Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

I think there's a lot of news in the technology side of the business on open ai. Open ai has agreed to rent a massive amount of computing power from Oracle data centers as part of its Stargate initiative, totally about four point five gigawats. I don't know what a gigawatt is, but it sounds big of data center power in the US. So I have no idea what that means. And open ai is not. I mean, Bloomberg ais give me some stuff, but I need to go to the source on a Ragrana technology analysts for Bloomberg Intelligence on a rocket. It seems like we're seeing a lot of deals getting inked here in the tech space. This open this ai story is still moving along at a rate pace. Talk to us about what's going on at Oracle.

I think there's a lot of news in the technology side of the business on open ai. Open ai has agreed to rent a massive amount of computing power from Oracle data centers as part of its Stargate initiative, totally about four point five gigawats. I don't know what a gigawatt is, but it sounds big of data center power in the US. So I have no idea what that means. And open ai is not. I mean, Bloomberg ais give me some stuff, but I need to go to the source on a Ragrana technology analysts for Bloomberg Intelligence on a rocket. It seems like we're seeing a lot of deals getting inked here in the tech space. This open this ai story is still moving along at a rate pace. Talk to us about what's going on at Oracle.

Yeah, so this is something we discussed a few days ago when Oracle was up you know, sharply at that point. They didn't disclose the name of the client, but that seems like, you know, as we said, it is open Ai. This is part of the Stargate project that came out right after the president gard elected at the beginning of January or the middle of the end of jan This is a big project. It's going to take several years to build out. It's going to be very humongous data centers across the country and perhaps even globe where open ai is basically buying computing capacity from Oracle with the help of SoftBank, you know, funding part of that particular project.

Yeah, so this is something we discussed a few days ago when Oracle was up you know, sharply at that point. They didn't disclose the name of the client, but that seems like, you know, as we said, it is open Ai. This is part of the Stargate project that came out right after the president gard elected at the beginning of January or the middle of the end of jan This is a big project. It's going to take several years to build out. It's going to be very humongous data centers across the country and perhaps even globe where open ai is basically buying computing capacity from Oracle with the help of SoftBank, you know, funding part of that particular project.

What is your sense of this deal, because we have credit ratings SMP saying that Oracle clouds infrastructure and buildings free was training cash flow and that the current spending pace is hired and anticipated. Is that also the view you have?

What is your sense of this deal, because we have credit ratings SMP saying that Oracle clouds infrastructure and buildings free was training cash flow and that the current spending pace is hired and anticipated. Is that also the view you have?

Yeah, it's going to be much higher.

Yeah, it's going to be much higher.

In fact, we think the company gave guidance of about capex of twenty five billion.

In fact, we think the company gave guidance of about capex of twenty five billion.

We think that's going to be low.

We think that's going to be low.

It's going to be you know, north of that over the long term, I mean over the next three to five years. Remember, just a few years ago they were generated, they were only spending about five six billion dollars a year. But frankly speaking, if you really want to play in the cloud infrastructure game or AI infrastructure game, you really need to spend the money up front in order to get those workloads down the road. Microsoft is spending, Amazon is spending, and you know, frankly, for Oracles, you know, good fortune they actually have a client who's willing to pay them ahead of time, or they have an agreement so that they can go out and build this data center and they can recognize revenue.

It's going to be you know, north of that over the long term, I mean over the next three to five years. Remember, just a few years ago they were generated, they were only spending about five six billion dollars a year. But frankly speaking, if you really want to play in the cloud infrastructure game or AI infrastructure game, you really need to spend the money up front in order to get those workloads down the road. Microsoft is spending, Amazon is spending, and you know, frankly, for Oracles, you know, good fortune they actually have a client who's willing to pay them ahead of time, or they have an agreement so that they can go out and build this data center and they can recognize revenue.

Over the next few years.

Over the next few years.

Oracle will develop multiple data centers across the US with partners, with sites in several states on consideration, including Texas, Michigan, and Wisconsin. Here where does Oracle fit within kind of your broader AI theme.

