WEBVTT - Bloomberg Surveillance: Tech in Focus and Jobs Report 0:00:05.040 --> 0:00:08.639 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:08.680 --> 0:00:12.040 with Paul Sweeney. Join us each day for insight from 0:00:12.039 --> 0:00:16.240 the best in economics, finance, investment, and international relations. You 0:00:16.239 --> 0:00:19.599 can also watch the show live on YouTube. Visit the 0:00:19.600 --> 0:00:24.360 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:24.360 --> 0:00:27.400 mornings from seven to ten am Eastern from our global 0:00:27.440 --> 0:00:32.080 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:32.440 --> 0:00:36.000 or anywhere else you listen, and always on Bloomberg Radio, 0:00:36.200 --> 0:00:40.480 the Bloomberg Terminal, and the Bloomberg Business App. Cardinal rule 0:00:40.560 --> 0:00:43.520 number one is when you're in an equity business, listen 0:00:43.560 --> 0:00:46.280 to the bond guys. The bond guys never listen to 0:00:46.360 --> 0:00:48.519 the equity guys. But you know, if you're like a 0:00:48.560 --> 0:00:51.160 gene monster, you really pay attention to what the debt 0:00:51.280 --> 0:00:54.560 side looks like as you look at your area. Gene 0:00:54.560 --> 0:00:59.440 Monsters area for decades Biper Jeffrey and now on his 0:00:59.480 --> 0:01:05.080 own gen Monster really looking at technology gene Robert Schiffman 0:01:05.760 --> 0:01:11.319 of Bloomberg Intelligence said, look, Microsoft's a tripaa. Apple's just 0:01:11.440 --> 0:01:15.640 below that. Microsoft could do twenty billion debt offering right 0:01:15.680 --> 0:01:19.560 now and not you know, affect anything at all. Do 0:01:19.640 --> 0:01:22.760 we have any understanding of their free cash flow? And 0:01:22.840 --> 0:01:26.399 Gene one idea, you're on their free cash flow. Apple's 0:01:26.480 --> 0:01:30.839 retired thirty nine percent of their shares in the last decade. 0:01:31.160 --> 0:01:32.960 Do we understand their profit? 0:01:35.120 --> 0:01:36.160 I don't think so, Tom. 0:01:36.319 --> 0:01:38.280 When you think of the free cash hold with Apple, 0:01:38.720 --> 0:01:43.000 we're talking fifty to sixty billion dollars per year. 0:01:43.160 --> 0:01:44.240 That's free cash flow. 0:01:44.640 --> 0:01:47.600 When they talk about their current cash position, call it 0:01:47.800 --> 0:01:51.040 roughly seventy five billion. I mean they've continued to try 0:01:51.040 --> 0:01:54.960 to whittle that down return that to investors. Welcome meta 0:01:55.040 --> 0:01:59.920 to that conversation regarding returning capital. But Apple, is you 0:02:00.520 --> 0:02:03.960 in that it is? I mean, it's it's mind boggling. 0:02:04.200 --> 0:02:07.000 If you look at the past year, revenue has basically 0:02:07.080 --> 0:02:09.280 been down two and a half percent, but they've generated 0:02:09.360 --> 0:02:11.840 called it sixty billion in free cash flow, and I 0:02:11.840 --> 0:02:14.840 think it just speaks to the strength of their margins. 0:02:14.960 --> 0:02:17.080 Paul I put this out last night in preparation for 0:02:17.160 --> 0:02:21.160 Gene Monster that I'm just had it with the sophomoric 0:02:21.480 --> 0:02:26.000 growthiness study of the media, and it's about the profit 0:02:26.120 --> 0:02:31.240 and as Gene mentions, Paul Zuckerberg gets the twenty twenty 0:02:31.280 --> 0:02:36.280 three trophy. The way he shifted Facebook to a profit 0:02:36.560 --> 0:02:37.520 juggernaf is. 0:02:37.520 --> 0:02:40.080 Jaw dropping, it really is, and the stock got rewarded 0:02:40.080 --> 0:02:42.160 for it too, more than doubling here, Hey Gene, So 0:02:42.360 --> 0:02:44.320 last night busy night for you and busy night for 0:02:44.360 --> 0:02:47.080 tech investors. Apple, Amazon, Meta. 0:02:47.160 --> 0:02:48.359 I want to start with. 0:02:48.440 --> 0:02:51.240 Apple here because for me and I think for a 0:02:51.240 --> 0:02:54.160 lot of investors, it's very much about China here, and 0:02:54.280 --> 0:02:57.680 I'm not sure I heard anything from Coopertino last night 0:02:57.720 --> 0:03:01.320 that makes me feel more comfortable about what's happening in China. 0:03:01.360 --> 0:03:04.600 My concern is maybe the consumer's moving away from Western 0:03:04.600 --> 0:03:07.080 products in general and maybe Apple in particular. 0:03:07.080 --> 0:03:09.720 How do you think about China? 0:03:09.919 --> 0:03:12.280 China hit the wall. It was down thirteen percent year 0:03:12.320 --> 0:03:14.160 of year, is done two and a half percent year 0:03:14.280 --> 0:03:17.120 year in this September quarter, so we saw that deceleration. 0:03:18.320 --> 0:03:20.680 The macro has definitely impacted that. If you look at 0:03:20.760 --> 0:03:23.880 broader Apple business, it was up ten percent in Europe, 0:03:23.880 --> 0:03:26.960 fifteen percent in Japan two percent. So if you think 0:03:27.000 --> 0:03:29.560 about what's going on at Apple, it really can be 0:03:29.720 --> 0:03:33.440 zeroed into the weakness in China. China's twenty percent of 0:03:33.480 --> 0:03:36.640 their business. And then the question comes to what does 0:03:36.720 --> 0:03:39.360 China look like going forward, and I think the answer 0:03:39.480 --> 0:03:41.880 is to continue to expect it to be down kind 0:03:41.880 --> 0:03:45.760 of this ten to fifteen percent for the next few quarters. 0:03:46.080 --> 0:03:48.960 There is the question is this just a macro issue 0:03:48.960 --> 0:03:52.360 related to China or tier point, is there just a 0:03:52.480 --> 0:03:56.000 structural shift away from Western products and Apple in particular. 0:03:56.680 --> 0:03:59.839 And what we saw was some conflicting data. We saw 0:04:00.160 --> 0:04:02.720 the China business being down like we talked about, but 0:04:02.840 --> 0:04:06.160 we also saw that Apple in terms of its market share. 0:04:06.240 --> 0:04:10.840 IDC reputable source said that Apple that the iPhone is 0:04:10.880 --> 0:04:13.680 now the best selling smartphone in China for the first 0:04:13.680 --> 0:04:17.120 time in the December quarter. And so I think the 0:04:17.200 --> 0:04:20.480 answer is this is more about the macro. I do 0:04:20.520 --> 0:04:23.880 want to put one other other one just slightly finer 0:04:23.920 --> 0:04:26.760 point on this. There is a dynamic of what's going 0:04:26.800 --> 0:04:30.240 on with the government and their commentary about buying Apple products. 0:04:30.560 --> 0:04:32.480 Now, if you look at the number of government. 0:04:32.120 --> 0:04:36.680 Employees, this basically can create about a three percent headwind 0:04:36.920 --> 0:04:39.520 to China's business. It's not a formal policy to avoid 0:04:39.560 --> 0:04:43.200 Apple products. It's been this informal kind of wink and nod, 0:04:43.480 --> 0:04:45.640 But I think that that probably plays in all this too. 0:04:46.080 --> 0:04:47.680 When you roll it all together. 0:04:47.800 --> 0:04:50.400 I still think China's a big opportunity for Apple. India 0:04:50.440 --> 0:04:52.560 is becoming a bigger opportunity too, and I think that 0:04:53.320 --> 0:04:55.760 I think this storm will pass. 0:04:56.160 --> 0:04:57.960 Yeah, and that's kind of I think the message we 0:04:58.000 --> 0:05:01.120 heard from Tim Cook, I think he's probably taken a little. 0:05:00.960 --> 0:05:02.200 Bit more of a longer view. 0:05:02.640 --> 0:05:05.920 All right, let's switch to Meta. You mentioned that, and 0:05:06.240 --> 0:05:09.560 just what a story here, I mean, and you know, 0:05:09.839 --> 0:05:12.920 Zuckerberg gets a lot of criticism, and he obviously was 0:05:12.960 --> 0:05:16.320 on the hill again recently, but boy did they turn 0:05:16.400 --> 0:05:19.960 this company around in the last eighteen months. It was, 0:05:20.040 --> 0:05:22.520 you know, since its inception was a top line growth story. 0:05:23.360 --> 0:05:28.560 And then he wisely wisely focused on costs and profitability, 0:05:28.960 --> 0:05:30.520 and boy, that's paid off for the company. 0:05:30.640 --> 0:05:31.840 What's your view there'll met. 0:05:31.800 --> 0:05:35.640 Him The cost is' that's nice. 0:05:36.080 --> 0:05:37.440 Absolutely has paid off. 0:05:37.480 --> 0:05:41.080 I think there's a bigger dynamic plane out here which 0:05:41.120 --> 0:05:44.359 is just related to their demand. And they had their 0:05:44.400 --> 0:05:46.359 revenue was up twenty five percent year over year in 0:05:46.360 --> 0:05:48.600 the December quarter. They guided you got to go to 0:05:48.600 --> 0:05:50.520 the high end of their guidance range because they're probably 0:05:50.520 --> 0:05:54.080 going to exceed. That would imply an acceleration to thirty percent. 0:05:54.680 --> 0:05:57.640 Their price per AD was up two percent year over year. 0:05:57.720 --> 0:06:01.080 A year ago, their price per AD was two percent. 0:06:01.160 --> 0:06:04.120 So that's outside of the whole expense control. The AD 0:06:04.120 --> 0:06:06.839 market is better. But there's something The bigger thing going 0:06:06.839 --> 0:06:10.440 on is this is that their products people want. I mean, 0:06:10.440 --> 0:06:13.120 that's the maybe optimistic way to say it. The more 0:06:13.279 --> 0:06:16.800 skeptical way to say it is their addictive deep Water 0:06:16.920 --> 0:06:19.240 does own meta. This is something that I struggle with, 0:06:19.760 --> 0:06:23.080 but we saw it in the numbers in the engagement. 0:06:23.279 --> 0:06:26.480 It's playing through to the revenue. One just other quick 0:06:26.520 --> 0:06:29.760 thought on the engagement number here, they're da used. 0:06:29.800 --> 0:06:30.479 This is a metric. 0:06:30.520 --> 0:06:32.840 They're no longer going to give daily active users. But 0:06:32.880 --> 0:06:36.360 that was two point one billion for Facebook. That was 0:06:36.440 --> 0:06:39.880 up six percent year over year. It's an acceleration over 0:06:39.920 --> 0:06:43.960 the past few quarters. Remarkable testimony to how people say 0:06:44.000 --> 0:06:45.760 they don't want social but they spend all their time. 0:06:45.839 --> 0:06:46.000 Yeah. 0:06:46.040 --> 0:06:48.800 Well, the daily average use of Instagram and the Keen 0:06:48.880 --> 0:06:51.440 household is in calcule. You can't do that number. We 0:06:51.480 --> 0:06:54.280 have this gene monster for this entire half hour commercial 0:06:54.279 --> 0:06:58.080 freees with deep Water Asset Management gene. Here's the real world. 