WEBVTT - Yellen's Retaliation Warning, Apple's Vision Pro Goes Global 0:00:02.480 --> 0:00:07.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.000 --> 0:00:13.760 This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis 0:00:13.760 --> 0:00:16.479 along with Doug Krisner, join us each day for the 0:00:16.560 --> 0:00:19.920 stories making news and moving markets in the Asia Pacific. 0:00:20.120 --> 0:00:22.560 You can subscribe to the show anywhere you get your 0:00:22.600 --> 0:00:26.520 podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and 0:00:26.560 --> 0:00:27.920 the Bloomberg Business app. 0:00:28.400 --> 0:00:32.040 Jonathan Gardner with US Chief Asia and em strategist at 0:00:32.120 --> 0:00:36.720 Morgan Stanley, joining us from the line city of Singapore. Jonathan, 0:00:36.760 --> 0:00:38.559 thanks for taking the time to chat with us. I 0:00:38.640 --> 0:00:41.239 was noting earlier that the MSCI China Index since that 0:00:41.800 --> 0:00:45.720 January low is up about twenty seven percent. A lot 0:00:45.760 --> 0:00:49.080 of this may be due to some rotation into cheaper valuations. 0:00:49.200 --> 0:00:51.959 Would you chase this move or do you think it's 0:00:51.960 --> 0:00:53.120 pretty much run its course? 0:00:53.360 --> 0:00:55.560 Well, in a word, we wouldn't chase the move. We 0:00:55.600 --> 0:00:58.600 wrote a note on that last week, myself, Laura Wang, 0:00:58.840 --> 0:01:01.840 and the team. I think it's important to remember just 0:01:01.920 --> 0:01:05.200 how volatile China equities are now relative to the rest 0:01:05.280 --> 0:01:08.679 of global equities. They're about two and a half times 0:01:08.680 --> 0:01:11.280 as volatile, and we've seen some of these short bursts 0:01:11.319 --> 0:01:14.400 of performance within an overall secular bear market on a 0:01:14.440 --> 0:01:17.240 number of occasions in the past. I think the reason 0:01:17.280 --> 0:01:20.920 that the bear market ultimately resumes is the very weak 0:01:20.959 --> 0:01:24.520 fundamentals that exist in China. And over the weekend we 0:01:24.600 --> 0:01:28.919 had some really quite bad numbers on the inflation side 0:01:29.000 --> 0:01:31.560 and the money supply and lending side, which really for 0:01:31.640 --> 0:01:34.640 US confirm our thesis that it's still trapped in debt deflation. 0:01:36.360 --> 0:01:39.319 And you have US Gina relations as well, that sort 0:01:39.319 --> 0:01:44.119 of looms. Jennet Yellen gave kind of tacit confirmation that 0:01:44.319 --> 0:01:48.560 higher US tariffs and Chinese products are coming, Jonathan. She said, 0:01:48.600 --> 0:01:52.320 basically she hoped China wouldn't retaliate. Doubtful she'd be talking 0:01:52.360 --> 0:01:55.280 about that if this wasn't coming. But even if they 0:01:55.360 --> 0:01:59.360 do retaliate on the Chinese side, does this have real 0:01:59.480 --> 0:02:03.520 teeth for investors or is it more symbolic for both 0:02:03.560 --> 0:02:05.600 sides Domestic audiences. 0:02:05.560 --> 0:02:09.320 Well, the China equity market is driven mainly by a 0:02:09.440 --> 0:02:13.280 domestic consumer stocks the big major internet e commerce names, 0:02:13.480 --> 0:02:16.080 so it doesn't have a lot of exporters directly in 0:02:16.120 --> 0:02:18.720 the index, though there are some large firms in the 0:02:18.760 --> 0:02:22.760 ashare market in things like electric vehicles and battery technology. 0:02:23.280 --> 0:02:26.320 So what really matters for the domestic stock market is 0:02:26.440 --> 0:02:29.680 just ultimately how weak the consumer continues to be. And 0:02:29.680 --> 0:02:32.760 there's plenty of evidence that the consumer's paying down mortgage 0:02:32.800 --> 0:02:37.040 debt for the first time ever. Big ticket spending is diminished, 0:02:37.080 --> 0:02:39.520 and so people they're out and about and spending, but 0:02:39.639 --> 0:02:42.359 much more on smaller ticket items. And we just think 0:02:42.400 --> 0:02:44.720 this is in stark contrast to some other parts of 0:02:44.760 --> 0:02:47.440 our coverage universe, for example India, where the trends are 0:02:47.440 --> 0:02:48.760 almost completely different. 