WEBVTT - Amazon Boosts Warehouse Worker Pay by at Least $1.50 an Hour 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.960 Wait inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.680 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:26.840 --> 0:00:29.440 We're watching obviously shares of Darden, but we're also watching 0:00:29.440 --> 0:00:32.320 shares of Amazon today hire, and they're on a tear 0:00:32.320 --> 0:00:34.360 this year. They're up about twenty four to twenty five percent. 0:00:34.840 --> 0:00:37.320 There's a few stories on what is one of the 0:00:37.360 --> 0:00:40.320 world's largest market cap companies, including wagehikes and a new 0:00:40.360 --> 0:00:43.519 AI assistant. So let's dig a little bit into Amazon 0:00:43.560 --> 0:00:47.080 with us as Bloomberg Intelligence Senior Technology analyst, Ana rag Grana. 0:00:47.120 --> 0:00:50.159 He's with us from our Chicago bureau anak. I know 0:00:50.200 --> 0:00:53.080 the market overall is rallying, so I know, you know, 0:00:53.200 --> 0:00:56.200 that's probably one reason or a good part of why 0:00:56.480 --> 0:01:00.360 Amazon is hire. But we also see that it's you know, 0:01:00.480 --> 0:01:02.720 raising wages a little bit. Is this just something that 0:01:02.880 --> 0:01:05.319 usually does ahead of the holiday season. 0:01:07.000 --> 0:01:09.319 I think it's it's probably driven by a lot of 0:01:09.360 --> 0:01:13.800 noise about you know, unionization and a little bit of back. 0:01:14.440 --> 0:01:17.760 You know, you could say issues around worker conditions, so 0:01:17.800 --> 0:01:19.959 they you know, I think it was long time due. 0:01:19.959 --> 0:01:22.360 It's it's good that they're doing it. One of the 0:01:22.360 --> 0:01:24.880 biggest stories for Amazon in the last twelve months to 0:01:25.560 --> 0:01:28.720 two years, which Punum and I have talked about quite 0:01:28.760 --> 0:01:33.000 a bit, is Amazon's you know, path towards improving profitability. 0:01:33.440 --> 0:01:36.080 So you know, they have done that quite a bit. 0:01:36.120 --> 0:01:37.959 If you look at the stock over the last twelve months, 0:01:37.920 --> 0:01:41.400 it's done very well. And profit expansion is you know, 0:01:41.480 --> 0:01:44.000 the biggest key of that particular thing. So now when 0:01:44.000 --> 0:01:47.039 the wages go up, that has an impact on margins. 0:01:47.080 --> 0:01:49.120 But at the same time, we also heard they are 0:01:49.240 --> 0:01:51.720 rationalizing their management structure. They're not going to be that 0:01:51.800 --> 0:01:54.160 many managers down the road. I think that's going to 0:01:54.200 --> 0:01:57.000 help offset some of these costs because more of the 0:01:57.040 --> 0:02:00.320 expensive workers are part of the AWS area, not so 0:02:00.400 --> 0:02:01.640 much on the retail side of it. 0:02:02.960 --> 0:02:05.320 And the stock, you know, it has done well. It's 0:02:05.400 --> 0:02:09.440 up over the last five years one hundred and seven percent. 0:02:10.200 --> 0:02:12.560 Some of the other hyper scalers are doing much better. 0:02:12.800 --> 0:02:16.280 I noticed that Microsoft, for example, is up double that 0:02:16.840 --> 0:02:19.239 over the past five years. They just handed sixty billion 0:02:19.320 --> 0:02:22.320 dollars back to shareholders or decided to start doing that 0:02:22.680 --> 0:02:27.120 for the second time. Is Amazon rewarding shareholders in the 0:02:27.120 --> 0:02:28.360 same way. 0:02:29.240 --> 0:02:31.520 I think it's a focus for Amazon at this point. 