Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
Speaker 1: with Paul Sweeney. Join us each day for insight from
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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Cardinal rule
Speaker 1: number one is when you're in an equity business, listen
Speaker 1: to the bond guys. The bond guys never listen to
Speaker 1: the equity guys. But you know, if you're like a
Speaker 1: gene monster, you really pay attention to what the debt
Speaker 1: side looks like as you look at your area. Gene
Speaker 1: Monsters area for decades Biper Jeffrey and now on his
Speaker 1: own gen Monster really looking at technology gene Robert Schiffman
Speaker 1: of Bloomberg Intelligence said, look, Microsoft's a tripaa. Apple's just
Speaker 1: below that. Microsoft could do twenty billion debt offering right
Speaker 1: now and not you know, affect anything at all. Do
Speaker 1: we have any understanding of their free cash flow? And
Speaker 1: Gene one idea, you're on their free cash flow. Apple's
Speaker 1: retired thirty nine percent of their shares in the last decade.
Speaker 1: Do we understand their profit?
Speaker 2: I don't think so, Tom.
Speaker 3: When you think of the free cash hold with Apple,
Speaker 3: we're talking fifty to sixty billion dollars per year.
Speaker 2: That's free cash flow.
Speaker 3: When they talk about their current cash position, call it
Speaker 3: roughly seventy five billion. I mean they've continued to try
Speaker 3: to whittle that down return that to investors. Welcome meta
Speaker 3: to that conversation regarding returning capital. But Apple, is you
Speaker 3: in that it is? I mean, it's it's mind boggling.
Speaker 3: If you look at the past year, revenue has basically
Speaker 3: been down two and a half percent, but they've generated
Speaker 3: called it sixty billion in free cash flow, and I
Speaker 3: think it just speaks to the strength of their margins.
Speaker 1: Paul I put this out last night in preparation for
Speaker 1: Gene Monster that I'm just had it with the sophomoric
Speaker 1: growthiness study of the media, and it's about the profit
Speaker 1: and as Gene mentions, Paul Zuckerberg gets the twenty twenty
Speaker 1: three trophy. The way he shifted Facebook to a profit
Speaker 1: juggernaf is.
Speaker 4: Jaw dropping, it really is, and the stock got rewarded
Speaker 4: for it too, more than doubling here, Hey Gene, So
Speaker 4: last night busy night for you and busy night for
Speaker 4: tech investors. Apple, Amazon, Meta.
Speaker 5: I want to start with.
Speaker 4: Apple here because for me and I think for a
Speaker 4: lot of investors, it's very much about China here, and
Speaker 4: I'm not sure I heard anything from Coopertino last night
Speaker 4: that makes me feel more comfortable about what's happening in China.
Speaker 4: My concern is maybe the consumer's moving away from Western
Speaker 4: products in general and maybe Apple in particular.
Speaker 5: How do you think about China?
Speaker 3: China hit the wall. It was down thirteen percent year
Speaker 3: of year, is done two and a half percent year
Speaker 3: year in this September quarter, so we saw that deceleration.
Speaker 3: The macro has definitely impacted that. If you look at
Speaker 3: broader Apple business, it was up ten percent in Europe,
Speaker 3: fifteen percent in Japan two percent. So if you think
Speaker 3: about what's going on at Apple, it really can be
Speaker 3: zeroed into the weakness in China. China's twenty percent of
Speaker 3: their business. And then the question comes to what does
Speaker 3: China look like going forward, and I think the answer
Speaker 3: is to continue to expect it to be down kind
Speaker 3: of this ten to fifteen percent for the next few quarters.
Speaker 3: There is the question is this just a macro issue
Speaker 3: related to China or tier point, is there just a
Speaker 3: structural shift away from Western products and Apple in particular.
Speaker 3: And what we saw was some conflicting data. We saw
Speaker 3: the China business being down like we talked about, but
Speaker 3: we also saw that Apple in terms of its market share.
Speaker 3: IDC reputable source said that Apple that the iPhone is
Speaker 3: now the best selling smartphone in China for the first
Speaker 3: time in the December quarter. And so I think the
Speaker 3: answer is this is more about the macro. I do
Speaker 3: want to put one other other one just slightly finer
Speaker 3: point on this. There is a dynamic of what's going
Speaker 3: on with the government and their commentary about buying Apple products.
Speaker 2: Now, if you look at the number of government.
Speaker 3: Employees, this basically can create about a three percent headwind
Speaker 3: to China's business. It's not a formal policy to avoid
Speaker 3: Apple products. It's been this informal kind of wink and nod,
Speaker 3: But I think that that probably plays in all this too.
Speaker 2: When you roll it all together.
Speaker 3: I still think China's a big opportunity for Apple. India
Speaker 3: is becoming a bigger opportunity too, and I think that
Speaker 3: I think this storm will pass.
Speaker 4: Yeah, and that's kind of I think the message we
Speaker 4: heard from Tim Cook, I think he's probably taken a little.
Speaker 5: Bit more of a longer view.
Speaker 4: All right, let's switch to Meta. You mentioned that, and
Speaker 4: just what a story here, I mean, and you know,
Speaker 4: Zuckerberg gets a lot of criticism, and he obviously was
Speaker 4: on the hill again recently, but boy did they turn
Speaker 4: this company around in the last eighteen months. It was,
Speaker 4: you know, since its inception was a top line growth story.
Speaker 4: And then he wisely wisely focused on costs and profitability,
Speaker 4: and boy, that's paid off for the company.
Speaker 5: What's your view there'll met.
Speaker 3: Him The cost is' that's nice.
Speaker 2: Absolutely has paid off.
Speaker 3: I think there's a bigger dynamic plane out here which
Speaker 3: is just related to their demand. And they had their
Speaker 3: revenue was up twenty five percent year over year in
Speaker 3: the December quarter. They guided you got to go to
Speaker 3: the high end of their guidance range because they're probably
Speaker 3: going to exceed. That would imply an acceleration to thirty percent.
Speaker 3: Their price per AD was up two percent year over year.
Speaker 3: A year ago, their price per AD was two percent.
Speaker 3: So that's outside of the whole expense control. The AD
Speaker 3: market is better. But there's something The bigger thing going
Speaker 3: on is this is that their products people want. I mean,
Speaker 3: that's the maybe optimistic way to say it. The more
Speaker 3: skeptical way to say it is their addictive deep Water
Speaker 3: does own meta. This is something that I struggle with,
Speaker 3: but we saw it in the numbers in the engagement.
Speaker 3: It's playing through to the revenue. One just other quick
Speaker 3: thought on the engagement number here, they're da used.
Speaker 2: This is a metric.
Speaker 3: They're no longer going to give daily active users. But
Speaker 3: that was two point one billion for Facebook. That was
Speaker 3: up six percent year over year. It's an acceleration over
Speaker 3: the past few quarters. Remarkable testimony to how people say
Speaker 3: they don't want social but they spend all their time.
Speaker 6: Yeah.
Speaker 1: Well, the daily average use of Instagram and the Keen
Speaker 1: household is in calcule. You can't do that number. We
Speaker 1: have this gene monster for this entire half hour commercial
Speaker 1: freees with deep Water Asset Management gene. Here's the real world.
Speaker 1: It's owned by portfolios x up one percent right now,
Speaker 1: and then we're gonna pick on our good friend Will
Speaker 1: dan Off up in Boston. He's been doing this for
Speaker 1: a few years at a shop called Fidelity. It's as
Speaker 1: large as holding. It's grown out where Meta Facebook is
Speaker 1: twelve point x percent of Will Danof's contra fund, but
Speaker 1: he's probably under owned it as well. Just the share
Speaker 1: price today moves Contrafund two percent off the leap in Meta.
Speaker 1: Are these stocks under owned by institutional Wall Street?
Speaker 2: I think Meta is.
Speaker 3: I think there's still some controversy around just what is
Speaker 3: ultimately you know, what does their advertising business look like.