0:02:49.240 --> 0:02:51.679 We were talking earlier on the program about the move 0:02:51.760 --> 0:02:54.080 on the part of Beijing to begin selling the first 0:02:54.160 --> 0:02:58.320 round of ultra long special sovereign bonds. I think the 0:02:58.360 --> 0:03:00.359 sale will begin on Friday, and we're looking at the 0:03:00.360 --> 0:03:02.880 first tranche of about one hundred and thirty eight billion. 0:03:03.400 --> 0:03:05.040 Do you think there's going to be strong demand for 0:03:05.120 --> 0:03:05.720 something like this. 0:03:06.720 --> 0:03:08.840 Well, I'm not a bond market expert, but what I 0:03:08.880 --> 0:03:11.440 would say is that that number is not very large 0:03:11.560 --> 0:03:14.240 in relation to the size of the Chinese economy, which 0:03:14.280 --> 0:03:17.639 is around about eighteen trillion dollars, and we don't think 0:03:17.639 --> 0:03:21.679 that it represents an aggregate net fiscal stimulus. Rather, what's 0:03:21.680 --> 0:03:25.600 happening is the central government is in a sense backstopping 0:03:25.680 --> 0:03:28.800 some of the provincial local government debt to stop a 0:03:28.840 --> 0:03:32.240 sort of cascading default cycle spreading out of the property developers. 0:03:32.680 --> 0:03:35.440 And that's the context in which this bond insurance is happening. 0:03:35.480 --> 0:03:39.200 It's not a net fiscal injection into the economy. 0:03:40.880 --> 0:03:43.680 Jonathan, I wanted to ask you briefly about rate cuts. 0:03:44.120 --> 0:03:46.400 We haven't had a lot of action on that front. 0:03:46.960 --> 0:03:50.880 Bloomberg Economics is saying that without rate cuts, the PBOC 0:03:51.120 --> 0:03:52.840 is just pushing on a string. 0:03:53.280 --> 0:03:55.520 It needs to be sooner rather than later. 0:03:56.680 --> 0:03:59.240 Is that another thing that doesn't really affect equity flows 0:03:59.240 --> 0:03:59.920 that much or does it? 0:04:00.760 --> 0:04:00.960 Well? 0:04:01.000 --> 0:04:03.960 It is actually really key points. I'm glad you mentioned 0:04:03.960 --> 0:04:06.520 it in this sense. It's quite reminiscent of what was 0:04:06.560 --> 0:04:09.040 going on in Japan thirty years ago in the early 0:04:09.080 --> 0:04:12.720 part of their debt deflation bust. That the authorities are 0:04:12.760 --> 0:04:15.360 looking back with regret at the amount of leveraging up 0:04:15.400 --> 0:04:19.440 in the prior decade or so, and they're not choosing 0:04:19.640 --> 0:04:23.520 to flood the system with liquidity at this occasion. There 0:04:23.520 --> 0:04:26.560 is an important difference, however, with Japan that may partly 0:04:26.600 --> 0:04:29.719 explain this behavior, and that is that ultimately China is 0:04:29.800 --> 0:04:33.600 not a developed market sovereign. It is ultimately an em 0:04:33.640 --> 0:04:37.000 sovereign in terms of its credit rating. And were it 0:04:37.120 --> 0:04:40.159 to slash interest rates, let's say, to zero, or try 0:04:40.200 --> 0:04:43.920 to launch a QE program, it would unlock probably currency weakness, 0:04:43.960 --> 0:04:47.719 currency declines. And that's why those kinds of policies haven't 0:04:47.720 --> 0:04:52.640 been open to typical em in for example, that the past, 0:04:53.080 --> 0:04:56.480 whereas for develop markets, including for Japan, Japan was ultimately 0:04:56.520 --> 0:04:59.880 able to reflate because it found a path substantially neg 0:05:00.120 --> 0:05:03.159 of real interest rates finally over the last decade, but 0:05:03.240 --> 0:05:04.760 that may not be open to China. 0:05:05.520 --> 0:05:08.400 So there's no way then that you see China repeating 0:05:08.440 --> 0:05:11.120 that kind of the lost three decades that Japan was 0:05:11.160 --> 0:05:14.279 miird in where you get in just so deeply entrenched 0:05:14.279 --> 0:05:18.360 in a deflationary cycle and just stagnant activity. 