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Let's just remind everybody, here's what happened FED officials. You heard it from Charlie leaving interest rates unchanged, continuing to pencil in two rate cuts in twenty twenty five, saying uncertainty over the economic outlook was still high but had diminished, and that effect can be kind of patient, it seems like as it awaits more information, here's fetchirt J.
Powell.
We feel like the right thing to do is to be where we are, where our policy stance is, and just learn more. In particular, we feel like we're going to learn a great deal more over the summer on tariffs. We hadn't expected them to show up much by now, and they haven't, and we will see whether the extent to which they do or overcoming months. And I think that's going to inform our thinking.
All right, That of course was fedya Jay Powell earlier at the FOMC press conference.
Let's get to it.
Let's get more on the investment landscape, also the rate landscape, and how the FED decision and commentary may affect all of it.
Are we all going to kind of just wait for the next FED meeting?
Ross Mayfield is with us, these investment strategists at BAIRED Private Wealth Management from Louisville, Kentucky.
Also with us.
Bloomberg Intelligence chief US interest rates strategist Ira Jersey out there in New Jersey.
Hey, Ira, I want to kick it off with you. Some went into this meeting truly.
I was listening to Bloomberg Television's coverage, really TV and radios coverage of the FED decision. Some said it was going to be boring. Some expected not much to happen. Others said it's never.
Bell, It's never boring for us, right.
Well, sometimes it is.
And then others said it was going to be historic because all that is coming at the FED right now.
Why was there such a gap going into this meeting?
Yeah, I think there's some people who think that, firstly, that the Federal Reserve does have to cut interest rates because they see cracks in certain parts of the economy. And then there's other people who are fearful of tariffs
and think that, you know, inflation might increase. And you even heard that the last question, which was about how come no one was projecting rate increases even though there were a number of members who were thinking the Fed is going to be on hold for the entire year and then cut a bit next year.
You know, I this was as I expected.
And what's always interesting about this, you know, and we have to as market professionals kind of parse every single thing coming out of the FED Reserve.
Is the reaction function? Right? What is the Fed's reaction function?
So we heard a number of if van statements from Jare Powell, and you know, those ifan statements could mean, you know, give us at least a little bit of an indication under what circumstances, don't make any kind of policy adjustments.
Hey, Ross, come on in here and just give us your general overview of how the meeting went, your expectations, Where they met, where they not met. What was your big takeaway?
Yeah?
I think they were largely met.
I mean, I don't know anyone who expected much action at this meeting or a resolution of all the uncertainty that they've been discussing at this meeting. Given that we're still in this kind of tariff pause, you know, we have the potential for oil prices to swing and impact headline inflation.
So I didn't expect much.
I'm on the side of the camp that thinks the FED should be a little more aggressive and cutting. I think the cracks in the labor market are starting to really accumulate. And to hear Finch, our pals say that the labor market is I forget the exact language, but on solid footing.
Yeah, he wouldn't agree with you. I think Ross that the cracks are starting to appear. What data are you paying attention to that he's not And.
Perhaps that headline Microsoft planning thousands more job cuts you.
Know that we saw.
Certainly, yeah, certainly, the anecdotal evidence of layoff is rising. But if you look at something like warn notices or initial claims and continued claims, I mean we're sitting at multi year highs for a lot of those levels.
If you look at some.
Of the employment statistics about people fresh into the job for us out of college. You know that the unemployment rate there is at not record highs by any means, but is significantly higher than the overall on employment rate. So I think it's a labor market where we have tight supply, and especially in this you know, given the immigration policy, but it is not a robust labor market,
and we are well north of a neutral policy. I think that getting to neutral should be more more of a goal for the Fed, who doesn't seem to want to get there until the end of twenty twenty six if you look at the CCP.
All right, come on in airah, yeah.
So I just want to want to say I think that's part of this debate, like where is neutral? And you know, there's you know, the Fed will say that they're still have restrictive policy, but a lot of the other information that that's some of us, me included, have looked at suggests that actually they're probably pretty close to neutral. So unless there's a deceleration of the economy, the Fed probably doesn't have to adjust interest rates.
Now.
The question is, and to Cross's point, like they can't wait until the economy is clearly really bad before.
They cut interest rates.
But I do suspect that because of this overhang of inflation and the recent past episode that we just had, that the Fed will try to wait until almost the last minute, and then once it cuts, it'll cut faster.
And I go back to the statement that J.
