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 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,480 --> 00:00:31,040 Speaker 2: This is incredibly well timed for the news. Laurie Calvesina 7 00:00:31,600 --> 00:00:32,159 Speaker 2: with this. 8 00:00:32,960 --> 00:00:35,040 Speaker 3: At RBC in where they work at Credit Squeeze. 9 00:00:35,040 --> 00:00:37,920 Speaker 2: Over the years, Lauriae, I've never seen this where once 10 00:00:37,960 --> 00:00:42,200 Speaker 2: again vix out three big figures, and I just don't 11 00:00:42,280 --> 00:00:45,240 Speaker 2: see the sweat that I should see with a vix 12 00:00:45,280 --> 00:00:50,159 Speaker 2: out three big figures. We're just weaned. We're hardwired by 13 00:00:50,240 --> 00:00:51,239 Speaker 2: in the dip, aren't we. 14 00:00:51,880 --> 00:00:54,960 Speaker 4: So it's interesting, Tom, if you look at aaii net bowls, 15 00:00:55,320 --> 00:00:57,800 Speaker 4: they dropped like a stone, sunk like a stone. I 16 00:00:57,800 --> 00:00:59,680 Speaker 4: guess I should stay in August. And the last time 17 00:00:59,680 --> 00:01:01,640 Speaker 4: we saw that was the first quarter of this year, 18 00:01:02,040 --> 00:01:04,959 Speaker 4: which predated the tariff sell off that we got. But 19 00:01:05,040 --> 00:01:07,840 Speaker 4: in retrospect was an indication that maybe that by the 20 00:01:08,200 --> 00:01:11,680 Speaker 4: mentality wasn't going to be rushing in to save the day. 21 00:01:12,560 --> 00:01:14,720 Speaker 4: So you know, it's funny, Tom, we're having sort of 22 00:01:15,280 --> 00:01:17,720 Speaker 4: a red day or red morning to start the week. 23 00:01:18,720 --> 00:01:21,679 Speaker 4: I'm a little surprised, you know, by the timing of 24 00:01:21,720 --> 00:01:24,240 Speaker 4: it necessarily, but you know, of this particular day. But 25 00:01:24,319 --> 00:01:26,920 Speaker 4: that being said, we had been telling people, you know, 26 00:01:27,319 --> 00:01:31,200 Speaker 4: back in August AAI I had sung valuations were stretched 27 00:01:31,520 --> 00:01:33,800 Speaker 4: and seasonalities poor in September and October. 28 00:01:33,880 --> 00:01:36,160 Speaker 2: Well, I've been remiss and mentioned it's the Nasdaq one 29 00:01:36,200 --> 00:01:38,800 Speaker 2: hundred a negative one point five percent this morning. 30 00:01:38,800 --> 00:01:42,720 Speaker 5: Absolutely, So let's let's just start with valuation. How are 31 00:01:42,760 --> 00:01:44,199 Speaker 5: you thinking about valuation here? 32 00:01:44,319 --> 00:01:44,480 Speaker 6: Is that? 33 00:01:44,760 --> 00:01:47,760 Speaker 7: Is that a cost for concern as we think about it? 34 00:01:47,880 --> 00:01:47,960 Speaker 8: So? 35 00:01:48,040 --> 00:01:48,680 Speaker 9: I think it is. 36 00:01:48,760 --> 00:01:51,480 Speaker 4: And if you look at just plain old fashioned vanilla 37 00:01:51,680 --> 00:01:54,480 Speaker 4: forward pe multiples, a market cap weighted s and P 38 00:01:54,600 --> 00:01:57,280 Speaker 4: five hundred number has been bumping up against recent highs 39 00:01:57,320 --> 00:01:59,040 Speaker 4: and started to stall. We've seen the same thing on 40 00:01:59,080 --> 00:02:00,920 Speaker 4: the Nasdaq one hundred, even if you look at it 41 00:02:00,960 --> 00:02:04,160 Speaker 4: on an equal weighted basis, And you know, the way 42 00:02:04,160 --> 00:02:05,520 Speaker 4: we put it is that we sort of hit a 43 00:02:05,600 --> 00:02:09,520 Speaker 4: valuation ceiling and things get a little bit tougher, and 44 00:02:09,800 --> 00:02:12,240 Speaker 4: it really just represents a headwind that you're kind of 45 00:02:12,280 --> 00:02:15,200 Speaker 4: not really vulnerable to good news anymore, but you are 46 00:02:15,280 --> 00:02:17,280 Speaker 4: vulnerable to bad news, and this morning the bad news 47 00:02:17,280 --> 00:02:18,919 Speaker 4: seems to be the bond market acting out. 48 00:02:19,400 --> 00:02:21,800 Speaker 5: Yeah, exactly, We've got the ten year treasure yields out 49 00:02:21,800 --> 00:02:24,440 Speaker 5: about six basis points four point two nine percent here, 50 00:02:25,320 --> 00:02:28,000 Speaker 5: so we do have a FED that presumably is going 51 00:02:28,040 --> 00:02:31,360 Speaker 5: to start easing. How does that play into your outlook? 52 00:02:31,600 --> 00:02:33,600 Speaker 4: So it's a great question, Paul, and I'll tell you. 53 00:02:33,639 --> 00:02:35,840 Speaker 4: We have a you know, sort of a top down 54 00:02:35,919 --> 00:02:38,519 Speaker 4: valuation model where we project where the PE should be 55 00:02:38,560 --> 00:02:40,239 Speaker 4: at the end of the year on a trailing basis, 56 00:02:40,280 --> 00:02:42,560 Speaker 4: and three inputs into that are inflation, the FED, and 57 00:02:42,600 --> 00:02:45,520 Speaker 4: ten year yields. The FED cutting, you know, getting some 58 00:02:45,639 --> 00:02:49,200 Speaker 4: relief there should give you some upward lift to that PE, 59 00:02:49,560 --> 00:02:52,160 Speaker 4: but inflation moving up should give you some downward pressure. 60 00:02:52,240 --> 00:02:54,680 Speaker 4: And we'll see you know, TBD on the ten year yield, 61 00:02:55,360 --> 00:02:57,720 Speaker 4: but it tends to be more of an inversely correlated factor. 62 00:02:57,760 --> 00:02:59,560 Speaker 4: So even if we have cuts coming off, ten year 63 00:02:59,600 --> 00:03:00,639 Speaker 4: yields are moving up. 64 00:03:00,919 --> 00:03:01,440 Speaker 3: The way the. 65 00:03:01,400 --> 00:03:03,880 Speaker 4: Math works says, you know, at best, they sort of 66 00:03:03,919 --> 00:03:05,120 Speaker 4: net out, you know, at the end of the day 67 00:03:05,120 --> 00:03:07,520 Speaker 4: if you throw inflation and may give you some downward pressure. 68 00:03:07,960 --> 00:03:11,079 Speaker 5: Right, So how do you screen here in this kind 69 00:03:11,120 --> 00:03:14,480 Speaker 5: of market? Again where it's a most people call it 70 00:03:14,480 --> 00:03:17,080 Speaker 5: an expensive market, but it's supported by some pretty solid 71 00:03:17,080 --> 00:03:17,920 Speaker 5: earnings out there. 72 00:03:18,160 --> 00:03:21,040 Speaker 7: How do you screen here? You screen by industry, by factor. 