WEBVTT - PCE Data Sets Stage for Fed Rate Cut 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.560 --> 0:00:12.440 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.520 --> 0:00:16.040 weekdays at ten am Eastern on applecar Play and Android 0:00:16.079 --> 0:00:18.840 Auto with the Bloomberg Business App. You can also listen 0:00:18.960 --> 0:00:22.080 live on Amazon Alexa from our flagship New York station, 0:00:22.440 --> 0:00:25.200 Just say Alexa Play Bloomberg eleven thirty. 0:00:26.760 --> 0:00:29.560 Well, Stock's climbing after the latest economic data show the 0:00:29.600 --> 0:00:31.960 economy is holding up while still leaving the door open 0:00:32.040 --> 0:00:35.120 for the Fed to cut rates a few times this year. 0:00:36.240 --> 0:00:39.599 Bonds a little change though on this data. Let's get 0:00:39.640 --> 0:00:42.880 to the story with Ira Jersey, Bloomberg Intelligence Chief US 0:00:43.520 --> 0:00:46.520 Interest rates strategists. He joins us from Princeton, New Jersey. 0:00:46.520 --> 0:00:50.440 This PCE data that we got Ira largely in line 0:00:50.720 --> 0:00:55.120 with expectations. Does it change any of the moves from 0:00:55.120 --> 0:00:58.720 the Federal Reserve come September and later this year? 0:00:59.360 --> 0:01:02.320 Well, I think it doesn't take fifty basis points off 0:01:02.360 --> 0:01:02.720 the table. 0:01:02.760 --> 0:01:04.080 But I think just given the. 0:01:04.720 --> 0:01:08.279 You know, whole mosaic of the data that this report 0:01:08.319 --> 0:01:11.600 gives us between income spending as well as the you know, 0:01:11.640 --> 0:01:15.000 two and a half is percent core PC and headline 0:01:15.000 --> 0:01:17.920 PC numbers on a year on year basis that it 0:01:18.360 --> 0:01:20.560 makes it. I think a fifty basis point cut as 0:01:20.600 --> 0:01:23.640 an initial cut a little bit less likely, particularly when 0:01:23.680 --> 0:01:25.920 you look at some of the spending data, because the 0:01:25.920 --> 0:01:29.720 spending data is suggesting that the consumer is still willing 0:01:29.760 --> 0:01:32.600 to spend. And you look at some of the sectors 0:01:32.640 --> 0:01:35.520 and I was just actually taking a look at services 0:01:35.560 --> 0:01:39.480 and durable goods and the like, and durable goods sales 0:01:39.520 --> 0:01:42.160 really plummeted last year, but those have come back and 0:01:42.840 --> 0:01:44.959 are still growing in around a four percent year on 0:01:45.040 --> 0:01:48.520 year growth rate. So you know, the consumer is still 0:01:48.560 --> 0:01:51.760 holding up the economy right now. And unless that changes meaningfully, 0:01:52.400 --> 0:01:55.400 I suspect that the Federal Reserve will will move cautiously, 0:01:55.440 --> 0:01:58.200 but I do expect that they'll that they'll cut interest rates, 0:01:58.200 --> 0:02:00.840 but maybe not one hundred basis points this year, maybe 0:02:00.880 --> 0:02:03.720 seventy five, which again isn't a massive change. But I 0:02:03.720 --> 0:02:06.440 think that this data, you know, points to a, you know, 0:02:06.480 --> 0:02:08.960 the soft landing being more probable than it was before 0:02:09.000 --> 0:02:09.400 we saw it. 0:02:09.520 --> 0:02:11.680 All right, I'm aways curious about in terms of Fed policy, 0:02:11.720 --> 0:02:14.040 twenty five basis points versus fifty Is it better to 0:02:14.120 --> 0:02:17.800 kind of spoon feed slowly when you're shifting in cycle. 0:02:17.840 --> 0:02:21.760 When monetary cycle is shifting, is it better for markets, investors, 0:02:21.800 --> 0:02:23.519 and the economy or is it better to kind of 0:02:23.560 --> 0:02:24.840 give it a jolt like fifty. 