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Join us down what a privileged in studio here Semashaw, who really has had an impact on the view of global economics, I should say from London, from the United Kingdom. She's probably here in pre prep for the president's trip do some little protocol and that kind of thing. I can understand it. Welcome, Thank you so much for joining today. I see your lengthy note here. But what we really want to know is how does this equity market keep
on going? Do you buy the gloom sell the news Wednesday at two pm.
Thanks about having me, it's great to be here. Well, we're still positive on the acuity market. I mean, I think it's more of a muddling through. There's no it's difficult to see any major catalyst which is going.
To create this very big upward leg from here.
But as long as the economy is chugging along, and yes it's slowing, but we're not expecting recession, you know, and its speech is still pretty positive. It can keep going up. I just don't expect to see very significant.
Returns from the animal spirit of nominal GDP. The ECB has to confront certainly a sub four percent nominal GDP. What's that statistic versus America? There's a huge difference in the growthiness of America versus Europe, isn't it? Yeah?
There is.
There is a really significant difference. And I think what's been interesting is that for this year you've seen that investors almost turned away from that very significant difference and putting a lot more focus on Europe. That seems like it's faded a bit in the last few months, and certainly from our analysts, they're looking and saying, look, the fundamental picture for Europe.
Is not as good as the US.
Yes, there's a slow down in the US, there's likely to be slow down in Europe at the same time.
It's difficult to avoid that.
So how can you continue to be very positive on Europe versus US?
Will you tell Chairman Paul the operative word? At the press conference on Wednesday? Solid he love saying that it's a solid economy. It sucks like solid. Last night, did they win? I went to they were the same, they won.
Sem told me the idea I do.
I do have a tendency to use the word solid as well. Yeah, I think that's a good description for the US at the moment. You know, we're expecting, as I said, slow down the trough in the in the growth picture around Q four, Q one, and then a rebound, a gentle rebound through twenty twenty six, but not really going above tun trend growth in the US.
So it's it's a picture.
It's nothing particularly exciting, but you don't necessarily need to have exciting to see equity markets continue to rally.
We wait with baited breath for that statement and whatever adject title descriptive that the chair uses to describe the economy. There is this debate, as I mentioned, between twenty five or fifty at this meeting, how do you see that shaking out? Can you understand the ration now? For those who do think that the Fed might want to go bigger at this.
Point in time, I mean, I'm sending very heavily in the twenty five base point camp. I've been saying that a fifty would be really about politics more than economics. Having said that, I guess I do have to pay some kind of lip service to the fact that, look, once the unemployment rate starts to rise in a normal environment, take out the labor supply issues, then it does typically spiral, so you do want to.
Get ahead of it.
But at this phase, looking across the broad set of economic data, earnings, credit spreads, there is very little here at this point in time to justify that kind of emergency sized cut. So I would have to say there's something political if you get a fifty base puish, did you.
Then interpret what we've seen over the last week or so in terms of labor market data? So first that monthly jobs report, the Revision's weekly claims which which surprits the downside as well. Taking all of that and nargrogant, what's your sense of where this labor market is and where it's going.
I think there is a slowdown and labor demand. I think we can clearly see that, but the labor supply issue is almost offsetting the magnitude of that weakness.
So there is something underway. It does need to be getting, you know, the FED does need to get in front of it.
But are we moving to a point where we can start talking about recession realistically. I don't think we're there, but the Fed does need to come in now in order to stop it from deteriorating to that point where you do become you know, recession does become the keyword again.
How does a dollar fold into this? I mean, I know, I did one chart today, folks, in the in betweenness of the dollar right now is remarkable. I guess it's resilient. That's the way the street's looking at it. But are you looking for a catalyst for dollar movement or do we just get used to sleepy dollar.
