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Speaker 2: Time to frame things up, we do that from the
Speaker 2: physicists from Morgan Stanley. James Karen joins us this morning
Speaker 2: on price down, yield up, Jim Karen's CIO process of solutions.
Speaker 2: Morgan Stanley is the bond move over. Jim, do you
Speaker 2: acquire bonds, notes, and bills today looking for a lower
Speaker 2: yield a higher price?
Speaker 3: Good morning, Tom.
Speaker 4: I think currently right now in the markets, I think
Speaker 4: bond yields have entered into a zone where they're probably
Speaker 4: gonna it's probably gonna.
Speaker 3: Be relatively sticky.
Speaker 4: I don't see that inflation is going to come down dramatically,
Speaker 4: at least over the near term. Could there have been
Speaker 4: some you know, stress higher of a release in bond
Speaker 4: yields higher? Yeah, you know that certainly happened. I don't
Speaker 4: think that we're necessarily going to get that either. But
Speaker 4: in order for bond yields to come down, we'd really
Speaker 4: start to need to see the disinflationary pressures of lower
Speaker 4: oil prices. Now today's are going to start, but we'd
Speaker 4: have to stay at these low oil prices, and they'd
Speaker 4: have to even decline further for bond yields to meaningfully
Speaker 4: move down and stay lower.
Speaker 2: Talk to me about the partial differentials, the dynamics of
Speaker 2: equities and bonds wrapped around a conventional sixty forty split.
Speaker 2: Describe those dynamics right now, given the chaos of news
Speaker 2: slow we have.
Speaker 4: Yeah, this is this is probably the most topical thing
Speaker 4: that's out there, at least something I focus on quite
Speaker 4: a bit, because essentially we are in a higher nominal
Speaker 4: growth world with above tar get inflation, which is not
Speaker 4: necessarily bond friendly. So that what that means is that
Speaker 4: if you're using fixed incompassively to hedge your equities, you
Speaker 4: may be disappointed, meaning that we're just not in a
Speaker 4: lower trending world of lower interest rates where bond returns
Speaker 4: just perpetually move higher steadily year after year. So when
Speaker 4: we think about bonds hedging equities today, we have to
Speaker 4: say we have to recognize that the correlation of returns
Speaker 4: between fixed income and equities is as high as it's
Speaker 4: been in the past one hundred and years. What that
Speaker 4: means is that bonds today are not a very good
Speaker 4: hedge to equities if you but if you use your
Speaker 4: bonds efficiently and you think about Carrie, and you think
Speaker 4: about spread, and you think about credit, then you can
Speaker 4: use your bonds as a source of alpha and a
Speaker 4: hedge against your against your equities. So there is a
Speaker 4: place for it, but it's not as traditional as it was.
Speaker 2: And what's great about Jim caaren Folks is all that complexity.
Speaker 2: He actually puts it into English, which is a gift to
Speaker 2: say the least. So if you're not hedging traditionally sixty forty,
Speaker 2: where's your equity hedge?
Speaker 4: So it really becomes a question of how you diversify
Speaker 4: across the equity market. So clearly you want to have
Speaker 4: some growth, you want to have some value. You also
Speaker 4: want to have some high quality and defensives mixed in
Speaker 4: there too. The reality though, is that you can still
Speaker 4: use bonds as a hedge, but you should have less
Speaker 4: than index duration in your bond portfolio. So I think
Speaker 4: I think that most people are making is that they
Speaker 4: say that their neutral allocation of fixed income is just
Speaker 4: to be neutral the index and just to have the
Speaker 4: same duration as the index. I would argue that having
Speaker 4: about a year's less one year less of duration in
Speaker 4: your fixingcome portfolio would do a better job at hedging
Speaker 4: your overall your overall equity exposure.
Speaker 5: Jim latest Offspring is doing his semester broad in Japan.
Speaker 6: So now Japan is all over my social media feed
Speaker 6: for some reason. You like Japan.
Speaker 3: Why do you like Japan? I?
