WEBVTT - Bloomberg Surveillance TV: January 27, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.640 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.160 Terminal and the Bloomberg Business app. We begin the sour 0:00:37.280 --> 0:00:40.760 stocks lower, much lower, global equality slammed as investor worries 0:00:40.800 --> 0:00:44.080 over China AI startup deep seek lead to questions about 0:00:44.200 --> 0:00:48.240 US tech leadership and valuations. Victoria Fernandez of Crossmark Global 0:00:48.240 --> 0:00:50.880 Investments with this to say, we expect high levels of 0:00:50.920 --> 0:00:53.959 volatility as markets try to find a broader footing than 0:00:53.960 --> 0:00:56.840 the highly concentrated environment of just a handful. 0:00:56.520 --> 0:00:57.280 Of tech names. 0:00:57.400 --> 0:00:59.680 There appears to be little room for error as we 0:00:59.800 --> 0:01:04.400 enter the new year with elevated sentiment levels and extremes invaluations. 0:01:04.680 --> 0:01:07.959 Victoria joins us now for more. Victoria, welcome to the program. You, 0:01:08.000 --> 0:01:10.240 of course wrote that before this big shakeout in the 0:01:10.280 --> 0:01:12.520 equity market, can you share with us your thoughts this 0:01:12.640 --> 0:01:15.520 morning as to whether you really believe this is a 0:01:15.560 --> 0:01:17.040 threat to US dominance. 0:01:18.760 --> 0:01:20.560 Yeah, I don't know if I would say threat to 0:01:20.720 --> 0:01:24.000 US dominance, Jonathan bet I do think it's a threat 0:01:24.040 --> 0:01:26.800 to the expectations that we had coming into this year 0:01:26.840 --> 0:01:29.480 that we were going to have this extremely strong growth 0:01:30.240 --> 0:01:32.399 for this year and that that was going to lead 0:01:32.440 --> 0:01:35.920 the stock market higher and lead bony olds higher. So 0:01:36.080 --> 0:01:38.520 there is a threat to that component, and what does 0:01:38.560 --> 0:01:41.800 that mean in regards to the FED. Obviously, the tech 0:01:41.840 --> 0:01:44.240 game can turn on a dime. We've seen it over 0:01:44.280 --> 0:01:47.039 the last twenty four hours. I do think that the 0:01:47.160 --> 0:01:50.720 US is probably still a little bit of head in 0:01:50.760 --> 0:01:53.840 this race, in this tech race, because of all of 0:01:53.880 --> 0:01:56.680 the investment that we have put in there. But it 0:01:56.800 --> 0:01:59.280 looks like the story is China is not as far 0:01:59.320 --> 0:02:01.720 back as what p people thought, They are much closer. 0:02:02.040 --> 0:02:04.520 So it leads to some questions, and obviously we see 0:02:04.520 --> 0:02:07.720 that response in the markets today, and it also leads 0:02:07.760 --> 0:02:10.760 to the concern that the US China trade wars and 0:02:10.800 --> 0:02:14.200 the restrictions on chips and things like that could get 0:02:14.320 --> 0:02:17.680 even more heated, which will bring more volatility to this market. 0:02:17.840 --> 0:02:20.320 So Victoria, let's go through the individual components of the 0:02:20.360 --> 0:02:22.880 market breakdown in equities, and you can share with us 0:02:23.040 --> 0:02:25.760 where you'd be constructive and where maybe you'd be hands off. 0:02:26.000 --> 0:02:28.320 So you've got the likes of Nvidia, the obvious place 0:02:28.360 --> 0:02:30.680 to start. That gets hammered, how many chips do we 0:02:30.720 --> 0:02:33.000 actually need to make this kind of progress? And then 0:02:33.040 --> 0:02:35.280 you've got the big spenders on those chips, the likes 0:02:35.280 --> 0:02:38.480 of Microsoft and Meta. They're getting some real competition, They've 0:02:38.520 --> 0:02:39.320 spent a lot of money. 0:02:39.360 --> 0:02:42.040 They're declining this morning. And then you've got the energy. 