Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Ley. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg Terminal. I
Speaker 1: want to bring in Mouf and boffinap Bombastead of FFECS
Speaker 1: and E. M. Mac cris stonogy MAV and you code
Speaker 1: in the dollar the base. It's still the base, but
Speaker 1: it can't get much stronger. White Well, it's already relatively
Speaker 1: overvalued if they look at it on a long term
Speaker 1: historical basis um. But uh, you know, we do expect
Speaker 1: it to continue to trade at these high levels. Not
Speaker 1: actually quite unusual. You look back historically when the dollar
Speaker 1: has been to its peaks, it's gone to these you know,
Speaker 1: peaks in the eighty five, in in uh two thousand two,
Speaker 1: and then it comes involved quite hard. That isn't what
Speaker 1: we're seeing this time. And part of that is because
Speaker 1: of exactly what you've been talking about here, that where
Speaker 1: are you going to go to access growth in the world.
Speaker 1: It's really about the US, but it's also the place
Speaker 1: that you go to access safety, so you get the
Speaker 1: best of both worlds. So people are going to maintain
Speaker 1: overallocations US assets for the foreseeable future. Marvin, when do
Speaker 1: deficits start to matter again? Well, I think we're getting
Speaker 1: to the point where they do matter, and I think
Speaker 1: it's more a question of the debt, not so much, um,
Speaker 1: the deficits. Let's remember that deficits are taking place pretty
Speaker 1: much everywhere, um, So it's not just a US issue. Um.
Speaker 1: What we're confronting right now is a very different situation
Speaker 1: from the past, or certainly the last decade, where countries
Speaker 1: were bailed out by following real interest rates. Now you're
Speaker 1: not going to see following real interest rates. We're at
Speaker 1: the zero lower around or effective lower around for most
Speaker 1: countries on nominal rates, and the only way to get
Speaker 1: real rates to fall from there is a hyper inflation.
Speaker 1: So Marvin, with your dollar resiliency, do you assume then
Speaker 1: that the real yield doesn't claw its way back to zero,
Speaker 1: that we stay with a persistent negative real yield, So
Speaker 1: ultimately we should expect that really yields will start to
Speaker 1: to pick up. Um. You know, we will see UM
Speaker 1: treasury yields start to pick up over the course of
Speaker 1: the next few years. Gradually, UM markets have already priced
Speaker 1: in a significant amount of the inflation that we expect.
Speaker 1: There's still room for that to go to get to
Speaker 1: the Fed's comfort zone in terms of where break evens
Speaker 1: uh go. But UM, we will see a rise in
Speaker 1: really yield, but it's not going to be anything um
Speaker 1: like what we've seen in the path. But remember that
Speaker 1: just makes UM. To Lesa's point, the debt problems more
Speaker 1: pressing for countries around the world. And John, what's so
Speaker 1: important here? The cadence, So Marvin Bart at Berkeleys is
Speaker 1: the same cadence as Chairman Powell. The real note yesterday
Speaker 1: with Chairman Poue is his ex axis. Chairman Paul's timeline
Speaker 1: extends well out into two thousand twenty two. And that's
Speaker 1: what I'm hearing from Marvin Burd the Ft is totally
Speaker 1: committed to this. Marvin totally committed to this. And Shaman
Speaker 1: pound one blink. Do you think everybody gets that now? Well, look,
Speaker 1: I think people will get that, and that's why we've
Speaker 1: had this pause in bond market markets over the course
Speaker 1: of the last month month or so. Right, Remember, we
Speaker 1: had a very intense sell off in the first quarter,
Speaker 1: a lot of altility assession, and since then bond yields
Speaker 1: you pointed out they've gone up a lot this week,
Speaker 1: but we're still basically trading within the same range we've
Speaker 1: traded for the last month, month or so. They're not
Speaker 1: really going anywhere. That is the market accepting that, And
Speaker 1: now the next step is they need to see, well,
Speaker 1: is the economy going to be stronger than share Powell
Speaker 1: in the committee exact, or is it going to be
Speaker 1: in line with theirs? Or is there going to be
Speaker 1: some sort of disaster that's that's gonna take it down.
