WEBVTT - Peloton Tumbles After Layoffs , Tech Earnings 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.840 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern. 0:00:15.520 --> 0:00:18.040 On FO card Playing and broud Otto with the Bloomberg 0:00:18.079 --> 0:00:18.760 Business app. 0:00:18.760 --> 0:00:22.000 Listen on demand wherever you get your podcasts, or watch 0:00:22.079 --> 0:00:24.000 us live on YouTube. 0:00:24.880 --> 0:00:26.120 We're just talking about Peloton. 0:00:26.400 --> 0:00:28.600 A lot of news there switching out to CEO and 0:00:28.720 --> 0:00:30.920 that's never good. It's checking with Mark German. He is 0:00:31.120 --> 0:00:34.720 a Bloomberg News reporter based in Los Angeles. 0:00:34.880 --> 0:00:37.040 Mark, I know you did the reporting on this story. 0:00:37.479 --> 0:00:38.440 What's up with the CEO? 0:00:39.880 --> 0:00:44.120 Yeah, Barry McCarthy two years he's out. I'm honestly surprised 0:00:44.159 --> 0:00:47.519 that he stayed this long. Nothing really to do with 0:00:47.560 --> 0:00:49.519 his age. He's in his seventies. He came out of 0:00:49.520 --> 0:00:51.680 retirement for this job. He used to be the CFO 0:00:51.720 --> 0:00:55.960 of Netflix and Spotify, but this was a tough turnaround job. 0:00:56.000 --> 0:00:59.200 His predecessor, John Foley, really left them in a hole. 0:00:59.280 --> 0:01:02.440 For those who don't remember, at the height of the pandemic, 0:01:02.480 --> 0:01:06.560 Peloton exploded. Everyone was buying bikes in order to work 0:01:06.600 --> 0:01:09.319 out at home when gyms were closed and fully and 0:01:09.560 --> 0:01:13.080 Peloton made this bet, which obviously in hindsight, we know 0:01:13.240 --> 0:01:16.480 was a terrible bet that gyms would continue to be closed, 0:01:16.760 --> 0:01:19.640 COVID would last forever, the pandemic would never end, nobody 0:01:19.680 --> 0:01:22.440 would leave their homes and apartments ever. Again, they built 0:01:22.440 --> 0:01:25.919 a bunch of bikes. That's the bet they made, because 0:01:25.959 --> 0:01:29.399 they built. They started building a facility in Ohio to 0:01:29.480 --> 0:01:32.600 build many more bikes. They invested and grew the company 0:01:32.680 --> 0:01:35.600 so quickly, right, and then when things started to reopen, 0:01:35.680 --> 0:01:38.240 Peloton fell flat on its face. They've had to lay 0:01:38.240 --> 0:01:41.240 off thousands of thousands of people. They had to restructure 0:01:41.280 --> 0:01:43.560 the whole company, and it was a hole that you 0:01:43.600 --> 0:01:46.920 couldn't really dig yourself out of. McCarthy was able to 0:01:46.920 --> 0:01:50.560 get Apple to sorry, Peloton to free cash flow. But 0:01:50.640 --> 0:01:52.960 at this point, their share price is about three dollars 0:01:53.000 --> 0:01:56.720 a share, sales are down, they continue to miss their estimates. 0:01:56.760 --> 0:01:59.680 They continued to miss their own forecasts. Time for him 0:01:59.680 --> 0:02:01.520 to move on, And I think he made the prudent 0:02:01.560 --> 0:02:04.680 decision for himself. And I'm surprised it took this long. 0:02:05.080 --> 0:02:07.560 So he was you mentioned CEO of Netflix and Spotify, right, 0:02:07.600 --> 0:02:11.440 So he is this subscription based guy, so right, see 0:02:11.480 --> 0:02:14.240 if I'm sorry, So he's a subscription guy. So are 0:02:14.240 --> 0:02:18.040 we learning anything about what Peloton will do and how 0:02:18.080 --> 0:02:19.400 their business model will evolve. 