0:02:31.680 --> 0:02:35.560 Far more is improving profitability, both you know, on the 0:02:35.600 --> 0:02:38.480 retail side as well as the AWS side. We've seen 0:02:38.520 --> 0:02:41.000 Airgibus margins really spiked up quite a bit in the 0:02:41.040 --> 0:02:43.960 last one in one year or so. On top of that, 0:02:43.960 --> 0:02:46.120 that advertising business is doing very well, and that's a 0:02:46.200 --> 0:02:48.160 very high margin business. I think that is going to 0:02:48.200 --> 0:02:52.240 be probably the single biggest driver of next you know, 0:02:52.280 --> 0:02:55.320 face a big, big profit expansion for them, because that's 0:02:55.400 --> 0:02:57.640 very high margin. People instead of you know, going to 0:02:57.680 --> 0:03:00.920 Google to search for a product, may go toon I 0:03:00.919 --> 0:03:03.720 mean directly into the search engine to look for that 0:03:03.800 --> 0:03:05.280 product and they can monetize on that. 0:03:05.720 --> 0:03:08.720 What about the monetization of AI. Where are they on that? 0:03:08.760 --> 0:03:10.720 Because that was one of the other stories that popped 0:03:10.800 --> 0:03:13.960 up on the Bloomberg launching an AI assist and designed 0:03:13.960 --> 0:03:17.840 to help some of their online merchants manage their own businesses. 0:03:17.880 --> 0:03:19.160 So what do we know about that? And I am 0:03:19.200 --> 0:03:21.720 curious if you can kind of put into context where 0:03:21.800 --> 0:03:23.800 Amazon is in the AI race. 0:03:25.080 --> 0:03:26.920 Yeah, So when you look at AI and Amazon, I 0:03:26.919 --> 0:03:29.079 think the first thing you will think about is, you know, 0:03:29.120 --> 0:03:31.760 the cloud business. That's where the bulk of the R 0:03:31.800 --> 0:03:33.320 and D and the bulk of the work is going 0:03:33.360 --> 0:03:36.840 to go because companies will use their cloud services and 0:03:37.040 --> 0:03:39.640 third party models to come up with their own solutions. 0:03:39.640 --> 0:03:41.640 So that's more on the you know, selling of cloud 0:03:41.640 --> 0:03:44.640 resources or technology side of it, as far as they're 0:03:44.720 --> 0:03:48.440 using it themselves to be more productive. Content creation is 0:03:48.440 --> 0:03:50.840 an area, and that's where the application that was launched 0:03:50.880 --> 0:03:54.720 today would help their merchants to be online very quicker, 0:03:55.000 --> 0:03:58.520 much better description of the product pictures. And you know 0:03:58.920 --> 0:04:01.680 what that does is it helps out to get to 0:04:01.720 --> 0:04:05.000 your products to market quicker in a far more effective 0:04:05.000 --> 0:04:07.040 way than you know, you and I would do. Let's 0:04:07.040 --> 0:04:09.840 say we are a third party merchant. This just helps 0:04:09.840 --> 0:04:13.000 it in the everything from points throw all the way 0:04:13.000 --> 0:04:14.880 down to the selling off that particular product. 0:04:15.400 --> 0:04:17.680 Why are you looking at me, Well, you're freaking me 0:04:17.839 --> 0:04:18.200 out here. 0:04:18.279 --> 0:04:21.320 So you don't know about my obsession with the comp function, 0:04:21.400 --> 0:04:23.800 or maybe you don't remember, but Paul Sweeny knows. So 0:04:24.400 --> 0:04:26.200 I use it all the time, and so I'm just 0:04:26.240 --> 0:04:29.240 putting up Amazon against the other fang peers, right, or 0:04:29.279 --> 0:04:33.359 the other megacap what we call magnificent seven stocks. So 0:04:33.440 --> 0:04:35.520 Amazon has doubled over the past five years, up one 0:04:35.560 --> 0:04:38.480 hundred eight percent. Facebook is up one hundred and ninety 0:04:38.560 --> 0:04:43.080 five percent. Right, Apple is up three hundred thirteen percent. 