Speaker 1: And for that we're just going to have to wait
Speaker 1: for the data. And that's why we're range trading across
Speaker 1: asset markets right now. Mom, And it's always good to
Speaker 1: see you got to catch up morv and Batley's head
Speaker 1: of Effects and am macro strategy, David Kelly, Whether this
Speaker 1: is JP Morgan and David Kelly, I'm gonna go to
Speaker 1: the bottom of this first look at g d P.
Speaker 1: In the nominal GDP statistic is ten point seven percent
Speaker 1: with the big prices paid statistic. Does that signal to
Speaker 1: you an inflation that is here or an inflation that's
Speaker 1: good to come, a little bit of both. Um I
Speaker 1: think there is clearly inflation right now. You can see
Speaker 1: and things like lumber prices which don't feed through that much.
Speaker 1: But you can also see in the difficulty that businesses
Speaker 1: are having and hiring workers, they're going to have to
Speaker 1: pay up in terms of higher wages. I think we've
Speaker 1: got some bottle legs all over the place. I think
Speaker 1: you know, light vehicle sales are pretty strong, but the
Speaker 1: inventories are very low, and that's that is pushing prices up.
Speaker 1: So I think we're seeing that right now. And in fact,
Speaker 1: one other thing in this report when you're actually with
Speaker 1: the numbers that's really interesting is inventories fell at an
Speaker 1: eighty six billion dollar annual pace in the first quarter.
Speaker 1: So if you think it's hard to find stuff, you're right.
Speaker 1: But what that's gonna do is going to cause manufacturing
Speaker 1: to crank up in the rest of this year. So
Speaker 1: I think you're going to see UM as inventories are
Speaker 1: restored over the course this year is just going to
Speaker 1: add further to this economy. We had a savings rate
Speaker 1: over in the first quarter. That's more fuel. So I
Speaker 1: can see this economy really geared up to boom in
Speaker 1: the second quarter. I think we'll get better than ten
Speaker 1: percent growth annualized in the second quarter. Can these companies
Speaker 1: make that demand? David? The money question, and it's still
Speaker 1: racing to be bullish the sancuity market. Yes, I think so.
Speaker 1: But I think you've got to got to focus on
Speaker 1: the cyclical sectors, the value sectors. I think they should
Speaker 1: They should do very well because this economy is going
Speaker 1: to accelerate fast here. I don't think interest rates are
Speaker 1: going to stay at this level. I think they have
Speaker 1: to go up with the pace of acceleration that would
Speaker 1: likely see over the next few quarters. How do you
Speaker 1: look at the data, David, Given the fact that people
Speaker 1: don't seem to trade off of it, what data are
Speaker 1: you looking at to determine whether this is something more
Speaker 1: than transitory, whether these price pressures have legs. Well, you
Speaker 1: you almost have to have a new model of inflation.
Speaker 1: I mean, the problem is that the old rules in
Speaker 1: terms of exact you know, the Phillips curve and the
Speaker 1: relationship between money supply and inflation, they don't really work
Speaker 1: very well. So it is it's a complicated process, but
Speaker 1: you have to put together the pieces of it. And
Speaker 1: I think the wage part of it's very important. Um.
Speaker 1: And also the fiscal party. You know, the present Biden
Speaker 1: announced a lot of plans yesterday. If he gets that
Speaker 1: through Congress, you know, usually it's spending now, taxes later, um.
Speaker 1: And so I think you get more physical stimulus. And
Speaker 1: if you get that stimulus, you will I think have
Speaker 1: some inflation that sticks. And the really interesting point about
Speaker 1: this is, you know the federal reserves as well. It's
Speaker 1: probably transitory. But by the time they know whether it's
Speaker 1: transitory or not, we're in the middle of next year.
Speaker 1: So the question is how long can you wait to
Speaker 1: be sure that it's transitory. That was a hatter of transitors.
Speaker 1: That was very good. Dr you're getting drunk, t K.