0:02:25.720 --> 0:02:28.760 Well, typically, you know, the Federal Reserve is cutting interest 0:02:28.800 --> 0:02:31.960 rates during some kind of crisis or massive downturn, or 0:02:32.000 --> 0:02:35.440 when there's some kind of exogynous shock that occurs to 0:02:35.760 --> 0:02:38.880 that that might make the economy really slip into recession 0:02:38.960 --> 0:02:42.040 very quickly. That is not this situation, right, So this 0:02:42.120 --> 0:02:45.200 is different than most other cycles that we've seen over 0:02:45.200 --> 0:02:48.880 the past forty years. And because of that, I think 0:02:48.919 --> 0:02:51.040 there's some people who say, oh, well, they'll cut fifty 0:02:51.080 --> 0:02:53.520 because they're behind the curve when you look at some data. 0:02:53.800 --> 0:02:56.280 But then you look at the data that we saw 0:02:56.360 --> 0:02:58.640 today from July, right, which is a first read on 0:02:58.960 --> 0:03:02.320 how third quarter GDP and the likeer shaping up, and 0:03:02.600 --> 0:03:05.560 it was decent. That not spectacular or anything, certainly not 0:03:05.639 --> 0:03:08.000 like it was a year or eighteen months ago, but 0:03:08.280 --> 0:03:12.840 definitely definitely a decent number. So so Carol, to your point, 0:03:13.200 --> 0:03:16.200 I think, you know, them going slow to start, and 0:03:16.240 --> 0:03:19.520 then if the economy does slow down more significantly, they 0:03:19.520 --> 0:03:20.040 can cut more. 0:03:20.120 --> 0:03:20.360 Later. 0:03:20.639 --> 0:03:22.679 I think that they'll be more cautious than not. And 0:03:22.960 --> 0:03:25.160 that's one of the ways that I differ from some 0:03:25.240 --> 0:03:27.400 of our colleagues over at Bloomberg Economics. 0:03:27.440 --> 0:03:30.200 But nonetheless, like the Federal Reserve is an easing mode. 0:03:30.240 --> 0:03:32.919 They're going to be easing inflation at two and a 0:03:32.960 --> 0:03:34.840 half percent. Core inflation at two and a half percent 0:03:34.920 --> 0:03:37.320 is close enough to their target that I think that 0:03:37.360 --> 0:03:40.720 they're comfortable, you know, to start easing monetary policy now. 0:03:40.800 --> 0:03:42.880 Well, just in the last eleven minutes, we got consumer 0:03:42.960 --> 0:03:46.000 sentiment data. It showed that it improved in August for 0:03:46.040 --> 0:03:48.720 the first time in five months. Slower inflation and prospects 0:03:48.760 --> 0:03:51.840 for the Fed interest rate cuts helped lift expectations about 0:03:51.840 --> 0:03:55.920 personal finances. IRA consumers expect prices are going to climb 0:03:55.920 --> 0:03:57.800 at an annual rate of two point eight percent over 0:03:57.840 --> 0:04:00.720 the next year, down from two point nine percent expected 0:04:00.800 --> 0:04:03.560 last month and the lowest since the end of twenty twenty. 0:04:03.880 --> 0:04:07.960 The data out Friday showed again good news for the Fed. 0:04:09.480 --> 0:04:12.920 Yeah, so certainly, you know, the Federal Reserve looks at 0:04:13.480 --> 0:04:17.400 expectations for inflation for as part of the as part 0:04:17.400 --> 0:04:19.760 of its analysis of what it needs to do with 0:04:19.760 --> 0:04:26.000 monetary policy, and certainly consumer expectations, like the Michigan Inflation Expectations. 0:04:25.360 --> 0:04:28.840 Component is one of those, along with along with the market. 0:04:28.920 --> 0:04:30.920 Now, yeah, you know when you look at the Tips 0:04:30.960 --> 0:04:32.920 market and we put out we put out a note 0:04:32.920 --> 0:04:37.520 about this last week, looking at the Tips market and 0:04:37.560 --> 0:04:40.640 what it's been pricing, and you know, it's pricing basically 0:04:40.640 --> 0:04:42.920 two percent inflation for the next decade. 0:04:43.240 --> 0:04:45.120 Now, tips haven't been. 0:04:45.560 --> 0:04:50.000 The greatest of indicators of and of where inflation is 0:04:50.040 --> 0:04:50.479 going to go. 0:04:50.560 --> 0:04:51.440 And in fact, if you. 0:04:51.440 --> 0:04:55.560 Had actually bought tips and tips break even so the 0:04:55.560 --> 0:04:59.400 inflation rate that the market expects back in twenty twenty one, 0:04:59.400 --> 0:05:01.280 when inflation started to go up, you would have made 0:05:01.279 --> 0:05:04.479 a killing because the inflation was meaningfully higher than what 0:05:04.560 --> 0:05:07.719 the market was pricing. But nonetheless, like at this point, 0:05:08.240 --> 0:05:12.600 you know, most inflation indicators forward inflation indicators are moderating somewhat. 