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Uh let's get to our first conversation then. Edd Yardini, president at Yardini Research is with us. Mr. Yardini, always a pleasure to have you in. I'll start with this whole business of the US government shutdown. Well, we've been at this point before, right? And it usually just passes over after a little bit of noise.
You think it'll be more of the same or could it be different this time? I don't know. I don't think it's going to be different. Uh we get this on a this drama on a regular basis. uh and it passes. Uh sometimes the government does shut down for a couple of weeks and sometimes the that's avoided. My hunch is uh it'll be avoided.
I I don't think the Democrats want to be blamed for uh shutting down the government. They've got enough problems going on. So I suspect they'll fold. Uh on the data piece, Mr. Yadini, what have you made of the latest prints? I mean, we saw the inflation numbers uh last week, end of last week, and pretty much in line with estimates, though.
Now, headline inflation is edging closer towards the 3% mark. Uh the labor market data has been patchy. Jobless claims weren't that bad last week. Of course, we'll look out for the the non-farm payrolls report on Friday. What do you make of the macros at this point? Well, the the the the macro data that's come out since Federal Reserve met to uh vote to cut uh the federal funds rate by 25 basis points.
All that data has shown that the economy is actually doing very well. Uh real GDP for the second quarter was revised up significantly from 3.3% to 3.8%. That was on Thursday of last week. And then on Friday of last week, the Atlanta Fed's tracking model uh is showing that real GDP is uh increasing at an annual rate of 3.9% in the fourth quarter.
Initial claims came out on Thursday uh suggesting that layoffs remain extremely low. So I, you know, we've got GDP being revised up and the payroll employment numbers being revised down. that that implies the productivity is absolutely stunning. And if that's the case, uh there's really there really was no reason for the Fed to lower interest rates.
The the labor market's just got a lot of strange things going on with the supply, especially also AI is having an impact. Uh I don't think that uh the last rate cut was necessary, and I don't think there'll be another rate cut this year. And u you know, you mentioned AI. Good morning. Lots of questions around maybe some weeks that's large number number of questions.
AI is a is it a entering some bubble zone or not? Some serious people are starting to talk about it. Uh seriously, but uh what did you make of that Nvidia OpenAI deal? Uh Ed, uh you know, you know, one paying the other to be able to sort of buy their GPUs and does it remind you of the past? Yeah. Yeah.
There's a Prince song, you know, party like it's 1999 and maybe it's going to be party like it's, you know, 2025, 2026. Uh, it certainly reminds one of the meltdown scenario we had with the tech bubble and then the tech wreck 1999 and then a couple of years there into the 2000s. uh look artificial intelligence uh a AI I should say is artificial and it's not intelligent uh but it's going to be very useful for certain applications but it's not going to be the kind of uh gamecher that people are talking about in in my humble opinion and I think there is a certain amount of hype there and it wouldn't be a bad thing if the AI stocks just kind of consolidate for a while while everybody figures out whether they should be at this at these elevated the valuation levels and meanwhile they they're not going to prosper unless they have technologies that really help other companies.
The S&P 493, let's say, if we're comparing it to the magnificent 7, the magn S&P 493, I I I I call them the impressive 493. And I think they need uh to show that they are using AI to increase their productivity. I think that's going to happen. Uh but I think there's a little bit too much hype about this and and the kinds of monies that are being thrown around.
I think the market is right to question whether there'll ever be any significant profits on the kind of investments that are being made. Absolutely. And I think it's a it's a big question of our times, right? Uh and people on both sides and and uh we we'll talk more about this. Ed, great speaking with you.
A short of conversation today. Appreciate you joining us here on CBTV. It's always a pleasure.
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