Oracle will develop multiple data centers across the US with partners, with sites in several states on consideration, including Texas, Michigan, and Wisconsin. Here where does Oracle fit within kind of your broader AI theme.

On a run? Yeah, just about five years ago.

On a run? Yeah, just about five years ago.

To be honest, they were pretty much absent in this game because their cloud infrastructure was there to take care of their clients only, and you know, nobody else was renting it from them. I mean there were certain clients, but not so big. I think the TikTok deal really made, you know, helped them out because TikTok runs on Oracle cloud infrastructure.

To be honest, they were pretty much absent in this game because their cloud infrastructure was there to take care of their clients only, and you know, nobody else was renting it from them. I mean there were certain clients, but not so big. I think the TikTok deal really made, you know, helped them out because TikTok runs on Oracle cloud infrastructure.

They gave them some credibility.

They gave them some credibility.

You know, they've been spending a lot of money to expand their data center footprint.

You know, they've been spending a lot of money to expand their data center footprint.

I think they can afford to do.

I think they can afford to do.

That because they have a very incredible profitable, you know, database business where they are the market leaders. They have a lot of cloud applications where they generate a lot of free cash flow. So they established this business and now they're getting the reaping the benefit of it. As it relates to let's say AWS, They're still very small in size and their infrastructure as a service business. Last year day ten billion dollars in revenue as compared to let's say Amazon, which is running about one hundred billion or so. But this particular customer or this customer and a few others by f FY twenty eight will add another thirty billion dollars on top of the ten that we are talking about. So their cloud business really becomes much stronger down the road because of this deal.

That because they have a very incredible profitable, you know, database business where they are the market leaders. They have a lot of cloud applications where they generate a lot of free cash flow. So they established this business and now they're getting the reaping the benefit of it. As it relates to let's say AWS, They're still very small in size and their infrastructure as a service business. Last year day ten billion dollars in revenue as compared to let's say Amazon, which is running about one hundred billion or so. But this particular customer or this customer and a few others by f FY twenty eight will add another thirty billion dollars on top of the ten that we are talking about. So their cloud business really becomes much stronger down the road because of this deal.

What about Microsoft? Lots of news here too. Their gaming division laid off hundreds of employees, and specific to Xbox, this is the fourth mass layoff at least in the last eighteen months. What is their strategy here?

What about Microsoft? Lots of news here too. Their gaming division laid off hundreds of employees, and specific to Xbox, this is the fourth mass layoff at least in the last eighteen months. What is their strategy here?

The strategy I think is by the CEO saying, listen, you use these.

The strategy I think is by the CEO saying, listen, you use these.

AI tools, become more productive, and I'm not going to hire at the same pace as we used to hire before.

AI tools, become more productive, and I'm not going to hire at the same pace as we used to hire before.

And I think that is the game now.

And I think that is the game now.

I think this is going to go on and carry on to other tech firms, whether it's on the software landscape or any of the other subsectors. But I think you're going to see this theme recurring over the next twelve months where CEO's CEOs are saying, you really need to figure out your productivity before you ask for a headcount. And I think that is frankly speaking, that's not good for the downstream players, people who are selling software packages to these companies HR software sales software. But there's not a whole lot anybody can do about it at this point.

I think this is going to go on and carry on to other tech firms, whether it's on the software landscape or any of the other subsectors. But I think you're going to see this theme recurring over the next twelve months where CEO's CEOs are saying, you really need to figure out your productivity before you ask for a headcount. And I think that is frankly speaking, that's not good for the downstream players, people who are selling software packages to these companies HR software sales software. But there's not a whole lot anybody can do about it at this point.

Anrag, I know you and Mandeep and your technology team have done deep, deep dives into AI, and folks, there's lots of great Bloomberg intelligence research out there on the terminal and so check it out. But there's some serious and deep dive work, some the best on Wall Street. If you want to learn about what AI is, check that out. I'll tell you what what I say, which I don't hear many people talking about this will replace people. AI is going to replace people across I think countless industries. What do you guys think?