Speaker 4: Yeah, so this is structurally one of our top picks,
Speaker 4: you know, in our in our ascid allocation and in
Speaker 4: our portfolios. So Japan is you know, we've left the
Speaker 4: zero lower bound rate in Japan. Japan has some inflation,
Speaker 4: They have a lot of fiscal stimulus coming through. This
Speaker 4: is a really really big push from not just this administration,
Speaker 4: not just from Takeiichi, but also from previous administrations. So
Speaker 4: this movement towards higher fiscal stimulus, a higher fiscal impulse,
Speaker 4: better corporate governance. Uh, you know, shareholder returns. There's a
Speaker 4: lot more caring about the equity investor.
Speaker 2: Within within Japan.
Speaker 4: That makes it much more viable for investors, and Japanese
Speaker 4: equities have done extremely well over the past few years.
Speaker 2: Now.
Speaker 4: The issue with Japan though, in your portfolio, and everybody
Speaker 4: needs to take note of this, is that it is
Speaker 4: a very volatile market. It a five percent move in
Speaker 4: Japan and Japanese equities and why day is not a
Speaker 4: big deal.
Speaker 3: I mean that happens quite a bit.
Speaker 4: So you have to right side in your portfolio. So
Speaker 4: it's a good investment, but you have to have the
Speaker 4: right size and be mindful of that and be mindful
Speaker 4: of that volatility.
Speaker 5: All right, I'll go with you in Japan, but I
Speaker 5: was there. I lived there in eighty seven eighty eight.
Speaker 5: Then you couldn't buy.
Speaker 6: A story on Japan for the next thirty years. But
Speaker 6: I guess it's back.
Speaker 3: How about Europe.
Speaker 5: Europe seems to be filling the brunt tier of some
Speaker 5: of the disruption we're seeing coming out of Iran.
Speaker 6: With just raw materials. What's the thought there in Europe?
Speaker 4: Yeah, so from our perspective, we are underweight Europe. We're
Speaker 4: more cautious. And the reason is is, as you mentioned,
Speaker 4: higher energy prices, some fiscal strains that are coming through
Speaker 4: on the European side. I think it's going to be
Speaker 4: a head win. So I mean, just look at the
Speaker 4: FED versus the ECB. The ECB is very aggressive about
Speaker 4: telling you that they're probably going to high grates in June,
Speaker 4: whereas the FED is more likely to be on hold
Speaker 4: for an extended period of time.
Speaker 3: So there were just elements here.
Speaker 4: And the reason is is because inflation cuts deeper in
Speaker 4: Europe than it does actually in the US. And the
Speaker 4: reason for that is because European economies are more structurally
Speaker 4: rigid and they can't necessarily adjust to inflation very well.
Speaker 4: In fact, the investor class in Europe is mainly a
Speaker 4: fixed income investor class, whereas the investor class US is
Speaker 4: mainly in equity investor class. So higher inflation, we all
Speaker 4: know what that does to bond returns, so that in
Speaker 4: terms of your wealth effect, you know, it can be
Speaker 4: much more detrimental in Europe than in the US. So
Speaker 4: a lot of the fiscal stimulus that was supposed to
Speaker 4: be coming through in Europe is now really becoming more
Speaker 4: support to try to you know, hold up the you know,
Speaker 4: to hold up the broader economy. So we are a
Speaker 4: little bit more cautious. We're not abandoning Europe. I mean,
Speaker 4: we still think that there's a lot of positives, but
Speaker 4: for right now we think that the investments better in
Speaker 4: the US in Japan.
Speaker 2: Shoe Karen, thank you so much. Always with Margen Stanley
Speaker 2: and investment.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: And well, what's great about this is Windin and I
Speaker 2: haven't had a driver's license since time began, like teen
Speaker 2: years ago. He's Chief Economists Bank of nwsaw Windin this
Speaker 2: morning as well. When the financial stability of the EMS system,
Speaker 2: it's like a Bill Lee question when he was, you know,
Speaker 2: at milking. You know, what does the financial system EM
Speaker 2: look given the shocks of this war.
Speaker 7: Well, you have so have and have nots as always right,
Speaker 7: So the the first of all again, thanks for having me.