0:06:58.440 --> 0:07:01.760 It's owned by portfolios x up one percent right now, 0:07:01.960 --> 0:07:03.640 and then we're gonna pick on our good friend Will 0:07:03.720 --> 0:07:05.560 dan Off up in Boston. He's been doing this for 0:07:05.560 --> 0:07:08.080 a few years at a shop called Fidelity. It's as 0:07:08.160 --> 0:07:11.600 large as holding. It's grown out where Meta Facebook is 0:07:11.640 --> 0:07:15.600 twelve point x percent of Will Danof's contra fund, but 0:07:15.680 --> 0:07:18.360 he's probably under owned it as well. Just the share 0:07:18.400 --> 0:07:23.200 price today moves Contrafund two percent off the leap in Meta. 0:07:23.240 --> 0:07:27.360 Are these stocks under owned by institutional Wall Street? 0:07:29.480 --> 0:07:30.720 I think Meta is. 0:07:30.840 --> 0:07:33.680 I think there's still some controversy around just what is 0:07:33.760 --> 0:07:37.440 ultimately you know, what does their advertising business look like. 0:07:37.920 --> 0:07:41.400 I think there's concern about regulation related to it. If 0:07:41.400 --> 0:07:44.360 you look at the multiple relative to the other big 0:07:44.400 --> 0:07:47.480 tech companies, it's still trades at a discount, so it's 0:07:47.520 --> 0:07:50.080 going to be I bet the earnings go up. I'm 0:07:50.160 --> 0:07:53.360 more than twenty percent today, the stock up eighteen percent 0:07:53.440 --> 0:07:53.800 pre market. 0:07:53.800 --> 0:07:54.600 I bet earnings go up. 0:07:54.640 --> 0:07:57.200 So I think the multiple probably is actually surprising, and 0:07:57.280 --> 0:07:59.080 to stay in that low twenty range where you look 0:07:59.080 --> 0:08:01.280 at the rest of big tech kind of loosely in 0:08:01.320 --> 0:08:04.240 the low thirty range, and so based on that, I 0:08:04.280 --> 0:08:06.840 don't think this is over owned, and I think that 0:08:06.920 --> 0:08:10.000 there's again there's a room to go. I think this 0:08:10.040 --> 0:08:13.400 should trade in line with the rest of larger tech. 0:08:13.480 --> 0:08:16.640 Okay, so they're three trillion a guy an uber bowl 0:08:16.680 --> 0:08:21.200 like Dana, iives is what Paul Ford four trillion added up? 0:08:21.280 --> 0:08:27.480 Geene monster in someday these four stocks, the Magnificent four whatever, Nvidia, 0:08:27.560 --> 0:08:29.360 I'm not there yet. I know Gene is. I'm not 0:08:29.440 --> 0:08:32.160 there yet, but Geane they're going to have an all 0:08:32.160 --> 0:08:35.880 in value of say fifteen trillion dollars? Are they like 0:08:35.920 --> 0:08:39.720 the Rockefellers standard oil eyed to tarble of one hundred 0:08:39.720 --> 0:08:41.800 and twenty years ago, where there's going to be a 0:08:41.840 --> 0:08:45.439 primal cry there too big? Are we getting there quickly? 0:08:46.760 --> 0:08:50.000 I think we were there three years ago. And I 0:08:50.000 --> 0:08:54.360 think that you know, this is lessons learned from the 0:08:54.400 --> 0:08:58.319 past here just about can things keep going about bubbles? 0:08:58.320 --> 0:09:00.280 There was everything bubble a couple years ago. See what 0:09:00.280 --> 0:09:03.040 happened two thousand. So I'm skeptical. I want to be 0:09:03.120 --> 0:09:05.200 just cautious, like can this keep going? But just the 0:09:05.240 --> 0:09:07.840 case that I think these will continue to get going. 0:09:08.040 --> 0:09:10.760 It is as simple as artificial intelligence. I think that 0:09:11.400 --> 0:09:14.400 this is something that now Apple has stepped into the game. 0:09:15.040 --> 0:09:18.600 That is is much of the rancor that goes on 0:09:18.640 --> 0:09:22.280 Capitol Hill related to large cap tech. I think lawmakers 0:09:22.520 --> 0:09:27.560 understand that these companies having strong domestic companies that are 0:09:27.559 --> 0:09:30.520 building AI. I think they understand the importance of that 0:09:30.520 --> 0:09:33.360 from a national security standpoint, and so I think that 0:09:33.640 --> 0:09:35.920 they'll be always talk of regulation, but I think these 0:09:35.960 --> 0:09:37.400 companies will continue to get bigger. 0:09:38.120 --> 0:09:41.800 Are you watching unc Duke this weekend with Vision Pro? 0:09:42.240 --> 0:09:44.080 Now I'm gonna go old school. 0:09:44.360 --> 0:09:47.120 You're gonna go old school? Yeah? 0:09:48.520 --> 0:09:49.240 I can't, but watch? 0:09:51.160 --> 0:09:53.280 What would you want? I at least help here? What 0:09:53.320 --> 0:09:56.120 would you when I use vision Pro for I? 0:09:56.760 --> 0:09:58.959 I don't know. Well, that's kind of where I want 0:09:58.960 --> 0:10:02.120 to go with the gior Gene. Where are we? 0:10:02.280 --> 0:10:04.960 Where is Mark Zuckerberg these days when you speak to him, 0:10:04.960 --> 0:10:08.240 when you hear his commentary with the metaverse that was 0:10:08.720 --> 0:10:11.760 at best at distraction for this company and at worst 0:10:11.760 --> 0:10:14.760 maybe a real suckhole in terms of a capital investment. 0:10:14.760 --> 0:10:15.600 Where are we with that? 0:10:17.600 --> 0:10:19.560 I hope we're wrapping it up, but I think the 0:10:19.640 --> 0:10:23.200 reality is that they're doubling down. And again mentioned we're 0:10:23.240 --> 0:10:26.760 investors of the meta We wish they would essentially pair 0:10:26.840 --> 0:10:27.959 back what they're doing there. 0:10:28.000 --> 0:10:29.000 The simple reason is. 0:10:28.960 --> 0:10:31.280 They had a billion in revenue first quarter of a 0:10:31.320 --> 0:10:34.040 billion in revenue, and Reality Labs they lost four billion. 0:10:34.400 --> 0:10:36.400 They said that the amount of losses annually are going 0:10:36.440 --> 0:10:38.760 to increase. This is going to be fifteen billion dollar plus. 0:10:38.880 --> 0:10:41.839 This is real numbers, even for these big companies. They're 0:10:42.000 --> 0:10:45.240 spending a lot. What Apple is showing today with Vision 0:10:45.280 --> 0:10:48.439 pro from a technology from a price standpoint, it's seven 0:10:48.480 --> 0:10:52.240 times higher. From a technology point, it's probably thirty x better. 0:10:52.720 --> 0:10:56.720 And I think ultimately is that what Meta wants to 0:10:56.760 --> 0:10:59.920 be spatial computing, the metaverse for the masses is that 0:11:00.440 --> 0:11:03.800 I do believe that that will roll out eventually, so 0:11:03.920 --> 0:11:06.800 but I wish that they just wouldn't spend as much. 0:11:06.880 --> 0:11:09.160 Spend five billion a year, not fifteen billion a year. 0:11:09.480 --> 0:11:12.559 But to answer your question, Paul, where are they? They're doubling, 0:11:12.600 --> 0:11:15.560 tripling down on this, And I kind of see this 0:11:15.640 --> 0:11:18.280 as BlackBerry versus the iPhone to you. 0:11:18.360 --> 0:11:20.400 To Global Wall Street, we start strolling on the seven 0:11:20.400 --> 0:11:23.040 o'clock or a gene monster with his deep water asset 0:11:23.080 --> 0:11:27.040 management here on this huge societal juggernaut. We're all writing 0:11:27.400 --> 0:11:31.480 the technology company. Speaking of technology, Apple car play, We 0:11:31.559 --> 0:11:33.720 are humble. I got goosebumps over like you know the 0:11:33.800 --> 0:11:38.600 January numbers, Apple car play on Apple on Android, Bloomberg 0:11:38.640 --> 0:11:42.400 Business app downloaded free and it works, it's safer, it's better, 0:11:42.480 --> 0:11:46.800 as Apple says. And on YouTube, Ian Bremer, technologist Yep, 0:11:47.160 --> 0:11:50.800 picks up Godfreed Jeff Gottfried's work at Pure Research in 0:11:50.840 --> 0:11:55.960 New Jersey over what do we actually consume? And Facebook's 0:11:56.040 --> 0:11:58.840 right up there, in Instagram's right up there. But paul 0:11:58.920 --> 0:12:03.040 Ian Bremer points out eight and ten Americans are engaged 0:12:03.200 --> 0:12:07.000 with YouTube. We're on YouTube, Bloomberg podcasts, look for it. 0:12:07.040 --> 0:12:08.400 Absolutely, we're there. Hey. 0:12:09.280 --> 0:12:14.199 The third company reporting last night, Amazon Boy another really good. 0:12:14.360 --> 0:12:16.520 I thought they would have liked they were terrible. 0:12:17.120 --> 0:12:19.440 Stocks up about six and a half percent pre market, 0:12:19.440 --> 0:12:22.240 trading up about forty percent over the trailing twelve months. 0:12:22.280 --> 0:12:22.400 Here. 0:12:22.440 --> 0:12:26.760 What did you hear from Amazon last night, Geen, Well. 0:12:26.600 --> 0:12:29.200 This one, just in terms of the stock reaction, is 0:12:29.200 --> 0:12:31.680 a surprise to me. I would if you'd have given 0:12:31.720 --> 0:12:33.079 me the press release beforehand. 0:12:33.080 --> 0:12:34.560 Out has said it's down a few percent. 0:12:34.640 --> 0:12:38.199 So what we heard last night was that AWS, which 0:12:38.360 --> 0:12:40.920 is typically the pressure point that people focus on, was 0:12:41.000 --> 0:12:44.079 up thirteen percent that was compares to twelve and a 0:12:44.080 --> 0:12:46.520 half percent growth in the September quarter and twelve point 0:12:46.559 --> 0:12:49.280 two percent in the June quarter, So we saw I 0:12:49.280 --> 0:12:53.360 would say, a fifty basis points acceleration. Compare that to 0:12:53.679 --> 0:12:55.880 what Google Cloud did. They showed a three hundred and 0:12:55.880 --> 0:12:59.040 twenty basis point acceleration of twenty six percent, an Azure 0:12:59.240 --> 0:13:02.319 one hundred bases point acceleration to thirty percent. Put all 0:13:02.320 --> 0:13:06.400 this together, AWS should and continue to be the focus 0:13:06.600 --> 0:13:10.839 for Amazon investors. And in fact, yes it showed acceleration, 0:13:10.920 --> 0:13:13.560 but it still is losing share notably. And I think 0:13:13.640 --> 0:13:17.040 when you fast forward this six twelve, twenty four months 0:13:17.080 --> 0:13:19.760 from now and think about how these platforms are going 0:13:19.800 --> 0:13:23.080 to be adding more AI capabilities for the people that 0:13:23.240 --> 0:13:27.800 use them, I think that advantage Microsoft and Google. So 0:13:27.840 --> 0:13:30.920 I think it's going to be increasingly competitive. The reason 0:13:30.960 --> 0:13:33.800 why the stock is up is because they beat earnings 0:13:33.840 --> 0:13:35.800 by operating income by fifty percent. 0:13:35.840 --> 0:13:39.440 They crushed it. And this is like the roller coaster 0:13:39.600 --> 0:13:41.280 game of Amazon and earnings. 0:13:41.320 --> 0:13:44.120 You get a boom bust cycle for two or three quarters, 0:13:44.160 --> 0:13:45.920 and then a boom cycle and then a bus cycle. 0:13:45.960 --> 0:13:48.560 And so Paul to put it all together. I think 0:13:48.880 --> 0:13:51.480 Amazon quarter was good, it wasn't great. 0:13:51.920 --> 0:13:58.960 They got people excited about this rufus, this assistant shopper. 0:13:59.640 --> 0:14:00.559 I think it's pretty cool. 0:14:00.600 --> 0:14:04.640 I think it's gonna help engagement, help people find products 0:14:04.679 --> 0:14:08.080 better on Amazon. Good use of AI, but to me 0:14:08.200 --> 0:14:10.320 doesn't justify what's happening with the stock this morning. 