0:05:18.600 --> 0:05:20.800 Well, I think there is a recentably high chance that 0:05:20.920 --> 0:05:24.240 China can remain in difficulties for the foreseeable future. We 0:05:24.320 --> 0:05:26.680 are in year four of this if you date the 0:05:26.680 --> 0:05:29.719 beginning of it to early twenty twenty one, when leverage 0:05:29.720 --> 0:05:32.520 peaked in the overall economy and property prices peaked, and 0:05:32.600 --> 0:05:36.360 there was also a mini stock market bubble, and there's 0:05:36.480 --> 0:05:39.920 very little sign that the macro is actually turning around again. 0:05:39.960 --> 0:05:42.160 I just want to emphasize these numbers. At the weekend 0:05:42.279 --> 0:05:46.720 PPI minus two and a half CPI essentially zero aggregate 0:05:46.760 --> 0:05:50.000 financing negative month or month. That's very unusual. 0:05:51.520 --> 0:05:52.800 I wanted to finish up on. 0:05:53.279 --> 0:05:55.200 I know you look back at the last fifteen or 0:05:55.200 --> 0:05:58.960 twenty years or so of investing in these markets, and 0:05:59.000 --> 0:06:02.480 you drew some conclude in about thirty or forty seconds 0:06:02.480 --> 0:06:06.960 some what are among those chief among your observations. 0:06:07.200 --> 0:06:09.920 I think it's really about the importance of quality in 0:06:09.920 --> 0:06:13.120 investing in an asset class that is quite volatile. So 0:06:13.160 --> 0:06:15.760 if you find business models that have superior are we 0:06:17.000 --> 0:06:20.479 and strong balance sheets versus their industry peers, and you 0:06:20.560 --> 0:06:24.120 control for valuation, that's really the answer to successful investing 0:06:24.160 --> 0:06:27.200 in a difficult top down environment that you often find 0:06:27.200 --> 0:06:27.880 in EM. 0:06:28.400 --> 0:06:30.599 Jonathan will leave it there. It's a pleasure today have 0:06:30.720 --> 0:06:33.440 you on the program and benefit from your insight. Jonathan 0:06:33.480 --> 0:06:37.600 Garner is a chief Asia and EM strategist at Morgan Stanley. 0:06:44.400 --> 0:06:44.599 Well. 0:06:44.640 --> 0:06:48.360 Apple is getting set to sell its Vision pro in 0:06:48.520 --> 0:06:53.000 markets outside the United States, trying to see whether the 0:06:53.160 --> 0:06:57.400 roughly thirty five hundred dollars mixed reality headset has brought appeal. 0:06:57.480 --> 0:07:00.440 Joining us in our studios is Mark German, Bloomberg, Chief 0:07:00.480 --> 0:07:05.000 correspondent on Global Technology. So this is really the biggest, 0:07:05.560 --> 0:07:09.840 biggest device, or the newest big device for Apple in 0:07:09.880 --> 0:07:12.920 a period of time from your own channel, checks Mark, 0:07:13.160 --> 0:07:14.960 what are you seeing? I mean, are people going to 0:07:14.960 --> 0:07:16.840 be willing to pay thirty five hundred bucks for this? 0:07:17.200 --> 0:07:17.400 Yeah? 0:07:17.440 --> 0:07:19.320 Thank you for having me. It's awesome to be here 0:07:19.320 --> 0:07:22.400 with you in Hong Kong. The Vision Pro. Like you said, 0:07:22.440 --> 0:07:25.440 it's Apple's first major new product release in nearly a 0:07:25.480 --> 0:07:27.800 decade since the Apple Watch came out in twenty fifteen, 0:07:28.120 --> 0:07:31.680 and at thirty five hundred dollars with limited applications technology 0:07:31.680 --> 0:07:34.880 that has very early appeal. It's a very much an 0:07:34.880 --> 0:07:38.040 early adopter device. It did really well out of the gate. 0:07:38.160 --> 0:07:40.600 I'm talking about the first two weeks or so when 0:07:40.680 --> 0:07:43.320 people who wanted to get the device lined up for it, 0:07:43.360 --> 0:07:45.720 the first pre orders arrived, the first people walking into 0:07:45.720 --> 0:07:47.720 Apple Source to try it out and buy it. But 0:07:47.840 --> 0:07:49.960 since then it has really tapered out. 0:07:50.160 --> 0:07:50.360 Right. 