0:02:20.480 --> 0:02:22.560 Well, he's you know, he was the he's the outgoing 0:02:22.600 --> 0:02:25.720 CEO Peloton, of course, and he did implement lots of 0:02:25.760 --> 0:02:28.920 subscription based features into the company. One of the first 0:02:28.919 --> 0:02:31.880 things he did was a subscription model for Peloton hardware, 0:02:32.120 --> 0:02:35.040 so you could actually lease a Peloton versus paying one 0:02:35.040 --> 0:02:37.480 thousand and fifteen hundred dollars outright for it. So that 0:02:37.600 --> 0:02:39.280 was a big thing he did. The other thing is 0:02:39.320 --> 0:02:43.080 they've expanded their content offerings, They've expanded their digital app tremendously, 0:02:43.320 --> 0:02:45.720 and these are all subscription based products. So he's sort 0:02:45.760 --> 0:02:48.600 of turned it into a subscription. Now, you didn't ask 0:02:48.639 --> 0:02:50.960 me this, but I will make my projection of my own. 0:02:51.720 --> 0:02:53.760 I think that they're going to try to sell this 0:02:53.760 --> 0:02:55.760 thing now, right, laying off more people, doing a two 0:02:55.840 --> 0:02:59.359 hundred million dollars restructuring. They have no CEO in place now, 0:02:59.440 --> 0:03:01.560 two of their board members are you know, taking over 0:03:01.600 --> 0:03:04.080 a new board member or one of their old board 0:03:04.120 --> 0:03:07.520 members is becoming their new chairman. This would make a 0:03:07.560 --> 0:03:10.440 good fit for something like Amazon Prime or for Netflix, 0:03:10.600 --> 0:03:12.600 right your Netflix or prime description get a little bit 0:03:12.600 --> 0:03:15.440 more valuable because it comes with fitness content. Maybe one 0:03:15.480 --> 0:03:17.200 of these companies can pull in all that content for 0:03:17.280 --> 0:03:20.040 under a billion dollars. I think that's the smart move 0:03:20.040 --> 0:03:22.200 for Peloton's board at this point. Try to get rid 0:03:22.240 --> 0:03:22.639 of this thing. 0:03:22.840 --> 0:03:25.240 Wow, all right, Mark, great stuff, great reporting. Really appreciate 0:03:25.320 --> 0:03:28.840 you taking a few minutes of your time, Mark Herman, you're. 0:03:28.680 --> 0:03:32.920 Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays 0:03:32.960 --> 0:03:35.560 at ten am Eastern on applecard. 0:03:34.960 --> 0:03:37.720 Play and Android Auto with the Bloomberg Business app. 0:03:37.840 --> 0:03:40.680 You can also listen live on Amazon Alexa from our 0:03:40.680 --> 0:03:44.680 flagship New York station, Just say Alexa Play Bloomberg eleven 0:03:44.800 --> 0:03:47.000 thirty s. 0:03:46.920 --> 0:03:49.880 Break down a little bit more on Quacom. 0:03:49.920 --> 0:03:52.920 Angela Zino joins as vice president and senior equity analyst 0:03:52.960 --> 0:03:56.680 for c fr A Research in New York. 0:03:56.840 --> 0:03:59.840 Angela, what's your takeaway here? The market certainly likes what 0:04:00.120 --> 0:04:02.480 soft from Qualcom. What's your takeaways? 0:04:02.840 --> 0:04:03.000 Yeah? 0:04:03.080 --> 0:04:03.960 No, we we love it. 0:04:04.480 --> 0:04:04.640 You know. 0:04:04.680 --> 0:04:07.440 We we upgraded the stock to a buy actually on 0:04:07.480 --> 0:04:10.560 the news. I mean, typically we hate upgrading near near 0:04:10.600 --> 0:04:14.320 the highs for a stock like this, but it's warranted 0:04:14.480 --> 0:04:17.240 and I think kind of The biggest takeaway on our 0:04:17.400 --> 0:04:20.240 end is this is a company that is clearly going 0:04:20.240 --> 0:04:23.920 to see some significant different diversification away from smartphones over 0:04:23.960 --> 0:04:25.719 the next couple of years. I think a big concern 0:04:25.760 --> 0:04:29.279 of hours was eventually Qualcom would lose that Apple business, 0:04:29.360 --> 0:04:32.960 right as Apple kind of starts, you know, internally designing 0:04:32.960 --> 0:04:34.719 their motives at some point in time might be a 0:04:34.760 --> 0:04:36.760 twenty six, twenty seven to twenty eight things, but it 0:04:36.800 --> 0:04:38.800 would happen at some point in time. But that's that 0:04:39.200 --> 0:04:41.080 you kind of look at what they just did here. 0:04:42.000 --> 0:04:45.240 Android ecosystem is definitely coming back, specifically in China, grew 0:04:45.279 --> 0:04:47.960 north of forty percent. More importantly, I think the numbers 