WEBVTT - Big Tech Earnings Boosts AI Sentiment 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.480 --> 0:00:30.120 Our next guest, Sarah Hunt joins is chief market strategist 0:00:30.160 --> 0:00:32.320 for Alpine Saxon, which he joins us here in our studio. 0:00:32.360 --> 0:00:34.839 Thank you so much for joining us. Sarah, You've got 0:00:34.840 --> 0:00:37.159 a nice note in your line in your notes that 0:00:37.200 --> 0:00:40.800 I really like from quote you're not spending enough too. Wow, 0:00:40.840 --> 0:00:43.559 that's a lot of Capex. Was a short trip. We 0:00:43.640 --> 0:00:47.880 did see a little bit of, I guess concern this week. 0:00:47.920 --> 0:00:52.280 We had Google up their Capex stock trades up. Meta 0:00:52.360 --> 0:00:56.400 ups their Capex stock trades down dramatically, So not all 0:00:56.440 --> 0:00:58.639 Capex is the same. What are we learning here? 0:00:58.960 --> 0:01:01.360 I think it's showing you that there's a question really 0:01:01.440 --> 0:01:03.720 about who's going to be able to put that Capex 0:01:03.760 --> 0:01:06.039 to most effective use. And I think unfortunately for Meta, 0:01:06.080 --> 0:01:08.760 because they've had some issues in the past spending a 0:01:08.760 --> 0:01:11.160 lot of money where it didn't always come to fruition, 0:01:11.600 --> 0:01:13.600 I think they have more of a penalty box than 0:01:13.600 --> 0:01:16.399 some of the other players in the space. And I think, 0:01:16.720 --> 0:01:22.119 I mean, the Capex boom has been so dramatic that 0:01:22.240 --> 0:01:24.840 the fear then becomes what happens when the second derivative 0:01:24.959 --> 0:01:26.959 goes negative. Right, it's up, but it's not up as 0:01:27.040 --> 0:01:29.759 much as it was last year, and right now that's 0:01:29.920 --> 0:01:32.119 not as much of a problem, but it's coming as 0:01:32.120 --> 0:01:34.840 the law of large numbers gets larger and larger, and 0:01:34.880 --> 0:01:36.840 the question is going to start to become what are 0:01:36.880 --> 0:01:38.360 you getting for that Capex? 0:01:38.440 --> 0:01:39.520 And if margins are. 0:01:39.440 --> 0:01:41.200 Going to be affected, then people are going to be 0:01:41.200 --> 0:01:43.480 a little less excited than they were when it looked 0:01:43.520 --> 0:01:45.760 like that Capex was going to drive margins. So I 0:01:45.760 --> 0:01:48.040 think that's the tension right now, that's what people are 0:01:48.040 --> 0:01:48.680 trying to figure out. 0:01:48.760 --> 0:01:50.160 Yeah, and in your note, I liked how you said 0:01:50.200 --> 0:01:52.400 it's going to be about show me the money right 0:01:52.440 --> 0:01:55.880 when it comes to Capex spending on AI, let's talk 0:01:55.880 --> 0:01:58.000 about the names that are not beating. Some of the 0:01:58.040 --> 0:02:02.360 companies that are not Wall Street disappointing on either the top, 0:02:02.360 --> 0:02:07.120 bottom or both lines. They're really getting beaten up. Do 0:02:07.160 --> 0:02:09.240 you think it's being a little overdone when you look 0:02:09.240 --> 0:02:10.440 at those individual names. 0:02:10.639 --> 0:02:12.560 If I want to add to the things that go 0:02:12.639 --> 0:02:14.720 on the wall of worry, the fact that stocks can 0:02:14.720 --> 0:02:17.120 get cut in half for bad news as opposed to 0:02:17.160 --> 0:02:19.799 down ten or fifteen percent. It seems to me one 0:02:19.840 --> 0:02:22.400 of those things where there's very much of a knee 0:02:22.480 --> 0:02:25.040 jerk reaction and there's a wholesale selling and there's not 0:02:25.200 --> 0:02:27.440 a lot of looking into what's wrong. Now, in some 0:02:27.520 --> 0:02:30.120 cases there were things that were wrong, people have cut guidance. 0:02:30.120 --> 0:02:32.680 I mean, I'm looking at companies like FMC or five 0:02:32.720 --> 0:02:35.079 Serve where there were big issues going on, but those 0:02:35.120 --> 0:02:37.480 are really big moves, and those kind of moves I 0:02:37.520 --> 0:02:40.040 think are a little bit should warn you that there 0:02:40.040 --> 0:02:42.840 could be more volatility ahead, because that is more than 0:02:42.880 --> 0:02:45.880 you usually get even for problems within an earning season. 0:02:45.960 --> 0:02:48.880 So does that tell you that investors are just looking 0:02:48.880 --> 0:02:50.480 for a reason to get out. 0:02:51.160 --> 0:02:54.399 I think it's almost like there's either either it's over 0:02:54.480 --> 0:02:56.720 owned for some reason or people are just getting out 0:02:56.760 --> 0:02:58.240 to say I want to go back to this, or 0:02:58.280 --> 0:03:00.080 I just want to get out of that. But some 0:03:00.120 --> 0:03:01.800 of them are not the big tech companies. I mean, 0:03:01.840 --> 0:03:04.359 met as the exception for this earning season so far. 0:03:04.680 --> 0:03:06.480 But I think that that is a little bit worrying 0:03:06.480 --> 0:03:09.359 to see that much volatility in names where you shouldn't 0:03:09.360 --> 0:03:10.920 expect to see that much volatility. 0:03:11.080 --> 0:03:12.760 And one of the ones yesterday that kind of got 0:03:12.800 --> 0:03:14.560 my attention was because it's near and dear to my 0:03:14.600 --> 0:03:18.360 heart is Chipotle. Actually, I stock got crushed yesterday on 0:03:18.440 --> 0:03:21.959 some bad numbers, and that's my Wednesday go to right. 0:03:22.040 --> 0:03:23.640 I mean, you go to the one on Third Avenue 0:03:23.639 --> 0:03:25.960 and they do a great job. So I was little well, 0:03:25.960 --> 0:03:26.480 and that's the. 0:03:26.440 --> 0:03:29.040 Concern about you know, you've got to cut earnings three 0:03:29.080 --> 0:03:31.359 times in a row, and or those prices and those 0:03:31.400 --> 0:03:33.919 costs are going up faster than you anticipated that they were. 0:03:34.080 --> 0:03:36.160 I mean, I don't know if that is individual to 0:03:36.200 --> 0:03:37.920 them where they didn't have a handle on it, or 0:03:37.920 --> 0:03:39.880 if it just kept the bad news just kept coming. 0:03:40.120 --> 0:03:41.400 But that's that's. 0:03:41.160 --> 0:03:43.600 Also something where the underlying is Peter Cheer was just 0:03:43.600 --> 0:03:46.480 saying before some of those tariffs, some of those impacts 0:03:46.480 --> 0:03:48.680 are coming next year. They're not here yet, and we 0:03:48.760 --> 0:03:51.120 have this sort of feeling that it's all okay, and 0:03:51.200 --> 0:03:53.280 I have concerns that going into next year you're going 0:03:53.320 --> 0:03:53.640 to see some. 0:03:53.640 --> 0:03:55.800 More of that. We had Michael Halen on yesterday. He's 0:03:55.840 --> 0:03:58.520 the restaurant analyst or of Bloomberg Intelligence, and he called 0:03:58.520 --> 0:04:01.400 out the company big time. He says, for them to 0:04:01.440 --> 0:04:05.000 blame the economy is not accurate because all their peers 0:04:05.040 --> 0:04:07.440 are doing pretty darn well. So he called it out 0:04:07.440 --> 0:04:10.559 as a company thing, and he heard from the company yesterday. 0:04:10.360 --> 0:04:14.960 So where are we going here as we think about 0:04:14.960 --> 0:04:18.680 twenty twenty six, Sarah Boom. We're turning in the calendar 0:04:18.720 --> 0:04:21.880 on November tomorrow. What are we thinking for twenty twenty 0:04:21.880 --> 0:04:22.400 six here? 0:04:22.880 --> 0:04:23.040 Well? 0:04:23.080 --> 0:04:25.679 I think that. So there's the plus side for twenty 0:04:25.680 --> 0:04:29.080 twenty six is you've got some fiscal stimulus, arguably with 0:04:29.200 --> 0:04:31.760 what happened with the legislation that was try asked, you've 0:04:31.800 --> 0:04:34.800 got and the tension is that you've got the trade 0:04:35.160 --> 0:04:37.760 situation where you're finally going to start seeing some of that. 0:04:37.880 --> 0:04:39.720 It's going to be about earnings. It's going to be 0:04:39.760 --> 0:04:41.960 about margins. You're already seeing some of the big tech 0:04:41.960 --> 0:04:44.839 companies lay people off, so that's also I think about margins. 0:04:44.839 --> 0:04:47.080 No matter how you want to slice that. If Amazon 0:04:47.120 --> 0:04:49.200 is saying, well we have too much, well you didn't 0:04:49.200 --> 0:04:51.599 have too much last year. So it's going to be 0:04:51.640 --> 0:04:52.359 a margin issue. 0:04:52.400 --> 0:04:54.160 If you know what's interesting about Amazon edged I just 0:04:54.360 --> 0:04:56.760 was just reading they had about seven hundred and fifty 0:04:56.760 --> 0:04:59.760 thousand employees in twenty nineteen. They came out of twenty 0:05:00.240 --> 0:05:02.280 and they have one point five million now. So they 0:05:02.480 --> 0:05:06.440 edited during the pandemic, a pandemic as we all did 0:05:06.520 --> 0:05:09.720 much more e shopping, And so I guess are they 0:05:09.839 --> 0:05:12.919 liking a couple two, three, four hundred thousand people out? Maybe? 0:05:13.080 --> 0:05:13.520 I don't know. 0:05:13.800 --> 0:05:17.239 Well, I just think it speaks to markets are driven 0:05:17.240 --> 0:05:21.160 by earnings, ns are driven by margins. The AI revolution 0:05:21.240 --> 0:05:23.560 that is supposed to add productivity, what does that really mean, Well, 0:05:23.560 --> 0:05:26.279 it generally means that there's less people working, so there's 0:05:26.279 --> 0:05:28.960 an issue. There's another tension there. How that all plays 0:05:29.000 --> 0:05:30.159 out through twenty twenty six. 0:05:30.080 --> 0:05:31.800 Is going to matter a lot. Night, Sarah, thank you 0:05:31.800 --> 0:05:34.240 so much for joining us. We always appreciate having you 0:05:34.240 --> 0:05:36.520 come in our studios here. Sarah Hunt, chief market strategists 0:05:36.520 --> 0:05:39.040 for Alpine Saxon Woods, stay with us. More from Bloomberg 0:05:39.080 --> 0:05:40.760 Surveillance coming up after this. 0:05:46.960 --> 0:05:50.560 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:05:50.640 --> 0:05:53.800 weekday afternoons from seven to ten am. Eastern Listen on 0:05:53.880 --> 0:05:57.520 Applecarplay and Android Auto with the Bloomberg Business app, or 0:05:57.680 --> 0:05:59.200 watch us live on YouTube. 0:05:59.279 --> 0:06:01.760 This is how you when you're a gentleman on a 0:06:01.760 --> 0:06:06.279 certain agent Wall Street Friday, blue jeans, popper shirt, blue 0:06:06.320 --> 0:06:10.279 blazer solid. I love it. This guy comes in and 0:06:10.320 --> 0:06:13.279 blows up the entire studio. I mean there were clashing 0:06:13.320 --> 0:06:15.320 in so many different directions. I don't even know where 0:06:15.360 --> 0:06:17.480 to go. But Dan Ives is here. He does all 0:06:17.520 --> 0:06:19.920 the tech stuff for wet Bush Securities. Dan, you've been 0:06:19.920 --> 0:06:22.400 busy this week. We've had a ton of tech earnings. 0:06:22.600 --> 0:06:25.359 I just want to start with Apple last night. The 0:06:25.400 --> 0:06:27.480 iPhone seventeen is a thing, isn't it. 0:06:27.520 --> 0:06:30.560 Look it's a surprise upgrade cycle. I mean that's the reality. 0:06:30.640 --> 0:06:32.880 And for so long we've always talked about, you know, 0:06:33.120 --> 0:06:36.719 these upgrade cycles, a potential supercycle, and this is a 0:06:36.760 --> 0:06:39.400 surprise upgrade cycle. And I think especially what we're seeing 0:06:39.440 --> 0:06:43.160 in China, well, China was a decliner. Now you start 0:06:43.200 --> 0:06:46.279 to see that increasing year of a year. That's something 0:06:46.360 --> 0:06:49.520 streets coming up in terms of numbers. The New York 0:06:49.600 --> 0:06:52.760 City cab driver's embarrassment Apple last six nine months, so 0:06:52.800 --> 0:06:56.440 that's this is a bullish scenario, especially leading into what 0:06:56.520 --> 0:06:59.120 I believe now will be the year of AI. Ultimately 0:06:59.200 --> 0:07:03.680 Google partners for Apple seventy five hundred dollars. 0:07:01.800 --> 0:07:05.839 To go back to that, What is Apple's AI strategy 0:07:06.000 --> 0:07:08.200 going to be or should be? Do you think today? 0:07:08.400 --> 0:07:09.800 It's invisible? Right today? 0:07:09.800 --> 0:07:12.640 In the AI party that started at nine pm, it's 0:07:12.680 --> 0:07:15.640 now ten thirty pm. That party goes to four am, 0:07:16.160 --> 0:07:18.480 cook an Apple. They're on the outside, looking behind the 0:07:18.560 --> 0:07:20.880 velvet ropes. They're looking through the party through the window. 0:07:21.360 --> 0:07:24.160 But what I believe they're going to do now once 0:07:24.240 --> 0:07:27.920 Google won that DOJ suit, that clears the road for 0:07:28.000 --> 0:07:31.800 them to do a significant Gemini partnership where ultimately the 0:07:31.920 --> 0:07:35.119 consumer AI revolution goes through Cooper Tino. 0:07:35.680 --> 0:07:38.120 Well, look, we're talking AI spend. We've got to talk 0:07:38.200 --> 0:07:40.760 Meta because they're the complete opposite of Apple. Right, they're 0:07:40.800 --> 0:07:43.480 just throwing the kitchen sink at AI right now. But 0:07:43.560 --> 0:07:46.720 Wall Street are they approving of the spending Meta is 0:07:46.880 --> 0:07:47.880 doing in that space? 0:07:48.080 --> 0:07:50.720 Look, in my opinion, it's a table pounder when that 0:07:50.840 --> 0:07:53.800 stocks sold off Yestad, because my whole view is this 0:07:53.840 --> 0:07:57.360 is an AI arms race. You want companies to spend now, Look, 0:07:57.440 --> 0:08:00.560 free cash for earnings obviously gets hit. But the reality 0:08:00.680 --> 0:08:03.600 is is that this is a fourth Industrial Revolution, and 0:08:03.680 --> 0:08:06.680 you want all these coming from Microsoft to Google to 0:08:06.880 --> 0:08:08.680 Meta to what we see with Amazon. 0:08:09.000 --> 0:08:10.160 But guess what they're. 0:08:10.040 --> 0:08:14.120 Fueling the AI revolution. That's obviously bullish for Nvidia, AMD 0:08:14.200 --> 0:08:16.960 and others. I love what Meta's doing. I think it's 0:08:16.960 --> 0:08:19.280 a four digit stock, and I think what you're seeing 0:08:19.320 --> 0:08:23.640 now it's spreading. Look at Amazon. Finally, Jassey saying, don't 0:08:23.680 --> 0:08:27.880 forget about us. It just shows in streak continues to 0:08:27.960 --> 0:08:32.280 underestimate the scope and scale of this fourth Industrial Revolution. 0:08:33.400 --> 0:08:36.800 So and Alexi saw yesterday Meta the stock did sell off. 0:08:36.840 --> 0:08:39.560 They went out and I sold thirty billion dollars worth 0:08:39.600 --> 0:08:42.000 of bonds one hundred and twenty five billion dollars Demand one. 0:08:42.120 --> 0:08:46.040 I was doing that business a five or ten billion 0:08:46.040 --> 0:08:49.200 dollar deals were monster, right, thirty billion and I bet 0:08:49.280 --> 0:08:51.240 you had made five phone calls LA last night and 0:08:51.240 --> 0:08:53.400 sold that deal. Believe I bet you that's what happened. Dan, 0:08:53.440 --> 0:08:55.720 talk to us about Amazon, boy that the stocks up 0:08:55.760 --> 0:08:58.560 twelve percent pre market trading. Here, talk to us about 0:08:58.720 --> 0:09:03.120 where they are with their cloud business. Visa v Microsoft, 0:09:03.200 --> 0:09:07.520 Visa v Google. Where's the cloud horizon for Amazon for 0:09:07.559 --> 0:09:08.640 the last few years. 0:09:08.760 --> 0:09:10.920 Right, if you look at the top of that mountain, 0:09:11.120 --> 0:09:13.800 it's Microsoft in the della and then of course Google 0:09:13.800 --> 0:09:15.920 what they've been done with GCP, and that's been huge, 0:09:15.960 --> 0:09:18.480 the rerating that we've seen with Google. But if you 0:09:18.480 --> 0:09:21.400 look at Amazon outside, looking at right, I mean Jase, 0:09:21.480 --> 0:09:24.959 even though he's in AWSK, really anthropics been the opportunity 0:09:25.559 --> 0:09:28.800 underwhelming last night. I think it's an inflection point quarter 0:09:28.840 --> 0:09:31.600 for Amazon. I think this now is going to change 0:09:31.640 --> 0:09:33.920 the view of Amazon when it comes to the. 0:09:33.840 --> 0:09:35.560 Cloudiest cool some of the parts. 0:09:35.600 --> 0:09:37.880 That's how you get the three forty three and fifty 0:09:37.880 --> 0:09:41.040 dollars stock And this is a very very important quarter 0:09:41.280 --> 0:09:44.440 for the two mag seventy. If you the Apple and 0:09:44.520 --> 0:09:47.600 Amazon both sort of like they're sitting at the table 0:09:47.640 --> 0:09:50.280 by the kitchen, like at the wedding, like with the 0:09:50.400 --> 0:09:52.960 random friends they get put that random table. 0:09:53.400 --> 0:09:56.760 They want to be at the cool table. Now they're there. 0:09:57.240 --> 0:09:59.400 Look, there's so much to talk about with Dan ives, right, 0:09:59.440 --> 0:10:00.880 because you just I just I want to tick through 0:10:01.120 --> 0:10:03.560 some of these things we have you here in studio Tesla. 0:10:04.520 --> 0:10:08.199 Are these shareholders going to vote for this huge compensation package? 0:10:08.240 --> 0:10:09.480 November six or elon Musk. 0:10:09.559 --> 0:10:12.880 There's a better chance to me not eating chocolate sour 0:10:12.960 --> 0:10:15.840 Patch kids tonight. Then this thing actually getting voted down. 0:10:15.880 --> 0:10:17.480 I mean, the point is this thing is getting one 0:10:17.559 --> 0:10:21.760 hundred percent getting voted for. The reality is that Musk 0:10:21.880 --> 0:10:25.800 is Tesla. Tesla is Musk. He's a wartime CEO right now. 0:10:25.880 --> 0:10:27.880 You need him in this AI chapter. 0:10:28.559 --> 0:10:31.160 And then also I think they'll they're gonna vote for 0:10:31.200 --> 0:10:35.960 the XAI ownership piece, which speaks to Tesla isn't a 0:10:36.120 --> 0:10:39.080 on it. It is an autonomous and robotics play. It 0:10:39.200 --> 0:10:41.800 is not about deliveries. In my opinion, I think that's 0:10:41.840 --> 0:10:44.680 why this is so important for shareholders when it comes 0:10:44.679 --> 0:10:45.120 to Musk. 0:10:45.440 --> 0:10:47.240 All Right, we got it before, we let you go, 0:10:48.400 --> 0:10:52.000 Happy Valley. Turbulent times in Happy Valley, Penn State, we 0:10:52.640 --> 0:10:55.720 don't have a coach, but boy, is that a good seat. 0:10:55.960 --> 0:10:57.400 What do you think Penn State's going to do in 0:10:57.480 --> 0:10:58.080 terms of hiring it. 0:10:58.120 --> 0:11:00.559 Look, in my opinion, it's the number Obviously you could 0:11:00.600 --> 0:11:03.400 say bias. I think, especially after the LSU Governors team, 0:11:03.640 --> 0:11:06.040 I think it's the number one coaching spine all of 0:11:06.080 --> 0:11:11.480 college football above Florida to me, you know, Paccraft there's 0:11:11.559 --> 0:11:13.880 no better athletic director I think right now in the 0:11:13.920 --> 0:11:16.120 world than him, And I think they're going to go 0:11:16.200 --> 0:11:18.920 for Elka at Texas A and M I think you go 0:11:19.000 --> 0:11:22.720 for Clark Lee at Vanderbilt, manny DA, potentially Brahm and 0:11:22.760 --> 0:11:25.920 others there. Look, this is it's obviously been a very 0:11:26.040 --> 0:11:29.440 very you know, disaster year, but it's our view we 0:11:29.600 --> 0:11:31.880 need the right person to ultimately take us to the 0:11:31.920 --> 0:11:32.520 next level. 0:11:32.800 --> 0:11:34.440 There you go. Dan, I is very He's a proud 0:11:34.480 --> 0:11:37.720 Penn State alum, very involved in the athletic department there 0:11:37.760 --> 0:11:40.480 at Penn State. And I think he also does some 0:11:40.559 --> 0:11:42.560 tech research on and he looks. 0:11:42.360 --> 0:11:44.880 Like Florida, the state of Florida walking. 0:11:44.800 --> 0:11:47.440 Badly, badly. It's a total sign there. 0:11:47.840 --> 0:11:50.360 Guys like Sweeney, they're the ones that give out the 0:11:50.520 --> 0:11:55.800 full chocolate bar for Halloween. So that remember that continues 0:11:55.840 --> 0:11:57.920 to be you know, obviously someone. 0:11:57.600 --> 0:12:00.360 That are many, none of the many, and we can't 0:12:00.360 --> 0:12:02.880 see you can't do. Dan, thanks so much for joining us. 0:12:02.880 --> 0:12:04.760 We really appreciate it. Dan Ive's global head of tech 0:12:04.800 --> 0:12:07.600 research and Webush Securities. Stay with us. More from Bloomberg 0:12:07.600 --> 0:12:09.319 Surveillance coming up after this. 0:12:15.520 --> 0:12:19.120 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:12:19.160 --> 0:12:22.320 weekday afternoons from seven to ten am Eastern. Listen on 0:12:22.400 --> 0:12:26.080 Applecarplay and Android Auto with the Bloomberg Business app, or 0:12:26.240 --> 0:12:27.679 watch us live on YouTube. 0:12:27.840 --> 0:12:29.880 That brings us to Peter Cheer. We want to get 0:12:29.920 --> 0:12:31.480 a sense of what we're doing with this Marketer. He's 0:12:31.480 --> 0:12:34.480 had a macro strategy at Academy Securities, and I'm guessing 0:12:34.600 --> 0:12:39.560 he is a Patriots fan. Yeah, okay, and they're back 0:12:39.640 --> 0:12:41.760 by the way for what it's true, you know, and 0:12:41.760 --> 0:12:43.360 not being a Patriots fan. If Peter, what do you 0:12:43.400 --> 0:12:45.200 make of this market? We were just talking to Dan 0:12:45.280 --> 0:12:48.120 Ives and web bullshavette all the spending that we're seeing 0:12:48.160 --> 0:12:50.960 a lot of these tech companies do on artificial intelligence, 0:12:51.000 --> 0:12:54.800 and I think people are supportive of it, but at 0:12:54.800 --> 0:12:57.120 the same time a little bit wary because these numbers 0:12:57.120 --> 0:13:00.400 are numbers we've never seen before from any industry. 0:13:00.640 --> 0:13:03.000 So that basically describes me to a t so, which 0:13:03.040 --> 0:13:05.000 is why we've been really focusing our investment on what 0:13:05.000 --> 0:13:08.280 we've been calling production for security, and we're really looking 0:13:08.400 --> 0:13:11.640 at areas that are going to benefit from a real 0:13:11.760 --> 0:13:14.720 focus on growth of domestic business. 0:13:14.800 --> 0:13:17.200 I think electricity production is a huge part of that. 0:13:17.280 --> 0:13:20.640 Right, if you look wherever the AI winners are, losers are, 0:13:20.760 --> 0:13:23.240 whatever the valuations are, we're going to need a lot 0:13:23.280 --> 0:13:26.040 more electricity coming online in the next three, five, ten 0:13:26.120 --> 0:13:29.400 years than it's currently scheduled. So we're huge believers in that. 0:13:29.760 --> 0:13:32.120 I really think the rarest and critical minerals, the processing 0:13:32.120 --> 0:13:34.040 and refining of those, is going to be brought domestically. 0:13:34.040 --> 0:13:36.040 You're going to see chip industry, You're going to see space. 0:13:36.360 --> 0:13:38.120 So I kind of like this what we've been calling 0:13:38.160 --> 0:13:40.680 pro sac or production for security, that is going to 0:13:40.679 --> 0:13:42.440 be the investment thesis. And I think it's actually going 0:13:42.480 --> 0:13:44.920 to replace ESG as a driving force for the next 0:13:44.960 --> 0:13:45.800 five to ten years. 0:13:45.880 --> 0:13:48.079 Yeah. Yes, gene boy, that took a turn. 0:13:48.080 --> 0:13:48.920 Came and went right. 0:13:49.200 --> 0:13:49.440 Yeah. 0:13:49.480 --> 0:13:51.079 And I think it's and I think this is almost 0:13:51.080 --> 0:13:53.640 an evolution. I think we're just rethinking sustainability. 0:13:53.679 --> 0:13:53.760 Right. 0:13:53.800 --> 0:13:56.600 Sustainability meant one thing, and I think now it's much 0:13:56.640 --> 0:13:58.400 more of a hard look. If we want to be 0:13:58.440 --> 0:14:00.880 sustainable as a country or as a company, you need 0:14:00.920 --> 0:14:03.120 to be in control of certain things. So I think 0:14:03.160 --> 0:14:05.520 when I look at this, we're going to produce x 0:14:05.559 --> 0:14:08.440 amount domestically then you're going to want to produce some 0:14:08.520 --> 0:14:11.280 amount with your close allies and friends, and then sure 0:14:11.280 --> 0:14:13.320 you can buy some on the open market because who cares, 0:14:13.360 --> 0:14:15.640 but you can adjust that, but you need this core 0:14:16.000 --> 0:14:19.200 base to be truly secure and sustainable as a nation. 0:14:19.520 --> 0:14:21.200 I think that's going to go to the corporate level, 0:14:21.280 --> 0:14:23.080 and I think it's going to spread globally as every 0:14:23.080 --> 0:14:24.560 country across the globe realizes this. 0:14:24.640 --> 0:14:27.400 So I think this is not a but I grew 0:14:27.440 --> 0:14:29.120 up in and you grew up in a world where 0:14:29.120 --> 0:14:33.080 it was globalization and the net result are One of 0:14:33.120 --> 0:14:37.080 the net results is low costs, low levels of inflation. 0:14:37.640 --> 0:14:39.920 We're buying stuff because we're making it where it's the 0:14:40.000 --> 0:14:43.200 most efficient slash cheapest. Then I guess the pandemic said, 0:14:43.280 --> 0:14:46.760 uh oh, there's some weaknesses there in terms of, you know, 0:14:47.760 --> 0:14:50.200 getting supply chain reliability, And I guess that's kind of 0:14:50.200 --> 0:14:51.640 where we're trying to figure out, now what that miss? 0:14:51.720 --> 0:14:53.080 Yeah, And I think first it was COVID where we 0:14:53.080 --> 0:14:55.280 realized supply chains were kind of broken for a variety 0:14:55.280 --> 0:14:57.680 of reasons, not necessarily in affarias. Then you saw Russian 0:14:57.680 --> 0:15:00.120 invade Ukraine, where you saw a really bad actor the 0:15:00.120 --> 0:15:02.920 first time in our lives behave badly, and now I 0:15:02.960 --> 0:15:04.960 think you have this ongoing friction with where we're want 0:15:05.040 --> 0:15:07.480 and it's clear China as a bottleneck. And you know, 0:15:07.560 --> 0:15:09.600 one of our general's work with Spider Marks is great. 0:15:09.880 --> 0:15:12.480 He's been talking about us moving to a pre war world, 0:15:13.480 --> 0:15:15.080 and I've never really thought about it that way, but 0:15:15.120 --> 0:15:16.640 we've kind of since World War Two lived in a 0:15:16.640 --> 0:15:18.840 post war world. We had this luxury, then the Soviet 0:15:18.960 --> 0:15:22.040 Union crashed and we have the true we're basking the 0:15:22.080 --> 0:15:24.040 peace divid end, and now we're moving to a pre 0:15:24.120 --> 0:15:26.080 war mentality. And I think there's three things that are 0:15:26.240 --> 0:15:28.680 good and important about that. One is it creates a 0:15:28.720 --> 0:15:30.920 sense of urgency. So some of these problems that we've 0:15:30.920 --> 0:15:32.960 been talking about five ten years and no one did anything, 0:15:33.000 --> 0:15:35.640 now we do it. It creates a sense of sacrifice, 0:15:35.720 --> 0:15:37.520 So I think people are maybe willing to do things, 0:15:37.520 --> 0:15:39.680 maybe give up on some regulatory things that they were 0:15:39.760 --> 0:15:43.440 really wanted to let this occur. And if it's successful, 0:15:43.520 --> 0:15:45.800 pre war leads to no war. And I think that's 0:15:45.800 --> 0:15:48.120 the key, right, It's kind of like deterrence. If we 0:15:48.200 --> 0:15:50.480 now realize we need to protect ourselves and make sure 0:15:50.480 --> 0:15:52.080 that China doesn't want to mess with us. 0:15:52.320 --> 0:15:53.720 We have to do these things, and I think we're 0:15:53.720 --> 0:15:55.480 on those stages, you know. 0:15:55.760 --> 0:15:58.880 Speaking of trends during this earning season, certainly AI spend 0:15:58.920 --> 0:16:00.800 is one of them. But something I'm not hearing a 0:16:00.840 --> 0:16:04.080 lot of is companies talking about the impact of tariffs. 0:16:04.120 --> 0:16:06.600 It's sort of been a non event. Why do you 0:16:06.640 --> 0:16:08.800 think that is? And do you think that's going to continue? 0:16:09.040 --> 0:16:11.320 So I think it's kind of natural if you look 0:16:11.360 --> 0:16:13.400 at it. We've only been paying an extra twenty five 0:16:13.400 --> 0:16:15.440 to thirty billion a month since kind of April, so 0:16:15.520 --> 0:16:17.520 cumulative it's been about one hundred and eighty billion, So 0:16:17.560 --> 0:16:20.040 it's not a big deal in the state of the economy. 0:16:20.400 --> 0:16:21.640 Two, I think. 0:16:21.480 --> 0:16:24.400 The large corporations had the working capital and the clout 0:16:24.480 --> 0:16:26.440 to get a lot of products brought in before tariff. 0:16:26.480 --> 0:16:28.960 So I think it's only going to start slowly affecting, 0:16:29.280 --> 0:16:31.200 you know, the large companies who that's who we tend 0:16:31.240 --> 0:16:32.640 to get the data from. That's who we tend to 0:16:32.680 --> 0:16:35.400 see going, you know, in the coming quarters. I think 0:16:35.480 --> 0:16:38.240 from the you know, smaller companies, it's already hitting, but 0:16:38.280 --> 0:16:40.680 we don't see that right. It's you know, the individual companies, 0:16:40.720 --> 0:16:43.920 small LLCs got hit, So I think it's there. We're 0:16:43.920 --> 0:16:45.520 going to start seeing I think creep into the data 0:16:45.520 --> 0:16:47.480 in Q one and Q two, And the other thing is, 0:16:47.560 --> 0:16:50.040 let's be you know, I think fairly honest here is 0:16:50.040 --> 0:16:53.080 that companies are very reluctant to attract attention to themselves 0:16:53.080 --> 0:16:55.080 on tariffs because the administration doesn't like that. 0:16:55.160 --> 0:16:57.440 So I think it's a Q one Q two story 0:16:57.480 --> 0:16:57.840 next year. 0:16:57.840 --> 0:17:00.360 I think it's there, but it's kind of being suppress 0:17:00.600 --> 0:17:02.720 and as we roll into the new year. 0:17:02.600 --> 0:17:04.119 That's when it's going to be harder to hold back. 0:17:04.240 --> 0:17:06.680 Is that a headwind for the markets if we start 0:17:06.720 --> 0:17:09.400 seeing more inflation data coming out? Yeah, I think it's 0:17:09.400 --> 0:17:10.440 a headwind for markets. 0:17:10.480 --> 0:17:12.600 And again I think this transition, as you pointed out, 0:17:12.640 --> 0:17:15.560 we benefit from globalization, made everything cheaper. I think it 0:17:15.560 --> 0:17:18.800 made things cheaper at the suspense of true sustainability and security. 0:17:19.119 --> 0:17:20.480 That I think is going to be the trade off 0:17:20.480 --> 0:17:22.320 that we're going to have better job security, but there 0:17:22.400 --> 0:17:23.560 is going to be this higher cost. 0:17:23.800 --> 0:17:24.879 I don't see a way around that. 0:17:24.960 --> 0:17:27.040 And is it a headwind for the Fed come December? 0:17:27.880 --> 0:17:29.639 You know, I think that's a tough one because I 0:17:29.680 --> 0:17:31.600 do think you know, we are going to get to 0:17:31.680 --> 0:17:33.320 something more neutral rates. So I think we get to 0:17:33.359 --> 0:17:36.720 three percent, come hell or high water on FED funds, 0:17:36.760 --> 0:17:39.480 and I think the ten year stays below four percent. 0:17:39.480 --> 0:17:41.640 Maybe it's in that three sixty to three eighty sort 0:17:41.680 --> 0:17:43.640