1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,240 --> 00:00:31,680 Speaker 2: Paul Dumb Question of the day, who chooses the next meme? Stuck? 7 00:00:32,080 --> 00:00:34,839 Speaker 3: I don't know. I think it's all in the online community, 8 00:00:34,960 --> 00:00:38,440 Speaker 3: the message boards. Whoever kind of has the biggest microphone 9 00:00:38,479 --> 00:00:40,479 Speaker 3: at the moment can kind of back up a name 10 00:00:40,520 --> 00:00:42,479 Speaker 3: and then it just seems to build upon itself. 11 00:00:42,520 --> 00:00:44,880 Speaker 2: Then biggest microphone on the moment for us right now. 12 00:00:44,960 --> 00:00:48,879 Speaker 2: Katrin Kaminski joins his chief research strategist Alpha Simplex just 13 00:00:49,080 --> 00:00:53,920 Speaker 2: terrific technical and trend analysis of what's going on, and 14 00:00:54,000 --> 00:00:58,840 Speaker 2: honored you, Katie. I took log Magnificent seven back to 15 00:00:58,880 --> 00:01:03,440 Speaker 2: the pandemic. It's a little bit rolling over, but my word, 16 00:01:03,560 --> 00:01:07,440 Speaker 2: is that a straight line. When you see persistency like 17 00:01:07,520 --> 00:01:12,000 Speaker 2: that over three four, five years, How do you trade 18 00:01:12,319 --> 00:01:13,039 Speaker 2: mag seven? 19 00:01:14,480 --> 00:01:17,919 Speaker 4: Well, this is a good question because we've definitely seen 20 00:01:17,959 --> 00:01:22,280 Speaker 4: a continued focus on those larger stocks. But as you've 21 00:01:22,319 --> 00:01:25,720 Speaker 4: just been discussing, we are seeing some pivot more recently. 22 00:01:25,840 --> 00:01:28,039 Speaker 4: So if you look at the Russell, for example, it's 23 00:01:28,080 --> 00:01:30,800 Speaker 4: been up quite a bit this month. So I think 24 00:01:30,920 --> 00:01:34,760 Speaker 4: there's some indications in the relative trend signals that there's 25 00:01:34,800 --> 00:01:37,600 Speaker 4: some sort of pivot going on right now, which is interesting. 26 00:01:37,840 --> 00:01:41,720 Speaker 2: Sam Moroa out there writing up as he does for TK, 27 00:01:41,959 --> 00:01:47,000 Speaker 2: samrou the folks that spelled ro not row, and Sam 28 00:01:47,000 --> 00:01:49,800 Speaker 2: Moroa would tell you that there's a value to studying 29 00:01:50,320 --> 00:01:54,680 Speaker 2: at all time highs. What does all time highs mean 30 00:01:55,080 --> 00:01:57,600 Speaker 2: for Katie Kaminski, Well. 31 00:01:57,440 --> 00:02:00,080 Speaker 4: It's interesting because all time highs often. One of the 32 00:02:00,160 --> 00:02:03,080 Speaker 4: challenges with many of the trend signals for this is 33 00:02:03,120 --> 00:02:06,000 Speaker 4: that when you see markets at all time highs, the 34 00:02:06,120 --> 00:02:09,679 Speaker 4: trend signals tend to continue to follow those, and it's 35 00:02:09,720 --> 00:02:14,240 Speaker 4: often those trends that prolong longer than we expect that 36 00:02:14,400 --> 00:02:17,079 Speaker 4: tend to be the most profitable. So I think as 37 00:02:17,160 --> 00:02:20,440 Speaker 4: people are starting to liquidate and adjust, if we continue 38 00:02:20,520 --> 00:02:23,280 Speaker 4: to see strength in this AI theme, that could be 39 00:02:23,320 --> 00:02:26,800 Speaker 4: a very positive trend because you're going to hold on 40 00:02:27,000 --> 00:02:29,200 Speaker 4: if you're a trend follower, if things are moving, even 41 00:02:29,240 --> 00:02:30,320 Speaker 4: if it's all time highs. 42 00:02:30,760 --> 00:02:32,800 Speaker 3: Katie, one of the trends I've been following. Is the 43 00:02:32,840 --> 00:02:36,240 Speaker 3: weakness in the US dollar we just don't see it 44 00:02:36,400 --> 00:02:39,520 Speaker 3: very often. Is this a trend it is just or 45 00:02:39,560 --> 00:02:42,320 Speaker 3: is this just a short term trade saying, hey, maybe 46 00:02:42,720 --> 00:02:45,520 Speaker 3: you know the US dollar was overvalued. There's a crowded 47 00:02:45,560 --> 00:02:47,480 Speaker 3: long trade, and now people are just kind of pulling 48 00:02:47,520 --> 00:02:48,079 Speaker 3: out a little bit. 49 00:02:49,160 --> 00:02:51,320 Speaker 4: This is a great question. I've gotten a lot of 50 00:02:51,360 --> 00:02:54,560 Speaker 4: questions about the dollar recently, and this is important because 51 00:02:55,000 --> 00:02:57,720 Speaker 4: it is one of the few themes that has been consistent. 52 00:02:57,800 --> 00:03:02,160 Speaker 4: So we've seen a lot of consistency in the short positioning, 53 00:03:02,320 --> 00:03:05,000 Speaker 4: and you continue to see a few fundamental themes that 54 00:03:05,080 --> 00:03:08,440 Speaker 4: support it. So when people are excited about equity markets, 55 00:03:08,440 --> 00:03:11,760 Speaker 4: that tends to make the dollar weaker. You also have 56 00:03:12,080 --> 00:03:16,360 Speaker 4: the fact that US rates are higher than other regions, 57 00:03:16,400 --> 00:03:18,720 Speaker 4: and if we start to cut rates that is also 58 00:03:19,000 --> 00:03:22,880 Speaker 4: negative for the dollar. Plus sort of disagreement about trade. 59 00:03:22,960 --> 00:03:26,640 Speaker 4: So we really seen very little ability to break resistance 60 00:03:26,760 --> 00:03:29,720 Speaker 4: levels for the dollars. So that means that anytime you 61 00:03:29,800 --> 00:03:32,280 Speaker 4: think that this trend is changing, that the dollars going 62 00:03:32,320 --> 00:03:33,960 Speaker 4: to come back, it hasn't happened. 63 00:03:34,080 --> 00:03:36,000 Speaker 2: Well, well, Paul's talking to you. I'm doing a bunch 64 00:03:36,000 --> 00:03:39,400 Speaker 2: of technical studies in the Bloomberg Professional Service. I'm looking 65 00:03:39,440 --> 00:03:42,760 Speaker 2: at the point and figure chart on BBDXY and the 66 00:03:42,800 --> 00:03:47,320 Speaker 2: bottom line is a dollar weakness is in place from February. 67 00:03:47,360 --> 00:03:48,840 Speaker 2: Do you agree with that, Katie? 68 00:03:49,600 --> 00:03:52,680 Speaker 4: One hundred percent. And what's interesting is we actually saw 69 00:03:52,680 --> 00:03:56,480 Speaker 4: the dollar strengthening around the US election, but then there's 70 00:03:56,600 --> 00:04:01,760 Speaker 4: been this sort of very colossal and strong dollar trade 71 00:04:01,800 --> 00:04:05,000 Speaker 4: and it was actually interesting because there seems to be 72 00:04:05,080 --> 00:04:08,160 Speaker 4: some indication that this is a shift out of the dollar. 73 00:04:08,440 --> 00:04:11,680 Speaker 4: There's certain data that suggests that maybe market share and 74 00:04:11,720 --> 00:04:13,360 Speaker 4: other currencies is causing. 75 00:04:13,040 --> 00:04:14,600 Speaker 2: The dollar as well to be weaker. 76 00:04:15,560 --> 00:04:17,440 Speaker 4: I think this is something that we're going to have 77 00:04:17,520 --> 00:04:19,640 Speaker 4: to continue to follow, and of course, if you're going 78 00:04:19,680 --> 00:04:22,480 Speaker 4: to take a vacation, you may not enjoy it so much. 79 00:04:22,880 --> 00:04:26,360 Speaker 2: What's your best Bible trend right now? Besides the Detroit 80 00:04:26,400 --> 00:04:29,560 Speaker 2: Tigers are going to recover, So I'd. 81 00:04:29,400 --> 00:04:31,880 Speaker 4: Say that the dollar has been the biggest theme for 82 00:04:32,000 --> 00:04:34,800 Speaker 4: us following recently. But I'm actually quite interested in the 83 00:04:34,839 --> 00:04:38,640 Speaker 4: recent rotation that we've seen in the equity markets. This 84 00:04:38,760 --> 00:04:43,960 Speaker 4: sort of pro domestic, pro growth, pro meanstock. That's interesting. 