Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Karl Messer and
Speaker 2: Tim Stenebek on Bloomberg Radio. Taking a look at shares
Speaker 2: of Amazon. They are higher right now by five percent.
Speaker 2: This after the company reported net sales for the first
Speaker 2: fourth quarter of one hundred and eighty one point five
Speaker 2: billion dollars to one hundred and eighty eight point five
Speaker 2: billion dollars and says they're seeing operating and income in
Speaker 2: a range of sixteen billion to twenty billion dollars. That
Speaker 2: estimate was for seventeen point four nine billion dollars. Net
Speaker 2: sales online up seven point two percent year over year,
Speaker 2: physical store net sales up five point four percent year
Speaker 2: over year, AWS net sales nineteen percent year over year increase.
Speaker 2: The coming in at twenty seven point four to five
Speaker 2: billion dollars, pretty much in line with estimates at twenty
Speaker 2: seven point four to nine billion dollars. Let's see what
Speaker 2: James Chalkmak has to say about all this and more.
Speaker 2: He's partner and tech analysts to Clockwise Capital. He joins
Speaker 2: us from Miami today. James, I do want to start
Speaker 2: with Amazon, and then we're gonna get to what happened
Speaker 2: a little earlier in the week with Microsoft and Alphabet.
Speaker 2: What are your thoughts of Amazon at first blush.
Speaker 1: Yeah, I think it's just atory of what Andy Jassey
Speaker 1: has laid out basically about a year ago, that the
Speaker 1: path of profitability on the retail side of the business
Speaker 1: will continue and continue in a in a bigger and
Speaker 1: bigger way as as they achieve the efficiencies across their
Speaker 1: fulfillment network and and UH and and further optimized for
Speaker 1: for shorter duration delivery time. So I think you're seeing
Speaker 1: what you want to see on the bottom line. The
Speaker 1: top line continues to perform more of on a status
Speaker 1: quo basis, So you know, we continue to like the
Speaker 1: name and UH and pretty pretty pleased with the court.
Speaker 3: I know that the results just came in minutes ago.
Speaker 3: But you know, one big theme that we were looking
Speaker 3: at just more broadly this week is whether these big
Speaker 3: tech companies are seeing the results in their earnings from
Speaker 3: all of the capex that they've done on AI. What
Speaker 3: does this Amazon earnings tell us about whether Amazon is
Speaker 3: able to kind of show all of the investments the
Speaker 3: fruit of their investments.
Speaker 1: Yeah, I haven't gone through it with a fine tooth
Speaker 1: come to change the NSSS kind of.
Speaker 4: The returns this quarter.
Speaker 1: But I think that from a bigger picture perspective, you know,
Speaker 1: you're not going to see a lot of trickle down
Speaker 1: to the bottom end or accretion to revenue on a
Speaker 1: short term basis. I think that these are much longer
Speaker 1: term investment cycles that will bear fruit over a longer term.
Speaker 1: So you know, that is a question that comes up
Speaker 1: repeatedly with investors. You know, where's ROI you're spending all
Speaker 1: this cappex But I think it just helps reinforce the
Speaker 1: competitive modes and UH and crew over time. UH the
Speaker 1: what the way that we're looking at big tech more
Speaker 1: broadly is that you know, a lot of these names
Speaker 1: have run up.
Speaker 4: You know, we've been rotating out.
Speaker 1: Of these names for the last couple of weeks now,
Speaker 1: rotating into smaller cap names, more value oriented names, because
Speaker 1: you know, you have expanded multiples, high expectations, as you
Speaker 1: saw with Microsoft Meta.
Speaker 4: You know, I think the correction today.
Speaker 1: Helped Amazon to a certain extent that the expect the
Speaker 1: bar had been lowered.
Speaker 4: But I think that big tech.
Speaker 1: Should, uh should likely remain choppy, at least for the
Speaker 1: interim as we you know, have uncertainties around geopolitics, the election,
Speaker 1: and just the sovereign debt situation.
Speaker 2: So let's let's zoom out a little bit and and
Speaker 2: talk specific about AWS because this is the number that
Speaker 2: you know, everybody cares about. It was pretty amazing to
Speaker 2: see net sales up nineteen percent.
Speaker 1: Year over year.