Speaker 3: I think there's concern about regulation related to it. If
Speaker 3: you look at the multiple relative to the other big
Speaker 3: tech companies, it's still trades at a discount, so it's
Speaker 3: going to be I bet the earnings go up. I'm
Speaker 3: more than twenty percent today, the stock up eighteen percent
Speaker 3: pre market.
Speaker 2: I bet earnings go up.
Speaker 3: So I think the multiple probably is actually surprising, and
Speaker 3: to stay in that low twenty range where you look
Speaker 3: at the rest of big tech kind of loosely in
Speaker 3: the low thirty range, and so based on that, I
Speaker 3: don't think this is over owned, and I think that
Speaker 3: there's again there's a room to go. I think this
Speaker 3: should trade in line with the rest of larger tech.
Speaker 1: Okay, so they're three trillion a guy an uber bowl
Speaker 1: like Dana, iives is what Paul Ford four trillion added up?
Speaker 1: Geene monster in someday these four stocks, the Magnificent four whatever, Nvidia,
Speaker 1: I'm not there yet. I know Gene is. I'm not
Speaker 1: there yet, but Geane they're going to have an all
Speaker 1: in value of say fifteen trillion dollars? Are they like
Speaker 1: the Rockefellers standard oil eyed to tarble of one hundred
Speaker 1: and twenty years ago, where there's going to be a
Speaker 1: primal cry there too big? Are we getting there quickly?
Speaker 3: I think we were there three years ago. And I
Speaker 3: think that you know, this is lessons learned from the
Speaker 3: past here just about can things keep going about bubbles?
Speaker 3: There was everything bubble a couple years ago. See what
Speaker 3: happened two thousand. So I'm skeptical. I want to be
Speaker 3: just cautious, like can this keep going? But just the
Speaker 3: case that I think these will continue to get going.
Speaker 3: It is as simple as artificial intelligence. I think that
Speaker 3: this is something that now Apple has stepped into the game.
Speaker 3: That is is much of the rancor that goes on
Speaker 3: Capitol Hill related to large cap tech. I think lawmakers
Speaker 3: understand that these companies having strong domestic companies that are
Speaker 3: building AI. I think they understand the importance of that
Speaker 3: from a national security standpoint, and so I think that
Speaker 3: they'll be always talk of regulation, but I think these
Speaker 3: companies will continue to get bigger.
Speaker 1: Are you watching unc Duke this weekend with Vision Pro?
Speaker 5: Now I'm gonna go old school.
Speaker 1: You're gonna go old school? Yeah?
Speaker 5: I can't, but watch?
Speaker 1: What would you want? I at least help here? What
Speaker 1: would you when I use vision Pro for I?
Speaker 5: I don't know. Well, that's kind of where I want
Speaker 5: to go with the gior Gene. Where are we?
Speaker 4: Where is Mark Zuckerberg these days when you speak to him,
Speaker 4: when you hear his commentary with the metaverse that was
Speaker 4: at best at distraction for this company and at worst
Speaker 4: maybe a real suckhole in terms of a capital investment.
Speaker 5: Where are we with that?
Speaker 3: I hope we're wrapping it up, but I think the
Speaker 3: reality is that they're doubling down. And again mentioned we're
Speaker 3: investors of the meta We wish they would essentially pair
Speaker 3: back what they're doing there.
Speaker 2: The simple reason is.
Speaker 3: They had a billion in revenue first quarter of a
Speaker 3: billion in revenue, and Reality Labs they lost four billion.
Speaker 3: They said that the amount of losses annually are going
Speaker 3: to increase. This is going to be fifteen billion dollar plus.
Speaker 3: This is real numbers, even for these big companies. They're
Speaker 3: spending a lot. What Apple is showing today with Vision
Speaker 3: pro from a technology from a price standpoint, it's seven
Speaker 3: times higher. From a technology point, it's probably thirty x better.
Speaker 3: And I think ultimately is that what Meta wants to
Speaker 3: be spatial computing, the metaverse for the masses is that
Speaker 3: I do believe that that will roll out eventually, so
Speaker 3: but I wish that they just wouldn't spend as much.
Speaker 3: Spend five billion a year, not fifteen billion a year.
Speaker 3: But to answer your question, Paul, where are they? They're doubling,
Speaker 3: tripling down on this, And I kind of see this
Speaker 3: as BlackBerry versus the iPhone to you.
Speaker 1: To Global Wall Street, we start strolling on the seven
Speaker 1: o'clock or a gene monster with his deep water asset
Speaker 1: management here on this huge societal juggernaut. We're all writing
Speaker 1: the technology company. Speaking of technology, Apple car play, We
Speaker 1: are humble. I got goosebumps over like you know the
Speaker 1: January numbers, Apple car play on Apple on Android, Bloomberg
Speaker 1: Business app downloaded free and it works, it's safer, it's better,
Speaker 1: as Apple says. And on YouTube, Ian Bremer, technologist Yep,
Speaker 1: picks up Godfreed Jeff Gottfried's work at Pure Research in
Speaker 1: New Jersey over what do we actually consume? And Facebook's
Speaker 1: right up there, in Instagram's right up there. But paul
Speaker 1: Ian Bremer points out eight and ten Americans are engaged
Speaker 1: with YouTube. We're on YouTube, Bloomberg podcasts, look for it.
Speaker 5: Absolutely, we're there. Hey.
Speaker 4: The third company reporting last night, Amazon Boy another really good.
Speaker 1: I thought they would have liked they were terrible.
Speaker 4: Stocks up about six and a half percent pre market,
Speaker 4: trading up about forty percent over the trailing twelve months.
Speaker 2: Here.
Speaker 5: What did you hear from Amazon last night, Geen, Well.
Speaker 3: This one, just in terms of the stock reaction, is
Speaker 3: a surprise to me. I would if you'd have given
Speaker 3: me the press release beforehand.
Speaker 2: Out has said it's down a few percent.
Speaker 3: So what we heard last night was that AWS, which
Speaker 3: is typically the pressure point that people focus on, was
Speaker 3: up thirteen percent that was compares to twelve and a
Speaker 3: half percent growth in the September quarter and twelve point
Speaker 3: two percent in the June quarter, So we saw I
Speaker 3: would say, a fifty basis points acceleration. Compare that to
Speaker 3: what Google Cloud did. They showed a three hundred and
Speaker 3: twenty basis point acceleration of twenty six percent, an Azure
Speaker 3: one hundred bases point acceleration to thirty percent. Put all
Speaker 3: this together, AWS should and continue to be the focus
Speaker 3: for Amazon investors. And in fact, yes it showed acceleration,
Speaker 3: but it still is losing share notably. And I think
Speaker 3: when you fast forward this six twelve, twenty four months
Speaker 3: from now and think about how these platforms are going
Speaker 3: to be adding more AI capabilities for the people that
Speaker 3: use them, I think that advantage Microsoft and Google. So
Speaker 3: I think it's going to be increasingly competitive. The reason
Speaker 3: why the stock is up is because they beat earnings
Speaker 3: by operating income by fifty percent.
Speaker 2: They crushed it. And this is like the roller coaster
Speaker 2: game of Amazon and earnings.
Speaker 3: You get a boom bust cycle for two or three quarters,
Speaker 3: and then a boom cycle and then a bus cycle.
Speaker 2: And so Paul to put it all together. I think
Speaker 2: Amazon quarter was good, it wasn't great.
Speaker 3: They got people excited about this rufus, this assistant shopper.
Speaker 2: I think it's pretty cool.
Speaker 3: I think it's gonna help engagement, help people find products
Speaker 3: better on Amazon. Good use of AI, but to me
Speaker 3: doesn't justify what's happening with the stock this morning.
Speaker 4: All right, let's step back a little bit, Geene, we
Speaker 4: kind of ran through the big three tech names are
Speaker 4: reported last night. I love to get your view here
Speaker 4: now that we've had a little bit of perspective here
Speaker 4: four five, six quarters where we've had a lot of
Speaker 4: these companies talking about generative AI. I love to get
Speaker 4: your view as kind of how you think it kind
Speaker 4: of really sits as a theme in technology.