0:05:12.600 --> 0:05:14.880 And because of that, I think it's another reason why 0:05:14.920 --> 0:05:18.279 the FED isn't concerned about a reacceleration of inflation at 0:05:18.320 --> 0:05:18.560 this point. 0:05:18.600 --> 0:05:20.040 All right, so check check. The Fed's got to fee 0:05:20.040 --> 0:05:22.800 pretty good about where inflation is. Dare I say goldilocks? 0:05:22.839 --> 0:05:25.000 But the one thing I am concerned about, and I 0:05:25.040 --> 0:05:27.560 know you watch it as well is the jobs market, 0:05:27.600 --> 0:05:29.480 and we get another read, of course the monthly report 0:05:30.000 --> 0:05:32.160 just about a week or so from now, or a 0:05:32.200 --> 0:05:34.280 week from now, I should say. Having said that, Tim 0:05:34.279 --> 0:05:37.200 and I have conversations with people saying that it's take 0:05:37.320 --> 0:05:39.520 that they're finding it's harder for people to find jobs, 0:05:39.600 --> 0:05:42.159 or they're getting a lot more job applications. Just twenty 0:05:42.200 --> 0:05:44.479 thirty seconds. Can Should we be a little worried about 0:05:44.480 --> 0:05:45.640 the job market real quickly? 0:05:45.839 --> 0:05:48.479 Yeah? I think so, And certainly the Fed has pivoted 0:05:48.520 --> 0:05:48.839 that way. 0:05:48.960 --> 0:05:52.039 Jay Powell was absolutely unequivocal about that last week. 0:05:52.080 --> 0:05:54.560 You know, a year ago we were only worried about inflation. 0:05:54.800 --> 0:05:57.680 Now the dual mandate is back in play, so any 0:05:57.720 --> 0:06:00.159 weakness in the job market will make the Fed Reserve 0:06:00.640 --> 0:06:04.320 worried that the economy slipping in therefore will cut interest rates. 0:06:05.200 --> 0:06:07.560 All right, Ira, thank you so much. Bloomberg Intelligence, Chief 0:06:07.680 --> 0:06:11.520 US interest rates strategist Ira Jersey joining us from Princeton, 0:06:11.640 --> 0:06:13.159 New Jersey. 0:06:13.600 --> 0:06:17.479 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:17.560 --> 0:06:20.360 weekdays at ten am Eastern on Affle Card playing then 0:06:20.400 --> 0:06:23.280 broud Otto with the Bloomberg Business app. Listen on demand 0:06:23.320 --> 0:06:27.640 wherever you get your podcasts or watch US live on YouTube. 0:06:28.960 --> 0:06:30.760 All right, back to Intel we go. We mentioned it, 0:06:30.760 --> 0:06:32.560 we talked about it with Carmen Rynegy. What's going on 0:06:32.640 --> 0:06:34.680 with the stock. It's up more than seven percent in 0:06:34.720 --> 0:06:37.080 today's session. It's a top gainer in the S and 0:06:37.120 --> 0:06:39.320 P and the Nasdaq one hundred. So let's talk about 0:06:39.320 --> 0:06:41.200 the news that really we thought it was gonna be 0:06:41.200 --> 0:06:43.800 a sleepy Friday, not even close. So with us is 0:06:43.880 --> 0:06:47.400 Ryan Gouldi's Bloomberg deal's reporter on Intel weighing a bunch 0:06:47.400 --> 0:06:51.080 of options, so Bloomberg exclusive. Kudos to you guys. So 0:06:51.480 --> 0:06:53.120 talk a little bit more about what they're considering and 0:06:53.160 --> 0:06:55.640 what this means. Is this good thing, bad thing, or 0:06:55.720 --> 0:06:56.520 we still don't. 0:06:56.279 --> 0:06:59.119 Know, Carol, I think it's the biggest story in tech 0:07:00.080 --> 0:07:01.800 right now. I think if you look across the board 0:07:01.800 --> 0:07:03.520 and you've seen the reaction today with the stock, I 0:07:03.520 --> 0:07:06.440 think Intel's obviously our semiconductors in general arep I think 0:07:06.600 --> 0:07:09.720 Broadcom was almost up four percent. This is a name 0:07:09.760 --> 0:07:13.480 that is being closely watched. There was there's been some commentary, 0:07:13.520 --> 0:07:15.760 you know, and as we've been speaking to sources around 0:07:15.800 --> 