Speaker 2: We heard from Alphabet earlier this week in Google Cloud.
Speaker 2: We also heard from Microsoft with Azure yesterday, Amazon with AWS. James,
Speaker 2: they're the company that started at all. What's their competitive advantage?
Speaker 2: How do they continue to win business or compete against
Speaker 2: the second and third place Azure and Alphabet? How do
Speaker 2: they maintain their position when there is so much competition
Speaker 2: out there?
Speaker 1: Yeah, I think it's going to be more of a
Speaker 1: rising time lifts all boat situation. You know, obviously is
Speaker 1: the number one scale player in the space, and all
Speaker 1: companies that are looking to the cloud, you know, will
Speaker 1: utilize them in some capacity. I think that the spend
Speaker 1: over AI and the shift from analog to digital will
Speaker 1: only get stronger and get faster, So all three of
Speaker 1: these companies will benefit.
Speaker 4: It's really for us, it's around what are the.
Speaker 1: Expectations around those growth rates and are those reasonable, Like,
Speaker 1: for example, with Amazon throughout the course of this year,
Speaker 1: you know, we were expecting that that growth rate to
Speaker 1: keep notching up.
Speaker 4: Toward the twenty percent number, which it has.
Speaker 1: So so long as you know the growth rates from
Speaker 1: an investment standpoint, are you know the bars are achievable.
Speaker 4: We think that, you know, as you look into the medium.
Speaker 1: And longer term, all three will benefit from it. But
Speaker 1: as far as you know Amazon specific competitive advantages, obviously
Speaker 1: they're they're the biggest player. They continue to iterate and
Speaker 1: provide more and more services more once stops shop solutions,
Speaker 1: so they're going to have an edge there. Obviously Microsoft
Speaker 1: and Google are not standing still. But you know, I
Speaker 1: think for us, it's as long as the overall industry
Speaker 1: trends toward CAPEC spend and the cloud spend continue to
Speaker 1: move in the right directions on a secular basis, then
Speaker 1: all three should be fine.
Speaker 3: We've spoke to a number of guests. We've spoken to
Speaker 3: a number of guests today about the mag seven and
Speaker 3: whether this is a time to hold or to buy
Speaker 3: the mag seven or to kind of play tech and
Speaker 3: AI in different names. What do you think when you're
Speaker 3: looking at you know how to play the mag seven.
Speaker 4: Yeah, we think that it's it's good to be there.
Speaker 4: For us, it's a question of what size.
Speaker 1: You know, these companies were our top weights, you know,
Speaker 1: a couple of quarters ago, five seven percent weights in
Speaker 1: the portfolio, you know, but now we've trimmed those back
Speaker 1: between two and four and we've all been we've exited
Speaker 1: Google for example, we no longer hold that, and you
Speaker 1: know which much smaller in Tesla, much smaller in Amazon Microsoft.
Speaker 4: So for us, you.
Speaker 1: Know, the trends continue to be the friend of these companies,
Speaker 1: but given how much they run, we think that you
Speaker 1: hold them, but just at lower weights and reallocate that
Speaker 1: to areas that have more opportunity.
Speaker 4: Like we like software for example. You know, we.
Speaker 1: Established positions some time ago and new Tanic's get lab
Speaker 1: and data.
Speaker 4: Do you know we think those could do well.
Speaker 1: You look at Confluence results today and last night and
Speaker 1: the stocks performance today. You know, we think that there's
Speaker 1: a lot of opportunity there. You know, we're going into
Speaker 1: value names at the same time. We like the commodities.
Speaker 1: You know, we're not sure that the inflation trade is
Speaker 1: off the table.
Speaker 2: That's interesting, Yeah, I see alca in here.
Speaker 4: Yeah, we have al CoA US Steel we think to
Speaker 4: be a real winner. You know. We also like gold, you.
Speaker 1: Know, so we are you know, we're betting on that
Speaker 1: and value names like we added General Motors for example,
Speaker 1: So I would think that that could be a great
Speaker 1: stock for as we look into twenty twenty five.
Speaker 4: Okay, we think that there's a lot of money. You'll
Speaker 4: hear a lot.