0:07:50.400 --> 0:07:52.480 You normally see this when a new iPhone comes out, 0:07:52.520 --> 0:07:54.960 you get a ton of sales and it tapers a 0:07:55.000 --> 0:07:57.120 little bit, but there is still quite a bit of 0:07:57.160 --> 0:08:00.200 demand over the life cycle of the product. But I'd 0:08:00.240 --> 0:08:03.400 say Vision Pro sales have completely fallen flat. Some stores 0:08:03.440 --> 0:08:06.360 told me that they've had as many returns over the 0:08:06.440 --> 0:08:09.960 last three months as they've had purchases over the first 0:08:10.000 --> 0:08:12.040 two weeks. There are other stores who tell me they're 0:08:12.040 --> 0:08:14.760 only selling, you know, one to two or three units 0:08:14.800 --> 0:08:16.880 per week. Some stories telling me they don't even sell 0:08:17.240 --> 0:08:20.360 one Vision Pro within one particular week. It's unclear for 0:08:20.560 --> 0:08:24.240 ninety nine point nine nine percent of people why you 0:08:24.280 --> 0:08:24.760 need one. 0:08:24.680 --> 0:08:25.200 Of these things. 0:08:25.360 --> 0:08:28.440 Yeah, the so are Apple devotees, right, I mean that 0:08:28.600 --> 0:08:31.400 the early adopters. When you look at the distribution of innovation, 0:08:31.920 --> 0:08:35.440 is this device manufactured by fox Conn? Are they the 0:08:35.480 --> 0:08:39.320 main manufacturing powerhouse behind the Vision Pro? 0:08:40.440 --> 0:08:44.080 No, the vision Pro is actually not produced by fox Conn. 0:08:44.120 --> 0:08:49.439 It's produced by Quanta. Sorry, it's it's produced by lux 0:08:49.440 --> 0:08:54.719 Share luck Share Precision based in Taiwan, I believe, and 0:08:55.000 --> 0:08:58.880 lux Share Precision they have been working with Apple for 0:08:59.080 --> 0:09:01.400 some number of years on this device. The plan for 0:09:01.440 --> 0:09:05.160 Apple is to move some production over time to fox 0:09:05.240 --> 0:09:08.439 Con to sort of differentiate with a cheaper model at 0:09:08.440 --> 0:09:11.120 some point, and fox Conn likely would get in on that. 0:09:11.840 --> 0:09:14.280 Maybe there'll be more suppliers like Quanta in the future 0:09:14.320 --> 0:09:17.880 as well, but it's still very early days for this product. 0:09:17.960 --> 0:09:20.240 And obviously, as we're talking about, the next big thing 0:09:20.280 --> 0:09:22.240 for the Vision Pro is expansion mark. 0:09:22.320 --> 0:09:25.400 You mentioned in your story that it takes as much 0:09:25.400 --> 0:09:28.080 as four days to be trained up on this thing, 0:09:28.960 --> 0:09:31.880 so it's obviously a niche product. Is this meant to 0:09:31.880 --> 0:09:35.760 be like a lost Leader or do they actually expect 0:09:35.760 --> 0:09:37.160 to sell a lot of these? 0:09:37.559 --> 0:09:39.200 What's the essential purpose of this? 0:09:39.760 --> 0:09:43.520 You know, it's funny. When they initially were planning to 0:09:43.559 --> 0:09:45.440 release the Vision Pro, they were looking at a price 0:09:45.480 --> 0:09:49.120 point around three thousand dollars and that basically put it 0:09:49.160 --> 0:09:53.240 as no margin, and the idea was to get people 0:09:53.240 --> 0:09:56.560 in the ecosystem, eventually, bring the bill of materials down 0:09:56.600 --> 0:09:59.520 over time, get the cost down over time to build, 0:09:59.559 --> 0:10:01.319 and then make a profit. But they priced it at 0:10:01.320 --> 0:10:03.120 thirty five hundred dollars and then you have a two 0:10:03.200 --> 0:10:06.600 hundred dollars up charge per additional storage capacity, and the 0:10:06.640 --> 0:10:10.440 margins on flash for Apple for storage is probably north 0:10:10.480 --> 0:10:13.640 of seventy percent, and so they're making a margin on this, 0:10:13.679 --> 0:10:16.000 so they are making some money, but it's going to 0:10:16.040 --> 0:10:19.800 take at the current rate of the amount of people 0:10:19.880 --> 0:10:21.960 purchasing this product, is going to take them a decade 0:10:22.000 --> 0:10:24.720 to make a return on their investment. So they're certainly 0:10:24.760 --> 0:10:26.120 going to have to get the price down get more 0:10:26.160 --> 0:10:28.760 people buying it to get back on their investment. 