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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hyde in New York

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Speaker 1: and Ed Lovelow in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: Belon Musk rejects another Wall Street convention, sets a fixed

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Speaker 3: price for his space xipo ahead of the marketing phase

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Speaker 3: of the deal. The plan offer shares at one hundred

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Speaker 3: and thirty five dollars a piece.

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Speaker 4: Plus Palo Alto Networks falls after the company reported its

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Speaker 4: results failing to meet really elevated by side expectations. This

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Speaker 4: following a more than six percent run to date.

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Speaker 3: And candidates backed by tech billionaires and founders fell short

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Speaker 3: in California's primary elections. Yesterday. We break down the results

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Speaker 3: and what it means for Silicon Valley.

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Speaker 4: But let's check in on what current geopolitics means for

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Speaker 4: this market.

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Speaker 2: We take a breather.

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Speaker 4: We have been at record high after record high, have

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Speaker 4: been on a nine day tair. The NASDAG have been

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Speaker 4: up for four straight training days. Today we pause rob

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Speaker 4: By just a tenth percent. Of course, Front and Center

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Speaker 4: is maybe conflict rumpting once more, A little bit that

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Speaker 4: sees far under pressure between the US and Iran. All

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Speaker 4: those higher bonialds they go higher. Stocks just pull back

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Speaker 4: a little bit ed.

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Speaker 2: But what are you.

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Speaker 3: Watching, skit today's big number eighty four point seventy five billion.

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Speaker 3: Alphabet is upsizing It's equity raised to that level, up

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Speaker 3: from the previously announced rays of eighty billion dollars. All

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Speaker 3: this to fund its AI infrastructure expansion. Interesting like this

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Speaker 3: is a multi day story. The stock's basically flat, but

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Speaker 3: is an element of dilution, the main point being parts

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Speaker 3: of the equity offering really oversubscribe to Alphabet's saying okay,

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Speaker 3: we'll do a little bit more. Google's lay is fundraising.

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Speaker 3: There's a race happening here, guys. Highlights this scramble for

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Speaker 3: capital in the Aire, and now SpaceX is taking things

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Speaker 3: a step further. Elon Musk company is planning a seventy

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Speaker 3: five billion dollar IPO and has already set a fixed

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Speaker 3: share price ahead of the traditional roadso process. Another sign

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Speaker 3: Musk is willing to rewrite Wall Street's playbook. That's all

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Speaker 3: according to sources. Bloomberg's caffriin dollarities here with more.

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Speaker 2: It's been.

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Speaker 3: Well, a bit of a well in few days, So

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Speaker 3: we report it's one hundred and thirty five dollars a share,

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Speaker 3: five hundred and fifty six point five million shares. Do

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Speaker 3: the math, they'll raise seventy five billion dollars. That's not

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Speaker 3: how this typically works in an IPO process.

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Speaker 5: Why No, Typically a company that's looking to list in

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Speaker 5: the US markets is going to look at a range.

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Speaker 5: They're not going with a firm number like this one

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Speaker 5: hundred and thirty five that you're referencing. And that's because

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Speaker 5: in the next week or so there's a lot of

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Speaker 5: things that could change. This is supposed to be a

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Speaker 5: marketing process, but locking in a price of one hundred

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Speaker 5: and thirty five dollars a share is giving some sort

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Speaker 5: of certainty. It's giving a signal to the market of

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Speaker 5: what to expect. We're expecting that next week, by around

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Speaker 5: the eleventh is when we could see these SpaceX shares

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Speaker 5: come to market, But even leading up to it, it's

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Speaker 5: just another indication of the difference in the approach that

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Speaker 5: SpaceX and Musk's team are taking at this time.

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Speaker 4: I mean, there is some precedent for doing it this way, Catherine,

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Speaker 4: just not of.

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Speaker 5: This size, right, absolutely so, smaller companies can take this

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Speaker 5: route that SpaceX is looking like it will, but it

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Speaker 5: is not typical for a company, especially given that this

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Speaker 5: is supposed to be the largest listing on record. So

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Speaker 5: it's taking just some unconventional roots. But you're absolutely right,

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Speaker 5: it's not the first time or likely the last, especially

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Speaker 5: for companies of smaller sizes.

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Speaker 4: I mean, and you've been at the forefront of reporting

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Speaker 4: each tick by tick when it comes to what's happening

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Speaker 4: with en On Musk and SpaceX more broadly. But isn't

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Speaker 4: there there are a lot of cooks in the kitchen

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Speaker 4: right now. How we understanding is to what this price

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Speaker 4: point means and what it means for all of those friends, family,

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Speaker 4: those are about to potentially becomes well.

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Speaker 3: The price point is interesting. So one hundred and thirty

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Speaker 3: five dollars to share is a twenty eight percent premium

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Speaker 3: from when they did a stock split on May the fifteen,

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Speaker 3: So basically SpaceX's shares were above five hundred dollars in

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Speaker 3: the private market, so it did a five for one

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Speaker 3: took it down to one hundred and five at the

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Speaker 3: valuation of one point twenty five trillion. So this is

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Speaker 3: like math, it's kind of you know, a little bit dry.

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Speaker 3: But the point is is that the share price at

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Speaker 3: one thirty five is not keeping up with the jump

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Speaker 3: in valuation. There's dilution there, but the friends and family

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Speaker 3: that'll get an allocation, all of the mechanics are still

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Speaker 3: in place, like traditional IPO stuff. The roadshow will happen,

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Speaker 3: it will price in the normal way. You're just saying, like,

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Speaker 3: here's the number. It's a very very unusual situation, by

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Speaker 3: the way, Bloomerskaarn dotty, thank you very much. Top recording.

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Speaker 3: As always, some news crossing the terminal as well. Elon

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Speaker 3: Musk's ai company Xai has paused hiring for professionals to

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Speaker 3: train its groc chatbot on a range of specialized skills.

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Speaker 3: That's according to sources, who say the decision is at

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Speaker 3: least partly to concerns that the company's HR department is

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Speaker 3: overwhelmed and often unable to process new candidates. Read that

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Speaker 3: one on the Bloomberg.

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Speaker 2: Carat we always will.

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Speaker 4: Meanwhile, read on the Bloomberg just how these markets are performing? Look,

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Speaker 4: you know the S and P five hundred had been

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Speaker 4: writing a really powerful winning streak.

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Speaker 2: It was up for nine straight days.

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Speaker 4: Maybe it's nine straight weeks stocks a record hires as

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Speaker 4: of yesterday. Next guest saying, look, we are just actually

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Speaker 4: at the infancy of this AI industrial revolution. Joining us

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Speaker 4: now with her outlook Rebecca Wels CEO, Chief Investment Officer,

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Speaker 4: whilst the wealth management and look we take a breather today,

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Speaker 4: it's more about geopolitics, Rebecca. But how when we have

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Speaker 4: five trillion dollar companies and we have Alphabet tapping the

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Speaker 4: market for eighty five billion dollars let's call it. How

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Speaker 4: is that not some sort of sign that we're kind

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Speaker 4: of nearer the end than the beginning here.

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Speaker 6: No, I don't think so, Caroly.

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Speaker 7: I think this is the very very beginning stages of monetization.

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Speaker 7: Now we I've seen some financing changes. I think Alphabet

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Speaker 7: Google is just trying to get ahead of the three

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Speaker 7: huge IPOs. Obviously just talked about SpaceX, the largest IPO

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Speaker 7: in history, will be the largest company valuation and the

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Speaker 7: entire world.

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Speaker 2: So that in and of itself is just crazy.

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Speaker 7: Then you follow that with opening AI and anthropic googlegle

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Speaker 7: once to get more money. If you look at the hyperscalers,

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Speaker 7: they're usually writing about a little under thirty billion of

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Speaker 7: bonds a year and last year in twenty twenty five,

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Speaker 7: they wrote one hundred and twenty one billion. So we're

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Speaker 7: starting to see we can't get enough capital to do

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Speaker 7: all of the investments the capex that we want, and

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Speaker 7: so I think if we get the capex, we're going

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Speaker 7: to keep seeing this market go up.

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Speaker 2: It's the beginning stages.

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Speaker 3: So, Rebecca, you are the capital or you're a part

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Speaker 3: of the capital. Right, you have the alphabet equity raise SpaceX,

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Speaker 3: IPO and tropics filed confidentially, a lot of debt financing,

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Speaker 3: and then there's the Nvidia bit. Is this the fomo

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Speaker 3: trade where you just have to have exposure to everything

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Speaker 3: or do you pick a hole in the race and say, actually,

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Speaker 3: in the end, why there are five lanes, but I

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Speaker 3: only think three of them will will succeed.

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Speaker 2: Yeah, that's a great question.

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Speaker 7: It's so hard to pick the winners at the beginning

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Speaker 7: stages of monetization because we don't know who what technologies

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Speaker 7: are actually gonna win out or what methodologies. So I

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Speaker 7: do think you have to sprinkle some capital kind of everywhere.

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Speaker 2: But that's and you have to hold.

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Speaker 7: You have to be willing, Like if you look at

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Speaker 7: the monetization of Nasdak in the nineties we had you know,

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Speaker 7: thirty thirty three percent overall, but we had fifteen pullbacks.

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Speaker 7: So people need to understand that monetization is volatile and

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Speaker 7: get the steal the band of steel to stay the

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Speaker 7: course and to be in for at least the long haul.

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Speaker 7: Most of our IPOs usually are you know, coming down

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Speaker 7: in the first twelve months, so I think there's gonna

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Speaker 7: be a lot of emotion. Possibly wait till the at

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Speaker 7: least the insider lockups expire in six months, and then

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Speaker 7: go in. But I do think if you're going to

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Speaker 7: participate in the emotion of it, you're going to I

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Speaker 7: want to feel the pressure pulling back. So I would wait,

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Speaker 7: and I would buy in strategically, and I would keep

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Speaker 7: my investment broad I.

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Speaker 4: Mean, in many ways people come what may well have

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Speaker 4: exposure to these names just by the very weight within

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Speaker 4: certain benchmarks.

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Speaker 2: But Rebecca, how much exposure do.

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Speaker 4: You want outside of the US that the IPO frenzy

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Speaker 4: is stealing the thunder when it comes to big US giants.

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Speaker 4: But still we've seen significant outperformance over an Asian training

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Speaker 4: for example.

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Speaker 7: Yes, I definitely think that you've got things in Korea Obviously,

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Speaker 7: you've got markets outside of the US that are going

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Speaker 7: to be a part of AI, and I look really

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Speaker 7: to the legislative policies. I'm really concerned about the Secure Act.

