1
00:00:02,920 --> 00:00:07,240
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:09,960 --> 00:00:13,840
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

3
00:00:13,920 --> 00:00:16,639
Speaker 2: weekdays at ten am Eastern on Apple car Playing and

4
00:00:16,720 --> 00:00:19,640
Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand

5
00:00:19,680 --> 00:00:24,000
Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

6
00:00:24,920 --> 00:00:28,320
Speaker 3: All right, let's go to our good friends out in Omaha, Nebraska.

7
00:00:28,840 --> 00:00:32,080
Speaker 3: Berkshire Hathaway, Mister Warren Buffett. He got all the accolades

8
00:00:32,200 --> 00:00:34,839
Speaker 3: together in Omaha, like he does once a year, and

9
00:00:34,880 --> 00:00:37,480
Speaker 3: people look forward to this. It's like, you know, they're

10
00:00:37,600 --> 00:00:40,760
Speaker 3: super Bowl the investors in Berkshire Hathway.

11
00:00:40,760 --> 00:00:43,120
Speaker 4: Matthew Polozola. I believe he was there.

12
00:00:43,360 --> 00:00:45,560
Speaker 3: I was there and he is a senior ANALYSTY covers

13
00:00:45,560 --> 00:00:47,440
Speaker 3: the insurance companies for Bloomberg Intelligence.

14
00:00:47,840 --> 00:00:51,000
Speaker 4: Matthew, you went, tell us, give us a lay of

15
00:00:51,000 --> 00:00:51,360
Speaker 4: the land.

16
00:00:51,520 --> 00:00:53,760
Speaker 3: What's it like after in Omaha when these people get

17
00:00:53,760 --> 00:00:56,600
Speaker 3: together to talk to Warren Buffett about his investment philosophy.

18
00:00:56,720 --> 00:01:00,160
Speaker 5: Yeah, it was crazy this year. Actually it was packed.

19
00:01:00,120 --> 00:01:03,360
Speaker 4: So as in like a big arena arena.

20
00:01:03,480 --> 00:01:07,800
Speaker 5: Yeah, it's it's the Chi Health Center arena there. They

21
00:01:07,800 --> 00:01:11,600
Speaker 5: said they expected around forty thousand people this year. It

22
00:01:11,760 --> 00:01:15,360
Speaker 5: was in previous years where I've been there, the upper

23
00:01:15,400 --> 00:01:18,240
Speaker 5: bowl of the arena's kind of empty. It was every

24
00:01:18,280 --> 00:01:19,840
Speaker 5: seat in the house was taken this year.

25
00:01:20,520 --> 00:01:22,760
Speaker 6: What was the vibe without Charlie Munger? This is the

26
00:01:22,760 --> 00:01:24,880
Speaker 6: first time in many years. I mean he passed away

27
00:01:24,920 --> 00:01:28,319
Speaker 6: a few months ago. Warren Buffett wasn't up there alone.

28
00:01:28,360 --> 00:01:31,039
Speaker 6: He had two deputies with them, very important deputies if

29
00:01:31,040 --> 00:01:32,120
Speaker 6: you followed Berkshire Hathaway.

30
00:01:32,120 --> 00:01:33,920
Speaker 5: But what was the vibe like? Yeah, it was sad

31
00:01:35,080 --> 00:01:37,600
Speaker 5: for sure. And they usually they start with this movie, right,

32
00:01:37,640 --> 00:01:39,560
Speaker 5: and usually the movie's kind of funny and it's got

33
00:01:39,560 --> 00:01:41,800
Speaker 5: a bunch of comedic elements to it. It was it

34
00:01:41,840 --> 00:01:43,840
Speaker 5: was a whole tribute to to Charlie, and it was

35
00:01:43,920 --> 00:01:48,800
Speaker 5: it was, you know, touching. But also Buffett really talked

36
00:01:48,840 --> 00:01:51,080
Speaker 5: a lot about passing a lot of things on to

37
00:01:51,240 --> 00:01:54,600
Speaker 5: Greg Able and how you know, maybe the next CEO

38
00:01:54,760 --> 00:01:57,040
Speaker 5: can do this that. So it was, you know, just

39
00:01:57,080 --> 00:01:59,920
Speaker 5: a kind of passing of torch. Seemed like moment two.

40
00:02:00,120 --> 00:02:02,800
Speaker 5: So not just said because Munger wasn't there, but said

41
00:02:02,800 --> 00:02:07,360
Speaker 5: because Buffett really seemed to be, you know, moving on

42
00:02:07,760 --> 00:02:08,120
Speaker 5: all right.

43
00:02:08,680 --> 00:02:11,840
Speaker 3: He's got a quote unquote problem in that he has

44
00:02:11,840 --> 00:02:13,760
Speaker 3: one hundred and eighty nine billion dollars of cash on

45
00:02:13,880 --> 00:02:14,640
Speaker 3: the balance se do.

46
00:02:14,639 --> 00:02:15,280
Speaker 6: You have that problem too?

47
00:02:15,400 --> 00:02:16,400
Speaker 4: I don't have that problem.

48
00:02:16,480 --> 00:02:19,760
Speaker 3: I mean I do carry an impressive cash in the pocket,

49
00:02:19,840 --> 00:02:21,640
Speaker 3: that's true, not one hundred eight ali and large.

50
00:02:22,360 --> 00:02:25,560
Speaker 4: I mean, realistically, did how does he put that in?

51
00:02:25,639 --> 00:02:27,639
Speaker 3: I mean, I guess with t bills at four or

52
00:02:27,639 --> 00:02:29,560
Speaker 3: five percent, that's not a terrible thing anymore.

53
00:02:29,960 --> 00:02:30,880
Speaker 4: What's he saying about that?

54
00:02:31,080 --> 00:02:33,840
Speaker 5: So that took a lot of pressure off of holding

55
00:02:33,880 --> 00:02:38,160
Speaker 5: cash for them. They made like a billion in investment

56
00:02:38,160 --> 00:02:40,480
Speaker 5: income before and it went up to like six billion,

57
00:02:41,160 --> 00:02:44,840
Speaker 5: you know, just from holding cash. They talked about their

58
00:02:45,000 --> 00:02:48,720
Speaker 5: retained earnings. Just just having retained earnings and investing that

59
00:02:48,720 --> 00:02:50,960
Speaker 5: in treasury bills, you should have earnings growth from the company.

60
00:02:52,000 --> 00:02:55,200
Speaker 5: They really talked about it's really tough to move the needle.

61
00:02:55,400 --> 00:02:57,720
Speaker 5: It didn't seem like anything was happening, you know, in

62
00:02:57,800 --> 00:02:59,399
Speaker 5: terms of where to put a lot of money to work.

63
00:02:59,680 --> 00:03:02,280
Speaker 6: Is this it's time different in terms of Warren Buffett

64
00:03:02,320 --> 00:03:05,800
Speaker 6: sitting back and looking at businesses out there for Berkshire

65
00:03:05,800 --> 00:03:08,040
Speaker 6: half the way to buy. Have there been dry spells

66
00:03:08,080 --> 00:03:08,959
Speaker 6: like this in the past.

67
00:03:10,240 --> 00:03:12,280
Speaker 5: Yeah, I mean, look they bought Alligating a couple of

68
00:03:12,320 --> 00:03:14,960
Speaker 5: years ago for almost twelve billion dollars, so.

69
00:03:15,600 --> 00:03:17,760
Speaker 4: From my good buddy Jeff Kirby, Yeah.

70
00:03:17,520 --> 00:03:20,600
Speaker 5: And it wasn't you know, so that wasn't an insignificant deal.

71
00:03:20,639 --> 00:03:22,919
Speaker 5: So they did something. They've put about fifteen billion dollars

72
00:03:22,960 --> 00:03:26,079
Speaker 5: to work in Japan as well, so it's not either

73
00:03:26,160 --> 00:03:28,400
Speaker 5: doing nothing. It's just these things don't move the needle

74
00:03:28,440 --> 00:03:30,079
Speaker 5: that much for them when they have, you know, so

75
00:03:30,160 --> 00:03:31,240
Speaker 5: much capital to begin with.

76
00:03:31,440 --> 00:03:37,960
Speaker 3: You know, one of our listeners earlier today, Pingban said Boeing, Boy,

77
00:03:38,160 --> 00:03:40,560
Speaker 3: would that be a great deal in terms of size

78
00:03:40,560 --> 00:03:43,000
Speaker 3: it's one hundred and ten billion market cap and could

79
00:03:43,040 --> 00:03:45,480
Speaker 3: they use a steadying hand? I'm thinking Goldman Sachs great

80
00:03:45,480 --> 00:03:46,400
Speaker 3: financial crisis.

81
00:03:47,160 --> 00:03:48,520
Speaker 5: I don't know if they want to be in the

82
00:03:48,520 --> 00:03:51,440
Speaker 5: air They had done a couple of equity investments in

83
00:03:51,440 --> 00:03:54,160
Speaker 5: the airlines years ago and kind of gave up on that.

84
00:03:54,200 --> 00:03:56,320
Speaker 5: They also own Precision Cast Parts, which is a big

85
00:03:56,320 --> 00:03:58,840
Speaker 5: supplier to these companies, So I don't know if they

86
00:03:58,880 --> 00:04:01,280
Speaker 5: want to be that far in the value chain for airlines.

87
00:04:01,320 --> 00:04:04,080
Speaker 6: If you guys missed what Paul was talking about on Friday,

88
00:04:04,560 --> 00:04:07,480
Speaker 6: Thomas black Over, who's over at Bloomberg opinion. He's got

89
00:04:07,520 --> 00:04:09,360
Speaker 6: to call him out. That says, how crazy would it

90
00:04:09,400 --> 00:04:11,280
Speaker 6: be if Buffett bought Bowing? It was among the most

91
00:04:11,320 --> 00:04:14,840
Speaker 6: read on Friday. Everybody was talking about this story. Okay,

92
00:04:14,840 --> 00:04:17,200
Speaker 6: so if not Boeing, what are the types of businesses

93
00:04:18,080 --> 00:04:19,800
Speaker 6: that you think could be next? I mean, I know

94
00:04:19,839 --> 00:04:22,320
Speaker 6: you cover property and casualty insurance, so that's certainly like

95
00:04:22,360 --> 00:04:26,320
Speaker 6: where your mind is. But any other sees candies out there?

96
00:04:26,839 --> 00:04:29,160
Speaker 6: Any other apples out there. We'll talk about Apple more

97
00:04:29,160 --> 00:04:31,120
Speaker 6: in a second, But if.

98
00:04:31,000 --> 00:04:33,159
Speaker 5: There are, I think the next thing they're gonna buy

99
00:04:33,240 --> 00:04:35,479
Speaker 5: is gonna be something like we haven't heard of, right,

100
00:04:35,560 --> 00:04:38,000
Speaker 5: or it's gonna be you know, they own Lubrasol, a

101
00:04:38,080 --> 00:04:40,480
Speaker 5: chemical company, right, and they make They're like one of

102
00:04:40,520 --> 00:04:45,119
Speaker 5: the only companies that make these specific chemicals for ev

103
00:04:45,440 --> 00:04:47,600
Speaker 5: engines and things like that. You know, so I think

104
00:04:47,800 --> 00:04:51,960
Speaker 5: that's what they look for, you know. I just I

105
00:04:52,000 --> 00:04:54,280
Speaker 5: don't think Buffett. I don't think he has it in

106
00:04:54,360 --> 00:04:57,599
Speaker 5: him anymore. For the for the last kind of elephant hunt,

107
00:04:57,839 --> 00:04:59,720
Speaker 5: I don't know it could happen. I mean, they were

108
00:04:59,760 --> 00:05:04,760
Speaker 5: int just did in a data company a while ago.

109
00:05:04,880 --> 00:05:07,040
Speaker 5: It was kind of like a data broker they talked

110
00:05:07,080 --> 00:05:09,960
Speaker 5: about at the meaning being interested in a Canadian company.

111
00:05:09,960 --> 00:05:12,240
Speaker 5: That was kind of all they said. They also have

112
00:05:12,800 --> 00:05:16,360
Speaker 5: several billion dollars of an undisclosed position, which they've kept

113
00:05:16,400 --> 00:05:20,200
Speaker 5: confidential in their last thirteen f's. So there's stuff cooking.

114
00:05:20,839 --> 00:05:24,320
Speaker 5: It's tough. I you know, I thought they were going

115
00:05:24,360 --> 00:05:26,680
Speaker 5: to buy all of oxy. They kind of threw cold

116
00:05:26,720 --> 00:05:29,440
Speaker 5: water on that, so maybe something the energy space was

117
00:05:29,440 --> 00:05:32,560
Speaker 5: a big thing actually at the meeting. Okay, Buffett and

118
00:05:32,600 --> 00:05:35,719
Speaker 5: his annual letter had said, you know, more or less,

119
00:05:35,760 --> 00:05:38,400
Speaker 5: if we're going to get pinged for these wildfire losses,

120
00:05:38,440 --> 00:05:41,120
Speaker 5: we might not want to be in this business. But

121
00:05:41,160 --> 00:05:44,359
Speaker 5: they kind of counterbalanced that at the meeting, saying a

122
00:05:44,400 --> 00:05:47,240
Speaker 5: lot of you know, energy demand's going to be through

123
00:05:47,240 --> 00:05:50,240
Speaker 5: the roof. There's very few companies in the world with

124
00:05:50,320 --> 00:05:52,719
Speaker 5: the capital to invest in this. We're one of them.

125
00:05:52,800 --> 00:05:54,760
Speaker 5: So it was kind of a little bit of a

126
00:05:54,800 --> 00:05:56,080
Speaker 5: good cop, bad cop situation.

127
00:05:57,320 --> 00:06:00,479
Speaker 3: So on the Apple thing, Yeah, what I mean, I

128
00:06:00,480 --> 00:06:03,279
Speaker 3: was surprised to well, I don't know, yeah, I was surprised.

129
00:06:03,320 --> 00:06:05,400
Speaker 3: I mean, it seems like something should be a core

130
00:06:05,440 --> 00:06:07,760
Speaker 3: holding now, So how did he kind of phrase it all?

131
00:06:08,040 --> 00:06:10,159
Speaker 5: So Tim Cook was there and he was, you know,

132
00:06:10,279 --> 00:06:12,760
Speaker 5: up in the crowd like he had like a normalcy.

133
00:06:13,320 --> 00:06:16,320
Speaker 5: He had a front row sack. Okay, I just big sure,

134
00:06:16,520 --> 00:06:21,000
Speaker 5: definitely on the floor front row. Buffett more or less

135
00:06:21,080 --> 00:06:27,400
Speaker 5: said he was worried about taxes going up and that

136
00:06:27,600 --> 00:06:30,240
Speaker 5: was part of the impetus for selling the position. They

137
00:06:30,279 --> 00:06:34,880
Speaker 5: sold about thirteen percent of their Apple shares. The stock

138
00:06:34,960 --> 00:06:37,559
Speaker 5: was up a lot last year, and that was pretty

139
00:06:37,640 --> 00:06:39,719
Speaker 5: much what he said. He said, we think tax rates

140
00:06:39,800 --> 00:06:43,119
Speaker 5: might go up from here. We have big unrealized gains

141
00:06:43,120 --> 00:06:46,840
Speaker 5: and realized gains, so it seemed like that was the

142
00:06:46,839 --> 00:06:47,680
Speaker 5: push for it.

143
00:06:48,800 --> 00:06:52,479
Speaker 6: How do we look at why, like, how do we

144
00:06:52,520 --> 00:06:56,000
Speaker 6: look at Berkshire Hathaway selling out of a position, because

145
00:06:56,320 --> 00:06:59,120
Speaker 6: typically you'd sell out of a position for one of

146
00:06:59,160 --> 00:07:01,320
Speaker 6: two reasons, and you think you can use that cash

147
00:07:01,360 --> 00:07:04,080
Speaker 6: better elsewhere, or two you think that investment is not

148
00:07:04,120 --> 00:07:06,560
Speaker 6: going in the direction you want it to go in. Obviously,

149
00:07:06,560 --> 00:07:08,400
Speaker 6: he has no use for the cash to use it elsewhere.

150
00:07:08,720 --> 00:07:10,280
Speaker 6: So the only other way to read into this is

151
00:07:10,440 --> 00:07:12,240
Speaker 6: he doesn't think the investment is going where he wants

152
00:07:12,240 --> 00:07:12,560
Speaker 6: it to go.

153
00:07:13,400 --> 00:07:16,440
Speaker 5: Is that a fair assessment is possible? I mean he

154
00:07:16,480 --> 00:07:19,280
Speaker 5: had also said he expects Apple to be their largest

155
00:07:19,280 --> 00:07:21,640
Speaker 5: holding in a year from now, and when Greg takes over,

156
00:07:21,680 --> 00:07:24,040
Speaker 5: expects it to be a large holding for them. So,

157
00:07:24,840 --> 00:07:27,080
Speaker 5: I mean, I think the taxes, the tax i location

158
00:07:27,280 --> 00:07:30,400
Speaker 5: was it. I don't know. I mean, the valuation of

159
00:07:30,400 --> 00:07:32,440
Speaker 5: the stock is probably plays a role in it. You know,

160
00:07:32,600 --> 00:07:35,200
Speaker 5: just taking some off the table, you're definitely right with.

161
00:07:35,360 --> 00:07:38,240
Speaker 5: It's not like they needed, you know, fifteen billion dollars

162
00:07:38,280 --> 00:07:42,960
Speaker 5: more on the one eighty nine. But you know, besides

163
00:07:43,000 --> 00:07:44,360
Speaker 5: the taxes, that's really all had the points.

164
00:07:44,520 --> 00:07:45,960
Speaker 4: Does Berkshire buy backstock?

165
00:07:46,440 --> 00:07:48,560
Speaker 5: They do. They only started doing it a couple of

166
00:07:48,600 --> 00:07:50,640
Speaker 5: years ago. They bought back two point six billion of

167
00:07:50,680 --> 00:07:54,200
Speaker 5: stock this quarter. Buffett talks about a lot. They just

168
00:07:54,240 --> 00:07:56,920
Speaker 5: can't buy back a lot because of the float. There's

169
00:07:56,960 --> 00:07:58,840
Speaker 5: just not a lot for them to buy back. So

170
00:07:59,640 --> 00:08:02,480
Speaker 5: they buy back more, I think, But it's been about

171
00:08:02,600 --> 00:08:05,000
Speaker 5: you know, two three billion one two three, and I

172
00:08:05,040 --> 00:08:06,760
Speaker 5: don't see it going up from there.

173
00:08:06,960 --> 00:08:09,080
Speaker 4: How was Omaha in May?

174
00:08:09,720 --> 00:08:11,920
Speaker 5: It's fine. The weather was fine. It was it rained

175
00:08:11,920 --> 00:08:13,280
Speaker 5: a little bit. You have to line up at like

176
00:08:13,280 --> 00:08:16,000
Speaker 5: five o'clock in the morning to get in there, so uh,

177
00:08:16,320 --> 00:08:18,680
Speaker 5: that was tough, but it was It's a spectacle. You

178
00:08:18,720 --> 00:08:20,720
Speaker 5: should you should go on yeah, I mean the first

179
00:08:20,760 --> 00:08:22,920
Speaker 5: the day before you get so you have to be

180
00:08:22,920 --> 00:08:27,800
Speaker 5: a shareholder. They give me a a an analyst thing,

181
00:08:27,920 --> 00:08:31,600
Speaker 5: but they don't really you know that. You still wait online.

182
00:08:31,880 --> 00:08:35,800
Speaker 5: And the day before on Friday, all the companies are

183
00:08:35,800 --> 00:08:39,960
Speaker 5: in the the the arena and you can go, you

184
00:08:40,000 --> 00:08:43,000
Speaker 5: buy stuff, you can talk to some of the managements.

185
00:08:44,040 --> 00:08:47,360
Speaker 5: It's really great. And it's like I said, it was packed.

186
00:08:47,440 --> 00:08:49,960
Speaker 5: Everything was packed. Seas candy they said they sold four

187
00:08:50,000 --> 00:08:50,880
Speaker 5: tons of seasca.

188
00:08:51,280 --> 00:08:52,839
Speaker 6: I was just gonna end with you. Did you eat

189
00:08:52,840 --> 00:08:53,839
Speaker 6: any of the peanut Britle?

190
00:08:54,320 --> 00:08:54,640
Speaker 7: I did.

191
00:08:54,720 --> 00:08:57,400
Speaker 5: I don't like peanut brittle. But seas candy, by the way,

192
00:08:57,400 --> 00:09:02,040
Speaker 5: not sheep. SE's candy box a box and they were

193
00:09:02,120 --> 00:09:04,280
Speaker 5: just hand over fists and they've got it down to

194
00:09:04,320 --> 00:09:07,240
Speaker 5: a science where you step in the line, they give

195
00:09:07,280 --> 00:09:08,480
Speaker 5: you the candy, you walk.

196
00:09:08,280 --> 00:09:08,760
Speaker 2: On the thing.

197
00:09:09,120 --> 00:09:12,040
Speaker 5: The other thing was squish mellows, which I've talked about before.

198
00:09:12,280 --> 00:09:14,440
Speaker 5: My kids love these things. They bought when they bought

199
00:09:14,440 --> 00:09:17,960
Speaker 5: Alleghany Allegheny almost coming to call Jazzuares which makes toys, yep.

200
00:09:18,280 --> 00:09:21,120
Speaker 5: And these things are just again they can't sell them

201
00:09:21,160 --> 00:09:21,680
Speaker 5: fast enough.

202
00:09:21,600 --> 00:09:22,280
Speaker 4: All right, good stuff.

203
00:09:22,280 --> 00:09:26,080
Speaker 3: Mata Alizola, senior analys who covers the insurance business ostensibly,

204
00:09:26,320 --> 00:09:27,920
Speaker 3: and he might be our candy analyst.

205
00:09:28,080 --> 00:09:30,679
Speaker 4: He was after an Almah. Does it all for Bloomberg Intelligence.

206
00:09:31,200 --> 00:09:32,120
Speaker 4: We appreciate that.

207
00:09:33,640 --> 00:09:37,520
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

208
00:09:37,600 --> 00:09:41,120
Speaker 2: weekdays at ten am Eastern on applecar Play and Android

209
00:09:41,160 --> 00:09:43,920
Speaker 2: Otto with the Bloomberg Business app. You can also listen

210
00:09:44,040 --> 00:09:47,120
Speaker 2: live on Amazon Alexa from our flagship New York station

211
00:09:47,480 --> 00:09:52,040
Speaker 2: Just say Alexa playing Bloomberg eleven thirty.

212
00:09:51,600 --> 00:09:54,600
Speaker 6: Seeing stocks up for what could be a third week

213
00:09:54,640 --> 00:09:56,240
Speaker 6: in a row. We'll have to wait till Friday to

214
00:09:56,240 --> 00:09:58,319
Speaker 6: see about that. Let's see what Brian Crowez has to

215
00:09:58,320 --> 00:10:00,920
Speaker 6: say about all this, president of Sharf Invests. He's joining

216
00:10:01,000 --> 00:10:04,040
Speaker 6: us from beautiful Low Scottos, California. Brian, good to have

217
00:10:04,120 --> 00:10:07,520
Speaker 6: you with us this afternoon. I'm going through your thesis here,

218
00:10:07,880 --> 00:10:12,640
Speaker 6: and you argue that there is too much optimism when

219
00:10:12,640 --> 00:10:15,880
Speaker 6: it comes to tech out there right now? What's going

220
00:10:15,920 --> 00:10:18,000
Speaker 6: on here? Because you say that S and P. Five

221
00:10:18,040 --> 00:10:21,440
Speaker 6: hundred levels of concentration of tech go all the way

222
00:10:21,440 --> 00:10:23,360
Speaker 6: back to a concerning time the Internet bubble.

223
00:10:25,000 --> 00:10:28,040
Speaker 8: Yeah, thanks for having me as you know, tech has

224
00:10:28,120 --> 00:10:33,560
Speaker 8: been a very strong performer really for since the twenty

225
00:10:33,360 --> 00:10:36,319
Speaker 8: twenty two bottom. And you know, last year, for example,

226
00:10:36,360 --> 00:10:39,720
Speaker 8: tech was a fifty six percent despite the tech sector

227
00:10:39,760 --> 00:10:44,320
Speaker 8: really having pretty mediocre earnings growth in total. And so

228
00:10:44,360 --> 00:10:47,080
Speaker 8: if you look at the tech sector relative the SMP,

229
00:10:47,720 --> 00:10:50,280
Speaker 8: it's actually at highs above.

230
00:10:49,960 --> 00:10:52,440
Speaker 7: Where that was in nineteen ninety nine.

231
00:10:52,720 --> 00:10:55,600
Speaker 8: And as a percentage, the S and P five hundred

232
00:10:55,640 --> 00:10:58,360
Speaker 8: tech sectors thirty percent of the SMP, which is which

233
00:10:58,360 --> 00:10:58,880
Speaker 8: is higher than.

234
00:10:58,840 --> 00:11:00,000
Speaker 7: It was at the peak of the bubble.

235
00:11:00,520 --> 00:11:04,120
Speaker 8: But that doesn't even include Amazon, Google, Tesla or Meta.

236
00:11:04,160 --> 00:11:06,079
Speaker 8: If you add those in, it's now forty one percent.

237
00:11:06,440 --> 00:11:08,920
Speaker 8: To put it in perspective, you ten years ago, the

238
00:11:08,960 --> 00:11:12,880
Speaker 8: tech sector was about seventeen percent of the SMP. So really,

239
00:11:12,920 --> 00:11:14,880
Speaker 8: tech is a huge waiting now in the SMP.

240
00:11:15,960 --> 00:11:18,600
Speaker 3: Did they not earn their way into that type of

241
00:11:18,640 --> 00:11:20,199
Speaker 3: waiting here? I mean, you look at it in a

242
00:11:20,320 --> 00:11:22,599
Speaker 3: video for example, the bulls will tell you, boy, the

243
00:11:22,679 --> 00:11:24,520
Speaker 3: multiple today is cheaper than it was before the run

244
00:11:24,600 --> 00:11:26,960
Speaker 3: up because we've seen such a surgeon earnings. I guess

245
00:11:27,000 --> 00:11:29,319
Speaker 3: that's just a way of saying, you know, is AI

246
00:11:29,480 --> 00:11:30,280
Speaker 3: really a thing here?

247
00:11:31,760 --> 00:11:35,000
Speaker 8: I mean, certainly the tech sector has earned some of

248
00:11:35,040 --> 00:11:38,000
Speaker 8: its stripes by having better earnings growth over the last

249
00:11:38,000 --> 00:11:39,880
Speaker 8: ten years than the other sectors.

250
00:11:40,920 --> 00:11:44,800
Speaker 7: But you know, we'd point to nineteen ninety nine end

251
00:11:44,800 --> 00:11:46,440
Speaker 7: in ninety nine, there was a lot.

252
00:11:46,280 --> 00:11:51,480
Speaker 8: Of great companies Cisco, Intel, Dell, Sun, Micro, Qualcom, AOL.

253
00:11:51,520 --> 00:11:53,200
Speaker 7: These are all companies that are in the top ten.

254
00:11:53,480 --> 00:11:56,680
Speaker 8: And I, an investor, bought those companies despite what we

255
00:11:56,720 --> 00:11:59,640
Speaker 8: all know was the tremendous growth of the Internet, you

256
00:12:00,120 --> 00:12:02,880
Speaker 8: would have underperformed dramatically over the next twenty.

257
00:12:02,679 --> 00:12:03,640
Speaker 7: Years as an investor.

258
00:12:03,760 --> 00:12:07,400
Speaker 8: So, yeah, and Video's growth is great right now, tremendous company,

259
00:12:07,400 --> 00:12:08,160
Speaker 8: tremendous CEO.

260
00:12:08,760 --> 00:12:10,880
Speaker 7: But there's always competition to knock you off.

261
00:12:10,720 --> 00:12:15,040
Speaker 8: To the top, and usually those largest companies underperform over

262
00:12:15,080 --> 00:12:15,920
Speaker 8: the longer term.

263
00:12:15,960 --> 00:12:19,079
Speaker 6: So would you argue that there is actual competition coming

264
00:12:19,080 --> 00:12:21,400
Speaker 6: for in video right now because it does seem like

265
00:12:21,480 --> 00:12:24,480
Speaker 6: they have something, at least at the moment, that nobody

266
00:12:24,480 --> 00:12:25,120
Speaker 6: else can offer.

267
00:12:26,480 --> 00:12:29,000
Speaker 8: Oh, there's one hundred percent competition coming. I mean, we're

268
00:12:29,000 --> 00:12:32,680
Speaker 8: based here in Silicon Valley. You know, the talk around

269
00:12:32,720 --> 00:12:36,080
Speaker 8: the water cooler and barbecues is one hundred percent. I

270
00:12:36,120 --> 00:12:41,640
Speaker 8: know people that are working at Microsoft and Google and

271
00:12:41,640 --> 00:12:44,680
Speaker 8: they're all working to find a cheaper chip. I mean,

272
00:12:44,960 --> 00:12:47,520
Speaker 8: the one thing tech companies don't like to do is

273
00:12:47,600 --> 00:12:49,200
Speaker 8: people holding to other tech companies that.

274
00:12:49,200 --> 00:12:51,560
Speaker 7: They can avoid it. Now, that's not to say they're

275
00:12:51,559 --> 00:12:52,559
Speaker 7: going to come up with something in.

276
00:12:52,520 --> 00:12:55,920
Speaker 8: The next year or two or even three, but eventually,

277
00:12:56,880 --> 00:13:00,240
Speaker 8: you know there's going to be competition, and you know,

278
00:13:00,280 --> 00:13:02,280
Speaker 8: competition is very fierce in tech.

279
00:13:03,040 --> 00:13:05,520
Speaker 3: Hey, Brian, if if tech is not going to lead

280
00:13:05,559 --> 00:13:08,840
Speaker 3: this market, what will Because there's a generation of investors

281
00:13:08,840 --> 00:13:12,440
Speaker 3: out there that know nothing but tech leading this market higher.

282
00:13:13,600 --> 00:13:16,640
Speaker 8: Yeah, it's kind of kind of amazing. You know, it's

283
00:13:16,679 --> 00:13:19,640
Speaker 8: not just tech, it's growth in general. You know, we

284
00:13:19,640 --> 00:13:22,440
Speaker 8: look at we looked at interest rates, and if you

285
00:13:22,480 --> 00:13:26,640
Speaker 8: look when rates are below three percent, growth outperforms. When

286
00:13:26,720 --> 00:13:30,240
Speaker 8: rates are above four percent, value outperforms. And actually, if

287
00:13:30,280 --> 00:13:33,000
Speaker 8: you look back to nineteen sixty, the average of the

288
00:13:33,040 --> 00:13:37,000
Speaker 8: ten year treasury has been about six percent, and today

289
00:13:37,040 --> 00:13:39,120
Speaker 8: it's you know, around four and a half. All of

290
00:13:39,160 --> 00:13:42,439
Speaker 8: the instances below three though, have occurred since the GFC,

291
00:13:43,080 --> 00:13:45,480
Speaker 8: and so a lot of younger investors only know a

292
00:13:45,520 --> 00:13:49,960
Speaker 8: time when when tech and growth outperform. However, if we're

293
00:13:49,960 --> 00:13:52,199
Speaker 8: going to higher for longer environment. You know, we think

294
00:13:52,240 --> 00:13:55,480
Speaker 8: it's a good good environment for value and if you

295
00:13:55,480 --> 00:13:58,280
Speaker 8: look at growth versus value right now, it's about a

296
00:13:58,360 --> 00:14:01,600
Speaker 8: ninety percent premium, which is well above you know, what

297
00:14:01,760 --> 00:14:04,760
Speaker 8: you usually pay. So we think it's potentially a good

298
00:14:04,760 --> 00:14:06,080
Speaker 8: time for value stocks.

299
00:14:06,160 --> 00:14:08,040
Speaker 6: What are some of those value stocks that you guys

300
00:14:08,080 --> 00:14:09,000
Speaker 6: are going after right now?

301
00:14:10,360 --> 00:14:13,920
Speaker 8: Yeah, I mean, you know, an example of a value

302
00:14:13,960 --> 00:14:16,640
Speaker 8: stock that's kind of really beaten up people don't like

303
00:14:16,720 --> 00:14:21,440
Speaker 8: right now is Comcast. It trades at around ten times earnings. Obviously,

304
00:14:21,440 --> 00:14:26,440
Speaker 8: there's there's some worries around not only cable sub subscriber disconnects,

305
00:14:26,440 --> 00:14:29,320
Speaker 8: but also the broadband has been weak coming out of

306
00:14:29,360 --> 00:14:32,920
Speaker 8: the pandemic. That a very strong pandemic, but broadband growth

307
00:14:33,000 --> 00:14:38,280
Speaker 8: has gone in reverse recently because of you fixed wireless competition.

308
00:14:38,440 --> 00:14:41,800
Speaker 8: But we think that longer term, this is a you know,

309
00:14:41,960 --> 00:14:46,200
Speaker 8: really great asset. Actually, interesting enough, over the last ten years,

310
00:14:46,560 --> 00:14:48,960
Speaker 8: Comcast has grown earnings at the same rate as Apple,

311
00:14:49,720 --> 00:14:52,400
Speaker 8: and yet obviously trades at a huge discount.

312
00:14:52,440 --> 00:14:54,800
Speaker 7: So, you know, we think this is one of those names.

313
00:14:54,440 --> 00:14:57,360
Speaker 8: That investors are ignoring, but that should be a pretty

314
00:14:57,400 --> 00:15:01,000
Speaker 8: high quality, good company over the next years, and a.

315
00:15:00,880 --> 00:15:01,960
Speaker 4: Great management team.

316
00:15:02,400 --> 00:15:04,720
Speaker 3: I could say, you over from experience, talk to us

317
00:15:04,720 --> 00:15:07,240
Speaker 3: about dividends here, Brian, how important are dividends to you

318
00:15:07,240 --> 00:15:09,680
Speaker 3: in a market where ten year treasures four and a

319
00:15:09,720 --> 00:15:10,200
Speaker 3: half percent.

320
00:15:11,640 --> 00:15:15,640
Speaker 8: Yeah, dividends are are one of the unsung heroes of investing.

321
00:15:15,720 --> 00:15:18,480
Speaker 8: I mean, if you look over the long term, dividends

322
00:15:18,520 --> 00:15:22,760
Speaker 8: are a significant contributor to to investors' returns.

323
00:15:23,000 --> 00:15:25,160
Speaker 7: It's not something we absolutely look at.

324
00:15:25,280 --> 00:15:27,080
Speaker 8: In other words, we're not saying, oh, we only want

325
00:15:27,080 --> 00:15:30,640
Speaker 8: to buy a company with xyz dividend, but it fits

326
00:15:30,640 --> 00:15:35,480
Speaker 8: into capital allocation strategy. And capital allocation is you know,

327
00:15:35,800 --> 00:15:39,040
Speaker 8: the holy grail for investors. Companies that do bad capital

328
00:15:39,080 --> 00:15:43,000
Speaker 8: allocation can really ruin, you know, the future returns for investors.

329
00:15:43,440 --> 00:15:45,280
Speaker 7: You know, Berkshire Hathaway just had.

330
00:15:45,160 --> 00:15:48,480
Speaker 8: Its annual meeting, and you know, one of the things

331
00:15:48,480 --> 00:15:51,480
Speaker 8: that's made them one of the best reforming stocks over

332
00:15:51,480 --> 00:15:54,160
Speaker 8: the last you know, fifty years, is is.

333
00:15:54,120 --> 00:15:57,040
Speaker 7: That Warren Buffet's been a tremendous steward of capital.

334
00:15:57,120 --> 00:16:00,560
Speaker 8: Even though they don't necessarily pay out large dividends, you

335
00:16:00,600 --> 00:16:02,320
Speaker 8: can trust that the management is going to do the

336
00:16:02,400 --> 00:16:04,320
Speaker 8: right thing with the capital.

337
00:16:04,400 --> 00:16:05,280
Speaker 4: Well, that's interesting.

338
00:16:05,320 --> 00:16:07,680
Speaker 3: We were just having a conversation with our insurance analyst

339
00:16:07,760 --> 00:16:10,360
Speaker 3: here earlier. One hundred and eighty nine billion dollars in cash,

340
00:16:10,800 --> 00:16:12,280
Speaker 3: By and large, that doesn't sound.

341
00:16:12,120 --> 00:16:14,160
Speaker 4: Like being a good steward of capital.

342
00:16:14,400 --> 00:16:17,120
Speaker 3: Although the interest rates today make it seem a little

343
00:16:17,120 --> 00:16:20,280
Speaker 3: bit better. But shouldn't it be returning that to shareholders?

344
00:16:21,120 --> 00:16:24,040
Speaker 8: So I think a couple of things from the Berkshire

345
00:16:24,320 --> 00:16:28,240
Speaker 8: meeting takeaway is remember, first of all, remember they're an

346
00:16:28,240 --> 00:16:31,160
Speaker 8: insurance company, so this is they have a lot of float,

347
00:16:32,200 --> 00:16:37,440
Speaker 8: and so they've always chosen to be conservative, although this

348
00:16:37,480 --> 00:16:39,680
Speaker 8: is this is sounding likely going to be more conservative.

349
00:16:39,720 --> 00:16:41,880
Speaker 8: They had mentioned one hundred and eighty nine billion in

350
00:16:42,000 --> 00:16:44,200
Speaker 8: cash going to potentially two hundred billion, So you bring

351
00:16:44,240 --> 00:16:46,960
Speaker 8: a good point, shouldn't they just be returning some of that? Well,

352
00:16:46,960 --> 00:16:49,240
Speaker 8: first of all, some of that is float. Second of all,

353
00:16:49,240 --> 00:16:52,120
Speaker 8: they're earning five percent plus on that capital right now.

354
00:16:52,200 --> 00:16:54,680
Speaker 8: So what Buffett's really saying is, hey, I'm not seeing

355
00:16:54,680 --> 00:16:57,840
Speaker 8: a lot of great opportunities better than that five percent.

356
00:16:57,880 --> 00:17:00,280
Speaker 8: I can get it's risk free. I don't have to

357
00:17:00,360 --> 00:17:04,159
Speaker 8: the risks. And he also talked about the ability to

358
00:17:04,320 --> 00:17:07,199
Speaker 8: really step in in a crisis, and so there's not

359
00:17:07,240 --> 00:17:09,320
Speaker 8: only the five percent he's returning. But there's also the

360
00:17:09,400 --> 00:17:13,199
Speaker 8: option value, and no one's better than Berkshire Hathaway in

361
00:17:13,280 --> 00:17:17,119
Speaker 8: terms of when events happen getting really good deals.

362
00:17:17,119 --> 00:17:18,760
Speaker 7: So we look at it as you're.

363
00:17:18,600 --> 00:17:21,600
Speaker 8: Getting five percent today with no risk, and you've got

364
00:17:21,640 --> 00:17:24,320
Speaker 8: the optionality if something were to happen that they could

365
00:17:24,320 --> 00:17:25,600
Speaker 8: really take advantage of that for sure.

366
00:17:25,640 --> 00:17:28,360
Speaker 6: Holdstill one hundred and nine billion dollars. That's a that's

367
00:17:28,359 --> 00:17:32,000
Speaker 6: a pretty big pile of cash. Hey, I know we

368
00:17:32,400 --> 00:17:33,959
Speaker 6: you talked a little bit about tech, but there is

369
00:17:34,000 --> 00:17:37,800
Speaker 6: one tech company out there that you are bullish on.

370
00:17:38,760 --> 00:17:42,080
Speaker 6: You argue that Oracle is a sneaky AI play. Why

371
00:17:42,080 --> 00:17:43,080
Speaker 6: are you bullish on Oracle?

372
00:17:44,400 --> 00:17:44,600
Speaker 9: Yeah?

373
00:17:44,600 --> 00:17:49,520
Speaker 8: I mean Oracle is not cheap anymore. You know, it's

374
00:17:49,560 --> 00:17:54,200
Speaker 8: still around an SMP multiple. But the thing that makes

375
00:17:54,200 --> 00:17:59,679
Speaker 8: it interesting is they have really done a lot of

376
00:18:00,000 --> 00:18:02,400
Speaker 8: behind the scenes in the cloud, and so people don't

377
00:18:02,400 --> 00:18:04,360
Speaker 8: really think of them as a cloud player. But now

378
00:18:04,359 --> 00:18:06,840
Speaker 8: they're with the purchase of Cerner, they're getting really big

379
00:18:07,240 --> 00:18:07,960
Speaker 8: in healthcare.

380
00:18:08,680 --> 00:18:11,000
Speaker 7: You've finally seen their cloud revenue really growing.

381
00:18:11,040 --> 00:18:13,480
Speaker 8: I think the last quarter was up twenty six percent

382
00:18:13,560 --> 00:18:16,240
Speaker 8: or so, and the cloud is starting to become a

383
00:18:16,320 --> 00:18:20,680
Speaker 8: large percentage of their total total earnings. You know, management

384
00:18:20,720 --> 00:18:23,240
Speaker 8: on the last call was really giddy in terms of

385
00:18:23,280 --> 00:18:26,120
Speaker 8: how much money they were able to spend and basically

386
00:18:26,160 --> 00:18:29,240
Speaker 8: said they just didn't have enough capacity for all of demand.

387
00:18:29,320 --> 00:18:31,359
Speaker 8: So we think it's it's sort of an under the

388
00:18:31,440 --> 00:18:34,919
Speaker 8: radar cloud play that has a lot more room to

389
00:18:34,960 --> 00:18:38,399
Speaker 8: catch up relative to some of the other big players.

390
00:18:38,760 --> 00:18:40,439
Speaker 3: All right, Brian, thanks so much for joining us there.

391
00:18:40,440 --> 00:18:43,560
Speaker 3: I really appreciate it. Brian Krawez. He is the president

392
00:18:44,080 --> 00:18:50,240
Speaker 3: of sharf In Investments, joining us from Los Gatos, California.

393
00:18:50,560 --> 00:18:54,400
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

394
00:18:54,520 --> 00:18:57,159
Speaker 2: weekdays at ten am Eastern on Apple card Playing and

395
00:18:57,320 --> 00:18:59,840
Speaker 2: broud Otto with the Bloomberg Business app. Listening on to

396
00:19:00,080 --> 00:19:03,119
Speaker 2: and wherever you get your podcasts, or watch us live

397
00:19:03,240 --> 00:19:04,600
Speaker 2: on YouTube.

398
00:19:05,280 --> 00:19:09,000
Speaker 3: It's called litigation risk, regulatory risk for a big tech

399
00:19:09,040 --> 00:19:11,560
Speaker 3: It's always been out there, but we're going to get

400
00:19:11,560 --> 00:19:13,520
Speaker 3: some high profile cases coming very soon that's going to

401
00:19:13,560 --> 00:19:17,000
Speaker 3: be really important for a lot of companies, including Google.

402
00:19:17,080 --> 00:19:20,480
Speaker 3: Jennifer rejoins iss. She's our senior litigation analys at Bloomberg Intelligence.

403
00:19:20,480 --> 00:19:22,679
Speaker 3: She joins us here in our Bloomberg Interactive Brookers Studio.

404
00:19:23,240 --> 00:19:28,239
Speaker 3: So Google antitrust trial about to begin. Can you give

405
00:19:28,320 --> 00:19:30,760
Speaker 3: us the background what's happening here with Google?

406
00:19:31,280 --> 00:19:33,320
Speaker 10: Well, the one that's about to begin is an ad

407
00:19:33,359 --> 00:19:34,919
Speaker 10: tech suit, but the one that you just finished up

408
00:19:34,960 --> 00:19:36,920
Speaker 10: is the search suit. Very good, Okay, So I think

409
00:19:37,000 --> 00:19:37,320
Speaker 10: it is.

410
00:19:37,520 --> 00:19:38,879
Speaker 6: To be fair, it's kind of hard to keep all

411
00:19:38,880 --> 00:19:39,200
Speaker 6: these things.

412
00:19:39,400 --> 00:19:42,520
Speaker 10: It's so hard to head a straight right. And we

413
00:19:42,560 --> 00:19:46,040
Speaker 10: have many others too, right, Google has other suits beyond that.

414
00:19:46,359 --> 00:19:48,560
Speaker 10: But the thing is, I think what the ruling, the

415
00:19:48,560 --> 00:19:50,520
Speaker 10: first ruling that's going to come out will probably be

416
00:19:50,600 --> 00:19:53,120
Speaker 10: this search suit, right, because they had the closing arguments.

417
00:19:53,320 --> 00:19:55,760
Speaker 10: The trial actually ended about six months ago. The judge

418
00:19:55,800 --> 00:19:57,760
Speaker 10: put a lot of space in between, I think to

419
00:19:57,880 --> 00:20:01,000
Speaker 10: really understand the facts and get through all the evidence.

420
00:20:01,760 --> 00:20:03,919
Speaker 10: And I think he'll be deciding in a few months.

421
00:20:03,960 --> 00:20:07,880
Speaker 10: And it's a really big deal because Google pays over

422
00:20:07,920 --> 00:20:10,760
Speaker 10: twenty billion dollars a year to other companies to set

423
00:20:10,800 --> 00:20:14,440
Speaker 10: Google as the default search engine. They pay Apple, they

424
00:20:14,440 --> 00:20:17,520
Speaker 10: pay Mozilla, they pay the OEMs that make the Android phones.

425
00:20:17,960 --> 00:20:20,840
Speaker 10: And it may be that if the judge decides those

426
00:20:20,880 --> 00:20:24,119
Speaker 10: agreements are exclusionary and that they're anti competitive, that they

427
00:20:24,119 --> 00:20:28,240
Speaker 10: arise to the level of exclusionary anti competitive conduct. He says,

428
00:20:28,359 --> 00:20:31,280
Speaker 10: you can't have these you can't enter these agreements anymore.

429
00:20:31,560 --> 00:20:33,679
Speaker 10: And the ones that are hurt are really not Google

430
00:20:33,720 --> 00:20:35,680
Speaker 10: because we all know Google Search. You know, we're all

431
00:20:35,680 --> 00:20:37,040
Speaker 10: going to keep using Google Search.

432
00:20:37,119 --> 00:20:40,240
Speaker 6: Yeah, it's a verb, yes, exactly, it's the Kleenex.

433
00:20:40,359 --> 00:20:42,720
Speaker 10: People aren't jumping to switch over to Bing, at least

434
00:20:42,800 --> 00:20:44,439
Speaker 10: not yet. Maybe they will with.

435
00:20:44,560 --> 00:20:45,800
Speaker 6: Je does he bing?

436
00:20:46,119 --> 00:20:48,640
Speaker 4: Yeah, because he does. He's a big chap GPT guy.

437
00:20:48,720 --> 00:20:51,440
Speaker 6: Oh yeah, in the Microsoft he always and that could change.

438
00:20:51,240 --> 00:20:53,560
Speaker 10: Things, you know, the market could change. So you know,

439
00:20:53,640 --> 00:20:55,840
Speaker 10: that's kind of out there too. Although this judge is

440
00:20:55,880 --> 00:20:58,280
Speaker 10: looking backward in time, not really looking forward. They're looking

441
00:20:58,320 --> 00:21:01,000
Speaker 10: at the conduct that has occurred in the last ten years.

442
00:21:01,320 --> 00:21:02,720
Speaker 6: But in the greater scheme of things. Is that a

443
00:21:02,800 --> 00:21:06,720
Speaker 6: huge threat to Google? Because if it is indeed the

444
00:21:06,800 --> 00:21:10,760
Speaker 6: default search engine, just because so many people are spent

445
00:21:10,920 --> 00:21:14,159
Speaker 6: you know, decades using it on their devices, on their computers,

446
00:21:14,560 --> 00:21:16,720
Speaker 6: then if you know, when you buy a new phone,

447
00:21:16,760 --> 00:21:18,800
Speaker 6: Apple says, Okay, which search engine would you like to

448
00:21:18,800 --> 00:21:21,320
Speaker 6: be the default one? Won't people just choose Google?

449
00:21:21,359 --> 00:21:21,760
Speaker 2: Anyway?

450
00:21:22,160 --> 00:21:24,000
Speaker 10: Well, I think that's the case, which is why the

451
00:21:24,000 --> 00:21:26,240
Speaker 10: remedy is going to be really important here. This judge

452
00:21:26,280 --> 00:21:28,080
Speaker 10: is going to have to get creative. And you know,

453
00:21:28,160 --> 00:21:30,359
Speaker 10: one of the things that he might do if, in fact,

454
00:21:30,400 --> 00:21:32,520
Speaker 10: he rules that Google's broken the law. I mean that

455
00:21:32,560 --> 00:21:34,919
Speaker 10: hasn't been determined yet. I tend to think he will,

456
00:21:35,240 --> 00:21:38,359
Speaker 10: but it's very close. What he could say is, look,

457
00:21:38,440 --> 00:21:41,280
Speaker 10: you've collected there's this flywheel, and you've collected so much

458
00:21:41,400 --> 00:21:44,520
Speaker 10: data through scale, through so many searches that's allowed Google

459
00:21:44,560 --> 00:21:48,240
Speaker 10: Search to get better and being Inductucgo and other potential

460
00:21:48,280 --> 00:21:51,080
Speaker 10: in nascent competitors out there can't get to that scale

461
00:21:51,359 --> 00:21:53,520
Speaker 10: to teach the search engine to get better. So maybe

462
00:21:53,560 --> 00:21:55,240
Speaker 10: what you have to do, Google is share all that

463
00:21:55,359 --> 00:21:58,359
Speaker 10: data and let others have a chance to actually become

464
00:21:58,359 --> 00:22:01,119
Speaker 10: better and show what they can prove. Maybe let an

465
00:22:01,119 --> 00:22:03,919
Speaker 10: ascent competitor come into the market, something like that, and

466
00:22:03,960 --> 00:22:06,639
Speaker 10: in that way there could be a threat, right, I mean,

467
00:22:06,680 --> 00:22:09,920
Speaker 10: it's not unrealistic to think with all that data that

468
00:22:10,040 --> 00:22:12,320
Speaker 10: Google's a mast over the years that some other company

469
00:22:12,320 --> 00:22:13,360
Speaker 10: could come in and compete.

470
00:22:13,480 --> 00:22:16,399
Speaker 3: So has Apple actually come in and maybe communicated to

471
00:22:16,440 --> 00:22:18,320
Speaker 3: the judge somehow like who whoa whoa whoa whoa, what

472
00:22:18,920 --> 00:22:21,439
Speaker 3: if you do what you could do, that's really going

473
00:22:21,480 --> 00:22:25,199
Speaker 3: to hurt us unintended consequence? Maybe has Apple appined on

474
00:22:25,200 --> 00:22:25,640
Speaker 3: this at all?

475
00:22:25,760 --> 00:22:30,040
Speaker 10: So both Apple and Mozilla executives testified, and Apple actually

476
00:22:30,080 --> 00:22:31,920
Speaker 10: believe it or not, when they signed this agreement to

477
00:22:31,960 --> 00:22:35,240
Speaker 10: get paid to set Google as a default, also agreed

478
00:22:35,240 --> 00:22:38,080
Speaker 10: that they would defend it if ever came under attack.

479
00:22:38,160 --> 00:22:40,440
Speaker 10: Now if that's not a little bit suspicious or defensive,

480
00:22:40,720 --> 00:22:42,520
Speaker 10: I don't know what is. But they so they did

481
00:22:42,560 --> 00:22:45,920
Speaker 10: come in and they defended the deal. They said, look,

482
00:22:45,920 --> 00:22:48,560
Speaker 10: it makes the Apple phone better. A user opens the phone,

483
00:22:48,560 --> 00:22:50,159
Speaker 10: they go to Safari and they do their search and

484
00:22:50,160 --> 00:22:51,760
Speaker 10: they have the best search engine, and that's better for

485
00:22:51,800 --> 00:22:54,439
Speaker 10: our users. And Google's the best. And that's just the

486
00:22:54,440 --> 00:22:57,439
Speaker 10: bottom line. Mozilla actually said, look, this is really going

487
00:22:57,480 --> 00:22:59,240
Speaker 10: to hurt our business. We depend on the money that

488
00:22:59,280 --> 00:23:01,600
Speaker 10: we get from Google. We're small, you know, Firefox is

489
00:23:01,640 --> 00:23:03,480
Speaker 10: really small, and we need that money. So they did

490
00:23:03,520 --> 00:23:04,200
Speaker 10: testify like.

491
00:23:04,160 --> 00:23:06,000
Speaker 6: That, Okay, like you said, this is not the only

492
00:23:06,119 --> 00:23:09,440
Speaker 6: legal challenge company. Why do the lawyers always get paid

493
00:23:09,440 --> 00:23:13,199
Speaker 6: by the way, always matter what it doesn't.

494
00:23:12,880 --> 00:23:15,000
Speaker 4: The right and a lot and a lot.

495
00:23:15,359 --> 00:23:16,000
Speaker 5: Yeah, I don't know.

496
00:23:16,080 --> 00:23:18,600
Speaker 6: Jed if you cover, if you cover that. But but

497
00:23:18,640 --> 00:23:20,760
Speaker 6: I'm curious where this falls and sort of the scheme

498
00:23:20,800 --> 00:23:24,320
Speaker 6: of lawsuits that Google, for its part, is facing right now.

499
00:23:24,440 --> 00:23:27,879
Speaker 6: Not to mention, I mean the lawsuits facing Amazon FTC

500
00:23:28,000 --> 00:23:30,320
Speaker 6: issues facing Amazon Apple as well Meta.

501
00:23:30,440 --> 00:23:32,959
Speaker 10: You have FTCV Meta at right. All of them right

502
00:23:32,960 --> 00:23:35,920
Speaker 10: now are facing big monopolization suits. They have a suit

503
00:23:35,960 --> 00:23:38,360
Speaker 10: coming up that challenges their ad tech business. It's it's

504
00:23:38,400 --> 00:23:41,160
Speaker 10: not a really business that consumers generally know about, because

505
00:23:41,160 --> 00:23:44,800
Speaker 10: this is a business to business supply chain right that

506
00:23:44,840 --> 00:23:48,560
Speaker 10: they kind of control. And it's about actually advertisers, digital

507
00:23:48,600 --> 00:23:51,200
Speaker 10: advertisers and publishers the software that they use to come

508
00:23:51,200 --> 00:23:53,840
Speaker 10: together to place ads right, to find the space, to

509
00:23:54,240 --> 00:23:56,040
Speaker 10: buy the space, to get the right ad to the

510
00:23:56,119 --> 00:23:59,280
Speaker 10: right consumer. And Google basically owns the entire supply chain.

511
00:23:59,440 --> 00:24:01,680
Speaker 10: They have nom and many pieces of it, and it's

512
00:24:01,720 --> 00:24:05,160
Speaker 10: about manipulating that to take extract as much money from

513
00:24:05,160 --> 00:24:08,359
Speaker 10: publishers and advertisers as they can. That's the allegation. That

514
00:24:08,400 --> 00:24:10,480
Speaker 10: trial is coming up toward the end of this year,

515
00:24:10,560 --> 00:24:12,840
Speaker 10: and I think that's actually kind of a bigger deal,

516
00:24:13,560 --> 00:24:15,800
Speaker 10: right because it's in front of a jury now that

517
00:24:15,840 --> 00:24:19,040
Speaker 10: doesn't happen very often because the DOJ can only go

518
00:24:19,080 --> 00:24:20,600
Speaker 10: in front of a jury when they're looking for a

519
00:24:20,680 --> 00:24:25,160
Speaker 10: monetary remedy. They're looking for injunctive and monetary remedy because

520
00:24:25,160 --> 00:24:29,119
Speaker 10: they themselves were advertisers. So they're saying us was hurt

521
00:24:29,440 --> 00:24:32,080
Speaker 10: by what Google did. We were advertisers, and we paid

522
00:24:32,080 --> 00:24:36,119
Speaker 10: more to do that advertising because of Google's conduct. But

523
00:24:36,160 --> 00:24:38,040
Speaker 10: when it goes in front of a jury, I think

524
00:24:38,080 --> 00:24:40,159
Speaker 10: it's really hard for a jury to kind of parse

525
00:24:40,200 --> 00:24:42,840
Speaker 10: out all the stages that have to be proven to

526
00:24:42,840 --> 00:24:45,920
Speaker 10: prove an anti trust violation. This judge, who is studying

527
00:24:46,040 --> 00:24:48,520
Speaker 10: really hard and the Google Search case is struggling. You

528
00:24:48,560 --> 00:24:51,359
Speaker 10: can tell this is hard for him, So determine that

529
00:24:51,520 --> 00:24:54,359
Speaker 10: line between conduct that's anti competitive and conduct that's just

530
00:24:54,440 --> 00:24:57,960
Speaker 10: hyper competitive is very difficult. And I think with a

531
00:24:58,040 --> 00:25:01,160
Speaker 10: jury there's probably a tendency the DJ just to paint

532
00:25:01,160 --> 00:25:04,160
Speaker 10: the company is a big dominant bully rather than kind

533
00:25:04,160 --> 00:25:07,119
Speaker 10: of getting into those nuances, and a jury's probably going

534
00:25:07,200 --> 00:25:09,720
Speaker 10: to go that direction. That's what I think. So I

535
00:25:09,720 --> 00:25:11,040
Speaker 10: think those are scary cases.

