> 0:04:28.440 suggested that construction payrolls were contracting, and that was actually 0:04:28.560 --> 0:04:31.760 very much in line with the fact that structures investment 0:04:31.839 --> 0:04:35.640 in the United States, both residential and non residential structures investment, 0:04:36.320 --> 0:04:39.160 were also contracting. So, of course, on the horizon we 0:04:39.279 --> 0:04:42.039 have this data center build out, but it actually does 0:04:42.120 --> 0:04:44.400 look like the range of data suggests that that even 0:04:44.400 --> 0:04:47.960 in construction in other places like that, you're seeing demand 0:04:47.960 --> 0:04:50.000 that's declining just as much as a supply. 0:04:50.160 --> 0:04:50.599 It's shifting. 0:04:50.640 --> 0:04:53.159 Welding was us with Pimcot. We continue here. We welcome 0:04:53.200 --> 0:04:55.919 all of you across the nation. After the early morning 0:04:55.960 --> 0:05:00.400 of Newport Beach, California. Good morning on YouTube. Subscribe to 0:05:00.480 --> 0:05:04.680 Bloomberg Podcast. It's our new digital expression. As they say, 0:05:04.880 --> 0:05:08.000 Neil data from Renaissance. It features out on LinkedIn a 0:05:08.000 --> 0:05:12.080 Bloomberg News article, Paul the combine out of Detroit, Tiffany, 0:05:12.080 --> 0:05:16.520 I want to fold this in. Bloomberg publishes that distressed 0:05:16.839 --> 0:05:21.880 auto loans are up to a record level. What indications 0:05:21.920 --> 0:05:25.279 do you see of a better part of half of 0:05:25.320 --> 0:05:29.640 the American economy under great stress? As simple as something 0:05:29.720 --> 0:05:31.240 like they can't pay their auto loans. 0:05:33.760 --> 0:05:36.520 Yeah, you know, there's like you know, like you mentioned, 0:05:36.560 --> 0:05:40.599 there is certainly winners and losers in this economy, and 0:05:41.120 --> 0:05:43.680 you know, it seems like the you know, lower income 0:05:44.480 --> 0:05:49.880 folks increasingly are are struggling more here the auto delinquency increase, 0:05:50.279 --> 0:05:52.240 I think as part of that story, there's been data 0:05:52.279 --> 0:05:57.680 on actual repossessions as well, which will increase use car supply, 0:05:57.800 --> 0:06:00.479 so that feeds into you know, some of the distantallyationary 0:06:01.360 --> 0:06:05.039 parts of the economy. So yeah, I mean there is 0:06:05.120 --> 0:06:09.000 certainly an effect here. You know. I think the story 0:06:09.040 --> 0:06:12.720 as well is for smaller and mid sized businesses that 0:06:12.839 --> 0:06:16.640 are more directly impacted by the tariffs. You know, those 0:06:16.680 --> 0:06:20.120 businesses will will struggle here. So there will be parts 0:06:20.160 --> 0:06:22.560 of the economy that, as the economy goes through a 0:06:22.600 --> 0:06:26.000 transition to these new policies and new technology, that will 0:06:26.000 --> 0:06:27.920 struggle to keep up. 0:06:28.640 --> 0:06:31.040 So how do you think this FED is going to 0:06:31.160 --> 0:06:35.800 proceed here with its presumably rate cutting policy here, is 0:06:35.800 --> 0:06:39.039 the cadence going to be kind of you know, steady 0:06:39.160 --> 0:06:41.480 eddy for the next two, three, four meetings or do 0:06:41.480 --> 0:06:42.880 you think they're going to be really stop and take 0:06:42.880 --> 0:06:43.600 a look at the data. 0:06:45.600 --> 0:06:49.039 Yeah, I mean, I ultimately think that they probably will pause. 