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Speaker 7: If the banking lobby is successful and really pulling weight

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Speaker 7: and teeth out of the stable corn in the United States,

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Speaker 7: it will route elsewhere and that is going to be

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Speaker 7: part of this whole AI monetization. We're changing our payment

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Speaker 7: system to digital that's coming.

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Speaker 2: So the United States.

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Speaker 7: Seem to be a part of that and facilitating that

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Speaker 7: and not trying to stop it and keep legacy systems

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Speaker 7: in place because they are on their out. It's going

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Speaker 7: to take time, but they are legacy, and we need

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Speaker 7: to keep making sure the United States is the focal

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Speaker 7: point of everything. But certainly I would pick up some

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Speaker 7: international as well.

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Speaker 3: Just what you said a minute ago, By the way,

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Speaker 3: love that participate in the emotion of it. I'm not

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Speaker 3: participating in the markets right for obvious reasons. Certainly participating

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Speaker 3: in the motion and the emotion of what's going on.

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Speaker 3: So now you've given me something to think about. There's

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Speaker 3: statement as well, right. Jensen Mung's on stage again last

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Speaker 3: night for the seventh time in five days saying that

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Speaker 3: you would be insane if you didn't see the return

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Speaker 3: on investment that is now real out in the world

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Speaker 3: from AI, and that you would be foolish, you know,

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Speaker 3: not to keep investing in the space. Do you see

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Speaker 3: it as clearly as he does.

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Speaker 2: Well, I was just.

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Speaker 7: Excited that he was on stage saying here's the first

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Speaker 7: laptop for an agentic AI agent Like I was like, yay,

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Speaker 7: Now we're buying laptops for agents AI agents, not people.

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Speaker 2: This is really interesting.

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Speaker 7: Listen, this is the largest technological change and the history

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Speaker 7: of human time. You can't be more hyperbolic and parabolic.

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Speaker 7: With these equity prices going up, there is going to

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Speaker 7: be volatility.

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Speaker 2: It is going to pull back.

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Speaker 7: But this is the largest opportunity for wealth creation and

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Speaker 7: for people, average people to get in on it.

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Speaker 6: Take only to.

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Speaker 7: The risk that you can tolerate, but definitely participate in

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Speaker 7: this and just know that you're going to have a volatility.

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Speaker 7: Stay the course, that's the theme. Stay the course and

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Speaker 7: you will be a winner in the long run. Financially. Anyways,

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Speaker 7: we don't know about all the other bad side of AI,

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Speaker 7: but the financial side positive.

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Speaker 6: Wow.

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Speaker 3: On debut, Rebecca Walsa, CEO and Chief investment officer of

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Speaker 3: so Wealth Management on Bloomberg Tech. Hit every single story

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Speaker 3: that we had to offer today, Thank you very much.

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Speaker 3: Now coming up Palato Networks fools after the company failed

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Speaker 3: to meet very elevated by side expectations. We got the

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Speaker 3: earning story and a little chat about a pay package

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Speaker 3: that's coming up next.

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Speaker 6: This is Bloomberg Tech.

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Speaker 4: Let's check in on Palo Alto Network shares down. They're

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Speaker 4: actually having their worst day and let's call it a

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Speaker 4: couple of months. April the tenth, we're off five to

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Speaker 4: five percent, but that's such a cybersecurity firm.

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Speaker 2: Actually reported really strong revenue growth.

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Speaker 4: They've again been fueled by AI spending in the fiscal

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Speaker 4: third quarter. It was up though against the Hima paralle

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Speaker 4: Alto network shares. Look, they're up fifty three percent so

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Speaker 4: far year today they were up sixty percent going into

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Speaker 4: this release. Let's talk more with Bloomberg's editor covering cybersecurity, Linduan,

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Speaker 4: and we've got plenty to talk about in the exec

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Speaker 4: chair as well. But first talk about these numbers, because

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Speaker 4: there was a lot of anticipation they raised, but it

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Speaker 4: wasn't good.

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Speaker 6: Enough, Karlin.

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Speaker 8: It feels baffling at first, right, But as you noted

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Speaker 8: just now, there was a huge run up in this

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Speaker 8: dark ahead of the earnings. They have done amazingly since

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Speaker 8: the beginning of the year. I think there was a

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Speaker 8: lot of anticipation. I'm just going to call this like

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Speaker 8: the Nvidia effect. From here on out right, you can

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Speaker 8: beat on every single key metric, and that's what Palo

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Speaker 8: Alto did. Every beat on revenue, earnings, outlook was solid.

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Speaker 8: And yet your stock can still come down because of

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Speaker 8: that run up, because analysts aren't really honest about what

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Speaker 8: they want to see in those earnings, and because of

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Speaker 8: the macro review, right. I mean, I'm sure that it

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Speaker 8: doesn't help that the entire stock market is down on

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Speaker 8: usc run news on top of all that bad timing

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Speaker 8: for Palo Alto.

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Speaker 3: Of course, one of the issues that shareholders have with

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Speaker 3: the company, or as we put it, the recurring beef,

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Speaker 3: is with the pay package of the CEO and other

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Speaker 3: senior leaders. We ran this big feature twenty four hours

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Speaker 3: ago explaining it.

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Speaker 6: Explain it to us.

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Speaker 3: You know, that's a really interesting issue, as I said,

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Speaker 3: that's going on in the background.

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Speaker 2: Isn't it.

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Speaker 8: Now, This is an analysis that we did based on

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Speaker 8: proxy data that is available on the Bloomberg terminal, and

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Speaker 8: we went back several years to twenty fifteen, and what

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Speaker 8: that revealed to us in a surprising way. We didn't

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Speaker 8: expect to see this that Palo Alto Networks has seen

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Speaker 8: more rejections on its say on pay votes, which cover

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Speaker 8: executive compensation for that past year, than any other company

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Speaker 8: in the SMP five hundred. They have seen seven total

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Speaker 8: rejections by investors on those SAM pay votes since twenty fifteen.

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Speaker 8: No other company in the EDIX comes close to that.

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Speaker 4: The last vote I think was in December, and at

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Speaker 4: that point I think more than half of shareholder has

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Speaker 4: pushed back on the one hundred million dollars potentially coming

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Speaker 4: Nick kesh Aora's way. But to be fair to the guy,

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Speaker 4: the stock has added a market cap of one hundred billion.

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Speaker 4: Is that sort of how they tend to say, Like, yes,

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Speaker 4: he's paid more, actually more than some of the biggest

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Speaker 4: CEOs in the world, like a Tim Cook, but a

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Speaker 4: lot more is actually linked to the performance of the stock.

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Speaker 2: You're raising.

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Speaker 8: Such a good point, Caroline, and we actually hit that

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Speaker 8: in the story because the story itself isn't even just

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Speaker 8: about Palo Alto. It's about the effectiveness of these say

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Speaker 8: on pay votes. And in fact, there have been reports

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Speaker 8: done that suggest that investors like it and they like

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Speaker 8: to compensate CEOs when the returns on their investments are strong.

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Speaker 8: So in that way, Palo Alto and its CEO are

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Speaker 8: a bit of an anomaly because Palo Alto has soared,

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Speaker 8: as we just talked about, in the past year. In fact,

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Speaker 8: they've soared in the past like six years. They've been

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Speaker 8: on the rise since Aurora took over. I think they've

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Speaker 8: added well over one hundred billion dollars in market cap, right,

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Speaker 8: So you would think that their shareholders would vote supporting

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Speaker 8: that compensation, but they are an exception to that rule.

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Speaker 8: They have voted against it.

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Speaker 3: Nikesha ROR's package is valued at like nearly one hundred

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Speaker 3: million dollars, and one of the things you do in

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Speaker 3: the story is compare it with some of the titans

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Speaker 3: of corporate America. Right, So it's not just tech. You know,

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Speaker 3: you've outlined the performance of the stock. Why is it

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Speaker 3: that the shareholders think that number is too big relative

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Speaker 3: to Nikesh's peers?

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Speaker 6: Well ed?

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Speaker 8: If you are comparing Nikesh and his pay packages to

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Speaker 8: his peers, ISS would say, and Glass Lewis for that matter,

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Speaker 8: both proxy advisory firms would say that it is not aligned.

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Speaker 8: He is consistently paid well above his peers in the

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Speaker 8: cybersecurity industry. What Nikesh would say, and what he did

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Speaker 8: say in our story is that that's because he's been

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Speaker 8: capable of delivering outsize returns. And in fact, if you

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Speaker 8: look at Palo Alto Networks performance this year, it has

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Speaker 8: performed well, far and above the rallies that you've seen

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Speaker 8: from other major cybersecurity stocks in the US.

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Speaker 3: Being mostly into bringing that story to life, thank you

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Speaker 3: very much. Indeed, CEOs and a ings are also top

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Speaker 3: of mind for Adobe investors. The creative software giant is

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Speaker 3: under pressure from AI native rivals and is in the

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Speaker 3: process of finding a new CEO to replace shantan In Iran,

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Speaker 3: who's led the company for nearly two decades. Being the

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Speaker 3: software reporter, Brody Ford joins us with reporting that there

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Speaker 3: are two internal candidates in the running, but the company,

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Speaker 3: Brody is also looking elsewhere.

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Speaker 9: What do we know, Yeah, well, we know that Adobe

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Speaker 9: needs a new CEO. They decide they stop nice. They

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Speaker 9: you know, they are kind of one of the air

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Speaker 9: examples of the saaspocalypse. Or investors have decided that AI

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Speaker 9: might disrupt some of these leading software companies that enjoyed

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Speaker 9: some of the best growth rates and margins for decades.

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Speaker 9: And so Adobe announced back in March that they're going

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Speaker 9: to do a whole search for a CEO. And what

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Speaker 9: we have today is that they've zeroed in on two

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Speaker 9: internal leaders, and they've also brought in one of tech's

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Speaker 9: best known search firms to look for folks who might

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Speaker 9: have a little more experience with cutting EDGI development.

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Speaker 4: I mean talk to us about the internal leaders and

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Speaker 4: where they were they stood to lead before in the

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Speaker 4: business units. Because this is a company that probably, rather

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Speaker 4: like Salesforce, a lot of the general revenue.

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Speaker 2: Drivers are just flowing down.

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Speaker 4: There's like a little bit of macro overhang.

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Speaker 2: Companies aren't spending so.

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Speaker 4: Much on software as much unless it is sort of

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Speaker 4: directly AI related.