Anrag, I know you and Mandeep and your technology team have done deep, deep dives into AI, and folks, there's lots of great Bloomberg intelligence research out there on the terminal and so check it out. But there's some serious and deep dive work, some the best on Wall Street. If you want to learn about what AI is, check that out. I'll tell you what what I say, which I don't hear many people talking about this will replace people. AI is going to replace people across I think countless industries. What do you guys think?

No, I think that's a very valid view.

No, I think that's a very valid view.

And as I was telling you on the Microsoft's case, when we go pre you know, pre chart gpt ERA, for every dollar one percentage points increase in revenue for Microsoft, that headcount used to grow somewhere around point seven zero.

And as I was telling you on the Microsoft's case, when we go pre you know, pre chart gpt ERA, for every dollar one percentage points increase in revenue for Microsoft, that headcount used to grow somewhere around point seven zero.

Point eight times.

Point eight times.

We're close to a point that it's going to be very difficult to see that ratio now because Microsoft revenue is going to grow, let's say, over the next twelve months, somewhere around thirteen to fifteen percent, but I don't think the HeadCount's going to grow anywhere more in four to five percent. And that's, frankly, is the asymmetric growth between revenue and headcount that's going to recur throughout the entire technology you know space, And that's you know, frankly speaking, it is good for the shareholders, but not so good for if you are a tech worker in this landscape.

We're close to a point that it's going to be very difficult to see that ratio now because Microsoft revenue is going to grow, let's say, over the next twelve months, somewhere around thirteen to fifteen percent, but I don't think the HeadCount's going to grow anywhere more in four to five percent. And that's, frankly, is the asymmetric growth between revenue and headcount that's going to recur throughout the entire technology you know space, And that's you know, frankly speaking, it is good for the shareholders, but not so good for if you are a tech worker in this landscape.

What about the tens of billions of dollars spent on data centers and application development. We have Microsoft, for instance, pledging that it will put a lid on that cost. Are you also hearing that same vibe from other companies? And by the way, to paulsepoint, that's kind of sad because I hope we still have a job, which is why I keep cooking, because I say cooking will not be replaced by AI. Back to AIS in Microsoft.

What about the tens of billions of dollars spent on data centers and application development. We have Microsoft, for instance, pledging that it will put a lid on that cost. Are you also hearing that same vibe from other companies? And by the way, to paulsepoint, that's kind of sad because I hope we still have a job, which is why I keep cooking, because I say cooking will not be replaced by AI. Back to AIS in Microsoft.

Yeah, I see.

Yeah, I see.

For Microsoft, they have already pledged you know, let's say over the next twelve months, somewhere close to one hundred dollars billion dollars for the expansion of their data center and all the AI infrastructure build. That revenue that the piece of that growth is going to slow down over the next let's say, twenty four months.

For Microsoft, they have already pledged you know, let's say over the next twelve months, somewhere close to one hundred dollars billion dollars for the expansion of their data center and all the AI infrastructure build. That revenue that the piece of that growth is going to slow down over the next let's say, twenty four months.

But what we don't know is beyond in.

But what we don't know is beyond in.

F F twenty seven or twenty eight, whether it's going to continue that level or not. Right now, it is driving some growth for them, but it's also hurting margins. All this reveting that's coming up is actually has a much lower margin structure than their core business.

F F twenty seven or twenty eight, whether it's going to continue that level or not. Right now, it is driving some growth for them, but it's also hurting margins. All this reveting that's coming up is actually has a much lower margin structure than their core business.

So we really have to see, you know, how.

So we really have to see, you know, how.

They're going to deal with margins, and one of the ways they can do that is by reducing headcounts.

They're going to deal with margins, and one of the ways they can do that is by reducing headcounts.

So I think they're going to give guidance.

So I think they're going to give guidance.

By the end of this month when they report results for the next their fiscal yer, which is have Fight twenty six, and I think that's where they're going to see some of the margin benefits of these layoffs.