0:04:47.960 --> 0:04:52.120 that they gave out for that automotive pipeline extremely impressive, 0:04:52.200 --> 0:04:55.200 kind of growing from thirty billion eighteen months ago to 0:04:55.320 --> 0:04:59.080 about forty five billion now. That provides some really nice 0:04:59.160 --> 0:05:01.080 visibility as you go. I went to twenty twenty sixth 0:05:01.080 --> 0:05:05.720 and beyond, and then you guys highlighted the ai PC opportunity, 0:05:05.960 --> 0:05:08.320 and I think that's a really undappreciated story. They didn't 0:05:08.360 --> 0:05:11.040 throw any numbers out as far as aipcs are concerned 0:05:11.040 --> 0:05:13.400 in their opportunity there this quarter, but they did say 0:05:13.400 --> 0:05:15.599 that they were going to start throwing those that type 0:05:15.600 --> 0:05:18.080 of numbers, those type of numbers out next quarter, So 0:05:18.120 --> 0:05:20.120 I think that also is a potential catalyst that we 0:05:20.160 --> 0:05:22.200 can kind of see as they kind of go into 0:05:22.240 --> 0:05:24.320 their June quarter results in July. 0:05:24.440 --> 0:05:26.320 All right, a lot to break through breakdown on that, 0:05:26.440 --> 0:05:27.919 And we'll get to Apple in this a second. But 0:05:28.279 --> 0:05:30.480 where do we learn from Qualcomm of where we are 0:05:30.560 --> 0:05:31.760 in the smartphone cycle? 0:05:33.360 --> 0:05:35.719 Yeah, I mean, as far as the smart phone cycle 0:05:35.800 --> 0:05:37.880 is concerned, Hey, listen, this is this is a market 0:05:37.960 --> 0:05:40.039 that we think is still you know, peaked out in 0:05:40.080 --> 0:05:42.719 twenty sixteen. We don't see it getting back to those 0:05:42.800 --> 0:05:45.719 levels anytime in the near future. But that said, I 0:05:45.720 --> 0:05:49.240 think what the real key takeaway here for Qualcom is 0:05:49.279 --> 0:05:52.200 concern is we were looking for low single digit growth 0:05:52.200 --> 0:05:55.600 as far as the smartphone market is concerned. But more importantly, 0:05:56.200 --> 0:05:59.240 the mix, especially on the Android side of things, will 0:05:59.279 --> 0:06:02.839 continue to kind of to shift towards more premium end devices. 0:06:02.880 --> 0:06:06.080 That's something that Apple has clearly benefited from over the 0:06:06.200 --> 0:06:09.760 years from a broader smartphone market, but as we kind 0:06:09.760 --> 0:06:12.640 of see that increasingly take place on the Android side, 0:06:12.640 --> 0:06:17.560 I think specifically from AI related smart smartphones. That provides 0:06:17.600 --> 0:06:20.880 greater content growth for Qualcom. So Qualcom will be able 0:06:20.920 --> 0:06:24.200 to outgrow the smartphone market here over the next couple 0:06:24.240 --> 0:06:26.760 of years. We think because of that, you know, the 0:06:26.800 --> 0:06:29.280 content games that they're seeing, unlike what you're seeing from 0:06:29.279 --> 0:06:32.680 the likes of you know, Corvo and Skyworks, which just 0:06:32.720 --> 0:06:35.640 you know, the last two nights, you know, reported results 0:06:35.640 --> 0:06:36.599 that were pretty abysmal. 0:06:37.000 --> 0:06:39.400 Hey, Angel, just a naive question for me. I just 0:06:39.480 --> 0:06:41.760 don't know the answer, but I do know there they 0:06:41.800 --> 0:06:44.320 sell a lot of chips into China. 0:06:44.520 --> 0:06:46.520 Is that a risk for them? And if so, how 0:06:46.520 --> 0:06:47.280 do they mitigate it? 0:06:48.360 --> 0:06:51.240 Yeah, I mean that's a great point. I mean, geopolitical 0:06:51.360 --> 0:06:54.680 risks are always out there, and you know, I think 0:06:54.720 --> 0:06:57.359 you know, it's been an issue that kind of Qualcom 0:06:57.400 --> 0:06:59.520 has had to contend with. I mean, they were more 0:07:00.200 --> 0:07:02.080 you know, relevant, and let's say, you know, Huawei is 0:07:02.160 --> 0:07:04.920 ecosystem here years ago and you kind of look at 0:07:04.920 --> 0:07:07.320 