0:10:28.760 --> 0:10:28.960 Here. 0:10:29.240 --> 0:10:31.520 The last time that Brian and I were speaking with you, Mark, 0:10:31.559 --> 0:10:35.319 you were giving us information. You're reporting on open Ai 0:10:35.480 --> 0:10:39.080 striking a deal with Apple for the iPhone. Looks like 0:10:39.120 --> 0:10:41.280 you were spot on there. What do we know? 0:10:42.440 --> 0:10:45.520 Yeah, So about two months ago, I reported that Apple 0:10:45.520 --> 0:10:50.240 had held discussions with open Ai about integration into the iPhone, 0:10:50.480 --> 0:10:54.680 and then about three weeks ago it appeared that Google 0:10:55.000 --> 0:10:56.640 was in the lead for a deal with Apple on 0:10:56.720 --> 0:10:59.360 Ai with Gemini integration into the new iPhone this year, 0:11:00.000 --> 0:11:02.600 and I reported that talks are back on with open Ai, 0:11:02.920 --> 0:11:06.800 and then just last week they reached the deal. And 0:11:06.880 --> 0:11:09.920 so open Ai will be part of the iOS eighteen 0:11:10.000 --> 0:11:13.040 launch later this year, and we'll be supporting features like 0:11:13.040 --> 0:11:16.200 a chatbot. Whether that's integration into Siri, into the Spotlight 0:11:16.240 --> 0:11:18.840 search in the phone is to be seen, but open 0:11:18.880 --> 0:11:20.640 Ai is going to be a part of the new 0:11:20.720 --> 0:11:24.360 version of iOS, alongside large language models in GENAI tech 0:11:24.400 --> 0:11:25.160 from Apple itself. 0:11:25.320 --> 0:11:27.840 I suppose it doesn't rule out a deal with Gemini 0:11:28.280 --> 0:11:31.600 of Google down the road. But in terms of AI 0:11:32.040 --> 0:11:34.920 and its application, if we go back here to the 0:11:35.000 --> 0:11:40.040 Vision Pro, is there any AI functionality in this? 0:11:40.400 --> 0:11:40.600 Yeah? 0:11:40.640 --> 0:11:42.760 I mean they say that the Vision Pro uses a 0:11:42.760 --> 0:11:46.000 lot of artificial intelligence to do on device processing, to 0:11:46.440 --> 0:11:50.440 mirror your eyes to create a virtual representation of you, 0:11:50.600 --> 0:11:52.480 And sure that is AI, but that's not the AI 0:11:52.520 --> 0:11:54.880 we're talking about the AI or anyone cares about right now. 0:11:55.400 --> 0:11:58.079 I would anticipate they get some GENAI features onto the 0:11:58.120 --> 0:12:00.120 Vision Pro, maybe a couple of features this year, but 0:12:00.120 --> 0:12:01.800 I would say that's probably more of a next year 0:12:01.840 --> 0:12:04.840 thing or the year after. The priority first and foremost 0:12:04.920 --> 0:12:07.920 is to get jenai based into the iPhone, then the iPad, 0:12:07.960 --> 0:12:10.280 than the Mac, then the Apple Watch, and then I 0:12:10.320 --> 0:12:13.360 would say Vision Pro comes last, probably alongside the Apple 0:12:13.400 --> 0:12:17.200 TV and the App Store. There. The big news I 0:12:17.200 --> 0:12:20.360 think though, regarding the Vision Pro itself is expansion. So 0:12:20.559 --> 0:12:22.199 it's been in the US now for about three and 0:12:22.240 --> 0:12:25.679 a half months, and so they're now bringing in employees 0:12:25.720 --> 0:12:29.520 from its retail stores in Asia and in Europe and 0:12:29.760 --> 0:12:33.240 Australia to come to the US to learn how to 0:12:33.280 --> 0:12:35.400 sell the Vision Pro, how to pitch the Vision Pro 0:12:35.480 --> 0:12:38.040 to customers. And so you'll see the Vision Pro launch 0:12:38.120 --> 0:12:45.400 after early June in places like Japan, Korea, China, Hong Kong, Singapore. 0:12:46.040 --> 0:12:50.079 You'll see France, You'll see Germany, Australia, and I anticipate 0:12:50.160 --> 0:12:52.559 you'll see Canada and the UK at some point this year. 0:12:52.720 --> 0:12:54.760 As you know Marca, China is a big market when 0:12:54.800 --> 0:12:57.640 it comes to gaming. Is there an intersection here between 0:12:57.720 --> 0:13:00.000 the gaming environment and the Vision Pro? Very quick? 0:13:00.920 --> 0:13:04.599 I think the Vision Pro most interesting market for the 0:13:04.679 --> 0:13:06.920 Vision Pro is probably China because of the gaming interest there. 