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Speaker 1: Jeff You of bn Y and writing investors are navigating
Speaker 1: a market that feels both familiar and fundamentally different. Growth
Speaker 1: is uneven, but still has room to run. Jeff joins
Speaker 1: us now for more. Jeff, good morning, Happy new year.
Speaker 3: Wonderful to see you.
Speaker 1: I want to start with something that you said in
Speaker 1: your latest report, which is sometimes it's better to ask
Speaker 1: good questions than to have answers. Right now, what are
Speaker 1: the key questions looking at heading into this year.
Speaker 4: I think from client's point of view, the questions are,
Speaker 4: you know, sustainability. As you've have said, we've had three
Speaker 4: good years of double digit returns. You it, can we
Speaker 4: extend that to a fourth and overall, it's if I
Speaker 4: am concerned about valuations and the like and there is
Speaker 4: going to be a bit more of a volatile path,
Speaker 4: what are some of the defensive positions, how do I diversify?
Speaker 4: I think those are one of the questions As a
Speaker 4: responsible investor, you stay the course. You know, if it
Speaker 4: ain't break, don't fix it. But you need to know
Speaker 4: where some of the pitfalls are, look at them in advance,
Speaker 4: and identify the insurance someplays. I think that comprehensive of
Speaker 4: that comprehensive approach is going to be the key question
Speaker 4: as we ask allocate you're heading into twenty twenty six.
Speaker 1: Yeah, one of the key questions about diversification is what
Speaker 1: are you diversifying against? Is it inflation risk or is
Speaker 1: it the risk of recession? Because the potential diversifiers are
Speaker 1: completely different depending on that answer.
Speaker 4: I totally agree with you, and I think it's different
Speaker 4: diversifiers for different markets and also different regions. If I
Speaker 4: look at the run of European data that we've had
Speaker 4: this morning, I'm afraid it's looking a bit more stagflationary.
Speaker 4: So if we're going to worry about inflation and worry
Speaker 4: about stagflation environment. I probably worry more about Europe than
Speaker 4: the US for this year. If I look at APAC
Speaker 4: for example, you know, Asian bourses are doing quite well,
Speaker 4: so there's a bit of a tech run too, So
Speaker 4: you can that actually take place, but not at the
Speaker 4: expense of my tech positioning in the US and elsewhere.
Speaker 4: And how do I defend against, you know, further trade
Speaker 4: volatility up ahead. So I think all of these aspects
Speaker 4: are important, but look at it on an individual market basis,
Speaker 4: rather than you think that there's one insurance play that
Speaker 4: can defend against everything. I don't think that works anymore.
Speaker 5: What about the broadening out, Jeff, that we've heard so
Speaker 5: much about.
Speaker 3: There's been a lot of head fakes. You know.
Speaker 5: We finished the year with all of the high bandwidth
Speaker 5: d ram makers winning the S and P five hundred,
Speaker 5: Western Digital, sand Disc, Seagate all the biggest winners in
Speaker 5: terms of the individual stocks, and then Robin Hood, New
Speaker 5: mine Land Research, Palanteer. Those are exactly the same stocks
Speaker 5: that are up today in the pre market.
Speaker 3: Are we going to see it broadening out or.
Speaker 5: Is it just going to be the same top twenty
Speaker 5: stocks pushing this rally into twenty six.
Speaker 4: I think that goes into a broader question about the
Speaker 4: broader economy. So can that K shape and growth that
Speaker 4: we're seeing not just in the US, and but I
Speaker 4: think other economies can sympathize as well. Can that actually
Speaker 4: narrow a bit so that K sort of converges the
Speaker 4: two arms of the K into more balanced to growth.