Speaker 5: Is it real?
Speaker 1: Is it?
Speaker 5: And how material is it? And how do you play it?
Speaker 1: So?
Speaker 2: Is it real? Yes? How material is it?
Speaker 3: The example My framework is that if you do the
Speaker 3: scale of zero to one hundred, we've talked about this
Speaker 3: zero to one hundred, one hundred being electricity, I would
Speaker 3: put the smartphone at in terms of importance. Electricity is
Speaker 3: one hundred, smartphones twenty five, The Internet's fifty.
Speaker 2: And I think jenering of AI and AI.
Speaker 3: More broadly, ninety, I think it is just a step function,
Speaker 3: and I think we're entering it's going to be a
Speaker 3: three to five year bowl market that's going to culminate
Speaker 3: in a bubble. By definition, almost has to happen. If
Speaker 3: this is in fact, ninety out of one hundred, we
Speaker 3: will see a bubble. So I'm I'm on board that
Speaker 3: these can be transformative. I mean, we saw Tim Cook
Speaker 3: finally utter those two letters yesterday in the prepared remarks,
Speaker 3: and I think they're it's setting Apple up to enter
Speaker 3: as with a foundation model this year. So big picture,
Speaker 3: it's I think it's hard to under under states how
Speaker 3: meaningful of a change this is going to be.
Speaker 1: Gene, I wanted to shift here too long ago and
Speaker 1: far away when we hung on every word you said
Speaker 1: at Piper Jeffrey about should we be in these stocks.
Speaker 1: There's a lot of people listening and watching on YouTube
Speaker 1: and car play who are saying I'm in this or
Speaker 1: I think I'm in it, I four oh one K
Speaker 1: or I'm not in it, and damn I got to
Speaker 1: get into it. But I'm scared, stiff. I want you
Speaker 1: to talk the five year vision of these companies that
Speaker 1: have come so far in the last decade. Do you
Speaker 1: extrapolate out the present trends? Is there a lesser slope
Speaker 1: or dare I say, can they even get convexity and
Speaker 1: accelerate free cash flow revenue growth their position within American society.
Speaker 3: I think when you look at the kind of scope
Speaker 3: of where wealth will be created around AI, I generally
Speaker 3: think of it as in three buckets. I think that
Speaker 3: there's the we'll call it the safe bet, and I
Speaker 3: think that is this megacap tech. And I think it's
Speaker 3: not just own the magnificent seven.
Speaker 2: I think they are.
Speaker 3: I think they're I think the best one surprisingly is Google.
Speaker 3: I think the best opportunity that's underappreciated relative to what's happened.
Speaker 2: With the other ones, I think Google.
Speaker 3: So this is not investment advice, but from our perspective,
Speaker 3: we onwn Google a meta and so continue to do that.
Speaker 3: Continue to think that's a great place to be, even
Speaker 3: with the upside that they've had. But we also believe
Speaker 3: that AI is going to have a profound impact on
Speaker 3: companies that are less well known.
Speaker 2: We have an ETF the ticker's loup.
Speaker 3: It's a frontier tech, which means that it effectively identifies
Speaker 3: what are the transformative themes over the next three to
Speaker 3: five years. AI is a big part of that, but
Speaker 3: I think some of these smaller companies that haven't had
Speaker 3: this tremendous run, I think that's a meaningful opportunity as well.
Speaker 3: And then the last piece is what we call the
Speaker 3: ordained late stage private companies. These are companies like Hugging
Speaker 3: Face and Data Bricks and open AI and Thropic. These
Speaker 3: are companies that are peer play AI companies. And so
Speaker 3: I want to go back and just answer your question specifically, Tom,
Speaker 3: is that yes, I think you should continue to own
Speaker 3: a select companies within the magnificent seven because I think
Speaker 3: they'll continue to benefit. But as far as trying to
Speaker 3: get outperformance relative to the market, I think you need
Speaker 3: to try to search for some of those less well
Speaker 3: known sub hundred billion dollars we call that small now
Speaker 3: sub one hundred billion dollars small tech companies.
Speaker 7: I'm long weighing lambs the weight labs exactly, all right,
Speaker 7: So gene in your fund here, what are some of
Speaker 7: the names that you guys own that maybe maybe people
Speaker 7: don't think about.
Speaker 4: I mean, everybody's you know, kind of feels like they
Speaker 4: have their own call on in the apples of the world,
Speaker 4: of the Amazon's of the world, other parts of the
Speaker 4: tech space that you think are underappreciated out there.
Speaker 3: Yeah, we actually go and look for companies off that
Speaker 3: beaten path. I mean, there's one company, New Bank, Tipker
Speaker 3: and you as in November uniform and New Bank is
Speaker 3: the fastest growing bank in Latin America. They've basically gone
Speaker 3: from nothing to about eight percent share. Like one in
Speaker 3: two people in Brazil use a form of New Bank.
Speaker 3: But they're using artificial intelligence to help better identify get
Speaker 3: the underbank population to be banked. And it's been a
Speaker 3: great use case of that and it works. It works
Speaker 3: for risk management. So New Bank is a company that
Speaker 3: we own Coupong maybe you may not, maybe a new one.
Speaker 3: Think of this as the Amazon of South Korea. Uh,
Speaker 3: and they basically have a pole position there. South Korea
Speaker 3: is doing relatively well. And then the last one Marcato
Speaker 3: Libre yep, and I hope both of you are sitting
Speaker 3: down for this one. Just recently we added we spent
Speaker 3: a lot of time seven years working in China covering
Speaker 3: these being bringing a lot of these companies public. The
Speaker 3: tech companies in China. We've just in the last few
Speaker 3: weeks actually made some investments in some Chinese equities tech equities.
Speaker 1: WHOA, I think we'll leave it there. I gotta go
Speaker 1: call my broker, Gene Munster. Generous of you tow b
Speaker 1: with us through this half hour, We're going to do
Speaker 1: a roundtable here. Mona Mahagen Joints from Edward Jones, senior
Speaker 1: investment strategist in Sarah House from Wells Fargo. We're going
Speaker 1: to try to keep him for two hours. I believe
Speaker 1: Sarah's got to go at some point. Jay Brison at
Speaker 1: a tantrum and says she can only do so much
Speaker 1: time with us, and Mona's with us. We're thrilled of both.
Speaker 1: You really with two different remits, Sarah, I got to
Speaker 1: go to you first because I got with revision a
Speaker 1: four hundred and seventy nine thousand statistic. Do we blame
Speaker 1: this in seasonality? Is this because Amazon and Bloomingdale's hired
Speaker 1: more people? What's the asterisk Wells Fargo sees in this
Speaker 1: buoyant report?
Speaker 8: Sure so, I mean, I think overall, the message is
Speaker 8: this job market that is still incredibly strong despite making
Speaker 8: all the efforts for the bed told the economy. But
Speaker 8: I think you're right in that there probably is some
Speaker 8: flattery from the seasonals of January is the month where
Speaker 8: we tend to get the biggest move and non seasonally
Speaker 8: adjusted number, So if you see any sort of deviation
Speaker 8: from that, that can flatter the January numbers. We saw
Speaker 8: that last January as well. But I think the message
Speaker 8: here is that we're just not seeing the same degree
Speaker 8: of layoffs that we took typically would in January, and
Speaker 8: that's why we're getting such a robust headline number again
Speaker 8: here in January.
Speaker 1: I mean the jobs numbers, I mean people. I understand
Speaker 1: there's a standard here and everybody gets it wrong. I
Speaker 1: get that, but it's months after months after months, we're
Speaker 1: getting nowhere near one fifty or one twenty. David Kelly
Speaker 1: over at JP Morgan Sarah House is looking for some
Speaker 1: form of migration to zero or even a negative statistic.
Speaker 1: Why are we eating so many jobs? Is it lower
Speaker 1: decile staff jobs. Is it a complete underestimation of the
Speaker 1: technology overlay? What's the why for two hundred whatever thousand
Speaker 1: per month?