By the end of this month when they report results for the next their fiscal yer, which is have Fight twenty six, and I think that's where they're going to see some of the margin benefits of these layoffs.

And Agrana thanks so much, appreciate it as always on our Agrana Senior Technology aannels for Bloomberg Intelligence.

And Agrana thanks so much, appreciate it as always on our Agrana Senior Technology aannels for Bloomberg Intelligence.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

One of the stories I really enjoyed the most on the Bloomberg terminal today is the company I to cover for years and years and years and did a lot of work with Warner Brothers Discovery. This was a company too nay famed media companies put together a few years ago to get scale to compete, but they probably don't have enough scale even there. So now they are and the stock is underperformed since putting that those two companies together. So now they're doing what I would have recommended as a banker, which is let's take them apart again. But part of it is you got to deal with the balance sheet. There's a lot of debt there for this company, so you have to figure out a way to deal with that. Rushmi Basu joins us here Bloomberg News, a credit reporter, Rushmi, I loved your story here today talks about what JP Morgan, the banker for Warner Brothers Discovery, what deal did they kind of craft to deal with the debt problem at Warner Brothers Discovery before they could even split the company apart.

One of the stories I really enjoyed the most on the Bloomberg terminal today is the company I to cover for years and years and years and did a lot of work with Warner Brothers Discovery. This was a company too nay famed media companies put together a few years ago to get scale to compete, but they probably don't have enough scale even there. So now they are and the stock is underperformed since putting that those two companies together. So now they're doing what I would have recommended as a banker, which is let's take them apart again. But part of it is you got to deal with the balance sheet. There's a lot of debt there for this company, so you have to figure out a way to deal with that. Rushmi Basu joins us here Bloomberg News, a credit reporter, Rushmi, I loved your story here today talks about what JP Morgan, the banker for Warner Brothers Discovery, what deal did they kind of craft to deal with the debt problem at Warner Brothers Discovery before they could even split the company apart.

In order for the split to happen, JP Morgan needed to doruct a restructuring of the debt stack. So basically what they did is they provided seventeen point five billion dollar bridge, which is biggest bridge, massive, and they use those funds to take out existing debt. They cut about three point two billion of thirty two point five billion of outstanding debt. And it was just a deal that really used a lot of distressed restructuring tools and applied it to an investment grade company, something we've never seen before.

In order for the split to happen, JP Morgan needed to doruct a restructuring of the debt stack. So basically what they did is they provided seventeen point five billion dollar bridge, which is biggest bridge, massive, and they use those funds to take out existing debt. They cut about three point two billion of thirty two point five billion of outstanding debt. And it was just a deal that really used a lot of distressed restructuring tools and applied it to an investment grade company, something we've never seen before.

Can you talk about how this has the potential to set a new president for companies, especially those in investment grade, to just renegotiate their debt moving forward.

Can you talk about how this has the potential to set a new president for companies, especially those in investment grade, to just renegotiate their debt moving forward.

So this kind of introduces a new playbook to the investment grade community in that it was an unbelievably short consent. It was only five days, and it was even shorter for some funds because they had to turn in their consent within three days given the processing times like they were depending on software, et cetera. So really, this deal prevented lenders from being able to organize a group and fight for better terms.

So this kind of introduces a new playbook to the investment grade community in that it was an unbelievably short consent. It was only five days, and it was even shorter for some funds because they had to turn in their consent within three days given the processing times like they were depending on software, et cetera. So really, this deal prevented lenders from being able to organize a group and fight for better terms.

How did they get away with that? I mean, if I ever tried that back in the day when I was at Chase, the bondholders would just smack back at me, right back in my face. How did they get that done?

How did they get away with that? I mean, if I ever tried that back in the day when I was at Chase, the bondholders would just smack back at me, right back in my face. How did they get that done?

