This is the Bloomberg Surveillance Podcast. I'm Lisa A.
Bromoids, along with Tom Keen and Jonathan Ferrell. Join us each day for insight from the best in economics, geopolitics, finance and investment.
Subscribe to Bloomberg Surveillance.
On demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App.
I've been looking forward to this conversation all morning. Richard Clarida, the Global Economic Advisor at Pimco and former Fed Reserve Vice Chair and a good friend of this program for many, many years. Rich wonderful to catch up with you, sir. I was thinking back to our conversation we had on the West Coast when Pimco put out their second outlook and you and I talked about what you called the
Fed tolerating two points something. Did you hear that from Chairman Power in that news conference yesterday, because I did.
Well, well, yeah, I think that you know, they've had a lot to do, They've done a lot of happy at lifting. Ultimately, they do want to get inflation to two but they understand and that if the year from now it's running in the twos, that will have been a big accomplishment, and they can adjust rates down. They don't, you know, they obviously don't want to tighten too much. And so yes, I think two points something is kicking and alive for sure right now.
Rich, it's worth going over what they're basically talingus. Explicitly, they're willing to cut interest rates with inflation above two percent? How controversial might that be?
I think they'll do a good job explaining it. What they're going to say is, look, as inflation falls, if the Fed doesn't count rates, it's actually tightening policy because policy is the real rate. So if the nomine rates unchanged, inflation's falling, they're tightening and they won't think they need to add additional tightening if they think the inflation momentum is going in the right way. So that's the way that they will that they'll explain it.
The FED was talking a lot about data dependency and how they really aren't giving forward guidance at this point.
Did you get a sense.
Of which data could really shift their views before September? Even though we do get a of data, we've heard every time them come out and say, one data point a trend does not make.
Sure, and I think so they'll have They'll have two more inflation prints and two more labor market prints. But Lisa, I thought for a long time that another important development that they're going to be following is what's going on in the labor market. They like the fact that the labor market is buoyant, but wages are going up faster
than consistent with the with the two percent target. So I do think they'll be looking at the labor market data, wage employment cost index, as well as the price inflation.
So what would they have to see?
How high is the threshold for them to hike again in September or, if not in September, in November.
I think it's I think it's maybe a closer call than some of the market pricing right now. You know, they did write down two more hikes in June. We got one of them yesterday, and an overwhelming majority of the committee thought in June that appropriate policy would call for one more hike. So I think certainly one more hike is in play at some point in the fall. The chair said that explicitly. He also said that when
he was in Europe, a couple of weeks ago. So I don't think it's an overly high hurdle to get that hike. I don't think they necessarily have to do it in September. I will say this, whatever hiking they think they need to do, I think they want to get in this year.
Why this year, Rich? Why is that important?
Well?
I think a couple of reasons. I think that I think they think they're close to the end anyway, and inflation's moving, however, slowly in their direction, and I think they would like to stay out of the spotlight in an election year. Now we've had the FED hike in election years four nineteen eighty four come to mind. And they'll do that if they really think that inflation really requires a much higher ratepath. But I think this cycle is aiming to finish up sometime in the fall.
You know that this FED is always criticized. The Committee always faces criticism for something. The criticism we heard from some guests in the news conference before the news conference and after the news conference too was just how data dependent this FED actually is. They took a break from hiking rich, then they come back and hike again, and in the intimated period we had inflation that actually improved the inflationy backdrops seem to get better, and yet they
hiked anyway. How data dependent are they?
Well, good good point. Data dependent is a very elastic phrase which has opened to various interpretations. I think, on balance, really the going forward, especially after this meeting yesterday, they really are data dependent. As you know, I've said on your air before most of this rate hike cycle, they've not been that data dependent. In March of last year, they knew two things. The funds rate was at zero
and inflation was at five going to six. That's all the data they needed to set off this this very aggressive rate hike cycle. I do think that we do get close to the terminal rate, that the margin is more a data dependent although I did I agree, and I said on Bloomberg after that meeting it was it was an awkward pause in June, that's for sure.