Speaker 7: It's voice a pleasure to be with you guys. The
Speaker 7: energie exports are doing okay. The energy importers and sort
Speaker 7: of the frontier countries are not. So it's we have
Speaker 7: to go back to how this oil shock, how much
Speaker 7: longer it lasts.
Speaker 3: We'll see how this rolls out.
Speaker 7: I think I've talked about some million times, but I
Speaker 7: think we are in what the IMF calls the adverse scenario,
Speaker 7: and that's when things get.
Speaker 3: A little dice.
Speaker 7: You get slower global growth, higher inflation, merging markets or
Speaker 7: some You have Columbia, Sri Lanka, Pakistan and Philippine central
Speaker 7: banks already high rates to defend the currencies and to
Speaker 7: sort of tamp down inflation. So it's going to be
Speaker 7: a i'd say stressful time ahead. I don't see any big,
Speaker 7: huge blow ups, but it's going to be very challenging
Speaker 7: for merging markets.
Speaker 5: I think it's gonna be pretty challenging for our new
Speaker 5: FED chairman, mister Walsh. I mean, coming in presumably he's
Speaker 5: got feel some pressure to lower rates, yet the data
Speaker 5: doesn't seem to support that at all.
Speaker 7: No, it's you're absolutely right, Paul. He's inheriting a very
Speaker 7: different situation than he saw I think six months even
Speaker 7: three months ago. So he's one of twelve people on FMC.
Speaker 7: His job is chairs to cajole and to discuss and corral.
Speaker 3: But there is a huge.
Speaker 7: Contingent of hawks right now on the FED. So I
Speaker 7: think right now, well, it's the Fed is on hole
Speaker 7: for the foreseeable future until these rates the inflation comes down.
Speaker 7: But the market's pricing fifty base points of tightening over
Speaker 7: the next twelve months, which seems litt aggressive.
Speaker 3: But let's see how the data comes on.
Speaker 6: How sticky do you think this inflation is going to be?
Speaker 5: Is if like if we have some agreement today, which
Speaker 5: could certainly happen given the actors here.
Speaker 3: Oil comes back down? Is that it?
Speaker 6: Or do we have something underneath that.
Speaker 3: I do feel there's some lingering effects.
Speaker 7: I think if you listen to the oil industry experts,
Speaker 7: you know, the sort of normal production isn't really going
Speaker 7: to come back in the Gulf for any three to
Speaker 7: six months, may even longer. We're talking about all the
Speaker 7: backlogs as well as the destruction of the infrastructure there, so.
Speaker 3: It's going to take a while.
Speaker 7: And obviously oil prices have a huge had a huge
Speaker 7: risk premium, and that's what's coming down.
Speaker 3: We don't I don't think anyone has a feel be.
Speaker 7: Where the sort of the fair value is given all
Speaker 7: the destruction we've seen in the oil sector.
Speaker 3: It's a risk.
Speaker 5: Yeah, I don't know, we say that, but this is
Speaker 5: US consumer. You cannot keep this consumer down.
Speaker 6: What do you make of the US consumer?
Speaker 3: So I'm starting to see some cracks.
Speaker 7: If you look at the real numbers, you know, the
Speaker 7: nominal numbers look great because if you look at the
Speaker 7: retail sales, the personal spending, the headlines are all nominal.
Speaker 7: So remember we're in a high inflation environment. If you
Speaker 7: can dig deeper the real it's the real spending, the
Speaker 7: real consumptions. A little bit on the soft side, we'll
Speaker 7: get personal spending, real personal spending this Thursday, along with
Speaker 7: the PCE. I think it's I think it's gonna show
Speaker 7: the dilemma that the phase we're in high inflation, sort
Speaker 7: of slow in growth environment. That's that's always sort of
Speaker 7: the challenge for for policymakers around the world, the sort
Speaker 7: of stackflationary environment. There's no easy answer.
Speaker 6: How long does stagflation last?
Speaker 3: Typically well so, and it seems like you could.
Speaker 6: Bump along that road for a while.