0:07:18.640 this idea that Intel is too big to fail, you know, 0:07:18.720 --> 0:07:20.400 getting back to you know, what happened in our way. 0:07:20.440 --> 0:07:22.320 This is kind of like this is almost getting to 0:07:22.360 --> 0:07:26.080 that territory. This is a big name for sort of 0:07:26.160 --> 0:07:29.760 national security almost but the United States, Intel itself accounts 0:07:29.760 --> 0:07:32.240 for forty one percent of US three hundred milimeter away 0:07:32.280 --> 0:07:34.640 for production. So you know, this is a name that 0:07:34.720 --> 0:07:36.600 you know, really is meaning we. 0:07:36.560 --> 0:07:38.720 Need Intel to be a healthy company, and we need 0:07:38.720 --> 0:07:40.760 a domestic, massive semi company. 0:07:40.840 --> 0:07:43.320 Indeed, indeed, and I think that is that's what's at 0:07:43.360 --> 0:07:44.840 the top of all of this. And so the pressure 0:07:44.880 --> 0:07:47.480 on on Gelsinger is enormous. 0:07:47.000 --> 0:07:49.440 But it's a lot less massive than it's been in 0:07:49.480 --> 0:07:52.680 the past at this point, especially after this year's stock decline. 0:07:52.720 --> 0:07:55.480 So Ryan, let's talk a little bit about what the 0:07:55.480 --> 0:07:58.560 options are from and again, the bank is working with 0:07:58.880 --> 0:08:01.200 the companies, working with banks like Morgan Stanley and Goldman Sachs. 0:08:01.200 --> 0:08:02.920 What are the options that these banks are laying out 0:08:02.920 --> 0:08:03.480 for the company. 0:08:03.560 --> 0:08:05.040 Yeah, And I think just at the top, I think 0:08:05.080 --> 0:08:07.520 it's it's it's good for us to note that Goldman 0:08:07.600 --> 0:08:09.960 and Morgan Stanley have been Intel's advisors for a long time. 0:08:10.040 --> 0:08:12.120 They took the company, you know, they've been around. They've 0:08:12.120 --> 0:08:13.680 been around the block, they know, they know a lot. 0:08:13.600 --> 0:08:14.920 Long relationship know the company. 0:08:14.960 --> 0:08:16.520 Yeah, exactly, And I think some of the things that 0:08:16.520 --> 0:08:19.040 they're talking about with Gelsinger on the board would include 0:08:19.080 --> 0:08:22.320 things such as a split of Foundry and the product 0:08:22.320 --> 0:08:23.000 design unit. 0:08:23.520 --> 0:08:26.160 That's a hue that would be meaning separate companies. 0:08:26.040 --> 0:08:28.360 A separation. Yeah, so going run it could be it 0:08:28.360 --> 0:08:29.400 could end up being a spin off. 0:08:29.480 --> 0:08:30.679 Why is that a good idea? 0:08:31.320 --> 0:08:33.560 I think because I think you know, Intel has found 0:08:33.960 --> 0:08:36.840 the scene pressure in recent weeks and months around this 0:08:36.920 --> 0:08:39.800 idea that the turnaround, the costs required for the turnaround 0:08:39.840 --> 0:08:43.240 in and around manufacturing itself of the actual chips is costly. 0:08:44.240 --> 0:08:46.800 One fab that they're taking money four tickets with twenty 0:08:46.800 --> 0:08:48.679 billion dollars to build. 0:08:48.960 --> 0:08:50.440 I gotta tell you, I'm just you know, you say 0:08:50.440 --> 0:08:52.480 too big to fail in the context of companies that 0:08:52.520 --> 0:08:55.120 we've talked about recently. Boeing is a company that has 0:08:55.120 --> 0:08:57.480 been talked about as being too big to fail. Instead 0:08:57.480 --> 0:09:01.400 of spinning off, they're consolidating bring back Spirit Aerosystems, a 0:09:01.400 --> 0:09:04.680 company they spun off twenty something years ago. It just 0:09:04.720 --> 0:09:09.000 seems like would these moves fundamentally change the fate of 0:09:09.080 --> 0:09:12.360 Intel or are they Is it financial engineering? 0:09:13.000 --> 0:09:15.280 I think it would because you'd essentially be looking at 0:09:15.520 --> 0:09:17.720 with a split of foundry, you'd essentially be looking at 0:09:17.720 --> 0:09:20.200 the company that's only focused on the product design, which 0:09:20.240 --> 0:09:22.080 i e. The chips that it might you might find 0:09:22.080 --> 0:09:24.160 an Adel computer or in Lenovo computer. 