WEBVTT - Debt-Ceiling Drama and Adobe's AI Push 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.080 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.880 --> 0:00:24.079 Madison Mills Paul Sweeney here in the Bloomberg Interactor Broker's studio. 0:00:24.120 --> 0:00:27.480 Time for little tech talk, So we turned to Ashley Still, 0:00:27.720 --> 0:00:31.200 senior vice president and general manager, where the creative cloud 0:00:31.240 --> 0:00:33.440 and document cloud at a little tech firm. You might 0:00:33.479 --> 0:00:36.960 have heard of Adobe. So Ashley, we can talk about 0:00:37.000 --> 0:00:39.400 the cloud because that was the cool kid on the 0:00:39.400 --> 0:00:42.720 block until about a month ago, and then this thing 0:00:42.800 --> 0:00:45.559 AI came out of nowhere. At least that's how it 0:00:45.600 --> 0:00:49.320 seems to me. And now that's all anybody can talk about. 0:00:49.600 --> 0:00:52.479 I would love to get your based upon your background 0:00:52.680 --> 0:00:56.920 in tech technology, kind of what you believe AI is 0:00:58.440 --> 0:00:59.640 and what it can be. 0:01:02.040 --> 0:01:04.800 Well, first, thank you for having me. Really appreciate being 0:01:04.840 --> 0:01:08.720 on the show and talking with you today. So yes, 0:01:08.800 --> 0:01:11.920 I mean AI has been around for actually a long time, 0:01:12.880 --> 0:01:21.120 But certainly the technology is rapidly accelerating. And one of 0:01:21.160 --> 0:01:25.679 the things that changed is kind of the methodologies and 0:01:26.240 --> 0:01:31.520 being used in AI, where increasingly the algorithms can kind 0:01:31.520 --> 0:01:39.000 of produce content on their own versus historically more automating 0:01:39.080 --> 0:01:42.720 repetitive tasks. So in the case of images, obviously you 0:01:42.720 --> 0:01:45.880 think of Adobe, you tink of creativity. In the case 0:01:45.880 --> 0:01:50.880 of images, it's now possible to create content just by 0:01:51.040 --> 0:01:55.640 simply writing text prompts. So if you want to read balloon, right, 0:01:55.720 --> 0:02:01.520 you can just the technology can basically imagine, if you will, 0:02:01.760 --> 0:02:05.760 a red balloon for you, and and that is been 0:02:05.800 --> 0:02:08.839 advancing pretty rapidly over the past few years. 0:02:09.560 --> 0:02:12.200 Ashley, you're you're the perfect person to talk to you 0:02:12.280 --> 0:02:15.200 about this. You're a former corporate finance analyst. Can you 0:02:15.480 --> 0:02:18.919 talk to me about the calculation for some of these 0:02:18.960 --> 0:02:23.760 companies that are reallocating their budgets to throw money at AI. 0:02:24.040 --> 0:02:25.920 How do you rate that decision? 0:02:28.200 --> 0:02:33.040 Well, certainly, Todobe. I mean, we believe that it's incredibly 0:02:33.040 --> 0:02:38.200 innovative technology that will help make our products better for 0:02:38.320 --> 0:02:42.200 existing users and help us actually expand who can use 0:02:42.240 --> 0:02:47.120 our product. So the example that I just gave where 0:02:47.600 --> 0:02:52.800 you can now create content using simple text prompts that's 0:02:53.000 --> 0:02:57.160 much more accessible than going, you know, to design school 0:02:57.240 --> 0:03:03.000 and learning sophisticated applications and tools. But it also makes 0:03:03.080 --> 0:03:06.839 the sophisticated applications and tools like Photoshop better and more 0:03:06.919 --> 0:03:11.000 powerful for the creative professionals. And it's unusual when you 0:03:11.040 --> 0:03:14.800 have a technology that both expands your market opportunity but 0:03:14.960 --> 0:03:18.160 also makes your products better and more valuable for your 0:03:18.200 --> 0:03:22.040 existing customers. And that's why we're excited about generative AI. 0:03:22.560 --> 0:03:26.160 So how do you, I guess, integrate generative AI into 0:03:26.160 --> 0:03:29.560 what you're doing at Adobe? I mean, is this something 0:03:29.600 --> 0:03:33.240 that you guys have I guess maybe