00:00 Josh
This AI trade and trend and theme, which Nvidia is the face of. How important is that at this point Jose, to the broader US economy?
00:09 Jose
Well, it’s huge, Josh. Great to be here. The market is now getting closer to becoming a barometer of the economy because the lower income and middle-income consumers, they’re having a lot of trouble. We’re hearing that on the retail earnings calls, and really it’s the high-income consumers that are really driving consumption forward. So, if you have a market correction, those folks, their behavior could now become dictated by their portfolios. You know, everyone’s looking at their phones, they’re looking at their portfolios. If they see their values go down, all of a sudden they’re going to start dropping their discretionary activities. So it’s huge. As far as for the AI theme, are these capital expenditures in AI, are they going to deliver long-term capital returns or is it going to be lackluster? That remains to be seen, but that’s why the market here is waiting for these results to really choose a direction. We’re really sandwich here on the S&P 500. We’ve recovered from the 5% drawdown from the high yesterday. And then we’re also we tried to get above the 50-day moving average today, but we didn’t. So we’re right there at those two pivotal points. The market’s waiting for direction. I think a beat and raise blockbuster guidance, that can take us above the 50-day moving average. And don’t forget tomorrow, we have that September jobs report as well, which can move rate cut expectations, which right now are at around the coin flip.
01:21 Josh
Let me ask you, Jose, there was a good piece by Greg Ip in the Journal. I thought of you when I read this this week. He says, the most joyless tech revolution ever. He says, AI is making us rich and unhappy. He says, discomfort around AI helps explain the disconnect between a solid economy and an anxious public. You agree with that as an economist? Is that is that the disconnect?
01:46 Jose
To an extent. You know, we’re starting to hear employers more and more, they’re starting to realize we’re not hiring as much because we’re adopting AI. You know, so that’s, that’s really hampering labor market performance. Uh, and that’s, we’ve heard the Fed minutes.
02:05 Josh
And do you think it’s making people– Let me ask you this, do you think it’s making people anxious?
02:08 Jose
I think so. I think so, because a lot of college grads, you know, they’re expecting to get into the labor force. They have great grades, great marks, great recommendations, and then they’re having trouble getting in because instead of maybe 20 spots, there’s only 10, uh, because AI is doing a lot of the work. So I think that’s generating some anxiety.