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Speaker 9: The most obvious choice is somebody named David Wadwani. I mean,

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Speaker 9: he's been the main deputy for quite a while for

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Speaker 9: the largest chunk of the business. I think a lot

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Speaker 9: of folks within Adobe assumed that he would just be

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Speaker 9: the next CEO, and so the fact that they announced

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Speaker 9: this big public search made some folks say, hmm, oh, well,

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Speaker 9: maybe David isn't going to get it right. Our understanding

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Speaker 9: is David certainly still could get it.

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Speaker 4: You need to have an evident race, you know, you

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Speaker 4: need to prove yourself that you are the right person

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Speaker 4: for their job.

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Speaker 3: Having at Disney as well, right like you know that

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Speaker 3: you go in internal candidate, but you put a little

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Speaker 3: pressure by saying, well, we're also looking at You said

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Speaker 3: search for them, but you mean executive search, right, headhunters

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Speaker 3: or that case.

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Speaker 10: Do we know if there's anyone out there headhunters? Yeah,

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Speaker 10: they're looking quite widely. One name that we have in

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Speaker 10: the story is Microsoft's Charles Lamana. I mean, he's an

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Speaker 10: ascendent executive at Microsoft. He helped some talks with Adobe,

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Speaker 10: ultimately backed out of those, but it's an illustrative example

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Speaker 10: of the kind of folks that Adobe's probably looking at,

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Speaker 10: those who are seen as being able to kind of

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Speaker 10: develop and monetize AI at the scale that you need

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Speaker 10: to at a company like Adobe.

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Speaker 4: What about Shantanou right now and how he guides it

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Speaker 4: in this interim period where everyone's.

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Speaker 2: Kind of just what kind of just holding all breath

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Speaker 2: and to find out more.

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Speaker 9: He's the chair of the board, so it's got to

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Speaker 9: be a little awkward for him, right. I mean you

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Speaker 9: have these two deputies. The other one Neil Chakravarti, he

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Speaker 9: runs the other big part of the business. He's done

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Speaker 9: very well that part of the business. While it's not

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Speaker 9: what we think of as Adobe. It's marketing software, marketing

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Speaker 9: and analytics software, which is you know, it's not Photoshop,

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Speaker 9: but it's still a big money maker and it's grown

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Speaker 9: quite a bit. You know, he has a Neil, and

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Speaker 9: he has David Likely saying hey, pick me.

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Speaker 6: I should be your next CEO.

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Speaker 3: Soare going back spaces right? You know people will know

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Speaker 3: Adobe because of Photoshop or PDF or some video editing

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Speaker 3: equip software platforms. But the basic story is that a

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Speaker 3: lot of that tool can be found free from some

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Speaker 3: kind of generated AI platform.

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Speaker 2: Right.

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Speaker 3: So Adobe, you know, you and I've worked on this together.

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Speaker 3: Right when we've we've sat down with Chantono in the

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Speaker 3: last twelve months, is to say what are you good

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Speaker 3: at here? Like are you using AI? Have they sort

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Speaker 3: of dispelled those fears with investors? Where are people still

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Speaker 3: saying oh, you know, the AI companies are coming for you.

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Speaker 9: The big concern with Adobe is that their software is

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Speaker 9: expensive when it's complicated hosting. If you're a professional who

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Speaker 9: needs all the knobs, you're not leaving. But if you're

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Speaker 9: somebody who wants to make a stupid meme and show

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Speaker 9: your friend and photoshop them doing something silly, you might

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Speaker 9: have bought Photoshop in the past, and you're probably not

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Speaker 9: going to today. That's the big concern the verse.

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Speaker 3: Brady Ford, thank you the real, really important read on

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Speaker 3: what's going on with the Adobe CEO.

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Speaker 6: Sir.

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Speaker 4: Let's go out to the Bloomberg Global Credit Forum while

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Speaker 4: Bloomberg savanas co host Elisa and Bromowitz is sitting down

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Speaker 4: with Steve Tannenbaum's Golden Dry Asset Management founder and Cia

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Speaker 4: take a listen.

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Speaker 11: Yes, and it also is very competitive. There's hundreds of

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Speaker 11: different managers out there. I remember when I started at

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Speaker 11: Makay Shields, we were eighty nine out of ninety one,

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Speaker 11: and within three years I was very proud we got

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Speaker 11: to be number one.

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Speaker 6: But that's a.

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Speaker 11: Lot of people to compete against and so and you

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Speaker 11: get your scoreboard every day. But more importantly, strategically, there

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Speaker 11: was the mindset of why do people buy, why do

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Speaker 11: they sell?

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Speaker 6: And can you front run that?

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Speaker 11: Can you predict if the premise if you're thinking of

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Speaker 11: investments as maybe as short movies, and how's a movie

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Speaker 11: going to end? And if your premise is that this happens,

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Speaker 11: and this happens, can I sell?

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Speaker 6: Who am I going to sell it to? And why

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Speaker 6: are they going to buy it?

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Speaker 11: And so, you know, part of that could be liquidity,

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Speaker 11: part of it can be the stats. Why isn't somebody

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Speaker 11: going to buy the four times levered software company that's

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Speaker 11: growing at eleven percent? Sure they're going to be upset

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Speaker 11: that they didn't buy it a twenty percent, but it

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Speaker 11: was five and a quarter or five and a half

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Speaker 11: times leverage back then, and the mindset was different. So

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Speaker 11: I think that and if that looks attractive, for instance,

441
00:21:32,720 --> 00:21:35,800
Speaker 11: just using an example to what else is in the

442
00:21:35,840 --> 00:21:39,320
Speaker 11: market that's yielding ten percent or nine percent, there's going

443
00:21:39,400 --> 00:21:42,000
Speaker 11: to be enough takers in that. So that so having

444
00:21:42,040 --> 00:21:46,720
Speaker 11: that mindset's always been attractive and helpful. There's also the

445
00:21:47,960 --> 00:21:50,119
Speaker 11: you know, you look at something like COVID and okay,

446
00:21:50,119 --> 00:21:53,800
Speaker 11: how are people going to going to behave there was usually.

447
00:21:53,840 --> 00:21:57,080
Speaker 11: I remember in mutual funds that when people got redeemed,

448
00:21:57,400 --> 00:22:01,040
Speaker 11: they would sell what they could sell quickest, or what

449
00:22:01,240 --> 00:22:04,000
Speaker 11: was most liquid. I always tried to sell my semi

450
00:22:04,040 --> 00:22:08,480
Speaker 11: liquid product because I know I could never sell it

451
00:22:08,520 --> 00:22:11,280
Speaker 11: in another week at this continued. So there's just different

452
00:22:11,320 --> 00:22:13,560
Speaker 11: strategies to think about.

453
00:22:13,840 --> 00:22:16,560
Speaker 12: So if you fast forward to now at Golden Tree

454
00:22:16,600 --> 00:22:21,040
Speaker 12: Asset Management, how do you perceive the mentality right now

455
00:22:21,840 --> 00:22:24,040
Speaker 12: in the masses or in the funds that you go

456
00:22:24,119 --> 00:22:24,640
Speaker 12: up against?

457
00:22:24,800 --> 00:22:27,200
Speaker 6: Sure, so there was a bigger question.

458
00:22:27,400 --> 00:22:30,880
Speaker 11: We were talking just a few moments ago about the

459
00:22:30,960 --> 00:22:34,600
Speaker 11: perspective on credit, particularly total return credit, and there's probably

460
00:22:34,640 --> 00:22:41,919
Speaker 11: frustration because some other assets equities are participating significantly. In

461
00:22:42,080 --> 00:22:45,600
Speaker 11: credit broadly speaking is in the low single digits, So

462
00:22:45,640 --> 00:22:50,800
Speaker 11: there's frustration and anxiousness. How do I capture returns against

463
00:22:50,800 --> 00:22:56,679
Speaker 11: that backdrop You have great current yields and still value

464
00:22:56,720 --> 00:23:01,640
Speaker 11: when you subtract out versus the faults that justify being

465
00:23:01,680 --> 00:23:02,159
Speaker 11: in credit.

466
00:23:03,600 --> 00:23:06,160
Speaker 12: Just to have everybody participate, this is a great time

467
00:23:06,160 --> 00:23:08,240
Speaker 12: to bring in our question, which is how you're positioned

468
00:23:08,600 --> 00:23:11,680
Speaker 12: in credit for the remainder of this year. And I

469
00:23:11,720 --> 00:23:14,800
Speaker 12: would love for you all to weigh in defensive, neutral

470
00:23:14,960 --> 00:23:20,560
Speaker 12: or risk on. From your perspective, how are you positioned?

471
00:23:20,640 --> 00:23:22,600
Speaker 12: I mean, right now, do you want to take more risk?

472
00:23:22,720 --> 00:23:25,600
Speaker 12: Are you looking for yields or are you looking for

473
00:23:26,040 --> 00:23:29,000
Speaker 12: defense ahead of greater opportunities.

474
00:23:29,400 --> 00:23:33,159
Speaker 11: So when we spoke in January at Davos, I mentioned

475
00:23:33,200 --> 00:23:38,560
Speaker 11: how the setup was poor for credit and good for equities. Historically,

476
00:23:38,640 --> 00:23:43,120
Speaker 11: when you've had stretch valuations in a mid cycle, where

477
00:23:43,119 --> 00:23:45,680
Speaker 11: the economy is expected to grow at two percent or better,

478
00:23:46,359 --> 00:23:52,240
Speaker 11: your returns in credit or less than the coupon, and

479
00:23:52,280 --> 00:23:55,800
Speaker 11: that's exactly what's happened so far. In contrast, usually that's

480
00:23:55,800 --> 00:23:58,399
Speaker 11: a great environment for equities, and that's what's happened. And

481
00:23:58,440 --> 00:24:00,159
Speaker 11: even if you look at the equal weight to S

482
00:24:00,200 --> 00:24:02,239
Speaker 11: and P is certainly beginning to catch on.

483
00:24:02,280 --> 00:24:03,120
Speaker 6: So it's been a.

484
00:24:03,080 --> 00:24:06,679
Speaker 11: More broader rally, particularly the last few weeks. Even in

485
00:24:06,720 --> 00:24:09,800
Speaker 11: the face of a run on again off again conversations,

486
00:24:10,040 --> 00:24:14,840
Speaker 11: credit has still been is still linguished, and we expect

487
00:24:14,840 --> 00:24:17,240
Speaker 11: that to continue. Now that's not to say that it

488
00:24:17,320 --> 00:24:20,760
Speaker 11: can't have a better second half, but I do think

489
00:24:20,760 --> 00:24:27,840
Speaker 11: there's some pockets of opportunity. But this is historically a

490
00:24:27,920 --> 00:24:30,080
Speaker 11: tough time to be in credit in terms of in

491
00:24:30,080 --> 00:24:30,960
Speaker 11: the cycle.