stepped up investment 0:03:33.280 --> 0:03:35.400 in time and effort and money over the last year two. 0:03:35.400 --> 0:03:36.960 How's that developed for you guys? 0:03:37.680 --> 0:03:37.960 Sure? 0:03:38.040 --> 0:03:41.200 Absolutely, I mean we've been investing in AI for a 0:03:41.280 --> 0:03:46.119 decade at least, but certainly we've been ramping up our 0:03:46.200 --> 0:03:48.640 efforts around gender AI. And there's a couple of things 0:03:48.640 --> 0:03:52.119 that we're doing. We announced incredibly exciting and very well 0:03:52.160 --> 0:03:57.400 received update to Photoshop last week. So we introduced a 0:03:57.440 --> 0:04:01.880 new beta a Photoshop where there's feature called generative Pill 0:04:02.560 --> 0:04:07.640 and this enables you to add, remove and extend your 0:04:07.760 --> 0:04:12.520 content in Photoshop again using simple text prompts. It's all 0:04:12.600 --> 0:04:15.880 non destructive. So again this is the power of Photoshop 0:04:16.279 --> 0:04:19.560 where you can accelerate your work and kind of have 0:04:19.680 --> 0:04:26.200 new ideas and explore creative possibilities in a really kind 0:04:26.200 --> 0:04:30.719 of low risk, so to speak way, and just have 0:04:30.800 --> 0:04:33.840 a lot of fun. So we've had seventy million images 0:04:33.960 --> 0:04:37.880 generated in Photoshop over the last week alone in a 0:04:37.920 --> 0:04:41.960 beta application, and again the response from our community has 0:04:41.960 --> 0:04:46.800 been fantastic. We also introduced an entirely new experience called 0:04:46.800 --> 0:04:50.960 Adobe Firefly, and you know, anyone can access this on 0:04:51.720 --> 0:04:55.239 firefly dot Adobe dot com. So go check out the website. 0:04:55.240 --> 0:05:00.400 It's completely free and there you can anyone and world 0:05:00.440 --> 0:05:04.680 with access to a browser can create content again just 0:05:05.240 --> 0:05:10.039 typing in simple text prompts and really just have a 0:05:10.040 --> 0:05:10.560 ton of fun. 0:05:11.520 --> 0:05:15.680 And Adobe offers the creative cloud across a lot of platforms, 0:05:15.720 --> 0:05:18.599 from desktop to of course mobile. And one of the 0:05:18.600 --> 0:05:21.680 big AI questions is how we're going to get the 0:05:21.880 --> 0:05:24.640 juice we need for lack of a better term, on 0:05:24.680 --> 0:05:28.839 our phones to power the AI tools that are going 0:05:28.880 --> 0:05:31.320 to be made available to us. Is that something that 0:05:31.320 --> 0:05:33.799 you all are thinking about Adobe when you think about 0:05:33.880 --> 0:05:35.400 AI questions. 0:05:36.920 --> 0:05:40.680 Absolutely, you know, and we actually on the document cloud side, 0:05:41.400 --> 0:05:44.320 we have a very powerful AI model called liquid Mode 0:05:44.360 --> 0:05:49.040 that's inside of Acrobat on mobile devices, both on iOS 0:05:49.040 --> 0:05:52.680 and Android, and that actually takes any PDF that's been 0:05:52.680 --> 0:05:55.960 created in the thirty year history of PDF and basically 0:05:56.000 --> 0:05:59.440 reformats it so you can read it on a phone. Right. 0:05:59.480 --> 0:06:04.440 It takes what would have otherwise been rendered, as you know, 0:06:04.440 --> 0:06:06.120 an eight and a half by eleven piece of paper 0:06:06.120 --> 0:06:10.839 which is unreadable, and basically reflows it into an HTML 0:06:10.880 --> 0:06:15.000 experience magically on your device. And so these devices are 0:06:15.040 --> 0:06:19.680 incredibly powerful. Certainly, technology always, you know, raises the bar, 0:06:20.760 --> 0:06:23.680 but we work closely with you know, folks like Google 0:06:23.720 --> 0:06:28.120 and Apple to constantly improve what's possible on devices. 