73 00:03:21,040 --> 00:03:22,600 Speaker 4: How do you think so we you know, we tend 74 00:03:22,600 --> 00:03:25,320 Speaker 4: to do less work on factors. I tend to do 75 00:03:25,360 --> 00:03:28,000 Speaker 4: more work on sectors and industries. And I'll tell you 76 00:03:28,160 --> 00:03:30,280 Speaker 4: I put another chart into the weekly this week. I'm 77 00:03:30,360 --> 00:03:32,360 Speaker 4: sounding like a broken record, but it comes back to 78 00:03:32,400 --> 00:03:35,680 Speaker 4: the financials and we did some work around ism prices 79 00:03:35,720 --> 00:03:38,200 Speaker 4: paid last week, just looking at its relationship to the 80 00:03:38,240 --> 00:03:40,800 Speaker 4: stock market, and then I ran it against sector performance 81 00:03:41,200 --> 00:03:44,040 Speaker 4: and guess what financials comes out as your top sector. 82 00:03:44,440 --> 00:03:47,200 Speaker 4: If that sort of leading indicator of inflation is moving up, 83 00:03:47,240 --> 00:03:49,960 Speaker 4: things like healthcare and staples tend to underperform. 84 00:03:50,040 --> 00:03:53,240 Speaker 2: Do you have a vector of inflation higher or is 85 00:03:53,280 --> 00:03:55,480 Speaker 2: it a vector level persistent? 86 00:03:56,400 --> 00:03:59,640 Speaker 4: So you know, our economists are looking for inflation on 87 00:03:59,680 --> 00:04:01,240 Speaker 4: a head line basis. I think to move up to 88 00:04:01,240 --> 00:04:03,200 Speaker 4: around two point nine percent at the end of the year, 89 00:04:03,240 --> 00:04:06,360 Speaker 4: So nothing crazy like what we saw in sort of 90 00:04:06,400 --> 00:04:08,600 Speaker 4: the you know, kind of post COVID era or even 91 00:04:08,680 --> 00:04:11,360 Speaker 4: back in the seventies, but you know, certainly far away 92 00:04:11,400 --> 00:04:14,200 Speaker 4: from that two percent target that the FED has, And 93 00:04:14,760 --> 00:04:16,200 Speaker 4: you know, I think this is just going to be 94 00:04:16,440 --> 00:04:18,960 Speaker 4: the question. You know, we've got this real test coming up. 95 00:04:19,200 --> 00:04:21,520 Speaker 4: We know the inflation pressures are there. We don't know 96 00:04:21,560 --> 00:04:23,599 Speaker 4: what the demand picture is really going to be, but 97 00:04:23,680 --> 00:04:27,640 Speaker 4: we know that tariffs are creating some upwards seen into sectors. 98 00:04:27,720 --> 00:04:30,640 Speaker 2: I mean, I like this idea, how quaint sectors If 99 00:04:31,120 --> 00:04:35,080 Speaker 2: I have a persistent inflation, which sectors win? 100 00:04:35,560 --> 00:04:38,159 Speaker 4: So you've actually been seeing energy act a little bit better. 101 00:04:38,200 --> 00:04:40,560 Speaker 4: And that's another one that typically, you know, we've just 102 00:04:40,640 --> 00:04:43,120 Speaker 4: noticed more anecdotally less so in a study like the 103 00:04:43,160 --> 00:04:46,640 Speaker 4: one I mentioned, But if you expect to see you know, 104 00:04:46,720 --> 00:04:48,920 Speaker 4: sort of inflation pressures mount, we often will see the 105 00:04:48,920 --> 00:04:53,080 Speaker 4: commodity sectors do quite well. We actually upgraded materials the 106 00:04:53,160 --> 00:04:55,240 Speaker 4: last time we made sort of our quarterly changes to 107 00:04:55,279 --> 00:04:59,000 Speaker 4: sector bets, and we liked the valuations there. Our analysts 108 00:04:59,040 --> 00:05:01,919 Speaker 4: were pretty enthusiasm. There are clearly some tariff headwinds, but 109 00:05:01,920 --> 00:05:03,760 Speaker 4: there's also a lot of you know, kind of a 110 00:05:03,880 --> 00:05:05,560 Speaker 4: dollar benefit from a weeker dollar. 111 00:05:06,200 --> 00:05:08,919 Speaker 7: I about just the concentration risk in this market. 112 00:05:08,920 --> 00:05:10,880 Speaker 5: Every once in a while, like every other week, maybe 113 00:05:10,880 --> 00:05:14,120 Speaker 5: it gets called out somewhere that boy it's ten percent. 114 00:05:14,160 --> 00:05:16,599 Speaker 5: You know, they're you know, halfu of stocks are really 115 00:05:16,640 --> 00:05:19,000 Speaker 5: responsible for the performance of the S and P five hundred. 116 00:05:19,240 --> 00:05:20,560 Speaker 7: How do you guys think about that? 117 00:05:20,680 --> 00:05:22,360 Speaker 10: So we have one chart in our deck. 118 00:05:22,680 --> 00:05:24,360 Speaker 4: This may be the first time I've ever talked about 119 00:05:24,360 --> 00:05:26,880 Speaker 4: it on TV, but we look at those top ten 120 00:05:27,000 --> 00:05:29,080 Speaker 4: market cap names in the S and P five hundred 121 00:05:29,080 --> 00:05:31,120 Speaker 4: as a percent of net income of the S and P, 122 00:05:31,279 --> 00:05:33,320 Speaker 4: and then we compare it to the percent of market cap. 123 00:05:33,920 --> 00:05:36,120 Speaker 4: And what we're seeing is that the market cap has 124 00:05:36,200 --> 00:05:38,840 Speaker 4: exceeded the net income percentage. But that gap has been 125 00:05:38,880 --> 00:05:40,680 Speaker 4: pretty stable in recent years, so. 126 00:05:40,640 --> 00:05:42,680 Speaker 10: You're getting the premium. I will tell you. 127 00:05:42,720 --> 00:05:44,720 Speaker 4: In August, it did seem like the gap got a 128 00:05:44,760 --> 00:05:47,640 Speaker 4: little bit wider between the two. Nothing super alarming, but 129 00:05:47,680 --> 00:05:49,480 Speaker 4: you could have made the case looking at that chart 130 00:05:49,480 --> 00:05:52,360 Speaker 4: that the concentration, you know, maybe got a little bit 131 00:05:52,360 --> 00:05:54,560 Speaker 4: of ahead of the relationship that have been in place 132 00:05:54,560 --> 00:05:55,000 Speaker 4: the last time. 133 00:05:55,000 --> 00:05:56,120 Speaker 3: So what is I mean? 134 00:05:56,120 --> 00:05:59,320 Speaker 2: Come on, it's September. I believe the quarter in September 135 00:05:59,320 --> 00:06:00,960 Speaker 2: thirty the present and can't change. 136 00:06:00,760 --> 00:06:01,680 Speaker 3: That, right, I don't think so? 137 00:06:01,720 --> 00:06:04,599 Speaker 2: Okay, thank you anyone, but September thirty. JP Morgan is 138 00:06:04,600 --> 00:06:08,559 Speaker 2: October fourteenth. I mean, we got earnings wrong last time 139 00:06:08,640 --> 00:06:11,560 Speaker 2: and the time before. Are we reducing it again? 