They really relied on kind of a prison prisoner's dilemma in that there were winners and losers created in the structure and they kind of stapled it to consent. There's no kind of rules around how long a consent can be, so they really utilized that deadline to prevent lenders from organizing. And also they you know, to Jpmerican's Credit and to the other advisors of Acorn Kirkland, they did provide an exchange rate that was higher than where the debt was currently trading.

They really relied on kind of a prison prisoner's dilemma in that there were winners and losers created in the structure and they kind of stapled it to consent. There's no kind of rules around how long a consent can be, so they really utilized that deadline to prevent lenders from organizing. And also they you know, to Jpmerican's Credit and to the other advisors of Acorn Kirkland, they did provide an exchange rate that was higher than where the debt was currently trading.

Okay, I see, but still.

Okay, I see, but still.

There a loss on the face value, yes, but a premium to current trade lot.

There a loss on the face value, yes, but a premium to current trade lot.

These are investment This isn't junk. I mean these bonds were investment grade.

These are investment This isn't junk. I mean these bonds were investment grade.

Weren't they?

Weren't they?

Yep?

Yep?

I mean it kind of took investment great bombholder.

I mean it kind of took investment great bombholder.

I'm not taking this deal. I just I've never seen anything like it.

I'm not taking this deal. I just I've never seen anything like it.

No, neither have we. And this is kind of the concern in the market that this is going to be the playbook that we're going to see for more and more investment grade companies. So the distressed kind of mechanisms are coming to investment grade.

No, neither have we. And this is kind of the concern in the market that this is going to be the playbook that we're going to see for more and more investment grade companies. So the distressed kind of mechanisms are coming to investment grade.

But they must be taking a victory lap right now. Although we do have the European Leverage Finance Association releasing a statement warning that the whole process was quote a worrying negative development, and they say that this might be coercive in nature. How are others receiving this and will it even be a president given warnings with certain language like this.

But they must be taking a victory lap right now. Although we do have the European Leverage Finance Association releasing a statement warning that the whole process was quote a worrying negative development, and they say that this might be coercive in nature. How are others receiving this and will it even be a president given warnings with certain language like this.

So they're talking about the anti boycott language, which basically prevents lenders from kind of banding together and deciding not to take part in a new issuance. So that kind of is the first time we've seen that language. And you know, as we know in the distressed land. We see a ton of like no so called liability management exercises. We see groups kind of forming locking arms together with these cooperation packs. But this one just basically prevents life unders from again coming together and not partaking in a new issuance. And you know, eventually JP Morgan is going to have to issue new debts.

So they're talking about the anti boycott language, which basically prevents lenders from kind of banding together and deciding not to take part in a new issuance. So that kind of is the first time we've seen that language. And you know, as we know in the distressed land. We see a ton of like no so called liability management exercises. We see groups kind of forming locking arms together with these cooperation packs. But this one just basically prevents life unders from again coming together and not partaking in a new issuance. And you know, eventually JP Morgan is going to have to issue new debts.

So this kind of in what's system again. What was also interesting to me was this, you know, huge bridge loan that JP Morgan did. Because I know a lot of boutique investment banks they're really good at doing these debt restructurings and maybe taking some business away from the JP Morgans and the Goldman Sachs of the world. I guess this is JPMorgan coming back and saying, listen, we've got this big balance sheet. It can help you get deals done.

So this kind of in what's system again. What was also interesting to me was this, you know, huge bridge loan that JP Morgan did. Because I know a lot of boutique investment banks they're really good at doing these debt restructurings and maybe taking some business away from the JP Morgans and the Goldman Sachs of the world. I guess this is JPMorgan coming back and saying, listen, we've got this big balance sheet. It can help you get deals done.

And that's so long ago we reported on a story about how JP Morgan was trying to take a bite out of restructurings and lmes, et cetera. And one thing that we were hearing is that they have the balance sheet to do so something that boutique firms may not. So this kind of gives them more validation and.

And that's so long ago we reported on a story about how JP Morgan was trying to take a bite out of restructurings and lmes, et cetera. And one thing that we were hearing is that they have the balance sheet to do so something that boutique firms may not. So this kind of gives them more validation and.

