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Rebecca Patterson right now to be kind senior fellow with the Council on Foreign Relations. Her work at Bridgwater bessemer at JP Morgan over the years, thrilled she could join. I guess I gotta do the FED meeting. To me, it could be dramatic. If he's going to change things. He doesn't want to dawdle around, does he mean?
I think Priority one, two and three this week is reinforce the Fed's credibility. You don't want any questions about any political bias. So that's goal number one for Kevin Warsh this week, I think, which he should be able to execute beautifully. I think beyond that, if he does a press conference, I expect he will, but it's not a given. If he does a press conference, then that'll be his opportunity to lay out the priorities. What is he going to focus on?
First?
I would imagine he wants to review all the economic models, the processes. He's going to review communication. He's already been very vocal about having less communication, think more less.
It has been for years.
Yes, a new thing, the balance sheet will wait.
Yeah, so, Rebecca. Obviously he's got some level of pressure from the President from the White House to lower rates. But wait, the data is not there. He's got a committee he has to deal with.
Yep.
Wait, I would think the messaging this week is as much for the rest of US i e.
The market, maybe even more so for the President. Yeah.
I mean, he's got a difficult needle to thread here, right, keep the President on his side ideally, but build credibility trust with his colleagues at the FOMC, I mean, And to your point on the data, I mean, right now, core PCE for May is tracking at around three point three percent year on year. If that's the number that comes in or something like that, there's no way they
can cut rates anytime soon. And even if the straight of the hormones straight of hormones does open soon, which we all hope it does, and oil prices retreat further, you still have a strong economy, now probably stronger. You have inflation coming through the AI channel as well as other channels, and so it seems like the market pricing and the possibility of a hike makes a lot more sense. So that is going to be a challenge for Chairman Warsh for sure.
I met u s dollar here. We kind of came into the year.
I guess the consensus on the street was for a week or a dollar, and then the war with Iran starts and we had that flight to quality like we typically see.
Now what well, the dollar until the news over the weekend was down or sorry, was down again only two major currencies, the Norwegian crown and the Australian dollar, both big commodity exporters. It was stronger against everything else, primarily on rate expectations, higher interest rates following higher energy prices and broader inflation pressures. Now that that is off the table, you have seen yields, as you guys just mentioned, down a little bit. You are seeing the dollar down a
little bit today. And the question again it goes back to the Fed, do we have a hawkish bias in the press conference this week or not. I think the rate expectations will continue to be pretty important for the dollar going ahead. And again it's not just the US, right, two sides to every currency trade. We expect a Bank of Japan hike this week. The ECB, the European Central Bank, just raised rate. So it's not clear how much stronger the dollar gets.
Out of Florida. And Johns Hopkins, I mean, there was this idea that if you end a war, even as Caplin says, a middle war, the idea is you get a disinflationary tendency competison now at CFR. But if you're on Wall Street right now, and what's clearly a boom investment banking environment, do you just assume disinflation?
I wouldn't assume anything right now. Look, we have we have some tweets and some headlines suggesting that we have a step forward towards peace, but the deal isn't supposed to be signed till Friday, and even then it's not clear yet if it sticks, it's not clear what the terms are going to be. I mean, Iran wants and needs funding. I think they could still pressure to have some sort of fee, service fee to go through the straight not at all a service fee.
And Paul, this is really Rick Wilson just now on Twitter with just a scathing quick note like where are the details?
Yeah, when do we get the details? I don't have an.
Answer, and we might not for sixty days. Right.
The markets will flip right around if we do that.
Well, they do that, right, And that's the point. Oil has come down, stocks are up. Does it last? Do you want to chase it here? I mean, if we have peace and it's certainly in both sides interest to have peace. Iran desperately needs money. It needs to rebuild.
The US does.
Not want oil at a four handle or thirty year year olds at a five handle going into midterms.
Gold, well, it seems like just a cup of coffee goes.
Tom had said we were at five thousand dollars and now so we've seen a pullback.
Here at forty three hundred.
Yeah, yeah, I mean you had a lot of speculative money going to gold at the beginning of the year. We had a little bit of a parabolic move, so that was part of it. But the other part of it is we did have two big central banks, Russia and Turkey selling Russia sold for four months in a row. Turkey was the biggest seller of gold in March. But those are the outliers. Central banks in general are continuing to buy.
Bloomberg surveillance across the SNAE show Boy and for San Antonio, Three Am and a diner and re Ordered tried to get over the hangover. Joining us now with the Rebecca Patterson and studio is Anry Horder, who was, Yeah, doing a seminar in Houston.
In Newston, can you get.
Me tickets to San Antonio. I'll take it over. How did you get from Houston to San Antonio?
Our friend drove me.
Friend.
Yeah, So a friend saw that I was in Houston.
Also saw I was at Game three with the presidents and I'm going to game five.
Why didn't you come?
And I made a game time game time decision Saturday night and I was like, you know what, like, I'm so cold?
Are you sitting with Prince Harry?
I was not sitting with Prince Harry.
Oh yeah, you texted me.
I saw him.
I saw Spike Lee. I was sitting more by Patrick Ewing, which was pretty amazing.
Did he block your view?
He did not block my view?
He was actually behind me.
So I will say San Antonio was the sixth borough on Saturday night. It was how to be fifty percent maybe seventy five percent New York Knick fans and the first order or two.
Obviously we were.
Behind, but we've been there before and it was a little intense, and then Jalen Brunson does what he does. This team works together so well and they clinched it. It was incredible.
You have to call him my Jalen. Missus Keene is calling my Jalen this week.
My Jalen.
I gotta ask what was in the arena the energy that was not captured for America on TV.
I think what was not captured was the moment you realize they were about to become champions after fifty three years. There was literally tears from New Yorkers and their faces, grown men just absolutely crying. One guy next to me was a New Yorker, stayed for the whole thing, moved to San Antonio in nineteen ninety four, so he was technically there supporting the Spurs, but even he was emotional and he said, this is.
Pretty bittersweet for me for our fans.
On radio, I just have to highlight the outfits that are in this studio here. Rebecca Patterson, New York can Nick orange head to toe fantastic. Hamry Horner comes in to the whole thing going and the Tom's got the blink. I mean I didn't know Tom either.
You were a Celtics fan.
Well, we're all Nick fans.
Yes, I said, he just writes to pay check exact.
One more question for Rebecca Patterson. Here. The spirit of this to me, the single miscall a New York city in the gloom was a census of twenty twenty where everybody, including the smart people, said, oh, we had six hundred thousand in the MSA here. I mean, it's his bet against New York that's always been there.
You know what, I think there is a human emotion that you always want to go after whoever's on top. And that could be a company, it could be a person, it could be a city. So it's easy to go after New York. But look, New York's back. People are working five days a week in the office, real estate prices are coming back.
God.
I mean last week, if you tried to get around the city in a cab or even on the subway, it was packed.
Yeah, Rebecca, thank you so much. Rebecca Patterson with us writing for the Console on Foreign Relations, a terrific podcast, Stay with us more from Bloomberg Surveillance coming up after this.
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The Royal strategist for Robinhood joins us right now for two shortest visits stuff guild with us as well. If I haven't ended his conflict. How does it change your six months forward view, your journey thirty report.
I think it makes costs a little bit lower for everybody. All those input costs that were elevated obviously start to come down. I don't think it'll happen right away because it takes a while to restart things. I saw something this morning where quit will take the longest because they're the most impacted. But it I mean, obviously the market is for discounting, so the market will care about it now and today, and you're seeing it in energy prices and energy stocks.
All right.
So let's say we do get some type of resolution here with around a little bit more certainty in that part of the world that brings the AI story right back to the you know, the front burner here. How do you guys think about AI at Robinhood, because that's a story that's kind of morphed over the last several years since we've all become involved with AI. How do you guys position it these days?
Yeah, I mean at the company, we use it a lot, but when it comes to you know, I've subscribed to Jensen Huong's five layer cake approach, and it starts everything from like the materials and the energy inputs down to the application layer. And I think, you know, at times you're going to have some things that go back and forth, like some fits and starts, because the physical world can't
just doesn't move as fast as the agentic world. And so I think that's where you know, obviously the conflict in the Middle East impacted that, but I do think we're moving a little closer to the application layer, which is like that that top end of the layer, which is if you look at a company like Eli Lilly, they have lily Pod where they take all of the data they've ever garnered and have, you know, can work
with it in AI. I think that's the most powerful aspect of working with AI is when I take all this data and I put it into something that I can talk to. Talking to your data, I think is extremely powerful.
How do you guys think about just I mean, what's your approach here as we go into the second half of twenty twenty six, here, stocks, bonds, alternatives on your platform?
What are your clients doing these days?
I mean, the stock market's been really good, so there's been a lot of buying of stocks. Whenever there's the pullback, we see them use ETFs to kind of, you know, add a little bit more exposure, but the buying has never.
Really slowed down.
I'd say prediction markets is are something that's rising, and I see a rising and ability to people to put their own views into it beyond the sports area that I focus beyond the sports area. So for example, the New York City, I'm sorry, the La Mayor Race was one of the top things in the last week or so. And also the price of bitcoin, the price of oil,
like that's kind of where they were playing. And we also have robin Hood Ventures, which is our foray into It's a close and fun and it's our foray into actually private investments.
Steph Coil, thanks so much with Robinhood driving all of their strategy this morning. Stay with us. More from Bloomberg Surveillance coming up after this.
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YouTube through Queen Victoria Street in London.
Julian Lee joins oil strategist doesn't describe as expertise and a global sense of flows of hydrocarbon. Julian, I'm looking at a chart of Brent crude. The obvious question is do we get back to seventy dollars from the present eighty two? But what I see is a convexity. There's a real acceleration to a lower price. Is it the market getting out front of oil or is a market chasing where oil is going to be?
I think, you know, at the moment, it's perhaps the market getting a little ahead of oil. There is a growing expectation that this MoU will get signed on Friday, and that will result in an opening of the strait of hormos. It's not going to be, you know, back to normal immediately. But there is a timescale to get flows back to normal through Hormus within thirty days. That may be optimistic. So I think the market is starting to price that in. There's still a lot of hesitancy
among ship owners. They really want to see a bit more than just talk about this. I think they may start to change their position come Friday if this deal is signed. And at the moment, you know, we've seen in the newsroom, we've seen three different versions of what's in this deal. All of them have come from the
Iranian side. They're all slightly different. We've had nothing official out of Washington yet, so you know, there's still plenty of room there, I think for wrinkles to appear before Friday. And I think that's what shippers are slightly nervous about. The market I think at the moment is it's much more optimistic about a deal being done than they have been for the past month or so.
Julian, I'm looking at just an image on the screen of all the dots representing ships that are in strated permeus both sides, but quite frankly, and there's they're all over the place. Isn't it that the insurance companies who decide if this trade is open or not.
Well, I think it's a mixture of the insurance companies, certainly, the ship owners, and to some extent the ship's crews as well. You know, it is an owner willing to risk its its vessel and its crew by sending it through a waterway that is still to some extent contested. They will want to see much more clarity and I think some mechanism of protecting these ships, at least legally, if not physically, before they start to move.
Do we yet have a good sense of the damage that may have been done to the infrastructure in the energy real complex there in that world, because I'm not sure where oil goes even if the straight is open.
Well, I think that's a very good question. I mean, there has undoubtedly been damage to some key facilities, certainly liquefied natural gas production in Katar, some gas and perhaps oil production in the United Arab Emirates, possibly installations elsewhere in the region. The other problem, I think is not just physical damage, but it's the fact that being unable to get their oil and their gas out of the Gulf,
countries have had to scale back production. They've had to shut wells in they've had to reduce the flow from fields. Once everything opens up again, all of that has to come back into operation. That will take time. We think the shutdowns have been done in a fairly controlled manner,
so that shouldn't have damaged the infrastructure. But then it has to be opened in a controlled manner as well in order to avoid surges of pressure that can damage well heads and pipelines and all that kind of stuff, and that will necessarily slow the process of everything coming back.
What does it, excuse me, what does it mean for the Pacific rims Julian. Obviously the boat's going to come out to Paul's great question. And infrastructure, I guess that's distillates and refinery cutter in Awe. But how does Singapore fields this morning? Or Japan?
Well, I think you know. I think Asia in particular has been hit hard by the closure of Horn Moves. Most of the oil out of the Persian Gulf, whether it's from the Arab side or the Iranian side, most of that goes to Asia, and so it is them is refiners in that part of the world who've been scrabbling around for barrels from elsewhere. I think if the strait does open fully, and if we start to see oil and gas flowing again, I think refiners in Asia
will breathe a huge sigh of relief. The people who perhaps won't will be those in the Kremlin who have enjoyed the surgeon prices that this war has brought, and have enjoyed some relaxation on sanctions on their oil that has allowed Indian refiners back into to the market, and perhaps even some of the you know, the US oil companies who have have had a real boost from the higher prices and the demand for US.
Crewed Julian, thank you so much. Really appreciate the breathe a small folks. This is the way we start really interesting.
We stay with us.
More from Bloomberg Surveillance coming up after this.
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This is an important conversation Jim rowins with us with Deloitte, and this is on the fundamental issue of revenue for all this AI stuff. Off the twenty billion dollar n Nvidia bond deal today, Jim, on these tokens, to me, there will be price discrimination, There'll be all sorts of levels of usage. When do we start seeing a much more sophisticated pricing of how we use AI? Yeah?
Thanks s having me on, guys.
I mean, I think one of the key things that we're seeing right now in the market is that people are moving from basic AI use cases, you know, chat simple agentic workflows, to thinking about how they apply AI agents across their business functions, and that's seeing a real explosion in the usage of tokens. But it's also going to see the explosion of value creation because we're now talking about real work getting done by agents in the enterprise and really adding efficiency to what we're seeing.
But do you model price down?
You know, we're going to expect to see that the cost per token go down over a period of time, but the number of tokens people need continue to increase up. And given the constraints that we see in the data center space, there's going to be a competition there for those tokens for you enterprice to get access to them and use them effectively in their enterprise.
Jim, I'm going to speak for about ninety nine percent of our viewing and listening audience.
Can you explain, I don't know what a token is neither.
Yeah, what's the token? Right? What is a token of?
Why does it matter? Yeah?
Think about it.
So, if you're in front of one of your AI tools and you're putting some input, that's an input token. So you're asking a question, you're asking it to do something, provide some feedback. You've sent it a picture and you want some help with something. That's an input token, and then the response back from the large language model is the output token. So organizations price it on both the input and the output. So if you think about a closed source model, they're charging you for the input that
you're putting in the output that you're taking out. If you think about an open source model, that's where some organizations are finding success putting models inside their enterprise and running their own kind of AI factories where they're running essentially these tokens without having to go outside the enterprise to pay those fees.
So is this our.
Token costs now a line item on my P and L that I have to mention for sure?
Yeah, Like when I talk to a lot of CIOs and enterprises that I'm working with. They're looking at their overall token budget, much like they were looking at their cloud budget that they were dealing with over the past couple of years, and so they're saying, you know, how much money do I need to set up side for the tokens for my employees? But also it's not just the amount of tokens that you're using, it's am I getting the value for the token that I'm putting in?
Right?
Like? What's the actual output that I'm getting that helps my enterprise?
Jim Rowan.
This weekend, Sir Lewis Hamilton did awfully well at Barcelona for Ferrari and at the top of his helmet is his personal endorsement from Perplexity. So I guess they're behind now. They're not like Apple, but they're behind. Where are we going to be in front? What does Deloyd say in five years about where the Perplexities and all the meta and all the other non players.
Where are they going to be?
Well?
I mean you have to break down the market into a couple different sets of companies, right, so you have your frontier model organizations that are advancing the capabilities of these labs, you have the hyper scalers that are out there, you have open source providers as well, and so we think there's going to be continued advancement on the model frontier.
When you continue to get better.
You see the release after release with the new capabilities that are out there. At the same point in time, organizations and other capabilities like other software companies are adding a layer above the model, sort of what we call an agentic harness, a wrapper around the model that allows you to tool calling, maintain memory, really complex technology related things.
And those are the areas where they're trying to differentiate to say that beyond the model, these are the things I have to offer you.
They can create value for you.
So tokens allow me to measure the cost of my AI usage. Are companies is it possible to measure the value? I mean, is that what they're trying to do?
Now?
Yeah, I mean it's a complex equation.
Right, you put your tokens in, you're not going to get an immediate ROI back out in a calculator. What you need to figure out is what are the workflows, like where am I applying this technology today and how is the work getting done? Differently in a more efficient and effective way, or am I opening up new areas of revenue growth through the usage of those token And so that's where the application of both where am I spending?
But then what's the business value creation side becomes a big question for clients.
You people did a great essay. I loved what Deloitte did on this. Are we to compete away the profits of AI? Just compete them away to a perfectly competitive analog.
I don't think you compete them away.
I mean in our token economics paper that we had back in January, we did an infrastructure survey back in March too. We're seeing a large number of the token volume increase. But it's really what the enterprises add their IP to this conversation that really differentiates what they're trying to do. And so the model is going to be the model, but what do you wrap around it? Where's your internal intelligence that you're adding to the model to
differentiate your services? And that's the key piece. I think I'm going to put this paper out folks January of this year from Deloyte. I'm sure they'll do an update at some point. Jim Rowan, thank you, Gold Principal US head of Ai at Deloyde. This paper was absolutely fabulous on tokens.
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