KG on Core PCE’s Market Impact, White House “Accord on Super Intelligence”

stocks and broader equity gains for us this m at the index level. All right let's get out to KG himself who joins me now for a l all of this data. So an encouraging PCE print. know that KG you've been actually highlighting something to with how they're actually crunching the numbers and doing the math. I know that you're not the only one. I mean, do we heavily discount the PCE because of that? Just walk through exactly what we saw and the significance of some of those changes that have been made to theata? Well, I don't think we heavily discounted. It's just something that we have to note, especially as we kind of move forward here. We did have the BEA revising the methodology for several different components within legal services. They're actually moving that back to 2021 and kind of adjus that, that metric, that different benchmor legal services, software and computer accessories has also beenadjusto management. I think the big key is portfolio management. That alr year and a half, two years orst so. It seems like they're trying to account for that. Sowg in lower, both on headline as well as core. And the real ims going to be on the year over year statistics here. But headline PCE came in at 0.3% somewhere in line with the Street's expecta for year over year headline PCE. That came in at 3.4%, missing the Street's expecs of around 3.7%. And for core PCE, tha came in at 0.2% on a month over month basis, softer than the 0.3% that was expected. And for year over year, that came in at 3%, and that was lower than expected at 3.3%. If you look and this is the high level analysis from some analysts already out there, they'd be the the the B A is still updating the website when it comes to PCE prices. So when you go to that page right now, from what I'm seein it's still actuallyed. But there are some analysts that areing that they actually did flag this beforehand. And you could see a 00.3 adjustment to the downside for year over year, both headline as well as core inflation. And if you take that into account, this came in line with the Street's expectationsere. But the market's not going to look at it that way. They like to see thisurrent print that we have right now. And we might continue to see that type of, you khis adjustment or this kind of deflator when it comes to expectations moving forward, especially when it s tod inflation now forecast, which once again, wa actually attle bo its expectations. So a decent print the right direction that wt there's also some mechanical things under the hood tha adjust this to the downside a little bit more than just the economic conditions that we are . Okay, sure. Something to keep methodology, as you pointed out, let's switch to GDP. This third revision here of estimate healthy upward revision to 2.2%. Wa through what got us there. Yeah. Actually, you 2.2% annualized. And that actually did beat the Unrevised 1.5% that we actually saw expected. A lot of that's coming from consu spending that actually rose to 3.8%, up from% in Q1, was also revised higher as well. A lot of this is just really AI spending, CapEx spending and equipment. That's really big drivers w comes to GDP, not so much con spending, but you l see it going in that positive direction. The worst thing you coulin this market, esly for the fed, is seeing GDP moving to the downside decelerating or even in the negative prices moving higher and labor force stagnan Right now, it like we have two of the three components that are still g up, at least for now, based on the data that we've been given here. And I think another reason why we eing markets kind of powering higher this morning. . e probabilities coming off as well this morning asl. ADP just to throw it in there. We did get 90 on the headline there up which was better health car education. That'sthek us t what the significance of that is in the broader scheme of things, particularly as a p to health care and educaeah. Well, services, that was around 60% of the overall job g Health care not too surprising. That has been the driver for job growth for the last like five years, six years or so. But when you're looking at education, we do have a little bit of back to school effects coming into this report as well. And y see a little bit of a bump to the upside when it comes to construction. And I those are the 2 areas that you want to focus on for Friday. Is that really of the seasonalin it comes to the labor market as well? Education, back to schooly relatively strong. Construction kind of this front loading to try toet a lot of the projects done for the end of the year. Andthe icing on the cake could also be retailers hiring for the holiday season. As we preparer s and all of those holidays aswelt in the September report are the two most vol ones that wesee whr market data. So we'll see how this actuans out for FrBut the ADP report was actually very solid. We also did see a little bit o re-acceleration back to the upside when it comes to wages. Ant has been a concern for a lot of, you know, economists that are out there when they're looking at the data set. Okay. That's encouraging. So we've got a few sort ofositive sort of, I guess, indicators, indications from this data this morning. Let's talk about the other big story. And that is what is going on with AI or should I call it's I as it's now been rebranded by Trump and some of the tech power, the leadership he was with yesterday. I mean, certainly we were talking about this yesterday on the show becauseu t press conference was going on off the back of that luncheon. I mean, the optics were fascinating, you know, particularly because it came at a time when on the other side tm Altman saying, hey, look, hey, be patient. We' to get this stuff right. We've got to do this safely. Just walk us through what we got from that. Some of the executive orders that were signed, some of the biggest takeaways from those meetings, well, we did see, well, the executive order kind of reframesificial intelligence for government agencies to start callingt suelligence. So a little bit more of a rebranding type of effort coming from the Trump administ. Obviously, that's also probably trying to rebrand leading up to the midterm elections. This has been a sticking point that we've been hearing pretty much on a dayy basis. But the leaders of that meeting, some of them actually d sign this accord that really tries to provide a framework for AI safety. Now, t four key points or layers of control that are going to be focusi on internal controls, monitoring model capabilit alignment duringing and deployment. And then you're looking at internal oversight teams making sure that they have one in place, and also verify the controls for cer AIs. And then they want to have an independent external audito evaluator, andey're talky leveraging each other, other companies kind of coming in, look the high level data for their models, just to make sure that eveg is on the up and up, for lack of a better term here. And then last but notst, an independent board committee that receives the reports from internal teams as well as external auditors to really make a determination how sound a model can be. It doespee having these periodic meetings to kind of check up on the AI ry as a whole. And they did make mention at the end of ord that they would like to see over time, this being codified into some for of law. President Trump obviously continues to focus o the non-policing or self-policing type of aspect her he did say that this agreement or this accord is morally binding. So not a big mover w it came to these stocks and for the companies that participated yesterday. once again, a little bit more of a PR move and maybe a little bit of, you know, a frk that they can kind of abide by, at least here in the near term. Yeah, that's exactly what Daniel Newman was talking about yesterday. I mean, you know, the PR around this has been fascinating. And in his mind, I mean, this should really change as we try to kind of navigate the juxtaposition right now around some of the safety and the dangers being put out there. And also, you know, kind of