what they did last night, and they're sincely going to 0:07:07.360 --> 0:07:10.800 be completely gone from Huawei phones by the end of 0:07:10.800 --> 0:07:14.160 this calendar year. So I think in some respects they're 0:07:14.160 --> 0:07:17.760 going to be forced out, you know, in certain instances 0:07:17.960 --> 0:07:21.360 of you know, certain devices out there. But yeah, I 0:07:21.640 --> 0:07:23.840 think that's a great question. I don't know if there's 0:07:24.360 --> 0:07:29.400 a way of necessarily mitigating that risk out there. But 0:07:29.560 --> 0:07:31.600 you know, in the same respect, a lot of kind 0:07:31.640 --> 0:07:34.800 of the the the chips that they sell into China 0:07:34.880 --> 0:07:38.040 are also not necessarily getting sold into the China market. 0:07:38.520 --> 0:07:40.520 They're getting kind of pushed out in kind of getting 0:07:40.520 --> 0:07:42.800 sold across the rest of the world, even if they 0:07:42.840 --> 0:07:45.840 are China related phones. But it is a Listen, it's 0:07:45.880 --> 0:07:48.360 a it's a risk out there over time. Absolutely. 0:07:48.800 --> 0:07:52.760 You mentioned the AIPC cycle, which leads us to some 0:07:52.880 --> 0:07:55.320 sort of the AI smartphone cycle, which leads us to 0:07:55.320 --> 0:07:57.320 Apple trying to connect all those jobs for us. I'm 0:07:57.320 --> 0:07:59.800 trying I do if that work. But what kind of 0:08:00.080 --> 0:08:03.920 AI computer AI phone cycle do you think we could 0:08:03.960 --> 0:08:05.760 be under and when does that kind of hit. 0:08:07.800 --> 0:08:10.720 So, you know, as far as Apple is concerned, I 0:08:10.760 --> 0:08:14.480 think this is an absolutely massive opportunity for them. Hearing 0:08:14.480 --> 0:08:18.000 and Calendar twenty twenty four, and you know, the way 0:08:18.000 --> 0:08:19.920 we would look at it is, listen, the results here 0:08:19.960 --> 0:08:21.640 are going to be tonight are going to be what 0:08:21.680 --> 0:08:24.080 they are going to be. We don't expect anything good. 0:08:24.320 --> 0:08:26.040 But as as soon as next week, you're going to 0:08:26.080 --> 0:08:29.640 start going into a refresh cycle of iPad announcements. You're 0:08:29.680 --> 0:08:32.360 going to see Developers Conference in June, and then you're 0:08:32.480 --> 0:08:34.600 later this year. We do think you're going to get 0:08:34.800 --> 0:08:37.760 you know, on device AI smartphones on the you know, 0:08:37.840 --> 0:08:40.840 the iPhone side of things, as well as another upgrade 0:08:40.840 --> 0:08:43.120 cycle opportunity on the Mac side of things. So this 0:08:43.200 --> 0:08:45.920 is a really interesting opportunity because we expect them a 0:08:45.920 --> 0:08:49.440 refreshed essentially their entire hardware ecosystem here over the next 0:08:49.520 --> 0:08:51.319 kind of eight to nine months, and we do think 0:08:51.320 --> 0:08:54.160 that is underappreciated to an extent. Whether or not kind 0:08:54.160 --> 0:08:55.960 of consumers are going to go up you know, go 0:08:56.080 --> 0:08:59.600 out there and actually you know, upgrade their devices to 0:08:59.760 --> 0:09:03.880 these kind of AI enabled you know devices, remains to 0:09:03.920 --> 0:09:07.040 be seen. It all depends on what exactly Apple kind 0:09:07.040 --> 0:09:09.079 of rolls out, but we know they're going to put 0:09:09.080 --> 0:09:12.200 some crazy marketing power behind all of this, right, and 0:09:12.240 --> 0:09:14.280 we do think that there is potential for them to 0:09:14.360 --> 0:09:17.440 kind of at least increase pricing across certain aspects of 0:09:17.480 --> 0:09:20.480 their ecosystem. So that should also kind of help support 0:09:21.320 --> 0:09:24.040 you know, an improving revenue trajectory as we get at 0:09:24.120 --> 0:09:27.320 least into the iPhone sixteen cycle later this year. 0:09:28.440 --> 0:09:32.840 So in reality, though, Angel, what can the company say 0:09:33.040 --> 0:09:34.280 today about China? 