140 00:06:11,800 --> 00:06:14,279 Speaker 4: Well, look, I will tell you that on earnings this 141 00:06:14,440 --> 00:06:16,960 Speaker 4: last reporting season, I would sort of fade the idea 142 00:06:16,960 --> 00:06:18,960 Speaker 4: that it was the best reporting season ever. I think 143 00:06:19,000 --> 00:06:21,680 Speaker 4: one of my competitors actually said that. And if you 144 00:06:21,680 --> 00:06:23,360 Speaker 4: go through and you look at the data, a lot 145 00:06:23,400 --> 00:06:25,680 Speaker 4: of it was backward looking. And it was because of 146 00:06:25,760 --> 00:06:28,000 Speaker 4: all these tariff impacts that weren't as bad as what 147 00:06:28,040 --> 00:06:30,120 Speaker 4: people had put in in the last reporting season. And 148 00:06:30,160 --> 00:06:33,520 Speaker 4: guess what, everybody figured that out starting in May, right, 149 00:06:33,560 --> 00:06:36,000 Speaker 4: and so it really had already gotten baked in. It 150 00:06:36,000 --> 00:06:38,760 Speaker 4: was a very sort of backward looking beat. If you 151 00:06:38,839 --> 00:06:41,200 Speaker 4: look at, you know, kind of the forward looking growth 152 00:06:41,240 --> 00:06:44,440 Speaker 4: expectations for twenty twenty six, we only saw them go up. 153 00:06:44,480 --> 00:06:46,320 Speaker 4: And you know, if you look at that percentage growth 154 00:06:46,360 --> 00:06:48,400 Speaker 4: rate twenty six over twenty five, it only went up 155 00:06:48,400 --> 00:06:50,040 Speaker 4: for two sectors, tech and materials. 156 00:06:50,040 --> 00:06:51,160 Speaker 10: It went down everywhere else. 157 00:06:51,480 --> 00:06:54,800 Speaker 4: That doesn't mean to me, that doesn't scream that we 158 00:06:54,920 --> 00:06:57,240 Speaker 4: just injected a bunch of optimism into the outlook. 159 00:06:57,680 --> 00:07:00,600 Speaker 2: I have one final quest. I mean, you're so healthy, 160 00:07:00,640 --> 00:07:03,479 Speaker 2: I mean for your children, are you going with the 161 00:07:03,600 --> 00:07:08,320 Speaker 2: leaded cheese or Kraft singles two percent milk American cheese. 162 00:07:08,520 --> 00:07:11,160 Speaker 4: We do not do Kraft, the Kraft singles we do. 163 00:07:11,200 --> 00:07:12,720 Speaker 4: The mozzarella sticks were big. 164 00:07:14,360 --> 00:07:15,520 Speaker 3: Those are very big. Thank you. 165 00:07:15,760 --> 00:07:17,440 Speaker 4: Yeah, the little one likes those. 166 00:07:17,600 --> 00:07:18,920 Speaker 7: Yeah, you gotta keep them happy. 167 00:07:20,120 --> 00:07:23,760 Speaker 2: Who does match sha go long mozzarella sticks. 168 00:07:22,640 --> 00:07:25,120 Speaker 10: Also, we also. 169 00:07:24,920 --> 00:07:28,360 Speaker 4: Have a daily dose of chocolate milk, so very good. 170 00:07:28,480 --> 00:07:28,960 Speaker 3: I like that. 171 00:07:29,120 --> 00:07:33,080 Speaker 2: I like that too. Remember Bosco, come in. You've been Bosco. 172 00:07:33,240 --> 00:07:36,840 Speaker 2: Your mother know you're too young to remember. I remember 173 00:07:36,920 --> 00:07:41,480 Speaker 2: powdered milk. You talk about Death's door. Lauri Calvicina, thank 174 00:07:41,520 --> 00:07:43,200 Speaker 2: you so much, greatly appreciate it. 175 00:07:43,520 --> 00:07:44,200 Speaker 3: Stay with us. 176 00:07:44,480 --> 00:07:47,720 Speaker 2: More from Bloomberg Surveillance coming up after this. 177 00:07:54,960 --> 00:07:58,559 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 178 00:07:58,600 --> 00:08:01,640 Speaker 1: weekday afternoons from seven into ten am. He's durn Listen 179 00:08:01,680 --> 00:08:05,280 Speaker 1: on Apple, Karplay and Android Otto with the Bloomberg Business app, 180 00:08:05,440 --> 00:08:07,120 Speaker 1: or watch us live on YouTube. 181 00:08:07,200 --> 00:08:11,560 Speaker 2: Henrietta Trey's briefs This avoiding the speculation of the weekend 182 00:08:11,600 --> 00:08:15,800 Speaker 2: and the president's health. Henrietta, if we have a war department, 183 00:08:16,280 --> 00:08:20,240 Speaker 2: what is the symbolism of going from Harry Truman's defense 184 00:08:20,520 --> 00:08:24,160 Speaker 2: Department back to a renamed War Department. 185 00:08:25,200 --> 00:08:28,400 Speaker 6: I think the most important takeaway here is that Congress 186 00:08:28,440 --> 00:08:31,480 Speaker 6: is about to reinsert itself into the conversation for the 187 00:08:31,480 --> 00:08:34,280 Speaker 6: first time in a month. Recall that the House left 188 00:08:34,360 --> 00:08:38,720 Speaker 6: early at the end of their scheduled the scheduled work period. 189 00:08:38,800 --> 00:08:42,440 Speaker 6: They called it quits early because of the hullabaloo around 190 00:08:42,440 --> 00:08:45,160 Speaker 6: the Epstein files. So now the President is going to 191 00:08:45,160 --> 00:08:52,120 Speaker 6: be facing a serious litany of competition from Congress when 192 00:08:52,120 --> 00:08:55,080 Speaker 6: they get back to talk about, you know, Miron, the 193 00:08:55,120 --> 00:08:58,520 Speaker 6: firing of Cook, the firing of the your Labor Statistics Commissioner, 194 00:08:59,240 --> 00:09:02,720 Speaker 6: the why not rename the War Department. It's a great 195 00:09:02,720 --> 00:09:05,120 Speaker 6: way to have another way to control the narrative, which 196 00:09:05,160 --> 00:09:07,760 Speaker 6: is going to be critical going into a potential government shutdown. 197 00:09:08,000 --> 00:09:10,760 Speaker 6: The fact that the Federal Court of Appeals ruled that 198 00:09:10,800 --> 00:09:14,120 Speaker 6: his aipatas were unlawful, and a whole host of other 199 00:09:14,160 --> 00:09:16,200 Speaker 6: things that he hasn't had to address for five weeks 200 00:09:16,200 --> 00:09:17,640 Speaker 6: and is going to have to starting today. 201 00:09:17,840 --> 00:09:20,960 Speaker 9: So a great way to have a counter cycle. 