Powell made in May at at the press conference, where he said, like, look, we know how to deal with a weak economy. We could just cut more aggressively and get down below the neutral rate to stimulate the economy. We don't want to have to go the other way and have to hike interest rates rate if inflation were to remain relatively high.
Hey, Ira, a couple more to you, and then we're going to bring ross back in here. But I'm wondering about a couple of things here. One specifically, is the question of AI and the labor force. The bed chair was asked about that, Carol, and I cannot stop talking about this. What did you make of the way that he answered this question about AI and the effect on the labor face feels like.
There's a pig pile of all of a sudden, people are waking up and saying, Okay, there's going to be a lot of jobs lost because of AI.
Well, there's always disruptions.
Whenever you have new technologies, there's always disruptions and you wind up having you know, layoffs in some sectors, and then the new economy creates other jobs and new jobs. We've done that over centuries since, you know, even before the Industrial Revolution, you've always seen you know, things replacing other things. I mean, we did it thirty years ago. Right when you think about the Internet, and you know
in nineteen ninety five, very few firms had websites. Yet today everyone does, right, and this is kind of an extension of that. So we created a whole new economy around the Internet that now is creating more jobs. Whereas robotics and other things like manufacturing, they're less people are needed to do the same amount of work in labor than was needed in nineteen seventies.
H So true.
Socho hey, Ross just got about twenty five seconds left here, Mike McKee saying, nobody on the committee has any conviction on these forecasts, so don't take us seriously on the rate cuts. Things will change. That was kind of the message that Mike took away, and he says that maybe kind of means for the Bloomberg audience, don't invest on this FED decision fifteen seconds.
Do you agree?
Yeah, I don't think you can take much away from this FED decision in terms of actionable investment items. I think you need to watch the long end of the curve, and for that you need to watch things like the budget deficit and service sector inflation. So that's what I'm watching, and I think you go long deration here.
All right, great duo Ross Mayfield Investment strategis ad baired Private Wealth Management, our own IRA Jersey chiefos interest rate Strategies at Bloomberg Intelligence.
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The Israeli Ron conflict, the more than three year old war between Russia and Ukraine, the US LED tariff for changing geopolitical relationships, Carol, These are all things that can and do affect global investment flows.
Yeah, it's kind of interesting at a moment in time where where they're rethinking whether or not the US is uninvestable and also questioning the dominance of the US dollar. We should point out as Alex Steel mentioned in our TV simulcast, foreign treasury holdings holding your record high in the month of April.
So foreign investors are.
They're not selling well foreign investors.
It sounds like, at least not when it comes to treasuries, which is what we kind of keep watching so closely. All of this tie it all up, and especially when it comes to foreign direct investment. It is the world of our next guest, and it's so great to have back with us in studio, Michael Lohan, CEO of IDA Ireland. It's the Foreign Direct Investment Agency of the Irish government.
Hello, Hello, how are you?
I'm good carel good to be back in tint.
There's a lot coming at everyone, and I'm not even quite sure to begin. Just give us a good Macro overview as you think of the things that the G seven leaders we're facing this week are facing this week. The war is the conflict certainly top of mind, and you know we're having this interview in real time and things are going to continue to develop. But how do you see the environment right now? Is it continuing to be an uncertain one?
I think that's the word that you'd have to you'd have to use is uncertainty, and you know when we last met actually just that in March of this year. I think we've gone through a lot in those in those intervening weeks, to be honest, probably as much as I've seen in my career in foreign direct investment. A lot has happened in a very short space of time.
And when you think about from from the tariffs in terms of what tariffs means, where they're going to be pulled, composed, at what level and what time frame, A lot of those questions still remain unanswered as we sit today, and I think from a European perspective, we are very clear that you know, bringing negotiation, trying to get to a
point of aspos consensus around what this looks like. It's so critically important for investment flows and indeed for the economic prosperity of the world, you know, whether it's the US or whether it's the Europe, or indeed whether it's
the Asia. So that's a that's a real area of focus from from a European perspective and indeed the Irish government perspective, and of course you're correct, this is all against the backdrop then of some other conflicts across the world, and you know, we see that increasing, so you know, it's we're very mindful of that in the context of trade flows and trade investments as well, because that brings another level of uncertainty into the equation.
Yeah, it's been pretty much exactly three months since we last saw you. You were here in New York, right before you went to Washington with the Prime Minister to visit the White House. That'so you met with the President, You met with his team. How did the meeting go?
So, so you're correct the last time was here. I left them.
I went to d C with on t shock or our Prime minister. The medium went very well actually, and I think actually it was was. In reflecting on it, you'd say that, you know, the President was actually very gracious in terms of his engagement. Yes, there was fourth Right discussions and you know he talked about the challenges in terms of trade, trade deficits in particular.