0:13:06.920 --> 0:13:09.720 But Apple really needs to boost its gaming capabilities for 0:13:09.720 --> 0:13:11.360 the device before it really will take off there. 0:13:11.440 --> 0:13:13.080 The Apple Watch had a slow start. 0:13:13.679 --> 0:13:16.080 Does the Vision Pro eventually get there or does this 0:13:16.120 --> 0:13:16.559 one fail? 0:13:17.120 --> 0:13:19.320 I think the first model the Vision Pro, will be 0:13:19.400 --> 0:13:21.439 recalled as a failure, but I think if they get 0:13:21.440 --> 0:13:24.160 the price down in half, it'll ultimately be a very 0:13:24.160 --> 0:13:25.319 successful product for Apple. 0:13:25.640 --> 0:13:27.600 All right, Mark, thank you very much for coming in. 0:13:27.720 --> 0:13:30.840 We could talk a whole half hour. I suppose even longer. 0:13:31.240 --> 0:13:41.880 Mark German, Bloomberg chief correspondent on global technology. Joining us 0:13:41.880 --> 0:13:44.400 now for a closer look at markets is Victoria Bill's 0:13:44.520 --> 0:13:49.240 chief investment strategist at Bantery and Capital Management. Victoria, thank 0:13:49.280 --> 0:13:52.400 you for joining us. We're seeing a lack of direction 0:13:52.840 --> 0:13:57.880 in US equities for sure. Elsewhere as well, what's rally 0:13:57.920 --> 0:14:01.679 the most of late has been and Hong Kong equities, 0:14:02.160 --> 0:14:06.440 US utilities and staples, So hard to find a thread 0:14:06.679 --> 0:14:09.480 through that other than you know, those are the most 0:14:09.520 --> 0:14:13.400 bombed out sectors late last year, and people have been 0:14:13.440 --> 0:14:16.560 selling megacap tech and have been buying there. 0:14:17.040 --> 0:14:18.640 When are we going to get some direction? 0:14:20.320 --> 0:14:20.600 Yeah? 0:14:20.840 --> 0:14:23.680 Direction, honestly is very hard to come by these days. 0:14:23.760 --> 0:14:25.440 I think a lot of what we are seeing in 0:14:25.480 --> 0:14:28.800 the market right now is just if we try to 0:14:29.040 --> 0:14:31.920 create a single thread. There's a lot of noise when 0:14:31.920 --> 0:14:34.479 it comes to what the markets are looking at. For example, 0:14:34.800 --> 0:14:40.120 ETFs are a very common resp solution for the comment 0:14:40.240 --> 0:14:43.840 for the average investor and for the average consumer investor, 0:14:44.400 --> 0:14:48.920 and whether that's ETFs or whether that's through volatility trades particularly, 0:14:49.320 --> 0:14:51.760 there's a lot of noise in terms of what we're 0:14:51.760 --> 0:14:54.640 seeing just from the consumer side of the market now. 0:14:54.720 --> 0:14:57.520 If we're looking at fundamentals, or if we're looking at 0:14:57.720 --> 0:15:00.720 different types of industries in particular, I think a lot 0:15:00.760 --> 0:15:03.120 of the common threads that we should be looking towards 0:15:03.200 --> 0:15:07.920 are within the technology sector, specifically within AI, web three, 0:15:08.120 --> 0:15:10.800 machine learning, and so those are a lot of things 0:15:10.840 --> 0:15:13.200 that I'm looking for to or the things that I'm 0:15:13.240 --> 0:15:16.360 looking to when it comes to market direction at this time. 0:15:16.520 --> 0:15:18.640 So talk to us a little bit about the way 0:15:18.640 --> 0:15:22.240 that you play artificial intelligence. Is it through a company 0:15:23.320 --> 0:15:26.720 like a chip maker, let's say Nvidia obviously maybe to 0:15:26.760 --> 0:15:29.600 a lesser extent some of the memory chip manufacturers, like 0:15:29.640 --> 0:15:32.360 if Samsung, or do you go to a company like 0:15:32.520 --> 0:15:37.840 Alphabet or Microsoft, or are there upstarts maybe publicly traded 0:15:37.880 --> 0:15:42.600 companies small market cap focused on AI that could be 0:15:43.040 --> 0:15:46.040 acquisition targets. I'm trying to understand the way that you 0:15:46.120 --> 0:15:48.440 evaluate and put money to work in this space. 