0:06:49.760 --> 0:06:52.360 And the reason for that is that you are going 0:06:52.440 --> 0:06:57.640 to see additional fiscal related stimulus offsetting some of the 0:06:57.680 --> 0:07:04.240 tariff related drag in the form of household tax credits refunds, 0:07:04.560 --> 0:07:08.080 you know, and lower taxes for corporations as well, and 0:07:08.120 --> 0:07:10.600 that will provide some offsetting support for the tariffs. Now, 0:07:10.600 --> 0:07:12.920 as I mentioned, not everybody will will be able to 0:07:12.960 --> 0:07:15.120 capture all of that. There will be winners and losers. 0:07:15.160 --> 0:07:17.920 But nevertheless, we think in the first you know, first 0:07:17.920 --> 0:07:20.360 half of next year, you will see that hit the 0:07:20.400 --> 0:07:22.920 economy and that will provide some support. I think the 0:07:22.960 --> 0:07:26.280 Federal Reserve is certainly looking to that, and it's probably 0:07:26.320 --> 0:07:29.200 why they are, you know, somewhat more cautious about cutting 0:07:29.200 --> 0:07:31.080 interest rates. You know, we think when we look at 0:07:31.120 --> 0:07:34.640 the labor market, you know, the data does suggest to us, however, 0:07:35.040 --> 0:07:38.520 that there has been you know, some additional deceleration over 0:07:38.560 --> 0:07:40.600 the last couple of months, you know, and I think 0:07:40.600 --> 0:07:43.800 the risks in the labor market do suggest it maybe 0:07:43.800 --> 0:07:46.440 one more cut, either in December or maybe January. But 0:07:46.480 --> 0:07:50.280 then after that you see how the tax stimulus hits 0:07:50.280 --> 0:07:52.920 the economy, and you wait, and there could be more 0:07:52.920 --> 0:07:53.440 of a pause. 0:07:53.520 --> 0:07:56.160 Tiffany, thank you, always, thank you, thank you, thank you. 0:07:56.200 --> 0:07:58.320 Tivity Welding with us, going to go here. 0:07:58.240 --> 0:07:59.160 Stay with us. 0:07:59.200 --> 0:08:02.440 More from Blue Imberg Surveillance coming up after this. 0:08:09.680 --> 0:08:13.280 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:08:13.320 --> 0:08:16.520 weekday afternoons from seven to ten am Eastern Listen on 0:08:16.560 --> 0:08:20.240 Applecarplay and Android Atto with the Bloomberg Business app or 0:08:20.400 --> 0:08:21.880 watch us live on YouTube. 0:08:22.240 --> 0:08:25.000 Joining us now, the new slow is so intense. 0:08:25.040 --> 0:08:28.400 They have one of our experts on American civics, Professor 0:08:28.440 --> 0:08:33.200 Schiller at Brown University, Wendy Schiller, joins us right now. Wendy, 0:08:33.240 --> 0:08:36.360 it's eighty days I think, or even seventy nine days 0:08:37.000 --> 0:08:40.040 to the end of January. I believe all we did 0:08:40.160 --> 0:08:43.960 was kick the can down the road to January thirtieth. 0:08:43.960 --> 0:08:44.120 Am. 0:08:44.120 --> 0:08:44.760 I right on that. 0:08:46.400 --> 0:08:48.439 Well, good morning Tom and Paul. 0:08:48.840 --> 0:08:53.480 We've discussed on this show how the incredible shrinking shutdowns, 0:08:53.840 --> 0:08:56.160 meaning that you know, every time we go through this, 0:08:56.520 --> 0:08:59.760 the Congress carves out more area that's protected from the 0:08:59.760 --> 0:09:00.360 shell down. 0:09:00.679 --> 0:09:03.400 So what's key about this agreement? 0:09:03.600 --> 0:09:06.080 And I think this is really what sold the senators, 0:09:06.440 --> 0:09:09.200 the Democrat senators who decided to vote for it, was 0:09:09.240 --> 0:09:13.920 extending appropriations for a full year for snap for example, 0:09:14.000 --> 0:09:18.000 for legislative appropriations meaning LEDG staffers will get paid, and 0:09:18.040 --> 0:09:19.160 for veterans affairs. 0:09:19.559 --> 0:09:21.720 So they've taken more hot. 0:09:21.480 --> 0:09:24.560 Button really you know what we call valence kinds of 0:09:24.720 --> 0:09:28.600 programs off the table for a shutdown. So next time, 0:09:28.679 --> 0:09:31.440 maybe it'll just be air traffic controllers and that's a 0:09:31.520 --> 0:09:34.560 huge deal, but it's you know, it's less than it 0:09:34.600 --> 0:09:36.920 would be now. So I think that's the that's the 0:09:36.920 --> 0:09:39.319 sort of hidden gem, if you will, in the shutdown deal. 0:09:39.520 --> 0:09:43.600 Speak to our listeners and viewers who say, why did 0:09:43.640 --> 0:09:47.839 we do this? I mean, I mean, I'm baffled by 0:09:47.880 --> 0:09:49.640 the constructive outcome of this. 0:09:50.000 --> 0:09:52.319 What was constructive in this exercise? 0:09:53.920 --> 0:09:58.360 Well, the Democrats gambled that healthcare would be of concern. 0:09:58.440 --> 0:10:01.280 They knew that private insurance market premiums were going to 0:10:01.320 --> 0:10:01.679 go up. 0:10:01.720 --> 0:10:04.360 That you know, the carriers have been very clear about 0:10:04.480 --> 0:10:06.439 the cost of health care and that these premiums were going. 0:10:06.400 --> 0:10:06.839 To go up. 0:10:07.160 --> 0:10:11.320 So they drew attention to extending a subsidy for people 0:10:11.360 --> 0:10:14.959 who buy Obamacare insurance and try to get a tax 0:10:15.000 --> 0:10:18.160 break for the premium or some part of the premium. 0:10:18.440 --> 0:10:21.720 You know, that's a smaller subset than everybody that's on Obamacare, 0:10:21.880 --> 0:10:25.240 and that's kind of a bureaucratic issue. But now everybody 0:10:25.280 --> 0:10:28.719 knows what that issue is, and they are they basically. 0:10:28.480 --> 0:10:30.520 It's a simple fix, let's just extend it. 0:10:30.800 --> 0:10:33.560 And they've put the Republicans in somewhat of a box 0:10:34.000 --> 0:10:36.320 and they are counting on the Republicans to say no 0:10:36.840 --> 0:10:39.400 so that they can run on this issue and run 0:10:39.400 --> 0:10:43.800 on healthcare all in twenty eight twenty twenty six, just 0:10:43.840 --> 0:10:46.360 as they did, excuse me, in twenty eighteen, where they 0:10:46.400 --> 0:10:50.000 were very successful Senator Joe Manson, former Senator Joe Manchino 0:10:50.120 --> 0:10:52.040 was Virginia. So the thing that saved them in his 0:10:52.120 --> 0:10:56.160 reelection campaign at twenty eighteen was in fact healthcare because 0:10:56.160 --> 0:10:58.720 they probably to try to repeal Obamacare. So I think 0:10:58.800 --> 0:11:01.200 this is a setup that the Democrats have tried to 0:11:01.200 --> 0:11:02.800 set up the Republicans on this issue. 0:11:02.840 --> 0:11:05.360 Well, it's like being in a classroom at Brown University. 0:11:05.440 --> 0:11:09.120 The professor's blather on, and I'm looking at ai. The 0:11:09.160 --> 0:11:12.800 biggest number I have is fifteen percent are involved with 0:11:12.880 --> 0:11:17.040 some form of healthcare assistance. I think the math is 0:11:17.160 --> 0:11:19.240 eighty five percent of Americans aren't. 0:11:19.520 --> 0:11:21.360 Yeah, maybe that's the heart of the matter. 0:11:21.360 --> 0:11:25.800 Maybe it is, Wendy, But how does this shutdown affect 0:11:25.840 --> 0:11:27.280 the midterm elections if at all? 0:11:27.400 --> 0:11:28.360 Is this going to be something or not? 0:11:28.400 --> 0:11:31.840 Even can remember in twenty six Well, you. 0:11:31.840 --> 0:11:35.200 Know interesting patterns, right, So twenty thirteen, Ted Cruz led 0:11:35.240 --> 0:11:37.480 the shutdown in the Senate to get the Grand bargain, 0:11:37.520 --> 0:11:40.520 you know, to cut eighty billion from the budget over 0:11:40.600 --> 0:11:42.839 ten years, not that we've been noticing now since the 0:11:42.880 --> 0:11:44.199 budget is bigger than it's ever. 0:11:44.040 --> 0:11:46.280 Been the federal budget. But they won the Senate. 0:11:46.320 --> 0:11:48.880 The Republicans won the Senate in twenty fourteen for lots 0:11:48.880 --> 0:11:51.440 of reasons, but that may have been one of them. 0:11:51.559 --> 0:11:55.240 And then in twenty eighteen, twenty nineteen, the Democrats shut 0:11:55.280 --> 0:11:58.720 the government down, essentially fighting with President Trump. Also that 0:11:58.800 --> 0:12:02.800 shutdown ended after a traffic cancelations were too much to bear. 0:12:03.200 --> 0:12:06.360 And you know, for lots of reasons, Biden won the 0:12:06.400 --> 0:12:08.480 presidency and the Democrats won the Senate. 0:12:08.880 --> 0:12:11.439 So I don't know that they think it's guaranteed, but it's. 0:12:11.280 --> 0:12:16.640 Shown a big strobe light on healthcare and affordability. So 0:12:16.840 --> 0:12:19.840 tom only fifteen percent may be affected, but two things. One, 0:12:19.920 --> 0:12:22.240 they have relatives who are affected. You know, they may 0:12:22.280 --> 0:12:24.520 not be on a bombcare, but they know people and 0:12:24.559 --> 0:12:28.080 their family that are. And second, you know, it's just 0:12:28.160 --> 0:12:30.120 shone a light on the fact that the healthcare system 0:12:30.200 --> 0:12:33.440 is broken, and affordability then becomes the mantra that extends 0:12:33.480 --> 0:12:37.240 to housing, to food, to gasoline, and the pressure on 0:12:37.280 --> 0:12:39.720 the incombent government to address that. We saw that with 0:12:39.720 --> 0:12:42.360 Biden in twenty four That pressure is only going to grow. 0:12:43.200 --> 0:12:46.880 So what is on the to do list for Congress 0:12:47.320 --> 0:12:49.200 now that it's going to be back in session, the 0:12:49.200 --> 0:12:51.280 government's going to be open. What should we be looking 0:12:51.280 --> 0:12:51.760 for here? 0:12:52.960 --> 0:12:55.480 Well, we may have an Epstein vote, a vote in 0:12:55.520 --> 0:12:57.480 the House to release the Epstein files. You have two 0:12:57.520 --> 0:13:00.800 hundred and eighteen signatures on a discharge petition House rules. 0:13:00.800 --> 0:13:03.480 That means it gets to bypass all the barriers and 0:13:03.520 --> 0:13:05.920 come to the floor for a vote. That's a big 0:13:06.000 --> 0:13:08.920 deal for the Republicans in the House. They're gonna have 0:13:08.920 --> 0:13:12.280 to figure out in their own party what that sweet 0:13:12.320 --> 0:13:16.000 spot is in terms of that vote and Obamacare subsidies, 0:13:16.040 --> 0:13:20.160 because this will be the Democratic slogan, and the pressure 0:13:20.200 --> 0:13:23.640 will be do you let these expire by December thirty first, 0:13:24.000 --> 0:13:25.160 or do you reach a deal what you. 0:13:25.120 --> 0:13:26.120 Extend them for a year? 0:13:26.480 --> 0:13:29.000 The Republicans would be wise to extend them for a 0:13:29.080 --> 0:13:31.480 year and then make the argument we control the government 0:13:31.480 --> 0:13:32.720 will come up with a better plan. 0:13:33.160 --> 0:13:36.880 Trump really wants it renamed. He hates that it's called Obamacare. 0:13:37.040 --> 0:13:39.080 I think if you just renamed it and made some 0:13:39.120 --> 0:13:41.920 small changes, he would sign it, and this problem would 0:13:41.920 --> 0:13:44.440 be at least put off for another couple of years. 0:13:44.640 --> 0:13:47.520 But that's where I think the Republicans can buy themselves 0:13:47.880 --> 0:13:50.079 time and get off the hook. I don't know that 0:13:50.120 --> 0:13:51.679 there are the votes in the House to do that. 0:13:51.720 --> 0:13:54.400 Based on the content of the debate yesterday, I'm not 0:13:54.400 --> 0:13:54.880 sure there are the. 0:13:54.920 --> 0:13:58.760 Votes that can you do a Thursday audible Sure, Professor Schiller, well, 0:13:58.800 --> 0:14:01.680 you were talking. You is Google Gemini to try to 0:14:01.679 --> 0:14:05.000 be smarter to keep up with you at Brown University? 0:14:05.040 --> 0:14:08.480 I mean, folks, Wendy's show is definitive in textbooks of 0:14:08.600 --> 0:14:14.160 basic American Civics. Are your undergraduates and graduate students smarter 0:14:14.720 --> 0:14:15.640 because of AI? 0:14:19.000 --> 0:14:22.320 At the moment, I would have to say no. Will 0:14:22.360 --> 0:14:25.480 they learn to be more efficient? Probably? 0:14:25.720 --> 0:14:28.880 But we have software at Brown many universities do that 0:14:29.000 --> 0:14:31.520 not only check for plagiarism, but it also checks for AI. 0:14:31.840 --> 0:14:34.640 And I have a no AI rule on my paper. 0:14:34.800 --> 0:14:37.320 So if you get a score of twenty percent of AI, 0:14:37.560 --> 0:14:39.320 I ask you to rewrite that paper. 0:14:39.720 --> 0:14:42.880 So at the moment, that's my attitude. Will it change 0:14:43.040 --> 0:14:43.600 over the year. 0:14:43.680 --> 0:14:46.440 We'll have to have more in person tests in class 0:14:46.520 --> 0:14:47.000 with pen. 0:14:46.920 --> 0:14:48.240 And paper, Like I already do. 0:14:48.840 --> 0:14:50.840 But a lot of professors are going to that solution 0:14:51.600 --> 0:14:52.960 because we still think we have. 0:14:52.920 --> 0:14:54.640 Something to teach and they have something to learn. 0:14:55.400 --> 0:14:58.760 But I imagine AI will be used as a tool 0:14:58.800 --> 0:15:01.800 for efficiency. I'm not sure that's going to expand their brains. 0:15:01.800 --> 0:15:04.200 So people on my bias here, Professor Shower, come on, 0:15:04.560 --> 0:15:08.240 you can do perplexity and type in Andrew Jackson, or 0:15:08.240 --> 0:15:11.400 you can go read three volumes of the giant Roger Remedy, 0:15:11.480 --> 0:15:14.240 who was very very kind to me. Are you telling 0:15:14.280 --> 0:15:16.880 me AI someday is going to be a substitute for 0:15:17.000 --> 0:15:20.320 James McGregor Burns or Roger Remedy. 0:15:21.200 --> 0:15:24.480 You know, I think intellectually curious students want to learn, 0:15:24.880 --> 0:15:27.120 you know, And if AI has a limit, which I 0:15:27.120 --> 0:15:29.600 think at the moment it does, then I think they're 0:15:29.640 --> 0:15:32.120 going to Actually, they don't read full books anymore. 0:15:32.160 --> 0:15:33.520 Tom, I can tell you us. 0:15:33.840 --> 0:15:36.720 I assign pieces of books, or chapters of books, or 0:15:36.760 --> 0:15:38.960 sets of pages from books, but they don't read whole 0:15:38.960 --> 0:15:39.640 books anymore. 0:15:39.800 --> 0:15:42.560 That's life. You have to just sorverjust if you're a professor. 0:15:42.920 --> 0:15:45.520 But I think AI, in terms of these kids are 0:15:45.520 --> 0:15:48.360 worried about how they present the outside world job market 0:15:48.400 --> 0:15:51.160 got tighter. They're worried abou getting a job. They want 0:15:51.160 --> 0:15:54.080 to look better and present better. They're using it for 0:15:54.280 --> 0:15:57.960 that right now, not necessarily for entire intellectual content. 0:15:58.040 --> 0:15:59.920 Professor Sweety would like to wait in here. 0:16:00.080 --> 0:16:02.960 I'm glad I'm not in the educational process anymore. 0:16:03.400 --> 0:16:05.520 I agree strongly. Yeah, I agree. 0:16:05.600 --> 0:16:07.520 You and I were just like shaking our heads, and 0:16:07.600 --> 0:16:11.560 Tucker over there's fulminating, Professor Schiller. They got to read books. 0:16:11.720 --> 0:16:15.240 I mean, we're going to be different if we're not 0:16:15.400 --> 0:16:16.120 reading books. 0:16:17.160 --> 0:16:20.400 But social media has just completely decimated our attention span. 0:16:20.480 --> 0:16:23.000 That's true of adults as well as you know. And 0:16:23.040 --> 0:16:25.360 even audiobooks. I believe in audiobooks. 0:16:25.400 --> 0:16:26.960 I think they're a really important tool for a lot 0:16:26.960 --> 0:16:29.200 of people who really but you know, it's a different 0:16:29.200 --> 0:16:31.520 cognitive process to listen than it is to read. 0:16:32.200 --> 0:16:34.240 But you know, I have to go where they are 0:16:34.560 --> 0:16:36.840 or I'm out of the chop. So in that sense, 0:16:37.520 --> 0:16:38.920 you know, we have to not be obsolete. 0:16:39.000 --> 0:16:41.520 We don't want to be turned into obsolete figures of professor, 0:16:41.600 --> 0:16:43.040 So you have to go where they are. 0:16:43.360 --> 0:16:45.040 So now I just shortened. 0:16:44.600 --> 0:16:48.480 The readings, but I am asking them to take exams 0:16:48.520 --> 0:16:49.160 in class. 0:16:49.320 --> 0:16:50.600 So we'll see how that comes there. 0:16:50.680 --> 0:16:52.240 You go, are you giving? 0:16:52.360 --> 0:16:55.280 I got twenty seconds, so you're given out qualities sees here. 0:16:55.320 --> 0:16:56.640 I don't see great inflation. 0:16:56.800 --> 0:17:01.400 And for tre Schiller, reading is private. I don't talk 0:17:01.400 --> 0:17:03.400 about unknown to me. 0:17:03.560 --> 0:17:05.800 If you google me, if you're a listener's google me, 0:17:06.200 --> 0:17:08.560 you'll see that I rate my professor. I don't always 0:17:08.560 --> 0:17:12.160 get all the stars. 0:17:11.160 --> 0:17:11.920 A star list. 0:17:12.000 --> 0:17:15.879 Wendy Schiller think absolutely brilliant, folks, A window there in 0:17:15.960 --> 0:17:19.640 the Brown University, the excellence at Wendy Schiller. 0:17:20.040 --> 0:17:20.760 Stay with us. 0:17:21.000 --> 0:17:31.320 More from Bloomberg Surveillance coming up after this. 0:17:31.320 --> 0:17:35.240 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:17:35.240 --> 0:17:38.240 starting at seven am Eastern on Apple Corplay and Android 0:17:38.280 --> 0:17:41.320 Auto with the Bloomberg Business App. You can also listen 0:17:41.400 --> 0:17:44.680 live on Amazon Alexa from our flagship New York station. 0:17:45.200 --> 0:17:48.880 Just say Alexa Play Bloomberg eleven thirty Joining us right now. 0:17:48.920 --> 0:17:53.520 Kimberly LaPoint out of Wealth from Acquire Asset Management. Here 0:17:53.560 --> 0:17:57.439 on other things to do besides buy Nvidia. How do 0:17:57.520 --> 0:18:02.919 you buy infrastructure? Is there like stocks you buy or 0:18:02.960 --> 0:18:04.320 do you buy alternative? 0:18:04.520 --> 0:18:07.400 Yeah? I'm seeing people talk a lot about infrastructure. 0:18:07.840 --> 0:18:10.600 But an acquarie on a global basis, how do you 0:18:10.720 --> 0:18:14.040 actually affect an infrastructure purchase? 