Speaker 1: He's going it, David Kelly. It was very transitory of
Speaker 1: you to come on and give us wisdom out to
Speaker 1: the third quarter or fourth quarter. With what we've seen
Speaker 1: in the last a week or even five days, do
Speaker 1: you have any clarity pest Labor Day of this year? Yeah,
Speaker 1: I mean I think I think we can see we
Speaker 1: can see the GDP story. I mean, this thing is
Speaker 1: just going to keep on accelerating. We know we've got
Speaker 1: the funds, and we also know that we've got people,
Speaker 1: you know, anxious to get back to to doing normal things.
Speaker 1: And you know, I think the fourth quarter this year
Speaker 1: is the first quarter that's going to feel in any
Speaker 1: way normal, and I expected to be a very blockbuster
Speaker 1: quarter in terms economic activity. I think the holiday season
Speaker 1: will be huge. But you know, I think things get
Speaker 1: much more murky when you get into twenty two. Just
Speaker 1: David Kelly, have to go back to the office soon.
Speaker 1: Is that July? Is that July line in the sand
Speaker 1: for you, David? I'm well, my second vaccine, I guess
Speaker 1: on May eight, two weeks later, I intend to go
Speaker 1: down to New York. We go. We look forward to
Speaker 1: seeing you, so hopefully can come back into the studio
Speaker 1: one day. I'd love to do that. That's the point
Speaker 1: in the next I don't know, several years. David Kelly
Speaker 1: check mugan asid Management Chief Club with Strategies. Now Henrietta
Speaker 1: Trades joins his Veda partners here on the soire in
Speaker 1: Washington last night, Henrietta, I want you to explain in
Speaker 1: the white marbled halls of Washington how politicians line up
Speaker 1: their tax policy around as a president mentioned three tenths
Speaker 1: of one percent of taxpayers, why aren't they more representative
Speaker 1: of the rest of America? You know, what are the
Speaker 1: interesting things I hear from senators and including the moderates, like, um,
Speaker 1: you know what Joe mansion is that they want to
Speaker 1: tax wealth like the tax work. So they have I
Speaker 1: think a lot of talking points around raising cap games,
Speaker 1: around raising taxes on top marginal rates. I think the
Speaker 1: real question is, you know, what can you functionally get
Speaker 1: the votes for with no margin for error? Where can
Speaker 1: you get those fifty votes then? And you know, I
Speaker 1: don't see much movement as realistic. Maybe a couple of
Speaker 1: points here and there. Okay, this is really really important.
Speaker 1: Dan Balls steam Dan Balls in the Washington Post, so
Speaker 1: talks about the narrowest of majorities. When do we come
Speaker 1: to our senses that the president can't be bold? If
Speaker 1: we do, is it within hours days? Or do we
Speaker 1: have to drag this into July? I mean, honestly, I
Speaker 1: think that you probably most investors should have seen that
Speaker 1: when you know, for instance, they couldn't pass the minimum
Speaker 1: wage hight votes see the fifteen dollars an hour, and
Speaker 1: they lost eight votes. I mean, I think July is
Speaker 1: probably a good time frame for when we'll start to
Speaker 1: recognize that we're going to be mostly deficit to financing
Speaker 1: the costs of this bill. The administration and Democrats generally
Speaker 1: have been doing a great job of avoiding the conversation
Speaker 1: around reconciliation and deficiting races that will have to be
Speaker 1: authorized this bill, and that's because President Biden has rolled
Speaker 1: out this ambitious agenda to pay for it. So July
Speaker 1: seems right to me based on what we see from
Speaker 1: the budget committees. We know that Secret Pelosi is marshaling
Speaker 1: this bill through the House and they want to be
Speaker 1: wrapped up by the fourth of July. I think reconciliation
Speaker 1: comes right after um. September is a possibility, you know,
Speaker 1: might be this headline risk that looms over us until September,
Speaker 1: But July september is my thinking as well well, the
Speaker 1: headline number, and most likely be in September after it