I think that the dollar can move a little bit lower over the coming months simply just you know, just from a central bank perspective, globally, the US is the one which is still cutting rates. You're seeing a lot of the other central banks at least coming to a pause or if not a complete halt. So from a fundamental perspective, I should put a little bit further down
the pressure on the dollar. I think the key question is is you know, as we know about you know, the smile for the dollar when you do see that global weakness, so US weakness, so typically the dollars tends to strengthen. That's what we've seen in the last week or two. I don't necessarily think that's going to hold, especially if you continue to see this pressure on Lisa Cooke on FED independence. Those are all things which are slowly eating away at the other strength.
Talk a bit about that, because we're this kind of pivotal moment where we don't really know which personnel they are going to be around the table when this decision is made this week. Lisa Cooke fighting to be there is kind of a normal governor fighting that out in the courts. The government course pushing against her. The administration is Steph Muren has a vote tonight in the Senate. Will he make it in time? We'll see, seems likely.
How much does personnel matter as the FED gets together to make this policy decision.
I don't think it necessarily matters for the great decision on Wednesday. I think it's when when you get further out into questions really about the independence. You know, how quickly can a FED government bee be fired at will? But also at some point in time the numbers game starts to really play through, and I think that for twenty twenty five, I think the forecast is fairy clears, you know, two or three cuts. It's when you get into twenty twenty six and you can't forget about the politics.
And I think that's where the muddiness of the forecasts are really sitting Semashaw with.
Us to get a started today. A good conversation here with the Principal group. Futures up thirteen, Death Features up seventy five. Good morning across awaking America. Good morning to the nation. Henrietta Treys will be with us here in a bit on Washington on YouTube. Subscribe to Bloomberg Podcasts out on YouTube. But it has been an extraordinary three or four days here. Thank you for your support, David. How about this, Seema Shaw, June of gloom June of
twenty twenty in the FT. I got to read it in entirety, folks, because it's shocking when apparently positive signals can turn negative June of twenty twenty, big negative and back again in a short time frame. It makes sense to wait portfolios with a high quality defensive assets such as megacap, tex, tax and investment grade credit with a bias towards the United States. Anything much riskier than that looks set for a white knuckle ride. You crushingly nailed
it there. I mean, just do you just reprint that paragraph again here?
I should, I should have it plastered on my forehead, not though, do mean? Well, but I think you know that in twenty twenty not many people got it wrong, right either you if you got on the market about the book, you know, I think there's a really big learning there from twenty twenty, which is that, look, we it looked horrific the global economy went through so much, and yet in terms of the US dynamics, US market,
it recovered really really quickly. And to me, that's one of the key things there is it it's very difficult for the US to have a prolonged recession. It's very difficult unless you know, have major colleges because of the chase.
In June of twenty twenty, you said free casual is going to sustain in the United States of America, including mega cap. Can you say the same thing today?
Yeah, I think with slightly less enthusiasm per Suddenly we are long term holders of that megacap tech trade.
We believe that you know, there will be volatility.
That'll be question marks about her earnings, there'll be moments where the market will be rattled, but we do generally believe that that is the frontier of productivity for the world, and so you want to keep having exposure. I think maybe the thing that investors really need to not thinking about is where next, Where beyond the megacap tech trade
do you want to be looking? And then I think there are lots of opportunities to cross all sectors, and that's what's going to really set apart the winners from the losers.
I've seen a string of these stories casting doubt on the viability of the AI narrative. There was the study out of MIT ninety five percent of whatever isn't working out in the way that people thought it would. I saw this latest thing from Anthropic that we're not using it to sort of do anything more than boost or
individual productivity. It's maybe a dumb question, but do you as an investor have to buy into that narrative fully or you just look at the way that these megacaps are performing and take the right In other words, how much conviction do you have to have in the story itself?
I think you need to have some kind of conviction in what the future of the world is. But I think it's fair to have your moments where you become a little bit cynical.
Do you look at evaluation, Yes, exactly.
You look at those valuations, you say, how much longer can they can really continue to deliver these kind of revenue growth.
And these growth So I think that's fair.
But I do think that for some companies, for some strategies, that is very much a long term theme. You know, we're not talking about one or two years. We're looking at from a five to ten year perspective. So you have to be able to be willing to live through some of those dips.