Speaker 8: Yes, I think one aspect is we're still getting I
Speaker 8: think pretty strong growth in labor supply. We can't compare
Speaker 8: the month and month changes here with the January numbers
Speaker 8: because you you did get some population control adjustments. But
Speaker 8: you know, overall, you you saw the labor force participation
Speaker 8: rate hanging there and it was up about four tenths
Speaker 8: of the percentage point last year. And so that's helping
Speaker 8: helping businesses bill positions meet with still very strong consumer
Speaker 8: and even and even business business demand. So I think
Speaker 8: that that's a big that's a big part of it
Speaker 8: as well. And I think just in some industries like leisure,
Speaker 8: in hospitality, government for example, there's still catchup hiring going
Speaker 8: on from the pandemic as well, which I think, Hey.
Speaker 4: Mona, I'm mona, I'm looking at the tier treasure were
Speaker 4: now up sixteen basis points four point three six percent.
Speaker 4: So from your perspective moment, does that kind of take
Speaker 4: any ambiguity around a March rate cut?
Speaker 5: Does that take that off the table? Now?
Speaker 9: Yeah?
Speaker 6: I think it does. And you know, look, I think
Speaker 6: most market participants we were fifty to fifty ahead of
Speaker 6: the FED meeting in terms of a March rate cut. Anyway,
Speaker 6: I think now people are looking towards May and June
Speaker 6: for the FED to start its rate cutting cycle. We
Speaker 6: do still think that they will pivot from this pause
Speaker 6: to rate cuts later this year, but Jerome Powell told
Speaker 6: us on Wednesday he's willing to take his time. He
Speaker 6: doesn't want to see inflation pick up again. And in fact,
Speaker 6: this job to report this morning may give him a
Speaker 6: bit of pause when he sees that four and a
Speaker 6: half percent wage gain figure, average hourly earnings figure. I'd
Speaker 6: be curious to see what the mix of you know,
Speaker 6: new jobs at it is if we are seeing higher
Speaker 6: paid workers take up more of that mix versus the
Speaker 6: lower skilled, lower paid parts of the market. But certainly
Speaker 6: what we're watching is the strength in this US economy
Speaker 6: and inflation that you know, immaculately has been continuing to
Speaker 6: move lower despite the strength the US economy. We want
Speaker 6: to see that continue in the next few months before
Speaker 6: we start seeing that rate cutting cycle.
Speaker 4: Yeah, just the you know, the highest estimate in the
Speaker 4: Bloomberg survey of seventy seven economists was three hundred thousand,
Speaker 4: so it just kind of blew away all expectations. So Mona,
Speaker 4: given that, how do you position it like you're gonna
Speaker 4: be talking to clients all day today. How are you
Speaker 4: going to position kind of how this data point impacts
Speaker 4: the fed Mona's going to be made by meta by meta'
Speaker 4: So attis is impact your market outlook here? Yeah?
Speaker 6: You know, look, I think it kind of reaffirmed some
Speaker 6: of the things messages we've been giving to our clients
Speaker 6: as well, which is one we do think if twenty
Speaker 6: twenty three was the year of narrow leadership, you know,
Speaker 6: folks piled into megacap tech, the AI trade. They also
Speaker 6: piled into cash and CDs, cash like instruments, we didn't
Speaker 6: think twenty twenty four is a year of broadening in participation.
Speaker 6: So yes, we still like the AI tech trade. We
Speaker 6: think it's in early innings of a long term secular
Speaker 6: bull market, but we want to make sure that we
Speaker 6: have exposure to other parts of the market that may
Speaker 6: play some catch up, especially in an environment where we're
Speaker 6: not seeing any cracks in the economy thus far, we
Speaker 6: could see cyclical parts of the market, even parts of
Speaker 6: value and across the market cast space as well. We
Speaker 6: would say also with yields remaining relatively higher not returning
Speaker 6: anywhere near the zero bound, we think longer term that
Speaker 6: means better balance in your portfolios between growth and value
Speaker 6: and bonds. They continue to play a critical element here
Speaker 6: as well.
Speaker 1: If you're just joining us. Mona Mahadj and Edward Jones,
Speaker 1: senior investment strategists with us for this entire half hour.
Speaker 1: Sarah House with Wells Fargo, their senior economist, as well,
Speaker 1: as we look at a stunning American jobs report. There's
Speaker 1: no other way to put it. I don't know the calculator,
Speaker 1: I don't the HP twelve seas off right now, but
Speaker 1: all you got to know is look at four hundred
Speaker 1: thousand in the last sixty days, over six hundred thousand
Speaker 1: jobs created in America. Robert up in Connecticut, you know
Speaker 1: he's got the bloody Mary going on a Friday. Artraguore
Speaker 1: and Robert, thank you for sending in the nice information
Speaker 1: there in seasonality on retail, on healthcare as well. Sarah,
Speaker 1: I'm gonna ask you a question you don't want to answer,
Speaker 1: but it's rude Friday. You got to be kidding me
Speaker 1: that Jay Powell wasn't brief on this for that FED
Speaker 1: press conference. Now, he may have not have known the
Speaker 1: numbers because you know, we play by rules in America,
Speaker 1: but you don't think someone like Sarah House. The Sarah
Speaker 1: House at the eCos building tapped him on the shoulder
Speaker 1: and said, excuse me, sir, it's going to be a
Speaker 1: ginormous number on Friday. Sarah House. Did he know that?
Speaker 3: They don't think so.
Speaker 8: I can't say for certain, but I think in a
Speaker 8: recent interview with David Rubinstein he indicated that he probably
Speaker 8: doesn't get those numbers until Thursday. And you know, the
Speaker 8: BLS does cut it close in terms of how many
Speaker 8: days they have to prepare this, and so this was
Speaker 8: a Hay report as well. So my implination is I
Speaker 8: don't believe he had these actual numbers.
Speaker 1: Sarah House. Seasonality. I got a lot of emails coming
Speaker 1: in from a season pros retired pros in that come on,
Speaker 1: it's January. Was this retail, healthcare and oddities? When you
Speaker 1: dive into this a say afternoon with Team Bryson, are
Speaker 1: you going to look at it being seasonality? Sarah House.
Speaker 8: Well, again, it comes down to the fact that we
Speaker 8: just did not see as many layoffs as we usually
Speaker 8: would this time of year. Now, there were some soft
Speaker 8: spots in the report, so you had a pretty meager
Speaker 8: gain in leisure and hospitality, But you all saw other
Speaker 8: sectors which actually can see even noticeable declines in January,
Speaker 8: like professional business services that posted a nice increase as well.
Speaker 8: Retail was very strong. So I think that suggests that
Speaker 8: you saw retail companies they didn't hire as much holiday workers,
Speaker 8: but that also means that they don't have to let
Speaker 8: go as many holiday weekers. So that's probably flattering that
Speaker 8: the rough of forty five thousand and eight we saw
Speaker 8: on detail on a seasonally just basis, Hey, mol.
Speaker 4: One, when I see it GDP print for the first
Speaker 4: quarter of three point three percent significantly better than expected,
Speaker 4: I see the labor market significantly stronger than expected. It
Speaker 4: kind of makes me feel like I want to run
Speaker 4: out and buy cyclical stocks if the economy is doing
Speaker 4: better than expected. How do you feel about those types
Speaker 4: of names coming out of the Great Midwest.
Speaker 6: Yeah, you know, Actually it's a great point and something
Speaker 6: that we have been considering. And if you know, I'll
Speaker 6: give you an interesting stat when we look historically in
Speaker 6: an environment where the FED starts cutting rates and we
Speaker 6: are not in a recession, probably perhaps the environment we're
Speaker 6: in now versus the FED starts cutting rates and we
Speaker 6: are in a downturn, a recession. The market outcomes are
Speaker 6: much better, of course in the non recessionary scenario, and
Speaker 6: in fact, the S and P in the twelve months
Speaker 6: after the first rate cut is up about eight to
Speaker 6: ten percent versus flat to slightly down in the recessionary scenario.