Speaker 1: gets pushed through the congressional sausage. My expectation is at
Speaker 1: the cost of this bill, which is currently four trillion dollars,
Speaker 1: the combo of the Infrastructure Bill and the family's plan
Speaker 1: gets flashed by at least half. So to trillion is
Speaker 1: the maximum sticker shock spending number that goes moderates in
Speaker 1: the Senate can stomach. So the spend alone is going
Speaker 1: to come down by half, and that means the revenues
Speaker 1: needed to offset the cost are going to calm down
Speaker 1: by at least half. And we haven't even started about
Speaker 1: started talking about the deficit hike. So the real question
Speaker 1: is going to be when do we see the spending level. Um,
Speaker 1: my expectation that that doesn't get discovered and earnest until
Speaker 1: the Senate starts to consider this bill, which will be
Speaker 1: July late July specifically, and then um, the deficit hike
Speaker 1: number again will be the other key input point to
Speaker 1: see how revenue we need. So all this is gonna
Speaker 1: just effectively wait till July. You can skip over the
Speaker 1: next couple of months. The Housel pass a big bill
Speaker 1: that maybe is three four trillion dollars and then we
Speaker 1: can forget about that as soon as we get over
Speaker 1: to the Senate. Henrietta, if you look at equity trading,
Speaker 1: you can see that a lot of people don't believe
Speaker 1: that corporate taxes will be raised all that much. What
Speaker 1: do you think they will be looking at in September.
Speaker 1: Will it be higher than they expect or will there
Speaker 1: be more enforcement of loopholes and just getting the actual
Speaker 1: taxes that they're charging A great point, I mean that
Speaker 1: enforcement mechanism. When you start hearing lawmakers talk about enforcement
Speaker 1: and collecting taxes that are due by beefing up the
Speaker 1: funding for the I R S, that should tell you
Speaker 1: all you need to know, which is we're not going
Speaker 1: to go after new taxes. We're not going to create
Speaker 1: some new tax stream. We're gonna go after the ones
Speaker 1: we've already collected, trying to boost you know, fraud ways
Speaker 1: an abuse and and and call some earnings from that.
Speaker 1: Um I think what investors are stuck in right now
Speaker 1: is this um mentality that whatever the President says goes.
Speaker 1: So they here, you know, at thirty nine point six
Speaker 1: capital gains tax rate, and that's what they go to.
Speaker 1: And then you see a couple of advisors say, you know,
Speaker 1: maybe twenty eight. We'll imagine if the number is. I
Speaker 1: think that's where we ultimately end up. But people are
Speaker 1: using their imagination effectively enough. Yet the same with corporate rates,
Speaker 1: it doesn't have to be. It doesn't even have to
Speaker 1: be five percent. It could easily be. And that's what
Speaker 1: the business community is pushing right now. You know, we
Speaker 1: can handle a point or two. Don't take us all
Speaker 1: the way at twenty eight, and possibly don't take us
Speaker 1: all the way at twenty five, and those are options,
Speaker 1: and I think the street will spawn pretty favorably based
Speaker 1: off of what current expectations are, which still can be
Speaker 1: really high. If you're on the phone with folks, I
Speaker 1: agree the market is not pricing it in. But when
Speaker 1: you're on the phone with people talking about where tax
Speaker 1: rates are going to go, they're surprised at our thesis
Speaker 1: that taxes will not rise that much. And then it
Speaker 1: just quickly. It wouldn't be the first time that we've
Speaker 1: had a week where we're drowning in fiscal news in
Speaker 1: America and we missed the foreign policy story that creeps
Speaker 1: up on us. What are we missing right now? At
Speaker 1: Sound of America? At Sound of Domestic Fiscal Policy? Man
Speaker 1: John I thought the part of the speech Laborite that
Speaker 1: was most compelling was the China facing component. Um The U. S.
Speaker 1: China relationship is one that I think is going to
Speaker 1: be paramount in the back three years of the Biden administration.