On a Monday, Can we do an audible Sure? You know it's still you know, we're not deep into Tuesday yet I won't be here. I see it like the chart this weeknd that France has a worse fixed in compositions in Spain just exam from the city in London. Are you are you watching the tumult of Europe and saying it's over there, it's distant, it's not going to upset the apple cart or is it inextricaly part of what's going on?
I think that they are two separate situations.
But the UK has its own very meaningful fiscal situation which has nothing to do with France, cannot be rectified by maybe France resolving its own situation. I think this is a global theme, but they're all very kind of individual stories which are going on around the world. For the UK, I you know, obviously for France and the UK, these are quite urgent situations.
I struggle to see.
How, for example, the UK can emerge from this completely unscathed. The budget is going to be a very very difficult moment for Rachel Ruves and for me for when I look across the UK to the guilt market, I do have genuine concerns about where we go from here.
For the UK.
Is that a traditional concern or it's just out longer duration or can it really upset the entire curve?
I think it could upset the entire curve. I think there's enough concerns about the credibility of the government. Essentially, what is the escape route for the UK? And I think it's very difficult to know what that is because the typical drivers of that would be productivity, growth, immigration.
Those are two things that we seem to close the door on.
But am I correct to those of us distracted by the Detroit Lions scoring fifty two points this weekend. One hundred thousand plus people protested in London this weekend. That is correct if we have a Trump I'm being very simplistic, Seema. If we had a Trump moment in reform one, how would that change finance and fixed income in the United Kingdom.
I think what we could see is again you have to take a long term perspective from a political perspective for the UK, and you do get to a point where the productivity concerns really do start to explode. Once you have these kind of movements, there's a very potential change for the government. Change of government at the next election to that far right movement, a ton of implications for the long term growth of the UK.
I spent on please I wanted tone about tott Nanda before we get there.
Many of us here became familiar with Minutia Fique when she was at Columbia University. Some of us know of her from her tenure at LC before that. She's now back in government, has this role as economic advisor to the to the Prime Minister. What does that dynamic look like between her and Rachel reaps going forward here? How is she how is her expertise going to be used?
Are we just setting the stage here for a conflict or she stands some key role here in trying to write the ship that you're describing.
I think she does have a key role here.
But I think that the UK it goes beyond just the kind of the simple economics for the and I don't know if she can genuinely push this narrative of changing the entire makeup of the UK.
Where is it heading?
So I think they're really deeper almost you know, introspective questions that the UK needs to be asking that goes beyond economics. So I think it's great and it's great to have a credible, absolutely have incredible policy makers like that really does help the UK at a time when there's so many question marks about who is in government and who is you know, who's essentially ruling.
But I think they have the challenges ready cut up, it's your questions.
I guess two lates, we'll do it next time. We'll do it next time. After they lost four.
In a row, I'm happy about that.
Yeah, I know, you know, you know all the fine you know, it's like.
You're you're all alone in your a Tottenham fandom.
Wait a lawyer. Well, I had no idea how Lona was. I was having a cigar at some fancy London hotel. Everyone in a room was an Arsenal fan. Yeah, like one hundred and ten percent. It's ridiculous. Missus Keene had the tot name had. So we got the bad service, we got semen show. Thank you stay one of us. More from Bloomberg Surveillance coming up after this.
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Showings on Henrietta Trey's Veda Partners on Your Washington, Henriette, I want to do an audible here. David's got a lot of smart things to talk about. But I noticed ten US senators twenty seven House members already have announced their retirements into next year's election. Why are we seeing so many retire as the two this weekend.
Yeah, they're dropping like flies. I have the benefit of having this incredible mentor. A woman named Ashley Miller back at the US Chamber of Commerce and she told me several years ago that Senators and congressmen are.
Heading for the exits.