0:04:43.240 --> 0:04:46.160 Netflix is up one hundred and forty six percent. Google 0:04:46.279 --> 0:04:49.000 is up one hundred and sixty two percent. Microsoft, I mean, 0:04:49.200 --> 0:04:52.679 up two hundred and eleven percent, all of them, all 0:04:52.800 --> 0:04:56.040 of them, and I won't even mention Nvidia because obviously 0:04:56.520 --> 0:05:01.240 they destroy this group. But Amazon's the big loser among 0:05:01.320 --> 0:05:04.080 the mag seven. Why is that an rag? 0:05:04.279 --> 0:05:07.200 So you know, why don't we try the last twelve months, 0:05:07.240 --> 0:05:09.000 I mean, they've done better than Microsoft. 0:05:09.120 --> 0:05:11.640 I always do five. Ye, it's just my base because 0:05:11.680 --> 0:05:13.400 it's the default of the comp function. I've done it 0:05:13.480 --> 0:05:15.440 since I started working here in nineteen ninety nine. 0:05:16.480 --> 0:05:18.200 Yeah, So one of the things I'd say is, you know, 0:05:18.240 --> 0:05:21.360 we're building in a lot of the up that happened 0:05:21.440 --> 0:05:24.000 during the pandemic and the down in that particular one. 0:05:24.160 --> 0:05:26.039 If you run a ten year number on COMP which 0:05:26.080 --> 0:05:29.520 I just did while we are talking, Amazon's annual growth 0:05:29.600 --> 0:05:32.640 rate is twenty four point six percent. And Microsoft is 0:05:32.680 --> 0:05:35.279 twenty eight, so not that big of a difference between 0:05:35.279 --> 0:05:37.800 the two. But you know, Amazon's been a very good 0:05:37.839 --> 0:05:40.320 story for a while. And frankly speaking, if you look 0:05:40.360 --> 0:05:44.520 at their cloud business, just that alone is far more 0:05:44.560 --> 0:05:47.680 profitable than most people understand Amazon to be. It's the 0:05:47.720 --> 0:05:50.039 retail side of HILD which is dragging it down. But 0:05:50.120 --> 0:05:51.839 frankly speaking, if you look at it for the next 0:05:51.839 --> 0:05:54.440 five seven years, I think they have a long way 0:05:54.440 --> 0:05:54.640 to go. 0:05:54.920 --> 0:05:57.400 He's not wrong. Over the last ten years, Amazon's the 0:05:57.440 --> 0:05:59.320 best performer in the group. 0:05:59.480 --> 0:06:02.159 Yes, why we talk to anorog right. Longer term, I. 0:06:02.160 --> 0:06:04.560 Can't believe the retail business is the drag, Like I 0:06:04.720 --> 0:06:08.119 buy stuff on Amazon every day? Is it because people 0:06:08.120 --> 0:06:11.040 are mad that they seem to have like more Chinese 0:06:11.120 --> 0:06:12.919 retailer than any other nationality. 0:06:13.080 --> 0:06:15.400 Is it expensive to get all this stuff out? 0:06:16.440 --> 0:06:16.640 Yeah? 0:06:16.680 --> 0:06:20.200 See, Matt, you're you're at this point comparing a technology 0:06:20.240 --> 0:06:22.720 business with the retail business. So you've got to take that, 0:06:22.960 --> 0:06:25.760 you know, with that particular aspect of it. Those are 0:06:26.000 --> 0:06:28.640 single digit margin businesses. Frankly in the long run. Now 0:06:28.760 --> 0:06:31.000 you're comparing it with the gross marchin business of seventy 0:06:31.000 --> 0:06:33.560 five eighty percent, which is the tech business of it. 0:06:33.920 --> 0:06:36.920 But when you look at logistics of Amazon, it's going 0:06:36.960 --> 0:06:39.240 to be very difficult to come up with anything even 0:06:39.279 --> 0:06:42.120 close to that. Over the next five years, they double 0:06:42.200 --> 0:06:47.240 their logistics footprint during the pandemic, which is, you know, 0:06:47.279 --> 0:06:49.400 not good for the shareholders in the short run, but 0:06:50.000 --> 0:06:52.280 I would contend that in the next five seven years 0:06:52.360 --> 0:06:54.640 it'll start to pay far more dividends than it has 0:06:54.680 --> 0:06:55.240 done so far. 0:06:56.200 --> 0:06:58.440 Well, all right, so I don't know, you know, we're 0:06:58.440 --> 0:07:01.200 not into earnings yet. I do wonder where, you know, 0:07:01.279 --> 0:07:03.839 how you're thinking about the environment. It seems like the 0:07:03.920 --> 0:07:06.880 Fed kind of giving a juice to certainly these megacap 0:07:07.279 --> 0:07:09.680 tech names today. Certainly you see it in the trade. 