202 00:09:21,160 --> 00:09:24,960 Speaker 5: Who in Congress is going to drive the agenda over 203 00:09:25,000 --> 00:09:28,440 Speaker 5: the next several weeks and months here the social play. 204 00:09:28,280 --> 00:09:31,920 Speaker 6: Out, well, really we're going to see the government shutdown 205 00:09:32,080 --> 00:09:35,000 Speaker 6: probably start to drive the narrative pretty quickly because it 206 00:09:35,120 --> 00:09:37,679 Speaker 6: is the most pressing issue for them. This month, we're 207 00:09:37,679 --> 00:09:39,840 Speaker 6: going to do the National Defense Authorization Act in the 208 00:09:39,840 --> 00:09:42,760 Speaker 6: Senate this week. We'll get the mirror confirmation hearing in 209 00:09:42,800 --> 00:09:45,920 Speaker 6: the Senate Banking Committee on Thursday. The House is going 210 00:09:46,000 --> 00:09:49,680 Speaker 6: to take up their NDAA next week. Those let's just 211 00:09:49,679 --> 00:09:52,160 Speaker 6: avert a government shutdown narratives are really going to drive 212 00:09:52,200 --> 00:09:54,720 Speaker 6: because that's the most urgent, pressing issue. There will be 213 00:09:54,720 --> 00:09:59,360 Speaker 6: press conferences with Republican Congressman Massy over Epstein. 214 00:09:59,400 --> 00:10:01,040 Speaker 9: They'll try to get that bill to the floor. 215 00:10:01,640 --> 00:10:03,720 Speaker 6: The Senators are going to talk about, you know, whether 216 00:10:03,800 --> 00:10:06,040 Speaker 6: or not they can cobble together an appropriations bill and 217 00:10:06,080 --> 00:10:08,959 Speaker 6: pocket recisions. The driving narrative is really going to be 218 00:10:08,960 --> 00:10:11,200 Speaker 6: the legislative agenda. I love the using the calendar just 219 00:10:11,240 --> 00:10:13,000 Speaker 6: for that purpose. It's all about a shutdown. 220 00:10:13,400 --> 00:10:15,560 Speaker 5: So, Henryette ken you, I feel like I ask you 221 00:10:15,600 --> 00:10:18,920 Speaker 5: this question every six or nine months. What is the 222 00:10:18,960 --> 00:10:20,959 Speaker 5: calendar look like as it relates to a shutdown? 223 00:10:20,960 --> 00:10:22,800 Speaker 7: What is the timing and the milestones we have to 224 00:10:22,800 --> 00:10:23,440 Speaker 7: pay attention to. 225 00:10:24,320 --> 00:10:26,560 Speaker 6: Basically, we need them to come to an agreement to 226 00:10:26,640 --> 00:10:29,480 Speaker 6: keep the lights on by September thirtieth at midnight. Asking 227 00:10:29,520 --> 00:10:33,160 Speaker 6: any more than that is probably unrealistic. The House and 228 00:10:33,200 --> 00:10:35,920 Speaker 6: Senate having come to an agreement on all twelve appropriations 229 00:10:35,920 --> 00:10:37,839 Speaker 6: bills since I want to say Bill Clinton's era in 230 00:10:37,920 --> 00:10:41,640 Speaker 6: ninety six, so you know, any hopes of camaraderie and 231 00:10:41,679 --> 00:10:44,880 Speaker 6: bipartisanship have flown that they are not realistic. But a 232 00:10:44,960 --> 00:10:47,640 Speaker 6: short term staff gap that's going to probably weigh on 233 00:10:48,120 --> 00:10:51,040 Speaker 6: the legislative agenda another one or two times for the 234 00:10:51,080 --> 00:10:52,840 Speaker 6: rest of this year is what we should expect. 235 00:10:53,240 --> 00:10:55,000 Speaker 9: I don't think there will be a shutdown. My odds 236 00:10:55,040 --> 00:10:55,960 Speaker 9: are twenty five percent. 237 00:10:56,000 --> 00:10:58,240 Speaker 6: That's pretty high for me, to be honest, But that's 238 00:10:58,240 --> 00:11:00,760 Speaker 6: because the administration is doing something called a rocket recision 239 00:11:00,800 --> 00:11:02,040 Speaker 6: where they try to cut spending. 240 00:11:02,040 --> 00:11:03,280 Speaker 9: The Congress is already. 241 00:11:02,960 --> 00:11:06,760 Speaker 6: Appropriated, but the shutdown would start at twelve oh one 242 00:11:06,840 --> 00:11:07,880 Speaker 6: on October. 243 00:11:07,440 --> 00:11:08,920 Speaker 3: First, and too short a visit. 244 00:11:09,000 --> 00:11:10,720 Speaker 2: Let me squeeze this in and I got like eight 245 00:11:10,720 --> 00:11:12,600 Speaker 2: ways to go here, folks. We literally could do two 246 00:11:12,679 --> 00:11:16,800 Speaker 2: hours with the Henrietta this morning. How does the imagery, 247 00:11:17,160 --> 00:11:23,120 Speaker 2: the pageantry play of putin g mody all the different 248 00:11:23,200 --> 00:11:27,760 Speaker 2: Bloomberg is a beautiful images g and Putin best pales, 249 00:11:27,800 --> 00:11:32,520 Speaker 2: best buds. How does it play in your world, Henrietta, In. 250 00:11:32,440 --> 00:11:34,960 Speaker 6: My world, which is very much tariff world, it shows 251 00:11:35,000 --> 00:11:39,200 Speaker 6: you the negative consequences of tariffs. You penalize our global allies, 252 00:11:39,400 --> 00:11:43,440 Speaker 6: NATO allies, You push India, who we've tried to foster 253 00:11:43,480 --> 00:11:46,520 Speaker 6: a relationship with for thirty years, that have made incredible 254 00:11:46,520 --> 00:11:49,400 Speaker 6: strides considering their neighboring China. 255 00:11:49,600 --> 00:11:51,000 Speaker 9: Is really really telling. 256 00:11:51,040 --> 00:11:54,680 Speaker 6: And the part that's really striking is how personal the 257 00:11:54,720 --> 00:11:57,920 Speaker 6: President makes his relationships with all of these men, whether 258 00:11:57,960 --> 00:12:01,800 Speaker 6: it's President She, President Putin Modi. The President has gone 259 00:12:01,840 --> 00:12:04,199 Speaker 6: out of his way to explain that he can fix 260 00:12:04,280 --> 00:12:08,240 Speaker 6: the US, the Ukraine Russia war on day one, Gaza 261 00:12:08,320 --> 00:12:11,280 Speaker 6: on day one. He has an incredible relationship with President She, 262 00:12:11,400 --> 00:12:15,120 Speaker 6: an incredible relationship with Mody, and yet we see precisely 263 00:12:15,160 --> 00:12:19,080 Speaker 6: the opposite, this relationship actually not being valid and driving 264 00:12:19,120 --> 00:12:21,439 Speaker 6: those men together because. 265 00:12:21,000 --> 00:12:22,280 Speaker 9: Of the tyriffs. 266 00:12:21,920 --> 00:12:26,160 Speaker 6: It's a obvious consequence, but nonetheless unintended from the administration. 