0:09:34.400 --> 0:09:35.120 Can they say? 0:09:35.720 --> 0:09:39.240 I mean, because I think it's unclear whether their challenges 0:09:39.280 --> 0:09:44.640 in China are from competition from you know, changing consumer 0:09:45.160 --> 0:09:49.000 behaviors relates to buying Chinese products or anti American products. 0:09:49.520 --> 0:09:51.520 I don't know how to kind of phrase that out 0:09:51.600 --> 0:09:52.480 or parse that out. 0:09:52.559 --> 0:09:54.920 What can they say? What's the market hoping to hear? 0:09:56.240 --> 0:09:58.640 Well, I'll tell you what I'm hoping to hear. That 0:09:58.679 --> 0:10:01.760 would help me in terms of the China story. The 0:10:01.840 --> 0:10:04.520 China we think China revenue declines are probably going to 0:10:04.559 --> 0:10:07.080 be closer to fifteen to twenty percent, which is worse 0:10:07.360 --> 0:10:10.880 than expectations out there. But more importantly, I think is 0:10:10.960 --> 0:10:14.319 going to be exactly what they have to say about 0:10:14.360 --> 0:10:18.559 the China ecosystem out there, and kind of what they 0:10:18.600 --> 0:10:20.560 have to say about the installed base. If they can 0:10:20.640 --> 0:10:22.880 kind of come out and say, hey, listen, the you know, 0:10:22.960 --> 0:10:26.920 we're seeing significant declines out there, and you know, maybe 0:10:26.960 --> 0:10:29.520 part of it is because, hey listen, you've got some 0:10:29.600 --> 0:10:31.640 tough comps out there. Maybe part of it is they 0:10:31.640 --> 0:10:34.480 don't have an AI enabled device out there where. You know, 0:10:34.600 --> 0:10:38.280 other China you know, OEMs out there are kind of 0:10:38.360 --> 0:10:41.760 rolling out their AI enable devices out already, and then 0:10:41.840 --> 0:10:44.160 of course the Huawei Play but they can come out 0:10:44.200 --> 0:10:48.280 and say, hey, listen, the installed base continues to remain 0:10:48.360 --> 0:10:51.400 either the same or incrementally grow out in China. I 0:10:51.400 --> 0:10:54.920 think that would alleviate some of the concerns out there 0:10:54.960 --> 0:10:59.320 about the China ecosystem, at least for US, and would 0:10:59.320 --> 0:11:01.120 also support view that this might be more of a 0:11:01.120 --> 0:11:03.199 cyclical thing than a circular structural thing. 0:11:03.720 --> 0:11:06.559 Okay, here's my question. I have an AI smartphone. What 0:11:06.840 --> 0:11:08.040 is that going to do for me that my phone 0:11:08.040 --> 0:11:08.400 doesn't do? 0:11:08.480 --> 0:11:08.680 Now? 0:11:08.800 --> 0:11:09.960 Do we know the answer to that? 0:11:10.679 --> 0:11:11.079 Angela? 0:11:11.160 --> 0:11:11.600 Do we know that? 0:11:13.320 --> 0:11:15.319 I mean, listen, I think when you kind of look 0:11:15.320 --> 0:11:17.679 at the and you know, you look at what the 0:11:17.760 --> 0:11:21.240 S twenty I think, you know, the most notable kind 0:11:21.280 --> 0:11:23.480 of AI enabled phone that's out there right now, at 0:11:23.520 --> 0:11:26.520 least from minuder saying, is the S twenty four with Samsung. 0:11:26.760 --> 0:11:31.040 And they've got some kind of incremental you know, you know, 0:11:31.160 --> 0:11:33.960 changes out there in terms of you know, supporting multi 0:11:33.960 --> 0:11:37.760 modal capabilities, translation, all that kind of stuff. It's not 0:11:37.800 --> 0:11:42.040 necessarily anything groundbreaking in nature, right. I think what's going 0:11:42.080 --> 0:11:44.760 to be more important, at least from from Apple's perspective, 0:11:44.840 --> 0:11:46.840 is what they can kind of do in terms of 0:11:46.880 --> 0:11:49.920 things like you know, content creation, imaging, all that kind 0:11:49.960 --> 0:11:52.320 of stuff. Will it kind of get some of the 0:11:52.360 --> 0:11:54.880 gen Z population out there. I'm a little bit more 0:11:54.920 --> 0:11:59.400 interested in potentially upgrading towards these devices. But to your point, 0:11:59.480 --> 0:12:01.679 you know, is there anything kind of earth shattering right now, 0:12:01.760 --> 0:12:04.560 some kind of killer opportunity out there on the AI side? 0:12:04.600 --> 0:12:06.800 I thinks I think that remains to be seen. It 0:12:06.800 --> 0:12:08.679 all depends on what some of these OEMs kind of 0:12:08.720 --> 0:12:11.240 come out with and showcase that the consumers. 