It's an awkward moment also right now, given that the FED is removing recession as the base case and we're looking at a soft landing. And yet there's a real question mark among analysts and a real split among investors about whether inflation could reaccelerate as a result of the strength, the resilience, the wages.
Where do you fall on this? What do you think the FED falls on this, given that.
They seem to be taking perhaps a bit more of a dubbish stance.
Yes, quite quite frankly, Lisa, I was surprised in the press conference. I wasn't surprised to hear the chair says he has many times that he thinks there's a path to a soft landing. That's okay, sure there's a path. But I was surprised that he invoked the change in the staff forecast. I don't think that was in the June minutes, and so he's obviously entitled to do that. But yes, not my base case, not our base case.
But there is a scenario where we get some good news on inflation in this fall because of falling rents, use car prices again falling. But if the FED finds itself in Marsha twenty twenty four with an unemployment rate of forig an inflation rate of four, you know, with some of that temporary good news behind them, they're in a very tough spot. So I do think it's a risk. It's not the base case, but it's certainly something if I were still there, I would be.
I'd be assessing, what do you think right now is the bigger risk rich the idea of inflation reaccelerating and still being a problem, or the idea of recession and avoiding something more entrenched, which could happen if the FED moves slower.
Well, personally, I do think that, you know, again, I'm in the private sector now, I do think that the FED. The bigger risk is for the FED is to declare a mission accomplished too early and find themselves next year having to restart the rate hike. So if I were there, it would skew me to getting in, you know, that additional hike this year, and I think some members of
the committee we'll see it that way, lookly. So the other thing is the Fed's own projection, which I agree with, has unemployment rate rising by about a point by the end of next year. That would be very modest. That would probably be the most modest downturn we've had. But historically, as we know the so rule, whenever the unemployment rate rises by more than a half a point, it's ultimately
declared a recession. So I actually think a truly non recession outcome without any rise in the unemployment rate at all is going to be tough.
That's my personal view, would be phenomenal if that materialized. I want to finish on this if we can rich. Yeah, no dissent. We talked about this yesterday. I've been talking about it for a while. You've been on the committee. Why do people, even when we know they might disagree with the decision, make the decision not to descend. Why does that happen on the committee?
Well, you know, the FED has been an institution that's been around for one hundred plus years, and there are certain cultural norms, and certainly it's been a very long time since you've had a governor dissent on a policy rate decision. If you go back to the Vulgar years, he had governors and his vice chair dissenting. But you know since green Span. But the Reserve Bank presidents can
indue dissent. Certainly, during my time at the FED, especially in twenty nineteen, we had three descents, and we had several presidents saying they would have descended if they had had a vote. So descents can happen. The other thing I should notice we've had a lot of turnover among the Regional Bank, District Bank presidential, the announcement of Jim Bullard recently Aster George at Charlie Evans Rosengrin. You know there's accumulated fifty plus years of institutional experience that's no
longer in that room. I think that's also relevant.
Richard, thank you sir for wangan. That's catch up.
So next time in studio please Richard Cloard of the the former FED Vice Chair and now with pim Coke joining us now for a preview of the ECP. James Athy, investment director at Aberdeen. James much had a decision for the Government Council in the European Central Bank. The FED has the luxury of saying growth is good, the labour market is strong.
Right now.
I'm not sure President the Guard can go into that news conference a little bit later this od James and say growth is good.
Is this a hard one for her?
H Hey, John, I mean you could argue it's a little bit easier because again, these the transmission for monetary policy to influence inflation is largely via demand. So if anything, the ECB is facing a slightly easier task because they can see that demand and forward demand through things like the bank lending survey are already softening and softening significantly, which suggests that their policy is further into restrictive territory
and maybe they can more convincingly consider the end. Whereas you know, as you guys were just discussing, if the US consumer doesn't die down, if the US labor market doesn't soften, it's difficult to believe that they've found equilibrium, and it feels like would have to come back to the table. So the communication is difficult because we're moving from this very backward looking policy stance into something highly
data dependent. Central bankers know that markets have a tendency to get carried away and they don't want that easing of financial conditions, but that's a problem they cannot really resolve. I think we'll see a very similar outcome today. Non committal, not really full of information.