Speaker 1: They're not going to pass anymore legislation after this bill,
Speaker 1: most likely except for a China facing component, so U
Speaker 1: S China relationships. That means everything from expert control restrictions
Speaker 1: beeping up to domestic subsidization of manufacturing in the high
Speaker 1: tech sectors. Um, you know, monitoring the South China, see
Speaker 1: dealing with Taiwan, dealing with the EU and the UK
Speaker 1: to sort of combat China on a multilateral basis. That's
Speaker 1: the future. That's the next three years. Henrietta gotta catch
Speaker 1: up and registrates there of Vata Panas thank you, the
Speaker 1: Caterpillos CFO saying that they may not meet the one
Speaker 1: and use a demand due to a chip shortage. You
Speaker 1: saw this in Apple as they knock off three or
Speaker 1: four billion dollars a quarterly revenue because of a chip shortage,
Speaker 1: holding back sales of the Mac and the iPad. You
Speaker 1: saw this from forward cutting production by fift planned production
Speaker 1: by in the second quarter. I want to bring it
Speaker 1: a man who knows this business far better than us
Speaker 1: p f Ago, the New Street Research head of Technology Infrastructure.
Speaker 1: Let's just start right there. What's happening at the moment,
Speaker 1: and why is this hitting some companies more than others. Okay,
Speaker 1: so on what's happening at the moment. Let's rewind back
Speaker 1: to a year ago. A year ago, the world came
Speaker 1: to a stud everything stopped, and then you know guys
Speaker 1: working in the supply chain at like in in boundaries
Speaker 1: at chip manufacturers, like buyers planning for orders, they all
Speaker 1: went a very cautious role. And then at that point
Speaker 1: in time, the word split into you have you have
Speaker 1: players more into tech space who we are thinking, we
Speaker 1: have very important turns to take, like the cloud, the
Speaker 1: five jet turn, and we don't want that situation, that
Speaker 1: temporary situation to stuff. So they kept ordering like there
Speaker 1: is more tomorrow. And then you have people who are
Speaker 1: more defensive, like the auto industry, like industrial supply chains,
Speaker 1: that were really scared about cash burn and like getting
Speaker 1: into trouble in such like a significant downturn, and they
Speaker 1: became very very cautious. Then right after that what happened.
Speaker 1: The word remained relatively slow, which is not great for
Speaker 1: many people for like restaurants and things like that. But
Speaker 1: people staying at home, like white collar kept getting paid.
Speaker 1: Blue collars or like you know, like a service jobs
Speaker 1: got compensated with government with simil this money and a
Speaker 1: lot of money kept flowing into demand. You look at
Speaker 1: the results of that early yesterday, that was a massive,
Speaker 1: massive bit like iphen stays up sixty five percent own here.
Speaker 1: So demand is far outstripping the questions supply planning that
Speaker 1: was made. Okay, So Pierre beautifully explained you are definitive
Speaker 1: on this out of Bernstein years ago. What is the
Speaker 1: fairly good timeline to where the logistics mass clears. So unfortunately,
Speaker 1: the core of the logistics mess is what we call
Speaker 1: legging edge uh logic chips. So that's the chips manufactured
Speaker 1: by Global Foundries, by t SMC, by UMC. And the
Speaker 1: lead time to put out a new fab and have
Speaker 1: it up and running is at best, in ideal conditions,
Speaker 1: eighteen months and you should be more like thinking, you know,
Speaker 1: um uh, like even six more months like that, like
Speaker 1: twenty four months or a bit more. So we're going
Speaker 1: to hear that chip supply for the next couple of years.
Speaker 1: Um And in terms of getting gets impacted the most
Speaker 1: and things like that, it's it's going to be very
Speaker 1: difficult to call because one chip missing on the mother board.
Speaker 1: You can't chip your iPad, one chip missing in your car.
Speaker 1: You can't manufacture your car. So it's going to be
Speaker 1: very random. You know, who gets hit, who doesn't get hit.
Speaker 1: But of course, if you are like uh an Apple,
Speaker 1: your better position because you've been preparing for that better
Speaker 1: because you were working on your five transitions and others
Speaker 1: taking way more precautions in terms of supply than to
Speaker 1: can manufact You're just being focused on managing the downtown here.
Speaker 1: This is exactly where I wanted to go execution risk.