267 00:12:26,400 --> 00:12:27,880 Speaker 2: We got to get you on daily and the new 268 00:12:27,960 --> 00:12:30,720 Speaker 2: slow extraordinary Henry ou to trace, Thank you so much, 269 00:12:30,960 --> 00:12:35,120 Speaker 2: stay with us. More from Bloomberg surveillance coming up after this. 270 00:12:42,360 --> 00:12:45,960 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us Live 271 00:12:46,040 --> 00:12:49,160 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 272 00:12:49,280 --> 00:12:52,880 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app. 273 00:12:52,840 --> 00:12:56,360 Speaker 3: Or watch us Live on YouTube. This is the interview 274 00:12:56,520 --> 00:12:57,040 Speaker 3: of the day. 275 00:12:57,080 --> 00:13:00,760 Speaker 2: It is Ernie Tedesky, the Budget lab at you on 276 00:13:00,800 --> 00:13:05,240 Speaker 2: your grocery bill, on the tariffs, on vespas, the tariffs 277 00:13:05,280 --> 00:13:08,680 Speaker 2: that are happening. The Budget lab At, y know, absolutely 278 00:13:08,760 --> 00:13:13,480 Speaker 2: expert under his leadership, Ernie, what inning are we in 279 00:13:13,480 --> 00:13:16,360 Speaker 2: in the impact of tariffs upon us all? 280 00:13:16,760 --> 00:13:20,439 Speaker 3: Is it like the second inning? Or are we like along 281 00:13:20,480 --> 00:13:20,800 Speaker 3: the way? 282 00:13:21,840 --> 00:13:24,719 Speaker 11: I think that we're like in the sixth word. We're 283 00:13:24,760 --> 00:13:27,240 Speaker 11: not quite at the seventh inning stretch. Yet we are 284 00:13:27,320 --> 00:13:31,440 Speaker 11: starting to see impacts on actual economic data. So so 285 00:13:31,559 --> 00:13:34,640 Speaker 11: core goods prices are about two percent higher than they 286 00:13:34,920 --> 00:13:38,000 Speaker 11: would have been based on pre twenty twenty five trend 287 00:13:38,480 --> 00:13:41,000 Speaker 11: and that suggests that like as of June and July, 288 00:13:41,280 --> 00:13:45,040 Speaker 11: consumers were paying about three quarters of the tariffs and 289 00:13:45,480 --> 00:13:46,960 Speaker 11: probably American. 290 00:13:46,520 --> 00:13:47,520 Speaker 8: Businesses the rest. 291 00:13:47,679 --> 00:13:51,440 Speaker 11: There's very little evidence that foreign producers are paying them 292 00:13:51,520 --> 00:13:52,040 Speaker 11: right now. 293 00:13:52,080 --> 00:13:54,400 Speaker 8: So look, there's obviously more to come. 294 00:13:54,520 --> 00:13:58,840 Speaker 11: We expect announcements on things like semiconductors, pharmaceuticals, et cetera. 295 00:13:59,720 --> 00:14:03,280 Speaker 8: But you know, it's we're beyond the beginning of the game. 296 00:14:03,679 --> 00:14:04,040 Speaker 3: Ernie. 297 00:14:04,559 --> 00:14:07,760 Speaker 2: I've been talking a lot about the microeconomics and dynamics 298 00:14:07,760 --> 00:14:10,720 Speaker 2: of the substitution effect, where Paul wants a vest but 299 00:14:10,840 --> 00:14:13,920 Speaker 2: in study by Zah Harley, I get that idea. But 300 00:14:13,960 --> 00:14:16,679 Speaker 2: there's also any income effect. Are you at the budget 301 00:14:16,760 --> 00:14:20,560 Speaker 2: lab at Yale? Are you seeing a diminished appetite for growth? 302 00:14:20,600 --> 00:14:23,920 Speaker 2: Are you seeing a diminished nominal GDP because of this 303 00:14:24,040 --> 00:14:25,200 Speaker 2: tariff tension. 304 00:14:26,040 --> 00:14:29,239 Speaker 11: It's tough to see right now because consumers and businesses 305 00:14:29,280 --> 00:14:33,160 Speaker 11: are timing the tariffs and they're still trying to sort 306 00:14:33,200 --> 00:14:35,000 Speaker 11: out what we're all trying to sort out, which is 307 00:14:35,040 --> 00:14:38,240 Speaker 11: the best time to import things, the best time to buy. So, 308 00:14:38,640 --> 00:14:42,240 Speaker 11: you know, we've seen big declines in consumer spending in 309 00:14:42,320 --> 00:14:46,600 Speaker 11: certain months, especially late last year early this year, that 310 00:14:46,680 --> 00:14:50,480 Speaker 11: seemed to definitely be anticipatory tariff effects. But then they're 311 00:14:50,520 --> 00:14:54,240 Speaker 11: followed by big spikes as there is a tariff pause 312 00:14:54,360 --> 00:14:57,040 Speaker 11: or tariff relief. You know that's temporary, and so people 313 00:14:57,040 --> 00:15:00,520 Speaker 11: try to get their spending in. So it's really clear 314 00:15:00,680 --> 00:15:04,440 Speaker 11: what the ongoing effect is, you know, looking through all 315 00:15:04,440 --> 00:15:07,200 Speaker 11: that noise, we think that ultimately the terriffs that have 316 00:15:07,280 --> 00:15:10,560 Speaker 11: been announced will be the equivalent of, you know, about 317 00:15:10,560 --> 00:15:13,640 Speaker 11: twenty four hundred dollars off of the purchasing power of 318 00:15:14,320 --> 00:15:16,400 Speaker 11: the average American household. But that's going to take about 319 00:15:16,400 --> 00:15:18,240 Speaker 11: two years or three years to get there. 320 00:15:18,400 --> 00:15:21,440 Speaker 2: Paul Harley, this most like a vespa is a Harley 321 00:15:21,560 --> 00:15:25,360 Speaker 2: soft tail, slim oh okay and crimson stonewashed white and 322 00:15:25,360 --> 00:15:27,480 Speaker 2: pearls so solid. 323 00:15:27,520 --> 00:15:31,240 Speaker 5: For the executive, I got the vesta pree tariff Ernie 324 00:15:31,320 --> 00:15:33,560 Speaker 5: talk to us about it. Kind of the nature of 325 00:15:33,600 --> 00:15:36,120 Speaker 5: these tariffs is it as a white house which to 326 00:15:36,400 --> 00:15:40,920 Speaker 5: suggest a one time price adjustment versus maybe a beginning 327 00:15:41,000 --> 00:15:42,760 Speaker 5: of a inflationary trend. 328 00:15:43,800 --> 00:15:46,560 Speaker 11: So that's also really hard to parse right now because 329 00:15:46,600 --> 00:15:49,200 Speaker 11: on the one hand, like the textbook will tell you 330 00:15:49,280 --> 00:15:52,080 Speaker 11: that this is a one time price adjustment. On the 331 00:15:52,120 --> 00:15:55,720 Speaker 11: other hand, when the given the chaotic rollout of the 332 00:15:55,760 --> 00:15:59,280 Speaker 11: tariffs and the gradual rollout of the tariffs, even if 333 00:15:59,280 --> 00:16:02,360 Speaker 11: it is a one time price adjustment, because it's so 334 00:16:02,880 --> 00:16:07,320 Speaker 11: you know, incremental, it feels like true inflation to people 335 00:16:07,800 --> 00:16:09,520 Speaker 11: because they get a little bit one month, they get 336 00:16:09,560 --> 00:16:11,480 Speaker 11: a little bit more the next month, and so it 337 00:16:11,480 --> 00:16:12,760 Speaker 11: doesn't feel like one time, it. 338 00:16:12,760 --> 00:16:14,560 Speaker 8: Feels like it's this ongoing thing. 