0:14:10.360 --> 0:14:12.839 All right, let's step back a little bit, Geene, we 0:14:13.120 --> 0:14:14.840 kind of ran through the big three tech names are 0:14:14.880 --> 0:14:18.400 reported last night. I love to get your view here 0:14:18.480 --> 0:14:20.360 now that we've had a little bit of perspective here 0:14:20.360 --> 0:14:22.640 four five, six quarters where we've had a lot of 0:14:22.680 --> 0:14:25.680 these companies talking about generative AI. I love to get 0:14:25.720 --> 0:14:29.720 your view as kind of how you think it kind 0:14:29.720 --> 0:14:32.800 of really sits as a theme in technology. 0:14:33.160 --> 0:14:33.800 Is it real? 0:14:34.360 --> 0:14:34.560 Is it? 0:14:34.600 --> 0:14:37.000 And how material is it? And how do you play it? 0:14:39.040 --> 0:14:39.120 So? 0:14:39.280 --> 0:14:41.920 Is it real? Yes? How material is it? 0:14:42.040 --> 0:14:45.400 The example My framework is that if you do the 0:14:45.440 --> 0:14:47.200 scale of zero to one hundred, we've talked about this 0:14:47.280 --> 0:14:50.000 zero to one hundred, one hundred being electricity, I would 0:14:50.040 --> 0:14:53.800 put the smartphone at in terms of importance. Electricity is 0:14:53.800 --> 0:14:57.360 one hundred, smartphones twenty five, The Internet's fifty. 0:14:57.400 --> 0:14:59.480 And I think jenering of AI and AI. 0:14:59.520 --> 0:15:03.280 More broadly, ninety, I think it is just a step function, 0:15:03.840 --> 0:15:06.520 and I think we're entering it's going to be a 0:15:06.560 --> 0:15:09.560 three to five year bowl market that's going to culminate 0:15:09.600 --> 0:15:13.720 in a bubble. By definition, almost has to happen. If 0:15:13.800 --> 0:15:16.760 this is in fact, ninety out of one hundred, we 0:15:16.840 --> 0:15:21.840 will see a bubble. So I'm I'm on board that 0:15:21.960 --> 0:15:25.440 these can be transformative. I mean, we saw Tim Cook 0:15:25.640 --> 0:15:29.680 finally utter those two letters yesterday in the prepared remarks, 0:15:29.840 --> 0:15:32.760 and I think they're it's setting Apple up to enter 0:15:32.840 --> 0:15:35.200 as with a foundation model this year. So big picture, 0:15:36.520 --> 0:15:41.600 it's I think it's hard to under under states how 0:15:41.640 --> 0:15:43.200 meaningful of a change this is going to be. 0:15:43.440 --> 0:15:46.040 Gene, I wanted to shift here too long ago and 0:15:46.160 --> 0:15:48.240 far away when we hung on every word you said 0:15:48.280 --> 0:15:52.040 at Piper Jeffrey about should we be in these stocks. 0:15:52.040 --> 0:15:55.040 There's a lot of people listening and watching on YouTube 0:15:55.040 --> 0:15:59.160 and car play who are saying I'm in this or 0:15:59.160 --> 0:16:00.960 I think I'm in it, I four oh one K 0:16:01.800 --> 0:16:03.480 or I'm not in it, and damn I got to 0:16:03.520 --> 0:16:06.520 get into it. But I'm scared, stiff. I want you 0:16:06.600 --> 0:16:11.400 to talk the five year vision of these companies that 0:16:11.400 --> 0:16:14.600 have come so far in the last decade. Do you 0:16:14.720 --> 0:16:19.120 extrapolate out the present trends? Is there a lesser slope 0:16:19.200 --> 0:16:22.040 or dare I say, can they even get convexity and 0:16:22.120 --> 0:16:29.120 accelerate free cash flow revenue growth their position within American society. 0:16:30.120 --> 0:16:32.760 I think when you look at the kind of scope 0:16:32.800 --> 0:16:37.920 of where wealth will be created around AI, I generally 0:16:37.960 --> 0:16:39.760 think of it as in three buckets. I think that 0:16:39.800 --> 0:16:43.240 there's the we'll call it the safe bet, and I 0:16:43.280 --> 0:16:46.120 think that is this megacap tech. And I think it's 0:16:46.120 --> 0:16:47.800 not just own the magnificent seven. 0:16:47.840 --> 0:16:48.480 I think they are. 0:16:49.440 --> 0:16:52.520 I think they're I think the best one surprisingly is Google. 0:16:52.560 --> 0:16:56.640 I think the best opportunity that's underappreciated relative to what's happened. 0:16:56.400 --> 0:16:57.520 With the other ones, I think Google. 0:16:57.600 --> 0:17:01.160 So this is not investment advice, but from our perspective, 0:17:01.440 --> 0:17:04.360 we onwn Google a meta and so continue to do that. 0:17:04.520 --> 0:17:06.720 Continue to think that's a great place to be, even 0:17:06.840 --> 0:17:10.879 with the upside that they've had. But we also believe 0:17:10.960 --> 0:17:14.359 that AI is going to have a profound impact on 0:17:14.600 --> 0:17:16.760 companies that are less well known. 0:17:17.080 --> 0:17:19.080 We have an ETF the ticker's loup. 0:17:19.320 --> 0:17:24.040 It's a frontier tech, which means that it effectively identifies 0:17:24.080 --> 0:17:26.199 what are the transformative themes over the next three to 0:17:26.240 --> 0:17:28.399 five years. AI is a big part of that, but 0:17:28.480 --> 0:17:30.920 I think some of these smaller companies that haven't had 0:17:31.040 --> 0:17:35.639 this tremendous run, I think that's a meaningful opportunity as well. 0:17:36.040 --> 0:17:38.199 And then the last piece is what we call the 0:17:38.400 --> 0:17:43.560 ordained late stage private companies. These are companies like Hugging 0:17:43.640 --> 0:17:48.880 Face and Data Bricks and open AI and Thropic. These 0:17:48.920 --> 0:17:52.960 are companies that are peer play AI companies. And so 0:17:53.680 --> 0:17:56.920 I want to go back and just answer your question specifically, Tom, 0:17:57.000 --> 0:17:59.560 is that yes, I think you should continue to own 0:17:59.560 --> 0:18:03.600 a select companies within the magnificent seven because I think 0:18:03.640 --> 0:18:06.840 they'll continue to benefit. But as far as trying to 0:18:06.960 --> 0:18:10.719 get outperformance relative to the market, I think you need 0:18:10.760 --> 0:18:13.359 to try to search for some of those less well 0:18:13.480 --> 0:18:16.720 known sub hundred billion dollars we call that small now 0:18:17.119 --> 0:18:19.560 sub one hundred billion dollars small tech companies. 0:18:19.600 --> 0:18:24.360 I'm long weighing lambs the weight labs exactly, all right, 0:18:24.400 --> 0:18:28.560 So gene in your fund here, what are some of 0:18:27.720 --> 0:18:31.720 the names that you guys own that maybe maybe people 0:18:31.720 --> 0:18:32.320 don't think about. 0:18:32.359 --> 0:18:34.760 I mean, everybody's you know, kind of feels like they 0:18:34.760 --> 0:18:36.800 have their own call on in the apples of the world, 0:18:36.800 --> 0:18:38.479 of the Amazon's of the world, other parts of the 0:18:38.480 --> 0:18:41.920 tech space that you think are underappreciated out there. 0:18:43.600 --> 0:18:46.879 Yeah, we actually go and look for companies off that 0:18:46.880 --> 0:18:49.480 beaten path. I mean, there's one company, New Bank, Tipker 0:18:50.359 --> 0:18:54.119 and you as in November uniform and New Bank is 0:18:54.160 --> 0:18:56.880 the fastest growing bank in Latin America. They've basically gone 0:18:56.880 --> 0:19:00.520 from nothing to about eight percent share. Like one in 0:19:00.600 --> 0:19:03.480 two people in Brazil use a form of New Bank. 0:19:03.760 --> 0:19:08.080 But they're using artificial intelligence to help better identify get 0:19:08.080 --> 0:19:12.320 the underbank population to be banked. And it's been a 0:19:12.359 --> 0:19:14.960 great use case of that and it works. It works 0:19:14.960 --> 0:19:17.840 for risk management. So New Bank is a company that 0:19:18.320 --> 0:19:22.400 we own Coupong maybe you may not, maybe a new one. 0:19:22.880 --> 0:19:27.040 Think of this as the Amazon of South Korea. Uh, 0:19:27.119 --> 0:19:31.040 and they basically have a pole position there. South Korea 0:19:31.400 --> 0:19:35.280 is doing relatively well. And then the last one Marcato 0:19:35.320 --> 0:19:39.159 Libre yep, and I hope both of you are sitting 0:19:39.200 --> 0:19:44.000 down for this one. Just recently we added we spent 0:19:44.080 --> 0:19:46.920 a lot of time seven years working in China covering 0:19:47.000 --> 0:19:49.399 these being bringing a lot of these companies public. The 0:19:49.640 --> 0:19:52.920 tech companies in China. We've just in the last few 0:19:52.960 --> 0:19:58.800 weeks actually made some investments in some Chinese equities tech equities. 0:19:59.200 --> 0:20:01.520 WHOA, I think we'll leave it there. I gotta go 0:20:01.560 --> 0:20:04.720 call my broker, Gene Munster. Generous of you tow b 0:20:04.800 --> 0:20:17.480 with us through this half hour, We're going to do 0:20:17.560 --> 0:20:20.840 a roundtable here. Mona Mahagen Joints from Edward Jones, senior 0:20:20.840 --> 0:20:24.520 investment strategist in Sarah House from Wells Fargo. We're going 0:20:24.600 --> 0:20:26.639 to try to keep him for two hours. I believe 0:20:26.680 --> 0:20:29.600 Sarah's got to go at some point. Jay Brison at 0:20:29.640 --> 0:20:31.560 a tantrum and says she can only do so much 0:20:31.560 --> 0:20:34.240 time with us, and Mona's with us. We're thrilled of both. 0:20:34.280 --> 0:20:36.879 You really with two different remits, Sarah, I got to 0:20:36.920 --> 0:20:41.159 go to you first because I got with revision a 0:20:41.240 --> 0:20:45.760 four hundred and seventy nine thousand statistic. Do we blame 0:20:45.760 --> 0:20:49.879 this in seasonality? Is this because Amazon and Bloomingdale's hired 0:20:49.920 --> 0:20:54.000 more people? What's the asterisk Wells Fargo sees in this 0:20:54.080 --> 0:20:55.560 buoyant report? 0:20:56.720 --> 0:20:59.200 Sure so, I mean, I think overall, the message is 0:20:59.320 --> 0:21:03.359 this job market that is still incredibly strong despite making 0:21:03.560 --> 0:21:07.240 all the efforts for the bed told the economy. But 0:21:07.400 --> 0:21:10.320 I think you're right in that there probably is some 0:21:10.520 --> 0:21:13.680 flattery from the seasonals of January is the month where 0:21:13.680 --> 0:21:16.560 we tend to get the biggest move and non seasonally 0:21:16.680 --> 0:21:19.360 adjusted number, So if you see any sort of deviation 0:21:19.480 --> 0:21:22.600 from that, that can flatter the January numbers. We saw 0:21:22.640 --> 0:21:25.640 that last January as well. But I think the message 0:21:25.640 --> 0:21:28.159 here is that we're just not seeing the same degree 0:21:28.200 --> 0:21:31.560 of layoffs that we took typically would in January, and 0:21:31.600 --> 0:21:34.680 that's why we're getting such a robust headline number again 0:21:34.720 --> 0:21:35.639 here in January. 0:21:36.119 --> 0:21:40.000 I mean the jobs numbers, I mean people. I understand 0:21:40.000 --> 0:21:43.000 there's a standard here and everybody gets it wrong. I 0:21:43.040 --> 0:21:46.640 get that, but it's months after months after months, we're 0:21:46.640 --> 0:21:50.919 getting nowhere near one fifty or one twenty. David Kelly 0:21:50.920 --> 0:21:53.720 over at JP Morgan Sarah House is looking for some 0:21:53.960 --> 0:21:57.840 form of migration to zero or even a negative statistic. 