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Speaker 1: And Video's impact on the epity trade today to the
Speaker 1: details behind and Video's earnings and outlook. That's where we
Speaker 1: want to go. As we noted, the superlatives continue the
Speaker 1: maker at the center of the artificial intelligence boom and
Speaker 1: Video shares topping one thousand dollars for the first time.
Speaker 1: We talked about the market cap a blowout quarter, So
Speaker 1: let's get to it. Back with us is Bloomberg News
Speaker 1: US Semiconductor and Networking reporter Ian King. He's in our
Speaker 1: San Francisco bureau. Ian, you know the superlatives. We're watching
Speaker 1: the stock up above one thousand dollars for the first time,
Speaker 1: soaring in today's session. Walk us through all the number
Speaker 1: that showed Nvidia continues to deliver in your view.
Speaker 3: I mean, obviously, the first place to start is with
Speaker 3: the revenue guidance analysts were looking for doubling year of
Speaker 3: a year in this current quarter. In Video said, yeah,
Speaker 3: we can do that, and we can do a bit more.
Speaker 3: So even though there were lofty expectations, they managed to
Speaker 3: set expectations even higher. The data center business is already
Speaker 3: bigger than Intel an AMD, and it's getting bigger quicker
Speaker 3: than people had projected more than four hundred percent a
Speaker 3: year on year increase in that particular business. So all
Speaker 3: of the fundamental numbers that in Vidia need to show
Speaker 3: we're heading in the right direction, it was able to
Speaker 3: deliver on.
Speaker 4: It's pretty again, incredible to see the stock reaction today.
Speaker 4: Shares hired by more than ten percent as we speak
Speaker 4: right now. Ian was I was a little struck, and
Speaker 4: Carol mentioned this by a couple of the things that
Speaker 4: they also announced the ten to one stock split coming
Speaker 4: next month, and then increasing the dividend. Curious if you
Speaker 4: have any thoughts on either of those things.
Speaker 3: Well, I mean, you know, as you were just discussing
Speaker 3: with Bailey, I believe that the stock split is something
Speaker 3: that's aimed at retail investors, but it's also aimed at
Speaker 3: their internal audience as well. A certain percentage of the
Speaker 3: shares get bought by individuals. You know, they get like
Speaker 3: a discount slash, you know, allowance that they can buy
Speaker 3: at a certain point. So you know they want to
Speaker 3: want to keep their employees happily. Right, you need those engineers,
Speaker 3: you need those that staff. That's that's you know, so
Speaker 3: invested in what you're doing. So that might be part
Speaker 3: of it as well.
Speaker 1: Can I ask you though, because I did scratch my
Speaker 1: head a little bit about it.
Speaker 2: I don't know.
Speaker 1: I was going back and forth with a brother of
Speaker 1: mine who has been in an Nvidia for years, and
Speaker 1: we're going back and.
Speaker 4: Got to get it your brother on.
Speaker 2: The show, I don't know that.
Speaker 1: Yeah, he's pretty smart, just really well read. But about
Speaker 1: the dividend, because I always feel like companies do that
Speaker 1: when maybe growth is slowing or something to kind of
Speaker 1: keep investors happy. Is there something, though, connected with that
Speaker 1: stock split that they raise the dividends so much?
Speaker 3: I mean, for some in conductor companies which are massively
Speaker 3: capital intensive, even when they don't own their own manufacturing,
Speaker 3: that the question is how much are they spending as
Speaker 3: a percentage of their revenue on R and D, on design,
Speaker 3: on making sure that the next product's coming along? And
Speaker 3: you look, you know, Nvidia is one of the highest,
Speaker 3: one of the biggest spenders by any measure in the
Speaker 3: chip industry. So as long as they're doing that, I
Speaker 3: would say that most in Vidia watchers don't care. It's
Speaker 3: just something nice to have. On the other side of.
Speaker 1: Things, well, you talk about the R and D spend
Speaker 1: and it really, you know, certainly seems to be paying
Speaker 1: off for Nvidia. Having said that, talk to us about
Speaker 1: the development cycle, and I bring it up because I
Speaker 1: was listening to Bloomberg Intelligence man Deep Seeing earlier. I
Speaker 1: think it was on surveillance this morning about how for
Speaker 1: Nvidia it's kind of a shorter time like almost every year,
Speaker 1: and that that is going to require companies who want
Speaker 1: to have the latest and greatest from Nvidia and in
Speaker 1: the AI chip world, that they're going to be adjusting
Speaker 1: their CAPEX been to include that every year. So maybe
Speaker 1: you know, different from Moore's law, right that you know,
Speaker 1: the increase in terms of components on a circuit and
Speaker 1: processing ability doubling every year for ten years. So maybe
Speaker 1: something's different. I don't know. Is it is it shorter,
Speaker 1: is it a much more kind of you know, new
Speaker 1: development cycle for Nvidia that's going to keep these numbers growing. Sorry,
Speaker 1: I'm not being very eloquent because you're smarter less than
Speaker 1: I am.