0:09:25.160 --> 0:09:27.559 So they wanted to be more like a TSMC right 0:09:27.640 --> 0:09:28.360 making chips. 0:09:29.040 --> 0:09:31.600 That was key to Gelsinger's view is that they wanted 0:09:31.600 --> 0:09:35.880 to rival TSMC. That so far, investors on convinced Intel 0:09:36.040 --> 0:09:40.520 is still the only customer of Intel's boundary business right, 0:09:40.559 --> 0:09:43.319 which you know, the challenge so far has been how 0:09:43.320 --> 0:09:45.160 can we get chips out the door at at fast 0:09:45.240 --> 0:09:47.679 enough rate? But other customers that aren't us. 0:09:47.760 --> 0:09:50.360 So if they do that, what's left in terms of 0:09:50.360 --> 0:09:53.200 Intel their secret sauce or their chips that they are making. 0:09:53.320 --> 0:09:54.880 You know, it's interesting in a week where we focus 0:09:54.920 --> 0:09:57.079 so much on Nvidia, is that enough of a business? 0:09:57.160 --> 0:09:59.080 Is that a better business? I understand it'll be more 0:09:59.080 --> 0:10:01.520 of a pure play all the costs of building up 0:10:01.520 --> 0:10:03.680 foundry thirty seconds here? Is that enough of a bit? 0:10:03.679 --> 0:10:05.760 It is because you'd essentially be looking at something that 0:10:05.840 --> 0:10:07.840 you know, where they've lost ground to the likes of 0:10:07.840 --> 0:10:10.960 AMD and around GPUs and CPUs. They could focus more 0:10:10.960 --> 0:10:12.960 time on the data cent to serve a type area 0:10:13.040 --> 0:10:13.800 well investors. 0:10:13.960 --> 0:10:16.360 That's huge investors are buying in today. Intel shares are 0:10:16.400 --> 0:10:18.360 up about seven percent as we speak, but let's not 0:10:18.400 --> 0:10:20.120 talk about where they are here today, because they're down 0:10:20.200 --> 0:10:22.800 a lot. Ryan Gould, thank you so much. Deal's reporter. 0:10:22.880 --> 0:10:26.000 Bloomberg News a Bloomberg exclusive. Read all the deals. Just 0:10:26.040 --> 0:10:27.760 head to Bloomberg dot com or check it out on 0:10:27.800 --> 0:10:28.680 the Bloomberg terminal. 0:10:30.160 --> 0:10:34.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:34.120 --> 0:10:38.040 weekdays at ten am Eastern on Applecarplay and Android Auto 0:10:38.080 --> 0:10:40.839 with the Bloomberg Business app. You can also listen live 0:10:40.920 --> 0:10:44.120 on Amazon Alexa from our flagship New York station. Just 0:10:44.160 --> 0:10:46.760 say Alexa play Bloomberg eleven thirty. 0:10:48.440 --> 0:10:50.360 All right, we'll talk a little bit more about what's 0:10:50.360 --> 0:10:53.000 going on in the markets. Fed expectations, because it does 0:10:53.040 --> 0:10:57.880 feel like the inflation report, the preferred inflation gauge of 0:10:57.920 --> 0:11:00.600 the US Central Bank, you know, coming in we're still 0:11:00.600 --> 0:11:05.520 seeing consumers spending, inflation cooling. It does feel like Jay 0:11:05.559 --> 0:11:08.080 Pal's got to feel pretty good going into this Labor Day, weekend. 0:11:08.240 --> 0:11:11.320 Somebody who watches this stuff so closely, the macro and 0:11:11.400 --> 0:11:14.200 the micro's Ben Emmons, founder and chief investment officer at 0:11:14.240 --> 0:11:17.680 fed Watch Advisors. He joins us from Washington, DC. Ben, 0:11:17.720 --> 0:11:21.000 I think you write more than some journalists. I know, 0:11:22.640 --> 0:11:25.120 how much of your day do you spend writing? 