Speaker 7: Yeah, so there's a lot of in some ways, there's
Speaker 7: some parallels obviously the seventies and a lot, but really
Speaker 7: the main thing right now is that the US is
Speaker 7: in a world exporter, so that's the one thing I
Speaker 7: really has cushioned us. But physically, you know, we got
Speaker 7: back to what you said, the consumer seventy percent of
Speaker 7: the US economy, and we're getting squeezed by high grass prices,
Speaker 7: high energy prices, high food prices.
Speaker 3: The lamrockets stabilizing.
Speaker 7: But I don't think it was out the breaking the
Speaker 7: Champagne open. You know. I know that this graduating college
Speaker 7: class had a really tough time. So I see some
Speaker 7: signs of nervousness within the consumer, and it's again to
Speaker 7: be determined.
Speaker 2: I haven't written on this yet, folks, because it's too difficult,
Speaker 2: and also I got to find his magnificant speech. Let's
Speaker 2: do it for the first time with Winthin of Columbia University.
Speaker 2: We've lost Ned Phelps, ninety two years old, a giant, argumentative,
Speaker 2: giant of economics. I loved what Olivier Blanchard said. He said,
Speaker 2: we didn't agree. Basically to paraphrase, Professor Blanchard said, Ned
Speaker 2: and I didn't agree. And if the sun came up
Speaker 2: in the ease, but there it was. I want you
Speaker 2: to define his work on dynamism in this time of AI.
Speaker 7: Well, Unfortunately I did not have the pleasure of having
Speaker 7: any classes with him, but he was there during my
Speaker 7: time when we had quite a few giants there that
Speaker 7: are unfortunate rest in peace there many are gone. Now
Speaker 7: that sort of tells you how old I am. But
Speaker 7: but you know, the Columbia University was a real incubator
Speaker 7: for just just great growth. I think a lot of
Speaker 7: the sort of the neoclassical and classic comments would have
Speaker 7: a hard time, uh, trying to figure what's going on
Speaker 7: in AI. I mean, obviously there's a whole boost to
Speaker 7: labor productivity that's great for the economy.
Speaker 3: But you know, Paul and I.
Speaker 7: Always discussed this, what does this mean for labored overall?
Speaker 7: Is this going to be a net job creator or
Speaker 7: not a net job destroyer. I don't think we've seen
Speaker 7: this sort of technological innovation.
Speaker 3: Over in this short period of time.
Speaker 7: So I think be great right now to be a
Speaker 7: PhD student. There's so much to write about in terms
Speaker 7: of the impact of AI on productivity, labor demand, favorite destruction.
Speaker 2: But but to go to el Arian, the unknown unknown
Speaker 2: is real, that's right, I mean it's hugely real.
Speaker 7: Yeah, you know, that's way about my pay grad I
Speaker 7: do know that right now we're benefiting this huge investment
Speaker 7: in all the infrastructure. We're finally seeing some payoffs. But
Speaker 7: you know what, who if all these people are being
Speaker 7: being proud of work, who's going to buy these goods?
Speaker 3: Who's going to buy Who's in consume?
Speaker 2: And that's what Paul says.
Speaker 3: I'm a Paul on this.
Speaker 7: I'm I'm gonna be a bit pessimistic, but you know,
Speaker 7: I'm you know, someone's being a lud eyed.
Speaker 2: The bank, the Bank of Nassa went in there.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten a m. Eastern Listen
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Speaker 2: We're gonna go QUI, how about commodity analysis from another
Speaker 2: time in place we can do that with are going
Speaker 2: to work in a city group VP of researching commodities
Speaker 2: and actually looking for trends and commodities in the last
Speaker 2: six months, which commodity has trended, appropriately trended in order
Speaker 2: in a good way.
Speaker 8: Well in the act sector and the one to look at.
Speaker 8: All of them are starting to trend in a proper way,
Speaker 8: and it's all kind of been in the sort of
Speaker 8: low price environment from which they were coming out as
Speaker 8: we started learning more about the conflict, the disruption in
Speaker 8: the strait of hormones and how long will it take?
Speaker 8: So I would say corn wheat, soybeans on the grain side.
Speaker 8: As we say that, fertilizer impact being the most relevant
Speaker 8: for those type of commodities.
Speaker 2: Robs Carolyn just emailed and he wants to know about
Speaker 2: Aldino in the drought is a drought based moving prices
Speaker 2: rot Paul ready for this.
Speaker 3: Yeah, go in the softs, softs, that's how we do
Speaker 3: it well.
Speaker 8: Al Nina is another risk that developed in the last
Speaker 8: two months or three months where meteorologic agency started to
Speaker 8: be very confident about this coming in the next month
Speaker 8: and then getting gaining some strength over the period of
Speaker 8: the next six months. Some meteorologic agencies are expecting very
Speaker 8: strong or record Almina and El Nina. Just to clarify,
Speaker 8: it's the level of sea surface in the Pacific Ocean,
Speaker 8: the degree of it, and whenever it reaches to two degrees,
Speaker 8: that's where we kind of say that there is an
Speaker 8: al Nina, and if there's deviation, if there's more than
Speaker 8: two degree warming happening in the Pacific Ocean, then that
Speaker 8: will characterize it as a strong Alminia. Now, what al
Speaker 8: Nina brings with it is this abnormal weather patterns. Abnormal
Speaker 8: weather patterns across the globe where you can see drought
Speaker 8: in the in the India, around India, around Southeast Asia, Australia,
Speaker 8: and you typically see some sort of high level of
Speaker 8: precipitation in South America, in Brazil and Columbia in those countries.
Speaker 8: So the bottom line because software very much concentrated around
Speaker 8: the production of softs are very much concentrated around the equator, right,
Speaker 8: and they would have kind of this bigger impact on
Speaker 8: the yields coming from this strong or moderate on Ninia.
Speaker 8: It's really early to tell what how how how strong
Speaker 8: this is significant the sweat pattern would be, but as
Speaker 8: it's developing, but from we know what we know now.
Speaker 8: The factual data is that the temperature in the Pacific
Speaker 8: Ocean is the warmest at the moment when we compare
Speaker 8: it with any observable history historical port in the past,
Speaker 8: at this at this moment. So that probably tells us
Speaker 8: that there's a relatively high probability and likelihood that this
Speaker 8: system will develop over the summer months and going forward.
Speaker 3: A look at some of the eggs here.
Speaker 5: I can do that my GLCO screen, the Global Commodity screen,
Speaker 5: it's my savior.
Speaker 6: It's the only thing I know about commodity.
Speaker 5: I soweteans up fifteen percent year to date. I got
Speaker 5: weed up twenty three percent, cottons up eighteen percent, Sugar
Speaker 5: down five percent.
Speaker 6: What's going on with sugar?
Speaker 8: Yeah, and we think that's the lagger in this case.
Speaker 3: I think sugar.
Speaker 8: There is a lot of news and expectations about the
Speaker 8: crop and sugar, especially.
Speaker 3: In Brazil.
Speaker 8: Brazil is the largest producer, marginal producer. About two thirds
Speaker 8: of what Brazil produces is being exported. The second biggest
Speaker 8: producer is India. However, in India about everything that's being
Speaker 8: produced in India is being consumed domestically. Whenever there is
Speaker 8: a bumper crop, that's where India gets into the market
Speaker 8: starts exporting. The risk there is that in the last
Speaker 8: strong on Nino, which was in twenty fifteen twenty sixteen,
Speaker 8: production in India fell by about thirty percent, and India
Speaker 8: came into the market aggressively importing sugar and that kind
Speaker 8: of spiked the preceures.
Speaker 2: Just a minute here, I'm going to take a chance
Speaker 2: from your Armenia, Georgia down to Armenia over to Azerbaijan.
Speaker 2: I think Americans are clueless about the importance of the
Speaker 2: Caspian Sea. We're absolutely clueless about it. It means I
Speaker 2: think it's a lake wall I don't know, but it's
Speaker 2: not like lake your ear. It's it's like ginormous tell
Speaker 2: us the importance of the Caspian Sea to the eastern
Speaker 2: Mediterranean and the stand nations.