Speaker 3: Not at all. No, you're going to a good point
Speaker 3: here and within It has numerous aspects to it. Basically,
Speaker 3: what Jensen Lang, the CEO said, he said, Look, we
Speaker 3: were bringing new product market for this market roughly sort
Speaker 3: of every eighteen months or so. Now we're going to
Speaker 3: do it every year. We're going to do it every
Speaker 3: year for a number of reasons. He you know, put
Speaker 3: that the salesman routine. Look, we're helping our customers. This
Speaker 3: market is changing rapidly, so we need to bring soft
Speaker 3: and market much much quicker than we were doing. To
Speaker 3: help support is to help bring these new capabilities. Everybody
Speaker 3: wins everything, you know, the pace of innovation increases. Flip
Speaker 3: side of that is, you remember earlier this year we
Speaker 3: were talking about what AMD's doing, what Intel's doing. You know,
Speaker 3: how are they going to get into the market. And
Speaker 3: what Jensen Wang has basically said to them is like
Speaker 3: that moving train that you are trying to catch is
Speaker 3: going even faster.
Speaker 2: Good.
Speaker 3: Look, So that's what's really going on on a competitive
Speaker 3: basis there as well.
Speaker 1: And more's law I meant doubling every two years, So
Speaker 1: forgive me, yeah, so much faster here.
Speaker 4: You know, Ian, I want to to that end of
Speaker 4: this of jumping on that train, I want to talk
Speaker 4: a little bit about margins, because the company said that
Speaker 4: margins for the gross margins will be seventy five point
Speaker 4: seven five percent in the current quarter. As you noted,
Speaker 4: this is more like a software company rather than a
Speaker 4: chip company. And you yesterday talked about Intel being in
Speaker 4: the low sixties at its height, when it really owned
Speaker 4: the server market. What can history tell us about the
Speaker 4: duration and durability of margins like this for a chip company.
Speaker 3: Yeah, I mean right now, their margins are what they
Speaker 3: want them to be because it's just really a case of, well,
Speaker 3: our prices a sky high, were sold out. We can
Speaker 3: essentially charge what we want, so obviously the pricing is
Speaker 3: very good for margins. On the flip side of that,
Speaker 3: as we just discussed, they can spend what they want.
Speaker 3: It's you know, how much do we want to spend
Speaker 3: on R and D, how well do we want to
Speaker 3: reward our employees. So the margins are sky high, but
Speaker 3: they could make them artificially higher. The fact that they're
Speaker 3: spending heavily. The fact that they're able to charge a lot,
Speaker 3: that's something that's going to probably persist. So they're setting
Speaker 3: very high targets, but they could be even higher, So
Speaker 3: you know, as a measure of their health, it's pretty good.
Speaker 4: Do you agree with Jensen's comment that the freight train
Speaker 4: is now moving faster and these companies will have a
Speaker 4: more difficult time, the AMDs and the like will have
Speaker 4: a more difficult time catching up with Nvidia.
Speaker 3: I mean Jensen's racing. I mean that one of the
Speaker 3: things that comes across in pretty much any time he
Speaker 3: says something, he's constantly aware of the tension that exists
Speaker 3: in his business and his market, and he's consciously trying
Speaker 3: to shape post what his company does and his understanding
Speaker 3: of the relationships, where we are in the cycle, where
Speaker 3: we are relative to the competition, what the customers want.
Speaker 3: He's trying to shape his narrative to fit that. He's
Speaker 3: very clever, and he's showing people that he understands what's
Speaker 3: going on and what he has to do to stay ahead,
Speaker 3: and that kind of institutional paranoia, that history of being
Speaker 3: the little guy still very much present in what he's doing.
Speaker 1: All right, thirty seconds left here, So who is most
Speaker 1: likely to catch up to Nvidia? And when.
Speaker 3: I mean for the talk to me this time next year,
Speaker 3: And there might be somebody, but right now it looks
Speaker 3: like everybody's just picking up the scraps.
Speaker 1: Unbelievable and just a fascinating story. Ian, Thank you. I
Speaker 1: know it's been a busy twenty four hours for you,
Speaker 1: so we really appreciate it. Ian King. Are Us Semikin,
Speaker 1: actor and networking reporter at Bloomberg News joining us from
Speaker 1: our San Francisco bureau as we mentioned, and VideA shares
Speaker 1: continuing to trade higher, still up about ten percent in
Speaker 1: today's session, and again you're now looking at a two
Speaker 1: point five almost two point six trillion dollar market cap company,
Speaker 1: so it is in the league of some of the
Speaker 1: largest market cap companies in the world.
Speaker 4: So far this year, Carol, this was after yesterday's block
Speaker 4: yet last year's blockbuster year for the company in video
Speaker 4: shares are hired by one hundred and eleven percent.
Speaker 1: Yeah, I think it's the third best performing group in
Speaker 1: the name in the S and P this year, after
Speaker 1: being number one last year.
Speaker 2: You're listening to the Bloomberg Business Week podcast catch US
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Speaker 5: Well for November presidential election in US, now less than
Speaker 5: six months away, there's a new variable to consider, and
Speaker 5: as far fetched as it may sound, the prospect of
Speaker 5: Donald Trump, should he find himself back in the Oval
Speaker 5: Office and then never leaving, is weighing big time on
Speaker 5: the minds of some voters.
Speaker 4: The story featured in the forthcoming issue of BusinessWeek magazine,
Speaker 4: soon on newstands and now at on Bloomberg dot com
Speaker 4: and at Bloomberg dot com Slash BusinessWeek, also of course
Speaker 4: on the terminal with more on his story, Bloomberg businesswek
Speaker 4: national correspondent Josh Green. Josh the author of The Rebels
Speaker 4: Elizabeth Warren, Bernie Sanders, AOC and The Rise of the
Speaker 4: New Left. Also the author of the bestseller Devil's Bargain
Speaker 4: Steve Bennon, Donald Trump and the Storming of the Presidency.
Speaker 4: Josh joins us from our Washington, DC bureau. Josh, what's
Speaker 4: going on here with the former president's rhetoric? What his
Speaker 4: advisors close to him? Are telling you, and the idea
Speaker 4: of taking him seriously but not literally kind of comes
Speaker 4: to mind when I read this.
Speaker 6: Yeah, well, I've been talking to a Republican and Democratic
Speaker 6: strategist recently who'd mentioned that they were seeing something strange
Speaker 6: in the focus groups and polls they were conducting, and
Speaker 6: that is that a lot of swing voters were worried
Speaker 6: that Trump was going to declare himself president for life
Speaker 6: if he's reelected in November. And as I did some
Speaker 6: reporting on the source of these worries, basically this is
Speaker 6: something that Trump likes to joke about. Of course, there
Speaker 6: was the January sixth riots that gave a lot of
Speaker 6: people pause. But it's a factor that I think isn't
Speaker 6: being paid a lot of attention to. But both Republican
Speaker 6: and Democratic strategists are seeing it and wondering if this
Speaker 6: is going to have an effect on the outcome in November.
Speaker 1: You know, it's interesting and Josh, we don't certainly have
Speaker 1: to tell you, but this idea that former president Donald
Speaker 1: Trump will say something and people be like, well, that's
Speaker 1: Donald Trump, Like you know what I mean, They're kind
Speaker 1: of dismissive. Is there something though different? As he runs
Speaker 1: for a second go at the White House.
Speaker 6: Yeah, I think there are a couple of things. I mean,
Speaker 6: as you mentioned, you know, the Trump people sort of
Speaker 6: laugh this office. This is just Trump being Trump. You know.
Speaker 6: He likes to say outrageous things to get a rise
Speaker 6: out of liberals. He's talked a little bit about will
Speaker 6: should I maybe serve three terms just this past weekend
Speaker 6: an our rally, for instance. But while a lot of
Speaker 6: people write off as just Trump being Trump, this particular
Speaker 6: group of voters seems to be listening to it and
Speaker 6: worrying about it. And as strategists have kind of plumbed
Speaker 6: the reason for this, they've come up with some interesting theories,
Speaker 6: And the best one I heard was that it was
Speaker 6: really what was driving this fear was the Supreme Court's
Speaker 6: decision to overturn Roe versus Wade. A Democratic strategist told
Speaker 6: me that what that did was convince a lot of
Speaker 6: ordinary voters that things they wouldn't have imagined possible, like
Speaker 6: Rovers's way being overturned or Trump abolishing term limit suddenly
Speaker 6: seemed real enough that these voters were worrying about it,
Speaker 6: and it seemed to be pushing at least some of
Speaker 6: them back into Joe Biden's camp.
Speaker 4: Well, you get into the piece that the idea of
Speaker 4: president serving only two terms, whether consecutive or not, hasn't
Speaker 4: been in the Constitution since the days of the Founding
Speaker 4: Fathers by any means. It was ratified in the nineteen
Speaker 4: fifties after FDR served more than two terms. Can you
Speaker 4: talk a little bit about the history of presidents since
Speaker 4: nineteen fifty talking about the potential repealed the twenty second
Speaker 4: Amendment or at least alluding to the idea of serving
Speaker 4: more than two terms.
Speaker 2: Yeah.
Speaker 6: Absolutely, I mean, as I did a kind of a
Speaker 6: deep dive in this piece. What was interesting was almost
Speaker 6: immediately when the twenty second Amend, after the twenty second
Speaker 6: Amendment was passed, popular presidents and their advisors in both
Speaker 6: parties have kind of objected to it. Ronald Reagan said
Speaker 6: in nineteen eighty seven he would like to overturn it.
Speaker 6: Democrats in the House of Representatives twice, once during Bill
Speaker 6: Clinton's presidency once during Barack Obama's tried to push legislation
Speaker 6: overturning it. So it's something that popular presidents sort of
Speaker 6: chafe at. But that being said, that the hurdle to
Speaker 6: actually get it overturned in abolished term limits is almost
Speaker 6: unthinkably difficult. It would require large majorities in both houses
Speaker 6: of Congress, that would require large majorities of state legislatures
Speaker 6: to approve it. So it's not something that's plausibly going
Speaker 6: to happen. And yet still people have learned that Trump
Speaker 6: is a norm breaker. It's something that gives them pause
Speaker 6: and it's weighing on them as they make their decision
Speaker 6: on who to vote for in November.