0:06:28.360 --> 0:06:31.920 So Ashley, again you mentioned and we've heard from all 0:06:31.920 --> 0:06:34.880 this artificial intelligence has obviously been around for a while, 0:06:34.920 --> 0:06:37.600 but it just feels like maybe it's just the Nvidia, 0:06:38.160 --> 0:06:40.479 you know, raising their their outlooks so dramatically and the 0:06:40.480 --> 0:06:43.480 big increase in market capitalization that they saw and in 0:06:43.600 --> 0:06:46.440 their company that maybe it's just come to everybody's attention 0:06:46.600 --> 0:06:49.159 right now. But almost every single company in Y S 0:06:49.160 --> 0:06:50.960 and P five hundred and on their last earnings call 0:06:51.000 --> 0:06:53.760 mentioned AI. So I'm wondering, from your perspective, as you 0:06:53.920 --> 0:06:56.119 have been working with it for a long time, within 0:06:56.240 --> 0:06:59.240 the creative cloud and the document cloud, what's the biggest 0:06:59.320 --> 0:07:02.400 risk to I guess just AI and the development of AI. 0:07:02.480 --> 0:07:06.440 Do you think, Well, one of the risks that we're 0:07:07.120 --> 0:07:09.680 very focused on and kind of passionate about is the 0:07:09.760 --> 0:07:14.240 risk for misinformation. And you know, there's a lot of 0:07:14.400 --> 0:07:18.480 trust that we all put in content. When we see 0:07:18.480 --> 0:07:21.920 an image that's you know, on a news site or 0:07:21.960 --> 0:07:25.119 even you know, shared by family, there's there's a certain 0:07:25.160 --> 0:07:27.360 amount of trust that you have to have and how 0:07:27.400 --> 0:07:31.320 that content was created. And we feel strongly again just 0:07:31.800 --> 0:07:35.200 based on the pace of change and innovation in AI 0:07:35.280 --> 0:07:38.480 right now, that we all need what we refer to 0:07:38.520 --> 0:07:41.760 as nutrition labels for content. We're part of about a 0:07:41.920 --> 0:07:47.680 thousand member Consortius and open standard that's developing content credentials. 0:07:47.720 --> 0:07:50.040 Think of this again as a nutrition label for content, 0:07:50.640 --> 0:07:54.720 and we really believe consumers need this information so that 0:07:54.720 --> 0:07:55.960 we can trust what we see. 0:07:56.240 --> 0:07:58.720 YEP, very very important and that will be a challenge 0:07:58.840 --> 0:08:02.200 going forward, no doubt. Ashley Still, Senior Vice president and 0:08:02.240 --> 0:08:05.320 general manager of the Creative Cloud and the document Cloud 0:08:05.400 --> 0:08:09.080 at Adobe, one of the leading tech companies based in 0:08:09.160 --> 0:08:15.120 San Jose, California, talking about the Cloud AI. It's everywhere, folks, 0:08:15.560 --> 0:08:16.600 this is Bloomberg. 0:08:17.840 --> 0:08:21.280 You're listening to the team Ken's are Live program Bloomberg 0:08:21.320 --> 0:08:24.680 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:24.760 --> 0:08:27.920 the iHeartRadio app and the Bloomberg Business App, or listen 0:08:28.000 --> 0:08:30.280 on demand wherever you get your podcasts. 0:08:32.320 --> 0:08:34.920 Let's talk markets here, Let's talk fixed income. We talked 0:08:34.960 --> 0:08:37.880 fixed income. We like to talk to Lared Landaman, general's 0:08:37.960 --> 0:08:41.280 portfolio manager at TCW. Laird, thanks so much for joining 0:08:41.360 --> 0:08:44.360 us here. We love getting your view here. It looks 0:08:44.480 --> 0:08:47.200 like our good friends in Washington, DC are going to 0:08:48.320 --> 0:08:51.559 avoid a debt default, a debt crisis. How do you 0:08:51.640 --> 0:08:53.440 kind of put that all into context? 0:08:53.520 --> 0:08:53.720 Here? 0:08:54.040 --> 0:08:56.120 Were you ever? What was your level of concern? And 0:08:56.160 --> 0:08:57.319 how do you think we go from here? 0:08:58.800 --> 0:08:58.959 Well? 0:08:59.040 --> 0:09:02.000 I think we have to say they avoided again. This 0:09:02.040 --> 0:09:05.680 is sort of a uniquely American thing. It's kind of 0:09:05.720 --> 0:09:08.120 like country line dancing or something that we go through 0:09:08.160 --> 0:09:11.240 this dance every once in a while. Yeah, you know, 0:09:11.320 --> 0:09:15.120 the bigger mistakes are the more likely cooler heads are 0:09:15.160 --> 0:09:18.120 to prevail, so we never had that much concern about it. 0:09:19.240 --> 0:09:21.319 We obviously went to a lot of operational hoops to 0:09:21.360 --> 0:09:24.160 make sure in case there was a brief period of 0:09:24.200 --> 0:09:27.559 default that you know, we could you know, as a manager, 0:09:27.600 --> 0:09:29.800 we could manage that. But I don't think we had 0:09:29.840 --> 0:09:32.400 any real belief that we were going to have a 0:09:32.480 --> 0:09:33.480 default at this point. 