Speaker 1: As John was talking about earlier, how much is this
Speaker 1: something that corporate executives can get ahead of at this point?
Speaker 1: What are you looking forward to hear from corporate executives
Speaker 1: that they are going to do about it? Um, So
Speaker 1: you know it's going to be very difficult to get
Speaker 1: granular details about what they're going to to be able
Speaker 1: to do that. If the CFO Ford, you know, you know,
Speaker 1: you cannot really have his own and on the plan
Speaker 1: to secure like alternative supply for a very minor chip
Speaker 1: in their car, So, um, it's going to be very
Speaker 1: difficult to be able to do something about it. I
Speaker 1: think what you have to do is to mitigate it. Uh.
Speaker 1: And then another perspectives that you have to keep in
Speaker 1: mind that is very important is that we are in
Speaker 1: this extreme situation where people braced for a downturn and
Speaker 1: actually spending increase. But as you know, the world reopened
Speaker 1: and you were talking about New York getting back to normal,
Speaker 1: people getting back into the cities that never sleeps in
Speaker 1: bars and restaurants. This is actually going to flush down
Speaker 1: the amount of money going into consumer econics and potentially
Speaker 1: even going into the car industry. And so maybe the
Speaker 1: saving grace in this environment is going to be when
Speaker 1: demands normalize. It is apply going to have like massive
Speaker 1: quarters that they reverted yesterday for the next six months
Speaker 1: or nine months. Maybe not. Maybe things are going to
Speaker 1: cool down, and that's actually what's going to to accelerate
Speaker 1: a return to normal. On the supply side of things
Speaker 1: are really smart as always, and I look forward to
Speaker 1: catching up again. I can't MANE told you about TESTA
Speaker 1: and then we get distracted by something else. We're gonna
Speaker 1: do that soon. I promised PFW to that New Street
Speaker 1: Research Head of Technology Infrastructure Joseph Feldban of Telsea Adviser
Speaker 1: to go up as a choice set. He wrote a
Speaker 1: brilliant note on Amazon to maybe three days ago. The
Speaker 1: ink is barely dry and he probably already has to
Speaker 1: change the model. Joe Feldman, how do you approach Amazon
Speaker 1: this afternoon after what you witnessed from Google and Apple? Yeah,
Speaker 1: I think you're going to see some really good results
Speaker 1: out of Amazon, especially fourth quarter has in the first
Speaker 1: quarter so far is proven to be quite strong for
Speaker 1: really all the retailers, anybody selling to the consumer, and
Speaker 1: Amazon is going to be a big winner of that.
Speaker 1: I think they're Amazon a ws business has been strong
Speaker 1: even last night. They just announced a new deal with
Speaker 1: Disney Plus. So they're continuing to be this juggernaut in
Speaker 1: the you know, retail and technology and just dominating out there.
Speaker 1: So I think our our numbers are probably going to
Speaker 1: go up. I think our models going to have to
Speaker 1: adjust again tonight after they report. I'm expecting good results.
Speaker 1: A juggernaut with a target on its back, and we
Speaker 1: saw it of an Apple trying to get ahead of
Speaker 1: that with a plan to do infrastructure spending in the
Speaker 1: United States, invest in new plants. Are we going to
Speaker 1: hear something similar out of Amazon. I think they are.
Speaker 1: You know you you. They continue to invest in the future.