339 00:16:14,880 --> 00:16:18,240 Speaker 11: Plus there is the FED concern that this is going 340 00:16:18,280 --> 00:16:22,040 Speaker 11: to spill over into supply chains and actually be more 341 00:16:22,080 --> 00:16:25,600 Speaker 11: persistently inflationary. We haven't seen evidence of that yet, but 342 00:16:26,000 --> 00:16:28,840 Speaker 11: you know, like I said, we're it's not the beginning anymore, 343 00:16:28,880 --> 00:16:31,040 Speaker 11: but it's not you know, it's not the late game still, 344 00:16:31,080 --> 00:16:32,680 Speaker 11: so we're still looking for more evidence. 345 00:16:33,320 --> 00:16:35,920 Speaker 5: Well, on the other side, Ernie, I guess it is 346 00:16:35,960 --> 00:16:40,320 Speaker 5: in fact true that the government is raising tariff revenue. 347 00:16:40,560 --> 00:16:43,400 Speaker 3: Is It's correct, no doubt. 348 00:16:43,680 --> 00:16:49,400 Speaker 11: We've raised almost ninety billion dollars this year from just 349 00:16:49,520 --> 00:16:52,040 Speaker 11: the new tariffs that have been announced in twenty twenty five. 350 00:16:52,040 --> 00:16:54,200 Speaker 11: That's not total tariff revenue. That's just from the new 351 00:16:54,200 --> 00:16:57,200 Speaker 11: tariffs that is. Look, that is substantial. We think that 352 00:16:57,200 --> 00:17:01,120 Speaker 11: that is consistent with three trillion dollars new tariff revenue 353 00:17:01,320 --> 00:17:04,000 Speaker 11: over ten years if the tariffs are kept in place. 354 00:17:04,359 --> 00:17:07,960 Speaker 11: Nobody should downplay that is that is a major amount 355 00:17:07,960 --> 00:17:08,399 Speaker 11: of revenue. 356 00:17:08,840 --> 00:17:12,600 Speaker 5: Just to tie it together for our listeners and viewers, 357 00:17:12,960 --> 00:17:16,160 Speaker 5: of that nine twenty billion a month, sixty to eighty 358 00:17:16,200 --> 00:17:18,840 Speaker 5: percent is being paid for by consumers and the rest 359 00:17:18,880 --> 00:17:19,920 Speaker 5: buy American businesses. 360 00:17:20,840 --> 00:17:22,520 Speaker 11: So that's what we think. So this is a tax 361 00:17:22,560 --> 00:17:25,080 Speaker 11: on Americans, let's be clear about that. The other thing 362 00:17:25,080 --> 00:17:27,720 Speaker 11: that's interesting so far, and we're going to start incorporating 363 00:17:27,760 --> 00:17:31,320 Speaker 11: this into our modeling, is that some tariffs are coming 364 00:17:31,320 --> 00:17:36,240 Speaker 11: in much lower than we expected, in particular Canada, where 365 00:17:37,119 --> 00:17:40,760 Speaker 11: ninety two percent of Canadian trade is now tariff free, 366 00:17:41,040 --> 00:17:43,960 Speaker 11: which is much higher than we expected given USMC. So 367 00:17:44,080 --> 00:17:48,480 Speaker 11: it appears that Canadian firms and American importers are taking 368 00:17:48,520 --> 00:17:51,960 Speaker 11: advantage of lots of different I won't say loopholes because 369 00:17:52,440 --> 00:17:56,560 Speaker 11: I'm sure it's all legal, but you know, available authorities 370 00:17:56,600 --> 00:17:58,199 Speaker 11: to bring things in TIF free. 371 00:17:58,400 --> 00:18:00,159 Speaker 2: You know, I know, I knew, haven Ernie, you just 372 00:18:00,200 --> 00:18:02,359 Speaker 2: doing pizza to takeout. I mean, you know that's what 373 00:18:02,440 --> 00:18:06,159 Speaker 2: you're rolling. But I look to groceries this weekend and 374 00:18:06,200 --> 00:18:09,879 Speaker 2: it's just jaw dropping out. Everything's up. Are the price 375 00:18:09,960 --> 00:18:14,280 Speaker 2: of groceries and produce up because of your world of tariffs. 376 00:18:15,480 --> 00:18:18,120 Speaker 11: So a little bit so a couple of things. One, 377 00:18:18,320 --> 00:18:20,800 Speaker 11: we get a lot of produce from Canada and Mexico. 378 00:18:21,119 --> 00:18:26,640 Speaker 11: Mexico in particular, and like fresh produce especially falls under 379 00:18:26,720 --> 00:18:30,280 Speaker 11: us mc A ninety percent of the time. And if remember, 380 00:18:30,320 --> 00:18:33,480 Speaker 11: if something is us mc A compliant, it's tariff free. 381 00:18:34,040 --> 00:18:37,840 Speaker 11: So you know, Mexican avocados are probably not very sensitive 382 00:18:37,840 --> 00:18:40,520 Speaker 11: at all to tariffs. The other thing is that there's 383 00:18:40,560 --> 00:18:43,560 Speaker 11: a lot of non tariff stuff going on in groceries 384 00:18:43,640 --> 00:18:47,760 Speaker 11: right now. Beef obviously, you know that's a whole thing, 385 00:18:47,960 --> 00:18:50,239 Speaker 11: but that's got very little to do with tariffs. That 386 00:18:50,280 --> 00:18:54,320 Speaker 11: has more to do with worldwide drafts, et cetera. So 387 00:18:54,320 --> 00:18:57,159 Speaker 11: so I think that I think the tariff story is 388 00:18:57,200 --> 00:19:00,560 Speaker 11: more on the good side things like appliance, is tronics, 389 00:19:00,600 --> 00:19:02,160 Speaker 11: furniture rather than groceries. 390 00:19:02,280 --> 00:19:05,119 Speaker 2: I know, you to front run your academics, but when 391 00:19:05,160 --> 00:19:08,960 Speaker 2: you have a meeting today with Miss Gimbal and the rest, 392 00:19:09,160 --> 00:19:12,080 Speaker 2: what's the thing that you're thinking about at the Yale 393 00:19:12,160 --> 00:19:12,800 Speaker 2: Budget Lab. 394 00:19:13,640 --> 00:19:15,880 Speaker 11: So the thing is, so we're thinking about we think 395 00:19:15,920 --> 00:19:17,439 Speaker 11: about lots of things all the time, but I mean 396 00:19:17,440 --> 00:19:20,880 Speaker 11: the thing that we're thinking about most is, you know, 397 00:19:20,960 --> 00:19:24,520 Speaker 11: where do we go from here in terms of tariff revenue? 398 00:19:24,520 --> 00:19:27,960 Speaker 11: Because we're we're a fiscal and a macroeconomic think take. 399 00:19:28,440 --> 00:19:31,320 Speaker 11: So you know, we've we've done a lot of work 400 00:19:31,359 --> 00:19:36,120 Speaker 11: on the macroeconomics. We're trying to think about ways that 401 00:19:36,440 --> 00:19:39,440 Speaker 11: you know, we're number one, how much are tariff's actually 402 00:19:39,440 --> 00:19:42,080 Speaker 11: going to raise when all of a sudden done. Two? 403 00:19:42,680 --> 00:19:44,840 Speaker 8: Is there a better, more efficient way of raising the 404 00:19:44,840 --> 00:19:45,720 Speaker 8: same amount of revenue? 