Speaker 1: Of opportunity, but you just got to be just you
Speaker 1: just got to have Sizing is so important in this
Speaker 1: market because the magnitude of the moves and the speed
Speaker 1: of the moves is only getting faster and becoming larger
Speaker 1: and larger. Well, I want to everything that petfolio sizing
Speaker 1: is so critical.
Speaker 2: I do want to remind everyone that we're talking to you,
Speaker 2: James Chockmock before we've heard from the Amazon colon. As
Speaker 2: we continue to await earnings from Apple, which we expect
Speaker 2: at four thirty, I do want to take this time
Speaker 2: to have you look back to what happened earlier this
Speaker 2: week and talk a little bit about Meta Platforms and
Speaker 2: Microsoft as well, which are both hold in your time.
Speaker 2: ETF Meta Platforms shares today ended up lower on the
Speaker 2: day after the company reported yesterday they felt four percent.
Speaker 2: We're speaking to you Thursday afternoon. What what did you
Speaker 2: make of the investor reaction to Meta's results.
Speaker 1: Yeah, I think Meta and Microsoft or a tale too
Speaker 1: different stories. I think with Meta you have a situation
Speaker 1: where the capex expectations, uh, you know, we're expected to
Speaker 1: come down.
Speaker 4: They didn't. You know.
Speaker 1: Now there's more and more question marks about where twenty
Speaker 1: five cappex is, you know from our perspective.
Speaker 4: You know, for us, we were thinking heading into the quarter,
Speaker 4: you know, how short sighted will or how.
Speaker 1: What kind of a duration of guidance is Meta likely
Speaker 1: to give on the capex side, and you know they
Speaker 1: came out with the conservative number for the fourth quarter
Speaker 1: and kind of conservative out look for twenty twenty five.
Speaker 4: Yeah.
Speaker 1: Our thinking is that in twenty twenty five that capex
Speaker 1: expectation number will come down and for free cash flow
Speaker 1: will will sarge as a result. So I think it
Speaker 1: was more of a management of expectations on Meta's part.
Speaker 1: But I think you know, you had the year of
Speaker 1: efficiency with Meta, was it last year? And then I
Speaker 1: think you can have the year of cash flow with
Speaker 1: Meta next year?
Speaker 2: Okay, So you talked to Meta. I do want to
Speaker 2: get your thoughts on Microsoft as well. Shares of Microsoft
Speaker 2: today close lower after that disappointing outlook, down six percent. Again,
Speaker 2: speaking to you Thursday afternoon, there's a sort of a
Speaker 2: change of heart, or maybe it was solidified after the
Speaker 2: call late yesterday Wall Street Time. What do you think
Speaker 2: happened with Microsoft this quarter and looking forward.
Speaker 1: To Yeah, from our perspective, Microsoft is kind of the
Speaker 1: worst report of last night. You know, that outlook, given
Speaker 1: the valuation that Microsoft's at, that outlook left much to
Speaker 1: be desired, put into question the growth rate for the
Speaker 1: agreg good business and and given where the valuation is,
Speaker 1: you know, we we'd want to lean more into the
Speaker 1: lower valuation names like a Meta, like an Amazon that
Speaker 1: continues to get cheaper and cheaper. But you know, Microsoft,
Speaker 1: we kind of let it ride last night, and but
Speaker 1: they disappointed, and you know, we think that there's more
Speaker 1: questions than answers following that forward outlook.
Speaker 2: All right, James, we're gonna have to leave it there.
Speaker 2: James Chock mak Uh He is over at Clockwise Capital.
Speaker 2: He's a partner in technology analyst, joining us from Miami
Speaker 2: this afternoon. All right, switching gears a little bit. It's Halloween.
Speaker 2: Here's what's gonna happen tonight. I'm gonna rush home, do
Speaker 2: some trick or treating with the kids, and as soon
Speaker 2: as they go to bed, I'm gonna sort of take
Speaker 2: a lot of their candy and on its way to
Speaker 2: the trash can, it's going to stop in this special
Speaker 2: pile that's for me and my wife, and we're gonna
Speaker 2: sort of, you know, say, we'll have a couple of
Speaker 2: pieces of this candy and then throw the rest away.
Speaker 2: Twenty minutes later, I'm gonna still be eating candy, you know,
Speaker 2: because that's how it goes.
Speaker 3: My dad was a dentist, and he wasn't even that strict.
Speaker 3: He's still a dentist, but when I was a kid
Speaker 3: on Halloween, he was not, you know, taking away the
Speaker 3: candy on Halloween. Halloween was like an exception.
Speaker 5: To the rule.
Speaker 2: Maybe don't remember. My kids are so young, they're not
Speaker 2: even gonna know tomorrow, I promise. How do we stay
Speaker 2: healthy though around the holidays, because after Halloween you got Thanksgiving,
Speaker 2: then you got Christmas and the December holidays then New
Speaker 2: Year's it's kind of hard. When the weather is cold,
Speaker 2: we go to doctor Julia Wolfson. She's Associate Professor in
Speaker 2: the International Health Department at the Johns Hopkins Bloomberg School
Speaker 2: of Public Health. It is supported by Michael R. Bloomberg,
Speaker 2: founder of Bloomberg LP and Bloomberg Philanthropies. Doctor Wolfson am,
Speaker 2: I just like a mean dad taking away the kids candy.
Speaker 5: Hi, nice to be with you, And no I would
Speaker 5: now say you're being a mean dad. I'd say you're
Speaker 5: being a smart dad and a good dad. You correctly
Speaker 5: point out, you know, Halloween is kind of the start
Speaker 5: of this really indulgent holiday season, and Halloween is kind
Speaker 5: of the you know for kids, like, that's it, right,
Speaker 5: they get such a huge hall of candy and you
Speaker 5: get to indulge for that one day, and I think
Speaker 5: that's great, but smart to kind of take it away
Speaker 5: and maybe exercise some of that same approach for yourself
Speaker 5: and your wife and you have your few treats and
Speaker 5: then you kind of get rid of the rest of
Speaker 5: that pile as well.
Speaker 2: Okay, but here's something different that I've only come to
Speaker 2: realize in the last few years. And maybe I'm just
Speaker 2: maybe my head was in the sand, But this stuff
Speaker 2: is like a lot worse for us than we thought.
Speaker 5: Yeah yeah, yeah, So I mean candy. I feel like
Speaker 5: we've known for a long time candy is not great
Speaker 5: for us. It's very sugary, you know, but it's kind
Speaker 5: of one piece of a big puzzle of a food
Speaker 5: environment and sort of a food system that gives us
Speaker 5: a lot of stuff that's really not good for us
Speaker 5: the majority of If you think about what's on a
Speaker 5: grocery store shelves and all the candy, all the junk food,
Speaker 5: all those kind of really highly processed products, it makes
Speaker 5: it really hard to eat healthy, and especially you know
Speaker 5: around the holidays when we have you know, you know,
Speaker 5: all the Halloween folly and Thanksgiving fall, the Christmas news,
Speaker 5: all the parties, all of that, and so it's really
Speaker 5: difficult and it's really bad for us. You know, we
Speaker 5: have a really growing body of evidence that our diet
Speaker 5: is really important for our health over the short and
Speaker 5: long term, tracking from childhood into adulthood. And we have
Speaker 5: growing rates of diet related diseases like hypertension, diabetes, cardiovascular
Speaker 5: disease that are the leading the cause of death among
Speaker 5: Americans and growing.
Speaker 3: So, doctor Wolfson, how are we supposed to understand what
Speaker 3: foods to avoid and what is okay Because a lot
Speaker 3: of people talk about the dangers of processed foods, but
Speaker 3: what does that really mean? How can consumers kind of
Speaker 3: understand like what's bad processed and what's simply okay to
Speaker 3: eat and maybe just you know, manufactured but not the
Speaker 3: bad kind of processed.
Speaker 5: Yeah, yeah, it's a good point. It's really difficult, and
Speaker 5: it's really confusing because we have you know, tens of
Speaker 5: thousands of food products everywhere, you know, just on the
Speaker 5: grocery store, in restaurants and all kinds of stores staring
Speaker 5: us in the face, and it is really hard to navigate. So,
Speaker 5: you know, ultra processed foods are i'd say, kind of
Speaker 5: the right now where we focus a lot of attention
Speaker 5: because they're particularly bad in a lot of ways because
Speaker 5: they are those formulations of foods and beverages that are
Speaker 5: really made from food products with a lot of additives
Speaker 5: to enhance taste and texture and appearance and make them
Speaker 5: especially tasty for us and easy to eat and quick
Speaker 5: to prepare. But they don't really have a lot of
Speaker 5: whole food in them. So I'd say a kind of
Speaker 5: a rule of thumb is where you're looking at a
Speaker 5: product and you see a list of ingredients that has
Speaker 5: a lot of words that you're like, I don't know
Speaker 5: what these words are. These are not ingredients that I'm
Speaker 5: familiar with or that I would use in my home. Pitchin.