Speaker 1: They're getting closer to the customer with more facilities. UM,
Speaker 1: whether it's distribution or grocery. They're leveraging their technology and
Speaker 1: the stores. I think we're going to have contact with
Speaker 1: shopping at a whole new level because of the technology
Speaker 1: Amazon has. Their distribution capabilities continue to improve. Like I said,
Speaker 1: the AWS, they're continuing to become more dominant there, and
Speaker 1: especially with more people working from home, and and you know,
Speaker 1: that's likely to continue to some extent that AWS becomes
Speaker 1: even more important to have things in the class. So
Speaker 1: I think they're going to continue to to to really
Speaker 1: push and lead the direction for most others, uh, in
Speaker 1: the in the consumer space for sure. There's also a
Speaker 1: question on the employment space. Um. Amazon coming out today
Speaker 1: and saying that it was planning to raise wages for
Speaker 1: a lot of workers. Is it enough what you've seen
Speaker 1: so far fifty cents to three dollars an hour for
Speaker 1: most workers, this idea that Amazon has had so much pressure,
Speaker 1: including that unionization push. Yeah, I think that they have
Speaker 1: done a good job, better than most people expect. I
Speaker 1: think if you look at their average wage, it is
Speaker 1: pretty strong. Um. You know, and it's certainly above the
Speaker 1: fifteen dollar mark. And I think that they've you know,
Speaker 1: been very competitive. I hear a lot of retailers talk
Speaker 1: about needing to compete with Amazon for for talent, uh,
Speaker 1: particularly in distribution UH and even at retail. So I
Speaker 1: think that, you know, Amazon has done a good job,
Speaker 1: and you know, people want to work at a company
Speaker 1: that's growing fast and has a lot of strong process
Speaker 1: backs ahead, Joe, I'm looking at free cash flow back
Speaker 1: five years. Here's the numbers, folks, six seventeen two six again,
Speaker 1: and we model out to fifty two. We've gone from
Speaker 1: six gazillion to fifty two gazillion. In a long cup
Speaker 1: of coffee, Joe Feldman, when's the dividend? Where's the ship share?
Speaker 1: Buy back? Where's the stock split? When did these guys
Speaker 1: grow up and become a Dow component? Yeah, the stock
Speaker 1: split is something that seems nearer to us than than something,
Speaker 1: you know, the others, the dividend or buy back. Uh.
Speaker 1: You would think that they are unstable enough footing at
Speaker 1: this point, and they've been able to show profitability quarter
Speaker 1: after quarter now for several years that they should be
Speaker 1: able to start to think about redeploying that cash to
Speaker 1: the shareholder in some some regard um. You know, I
Speaker 1: get it, you want to hold some cash and be
Speaker 1: able to continue to invest and do what they're doing.
Speaker 1: But we're back, We're now that new territory, a new
Speaker 1: phase of growth for these this company where I do
Speaker 1: agree that you're gonna have to see some of that cash, Lisa. One,
Speaker 1: they've gone from four gazillion and like another long cup
Speaker 1: of coffee, which raises a question, Joe, what are they
Speaker 1: gonna buy? Well, they can buy whatever they want, I guess,
Speaker 1: but you know, they do have a lot of opportunity
Speaker 1: to grow. I think their footprint to get closer to
Speaker 1: the customer, now, whether that's going to be through distribution
Speaker 1: facilities or grocery stores. I mean, a lot of our
Speaker 1: contacts in the real estate community, you know, indicate that
Speaker 1: that Amazon has been pretty aggressive trying to build out
Speaker 1: their grocery networks. You know. Now clearly they've more than
Speaker 1: enough cash to do that. I don't think they want
Speaker 1: to buy a retailer, though, I think they'd rather grow
Speaker 1: it themselves organically. You know, maybe they could get some
Speaker 1: you know, leases or something, but it's not clear that
Speaker 1: that's where they would make acquisition. Well, I gotta say, Joe,
Speaker 1: when you say that they could buy anyone. Sure they
Speaker 1: have the cash, But I do wonder the anti trust
Speaker 1: push in Washington, d C. Is it just lip service
Speaker 1: or is that a real threat for Amazon. I mean,
Speaker 1: you know, look as big as they are, you know,
Speaker 1: they've got this big guy in Bentonville that quite large
Speaker 1: themselves on the retail side of things anyway, you know,
Speaker 1: and they've got quite a few competitors in the cloud.
Speaker 1: I'm not so sure that they've got this monopolist of
Speaker 1: power out there that that people are concerned about. Um,
Speaker 1: there is pretty strong competition in the space of retail
Speaker 1: and technology. Joe Fellman, thank you so much. Thrilled to
Speaker 1: have you on here early in the years. On day
Speaker 1: he is with Telsey Advisory. This is the Bloomberg Surveillance Podcast.
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