0:15:49.680 --> 0:15:51.480 I think there's a a few different ways or a 0:15:51.480 --> 0:15:54.080 few different scenarios of which you can talk about or 0:15:54.160 --> 0:15:56.960 do all of the companies that you're talking about. So, 0:15:57.120 --> 0:15:59.680 whether that's a data play when it comes to Meta 0:15:59.800 --> 0:16:03.560 or Alphabet, data is a crucial component when it comes 0:16:03.600 --> 0:16:06.200 to AI and machine learning, and especially when we think 0:16:06.200 --> 0:16:10.760 about like the transference of that data and information from 0:16:10.880 --> 0:16:15.200 larger computer systems to individuals, individuals stant hands or even 0:16:15.280 --> 0:16:20.320 through like individual means, if you want to do a 0:16:20.360 --> 0:16:24.360 computer or a microchip or a GPU play, I would 0:16:24.360 --> 0:16:27.680 say that that's definitely a Nvidia or even a Samsung company. 0:16:28.440 --> 0:16:32.280 The thing about Navidia is that they manufacture majority of 0:16:32.400 --> 0:16:35.400 the GPU chips that are used in AI as well 0:16:35.440 --> 0:16:38.600 as in sorry I'm thinking I'm blinking out in the 0:16:38.640 --> 0:16:42.880 world right now, but sorry crypto plays as well. So 0:16:43.240 --> 0:16:46.080 when we're thinking about companies that are within those spaces, 0:16:46.240 --> 0:16:48.960 those are some of the primary industries that we're looking at. 0:16:49.400 --> 0:16:51.760 And then the other thing that I like to think 0:16:51.800 --> 0:16:54.840 about is machine learning. And so again we're looking at 0:16:54.960 --> 0:16:58.320 Navidia or even Samsung a lot of the chips that 0:16:58.360 --> 0:17:00.440 they're creating right now, and especially if we talk about 0:17:00.880 --> 0:17:06.080 Samsung or even Nvidia, Samsung particularly the they're hopefully going 0:17:06.160 --> 0:17:09.439 to like further their partnership with Nvidia and provide some 0:17:09.480 --> 0:17:11.840 of the some of the chips that they're using for 0:17:11.920 --> 0:17:15.840 their Web three and AI plays. So Samsung only has 0:17:15.840 --> 0:17:20.040 an upboards or upworts tailwinds to gain from continuing to 0:17:20.080 --> 0:17:22.840 partner with companies such as Nvidia right now, well. 0:17:22.760 --> 0:17:25.399 There's so many derivative bets on this. So we mentioned 0:17:25.400 --> 0:17:28.479 that companies like Nvidia and Broadcom are well off their highs, 0:17:28.480 --> 0:17:30.879 so people have been selling that and they've been buying 0:17:30.920 --> 0:17:34.080 into some of these derivative plays, even utilities. You know 0:17:34.119 --> 0:17:36.960 that raises a few eyebrows, but you know, these data 0:17:36.960 --> 0:17:40.480 centers need a ton of electrification, so you know people 0:17:40.480 --> 0:17:44.080 have even spread there. They're buying HVAC companies because you know, 0:17:44.119 --> 0:17:47.159 you need cooling systems for all the all the power 0:17:47.240 --> 0:17:48.600 that AI needs. 0:17:48.960 --> 0:17:50.800 So there's been a lot of bets. I'm wondering. 0:17:51.040 --> 0:17:53.040 You know, some of those companies have gone up even 0:17:53.080 --> 0:17:56.280 more in the last month or two than the NVIDIAs 0:17:56.280 --> 0:17:59.720 of the world. So I'm thinking that maybe now money 0:17:59.720 --> 0:18:03.159 flows back into the peer plays because have already spread out. 0:18:03.960 --> 0:18:07.639 I mean, that's definitely it. I remember back in last 0:18:07.720 --> 0:18:10.880 year in November, I was very much pro super Microcomputer, 0:18:11.480 --> 0:18:16.000 and that company was originally in the small cap like 0:18:16.200 --> 0:18:20.399 small cap index, but now it's trading at almost triple 0:18:20.480 --> 0:18:22.199 or double what I would recommend in terms of a 0:18:22.240 --> 0:18:25.800 price for purchase. So when it comes to small cap 0:18:25.840 --> 0:18:28.920 plays or even companies that are like I would say, 0:18:28.960 --> 0:18:33.240 more fairly priced in this arena, there's a very slim 0:18:33.280 --> 0:18:35.480 picking in terms of companies that you could look at 0:18:35.520 --> 0:18:38.439 to get into the AI world. And going off of 0:18:38.480 --> 0:18:41.240 what you were saying earlier, a lot of this requires 0:18:41.400 --> 0:18:44.640 like a lot of manufacturing power in order to create 0:18:44.680 --> 0:18:48.760 these microchips in order to create these processors semiconductor processors 0:18:48.800 --> 0:18:52.159 as well, which helped to process that data. So I 0:18:52.359 --> 0:18:55.440 honestly that's where the larger plays come in, because these 0:18:55.480 --> 0:18:57.879 are the companies that are well equipped in order to 0:18:57.960 --> 0:19:00.920 create those processes and create that data, create that information. 0:19:01.440 --> 0:19:04.800 Brian raised an interesting point. They're talking about the demand 0:19:04.880 --> 0:19:08.320 for electricity to power a lot of this processing, whether 0:19:08.359 --> 0:19:12.120 it's you know, a server farm or you know individual 0:19:12.160 --> 0:19:16.600 companies that are set up to kind of run AI applications. 0:19:16.720 --> 0:19:18.920 Is that a play that interests you in any way? 0:19:19.320 --> 0:19:21.760 I know it may sound boring to put money to 0:19:21.760 --> 0:19:24.720 work into utility, but maybe it's not a utility. Maybe 0:19:24.760 --> 0:19:28.239 it's something connected to a form of energy that attracts you. 0:19:29.320 --> 0:19:32.399 Oh. Absolutely, The thing is like energy is going to 0:19:32.440 --> 0:19:35.000 be the energy is the number one resource when we 0:19:35.040 --> 0:19:38.000 think about the play that's going to be in the 0:19:38.119 --> 0:19:42.000 AI and machine learning space, Like these are very high 0:19:42.320 --> 0:19:45.800 energy intensive processes in order to not only just create 0:19:45.800 --> 0:19:49.040 these microchips, but also to run them and operate them. 0:19:49.359 --> 0:19:53.080 So whether you're thinking about crypto mining, that is a 0:19:53.240 --> 0:19:57.320 very energy intensive sector. But the chips, for example, that 0:19:57.440 --> 0:20:00.959 Nvidia creates for like GPU process as saying, those have 0:20:01.920 --> 0:20:05.560 additional cooling factors that allow for them to not process 0:20:05.600 --> 0:20:09.200 as much energy. But with the crypto having that happened 0:20:09.280 --> 0:20:12.680 last month, essentially what happens is that the supply of crypto, 0:20:12.840 --> 0:20:15.520 for example, has now gone down, so that means but 0:20:15.680 --> 0:20:17.920 still continuing with the demand. 0:20:17.560 --> 0:20:18.040 That we have. 0:20:18.560 --> 0:20:22.520 So therefore the logical explanation is that either these crypto 0:20:22.560 --> 0:20:26.399 mining companies need to add more additional computers and processors 0:20:26.400 --> 0:20:29.320 in order to meet that demand, or it's just kind 0:20:29.320 --> 0:20:31.120 of you're just going to resign yourself to the fact 0:20:31.160 --> 0:20:32.760 that maybe you're not going to be able to mine 0:20:32.760 --> 0:20:34.439 as much crypto as you might have been able to 0:20:34.480 --> 0:20:35.000 in the past. 0:20:35.600 --> 0:20:39.280 But let's get to the broader market briefly. People are 0:20:39.320 --> 0:20:41.359 worried about, you know what's out there. The market near 0:20:41.400 --> 0:20:43.439 all time highs would seem to be telling us that 0:20:43.840 --> 0:20:46.960 six to nine months out things will still be okay. 0:20:47.760 --> 0:20:51.639 It's the nervous commentators that are suggesting that stagflation is 0:20:51.680 --> 0:20:54.000 a risk this year. The market seems to be saying, sure, 0:20:54.200 --> 0:20:58.119 anything's possible. Stagflation is not happening anytime soon. Your thoughts 0:20:58.119 --> 0:20:59.720 on that, I. 0:21:00.040 --> 0:21:03.040 Thinks stiflation is happening anytime soon. I think that again, 0:21:03.160 --> 0:21:06.520 labor markets remain pretty strong, and while inflation rates are 0:21:06.560 --> 0:21:09.800 pretty high, but there's no reason to believe that CPI 0:21:09.800 --> 0:21:13.119