85 00:04:44,360 --> 00:04:46,080 Speaker 2: So your long equities cut to the. 86 00:04:46,080 --> 00:04:50,680 Speaker 4: Chase, Yes, long equities, but it has been a pivot. 87 00:04:50,760 --> 00:04:53,880 Speaker 4: So originally we had much longer signals outside the US, 88 00:04:54,240 --> 00:04:56,200 Speaker 4: and we're seeing a little bit of a shift in 89 00:04:56,320 --> 00:04:59,159 Speaker 4: sentiment over the last six weeks which has been more 90 00:04:59,240 --> 00:05:02,599 Speaker 4: pro US and that's interesting to watch because I definitely 91 00:05:02,640 --> 00:05:04,160 Speaker 4: didn't expect that six weeks ago. 92 00:05:04,440 --> 00:05:07,960 Speaker 2: Katie, thanks so much, really really appreciate it. This morning, 93 00:05:08,000 --> 00:05:09,680 Speaker 2: Cathery Convincy Alpha Simple. 94 00:05:15,960 --> 00:05:19,520 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live 95 00:05:19,600 --> 00:05:22,760 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 96 00:05:22,839 --> 00:05:26,479 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 97 00:05:26,640 --> 00:05:28,200 Speaker 1: watch US live on YouTube. 98 00:05:28,240 --> 00:05:30,839 Speaker 2: There are people that talk in then there are people 99 00:05:30,880 --> 00:05:35,440 Speaker 2: that do. Out of Harvard, Peter Kantie Brown has established 100 00:05:35,480 --> 00:05:40,640 Speaker 2: a young, very brief, but nevertheless authoritative career and the 101 00:05:40,760 --> 00:05:45,240 Speaker 2: power in the independence of our central bank, and critically 102 00:05:45,760 --> 00:05:48,120 Speaker 2: he's done it away from is the FED going to 103 00:05:48,240 --> 00:05:50,600 Speaker 2: raise rate? Is the Fed get a lower rate? And 104 00:05:50,720 --> 00:05:54,800 Speaker 2: much more the regulatory and capital markets operations of the Fed. 105 00:05:54,880 --> 00:05:58,280 Speaker 2: Professor Kanty Brown and Wharton, thank you so much for 106 00:05:58,400 --> 00:06:02,080 Speaker 2: joining us. I want to advance the dialogue Peter Conti 107 00:06:02,160 --> 00:06:06,880 Speaker 2: Brown and just suggest what is a chance two years 108 00:06:06,920 --> 00:06:10,600 Speaker 2: out post Trump five years out, that we have a 109 00:06:10,720 --> 00:06:14,640 Speaker 2: radically new FED that Alan Meltzer wouldn't recognize. 110 00:06:16,600 --> 00:06:20,400 Speaker 5: What a phenomenal question. And you're focusing on exactly the 111 00:06:20,440 --> 00:06:25,159 Speaker 5: right question. In the circus of Trump versus Pow. We 112 00:06:25,279 --> 00:06:28,240 Speaker 5: forget that the Central Bank has been around for one 113 00:06:28,320 --> 00:06:31,040 Speaker 5: hundred and ten plus year, one hundred and twelve years, 114 00:06:31,720 --> 00:06:34,039 Speaker 5: and it is an institution for the medium term, And 115 00:06:34,120 --> 00:06:35,880 Speaker 5: so your question is the right question, What does it 116 00:06:35,920 --> 00:06:38,599 Speaker 5: look like in the medium term? Well, now I know 117 00:06:38,720 --> 00:06:42,080 Speaker 5: Alan Meltzer, I knew him before he passed away, and 118 00:06:42,200 --> 00:06:45,720 Speaker 5: he didn't recognize the FED following two thousand and eight, 119 00:06:46,440 --> 00:06:50,279 Speaker 5: and it has continued to change in pretty incredible ways 120 00:06:50,320 --> 00:06:53,560 Speaker 5: since then. I think the biggest changes that we see 121 00:06:53,560 --> 00:06:55,279 Speaker 5: in the FED and are likely to see five years 122 00:06:55,320 --> 00:06:58,880 Speaker 5: from now, are to one is inevitable and we should 123 00:06:58,920 --> 00:07:03,839 Speaker 5: welcome or at least be aware of and navigate that inevitability. 124 00:07:03,880 --> 00:07:07,680 Speaker 5: And the other is very lamentable. The inevitability is as 125 00:07:07,720 --> 00:07:13,600 Speaker 5: the world becomes more dynamically complex. Because the Fed's mandate 126 00:07:13,720 --> 00:07:18,040 Speaker 5: is simply macroeconomic stability, it means that its functions will 127 00:07:18,080 --> 00:07:22,520 Speaker 5: become dynamically complex. The reason we can't just ask ourselves. 128 00:07:22,560 --> 00:07:24,440 Speaker 5: Are we going to nudge twenty five BIPs this way 129 00:07:24,520 --> 00:07:27,120 Speaker 5: or that way about the federals, Because that's not the 130 00:07:27,120 --> 00:07:28,640 Speaker 5: way that the financial system works. 131 00:07:28,680 --> 00:07:29,880 Speaker 2: That's not the way the world works. 132 00:07:30,240 --> 00:07:34,320 Speaker 5: And so asking questions about crypto and stable coin, about 133 00:07:34,360 --> 00:07:38,720 Speaker 5: private credit and non bank finance, about tariffs, about geopolitics, 134 00:07:38,920 --> 00:07:41,360 Speaker 5: those are questions that central bankers have to think about. 135 00:07:41,480 --> 00:07:44,040 Speaker 2: Well, this is addressed bike Secretary Best sent this morning. 136 00:07:44,080 --> 00:07:46,920 Speaker 2: They am Ma ree Hoarded. Professor, this is critical and 137 00:07:46,960 --> 00:07:49,440 Speaker 2: you're the guy. You're writing a new history, hopefully shorter 138 00:07:49,480 --> 00:07:52,920 Speaker 2: than Meltzer's. We're looking forward to that from Norton. But 139 00:07:53,200 --> 00:07:56,680 Speaker 2: Professor County Brown just simply is their mission creep? If 140 00:07:56,680 --> 00:08:00,040 Speaker 2: you look at you know, green and climate change, the 141 00:08:00,040 --> 00:08:02,880 Speaker 2: Fed's going to solve the world. Even taking it back 142 00:08:02,920 --> 00:08:07,320 Speaker 2: to currency discussions, is their mission creep at the Powell Fed? 143 00:08:09,920 --> 00:08:13,560 Speaker 5: I think yes and no. I think the allegations of 144 00:08:13,720 --> 00:08:17,880 Speaker 5: mission creep are higher in number than the instances of 145 00:08:18,000 --> 00:08:21,160 Speaker 5: mission creep. But that is not to say that the 146 00:08:21,160 --> 00:08:26,280 Speaker 5: instances are zero. And so, because there are so many 147 00:08:26,680 --> 00:08:31,440 Speaker 5: factors of potential macroeconomic instability, it would be a dereliction 148 00:08:31,560 --> 00:08:34,400 Speaker 5: of the Fed's duty to be like those three monkeys, 149 00:08:34,559 --> 00:08:36,719 Speaker 5: see no evil, speak no evil, hear no evil. We 150 00:08:36,800 --> 00:08:39,960 Speaker 5: can only nudge interest rates twenty five BIPs one way 151 00:08:40,040 --> 00:08:43,560 Speaker 5: or another. And so when we see the FED asking 152 00:08:43,760 --> 00:08:48,000 Speaker 5: will there be inflationary consequences from tariff changes, that's not 153 00:08:48,080 --> 00:08:53,000 Speaker 5: mission creep, that's macroeconomic stability. They would fail at their 154 00:08:53,120 --> 00:08:55,640 Speaker 5: jobs if they didn't ask those kinds of questions. Similarly, 155 00:08:56,120 --> 00:09:00,480 Speaker 5: if in the bank regulatory and supervisory functions in Florida, 156 00:09:00,880 --> 00:09:03,680 Speaker 5: if the Federal Reserve Bank supervisors weren't asking banks hard 157 00:09:03,760 --> 00:09:08,199 Speaker 5: questions about how they were underwriting, say mortgage loans to 158 00:09:09,480 --> 00:09:15,319 Speaker 5: banks or to homes exposed to do global warming risk changes, 159 00:09:15,360 --> 00:09:18,400 Speaker 5: that would be a dereliction of duty. Should the FED, however, 160 00:09:18,960 --> 00:09:21,800 Speaker 5: say we are no longer going to support through regulatory 161 00:09:21,800 --> 00:09:26,679 Speaker 5: and supervisory functions, oil companies that seek financing, now, that 162 00:09:26,720 --> 00:09:29,080 Speaker 5: would be a mission creep. That's not their job to do. 163 00:09:29,120 --> 00:09:32,920 Speaker 5: They're not in the world in a world of environmental remediation. 164 00:09:33,400 --> 00:09:36,040 Speaker 5: And there were instances in the twenty tens and twenty 165 00:09:36,040 --> 00:09:38,720 Speaker 5: twenties where some central bankers really wanted to get into 166 00:09:38,720 --> 00:09:39,120 Speaker 5: that mix. 167 00:09:39,280 --> 00:09:42,280 Speaker 2: Paul and I think so just because the time Paul 168 00:09:42,360 --> 00:09:45,239 Speaker 2: jump in here, this one with Professor Conti Brown. 169 00:09:45,000 --> 00:09:49,280 Speaker 3: Of Wharton, Professor has the president? Has President Trump done damage, 170 00:09:49,480 --> 00:09:53,480 Speaker 3: meaningful damage, a lasting damage to the reputation of the FED? 171 00:09:54,760 --> 00:09:57,760 Speaker 5: I think he has. And it's not the near term 172 00:09:57,840 --> 00:10:03,319 Speaker 5: question about whether the Fed's are innovations constitute fraud or recklessness. 173 00:10:03,400 --> 00:10:05,480 Speaker 5: I think that's a red hair ring. I think that's 174 00:10:05,559 --> 00:10:11,120 Speaker 5: mostly pretextual. Most Americans in their lives should think about 175 00:10:11,120 --> 00:10:14,440 Speaker 5: the Federal Reserve not at all. And that's not because 176 00:10:14,480 --> 00:10:17,640 Speaker 5: they're not sophisticated. It's because they're sophisticated in the things 177 00:10:17,640 --> 00:10:20,560 Speaker 5: that give their lives meaning. But the Federal what President 178 00:10:20,559 --> 00:10:22,600 Speaker 5: Trump has done has made people think about the Federal 179 00:10:22,640 --> 00:10:25,240 Speaker 5: Reserve constantly and made them think that the Federal Reserve 180 00:10:25,559 --> 00:10:31,680 Speaker 5: is a It is just a cabal of incompetence who 181 00:10:31,720 --> 00:10:36,640 Speaker 5: are mismanaging the economy and costing us all money. That's 182 00:10:36,679 --> 00:10:39,400 Speaker 5: not true. The FED is not beyond approach. Experts should 183 00:10:39,440 --> 00:10:41,120 Speaker 5: be and Fed watchers, like all of us, we should 184 00:10:41,120 --> 00:10:43,840 Speaker 5: be criticizing the FED all the time. But by constantly 185 00:10:43,880 --> 00:10:47,479 Speaker 5: attacking the FED and making it so the average American 186 00:10:47,600 --> 00:10:50,840 Speaker 5: is associating the central Bank with a negative sense, a 187 00:10:50,880 --> 00:10:55,800 Speaker 5: sense of instability. It just it pushes that freedom of 188 00:10:55,880 --> 00:10:58,840 Speaker 5: movement for the FED into a very dangerous spot. No 189 00:10:58,880 --> 00:10:59,760 Speaker 5: one has done that much. 190 00:11:00,120 --> 00:11:02,079 Speaker 2: Twenty seconds, When do we get your book out on 191 00:11:02,120 --> 00:11:05,520 Speaker 2: the political history of the FED hugely into well, but you. 192 00:11:05,840 --> 00:11:07,720 Speaker 5: And my publisher both want to know. I should finish 193 00:11:07,760 --> 00:11:09,480 Speaker 5: it this year and it should be out nine months 194 00:11:09,480 --> 00:11:12,000 Speaker 5: after that. You should about a decade. 195 00:11:12,160 --> 00:11:14,920 Speaker 2: You're at Norton. Who do you think you are, Patrick O'Brien. 196 00:11:15,000 --> 00:11:18,439 Speaker 2: You're not writing about the Napoleonic War. Get that puppy out. 197 00:11:18,920 --> 00:11:21,520 Speaker 2: We thank Peter Conty Brown, really one of our best 198 00:11:21,559 --> 00:11:25,040 Speaker 2: on the FED history and the FED independence. Peter Conty 199 00:11:25,040 --> 00:11:28,040 Speaker 2: Brown holds court at Wharton. 200 00:11:28,720 --> 00:11:32,640 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 201 00:11:32,640 --> 00:11:35,679 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 202 00:11:35,679 --> 00:11:38,720 Speaker 1: Auto with the Bloomberg Business app. You can also listen 203 00:11:38,800 --> 00:11:42,079 Speaker 1: live on Amazon Alexa from our flagship New York station. 204 00:11:42,640 --> 00:11:45,520 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 205 00:11:45,400 --> 00:11:49,520 Speaker 2: Joining us now after the bank suare Michael Mayo as well? Mike, 206 00:11:49,600 --> 00:11:53,800 Speaker 2: let me dovetail in technology into banking. You and I 207 00:11:53,840 --> 00:11:58,120 Speaker 2: remember E. F. Hutton. They didn't keep up in technology. A. G. Edwards. 208 00:11:58,120 --> 00:12:00,800 Speaker 2: They didn't keep up in technology, and on and on. 209 00:12:01,200 --> 00:12:06,320 Speaker 2: Which bank is leading in using potential AI and in 210 00:12:06,480 --> 00:12:08,240 Speaker 2: using present technology. 211 00:12:10,000 --> 00:12:13,960 Speaker 6: Well, there, that's an easy first question, Tom that JP 212 00:12:14,120 --> 00:12:16,560 Speaker 6: Morgan is the Nvidia of banking. 213 00:12:17,000 --> 00:12:23,000 Speaker 7: They're leading with AI. They have it centralized. They say that, you. 214 00:12:22,920 --> 00:12:26,880 Speaker 6: Know, most of their employees use it every day to 215 00:12:26,960 --> 00:12:32,959 Speaker 6: save a bit more productivity. They seem strategically and operationally 216 00:12:33,440 --> 00:12:36,200 Speaker 6: ahead of the pack. They do spend a lot of 217 00:12:36,240 --> 00:12:41,280 Speaker 6: money on technology. They spend eighteen billion dollars this year 218 00:12:41,440 --> 00:12:46,360 Speaker 6: on technology, and you know, the amount to AI continues 219 00:12:46,400 --> 00:12:49,400 Speaker 6: to increase, so they think it's real. They're embracing it 220 00:12:50,360 --> 00:12:55,200 Speaker 6: and it's you know, it starts more non customt facing activities. 221 00:12:55,600 --> 00:12:57,520 Speaker 7: But they're certainly ahead of the game. 222 00:12:58,120 --> 00:13:01,760 Speaker 2: Mike Mayo with this, folks, Howard moving from eight fifteen 223 00:13:01,840 --> 00:13:05,280 Speaker 2: to eight forty five Secretary of Commerce here in half 224 00:13:05,320 --> 00:13:06,760 Speaker 2: an hour. Paul Sweeney, Hey, Mike. 225 00:13:06,840 --> 00:13:09,120 Speaker 3: When we came into this second Trump administration, one of 226 00:13:09,160 --> 00:13:11,600 Speaker 3: the sectors that was really called out as a potential 227 00:13:11,600 --> 00:13:16,360 Speaker 3: beneficiary was the financial services industry, primarily from a perspective 228 00:13:16,360 --> 00:13:19,320 Speaker 3: of maybe loosening of some of the restrictions on the 229 00:13:19,320 --> 00:13:22,240 Speaker 3: big banks. What have we what have we learned so far? 230 00:13:23,880 --> 00:13:29,680 Speaker 6: Well, yesterday was the first ever Federal Reserve conference to 231 00:13:29,840 --> 00:13:34,959 Speaker 6: overhaul regulations, specifically capital rules, and I had the pleasure 232 00:13:35,120 --> 00:13:37,760 Speaker 6: to present on one of the panels. So I was 233 00:13:37,800 --> 00:13:40,960 Speaker 6: back in Washington, DC at the Federal Reserve Board for 234 00:13:41,000 --> 00:13:42,520 Speaker 6: the first time in thirty three years. 235 00:13:42,679 --> 00:13:43,000 Speaker 8: Wow. 236 00:13:43,120 --> 00:13:48,920 Speaker 6: And I would say this was remarkable. This was at 237 00:13:49,160 --> 00:13:53,760 Speaker 6: their headquarters building. In the front row was Chairman Palell 238 00:13:53,800 --> 00:13:58,360 Speaker 6: and Vice Chairman Bowman taking notes all day on by 239 00:13:58,440 --> 00:14:01,720 Speaker 6: different panels. By the way, Sam Altman was the keynote speaker. 240 00:14:02,360 --> 00:14:07,319 Speaker 6: And they're operating with eyes wide open to modernize bank regulation, 241 00:14:08,360 --> 00:14:11,439 Speaker 6: to you know, keep up with the times, update some 242 00:14:11,559 --> 00:14:16,000 Speaker 6: stale parts of it, and to create a more level 243 00:14:16,000 --> 00:14:19,720 Speaker 6: playing field with more transparency and a more holistic approach. 244 00:14:20,880 --> 00:14:22,480 Speaker 7: I think that what. 245 00:14:22,400 --> 00:14:25,000 Speaker 3: Are some of the big items, Mike, that you think 246 00:14:25,640 --> 00:14:27,040 Speaker 3: may be ripe for change. 247 00:14:28,280 --> 00:14:29,800 Speaker 7: Well, I think the capital rules. 248 00:14:29,920 --> 00:14:34,520 Speaker 6: I mean, this is really there's an alphabet, soup of acronyms. 249 00:14:35,200 --> 00:14:41,080 Speaker 7: They overlap, they double counts, it's convoluted. 250 00:14:41,160 --> 00:14:43,720 Speaker 6: So I think they can make it, you know, less complex, 251 00:14:43,880 --> 00:14:48,200 Speaker 6: less convoluted. You know, in my opening slide yesterday, I said, bank, 252 00:14:48,240 --> 00:14:50,960 Speaker 6: you regulators for a great job you did after the 253 00:14:51,000 --> 00:14:55,160 Speaker 6: global fancer crisis. But the rules are too confusing, too constraining, 254 00:14:56,320 --> 00:14:59,360 Speaker 6: and too costly, and so to the extent that you 255 00:14:59,400 --> 00:15:03,360 Speaker 6: can make them and you know, less complex, that's important. 256 00:15:03,360 --> 00:15:05,600 Speaker 6: To the extent that you can make it less constraining. 257 00:15:06,080 --> 00:15:09,520 Speaker 6: I mean banks have been marginalized. I mean, as a 258 00:15:09,520 --> 00:15:12,560 Speaker 6: percentage of total corporate bones, banks are gone from sixty 259 00:15:12,600 --> 00:15:15,160 Speaker 6: percent down to forty percent. Loan growth for the last 260 00:15:15,200 --> 00:15:17,880 Speaker 6: two years of justin for inflation's been negative, and you 261 00:15:17,920 --> 00:15:19,880 Speaker 6: see a lot of the loan go to the shadow 262 00:15:19,880 --> 00:15:23,080 Speaker 6: banking industry. So those are some of the changes. 263 00:15:23,560 --> 00:15:26,080 Speaker 2: Mike Mayo with this yere with Willis Farger, we continue 264 00:15:26,080 --> 00:15:28,520 Speaker 2: with mister Mayo. We welcome all of you on your 265 00:15:28,560 --> 00:15:31,840 Speaker 2: commute a crastination at home in the office, our new 266 00:15:31,880 --> 00:15:37,000 Speaker 2: distribution YouTube. Thank you so much for subscribing to Bloomberg Podcast. 267 00:15:37,080 --> 00:15:39,920 Speaker 3: Paul, So, Mike, give us a sense of timing here. 268 00:15:40,000 --> 00:15:41,480 Speaker 3: I know that you know, the Jamie Diamonds of the 269 00:15:41,520 --> 00:15:46,680 Speaker 3: world would like these rules kind of relaxed yesterday. Realistically, 270 00:15:46,720 --> 00:15:48,040 Speaker 3: what's the timing here? 271 00:15:49,960 --> 00:15:55,000 Speaker 6: Well, this year is about updating the stress test you 272 00:15:55,080 --> 00:15:58,640 Speaker 6: saw that last month in terms of a little bit 273 00:15:58,640 --> 00:16:02,880 Speaker 6: more clarity, a little bit more less harsh, i'd say, 274 00:16:03,320 --> 00:16:07,040 Speaker 6: and the assumptions are already more harsh the actual experience 275 00:16:07,120 --> 00:16:09,760 Speaker 6: during the global cancer praises. We're not talking about going 276 00:16:09,800 --> 00:16:13,440 Speaker 6: back to two thousand and seven or those sorts of days. 277 00:16:13,480 --> 00:16:16,359 Speaker 7: So that's this year. I think next year. 278 00:16:16,320 --> 00:16:20,720 Speaker 6: There's international capital rules that's likely to get modified, and 279 00:16:20,760 --> 00:16:22,640 Speaker 6: then by the year after that, I think you should 280 00:16:22,640 --> 00:16:24,880 Speaker 6: start seeing efficiency. 281 00:16:24,320 --> 00:16:26,040 Speaker 7: Benefits and this can be win win win. 282 00:16:26,280 --> 00:16:29,360 Speaker 6: The regulators can win because you cost less money for 283 00:16:29,440 --> 00:16:32,800 Speaker 6: the oversight. The banks can win for more profitability. But 284 00:16:33,120 --> 00:16:36,120 Speaker 6: the customers can win because that profitabilities, A bit of 285 00:16:36,160 --> 00:16:37,760 Speaker 6: that's going to be passed on to them and they'll 286 00:16:37,760 --> 00:16:38,520 Speaker 6: have more options. 287 00:16:38,800 --> 00:16:41,760 Speaker 2: Mike Mayil on the banking front, you look at your 288 00:16:42,400 --> 00:16:45,240 Speaker 2: major overweight view M and t up in Buffalo. Maybe 289 00:16:46,120 --> 00:16:49,040 Speaker 2: a bit of a caution there. Finally you get a 290 00:16:49,080 --> 00:16:53,680 Speaker 2: hockey stick move in City Group, a really really nice move, 291 00:16:53,720 --> 00:16:57,640 Speaker 2: even after the ten to one reverse split of decades ago. 292 00:16:58,000 --> 00:17:00,680 Speaker 2: Reaffirm your strung by on City Group. 293 00:17:01,920 --> 00:17:03,800 Speaker 6: Well, tom As, you know I've been on your show 294 00:17:03,960 --> 00:17:08,639 Speaker 6: a few times since last year. It was slow going, 295 00:17:08,840 --> 00:17:11,200 Speaker 6: you know through parts of last year the tariffs sell off, 296 00:17:11,560 --> 00:17:14,679 Speaker 6: but City group remains my dominant number one. 297 00:17:14,560 --> 00:17:15,960 Speaker 7: Pick by a mile. 298 00:17:16,640 --> 00:17:20,920 Speaker 6: And I think, well, look what's underappreciated. They've transitioned from 299 00:17:20,960 --> 00:17:26,040 Speaker 6: fifty years of a global matrix missmatched structure to five 300 00:17:26,119 --> 00:17:29,760 Speaker 6: lines of business payments, banking, markets, consumer and wealth. 301 00:17:29,920 --> 00:17:32,119 Speaker 7: And each one of those lines of business, you know, 302 00:17:32,280 --> 00:17:33,280 Speaker 7: has a P and L. 303 00:17:33,640 --> 00:17:36,520 Speaker 6: They have returns, they have targeted returns, and they have 304 00:17:36,560 --> 00:17:40,239 Speaker 6: a CEO that's in charge of achieving those targeted returns. Now, 305 00:17:40,320 --> 00:17:43,199 Speaker 6: you say, Jane Frazer, the CEO does not get a 306 00:17:43,240 --> 00:17:47,480 Speaker 6: Nobel prize for doing that. But City is now getting 307 00:17:47,480 --> 00:17:50,200 Speaker 6: operated more like a normal company and they're only six 308 00:17:50,280 --> 00:17:54,439 Speaker 6: quarters into this new structure. Short term people are selling 309 00:17:54,440 --> 00:17:57,800 Speaker 6: the stock inappropriately due to the terraff City is a 310 00:17:57,920 --> 00:17:59,280 Speaker 6: tariff beneficiary. 311 00:17:59,520 --> 00:17:59,960 Speaker 7: They moved. 312 00:18:00,080 --> 00:18:03,120 Speaker 6: I've trained dollars of money every day around the world. 313 00:18:03,200 --> 00:18:06,399 Speaker 6: Now it might be moving to different countries. Also, a 314 00:18:06,400 --> 00:18:08,880 Speaker 6: lot of the customers around the world need trade financee. 315 00:18:08,920 --> 00:18:12,040 Speaker 6: They need more trade finante now or in exchange. So 316 00:18:12,119 --> 00:18:17,119 Speaker 6: this really fits right into cities right, you know, structural positioning. 317 00:18:17,200 --> 00:18:18,800 Speaker 6: While they make the structural. 318 00:18:18,359 --> 00:18:21,359 Speaker 2: Change, perceive it on price to book using the the 319 00:18:21,480 --> 00:18:24,919 Speaker 2: b Q screen on the Bloomberg I got JP Morgan 320 00:18:24,960 --> 00:18:27,919 Speaker 2: two point four to four price to book. City Groups 321 00:18:28,000 --> 00:18:31,320 Speaker 2: really recovered from a Deutsche Bank disaster, if you will, 322 00:18:31,400 --> 00:18:35,600 Speaker 2: folks out to point nine. So City Groups at point nine. 323 00:18:36,080 --> 00:18:38,680 Speaker 2: JP Morgan is at two point four to four. Mike 324 00:18:38,760 --> 00:18:41,560 Speaker 2: in your head, how much of that delta can City 325 00:18:41,600 --> 00:18:42,360 Speaker 2: Group make up? 326 00:18:44,320 --> 00:18:47,359 Speaker 6: Well, they can. Look which my kids do I love more? 327 00:18:47,600 --> 00:18:51,439 Speaker 6: And uh, you know, I notice the two stocks that 328 00:18:51,560 --> 00:18:54,840 Speaker 6: have been on our firm signature picklist. So Jake Morgan's 329 00:18:54,880 --> 00:18:59,280 Speaker 6: best in class, City's worst in class. So I do 330 00:18:59,320 --> 00:19:03,760 Speaker 6: think though that City can re rate on trading below 331 00:19:03,800 --> 00:19:06,480 Speaker 6: book value when it's not a crisis, when they're making. 332 00:19:06,280 --> 00:19:08,880 Speaker 7: These sort of moves is a little unusual. 333 00:19:08,920 --> 00:19:12,520 Speaker 6: So I think the stock has fifty percent upside over 334 00:19:12,520 --> 00:19:15,200 Speaker 6: the next two and a half years to one hundred 335 00:19:15,200 --> 00:19:19,080 Speaker 6: and fifty dollars. And that's there's no analytical gymnastics were 336 00:19:19,119 --> 00:19:19,560 Speaker 6: doing that. 337 00:19:19,560 --> 00:19:20,920 Speaker 7: That's simply as. 338 00:19:20,720 --> 00:19:25,199 Speaker 6: Citi's returns go up from seven percent last year, and 339 00:19:25,240 --> 00:19:28,520 Speaker 6: that's return on tangible equity to ten or eleven percent 340 00:19:28,600 --> 00:19:33,000 Speaker 6: next year and then higher after that. Mathematically you get 341 00:19:33,080 --> 00:19:36,440 Speaker 6: higher stock ranks. So it's there's a line of site 342 00:19:36,480 --> 00:19:38,639 Speaker 6: for the restructuring. And Tom you know what's unique for 343 00:19:38,720 --> 00:19:42,840 Speaker 6: any industry, any industry, when you say there's restructuring, Okay, 344 00:19:42,920 --> 00:19:43,600 Speaker 6: what's going. 345 00:19:43,400 --> 00:19:46,959 Speaker 7: To happen to revenues? Cities revenues were up eight percent 346 00:19:47,000 --> 00:19:49,080 Speaker 7: year a year of the second quarter to here with 347 00:19:49,240 --> 00:19:53,080 Speaker 7: City you have a unique story of structuring with revenue growth, 348 00:19:53,560 --> 00:19:55,280 Speaker 7: and that's unique for any company. 349 00:19:55,840 --> 00:19:57,600 Speaker 2: Paul, get one more in here with mister Manning. It's 350 00:19:57,600 --> 00:19:59,520 Speaker 2: got to go work out exactly. So are you doing 351 00:19:59,600 --> 00:20:01,600 Speaker 2: upper out of your lower body today? Mike? 352 00:20:03,119 --> 00:20:04,280 Speaker 7: This is a lower body day. 353 00:20:04,359 --> 00:20:07,720 Speaker 6: Thanks for asking, and I'm doing my deadlift and squats 354 00:20:07,720 --> 00:20:10,080 Speaker 6: and I'm still trying to push forward. 355 00:20:10,359 --> 00:20:13,400 Speaker 2: Michael bar and I are as well. Paul get exactly. 356 00:20:13,720 --> 00:20:16,200 Speaker 3: Hey, Michael, what did you take away from the Big 357 00:20:16,240 --> 00:20:18,359 Speaker 3: Banks earnings last week? 358 00:20:21,000 --> 00:20:22,480 Speaker 7: This is an on inflection. 359 00:20:23,119 --> 00:20:26,119 Speaker 6: This is an on ramp to double digit EPs growth 360 00:20:26,760 --> 00:20:30,640 Speaker 6: after having negative year of year EPs growth for much 361 00:20:30,720 --> 00:20:32,879 Speaker 6: the last year and a half. And we see this 362 00:20:32,920 --> 00:20:37,440 Speaker 6: double digit EPs growth for the next ten quarters through 363 00:20:37,480 --> 00:20:38,720 Speaker 6: the end of twenty twenty seven. 364 00:20:38,840 --> 00:20:41,360 Speaker 7: So after that we'll see. 365 00:20:41,359 --> 00:20:43,840 Speaker 2: Mike man thank you so much. With Wells Fargo there 366 00:20:43,880 --> 00:20:49,000 Speaker 2: in City Group and also on the technology over two 367 00:20:49,080 --> 00:20:54,280 Speaker 2: seventy Park Avenue. 368 00:20:56,760 --> 00:21:00,679 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 369 00:21:00,720 --> 00:21:04,119 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 370 00:21:04,160 --> 00:21:06,919 Speaker 1: with the Bloomberg Business app. You can also watch us 371 00:21:07,000 --> 00:21:10,920 Speaker 1: live every weekday on YouTube and always on the Bloomberg Terminal. 372 00:21:11,600 --> 00:21:15,600 Speaker 2: Now our interview of the day without question technology earnings. 373 00:21:15,600 --> 00:21:18,680 Speaker 2: I even finds joins us with tigers. I've ben cut 374 00:21:18,680 --> 00:21:22,320 Speaker 2: to the chase. How different is Google from the other 375 00:21:22,560 --> 00:21:24,040 Speaker 2: aimag seven. 376 00:21:25,320 --> 00:21:28,400 Speaker 9: Well, they first of all lead in search, so they 377 00:21:28,640 --> 00:21:32,200 Speaker 9: get the leg up on AI driven search, which they 378 00:21:32,200 --> 00:21:35,680 Speaker 9: are able to collect a lot of data from and 379 00:21:36,200 --> 00:21:41,359 Speaker 9: which optimizes their large language models. That is a key 380 00:21:41,440 --> 00:21:44,960 Speaker 9: driver of their business. Second, their main source of revenue 381 00:21:45,119 --> 00:21:48,280 Speaker 9: is advertising, and the more they can leverage AI to 382 00:21:48,400 --> 00:21:53,960 Speaker 9: show how they can create connections for advertisers to optimize 383 00:21:54,200 --> 00:21:59,159 Speaker 9: the advertisers return on their advertising invested dollar, that is 384 00:21:59,200 --> 00:22:02,520 Speaker 9: a powerful drive as well. So they continue to optimize 385 00:22:02,920 --> 00:22:07,440 Speaker 9: the data from searches to better connect advertisers with most 386 00:22:07,760 --> 00:22:09,840 Speaker 9: more likely or highly likely customers. 387 00:22:10,440 --> 00:22:13,280 Speaker 3: I then I find myself clicking on a fewer links 388 00:22:13,320 --> 00:22:16,040 Speaker 3: because I got Gemini kind of answering my question, how 389 00:22:16,080 --> 00:22:20,040 Speaker 3: does it impact the business model or Google well? 390 00:22:20,080 --> 00:22:21,280 Speaker 8: As far as Gemini. 391 00:22:21,320 --> 00:22:25,720 Speaker 9: They are competing against things like chat, GPT and Perplexity, 392 00:22:26,240 --> 00:22:29,560 Speaker 9: and I think they stack up well because they have 393 00:22:29,680 --> 00:22:34,159 Speaker 9: a lot more data being fed from the advertising, you know, 394 00:22:34,200 --> 00:22:38,520 Speaker 9: the search data. But so if you're looking for specific 395 00:22:38,640 --> 00:22:43,760 Speaker 9: questions to answers, now you're starting to see the Gemini 396 00:22:44,160 --> 00:22:47,600 Speaker 9: generated answer to the question, but then you're still seeing 397 00:22:47,640 --> 00:22:51,120 Speaker 9: advertising links to be able to drive further. The most 398 00:22:51,160 --> 00:22:54,160 Speaker 9: important thing is consumers don't mind advertising. They just don't 399 00:22:54,280 --> 00:22:57,119 Speaker 9: like advertising that there are not interested in. But the 400 00:22:57,200 --> 00:23:01,240 Speaker 9: ability to find new products that are being optimized by 401 00:23:01,359 --> 00:23:05,520 Speaker 9: these search algorithms on Google and of course on Instagram 402 00:23:05,880 --> 00:23:07,120 Speaker 9: are powerful drivers. 403 00:23:07,400 --> 00:23:11,200 Speaker 2: I'm in business playing off Mark German in his definitive 404 00:23:11,200 --> 00:23:13,920 Speaker 2: work for Bloomberg with Apple, and I went to Google 405 00:23:14,040 --> 00:23:17,159 Speaker 2: Gemini just like Paul, and I typed it in and 406 00:23:17,200 --> 00:23:22,399 Speaker 2: I got this beautiful essay on Apple and Google agreeing 407 00:23:23,119 --> 00:23:27,480 Speaker 2: to bring Google AI over to Apple. Is there any veracity? 408 00:23:27,480 --> 00:23:28,680 Speaker 2: Is there any veracity to. 409 00:23:28,640 --> 00:23:33,440 Speaker 9: The well, Apple, certainly they want to enhance the power 410 00:23:33,480 --> 00:23:36,240 Speaker 9: of Siri, they want to enhance the power of their search, 411 00:23:36,320 --> 00:23:40,080 Speaker 9: and they have been developing Apple Intelligence to drive it. 412 00:23:40,280 --> 00:23:42,960 Speaker 9: But they have also been in talks to use Gemini 413 00:23:43,080 --> 00:23:47,840 Speaker 9: and to use open AIS Chad gppig so and really 414 00:23:47,880 --> 00:23:49,959 Speaker 9: I think what you want to see is sort of 415 00:23:50,080 --> 00:23:52,760 Speaker 9: like a meta search or a meta AI search where 416 00:23:52,800 --> 00:23:57,840 Speaker 9: you're getting data fed from different sources and then the 417 00:23:58,000 --> 00:24:01,240 Speaker 9: end you know, end AI and in the case of Apple, 418 00:24:01,560 --> 00:24:04,320 Speaker 9: to summarize the most concise answer. 419 00:24:04,920 --> 00:24:08,800 Speaker 3: So I've in for the tech sector here for this 420 00:24:08,880 --> 00:24:11,560 Speaker 3: market to move hard? Does a tech sector need to lead? 421 00:24:12,359 --> 00:24:14,960 Speaker 3: This market has for god boy, a decade and a half, 422 00:24:15,040 --> 00:24:16,600 Speaker 3: it seems like no. 423 00:24:16,800 --> 00:24:19,439 Speaker 9: Since the beginning of time, the tech sector, whether it 424 00:24:19,560 --> 00:24:25,119 Speaker 9: was fire, lever, wheel, those were technologies early on. 425 00:24:25,440 --> 00:24:27,360 Speaker 8: The tech sector, we came out of the caves. 426 00:24:27,400 --> 00:24:29,960 Speaker 9: We're not going back. We started to eat cook food. 427 00:24:30,000 --> 00:24:32,840 Speaker 9: We don't go back to eating raw food and so on. 428 00:24:33,320 --> 00:24:40,160 Speaker 9: And so once we enjoy the benefits of tech driven amenities, 429 00:24:41,040 --> 00:24:44,360 Speaker 9: then we don't go back to using old tools. 430 00:24:44,400 --> 00:24:45,960 Speaker 8: So we once we. 431 00:24:45,880 --> 00:24:48,679 Speaker 9: Started using the work processor, we didn't go back to 432 00:24:48,720 --> 00:24:54,600 Speaker 9: the typewriter. So the tech sector drives humanity and globally 433 00:24:54,840 --> 00:24:58,640 Speaker 9: the global economy forward. And that will to you since 434 00:24:58,680 --> 00:25:01,240 Speaker 9: the beginning of time, and hold the end of time. 435 00:25:01,160 --> 00:25:04,040 Speaker 2: On your commute today across this nation. Good morning and 436 00:25:04,240 --> 00:25:07,280 Speaker 2: serious six Channel one twenty one, ninety nine one FM, 437 00:25:07,480 --> 00:25:11,399 Speaker 2: Hagar Radio, Washington, Good Morning ninety two nine FM in 438 00:25:11,560 --> 00:25:16,160 Speaker 2: Boston all the way out to well Fleet. Wow, nailed dead? Okay, 439 00:25:16,440 --> 00:25:19,119 Speaker 2: Mermaid had clammed some weal feet there like to die for. 440 00:25:19,320 --> 00:25:21,199 Speaker 2: I've been find set through with us here as we 441 00:25:21,240 --> 00:25:23,200 Speaker 2: go to Tech Earnings this afternoon and look for those 442 00:25:23,240 --> 00:25:27,280 Speaker 2: with Carrol Masser and team this after noon. Ivan, what's 443 00:25:27,320 --> 00:25:30,320 Speaker 2: your single best buy? Now? Is it Google? Or can 444 00:25:30,359 --> 00:25:33,520 Speaker 2: we go someplace else for the fine set single best buy? 445 00:25:34,880 --> 00:25:35,960 Speaker 8: Still it's in video. 446 00:25:36,640 --> 00:25:42,040 Speaker 9: In video is driving the whole AI process, and I 447 00:25:42,119 --> 00:25:45,280 Speaker 9: know it's up a lot, and it certainly had a 448 00:25:45,280 --> 00:25:48,400 Speaker 9: big pullback in April that went all the way down 449 00:25:48,400 --> 00:25:51,719 Speaker 9: to eighty six dollars, and now it is recovered, you know, 450 00:25:51,760 --> 00:25:56,320 Speaker 9: more than doubling. It hits one seventy two. So uh 451 00:25:56,359 --> 00:25:58,159 Speaker 9: and people say, oh, what's up a lot? It is 452 00:25:58,200 --> 00:26:03,560 Speaker 9: the engine behind the AI process. And all we hear 453 00:26:03,880 --> 00:26:07,439 Speaker 9: is the amount of money every every day. It's tens 454 00:26:07,680 --> 00:26:11,359 Speaker 9: hundreds of billions of dollars being invested in AI and 455 00:26:11,480 --> 00:26:16,359 Speaker 9: data centers. And in Vidia is the primary beneficiary of this. 456 00:26:16,600 --> 00:26:21,600 Speaker 9: So you need Nvidia processors, the GPUs, you need then 457 00:26:21,720 --> 00:26:25,560 Speaker 9: power you need land, you need water, you need connectivity, 458 00:26:25,640 --> 00:26:29,199 Speaker 9: So it is a ecosystem. In fact, President Trump is 459 00:26:29,600 --> 00:26:33,240 Speaker 9: scheduled to give a keynote speech added AI summit in 460 00:26:33,359 --> 00:26:37,920 Speaker 9: Washington talking about his emphasis on us AI. He would 461 00:26:38,040 --> 00:26:43,760 Speaker 9: be the global industry leader in AI. And we saw 462 00:26:43,880 --> 00:26:48,240 Speaker 9: last week the ninety billion dollar commitment to energy and 463 00:26:48,359 --> 00:26:50,480 Speaker 9: data center development in Pennsylvania. 464 00:26:50,560 --> 00:26:52,200 Speaker 8: By the way, that's not government money. 465 00:26:52,200 --> 00:26:56,080 Speaker 9: That's company you know, companies investing with Amazon, you know, 466 00:26:56,119 --> 00:26:59,280 Speaker 9: committing to twenty billion of that ninety billion. 467 00:27:00,080 --> 00:27:02,600 Speaker 2: So it's even great about that. Ivan and Steve Schwartzman's 468 00:27:02,640 --> 00:27:06,080 Speaker 2: taking over the Pittsburgh Pirates. That's really what's going on here. 469 00:27:06,080 --> 00:27:08,760 Speaker 2: As Blackstone I believe goes goes out there. So in 470 00:27:08,880 --> 00:27:14,600 Speaker 2: Vidia's four point zero eight trillion dollars of marketcap with 471 00:27:14,760 --> 00:27:20,159 Speaker 2: thirty six thousand employees Santa Clair, California, Ivan, is it 472 00:27:20,240 --> 00:27:25,320 Speaker 2: like an extrapolation to five trillion dollars market cap or 473 00:27:25,400 --> 00:27:27,720 Speaker 2: is it accelerative right now? 474 00:27:28,320 --> 00:27:31,879 Speaker 9: Well, it's going to continue to increase in value. Revenue 475 00:27:32,359 --> 00:27:37,960 Speaker 9: continues to grow at a huge rate. The demand, they 476 00:27:37,960 --> 00:27:42,199 Speaker 9: cannot keep up with demand. President Trump, who relaxed the 477 00:27:42,280 --> 00:27:46,800 Speaker 9: restrictions a couple of weeks ago on their ability to 478 00:27:46,840 --> 00:27:50,280 Speaker 9: sell back into China, which is a huge market. So 479 00:27:50,520 --> 00:27:54,040 Speaker 9: in Nvidia leads, and by the time any other company 480 00:27:55,240 --> 00:27:58,119 Speaker 9: other companies catch up to the Hopper, which is the 481 00:27:58,200 --> 00:28:00,720 Speaker 9: main one they sell, they have the black one, and 482 00:28:00,760 --> 00:28:03,719 Speaker 9: then after the blackwell, when people catch up to the Blackwell, 483 00:28:03,960 --> 00:28:04,440 Speaker 9: they're going. 484 00:28:04,359 --> 00:28:05,360 Speaker 8: To have the Rubin. 485 00:28:05,600 --> 00:28:09,080 Speaker 9: So they are two steps ahead of being two steps 486 00:28:09,080 --> 00:28:10,480 Speaker 9: ahead of everybody else. 487 00:28:11,200 --> 00:28:14,280 Speaker 3: Ivan, you've got a SMP target I think around sixty 488 00:28:14,280 --> 00:28:16,840 Speaker 3: seven hundred, one of the higher ones on the street. 489 00:28:16,920 --> 00:28:20,840 Speaker 3: That suggests to me that you're pretty bullish on earnings here. 490 00:28:20,640 --> 00:28:22,640 Speaker 3: What are you taking away from the earning season here? 491 00:28:22,720 --> 00:28:25,080 Speaker 8: So far, it's going to be tech. 492 00:28:25,240 --> 00:28:29,440 Speaker 9: Tech is driving growth, Tech is growing, and all we're 493 00:28:29,440 --> 00:28:33,600 Speaker 9: going to see is ongoing huge commitments to capital investment 494 00:28:33,840 --> 00:28:37,040 Speaker 9: in technology. And it's not only the tech companies. To 495 00:28:37,160 --> 00:28:40,440 Speaker 9: quote I believe Tom Siebel, the founder of C three 496 00:28:40,480 --> 00:28:43,600 Speaker 9: AI set, every company is going to be an AI company. 497 00:28:44,080 --> 00:28:47,560 Speaker 9: Every company is going to use AI to improve their business, 498 00:28:48,000 --> 00:28:54,480 Speaker 9: whether it's pricing optimization, supply chain optimization, and target marketing. 499 00:28:54,800 --> 00:28:57,880 Speaker 9: So AI is going to be integrated, just like people 500 00:28:57,920 --> 00:29:02,160 Speaker 9: are using chat, GPT and J and I on their 501 00:29:02,200 --> 00:29:04,920 Speaker 9: phones and more on their computer. 502 00:29:06,160 --> 00:29:07,720 Speaker 8: This is going to continue to grow. 503 00:29:07,800 --> 00:29:12,200 Speaker 9: And I recently was at a two different Walmart distribution 504 00:29:12,360 --> 00:29:16,640 Speaker 9: centers where they have replaced people who are working on 505 00:29:16,880 --> 00:29:19,600 Speaker 9: the floor of the warehouse carrying and lifting things to 506 00:29:19,720 --> 00:29:24,160 Speaker 9: people who are overseeing automation, holding tablets and looking at 507 00:29:24,200 --> 00:29:28,520 Speaker 9: computer monitors to monitor the progress. Where in one of 508 00:29:28,520 --> 00:29:32,400 Speaker 9: their fulfillments, they have taken pickpack and ship fulfillment down 509 00:29:32,440 --> 00:29:35,840 Speaker 9: from four hours to thirty minutes. They in their frozen 510 00:29:35,880 --> 00:29:39,400 Speaker 9: warehouse which is fifteen degrees below zero. I could only 511 00:29:39,440 --> 00:29:42,560 Speaker 9: stay in there for a few minutes with the hat 512 00:29:42,600 --> 00:29:45,720 Speaker 9: and glove and coat that they gave me. People used 513 00:29:45,760 --> 00:29:49,120 Speaker 9: to work eight hour ships in the frozen warehouse, coming 514 00:29:49,160 --> 00:29:52,560 Speaker 9: in and out, but now these people are outside minding it. 515 00:29:52,720 --> 00:29:54,840 Speaker 2: You got to try a studio in New York City. 516 00:29:54,880 --> 00:29:57,640 Speaker 2: It's like five degrees colder in that. Where else I've 517 00:29:57,640 --> 00:29:59,560 Speaker 2: an around of time. We got to live there. Thank 518 00:29:59,600 --> 00:30:02,840 Speaker 2: you for the particularly. They're on Google this afternoon and 519 00:30:03,000 --> 00:30:06,280 Speaker 2: Ivan finds it of Tigris on Nvidio. 520 00:30:07,080 --> 00:30:11,000 Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday 521 00:30:11,000 --> 00:30:14,040 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 522 00:30:14,040 --> 00:30:17,080 Speaker 1: Auto with the Bloomberg Business app. You can also listen 523 00:30:17,160 --> 00:30:20,440 Speaker 1: live on Amazon Alexa from our flagship New York station. 524 00:30:21,000 --> 00:30:23,640 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 525 00:30:23,920 --> 00:30:27,560 Speaker 2: We need a distraction, Lisa Manteo the newspapers. Lisa, what 526 00:30:27,600 --> 00:30:27,880 Speaker 2: do you have? 527 00:30:28,040 --> 00:30:31,360 Speaker 10: That is my job and distraction? Okay. There is a 528 00:30:31,440 --> 00:30:34,840 Speaker 10: hot new bag trend from moms this summer. If you're 529 00:30:34,880 --> 00:30:37,040 Speaker 10: listening up. It's not the bog bag, okay, that was 530 00:30:37,080 --> 00:30:38,480 Speaker 10: like the hot old one. It was the one that 531 00:30:38,560 --> 00:30:40,600 Speaker 10: kind of looked like cracks with the holes in it. 532 00:30:41,160 --> 00:30:45,120 Speaker 10: Now that's old news. It is Yetti's Camino thirty five 533 00:30:45,400 --> 00:30:46,640 Speaker 10: carryall tote. 534 00:30:46,920 --> 00:30:47,360 Speaker 3: Okay. 535 00:30:47,720 --> 00:30:50,360 Speaker 10: It is all over social media. It runs about one 536 00:30:50,400 --> 00:30:53,080 Speaker 10: hundred and fifty to one hundred and seventy dollars and 537 00:30:53,120 --> 00:30:56,680 Speaker 10: it can carry up to three hundred pounds of weight 538 00:30:57,240 --> 00:30:58,680 Speaker 10: because moms carry a lot. 539 00:30:58,800 --> 00:30:59,280 Speaker 3: I'm telling you. 540 00:30:59,480 --> 00:31:01,880 Speaker 10: Get this Stanley cup in there. They bring it on 541 00:31:01,920 --> 00:31:05,680 Speaker 10: their boats, the beach athletic fields. And you can customize 542 00:31:05,680 --> 00:31:07,440 Speaker 10: it Tom with those la Boo boo plushies. 543 00:31:07,920 --> 00:31:08,800 Speaker 7: Wow makes it? 544 00:31:10,600 --> 00:31:13,040 Speaker 2: Yes, it is, and you can hook the la boo 545 00:31:13,040 --> 00:31:14,160 Speaker 2: boo around it. 546 00:31:14,320 --> 00:31:17,800 Speaker 10: You can hook the LaVoo boo on it. But Jeffrey's analyst. 547 00:31:17,880 --> 00:31:20,240 Speaker 10: They actually point to it and they're saying it's boosting 548 00:31:20,240 --> 00:31:23,400 Speaker 10: confidence in Yetti's stock. So that's giving it a little 549 00:31:23,400 --> 00:31:25,040 Speaker 10: bit of a boost. But this is the hot new thing. 550 00:31:25,040 --> 00:31:26,800 Speaker 10: You're going to see it all. You're going to see 551 00:31:26,840 --> 00:31:28,240 Speaker 10: it on the Jersey shore there. 552 00:31:28,320 --> 00:31:31,920 Speaker 2: I'm telling you to be on thirteen people. 553 00:31:32,560 --> 00:31:33,880 Speaker 8: Okay YETI Good. 554 00:31:33,760 --> 00:31:37,800 Speaker 2: Morning Matthew and von Thank you so much for Michael 555 00:31:37,840 --> 00:31:41,560 Speaker 2: McMillan's CFO, Yetti Holdings. 556 00:31:41,440 --> 00:31:44,800 Speaker 3: The Yetti water bottles, the technology there is life change. 557 00:31:44,840 --> 00:31:47,280 Speaker 7: Oh yeah, the coolers are I'm sitting out. 558 00:31:47,160 --> 00:31:49,960 Speaker 3: On the beach. I can't even hold my Yetty bottle. 559 00:31:49,960 --> 00:31:52,720 Speaker 3: It's so hot, but then the water's ice cold. 560 00:31:52,880 --> 00:31:53,760 Speaker 8: It's unbelievable. 561 00:31:53,800 --> 00:31:56,920 Speaker 3: It's crazy technology. But beach the thermost I grew up with. 562 00:31:57,160 --> 00:31:59,760 Speaker 2: So this is a tote bag like a Trader Joe's. 563 00:32:00,640 --> 00:32:02,800 Speaker 7: It's really durable, Like I think. 564 00:32:02,640 --> 00:32:05,520 Speaker 2: Like, why is it superior to an LL bean bag. 565 00:32:05,800 --> 00:32:08,560 Speaker 10: Because you can carry more stuff in it, it's waterproof, 566 00:32:08,680 --> 00:32:11,600 Speaker 10: it's durable. You know, you can drag it around, get 567 00:32:11,640 --> 00:32:13,800 Speaker 10: it knocked around, and it still survives. 568 00:32:13,920 --> 00:32:17,800 Speaker 2: So if you have the LL being thermos of the 569 00:32:17,800 --> 00:32:20,640 Speaker 2: beverage of your choice and it leaks out into the 570 00:32:20,960 --> 00:32:23,360 Speaker 2: ll bean bag. You learn it's not water exactly. 571 00:32:23,480 --> 00:32:23,840 Speaker 8: Next. 572 00:32:24,360 --> 00:32:26,720 Speaker 10: Oh, by the way, someone on the chat was asking 573 00:32:26,800 --> 00:32:28,880 Speaker 10: if I can talk about a man toat I will 574 00:32:28,920 --> 00:32:29,360 Speaker 10: work on that. 575 00:32:29,440 --> 00:32:30,480 Speaker 3: Okay, here we go. 576 00:32:30,760 --> 00:32:31,360 Speaker 2: Moving on. 577 00:32:31,880 --> 00:32:34,600 Speaker 10: This is people right when they travel to Europe in 578 00:32:34,600 --> 00:32:36,640 Speaker 10: the summer. One thing people always complain about is lack 579 00:32:36,640 --> 00:32:39,560 Speaker 10: of air conditioning. So the thing is heat waves are 580 00:32:39,560 --> 00:32:42,720 Speaker 10: happening more often, they're more intense. So the hot new 581 00:32:42,760 --> 00:32:47,280 Speaker 10: topic in European politics is this it's air conditioning. So 582 00:32:47,320 --> 00:32:49,960 Speaker 10: the Wall Street Journal says politicians on the right they've 583 00:32:49,960 --> 00:32:52,880 Speaker 10: been sounding off. You have Francis Marine La Penn proposed 584 00:32:52,920 --> 00:32:55,480 Speaker 10: this major campaign to put it in schools because a 585 00:32:55,480 --> 00:32:57,560 Speaker 10: lot of schools in France had to close down because 586 00:32:57,560 --> 00:33:00,720 Speaker 10: it was too hot. In the UK, Conservative urged London's 587 00:33:00,760 --> 00:33:03,280 Speaker 10: Labor Party to get rid of rules that restrict how 588 00:33:03,320 --> 00:33:05,360 Speaker 10: air condition can be used in new housing. But you 589 00:33:05,440 --> 00:33:08,080 Speaker 10: have the French authorities who are kind of pushing back 590 00:33:08,120 --> 00:33:10,480 Speaker 10: on this. They say air conditioning would eat up the 591 00:33:10,520 --> 00:33:14,040 Speaker 10: streets because of the exhaust. Then you have environmentalists saying 592 00:33:14,080 --> 00:33:16,560 Speaker 10: it's going to generate more greenhouse gas emissions too. 593 00:33:16,600 --> 00:33:17,120 Speaker 3: On top of it. 594 00:33:17,120 --> 00:33:19,120 Speaker 10: They say, what you need to do is plant more 595 00:33:19,280 --> 00:33:20,640 Speaker 10: greenery and that will make it. 596 00:33:20,880 --> 00:33:23,680 Speaker 2: I actually did like a gemini you search on this 597 00:33:23,800 --> 00:33:28,320 Speaker 2: the other day and I guess air conditioning implementation is 598 00:33:28,400 --> 00:33:30,720 Speaker 2: speeding up. Yeah, I mean just because of the heat. 599 00:33:31,040 --> 00:33:33,200 Speaker 3: Yeah, He's all I know is that the tube in 600 00:33:33,240 --> 00:33:35,960 Speaker 3: London is not air conditioning in some days. 601 00:33:36,000 --> 00:33:36,920 Speaker 8: Boy wow. 602 00:33:37,120 --> 00:33:41,120 Speaker 10: Yeah, especially seeze in a I do okay. Shopping malls, 603 00:33:41,120 --> 00:33:42,800 Speaker 10: we talked about it, right, A dying breed a lot 604 00:33:42,800 --> 00:33:47,480 Speaker 10: of places, but one in Queen's is actually thriving. This 605 00:33:47,520 --> 00:33:49,840 Speaker 10: is Tangrum. It's two hundred and seventy five thousand square 606 00:33:49,880 --> 00:33:53,920 Speaker 10: feet indoor shopping center and Flushing opened about three years ago. 607 00:33:54,640 --> 00:33:56,680 Speaker 10: But the thing that makes it different it has has 608 00:33:56,720 --> 00:33:59,680 Speaker 10: you know, boutiques and restaurants. It has you know, karaoke 609 00:34:00,080 --> 00:34:01,680 Speaker 10: places up till six in the morning. 610 00:34:01,680 --> 00:34:02,720 Speaker 3: It's open arcades. 611 00:34:02,800 --> 00:34:06,200 Speaker 10: It has the PopMart store which sells those La Boo boos. 612 00:34:06,400 --> 00:34:08,960 Speaker 10: It has a cat cafe. So it has all these 613 00:34:09,000 --> 00:34:11,879 Speaker 10: different things. Because they're saying it's not just shopping, it's 614 00:34:11,880 --> 00:34:14,840 Speaker 10: a destination for food and fun. And that's what mals 615 00:34:14,920 --> 00:34:17,560 Speaker 10: need to start doing, is going to that rather than 616 00:34:17,760 --> 00:34:18,959 Speaker 10: just the shopping. 617 00:34:18,640 --> 00:34:21,680 Speaker 2: Alone, Lisa, take you. Thank you so much the newspapers 618 00:34:21,920 --> 00:34:22,520 Speaker 2: this morning. 619 00:34:23,000 --> 00:34:27,840 Speaker 1: This is the Bloomberg Surveillance Podcast, available on apples, Spotify, 620 00:34:27,960 --> 00:34:32,240 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 621 00:34:32,400 --> 00:34:35,840 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 622 00:34:35,920 --> 00:34:39,960 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 623 00:34:40,000 --> 00:34:43,360 Speaker 1: can also watch us live every weekday on YouTube and 624 00:34:43,560 --> 00:34:45,280 Speaker 1: always on the Bloomberg terminal