DC is incredibly unpleasant to be and we are knocking at the door of eliminating the filibuster, which any Senate staff or will tell you is what keeps the Senate from being the House, and they mean that as an insult. So it's definitely not a good time to be down there right now. I think the assassination of Charlie Kirk is certainly in forefront of people's minds. The physical violence component of it really can't be under stressed.
I saw Michael McCall also announcing his resignation or not resignation, but not seeking reelection once again. So this is happening in the House as well, isn't it.
Yeah, it absolutely is happening in the House. We're up to two House Republicans from Texas if I'm not mistaken.
The one that was.
Really surprising to me is some of the farms take members I'm thinking of like Joni Ernst for example. Those members should be in really safe re elections, but you know the potential for having to vote on tariffs the trade wars, the discontent with farmers are all issues that are plaguing them, aside from just the general lack of comedy in DC.
Range are grizzled pros of this. I'm the heck David, they're just retiring because they're getting out front of Democrats winning the House? Am I too simplistic?
That might be a little too simplistic, I think, But Henrietta, you bring up the kind of difficulty in farm country especially, and I think there's been a theme to the newspapers and news sites I've looked at over the course of the last week, and that is this level of dissatisfaction and worry amongst soybean farmers in particular about their prospects in light of these trade policies, not having a buyer in China. How does all of this sort itself out?
This needs to be sorted out at the top levels, like this needs to be a prominent topic of conversation between Bessett and jameson Greer in Spain today with their
Chinese counterparts. We need to be talking about sey purchases. Unfortunately, when we start inserting Nvidia and tiktoking and the conversation I don't think there's a place for any kind of give on soy purchases, and we're seeing in the farmer's main concern is that they are permanently losing market share to Brazil and Argentina from the world's largest purchaser of.
Soybeans and sixty one percent.
So the farming community is doing something that really you don't see from a lot of other businesses. I would talk about, you know, car dealerships, for example. They're a huge political donor base, and they're being really quiet about the tariffs. They're only hiking new car prices by one percent, but used car prices, which is the bulk of their sales, are up six percent as they try to stay on
Trump's good side. The farmers, though, are putting out public letters and they have been for several weeks now and giving a lot of news interviews on the record saying how problematic the president's trade war is for them. They do not have any sales to China going forward, and that's that's a death now for them.
I look at this and wonder is a bailout inevitable? So I gather that Trump one isn't prologue for all the farm made, farm made yelling also good play as he is. I think, I think tonight. But you know, Henry, I'm curious, is that where all of this is headed? Are we going to see a twenty thirty billion dollars bail out the likes of which we saw the last time around?
Yeah, we got three of them last time around. I suspect we'll get another one this time around. There's already rumblings from members, specifically on the House side and the agriculture committees, calling for the insertion of a farm aid package in the upcoming cr that will have a government shutdown, so it's definitely already part of it.
There was some of that in the One Big Beautiful Bill.
There was some rejiggering of some of the methodologies and accounting for how farmers get subsidized, and that's going to be branded on in the next package.
I again, another dumb question. Only handring out of trades would know this. When there's a farm bailout, who gets a check? A mom and pop farmer with two hundred pigs on a ranch and you know, I don't know Kansas or or is it like corporate America gets the check?
It's both and it's usually run through the Department of Agriculture, through a really small entity there that was heavily accessed during the president's first term. Is the US trying to trade war kicked off, they replenish this fund that goes specifically to commodity purchases, and that's how the money gets bundled.
And I suspect that's what they'll do again.
That's they're having like pretty advanced talks about it now, but still relatively rudimentary.
There's no text, but I would imagine that's what they do.
If we're growing tomatoes on the deck, do I get a farmer tom sacks on the deck?
Yeah, Henrietta, we have this irregular series with you where we ask you what a recess is going to be like for lawmakers when they go home to their district. So let's let's pick that up again. Let's do another edition of it as we face a ten day recess
here starting at the end of the week. In the past, there have been these town hall meetings where there's been a lot of commotion and outrage as we look toward this one and on the heels of that two legislative days to hammer out some sort of deal here on whether or not to averted government shutdown. What does that recess look like for members of the House in the Senate.