Speaker 8: Well, it's a little bit of seguey, but yes, Caspian
Speaker 8: Sea is very important.
Speaker 3: Yeah, we call them sui for.
Speaker 8: It's it's very much relevant, but more for the energy complex.
Speaker 8: And part of my research agenda that I look is
Speaker 8: we're going in the segways. I look at the uranium
Speaker 8: and Kazakhstan is the biggest producer of uranium.
Speaker 3: And over the last.
Speaker 8: Four years, since twenty twenty two, really the development of
Speaker 8: the trans Caspian kind of route has developed as an
Speaker 8: alternative root rather than exporting uranium through Russia as typically
Speaker 8: Kazakstan would do that. But as Aerba, John is a
Speaker 8: big oil and gas producer, and so the Caspian importance
Speaker 8: is there and it kind of connects.
Speaker 2: Yeah, I can just see you in a meeting with
Speaker 2: Jane Fraser. He starts sting in the Caspian uranium. She's
Speaker 2: taken notes. This has been wonderful. This is like old school.
Speaker 2: I mean, I'm loving it.
Speaker 7: I love it.
Speaker 2: This has been great, Arkady, Thank you so much, Arcady Gevorkian.
Speaker 2: He's with City Group. That was absolutely brilliant to stay
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
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Speaker 2: What a wonderful time quickly, or Carol Striker with us
Speaker 2: with KPMG Deal Advisory Strategy Service at Leader. Call it
Speaker 2: the exuberance out there right now. What is the character
Speaker 2: of exuberance the KPMGCS.
Speaker 9: Yeah, I mean from an exciting perspective around deals and
Speaker 9: just the pent up demand for deals. There is a
Speaker 9: private equity space. There are thirty three thousand portfolio companies
Speaker 9: that are wanting to trade over three trillion dollars in
Speaker 9: those assets, and so there is a demand to be
Speaker 9: trading within the private equity space.
Speaker 5: So this year, I mean, we're going to get some
Speaker 5: mega mega IPOs in the marketplace SpaceX and maybe we'll
Speaker 5: get some AI deals.
Speaker 6: How about the other stuff.
Speaker 5: That's just in the PE portfolios that I've had a
Speaker 5: tough time over the last four or five six years
Speaker 5: getting liquidity. I mean, if I see another PE firm
Speaker 5: sell at portfolio company to another PE firm, I'm going
Speaker 5: to scream. I mean, that's like, that's the weakest exit
Speaker 5: you can ever have in my opinion.
Speaker 9: Well, it's interesting that you say that. So if you
Speaker 9: look at the data over this last quarter and the
Speaker 9: quarters before, the sponsored sponsor activity is actually significantly down
Speaker 9: from where it was. And if you look at the
Speaker 9: last quarter, a majority of the deals have been private
Speaker 9: equity selling to corporates and corporate seeing the strategic nature
Speaker 9: of being able to bring those companies into their their
Speaker 9: portfolio and have strategies.
Speaker 2: Paul, I got to go here. I mean, I just
Speaker 2: got to impress everybody a nation. You have a bullet
Speaker 2: point paragraph on your use of Claude at KPMG. You
Speaker 2: guys are out front on this the uproar this weekend
Speaker 2: that Microsoft's cutting Claude back because everybody's using it, it's
Speaker 2: costing a fortune. Are you observing that at KPMG.
Speaker 9: Well, I'm glad you asked. One of the things that
Speaker 9: we're really excited about is we just announced a partnership,
Speaker 9: a strategic partnership with Anthropic and Claude, and so we
Speaker 9: are absolutely leaning in.
Speaker 2: What you observing on token use in OMG. We're spending
Speaker 2: a lot of money.
Speaker 9: Yeah, I mean, don't get me wrong. The world that
Speaker 9: we're moving to is not going to be a world
Speaker 9: that's not having that token use, and so we are
Speaker 9: experiencing it as clients zero around increase in token use
Speaker 9: this last quarter. But we're also you know, hearing it
Speaker 9: from our clients in regards to their concerns around the
Speaker 9: cost that the token usage is going to have. That's
Speaker 9: going to figure itself out over the mist.