0:11:26.320 --> 0:11:28.559 I think probably a good eighty percent of my day 0:11:28.600 --> 0:11:33.200 on that. It's just like I'm addicted writer. I think, 0:11:33.440 --> 0:11:36.560 you know, I listened to you and Carol and John 0:11:36.600 --> 0:11:38.800 and other people, and that actually is always a really 0:11:38.840 --> 0:11:43.120 good inspiration for writing. Obviously checking numbers and markets and yeah, 0:11:43.720 --> 0:11:47.719 it's just enjoyed doing it. So it's always focused on analysis, right, 0:11:47.760 --> 0:11:50.480 It's always focused on trying to come up with another 0:11:50.520 --> 0:11:53.200 angle to this story like what we're looking at now 0:11:53.200 --> 0:11:55.280 at PCEE, and try to drill in and trying to 0:11:55.280 --> 0:11:58.160 come up with with practical ideas about it and then 0:11:58.400 --> 0:12:01.880 obviously extrapolating that to what I do now. I've decided 0:12:01.920 --> 0:12:04.120 to do the set of mown firm and really focus 0:12:04.200 --> 0:12:06.920 on FET watching and making that more like an investment 0:12:07.000 --> 0:12:11.120 firm around FET watching and apply that writing. And as 0:12:11.160 --> 0:12:13.680 the last point there, I want to say this, you know, 0:12:14.000 --> 0:12:15.840 as you know, I used to work for Bill gross 0:12:15.840 --> 0:12:18.720 A Binco for for many years. He taught me. Actually 0:12:18.720 --> 0:12:20.280 this he did that himself through This is one of 0:12:20.320 --> 0:12:23.920 the most prolific writers too. Tell you write out your thoughts. 0:12:24.400 --> 0:12:27.360 Is that gives you really the sort of your say, 0:12:27.400 --> 0:12:29.160 compass to navigate these markets. 0:12:29.520 --> 0:12:32.600 I do think that there's something really healthy and also, 0:12:33.040 --> 0:12:36.160 like we joke about putting your phone down or you know, 0:12:36.200 --> 0:12:38.880 sitting and writing something and just walking away from the 0:12:38.960 --> 0:12:41.720 day to day barrage or minute by minute barrage of 0:12:42.200 --> 0:12:45.360 headlines and statistics to try and just kind of think 0:12:45.400 --> 0:12:47.480 about where we are in a sane way. 0:12:47.679 --> 0:12:50.680 Well, Ben, there's a synthesis that happens when you sit 0:12:50.720 --> 0:12:53.760 down to write about something. I learned this in high school. 0:12:53.800 --> 0:12:55.360 I think one of my teachers said, you don't really 0:12:55.360 --> 0:12:57.920 know something unless you can explain it or you can 0:12:57.920 --> 0:12:59.800 write about it. Ben, And that's what that's what you 0:12:59.840 --> 0:13:01.920 do with your notes, and that's certainly why I appreciate 0:13:01.920 --> 0:13:05.120 getting them pretty much every day. Just to give you 0:13:05.160 --> 0:13:07.720 an idea of the types of notes that that Ben's written. Recently, 0:13:07.720 --> 0:13:09.760 he's written about the data center surge. He's written about 0:13:09.800 --> 0:13:12.480 Nvidia's economic impact and I know he's listening to our 0:13:12.520 --> 0:13:16.160 show because he forwarded me the Nvidia Economic impact note 0:13:16.360 --> 0:13:19.160 after we were talking about in Nvidia's economic impact on 0:13:19.200 --> 0:13:21.160 our program a couple of days ago, the uncertainty when 0:13:21.160 --> 0:13:23.520 it comes to IPO's reflation when it comes to shipping, 0:13:24.040 --> 0:13:26.600 and of course everything happening last week at Jackson Hole. 0:13:26.800 --> 0:13:29.640 Yeah, exactly. So let's start with Nvidia because it has 0:13:29.679 --> 0:13:32.120 been We even kick off our weekend show saying, listen, folks, 0:13:32.120 --> 0:13:34.080 there was one story pretty much this week, and that 0:13:34.200 --> 0:13:37.920 was Nvidia's earnings. How do you extrapolate that out not 0:13:37.960 --> 0:13:41.120 only to what it means for Nvidia specifically, but the 0:13:41.160 --> 0:13:45.280 AI race, the AAI build out, and what it maybe 0:13:45.280 --> 0:13:48.640 says more broadly about CAPEX spending and I don't know, 0:13:48.800 --> 0:13:51.000 and what it means for financial markets when that big, 0:13:51.080 --> 0:13:53.160 you know, tech trade means so much. 0:13:54.640 --> 0:13:55.400 That's right, Carol. 