0:12:11.679 --> 0:12:13.160 Is it gonna like do my laundry for me? 0:12:13.480 --> 0:12:13.560 Like? 0:12:13.920 --> 0:12:16.400 I mean, there's you guys think about these things, right? 0:12:16.559 --> 0:12:18.120 Oh man? Do my taxes? All right? 0:12:18.120 --> 0:12:20.720 Angela, thanks a lot. Angela Zio, vice President, senior equity 0:12:20.720 --> 0:12:22.680 analyst at cfr A Research. 0:12:22.720 --> 0:12:28.600 Joining us there, you're listening to the Bloomberg Intelligence Podcast. 0:12:28.800 --> 0:12:31.400 Catch us live weekdays at ten am Eastern on. 0:12:31.360 --> 0:12:34.440 Apple car Playing and broyd Outo with the Bloomberg Business App. 0:12:34.480 --> 0:12:37.720 Listen on demand wherever you get your podcasts, or watch 0:12:37.760 --> 0:12:40.880 us live on YouTube. 0:12:40.400 --> 0:12:43.480 Lexd alongside Paul Seenia and John Tucker. This is Bloomberg 0:12:43.559 --> 0:12:46.680 Intelligence Radio. We're live from Interactive Broker Studio right here 0:12:46.679 --> 0:12:48.199 in midtown Manhattan. 0:12:48.320 --> 0:12:49.679 We're also live on YouTube, so. 0:12:49.640 --> 0:12:52.760 Go ahead and check us out. Okay, so the market's 0:12:52.800 --> 0:12:54.360 kind of rolling over a little bit here. We got 0:12:54.360 --> 0:12:56.560 through some earnings. We do have Apple after the bell, 0:12:56.679 --> 0:13:00.200 we get jobs tomorrow dot dot dot. Then what like, 0:13:00.240 --> 0:13:02.760 what's your big takeaway? What's going to be the next catalyst? 0:13:02.800 --> 0:13:06.160 Joining us in studio to discuss is carol'sh life. 0:13:06.240 --> 0:13:06.760 She is? 0:13:07.880 --> 0:13:11.000 Where's the thing there? We go cio at BEMO Family Office. 0:13:11.000 --> 0:13:12.960 I knew it was there, Carol. I don't think I've 0:13:12.960 --> 0:13:14.520 ever seen you in person. 0:13:16.600 --> 0:13:18.079 Hiding out in the Midwest a lot. 0:13:18.200 --> 0:13:19.480 No, this is very exciting. 0:13:19.559 --> 0:13:22.200 Yeah, it's very exciting for me. I love being in studio. 0:13:22.320 --> 0:13:24.760 Okay, great, well, Carol, it's great to see you in person. 0:13:25.679 --> 0:13:27.800 What is going to be your next catalyst that you're 0:13:27.800 --> 0:13:29.719 looking for within the market. We keep getting through these 0:13:29.720 --> 0:13:33.280 big events. It's a little or no fanfare. So what's next? 0:13:33.400 --> 0:13:35.720 Well, and I think the most interesting thing is is 0:13:35.760 --> 0:13:38.000 to take it up a level and instead of focusing 0:13:38.040 --> 0:13:40.200 on every piece of data, because the FED has kept 0:13:40.320 --> 0:13:43.720 us really data dependent for a very long time. Is 0:13:43.760 --> 0:13:46.320 to focus on the overarching trend and there's lots of 0:13:46.400 --> 0:13:50.800 really interesting things going on intermediate and longer term, especially this, 0:13:51.720 --> 0:13:56.480 even though it's talked about, it's largely underappreciated, the secular 0:13:57.040 --> 0:14:01.040 trends we've got going on in infrastructure built not just infrastructure, 0:14:01.040 --> 0:14:04.920 but also that implies that we have to build data centers, 0:14:04.960 --> 0:14:06.800 which means we have to hook them to the grid, 0:14:06.840 --> 0:14:09.600 which the grid, you know, is difficult getting them hooked. 