0:09:34.440 --> 0:09:37.920 Are you thinking more than about the next FED meeting? 0:09:38.000 --> 0:09:39.800 Does that feel like the bigger question. 0:09:39.559 --> 0:09:39.960 Mark for you? 0:09:41.520 --> 0:09:43.320 Well, I think it is. I mean, I think, you know, 0:09:43.360 --> 0:09:45.800 the market consensus is certainly one hundred percent over the 0:09:45.840 --> 0:09:50.240 next two meetings for another hike, and certainly if we 0:09:50.280 --> 0:09:53.480 got a strong jobs number, and again like the Jolts number, 0:09:53.520 --> 0:09:56.160 these numbers can bounce around quite a bit, and the 0:09:56.200 --> 0:09:59.400 market generally overreacts to this short term news. So we 0:09:59.400 --> 0:10:02.400 could see short rates get pushed back up near their 0:10:02.480 --> 0:10:05.280 highs again if we get a strong jobs number, but 0:10:05.360 --> 0:10:07.200 certainly over the long term, you know, you look at 0:10:07.200 --> 0:10:10.200 some of the effects that the higher rates are having, 0:10:10.280 --> 0:10:13.440 whether it's what happened with banks in March or what's 0:10:13.480 --> 0:10:17.160 happening to the interest expense on US debt right now. 0:10:18.120 --> 0:10:22.480 Really moving up from nineteen percent of tax resort tax 0:10:22.520 --> 0:10:25.880 dollars to thirty three percent is now being used for 0:10:26.240 --> 0:10:29.600 interest expense. This is going to have a pretty big 0:10:30.080 --> 0:10:33.000 hit to the economy, and I think the FED is 0:10:33.080 --> 0:10:36.120 kind of dancing right on the edge here, not realizing 0:10:36.160 --> 0:10:40.160 that these you know, the monetary policy hits with longer delays. 0:10:41.040 --> 0:10:43.000 So lard giving that backdrop. Given where we are with 0:10:43.040 --> 0:10:46.640 a FED and I guess the debt ceiling, where are 0:10:46.640 --> 0:10:49.960 you seeing opportunities here at TCW? 0:10:51.559 --> 0:10:53.640 Well, I think I think that we think fixed income, 0:10:53.880 --> 0:10:56.960 you know, is setting up for probably close to double 0:10:57.000 --> 0:10:59.880 digit types of returns. I think that you you want 0:10:59.920 --> 0:11:01.760 to be in the intermediate part of the yield curve. 0:11:01.800 --> 0:11:03.439 The FED is going to have to ease at some 0:11:03.559 --> 0:11:06.600 point here. The banking system will continue to be under 0:11:06.600 --> 0:11:10.640 stressed as long as they keep increasing rates or holding 0:11:10.679 --> 0:11:14.800 them higher, and so eventually they're going to have to 0:11:14.800 --> 0:11:18.440 turn this around. The market thinks the fourth quarter of 0:11:18.480 --> 0:11:22.240 this year is when we start seeing easing, and that 0:11:22.360 --> 0:11:26.000 will also bring about lower interest rate volatility. I think 0:11:26.040 --> 0:11:28.880 you're very aware that interest rate volatility has been very high. 0:11:29.280 --> 0:11:33.240 Sectors like agency mortgages are pretty much as cheap as 0:11:33.280 --> 0:11:35.160 we've ever seen them because they've been hit by the 0:11:35.240 --> 0:11:39.520 high volatility. We would go all in right now pretty 0:11:39.600 --> 0:11:44.000 much on the agency mortgage basis. We think that that's probably, 0:11:44.360 --> 0:11:46.760 you know, one of the most liquid and cheapest sectors 0:11:46.800 --> 0:11:51.559 out there. Avoid sort of large scale exposure to corporates 0:11:52.040 --> 0:11:55.040 at this point because they could see some spread widening 0:11:55.120 --> 0:11:57.400 as the economy begins to deteriorate. 