Meanwhile, we've been talking about the bank lending transmission mechanism in Europe and John rightly pointed out that it is more sensitive to this type of contraction which we've heard and we've seen. What are you experiencing, What are you seeing on the ground in terms of how quickly credit is contracting in the euroregion?
Well, I mean, that's difficult to say on the ground. I think we all have to rely on the data as we see it. And I look at the contents of the bank lending survey and I think more pertinently on the demand side than the supply side. Of course, supply conditions matter, they always do. But what matters for judging the stance of and transmission of monetary policy is more about the demand for loans, and we can see that that really does look incredibly soft across the Eurozone.
If you look at the sort of pre pandemic estimates for neutral rates in Europe and the US, maybe half a percent in the Eurozone and maybe two and a half percent in the US, there's two hundred basis points between them, but actually there's only one hundred hundred and fifty basis points between the cash rates. So that alone suggests that European policy is already tighter than US policy, and I do think we see that in the data.
And that's without even getting to the structural challenges in the Eurozone.
We've got to talk about some of those challenges now on the ground. In Frankfurt, Germany, Bloomberg's Marit toed out outside of the ECB headquarters. Maria, I just frame how difficult this is going to be for the European Central Bank in thirty minutes time for President of Guard when she has to deliver that news conference.
Well, this is going to be a very difficult communications exercise for the head of the European Central Bank because on the one hand, we know they will hike twenty five basis points out with the guidance to the market and everyone as well calibrated for them. But the big question is what happens next. And you've talked about this range of data, some of it very soft when you look at the BMIs, and it wasn't just Germany this week.
You also had significant downturns coming also from economies like France. We also had that lending survey, which we know they look at. But then core inflation's sticky. So again the market will be focused on any guidance, any bias potentially in this decision, but I'm not sure they want to
do that. If anything, the European Central Bank, you could argue, wants to go for the most neutral possible, the most options open, look at the data, say we go back to very data dependent and look back in September where we are so, I think this is going to be a tricky exercise. There will be a lot of questions to try to get an indication of.
Where they want to go. But I'm not sure she wants to do that yet.
You follow the speakers we heard from Klasska not of the Netherlands recently in the last couple of weeks, the individual members of the Governing Council, the traditional hawks, Maria, do you send from them that even they are unsure about what comes next after July?
Yeah, and remember, Jonathan, this was presented today July as a quote necessity for the Central Bank. When it comes to September, we've seen maybe it's now fifty to fifty. Maybe it's now an open call. Maybe we need to look at the data again, the waiting for new projections in September. So I think there's been almost a rethinking over the past two weeks. What I'm also curious to hear about is, and this will be sure a question, is this idea of rate cuts potentially earlier than expected.
That would be the worst case scenario for the Central Bank to have inflation that is above target and get all this chit chat and market's about potentially because of the state of the economy cutting beforehand. I'm also very curious is to see can she shut it.
Down and how will she push back against that idea.
We're about five minutes away from that ECB rate decision, still with us James Athey of Aberdeen and James, I'd love your take on the data dependency, the maximum optionality that we're hearing certainly from the FED and as Maria was suggesting, from the ECB coming up as well, what data are you.
Honed in on?
Are you going to be trading more aggressively on data in a new way?
Yeah?