Speaker 4: And here's where we get a multiplier effector into the
Speaker 4: broader economy. So can main street benefit as well? If
Speaker 4: I look at our underlying positioning data, yes, tech has
Speaker 4: done well, but consumer related segments have really softened, and
Speaker 4: that points to a margin story. You know that that
Speaker 4: points to the demand story as well. So can we
Speaker 4: have that nurse the so called trickle down effect into
Speaker 4: main street? If that can happen, then we can see
Speaker 4: a broadening out from the tech stocks which are overheld
Speaker 4: of course you're heading into twenty twenty six, but into
Speaker 4: some of the consumer oriented stocks as well in the
Speaker 4: US and also in EM. I think that is a
Speaker 4: consensus view for the years allocation into EM into EM tech,
Speaker 4: but for China, you know, for Japan and for the rest,
Speaker 4: can we see EM consumer stocks do well? Are we
Speaker 4: going to see a fiscal push benefit consumer. So globally
Speaker 4: it really is about main street. If main Street can
Speaker 4: pick up, then we'll see that broadening out. But I
Speaker 4: think on the fiscal side, markets are waiting to be
Speaker 4: convinced you're.
Speaker 3: Here in the US.
Speaker 5: Of course, everybody in markets wants to see or everybody,
Speaker 5: I guess long stocks wants to see FED cuts. Is
Speaker 5: that going to continue and will that help main Street?
Speaker 3: Jeff?
Speaker 5: Is that going to be able to bring down mortgage
Speaker 5: rates and auto lawn rates which so far haven't responded
Speaker 5: very well to one hundred and seventy five basis points
Speaker 5: of cuts.
Speaker 4: So I think the question is as the FED cuts rates,
Speaker 4: and I think that that is going to be a
Speaker 4: consensus view. Of course, your cash flow improves on the
Speaker 4: liability side. What main street wants to see not just
Speaker 4: in the US but around the world. Can real incomes
Speaker 4: grow and if it can grow, can expectations pick up.
Speaker 4: You look at the UK for example, as Governor Bailey
Speaker 4: has highlighted, wage growth is very strong, but you're seeing
Speaker 4: savings rates go up as well. It looks like the
Speaker 4: UK is going to run a double digit savings rate
Speaker 4: on a sustained basis, which is unheard of, right, So
Speaker 4: what is it that's holding back the consumer in the
Speaker 4: US and the UK and elsewhere and also in APAC
Speaker 4: there're sitting on high savings where they're not spending, they're
Speaker 4: not pushing it into the broader economy. So I think
Speaker 4: that requires more stability in terms of their expectations. Yes,
Speaker 4: wage growth is firm right now, can that be maintained?
Speaker 4: And the US economy there's no far, no higher economy.
Speaker 4: Let's move into a more hiring economy. I think that's
Speaker 4: what's needed to get mainStreet going and to lift the
Speaker 4: consumer segment.
Speaker 1: Right now, the consensus is that the dollar will weaken
Speaker 1: even if you do have stronger growth, and say in Europe,
Speaker 1: and it's because of the rate cuts that are expected.
Speaker 1: What do you think is going to be the main
Speaker 1: driver for the currency the actual growth rate or the
Speaker 1: expected rate cuts by the Federal Reserve With the rest
Speaker 1: of the central banks around the world largely sitting on
Speaker 1: their hands, so.
Speaker 4: I think it is going to be policy different at
Speaker 4: the end of the day. So as long as we
Speaker 4: go through this so called hawkish cuts approach with the Fed,
Speaker 4: I think, you know, dollar downside is going to be
Speaker 4: a bit more limited. Yes, there will be hedging, and
Speaker 4: the costom of hedging will factor into that, you know,
Speaker 4: as a rate differentials shift around. But if I look
Speaker 4: at APAC right now, APAC FX is where we see
Speaker 4: the most capacity for strength against the dollar.
Speaker 3: It's not going to be in Europe.
Speaker 4: I've been wrong on europe dollar last year, so this
Speaker 4: year I still think Euro's looking a bit stagflation rea.
Speaker 4: So I think Euro's strength is going to be the
Speaker 4: dollar weakness against the lights of the rim and b
Speaker 4: against the lights of the end. That is the consensus view,
Speaker 4: but I'd be a bit more cautious there too. Yes,
Speaker 4: APAC currencies will rally in real terms, but in nominal terms,
Speaker 4: I'd be a bit more careful. If China, for example,
Speaker 4: can shift PPI from negative two point two percent two
Speaker 4: point five percent, that's the expect the values right now
Speaker 4: towards positive to positive three that kind of real effective
Speaker 4: exchange rate appreciation is something that they would probably be
Speaker 4: more happy with. So position for your dollar very very carefully.