0:11:58.400 --> 0:12:00.920 What are you thinking about in terms of the biggest 0:12:01.120 --> 0:12:05.080 losers potentially heading into the second half of twenty twenty four, 0:12:05.120 --> 0:12:07.440 where are you saying we need to kind of get 0:12:07.480 --> 0:12:07.920 out of. 0:12:09.360 --> 0:12:13.240 Well, if we're looking out over the next year, certainly 0:12:13.280 --> 0:12:18.560 anything commercial real estate related, particularly around the office office 0:12:18.559 --> 0:12:21.559 sector is going to be under pressure. But it'll expand 0:12:21.600 --> 0:12:24.880 beyond that because, as we're very aware, small and mid 0:12:24.880 --> 0:12:27.880 sized banks are going to be cutting back lending over 0:12:27.960 --> 0:12:29.880 the next year, and they support a lot of not 0:12:29.920 --> 0:12:33.160 necessarily office properties, but they support a lot of smaller 0:12:33.200 --> 0:12:35.520 projects that can get rolled up into some of the 0:12:35.520 --> 0:12:40.640 conduit deals that might be residential, multifamily, they might be 0:12:41.360 --> 0:12:44.400 strip malls, things like that. I think there's going to 0:12:44.400 --> 0:12:49.760 be general carnage there. We're seeing appraisals coming down in 0:12:50.000 --> 0:12:55.480 LA on office properties, you know, fifty sixty percent from 0:12:55.600 --> 0:12:58.920 twenty nineteen levels, and we certainly think that, you know, 0:12:58.960 --> 0:13:03.920 you got to avoid office properties La San Francisco, Chicago, 0:13:04.559 --> 0:13:07.040 New York, and Houston. Those are sort of the big 0:13:07.080 --> 0:13:10.320 sectors that we're trying to avoid in our portfolio. And 0:13:10.360 --> 0:13:13.800 we think there could be individual securities that are tied 0:13:13.840 --> 0:13:17.720 to those office properties that could take very, very large losses. 0:13:17.760 --> 0:13:20.000 So that to us is a priority to be avoiding 0:13:20.040 --> 0:13:22.360 those pitfalls in the portfolio. 0:13:22.920 --> 0:13:26.000 How about emerging markets, lair, Is that something that's attractive 0:13:26.040 --> 0:13:27.040 to you guys at this point? 0:13:28.679 --> 0:13:32.000 Well, I would always refer to Pennyfolio, our team leader 0:13:32.000 --> 0:13:35.280 who's done it for forty plus years. They certainly think 0:13:35.280 --> 0:13:39.160 that they're seeing some opportunities there. As we look at 0:13:39.600 --> 0:13:41.439 the type of credit risk you have to take in 0:13:41.480 --> 0:13:46.000 emerging markets for a largely US based portfolio that we manage, 0:13:46.760 --> 0:13:49.840 we certainly see better value in things like agency mortgages. 0:13:49.880 --> 0:13:52.559 As I mentioned, you're not taking a lot of credit risk, 0:13:52.600 --> 0:13:55.240 at least as long as this debt deal passes. You're 0:13:55.320 --> 0:13:58.720 not taking a lot of credit risk, and you're getting 0:13:58.720 --> 0:14:02.960 spreads that are abu many of the investment grade emerging 0:14:03.000 --> 0:14:06.000 market countries. So we're going to stick with sort of 0:14:06.040 --> 0:14:10.319 what we think is cheapest and simplest in the portfolio here, 0:14:10.480 --> 0:14:12.920 and we'll benefit most from a FED tightening. And that's 0:14:12.960 --> 0:14:14.440 the agency mortgage basis. 0:14:14.640 --> 0:14:15.280 All right, good. 0:14:15.120 --> 0:14:18.319 Stuff, Laird Landman, thanks so much for joining us. Laird 0:14:18.400 --> 0:14:22.520 Landman is the generalist portfolio manager at TCW and that 0:14:22.680 --> 0:14:25.240 is a trust company of the West back in the days, 0:14:25.280 --> 0:14:28.680 big big asset management firm, huge inequities, huge in fixed income, 0:14:29.320 --> 0:14:32.520 based out in Los Angeles, a big account out there. 0:14:33.400 --> 0:14:36.520 You're listening to the tape kens our live program Bloomberg 0:14:36.600 --> 0:14:40.200 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:14:40.240 --> 0:14:43.480 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:14:43.520 --> 0:14:46.320 You can also listen live on Amazon Alexa from our 0:14:46.360 --> 0:14:50.720 flagship New York station, Just say Alexa, play Bloomberg eleven thirty. 0:14:52.120 --> 0:14:54.760 Let's check in with a professional here, Quincy Crosby. She 0:14:54.840 --> 0:14:58.600 is the chief global strategist for LPL Financial, that is 0:14:58.640 --> 0:15:02.040 the Nasdaq traded company. Lp LA is a ticker to 0:15:02.160 --> 0:15:05.640 load into your Bloomberg terminal there, Quincy, it looks like 0:15:05.760 --> 0:15:10.480 the uncertainty surrounding the debt deal to the extent there 0:15:10.520 --> 0:15:12.560 was some uncertainty for some people, some people more so 0:15:12.600 --> 0:15:14.920 than others. Looks like that's been kind of lifted here. 0:15:16.360 --> 0:15:18.280 Is that important to you or if it is kind 0:15:18.280 --> 0:15:20.320 of maybe, what else are you looking at now for 0:15:20.360 --> 0:15:22.840 the next kind of big, big catalyst for this market 0:15:22.880 --> 0:15:23.720 one way or the other? 0:15:25.120 --> 0:15:28.040 Well, yeah, absolutely, I mean the market does think that 0:15:28.040 --> 0:15:30.440 they're going to get the vote that it's been going 0:15:30.480 --> 0:15:32.680 to obviously go through the House and then to the Senate, 0:15:33.160 --> 0:15:36.600 and obviously they want to do it expeditiously. But the 0:15:36.640 --> 0:15:39.800 market is also focused on the set and you may 0:15:39.840 --> 0:15:44.800 have seen, you know, this morning, the probability, it's the futures. 0:15:44.880 --> 0:15:48.360 It's about sixty percent for rat high June fourteenth. That's 0:15:48.440 --> 0:15:53.800 client higher of following Loretta Mester's comments. Now she doesn't vote, 0:15:54.000 --> 0:15:57.880 you know, many many of the because don't vote, but 0:15:57.920 --> 0:16:02.280 nonetheless they are part of the discussion and she's highly regarded. 0:16:02.960 --> 0:16:06.320 The question is whether or not the said actually does 0:16:06.640 --> 0:16:09.200 come in with a raid hike, and the other question 0:16:09.360 --> 0:16:12.760 is if they do, well it be one or two 0:16:12.920 --> 0:16:16.280 that the market can expect. So this is something that 0:16:16.520 --> 0:16:20.280 the market is trying to piece together how the SAID 0:16:20.360 --> 0:16:23.840 will see the data coming in, particularly the payroll data 0:16:24.320 --> 0:16:28.520 and probably the ISM report next week on the price 0:16:28.600 --> 0:16:31.400 is paid in the service sector. So there's so much 0:16:31.440 --> 0:16:34.000 for the market to have to digest. But that really 0:16:34.440 --> 0:16:37.480 does matter for the market, and so does the debt ceiling, 0:16:37.560 --> 0:16:41.040 needless to say, and you know, the market has quite 0:16:41.080 --> 0:16:43.680 a bit of a wall of worry yet yet the 0:16:43.720 --> 0:16:47.080 market is up for the year, and that is the 0:16:47.120 --> 0:16:51.320 price action that says, hey, wall of worry, don't stop worrying. 0:16:51.720 --> 0:16:53.280 We're still going to prevail. 0:16:54.400 --> 0:16:56.880 Hey, Quincy, I wanted to reach out to you about this, 0:16:56.920 --> 0:16:59.080 so it's perfectly you're on our show today to ask 0:16:59.120 --> 0:17:02.240 you about how US potentially approaching the end of the 0:17:02.280 --> 0:17:06.480 FED rate hiking cycle, uh might lead to more weakness 0:17:06.520 --> 0:17:09.240 in the US dollar. And if that is something that 0:17:09.320 --> 0:17:13.840 you're anticipating and maybe changing some of your thinking and 0:17:13.880 --> 0:17:15.320 positioning around. 0:17:16.160 --> 0:17:19.560 You know, that's that's logical. You know, there's there's there's 0:17:19.600 --> 0:17:23.720 an entire story about the dollar, whether or not you know, 0:17:23.800 --> 0:17:27.080 king dollar is finished. And that's one thing, whether or 0:17:27.160 --> 0:17:29.640 not you know it is China trying to push us 0:17:30.040 --> 0:17:33.359 the dollar out of the reserve currency status or put 0:17:33.359 --> 0:17:35.280 the U on right up there with the US dollar. 0:17:35.320 --> 0:17:38.960 But the other one is predicated on on the economy. 0:17:39.000 --> 0:17:43.600 It's predicated on on whether or not we do stop 0:17:43.720 --> 0:17:48.440 raising rates and we lose the interest rate differential. That's normal, 0:17:48.800 --> 0:17:52.600 and you know, if the FED does finish when we 0:17:52.640 --> 0:17:55.480 do expect the FED to be finished, you know, if 0:17:55.480 --> 0:17:57.840 it's not in June, it'll be sometime in the summer 0:17:58.080 --> 0:18:01.920 that the dollar will ease further. And that does help 0:18:02.280 --> 0:18:06.000 global financial conditions. A weaker dollar does help. It helps 0:18:06.680 --> 0:18:09.520 many of the big tech names. There are global leaders 0:18:09.560 --> 0:18:13.520 that got a global footprint, and a software dollar does help. 0:18:13.840 --> 0:18:17.800 It also helps other companies, you know, the companies in 0:18:17.880 --> 0:18:19.959 the S and P five hundred that have nothing to 0:18:20.000 --> 0:18:23.280 do with technology, but that you know, sell overseas. But 0:18:23.359 --> 0:18:27.400 it also helps emerging markets in that we know from 0:18:27.440 --> 0:18:30.520 many of the reports coming out that are having trouble 0:18:30.600 --> 0:18:34.560 servicing their debt dollar denominated debt. The weaker dollar does help. 0:18:34.880 --> 0:18:38.919 It also helps commodities. So all of the all of 0:18:38.960 --> 0:18:43.399 that together should help, should help the overall economy and 0:18:43.520 --> 0:18:47.760 also help you know, the big companies and help help 0:18:47.800 --> 0:18:49.520 emerging markets to some degree. 0:18:49.840 --> 0:18:52.440 You mentioned some of the companies that have a big 0:18:52.480 --> 0:18:57.240 presence overseas being some of the bigger beneficiaries within specifically 0:18:57.280 --> 0:19:01.320 the consumer discretionary and staples sectors. Who do you think 0:19:01.359 --> 0:19:05.600 the biggest potential winners are because of that overseas presence? 0:19:06.800 --> 0:19:10.000 Well, you know, now, all all of the all the companies, 0:19:10.040 --> 0:19:13.200 I mean, you even have Walmart is active overseas. You 0:19:13.760 --> 0:19:18.840 have Procter and Gamble, the host raft of names that 0:19:19.280 --> 0:19:24.560 came out, the pharmaceuticals that sell overseas. All of those companies, 0:19:24.600 --> 0:19:29.240 coupled with the Microsoft, coupled with Apple, all of those 0:19:29.359 --> 0:19:33.560 are major beneficiaries of the weaker dollar. In fact, Nike 0:19:34.080 --> 0:19:36.879 I could go on and on because remember when the 0:19:37.000 --> 0:19:41.560 dollar was at its you know, full strength, all we 0:19:41.600 --> 0:19:43.760 would hear during the early season was how it was 0:19:43.880 --> 0:19:48.760 hindering their ability to do well. Now we're on the 0:19:48.880 --> 0:19:53.040 road towards the other extreme with the dollar easing, and 0:19:53.320 --> 0:19:56.000 it will ease. It's part of the it's part of 0:19:56.040 --> 0:20:01.440 the natural equilibrium in currency market that when your central bank, 0:20:01.560 --> 0:20:05.200 particularly when it's the FED, begins to tail off, your 0:20:05.240 --> 0:20:07.040 currency is going a week and you still have the 0:20:07.600 --> 0:20:11.960 euro climbing higher because the European central bank is most 0:20:12.119 --> 0:20:15.800 likely has a number of more rate hikes in the pipeline. 0:20:16.280 --> 0:20:19.240 So you think even a retailer like a Nike has 0:20:19.280 --> 0:20:21.760 a chance despite some of the bad earnings that we 0:20:21.880 --> 0:20:24.280 just got from them because of weakening dollar. 