0:02:41.840 --> 0:02:44.799 Names as well, So the whole ecosystems being questioned. The 0:02:44.960 --> 0:02:48.240 utilities that ran up aggressively over the last twelve months 0:02:48.320 --> 0:02:50.760 are getting hit this morning too. What would you be 0:02:50.800 --> 0:02:53.640 looking to pick up the pieces with, Victoria, would you 0:02:53.720 --> 0:02:55.480 be willing to say, you know what, I'm going to 0:02:55.480 --> 0:02:56.680 stay away for the time big. 0:02:57.840 --> 0:02:58.080 Yeah. 0:02:58.120 --> 0:03:01.480 So, as you know at Crossmark actually been underweight a 0:03:01.520 --> 0:03:04.080 lot of these names versus the market over the past 0:03:04.320 --> 0:03:06.880 nine months to twelve months because we were taking a 0:03:06.880 --> 0:03:09.160 little bit off the table as things went along. So 0:03:09.240 --> 0:03:12.080 I think that's what you you know hopefully have done, 0:03:12.080 --> 0:03:14.400 so your position is a little bit less. I would 0:03:14.400 --> 0:03:17.000 not go in and pick names up right now at 0:03:17.040 --> 0:03:19.040 this point in time. I would let this shake out 0:03:19.160 --> 0:03:21.359 a little bit, unless you want to make a very 0:03:21.400 --> 0:03:23.960 tactical move and go in and be trading, you know, 0:03:24.120 --> 0:03:27.080 every few hours or every day in these names. If 0:03:27.080 --> 0:03:29.720 you're a long term investor, let this shake out a 0:03:29.720 --> 0:03:30.120 little bit. 0:03:30.160 --> 0:03:30.520 You're right. 0:03:30.600 --> 0:03:34.359 The whole ecosystem, from utilities to chips, to the support 0:03:34.480 --> 0:03:37.400 to the software, have all been rattled here. So I 0:03:37.440 --> 0:03:39.480 would actually look at some of the other areas of 0:03:39.520 --> 0:03:42.280 the market. I would look at some industrials. I would 0:03:42.280 --> 0:03:45.040 look at some financials and see if you could find 0:03:45.080 --> 0:03:47.920 some areas there to put your money to work while 0:03:47.920 --> 0:03:50.440 you let these elements kind of fade a little bit. 0:03:50.600 --> 0:03:52.840 How does an influence though, and there is still a 0:03:52.920 --> 0:03:55.480 lot to be learned in terms of how broadly applicable 0:03:55.560 --> 0:03:59.400 and how truly revolutionary this is. But Victoria, how much 0:03:59.400 --> 0:04:02.240 does it change thesis on the energy space in particular, 0:04:02.280 --> 0:04:05.760 at a time we're already Donald Trump wants to increase 0:04:05.800 --> 0:04:08.480 the US infrastructure and keep energy prices low. 0:04:09.800 --> 0:04:12.280 Yeah, so obviously the energy names that are being hit 0:04:12.320 --> 0:04:15.920 today there was such this huge expectation that demand would 0:04:15.960 --> 0:04:17.800 increase because of AI, that we were going to be 0:04:17.800 --> 0:04:20.560 building lots of data centers, we were going to need 0:04:20.600 --> 0:04:25.320 all of this power coming from these companies, and that 0:04:25.520 --> 0:04:28.359 tone has shifted when you look at the oil companies 0:04:28.360 --> 0:04:29.000 and you look at some. 0:04:29.000 --> 0:04:30.440 Of the other energy companies. 0:04:30.440 --> 0:04:33.680 Though we've been expecting that the price of oil is 0:04:33.720 --> 0:04:35.479 going to come down, we know that that's what this 0:04:35.520 --> 0:04:37.880 current administration wants to do and that was going to 0:04:37.920 --> 0:04:40.480 be difficult for some of these companies. So we were 0:04:40.480 --> 0:04:44.840 already shifting and looking at more of the midstream, the 0:04:44.839 --> 0:04:48.080 transportation components of the oil and gas and the energy 0:04:48.120 --> 0:04:52.320 companies versus maybe some of the upstream or utilities themselves. 0:04:52.400 --> 0:04:55.000 So I think you can make that shift and then 0:04:55.040 --> 0:04:58.799 if things change and the expectation starts to move higher again, 0:04:59.000 --> 0:05:00.479 you can add a little bit more or back to 0:05:00.520 --> 0:05:01.719 that part of your portfolio. 