492
00:24:31,359 --> 00:24:36,440
Speaker 12: Because of inflation and growth. That doesn't really benefit the instruments.

493
00:24:36,840 --> 00:24:40,760
Speaker 11: It's just how it's priced its price as if defaults

494
00:24:40,760 --> 00:24:45,840
Speaker 11: are going to be low, and and that the corporate

495
00:24:45,880 --> 00:24:49,280
Speaker 11: earnings are going to and that they're more likely to disappoint.

496
00:24:49,320 --> 00:24:53,560
Speaker 11: You're getting you're not getting paid to increase corporate earnings

497
00:24:53,600 --> 00:24:57,640
Speaker 11: or for earnings to surprise on the upside, and you're

498
00:24:57,720 --> 00:25:01,240
Speaker 11: being heavily penalized at the surprise on the downside. In

499
00:25:01,280 --> 00:25:05,800
Speaker 11: the equity market, there's still some acceptance or excitement if

500
00:25:05,840 --> 00:25:06,840
Speaker 11: you're taking up numbers.

501
00:25:07,080 --> 00:25:10,600
Speaker 12: There are some opportunities. Like you said, where's the distress

502
00:25:10,720 --> 00:25:12,120
Speaker 12: and where are you finding them right now?

503
00:25:12,400 --> 00:25:14,800
Speaker 6: So it's very situational.

504
00:25:15,200 --> 00:25:20,040
Speaker 11: There's the expected distress, which is in software where the

505
00:25:20,080 --> 00:25:24,080
Speaker 11: business model is getting called into question. Then there is

506
00:25:24,160 --> 00:25:29,639
Speaker 11: also in telecom another business model that's getting called into question.

507
00:25:30,000 --> 00:25:33,639
Speaker 11: And there's an interesting relationship between the public equity. As

508
00:25:33,680 --> 00:25:35,320
Speaker 11: you look at a Comcast, I think that's hitting a

509
00:25:35,359 --> 00:25:37,720
Speaker 11: new low as we speak, a fifty two week low.

510
00:25:37,840 --> 00:25:40,960
Speaker 11: If not, it's certainly close to that. Charters probably in

511
00:25:40,960 --> 00:25:44,879
Speaker 11: the same camp, Cable one in the same camp, but

512
00:25:45,000 --> 00:25:49,400
Speaker 11: yet some of the debt isn't, so I think that's

513
00:25:49,480 --> 00:25:53,960
Speaker 11: kind of an interesting relationship the debt and what happened

514
00:25:55,320 --> 00:25:58,800
Speaker 11: I guess recently with lts with threatening a transaction. I

515
00:25:58,800 --> 00:26:01,399
Speaker 11: think it's all a ploy for negotiation, but it probably

516
00:26:01,400 --> 00:26:04,560
Speaker 11: brings people to the table sooner if it works. It's

517
00:26:04,600 --> 00:26:07,240
Speaker 11: the same team that brought you Ballish and we respect

518
00:26:07,280 --> 00:26:10,000
Speaker 11: them an awful lot, but it kind of went nowhere

519
00:26:10,000 --> 00:26:14,400
Speaker 11: when there was a bunch of of I guess potential

520
00:26:14,440 --> 00:26:18,040
Speaker 11: transactions being contemplated that didn't get to the finish line

521
00:26:18,119 --> 00:26:19,120
Speaker 11: from the equity.

522
00:26:19,880 --> 00:26:22,960
Speaker 12: So playing the debt equity structure in creative ways is

523
00:26:23,160 --> 00:26:24,119
Speaker 12: why you're playing.

524
00:26:23,840 --> 00:26:24,239
Speaker 6: With it right.

525
00:26:24,359 --> 00:26:28,240
Speaker 11: And within industries, I think the equity in cable is

526
00:26:28,359 --> 00:26:32,800
Speaker 11: much easier. It's hard to see that the equities don't work,

527
00:26:33,760 --> 00:26:36,800
Speaker 11: workers don't work, and the debt works. So I think

528
00:26:36,840 --> 00:26:40,320
Speaker 11: that relationships kind of is kind of interesting. I'd say

529
00:26:40,320 --> 00:26:42,840
Speaker 11: the same thing in healthcare, which seems like it's been

530
00:26:42,840 --> 00:26:46,399
Speaker 11: a source of funding for technology stocks, and there's certain

531
00:26:46,480 --> 00:26:48,720
Speaker 11: companies like Tenant which strike.

532
00:26:48,600 --> 00:26:50,440
Speaker 6: Me as very reasonable value.

533
00:26:50,720 --> 00:26:54,240
Speaker 11: Sure there has been some volume issues, but the valuations

534
00:26:54,240 --> 00:26:55,640
Speaker 11: seem very credible.

535
00:26:56,480 --> 00:26:57,960
Speaker 6: Top match management team, and.

536
00:26:57,920 --> 00:27:01,200
Speaker 11: I think the equity market exhues me the credit markets

537
00:27:01,240 --> 00:27:03,080
Speaker 11: would finance the entire market cap.

538
00:27:04,720 --> 00:27:08,320
Speaker 12: More broadly, you started by talking about the frustration felt

539
00:27:08,359 --> 00:27:10,840
Speaker 12: by a number of credit fund managers because right now,

540
00:27:11,280 --> 00:27:13,399
Speaker 12: this isn't an assa class that tends to work that

541
00:27:13,440 --> 00:27:17,520
Speaker 12: well or give that many that give outsize returns, given

542
00:27:17,560 --> 00:27:20,840
Speaker 12: the narrow we're in, and yet people are pouring trillions

543
00:27:20,880 --> 00:27:26,040
Speaker 12: of dollars into AI infrastructure. Does that worry you, excite

544
00:27:26,080 --> 00:27:27,760
Speaker 12: you for the potential down the line?

545
00:27:28,119 --> 00:27:31,400
Speaker 11: Well, when you look at the devils in the details

546
00:27:31,440 --> 00:27:33,520
Speaker 11: in terms of what the terms are, but when you

547
00:27:33,560 --> 00:27:36,600
Speaker 11: look at who's backstopping it, they seem like good credits.

548
00:27:37,080 --> 00:27:40,840
Speaker 11: And people tend to think of two and three years out,

549
00:27:40,880 --> 00:27:43,040
Speaker 11: not five or ten years out, and it looks like

550
00:27:43,040 --> 00:27:45,679
Speaker 11: for two to three years out you're getting overcompensated for

551
00:27:45,720 --> 00:27:50,840
Speaker 11: the risk. On the other hand, you're dealing with terrible technicals.

552
00:27:50,880 --> 00:27:54,159
Speaker 11: They don't seem to run out of product. And I

553
00:27:54,200 --> 00:27:58,480
Speaker 11: think even this Google financing is suggesting that they want

554
00:27:58,520 --> 00:28:00,919
Speaker 11: to make sure to be out in front of the

555
00:28:00,920 --> 00:28:05,200
Speaker 11: financing in terms of the equity, and there's almost not almost,

556
00:28:05,280 --> 00:28:08,760
Speaker 11: there is an arms race going on, and the issue

557
00:28:08,800 --> 00:28:13,359
Speaker 11: is will the infrastructure investment be justified or will this

558
00:28:13,480 --> 00:28:16,520
Speaker 11: be more like underwater cable, which was a good thing

559
00:28:16,600 --> 00:28:17,520
Speaker 11: until it wasn't.

560
00:28:18,359 --> 00:28:20,200
Speaker 6: Do you have a take on that.

561
00:28:20,359 --> 00:28:24,160
Speaker 12: Are you imbedding a sort of thesis into your investments.

562
00:28:25,359 --> 00:28:30,000
Speaker 11: I'm somewhat agnostic, but history would have a bad record

563
00:28:30,320 --> 00:28:36,639
Speaker 11: in terms of overinvestment for industries that have very high payouts,

564
00:28:36,960 --> 00:28:44,840
Speaker 11: whether it's riverboat gambling to something like undersea cable. So

565
00:28:45,120 --> 00:28:47,600
Speaker 11: you know, it's not a great precedent, but there's not

566
00:28:47,680 --> 00:28:51,640
Speaker 11: a great precedent, But there's an argument that you know,

567
00:28:51,640 --> 00:28:53,840
Speaker 11: I understand the arguments now, and I think our view

568
00:28:53,920 --> 00:29:00,440
Speaker 11: is to be very deliberate to have additional assurances by

569
00:29:00,440 --> 00:29:02,840
Speaker 11: the users that they're committed to these projects.

570
00:29:03,680 --> 00:29:06,120
Speaker 12: Would you rather invest in the high yield part of

571
00:29:06,160 --> 00:29:09,600
Speaker 12: the investment grade part with the all in back drop

572
00:29:09,680 --> 00:29:11,800
Speaker 12: the idea that it tends to be lower duration, shorter

573
00:29:11,880 --> 00:29:15,040
Speaker 12: maturity in the high yield but higher risk investment grade

574
00:29:15,200 --> 00:29:16,520
Speaker 12: longer duration but tied to.

575
00:29:16,600 --> 00:29:20,680
Speaker 11: Very So my guess is at different points in this

576
00:29:20,840 --> 00:29:24,360
Speaker 11: funding you're going to get high yel type of spreads

577
00:29:24,640 --> 00:29:27,600
Speaker 11: in the investment grade market. So the issue is, you

578
00:29:27,640 --> 00:29:31,160
Speaker 11: know what you do in between them. So I think

579
00:29:31,160 --> 00:29:33,400
Speaker 11: it depends you know, on the pricing, but I think

580
00:29:33,440 --> 00:29:40,400
Speaker 11: you'll get at least every other stretched or over financed

581
00:29:41,400 --> 00:29:43,800
Speaker 11: industry I've been part of, you usually have been able

582
00:29:43,800 --> 00:29:49,360
Speaker 11: to get excellent protection with below investment grade pricing at

583
00:29:49,360 --> 00:29:49,800
Speaker 11: some point.

584
00:29:50,200 --> 00:29:52,440
Speaker 6: So now what do you do in between? There? You

585
00:29:52,480 --> 00:29:54,640
Speaker 6: know is the issue, But it's going to get there

586
00:29:54,640 --> 00:29:55,160
Speaker 6: at some point.