Speaker 6: So we do think there is still historical precedent. The
Speaker 6: history may not repeat itself, but there is some precedent
Speaker 6: for better market outcomes, and we think the parts of
Speaker 6: the market that will show those better outcomes are exactly
Speaker 6: the ones that you highlighted. We like the cyclical parts
Speaker 6: of the market, you know, areas like industrials for example, especially
Speaker 6: if global growth starts to place and ketchup in the
Speaker 6: back half of the year, could do well. And we're
Speaker 6: you know, taking any opportunity we can really on with
Speaker 6: volatility to position ourselves for those those rebounds.
Speaker 1: Sarah House, We're gonna let you go now to duties
Speaker 1: at Wells Fargo. Lost to write up on this stunning
Speaker 1: jobs report. Thank you so much to you and team
Speaker 1: Brison for perspective this morning. Mona ma Hodgen continues with
Speaker 1: us Edward Jones here commercial free in this half hour
Speaker 1: of a bang up jobs report, just no other way
Speaker 1: to put it. We welcome all of you on Apple,
Speaker 1: car Play and YouTube again your search Google? Right, you
Speaker 1: use bing?
Speaker 4: Paul's pretty much a Google person.
Speaker 5: Matt Miller is a Bing. Matt Miller's a chat. Yes
Speaker 5: he has made I have to.
Speaker 1: Look at Miller's the text study. Yes, I guess I
Speaker 1: gotta look at Bing. I'm not using Bang, I'm looking
Speaker 1: Safari or whatever. But you go YouTube.
Speaker 5: It's got Bloomberg to help me.
Speaker 1: Are you bings?
Speaker 2: I'm Google?
Speaker 1: Mona, Are you Bing or Google or what?
Speaker 9: Oh?
Speaker 6: Oh Google for sure?
Speaker 1: Okay, Mona, Mahadgen weighing in there. That's the Edward Jones
Speaker 1: perspective here personally. So let me say, good morning YouTube,
Speaker 1: Bloomberg Podcasts, Good morning Matt Miller. Look it up on
Speaker 1: bing if you can, Mona, I need to reset here.
Speaker 1: The tech cash flows are stunning.
Speaker 10: Yeah.
Speaker 1: Now they make up twenty five thirty percent of the
Speaker 1: S and P five hundred. Let's say they go to
Speaker 1: thirty five percent or forty percent where the math doesn't
Speaker 1: work in retirement planning, how do you at Edward Jones
Speaker 1: deal with that?
Speaker 6: Yeah, it's a great call out. Look when you look
Speaker 6: at any US index, but particularly the S and P
Speaker 6: five hundred, which is pretty much a global benchmark. Forty
Speaker 6: five percent of that index does come from growth tech
Speaker 6: type of stocks and sectors, and so even if you
Speaker 6: are just an index investor, you are forty five percent
Speaker 6: invested in technology. And of course, when we think about
Speaker 6: a global stock market, it doesn't look the same in
Speaker 6: Europe or even in Asia. In Europe in particular, much
Speaker 6: more heavily weighted in value parts of the market industrials, manufacturing, financials.
Speaker 6: So when we think about, you know, putting together a
Speaker 6: diversified portfolio, US is still the largest part of that.
Speaker 6: And within that we still see value in and we
Speaker 6: talked about this briefly earlier in the technology space, because
Speaker 6: not only have we seen cash flows increase, we've seen
Speaker 6: earnings increase quite a bit as well, and we do
Speaker 6: think the AI boom and trade continues over the next
Speaker 6: five to ten years. Some of that has been priced in.
Speaker 6: You know, the mag seven was up seventy percent plus
Speaker 6: on average last year, so we are starting to see
Speaker 6: we are starting to see a bit of that priced in.
Speaker 6: We think we do get better opportunities in the weeks
Speaker 6: and months ahead but we don't want to give up
Speaker 6: on that trade. Early on. We do think that not
Speaker 6: only will we see those index players benefit, but over
Speaker 6: time we'll see other parts of the more could benefit
Speaker 6: from the products that come out of it. So the
Speaker 6: manufacturing even financial sector will ultimately benefit from AI as well.
Speaker 6: But you have to think about where all those docks
Speaker 6: are housed.
Speaker 1: Paul, can we have a surveillance moment of silence for
Speaker 1: Neil Dutta at Renmac These job numbers are like Neil
Speaker 1: Dutta numbers where he's saying, look, we're creating jobs, and
Speaker 1: the heart of his thesis is we're creating inflation adjusted
Speaker 1: constructive wages, which goes into consumption. Most of us spend
Speaker 1: our paychecks we do, which goes into GDP nominal revenue,
Speaker 1: and that goes over to Mona Madgen's world.
Speaker 5: It does, and you know, all the Sweeny offspring are employed.
Speaker 5: So that's good.
Speaker 4: That's kind of my personal gauge of employment out there.
Speaker 5: In the world. Mona.
Speaker 4: Let's talk about valuation here a right smack in the
Speaker 4: middle of earnings. We had some really good tech numbers
Speaker 4: last night from some of the big tech names. Broadly speaking,
Speaker 4: you know, if the barecase out there that we speak
Speaker 4: to some people that I'm cautious, they're going to call invaluation.
Speaker 4: They're going to say the stocks have kind of gotten
Speaker 4: ahead of earnings out there. Do you have concern or
Speaker 4: what level of concern do you have about valuation in
Speaker 4: this market?
Speaker 6: Yeah, you know, it's a good call out. And we
Speaker 6: had seen some valuation expansion. If you look at the
Speaker 6: S and P five hundred last year, it went from
Speaker 6: about seventeen times about twenty times by the end of
Speaker 6: the year. Of course, if you look one layer underneath
Speaker 6: the surface, if you look at the S and P
Speaker 6: equal weight valuation, that's still actually pretty reasonable about sixteen times.
Speaker 6: And of course what drove the valuation expansion for the
Speaker 6: most part was that magnificent seven technology trades. So that's
Speaker 6: why we think, you know, when we think about the
Speaker 6: year ahead, yes we'll get earnings growth, but the other
Speaker 6: part of the story is where can we get valuation expansion,
Speaker 6: And we do think more scope for valuation expansion is
Speaker 6: in that equal weight the four ninety three stocks that
Speaker 6: may have some catch up to play.
Speaker 1: So you're talking about PEP expansion, you're talking about you're
Speaker 1: modeling out within Somebody's blended four oh one K and
Speaker 1: equity pe multiple expand this year.
Speaker 6: Yeah, we think certain parts of the market we talked
Speaker 6: about value cyclicals, all of those still are pretty reasonably valued.
Speaker 6: Some of them are even priced to you know, this
Speaker 6: recessionary environment that hasn't showed up yet. And once we
Speaker 6: are confirmed that we continue to get at least decent
Speaker 6: growth over the next three quarters, we could see evaluation expansion. Also,
Speaker 6: keep in mind, when the FED is cutting rates and
Speaker 6: interest rates are overtime moving lower, that's better for the
Speaker 6: valuation story as well.
Speaker 1: Mona, thank you, Mona Mahajen, Edward James, you guys just
Speaker 1: really brilliant here on this allocation between bonds in equities.
Speaker 1: I have anticipated this. And Paul Sweeney, how did we
Speaker 1: get these two guys? Guys? This is like it's spring
Speaker 1: training where pitchers catch your show up and everybody's there
Speaker 1: and then the two studs wander out about eight days later.
Speaker 1: Just take ten seconds here, how did you find Ani
Speaker 1: rog Rana?
Speaker 4: We got very fortunate because when you're building a research department,
Speaker 4: arguably you know you have to lead with technology, just
Speaker 4: like the market leads with technology. You have to have
Speaker 4: this technology. Yeah, you have to have a world class
Speaker 4: technology research team. And we're able to do that in
Speaker 4: the way we did that as we hired man Deep
Speaker 4: Singh and onnarag Rana. They both are senior technology channels
Speaker 4: and they built out a global technology research.
Speaker 5: Team for Bloomberg Intelligence. So we appreciate all their hard work.
Speaker 4: And now these two folks are front and center here
Speaker 4: on a day when you've got some big, big tech
Speaker 4: earnings and I'm gonna start, I'm gonna start with Apple,
Speaker 4: So that means I go to anurag Rana, Honoraga. Did
Speaker 4: we learn anything from Apple? And it's positioned in China?
Speaker 4: Because China is twenty percent of their revenue. It looks
Speaker 4: like it's more competitive, It looks like the economy is
Speaker 4: not as strong as they would like to see it.
Speaker 4: What do we learn, if anything, about Apple and their
Speaker 4: growth opportunities in China?
Speaker 11: You know, what we learned is yes, long term, it
Speaker 11: is a big story, but at least for the next
Speaker 11: tweld through eighteen months, you know, you could say that
Speaker 11: things are going to not be as smooth over there
Speaker 11: as they you know, try to figure out how to
Speaker 11: be more competitive give more rebates, try to work with
Speaker 11: more carriers. So Apple has their work cut out for
Speaker 11: them in China, and we are not expecting a rebound
Speaker 11: anytime soon, all right.
Speaker 4: So that's we'll get back to that because there's a
Speaker 4: lot to peel there on a rug on Apple Man Deep.
Speaker 4: We also had Amazon last night, and we also had
Speaker 4: Google last night. Let's start with Google because it kind
Speaker 4: of goes to that. Oh I'm sorry, I met at Yeah,
Speaker 4: thank you very much.
Speaker 5: I met at Facebook.
Speaker 1: Yeah.
Speaker 5: Whatever.
Speaker 4: So what do we learned from Meta last night? Just
Speaker 4: about the digital advertising environment out there?
Speaker 9: Yeah, I mean it was a beat and race quarter
Speaker 9: and that too, you know, with expectations being high. Clearly
Speaker 9: they delivered, and I think the tailwind was coming from
Speaker 9: multiple fronts. So one, the digital ad pricing environment is
Speaker 9: getting better, so that means, you know, online advertisers are
Speaker 9: spending more on ads and that's helping the pricing. And
Speaker 9: the other thing is the relevance of AI for all
Speaker 9: these ad companies. I mean, Meta is definitely the scale
Speaker 9: player and they have invested heavily in AI and that
Speaker 9: has actually helped their ad infrastructure far more than anyone
Speaker 9: else out there. So that showed up in the numbers,
Speaker 9: and you know that that was the reason for the beat.
Speaker 1: I want to dovetail here, guys and folks. This goes
Speaker 1: to just the sheer margin profitability of all these companies
Speaker 1: that mandate and in and run. All you got to
Speaker 1: know is Apple because they're actually making something. Maybe it's
Speaker 1: a little lower ebit don margin, it's like thirty forty
Speaker 1: percent whatever the number is. And the rest of them
Speaker 1: are minting money with a fifty cents every dollar they
Speaker 1: bring in, they're basically bringing fifty cents down to be
Speaker 1: distributed for cash flow. Michael Momison over at Morgan Stanley
Speaker 1: Guys writes up a twenty five essay here on increasing
Speaker 1: returns about what technology is doing is it gets bigger
Speaker 1: and bigger. Mandy, let me start with you. Do you
Speaker 1: just extrapolate out these growth lines? I mean, is Peter
Speaker 1: or Zaga Lazard would say the glide pass here? Are
Speaker 1: they just smooth extrapolations out three years and five years? Man?
Speaker 9: Deep?
Speaker 1: No?
Speaker 9: I mean look at Meta right last year we're talking about,
Speaker 9: you know, whether this company can grow and you know,
Speaker 9: engagement was a concern and they had negative sales growth,
Speaker 9: you know for three quarters, So clearly it's not smooth.
Speaker 9: And every time we have you know a period of
Speaker 9: thirty to forty percent growth, it follows with you know,
Speaker 9: low growth or no growth, especially on the ad side.
Speaker 9: But what they have shown time and again is you know,
Speaker 9: at the online ad business is secular. There is that
Speaker 9: shit right and I would say we're closer to saturation
Speaker 9: than we were probably three years back. So at the
Speaker 9: scale these companies are, it will be hard for them
Speaker 9: to maintain that twenty percent plus grow interog.
Speaker 1: I think I saw Tim Cook, I think over at
Speaker 1: Fox doing the reality the virtual Vision pro reality in
Speaker 1: front of the Apple store in New York. I stood
Speaker 1: in front of that store a lifetime ago with my
Speaker 1: favorite Lawrence Haverty, who come in tech before you got
Speaker 1: you guys were you know, these guys man deep in
Speaker 1: the anagets slide rules going in undergraduate school when Larry
Speaker 1: Haverty was working it up. And guess what Apple was
Speaker 1: going out of business. Then it's going out of business
Speaker 1: now Anti rak Rna. Do you see the innovation trend
Speaker 1: at Apple that will sustain these glide pass sustain this
Speaker 1: cash flow?
Speaker 11: Yeah, I know, I'm not that concerned about Apple in
Speaker 11: the long run, I think they'll be fine. The problem
Speaker 11: is what happens in the next two to three years,
Speaker 11: and that's where some of the problem is just because
Speaker 11: China is not growing. China is the big growth driver
Speaker 11: in the near term. The vision pro is not going
Speaker 11: to do anything to you know, accelerate their growth rates.
Speaker 11: It's really you know, all the phones that they're selling
Speaker 11: in emerging market and China is the big market. So
Speaker 11: for US I, we're not concerned about Apple in the
Speaker 11: long run, but in the short run, I think it's
Speaker 11: going to be very hard for them to grow, you know,
Speaker 11: anything north of five percent unless they throw that Jenai
Speaker 11: stuff that they you know, talked about on the call.
Speaker 11: If anything cool comes out of that in the next
Speaker 11: six to eight months, then I'm going to be wrong.
Speaker 1: Paul iPhone GPT. It just means you can order take
Speaker 1: out faster and Rod Royn i' man Deep Singh. There's
Speaker 1: Bloomberg Intelligence. We continue with us here commercial free this
Speaker 1: half hour.
Speaker 4: All right, Ana, rag my good friend Laura Martin overt
Speaker 4: need Aman Company. She's hat the piece of research which
Speaker 4: I think is really interesting. Google Meta Amazon. On their
Speaker 4: conference calls, they mentioned either AI or generative AI like
Speaker 4: fifty sixty times each Apple like none at all?
Speaker 5: Here is Apple?
Speaker 4: What are they doing or not doing with AI? Are
Speaker 4: they not kind of getting that buzz?
Speaker 11: I think they were caught, you could say, off the
Speaker 11: guard a couple of years ago when chat GPT came out.
Speaker 11: We've been very stronger. I think they are. They sat
Speaker 11: on the call that they're going to have an event
Speaker 11: sometime later this year. And if they are able to
Speaker 11: release some tools or you know, some cool features in
Speaker 11: the phone that allows them to actually capitalize on some
Speaker 11: of this buzz, then what's going to happen is if
Speaker 11: and if, if the iPhone sixteen has those features embedded
Speaker 11: in them, then you can actually create a new refresh
Speaker 11: cycle that we have been waiting for. Remember we've been
Speaker 11: talking about the extension of the restress cycle for the
Speaker 11: last three to five years. And if if that happens,
Speaker 11: and it's a very very big if, then iPhone sixteen
Speaker 11: can truly you know, put a dentse to my thesis
Speaker 11: of slow growth and we see, you know, a big
Speaker 11: number next year.
Speaker 5: Interesting.
Speaker 4: All right, So Mandy, just going on the AI theme here.
Speaker 4: I know you and the research team at Bloomberg Intelligence
Speaker 4: have done a lot of research on this. You guys
Speaker 4: have a big definitive report out on AI. I guess
Speaker 4: my question is do we have a sensor how much
Speaker 4: of this AI I'm using air quotes for those on
Speaker 4: the radio. Tech spending is incremental or is it just
Speaker 4: putting another name on usual tech spending on hardware and software.