0:21:58.960 --> 0:22:02.639 Why are we eating so many jobs? Is it lower 0:22:02.760 --> 0:22:06.840 decile staff jobs. Is it a complete underestimation of the 0:22:06.920 --> 0:22:11.520 technology overlay? What's the why for two hundred whatever thousand 0:22:11.680 --> 0:22:12.200 per month? 0:22:13.520 --> 0:22:16.439 Yes, I think one aspect is we're still getting I 0:22:16.440 --> 0:22:20.000 think pretty strong growth in labor supply. We can't compare 0:22:20.400 --> 0:22:22.919 the month and month changes here with the January numbers 0:22:22.960 --> 0:22:26.040 because you you did get some population control adjustments. But 0:22:26.440 --> 0:22:29.280 you know, overall, you you saw the labor force participation 0:22:29.600 --> 0:22:32.240 rate hanging there and it was up about four tenths 0:22:32.240 --> 0:22:35.240 of the percentage point last year. And so that's helping 0:22:35.440 --> 0:22:39.480 helping businesses bill positions meet with still very strong consumer 0:22:39.560 --> 0:22:43.520 and even and even business business demand. So I think 0:22:43.520 --> 0:22:45.640 that that's a big that's a big part of it 0:22:45.720 --> 0:22:49.040 as well. And I think just in some industries like leisure, 0:22:49.080 --> 0:22:52.440 in hospitality, government for example, there's still catchup hiring going 0:22:52.480 --> 0:22:55.440 on from the pandemic as well, which I think, Hey. 0:22:55.280 --> 0:22:58.320 Mona, I'm mona, I'm looking at the tier treasure were 0:22:58.320 --> 0:23:01.159 now up sixteen basis points four point three six percent. 0:23:01.280 --> 0:23:03.720 So from your perspective moment, does that kind of take 0:23:03.760 --> 0:23:06.280 any ambiguity around a March rate cut? 0:23:06.320 --> 0:23:07.560 Does that take that off the table? Now? 0:23:08.200 --> 0:23:08.440 Yeah? 0:23:08.520 --> 0:23:10.280 I think it does. And you know, look, I think 0:23:10.880 --> 0:23:13.320 most market participants we were fifty to fifty ahead of 0:23:13.320 --> 0:23:15.720 the FED meeting in terms of a March rate cut. Anyway, 0:23:16.359 --> 0:23:18.840 I think now people are looking towards May and June 0:23:19.080 --> 0:23:21.040 for the FED to start its rate cutting cycle. We 0:23:21.080 --> 0:23:24.000 do still think that they will pivot from this pause 0:23:24.080 --> 0:23:27.040 to rate cuts later this year, but Jerome Powell told 0:23:27.080 --> 0:23:29.520 us on Wednesday he's willing to take his time. He 0:23:29.560 --> 0:23:32.320 doesn't want to see inflation pick up again. And in fact, 0:23:32.320 --> 0:23:34.399 this job to report this morning may give him a 0:23:34.400 --> 0:23:35.879 bit of pause when he sees that four and a 0:23:35.920 --> 0:23:39.720 half percent wage gain figure, average hourly earnings figure. I'd 0:23:39.760 --> 0:23:41.800 be curious to see what the mix of you know, 0:23:41.880 --> 0:23:44.800 new jobs at it is if we are seeing higher 0:23:45.240 --> 0:23:48.119 paid workers take up more of that mix versus the 0:23:48.160 --> 0:23:51.919 lower skilled, lower paid parts of the market. But certainly 0:23:51.920 --> 0:23:54.600 what we're watching is the strength in this US economy 0:23:55.119 --> 0:23:58.800 and inflation that you know, immaculately has been continuing to 0:23:58.840 --> 0:24:01.360 move lower despite the strength the US economy. We want 0:24:01.359 --> 0:24:03.680 to see that continue in the next few months before 0:24:03.680 --> 0:24:05.159 we start seeing that rate cutting cycle. 0:24:05.560 --> 0:24:07.320 Yeah, just the you know, the highest estimate in the 0:24:07.359 --> 0:24:11.880 Bloomberg survey of seventy seven economists was three hundred thousand, 0:24:12.080 --> 0:24:15.240 so it just kind of blew away all expectations. So Mona, 0:24:15.400 --> 0:24:17.560 given that, how do you position it like you're gonna 0:24:17.560 --> 0:24:20.119 be talking to clients all day today. How are you 0:24:20.119 --> 0:24:23.400 going to position kind of how this data point impacts 0:24:23.680 --> 0:24:27.520 the fed Mona's going to be made by meta by meta' 0:24:28.920 --> 0:24:32.000 So attis is impact your market outlook here? Yeah? 0:24:32.040 --> 0:24:34.520 You know, look, I think it kind of reaffirmed some 0:24:34.520 --> 0:24:36.880 of the things messages we've been giving to our clients 0:24:36.920 --> 0:24:39.160 as well, which is one we do think if twenty 0:24:39.200 --> 0:24:41.919 twenty three was the year of narrow leadership, you know, 0:24:42.160 --> 0:24:45.680 folks piled into megacap tech, the AI trade. They also 0:24:45.720 --> 0:24:48.840 piled into cash and CDs, cash like instruments, we didn't 0:24:48.880 --> 0:24:52.040 think twenty twenty four is a year of broadening in participation. 0:24:52.119 --> 0:24:54.879 So yes, we still like the AI tech trade. We 0:24:54.880 --> 0:24:57.400 think it's in early innings of a long term secular 0:24:57.520 --> 0:25:00.240 bull market, but we want to make sure that we 0:25:00.280 --> 0:25:02.840 have exposure to other parts of the market that may 0:25:02.880 --> 0:25:05.120 play some catch up, especially in an environment where we're 0:25:05.160 --> 0:25:08.159 not seeing any cracks in the economy thus far, we 0:25:08.200 --> 0:25:10.840 could see cyclical parts of the market, even parts of 0:25:10.960 --> 0:25:14.399 value and across the market cast space as well. We 0:25:14.440 --> 0:25:18.440 would say also with yields remaining relatively higher not returning 0:25:18.440 --> 0:25:20.919 anywhere near the zero bound, we think longer term that 0:25:20.960 --> 0:25:23.800 means better balance in your portfolios between growth and value 0:25:23.960 --> 0:25:26.680 and bonds. They continue to play a critical element here 0:25:26.720 --> 0:25:27.119 as well. 0:25:27.400 --> 0:25:30.320 If you're just joining us. Mona Mahadj and Edward Jones, 0:25:30.320 --> 0:25:33.120 senior investment strategists with us for this entire half hour. 0:25:33.440 --> 0:25:37.120 Sarah House with Wells Fargo, their senior economist, as well, 0:25:37.160 --> 0:25:40.480 as we look at a stunning American jobs report. There's 0:25:40.520 --> 0:25:42.760 no other way to put it. I don't know the calculator, 0:25:42.760 --> 0:25:45.359 I don't the HP twelve seas off right now, but 0:25:45.440 --> 0:25:47.480 all you got to know is look at four hundred 0:25:47.480 --> 0:25:51.320 thousand in the last sixty days, over six hundred thousand 0:25:51.880 --> 0:25:55.439 jobs created in America. Robert up in Connecticut, you know 0:25:56.320 --> 0:25:58.800 he's got the bloody Mary going on a Friday. Artraguore 0:25:59.000 --> 0:26:02.200 and Robert, thank you for sending in the nice information 0:26:02.280 --> 0:26:06.760 there in seasonality on retail, on healthcare as well. Sarah, 0:26:06.760 --> 0:26:08.840 I'm gonna ask you a question you don't want to answer, 0:26:08.880 --> 0:26:12.520 but it's rude Friday. You got to be kidding me 0:26:13.160 --> 0:26:17.000 that Jay Powell wasn't brief on this for that FED 0:26:17.119 --> 0:26:20.719 press conference. Now, he may have not have known the 0:26:20.840 --> 0:26:23.720 numbers because you know, we play by rules in America, 0:26:24.240 --> 0:26:28.000 but you don't think someone like Sarah House. The Sarah 0:26:28.080 --> 0:26:31.119 House at the eCos building tapped him on the shoulder 0:26:31.119 --> 0:26:33.679 and said, excuse me, sir, it's going to be a 0:26:33.800 --> 0:26:37.160 ginormous number on Friday. Sarah House. Did he know that? 0:26:38.840 --> 0:26:39.600 They don't think so. 0:26:39.680 --> 0:26:42.240 I can't say for certain, but I think in a 0:26:42.400 --> 0:26:45.480 recent interview with David Rubinstein he indicated that he probably 0:26:45.520 --> 0:26:48.560 doesn't get those numbers until Thursday. And you know, the 0:26:49.200 --> 0:26:51.640 BLS does cut it close in terms of how many 0:26:51.720 --> 0:26:54.200 days they have to prepare this, and so this was 0:26:54.240 --> 0:26:58.560 a Hay report as well. So my implination is I 0:26:58.600 --> 0:27:00.760 don't believe he had these actual numbers. 0:27:01.040 --> 0:27:03.760 Sarah House. Seasonality. I got a lot of emails coming 0:27:03.800 --> 0:27:08.119 in from a season pros retired pros in that come on, 0:27:08.240 --> 0:27:13.320 it's January. Was this retail, healthcare and oddities? When you 0:27:13.400 --> 0:27:15.960 dive into this a say afternoon with Team Bryson, are 0:27:15.960 --> 0:27:18.359 you going to look at it being seasonality? Sarah House. 0:27:20.000 --> 0:27:22.800 Well, again, it comes down to the fact that we 0:27:23.000 --> 0:27:25.720 just did not see as many layoffs as we usually 0:27:25.840 --> 0:27:28.359 would this time of year. Now, there were some soft 0:27:28.359 --> 0:27:30.399 spots in the report, so you had a pretty meager 0:27:30.440 --> 0:27:33.600 gain in leisure and hospitality, But you all saw other 0:27:33.680 --> 0:27:38.000 sectors which actually can see even noticeable declines in January, 0:27:38.040 --> 0:27:42.080 like professional business services that posted a nice increase as well. 0:27:42.200 --> 0:27:45.040 Retail was very strong. So I think that suggests that 0:27:45.560 --> 0:27:49.240 you saw retail companies they didn't hire as much holiday workers, 0:27:49.320 --> 0:27:50.920 but that also means that they don't have to let 0:27:50.960 --> 0:27:54.360 go as many holiday weekers. So that's probably flattering that 0:27:54.480 --> 0:27:56.640 the rough of forty five thousand and eight we saw 0:27:56.640 --> 0:27:59.280 on detail on a seasonally just basis, Hey, mol. 0:27:59.200 --> 0:28:01.359 One, when I see it GDP print for the first 0:28:01.520 --> 0:28:04.760 quarter of three point three percent significantly better than expected, 0:28:04.800 --> 0:28:08.639 I see the labor market significantly stronger than expected. It 0:28:08.720 --> 0:28:10.040 kind of makes me feel like I want to run 0:28:10.040 --> 0:28:12.400 out and buy cyclical stocks if the economy is doing 0:28:12.440 --> 0:28:15.639 better than expected. How do you feel about those types 0:28:15.720 --> 0:28:17.560 of names coming out of the Great Midwest. 0:28:18.840 --> 0:28:21.040 Yeah, you know, Actually it's a great point and something 0:28:21.040 --> 0:28:22.800 that we have been considering. And if you know, I'll 0:28:22.840 --> 0:28:26.080 give you an interesting stat when we look historically in 0:28:26.160 --> 0:28:29.480 an environment where the FED starts cutting rates and we 0:28:29.560 --> 0:28:32.800 are not in a recession, probably perhaps the environment we're 0:28:32.840 --> 0:28:35.560 in now versus the FED starts cutting rates and we 0:28:35.680 --> 0:28:39.080 are in a downturn, a recession. The market outcomes are 0:28:39.160 --> 0:28:41.960 much better, of course in the non recessionary scenario, and 0:28:42.000 --> 0:28:43.720 in fact, the S and P in the twelve months 0:28:43.760 --> 0:28:46.000 after the first rate cut is up about eight to 0:28:46.040 --> 0:28:49.840 ten percent versus flat to slightly down in the recessionary scenario. 