Speaker 1: Hey, Josh, there are focus groups, and then there are
Speaker 1: focus groups by those who have been doing them for
Speaker 1: some time that maybe you sit up a little bit
Speaker 1: straighter and take note, and is that kind of what's
Speaker 1: going on? Because I am curious. I think it was
Speaker 1: the Democratic individual in your story from David Binder Research,
Speaker 1: who's been doing these focus groups for a long time,
Speaker 1: Like I just do wonder is there something that just
Speaker 1: makes everybody kind of be like, wait a minute, there's
Speaker 1: something different this time around, because you're like, as you said,
Speaker 1: it not the first president to maybe say yeah, I'd
Speaker 1: like another term.
Speaker 6: Yeah, I think that's I think that's exactly what's going on.
Speaker 6: I mean, if you go back to twenty twenty and
Speaker 6: the January sixth, Uprising. It's sort of shaken a lot
Speaker 6: of people and made them realize that, well, maybe things
Speaker 6: aren't as smooth as we expect. The focus group guy
Speaker 6: that you were referring to has sort of said, you know, historically,
Speaker 6: when we conduct these focus groups and we throw out
Speaker 6: these kind of wild scenarios, val push back and say oh,
Speaker 6: that could never happen. But that kind of pushback now,
Speaker 6: he says, has stopped in his focus groups. I was
Speaker 6: able to sit in on a couple of these and
Speaker 6: sort of see this myself, and people are just much
Speaker 6: more willing to believe that crazy things can happen, and
Speaker 6: that maybe one of those crazy things will be Trump
Speaker 6: declaring himself president for life. As implausible as that sounds,
Speaker 6: I think to most voters.
Speaker 4: Well, it was struck by a woman who you spoke
Speaker 4: to who actually said that she would vote for Biden
Speaker 4: even if he is in a coma, despite the fact
Speaker 4: that back in twenty sixteen she voted for former President
Speaker 4: Trump during that election. Talk to me a little bit
Speaker 4: about her thinking, Josh, and how this could move the
Speaker 4: needle with the undecided voters.
Speaker 6: Yeah, Well, the people I was focusing on in this
Speaker 6: piece really were that narrow group of undecided voters who
Speaker 6: are going to decide the election. A lot of committed
Speaker 6: Republicans like it when Trump talks about abolishing term moments.
Speaker 6: A lot of Democrats like to get upset about it,
Speaker 6: but their votes aren't really up for grabs on either side.
Speaker 6: So the focus of these focus groups and the voters
Speaker 6: that I talked to were people who had either been
Speaker 6: former Trump voters former Biden voters, were now undecided. The
Speaker 6: woman you mentioned, Laura McCammon, is a grandmother in Wisconsin
Speaker 6: I talked to. Voted for Trump in twenty sixteen, but
Speaker 6: as she's witnessed January sixth, she's listened to, you know,
Speaker 6: maga media figures like Steve Bannon talk about multiple terms.
Speaker 6: It scared her into deciding that she wouldn't risk another
Speaker 6: vote for Donald Trump. And she told me, as you said,
Speaker 6: she's planning to vote for Biden in November no matter what.
Speaker 1: Hey, you know, while we have you and one thing
Speaker 1: we wanted to ask you, and this was certainly a
Speaker 1: story that we've been talking about this week a lot,
Speaker 1: and this has to do with Donald Trump. A video
Speaker 1: posted to his social media account the report, Yeah, to
Speaker 1: his that referenced a unified Reich as a potential news
Speaker 1: headline if you won a second term. You know, Devil's
Speaker 1: Bargain bestseller, You know, you really got inside Steve Bannon
Speaker 1: and the road to the White House for Donald Trump
Speaker 1: the first go round. How are you thinking about some
Speaker 1: of the terminology that's being used, the rhetoric that's being
Speaker 1: used by Donald Trump.
Speaker 6: Well, this is something that we've seen going all the
Speaker 6: way back to Trump's first run in twenty fifteen and
Speaker 6: twenty sixteen, that kind of winking at the far right,
Speaker 6: either through phrases or memes or videos or what have you.
Speaker 6: I don't know whether this was intentional or not, but
Speaker 6: you know, given Trump's background, given the praise he heaped
Speaker 6: on some of the Charlottesville protesters in twenty seventeen, another
Speaker 6: earlier controversy over anti Semitism, it's something that people in
Speaker 6: the press and people in the electro I think are
Speaker 6: very alert. So something like this pops up in a
Speaker 6: Trump video, you see the media pouncing, you see the
Speaker 6: attention to it, and it's something that the Trump campaign,
Speaker 6: either intentionally or unintentionally, hasn't really managed to fix and
Speaker 6: bottle up. And kind of clean up their campaign. But
Speaker 6: I think we can see based on this it's something
Speaker 6: that we're going to have to keep an eye on
Speaker 6: going forward.