This was before all the teriffs were announced.
Yeah, this is before.
But remember this was all very you know, it was all very live and active at that point because you were this we were talking about this is the fifteenth, sixteenth of March, so it was all becoming very transparent or apparent as to what was what was going to
come down the tracks. So I would say that that that that meeting and engagement very much reflect this the relationship which is one hundred years between Ireland and the US, and I think in any relationship there can be pints of let's call this discussion, and that was the discussion that we had, but it would think it was very respectful on both on both sides.
Michael, what changes have you guys seen in investment flowers? What are you seeing from your bead point?
Yeah, so what we're seeing today, actually, Carol, it's interesting. So I can sit here today and actually in two weeks time I'll be sharing with her Minister Peter Burke are results for the first half of the year, and when I can't disclose them to you on air, what I could, yeah, but I won't. But what I can say is this is that we continue to see investment flows.
In fact, it is a power with last year in terms of the first half of last year, which is maybe somewhat maybe surprising giving the level of uncertainty that you see across the globe. But the reasons where we see that is and we're seeing across a number of different areas. We're seeing reinvestment in research and innovation continuing and companies looking to double down on their investments in
Ireland in innovation. We're also seeing a lot of investment as well in terms of new entrance into the Irish economy, which is really important. And that's because they're looking for global marketplace, stable locations where they who's just trusted and proven, I believe, and that's what they're seeing in Ireland. In terms of the future world.
I know you can't reveal all, but I am curious so on that where there's new investments coming in. Are there conversations you're having with entities, global companies, US companies who say we want to do more stuff with you guys because we don't necessarily want to be in the US or other like give me an idea if there's anything that's a repercussion or you know, the result of an action by the White House.
Yeah, So I don't think it's it's a scenario of we don't want to do it in location A, so we're doing location B. I actually think companies are looking to actually how can.
We grow our business?
Where can we grow that from what markets do we want to serve and where can we get the skills.
Or are the policies that support that.
That's really what we're seeing and what we do in Ireland is that, you know, we make sure we bring is stability and certainty to those areas of policy in terms of talent and talent availability, not just Irish talent, but international talent. These are the pieces that are setting I believe investors apart when they're looking at locations around the globe, because I said previously at the very core of the IE and of multinational companies, they look to
international markets. They need international markets, they need international supply chains, they need international talent. That's what they need in order to be successful. And that success isn't just success in the country they're located in, It actually comes back to their entire supply chain.
We're speaking to you on today where we heard from the FED chair and there are a lot of questions about what the labor market looked like. The takeaway that I got from him, Carol, and I think you'd agree with this is that he really likes where the labor market is right now. And then despite what anecdotes people hear and what people are saying, there are not cracks
starting to appear. Things are looking pretty strong. Explain to us the labor market in Ireland right now in the context of these companies, especially tech companies battling it out for top tech talent for AI.
Yeah, and I think you're just to use it the comment in terms of the Fed's comments this afternoon of the labor market, actually, Irish labor market is somewhat mirrors. I think what the FED has has mentioned today. It's robust where like you know, we're almost at full employment. So there is actually I think for economies that are performing and have a strong underlying fundamentals that is I
think that's mirrored across many economies across the globe. And the key is in this context is you're correct, there is like talent availability and is probably this key differentiator for success for whatever business you're in or whatever sector you're in. And that's why I believe that multinational companies look they see talent as global.
They don't see it as within a geography or within a region.
They see it as global. And I think that's what we have to continue and we're very we're very as suppose attuned to the fact that not howlone do we have to generate our own talent, but we have to be able to track the best talent to Ireland, and we have to create the conditions in which they can prosper, which they can live, and which they can and enjoy life as well.
Well.
I'm also curious because there is a lot of pressure from this administration, the President specifically for US based companies, US based multinationals to do more in the United States. Having said that, I think about a company like Microsoft, who has been in Ireland in for four decades or so, correct, I'm just curious, you know, is any of that relationship that you folks have, and especially the investments that Microsoft has made and maybe continue to do, has any of that changed?