0:05:01.800 --> 0:05:03.960 There's another aspect of the trade this morning, and something 0:05:04.000 --> 0:05:07.560 Jim Bianco pointed to is simply algorithmic buying in the 0:05:07.600 --> 0:05:10.960 bond space. Does a change of you with the FEDSTNE 0:05:11.040 --> 0:05:13.840 this week, Given the fact that there was so much 0:05:13.960 --> 0:05:17.520 expectation around growth and even potentially a resurgence and inflation. 0:05:18.160 --> 0:05:19.839 Does this put a damper on that. 0:05:20.040 --> 0:05:23.800 Given that where the stock market goes so to the sentiment, 0:05:24.800 --> 0:05:25.400 I think it. 0:05:25.320 --> 0:05:27.680 Does a little bit, Lisa. I mean we've talked over 0:05:27.680 --> 0:05:30.239 the last few weeks about that rise in the longer 0:05:30.360 --> 0:05:32.760 end part of the curve. Then it really wasn't due 0:05:32.800 --> 0:05:35.880 to inflation expectations brape evens have held pretty steady. It 0:05:35.960 --> 0:05:38.960 was due to tertle gremium to the growth that we 0:05:39.000 --> 0:05:41.680 were looking for, meaning what I'm f saying three point 0:05:41.760 --> 0:05:44.880 three percent growth globally over the next couple of years. 0:05:45.040 --> 0:05:47.960 I have a feeling that'll probably come down if the 0:05:48.040 --> 0:05:50.920 AI story continues the way it is today. So if 0:05:51.000 --> 0:05:54.599 growth expectations are lower, that's why you're seeing that longer 0:05:54.720 --> 0:05:57.800 end part of the curve come down, and that steepness 0:05:57.839 --> 0:06:00.840 of the curve that has been a benefit for financials 0:06:00.839 --> 0:06:03.120 and for banks will start to go away a little bit. 0:06:03.160 --> 0:06:05.680 So it does shift the story, and I think it 0:06:05.839 --> 0:06:08.599 actually gives the Fed a little bit more room to 0:06:08.720 --> 0:06:11.680 take this pause because volatility. 0:06:11.279 --> 0:06:12.280 Is continuing to go up. 0:06:12.279 --> 0:06:14.360 Look at the VIX today, it's up what thirty percent 0:06:14.520 --> 0:06:17.800 just this morning, and it was a net speculative short 0:06:17.839 --> 0:06:21.320 position on VIX over the weekend, so I think we'll 0:06:21.320 --> 0:06:23.680 see a lot more volatility that's going to give the 0:06:23.680 --> 0:06:24.320 FED more. 0:06:24.160 --> 0:06:24.799 Time to pause. 0:06:25.000 --> 0:06:26.160 Victoria, you have to forgive me. 0:06:26.279 --> 0:06:28.240 My head's kind of spinning here because there are these 0:06:28.240 --> 0:06:30.520 competing narratives that are hard to get my head around. 0:06:30.600 --> 0:06:33.039 You've got the AI revolution that may or may not 0:06:33.200 --> 0:06:36.160 transpire in short order as a result of greater efficiency. 0:06:36.480 --> 0:06:39.360 You have a FED at the scrappling with growth expectations 0:06:39.400 --> 0:06:41.479 and just where we are currently in the economy. And 0:06:41.480 --> 0:06:44.360 then you have politics overlaying on that, which is part 0:06:44.400 --> 0:06:46.080 of the reason why people were saying that bonds were 0:06:46.080 --> 0:06:49.400 selling off, that the deficit is just increasing dramatically, and 0:06:49.440 --> 0:06:52.479 that at some point the bond vigilantes are back. Which 0:06:52.520 --> 0:06:55.040 story are you paying most attention to? What's your sort 0:06:55.040 --> 0:06:58.000 of load star at a time of so many cross currents. 0:06:58.920 --> 0:07:00.880 Yeah, you're right, I mean there's it's different stories you 0:07:00.880 --> 0:07:03.000 can look at, and really, depending on what you want 0:07:03.040 --> 0:07:05.960 your story to be, you can find the right evidence 0:07:06.000 --> 0:07:09.880 to back that up. For me, it's obviously the bond market, 0:07:10.000 --> 0:07:12.120 not that we say the bond market's always right, and 0:07:12.120 --> 0:07:14.280 the equity market isn't. But the bond market is giving 0:07:14.360 --> 0:07:16.320 us a lot of clues as to what's going on 0:07:17.080 --> 0:07:21.239 in regards to inflation expectations, in regards to growth expectations, 0:07:21.280 --> 0:07:25.080 in regards to debt issuance coming in. Obviously that's tied 0:07:25.120 --> 0:07:27.800 to the political element and what we're going to see there. 