Speaker 2: I agree, it's going to just figures. That's a nice one.
Speaker 2: That's University of Chicago to figure itself out.
Speaker 5: So what are your companies, like when you look for
Speaker 5: in the advisory side of the business to get liquidity
Speaker 5: in some of your client's portfolios, they have to have
Speaker 5: confidence in the economy, they have to have confidence in,
Speaker 5: you know, the overall geopolitical situation.
Speaker 3: There's not a lot of that out there exactly.
Speaker 5: So what are they saying in terms of we want
Speaker 5: to buy or we want to sell?
Speaker 6: What are they doing?
Speaker 9: Yeah, absolutely so. I think there's two things. I'd say.
Speaker 9: First is volatilities in New norm and our clients get
Speaker 9: that and they have been working through volatility. But when
Speaker 9: there's shockwaves to the system, it's a little bit harder
Speaker 9: for them to transact. And so when we saw the
Speaker 9: first part of the year January coming out real strong,
Speaker 9: then the war broke out and it came to a stop.
Speaker 9: But within several weeks we saw in our business and
Speaker 9: with our clients is that they really want to transact
Speaker 9: and the deal market started to pick back up pretty quickly.
Speaker 2: With your relationship with Claude, is it generational? The young
Speaker 2: Turks are learning Claude over the week in and the
Speaker 2: fossils are like over my dead body.
Speaker 9: What I would say is that the younger generation is
Speaker 9: definitely leaning in more than the older generation. But that
Speaker 9: being said, we've got a lot of people who are
Speaker 9: leaning in the and the older genera.
Speaker 2: An example, what KPMG uses Claude for besides.
Speaker 9: The summer party, we use Claude for and a lot
Speaker 9: of the different AI. But with Claude we use it
Speaker 9: for a ton of analysis with our clients to help
Speaker 9: them improve their operations. So for example, if we're talking
Speaker 9: to them around.
Speaker 2: You've got a plast six manufacturer in Toledo.
Speaker 9: Yeah, Pardi help them thinking through their production, thinking through
Speaker 9: their distribution, thinking through their vendors. It can be helping
Speaker 9: them through collecting AR and receivables faster. So there's multiple
Speaker 9: use cases around how we're using information, taking data from
Speaker 9: all different types of sources. There's internal, external, and using
Speaker 9: claud to understand what can help to optimize.
Speaker 2: I'm going to ask you get back to the key
Speaker 2: question to the zeitgeist right now, which is who's going
Speaker 2: to pay for all this? You say token pricing will
Speaker 2: work its way out just within an open hyachin system,
Speaker 2: or is there going to be a regulator or is
Speaker 2: there going to be a price dominant user like Microsoft
Speaker 2: or Anthropic that can say no, this is what we're
Speaker 2: going to do. How do you envision that?
Speaker 9: I mean, I go back to just like you said,
Speaker 9: University of Chicago. Right, is the market basic price theory? Yeah,
Speaker 9: I mean this is going to work its way out
Speaker 9: in the long term. In the short term, it's it's
Speaker 9: something that everybody's focused in on and figuring out what's
Speaker 9: what's the right for their business, the right usage.
Speaker 2: Can you come back tomorrow because I learned a lot
Speaker 2: about Claude.
Speaker 6: I know, I know every day.
Speaker 2: It's all brand new. It's like a whole new world.
Speaker 2: Fl Carol, thank you, it's brilliant. Don't be a strange.
Speaker 3: Are you based in New York Chicago? Yeah? Okay, Cubs Cubs.
Speaker 9: But I mean seriously, this last one, the one before
Speaker 9: winning streets and then it's terrible.
Speaker 2: Alexis would like your tickets and it's better than the Mets.
Speaker 2: Nice to see Carol. Just get up and leave with
Speaker 2: the mic on Carol Striker.
Speaker 3: You know who does this?
Speaker 2: You know who just leaves with the mic on Michael
Speaker 2: Bloomberg just good walks away. You're in good company.
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