To be honest, it hasn't. And if you think about your correct, Microsoft celebrated it's fiftieth birthday actually since we last spoke, and forty of those fifty years have been in Ireland. And when when when Actually, when we celebrated Microsoft's fortieth birthday in Ireland, they spoke about how important Ireland was to the Microsoft's success, not just Microsoft Ireland, but Microsoft the corporation because that's what it really is
is embedded. And when we look at companies like Microsoft and the many more companies that we have in Ireland, there are there are multi decade investments, there are you know, trusted long term partnerships with IDA and with the Irish, with the Irish government, and that's what really brings that success back. And what we have to be conscious of as well is that we need to make sure that we actually have we're meeting the future needs of industry
as well. So that means people, it means infrastructure, and it means policy, and that's very much what we're focused on, what Irish government or folks.
We'll go back to my question about AI specifically. Carol mentioned there were some layoffs at Microsoft.
Today.
There are hundreds of thousands of people who work at Microsoft and we know thousands.
Is that the latest report, Carol, Yeah, some more job cuts in salespeople, I think they were saying.
And it's about making sure that you have the workforce that these tech companies need. J Powell was asked the same question, what is going to be effect of AI on the workforce? Yes, what is it in your view and how do you make sure that it doesn't decimate a workforce, like the CEO of Anthropic dom Dario Amidae said recently.
So I think you're correct.
We need to be conscious of the fact that AI is going to be a technology and is a technology that's going to revolutionize. In fact, we see it all in our day to day lives and their day to day work. What we're looking at from an idea perspective is we're trying. We have very much looked at where is the opportunity for AI to bring efficiency and bring productivity gains.
But secondly, then how do we make.
Sure that where there are risks, we are upskilling and reskilling that workforce for future and new new technologies. And that's our real focus is in our new strategy. Just to say this, for the first time, we have put a public target and upskilling and reskilling of the workforce, so forty thousand people we are committing to to upscale and rescale and that's actually not just to meet AI, but to meet all technological changes that's coming.
Michael just got about thirty seconds.
I'm just curious about what's Ireland's relationship with China and what do you think it is going forward?
Just quickly Yeah.
So with China, our relationship has been the same and the same with the European Union. I suppose it's d risk, but don't the couple We see opportunity, but we also understand that we need we need to do that balance between the risk and the coupling, and we will continue to do that.
Is China being more aggressive though and reaching out to a country like.
Your own, I can't say this. I think we have offices in China, We have offices all across Asia, so I think it's no different to dat than it was this time six months ago.
Trying to just get an idea right as we look get geopolitics and new relationships being formed, whether or not you know John has certainly there's been reporting that as the US backs off, kind of looking to kind of step in, but not necessarily.
Not evident of this juncture. Yeh.
Be well, be well. We know you travel a lot, so stay safe.
Michael Lowan, chief executive Officer of IDA Ireland, joining us here in our Bloomberg Interactive Broker Studio.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty well.
As Kate Sullivan told us earlier this hour, Bloomberg News White House correspondent, the President's latest meeting to discuss the conflict in the Middle East is ongoing right now. Earlier, the President remained qui about whether the US plans to join Israel's offensive aim at destroying Uran's nuclear enrichment program. What exactly is that nuclear enrichment program? What exactly is Iroon's strategy. Is it for weapons or is it for energy?
Is it even close to having a nuclear weapon? These are all questions that we talked about in preparation for this segment today. We've got a great voice on this. Heather Williams is the director of the Project on Nuclear Issues and a Senior Fellow in the Defense and Security Department at these Center for Strategic and International Studies. She's also an associate Fellow with the Project on Managing the Atom in the Belfer Center for Science and International Affairs
at the Harvard Kennedy School. She joins us this afternoon from Boston. It's good to have you with us, Heather, thanks for taking the time. I think a place we want to start is just getting an understanding of exactly what the capabilities Iran has right now when it comes to nuclear energy and weapons. What do they have?
Yeah, well, thanks so much Carolyn tim for inviting me on. So we before we talk about what they have right now, I want to just very quickly say what they had a week ago, because there's a big difference between then and now. A week ago, iron had a nuclear enterprise involving thirty different facilities spread out across the country. It was enriching to sixty percent its uranium, which is well above the amount that you need for civilian purposes.
It also had some ballistic missile.
Capabilities, and so this was a really concerning program. And the day before the Israeli strikes, the International Atomic Energy Agency actually found that Iran was in breach of its non proliferation obligations for the first time since two thousand and five. So there was this really expansive program. Where that program stands now is a very different picture.
One of the.
Biggest enrichment facilities, Naton's, has essentially been destroyed and that is partially because of the power being cut the targeting of the structure itself.
But there's one big piece.
Of Iran's nuclear program that remains, and that is the four Doah enrichment facility, which is buried really deep underneath the mountain, and Israel has had a few strikes on Fourdah. That facility still remains, but for the most part, a lot of Iran's other nuclear facilities and capabilities have been significantly impacted by the Israeli strikes.