0:07:27.840 --> 0:07:29.360 What is issue it's going to look like. Is it 0:07:29.400 --> 0:07:30.800 going to be more bills? Is it going to be 0:07:30.880 --> 0:07:33.280 longer term coupons, which I think it probably will be, 0:07:33.640 --> 0:07:35.440 and what does that mean for interest expense. 0:07:35.480 --> 0:07:39.000 It's all tied together. But I'd be watching the bond market. 0:07:38.680 --> 0:07:41.800 To see where yields go and how those bond Vigilani's 0:07:41.920 --> 0:07:44.400 actually come in and how long they want to play 0:07:44.440 --> 0:07:46.880 this game. To me, that's what's going to drive the 0:07:46.920 --> 0:07:49.240 equity market obviously, along with earnings. 0:07:49.280 --> 0:07:51.240 No sign of the vigil lanecies this morning so far, 0:07:51.280 --> 0:07:54.000 at least, Victoria, I appreciate your time, Victoria Fernandez there 0:07:54.160 --> 0:08:06.840 of Crossmark Global Investments. Yeah, US tech leader's under pressure 0:08:06.840 --> 0:08:10.119 ahead of earnings as the Chinese AI startup Deep Seak's 0:08:10.200 --> 0:08:14.440 latest model boost cost effectiveness one running on less advanced chips. 0:08:14.720 --> 0:08:17.840 Angelo Zeno f Cfira joined US now for more, Angela, 0:08:17.920 --> 0:08:19.600 Welcome to the program. What a time to catch up 0:08:19.600 --> 0:08:21.600 with you, sir. So Meta comes out and says it's 0:08:21.600 --> 0:08:24.000 going to spend north as sixty billion dollars on campex 0:08:24.040 --> 0:08:26.000 this year, and then Deep Seak comes out and says, 0:08:26.240 --> 0:08:28.800 slow down, maybe you don't have to spend that much, Angela, 0:08:28.880 --> 0:08:31.000 Is this good news or bad news for the likes 0:08:31.000 --> 0:08:31.440 of Meta? 0:08:33.120 --> 0:08:33.680 Yeah, I mean. 0:08:33.600 --> 0:08:35.839 It's amazing what a couple of days will do, right, 0:08:36.720 --> 0:08:39.120 But yeah, I mean as far as kind of what 0:08:39.160 --> 0:08:42.679 this means specifically for Meta, you know, I don't think 0:08:42.679 --> 0:08:45.240 it necessarily changes the story for Meta very much. To 0:08:45.240 --> 0:08:47.160 be honest with you, I think, you know, the company 0:08:47.200 --> 0:08:49.400 kind of just you know, they announced their CAPEX plan 0:08:49.480 --> 0:08:51.720 on Friday, the sixty to sixty five billion. I think 0:08:51.760 --> 0:08:55.560 they're going to reiterate that when they report later this week, 0:08:55.880 --> 0:08:58.240 and you know, when we kind of think about some 0:08:58.280 --> 0:09:00.920 of the hyperscalers out there, continue to think that they're 0:09:01.000 --> 0:09:04.120 very well positioned, you know, given the free cash flow 0:09:04.200 --> 0:09:07.000 generation kind of their business models and their ability to 0:09:07.040 --> 0:09:10.079 continue to aggressively, you know, spend on some of these 0:09:10.120 --> 0:09:13.480 next generation tools out there. But you know, whether or not, 0:09:13.559 --> 0:09:15.959 you know, this allows them to potentially kind of lower 0:09:16.000 --> 0:09:19.240 their costs of modeling or what have you. Remains to 0:09:19.280 --> 0:09:20.960 be seen, but you know, I think at the end 0:09:20.960 --> 0:09:22.600 of the day, I don't think it changes the much. 0:09:23.040 --> 0:09:25.720 Doesn't change the story much specifically for Meta I think 0:09:25.760 --> 0:09:28.079 kind of some of these chip makers that might be 0:09:28.120 --> 0:09:29.160 a little bit of a different story. 