It looks bad.
I mean, they are getting increased funding for military productive police protection.
They're going to need all of that.
I suspect most of the events would be inside, if they're held at all. I imagine we hear a lot more about like virtual town halls. We had already seen so much democratic outcry, sorry from democratic constituents at Republican town halls across the country that a lot of members had been putting up placards about the rules of civility
and canceling events outright. I think you've seen a lot of cancelations and a lot of concern about political violence, and there's an undercurrent feeling that this is going to lead somewhere else there will be another Political Violence Act.
So I know that's top of mind for a lot of members.
Henriya, last question. In your most recent note, you put twenty five percent odds on a shutdown here. What gives you the confidence here to keep it? What is relatively low? I think by a lot of standards, there been there have been many people who think that Democrats are going to allow them to happen this time? Why do you feel like it's unlikely?
Sure?
And I'm usually on the low end, and I don't put a lot of stock in the narrative that there's going to be a shutdown, especially when we're fifteen days out from the thirtieth.
It's like a lifetime in DC language.
I get my information from staff, which I think differentiates me from some other folks. I don't really talk to members all that often. I really very much care what staff has to say because they're the ones with the finger on the pulse. And the read that I get is that House members are much more inclined to encourage your shut down. The Senators just aren't there. And until that changes, I'm going to keep my low odds of
twenty five percent. We're probably going to take this into September twenty ninth and thirtieth.
Things will look funky this week.
It'll be a lot of drama, but with a ten day race, that's a lot can change.
Henrietta, thank you so much. Look forward to speaking to you again soon, soon soon. Henrietta Treys with Beta Partners, just terrific perspective on Washington stay with us. More from Bloomberg's Surveillance coming up after this.
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Good lucky with the timing. Annas Jamroso with us this morning, and that is a wonderful thing. She is at partners and of course has been just incredibly pression about the need to be in the market. I have to read this tweet in full from the President of the United States, Anastasia. Listen carefully. It's detailed. Subject to SEC approval. Companies and corporations should no longer be forced to quote report unquote on a quarterly basis, but rather to report a six
month basis. I would note, folks, very much like most European companies, this will save money and allow managers to focus on properly running their companies. Did you ever hear the statement that quote China has a fifty one hundred year view on management of a company, whereas we run our companies on a quarterly basis. Question marks not good three exclamation points. You and I know this has been a raging debate since you were an undergrad at in
New Mexico a million years ago. Should we go like year up to twice a year reporting.
A million years Indeed?
Look, I think there are some sympathizers with that in public markets that maybe quarterly reporting can be made more efficient by stretching that out. And I sort of think about JP Morgan and Jamie Dimond periodically talking about that as well. So, look, I we now focus our time on private markets, Tom, and we're certainly sympathetic to making changes over the course of many, many years that I think there are great benefits to that, for sure.
The history of this, folks, is in the old days, you had a value line on your floor that was eight inches thick, and you trip over it about once every ten days, and you at the back of the Wall Street Journal which showed revenues, net income and shares that the earning season. Now anastasia, it's a parler game, it's a frenzy. I'm as guilty of it as anybody else. Should we get away from that frenzy?
Well, I don't think we should completely get away from that. I do think it's important to keep investors abreast of what's happening, and you know, it has become I guess, a bit of a game though, because you set the expectations, you reset them lower, you beat the lower bar. But I do think we are part of the reason why there's still the existence of public versus private markets is some investors like that transparency, and I think the lines would get.
Too blurred if we were to go to any less cadence.
Now, I will say in private markets, you know, if we don't have the scrutiny of the quarterly reporting, there's so much more that we can do in terms of transforming supply chains, building out margins over a course of time.
So I think that's where that belongs.
David, the cutcher that drives people nuts as you're on the conference call with eighty five analysts and they go and now the guy from Dad, and you go, great quarter drives me insane. We'll continue. Maybe we should talk about the markets right now, mister Barra.