Speaker 1: Right and certainly those undecided voters are keeping an eye
Speaker 1: on too. That maybe explains what you just talked about
Speaker 1: in your story. Hey Bloomberg, Bloomberg Business Week National correspondent
Speaker 1: Josh Green, Josh, thank you so much.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on applecar Play
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Speaker 2: New York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 4: Well, this graduation seasons over the next few weeks are
Speaker 4: months hopefully young people will be going off to their
Speaker 4: first post college jobs. Bloomberg opinion columnist Alison Schreeger covers economics,
Speaker 4: and she writes in one of the most read stories
Speaker 4: on the Bloomberg terminal about an interesting trend that she's noticed,
Speaker 4: at least according to one recent survey, and that's that
Speaker 4: more graduates are looking to job in the public sector.
Speaker 1: They are Alison Schrager a Senior Fellow at the Manhattan
Speaker 1: Institute in addition to being a Bloomberg Opinion columnist. She
Speaker 1: jes us here in our Bloomberg Interactive broker's studio. So
Speaker 1: an important caveat. Some of your best friends work in
Speaker 1: the government.
Speaker 7: Actually I don't have a lot of friends in government,
Speaker 7: but you wrote in the piece. Yeah, but you know,
Speaker 7: there's no shame. I mean, it's a reasonable, it's a
Speaker 7: respectable career path.
Speaker 8: It is.
Speaker 1: We all know people who work in the government. All right,
Speaker 1: tell us what's going on. I have a twenty one
Speaker 1: year old just get one more year in college, but
Speaker 1: I will say that working in the government is certainly
Speaker 1: on her radar.
Speaker 7: Really, yes, well, because I was surprised because the survey,
Speaker 7: you know, did a lot of sort of hype about, ooh,
Speaker 7: government is up and tech is down. And then you
Speaker 7: saw the numbers and it was like up from five
Speaker 7: and a half to seven and a half percent and
Speaker 7: tech is down from twenty three to twenty one. So
Speaker 7: you're like, all right, well, mean, people still prefer tech.
Speaker 7: But what really concerned me was that there was another
Speaker 7: like the listing of what you're looking for in a job,
Speaker 7: and the number one thing by far overwhelming was stability,
Speaker 7: and last was a fast growing company, which is just
Speaker 7: like when you're young. I mean, like if you get
Speaker 7: on a fast grown company path, like this is how
Speaker 7: you get like rich and successful.
Speaker 1: Well, we love how you start the story, like in
Speaker 1: a week where we have been obsessed with Nvidia and
Speaker 1: still are that. Everybody's looking for their Nvidia, right, you
Speaker 1: want to be with that company that's going to be
Speaker 1: the hot new thing. Hopefully get in early, get options,
Speaker 1: and make a lot of money, like that's it.
Speaker 7: Yeah, but no, they want stability.
Speaker 1: I will I will say for my daughter, I don't
Speaker 1: know that that's it. She's gonna hate me that I'm
Speaker 1: talking about her.
Speaker 4: She's not even a senior.
Speaker 1: No, but they start early and there's a lot of pressure,
Speaker 1: but on way to doing something, probably in the private
Speaker 1: sector and possibly in the investment world. But that experience
Speaker 1: is certainly looked at highly.
Speaker 8: I can be. I guess it depends on what you do.
Speaker 7: I mean, I think what struck me about it is
Speaker 7: it's like.
Speaker 8: There's been a downward trend of working in the government.
Speaker 7: So of course, but we've had a lot of new
Speaker 7: policies in the last couple of years that aim to
Speaker 7: grow the government and grown many Facturing was also a
Speaker 7: big growth area in terms of job interest, So I
Speaker 7: mean these are policy priorities, So maybe it reflects that.
Speaker 4: What does it tell you about the idea of stability
Speaker 4: in the way that some graduates might be looking for
Speaker 4: more stability rather than that path to being the next
Speaker 4: next Jets and Wong, Well.
Speaker 7: I mean there is all this evidence, like Genie Twang's
Speaker 7: Generations that has all this evidence that young people are
Speaker 7: more risk averse, So I guess, I mean, I think
Speaker 7: that that would be the concern is that they're going
Speaker 7: to be less dynamic and less risk takers, which you
Speaker 7: know means less growth for the future, which you know,
Speaker 7: we need them to pay for all of our retirements.
Speaker 8: So that's not good.
Speaker 1: I've already worn my daughter.
Speaker 7: But so I said, it could reflect that that like, hey,
Speaker 7: you know, I don't want to be at that fast
Speaker 7: grown company. I just want the stability, and that might
Speaker 7: reflect more risk a version. Also, I mean, this is
Speaker 7: a generation, this is a very tumultuous last couple of years,
Speaker 7: so I mean maybe the stability is just very appealing
Speaker 7: after you know, having their end of high school and
Speaker 7: honestly almost their entire college career.
Speaker 8: Being credibly charel, I.
Speaker 4: Will say, there's also this revolving door between the government
Speaker 4: and the private sector, and yes, it's pretty incredible to see,
Speaker 4: and especially with politicians in the House and Senate. Like
Speaker 4: ex politicians go from making what I think close to
Speaker 4: two hundred thousand dollars a year maybe as a member
Speaker 4: of the House, to like eight hundred thousand dollars a
Speaker 4: year being a consultant for some of the companies or
Speaker 4: industries that they used to actually legislate. And I wonder
Speaker 4: if there's any sort of visibility there.