0:07:10.040 --> 0:07:11.520 But I don't know how does the next six to 0:07:11.560 --> 0:07:13.400 twelve months look specifically for Amazon. 0:07:14.680 --> 0:07:16.280 I think, you know, one of the good things in 0:07:16.320 --> 0:07:18.960 this particular case is going to be small businesses. This 0:07:19.040 --> 0:07:21.360 is I think the one thing I haven't heard a 0:07:21.360 --> 0:07:24.640 lot of people talk about it today or since yesterday. 0:07:25.360 --> 0:07:28.040 They have been struggling because of high cost of funding. 0:07:28.120 --> 0:07:30.960 It's not the big guys, I mean, Amazon and Microsoft 0:07:30.960 --> 0:07:32.880 and Apple, they don't really care about what cost of 0:07:32.920 --> 0:07:35.040 funding is they have too much cash on their hands. 0:07:35.360 --> 0:07:38.160 But when I look at companies, smaller software companies that 0:07:38.200 --> 0:07:41.080 cater to the SMB market, they're really struggling. And I'm 0:07:41.120 --> 0:07:45.000 hoping with this particular pivot, the consumption of cloud goes 0:07:45.040 --> 0:07:50.080 up from the SMB community, which will help Amazon. The 0:07:50.200 --> 0:07:55.000 SMBs that are selling their products on Amazon's retail framework, 0:07:55.240 --> 0:07:57.560 that's going to go up. So I think netnet it 0:07:57.640 --> 0:08:00.440 is going to be good for Amazon on to end 0:08:00.480 --> 0:08:02.200 customers as better as its suppliers. 0:08:02.840 --> 0:08:03.000 You know. 0:08:03.240 --> 0:08:06.320 I talked to Steve Eisman on my television show this morning. 0:08:06.400 --> 0:08:11.240 He of big short fame from Newburger Berman, and he 0:08:11.440 --> 0:08:13.320 has he doesn't do shorts anymore. 0:08:13.440 --> 0:08:14.280 He just has. 0:08:14.120 --> 0:08:17.040 A portfolio of thirty to thirty five longs and he 0:08:17.120 --> 0:08:20.000 invests in two stories, one infrastructure, the other is AI. 0:08:20.640 --> 0:08:23.080 And he was saying that, you know, medium to even 0:08:23.200 --> 0:08:26.800 large sized businesses, they don't even have their data sorted 0:08:26.840 --> 0:08:30.880 out to use for jen AI yet, so they need 0:08:31.360 --> 0:08:36.080 to partner with these other AI, you know, masters of 0:08:36.120 --> 0:08:38.400 the universe in order to get that done. And I 0:08:38.440 --> 0:08:42.240 wonder are people going to reach out to AWS before 0:08:42.280 --> 0:08:45.000 they reach out to you know, Microsoft or Google. I mean, 0:08:45.080 --> 0:08:47.640 is is there AI business going to be a big 0:08:47.679 --> 0:08:49.080 money maker for them. 0:08:49.600 --> 0:08:52.240 Yeah. I mean AW is the biggest cloud vendor out 0:08:52.240 --> 0:08:54.200 there just in terms of market size, so that's going 0:08:54.240 --> 0:08:56.960 to do very well. As far as data is concerned, 0:08:57.000 --> 0:08:59.320 each one of these companies has their own data framework. 0:08:59.600 --> 0:09:01.520 I did listen to Steve this morning and he talked 0:09:01.520 --> 0:09:05.240 about Accentua's you know, business of cleaning that up. Frankly speaking, 0:09:05.280 --> 0:09:06.880 there was a mix up. I mean he talked about 0:09:06.880 --> 0:09:10.240 the outsourcing business, but that's completely different. It's the consulting 0:09:10.280 --> 0:09:13.320 business where the data cleanup happens, and from that point 0:09:13.400 --> 0:09:16.160 they are still in that phase of a slowdown. But 0:09:16.360 --> 0:09:19.120 having said that, we think that the data cleanup issue 0:09:19.400 --> 0:09:23.320 is a very long term secular cycle for all technology companies, 0:09:23.360 --> 0:09:26.080 not just you know, either Accenture or AWS. 0:09:26.160 --> 0:09:27.880 Did we do a good job? Did you think Did 0:09:27.880 --> 0:09:28.600 you like the interview? 0:09:29.200 --> 0:09:29.320 Own? 0:09:29.360 --> 0:09:29.520 Oh? 0:09:29.520 --> 0:09:30.680 It was excellent, excellent. 0:09:30.720 --> 0:09:31.240 Thank you. 0:09:31.240 --> 0:09:32.840 You put him on the spot. You think he's going 0:09:32.920 --> 0:09:33.240 to say no. 0:09:33.440 --> 0:09:36.120 You can catch my television program Bloomberg Open Interest every 0:09:36.200 --> 0:09:37.079 day from nineteen. 0:09:37.600 --> 0:09:41.040 Guy, Hey, one more thing before you go. There was 0:09:41.120 --> 0:09:43.640 the story headlines about Intel. This was I think earlier 0:09:43.640 --> 0:09:45.360 in the week at the start of the week about 0:09:45.679 --> 0:09:48.679 Intel making an AI fabric chip for Amazon Web Services 0:09:48.679 --> 0:09:51.920 and the two looking to a customer potential for further designs. 0:09:51.960 --> 0:09:54.800 It was great news for Intel. What do we need 0:09:54.800 --> 0:09:55.520 to know about this? 0:09:56.440 --> 0:09:58.679 Yeah, so think about it this way, and I'll take 0:09:58.720 --> 0:10:01.439 you back to Apple. Apple long time ago was buying 0:10:01.480 --> 0:10:04.360 Intel chips. It was getting heated up. They weren't able 0:10:04.400 --> 0:10:06.840 to do some stuff with it. So then Apple decided 0:10:06.880 --> 0:10:09.200 to design their own chips, which they do and then 0:10:09.240 --> 0:10:11.840 TSMC makes it for them. Made a huge difference to 0:10:11.840 --> 0:10:15.400 their Mac portfolio. All these cloud providers, whether it's Amazon, 0:10:15.440 --> 0:10:18.400 whether it's Google, whether it's Microsoft, they are all going 0:10:18.440 --> 0:10:21.440 down the route of creating their own chips, designing their 0:10:21.440 --> 0:10:24.080 own chips. When I say creating, I mean you just 0:10:24.120 --> 0:10:26.360 design it and somebody else creates it for you. So 0:10:26.440 --> 0:10:28.840 Intel is probably you know, one of the people they're 0:10:28.880 --> 0:10:31.280 talking to. I pet you. They're talking to multiple other 0:10:31.280 --> 0:10:33.840 peoples to help out with that thing. Because the number 0:10:33.920 --> 0:10:36.560 one problem for cloud providers right now is the lack 0:10:36.600 --> 0:10:39.360 of GPUs and chips that they need to take care 0:10:39.400 --> 0:10:41.280 of the AI workload and the other workloads. 0:10:41.559 --> 0:10:44.720 Wait, if everybody designs their own chips. What does what 0:10:44.720 --> 0:10:46.840 do we need in video for? They don't make chips, 0:10:46.840 --> 0:10:47.720 They send their designs. 0:10:49.679 --> 0:10:52.520 Yes, exactly my point. But that's going to take some time. 0:10:53.320 --> 0:10:55.280 So they have a little bit of a runway, probably 0:10:55.440 --> 0:10:56.560 a fairly good size. 0:10:57.640 --> 0:10:59.160 Pretty good job they're doing. 0:10:59.240 --> 0:11:03.319 Okay, okay, aniok, thank you so much. Anna rag Rana 0:11:03.440 --> 0:11:06.160 of course, joining us right there Bloomberg Intelligence senior technology 0:11:06.200 --> 0:11:08.680 analyst out there in our Chicago bureau iceman. 0:11:09.480 --> 0:11:11.760 Yeah, he was. He's always a lot of fun to 0:11:11.800 --> 0:11:12.079 talk to. 0:11:12.280 --> 0:11:13.160 What was the most interesting? 0:11:13.160 --> 0:11:15.440 You know, it's cool about Steve Iisman. He won't give 0:11:15.520 --> 0:11:18.079 us pre interview notes. I love that he does it. 0:11:18.080 --> 0:11:20.240 He's like, listen, I'll show up. You asked me what 0:11:20.280 --> 0:11:22.440 you want to ask me, and if it's interesting, it'll 0:11:22.480 --> 0:11:24.680 be a good interview. Yeah, he said. Last time he 0:11:24.679 --> 0:11:26.680 was on, he said Trump has one hundred percent chance 0:11:26.720 --> 0:11:29.000 of winning. And now but since then, you know, Joe 0:11:29.040 --> 0:11:31.080 Biden dropped out of the race, and now he says 0:11:31.080 --> 0:11:32.000 it's a coin toss. 0:11:32.280 --> 0:11:34.920 All right, Well that's interesting. 