Bloomberg Surveillance TV: September 12th, 2025

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and am Marie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the

Cuts will be in love. And the wonderful thing about trim cuts is for the FED, what it is is the economic data, particularly around the job's number, has offered an opportunity of essentially a free haul pass.

So if the FED Chair.

The FOMC Comte Committee come out with a cut, it's not politics. It's just the dual mandate and looking at what the weakness in the jobs market and adding some liquidity to the system. And it's also an anniversary shop in September. If they do twenty five BIPs, or if they do even fifty, the market should be able to take it digested.

Let's address that weakness in a job's market, and we testing the limits of bad news being good news for stocks.

You know, I think somewhere in the middle of that job it depends the way traders look at it and the way intermediate to longer term investors who are investing for retirement, which is a multi generational effort. Now that has changed the tone of the private investor and the size and presence of the individual private investor more than I've ever seen it in forty two years.

At this point, we're watching what the FED signals next week and how that really will play forward. And John was talking about you know, he didn't say these words because he hates these words, but a hawkish cut or a dubbish cut. There's this question going forward if they are alluded to it. You alluded to it because you tried not to say it, which I admire, and you did that very well. But of course I'm going to

Well, it would be Would that make me become bearish because I'm not buried?

Okay?

Would make you a little less bulleted? Yeah, well, it would.

Certainly make me take a look at the data, see where we're going to take a look at what the what the terms were that when the FED chair is reporting to the press.

How things went and answering questions. But overall, you know, what we've seen really over the last couple of years has.

Been the size of the US economy and the resons allions that exhibited both by corporations and by the consumer, I mean the consumer.

The soft data is.

Oh, they're so worried about inflation, yet the consumer is still spending, you know, at different things. But it also prudently you know, this day of digitalization and information going around the world fairly quickly.

It really is remarkable.

When you look at the US economy around thirty trillion in size, still way ahead of China. After all these years of US hearing that China was going to surpass us and everything else, it hasn't happened. And we think a lot of that is related to innovation. The Federal Reserve has done its job, we think remarkably well, you know, once they got out from being behind the curve and what you we call it in March of twenty twenty two.

So far with all the.

Hikes, all the pauses, and very few cuts, no recession.

Remarkable.

A lot of people who are listening to are probably nodding along with this idea of innovation, especially when it comes to technology and how much that's powered what we've seen in the US equity markets. Can I continue powering it? Given how inflated expectations are and how difficult it is to price in a sea change in technology innovation at the scale that say Oracle is predicting, well.

I would say, I think.

What type of overvaluation is being placed by investment or capex at this point? Really is in the eyes and the ears of the beholder, because maybe the investments that are being made across the eleven sectors to participate in what AI can do, both for the consumer as well as for businesses, maybe this may be appropriate.

What we're seeing, this is so.

Different than the you know, I remember the tech bubble, you know, I mean, like father time, forty two years.

In the business.

Good lord, it's shocking, you know, I still feel thirty five, but it's like nearly one hundred, you know, at this point. But when I look at it, it's just this is not this is not beginners technology. This is, if anything, is technology that needs to be has to be checked somewhat by regulation necessary, but not by too much regulation. And yet what it offers in a world in which we have not reproduced enough to replace ourselves, AI may be able to fill things out in factories and in

That's what I want to ask you to accept this innovation. Do we need to accept that we're just going to have bigger layoffs and less jobs in the economy.

Well, I think I think that's the first part, you know that it gets.

I think we need to prepare for that.

And I think already we've heard Elon Musk and others mentioned things that may be necessary to be considered it really if we meet it with retraining, looking for opportunities, because the biggest thing is as wonderful as the machines can be.

People love to deal with human beings. They just do or not always love. But I okay, well it's not no.

But but at the same time, just think yourself, if you're trying to get some customer service, you know it's rare that you find an outfit that has real good beginners AI in those chat boxes and things to settle things.

When you mentioned the consumer as well, yesterday we did see household furnishings becoming a bit more expensive, clothing, airfares are up. Are you concerned about more of a tariff pass through as we progress throughout twenty twenty five?

I think most certainly in the near term, and then because we go forward, if we see the benefits that the administration expects from it and reducing our deficits, I think that would be it would be very much helpful. And I also think in addition to that, what we haven't seen yet across the sectors in a broad format

What you said about AI I think is so so important. What you're acknowledging is that it's going to be regressive upfront. This is something that Luke Kara, former colleague, has talked about extensively and something Leasa's hamme it hold on again and again and again over the last month or so, is that we could see a real decaupling between the performance of a stock market and the direction of the labor market. Is that what you think people are comfortable with going into twenty six?

Oh, you know, at least at this point, I don't think that the market is looking as much to twenty six.

Yeah, as to the end of this year. I really think.

I think when we start looking at it in twenty six, it'll probably bring up a bit somewhat a periods of volatility when we see catalysts in terms of news items and things that they'll make trainers, skeptics and bears give them an opportunity to take profits without FOMA and what likely is a sexual ball market based on the degree of innovation we have today.

Stay with us.

Marble Impergs have it's coming up after this. Robert Fishman, senior research analyst of Muffin Nithisen, is writing this. We view the news as a key milestone in the Warner Brothers Discovery success story and potentially the opening of a second chapter for a growing media conglomerate. Robert joins is now for more. Robert, Welcome to the program sir. Let's just start with the basics. What's to like this morning with this potential tie up?

Well, I think, as you just heard, what you have is a lot of potential strategic combination between these two players. We've been talking for a long time about the lack of scale on streaming and what this does is really help accelerate the streaming story by putting two subscale players together to help better compete in the current landscape. Then you also have to go to the cost savings that

Once upon a.

Time, the idea of CBS and CNN being combined and the idea of synergies read probably job losses and some consolidation of efforts would have raised concerns by regulators. Will it still or has the landscape changed so much competitively that it doesn't necessarily reach that level.

Ye, that's a really interesting question. I would say that the landscape has clearly changed. You know, back to my first point, Streaming is first and foremost here and that's where all the I are going and already you know, essentially are for a lot of the parts in the

How much do you think that Warner Brothers is just going to hold off on any kind of deal because they were planning on splitting.

Up, and they did believe that each of the pieces was worth a lot more than the whole.

We are seeing a premium here in terms of the paramount Skydance offer from Ellison. But do you think that it's enough or do you think that it's going to have to be sweetened?

Well, I think we're going to see how this all plays out, so that this is just kind of the first salvo. And really what we're really waiting to see is if there's gonna if the paramount sky Dance bid is going to bring in other bidders here, because that potentially has the opportunity to As we've seen in past, these are premium, you know, very very demanded assets, especially when you think about the studio and streaming and HBO.

Potentially a price war.

Who else could bid for these assets?

Well, I mean, if you go through the list, clearly Comcast is a potential bidder. It's unclear you know, to the regular regulatory point if they're going to look to enter into into the fray and and you know, put their hat in the ring. But I think Comcast has long been discussed again from the streaming side and also from the studio side and other assets that that this can be part of that. The question is they're going through their own spin with versay it and you know,

More consolidation could we see Robert in this space.

Well, this is a big one.

We've been waiting for something like this for a little while now, again talking about the potential dance partners with a Comcast, with Warner Brothers, Discovery and and Paramounts being the three key players. So you know, I think this is going to lead to other potential dominoes that that could fall. But but clearly that this is the big one that we're all focused on right now.

Stay with us Multpleinberg. Savannah's coming up after this. Andrew Holnholt of City Writing, we continue to expect one hundred and twenty five basis points of right cuts over the next five FMC meetings, with growing risk that the Fed

I mean, I think you.

Always have to watch the jobless claims numbers. What we would look for is is this going to be a sustained movement.

Up in jobless claims?

A lot of times you get one week of data and it's weekly data, right, You're trying to seasonally a just weekly data in a holiday week spiked up in one state, So you never take that too seriously. So so I'd be kind of cautious in terms of getting too concerned about that number.

The broader backdrop, though, the totality of the data, as the Fed likes to say, hasn't been great on the labor market side of things. When we go into next week, we're talking about the following mid cycle adjustment or the start of a really big easy cycle, and you've alluded to it, we're going to stop at three percent, or well, we need to go even further.

I think it's increasingly clear that we're going to get to at least three percent. And you look at the jobs data, and we do have some conflict in the data. If you look at the household survey, where the unemployment rate comes from, unemployment rate has been more stable, did move up in the last report. You look at the payrolls data, and with these revisions, it's just fallen apart. I mean, we're running at twenty nine thousand jobs per month on a moving average basis, just twenty two thousand

Hold on a second, the cooling inflation data cooling, sure, we're still above three percent on a year over year basis. You still haven't gotten below two percent going back more than four years. Is that enough at this point to be actually a reason for the Fed to cut aggressively?

Well, I think the reason to cut aggressively is the jobs data, what we're seeing in the labor market. The question is how can strained are you by inflation? To your point, and you're right. You look at core pc inflation, we're still above three percent when we looked at the CPI report yesterday. Though, this is really interesting. You map that through to core PCEE inflation. We're getting just zero point two zero percent month on month core PCEE inflation.

I'm pretty clear what the Fed's going to do here.

I mean, we've got the Restoration Hardware CEO cursing out the investors because of their inability to have pricing power,

There's a little bit of a disconnect between markets here, and this is I hear this when I speak with investors. Also, that equity market, I think definitely thinks that there will be this reacceleration in the economy.

Not as clear to me that the rates.

Market is sold on that, which is part of why we're pricing in these cuts in the rates market. So maybe you need to kind of reconcile those two markets with each other. I do think that these FED cuts are getting increasingly priced in. I think that is part of the story of what is supposed to get the economy moving a little bit faster. You look at the housing market, that's the most interest rate sensitive sector of the economy, and we have really weak housing right now.

In terms of activity. In terms of prices moving lower.

You need to get rates lower if you want to re accelerate that portion of the economy.

The question, though, is if fit cuts interest.

Rates, it's going to bring down policy rates, it's going to bring down the two year yield. How much lower will we get in terms of the ten year yield. It has been moving down together with the front end of the yield curve, but I think that's still an open question.

Andrew, how likely is it potentially that they go fifty basis points, especially given everything you've just outlined in the last five minutes.

So I think fundamentally, you can look at this data and you can say, look back at June payrolls. June payrolls originally reported above one hundred and fifty thousand.

Now it's negative. Right, if we had had a negative.

Payrolls print in June, I'm pretty sure this is a FED that would have been cutting in July.

Right.

We have seen rate cuts by now. That said, they're a big diferences across the committee. Remember back in June, we had a lot of FED officials who didn't want to cut at all. This year, Powell has to pull that committee together. So twenty five basis points I think is going to be a lot easier to build a consensus around. We could see some descents for fifty. I wouldn't be surprised if we see some descents, but twenty five looks much much more likely than fifty.

What is a FED under Laurence Lindsay, Kevin Warsh or James Bullard look like, given the fact that those are the most recent individuals to sit down the Treasury Secretary.

Yeah, personnel matters here, right, There's no question that the fedchair matters. It is a committee, right, So we always think about where are the votes actually going to line up in terms of where policy rates go. One discussion, we're talking about three percent. Why does everyone talk about three percent? That's kind of a notion of where maybe the neutral policy rate is. Different candidates for fedchair are going to have different views about where the neutral raiate is.

And where do you see neutral?

I think neutral is still around three percent here. So when we talk about the FED cutting below three percent, that really are they going to actually go to stimulative levels? To Lisa's point, if you have an inflation problem, it gets pretty awkward to get below neutral. But if this inflation problem is, you know, kind of quickly disappearing, which I think it may in the next few months of data, all of a sudden, there's less of a constrained and yeah, you should support the labor market.

Got about sixty seconds left. They don't forecast payrolls, they forecast unemployment, and they've got unemployment year round at four point five percent, core PC at three point one. Is there anythink that's evolved since the last meeting that sound of whack with the June SEP.

Those for forecasts can actually pretty much stay where they are. And I think the way that Cher Paul will talk about this, and he said this at Jackson Hole is not where that point estimate is. So you might still be at four point five percent on the unemployment rate. What's the risk around that you're running twenty nine thousand payrolls?

It's to the upside.

This is the Bloombergs Events podcast, bringing you the best in market, economics, angio politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app