0:28:49.920 --> 0:28:53.200 So we do think there is still historical precedent. The 0:28:53.320 --> 0:28:55.640 history may not repeat itself, but there is some precedent 0:28:56.280 --> 0:28:58.240 for better market outcomes, and we think the parts of 0:28:58.240 --> 0:29:00.440 the market that will show those better outcomes are exactly 0:29:00.520 --> 0:29:03.240 the ones that you highlighted. We like the cyclical parts 0:29:03.280 --> 0:29:06.800 of the market, you know, areas like industrials for example, especially 0:29:06.840 --> 0:29:09.200 if global growth starts to place and ketchup in the 0:29:09.200 --> 0:29:11.360 back half of the year, could do well. And we're 0:29:11.520 --> 0:29:13.960 you know, taking any opportunity we can really on with 0:29:14.080 --> 0:29:16.920 volatility to position ourselves for those those rebounds. 0:29:17.160 --> 0:29:19.160 Sarah House, We're gonna let you go now to duties 0:29:19.160 --> 0:29:21.760 at Wells Fargo. Lost to write up on this stunning 0:29:21.840 --> 0:29:24.480 jobs report. Thank you so much to you and team 0:29:24.520 --> 0:29:28.240 Brison for perspective this morning. Mona ma Hodgen continues with 0:29:28.360 --> 0:29:30.920 us Edward Jones here commercial free in this half hour 0:29:31.440 --> 0:29:34.160 of a bang up jobs report, just no other way 0:29:35.040 --> 0:29:37.280 to put it. We welcome all of you on Apple, 0:29:37.320 --> 0:29:40.720 car Play and YouTube again your search Google? Right, you 0:29:40.800 --> 0:29:41.240 use bing? 0:29:41.320 --> 0:29:43.720 Paul's pretty much a Google person. 0:29:43.720 --> 0:29:47.960 Matt Miller is a Bing. Matt Miller's a chat. Yes 0:29:48.000 --> 0:29:49.160 he has made I have to. 0:29:49.120 --> 0:29:52.920 Look at Miller's the text study. Yes, I guess I 0:29:52.960 --> 0:29:55.080 gotta look at Bing. I'm not using Bang, I'm looking 0:29:55.120 --> 0:29:57.920 Safari or whatever. But you go YouTube. 0:29:58.080 --> 0:30:00.520 It's got Bloomberg to help me. 0:30:00.560 --> 0:30:01.240 Are you bings? 0:30:01.840 --> 0:30:02.520 I'm Google? 0:30:02.960 --> 0:30:04.760 Mona, Are you Bing or Google or what? 0:30:05.160 --> 0:30:05.320 Oh? 0:30:05.560 --> 0:30:06.600 Oh Google for sure? 0:30:06.760 --> 0:30:09.640 Okay, Mona, Mahadgen weighing in there. That's the Edward Jones 0:30:09.880 --> 0:30:13.160 perspective here personally. So let me say, good morning YouTube, 0:30:13.240 --> 0:30:16.480 Bloomberg Podcasts, Good morning Matt Miller. Look it up on 0:30:16.600 --> 0:30:20.120 bing if you can, Mona, I need to reset here. 0:30:20.360 --> 0:30:23.480 The tech cash flows are stunning. 0:30:23.600 --> 0:30:23.800 Yeah. 0:30:23.880 --> 0:30:26.680 Now they make up twenty five thirty percent of the 0:30:26.840 --> 0:30:29.600 S and P five hundred. Let's say they go to 0:30:29.680 --> 0:30:35.200 thirty five percent or forty percent where the math doesn't 0:30:35.240 --> 0:30:38.720 work in retirement planning, how do you at Edward Jones 0:30:38.960 --> 0:30:39.440 deal with that? 0:30:40.520 --> 0:30:42.400 Yeah, it's a great call out. Look when you look 0:30:42.400 --> 0:30:44.560 at any US index, but particularly the S and P 0:30:44.680 --> 0:30:47.600 five hundred, which is pretty much a global benchmark. Forty 0:30:47.640 --> 0:30:50.640 five percent of that index does come from growth tech 0:30:51.400 --> 0:30:54.920 type of stocks and sectors, and so even if you 0:30:55.040 --> 0:30:58.479 are just an index investor, you are forty five percent 0:30:58.600 --> 0:31:01.479 invested in technology. And of course, when we think about 0:31:01.520 --> 0:31:03.760 a global stock market, it doesn't look the same in 0:31:03.800 --> 0:31:07.240 Europe or even in Asia. In Europe in particular, much 0:31:07.280 --> 0:31:13.200 more heavily weighted in value parts of the market industrials, manufacturing, financials. 0:31:13.600 --> 0:31:15.680 So when we think about, you know, putting together a 0:31:15.720 --> 0:31:18.800 diversified portfolio, US is still the largest part of that. 0:31:18.840 --> 0:31:21.640 And within that we still see value in and we 0:31:21.680 --> 0:31:25.280 talked about this briefly earlier in the technology space, because 0:31:25.800 --> 0:31:27.880 not only have we seen cash flows increase, we've seen 0:31:27.960 --> 0:31:31.120 earnings increase quite a bit as well, and we do 0:31:31.160 --> 0:31:35.000 think the AI boom and trade continues over the next 0:31:35.000 --> 0:31:37.440 five to ten years. Some of that has been priced in. 0:31:37.520 --> 0:31:40.800 You know, the mag seven was up seventy percent plus 0:31:40.800 --> 0:31:43.720 on average last year, so we are starting to see 0:31:44.640 --> 0:31:46.280 we are starting to see a bit of that priced in. 0:31:47.080 --> 0:31:49.680 We think we do get better opportunities in the weeks 0:31:49.680 --> 0:31:52.440 and months ahead but we don't want to give up 0:31:52.480 --> 0:31:55.000 on that trade. Early on. We do think that not 0:31:55.040 --> 0:31:57.920 only will we see those index players benefit, but over 0:31:57.960 --> 0:32:00.600 time we'll see other parts of the more could benefit 0:32:00.600 --> 0:32:02.000 from the products that come out of it. So the 0:32:02.000 --> 0:32:06.160 manufacturing even financial sector will ultimately benefit from AI as well. 0:32:06.160 --> 0:32:08.040 But you have to think about where all those docks 0:32:08.040 --> 0:32:08.840 are housed. 0:32:08.600 --> 0:32:13.000 Paul, can we have a surveillance moment of silence for 0:32:13.120 --> 0:32:17.720 Neil Dutta at Renmac These job numbers are like Neil 0:32:17.760 --> 0:32:22.080 Dutta numbers where he's saying, look, we're creating jobs, and 0:32:22.400 --> 0:32:26.800 the heart of his thesis is we're creating inflation adjusted 0:32:26.920 --> 0:32:32.760 constructive wages, which goes into consumption. Most of us spend 0:32:32.800 --> 0:32:37.280 our paychecks we do, which goes into GDP nominal revenue, 0:32:37.480 --> 0:32:39.360 and that goes over to Mona Madgen's world. 0:32:39.480 --> 0:32:43.040 It does, and you know, all the Sweeny offspring are employed. 0:32:43.160 --> 0:32:43.680 So that's good. 0:32:43.720 --> 0:32:46.840 That's kind of my personal gauge of employment out there. 0:32:46.880 --> 0:32:48.560 In the world. Mona. 0:32:49.200 --> 0:32:51.240 Let's talk about valuation here a right smack in the 0:32:51.240 --> 0:32:53.320 middle of earnings. We had some really good tech numbers 0:32:53.440 --> 0:32:56.040 last night from some of the big tech names. Broadly speaking, 0:32:56.560 --> 0:32:59.400 you know, if the barecase out there that we speak 0:32:59.400 --> 0:33:02.000 to some people that I'm cautious, they're going to call invaluation. 0:33:02.040 --> 0:33:03.520 They're going to say the stocks have kind of gotten 0:33:03.520 --> 0:33:07.440 ahead of earnings out there. Do you have concern or 0:33:07.440 --> 0:33:09.360 what level of concern do you have about valuation in 0:33:09.360 --> 0:33:09.920 this market? 0:33:10.560 --> 0:33:12.280 Yeah, you know, it's a good call out. And we 0:33:12.440 --> 0:33:14.880 had seen some valuation expansion. If you look at the 0:33:14.920 --> 0:33:17.160 S and P five hundred last year, it went from 0:33:17.200 --> 0:33:19.440 about seventeen times about twenty times by the end of 0:33:19.480 --> 0:33:22.320 the year. Of course, if you look one layer underneath 0:33:22.360 --> 0:33:23.920 the surface, if you look at the S and P 0:33:24.160 --> 0:33:28.520 equal weight valuation, that's still actually pretty reasonable about sixteen times. 0:33:28.640 --> 0:33:30.960 And of course what drove the valuation expansion for the 0:33:31.000 --> 0:33:34.960 most part was that magnificent seven technology trades. So that's 0:33:35.000 --> 0:33:36.760 why we think, you know, when we think about the 0:33:36.840 --> 0:33:40.040 year ahead, yes we'll get earnings growth, but the other 0:33:40.080 --> 0:33:42.400 part of the story is where can we get valuation expansion, 0:33:42.440 --> 0:33:45.640 And we do think more scope for valuation expansion is 0:33:45.680 --> 0:33:48.600 in that equal weight the four ninety three stocks that 0:33:48.760 --> 0:33:50.160 may have some catch up to play. 0:33:50.280 --> 0:33:53.280 So you're talking about PEP expansion, you're talking about you're 0:33:53.320 --> 0:33:56.800 modeling out within Somebody's blended four oh one K and 0:33:57.040 --> 0:34:00.720 equity pe multiple expand this year. 0:34:02.240 --> 0:34:04.200 Yeah, we think certain parts of the market we talked 0:34:04.240 --> 0:34:07.800 about value cyclicals, all of those still are pretty reasonably valued. 0:34:07.800 --> 0:34:09.680 Some of them are even priced to you know, this 0:34:09.719 --> 0:34:13.160 recessionary environment that hasn't showed up yet. And once we 0:34:13.239 --> 0:34:15.600 are confirmed that we continue to get at least decent 0:34:15.600 --> 0:34:19.799 growth over the next three quarters, we could see evaluation expansion. Also, 0:34:19.920 --> 0:34:22.520 keep in mind, when the FED is cutting rates and 0:34:22.600 --> 0:34:25.600 interest rates are overtime moving lower, that's better for the 0:34:25.640 --> 0:34:26.799 valuation story as well. 0:34:27.000 --> 0:34:30.239 Mona, thank you, Mona Mahajen, Edward James, you guys just 0:34:30.440 --> 0:34:34.680 really brilliant here on this allocation between bonds in equities. 0:34:39.360 --> 0:34:43.200 I have anticipated this. And Paul Sweeney, how did we 0:34:43.239 --> 0:34:45.880 get these two guys? Guys? This is like it's spring 0:34:46.000 --> 0:34:49.880 training where pitchers catch your show up and everybody's there 0:34:50.440 --> 0:34:53.880 and then the two studs wander out about eight days later. 0:34:55.040 --> 0:34:58.759 Just take ten seconds here, how did you find Ani 0:34:58.880 --> 0:34:59.480 rog Rana? 0:35:01.000 --> 0:35:03.719 We got very fortunate because when you're building a research department, 0:35:04.000 --> 0:35:07.719 arguably you know you have to lead with technology, just 0:35:07.760 --> 0:35:09.759 like the market leads with technology. You have to have 0:35:09.840 --> 0:35:12.760 this technology. Yeah, you have to have a world class 0:35:12.760 --> 0:35:15.520 technology research team. And we're able to do that in 0:35:15.560 --> 0:35:17.600 the way we did that as we hired man Deep 0:35:17.640 --> 0:35:21.280 Singh and onnarag Rana. They both are senior technology channels 0:35:21.280 --> 0:35:24.160 and they built out a global technology research. 