0:14:09.640 --> 0:14:14.040 So the energy play utilities. There's lots of different ways 0:14:14.080 --> 0:14:16.880 to play this, and you can make an argument that 0:14:16.920 --> 0:14:22.840 this is the biggest infrastructure spend or the biggest productivity 0:14:23.080 --> 0:14:26.280 potential boost we've had since we put the interstates in 0:14:26.280 --> 0:14:29.440 in the fifties and completely changed the complexion of the 0:14:29.560 --> 0:14:32.400 United States. And so there's lots of stuff going on there. 0:14:32.480 --> 0:14:35.240 It can be easy to get caught in the in 0:14:35.280 --> 0:14:38.040 the near term, we've got an election coming up, we've 0:14:38.080 --> 0:14:40.920 got more FED meetings, more data, but it's important to 0:14:40.960 --> 0:14:43.400 pull out of that and keep a longer term perspective. 0:14:44.040 --> 0:14:47.080 William Woods University, Ulton, Missouri Awesome. 0:14:47.160 --> 0:14:49.800 I was an equestrian science major. I thought I was 0:14:49.880 --> 0:14:51.960 going to horse trainer. 0:14:52.080 --> 0:14:55.720 Yep, running money. 0:14:57.080 --> 0:14:58.720 I did get a business degree while I. 0:15:00.600 --> 0:15:04.120 So was the science in relation to equestrian stuff or 0:15:04.200 --> 0:15:04.360 was it. 0:15:04.400 --> 0:15:05.880 Like it was? 0:15:06.120 --> 0:15:08.320 It was I wanted to run the bar, not just 0:15:08.400 --> 0:15:10.800 train the horses, and so there was. And then I 0:15:10.840 --> 0:15:14.520 found I loved my business classes and I loved being 0:15:14.720 --> 0:15:17.240 based in the Midwest, because I do know who SOE. 0:15:17.480 --> 0:15:19.200 Robinson is, and I know who a lot of those 0:15:19.240 --> 0:15:21.400 other companies are there. Are you based in the mid 0:15:22.000 --> 0:15:24.000 based in Minneapolis, based in Minneapolis? 0:15:24.040 --> 0:15:24.120 Yes? 0:15:24.360 --> 0:15:26.640 Nice, Okay, what do we Okay, let's say we want 0:15:26.640 --> 0:15:30.000 to play infrastructure. Let's say some of those great Midwestern industries. 0:15:30.760 --> 0:15:32.400 How are you guys playing it? How are you getting 0:15:32.400 --> 0:15:33.120 exposure here? 0:15:33.240 --> 0:15:38.920 We've got and we've had an important uh specifically called 0:15:38.960 --> 0:15:44.240 out in an ETF and actively managed ETF pave Yeah 0:15:44.400 --> 0:15:47.880 like that, which is and then we actually another iteration 0:15:48.160 --> 0:15:51.840 is another actively managed ETF. The ai Q and X 0:15:52.040 --> 0:15:54.240 is one of the ways we've been doing it. There's 0:15:54.280 --> 0:15:56.680 a lot you can own the ETF, you can own 0:15:56.680 --> 0:15:59.600 the individual securities. We do have a lot of clients 0:15:59.600 --> 0:16:02.280 that own it individual securities. Lots of ways to play it. 0:16:02.680 --> 0:16:05.280 There's also the structure around it. One of the other 0:16:05.760 --> 0:16:08.560 things we're focusing on from a global standpoint is trying 0:16:08.600 --> 0:16:11.000 to get to even a neutral weight in Japan when 0:16:11.000 --> 0:16:13.360 most of the world is underweight, because when you look 0:16:13.360 --> 0:16:16.880 at the Japanese indexes, they're much more technology heavy than 0:16:16.960 --> 0:16:21.560 the European the other developed markets which are more industrial 0:16:21.000 --> 0:16:24.760 or utility or old schools. So there's lots of different 0:16:24.760 --> 0:16:27.680 ways to play it, both individually as well as just 0:16:27.760 --> 0:16:30.560 leaning into those those sectors. 0:16:30.200 --> 0:16:31.040 And so paved. 0:16:31.440 --> 0:16:34.800 If you look on your Bloomberg terminal, it is Eaten, 0:16:35.000 --> 0:16:44.280 it is parkerhannafin Rentals Emerson. I love these guys. 0:16:41.520 --> 0:16:43.880 Well, and when we were looking for a way to 0:16:43.960 --> 0:16:46.840 play it, we specifically searched out who are the ones 0:16:46.880 --> 0:16:49.560 that are going to be based on that rebuilding in 0:16:49.560 --> 0:16:52.880 the United States, And it's interesting. One of the it 0:16:53.080 --> 0:16:56.680 was watching h Robinson's Earnings actually where I first learned 0:16:56.720 --> 0:16:59.920 that Mexico is our biggest trading partner before the news 0:17:00.200 --> 0:17:02.760 was announcing it, because they were putting five hundred million 0:17:02.800 --> 0:17:05.359 dollar facility on this side of the border in Texas 0:17:05.760 --> 0:17:07.919 to help move that stuff. 