But let's detail your work in the private markets with the public ones. And I'm curious of how you look at the enthusiasm that we've noted over the last few days initial public offerings, companies wanting to merge with one another. I think there have been a number of days over the last week or so when we've headlined AIG, a big deal merger that's happened here. How do you see that atmosphere of that environment right now?
Right Well, it is kind of a title change, to be honest, in terms of the activity that we've seen in M and A and IPO markets, and I'll focus on IPOs in particular because that's where we've seen sort of the most notable pickup. Global EPO volumes are up about twenty five percent year over year, but we've had in America especially, we've had an incredibly robust August and incredibly robust September, and it's sort of been a long time coming. Now I guess the question is does it continue?
And our answer is yes, and most likely does because you've got a comeback of CEO confidence. You got now the rate cut of course that we're anticipating, and a few more this year which should support valuations, and that if you look at the performance of the IPOs this year, the SMP is up about eleven twelve percent depending on the day. The average performance of an IPO stock today this year, I should say it's about thirty eight percent.
So all of that.
Should continue to be the incentive, I will say, David, this has obviously been supportive for the public markets, has been supportive for private market managers. It's certainly been supportive for our platform as well. And we're seeing of the top twenty five IPOs, we've participated close to half of those, so clearly as significant value on lock for the industry.
You mentioned that uncertainty abating. I wonder what is still stuff that needs to be figured out, as you said, So we've got the Treasury sectory in the US Trade representative in Spain right now still haggling with China trying to fund find some resolution to what seems like a very difficult situation to Brook, where is the uncertainty? What needs to be resolved for this to kind of come into its own more more fully?
Right?
I think when you think about it tactically, some of the trade negotiations, and also do we actually have the legal authority to impost hariiffs in the fashion that there were imposed? You know, obviously some court decisions are still pending there. That's kind of the tactical side of it. But I think, to me, the bigger uncertainty that needs to be settled and resolved is look at the label market. It is weakening and we see more and more signs
of that. So obviously the markets are exuberant about the rate cuts and supporting the economy. But what if we don't get enough FED action quickly enough. What if the labor market does actually sort of turn before the fat can can support it. That's sort of the biggest uncertainty in my mind as I look into twenty twenty six.
Yes, the outlook is.
Supportive because we got the tax cuts that come in, but the biggest uncertain for me will the FED act quickly enough to cush in the labor market now?
But you say the market, this came up like eight times this weekend. It's not the market anymore. And you nailed this six months, eight months, a year ago. We have this one parcel of the market. MAG seven whatever tech it's doing exceptionally well and everything else is really mediocre. How do you play it? At Partners Are you still MAG seven Tech focus? Large cap focused?
Right?
Well?
At Partners Group, we look at large mega trends, and we also look at some of the four sectors along which we invest and it's looking of course to technology. We certainly are investing in artificial intelligence, not only investing in it but also thinking about who might be disrupted by it. We look at things like goods and products, so then consumer products, think industrial products.
Services.
Let's say we like utilities, but we also like servicing utilities companies, and of course life sciences and pharmaceutical services is the other pillar that we look at. So that's how we look at it in private markets. In public markets, I would say, you know, Tom, the conversation continues. Is the AI momentum still there? For us the Answered Partners Group,
it's still very much. And just look at what happened with the Oracle, for example, last week and the fact that they went from guiding you've ever seen it then, well not since nineteen ninety two, right, And you know the fact that they went from revising their cloud infrastructure revenue from eighteen billion to one hundred and forty four billion over the next five years. That's monumental and that really tells you that the AI momentum is continuing.
So a partners group.
We think about investing it obviously in application software, but also in infrastructure. And there's probably three, four or five ways in which you can invest in AI in infrastruture some window.
Into that for private market stuff, I wouldn't understand how do you do AI data, electricity, generation, infrastructure away from the Dow Jones industrial average.