An interesting thing in your stories you said the whole thing was so important, important enough that even Jamie Diamond received updates on it. So it's not like this one little niche group risking something big. Even the CEO, Yes, Kepta breast.

An interesting thing in your stories you said the whole thing was so important, important enough that even Jamie Diamond received updates on it. So it's not like this one little niche group risking something big. Even the CEO, Yes, Kepta breast.

This front to the top. So this was a big deal for JP Morgan and it's bankers, the M and A bankers, the capital markets bankers, the restructuring desks.

This front to the top. So this was a big deal for JP Morgan and it's bankers, the M and A bankers, the capital markets bankers, the restructuring desks.

This was all right, JP Morgan and the company may be doing a victory lap, but at some point in the next year, two three, they're gonna have to come back to the bond market and these people are going to remember, and there could be a price to pay there. I know I would hold a grudge if I were a bond holder there. So anyway, great story. It got a green bee, folks, and that means that it's a really really good, cool story, and it's unique and into scoopish and all those kinds of things of the journalists worry about. Resh me, Bossu, thank you so much for joining us credit reporter for Bloomberger's great story right down my hallway. And what I did notice is JP Morgan actually was the M and A advisor on the deal coming together to put the company together, and now they're getting paid to take them apart.

This was all right, JP Morgan and the company may be doing a victory lap, but at some point in the next year, two three, they're gonna have to come back to the bond market and these people are going to remember, and there could be a price to pay there. I know I would hold a grudge if I were a bond holder there. So anyway, great story. It got a green bee, folks, and that means that it's a really really good, cool story, and it's unique and into scoopish and all those kinds of things of the journalists worry about. Resh me, Bossu, thank you so much for joining us credit reporter for Bloomberger's great story right down my hallway. And what I did notice is JP Morgan actually was the M and A advisor on the deal coming together to put the company together, and now they're getting paid to take them apart.

That is beautiful.

That is beautiful.

You're listening to the Bloomberg Intelligence podcast live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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The bond market's certainly taking notice here. I got the fun end of the curve up nine basis points on the two year. So the bond market cares, which means Ira Jersey cares. Ira Jersey, chief US interest rate Strategies. Bloomberg Intelligence esconced in that Princeton office. I keep ting, we have a nice office here in New York, but it's not budgeting at all. My man is comfortable down there, and I respect that. Hey, Ira, what did you and what did your bond market take away from some of all this economic data we had today, including ism, which came in a little bit better and expected as well.

The bond market's certainly taking notice here. I got the fun end of the curve up nine basis points on the two year. So the bond market cares, which means Ira Jersey cares. Ira Jersey, chief US interest rate Strategies. Bloomberg Intelligence esconced in that Princeton office. I keep ting, we have a nice office here in New York, but it's not budgeting at all. My man is comfortable down there, and I respect that. Hey, Ira, what did you and what did your bond market take away from some of all this economic data we had today, including ism, which came in a little bit better and expected as well.

Yeah.

Yeah.

Well, I think in particular, people were concentrating on that unemployment rate as well as the fact that you didn't have a signific you know, you had to slow down in private payrolls, but you didn't have as significant a slowdown in aggregate payrolls, and those were.

Well, I think in particular, people were concentrating on that unemployment rate as well as the fact that you didn't have a signific you know, you had to slow down in private payrolls, but you didn't have as significant a slowdown in aggregate payrolls, and those were.

The things that people were worried about.

The things that people were worried about.

So the reason why the two year yield is off nine basis points right now is basically we were starting to price in for the chance of a July rate cut, and that's basically off the table at this point.

So the reason why the two year yield is off nine basis points right now is basically we were starting to price in for the chance of a July rate cut, and that's basically off the table at this point.

So September is now.

So September is now.

Priced about three quarters of a seventy five percent chance of a September cut. I still think that's probably going to be a little bit too early, but nonetheless, you know, taking out July meant no nine basis points on twoes, and that's exactly what we've seen.