0:09:29.200 --> 0:09:31.760 Though Angey might not change things for management. I wonder 0:09:31.760 --> 0:09:34.280 if it changes things for investors. Do you think they'll 0:09:34.280 --> 0:09:36.959 carry on supporting the amount of spending that this company 0:09:37.040 --> 0:09:37.400 is doing. 0:09:39.040 --> 0:09:41.160 I mean, listen, I think they're going to have to 0:09:41.200 --> 0:09:43.959 tell a really good story in terms of the monetization 0:09:44.080 --> 0:09:46.280 of AI when they do a report on Wednesday. I 0:09:46.280 --> 0:09:48.520 think the investors are going to kind of want, you know, 0:09:48.920 --> 0:09:52.200 more clarity on how they plan to monetize AI. I think, 0:09:52.760 --> 0:09:56.320 you know, the ROI potential is there for this company, 0:09:57.000 --> 0:10:00.000 maybe not as clear as for some of the cloud 0:10:00.280 --> 0:10:02.680 companies out there, and kind of the need to increase 0:10:02.720 --> 0:10:03.480 capacity and. 0:10:03.440 --> 0:10:03.920 What have you. 0:10:04.240 --> 0:10:08.120 But I think it's extremely important for metas on Wednesday 0:10:08.360 --> 0:10:11.040 to really kind of tell a clear cut story on 0:10:11.160 --> 0:10:14.080 how they monitor how they plan to monetize AI. You're 0:10:14.080 --> 0:10:16.600 going to have LAMA four point a zero ramp here 0:10:16.640 --> 0:10:19.160 in the first half of this year. You know, clearly 0:10:19.240 --> 0:10:21.880 Meta AI has seen kind of a significant increase, and 0:10:21.920 --> 0:10:24.280 it's kind of installed based, So there are definitely ways 0:10:24.320 --> 0:10:25.920 that you know, we think that they can kind of 0:10:26.160 --> 0:10:28.520 monetize AI here over the next couple of years. They've 0:10:28.559 --> 0:10:30.400 just got to make sure that they tell the story 0:10:30.840 --> 0:10:31.679 properly there for. 0:10:31.679 --> 0:10:34.480 Investors, Angelo, how worried are you about a late nineteen 0:10:34.559 --> 0:10:38.040 ninety nine moment or suddenly we have valuations on a 0:10:38.080 --> 0:10:41.320 story that actually is true that there is a revolution 0:10:41.520 --> 0:10:45.120 going on, but that we don't fully understand. 0:10:44.640 --> 0:10:47.360 What it is yet and who the winners actually will be. 0:10:47.559 --> 0:10:49.600 Do you think that there will be some more disruption 0:10:50.000 --> 0:10:52.240 that will be profound to the rally that we've seen 0:10:52.320 --> 0:10:53.520 so far, Big Tech. 0:10:54.280 --> 0:10:56.480 Listen, I think you'll continue to see a lot of 0:10:56.480 --> 0:10:58.840 noise out there. I think the game's going to continue 0:10:58.880 --> 0:11:01.520 to change as far as kind of the AI ecosystem 0:11:01.640 --> 0:11:04.640 is concerned, as far as where valuations are concerned. You know, 0:11:04.679 --> 0:11:07.720 what we do like about tech actually is, you know, 0:11:07.880 --> 0:11:10.920 the valuations are not extreme at all. We do think 0:11:10.960 --> 0:11:13.559 for the most part, Big Tech, you've got growth at 0:11:13.559 --> 0:11:16.600 a reasonable price among you know, kind of let's call 0:11:16.640 --> 0:11:20.320 it the mag five names that I cover within you know, 0:11:20.400 --> 0:11:23.080 tech and comm services, you know, not taking into account 0:11:23.280 --> 0:11:27.000 Amazon or Tessa within kind of that ecosystem, and you 0:11:27.080 --> 0:11:29.360 kind of, again you look at those valuations out there, 0:11:29.440 --> 0:11:32.000 You look at kind of that the secular driver specifically 0:11:32.080 --> 0:11:35.200 tied to the cloud and digital light spend, and that 0:11:35.280 --> 0:11:38.640 continues to remain intact. And I don't actually think kind 0:11:38.640 --> 0:11:42.239 of a lot of this monetization AI potential is embedded 0:11:42.280 --> 0:11:45.360 in a lot of these kind of stories for these names, 0:11:45.400 --> 0:11:48.880 So