Speaker 9: I mean, based on what we are seeing right now,
Speaker 9: you know, with the semi company, especially the likes of
Speaker 9: Nvidia and amb it sounds like, you know, this spending
Speaker 9: is incremental. And yes, companies are slowing down, they're spending
Speaker 9: on traditional servers, so there is some market share shift
Speaker 9: going on as well. But clearly, you know, I would
Speaker 9: talk about above trend growth for the next two three
Speaker 9: years and that's where our you know, one point three
Speaker 9: trillion number for twenty thirty two comes from. Half of
Speaker 9: that is spending on data centers, hardware, real changing the infrastructure,
Speaker 9: and you know the software part will follow as we
Speaker 9: are seeing with the hyperscalers, Microsoft, Amazon and Google also benefiting,
Speaker 9: so their growth rates should go up as well. But clearly,
Speaker 9: you know there is incremental spending around are.
Speaker 1: When you talk to the people, is it within the
Speaker 1: culture and I'm reading I haven't read the whole book yet,
Speaker 1: I'm actually reading every word of it. Sacha Ndella's one
Speaker 1: volume biography is spectacular about the courage he had coming
Speaker 1: out of southern India, and there's too much cricket talk
Speaker 1: in it. That's the only problem I have. When you
Speaker 1: guys talk to the cultural the Double's operational research people,
Speaker 1: do they believe in the financial profitability of what they're
Speaker 1: living every day? Mandy, the guys like you and anaerog
Speaker 1: Mandeep saying, do they believe in the link over to
Speaker 1: profitability that we're observing right now?
Speaker 9: Yeah, I mean, I think especially with a company like Microsoft,
Speaker 9: you can see that you know, they have priced their
Speaker 9: services in a way where a co pilot they are
Speaker 9: charging an additional twenty dollars subscription. So look, they are
Speaker 9: making a big investment and it is you know, to
Speaker 9: acquire customers to drive that stickiness. But I think it
Speaker 9: will be profitable.
Speaker 1: Okay, at first principles here, let's get right back to basics.
Speaker 1: Lisa Matail is going to be with her daughter this weekend,
Speaker 1: and Lisa wants her daughter to be brilliant. So Lisa's
Speaker 1: going to say to her daughter, Dear, let's sign up
Speaker 1: for co pilot, Mandy. When I sign up for co
Speaker 1: pilot GPT, what a God's name do I get?
Speaker 12: Well?
Speaker 9: So it brings productivity, right, and at the end of
Speaker 9: the day, if we are more productive in our jobs,
Speaker 9: if we can get rid of the mundane things that
Speaker 9: we do in our day to day jobs that the redundant. Think,
Speaker 9: I mean, I think that's what drives productivity and efficiency.
Speaker 9: And we know, I mean, look at how far we
Speaker 9: have come with PCs and Word and Excel. What kind
Speaker 9: of productivity it gives you. So this is like taking
Speaker 9: one step further in terms of what are the redundant
Speaker 9: things that you do in Word or Excel.
Speaker 1: So, Paul, you're going to ramp up You're going to
Speaker 1: ramp up copilot, sure, and it's going to make you
Speaker 1: more efficient in ordering the marginal park role.
Speaker 5: That's right.
Speaker 1: The Jersey Shore this.
Speaker 4: Summery on the Grill and Jersey Shore, an Rod talk
Speaker 4: to us about just kind of your sense of just
Speaker 4: overall tech spending here. I know it's a good question.
Speaker 4: You guys have talked about that question. The rate of
Speaker 4: growth slowing, do you expect a reacceleration here.
Speaker 11: Oh yes, Actually, I've talked about this quite a bit,
Speaker 11: so you know, we did a survey back in November
Speaker 11: December and we really got some really good results out
Speaker 11: of it. We think this year is going to be
Speaker 11: the first year of rebound after two years of hunted spending.
Speaker 11: You know, we've talked about cloud, for example, quite a bit.
Speaker 11: Amazon's cloud commitments were just released this morning. They're up
Speaker 11: forty one percent, so that's a mass of acceleration from
Speaker 11: last quarter over the next twelve months. We do see,
Speaker 11: We do expect, you know, sales growth rates for almost
Speaker 11: all major categories in cloud to pick up, perhaps more
Speaker 11: at a pasta rates more in the second half than
Speaker 11: the perst half. And I think that puts it into
Speaker 11: us into a very good twenty twenty five because if
Speaker 11: you have strong bookings sometime this year, they can translate
Speaker 11: into much faster revenue growth next year.
Speaker 1: I mean, man, if you don't give me any couch time,
Speaker 1: what I do, Folks when I decompress her as I
Speaker 1: go up to our acclaimed food court and I sit
Speaker 1: on the couch. You know, the food court in London
Speaker 1: is better than here. That's saying, you know, and the
Speaker 1: Washington is the best Washington's the best food court. We haven't,
Speaker 1: but I'm up with the food court. I'm putting down
Speaker 1: the cheese. It's and you know, you know, I'm having fun.
Speaker 1: An rog gives me couch time. I never get any
Speaker 1: couch time now. So Mandy, my question to you that
Speaker 1: i'd ask you sitting on a couch is this stuff's
Speaker 1: a large part of our diversified portfolios, index funds or
Speaker 1: active managers that we have. Do we own too much
Speaker 1: meta the moon shot? That is today from where you
Speaker 1: sit in our conservative money, do we own too much tech?
Speaker 9: I mean, look, these companies, the six tech companies in
Speaker 9: the Magnificent seven. They are wonderful businesses. There is no
Speaker 9: doubt about you know, how good they are at scale
Speaker 9: and how they keep growing, you know, year after year,
Speaker 9: and they are very profitable. So clearly you know they
Speaker 9: have an outsized influence in our lives and there is
Speaker 9: a good reason, you know, to be proud of them,
Speaker 9: as you know American companies that have a global presence,
Speaker 9: and that's why you know they will keep delivering. The
Speaker 9: question remains what is the right valuation? And that's where
Speaker 9: you know you look at a company trading at thirty
Speaker 9: thirty five times earnings, and you have to ask yourself
Speaker 9: how much good news is priced in? And yes, it's
Speaker 9: a phenomenal business. It's growing at a great pace. But
Speaker 9: then there is a price that you pay as a shareholder.
Speaker 9: And I think after a while, a lot of the
Speaker 9: growth is pricing and it becomes very crowded. And that's
Speaker 9: what you have to ask.
Speaker 1: I mean, Paul, I know your shopping this weekend. The
Speaker 1: price you pay, You're gonna be over at the Apple
Speaker 1: Store like Tim Cook today And the answer is you
Speaker 1: got to go for the Vision Pro ye. This is
Speaker 1: just a question about.
Speaker 4: It, absolutely, Apple CEO Tim Cook, he opened the flagship
Speaker 4: Fifth Avenue Apple Store today's greeting customers.
Speaker 5: Why it's Vision Pro release day? How about that?
Speaker 4: I'm not sure Vision Pro is ana rog Are you
Speaker 4: going to rush out to the Apple Store in the
Speaker 4: Greater Chicago area and buy your Vision Pro today.
Speaker 11: I'm going to go test it out, but I'm not
Speaker 11: going to buy it. It is too much, too expensive
Speaker 11: for me. But I'm going to go play it ound
Speaker 11: with it. I'm going to ask people what they think
Speaker 11: about it.
Speaker 5: But all right, so what does it cost? Do we
Speaker 5: know the price of the thing.
Speaker 11: Three five hundred.
Speaker 1: Oh, I mean who's.
Speaker 5: Buying this thing? Is it? Is it just the gamers?
Speaker 1: Or Okay, what did you learn about the six hundred apps? Seriously?
Speaker 1: Ani Rog? I mean, Mandy, you know is gonna buy it?
Speaker 1: You're not, Ana Rog? But of the six hundred apps, like,
Speaker 1: what's the app that will make people spend that money?
Speaker 1: Make businesses spend that money?
Speaker 9: See?