0:13:55.440 --> 0:13:57.400 I think that you know, the Wall Street Journal and 0:13:57.480 --> 0:13:59.840 a nice graph and that's showing all his TEX spending 0:14:00.080 --> 0:14:04.120 projection of it. And it's all based on the video, Lily, 0:14:04.160 --> 0:14:07.439 on expectations on how the video will perform from here, 0:14:07.840 --> 0:14:11.280 because they have the monopoly on those GPUs and chips 0:14:11.280 --> 0:14:15.000 and Blackwell and all the things that they that they create, 0:14:15.520 --> 0:14:19.080 and yet as they create those those chips, as we 0:14:19.160 --> 0:14:21.120 now know, there's on the on the ground all these 0:14:21.200 --> 0:14:23.480 data centers being set up across the country. And that 0:14:23.680 --> 0:14:25.640 was one of the graphs I put in the note 0:14:25.680 --> 0:14:28.880 of those bubbles out there, and that's not just a 0:14:29.000 --> 0:14:31.520 data center that I guess I haven't. I want to 0:14:31.560 --> 0:14:33.960 visit one of those, actually because it's kind of interesting, 0:14:34.360 --> 0:14:36.920 new new concept. But there's a lot of people that 0:14:37.000 --> 0:14:39.040 start working there. There's a lot of surfaces that happen 0:14:39.120 --> 0:14:42.360 around these data centers. So the VIDIA has become a 0:14:42.480 --> 0:14:47.000 major macroeconomic force in my view, where you could talk 0:14:47.000 --> 0:14:50.440 about the stock and the multiple and earnings projections and 0:14:50.480 --> 0:14:52.880 all those things that and everybody in the bronment had 0:14:52.920 --> 0:14:56.200 and was very excited about that. But me as a 0:14:56.200 --> 0:14:58.480 as an economist fabwatch, I think of it, this is 0:14:58.480 --> 0:15:01.760 a company that's become very powerful for the economy that 0:15:01.800 --> 0:15:05.800 if its performance were to change and the expectations about 0:15:06.080 --> 0:15:09.120 is growth changes, that it could have an impact on 0:15:09.440 --> 0:15:12.920 the economy in itself. It's like Boeing with its impact 0:15:12.960 --> 0:15:15.360 on the supply chain, and people have calculated that it's 0:15:15.400 --> 0:15:17.960 worked up to half a percent of GDP. I think 0:15:18.000 --> 0:15:20.760 in the video it could be actually more more impactful level. 0:15:21.120 --> 0:15:23.240 I think about that those data centers that are the 0:15:23.280 --> 0:15:25.720 big build out right, and do we all of a sudden, 0:15:25.720 --> 0:15:28.840 maybe in a year or two, are they not actually operating? 0:15:28.920 --> 0:15:32.960 Are they a little quiet because maybe the reality doesn't 0:15:32.960 --> 0:15:36.440 live up to the expectation. So so that's certainly top 0:15:36.480 --> 0:15:38.440 of mind. The other thing is we gotta talk, we 0:15:38.520 --> 0:15:39.480 gotta talk politics. 0:15:39.560 --> 0:15:41.480 Yeah, you know, I don't. I don't see a recent 0:15:41.520 --> 0:15:43.280 note Ben that you have about this. You had something 0:15:43.280 --> 0:15:44.600 about Harris a couple of weeks ago. 0:15:44.680 --> 0:15:45.080 It's coming. 0:15:45.120 --> 0:15:47.160 Okay, Well here's what here's what I want to let's 0:15:47.160 --> 0:15:50.480 get a little preview from you on this because Bloomberg 0:15:50.520 --> 0:15:53.760 News Morning Console poll came out late yesterday shows that 0:15:54.000 --> 0:15:56.840 uh Kamala Harris has sustained the burst of momentum she 0:15:56.960 --> 0:16:00.320 brought to the presidential contest. She's leading or tied with 0:16:00.400 --> 0:16:03.840 Donald Trump in each of the seven swing states most 0:16:03.920 --> 0:16:07.640 likely to decide the race. How do you think about 0:16:07.800 --> 0:16:12.200 economic policies under a president Harris versus the President Trump. 0:16:13.640 --> 0:16:15.760 Yeah, the first thing you think of is that, Okay, 0:16:15.840 --> 0:16:19.360 she just extends what we've been doing so far with Biden. 