I'm not necessarily worried about the valuations here. Again, 0:11:48.920 --> 0:11:51.120 I think as far as the chip industry is concerned, 0:11:51.120 --> 0:11:53.440 what you're going to see start happening is you're going 0:11:53.520 --> 0:11:57.800 to potentially start seeing multiple compression on any sort of 0:11:57.880 --> 0:11:59.680 rallies here, because I think there are going to be 0:11:59.720 --> 0:12:03.720 some concerns about kind of the magnitude of spend as 0:12:03.760 --> 0:12:06.320 we go into twenty twenty six and twenty twenty seven, 0:12:06.559 --> 0:12:08.240 not necessarily twenty twenty five. 0:12:08.480 --> 0:12:10.640 All of that being said, Angelo there was a theory 0:12:10.679 --> 0:12:14.319 out there that essentially, if this efficiency story was correct 0:12:14.559 --> 0:12:17.600 with artificial intelligence, it would be the non tech names 0:12:17.800 --> 0:12:21.000 that would benefit that much more. Simply because they wouldn't 0:12:21.000 --> 0:12:24.040 have to be as heavily cost driven as they have 0:12:24.160 --> 0:12:27.439 been in the past. Does that concern you, Do you 0:12:27.440 --> 0:12:30.760 think that we're closer to that shift that threshold in 0:12:31.080 --> 0:12:33.719 who benefits from future advancements? 0:12:35.960 --> 0:12:38.760 Yeah, I mean, listen, get I think that the story 0:12:38.840 --> 0:12:41.120 is going to continue to change in the market here 0:12:41.520 --> 0:12:44.839 in terms of who potential winners are, you know, where 0:12:44.880 --> 0:12:47.320 you should kind of be investing and what have you. 0:12:47.920 --> 0:12:50.400 We continue to be, you know, very big believers kind 0:12:50.400 --> 0:12:53.040 of the way you invest kind of in AI long 0:12:53.120 --> 0:12:56.679 term is you know, the cloud companies we think are 0:12:56.720 --> 0:12:59.880 going to be the biggest beneficiaries out there, especially when 0:12:59.920 --> 0:13:01.640 you kind of look at some of those companies from 0:13:01.640 --> 0:13:04.520 a valuation perspective and the amount of capacity that you're 0:13:04.559 --> 0:13:06.760 going to need here, you know, over the long term. 0:13:06.880 --> 0:13:08.920 We also think they're going to be select semi names 0:13:08.960 --> 0:13:10.880 out there, despite some of the concern out in the 0:13:10.920 --> 0:13:13.360 market right now, that will continue to benefit in the 0:13:13.360 --> 0:13:15.840 long term. And I'm not necessarily talking you know, just 0:13:16.520 --> 0:13:20.559 you know, cloud oriented in nature, so you know, but 0:13:20.559 --> 0:13:22.360 but that said, I mean, they're going to continue to 0:13:22.360 --> 0:13:24.640 be narratives that change here over time. And I think 0:13:24.679 --> 0:13:28.360 investors I think if you're you know, whether you're an 0:13:28.400 --> 0:13:30.839 investor or a trader, I think is also going to 0:13:31.040 --> 0:13:33.600 dictate how you kind of navigate through this market as well. 0:13:33.920 --> 0:13:36.400 Do you think today is just the trader reaction not 0:13:36.480 --> 0:13:37.360 the investor reaction? 0:13:38.720 --> 0:13:41.240 Listen, I think there's a lot of kind of trading 0:13:41.240 --> 0:13:44.280 involved in this market right now. But you know, at 0:13:44.320 --> 0:13:47.640 the same time, there's you know, one thing the markets 0:13:47.679 --> 0:13:50.400 hate is uncertainty, right and when you kind of think 0:13:50.440 --> 0:13:53.520 about the uncertainty that's been created here from this deep 0:13:53.559 --> 0:13:56.240 seak scenario out there, I think you've got to sell 0:13:56.280 --> 0:13:59.559 off on some names or you know, compress some of 0:13:59.559 --> 0:14:02.800 those molts out where there the uncertainty is greatest. And 0:14:02.840 --> 0:14:04.720 I think specifically when you look at it in Vidia 0:14:04.760 --> 0:14:06.560 and then it's a name that we've liked here for 0:14:06.600 --> 0:14:09.000 a long time, Tom, I think you have to, you know, 0:14:09.080 --> 0:14:11.560 potentially put into a question, do you need to kind 0:14:11.559 --> 0:14:14.640 of continue to upgrade at the pace that we've been 0:14:14.720 --> 0:14:16.920 upgrading at for a name like in Vidia. I mean, 0:14:17.120 --> 0:14:20.320 these annual cadences now that Invidia is on, you know, 0:14:20.520 --> 0:14:22.440 is the is the is the pace and the amount 0:14:22.480 --> 0:14:24.600 of spend that we're you know, we've got on in 0:14:24.680 --> 0:14:27.560 video right now kind of warranted in nature, and I 0:14:27.560 --> 0:14:30.800 think time will tell on that. But that said, I mean, 0:14:30.960 --> 0:14:33.800 one of our biggest competitive advantages out there, our biggest 0:14:33.800 --> 0:14:36.840 competitive advantage is the fact that we have access to 0:14:36.920 --> 0:14:41.840 these leading edge GPUs and capabilities. So from that perspective, 0:14:42.400 --> 0:14:45.560 I do expect these hyperscalers to continue to aggressively invest. 0:14:45.760 --> 0:14:48.000 That's what Dan Ives is also talking about this morning 0:14:48.120 --> 0:14:51.280 in his constant Twitter post following all of this. Given 0:14:51.320 --> 0:14:53.560 your work on Meta, I'd love to get your thoughts 0:14:53.600 --> 0:14:56.000 on the fact that the Information has this story out 0:14:56.040 --> 0:14:58.240 saying that there's been a scramble and almost a panic 0:14:58.320 --> 0:15:01.600 at Meta Meta, with leaders saying that they're not sure 0:15:01.600 --> 0:15:06.120 if the next Meta flagship AI version could perform as 0:15:06.160 --> 0:15:08.920 well as Deep Seek. So can they even catch up 0:15:08.920 --> 0:15:11.360 to what Deep Seek is doing? How much is this 0:15:11.440 --> 0:15:15.520 earnings call analysts and investors going to demand answers on 0:15:15.600 --> 0:15:17.800 whether or not they were paying attention to the competition 0:15:17.960 --> 0:15:18.400 was doing. 0:15:19.680 --> 0:15:23.080 Yeah, I mean, listen again, I think the competitive landscape 0:15:23.160 --> 0:15:25.280 is definitely kind of an intensive out here in the 0:15:25.320 --> 0:15:27.000 last couple of days, and we do have to take 0:15:27.040 --> 0:15:29.160 into you know, we do have to take China seriously 0:15:29.200 --> 0:15:31.720 at this point in time, I think it creates a lot. 0:15:31.840 --> 0:15:33.560 There are definitely and there are definitely a number of 0:15:33.640 --> 0:15:36.280 storylines here that are created also, you know, from a 0:15:36.320 --> 0:15:39.920 privacy perspective, and other type of storylines out here as 0:15:39.960 --> 0:15:42.120 well that I think the US government is going to 0:15:42.160 --> 0:15:44.920 have to address. But as far as far as kind 0:15:44.920 --> 0:15:48.280 of the ability for kind of metas models now to 0:15:48.320 --> 0:15:52.080 be compared to the likes of you know, Deep Seek 0:15:52.120 --> 0:15:54.360 and others out there, that's just you're going to continue 0:15:54.400 --> 0:15:55.680 to you know, continue. 0:15:55.320 --> 0:15:55.720 To see that. 0:15:56.920 --> 0:16:00.080 So listen, I think you know that competitive landscape I 0:16:00.320 --> 0:16:03.040 think long term is good for the industry, but near 0:16:03.160 --> 0:16:05.600 term in nature I think gets a lot of investors 0:16:05.640 --> 0:16:05.920 out there. 0:16:05.960 --> 0:16:08.880 Word Angela, I appreciate your time this morning, sir, Thank you, 0:16:08.920 --> 0:16:09.640 Angelo Zena. 0:16:09.680 --> 0:16:20.520 There of CFIRA investors. 0:16:20.640 --> 0:16:24.720 Ratt orders China's AI startup Deep Seeg threatens US tech dominance, 0:16:24.840 --> 0:16:28.240 leading to questions over Max seven valuations. Seema shaff Prince 0:16:28.280 --> 0:16:30.800 bal Asset Management has been saying the following, Well, the 0:16:30.840 --> 0:16:33.480 secular trend upward of the Max seven should persist. 