0:17:08.359 --> 0:17:10.600 Something we have heard though in a lot of these 0:17:10.640 --> 0:17:14.280 conference calls. Is that there's no doubt a structural shift 0:17:14.359 --> 0:17:17.240 underway for these industrial guys as they take advantage of 0:17:17.240 --> 0:17:21.320 the Chips Act and the Infrastructure Act and in etc. 0:17:22.200 --> 0:17:25.040 But it's still a cyclical industry and so a lot 0:17:25.119 --> 0:17:28.320 of these companies wind up having say a strong backlog, 0:17:28.400 --> 0:17:30.560 but they're not like booking the orders right away, like 0:17:30.560 --> 0:17:32.359 they're not making the kind of money now that we 0:17:32.400 --> 0:17:35.399 thought they necessarily would. How do you think about. 0:17:35.119 --> 0:17:38.000 That, Well, I think it's important to you get that 0:17:38.040 --> 0:17:40.840 same sort of push and pull in the artificial intelligence 0:17:41.240 --> 0:17:43.400 because on the one hand, three years from now, we're 0:17:43.400 --> 0:17:46.639 going to be really happy that these big, deep pocketed 0:17:46.720 --> 0:17:50.080 companies are spending on infrastructure. But in the last earnings 0:17:50.160 --> 0:17:53.240 round we nailed some of them because they're spending on infrastructure. 0:17:53.280 --> 0:17:56.879 To put that in, so it is the advantage we 0:17:56.920 --> 0:17:59.879 have is that we're investing very long term money, and 0:18:00.640 --> 0:18:03.560 so part of it is managing the expectations in the 0:18:03.600 --> 0:18:06.520 short run with clients that you know, here's what we're 0:18:06.560 --> 0:18:09.040 building for the long run. We know it might be 0:18:09.119 --> 0:18:12.200 ballatle on the short run, and so will dollar cost 0:18:12.240 --> 0:18:14.959 average into some of these positions take advantage if they 0:18:14.960 --> 0:18:18.280 blow up on an earnings report or something like that, 0:18:18.400 --> 0:18:22.960 But it really is you have to stay out of 0:18:22.960 --> 0:18:25.399 the day to day frenzy, if you will, and focus. 0:18:25.440 --> 0:18:27.960 So at BIMO Family Office for those who don't know, 0:18:28.000 --> 0:18:31.320 Bemo's Bank of Montreal. So I'm guessing by the name 0:18:31.359 --> 0:18:33.520 you have a lot of Canadian clients. 0:18:33.640 --> 0:18:38.199 We actually we're the US of the Family Office and 0:18:38.280 --> 0:18:43.160 it was BIMO in the US has had Harris Bank 0:18:43.200 --> 0:18:45.480 from Chicago, so there's a lot of team mentioned. 0:18:46.160 --> 0:18:48.920 Is there a difference between risk tolerance for a Canadian 0:18:48.960 --> 0:18:50.399 investor versus a US vestor? 0:18:50.440 --> 0:18:53.879 Do you look at them differently? Stock spawns, alternatives, that 0:18:53.920 --> 0:18:54.280 kind of thing. 0:18:54.520 --> 0:18:59.360 Interesting question. Canada tends to be very resource based, as 0:18:59.400 --> 0:19:03.280 you can, and so there's a lot of emphasis there. 0:19:03.680 --> 0:19:08.240 There is a difference to in the individual space somewhat, 0:19:08.280 --> 0:19:12.000 but you know, it's no different than any couple that 0:19:12.080 --> 0:19:14.120 sits down across from US. There might be different risk 0:19:14.160 --> 0:19:16.480 tolerance there where one wants to be a longer term 0:19:16.520 --> 0:19:20.440 investor and one wants to trade on the lightest. Would 0:19:20.440 --> 0:19:26.080 you like energy looking for a friend? Yeah, Energy is 0:19:26.480 --> 0:19:29.359 definitely an interesting play and there's some of the you know, 0:19:29.359 --> 0:19:34.640