Speaker 11: For consumer it's really gaming. I mean that's really where
Speaker 11: it boils out to Disney. You know, you can watch
Speaker 11: a Disney movie. They have really talked about it. But
Speaker 11: I personally think the commercial use is probably far better
Speaker 11: because if you have an architect, if you look at engineering,
Speaker 11: you know, those kinds of things. I think, you know,
Speaker 11: makes a lot of tense, but but but it's not.
Speaker 11: This is not a game changer. You know, you sell
Speaker 11: one million units, you make three million dollars, that's three
Speaker 11: point three point five that's nothing, right, appen, Let's wrap.
Speaker 1: It up, Mandy. If you've got the Vision Pro thing on,
Speaker 1: are you going to synergize here? And are you gonna
Speaker 1: have Microsoft Activision am I I'm going to be playing
Speaker 1: Diablo for on my Apple Vision Pro.
Speaker 9: Well, so I think again, it's it's a cool device.
Speaker 9: My problem with a VR headsets and with Vision Pro
Speaker 9: most likely is going to be how much time can
Speaker 9: I wear it for it? Because these are still bulky like.
Speaker 9: You can use them for entertainment, but I just can't imagine,
Speaker 9: you know, putting the headset for two three hours. So
Speaker 9: it gives you that immersive experience, but I still think,
Speaker 9: you know, it's too heavy for me to use.
Speaker 1: You're on a Bloomberg terminal. Go to Bloomberg Intelligence required
Speaker 1: read and Rana man Deep Singh after this tech juggernaut
Speaker 1: a weakened with our newspapers, Lisa Mattello, Lisa, what do
Speaker 1: you start with?
Speaker 9: All right?
Speaker 12: I remember Royal Cribbing came out with figures yesterday, but
Speaker 12: now they're big news. Is this new ship Icon of
Speaker 12: Disease monstrous? It's a monstrous I know you're not into cruising, Paul,
Speaker 12: I will be soon, okay, sir. So maybe here we
Speaker 12: go three hundred and forty five per person per day, okay,
Speaker 12: But here's the thing. It's this multi level ultimate family townhouse.
Speaker 12: It's going to run you an average of one hundred
Speaker 12: thousand dollars a week.
Speaker 5: Well, I think that you.
Speaker 12: Had of your league two bedrooms more than twenty five
Speaker 12: thousand square feet. That's like bigger than the average apartment
Speaker 12: in most places. It has a lot of balconies, multi slides, lounges,
Speaker 12: hot tubs, game rooms. But here's the point, it's reserved
Speaker 12: for most of twenty twenty four.
Speaker 5: Weird are spending.
Speaker 4: Yep, we're down in Aruba, just a couple weeks to
Speaker 4: go in every day. The cruise ships are just flying
Speaker 4: in there. So the cruising biz is back baby.
Speaker 5: Oh yeah, that's one.
Speaker 1: Of the most important things. Ellen Zenner said today. She said, look,
Speaker 1: it is a bifurcated America.
Speaker 5: Yep. And that's not good. I mean that's it's not good.
Speaker 5: That's not good. We are we read them the middle class.
Speaker 1: Next, Lisa Potato, Yes.
Speaker 12: This one's for you. It's a little dog theme here
Speaker 12: we have going. Okay, so this is from the Times.
Speaker 12: There's a study of about six hundred thousand British dogs, okay,
Speaker 12: from more than one hundred and fifty breeds. It turns
Speaker 12: out small dogs with prominent noses they live longer, oh yeah,
Speaker 12: than the bigger flat faced dog.
Speaker 9: Going.
Speaker 12: So like the French bulldog for example, it has the flat.
Speaker 5: Which is the most popular breath these days.
Speaker 12: Yes, it is, it is, it is. But you know
Speaker 12: the short snouts, they have respiratory problems. They can get
Speaker 12: heat stroke things like that. So that's the problem with
Speaker 12: those dogs.
Speaker 1: Do you know my little one, the vet that I
Speaker 1: go to in New York, she's absolutely lovely. And what's
Speaker 1: great about her it's the horse Man Vetinary school. You
Speaker 1: make the check right out to her kids prep schools. Yes,
Speaker 1: you know. You go in and it's like you think
Speaker 1: you're going to spend two hundred and eighty two dollars
Speaker 1: and it's like nine hundred and fourteen dollars. You just
Speaker 1: write it out to horse Man. I mean, she's just
Speaker 1: the time safe. It just write it out Director horse Man.
Speaker 1: My vetwent apoplectic on this at one point, and she said, yeah,
Speaker 1: there is a bread issue here. And I'm very pleased
Speaker 1: to say that. Bill and kennel fere Cotons, which are
Speaker 1: in their own way a little twisted, but they have
Speaker 1: like the normal nose and that's better. It's like it's like,
Speaker 1: actually a big.
Speaker 12: Deal in dog I did not see today who knew?
Speaker 12: Who knew? And female dogs live longer than male dogs.
Speaker 5: If really know that as well?
Speaker 9: Yeah, make sense.
Speaker 1: I think that's true of other humans. Well, missus Keane
Speaker 1: asked me with one foot in the casket.
Speaker 10: Do you call Ken? Prutt wants to ask why do
Speaker 10: men die before their wives? His answer, because they want to?
Speaker 10: That was just Ken.
Speaker 9: What do you go?
Speaker 1: John Tucker helping his ye it providing congestion in the studio.
Speaker 12: The last from the journal. This is about twenty something
Speaker 12: year olds. They're no longer hanging out like how Matteo
Speaker 12: used to do back in the day.
Speaker 9: You go to the.
Speaker 12: Clubs delayed at night. No, that's not they're in bed
Speaker 12: by nine pm.
Speaker 1: Huge.
Speaker 12: Yeah, it's the the link between sleep and better health.
Speaker 12: They say they believe they're not going out.
Speaker 1: Well, I saw this week the first time Jim Carrey
Speaker 1: was ever on TV. It was a Johnny Carson. Everyone
Speaker 1: should see it on YouTube. Jim Carrey as a child
Speaker 1: and it's all there. Everything he became is there, absolutely
Speaker 1: mesmerizing twenty minutes of YouTube video. Paul in the media business,
Speaker 1: we stayed up to eleven thirty to watch Johnny Carson
Speaker 1: shore every Now. Why did this stop?
Speaker 4: Well, no, that late night viewing. Late night viewing is
Speaker 4: still pretty good. Late night TV is still important. They
Speaker 4: still invest a lot, They still make a lot of
Speaker 4: money in that late late night block there, so it's
Speaker 4: still important for television. But I guess it's not. According
Speaker 4: to the Wall Street Journal, the days of hanging out
Speaker 4: late for people in their twenties is over.
Speaker 5: I'm trying to think about my kids, But.
Speaker 12: Do you think about businesses are changing? Like businesses are
Speaker 12: doing these matinee parties that started like five pm. That's
Speaker 12: what they're starting to say.
Speaker 5: For me, that's my day's happy think do you guys think?
Speaker 1: Seriously? John Tucker jump in here as well. Do you
Speaker 1: guys think because his kids are ill mannered? I mean,
Speaker 1: it's a it's a better picture of what's going on.
Speaker 1: Do you think it's the pandemic? My basic take is
Speaker 1: the ramifications of COVID are with us far more now
Speaker 1: than we're living, you know, day to day with our kids,
Speaker 1: the dogs, everyone.
Speaker 12: What do you think, Lisa, that's a good point. I
Speaker 12: didn't even think of it about it that way.
Speaker 1: We went to bed at nine pm with COVID because
Speaker 1: there's nothing to do. John, what do you think now?
Speaker 10: I was looking at my easy pass receipts because they
Speaker 10: had to pay it this morning. And I'm like, what's
Speaker 10: this one three am on the Garden State Parkway. I'm like,
Speaker 10: that's my daughter and I'm like freaking out, and then
Speaker 10: I realized, oh no, it's me. Now they're no, they're
Speaker 10: not in better early. No, this does not apply to
Speaker 10: my children, not years.
Speaker 5: But they're like going to bet at nine p not
Speaker 5: my son.
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