Priced about three quarters of a seventy five percent chance of a September cut. I still think that's probably going to be a little bit too early, but nonetheless, you know, taking out July meant no nine basis points on twoes, and that's exactly what we've seen.

We have Gregory Faranello, if a mayor of it Security, saying the Fed will take the summer off. It's really a surprising report. To your point, rate cuts for July basical punches zero September is kind of ify. How did this shape your view moving forward? Did you immediately have to write a report? Did you and your team really were surprised and had to reshape or re angle your outlook?

We have Gregory Faranello, if a mayor of it Security, saying the Fed will take the summer off. It's really a surprising report. To your point, rate cuts for July basical punches zero September is kind of ify. How did this shape your view moving forward? Did you immediately have to write a report? Did you and your team really were surprised and had to reshape or re angle your outlook?

Yeah, it was, I mean, I guess a little bit.

Yeah, it was, I mean, I guess a little bit.

You know, you know, the consensus for the unemployment rate was for it to go up a tenth and set it went down a tenth, and I think that that was the single biggest surprise, you know, you know, we don't our colleagues over at Bloomberg geconom they own that unemployment call, but the you know, I think it didn't really reshape our views very much at all, because we've been suggesting that we'll continue to kind of muddle along with okay, employment situation, with this overhang of tariffs, keeping the Fed on hold probably until at least the October meeting, which happens in very late October. So we're looking at the fourth quarter in our view, before the Federal Reserve makes any moves at all.

You know, you know, the consensus for the unemployment rate was for it to go up a tenth and set it went down a tenth, and I think that that was the single biggest surprise, you know, you know, we don't our colleagues over at Bloomberg geconom they own that unemployment call, but the you know, I think it didn't really reshape our views very much at all, because we've been suggesting that we'll continue to kind of muddle along with okay, employment situation, with this overhang of tariffs, keeping the Fed on hold probably until at least the October meeting, which happens in very late October. So we're looking at the fourth quarter in our view, before the Federal Reserve makes any moves at all.

Or we'll get enough data, you know.

Or we'll get enough data, you know.

You know, I think the market is more sensitive to data now thinking that oh, they're going to change on a dime. One bad data print means that the Federal Reserve may go or not. But that's that's quite frankly not the case. And one of the you know, necessary conditions for the Fed to cut rates is a weakening employment situation. And while it's it's weakening, it's not getting weaker, right, So so it's you know, the the we're not yet at a point where the FED will feel compelled to cut because of the job situation.

You know, I think the market is more sensitive to data now thinking that oh, they're going to change on a dime. One bad data print means that the Federal Reserve may go or not. But that's that's quite frankly not the case. And one of the you know, necessary conditions for the Fed to cut rates is a weakening employment situation. And while it's it's weakening, it's not getting weaker, right, So so it's you know, the the we're not yet at a point where the FED will feel compelled to cut because of the job situation.

So sent that the market now has maybe a better feel on the labor market, and maybe the FED has a better feel on the labor market with today's data focused, can then maybe move to inflation. What are the expectations in the market here. We haven't really seen any inflation creep into this market of any note here, which some people had feared with the tariffs and so on.

So sent that the market now has maybe a better feel on the labor market, and maybe the FED has a better feel on the labor market with today's data focused, can then maybe move to inflation. What are the expectations in the market here. We haven't really seen any inflation creep into this market of any note here, which some people had feared with the tariffs and so on.

What's the view there, Yeah, well, there's a couple of things going on under you know, underlying some there were some when you look at the May data, there were some sectors that did see a little bit of an uptick in inflation in the good sector, but that was offset in large part and will be offset again by lower energy prices and as well as rents that are starting to flow through. Keep in mind, you know, when we talk about rents and owner's equivalent rent, which is the housing component of the consumer price index, that will continue to fall just naturally because it takes a long time for you know, twelve months basically right for rents to be adjusted to these new prices. So you're going to wind up seeing, yes, it, prices will increase but they're increasing at a slower pace. That means that inflation is falling. And I think we're in an environment where okay, goods prices go up a little, but with energy prices and housing prices starting to come down, the only variable left is what are service prices doing? And in today's report you saw that wages in the services sector were a little bit lower.