587
00:29:55,720 --> 00:29:58,760
Speaker 12: So just dance and cable and and and some pick

588
00:29:58,840 --> 00:30:01,720
Speaker 12: up some distressed software where and wait to invest in

589
00:30:01,720 --> 00:30:02,920
Speaker 12: this area until it falls out A.

590
00:30:02,880 --> 00:30:07,120
Speaker 11: Bit no, no, because if it's two or three years,

591
00:30:07,160 --> 00:30:08,920
Speaker 11: it's a lot of return to give up. But to

592
00:30:08,960 --> 00:30:13,920
Speaker 11: be deliberate about what you're getting versus the opportunity of

593
00:30:14,200 --> 00:30:16,920
Speaker 11: what you might be getting. And you know, at I'm

594
00:30:17,000 --> 00:30:19,560
Speaker 11: incredibly fickle on these topics. So I could you know

595
00:30:19,640 --> 00:30:21,440
Speaker 11: in a month or two, could just have a different

596
00:30:21,440 --> 00:30:22,760
Speaker 11: perspective with more evidence.

597
00:30:23,240 --> 00:30:26,240
Speaker 12: How do you remain nimble at a time when you're

598
00:30:26,280 --> 00:30:30,200
Speaker 12: going in and out of sometimes less liquid instruments.

599
00:30:31,880 --> 00:30:34,280
Speaker 11: First is you've got to assume you can't be nimble

600
00:30:34,320 --> 00:30:37,880
Speaker 11: and less liquid instruments and lower prices brings in illiquidity,

601
00:30:37,960 --> 00:30:41,400
Speaker 11: higher prices brings in confidence. So that's kind of the

602
00:30:41,440 --> 00:30:46,520
Speaker 11: way the credit markets work. Just trying to ask as

603
00:30:46,560 --> 00:30:49,640
Speaker 11: many questions and focus on what we think are the

604
00:30:49,720 --> 00:30:53,720
Speaker 11: key variables, and something like AI. You can be overwhelmed

605
00:30:53,840 --> 00:30:57,280
Speaker 11: by so much, so to try and look at some

606
00:30:57,440 --> 00:31:01,280
Speaker 11: of the larger issues and just focus on that and

607
00:31:01,320 --> 00:31:03,959
Speaker 11: be deliberate, you know, because there's so much supply.

608
00:31:04,600 --> 00:31:05,920
Speaker 6: The idea of.

609
00:31:08,440 --> 00:31:11,760
Speaker 11: You're going to run out of opportunities isn't a real Yeah,

610
00:31:11,760 --> 00:31:14,239
Speaker 11: that's not realistic. There's going to be something to do

611
00:31:14,280 --> 00:31:18,960
Speaker 11: in this space, particularly as it continues to be successful.

612
00:31:20,000 --> 00:31:20,240
Speaker 6: Right now?

613
00:31:20,280 --> 00:31:24,080
Speaker 12: Would you rather be in public securities or private securities?

614
00:31:24,120 --> 00:31:26,040
Speaker 12: Just as a rule, I mean in terms of the

615
00:31:26,080 --> 00:31:27,040
Speaker 12: interests that demand.

616
00:31:27,720 --> 00:31:30,080
Speaker 11: So when we look at asset classes, probably the asset

617
00:31:30,120 --> 00:31:32,440
Speaker 11: back to asset class we find the best value, which

618
00:31:32,440 --> 00:31:36,200
Speaker 11: is a private asset class. So we're finding good value there.

619
00:31:36,360 --> 00:31:40,680
Speaker 11: In private credit, there's some of the more anxious capital

620
00:31:40,760 --> 00:31:43,280
Speaker 11: the open end of private credit funds are out of

621
00:31:43,320 --> 00:31:47,160
Speaker 11: the market, so that leaves the funds and other players

622
00:31:47,160 --> 00:31:50,480
Speaker 11: in private credit who are more deliberate being the main

623
00:31:51,760 --> 00:31:54,200
Speaker 11: buyers of private credit. So we're seeing good good value there.

624
00:31:54,520 --> 00:31:57,960
Speaker 11: We're seeing good of value in some of the out

625
00:31:57,960 --> 00:32:00,760
Speaker 11: of favor sectors, which is always the case by definition,

626
00:32:00,760 --> 00:32:01,880
Speaker 11: out of favorite sectors or.

627
00:32:01,800 --> 00:32:06,160
Speaker 6: At discounts, but so I'd say it's eclectic.

628
00:32:06,240 --> 00:32:09,320
Speaker 11: But we certainly are seeing better value in private credit

629
00:32:09,360 --> 00:32:11,520
Speaker 11: today than we've seen in the last twenty four to.

630
00:32:11,480 --> 00:32:12,320
Speaker 6: Thirty six months.

631
00:32:12,520 --> 00:32:16,520
Speaker 12: Are you getting paid for the illiquidity premium?

632
00:32:16,760 --> 00:32:21,120
Speaker 11: That's always after the fact comment, but it seems like

633
00:32:21,160 --> 00:32:24,880
Speaker 11: you're getting better paid in the absolute. When I think

634
00:32:24,920 --> 00:32:29,000
Speaker 11: of things, I think it's far to say out of ten,

635
00:32:29,840 --> 00:32:32,680
Speaker 11: maybe a six, you know, six and a half, So

636
00:32:32,720 --> 00:32:34,760
Speaker 11: it's above average, but not by much.

637
00:32:36,160 --> 00:32:39,000
Speaker 12: Right now, we're looking out for a year where a

638
00:32:39,040 --> 00:32:41,480
Speaker 12: lot of people keep talking about inflation inflationary risks, and

639
00:32:41,520 --> 00:32:43,880
Speaker 12: this is one of the reasons why credit hasn't been

640
00:32:44,280 --> 00:32:45,640
Speaker 12: as much of a sweet spot.

641
00:32:46,480 --> 00:32:46,960
Speaker 7: How do you.

642
00:32:47,360 --> 00:32:47,880
Speaker 2: Price it in?

643
00:32:47,920 --> 00:32:49,000
Speaker 12: I mean, at what point do you just start to

644
00:32:49,040 --> 00:32:51,680
Speaker 12: increase the sleeve of equities and create some protection on

645
00:32:51,720 --> 00:32:54,160
Speaker 12: the downside And I kind of hope for the best

646
00:32:54,240 --> 00:32:57,760
Speaker 12: with a couple of security selections.

647
00:33:00,000 --> 00:33:00,280
Speaker 6: At least.

648
00:33:00,320 --> 00:33:03,320
Speaker 11: It's probably the biggest risk in the market, and it's

649
00:33:04,080 --> 00:33:07,400
Speaker 11: impacted because it's impacted rates much more credit than it

650
00:33:07,480 --> 00:33:10,640
Speaker 11: has equities, which I'm surprised at, but just as what

651
00:33:10,720 --> 00:33:13,400
Speaker 11: it is, and if you look in the seventies there

652
00:33:13,440 --> 00:33:16,680
Speaker 11: were better equities did better than credit. So you know,

653
00:33:16,720 --> 00:33:20,320
Speaker 11: if if the if you're looking at a bad environment,

654
00:33:20,360 --> 00:33:27,680
Speaker 11: at least that's one example where equity outperform credit. It's

655
00:33:27,680 --> 00:33:30,360
Speaker 11: it's very much data dependent. It's also what's going to

656
00:33:30,400 --> 00:33:33,120
Speaker 11: happen with the war. You know, if you look at

657
00:33:33,240 --> 00:33:36,200
Speaker 11: one of the big surprises so far this year is

658
00:33:37,000 --> 00:33:42,800
Speaker 11: oil has been relatively calm in a relative to what expectations.

659
00:33:42,840 --> 00:33:45,520
Speaker 11: Most people thought if you got past Memorial Day, it

660
00:33:45,560 --> 00:33:48,000
Speaker 11: would be one twenty five, one thirty five.

661
00:33:48,400 --> 00:33:51,720
Speaker 6: But yet we're in the mid nineties. So I think it's.

662
00:33:53,080 --> 00:33:55,920
Speaker 11: You know, that's a factor that seems to you know,

663
00:33:56,040 --> 00:33:56,640
Speaker 11: be developing.

664
00:33:56,840 --> 00:33:58,640
Speaker 6: So it's hard to do. It's hard to.

665
00:34:00,640 --> 00:34:02,840
Speaker 11: You have a line, you know, to draw a line

666
00:34:02,840 --> 00:34:04,960
Speaker 11: in the sand, you know on that you know.

667
00:34:05,040 --> 00:34:08,960
Speaker 12: This is a cognitive dissonance. Every single morning. We talked

668
00:34:08,960 --> 00:34:11,000
Speaker 12: to a lot of people, and we were speaking with

669
00:34:11,000 --> 00:34:13,400
Speaker 12: Mike Worth of Chevron the other day and he said,

670
00:34:13,480 --> 00:34:15,319
Speaker 12: we're going to end up with shortages. If this keeps

671
00:34:15,360 --> 00:34:16,919
Speaker 12: going in the next couple of weeks, we could start

672
00:34:16,920 --> 00:34:19,200
Speaker 12: seeing shortages. In the United States, diesel inventories are the

673
00:34:19,200 --> 00:34:21,719
Speaker 12: lowest levels since two thousand and three, and then you

674
00:34:21,760 --> 00:34:24,759
Speaker 12: get an equity strategist on a credit strategist on we're

675
00:34:24,760 --> 00:34:28,440
Speaker 12: not looking at that. That doesn't matter. How do you

676
00:34:28,480 --> 00:34:29,080
Speaker 12: think about that?

677
00:34:29,400 --> 00:34:32,680
Speaker 11: So I've kind of processed a little different is how

678
00:34:32,719 --> 00:34:37,319
Speaker 11: are equities pricing this? And equities seem to not be

679
00:34:37,480 --> 00:34:41,439
Speaker 11: pricing the future's curve. So on the strip curve, it's

680
00:34:41,520 --> 00:34:45,960
Speaker 11: just so on oil service. Sure, Helliburton's having an excellent year,

681
00:34:45,960 --> 00:34:47,480
Speaker 11: But when I look at some of the mid caps,

682
00:34:48,280 --> 00:34:53,200
Speaker 11: very much pricing in i'd say seventy seventy five dollars oil.

683
00:34:53,400 --> 00:34:55,560
Speaker 11: And when we see the M and A market in

684
00:34:55,880 --> 00:35:00,320
Speaker 11: oil services, and we have a company that we or

685
00:35:00,400 --> 00:35:03,160
Speaker 11: more than half of that looks at the M and

686
00:35:03,200 --> 00:35:05,719
Speaker 11: A market and has bought a few companies in the

687
00:35:05,719 --> 00:35:09,239
Speaker 11: past twelve months, that market hasn't changed that much so

688
00:35:09,880 --> 00:35:13,520
Speaker 11: in terms of levels and pricings and multiples and expectations.

689
00:35:13,560 --> 00:35:17,120
Speaker 11: So we see the regardless of what people are saying,

690
00:35:17,400 --> 00:35:20,120
Speaker 11: how they're voting with their feet, they're still very cynical

691
00:35:20,560 --> 00:35:22,840
Speaker 11: of how long this will last. And that's probably it

692
00:35:22,880 --> 00:35:25,799
Speaker 11: seems like a better opportunity that it's going to be

693
00:35:25,880 --> 00:35:27,560
Speaker 11: higher for longer than what's in the market.

694
00:35:27,760 --> 00:35:30,440
Speaker 12: So in other words, by MidCap oil names.

695
00:35:30,719 --> 00:35:34,560
Speaker 11: Yeah, and suppliers, but also when you're thinking about oil

696
00:35:34,719 --> 00:35:37,399
Speaker 11: as an input to your companies, and I'm thinking as

697
00:35:37,400 --> 00:35:41,160
Speaker 11: a portfolio manager, Okay, what should we be assuming in

698
00:35:41,239 --> 00:35:46,600
Speaker 11: terms of whether it's in building material products and which

699
00:35:46,640 --> 00:35:49,839
Speaker 11: oil can be an important input? You know, what does

700
00:35:49,880 --> 00:35:52,120
Speaker 11: it mean for inflation, etc. My guess is going to

701
00:35:52,120 --> 00:35:53,000
Speaker 11: be higher for longer.

702
00:35:53,320 --> 00:35:54,839
Speaker 12: I want to pull up the results to the pole,

703
00:35:54,920 --> 00:35:57,680
Speaker 12: and unfortunately we didn't have an answer to the pole

704
00:35:58,040 --> 00:35:59,239
Speaker 12: of just frustrating.

705
00:36:00,120 --> 00:36:01,399
Speaker 2: What the answer was, how are.

706
00:36:01,360 --> 00:36:04,040
Speaker 12: You positioning credit for the rest of twenty twenty six?

707
00:36:04,120 --> 00:36:08,239
Speaker 12: Not for ultimate frustration but neutral forty two percent, defensive,

708
00:36:08,480 --> 00:36:11,280
Speaker 12: thirty one percent, risk on twenty seven percent?

709
00:36:11,320 --> 00:36:12,080
Speaker 6: Does that surprise you?

710
00:36:14,080 --> 00:36:18,240
Speaker 11: So I look at it as almost seventy five percent

711
00:36:18,320 --> 00:36:23,120
Speaker 11: seventy three percent of people who are like yeah, what

712
00:36:23,160 --> 00:36:23,879
Speaker 11: else did you say?

713
00:36:24,000 --> 00:36:27,799
Speaker 6: Yeah? And so you know, it's it seems about about fair.

714
00:36:28,120 --> 00:36:31,640
Speaker 11: What's being What's a strategy that's been very popular this

715
00:36:31,719 --> 00:36:35,000
Speaker 11: year in terms of inflows is opportunistic credit having a

716
00:36:35,040 --> 00:36:39,440
Speaker 11: long playbook and instead of a distress manager a private

717
00:36:39,480 --> 00:36:42,279
Speaker 11: credit manager, how about a manager who can look for

718
00:36:42,320 --> 00:36:46,120
Speaker 11: the best opportunities with a long playbook, So that strategy

719
00:36:46,200 --> 00:36:48,800
Speaker 11: has been gaining a lot of traction.

720
00:36:48,960 --> 00:36:54,360
Speaker 6: I think the.

721
00:36:52,160 --> 00:36:55,560
Speaker 11: Positioning and credit credit in terms of getting alpha and

722
00:36:55,640 --> 00:36:59,960
Speaker 11: dispersion is that's not surprising with the results here.

723
00:37:00,920 --> 00:37:04,400
Speaker 12: You've been in the business for decades. You've seen a

724
00:37:04,400 --> 00:37:06,600
Speaker 12: lot of cycles. You were talking earlier about the seventies.

725
00:37:07,000 --> 00:37:09,120
Speaker 12: I hope that's not the aut analog. But is there

726
00:37:09,120 --> 00:37:11,239
Speaker 12: an analog to the moment that we're in right now

727
00:37:11,280 --> 00:37:13,120
Speaker 12: that you can think of in terms of investing, in

728
00:37:13,200 --> 00:37:15,320
Speaker 12: terms of the macroeconomic backdrop.

729
00:37:15,600 --> 00:37:20,920
Speaker 11: So we're mid cycle in a stretched environment where it's

730
00:37:21,080 --> 00:37:25,000
Speaker 11: very narrow for what the opportunities are. That's like most

731
00:37:25,040 --> 00:37:25,799
Speaker 11: markets I've been in.

732
00:37:26,640 --> 00:37:27,680
Speaker 6: I mean, that's like just in.

733
00:37:27,760 --> 00:37:30,000
Speaker 12: Feeling most markets for most people.

734
00:37:30,320 --> 00:37:32,680
Speaker 11: So if you were to go back and count, yeah,

735
00:37:32,840 --> 00:37:38,160
Speaker 11: stretch valuations, very little dispersion except for a certain percentage

736
00:37:38,160 --> 00:37:40,200
Speaker 11: of the market, call it less than twenty percent of

737
00:37:40,239 --> 00:37:42,520
Speaker 11: the market, that's kind of most markets.

738
00:37:42,719 --> 00:37:43,880
Speaker 6: I bet, I haven't.

739
00:37:44,600 --> 00:37:48,040
Speaker 11: I bet it's three quarters of the market, is what that?

740
00:37:48,200 --> 00:37:49,360
Speaker 11: It's certainly more than half.

741
00:37:49,880 --> 00:37:52,120
Speaker 12: So you think that the analog is almost every time

742
00:37:52,160 --> 00:37:54,200
Speaker 12: except for the big extremes, Well.

743
00:37:54,120 --> 00:37:56,720
Speaker 11: I think that what's different this time because every cycle

744
00:37:56,760 --> 00:37:57,760
Speaker 11: has something that's different.

745
00:37:58,120 --> 00:38:00,439
Speaker 6: And what's different this time is.

746
00:38:00,640 --> 00:38:05,960
Speaker 11: The AI expense and what the ramifications of who the

747
00:38:06,000 --> 00:38:08,160
Speaker 11: winners and losers are. And you could have said that

748
00:38:08,239 --> 00:38:12,680
Speaker 11: with media with the Internet, and who's going to be

749
00:38:13,400 --> 00:38:18,680
Speaker 11: when I think of software and try and conceptualize who

750
00:38:18,680 --> 00:38:21,440
Speaker 11: the winners and losers are. I look at legacy media,

751
00:38:21,840 --> 00:38:25,600
Speaker 11: and there was TV which went from call it nominal

752
00:38:25,640 --> 00:38:29,200
Speaker 11: growth to lesser noomenal growth, but still growth. You look

753
00:38:29,239 --> 00:38:33,000
Speaker 11: at cable programmers who still had above nominal growth for

754
00:38:33,040 --> 00:38:36,399
Speaker 11: about fifteen years, so those were healthy businesses. You had

755
00:38:36,520 --> 00:38:41,439
Speaker 11: radio that call it by two thousand and eight or nine,

756
00:38:41,520 --> 00:38:46,919
Speaker 11: seem to really be a more marginal product, and then

757
00:38:47,560 --> 00:38:50,400
Speaker 11: by the late teens really in trouble. And then you

758
00:38:50,440 --> 00:38:53,960
Speaker 11: had newspapers which really peaked about I'm trying to think

759
00:38:53,960 --> 00:38:56,960
Speaker 11: of the tribune transaction of two thousand and six, two

760
00:38:57,000 --> 00:38:59,120
Speaker 11: thousand and seven, I think two thousand and five. So

761
00:38:59,680 --> 00:39:03,760
Speaker 11: after two thousand and five really began to be disintermediated.

762
00:39:04,080 --> 00:39:07,560
Speaker 11: So where does some of these industries fall with that methodology?

763
00:39:08,200 --> 00:39:11,600
Speaker 12: Fascinating and everyone wants to be not radio, although radio

764
00:39:11,680 --> 00:39:13,600
Speaker 12: is coming back with podcasts, so there's.

765
00:39:13,400 --> 00:39:18,600
Speaker 11: That though it's not though it's not only on the band, right,

766
00:39:18,920 --> 00:39:21,880
Speaker 11: So when you're thinking about radio, as I grew up

767
00:39:21,920 --> 00:39:25,239
Speaker 11: with it, it was AMFM and really FM for the

768
00:39:25,239 --> 00:39:28,520
Speaker 11: most part, though I think I remember being invested the

769
00:39:28,560 --> 00:39:32,520
Speaker 11: largest credit in MS, which was w FAN on the

770
00:39:32,560 --> 00:39:37,000
Speaker 11: AM band, But it was but that's a different it's

771
00:39:37,040 --> 00:39:40,240
Speaker 11: a different medium for radio.

772
00:39:40,480 --> 00:39:44,320
Speaker 12: Yeah, different distribution mechanisms. Stephen Tannebaum, always a clinic, Always

773
00:39:44,320 --> 00:39:46,640
Speaker 12: wonderful to speak with you. Steven Tannabaum of Golden Tree

774
00:39:46,680 --> 00:39:50,960
Speaker 12: Asset Management, Thank you, it's so good here.

775
00:39:52,000 --> 00:39:55,720
Speaker 3: That was Steve Tannenbaum, Golden Tree Asset Management founder and CIO,

776
00:39:55,840 --> 00:39:59,160
Speaker 3: speaking with our own Lisa Abromowitz. Hello, Welcome back to

777
00:39:59,160 --> 00:40:01,840
Speaker 3: Bloomberg Tech. This is what financial markets look like, zeroed

778
00:40:01,840 --> 00:40:04,000
Speaker 3: in on the tech sector. There is a lot in

779
00:40:04,040 --> 00:40:06,200
Speaker 3: the market to do with the move in oil. There

780
00:40:06,239 --> 00:40:09,239
Speaker 3: is some concern about the current state of affairs in

781
00:40:09,280 --> 00:40:11,319
Speaker 3: the relationship between the US and Iran and what that

782
00:40:11,360 --> 00:40:14,520
Speaker 3: means for peace talks. Broadly, we're a little softer to

783
00:40:14,640 --> 00:40:16,839
Speaker 3: flat on the Nasdaq one hundred, you know, that's our

784
00:40:16,880 --> 00:40:19,920
Speaker 3: go to tech heavy index. But continued out performance in

785
00:40:20,000 --> 00:40:22,719
Speaker 3: chip stocks and we've given you that story throughout the hour.

786
00:40:22,760 --> 00:40:23,880
Speaker 3: We're going to get a lot more on it in

787
00:40:23,920 --> 00:40:26,560
Speaker 3: just a moment's time. Bitcoin at sixty six thousand US

788
00:40:26,560 --> 00:40:30,120
Speaker 3: dollars per token, down two percent, but you know, kind

789
00:40:30,120 --> 00:40:32,600
Speaker 3: of risk off. And then there was that big number

790
00:40:32,760 --> 00:40:35,680
Speaker 3: alphabet boosting its equity offering to eighty four point seventy

791
00:40:35,680 --> 00:40:38,080
Speaker 3: five billion dollars. A little bit of dilution going on,

792
00:40:38,120 --> 00:40:40,799
Speaker 3: maybe down six ten to one percent. Okay, markets are fun?

793
00:40:40,840 --> 00:40:41,839
Speaker 3: What else is going on current?

794
00:40:42,160 --> 00:40:45,200
Speaker 4: Maybe politics is fun in certain places. Right here in California,

795
00:40:45,320 --> 00:40:48,840
Speaker 4: several tech favored candidates they delivered actually a poor showing

796
00:40:48,840 --> 00:40:52,120
Speaker 4: in California's primary elections just yesterday. The results are still

797
00:40:52,120 --> 00:40:55,120
Speaker 4: being tallied, but so far, the big buck spent by

798
00:40:55,120 --> 00:40:58,680
Speaker 4: Silicon Valley billionaires and founders they haven't resulted in wide

799
00:40:58,760 --> 00:41:01,960
Speaker 4: ranging wins for their favorite candidates. But in most California

800
00:41:02,000 --> 00:41:05,840
Speaker 4: reporter Aniahou Commission is here with us and an iaho.

801
00:41:06,400 --> 00:41:08,200
Speaker 2: Why why has money not worked?

802
00:41:08,840 --> 00:41:11,960
Speaker 13: That's a good question. I think we're seeing that a

803
00:41:11,960 --> 00:41:16,440
Speaker 13: lot of this frustration in Silicon Valley has been concentrated

804
00:41:16,520 --> 00:41:19,799
Speaker 13: amongst a very small group of tech elite, and it

805
00:41:19,800 --> 00:41:21,839
Speaker 13: didn't really translate to the voter base.

806
00:41:21,920 --> 00:41:25,280
Speaker 6: So they spent a lot of money on Matt Mayhon.

807
00:41:25,120 --> 00:41:28,719
Speaker 13: The moderate San Jose mayor, and they there's a lot

808
00:41:28,719 --> 00:41:33,160
Speaker 13: of enthusiasm on X for him. A lot of venture capitalists,

809
00:41:33,840 --> 00:41:37,160
Speaker 13: big names like Mike Morritz, Sergey Brinn came in behind him.

810
00:41:37,160 --> 00:41:39,480
Speaker 2: But he promising like no billionaire attacks.

811
00:41:39,120 --> 00:41:42,280
Speaker 13: Basically that was one of his promises. He was against

812
00:41:42,320 --> 00:41:44,400
Speaker 13: the billionaire tax. He wanted to kind of do a

813
00:41:44,440 --> 00:41:50,000
Speaker 13: more back to basics, smaller government, you know, kind of

814
00:41:51,120 --> 00:41:54,760
Speaker 13: less taxation and little less regulation, a little more friendly

815
00:41:54,800 --> 00:41:58,759
Speaker 13: to tech. And I think, you know, we've seen that

816
00:41:58,800 --> 00:42:01,799
Speaker 13: there's a lot of actually fresh with Silicon Valley in

817
00:42:01,840 --> 00:42:06,560
Speaker 13: California and these leaders who are making a lot of

818
00:42:06,560 --> 00:42:08,760
Speaker 13: money in the tech boom, and they're feeling very confident.

819
00:42:08,800 --> 00:42:10,800
Speaker 13: It's actually not translating.

820
00:42:10,200 --> 00:42:13,560
Speaker 3: To the ballot box right now if you're watching Bloomberg

821
00:42:13,600 --> 00:42:17,120
Speaker 3: Tech from outside of California, we're talking about the gubernatorial primary,

822
00:42:17,120 --> 00:42:20,840
Speaker 3: the race for governor, and the first instance of that

823
00:42:20,920 --> 00:42:23,279
Speaker 3: has been gone. The top two will go to the

824
00:42:23,360 --> 00:42:26,759
Speaker 3: general election in November. Just where do we stand? You know,

825
00:42:27,000 --> 00:42:29,800
Speaker 3: who is likely to go through on that? And always

826
00:42:30,160 --> 00:42:32,200
Speaker 3: on this show, give us the tech angle of whoever

827
00:42:32,280 --> 00:42:32,879
Speaker 3: does go through?

828
00:42:33,200 --> 00:42:35,960
Speaker 13: Yeah, so there's three candidates that are at the top.

829
00:42:36,120 --> 00:42:39,640
Speaker 13: Is Javier Bessera, Joe Baden's former health secretary, Steve Hilton,

830
00:42:40,040 --> 00:42:43,920
Speaker 13: who is a Republican former Fox News commentator, and then

831
00:42:43,960 --> 00:42:49,319
Speaker 13: Tom Steyer, who is a liberal former hedge fund billionaire.

832
00:42:50,239 --> 00:42:52,799
Speaker 13: And right now it looks like Javier and Hilton are

833
00:42:52,800 --> 00:42:55,319
Speaker 13: going to go to the runoff, although ballots are still

834
00:42:55,320 --> 00:42:59,800
Speaker 13: being counted and Tom could make a late run. The

835
00:43:00,120 --> 00:43:02,840
Speaker 13: ending on, you know, to be determined. I think what

836
00:43:03,120 --> 00:43:05,799
Speaker 13: the tech angle is Javier has kind of started to

837
00:43:05,840 --> 00:43:11,080
Speaker 13: coalesce some of the establishment democratic interests and also a

838
00:43:11,120 --> 00:43:11,960
Speaker 13: little bit of.

839
00:43:11,840 --> 00:43:13,040
Speaker 6: The tech money.

840
00:43:13,120 --> 00:43:17,200
Speaker 13: So when he started surging as a late stage favorite,

841
00:43:17,200 --> 00:43:20,479
Speaker 13: you saw Meta and you saw Airbnb come in for him.

842
00:43:20,680 --> 00:43:23,800
Speaker 13: And interesting, they're kind of they laid in the stage.

843
00:43:23,840 --> 00:43:25,640
Speaker 13: They acknowledge that he's going to be the front runner,

844
00:43:25,640 --> 00:43:27,840
Speaker 13: and they're trying to kind of put pick a winning horse.

845
00:43:28,160 --> 00:43:31,520
Speaker 3: Bimbogs Ellie Camrashow on tech and politics. What's happening in

846
00:43:31,520 --> 00:43:35,120
Speaker 3: a selection cycle here in California? GitHub is beending big

847
00:43:35,160 --> 00:43:38,799
Speaker 3: on ai agents, launching a new GitHub co pilot desktop app,

848
00:43:39,120 --> 00:43:41,640
Speaker 3: or racing to keep up with surging demand. I sat

849
00:43:41,680 --> 00:43:45,120
Speaker 3: down with Microsoft's EVP of Core Ai, Jay Prie, to

850
00:43:45,200 --> 00:43:49,160
Speaker 3: discuss GitHub's growth, its efforts to improve reliability, and what

851
00:43:49,280 --> 00:43:49,840
Speaker 3: comes next.

852
00:43:50,040 --> 00:43:50,560
Speaker 6: Listen to this.

853
00:43:53,000 --> 00:43:56,880
Speaker 14: For us, it is one where GitHub continues to get

854
00:43:57,200 --> 00:44:00,239
Speaker 14: lots of help from the rest of Microsoft. Right, So,

855
00:44:00,360 --> 00:44:03,000
Speaker 14: we have even in just the year and a half

856
00:44:03,040 --> 00:44:06,680
Speaker 14: I've been at Microsoft, we have brought in really great

857
00:44:06,719 --> 00:44:09,359
Speaker 14: talent from other parts of the company to help us

858
00:44:09,400 --> 00:44:12,560
Speaker 14: build products, to help us scale, to help get Hub

859
00:44:12,600 --> 00:44:16,040
Speaker 14: be more secure, to build those enterprise backstory.

860
00:44:15,719 --> 00:44:18,120
Speaker 3: Was the outage security issues, and then there was a

861
00:44:18,239 --> 00:44:22,280
Speaker 3: change or departure of leadership. So you're describing what's happened since.

862
00:44:22,640 --> 00:44:24,839
Speaker 14: So you know, we should start with the fact that

863
00:44:25,160 --> 00:44:27,560
Speaker 14: beginning since the beginning of the year, the amount of

864
00:44:27,719 --> 00:44:31,239
Speaker 14: traffic that has come to Getthub has gone up significantly. Right,

865
00:44:31,320 --> 00:44:34,000
Speaker 14: So last year we had about a billion commits that

866
00:44:34,040 --> 00:44:37,239
Speaker 14: we processed in all of twenty twenty five. Now we

867
00:44:37,280 --> 00:44:41,480
Speaker 14: process about three hundred million commits each each week, So

868
00:44:41,680 --> 00:44:45,800
Speaker 14: traffic has gone up pretty significantly, and we're very committed

869
00:44:45,960 --> 00:44:50,319
Speaker 14: to improve the availability the performance of the platform. We're

870
00:44:50,360 --> 00:44:54,000
Speaker 14: getting help from more of the Microsoft engineers and the

871
00:44:54,040 --> 00:44:57,080
Speaker 14: top talent that we have. We're attracting new talent to

872
00:44:57,160 --> 00:45:00,120
Speaker 14: the team, We're bringing in more capacity to scale well,

873
00:45:00,480 --> 00:45:03,359
Speaker 14: and we're re architecting these systems. But you know, I

874
00:45:03,360 --> 00:45:05,960
Speaker 14: feel really good about the path that we're on.

875
00:45:06,200 --> 00:45:09,480
Speaker 3: Could you just give us a real time view of

876
00:45:09,560 --> 00:45:12,920
Speaker 3: how much work is being done, real work by an

877
00:45:12,920 --> 00:45:15,319
Speaker 3: agent and where you see that going over the next

878
00:45:15,320 --> 00:45:16,480
Speaker 3: twelve months and beyond.

879
00:45:16,960 --> 00:45:19,480
Speaker 14: And I think we're just at the start as this

880
00:45:19,600 --> 00:45:22,359
Speaker 14: is right because it's early, but it is amazing to

881
00:45:22,440 --> 00:45:26,839
Speaker 14: see how people are translating these ideas into these use

882
00:45:26,880 --> 00:45:30,359
Speaker 14: cases and building these platforms right, and lots of use

883
00:45:30,400 --> 00:45:34,919
Speaker 14: cases even internally where teams are building agents to continually

884
00:45:34,960 --> 00:45:38,440
Speaker 14: improve their product even when they're sleeping, you know, on

885
00:45:38,480 --> 00:45:41,879
Speaker 14: the weekends, these agents are running and then analyzing all

886
00:45:41,880 --> 00:45:45,279
Speaker 14: sorts of different telemetry to find ways to then make

887
00:45:45,320 --> 00:45:48,560
Speaker 14: suggestions for the engineers for the product folks when they

888
00:45:48,560 --> 00:45:50,799
Speaker 14: wake up in the morning to how to improve the

889
00:45:50,840 --> 00:45:54,319
Speaker 14: systems right. And this is technology that works today. You

890
00:45:54,360 --> 00:45:57,759
Speaker 14: need that observability, as you keyed on earlier. You need

891
00:45:57,760 --> 00:46:00,080
Speaker 14: that human in the loop to make sure the thing

892
00:46:00,120 --> 00:46:02,640
Speaker 14: stay on track and that it is doing what you

893
00:46:02,800 --> 00:46:06,440
Speaker 14: expected to and prioritizing it correctly. It's early, but it

894
00:46:06,600 --> 00:46:09,280
Speaker 14: is going to be I think a really really quick

895
00:46:09,400 --> 00:46:12,799
Speaker 14: ramp and it's exciting that we're seeing this. And you know,

896
00:46:12,840 --> 00:46:15,479
Speaker 14: the team's super energized to be working closely with our

897
00:46:15,520 --> 00:46:19,399
Speaker 14: customers to be iterating on these platforms, on these technologies.

898
00:46:20,840 --> 00:46:24,440
Speaker 4: Microsoft's EVP of Core ai j perk there with ed

899
00:46:24,719 --> 00:46:27,520
Speaker 4: coming up, all eyes and Broadcom as they get set

900
00:46:27,560 --> 00:46:29,480
Speaker 4: to report off of the closing bell. What I need

901
00:46:29,520 --> 00:46:32,480
Speaker 4: is you tell us about the AI trade chess Hi,

902
00:46:32,640 --> 00:46:33,240
Speaker 4: this is blue.

903
00:46:33,080 --> 00:46:33,640
Speaker 2: Bag Tex.

904
00:46:37,040 --> 00:46:38,760
Speaker 6: The next trillion dollar company.

905
00:46:38,840 --> 00:46:43,400
Speaker 11: Ladies and gentlemen, WHOA that would be exciting.

906
00:46:43,480 --> 00:46:44,240
Speaker 3: Let's do it together.

907
00:46:44,560 --> 00:46:45,120
Speaker 6: Let's do it.

908
00:46:45,040 --> 00:46:50,720
Speaker 4: Together A CEO Jason Wong alongside Marvel CEO Matt Murphy

909
00:46:50,880 --> 00:46:53,839
Speaker 4: over in Taiwan at computext that was yesterday and share

910
00:46:53,880 --> 00:46:57,080
Speaker 4: some of continuing to run high and look at that

911
00:46:57,160 --> 00:46:59,840
Speaker 4: move over three training days that we are getting c

912
00:47:00,160 --> 00:47:03,439
Speaker 4: set potential one trillion dollars as Jensen was just talking

913
00:47:03,440 --> 00:47:06,080
Speaker 4: about for more who most Denavas joins us. Now, it's

914
00:47:06,160 --> 00:47:09,680
Speaker 4: the power of the five trillion dollar giant in the

915
00:47:09,760 --> 00:47:12,359
Speaker 4: room to anoint the next one trillion. But is there

916
00:47:12,360 --> 00:47:13,480
Speaker 4: real fundamentals behind it?

917
00:47:13,560 --> 00:47:17,480
Speaker 15: Dina, It's we're i think waiting to see you know

918
00:47:17,560 --> 00:47:21,160
Speaker 15: what Broadcom reports today Marvel's made competitor. But also Marvel,

919
00:47:21,680 --> 00:47:24,680
Speaker 15: you know, and Broadcom are basically competing for the business

920
00:47:24,760 --> 00:47:28,680
Speaker 15: around custom AI accelerators that aren't in video. Now, Jensen

921
00:47:29,160 --> 00:47:31,479
Speaker 15: is not objective when he and you know so to speak,

922
00:47:31,480 --> 00:47:34,360
Speaker 15: annoints Marvel in that manner. Marvel is the horse that

923
00:47:35,000 --> 00:47:38,960
Speaker 15: Invidia has backed in that space, They've invested, and you know,

924
00:47:39,000 --> 00:47:41,160
Speaker 15: he wants to set them up as an even stronger

925
00:47:41,160 --> 00:47:45,200
Speaker 15: competitor to Broadcom because Broadcom itself has you know, been

926
00:47:45,239 --> 00:47:48,360
Speaker 15: positioned and has positioned itself as a the alternative to

927
00:47:48,480 --> 00:47:51,240
Speaker 15: in video if you don't want to use in videos GPUs.

928
00:47:51,040 --> 00:47:53,840
Speaker 3: Right, and Broadcom is now a two point three trillion

929
00:47:53,880 --> 00:47:57,600
Speaker 3: dollar company as a result. This is an important earning.

930
00:47:57,640 --> 00:48:01,000
Speaker 3: Sprint explain why it's important, but also why Broadcom is

931
00:48:01,320 --> 00:48:03,320
Speaker 3: a genuine competitor to Nvidia.

932
00:48:04,360 --> 00:48:07,359
Speaker 15: So the vast majority of the AI chips that are

933
00:48:07,480 --> 00:48:12,560
Speaker 15: used are in video's GPUs. The alternatives increasingly are coming from,

934
00:48:12,760 --> 00:48:15,440
Speaker 15: you know, some of the hyper scalers and the large

935
00:48:15,680 --> 00:48:18,840
Speaker 15: frontier labs that are making their own custom chips, and

936
00:48:18,960 --> 00:48:23,560
Speaker 15: Broadcom has several of those. The biggest customers there. We

937
00:48:23,640 --> 00:48:25,680
Speaker 15: talk a lot on this show in the past few

938
00:48:25,680 --> 00:48:30,600
Speaker 15: months about Google's TPU that's made with Broadcom. Anthropic is

939
00:48:30,640 --> 00:48:33,080
Speaker 15: buying a bunch of those and paying Broadcom for them,

940
00:48:33,239 --> 00:48:37,360
Speaker 15: Metal Works with Broadcom, and those three companies have signed extended,

941
00:48:37,640 --> 00:48:40,319
Speaker 15: you know, long term deals with Broadcom in the last

942
00:48:40,320 --> 00:48:42,640
Speaker 15: few months. They already had deals and they expanded them.

943
00:48:42,680 --> 00:48:45,840
Speaker 15: And so what we're seeing from Broadcom is, you know,

944
00:48:45,840 --> 00:48:49,520
Speaker 15: according to Bloomberg Intelligence analysts, a better visibility of what

945
00:48:49,560 --> 00:48:53,000
Speaker 15: the long term picture looks like for that pipeline. That's

946
00:48:53,040 --> 00:48:55,440
Speaker 15: been something I think investors have been a little bit

947
00:48:55,480 --> 00:48:57,759
Speaker 15: concerned about. You know, what is the long term pipeline.

948
00:48:57,760 --> 00:49:00,759
Speaker 15: When do these contracts come online? And if they're a

949
00:49:00,800 --> 00:49:03,480
Speaker 15: multi year contract, what is the amount of revenue the

950
00:49:03,480 --> 00:49:05,239
Speaker 15: Broadcam is going to be able to get from each

951
00:49:05,280 --> 00:49:08,000
Speaker 15: of them in you know, in each quarter. How does

952
00:49:08,000 --> 00:49:10,839
Speaker 15: that kind of play out? But there is now greater visibility.

953
00:49:11,640 --> 00:49:14,120
Speaker 3: Bloomberg's Dina Bass with the broadc on preview and stay

954
00:49:14,120 --> 00:49:17,400
Speaker 3: with Bloomberg Tech tomorrow. We're live from the Bloomberg Tech Conference.

955
00:49:17,640 --> 00:49:21,040
Speaker 3: Hock Tan, Broadcom president and CEO, joins us. This is

956
00:49:21,120 --> 00:49:23,680
Speaker 3: just pure timing Caro and the linings after the Bell

957
00:49:23,880 --> 00:49:24,840
Speaker 3: conversation tomorrow.

958
00:49:25,000 --> 00:49:28,040
Speaker 4: What a phenomenal executive discussion to be having. Tom Giles,

959
00:49:28,440 --> 00:49:30,520
Speaker 4: our executive editor, is going to be leading that conversation.

960
00:49:30,760 --> 00:49:32,960
Speaker 4: What an array of people we're going to speak into

961
00:49:32,960 --> 00:49:34,640
Speaker 4: throughout the day. I mean, you're going to be speaking

962
00:49:34,640 --> 00:49:36,839
Speaker 4: with Andrell's chair and of.

963
00:49:36,719 --> 00:49:38,400
Speaker 2: Course big Player over it found us fun.

964
00:49:38,440 --> 00:49:40,880
Speaker 4: I'm going to be talking to San Francisco Fed President.

965
00:49:41,160 --> 00:49:42,719
Speaker 2: We have a lot to digest tomorrow and it's a

966
00:49:42,719 --> 00:49:43,120
Speaker 2: big show.

967
00:49:43,360 --> 00:49:45,200
Speaker 3: It was a good show today, So recap it you

968
00:49:45,200 --> 00:49:47,160
Speaker 3: know where on the podcast and you can find it

969
00:49:47,200 --> 00:49:51,600
Speaker 3: online Spotify, iHeart and on Apple and then of course

970
00:49:51,640 --> 00:49:54,759
Speaker 3: and all the Bloomberg platforms. This is Bloomberg Tech