Speaker 7: Well, you know, it's kind of weird to say, but
Speaker 7: I hope that's it. At least there's some ambition, because
Speaker 7: I think when I think of most people aspiring to
Speaker 7: work at government, especially where most of the government jobs are,
Speaker 7: it's like at the state and local level, Yeah, which
Speaker 7: is you know, more like parks and recreation. Yeah, so
Speaker 7: you know they're working for the SEC.
Speaker 1: Which could be fun.
Speaker 8: Yeah, just kidding, Yeah, it totally could.
Speaker 7: Again, someone needs to make the world work. And when
Speaker 7: I posted the column on Twitter, so many people wrote
Speaker 7: and they're.
Speaker 8: Like, excellent, it's great.
Speaker 7: People of such a great sense of service, which I've
Speaker 7: then felt bad.
Speaker 8: That's not what occurred to me.
Speaker 4: That's that's interesting. Why do you think that didn't occur
Speaker 4: to you?
Speaker 7: Because I've never worked in the government, actually not the
Speaker 7: US government, But I mean I always thought of it
Speaker 7: as being sort of like boring and stay safe, and
Speaker 7: I always want to like do something, you know, a
Speaker 7: little bit. But I mean that might be my bias.
Speaker 7: Maybe I also don't have a good sense of service.
Speaker 1: I don't know that that is super interesting. And I
Speaker 1: do think that maybe there are like we've gone through
Speaker 1: some generations where it's like big government, what do they do?
Speaker 8: It's those people there.
Speaker 1: Forever and you know, you have to dust them off
Speaker 1: kind of thing. Forgive me not my view what people say,
Speaker 1: but I do like I am encouraged when I hear
Speaker 1: a younger individuals say I want to be part of government,
Speaker 1: like I want to help. I want to help, you know,
Speaker 1: create policy. I want to do that. And so I
Speaker 1: think that's kind of interesting.
Speaker 7: You see, like a lot of these jobs are like
Speaker 7: the stay and local level. They're not glamorous, but they
Speaker 7: really are important and you know, we all need them
Speaker 7: to make the world go.
Speaker 1: Round exactly one line I love in your column. What
Speaker 1: explains this shift? Perhaps they just feel grateful to be
Speaker 1: working because like this idea, and I've heard this from
Speaker 1: you know, very graduates, like it's tough the job market
Speaker 1: out there, which is amazing because we talk about it
Speaker 1: being tight and that there are jobs out there, but
Speaker 1: that many are finding it tricky.
Speaker 7: I think I want to come about this a couple
Speaker 7: of weeks, or maybe it was last week that you know.
Speaker 8: I think we often confuse.
Speaker 7: Forget about the fact that we talk about generational strife.
Speaker 7: Yea that like your first job, getting that first job
Speaker 7: and getting that good first job and getting a foothold
Speaker 7: in your career is always hard, and it's hard for
Speaker 7: every generation.
Speaker 8: It was hard for us.
Speaker 1: Took me a year and a half to finally get
Speaker 1: something and not settle, to be quite honest.
Speaker 7: Yeah, and we get into these generational ships. But I
Speaker 7: think it just doesn't change. It's just it's hard to
Speaker 7: become an adult and it's hard to make that transition
Speaker 7: into the like having a career and feeling stable in
Speaker 7: your career.
Speaker 8: And it's never going to be easy for anyone because
Speaker 8: we don't want to be adults, Tip and I we're
Speaker 8: talking about.
Speaker 7: This generation does though apparently like they're not looking to
Speaker 7: be like poets somewhere, they want the government job.
Speaker 4: Yeah, at the end of the day, it's just one survey.
Speaker 4: Do we have to think about that a lot?
Speaker 7: Well, you know, I would, that's you know, and it's
Speaker 7: a small survey. It's only like twenty three hundred people.
Speaker 7: I think the reason why I felt like it was
Speaker 7: worth writing about though, is it does seem in line
Speaker 7: with other surveys I've seen that put such a high
Speaker 7: premium on stability.
Speaker 8: Yeah, such an aversion to risk.
Speaker 7: So it's consistent with that, because yeah, normally you wouldn't
Speaker 7: be like, okay, five survey of twenty five hundred people
Speaker 7: like two percent more when working government, big deal. But
Speaker 7: I do it does seem consistent with other things. And
Speaker 7: I was struck by they had an interesting chart where
Speaker 7: they did the correlation of where job opportunities are and
Speaker 7: it was a very sort of perfect correlation with you know,
Speaker 7: people feeling like disenchanted with finance and tech and more
Speaker 7: with government and manufacturing.
Speaker 1: I will say that, you know, having covered a lot
Speaker 1: of different business cycles, that I do feel like companies
Speaker 1: are very very quick that if there's some pressure something,
Speaker 1: they'll cut jobs, they'll cut costs because that's what certainly
Speaker 1: they're publicly held, that's what Wall Street and investors want.
Speaker 1: So you know that can be pretty uncomfortable to be around.