What's the view there, Yeah, well, there's a couple of things going on under you know, underlying some there were some when you look at the May data, there were some sectors that did see a little bit of an uptick in inflation in the good sector, but that was offset in large part and will be offset again by lower energy prices and as well as rents that are starting to flow through. Keep in mind, you know, when we talk about rents and owner's equivalent rent, which is the housing component of the consumer price index, that will continue to fall just naturally because it takes a long time for you know, twelve months basically right for rents to be adjusted to these new prices. So you're going to wind up seeing, yes, it, prices will increase but they're increasing at a slower pace. That means that inflation is falling. And I think we're in an environment where okay, goods prices go up a little, but with energy prices and housing prices starting to come down, the only variable left is what are service prices doing? And in today's report you saw that wages in the services sector were a little bit lower.

Month on month in June than they were in May.

Month on month in June than they were in May.

So yeah, I agree with you, Paul, Like, we haven't seen inflation and probably won't.

So yeah, I agree with you, Paul, Like, we haven't seen inflation and probably won't.

Interesting all right, folks, Ira Jersey we know him as one of the leading voices on US interest rates in Global Wall Street, but he's also our soccer correspondent as well. Ira, can you explain to me.

Interesting all right, folks, Ira Jersey we know him as one of the leading voices on US interest rates in Global Wall Street, but he's also our soccer correspondent as well. Ira, can you explain to me.

Club World Cup?

Club World Cup?

Where did that come from?

Where did that come from?

It was the attempt by FIFA for money grab and quite frankly, I think it's underwhelmed. You know, there's in the summer you're kind of used to seeing Major league soccer, and then you know international tournaments like the Women's Euros.

It was the attempt by FIFA for money grab and quite frankly, I think it's underwhelmed. You know, there's in the summer you're kind of used to seeing Major league soccer, and then you know international tournaments like the Women's Euros.

Just kicked off.

Just kicked off.

That's all the national women's teams in Europe kicking off, and we have the Gold Cup here in North America where we just saw last night Guatemala lose to the United States, and you know, so now we're set up for a final in this weekend. You know, the Club World Cup is an idea that maybe some people will like, but it's really underwhelmed. The times of games have been really poor. It hasn't been good for the health of some players playing in you know, summer.

That's all the national women's teams in Europe kicking off, and we have the Gold Cup here in North America where we just saw last night Guatemala lose to the United States, and you know, so now we're set up for a final in this weekend. You know, the Club World Cup is an idea that maybe some people will like, but it's really underwhelmed. The times of games have been really poor. It hasn't been good for the health of some players playing in you know, summer.

Heat in the United States at noon.

Heat in the United States at noon.

I'm not not a huge fan of the tournament so far, the way it's been run.

I'm not not a huge fan of the tournament so far, the way it's been run.

Yeah kind of yeah. I kind of was there, but I didn't really know what was there, and I'm like, where did that come from? So all right, now I've a little bit more clear. Irid Jersey, he gives you what you need to know on the interest rate space. It gives you what you need to know about global soccer. He tells me what I need to pay attention to him when I don't, So we appreciate that. Irid Jersey, Chief US Interest rate Strategist at Bloomberg Intelligence, coming to us from our Princeton office.

Yeah kind of yeah. I kind of was there, but I didn't really know what was there, and I'm like, where did that come from? So all right, now I've a little bit more clear. Irid Jersey, he gives you what you need to know on the interest rate space. It gives you what you need to know about global soccer. He tells me what I need to pay attention to him when I don't, So we appreciate that. Irid Jersey, Chief US Interest rate Strategist at Bloomberg Intelligence, coming to us from our Princeton office.

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal