Surveillance: Fed Course with Susan Collins

With Susan Collins, it's very simple. She is associated with the University of Michigan, but far more her sterling academics that we've seen from Susan Collins at Harvard and then deep down the Charles River to Mit and of course, as Michael mckeeg goes plunging across to near South Station and the Federal Reserve Bank of Boston, Michael McKee was

Susan Collins. Thank you very much. Time. We have the Boston Fed President here with us in Washington, and we'd like to thank you for joining us today here at Bloomberg and to our audience around the world on Bloomberg Radio and television. Thank you for joining us. Let's start with the numbers, because they just came out. Personal income up three tenths, personal spending two tenths, and then the PC indicator, which of course is the Fed's favorite. Three

tenths for the headline, three tenths for the core. What does this tell you about the state of the economy and where the FED is in its inflation fight? So let me start by saying, just absolutely delighted to be here with you. Look forward to our conversation, and of course I haven't had a chance to dig deeply into the numbers yet, and sometimes the you know, the details actually are important in terms of understanding the story. But starting with the PC inflation, that's about what was expected,

and so that is some positive news. At the same time, let me say two things about that. Once, that the monthly data really noisy. We've seen that, and so one month of move in a kind of more helpful direction

is not something that really indicates a sustained change. And the other thing I'll say is that if you recognizing the high the elevated numbers we saw in December and January, this a bit lower number that we expected just means that the three month average is about what the twelve month average is, and so that's not a lot of progress. We still do have more work to do and more to see to know that inflation is really on a sustained downward path. Well, you're on record is saying your

favorite at least one more move by the Fed. Does this sort of lock it in for May, that you do it because inflation is still at a high level, and you don't pause for a month to see how things are going. Well. Actually, what I think I'm on record as saying is that I'm highly data dependent, and so my assessment at the last meeting just last week with the summary of economic projections did suggest an additional rate hike and then pausing and holding over the year.

But I need to assess all of the data that's going to come in between now and when our next meeting is in early May. And you know where I am at the moment. The new data that I've seen just in the past week has not materially changed how I'm thinking about things. But I certainly don't make a decision this far in advance about what I'm going to think is the right thing to do. Well, the markets have looked at all the data and they're pricing in

four rate cuts this year. Are traders crazy? What I would say is obviously there's a range of views about these things. I mean, look, inflation is just really too high when we talk about price stability. To me, what that means is a level of low stable inflation. When I was thinking about inflation, well, everybody is thinking about inflation, and that really does mean we have more work to do.

And what history has told us is that you need to have conditions sufficiently tight and then really hold the course in order to know that you have in a sustainable way gotten inflation. Going back to what the target is, well, spending was down during not down, but decelerated significantly during the month of February according to this report. Do you worry about going too far and tipping the country into recession?

That's the standard view of what the FED does. It is absolutely a balance, and I think it's important to recognize that there are uncertainties, there are risks, and in particular, we do need to balance the risk that we don't do enough, that we're not sustained, don't hold the course and don't bring inflation down. And again, as I mentioned before, inflation is really costly to businesses and households, and so

that's important. At the same time, you're absolut right. I do monitor the data looking at the when we might see the economy turning, and some of the slower data I think is helpful in that context. That's what we would help to hope to see at the same time early days. Yet in terms of assessing whether we really have gone as far as we need to go, well, in terms of assessing, have you got any assessment of what impact the recent banking issues will have on the economy.

There's a theory out there thanks are going to tighten credit and do some of your work for you, and that could also send us into recession. That is certainly an important factor. There's absolutely a theory out there, and we could see some of that. My expectation is that we're likely to see at least some, but we'll have to continue to really monitor the data and see what happens in terms of how things evolve. But you knows.

As I've said, I had expected early in March that I might think we would need to do more work and the banking stresses and what I think is at least a possible response of banks in terms of their own liquidity needs has influenced that, and so it's certainly

one of the important things to factor. You know, one of the things I do want to just emphasize is I continue to see, given the resilience in our economy, that there's a pathway that we can bring inflation down without a significant downturn, and so monitoring holistically the range of data and that balance that we just talked about

is a really important factor in that outlook. Do you think the FED bears any responsibility for what happened with the banks because they raise rates interest rates so fast and so far. I think that there were a number

of mistakes and challenges that were made. I also think it's really important that the review that Vice share Bar is conducting that's underway be thorough unfettered, and that we not kind of prejudge what lessons and findings from that report are going to be, but we commit with a bit of a sense of humility, that we will take those findings really seriously and act on them to continue to strengthen what I see as already a sound and resilient banking system. Well, what are banks in your district

telling you about their situation. So of course we monitor very closely and we are in close contact with the banks throughout the first district, which is most of New England, and what we're seeing is that they are very focused on the their activities to really support the communities throughout

our district. The you know, as you know, small and medium banks play a critical role in a vibrant economy, and they also, you know, are particularly focused on what some of the risks might be, especially in the aftermath of some of the stresses that we've seen, and so we very much work to support those activities and appreciate the work that they're doing. You and your colleagues talk a lot about the cumulative impact of your rate increases. Is that hitting now? Has that hit? When do we

really see five percent fed funds rate have an impact? Yeah, so that's a really important question. And the way that I think about it is that there are absolutely lags. There's some sectors, some parts of the economy that see the increase in rates and they respond relatively quickly, and

I would put housing markets there. We certainly saw responses in housing markets to tighter financial conditions relatively quickly, and that's what we would expect at the same time, other markets, such as labor markets often are impacted over time, and it really is only in the second half of twenty twenty two that our interest rates got to a broader range that we're quite restrictive, and so my assessment is that it will still be some time, but over the

coming quarters we really should see other sectors of the economy respond to the tightening that is already kind of factoring through the system. Well, I guess we'll check back with you with the fall. One last question, Tom Kane, Since I know the Red Sox lost yesterday and uron record is saying that the season is over, let me ask the Boston Fedbank president one loss? Is the season over for the resolutely not? And we look forward to our Red Sox and our other teams having a wonderful

season and many exciting games ahead. All right, Tom, Somebody she absolutely nailed that. Michael Zelden is described by that adjunct professor at American University Washington College of Law. Michael, thank you so much for joining us. What was your first day at Justice? Like ages ago? Is a Justice department now? The same Justice department where you walked in out of Binghamton in your legal practice years ago. I

believe it is. I believe that under Merrick Garland they are committed to the rule of law and to following the facts and the law, and to dispense justice even handedly. So yes, I think they are. What will we see Tuesday? If we have a presumed arrayment of X number of items? Can you prejudge that or pre analyze that? Well, we can guess that Trump is going to be charged with a campaign violation, campaign law violation, and the business records violation.

The business records will probably be ten or twelve different business entries that reflect payment to Michael Cohen as legal fees, which were in fact repayment of the Stormy Daniels thirty thousand dollars hush money payment. So we might see a ten or twelve count entitement, but really it boils down to one hush money payment by Cohen to Stormy Daniels, and that a ten part or twelve part reimbursement of Cohen for that. That is a business crimes offense in

New York and it is a misdemeanor. They can make it a felony if they say that those payments were made as part of a other crime, and that other crime is a federal campaign elections crime, a theory not previously tested in New York. So it's not a simple case, but that I think will be the outline of what

we'll see on Tuesday, Michael. There are people who are watching, those who are frustrated to be dragged back into wall to all circus coverage of this question of you know, hush money paid to people who may or may not have had affairs. This is really one consequence of an era that a lot of people want to perhaps move on, move forward, and yet the erosion of the trust in the judicial system continues. How much do prosecutors away this type of social response when deciding whether to go forward.

It's part of the calculus, but it shouldn't be the primary calculus. The primary aunt calculus has to be war laws violated and is accountability required for that law violation? And I think that in this case, though it's an old case by current standards, it is a case that I think the Manhattan disc Aturney's office felt accountability was

required and therefore they brought it. Now. Yes, it's true that people would like to move on from this, but people would like to move on from January sixth, and there needs to be accountability there and people want to be moving on from all sorts of things in the Trump error, but we still need a reconciliation with what occurred so that we can learn from it and move

forward as a country away from it. Given the fact that you just talked about the nature of this particular crime, do you think that there will be blowback The New York prosecutor is going forward with us there already is. I mean, he's already been labeled as a sorrows funded liberal and a racist by the former president. So yes, I think that part of the strategy in the court of public opinion is going to be to demonize Bragg