0:11:35.080 --> 0:11:36.800 Yeah. 0:11:36.880 --> 0:11:40.400 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:40.440 --> 0:11:43.679 live weekday afternoons from two to five pm Eastern Listen 0:11:43.720 --> 0:11:45.880 on Apple card play and then brout Auto with a 0:11:45.880 --> 0:11:49.559 Bloomberg business act or watch us live on YouTube. 0:11:49.960 --> 0:11:51.839 I see five hundred we were talking about it did 0:11:51.880 --> 0:11:54.600 hitting an inter day right all time high. We'll see 0:11:54.600 --> 0:11:56.520 whether or not we close that way, but it could. 0:11:56.640 --> 0:11:59.439 If it does close at a record, it would be 0:11:59.480 --> 0:12:00.959 its thirty ninth record this year. 0:12:01.200 --> 0:12:03.280 And you know, it was crazy yesterday after the FED 0:12:03.320 --> 0:12:05.760 decision we had the market had two hours to be 0:12:05.800 --> 0:12:08.400 open and figure this out, and we closed down. 0:12:08.640 --> 0:12:08.920 Yeah. 0:12:09.000 --> 0:12:11.040 Then all of a sudden this morning, I'm looking at 0:12:11.040 --> 0:12:14.600 futures up two percent. Wait, yeah, it's good overnight. Did 0:12:14.600 --> 0:12:18.320 somebody tell mister market like, actually the dot plot is 0:12:18.360 --> 0:12:21.120 way underestimating what they're going to cut? Or did the 0:12:21.120 --> 0:12:24.439 initial jobless claims say, hey, look he nailed it. It's 0:12:24.440 --> 0:12:25.560 a soft landing, right. 0:12:25.480 --> 0:12:27.560 And things aren't falling apart, right, And that's what you 0:12:27.559 --> 0:12:29.200 want to see. Jeff Crumpleman and we'll see what he 0:12:29.240 --> 0:12:31.000 has to say. He's chief Investment Striatege, his head of 0:12:31.040 --> 0:12:34.360 equities over at Mariner Wealth Advisors. They're based in Cincinnati. 0:12:34.400 --> 0:12:35.800 He's joining us back in our studio. 0:12:35.800 --> 0:12:37.320 How I should have known you were from the great 0:12:37.320 --> 0:12:40.760 state of Ohio. Oh, now it all makes sense. 0:12:42.520 --> 0:12:46.280 For the next ten minutes. You though expected a quarter 0:12:46.320 --> 0:12:46.839 point cut. 0:12:46.920 --> 0:12:47.240 I did. 0:12:47.360 --> 0:12:48.760 I expected a quarter point cut. 0:12:49.480 --> 0:12:53.920 I also until yesterday, until what until I think on 0:12:54.040 --> 0:12:57.960 Monday morning, I talked to Ed Hyman and he convinced me, oh, okay, 0:12:58.720 --> 0:13:01.880 but I have been expected because they didn't really telegraph 0:13:01.880 --> 0:13:05.280 a fifty basis point. I thought, this Fed wants to 0:13:05.320 --> 0:13:06.240 tell us what they're going to do. 0:13:06.320 --> 0:13:08.439 But do you think the Fed got it wrong or right? Then? 0:13:08.720 --> 0:13:09.120 What's that? 0:13:09.440 --> 0:13:11.440 Do you think the Fed got it wrong or right? Then? 0:13:11.559 --> 0:13:14.280 You know you could justify either one. It was kind 0:13:14.280 --> 0:13:16.360 of a flip of the coin with a slight edge 0:13:16.360 --> 0:13:17.520 that I gave to twenty five. 0:13:18.200 --> 0:13:19.800 And I think that. 0:13:20.080 --> 0:13:23.120 The twenty five would have said, we respect the inflation 0:13:23.320 --> 0:13:26.080 number that didn't improve as much as we wanted it to 0:13:26.120 --> 0:13:30.679 do in the prior month. And you know the fact 0:13:30.760 --> 0:13:35.160 that economic growth is not all that bad. We've got 0:13:35.160 --> 0:13:37.559 a number of things unemployment claims and retail sales and 0:13:37.600 --> 0:13:40.720 all this stuff that just came out that says we're 0:13:40.720 --> 0:13:43.160 doing okay. The Atlanta Fed is saying real GDP growth 0:13:43.200 --> 0:13:46.920 to three percent pace. So I thought, you know, Powell 0:13:46.960 --> 0:13:51.920 probably would push for fifty, but the committee given there 0:13:52.120 --> 0:13:54.079 if you look at some of the members just a 0:13:54.120 --> 0:13:57.560 little more cautious and conservative, I thought he wouldn't convince him. 0:13:59.000 --> 0:14:03.760 And by going fifty, okay, fine, what they've done is 0:14:03.760 --> 0:14:05.959 said we're going to be proactive in case it is flowing. 0:14:06.120 --> 0:14:07.959 Is it really just fine? Wor as Matt like you 0:14:08.080 --> 0:14:10.360 kind of were pepperating Mike McKee like, is there something 0:14:10.360 --> 0:14:13.320 that Fed sees or J. Powell that we need to 0:14:13.320 --> 0:14:13.640 be worthed? 0:14:13.679 --> 0:14:15.920 I just don't understand. Five and a half percent didn't 0:14:15.920 --> 0:14:20.040 feel particularly restrictive to me considering how well or I mean, 0:14:20.400 --> 0:14:24.120 the stock market is doing, how well unemployment is doing. 0:14:24.240 --> 0:14:25.800 You know, I know we went from three point four 0:14:25.880 --> 0:14:28.120 to four point two, but still four point two is 0:14:28.120 --> 0:14:29.840 well below the long term average. 0:14:29.920 --> 0:14:32.360 I could take your case, but I'm gonna sense you're 0:14:32.600 --> 0:14:35.560 asking you to take the other case. The other case 0:14:35.560 --> 0:14:39.640 would be we are way away from normal real Fed 0:14:39.680 --> 0:14:42.960 funds rates and we're five and a half percent. The 0:14:43.080 --> 0:14:46.880 normal real after inflation Fed fund's rate is about one percent, 0:14:47.560 --> 0:14:49.760 So that means that you would have to get if 0:14:49.760 --> 0:14:51.480 inflation's at two and a half percent, you got to 0:14:51.520 --> 0:14:54.240 get Fed funds down to three and a half percent 0:14:54.400 --> 0:14:55.040 to get. 0:14:54.840 --> 0:14:55.880 Back to normal. 0:14:56.680 --> 0:14:59.480 So you know, I mean, you have Jeffrey Gunlock out 0:14:59.480 --> 0:15:01.400 there saying and they should have gone twenty five in 0:15:01.440 --> 0:15:02.360 the prior month. 0:15:02.520 --> 0:15:03.080 So fine. 0:15:03.200 --> 0:15:05.520 Kind of the way I resolved in my mind is, well, 0:15:05.520 --> 0:15:07.800 if they would have done that and started their measured 0:15:07.960 --> 0:15:10.360 kind of approach, it would have been twenty five last month, 0:15:10.480 --> 0:15:12.320 twenty five this month, a total of fifty. I think 0:15:12.360 --> 0:15:15.320 what freaks people out is this all of a sudden, 0:15:15.360 --> 0:15:18.600 these guys are saying, Ah, you know, we fought inflation, 0:15:18.840 --> 0:15:22.920 We're comfortable. Now we're really going to focus on employment. 0:15:23.520 --> 0:15:26.240 And they were willing earlier to let inflation run to 0:15:26.280 --> 0:15:28.760 two and a half or three percent hotter before all 0:15:28.800 --> 0:15:32.320 this stuff started a couple of years ago, And now 0:15:32.360 --> 0:15:33.680 I think they're going to err on the side of 0:15:33.720 --> 0:15:36.440 being if they're going to be wrong, they'll be a 0:15:36.480 --> 0:15:38.000 little too aggressive and making sure. 0:15:37.880 --> 0:15:41.000 They're Powell said as much yesterday. He said, could we 0:15:41.040 --> 0:15:44.240 have cut at the last meeting? Yeah, yeah, I mean 0:15:44.240 --> 0:15:46.880 would have had we seen the employment number that came 0:15:46.920 --> 0:15:49.960 out right after. But it doesn't make that much of 0:15:50.000 --> 0:15:52.960 a difference. I mean, one month this even if you 0:15:53.000 --> 0:15:56.800 think the long and variable legs are shorter now they're 0:15:56.840 --> 0:15:57.560 not that short. 