0:20:25.280 --> 0:20:28.560 Well, no, it won't change a dynamic that is, you know, 0:20:28.560 --> 0:20:32.239 if you don't have customers or the global economy is 0:20:32.280 --> 0:20:35.719 slowing dramatically. But what it does do it gives you 0:20:35.760 --> 0:20:40.919 an edge. It helps your competitiveness overseas. But you know, 0:20:41.000 --> 0:20:43.639 you still need to have demand, you still need to 0:20:43.680 --> 0:20:47.320 have top line revenue growth. But what a weaker dollar 0:20:47.680 --> 0:20:51.080 does do it helps? It gives you an edge. 0:20:51.640 --> 0:20:54.440 Hey, Quin, I'm not sure if I'm representative, but boy, 0:20:54.560 --> 0:20:56.480 up until a few months ago, I didn't even really 0:20:56.480 --> 0:20:59.200 think about this whole thing called AI, what the kids 0:20:59.240 --> 0:21:04.040 call AI artificial intelligence. But boy, every CEO on every 0:21:04.040 --> 0:21:06.320 earnest call talks about how AI is going to be 0:21:06.320 --> 0:21:08.880 the greatest thing for their business, and it doesn't matter 0:21:08.920 --> 0:21:12.119 what business they're in. But then you see Nvidia raised 0:21:12.160 --> 0:21:15.560 their guidance last week and just an explosion in market 0:21:15.600 --> 0:21:19.560 capitalization for that company. I don't think I've ever seen 0:21:19.600 --> 0:21:21.679 that before. I mean, what do you make of this 0:21:21.760 --> 0:21:25.560 whole AI thing? Is it something that you think about 0:21:25.840 --> 0:21:31.399 as you think about companies and investments. 0:21:29.720 --> 0:21:33.800 Well, yeah, absolutely. I mean, you know, I have returned 0:21:33.800 --> 0:21:36.280 things to Amazon, and the first time I did it, 0:21:36.280 --> 0:21:38.000 I didn't know how to do it, and the kids 0:21:38.000 --> 0:21:40.320 weren't around to tell me or to actually do it 0:21:40.359 --> 0:21:43.200 for me. So I called the number and the guy 0:21:43.280 --> 0:21:46.399 who answered wasn't real, but boy was he nice. I 0:21:46.440 --> 0:21:49.840 felt like calling up again, just so easy to talk 0:21:49.920 --> 0:21:54.479 to answering my questions. What the AI we have to 0:21:54.680 --> 0:21:58.280 you know, put it in the context of why are 0:21:58.359 --> 0:22:02.600 the companies, the large companies going into this area, why 0:22:02.600 --> 0:22:05.560 are they working with in the video, for example, Microsoft 0:22:06.040 --> 0:22:09.879 continuing to present it because they will be able to 0:22:09.960 --> 0:22:13.600 sell it to other companies so that they could cut costs. 0:22:13.840 --> 0:22:17.919 This is about cutting costs, and that is that is 0:22:18.040 --> 0:22:21.520 why it is important because it's the development which has 0:22:21.560 --> 0:22:27.160 already begun. But if it intensifies with the attention that 0:22:27.200 --> 0:22:31.520 we see that in the video has sort of unwound, 0:22:32.680 --> 0:22:35.359 it's going to be important and companies are going to 0:22:35.359 --> 0:22:38.960 be able to save money. Customer service is a you know, 0:22:39.119 --> 0:22:44.040 primary example of how much AI can help. Now, the 0:22:44.080 --> 0:22:48.399 thing is you need to have strong balance sheets, and 0:22:48.520 --> 0:22:52.159 companies that are such such as I'm not suggesting it, 0:22:52.640 --> 0:22:56.359 recommending it that such as a Microsoft to develop it 0:22:56.520 --> 0:23:00.199 and and fine tune it towards how they can all 0:23:00.240 --> 0:23:04.080 evan to other companies. And that's going to be extremely important. 0:23:04.400 --> 0:23:06.720 You know, you see it and Sada I say this 0:23:06.840 --> 0:23:10.720 on the internet. Even with Bloomberg write help with automation, 0:23:11.520 --> 0:23:15.320 that's going to intensify and it's going to become a 0:23:15.880 --> 0:23:20.000 much more tvalent part of the of the landscape, of 0:23:20.000 --> 0:23:23.240 the economic landscape. So, by the way, just having the 0:23:23.400 --> 0:23:26.560 video in that cohort to begin with this is before 0:23:26.600 --> 0:23:29.680 their earnings, was pretty amazing. Just you know, I've asked 0:23:29.720 --> 0:23:31.720 you said, what is it? How do you pronounce it? 0:23:32.160 --> 0:23:35.320 How does this fit in with you know, the megacat 0:23:35.440 --> 0:23:38.160 techniques they are part of now the cohort it. 0:23:38.080 --> 0:23:40.600