405 00:19:45,760 --> 00:19:48,160 Speaker 11: Because look, like I said before, you can't dismiss three 406 00:19:48,200 --> 00:19:51,400 Speaker 11: trillion dollars in revenue over ten years. But is there 407 00:19:51,400 --> 00:19:53,760 Speaker 11: a way to raise the same trill three trillion dollars 408 00:19:53,800 --> 00:19:56,280 Speaker 11: in a way that doesn't hurt business investment the same way? 409 00:19:56,440 --> 00:19:58,600 Speaker 2: Ernie, thank you so much. Journey to this great work. 410 00:19:58,640 --> 00:20:01,440 Speaker 2: I really can't say enough about it. Migrate folks over 411 00:20:01,480 --> 00:20:04,960 Speaker 2: to the budget lab at Yale. Just really real brilliant work. 412 00:20:05,080 --> 00:20:09,280 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 413 00:20:16,520 --> 00:20:20,080 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 414 00:20:20,160 --> 00:20:23,320 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 415 00:20:23,400 --> 00:20:27,040 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 416 00:20:27,200 --> 00:20:28,560 Speaker 1: watch us live on YouTube. 417 00:20:28,600 --> 00:20:31,760 Speaker 2: Fatima Bulani, I need like six bullet points to move 418 00:20:32,200 --> 00:20:36,320 Speaker 2: forward here. You've been doing this since Thomas Weisel. I 419 00:20:36,359 --> 00:20:39,520 Speaker 2: want you to explain. This weekend you're at some family 420 00:20:39,600 --> 00:20:42,720 Speaker 2: get together and everybody's a I A I E I 421 00:20:42,920 --> 00:20:47,680 Speaker 2: E I O. What's the biggest misconception mere mortals have 422 00:20:48,160 --> 00:20:51,160 Speaker 2: about your world at City Group? What's the single thing 423 00:20:51,600 --> 00:20:54,520 Speaker 2: we most get wrong about tech that you cover? 424 00:20:55,560 --> 00:20:59,600 Speaker 12: Look, thanks for having me here to explain what we're 425 00:21:00,080 --> 00:21:02,960 Speaker 12: working through right now to my two year old, which 426 00:21:03,000 --> 00:21:05,960 Speaker 12: I have one, and the eiio lands very well because 427 00:21:06,080 --> 00:21:09,680 Speaker 12: my mind is very preoccupied with nursery rhymes. Is Look, 428 00:21:09,840 --> 00:21:14,720 Speaker 12: the most consequential technology paradigm shift in our lifetime. And 429 00:21:15,080 --> 00:21:17,760 Speaker 12: you know, there have been a lot of analogs made 430 00:21:17,880 --> 00:21:21,600 Speaker 12: towards you know, when the Internet, corporate Internet broke out 431 00:21:21,640 --> 00:21:22,720 Speaker 12: onto the scene twenty five. 432 00:21:22,800 --> 00:21:25,280 Speaker 2: There I have said this. It is so much like 433 00:21:25,440 --> 00:21:28,480 Speaker 2: late ninety four or ninety five. You're saying, it's. 434 00:21:28,320 --> 00:21:30,639 Speaker 10: Bigger, it's bigger, it's better. 435 00:21:30,840 --> 00:21:35,879 Speaker 12: It's far more consequential because you've had a democratization of 436 00:21:36,000 --> 00:21:37,680 Speaker 12: computing that. 437 00:21:37,600 --> 00:21:39,880 Speaker 10: Has compounded over the last three decades. Right. 438 00:21:39,920 --> 00:21:43,879 Speaker 12: Your iPhone today is five thousand, maybe ten thousand times 439 00:21:43,880 --> 00:21:46,720 Speaker 12: more powerful than the first iteration of the computer that 440 00:21:46,760 --> 00:21:49,760 Speaker 12: IBM spun out, you know, thirty forty years ago, right, 441 00:21:49,840 --> 00:21:55,520 Speaker 12: and so just the sheer power of computing infrastructure, and 442 00:21:55,560 --> 00:21:57,960 Speaker 12: you see this from the hyperscalers. It's just at your 443 00:21:57,960 --> 00:22:00,800 Speaker 12: fingertips and that's really what you think is going to 444 00:22:00,800 --> 00:22:03,199 Speaker 12: move the ball forward, and you know, you know it's 445 00:22:03,280 --> 00:22:07,119 Speaker 12: chatting earlier. We are hosting our flagship conference in New 446 00:22:07,200 --> 00:22:10,199 Speaker 12: York City this week. We have, you know, close to 447 00:22:10,280 --> 00:22:13,520 Speaker 12: five hundred investors from some of the biggest asset managers. 448 00:22:13,520 --> 00:22:16,200 Speaker 3: Are you guys taking every room at the Waldorf Astoria? 449 00:22:16,800 --> 00:22:19,600 Speaker 10: I wish it were the Waldorf Astoria. It's the Hilton though. 450 00:22:22,359 --> 00:22:24,080 Speaker 7: So I mean, I'm just looking at your line up here. 451 00:22:24,520 --> 00:22:27,240 Speaker 5: Everybody in tech TMT is going to be the tech, media, 452 00:22:27,240 --> 00:22:27,920 Speaker 5: tech telecom. 453 00:22:27,960 --> 00:22:29,120 Speaker 7: Everybody's going to be there. 454 00:22:30,000 --> 00:22:33,280 Speaker 5: How do you wind the AI theme throughout this three 455 00:22:33,359 --> 00:22:34,240 Speaker 5: day conference that you have. 456 00:22:34,800 --> 00:22:37,919 Speaker 12: We think about it from a supply chain perspective, so 457 00:22:38,040 --> 00:22:41,880 Speaker 12: to speak. Right, So, my colleagues within the tech franchise 458 00:22:42,640 --> 00:22:45,879 Speaker 12: between you know, the individual who covers the media names, 459 00:22:45,920 --> 00:22:49,320 Speaker 12: the individual who covers the telecom and tower names. Myself, 460 00:22:49,359 --> 00:22:52,159 Speaker 12: I cover enterprise software, which is you know, dare I 461 00:22:52,200 --> 00:22:57,040 Speaker 12: say some of the sexiest places should be in technology. 462 00:22:57,119 --> 00:23:00,720 Speaker 12: So just thinking about the AI value chain from a 463 00:23:01,200 --> 00:23:04,280 Speaker 12: supply chain perspective, and I will tell you that the 464 00:23:04,520 --> 00:23:08,879 Speaker 12: number one burning question, the most polarizing debate right now 465 00:23:09,040 --> 00:23:12,760 Speaker 12: is how are companies in the software sphere going to 466 00:23:12,760 --> 00:23:15,920 Speaker 12: be monetizing this trend. We understand, you know, what's going 467 00:23:15,960 --> 00:23:19,640 Speaker 12: to happen, and we are understanding and witnessing what's happening. 468 00:23:19,320 --> 00:23:20,560 Speaker 10: In the power and utility space. 