I mean that's unfortunately the game of investing it. It really is John Maynard Kine's beauty contest. Much as I would like to look more heavily at the most forward looking data, the fact of the matter is that the markets are still somewhat focused on the most lagging indicators, that's jobs and inflation. So I think some balance between the two is probably the right path to tread. I agree with Maria completely. The EACB really doesn't want to
give a strong signal one way or the other. There is definitely persistent weakness across the manufacturing sector that's much more significant in the Eurzone than it is in the US. We're now starting to see softening in the service sector as well, and that is good news. But of course none of these central banks want to box them in, you know, to Nick John's words, they want maximum optionality, So some sort of obfuscation, constructional, constructive ambiguity is what
we're likely to see. I think once these risk of are out the way, the market at the moment is in the mood to then run with the themes and the trades that it wanted to run with anyway. So I think we saw that in the US last night. Week a dollar risk on probably lower yields for the summer. That's what I'm expecting, and I don't expect Madame Lagarde to necessarily put a hole in that this afternoon.
Do you expect the dollar to weaken and the euro to strengthen because of the US or because of Europe's actions.
Well, I think the dollar is weakening because it's become a bit of a self fulfilling prophecy. The market always has a bias to want a week a dollar because risk tends to perform better in a week dollar environment. The market has been and continues to love the carry trade that generally involves at least selling dollar as an intermediate step. But I look at the dynamics currently and
it doesn't necessarily look like a week dollar environment. To me, US rates are higher than European rates, the European data is rolling over far more quickly. As a general rule, that looks like a reasonably solid dollar environment versus the US euros. So we're marginally long the dollar here. We think already the market's got a little bit over excited. But short term, as I say, the market tends to run with the themes it wants to. I think positioning
is a bigger headwind, a bigger headwind medium term. It exactly everybody sees what they want to It's.
Always the way, James. I just wonder, I know what investors want. They'd like a big easing program out of China. Do you think that's what policy makers under government Council would like to see right now? Would that be welcomed by them?
Yeah?
I mean that's a really good question. I'm not sure there's necessarily a huge supply side stimulus from China easing aggressively, so that might actually complicate their picture ad to demand without an offset via supply. I think I think the Central Bank would like to see inflation closer to two percent by hook or by crook, and then they can worry about the balance between supply and demand and how
stimulatory or how restrictive their policy is. For what it's worth, I don't think China is going to engage in the sort of massive sticks we've seen in twenty fifteen, sixteen or two thousand and seven and eight. I think there's a lot of adjustment and fiddling around the edges. I don't think they're going to go back to the sort of debt funded infrastructure investment stimulus that we've seen historically. So I don't think there's a massive impulse for Europe coming from China so far.
Lots of people would agree with you. James Athy, investment director at Aberdeen.
Right now, I really want to get through what we're looking at in terms of is it a soft landing or is it a head fake? And I'm pleased to say that we're joined by Vincent rein Hart, chief economist and macro strategist at Dreyfus and Melan Vincent, what's your take on the slew of data that we just got that really highlights both the soft landing and on the margins disinflation.
We probably heard it from care Pal yesterday. Importantly, he said that the board staff had taken out air forecast of recession, and Mike noted that GDP wasn't a surprise to the Atlanta Fed that had an estimate of two point four percent growth last quarter. Board staff invests a lot of resources in doing the same thing. So I don't really think that this morning, certainly from the National Income Accounts, was that much of a surprise. Big question is does it make it more or less likely there's
a soft landing? Sure leans that way, but it's one data point. That's what shar Pale would say.
At this point, What.
Do you make of initial jobless claims second consecutive month that there's been an upside surprise or at least a positive downside surprise. Basically there are fewer people filing for unemployment than previously expected in the prior month. How does this confirm with the idea that we need a loosening labor market in order to achieve disinflation.
Yeah, So the other part of soft landing is new productivity that we are getting very strong employment growth that is at least matching that and output we're not gaining anything in terms of output.
Power, among other things.
That means that wage gains are more serious because there's no cushion between what firms pay workers and what they produce.
I think that, among other.
Things, you know that the main takeaway is tight labor market is fueling household income, and household income is supporting consumption, which isady to get a recession that way, which.