Speaker 4: If there's going to be dollar weakness, I'll probably see
Speaker 4: it more against APAC rather than European currencies.
Speaker 1: Speaking, of China and US versus China dynamics, jjimping over
Speaker 1: in China had this New Year's message that he gave
Speaker 1: in an address. China has become one of the world's
Speaker 1: fastest rising economies in terms of innovative capacity, giving a
Speaker 1: nodge that the war in terms of AI prowess between
Speaker 1: US and China, Do you have a sense of who
Speaker 1: is going to come out ahead at the end of
Speaker 1: twenty twenty six?
Speaker 4: So I think the direction for innovation and AI, if
Speaker 4: we look at the application for example, is a bit divergent.
Speaker 4: So I think both can lead in terms of one
Speaker 4: as consumer facing and the US side on the industrial side.
Speaker 4: That's what's China's focusing on. But what investors, what the
Speaker 4: positioning is looking at is can we see AI proess
Speaker 4: in China and also beyond translate into higher margins, in
Speaker 4: higher earnings growth and that can lift the consumer that
Speaker 4: seems to be in the missing link and as allocation
Speaker 4: right now, that having said that, a lot of savings
Speaker 4: are being pushed into AI stocks and APAK. We've seen
Speaker 4: the IPOs are the reaction over the last twenty four
Speaker 4: hours of trading war. So hence that theme is going
Speaker 4: to play out in their different fields of course, but again,
Speaker 4: can that translate into growth into mainStreet earnings and wages
Speaker 4: and lift Chinese consumer spending as well. That will require
Speaker 4: not just on the corporate side, but on the fiscal side.
Speaker 4: I think that's going to be one of the big
Speaker 4: pushes for em growth this year, and we'll have positive
Speaker 4: benefits of for the rest of the world as well.
Speaker 4: If you look at Europe, for example, it wants to
Speaker 4: see stronger Chinese demand. Bat trade deficit certainly needs houring.
Speaker 2: Stay with us more Blomberg surveillance coming up after this.
Speaker 3: Data.
Speaker 1: Peterson of the Conference Board, writing twenty twenty five is
Speaker 1: ending on a confusing note for markets, economists and central
Speaker 1: bankers alike. So we should not completely ignore the data,
Speaker 1: joins us now, happy new year. Thank you so much
Speaker 1: for being with us data. Let's start with the data
Speaker 1: that we have gotten. Why is it so noisy? How
Speaker 1: should people look at it? Considering that people do view
Speaker 1: it as somewhat noisy, but also.
Speaker 6: They can't ignore it exactly, you can't ignore these data.
Speaker 6: We did have data for the third quarter. Certainly the
Speaker 6: GDP came in a lot stronger than expected, and certainly
Speaker 6: consumption was a lot stronger even though we did have data.
Speaker 6: It shows that the Fed, I mean the federal resert Sorry,
Speaker 6: it shows that the federal government probably had more data
Speaker 6: in between releases and certainly after the shutdown. But I
Speaker 6: think the key thing is that inventories and trade were
Speaker 6: very confusing. And indeed, when you add up the inventories, well,
Speaker 6: when you add up the imports plus the consumption, the
Speaker 6: inventory's numbers just don't make sense. So we really need
Speaker 6: to get data next week on inventories as well as
Speaker 6: international trade, business sense, and then and also employment. I
Speaker 6: think we really need to see more data to get
Speaker 6: a handle on what happened in the third quarter and
Speaker 6: also what happened in the fourth quarter.
Speaker 3: Data.
Speaker 1: We are going to get some data come next week
Speaker 1: that is going to be important, including the non farm
Speaker 1: payils as well as some of the manufacturing aspects that
Speaker 1: you're talking about. Nonetheless, we have a host of other
Speaker 1: information out there that people keep pointing to. Whether it's ADP,
Speaker 1: whether it's earnings, whether it's the rudderic coming out of
Speaker 1: a lot of companies, or whether it's retail sales. I mean,
Speaker 1: is there some sort of conclusion that you can take
Speaker 1: even amid the noise.
Speaker 6: Well, I think, you know, certainly the stock market does
Speaker 6: not reflect the real economy, so we can't look to that.
Speaker 6: And also people who most people don't own stocks, so
Speaker 6: they're not really benefiting from that. We do have lots
Speaker 6: of sentiment data. Of course, our consumer sentiment data has
Speaker 6: shown that consumers are less sanguine about the current conditions
Speaker 6: as well as having some concerns about the future. You know,
Speaker 6: retail sales at all we have really is the end
Speaker 6: of the third quarter, and they were weaker. So I
Speaker 6: think that we just need more information, and you can't
Speaker 6: look at these things and try to estimate what the
Speaker 6: government data is going to tell us.
Speaker 5: I'm looking at the Conference Board Consumer Confidence Index and
Speaker 5: it hasn't been this low since the pandemic.
Speaker 3: So what does that tell us.
Speaker 5: About you know, inflation, growth, spending.
Speaker 6: Well, I think the inflation bit has yet to hit us. Remember,
Speaker 6: the tariffs that were implemented were delayed twice and also
Speaker 6: they were raised and lowered several times. So many businesses
Speaker 6: are still waiting to see if there's any certainty with
Speaker 6: respect to tariffs. Yes, we've had a number of deals established,
Speaker 6: but there's still a lot that's unknown. And so with
Speaker 6: businesses uncertain, it doesn't mean that it just means that
Speaker 6: we're not going to see much hiring. We're not seeing layoffs.
Speaker 3: Which is good.
Speaker 6: Most people still are working, but those who do get
Speaker 6: laid off are finding it very difficult to find jobs.
Speaker 6: And even though most consumers are working and they actually
Speaker 6: are spending, the type of spending that they're engaged with
Speaker 6: is very different. They're buying things that they need, and
Speaker 6: when it comes to especially with goods and services, and
Speaker 6: when it does come to things that are entertaining, they're
Speaker 6: buying cheap things right, cheap thrills like streaming instead of
Speaker 6: going to the movies and paying, you know, over one
Speaker 6: hundred dollars for a family of four. And so I
Speaker 6: think we need to really get beyond the first quarter
Speaker 6: of this year to really see what's happening, because I
Speaker 6: think that's when we're going to see the bigger effects
Speaker 6: of tariffs on inflation and consumers really pull back.
Speaker 3: Dana.
Speaker 5: I've been trying to pin down how workers' wages have
Speaker 5: kept up with inflation, as I've been saying, you know,
Speaker 5: Torsten Slot put out a six year average showing that
Speaker 5: wages are doing better than inflation. But Mark Chandler, whom
Speaker 5: we just spoke with from Vandenbrooks, says in his household
Speaker 5: that certainly isn't the case, and he doesn't think that
Speaker 5: it looks like a great picture for consumers.
Speaker 3: How do you see it?
Speaker 6: Well, Yes, wage growth and compensation have been slowing from
Speaker 6: the peaks that we saw during the pandemic, certainly the
Speaker 6: later portion of the pandemic when we were trying to
Speaker 6: get everybody back into the labor market and you need
Speaker 6: to entice them and also keep workers with compensation. But still,
Speaker 6: I mean, I would say that wages are still growing
Speaker 6: at a pace that's above where we were between the
Speaker 6: Great Financial Crisis and the pandemic. But I would look
Speaker 6: at the last GDP data where we saw real disposable
Speaker 6: income grow at zero point zero percentage points annualized in
Speaker 6: the third quarter. That's not a good sign. And so
Speaker 6: we definitely do see slowing in wages, and for some
Speaker 6: people it may be faster than others.
Speaker 2: Stay with US multile Impax. Savannah's coming up off to.
Speaker 1: This under surveillance this morning, Locked and loaded, President Trump
Speaker 1: saying the US is ready to rescue Iranian protesters if
Speaker 1: they are attacked by authorities, protests escalating over the countries,
Speaker 1: deepening economic crisis. And Andrew Bishop of Signal Global Joys
Speaker 1: is now for more. Andrew, what do you make of
Speaker 1: this locked and loaded comment? Do you think that there
Speaker 1: actually are plans in place to intervene by the US
Speaker 1: in Iran?
Speaker 7: So I don't think the plan is to intervene. I
Speaker 7: think this should be read mainly as attempting to give
Speaker 7: the protesters a chance right, so to essentially tell the
Speaker 7: regime there should be a red line not to cross,
Speaker 7: and that is quote unquote violently killed. I think it
Speaker 7: is interesting and a been gruesome interesting the way that
Speaker 7: the president choses words that essentially supposes that if they
Speaker 7: are killed, but perhaps not shot out during protest, but
Speaker 7: instead arrested and you know, disappeared, that would be a
Speaker 7: little less sort of crossing the president's red lines. Also
Speaker 7: potentially out shot at with rubber bullets. We know that
Speaker 7: in previous protests the regime used that to blind protesters.
Speaker 7: These are gruesome details, but I think that they actually
Speaker 7: should be read in the context of the present's choice
Speaker 7: of words.
Speaker 5: So, what would we do with people if we save
Speaker 5: them there. Does that mean we'd bring them here as refugees?
Speaker 3: No, no, no.
Speaker 7: I think what would happen if the present were to
Speaker 7: intervene in the conflict is that the US would essentially
Speaker 7: target the security apparatus. So we would essentially launch I
Speaker 7: mean's put very simply at Tomahawk missiles on ira GC
Speaker 7: domestic facilities, especially besiege sort of the more hardcore security
Speaker 7: forces meant to keep control of the situation. We would
Speaker 7: essentially attack those and hope that the protesters can can
Speaker 7: then have a chance at overwhelming the regime security apparatus.
Speaker 5: I thought it was interesting that, you know, we've been
Speaker 5: chasing this oil tanker below, one which came out of Iran,
Speaker 5: went to Venezuela and is now.
Speaker 3: Headed I guess to Russia.
Speaker 5: The Russians have claimed this tanker, and it looks like
Speaker 5: maybe we'll give them a little leeway because it's Russia.
Speaker 5: At the same time we're sanctioning Chinese and Hong Kong
Speaker 5: based tankers. Are we giving Russia a little bit more
Speaker 5: leeway because we want to get a truce or an
Speaker 5: end to this conflict in Ukraine?
Speaker 7: Yes, But I would say the bigger difference between Russia
Speaker 7: and China is the fact that the US, you know,
Speaker 7: really doesn't have the ability to put any pressure on
Speaker 7: China at all. So, you know, we we sort of
Speaker 7: are in the kabuki dance phase with China where we
Speaker 7: pretend to both sanctions, but they don't actually bite. So
Speaker 7: I think that's that's the biggest difference.
Speaker 3: So what will we do?
Speaker 5: I mean, President Trump started this trade war with China
Speaker 5: in his first term. President Biden actually carried it on
Speaker 5: in a sense, But now it looks like the Chinese
Speaker 5: have realized that their access and refining capabilities of their
Speaker 5: earth minerals gives them a massive advantage.
Speaker 3: Is there anything we can do? Not in the short term.
Speaker 7: I think in the short term, the US and this
Speaker 7: administration have come to realize that there really is nothing
Speaker 7: that the US can do to minimize China's overwhelming leverage
Speaker 7: over the US. And that's why we're seeing the President
Speaker 7: take such a soft, dubbish approach to China. Yes, he's
Speaker 7: a deal maker, but some of the deals that he's
Speaker 7: struck over the past a few months with China are
Speaker 7: borderline humiliating, I think from an a political standpoint, right,
Speaker 7: this famous sort of high end chips in exchange for soybeans.
Speaker 7: It's pretty much from a bipartisan perspective, I think it's
Speaker 7: fair to say that's not a great deal for the US,
Speaker 7: and that's just a recognition of the US's weaker hand
Speaker 7: in the short term.
Speaker 1: How much is this the reason why China is doing
Speaker 1: these drills around Taiwan right now?
Speaker 3: So it isn't.
Speaker 7: It isn't China would probably be conducting these drills. It's
Speaker 7: conducted drills like these every year, sometimes twice a year,
Speaker 7: for the past several years. So in that sense, it's
Speaker 7: not particularly surprising. I don't think it's necessarily a result
Speaker 7: of the president's sort of soft approach to China. What's interesting,
Speaker 7: or what's maybe more political, is China's takeaways from the
Speaker 7: President's reaction to the drills. Right I think the State
Speaker 7: Department's press release yesterday that sort of condemned the drills
Speaker 7: and took a harsher tone was an attempt to not
Speaker 7: send the wrong message to China. But the president's decision
Speaker 7: to essentially say, you know, President season being hasn't talked
Speaker 7: to me about this, it's not a big deal. That
Speaker 7: is the kind of thing that she notes down writes
Speaker 7: down and potentially, let's be very clear about it, potentially
Speaker 7: factors into his decision to attack Taiwan for good at
Speaker 7: some point.
Speaker 1: So there's sort of a panoply of potential risks geopolitically
Speaker 1: that people are looking at for next year. On one hand,
Speaker 1: you've got the China Taiwan issue. On the other hand,
Speaker 1: you've got rushed to Ukraine. You of course also have Iran,
Speaker 1: as we were just talking about. Then you have Venezuela
Speaker 1: that has also been increasingly ground zero for a proxy
Speaker 1: between the US and China, with China getting increasingly influential
Speaker 1: in South America. Which of those do you think is
Speaker 1: going to be the most significant heading into this year.
Speaker 7: So on the question of likelihood, it's Venezuela, because there
Speaker 7: is a real chance for the US to essentially ensure
Speaker 7: that Maduro is no longer in power, whether that's you know,
Speaker 7: kinetic actions, CiU, covid ops, etc. When can debate or
Speaker 7: even striking a deal with him. But let's put it
Speaker 7: like this, I think the odds of Maduro being out
Speaker 7: of power at the end of the year are well
Speaker 7: above fifty percent. And that's not something that can be
Speaker 7: said about the Iran situation, or about an end of
Speaker 7: the war in Ukraine and so on and so forth,
Speaker 7: just because those situations are far more complicated. Right, So
Speaker 7: in Iran, for example, these process have legs. But to
Speaker 7: really go from this to actually toppling the regime, it
Speaker 7: requires a lot of steps. The security forces have to defect,
Speaker 7: they then have to take over the hardliners and win
Speaker 7: and so on and so forth. That's much harder than
Speaker 7: just essentially taking out Maduro. So from a likelihood perspective,
Speaker 7: I would say Maduro. From an impact perspective, it would
Speaker 7: definitely be Iran. I mean Iran, you know, turning into
Speaker 7: a different regime would have massive regional implications.
Speaker 2: Stay with us, multiple impex Savanans coming up off to.
Speaker 1: This wood Bush out with its top AI stocks for
Speaker 1: twenty twenty six. Dannives writing heading into twenty twenty six,
Speaker 1: investors are both excited and nervous about the Ai revolution.
Speaker 1: Twenty twenty six is an inflection point here, Dan joins
Speaker 1: us now with his colorful self, Happy new year, wonderful
Speaker 1: to see you as So let's talk about that.
Speaker 3: Why is it an inflection point? What do you mean
Speaker 3: by that? It's really about to me. It's about the second, third,
Speaker 3: fourth derivatives playing out across AI. Look, it's Moniziesian you
Speaker 3: talk about Tessa. It's the next phase in terms of
Speaker 3: autonomous robotics, consumer AI socially when it comes to Apple
Speaker 3: and I think what we're gonna say. Look, I think
Speaker 3: it's a proven year, but that actually makes me more
Speaker 3: bullish because I think now we go into the next
Speaker 3: fees of AI. I think tech stocks are up twenty
Speaker 3: twenty five percent in twenty twenty six, but it's not
Speaker 3: just big tech. It's about second, third, fourth derivatives planing out.
Speaker 3: I will be fascinated to see.
Speaker 5: I don't think anything is officially expected, but you're going
Speaker 5: to SEEES, right, which is not only the biggest tech
Speaker 5: conference in the world, but it has become the most
Speaker 5: important carmaker conference as well. It'll be fascinating to see
Speaker 5: if Tesla comes out with any other products there, or
Speaker 5: if we see a lot more robotics and automization products.
Speaker 3: And to your p it all starts with the godfather
Speaker 3: of AI, Jensen, who'll be there with the black leather jacket.
Speaker 3: Because when his speech to me is just so important
Speaker 3: on Monday, because it really starts off strategically what AI
Speaker 3: is going to look like. He's going to talk about
Speaker 3: physical aims are autonomous robotics, and the two best physical
Speaker 3: AI plays in the world today it's in Nvidia and
Speaker 3: it's Tesla, And I think that speaks to you about Tesla.
Speaker 3: What everyone's focused on this is autonomous chapter now coming
Speaker 3: to Tesla. I think you see Musk right now, Wartime CEO.
Speaker 3: That's the focus when it comes to AI. But also
Speaker 3: it's demonization. Remember only three percent of US companies have
Speaker 3: gone down the AI path so far.
Speaker 5: Are these robots expected to be like B to B robots,
Speaker 5: so building things in factories or like a room. But
Speaker 5: for consumers, what kind of products do you expect them
Speaker 5: to monetize?
Speaker 3: Yeah, especially to see humanoid robotics is going to be
Speaker 3: front and center. Autonomous. You're seeing flying cars, a lot
Speaker 3: of the look the presence you talk about a lot
Speaker 3: of the tensions between US and China, the presence of
Speaker 3: Chinese companies is going to be It's going to be
Speaker 3: a monster in terms of what we see there. And
Speaker 3: I think doubling you over the last few years, but
Speaker 3: I think it's really going to be about humanoid robotics.
Speaker 3: It's going to be about autonomous but it's going to
Speaker 3: this is al's going to be about more embedded AI
Speaker 3: devices that consumers are going to see. See. Yes, we're
Speaker 3: not just talking about flying drones and refrigerators that talk
Speaker 3: to you. Now, these are much more short in front
Speaker 3: and center in terms of it to who's who. Every
Speaker 3: big tech player is going to be there, even if
Speaker 3: they're not unofficially there. They're there to look for acquisitions.
Speaker 1: I love the idea of opening the refrigerator and having
Speaker 1: a site.
Speaker 3: Do you really want that?
Speaker 1: And I can just imagine the future for you know,
Speaker 1: move over ozempic. So there's this question here also about
Speaker 1: what some of the moves in late twenty twenty five mean.
Speaker 3: And I'd love your take on.
Speaker 1: This because we saw some acquisitions made by the likes
Speaker 1: of Meta and Nvidia, and I just wonder whether there's
Speaker 1: more cost consciousness and more of a competitive advantage that
Speaker 1: they're looking to solidify at a time where suddenly companies
Speaker 1: are saying, hold on, what are we paying for this
Speaker 1: and what are we actually getting?
Speaker 3: Look, I think you hear a great point because the
Speaker 3: reality is this isn't it's an arms race. That's what's
Speaker 3: going on with big tech. And right now at the
Speaker 3: top of that mount is big tech. And when you
Speaker 3: look at like Google's win versus doj Anti Trust, I
Speaker 3: mean this is sort of good time for big tech.
Speaker 3: And I think you're going to see more and more acquisitions.
Speaker 3: And we've talked about not just on enterprise, on energy,
Speaker 3: and I think really across the board, and it speaks
Speaker 3: to really what we're seeing right here is that it's
Speaker 3: not just about big tech getting bigger and bigger do
Speaker 3: an acquisition spending. You have six hundred billion in cap
Speaker 3: backs and big tech, but it's also you going to
Speaker 3: see other players being like, don't forget about me. Look
Speaker 3: at AMD. You know you're going to see like look
Speaker 3: at CISCOO other look at IBM. I mean, there's gonna
Speaker 3: be a lot of other players saying like, hey, we
Speaker 3: want to get into that AI party. We don't want
Speaker 3: to look through the windows, you know, like a lot
Speaker 3: of the bears are.
Speaker 1: We were talking about vyd triumphed over Tesla to become
Speaker 1: the world's biggest electric vehicle manufacturer.
Speaker 3: We also have seen a big.
Speaker 1: Tech in China outperform on an equity market perspective, in
Speaker 1: twenty two twenty five, do you expect that to continue
Speaker 1: and for China to really solidify more of its neck
Speaker 1: and neck position with the US or even superseded.
Speaker 3: Look, I think the reality is for the first time
Speaker 3: in thirty years, US is ahead of China when it
Speaker 3: comes to tech, and I think that's very important, obviously
Speaker 3: led by Nvidia, Microsoft, Poundteer in others, but in China. Look,
Speaker 3: we're bullish on China tech. We talk about Ali Baba.
Speaker 3: You look at Tens and you look at Allow the
Speaker 3: other names there. I think what you're seeing is it's
Speaker 3: a narrowing, but it's something where you're seeing robotics really
Speaker 3: play front and center, autonomous evs byd and others in China.
Speaker 3: But when you think about how to play it, you
Speaker 3: have to play US tech and then there are Chinese
Speaker 3: tech players to go after. But in terms of AI revolution,
Speaker 3: you've said it's third inning, one out relative to this
Speaker 3: AI game. And I think the Bears, like I said,
Speaker 3: like in hibernation mood, they can see AI in the spreadsheets.
Speaker 3: And I think twenty twenty six is going to be
Speaker 3: a year that's going to be another bull market year
Speaker 3: for you know, for attacking for AI.
Speaker 5: I had really the same question as Lisa again, because
Speaker 5: we've seen so many stories this morning about by Doo's
Speaker 5: chip unit filing for an IPO, another chip design. I
Speaker 5: think Brianner with a very successful i PO today another
Speaker 5: maybe another mini deep seek moment right with a cheaper
Speaker 5: artificial intelligence, all among the most read stories on the
Speaker 5: Bloomberg Terminals. Clients are paying attention to what's going on
Speaker 5: in China with AI.
Speaker 3: How do you bet on that? I mean, do you
Speaker 3: buy the individual stocks? Is there an ETF that you like?
Speaker 3: Do you have some of these stocks in your ETF? Sure? So, obviously,
Speaker 3: you know for the IVS, e TF. I mean what
Speaker 3: we really focus on is the AI thirty. You know,
Speaker 3: it was like who are the thirty winners? We have
Speaker 3: a few of the Chinese players in there. I think,
Speaker 3: by do you know you look at Huawei in terms
Speaker 3: of the success they're having. Look right now, in Vidia's
Speaker 3: four to five years ahead of any other chip player,
Speaker 3: and I think that's well known. That's why even a
Speaker 3: third rate h two hundred restricted China Big tax is
Speaker 3: going to line up despite where the politics in Beijing.
Speaker 3: But this is an armseries. It's the narrowing of the gap.
Speaker 3: You want to play some of those Chinese tech players,
Speaker 3: but the reality is in the US. From Nvidia AMD,
Speaker 3: we took our top five pound tier crowdsheing and cybersecurity Tesla.
Speaker 3: I think it's going to be the most important year
Speaker 3: ever for them. Microsoft, I think on hyperscale right now, Microsoft, Oracle,
Speaker 3: those are names, I think you know table pounders in
Speaker 3: my opinion in terms of what we see. And then
Speaker 3: Apple finally they come to the AI party instead of
Speaker 3: being on the treadmill two point zero speed, and now
Speaker 3: they actually start to get in terms of the consumer
Speaker 3: AI revolution seventy five hundred dollars per share.
Speaker 1: There's only one company that you didn't mention that's on
Speaker 1: your list, and that's Microsoft. Where is Microsoft in terms
Speaker 1: of winning out versus Google?
Speaker 3: Who is its main competitor? Look in terms of Redmond,
Speaker 3: what they're the enterprise, this is their backyard. When you
Speaker 3: think about companies that are moving to AI. The first
Speaker 3: phone call goes from the della and I think you're
Speaker 3: seeing Google, You're seeing Amazon, what Jasu's doing. They're narrow
Speaker 3: in the gap and they're gonna be success. But when
Speaker 3: I look at when I look at Microsoft, you have
Speaker 3: twenty five thirty billion incremental monization. I don't even think
Speaker 3: factor industry numbers. That's right in the stock ultimately as
Speaker 3: a six in front of it. And I think this
Speaker 3: is gonna be We're gonna go into January into earning season.
Speaker 3: I think that's gonna be kind of the show me
Speaker 3: stories showing like, look, this is not stopping. We said
Speaker 3: AI party starting nine PM's down ten thirty, ten forty
Speaker 3: five pm. Mean that's that party. But the party goes
Speaker 3: to four am, and and that's where we are.
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Speaker 3: M hmm