Speaker 7: Yeah, although we do think of government is more stable.
Speaker 7: But I mean, especially if you're working at the state
Speaker 7: and local level, I mean a stall finances, you're not
Speaker 7: good that actually you might be better.
Speaker 4: Off in the video or maybe if you're in a
Speaker 4: part of a cabinet thousand.
Speaker 8: Sorry sorry to throw water on your safety.
Speaker 4: The presidential administration.
Speaker 7: You never know what's going to happen, remember, really really
Speaker 7: fun column.
Speaker 1: Something to think about though, And like I said, just
Speaker 1: talking with my daughter and some of her friends, like
Speaker 1: it's interesting that they are looking at this and kind
Speaker 1: of in it. They'll be grad school fortunately, Oh discuss
Speaker 1: Allison Schrager, Senior Fellow at the Manhattan Institute and Bloomberg
Speaker 1: Opinion Columns. Check out more.
Speaker 2: I'd be go mac journal.
Speaker 5: How about you let me drive?
Speaker 8: No, no, no, no, who's going alright?
Speaker 6: Please?
Speaker 2: I'll gravelt.
Speaker 1: I want to try.
Speaker 7: It's a good question.
Speaker 2: This is the drive to the clothes ung for me think. Well,
Speaker 2: on Bloomberg Radio.
Speaker 1: All right, everybody, we're driving to the clothes. We're talking
Speaker 1: with Bill Maloney.
Speaker 4: Because because he's a legend.
Speaker 1: It's yeah, he's a legend, and it's also just kind
Speaker 1: of an interesting market and it's just you know, here,
Speaker 1: you think, and Vidi's going to come out of the gate,
Speaker 1: and it is doing. It is rallying in a big way,
Speaker 1: no doubt about it. But you're not seeing it translate
Speaker 1: across And even though we did see some enthusiasm out
Speaker 1: of the gate earlier, we were just talking about the
Speaker 1: hot manufacturing data. We talked about that with Stuart Paul earlier,
Speaker 1: and it just is enough to push up yields hired
Speaker 1: and it makes everybody kind of rethink, all right, you know,
Speaker 1: where's our environment right now? Hen tick, he says, he's
Speaker 1: like just focusing.
Speaker 4: SQUA on the Bloomberg terminal s qua. Yeah, that's how
Speaker 4: you get to audio squak and you can hear Bill
Speaker 4: Maloney all day.
Speaker 1: Worth listening to, all right. Also worth listening to is
Speaker 1: Lauren san Felipo. She's senior investment strategist from Maryland Bank
Speaker 1: of America's private bank. Joins US Bank of America Private Bank,
Speaker 1: I should say she is joining us from New York City, Lauren,
Speaker 1: Good to have you here with us. I'm always interested
Speaker 1: because you guys have wealthy clients, those who deal with
Speaker 1: you in the private bank. What do they want to
Speaker 1: know about this environment?
Speaker 9: Well, for sure, they want to be opportunistic here up
Speaker 9: ahead of the election. They're watching a market that just
Speaker 9: seems to be straight up into the right. And you know,
Speaker 9: I'd say what we're telling them on a sector level
Speaker 9: at least, is to buy energy here. We think it's
Speaker 9: a great place to put money to work. We're looking
Speaker 9: at some good balance sheets for energy valuation still attractive.
Speaker 9: You know, there's still that energy transition that's in front
Speaker 9: of us. So you know, we try to be opportunistic
Speaker 9: with our clients.
Speaker 4: Why is energy attractive?
Speaker 2: Few?
Speaker 9: So, as I said, they have those Fortress balance sheets.
Speaker 9: You know, I think another way to think about it though,
Speaker 9: some of these long arc stories, and I think this
Speaker 9: market likes narratives. We think about hard assets, hard power,
Speaker 9: and hard hats. We like hard assets that commodities tilts
Speaker 9: just as an inflation head, geopolitical risk kedge, hard power.
Speaker 9: We think about the fact that security the world we're
Speaker 9: living in, right, cybersecurity that's also included under hard power
Speaker 9: and then hard hats. We have these massive legislative packages
Speaker 9: out there are they're being awarded now to companies, and
Speaker 9: you know, the spending stickets are clearly open.
Speaker 1: So narratives I like it, And you said kind of
Speaker 1: like hard assets. It sounds like, what's interesting is AI
Speaker 1: in a day when we're focused on Nvidia, which is
Speaker 1: doing very well compared to the rest of the market,
Speaker 1: soaring in today's session, what's the AI narrative and AI
Speaker 1: investment play that you think makes the most sense? Is
Speaker 1: it the hard asset play if you will, like the
Speaker 1: power centers needed to power the data centers. Pull that
Speaker 1: line through for us, if you.
Speaker 9: Would, Carol, Yeah, I agree. This is sort of a
Speaker 9: both story in the sense it's software and hardware. So AI.
Speaker 9: We still believe AI has a place in moor folios
Speaker 9: core holdings, right. I don't know if you buy it
Speaker 9: at this level today. Valuations have obviously run up, but
Speaker 9: you know, I think AI's impacts will be measured in years.
Speaker 9: It's not like a quarter to quarter type play. We're
Speaker 9: seeing though. Some real profitability comes through though on this
Speaker 9: whole early innings of this AI revolution. So it's a
Speaker 9: hardware and software play for sure, and data center is
Speaker 9: certainly part of that story. Power electricity, GPUs, the whole,
Speaker 9: the whole sort of ecosystem.
Speaker 4: Which part of the ecosystem are you most bullish on.
Speaker 9: Right now? I mean utilities. It's it's kind of like
Speaker 9: the underdog story, right I mean, I think it's the
Speaker 9: tertiary sort of the fact that utilities are defensive. So
Speaker 9: he sort of saw utilities work really well last month
Speaker 9: April when we had that pullback in the market overall,
Speaker 9: But it's that power producer. It's the setup is right there.
Speaker 9: I mean, we need more electricity devoted to those GPUs,
Speaker 9: the data centers. Then you start thinking about cooling equipment,
Speaker 9: and you know, there's just a lot of tentacles to
Speaker 9: the story.
Speaker 1: Interesting, and I'm looking at utility is it's your third
Speaker 1: best major industry group out of eleven in the S
Speaker 1: and P five hundred for the year, up about eleven percent.
Speaker 1: Above it though infotech, which is up seventeen percent, communication
Speaker 1: services up almost twenty percent here, So investors, we know
Speaker 1: kind of what's been some of the trends here. I
Speaker 1: don't know, how do you look at this market more
Speaker 1: broadly in terms of I don't know, does it need
Speaker 1: a breather? Are you thinking about rates on a regular
Speaker 1: basis and the implications of that. It just kind of
Speaker 1: feels like day to day a bit manic in terms
Speaker 1: of what we think might happen next manic.
Speaker 9: It's probably a good way to put it, I'd say, though.
Speaker 9: There are plenty of reasons though, to still be positive
Speaker 9: on the market without getting tumnic about it. I mean,
Speaker 9: consumers are still spending, right, Businesses are still investing. There's
Speaker 9: a lot of capex. I mean, I think that's one
Speaker 9: great underlying thing we learned from earning season this quarter. Right,
Speaker 9: Businesses are certainly so investing, capics putting up big numbers
Speaker 9: buy backs. I mean we even Atlanta fed GDP at
Speaker 9: an estimate of three point six percent, so and we're
Speaker 9: more than halfway through, right, I mean, we're closing in
Speaker 9: here on then to met here. So a lot to
Speaker 9: still be positive. I mean, try not to be too
Speaker 9: manic about it, but there's a lot out there we
Speaker 9: pullish on.
Speaker 4: What out there concerns you though, Yeah.
Speaker 9: So inflation sticky, I mean isn't that the obvious answer.
Speaker 9: It's going to be the predominant focus now for once
Speaker 9: we close in on the end of earning season, and
Speaker 9: then the focus for markets really will shift back to
Speaker 9: that macro data, So inflation for sure. You know, I
Speaker 9: think another risk, volatility is basically absent. I think volatility
Speaker 9: is already already on vacation right now. The VIX is
Speaker 9: super subdued. But you know, geopolitical flare ups, let's not
Speaker 9: completely rule it out right. I mean, I know we
Speaker 9: temporarily see some price wings following some of those layer ups.
Speaker 9: We've seen that a lot this year. But you know,
Speaker 9: I think there's always that sneaky potential for geopolitics to matter.
Speaker 1: Hey, Lauren, earlier we were talking about a story that's
Speaker 1: among the most read and about kind of private credits
Speaker 1: problem that they've got a lot of money to work,
Speaker 1: to put to work, and so they're have to do
Speaker 1: some interesting deals maybe you know, take down the rates
Speaker 1: in terms of when banks need to when companies need
Speaker 1: to do a deal with them, they're getting lower rates,
Speaker 1: which you know, obviously you think about in terms of
Speaker 1: returns for investors. Having said that, you are part of
Speaker 1: the b of a private bank. How many of your
Speaker 1: clients are accessing private credit, are interested in doing private credit?
Speaker 1: That the private medit markets are what they're really interested
Speaker 1: in today.
Speaker 9: A lot of focus actually has been devoted to this
Speaker 9: private credit sleeve, I'll say, And you know, it speaks
Speaker 9: a lot to clients here about this liquidity environment, right,
Speaker 9: and so immediately that's sort of like the intriguing factor.
Speaker 9: So private credit. Yeah, we are gonna have to do
Speaker 9: more in this space sort of through your end. And
Speaker 9: we're up against an election, so that's another consideration.
Speaker 1: But I mean your private bank clients increasingly, you guys
Speaker 1: putting investments for them into private credit.
Speaker 9: Yes, And I think that's an industry change sort of
Speaker 9: this year, right. I do think that we're sort of
Speaker 9: adding towards that. Yeah, this is the year.
Speaker 1: All right, Gonna leave it there, Hey, Lauren, thank you
Speaker 1: so much. Lauren san Felipe. She's senior investment strategist for
Speaker 1: Merrill and Bank, a private a Bank of America private
Speaker 1: bank joining us here in New York City.
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