Is a reason why some people are wondering whether this is somewhat of an uncomfortable rational that you're seeing strengthen the economy, and yet the Fed is moving away from
any forward guidance of further rate hikes. Do you think that this is a mistake that there wasn't a greater indication to markets that the Fed did plan to raise rates again once in this particular year, Considering that rich Clara earlier on this show said that he, if he were still on the FED, would vote to raise rates again this fall.
Well, last guidance was that they would raise rates. In the summary of economic projections, chairpala is pretty confusing. He wanted to assert very strongly that every decision is every meeting is live, that every meeting is made based.
On the data.
But in fact there seemed to be guiding us to a slower pace of policy firming. Twelve and a half basis points of meeting on average. That sounds like a committee that is number one divided and number two pretty close to the end.
Do you get the senses you look through this data that there is strength in the economy, that perhaps they're not really watching closely enough that there does seem to be something that could reignite inflation later in the year.
So I think they're watching closely the data. They see the strength of the economy, and if your chair of pal you're encouraged by it. He's never really had a hard.
Landing in his outlook. I think that.
The extent that the strong data is coming from the labor market, it's got to be troubling. It's got to be reason why you have to lean toward more policy firming, and I think it does pose a fundamental challenge.
Are you concerned that there isn't more dissent, at least publicly on the federal Reserve at a time where as you said it was somewhat confusing, and it seems as though there's a bit of a herding cats type of trend going on there.
So I think we saw the the division in the committee just by the two press conferences in a succession. In the June meeting, the chair spent a lot of time talking about all they've done was slow the pace slowing policy tightening allows more information to gather. But this time it was had he had it, must have had a yellow sticky note on his talking point saying, say, meeting by meeting, live, live, data dependent as often as you can. That suggests to me that he wants a
slow pace of policy firming. So he's got optionality. May may or may not tighten in November, but he's got enough rest of colleagues saying nope, every meeting is live. Go out there and remind everybody every meeting is live. That's a division in the committee. We'll see probably better in three weeks when we.
Get the minutes in about five minutes time, will get maybe a sense of what's on the sticky note, the yellow sticky note of Christine Legard. In the meantime, I do want to head back to Michael McKee who's been parsing through all of the data, Mike, what stands out to you in the details, the fine line items underpinning GDP, underpinning durable goods well GDP.
The interesting thing here is we've seen a couple of months where inventories in trade really affected the numbers, but not in the second quarter. They both subtracted about a tenth of a percent from the overall number. They kind of offset each other, and the real strength was in business spending up one percent and consumer spending up one point one percent. So that makes up most of what we saw during the second quarter, and it does suggest strength.
Government consumption was up two point six percent. That's down from five percent in the previous quarter. Non defense spending, which was up ten and a half percent in this first quarter, was down one point one percent, so not a huge contribution from the government this time. It's consumers and business spending the C and I part of C plus I plus G plus NX, and in terms of durable goods, it's just overall good news that there is some spending, but it did slow in the capital goods
non defense area. So we'll see what kind of contribution that we get from durable goods. When we go into the next month. I think the FED looks at today's numbers and has obviously has to change their forecast for GDP for the year at the September meeting, and the jobless claims numbers just tell the FED we're not going to see unemployment start to rise in the near future,
so they may have to adjust those as well. And this is the kind of report I guess that keeps them on alert, not going to make them make a decision because we're a long way away from September twenty first, but keeps them on alert for the possibility of having to raise rates again.
Thank you so much, Mike.
Great synopsis there, especially as we start to see increasing momentum or at least stability in the consumer vincent rein hardstill with US vincent. How long can consumers keep spending like this at a time or we're seeing results from the likes of Hurts, from the likes of Royal Caribbean, that trend is still in place.
So a couple things.