So how long does it take to kind of.
Rebuild all of this if that is ultimately Iran's plan.
Yeah, it's an unsatisfying answer.
We don't know because it really depends on the extent of the damage.
But it also really depends on.
What President Trump is going to decide, probably in the next days or weeks, because that Florida facility is going to be really crucial if Iran does want to rebuild a race to having a nuclear weapon in the near future, because that's where a lot of the higher enrichment was happening. It's a place where iron stockpile could be transported to. And so if that facility endures and Iran continues to use it. In that case, some estimates had said that Iran was just weeks away from.
Having a nuclear weapon.
Now if that facility is destroyed, that will probably set Aron back by a significant amount of time. But the answer to that question, we just don't know. But we probably will know a lot more in the next few days, assuming that President Trump makes a decision.
Do you think Florida can be destroyed without using the GBU fifty seven.
It would be really, really difficult.
It would require sustained Israeli strikes using their own bunker busting bombs, which are a lot smaller than the GBU fifty seven, and even then it's not clear that those sustained strikes would get the job done. Another option would be an Israeli sabotage mission such as cutting the power to four Do Doh, or some sort of commando mission on the ground, such as go and getting folks into
Fourdoh to blow it up from inside. That might be one option for probably having the higher likelihood of success of just throwing Florida, But for air strikes, it's really hard for the Israelis to do this without US support. I do think it's important to point out, though, that the US strikes on Florida.
If they do come to fruition, this might not be a one and done mission.
It would be difficult, I think for the US to be able to take out all of Flouridah with one of these bombs.
And the reason for that is Florida is buried so deep.
Also, we don't know a lot about the extent of the Floidau facility.
There could be additional tunnels even further underground.
Some suspect that there are facilities buried up to half a mile into that mountain, and so the GBU fifty seven is probably the best bet for air strikes in taking out that facility, but it might require multiple strikes.
How do you feel? Forgive me?
And this is with all due respect, but there's been so much debate about does Iran have weapons?
Do they not have weapons? I feel like it's gone back and forth.
So how do we trust the intel or how do you determine that you can trust the intel that you've got.
I love this question.
It's such an important question because there is all this confusion about the intel right now. Right Chelsea Gabbert says one thing, the President says another thing, The CIA says one thing, central Command says another thing. And I actually think this confusion is really really understandable, and a big reason for that is how you define a nuclear weapon.
And I promise I'm not going to get academic about this, but it is the difference between if Iron is pursuing weaponization technologies, so for example, triggering devices, if you want an implosion device, what do you do with all that highly enriched uranium.
It's not just going to sit there. You have to figure out how to convert it into.
A nuclear weapon, versus a nuclear weapons program which requires the highly enriched uranium a means of delivery along with that weaponization technology. And so if we're talking about that weaponization technology, I think those in the Intel community who said they don't see evidence of that, that seems to
be pretty consistent. However, if you count a nuclear weapons program as enriching uranium well beyond billion purposes, having secretive nuclear facilities, talking about using wiping your neighbor off the face of the earth, then that also points towards the nuclear weapons program.
And so I think that there's a lot less daylight.
On the Intel then sometimes comes across it does just require this kind of wonky more nuanced understanding of what actually goes into making a nuclear weapon.
Heather, I have no idea if this is in your purview, But I mean, do you think that there is a world where Ron says, Okay.
I'm out, we don't need nuclear weapons just quickly?
It's hard to envision that world under the current regime. They have staked a lot on this nuclear program. I don't see many face saving off ramps ahead for them, and they can make a pretty strong case and have international support for saying that they have the right to a civilian enrichment program. But at the same time, I don't know how the international community can ever trust them again not to pursue a nuclear weapon.
So you do wonder, you know, does the US take the step of potentially using the GBU fifty seven, which would be seen as a pretty pretty strong move, and then in the long term around still continues to build up its nuclear facilities for weapons.
Yeah, this is the massive bunker buster bomb that we've been referring to over the last couple of days that can only be delivered by the B two Spirit aircraft.
So the USN does right.
This is probably some of the conversations the president is currently having, perhaps Heather Williams.
Thank you so much.
This is what we were hoping to do for the Bloomberg audience, and you did it so well.
Thank you. Thank you.
Director of the Project on Nuclear Issues and Senior Fellow for Defense and Security at the Center for Strategic and International Studies there in Boston.
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on ute you and always on the Bloomberg terminal.
Mm hmm.