Right, Let's talk about infrastructure, and let's talk about the three or four or five ways. I mean, the first one was how about well data centers, which I realized Tom, it's a theme that's well talked about and at the same time, if you look at and at the growth in data centers, it's still forecasted to be fourteen percent per annum for the next number of years. So data centers, and I will say building a traditional data center versus building an AI data center are two very different things.
And what you need for an.
AI data center, First of all, you need a lot more power capacity, power density, So that's a different requirement. If you're going to run those racks of GPUs that require a whole lot more power, that's a whole different cooling requirement, So we have to think about that. And then also you know Tom especially if you're not doing training, if you're doing AI, inference latency and that you know,
speed of transferring data is really paramount. So building out the fiber capabilities five G capabilities is all that we think about in terms of the data center design. So quite different than just the traditional stuff and certainly quite different than just semiconductors.
How about electricity generation, and we were talking about builds are going up, the demand for electricity is going up. Over who gets the electricity is certainly becoming a roiling debate as well. How do you see all of that laying out? Are you someone who sees nuclear is the solution here? How is that going to sort of shape the way this arc with AI continues to do.
Yeah? Well, first of all, some kind of big picture stats.
If you look at the electricity generation for the last twenty five years, it has not grown. But if you look at the electricity generation forecasts for the next twenty five years, it is forecast to grow at thirty eight percent.
That's in terms of demand for electricity.
Some of it comes from AI, some of it comes from just the electrification of transportation.
But here's the status.
Something like seven hundred terawat hours is what's required in terms of additional capacity that we have to build out. So that's why I think in public markets, utilities, for example, have done fairly well this year, and that is a trend that we certainly see continuing because they'll be at the forefront of bridging that gap.
Well, thinks back here to the FED meeting this week, when I get a sense of what you expecting out of that, but also what that decision and I suppose subsequent decisions, the way that they unfold, how they're sequenced, is likely to mean for investors.
Right, I mean, twenty five basis points is obviously has it is about to decide, But I do really hope that not only do they decide on the twenty five basis points now, but also another in the end of
October and another one in December. And you know, again, I say that is because the labor market is sort of on the verge of slipping into further weakness, and if they worry about inflation, that's sort of a backwards looking worry because if all of a sudden, you don't have the labor market, you don't have the consumer spending four or five percent year over year as we are doing today, then that inflationary concern can very quickly pivoted
to a deflationary concern. So I do hope that not only do we get the ray cut this week, but we get a pretty.
Strong indication that this is a beginning.
Of a rate cut aside forecast.
That's right, that's I think that's really key to the market because think about it, twenty five basis points a doesn't really push in the economy. Seventy five basis points that could translate to economic benefit. And you know, one example I would give you is, obviously tariffs are a cost for corporations. They're absorbing them in their margins. But what are they doing instead. They're maybe laying off workers,
maybe they're not hiring workers. But if you can free up seventy five basis points of interest expense that can be used for other purposes, and that's the support for the economy.
I look at the Santastasian. I'm just I think of other guests we've had have just said, look, invest in America, and you've been one of the most strident voices that say you have to participate in American capitalists. Yeah, talk to people that are still scared stiff. They see the political trauma of this nation that we talked about earlier with the Henrietta state. Again the case to invest in America.
Right, well, let's talk about the facts.
And I was never in the camp of the American exceptionalism is over and the reason for that. Let's just talk about the backdrop forward corporate in America. And one of the things that the tax bill did is solidify the fact that corporate tax rate in the United States is going to be twenty one percent. After accounting for certain deductions, it's probably close to about nineteen percent. The big deal about that time is if you look at some of the other develop market economies, the average is
twenty five percent or higher in some instances. So all of a sudden, you have an incredibly friendly corporate tax regime that on top of that, there's a couple of things in the tax building it even more friendly. And I'm talking about the one hundred percent bonus depreciation. So if you invest today in America, you get that one hundred percent bonus depreciation in year one that has been permanent. So that is a long term boost to us GDP. If you invest in R and D in the United states.