They still have the retained fiscal transfers they got in twenty In twenty twenty one, they've worked down a lot of that nound but they still have that saving. And second is we're generating jobs and wage growth is strong. That means they're getting household income. Two points to what Mike said, I actually see a lot of the government and the GDP print and that's incentives for capital spending. I think that's part of the reason capital spending was
so strong, given all the green initiatives. Second thing, inventory is on the soft side. The closest relationship of business loans to eken activity is the inventory component. So some of the softening in bank lending we've seen might actually be demand, not supply and credit constriction.
And that's what we've seen over in Europe as well. It was a drop off in demand, not necessarily on the supply side. As you parse through this, though, are you watching things like the student loan repayments. Is that going to really play a role or is it really going to have to come from some I guess tightening further in a way that might be a little more disorderly.
So I think it's got to be the latter. I e.
At this stage in the monetary transmission mechanism, is the credit constriction that Japwell is waiting for. It is going to be uh, you know the cumulative toll of the earlier bank grounds.
And by the way, quantitative tightening is actually.
Starting in earnest only now first year of the program when the when the FED ran off its secure securities holdings, the Treasury paid for it by working down at its cash balance at the FED just move money from one pocket for the government to another. And now with the Treasury keeping its cash balance at a high level, all the security redemptions the FED is doing is going to be coming out of the assets the private sector holds. We're quantitative titan is really kicking in now.
We're just minutes away from Christine Legard giving a press conference.
It's scheduled to be eight forty five. However, there usually are.
A lot of photos and introductions, so it may be a couple of minutes after that.
Vincent Reinhardt with us of Dreyfus and.
Mellon METSA up by close to one hundred and fifty percent. Yet today before these earnings, after them, we could it go through that level. The METSA right now is a close to nine percent in the pre market after beating estimers and providing guidance that the way well be more to come. Mandy's seeing joins us now senior technology analyst for Bloomberg Intelligence Mandate.
Just Wow, they got it done.
And the question I think lots of people are asking at the moment is that just cost control or are we seeing a reacceleration in revenue growth. I spoke to analyst later on yesterday who said, we're expecting the latter. Are you seeing the latter?
I think so, And look, it's both. Cost control is the primary driver of why the stock has run up so much because the margins are trending in the right direction. But with inflation pulling back, it's good for ads spending, and that's what we saw that you know from Alphabet. I think Meta was an exception. The one thing both these companies seem to be doing right is the pivot to AI and how they are using it to improve their ranking and recommendations in terms of the content that is being viewed.
On the apps.
And that's what Meta called out yesterday. It's driving engagement in their blue app, which everyone thought was a declining business. Well it grew. And I think that is what AI can do in terms of driving that content engagement, which is the pole really to drive impressions, and you know in an ad business, that is what matters.
At least I mentioned earlier that Facebook, not tourist, is very good at copying other people cough TikTok, and Reels how successful, how sticky has that product become.
So one data point they shared last night was Reels is now a ten billion dollar rund rate business versus three billion last fall, and.
That just goes to show three x wow in.
A matter of three quarters. I think that just goes to show the point that yes, they're very good at incorporating new features, but I do think it's going to cannibalize their existing ad inventory, the high priced ad inventory, which is why in the print the only negative I could find is the ad pricing went down sixteen percent. We saw that from Snap it was down twelve percent,
and we thought it's a so media problem. In this case, they're actually cannibalizing their own ad inventory because Reels doesn't monetize as well as their other formats.
Of course, if you own the world and you earn a little bit less off of everything, you're still earning a lot of money. How much are we seeing them consolidate market share for the ad business versus simply just organically growing. In other words, is there gain someone else's loss.
Well, so look at messaging. Messaging no one was able to monetize till now. Now they messaging is a ten pillion dollars rundread business for them. And they talked about incorporating AI agents. So the customer service use case for WhatsApp is huge. Again we are still very early on, but the fact that they're talking about running digital storefronts who can do their customer service through WhatsApp AI agents. I mean, the market gets excited with these kind of things.
And can I just tell you, John, I get really frustrated when you go to a website and then you look for a phone number and there is no phone number.