0:18:14.720 --> 0:18:17.159 Well, first, great to be here, thanks for having me. 0:18:17.520 --> 0:18:21.600 When we think about infrastructure at mcquari, we're primarily talking 0:18:21.640 --> 0:18:26.360 about private infrastructure, so things like privatizing airports, toll roads, 0:18:26.600 --> 0:18:29.800 the data centers, and the way you buy those investments 0:18:29.840 --> 0:18:32.480 at firm. At a firm like Mcquarie, we have deep 0:18:32.520 --> 0:18:35.719 teams of on the ground asset specialists that work closely 0:18:35.760 --> 0:18:40.040 with local government, with local governments, with local operating partners. 0:18:40.720 --> 0:18:43.680 Well, I just how do I buy a piece of LaGuardia. 0:18:44.480 --> 0:18:45.920 So there's a number of ways that you could buy 0:18:45.920 --> 0:18:46.920 a piece of LaGuardia. 0:18:47.160 --> 0:18:51.280 One is through working with firms like mcquarie and some 0:18:51.920 --> 0:18:55.240 of our peers that offer access to more and more 0:18:55.400 --> 0:18:58.720 high net worth individuals as well as wealth investors around 0:18:58.720 --> 0:19:02.640 the globe through the sties that they're bringing to market. So, 0:19:02.680 --> 0:19:07.200 for example, at Macquarie, we have been working to bring 0:19:07.280 --> 0:19:11.120 to wealth investors the same quality of investments, working and 0:19:11.320 --> 0:19:16.840 investing alongside our institutional portfolios that invest in things like airports, 0:19:16.880 --> 0:19:19.960 where we just took an additional stake in investing in 0:19:20.160 --> 0:19:24.840 two airports in the UK Bristol and Birmingham. 0:19:24.960 --> 0:19:30.520 Interesting, So just broadly define alternatives, how did they fit 0:19:30.560 --> 0:19:33.359 into what was the traditional sixty forty portfolio? What do 0:19:33.440 --> 0:19:36.399 you think the allocation to alternatives can be should be? 0:19:36.560 --> 0:19:36.960 Maybe? 0:19:37.440 --> 0:19:39.600 Yeah, I think that is a question, particularly when you 0:19:39.640 --> 0:19:42.520 think about wealth investors that everyone is asking you think 0:19:42.520 --> 0:19:46.440 about the traditional sixty forty portfolio. Particularly in today's environment, 0:19:46.520 --> 0:19:48.760 you're not gaining the benefits of a lot of diversification, 0:19:49.000 --> 0:19:50.080 particularly when you look at the. 0:19:50.000 --> 0:19:52.399 Correlation of the largest drivers of the S and P. 0:19:53.400 --> 0:19:56.280 One of the benefits of alternatives and infrastructure, and particularly 0:19:56.320 --> 0:20:00.879 infrastructure is the low correlation to public equity. It's about 0:20:01.240 --> 0:20:05.960 one point five correlations, so you naturally get the diversification benefits. 0:20:06.240 --> 0:20:10.520 Will you currently see around ten percent of wealth client 0:20:10.600 --> 0:20:15.280 portfolios in alternatives? Many are calling that number to reach 0:20:15.359 --> 0:20:16.800 up to twenty or twenty five percent. 0:20:16.840 --> 0:20:20.040 Okay, I get it. But like you mentioned, what was 0:20:20.080 --> 0:20:22.760 the airport in England? You have two airports in England. 0:20:22.560 --> 0:20:23.760 The Birmingham and Bristol. 0:20:23.840 --> 0:20:26.560 Okay, so I want to go long Birmingham aviation. 0:20:27.119 --> 0:20:29.639 Am I buying a piece of the airport with a 0:20:29.680 --> 0:20:32.600 predictable cash flow or is it just buying the debt 0:20:33.280 --> 0:20:34.280 that built the airport. 0:20:34.560 --> 0:20:37.159