0:35:24.080 --> 0:35:26.799 Team for Bloomberg Intelligence. So we appreciate all their hard work. 0:35:26.960 --> 0:35:29.719 And now these two folks are front and center here 0:35:29.719 --> 0:35:32.239 on a day when you've got some big, big tech 0:35:32.360 --> 0:35:35.280 earnings and I'm gonna start, I'm gonna start with Apple, 0:35:35.320 --> 0:35:39.160 So that means I go to anurag Rana, Honoraga. Did 0:35:39.200 --> 0:35:44.200 we learn anything from Apple? And it's positioned in China? 0:35:44.200 --> 0:35:46.480 Because China is twenty percent of their revenue. It looks 0:35:46.520 --> 0:35:48.960 like it's more competitive, It looks like the economy is 0:35:49.000 --> 0:35:50.799 not as strong as they would like to see it. 0:35:51.440 --> 0:35:53.879 What do we learn, if anything, about Apple and their 0:35:53.880 --> 0:35:57.200 growth opportunities in China? 0:35:57.320 --> 0:35:59.000 You know, what we learned is yes, long term, it 0:35:59.080 --> 0:36:00.799 is a big story, but at least for the next 0:36:00.800 --> 0:36:03.040 tweld through eighteen months, you know, you could say that 0:36:03.080 --> 0:36:05.120 things are going to not be as smooth over there 0:36:05.239 --> 0:36:07.719 as they you know, try to figure out how to 0:36:07.719 --> 0:36:10.680 be more competitive give more rebates, try to work with 0:36:10.760 --> 0:36:13.719 more carriers. So Apple has their work cut out for 0:36:13.760 --> 0:36:16.400 them in China, and we are not expecting a rebound 0:36:16.440 --> 0:36:18.120 anytime soon, all right. 0:36:18.160 --> 0:36:20.279 So that's we'll get back to that because there's a 0:36:20.280 --> 0:36:23.600 lot to peel there on a rug on Apple Man Deep. 0:36:23.960 --> 0:36:28.000 We also had Amazon last night, and we also had 0:36:28.200 --> 0:36:30.640 Google last night. Let's start with Google because it kind 0:36:30.680 --> 0:36:33.200 of goes to that. Oh I'm sorry, I met at Yeah, 0:36:33.200 --> 0:36:33.759 thank you very much. 0:36:33.800 --> 0:36:34.839 I met at Facebook. 0:36:34.960 --> 0:36:35.160 Yeah. 0:36:35.440 --> 0:36:35.840 Whatever. 0:36:36.200 --> 0:36:38.680 So what do we learned from Meta last night? Just 0:36:38.719 --> 0:36:41.359 about the digital advertising environment out there? 0:36:42.520 --> 0:36:45.680 Yeah, I mean it was a beat and race quarter 0:36:45.960 --> 0:36:50.320 and that too, you know, with expectations being high. Clearly 0:36:50.600 --> 0:36:54.279 they delivered, and I think the tailwind was coming from 0:36:54.360 --> 0:36:59.040 multiple fronts. So one, the digital ad pricing environment is 0:36:59.040 --> 0:37:03.000 getting better, so that means, you know, online advertisers are 0:37:03.040 --> 0:37:07.040 spending more on ads and that's helping the pricing. And 0:37:07.080 --> 0:37:11.279 the other thing is the relevance of AI for all 0:37:11.320 --> 0:37:14.320 these ad companies. I mean, Meta is definitely the scale 0:37:14.360 --> 0:37:19.080 player and they have invested heavily in AI and that 0:37:19.320 --> 0:37:24.040 has actually helped their ad infrastructure far more than anyone 0:37:24.080 --> 0:37:26.720 else out there. So that showed up in the numbers, 0:37:26.760 --> 0:37:28.960 and you know that that was the reason for the beat. 0:37:29.280 --> 0:37:32.160 I want to dovetail here, guys and folks. This goes 0:37:32.200 --> 0:37:36.360 to just the sheer margin profitability of all these companies 0:37:36.360 --> 0:37:38.840 that mandate and in and run. All you got to 0:37:38.920 --> 0:37:42.719 know is Apple because they're actually making something. Maybe it's 0:37:42.760 --> 0:37:45.600 a little lower ebit don margin, it's like thirty forty 0:37:45.640 --> 0:37:48.239 percent whatever the number is. And the rest of them 0:37:48.239 --> 0:37:51.000 are minting money with a fifty cents every dollar they 0:37:51.000 --> 0:37:54.040 bring in, they're basically bringing fifty cents down to be 0:37:54.080 --> 0:37:58.400 distributed for cash flow. Michael Momison over at Morgan Stanley 0:37:58.440 --> 0:38:02.400 Guys writes up a twenty five essay here on increasing 0:38:02.560 --> 0:38:07.680 returns about what technology is doing is it gets bigger 0:38:07.800 --> 0:38:11.040 and bigger. Mandy, let me start with you. Do you 0:38:11.239 --> 0:38:15.680 just extrapolate out these growth lines? I mean, is Peter 0:38:15.920 --> 0:38:19.200 or Zaga Lazard would say the glide pass here? Are 0:38:19.200 --> 0:38:23.440 they just smooth extrapolations out three years and five years? Man? 0:38:23.480 --> 0:38:23.760 Deep? 0:38:25.000 --> 0:38:25.080 No? 0:38:25.239 --> 0:38:29.080 I mean look at Meta right last year we're talking about, 0:38:29.280 --> 0:38:32.080 you know, whether this company can grow and you know, 0:38:32.239 --> 0:38:37.160 engagement was a concern and they had negative sales growth, 0:38:37.200 --> 0:38:42.000 you know for three quarters, So clearly it's not smooth. 0:38:42.280 --> 0:38:45.480 And every time we have you know a period of 0:38:45.520 --> 0:38:49.080 thirty to forty percent growth, it follows with you know, 0:38:49.239 --> 0:38:52.800 low growth or no growth, especially on the ad side. 0:38:53.120 --> 0:38:56.120 But what they have shown time and again is you know, 0:38:56.360 --> 0:39:00.319 at the online ad business is secular. There is that 0:39:00.360 --> 0:39:03.239 shit right and I would say we're closer to saturation 0:39:03.440 --> 0:39:06.600 than we were probably three years back. So at the 0:39:06.640 --> 0:39:09.239 scale these companies are, it will be hard for them 0:39:09.239 --> 0:39:11.640 to maintain that twenty percent plus grow interog. 0:39:11.719 --> 0:39:13.640 I think I saw Tim Cook, I think over at 0:39:13.680 --> 0:39:18.359 Fox doing the reality the virtual Vision pro reality in 0:39:18.360 --> 0:39:20.960 front of the Apple store in New York. I stood 0:39:20.960 --> 0:39:24.400 in front of that store a lifetime ago with my 0:39:24.520 --> 0:39:27.799 favorite Lawrence Haverty, who come in tech before you got 0:39:27.840 --> 0:39:30.000 you guys were you know, these guys man deep in 0:39:30.040 --> 0:39:33.640 the anagets slide rules going in undergraduate school when Larry 0:39:33.640 --> 0:39:36.800 Haverty was working it up. And guess what Apple was 0:39:36.840 --> 0:39:39.160 going out of business. Then it's going out of business 0:39:39.200 --> 0:39:42.480 now Anti rak Rna. Do you see the innovation trend 0:39:42.520 --> 0:39:46.880 at Apple that will sustain these glide pass sustain this 0:39:47.040 --> 0:39:47.640 cash flow? 0:39:49.160 --> 0:39:51.400 Yeah, I know, I'm not that concerned about Apple in 0:39:51.400 --> 0:39:53.680 the long run, I think they'll be fine. The problem 0:39:53.760 --> 0:39:55.680 is what happens in the next two to three years, 0:39:55.960 --> 0:39:58.760 and that's where some of the problem is just because 0:39:59.040 --> 0:40:01.640 China is not growing. China is the big growth driver 0:40:01.880 --> 0:40:04.200 in the near term. The vision pro is not going 0:40:04.280 --> 0:40:07.440 to do anything to you know, accelerate their growth rates. 0:40:08.000 --> 0:40:10.680 It's really you know, all the phones that they're selling 0:40:10.719 --> 0:40:13.120 in emerging market and China is the big market. So 0:40:13.560 --> 0:40:16.200 for US I, we're not concerned about Apple in the 0:40:16.200 --> 0:40:18.120 long run, but in the short run, I think it's 0:40:18.160 --> 0:40:20.600 going to be very hard for them to grow, you know, 0:40:20.640 --> 0:40:23.800 anything north of five percent unless they throw that Jenai 0:40:23.960 --> 0:40:26.359 stuff that they you know, talked about on the call. 0:40:26.680 --> 0:40:28.759 If anything cool comes out of that in the next 0:40:28.760 --> 0:40:31.000 six to eight months, then I'm going to be wrong. 0:40:31.160 --> 0:40:34.799 Paul iPhone GPT. It just means you can order take 0:40:34.840 --> 0:40:37.759 out faster and Rod Royn i' man Deep Singh. There's 0:40:37.760 --> 0:40:41.120 Bloomberg Intelligence. We continue with us here commercial free this 0:40:41.160 --> 0:40:41.680 half hour. 0:40:42.040 --> 0:40:45.400 All right, Ana, rag my good friend Laura Martin overt 0:40:45.800 --> 0:40:48.239 need Aman Company. She's hat the piece of research which 0:40:48.239 --> 0:40:52.719 I think is really interesting. Google Meta Amazon. On their 0:40:52.719 --> 0:40:57.440 conference calls, they mentioned either AI or generative AI like 0:40:58.239 --> 0:41:02.040 fifty sixty times each Apple like none at all? 0:41:02.200 --> 0:41:03.400 Here is Apple? 0:41:04.120 --> 0:41:07.239 What are they doing or not doing with AI? Are 0:41:07.239 --> 0:41:09.120 they not kind of getting that buzz? 0:41:10.719 --> 0:41:13.040 I think they were caught, you could say, off the 0:41:13.040 --> 0:41:16.319 guard a couple of years ago when chat GPT came out. 0:41:16.480 --> 0:41:19.000 We've been very stronger. I think they are. They sat 0:41:19.040 --> 0:41:20.440 on the call that they're going to have an event 0:41:20.600 --> 0:41:23.360 sometime later this year. And if they are able to 0:41:23.400 --> 0:41:25.920 release some tools or you know, some cool features in 0:41:25.960 --> 0:41:29.920 the phone that allows them to actually capitalize on some 0:41:29.960 --> 0:41:32.520 of this buzz, then what's going to happen is if 0:41:32.560 --> 0:41:36.280 and if, if the iPhone sixteen has those features embedded 0:41:36.280 --> 0:41:38.920 in them, then you can actually create a new refresh 0:41:38.960 --> 0:41:41.640 cycle that we have been waiting for. Remember we've been 0:41:41.640 --> 0:41:43.759 talking about the extension of the restress cycle for the 0:41:43.840 --> 0:41:46.720 last three to five years. And if if that happens, 0:41:46.840 --> 0:41:49.480 and it's a very very big if, then iPhone sixteen 0:41:49.560 --> 0:41:52.640 can truly you know, put a dentse to my thesis 0:41:52.640 --> 0:41:55.080 of slow growth and we see, you know, a big 0:41:55.160 --> 0:41:55.879 number next year. 0:41:55.960 --> 0:41:56.360 Interesting. 0:41:56.560 --> 0:41:59.520 All right, So Mandy, just going on the AI theme here. 0:41:59.560 --> 0:42:02.600 I know you and the research team at Bloomberg Intelligence 0:42:02.600 --> 0:42:04.879 have done a lot of research on this. You guys 0:42:04.920 --> 0:42:07.640 have a big definitive report out on AI. I guess 0:42:07.719 --> 0:42:10.239 my question is do we have a sensor how much 0:42:10.280 --> 0:42:13.480 of this AI I'm using air quotes for those on 0:42:13.719 --> 0:42:18.200 the radio. Tech spending is incremental or is it just 0:42:18.640 --> 0:42:22.160 putting another name on usual tech spending on hardware and software. 0:42:23.360 --> 0:42:25.839 I mean, based on what we are seeing right now, 0:42:25.880 --> 0:42:28.279 you know, with the semi company, especially the likes of 0:42:28.440 --> 0:42:32.719 Nvidia and amb it sounds like, you know, this spending 0:42:33.000 --> 0:42:37.320 is incremental. And yes, companies are slowing down, they're spending 0:42:37.480 --> 0:42:41.520 on traditional servers, so there is some market share shift 0:42:41.560 --> 0:42:45.040 going on as well. But clearly, you know, I would 0:42:45.120 --> 0:42:48.560 talk about above trend growth for the next two three 0:42:48.600 --> 0:42:51.120 years and that's where our you know, one point three 0:42:51.239 --> 0:42:55.400 trillion number for twenty thirty two comes from. Half of 0:42:55.440 --> 0:43:01.840 that is spending on data centers, hardware, real changing the infrastructure, 0:43:02.120 --> 0:43:04.920 and you know the software part will follow as we 0:43:04.960 --> 0:43:10.400 are seeing with the hyperscalers, Microsoft, Amazon and Google also benefiting, 0:43:10.440 --> 0:43:14.080 so their growth rates should go up as well. But clearly, 0:43:14.160 --> 0:43:16.959 you know there is incremental spending around are. 0:43:17.360 --> 0:43:19.880 When you talk to the people, is it within the 0:43:19.920 --> 0:43:22.239 culture and I'm reading I haven't read the whole book yet, 0:43:22.280 --> 0:43:25.200 I'm actually reading every word of it. Sacha Ndella's one 0:43:25.239 --> 0:43:29.799 volume biography is spectacular about the courage he had coming 0:43:29.840 --> 0:43:32.680 out of southern India, and there's too much cricket talk 0:43:32.719 --> 0:43:35.279 in it. That's the only problem I have. When you 0:43:35.320 --> 0:43:40.440 guys talk to the cultural the Double's operational research people, 0:43:41.040 --> 0:43:44.120 do they believe in the financial profitability of what they're 0:43:44.160 --> 0:43:47.880 living every day? Mandy, the guys like you and anaerog 0:43:48.040 --> 0:43:52.680 Mandeep saying, do they believe in the link over to 0:43:53.000 --> 0:43:55.160 profitability that we're observing right now? 0:43:57.000 --> 0:44:01.040 Yeah, I mean, I think especially with a company like Microsoft, 0:44:01.120 --> 0:44:03.839 you can see that you know, they have priced their 0:44:03.920 --> 0:44:06.680 services in a way where a co pilot they are 0:44:06.800 --> 0:44:11.480 charging an additional twenty dollars subscription. So look, they are 0:44:11.560 --> 0:44:16.040 making a big investment and it is you know, to 0:44:16.120 --> 0:44:19.520 acquire customers to drive that stickiness. But I think it 0:44:19.560 --> 0:44:20.240 will be profitable. 0:44:20.280 --> 0:44:22.920 Okay, at first principles here, let's get right back to basics. 0:44:22.960 --> 0:44:25.240 Lisa Matail is going to be with her daughter this weekend, 0:44:25.600 --> 0:44:28.360 and Lisa wants her daughter to be brilliant. So Lisa's 0:44:28.360 --> 0:44:30.759 going to say to her daughter, Dear, let's sign up 0:44:30.760 --> 0:44:33.600 for co pilot, Mandy. When I sign up for co 0:44:33.760 --> 0:44:37.440 pilot GPT, what a God's name do I get? 0:44:38.680 --> 0:44:38.960 Well? 0:44:39.080 --> 0:44:42.480 So it brings productivity, right, and at the end of 0:44:42.600 --> 0:44:46.040 the day, if we are more productive in our jobs, 0:44:46.080 --> 0:44:48.799 if we can get rid of the mundane things that 0:44:48.880 --> 0:44:51.560 we do in our day to day jobs that the redundant. Think, 0:44:52.440 --> 0:44:56.560 I mean, I think that's what drives productivity and efficiency. 0:44:56.600 --> 0:44:58.560 And we know, I mean, look at how far we 0:44:58.600 --> 0:45:02.839 have come with PCs and Word and Excel. What kind 0:45:02.880 --> 0:45:06.000 of productivity it gives you. So this is like taking 0:45:06.040 --> 0:45:09.080 one step further in terms of what are the redundant 0:45:09.080 --> 0:45:11.240 things that you do in Word or Excel. 0:45:11.440 --> 0:45:13.200 So, Paul, you're going to ramp up You're going to 0:45:13.239 --> 0:45:15.560 ramp up copilot, sure, and it's going to make you 0:45:15.600 --> 0:45:19.560 more efficient in ordering the marginal park role. 0:45:19.800 --> 0:45:20.279 That's right. 0:45:20.640 --> 0:45:21.600 The Jersey Shore this. 0:45:21.520 --> 0:45:25.839 Summery on the Grill and Jersey Shore, an Rod talk 0:45:25.840 --> 0:45:28.360 to us about just kind of your sense of just 0:45:28.480 --> 0:45:31.439 overall tech spending here. I know it's a good question. 0:45:31.520 --> 0:45:33.239 You guys have talked about that question. The rate of 0:45:33.320 --> 0:45:36.120 growth slowing, do you expect a reacceleration here. 0:45:37.440 --> 0:45:40.160 Oh yes, Actually, I've talked about this quite a bit, 0:45:40.239 --> 0:45:43.920 so you know, we did a survey back in November 0:45:43.920 --> 0:45:46.319 December and we really got some really good results out 0:45:46.320 --> 0:45:48.520 of it. We think this year is going to be 0:45:48.560 --> 0:45:51.320 the first year of rebound after two years of hunted spending. 0:45:51.600 --> 0:45:53.799 You know, we've talked about cloud, for example, quite a bit. 0:45:54.440 --> 0:45:58.000 Amazon's cloud commitments were just released this morning. They're up 0:45:58.080 --> 0:46:00.920 forty one percent, so that's a mass of acceleration from 0:46:01.000 --> 0:46:03.680 last quarter over the next twelve months. We do see, 0:46:04.000 --> 0:46:06.760 We do expect, you know, sales growth rates for almost 0:46:07.000 --> 0:46:10.839 all major categories in cloud to pick up, perhaps more 0:46:11.120 --> 0:46:13.080 at a pasta rates more in the second half than 0:46:13.120 --> 0:46:15.600 the perst half. And I think that puts it into 0:46:15.719 --> 0:46:19.040 us into a very good twenty twenty five because if 0:46:19.040 --> 0:46:22.280 you have strong bookings sometime this year, they can translate 0:46:22.320 --> 0:46:24.279 into much faster revenue growth next year. 0:46:24.400 --> 0:46:26.160 I mean, man, if you don't give me any couch time, 0:46:26.200 --> 0:46:28.080 what I do, Folks when I decompress her as I 0:46:28.120 --> 0:46:30.480 go up to our acclaimed food court and I sit 0:46:30.560 --> 0:46:32.960 on the couch. You know, the food court in London 0:46:33.120 --> 0:46:35.480 is better than here. That's saying, you know, and the 0:46:35.680 --> 0:46:38.680 Washington is the best Washington's the best food court. We haven't, 0:46:39.120 --> 0:46:40.680 but I'm up with the food court. I'm putting down 0:46:40.719 --> 0:46:43.520 the cheese. It's and you know, you know, I'm having fun. 0:46:43.520 --> 0:46:45.839 An rog gives me couch time. I never get any 0:46:45.880 --> 0:46:50.759 couch time now. So Mandy, my question to you that 0:46:50.800 --> 0:46:54.200 i'd ask you sitting on a couch is this stuff's 0:46:54.280 --> 0:47:01.319 a large part of our diversified portfolios, index funds or 0:47:01.480 --> 0:47:05.120 active managers that we have. Do we own too much 0:47:05.400 --> 0:47:09.000 meta the moon shot? That is today from where you 0:47:09.080 --> 0:47:13.960 sit in our conservative money, do we own too much tech? 0:47:15.560 --> 0:47:19.520 I mean, look, these companies, the six tech companies in 0:47:19.560 --> 0:47:23.279 the Magnificent seven. They are wonderful businesses. There is no 0:47:23.440 --> 0:47:27.000 doubt about you know, how good they are at scale 0:47:27.560 --> 0:47:30.560 and how they keep growing, you know, year after year, 0:47:30.760 --> 0:47:34.160 and they are very profitable. So clearly you know they 0:47:34.200 --> 0:47:37.360 have an outsized influence in our lives and there is 0:47:37.400 --> 0:47:40.040 a good reason, you know, to be proud of them, 0:47:40.200 --> 0:47:43.600 as you know American companies that have a global presence, 0:47:43.680 --> 0:47:47.440 and that's why you know they will keep delivering. The 0:47:47.520 --> 0:47:51.000 question remains what is the right valuation? And that's where 0:47:51.080 --> 0:47:54.120 you know you look at a company trading at thirty 0:47:54.640 --> 0:47:57.360 thirty five times earnings, and you have to ask yourself 0:47:58.040 --> 0:48:00.600 how much good news is priced in? And yes, it's 0:48:00.640 --> 0:48:04.600 a phenomenal business. It's growing at a great pace. But 0:48:04.719 --> 0:48:07.920 then there is a price that you pay as a shareholder. 0:48:08.080 --> 0:48:12.400 And I think after a while, a lot of the 0:48:12.400 --> 0:48:15.359 growth is pricing and it becomes very crowded. And that's 0:48:15.960 --> 0:48:16.719 what you have to ask. 0:48:17.000 --> 0:48:18.960 I mean, Paul, I know your shopping this weekend. The 0:48:19.000 --> 0:48:21.600 price you pay, You're gonna be over at the Apple 0:48:21.600 --> 0:48:24.360 Store like Tim Cook today And the answer is you 0:48:24.400 --> 0:48:26.320 got to go for the Vision Pro ye. This is 0:48:26.360 --> 0:48:27.600 just a question about. 0:48:27.400 --> 0:48:31.239 It, absolutely, Apple CEO Tim Cook, he opened the flagship 0:48:31.320 --> 0:48:34.480 Fifth Avenue Apple Store today's greeting customers. 0:48:35.000 --> 0:48:38.640 Why it's Vision Pro release day? How about that? 0:48:39.000 --> 0:48:41.759 I'm not sure Vision Pro is ana rog Are you 0:48:41.760 --> 0:48:43.880 going to rush out to the Apple Store in the 0:48:43.920 --> 0:48:48.080 Greater Chicago area and buy your Vision Pro today. 0:48:48.280 --> 0:48:49.799 I'm going to go test it out, but I'm not 0:48:49.800 --> 0:48:52.400 going to buy it. It is too much, too expensive 0:48:52.400 --> 0:48:53.839 for me. But I'm going to go play it ound 0:48:53.880 --> 0:48:55.600 with it. I'm going to ask people what they think 0:48:55.600 --> 0:48:56.080 about it. 0:48:56.520 --> 0:48:59.279 But all right, so what does it cost? Do we 0:48:59.320 --> 0:49:00.440 know the price of the thing. 0:49:01.400 --> 0:49:02.480 Three five hundred. 0:49:02.560 --> 0:49:04.239 Oh, I mean who's. 0:49:03.920 --> 0:49:06.719 Buying this thing? Is it? Is it just the gamers? 0:49:06.960 --> 0:49:11.680 Or Okay, what did you learn about the six hundred apps? Seriously? 0:49:11.760 --> 0:49:14.160 Ani Rog? I mean, Mandy, you know is gonna buy it? 0:49:14.200 --> 0:49:17.000 You're not, Ana Rog? But of the six hundred apps, like, 0:49:17.040 --> 0:49:20.440 what's the app that will make people spend that money? 0:49:20.480 --> 0:49:22.400 Make businesses spend that money? 