and try to delegitimize the prosecution. Oh, Michael, and the honest thing, folks, I remember exactly where I was standing on the oj decision years ago, and you provided the nation with legal coverage at that time, Michael Zelda and Donald Trump was twenty seven, twenty eight years old in nineteen seventy four, were Wilbe Mills, and you know it was in the Jefferson title basin and the scandal and

or then and the fourteen other scandals you've followed. Is the job change for federal prosecutors because of the cultural acceptance of this or that vice along the way? Is a job now of your world totally different than it was in nineteen seventy four, Well, yes and no. So when Wilbur Mills and Fanny Fox fall into the title basin, I don't think people were talking then in me too terms. I think that was thought of as well. That's just the way the system works now in the aftermath of

the me too movement. I think that sort of behavior is intolerable and that's good, and so I think, for example, had Bill Clinton done what he did with Monica Lewinsky now, he would have been removed from the office of president. I think that we're in a better time now than we were then with respect to this misogynistic behavior. Michael Zelden, for our audience international, what should they look for on Tuesday when we get this arrayment? How should we approach

the news frenzy that we're going to see. I really think that a lot of that depends on how Donald Trump wants to play this. That is to say, if he wants to do what the Justice Department would like to do, or the Department the Manhattan disc Attorney's Office would like to do. He'll come in through a private entrance in a car. He'll go up in the judge's elevator. He'll go into the courtroom, he'll make his not guilty plea,

He'll be fingerprinted and mugshot. He'll go back down that elevator and leave, and that will be the end of the day, a one hour process. If he elects to make a spectacle of it, wanting to be handcuffed or go out in front of the court and talk about how he's the most persecuted person in the history of America, then you'll have a street scene that really won't be controllable as easily. So hopefully he'll do the right thing and just try this case in the court of law.

But you know, Donald Trump is Donald Trump, and he'll do what he thinks is in his best interest, irrespective of whether it's in the national or the city's best interest. Michael Zolden, thank you for joining Bloomberg Surveillance this morning. He is a former federal prosecutor years of public service in our Department of Justice. Elon Musk meet Jim Bianco Jim Bianco is what Twitter is all about, and he is definitively led on Twitter in this banking crisis with

intelligence threads. He joins us, right now, have the flows stopped, the deposit flows, the money market flows? Where are we right now? It hasn't stopped, but it has slowed down a little bit, but it is still If you go back to prior to Marches, a huge number of money is moving from the banks to higher yielding alternatives, whether it's money market funds or it's treasury bills or ETFs that are a very short term. The public has woken up.

They've found out that I'm getting zero at the bank, I can get four and a half in something else. If you have two or fifty thousand dollars that's in the bank, that's like fifteen grand a year or fourteen grand a year. And they're making that move. They have been, and they're not stopping. Is it still destabilizing? There seems to be a zeitgeist out there that well, that was harsh, silicon veil and all that, But we're through that and now there'll be a lesser instability. Do you buy it?

Yes and no? Yes. The initial response that is another bank going to fail, Probably not at this point. Is there gonna be another hemorrhage? Hopefully not? But is the public going to slow down? Are they gonna say, I'm fine with two basis points literally at my Chase account, and now'll just leave my money there. No, they're not going to do that either. So the flow I think away from the low yielding bank deposits to high yielding alternatives will continue. That will continue to press your banks

as they struggle to understand their deposit base. So let's talk about those money market funds, which reached five point two trillion dollars is the latest data from ICI that came out on Wednesday. We have seen it increase at an astronomical pace over the past two weeks, with one hundred billion dollars alone. Over the past four weeks, more than three hundred billion dollars of inflows, which is taking us back to the pandemic era. Where do you expect

this to go? What are you looking for for when this hits the breaking point at a time when you're also starting potentially to see the ramifications of the rate hikes and other capacities. I think once you see the spread between deposit rates and market rates collapse and basically offer the same deal as long as I said, as long as you get one percent or less in the bank, and you can get four more than four in a

money market fund, that is going to continue. Also keep in mind, in the post financial crisis era, seventy five percent of the money that is invested by a money market fund is either in a T bill or FED reverse repo. So in the old days, pre two thousand and nine, you say, well, the money's going to money market funds, they buy commercial paper, and they still fund Corporate America and they still do that, but not nearly to the degree that they used to. They're funding the