0:16:33.240 --> 0:16:33.960 Over the long run. 0:16:34.000 --> 0:16:37.920 They're expensive valuations coupled with elevated bond yields, imply that 0:16:38.000 --> 0:16:41.440 investors should pay increased attention to stocks trading at more 0:16:41.480 --> 0:16:45.080 attractive valuations. Sema, John, just now for more Sema, welcome 0:16:45.080 --> 0:16:46.840 to the program. Of course you wrote that before the 0:16:46.880 --> 0:16:49.280 news over the last week. How much does the news 0:16:49.280 --> 0:16:52.200 over the last week change your thesis for twenty twenty five? 0:16:53.960 --> 0:16:56.520 Hi, John, Well, look, as you said before, there are 0:16:56.560 --> 0:16:59.400 a lot of question marks investors. I think everyone needs 0:16:59.400 --> 0:17:02.600 some time to digest exactly how real this is, sort 0:17:02.600 --> 0:17:06.560 of the impacts, how it can be sustained. But you know, 0:17:06.600 --> 0:17:08.840 as we said, valuations are really extend. It's coming into 0:17:08.880 --> 0:17:11.040 this year, they were already going to be vulnerabilities. Now 0:17:11.040 --> 0:17:14.359 I don't think anyone quite saw this coming, but it 0:17:14.400 --> 0:17:19.320 really does accentuate that need for diversification looking at things 0:17:19.359 --> 0:17:22.720 with lesser evaluations. But you know, we came into twenty 0:17:22.760 --> 0:17:26.160 twenty five and I think across the board outlooks the 0:17:26.160 --> 0:17:29.800 theme was us exceptionalism. We're at the end of January, 0:17:29.880 --> 0:17:31.280 or not even at the end of January, and a 0:17:31.280 --> 0:17:33.480 lot of this has the potential of already being rewritten 0:17:33.480 --> 0:17:35.080 for twenty twenty five. So I think a lot of 0:17:35.200 --> 0:17:39.080 uncertainty adding to all the tariff uncertainty, inflation, uncertainty that 0:17:39.200 --> 0:17:41.919 investors were already dealing with. It only looks like a 0:17:42.040 --> 0:17:43.760 very tough year for investors. 0:17:43.359 --> 0:17:45.000 It seems, just to follow up this is a question 0:17:45.080 --> 0:17:47.440 the Lisa Race on a program a little bit earlier. 0:17:47.520 --> 0:17:50.000 Given what we know, and we know a fair bit 0:17:50.040 --> 0:17:52.560 over the last week, not enough, but a fair bit. 0:17:52.920 --> 0:17:55.960 Do you think it is sufficient to undermine US exceptionalism, 0:17:56.080 --> 0:17:57.360 US tech dominance. 0:17:59.280 --> 0:18:02.240 Well, I think what it does is it does really 0:18:02.280 --> 0:18:05.480 put bigger question marks around those valuations because it reminds 0:18:05.560 --> 0:18:08.800 investors that these companies are not completely immune. It's not 0:18:08.840 --> 0:18:11.320 like they're never going to have competitors. There will be competition. 0:18:11.720 --> 0:18:13.840 So there has to be question marks around how much 0:18:13.920 --> 0:18:17.000 is being spent on chips companies like in video, what 0:18:17.160 --> 0:18:19.280 is going on with their future? You know, can this 0:18:19.480 --> 0:18:22.440 really be sustained and this demand going to be kept? 0:18:22.560 --> 0:18:23.800 So I think there has to be question marks. I 0:18:23.840 --> 0:18:27.480 think there's a longer term story where US exceptionalism can persist, 0:18:27.480 --> 0:18:30.439 probably not to such a significant degree, just because of 0:18:30.520 --> 0:18:33.639 innovation the system. You know, we have you have an 0:18:33.640 --> 0:18:36.600 administration coming in now who is very much focused on 0:18:36.640 --> 0:18:39.639 that growth, ensuring that the US keeps it stage. So 0:18:39.760 --> 0:18:41.480 I think you can't answer that today. But I think 0:18:41.520 --> 0:18:43.240 investors have to wake up today and say, well, look, 0:18:43.880 --> 0:18:46.440