0:49:23.680 --> 0:49:23.879 See? 0:49:23.920 --> 0:49:26.359 For consumer it's really gaming. I mean that's really where 0:49:26.360 --> 0:49:28.279 it boils out to Disney. You know, you can watch 0:49:28.280 --> 0:49:31.400 a Disney movie. They have really talked about it. But 0:49:31.480 --> 0:49:34.640 I personally think the commercial use is probably far better 0:49:34.960 --> 0:49:37.400 because if you have an architect, if you look at engineering, 0:49:37.800 --> 0:49:40.400 you know, those kinds of things. I think, you know, 0:49:40.719 --> 0:49:44.560 makes a lot of tense, but but but it's not. 0:49:44.719 --> 0:49:46.560 This is not a game changer. You know, you sell 0:49:46.600 --> 0:49:49.319 one million units, you make three million dollars, that's three 0:49:49.360 --> 0:49:52.080 point three point five that's nothing, right, appen, Let's wrap. 0:49:51.880 --> 0:49:54.920 It up, Mandy. If you've got the Vision Pro thing on, 0:49:55.680 --> 0:49:58.080 are you going to synergize here? And are you gonna 0:49:58.080 --> 0:50:00.800 have Microsoft Activision am I I'm going to be playing 0:50:00.840 --> 0:50:03.360 Diablo for on my Apple Vision Pro. 0:50:05.080 --> 0:50:08.440 Well, so I think again, it's it's a cool device. 0:50:08.640 --> 0:50:12.120 My problem with a VR headsets and with Vision Pro 0:50:12.719 --> 0:50:15.120 most likely is going to be how much time can 0:50:15.160 --> 0:50:19.200 I wear it for it? Because these are still bulky like. 0:50:19.320 --> 0:50:23.040 You can use them for entertainment, but I just can't imagine, 0:50:23.040 --> 0:50:25.400 you know, putting the headset for two three hours. So 0:50:26.040 --> 0:50:29.520 it gives you that immersive experience, but I still think, 0:50:29.960 --> 0:50:31.839 you know, it's too heavy for me to use. 0:50:31.960 --> 0:50:35.400 You're on a Bloomberg terminal. Go to Bloomberg Intelligence required 0:50:35.440 --> 0:50:39.480 read and Rana man Deep Singh after this tech juggernaut 0:50:40.280 --> 0:50:56.160 a weakened with our newspapers, Lisa Mattello, Lisa, what do 0:50:56.160 --> 0:50:56.600 you start with? 0:50:56.760 --> 0:50:57.120 All right? 0:50:57.280 --> 0:50:59.960 I remember Royal Cribbing came out with figures yesterday, but 0:51:00.239 --> 0:51:02.960 now they're big news. Is this new ship Icon of 0:51:03.000 --> 0:51:06.479 Disease monstrous? It's a monstrous I know you're not into cruising, Paul, 0:51:06.600 --> 0:51:09.360 I will be soon, okay, sir. So maybe here we 0:51:09.400 --> 0:51:13.240 go three hundred and forty five per person per day, okay, 0:51:13.239 --> 0:51:16.600 But here's the thing. It's this multi level ultimate family townhouse. 0:51:16.920 --> 0:51:18.479 It's going to run you an average of one hundred 0:51:18.520 --> 0:51:19.479 thousand dollars a week. 0:51:20.320 --> 0:51:21.440 Well, I think that you. 0:51:21.440 --> 0:51:24.239 Had of your league two bedrooms more than twenty five 0:51:24.280 --> 0:51:27.160 thousand square feet. That's like bigger than the average apartment 0:51:27.360 --> 0:51:31.360 in most places. It has a lot of balconies, multi slides, lounges, 0:51:31.400 --> 0:51:34.520 hot tubs, game rooms. But here's the point, it's reserved 0:51:34.560 --> 0:51:36.319 for most of twenty twenty four. 0:51:36.760 --> 0:51:38.440 Weird are spending. 0:51:38.280 --> 0:51:40.279 Yep, we're down in Aruba, just a couple weeks to 0:51:40.320 --> 0:51:42.640 go in every day. The cruise ships are just flying 0:51:42.680 --> 0:51:44.960 in there. So the cruising biz is back baby. 0:51:45.080 --> 0:51:46.160 Oh yeah, that's one. 0:51:46.040 --> 0:51:49.000 Of the most important things. Ellen Zenner said today. She said, look, 0:51:49.040 --> 0:51:50.880 it is a bifurcated America. 0:51:51.040 --> 0:51:53.719 Yep. And that's not good. I mean that's it's not good. 0:51:53.800 --> 0:51:56.840 That's not good. We are we read them the middle class. 0:51:57.239 --> 0:51:59.360 Next, Lisa Potato, Yes. 0:51:59.200 --> 0:52:01.680 This one's for you. It's a little dog theme here 0:52:01.680 --> 0:52:03.880 we have going. Okay, so this is from the Times. 0:52:03.880 --> 0:52:06.840 There's a study of about six hundred thousand British dogs, okay, 0:52:06.840 --> 0:52:08.960 from more than one hundred and fifty breeds. It turns 0:52:08.960 --> 0:52:12.959 out small dogs with prominent noses they live longer, oh yeah, 0:52:13.000 --> 0:52:14.960 than the bigger flat faced dog. 0:52:15.239 --> 0:52:15.439 Going. 0:52:15.600 --> 0:52:18.320 So like the French bulldog for example, it has the flat. 0:52:18.120 --> 0:52:19.640 Which is the most popular breath these days. 0:52:19.719 --> 0:52:21.920 Yes, it is, it is, it is. But you know 0:52:22.040 --> 0:52:25.279 the short snouts, they have respiratory problems. They can get 0:52:25.320 --> 0:52:28.200 heat stroke things like that. So that's the problem with 0:52:28.280 --> 0:52:28.840 those dogs. 0:52:28.880 --> 0:52:31.200 Do you know my little one, the vet that I 0:52:31.239 --> 0:52:34.359 go to in New York, she's absolutely lovely. And what's 0:52:34.400 --> 0:52:37.480 great about her it's the horse Man Vetinary school. You 0:52:37.560 --> 0:52:40.080 make the check right out to her kids prep schools. Yes, 0:52:40.680 --> 0:52:42.359 you know. You go in and it's like you think 0:52:42.400 --> 0:52:44.240 you're going to spend two hundred and eighty two dollars 0:52:44.280 --> 0:52:46.880 and it's like nine hundred and fourteen dollars. You just 0:52:46.920 --> 0:52:49.239 write it out to horse Man. I mean, she's just 0:52:49.280 --> 0:52:51.959 the time safe. It just write it out Director horse Man. 0:52:52.120 --> 0:52:55.879 My vetwent apoplectic on this at one point, and she said, yeah, 0:52:55.880 --> 0:52:59.240 there is a bread issue here. And I'm very pleased 0:52:59.280 --> 0:53:03.040 to say that. Bill and kennel fere Cotons, which are 0:53:03.080 --> 0:53:06.799 in their own way a little twisted, but they have 0:53:07.040 --> 0:53:10.560 like the normal nose and that's better. It's like it's like, 0:53:10.640 --> 0:53:11.560 actually a big. 0:53:11.400 --> 0:53:15.360 Deal in dog I did not see today who knew? 0:53:14.880 --> 0:53:18.520 Who knew? And female dogs live longer than male dogs. 0:53:18.520 --> 0:53:19.480 If really know that as well? 0:53:19.560 --> 0:53:20.280 Yeah, make sense. 0:53:20.600 --> 0:53:25.439 I think that's true of other humans. Well, missus Keane 0:53:25.440 --> 0:53:28.960 asked me with one foot in the casket. 0:53:28.640 --> 0:53:31.520 Do you call Ken? Prutt wants to ask why do 0:53:31.640 --> 0:53:34.960 men die before their wives? His answer, because they want to? 0:53:36.640 --> 0:53:37.480 That was just Ken. 0:53:37.600 --> 0:53:38.320 What do you go? 0:53:39.360 --> 0:53:43.080 John Tucker helping his ye it providing congestion in the studio. 0:53:44.440 --> 0:53:47.479 The last from the journal. This is about twenty something 0:53:47.520 --> 0:53:51.000 year olds. They're no longer hanging out like how Matteo 0:53:51.120 --> 0:53:52.200 used to do back in the day. 0:53:52.320 --> 0:53:52.879 You go to the. 0:53:52.800 --> 0:53:55.400 Clubs delayed at night. No, that's not they're in bed 0:53:55.680 --> 0:53:56.840 by nine pm. 0:53:57.640 --> 0:53:58.359 Huge. 0:53:58.520 --> 0:54:02.160 Yeah, it's the the link between sleep and better health. 0:54:02.239 --> 0:54:05.000 They say they believe they're not going out. 0:54:05.280 --> 0:54:07.720 Well, I saw this week the first time Jim Carrey 0:54:07.800 --> 0:54:11.040 was ever on TV. It was a Johnny Carson. Everyone 0:54:11.040 --> 0:54:13.360 should see it on YouTube. Jim Carrey as a child 0:54:13.800 --> 0:54:16.800 and it's all there. Everything he became is there, absolutely 0:54:16.880 --> 0:54:21.720 mesmerizing twenty minutes of YouTube video. Paul in the media business, 0:54:21.760 --> 0:54:24.440 we stayed up to eleven thirty to watch Johnny Carson 0:54:24.520 --> 0:54:26.240 shore every Now. Why did this stop? 0:54:26.680 --> 0:54:29.440 Well, no, that late night viewing. Late night viewing is 0:54:29.440 --> 0:54:31.640 still pretty good. Late night TV is still important. They 0:54:31.680 --> 0:54:33.319 still invest a lot, They still make a lot of 0:54:33.320 --> 0:54:36.040 money in that late late night block there, so it's 0:54:36.040 --> 0:54:40.080 still important for television. But I guess it's not. According 0:54:40.080 --> 0:54:41.759 to the Wall Street Journal, the days of hanging out 0:54:41.800 --> 0:54:44.080 late for people in their twenties is over. 0:54:44.160 --> 0:54:45.520 I'm trying to think about my kids, But. 0:54:45.480 --> 0:54:48.040 Do you think about businesses are changing? Like businesses are 0:54:48.040 --> 0:54:51.600 doing these matinee parties that started like five pm. That's 0:54:51.640 --> 0:54:52.399 what they're starting to say. 0:54:52.440 --> 0:54:56.759 For me, that's my day's happy think do you guys think? 0:54:56.920 --> 0:54:59.359 Seriously? John Tucker jump in here as well. Do you 0:54:59.360 --> 0:55:02.279 guys think because his kids are ill mannered? I mean, 0:55:02.320 --> 0:55:04.080 it's a it's a better picture of what's going on. 0:55:04.680 --> 0:55:07.719 Do you think it's the pandemic? My basic take is 0:55:07.760 --> 0:55:11.919 the ramifications of COVID are with us far more now 0:55:11.960 --> 0:55:14.040 than we're living, you know, day to day with our kids, 0:55:14.360 --> 0:55:15.280 the dogs, everyone. 0:55:15.320 --> 0:55:17.239 What do you think, Lisa, that's a good point. I 0:55:17.239 --> 0:55:18.879 didn't even think of it about it that way. 0:55:18.960 --> 0:55:21.120 We went to bed at nine pm with COVID because 0:55:21.680 --> 0:55:24.279 there's nothing to do. John, what do you think now? 0:55:24.440 --> 0:55:26.839 I was looking at my easy pass receipts because they 0:55:26.880 --> 0:55:29.560 had to pay it this morning. And I'm like, what's 0:55:29.600 --> 0:55:33.480 this one three am on the Garden State Parkway. I'm like, 0:55:34.080 --> 0:55:37.440 that's my daughter and I'm like freaking out, and then 0:55:37.440 --> 0:55:42.399 I realized, oh no, it's me. Now they're no, they're 0:55:42.400 --> 0:55:45.040 not in better early. No, this does not apply to 0:55:45.080 --> 0:55:46.959 my children, not years. 0:55:47.560 --> 0:55:49.239 But they're like going to bet at nine p not 0:55:49.280 --> 0:55:49.640 my son. 0:55:50.080 --> 0:55:53.279 This is a Bloomberg Surveillance podcast, bringing you the best 0:55:53.320 --> 0:55:58.080 in economics, finance, investment, and international relations. You can also 0:55:58.160 --> 0:56:02.200 watch the show live on YouTube. Visit the Bloomberg Podcast 0:56:02.320 --> 0:56:06.359 channel on YouTube to see the show weekday mornings from 0:56:06.400 --> 0:56:09.640 seven to ten am Eastern from our global headquarters in 0:56:09.719 --> 0:56:13.440 New York City. 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