0:15:58.200 --> 0:16:00.200 Yeah, And at the end of the day, we look 0:16:00.240 --> 0:16:02.000 at three things when we look at the markets. We 0:16:02.000 --> 0:16:05.480 look at fundamentals, valuation levels, and technicals. And from a 0:16:05.480 --> 0:16:08.600 fundamental standpoint, you look at the economy and trends of 0:16:08.640 --> 0:16:11.320 the economy that are solid. You look at overall interest 0:16:11.400 --> 0:16:15.840 rate trends that are stable and coming down a little bit, 0:16:15.920 --> 0:16:17.840 and you look at credit spreads. All that stuff is 0:16:17.880 --> 0:16:21.720 good and earnings are very good. So if inflation's falling, 0:16:21.800 --> 0:16:24.800 margins are expanding, you've got good business models. 0:16:24.920 --> 0:16:26.720 That tends to be a decent time in the market. 0:16:26.720 --> 0:16:28.040 All right, Well, let's talk a little bit about some 0:16:28.080 --> 0:16:30.400 of the names that you like, because the semiconductor area 0:16:30.440 --> 0:16:31.479 is definitely outperforming. 0:16:31.520 --> 0:16:31.840 It's up. 0:16:31.840 --> 0:16:33.840 I'm looking at the socks up about five percent so 0:16:33.920 --> 0:16:36.000 far in today's trade. If I look at some of 0:16:36.000 --> 0:16:37.880 the best performers in both the NASTAQ one hundred and 0:16:37.880 --> 0:16:40.160 the S and P five hundred, AMD is on that list. 0:16:40.560 --> 0:16:43.360 You like AMD? Why that name in the semispace? 0:16:43.880 --> 0:16:47.520 Well, I think that it's just a diversified way. If 0:16:47.320 --> 0:16:49.920 you've had your fill of Nvidia and you've had so 0:16:50.040 --> 0:16:52.840 much success, you can't stand it anymore? Why don't you 0:16:52.880 --> 0:16:55.360 diverse file a little bit and get some AMD in there, 0:16:55.400 --> 0:16:58.680 which also benefits from the graphics chips and the expansion 0:16:58.680 --> 0:17:01.680 in cloud and data center, but also has some cyclical 0:17:01.720 --> 0:17:06.200 stuff going on with just CPUs that they also manufacture. 0:17:06.359 --> 0:17:09.240 And you got a thirty percent growth rate trading at 0:17:09.280 --> 0:17:12.160 about thirty five times, which is a wonderful PEG rate. 0:17:13.600 --> 0:17:16.880 So you know, you don't just have to own one 0:17:17.160 --> 0:17:19.960 semiconductor company. You can spread out the risk. 0:17:19.800 --> 0:17:20.360 A little bit. 0:17:21.840 --> 0:17:24.200 Would you still you still own Nvidio? 0:17:24.320 --> 0:17:24.760 Absolutely? 0:17:24.840 --> 0:17:27.280 We under own it relative to its waiting in the market. 0:17:27.320 --> 0:17:30.719 Those things are crazy in terms of there are percent 0:17:30.880 --> 0:17:34.960 of market value of the indices, so I think it's 0:17:34.960 --> 0:17:37.640 something like eleven percent of the Russell one thousand growth index. 0:17:38.000 --> 0:17:41.680 We own more like seven percent of it in our portfolio, 0:17:42.160 --> 0:17:45.879 so yes. And it is in terms of earnings growth, 0:17:46.040 --> 0:17:48.359 I'm looking for eighty percent earnings growth and it's trading 0:17:48.359 --> 0:17:52.480 at about thirty times. I'm sorry, but you know there's 0:17:52.520 --> 0:17:55.360 not a whole lot not to like about that right now. 0:17:55.359 --> 0:17:56.080 Just at the numbers. 0:17:56.280 --> 0:17:58.359 Did I tell you guys talked to Steve Eisman this morning. 0:18:00.080 --> 0:18:02.040 He was saying pretty much exactly the same thing you 0:18:02.080 --> 0:18:03.880 are in terms of the economy and the FED. And 0:18:04.680 --> 0:18:07.040 he also likes the AI sort guy. 0:18:07.119 --> 0:18:10.040 He's got stories. 0:18:10.200 --> 0:18:12.160 We're in good times right now, and in good times 0:18:12.200 --> 0:18:14.480