government and they're funding the FED now. So translate this into six months from now, and what this means in terms of access to credit either defaults or simply firings and sort of straint a restraint with respect to business plans. How much more do you see that than perhaps is getting priced in. Well, I do worry about that. Collectively, the regional banks are six point eight trillion in assets. Collectively, they're larger than JP Morgan and Bank of America combined,

so collectively they matter. They fund eighty percent of commercial real estate, fifty percent of personal loans, forty of commercial industrial loans. If they've lost visibility on their deposit base and they don't know what striving their depositors, and their positors are leaving and going somewhere else, they're going to pull back on their lending. A quick point when you ask whe we talk about banks, I would like to

ask people what do you think a bank is? And most people would say, it's a warehouse where I keep my money and I get an interest rate. Okay, that is a definition of a bank. But for regulators and bankers and everybody else's it's a credit intermediation. It's a way to get a loan, it's a way to extend a business. And if the warehouse of money is going somewhere else, that lending action is going to really change. We're seeing in the price of bank stocks. Where are

we not seeing this priced in? Well? The thing about bank stocks is there's two things about them. Is it are they pricing in potential more defaults or to failure, or what I think they're pricing in is a squeeze of their margins because they're going to have to raise deposit rates and their profitability is going to be under pressure. That's why the bank stocks have not really recovered, because there's a worry that in order to get past this

problem they have to start making less money. Let's bring them back to the FED economic data here. In seven minutes, Michael mckew will join us with a Jim beyond the Fed here, and we had no landing. This landing dot dot dot hair landing, whatever the landing is. What's the efficacy of a pause right now? Or as I mentioned earlier in the show, how about three pauses? Pause, pause, pause, just to wait to see to get to July, to

see where we are. Is a pause a good thing if if we continue to have a credit crisis or credit problem. Yes, but the Fed is not thinking pause right now. They're thinking about inflation. They're thinking about a pre March eighth world and whether or not we are going to continue to see you know, high inflation, persistent inflation, a no landing, a strong economy. If that's what they believe, they're going to continue to move forward with their rate hikes.

But if we start to see a slowdown in credit, that should lead them to a pause. Cubs, white socks, what do you think, what's the story in Chicago this year? And now they're both one hundred percent right now one and oh, and we're at the Cody Bellinger era in the in the north side of town, and we're still in the Tim Anderson era outside of town. Which way are you, Tilton? I mean, who are you going to see? This is a hugely important Midwest thing. It really is

at this point. I hate to say it, but I'm kind of leaning towards the Cubs. I've always kind of had a bias for the white side of what. The Cubs are the more interesting team right now. So we've got news we can use there. You see that South Side. Let's go Jim beyond can think and Jim congratulations on being definitive on Twitter. I mean, if Elon Musk needs to know anything about the communicative thrust in the crisis of Twitter, there's other people out there as well. But

Bianco's doing these threads. You can just feel all of Twitter just stops. He goes, I've got another block. I got to read it. It's a continuation of the amazing notes and the amazing reports that he's put out for decades. Joining us now and all timely as Matt Luzatti's chief yours economist at Deutsche Bank, who had a shocking call long ago and far away of economic slow down, but was emphasizing it would be out there somewhere where so

many others we're looking for immediate economic slowdown. We could recalibrate this morning with Matt Lozzetti. I guess we see disinflation out there. Can you establish off this data disinflationary vectors and goods and services? Yeah, I think we need to put the disinflation into context. It's still a point three percent core PC month on month print, still well above the FED subjective. Four point six percent year on

year is well above the FEDS objective. We were expecting this to be a bit softer than CPI, in part because airfares were much weaker in the PC data. We'll have to see, you know, what we get in the core services X shelter, which has been Chairpal's main focus. But I think what we'd see from this data is a little bit softer than expected, but still well above the FEDS objective. Still to Mike's point, I mean, this is basically inflation, perhaps not as hot, but growth also slowing,

perhaps more than people had expected. At what point does that story start to get priced in more In other words, not exactly supportive of this robust we can make it through anything kind of narrative. Yeah, we saw it yesterday with the GDP revisions. Consumer spending revised down. Basically the domestic economy didn't grow in Q four. We have an alternative version. GDI was actually negative in Q four. So I do think you have some evidence of slowing in

the economy. We have to be cognizant. Yet a lot of strength in January, and so a lot of this is a give back to that. I think it all comes down to the labor market. You know, do we eventually begin to see that to soften. Do we eventually begin to see employment games slowing, unemployment atsurance roles picking up. I think that's the key question from the FT's perspective. A lot of people are wondering whether the Fed's going to cut rates later this year the face of whatever

weakness right now materializes later as a greater weakness. How is the response going to be at a time when you do say that inflation is well above their targets, they need to bring it down, but it is going down and a lot of people think it will continue to do so as time crimes on. Yeah, I think

you know, inflation is obviously well above the rejective. The way that Chapou has been talking about the labor markets, it's either extremely tight or tight to one unhealthy degree, and so there's no difference in the tension in their demand data at this point. I think the real issue comes when that tension arises. We think it begins to arise this year as you see the unemployment rate begin to increase at a time where inflation is still well

above their objectives. You know, their own forecast at the end of this year have four point six percent on the unemployment rate, about three point six percent on core PC and them not cutting at this point. We expect that the cut rates in January, but a lot of it depends on how this credit chuck plays out. You know, certainly it could mean that the recessions earlier, labor market weekends earlier in the FED has to cut earlier. Susan Collins will be with us in ten minutes with Michael McKee.

She's absolutely definitive academics, as are you from UCLA and who has a Harvard mit heritage, and she's been at Michigan, and Michigan has a cottage industry of studying inflation in price change when they debate at the FED and whether voting or non voting. When Susan Collins leaned forward and talks about inflation, does she talk about the same inflation that Peter Hooper talks about, or that Muhammad Alarian talks about, or that Law Brainerd talks about. Does everybody on the

same page on what to look at? Yeah? I think her speech yesterday was very clear. She broke down the baskett of the three components that Cherpal has been emphasizing, core goods shelter and core services at shelter. I thought it was most interesting from our comments yesterday, she used a language about rate hikes that was a bit different than the statement. She said that additional tending will likely be necessary, you know, not May, which is what the

statement indicated. I thought that was a firmer indication of another rate hike, at least at the MAYFIMC meeting. That's our bait based case at the moment. But I was surprised about that. I opened the Quentin Pa game for him yesterday with the slew rate of this rate rise. It's just incredible how quick we got here, and in hindsight, maybe too quick. What's the efficacy of a pause when you aditt your banks sit around and say lift, cut or pause? To me, a pause gives you optionality? Am

I wrong on that? No doubt it can. But I think it's a multifaceted question. You know, if they pause, what does the market do in response to that? You know, we have a market that has been pricing race cuts earlier than the FED has wanted. If they pause, what happens with that? I think ray cuts come much sooner and earlier. And I think that's a difficult Really. They can't pause and say we're just pausing to see the data,

even if we think it's going up. I think it's very difficult for them to pause and not pull forward the markets. Pissy. I'm a bit distracted over here because I'm trying to understand this market movement, and it basically seems to say a soft landing looks more certain after this data comes out. What's your take on that? I mean, do you think that what we have seen from the data, from the response mechanism from central bankers that we're heading

closer or further away from a soft landing. So I think it all depends on how you're viewing this credit, Chuck. We think it can be material, but to be quite honest, at the moment, it's it's speculative because we don't have data on how it's playing out. You know, we're we're looking towards the FED Senior Loan Officer Survey in early May. Everybody is. We're looking at the H eight data LA later today to see what's happening with CNI loan cer loans.

What we saw that at the Fed's balance sheet data yesterday was supportive. It's you know, things are not getting worse. We saw an aggregate reduction in their lending facilities so far.

But we do think that credit conditions are going to tighten the way that we've tried to quantify it suggested could be anywhere from half a percent on growth to certainly more than one percent, but at this point it's difficult to gauge if that does Titan, I think it certainly means hard landing is more more likely than even we were intense moments ago. Lisa Oil seventy five dollars a barrel American oil from that sixty nine level up

to seventy five. Just an example of this correlated lift away from all the gloom, this feeling we're gonna make it through. I mean, oil has been its own animal, with a lot of other specific stories, but there has been this feeling we will get through, and if there is some sort of downturn, it would be short and shallow as the theme. And now it's maybe we won't get one, the no landing, and maybe we're back to that. Do you still believe that if we prolong some sort

of recession it will be a worse recession? Not necessarily. I think the way that we typically think about this is imbalances can build up the longer that this goes on, and therefore the recession can be deeper, more protracted as you have to delever. You know, this time around, we haven't seen the imbalances being built. You have household balance sheets that are in very good shape. You have a housing markets that is already going through the correction. You know,

we haven't seen overbuildings certainly take place there. So our view is still that this is a modern recession. It looks a lot like the early nineteen nineties. We've always thought it happens in the second half of this year and haven't really changed that view. I think it's consistent with what we're seeing. I would not say that just because we got a point three percent on core PC that we've shifted to our soft landing type narrative here.

You know, inflation is still well too high for the fence like equities lifting here as well, and the two year yield comes in four point one zero. We're looking to the two year, folks, just because of the banking crisis. It's got some more information than three point five two and the ten year yield. Let's review your home call. You came out said recession. Everybody got all bent out of shape. But what you really did and said recession in late twenty twenty three, how do you nudge that out?

What economic data would would force you to move your recession call that's been fabulous into twenty twenty four. Yeah, I think it's again all about the labor market, job and what are you seeing? And not only because it's you know, if you if you see the unplumber rate rise, it's always shows a recession is happening. But the labor market tells us about the underlying strength and the consumer and household, and so for producing strong wage gained strong

income gains. The idea that the consumer can remain resilient in the recession further off is the key question. I mean, it's a Lozetti statistic. I missed it yesterday because I was doing the Quinnipiac thing claims one ninety one to one ninety eight. We're gonna stop the show right now and get some humility with Daniel Eyes. He's seen your equity analyst Wedbush now, who absolutely nailed have courage stay with Apple. You've heard me tell this story before a

cillion reasons Apple was going to blow up. Ago, Lawrence Harty and I stood on Fifth Avenue and discussed all the reasons the Apple game was done. It's not there were so many reasons to sell Apple ninety days ago. What did you see ninety days ago that gave you confidence to be long Apple? It's the install base of

Apple is still underappreciated by investors. And I think, ultimately what we've seen with our checks and ages that demand, despite many yelling fire in a crowded theater, has actually held in more rock or Gibraltar, and is that's played out us the key. Let's get out front of Mark German here, who owns a high ground on Apple technology gossip and all that it is part of your calculus of Apple higher a new chip because to me it's the chips at the bedrock of why they do well.

Are we to see new chips with this June meeting or sware or whatever they're I think that I think you have and you're gonna have chips as well as the ARVR in terms of Apple glass. And I think it just shows that even though many say innovations in the rear view mirror, you have the biggest install base in consumer and now you're just further monetizing with services.

And I think in these environments you can never underestimate how bad Imagine team is or just how good the tactician, the Hall of Famer Cook, I think, is again going to navigate Apple, in our opinion, back to a three trillion dollar market. When can we stop calling it big tech and talk about communication companies and hardware companies and cloud companies and something much more specific. The caters to a very different cycle than perhaps each of the company

is combined well I think that's starting to happen. I mean, if you look at like Cloud, you look at Microsoft and what the Dell is doing in Redman, that demands held up and that started to seep in what we've seen with bending off at Salesforce and the broader group. Cybersecurity I think is a pocket of strength. But I think overall, at least you hit it on a great in terms of big tech the cost cutting. Once that started to happen, the bottom and tech, in my opinion,

was done. And that's why I believe there's still another ten to fifteen percent upside and tech. But there's a ten to fifteen percent upside at a time, and a lot of people think that it's already gotten overblown. That said, they're different kinds of job cuts. They're job cuts because you have excess because you overhired, and because you have

a lot of perhaps excess weight. There's also the kind of cuts that come because you see the potential for growth diminishing at a time when possibly you cannot borrow the same kind of way and the potentially is less demand. And oh yeah, people already loaded up on devices and on services during the pandemic. How do you distinguish between the two. Yeah, and well, I think you see it in terms of profitless tech and frafit tach oh ah,

that really hasn't come back. But I think what you're seeing with a lot of bigger tech or i'll say like high quality tech, you know they've cut costs they were spending like nineteen eights rock stars that stopped, and now numbers of stave wise and also on the other side of this, now you are seeing strong demand that's really starting to come back despite this macro and I think that's what we've seen with Apple specifically in China when you talk about and talk about China. We'll get

there in a second. But just going forward, are there any tech names that you do not think will participate in this game of fifteen to twenty percent as you predicted? Look, I think when you look at I Share donors, and when you look at the ciscos, some of the hardware players, but what's really ultimately happening is the likes of Microsoft. You're seeing some bigger attack players more and more like

a pal out though, and cybersecurity further expand. And I think that's I think that the ultimate headline of one Q earnings is going to be Wow, didn't fall off a cliff, And I view that as more something I embrace rather than fear in terms of one que and right now, look the New York City cab drivers barrash on' at tech and I continue to like that dynamic as

it plays out. Oh, it's time for the gossip ower here at Bloomberg Surveillance and we can always do that with a well dressed Dan ives a Disney Apple mating that to me is just like an ib frenzy there. I mean, the lunch is at the Sunset Tower Hotel, Mister Cook's hanging out with mister Eiger, and they're at the Sunset Tower. Ives is over a couple of tables, the bankers are surrounded. Any ability for Apple to acquire Disney, look,

I think it's a possibility. I think that the difference now for Apple is that this is the first time I think brilliant that their history that they're going to have to significantly look at m and A. You know, I think when you look at Disney, I think if TikTok's potentially on the table, depending on what happens with Cepheus in terms of a forced deal, I think this is the time that Cooper Tino, you know, that's really

never done. M and A is going to have to look at this and look at Disney comes that something that strategically is a marriage makes a ton of sense and their creative My take on this, and I'm not going to try to be Moffatt Nathanson here or Dane lives is these mergers always fall apart when non creatives take over the creative process. Do you have the confidence that Apple management can be humble enough to let Disney

and the creatives like mister Iger be creative. Yeah, I think that's something that I think uniquely they could balance that because ultimately, if you look at that marriage, what that could do Apple and Disney, that would really be

the golden goose. And I think something that Apple has been missing is we know is content and that's something in terms of streaming services that's gonna be a one hundred billion dollar business terms of services, I think that's going to be the next the stool German talks about us all the time. Services. That is the really jewel that I think has been the key rerating here in Apple. You mentioned TikTok, you mentioned China and with respect to Apple, and how much is this the fly in the ointment?

We hear that Tim Cook is heading to China potentially in April, this being reported by Reuters this morning. Is this going to become a liability for companies at a time of increasing tensions between the US and China. Well, Cook's part politician, part CEO, and I think what he's been able to do is a tactician better than anyone out there. Is tight rope because ultimately Apple it's basically one hundred percent iPhone production, twenty percent demand, but that

ultimately continues to be part of their success. Slow news day, you're one ninety on Apple up seventeen percent? What are we get an ivesy and lift above two hundred dollars? Look, I think right now, in terms of our check this this is a stock that I believe is gonna you know, have I believe back to the three trillion dollars mark cap over the look, I think you start to look at you know, ultimately you start to look now what I believe fifteen twenty hour upside from here we start

to approach three trillion. I didn't get it out of him. He's you know, he's got compliance on him, Dan ives, thank you, that was wonderful. Thought that that was really interesting, especially given that so many people are shrugging off the story of tech pre eminence right now is simply people sing in lower rates and that pulling the story right back, and it seems like the efficiency story coming in, perhaps in a more significant way. I'm so this is I

can't get it. Wait a minute, quantests, I'm surrounded by Mets fans. I just figured, look at this, let's go. It's a Mets than for lander looked pretty good there. Well, here's easy. I think this is the year for the match sides. Are you going? Are you going? You know, like this weekend or soon with a horde. I'm gonna go crawling to Ben and stay there for the whole weekend,

like I think everybody in the market is. Because I think it's been an exhausting couple of weeks and I think that I'm looking for, you know, just a dark, quiet space. We call that the land of the bust and red sicks go away. Thank you for what Bush. 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. I'm Bloomberg dot Com, the

iHeartRadio app tune In, and the Bloomberg Business App. You can watch us live on Bloomberg Television and always I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keene, and this is Bloomberg