0:16:19.440 --> 0:16:21.680 And yes, the Infrastructure Act in the Chips Act will 0:16:21.680 --> 0:16:24.400 not be disrupted, right, which is I think back to 0:16:24.440 --> 0:16:28.360 the Navideo story an important aspect because they have been 0:16:28.480 --> 0:16:33.680 slow down in some of these chips activities recently, meaning 0:16:34.200 --> 0:16:37.000 there's a lot of semiconductor investment that's happening in the States, 0:16:37.000 --> 0:16:39.440 but some of these projects have been put off. The 0:16:39.440 --> 0:16:42.080 Financial Times report on that, so that's key. I think 0:16:42.640 --> 0:16:44.800 we go from an economic policy point of view. 0:16:45.160 --> 0:16:47.359 Then of course everybody looks at the Federal Reserve. 0:16:47.120 --> 0:16:49.280 And it's independence. You will not rail against that. I 0:16:49.320 --> 0:16:52.760 think for the broad markets that probably matters not as much. 0:16:52.840 --> 0:16:56.440 It's more about then further down, about how are you 0:16:56.480 --> 0:16:59.000 going to go after people with higher taxes? 0:16:59.080 --> 0:16:59.200 Right? 0:16:59.240 --> 0:17:02.480 Are you really going to increase capital gains taxes and 0:17:02.520 --> 0:17:05.920 wealth taxes and that sort of discussion. And I think 0:17:06.000 --> 0:17:09.840 lastly it's really about her own agenda in terms of 0:17:09.880 --> 0:17:13.080 like how she's shaping it. We're getting some contours of it. 0:17:13.160 --> 0:17:16.320 She does seem to be in favor of fracking, for example, 0:17:16.400 --> 0:17:19.720 which matters to energy supply, and you know she is 0:17:19.760 --> 0:17:22.560 going to address the border, which could you know, affect 0:17:22.560 --> 0:17:25.399 immigration flows, right, So I think, if you think all 0:17:25.440 --> 0:17:29.560 those things, her agenda is extension of Buyden, but it 0:17:29.640 --> 0:17:32.280 is her own agenda. But the most important thing for 0:17:32.320 --> 0:17:34.439 me at least is I think that if there's no 0:17:34.520 --> 0:17:37.840 disruption in what the Infrastructure Act and chips actually doing 0:17:38.240 --> 0:17:41.120 to the economy, that will matter a lot, because that's 0:17:41.160 --> 0:17:43.560 really been a big drive I think for economic performances 0:17:43.560 --> 0:17:44.240 of the past year. 0:17:44.320 --> 0:17:46.919 Listen, I think about tim the conversation we had on 0:17:46.920 --> 0:17:52.160 Bloomberg Business Week with the Windham Hotels CEO, who said 0:17:52.440 --> 0:17:56.359 some of their development, especially for extended stay hotels, was 0:17:56.400 --> 0:18:00.480 specifically tied to some of the congressional spending plans that 0:18:00.520 --> 0:18:03.120 have come from the Body administration. In other words, whether 0:18:03.119 --> 0:18:06.080 it's infrastructure or so and so forth, that places are 0:18:06.160 --> 0:18:10.280 building out, companies are building out throughout the nation. 0:18:10.600 --> 0:18:12.840 Texas joined us from Frisco Texas. Yeah, you're talking about 0:18:12.840 --> 0:18:14.480 Geff Bilotti, who was on with us last week or 0:18:14.480 --> 0:18:15.960 the week before, right, So what. 0:18:15.840 --> 0:18:20.879 You say in terms of these plans, whether it's data centers, AI, 0:18:21.080 --> 0:18:25.040 whether it's climate change, renewable energy, these spending plans are 0:18:25.119 --> 0:18:27.840 certainly key in terms of economic growth and keeping kind 0:18:27.880 --> 0:18:31.040 of the engine going. Having said that What is the 0:18:31.080 --> 0:18:35.720 one political policy, whether it's Donald Trump or Kamala Harris 0:18:36.080 --> 0:18:38.879 in the White House come November that you think is 0:18:38.880 --> 0:18:42.679 going to be very important to keeping the economy in 0:18:42.720 --> 0:18:44.199 a good place here in the US And just have 0:18:44.200 --> 0:18:45.520 about forty seconds. 0:18:46.400 --> 0:18:49.680 Yeah, it would be the debt seating negotiation and how 0:18:49.760 --> 0:18:53.399 fiscal policy will be shaped into twenty twenty five, because 0:18:53.440 --> 0:18:56.040 remember that that's the negotiation. Last year had a one 0:18:56.119 --> 0:19:01.840 percent secretation attached as part of the negotiation. Will that secrestration, 0:19:02.119 --> 0:19:05.040 which is a spending gap, will that be like what 0:19:05.119 --> 0:19:07.480