That's again a one hundred percent deduction in year one versus the five year stretch out before. So you package that together, that's that's an incredible incentive to invest in America.
Anastasia, thanks so much. Anastasia m Roso nailed the boom market is with partners, Stay with us. More from Bloomberg Surveillance coming up after this.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple, Corplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.
David Gurney David Gurney, Gurney, David g David, I need more, Senka David Gera in for Paul Sweeney right now, She'll save me. Let's get to the newspapers. El Matteo.
I don't know if I'll save you, but I'll try. Here we go.
Okay, so we've been talking about how AI is transforming corporate America, right, but this says something interesting from gold mien sacts. They say its growth is understated and government data so they say AI added one hundred and sixty billion dollars to the US economy, but only forty five billion shows up in GDP, and anils are saying that
leaves about one hundred and fifteen billion dollars uncounted. For the reason how this is happening is, they say, because semiconductors treated as intermediate inputs which are only counted toward that final demand when products like things like consumer laptops that they enable our sold. So the chips in recent years they're being developed for things like training supporting AI models.
So these Goldman analysts are estimating that about seventy five billion dollars spent on developing AI models and solutions in the cloud, they have not been counted in these investment statistics. So it's an interesting number to think about when all the talk we've been having about AI and its influence on corporate America, Ya's.
Saying to think about that, I mean, we had that conversation last week just about productivity, and now that's still something that's so amorphous with the effect that hugely.
Amorphous to go into it now because it's three ratios. Last week, that conversation with Heath Terry Studibank was extraordinary and Lisa, he said expert. It's moving so damn fast, was what mister Terry said next week.
Most definitely, Okay, I want to take it to the entertainment media space. We know about David Elson right acquiring Powermount. Now he's hiring financial advisors to get ready to buy Warner Brothers Discovery. But this is an interesting reader in bloomberg screen time newsletter as to why now. So they're saying, you know what, he could have waited to do this
whole paramounts guidance, and there sever things off. Warner Brothers could have even been cheaper if he waited, But if he did, he'd risk into running into a different regulatory regime, a different Yeah, that's the scene the president correct. Correct, And if he waited, he calls. He could also have other parties could have made a play for Warner Brothers. He could have had that. But now you know, Bloomberg's screen Time is saying the likely list of buyers is short.
So mean now is you know possibly the right time today?
I read every word of screen Time. You can't say enough about it. It's event in October is like it's got goosebumps, It's got everybody.
Yeah, I know, we can't get tickets. We can't get in. You and I.
You know it's you gotta be cool, you know you get in. But the basic idea here is what do you do with old media? That permeates every paragraph of the newsletter? What does Warner Brothers? What does Paramount do with I guess the movies, and I guess they're not worth all that much, right, I mean, it's it's great.
It makes you think, it really does.
It makes you think about where are we in five years? How much TV was watched at the girl.
House quite a bit yesterday. I don't know what game we didn't watch, but Brian Weezer was so good on this last week.
We didn't have enough, we got enough time with it, but he can you you know, I know it's three layers below you, but can you tell the team if you have time to go that low on a tree, that we'd like to get Ryan Weezer back again because he was shorter last week without the emergency stuff.
We didn't do.
You have anything else? I do? I do?
And this one might touch your heartstrings a little bit. Okay, So moms and dads right for years have been taken after the kids, and now they send them off to college, and now it's setting in right, what do I do getting emotional? What do I do with this new chapter in my life? You know, it does get emotional. I got a year to go and then I'm going to be in the same spot and how you're feeling. Some are finding it liberating, but others are having a really tough time with it because.
They're so used to Tom's got his heart.
Apartment. Is the messaging the iPhone? Like the messing? I did this exactly fifty years ago, four a M. Did I wake you?
But I bet you treasured that text message? You know, like it is, Oh shut out, I'm want to get it out of it?
Show me from newspapers the newspapers with Lisa Matteo this morning.
This is the Bloomberg Surveillance podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday seven to ten am Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal