Episode summary
Fed Decision and Tech Earnings | Bloomberg Surveillance
Bloomberg Surveillance
· · 31 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Constance Hunter, Dominic Konstam, David Schassler, Ed Ludlow
Summary
The conversation centered on whether the Fed is still behind the curve or simply late enough that a hike now versus in December would not change the economy much. A guest argued the inflation fight is complicated by energy spikes, possible AI-driven demand, trade-war frictions, and a more inflationary global backdrop than the 1990s. The guest also said the 2% target may be harder to defend if the U.S. is reshoring manufacturing and restricting immigration, but that the bigger issue is nominal GDP and preserving the Fed’s credibility on the long end of the bond market.
Another guest said AI could be a productivity shock that reabsorbs displaced labor, though the transition may hurt workers and worsen income and capital distribution. He emphasized that rates around 5% are not helpful for debt service, but are not absurd if growth is strong and inflation remains sticky. He also argued that consumer surplus is being converted into corporate profits, which helps explain why profits look so strong even as some households feel stretched.
The market discussion then shifted to AI earnings, commodities, and gold. One guest said the AI trade is still early, with infrastructure and commodity bottlenecks likely to benefit regardless of which model wins, and said gold can still go higher because the geopolitical and debasement catalysts remain elevated. The tech preview from the host focused on Microsoft’s large workforce reduction and Alphabet’s need to prove that cloud growth and AI are improving the core business.
Key takeaways
- A guest said the Fed’s main job is credibility, because inflation expectations matter more than the central bank itself.
- Another guest argued a hike now versus December may matter less than signaling toughness on inflation.
- The labor-market risk from AI is less about permanent unemployment than about weaker wages and worse capital distribution, according to a guest.
- A guest at VanEck said the AI trade is still early and favors infrastructure, energy, metals, and other scarce physical assets.
- The same guest said gold can move higher because debasement, geopolitics, and uncertainty remain supportive.
Notable quotes
“the raise once and then possibly be on a downward trajectory is looking at factors in underlying inflation that are moderating”
“we are increasing frictions where global institutions are not easing uh glo global uh you know global frictions”
“inflation expectations matter a lot for inflation. Uh and the Fed itself matters much less”
“I think the bigger issue is actually uh income and capital distribution”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. She's senior adviser, macro policy perspective, chief of economist for the economist intelligence unit constant hunter with us uh this morning.
I want to frame out two groups. There's a group looking for maybe one more rate rise that's it then down we go disinflationary vector etc. And there's another group saying they should be raising rates today or at least raising rates in December and raising rates again.
What is the single distinction between those two groups constants? So we have this debate on our team all the time and we're not monolithic. We have both representatives and the the raise once and then possibly be on a downward trajectory is looking at factors in underlying inflation that are moderating non-energy factors.
Um and of course the real question is does the do the energy price spikes spill over into services? um is is there demand pull inflation enough demand pull inflation from AI that's going to have broader inflationary effects or is that going to be contained and then I think finally we are not done with the trade war
So how folks this is this is the Latin moment of Bloomberg surveillance this morning Sweeney killing Latin at Duke of you were you were at Lawrenville years ago you took Latin — We had Latin at the Blessed Sacrament school in Trenton New Jersey back in the day how bet we did. So, let's go Latin with Paul Sweeney. X ante get out in front. Expost. You got to wait. I'm suggesting this is a Fed that is massively expost right now.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed preview
- rate hiking cycle
- macro strategy
- gold and commodities
- ai trade and tech earnings
Companies and tickers mentioned
- EIU
- Mizuho
- VanEck Funds
Watch the episode
Watch “Fed Decision and Tech Earnings | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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