They're just chatbots. And then you discussed with the chat but and they help.
You not to all space to the automatic chat bobs.
Well then you can't find a total number. So frequently we can.
Find their WhatsApp channel now and you can talk to that channel. That's what they're trying to do with their.
Real person there though no no, of course, not that I've got no time for that. MANDI I want to speak to people.
I totally agree. I absolutely hear you.
I am curious with respect to Meta going forward, how much of their earnings had to do with crushing it on the advertising revenue and how much had to do with the job cuts.
I mean, job cuts was a big factor, twenty five percent layoffs. So they've already reduced their expenses six to seven billion, and that shows up in the free cash flow. And they didn't cut anything on the reality lab side. That was the big surprise. They talked about raising their expenses on the reality labs front. So they're still going to lose fifteen billion on building this metal works again
this year, and that's why the stock is not up more. Otherwise, I think investors would have cheered this print even more.
So you still think that day and Mark Zuckerberg's big hopes and dreams are the metaverse still.
Oh absolutely, that was evident on the call, Like he firmly believes in this. He thinks this will still drive the next leg of growth. But at the time he's he's course corrected pivoted to AI rightly so, and that's been a good.
For the need describe it. What does he have in mind? What does he think this is going to look like well.
So he thinks once he has the install base, and he's very focused on building the hardware where you know, he can have the content and control that ecosystem. He called out Apple for thwarting, you know, their innovation and changing the rules all of a certain which hurt ten billion dollars of revenue last year for meta and I think he wants to control that ecosystem. But with Apple Vision Pro launch, I think at least it has validated the market. I still think they are spending way too
much without really establishing a business case for Metaverse. I don't think it's going to be that next computing platform that he thinks is probably too far out of bed and losing fifteen bills in every year. I mean, investors won't like it. But at the same time, he's growing top line twenty percent, so you may get a pass for at least two three quarters.
Is he investing enough on the other tech innovations, in particular artificial intelligence as he tries to lean into the metaverse with dubious application and frankly a dubious leg up on some of the other areas. They're companies that are developing this.
Yeah, so they are open sourcing their large anguage model, unlike chat, GPT or you know some of the other ones. And what they're saying is since they don't have a public cloud, they're going to partner with Microsoft and really make that available for consumption. So it's a good way
to go about, you know, driving adoption. But I still think, you know, with large anguid models and how they're going to be monetized, I think public cloud vendors are the best position, which is why Microsoft and Alphabet got a bump from that.
Asam was talking about, in about a week's time after the bell, we're going to hear from Apple. From Amazon is the expectation that they'll similarly deliver than expected results that we've seen from most of the other tech giants snap not included. Is this basically a telltale sign that the rally has been justified by fundamentals.
I mean, in the case of Amazon, you could see ads spending getting a lift because overall AD spending has improved, but a BLUs I think because of their lack of exposure to generative AI and the expectations are low, you're going to see a muted growth on that front. And Apple, Look, we saw that from TSMC print smartphone demand is down, so I can't see how Apple beats on the top line.
But at the same time, they still control the ecosystem, which Mark Zuckerberg doesn't like, and I think that's why they are where they are.
Apple earnings a week away, based on our reporting, maybe units this year is stable, don't change much from last year, but average selling prices are going to go up.
That's the hope, anyway, hope for her. The stock exactly.
Mine's a few years and I'm not upgrade on it unless they do that thing they do where they sort of press those buttons and come in and slow it down aggressively, and then I've got to upgrade it. But right now I want nothing to do with it.
I understand what am I upgrading to better.
You can run your large anguage model on your.
Phone large no interest in that all.
Well, I'm like a doctor.
I know on pretty much everything when it comes to technology. Man Deep seen Genie technology analysts for Bloomberg Intelligence.
Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern on Bloomberg Dot com the iHeartRadio app tune In, and.
The Bloomberg Business app.
You can watch us live on Bloomberg Television and always on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and this is Bloomberg