469 00:23:20,600 --> 00:23:25,800 Speaker 12: I mean, AI gear data centers are just hoovering massive 470 00:23:25,840 --> 00:23:30,959 Speaker 12: amounts of power right and data center infrastructure and all 471 00:23:30,960 --> 00:23:34,320 Speaker 12: the adjacent investment around that. So what does the downstream 472 00:23:34,840 --> 00:23:38,040 Speaker 12: monetization path look like? And that is the single largest debate, 473 00:23:38,080 --> 00:23:40,040 Speaker 12: And so that's sort of what we're endeavoring to do 474 00:23:40,080 --> 00:23:41,919 Speaker 12: at the conference, weaving a lot of these themes from 475 00:23:41,960 --> 00:23:42,480 Speaker 12: a subsector. 476 00:23:42,720 --> 00:23:44,640 Speaker 3: Is Apple going to be there? I mean maybe they'll 477 00:23:44,720 --> 00:23:45,280 Speaker 3: learn something. 478 00:23:45,400 --> 00:23:48,600 Speaker 2: Apples so far behind with you, Tyler Radkin the rest 479 00:23:48,640 --> 00:23:51,200 Speaker 2: When you and your team look at how Apple's quote 480 00:23:51,280 --> 00:23:54,159 Speaker 2: unquote behind on AI, what's your response to that. 481 00:23:55,080 --> 00:23:57,400 Speaker 10: Look, we're not ruling Apple out. 482 00:23:57,440 --> 00:24:01,600 Speaker 12: I mean our perspective is purely from the enterprise software standpoint, right, So, 483 00:24:01,680 --> 00:24:06,280 Speaker 12: how are organizations standing up an AI strategy where they 484 00:24:06,320 --> 00:24:09,159 Speaker 12: can operationalize AI in the sense of how do we 485 00:24:09,160 --> 00:24:12,680 Speaker 12: improve business processes? How do we improve customer satisfaction. Right, 486 00:24:12,800 --> 00:24:17,160 Speaker 12: So our perspective in our lens is very much geared 487 00:24:17,200 --> 00:24:20,720 Speaker 12: towards how very large entities and professional organizations are going 488 00:24:20,760 --> 00:24:24,560 Speaker 12: to be deploying this technology as opposed to you know, 489 00:24:25,160 --> 00:24:28,399 Speaker 12: from a consumer angle, if you will, who. 490 00:24:28,240 --> 00:24:31,080 Speaker 7: Loses an AI? We have them because I'm always asked 491 00:24:31,080 --> 00:24:33,159 Speaker 7: the question who wins, Who's when? How do I plan it? 492 00:24:33,640 --> 00:24:34,680 Speaker 7: Who loses in AI? 493 00:24:35,000 --> 00:24:37,840 Speaker 12: You know, I'm glad you asked my team and I 494 00:24:38,040 --> 00:24:40,639 Speaker 12: We've had a big piece come out overnight. You know, 495 00:24:40,680 --> 00:24:43,240 Speaker 12: between Tyler and myself, our team covers close to eighty 496 00:24:43,520 --> 00:24:46,600 Speaker 12: software stocks, right, so there's plenty of nuance to be 497 00:24:46,640 --> 00:24:49,840 Speaker 12: had and thinking about how this is going to be impactful. 498 00:24:50,520 --> 00:24:52,119 Speaker 10: There's going to be some winners, there's going to be 499 00:24:52,119 --> 00:24:52,680 Speaker 10: some losers. 500 00:24:53,240 --> 00:24:55,359 Speaker 12: And the way we've thought about it is, you know, 501 00:24:55,400 --> 00:25:00,520 Speaker 12: if you stratify our software space between applications, so the 502 00:25:00,560 --> 00:25:02,960 Speaker 12: household names there are at Salesforce, dot Com and Adobe 503 00:25:03,160 --> 00:25:07,080 Speaker 12: Infrastructure which is more or less cybersecurity, you know, and 504 00:25:07,160 --> 00:25:13,359 Speaker 12: some other names of where you're building your IT environments 505 00:25:13,400 --> 00:25:18,399 Speaker 12: with these capabilities. You know, we generally think the infrastructure 506 00:25:18,440 --> 00:25:22,240 Speaker 12: software space has more stickiness and teeth to it, So 507 00:25:22,560 --> 00:25:25,560 Speaker 12: in broad strokes, there is a level of insulation around 508 00:25:25,560 --> 00:25:29,960 Speaker 12: the infrastructure names, whereas application there's absolutely trepidation, absolutely fears. 509 00:25:29,720 --> 00:25:31,000 Speaker 3: Around that I'm gonna squeeze this. 510 00:25:31,200 --> 00:25:33,520 Speaker 2: And you're having a cup of coffee right now with 511 00:25:33,800 --> 00:25:37,200 Speaker 2: our of insern of us of Perplexity. I'm absolutely blown 512 00:25:37,240 --> 00:25:40,120 Speaker 2: away at the game changing nature of that, the software 513 00:25:40,119 --> 00:25:42,720 Speaker 2: around it. And what's your number one question to the 514 00:25:42,800 --> 00:25:44,200 Speaker 2: leadership at Perplexity. 515 00:25:45,200 --> 00:25:49,399 Speaker 12: Look, it's really how do you continue to innovate in 516 00:25:49,560 --> 00:25:52,680 Speaker 12: a space where you know, frankly, there's a Cambrian explosion 517 00:25:52,720 --> 00:25:59,560 Speaker 12: of sworts going on in LOI patent pending, and you know, 518 00:25:59,680 --> 00:26:02,120 Speaker 12: the the confluence of the Russia VC. 519 00:26:02,080 --> 00:26:05,560 Speaker 10: Capital, the you know, the the. 520 00:26:05,480 --> 00:26:09,240 Speaker 12: Unabated appetite to become the number one standard bearer and 521 00:26:09,280 --> 00:26:11,800 Speaker 12: AI because you know, to the victor goes the spoiled, 522 00:26:11,840 --> 00:26:14,119 Speaker 12: and the massive amounts of market share. Right so we 523 00:26:14,160 --> 00:26:16,840 Speaker 12: are absolutely in a gold rush phase right now. So really, 524 00:26:16,840 --> 00:26:19,399 Speaker 12: I think the most inquiring minds will want to know, 525 00:26:20,560 --> 00:26:23,600 Speaker 12: you know, how are you keeping up with the rapidly 526 00:26:23,720 --> 00:26:27,680 Speaker 12: changing pace of technology preferences and procurement. 527 00:26:28,000 --> 00:26:29,919 Speaker 2: Wait for sure, you got to come back after the 528 00:26:29,960 --> 00:26:33,520 Speaker 2: technology conference to briefast and It's fifteen year about Bulani 529 00:26:33,720 --> 00:26:34,800 Speaker 2: is coded. 530 00:26:34,560 --> 00:26:37,960 Speaker 3: US software equity research at City Group. 531 00:26:38,280 --> 00:26:43,119 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 532 00:26:43,240 --> 00:26:47,520 Speaker 1: and anywhere else you get your podcasts. 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