Speaker 5: That's probably a sign that this is an industrially processed
Speaker 5: food that is something that should be avoided or eaten
Speaker 5: in moderation. In contrast, they're but they're not all bad, right,
Speaker 5: So some things like if you think about whole wheat
Speaker 5: bread on a groy sliced whole wheat bread, that's also
Speaker 5: a highly processed but it has some nutritional qualities like
Speaker 5: it's made with whole grains, and it's perhaps like on
Speaker 5: a spectrum less bad. So I think, you know, you've
Speaker 5: got to kind of read that food label, look that
Speaker 5: ingredient list. When you see a lot of things that
Speaker 5: you don't know what they are and would never use
Speaker 5: or cook with them yourself, that's a sign. And then
Speaker 5: compare that with the nutritional content, looking for is there
Speaker 5: a lot of sodium, is there a lot of sugar,
Speaker 5: what's the fiber content, what's the protein content? You know,
Speaker 5: do we have any whole foods at all? Here? And
Speaker 5: make some judgments in that respect. But these foods are
Speaker 5: everywhere and we all use them a lot. They're really
Speaker 5: hard to avoid full stop.
Speaker 3: What is the I guess what is the recommended way
Speaker 3: to talk to children about eating healthy? Because Tim mentioned
Speaker 3: Halloween and kids, do you completely restrict candy? How can
Speaker 3: you kind of teach kids that diet is really all
Speaker 3: about balance, but there are foods that you should be
Speaker 3: avoiding more.
Speaker 2: Than others without giving the kids a complex too, right, And.
Speaker 3: That then finally when you're away, they go crazy because
Speaker 3: they think that they are not allowed to have it.
Speaker 1: Right.
Speaker 5: I think you know, it's all like you use the
Speaker 5: word balance, right, It's all about balance. It's all about
Speaker 5: everything in moderation. It's all about mindful eating and listening
Speaker 5: to your body. So we you know, food is not
Speaker 5: just a source of nutrients or something that's good for
Speaker 5: our health or bad for our health. Food is, you know,
Speaker 5: part of our culture. It's part of traditions, it's part
Speaker 5: of joy and love. It's how we celebrate as a family.
Speaker 5: It's how we celebrate most of our holidays. So we
Speaker 5: want kids to grow up understanding that and loving and
Speaker 5: enjoying food and getting to have treats, you know, but
Speaker 5: everything in moderation, So thinking about, you know what, having
Speaker 5: conversations about like what is food that makes me feel good?
Speaker 5: What is this a real food? Is this a food
Speaker 5: that like grow? Is this an apple or a carrot
Speaker 5: that like actually grows, you know, from a farm, or
Speaker 5: is this something that was made in a factory or
Speaker 5: something you know, thinking having them really engage with like
Speaker 5: what are these things? And how do I feel when
Speaker 5: I eat them? Do I get to gorge myself on
Speaker 5: candy and Halloween and then have a tummy ach the
Speaker 5: next day? Maybe they do, and that's not the worst
Speaker 5: thing in the world, and they learn that lesson for
Speaker 5: daily life where I'm not going to then, you know,
Speaker 5: go off and gorge myself on candy all the time
Speaker 5: and feel bad. So I think it really is about
Speaker 5: this balance everything a moderation and for adults too, thinking
Speaker 5: about your diet holistically. Can we go out to a
Speaker 5: holiday party or restaurant indulge, Sure, but then we want
Speaker 5: to think about how we're eating the rest of the
Speaker 5: week as well.
Speaker 2: Doctor Julia Wolfson, Associate Professor in the International Health Department
Speaker 2: of the Johns Hopkins Bloomberg School of Public Health, supported
Speaker 2: by Michael R. Bloomberg