536
00:25:11,320 --> 00:25:12,919
Speaker 3: All right, give us the timing on when some of

537
00:25:12,960 --> 00:25:14,600
Speaker 3: these things are going to happen here, because I'm looking

538
00:25:14,600 --> 00:25:16,600
Speaker 3: at the stock stacks up twenty percent this year, it's

539
00:25:16,680 --> 00:25:19,800
Speaker 3: up sixty percent over the trailing twelve month. The market's

540
00:25:19,840 --> 00:25:21,959
Speaker 3: not worried about it, now worried. What's the timing here

541
00:25:22,000 --> 00:25:22,560
Speaker 3: of some of these?

542
00:25:22,720 --> 00:25:24,960
Speaker 10: I think on liability, a decision will probably come out

543
00:25:24,960 --> 00:25:27,160
Speaker 10: on the search case in a few months. And then

544
00:25:27,320 --> 00:25:29,480
Speaker 10: if that happened in a few months, that's what I think.

545
00:25:29,640 --> 00:25:31,359
Speaker 10: And if that happens, he's going to the judge is

546
00:25:31,359 --> 00:25:34,320
Speaker 10: gonna have a separate hearing on remedy, separate process to

547
00:25:34,400 --> 00:25:37,040
Speaker 10: determine the proper remedy. I think he'll give them a

548
00:25:37,040 --> 00:25:39,280
Speaker 10: few months to get prepared for that. Experts will be

549
00:25:39,320 --> 00:25:42,520
Speaker 10: testifying in that So I'm thinking maybe a remedy comes

550
00:25:42,520 --> 00:25:44,520
Speaker 10: out sometime in fourth quarter. That's what I think.

551
00:25:44,600 --> 00:25:46,280
Speaker 6: Okay, we only have a minute and a half left,

552
00:25:46,320 --> 00:25:49,679
Speaker 6: but do you want to talk Apple? Meta is on

553
00:25:49,680 --> 00:25:49,960
Speaker 6: your pap?

554
00:25:49,960 --> 00:25:52,240
Speaker 10: Okay, madam, let's say the least risk is Meta. I

555
00:25:52,240 --> 00:25:55,680
Speaker 10: think I think the FDC will lose. All they're really

556
00:25:55,720 --> 00:25:58,040
Speaker 10: seeking is a divestiture of Instagram or What's app, And

557
00:25:58,080 --> 00:25:59,840
Speaker 10: I just don't think it's it's not going to happen.

558
00:26:00,000 --> 00:26:01,040
Speaker 10: That would be a big deal. It would be a

559
00:26:01,040 --> 00:26:02,520
Speaker 10: big deal. I don't think it's going to happen.

560
00:26:02,720 --> 00:26:03,000
Speaker 5: I don't.

561
00:26:03,040 --> 00:26:05,520
Speaker 10: I actually don't think the DOJ suit against Apples all

562
00:26:05,520 --> 00:26:07,600
Speaker 10: that great either. I know people would disagree with me,

563
00:26:08,040 --> 00:26:11,159
Speaker 10: but I think the allegations I think Apples change some

564
00:26:11,200 --> 00:26:15,240
Speaker 10: of the conduct that they're challenging already, and I think

565
00:26:15,320 --> 00:26:18,159
Speaker 10: a lot of pro competitive justifications which can outweigh some

566
00:26:18,240 --> 00:26:21,080
Speaker 10: of those anti competitive allegedly anti competitive conduct.

567
00:26:21,400 --> 00:26:23,040
Speaker 6: Lena Cohn versus Amazon.

568
00:26:24,160 --> 00:26:26,439
Speaker 10: I also don't think that's a great suit. Wow, I

569
00:26:26,440 --> 00:26:29,080
Speaker 10: think the best suits that I think the suits against Google.

570
00:26:29,440 --> 00:26:31,919
Speaker 10: I think I have some teeth, have some possibility. I

571
00:26:31,960 --> 00:26:34,280
Speaker 10: don't really think the other three suits are all that great.

572
00:26:34,400 --> 00:26:37,919
Speaker 3: Okay, interesting, this is their time to get big tech, right.

573
00:26:37,960 --> 00:26:40,879
Speaker 3: I mean, you know, never know what the next administration.

574
00:26:40,320 --> 00:26:42,600
Speaker 10: Is going to be, That's right, you don't know. Although

575
00:26:42,600 --> 00:26:46,080
Speaker 10: there are some gopiers in the Congress that like what

576
00:26:46,160 --> 00:26:49,399
Speaker 10: Lena Coon's doing, It actually said Donald Trump's keep her around.

577
00:26:49,480 --> 00:26:49,640
Speaker 3: Yeah.

578
00:26:49,640 --> 00:26:51,800
Speaker 6: I feel like Republicans and Democrats like they don't agree

579
00:26:51,840 --> 00:26:53,600
Speaker 6: on anything except for going after big tech.

580
00:26:53,680 --> 00:26:56,240
Speaker 10: Yeah, for different reasons, yes, live career, but they do agree.

581
00:26:56,320 --> 00:26:58,679
Speaker 3: Yes, but if you ask the consumers, we're like, we

582
00:26:58,840 --> 00:27:01,960
Speaker 3: like it. It's all good which works the Yeah, I

583
00:27:01,960 --> 00:27:02,720
Speaker 3: don't know, I mean.

584
00:27:02,920 --> 00:27:05,640
Speaker 10: I mean it's Amazon case in particular. I yeah, Amazon,

585
00:27:05,760 --> 00:27:08,200
Speaker 10: they brought a lot of pro competitive benefits to consumers

586
00:27:08,240 --> 00:27:10,520
Speaker 10: in the market since they started right, And so I

587
00:27:10,560 --> 00:27:13,800
Speaker 10: think again, with these monopolization suits, it's always the anti

588
00:27:13,800 --> 00:27:17,080
Speaker 10: competitive harm weighed against the pro competitive side when you've

589
00:27:17,080 --> 00:27:18,560
Speaker 10: got a strong pro competitive side.

590
00:27:18,720 --> 00:27:21,199
Speaker 4: Yep, all right, Jenniferree, thanks so much for joining us.

591
00:27:21,280 --> 00:27:24,480
Speaker 3: Jenry, she is a senior litigation analyst for Bloomberg Intelligence,

592
00:27:24,560 --> 00:27:27,720
Speaker 3: joining us live here in our Bloomberg Intelligence office. She

593
00:27:27,760 --> 00:27:29,800
Speaker 3: doesn't mail it in like BI management does. She comes

594
00:27:29,840 --> 00:27:33,399
Speaker 3: into the office, which we appreciate. In New York City

595
00:27:33,480 --> 00:27:34,360
Speaker 3: as well.

596
00:27:35,640 --> 00:27:39,520
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

597
00:27:39,600 --> 00:27:43,160
Speaker 2: weekdays at ten am Eastern on applecard Play and Android

598
00:27:43,160 --> 00:27:45,920
Speaker 2: Otto with the Bloomberg Business app. You can also listen

599
00:27:46,040 --> 00:27:49,120
Speaker 2: live on Amazon Alexa from our flagship New York station

600
00:27:49,520 --> 00:27:53,000
Speaker 2: Just Say Alexa playing Bloomberg eleven thirty.

601
00:27:54,080 --> 00:27:58,440
Speaker 3: Tyson Food reported some numbers here. Let's break it down

602
00:27:58,480 --> 00:28:01,320
Speaker 3: with Jen Bartashis. She covers all of the retail stuff,

603
00:28:01,359 --> 00:28:04,120
Speaker 3: all of the food companies for Bloomberg intelligence.

604
00:28:04,119 --> 00:28:05,560
Speaker 4: She's based down in Princeton, New Jersey.

605
00:28:05,640 --> 00:28:08,280
Speaker 3: I think she's using that zoom stuff that the kids

606
00:28:08,359 --> 00:28:11,360
Speaker 3: use these days to kind of, you know, phone into.

607
00:28:11,200 --> 00:28:14,000
Speaker 4: Us, Jen, talk to us about Tyson Food here.

608
00:28:14,160 --> 00:28:16,280
Speaker 3: What did you see from again? What I just learned

609
00:28:16,359 --> 00:28:18,359
Speaker 3: was the largest meat producer in the US.

610
00:28:18,840 --> 00:28:21,600
Speaker 9: Yeah, good morning. So Tyson is one of the biggest

611
00:28:21,600 --> 00:28:25,000
Speaker 9: meat producers globally actually, and by all accounts, they had

612
00:28:25,000 --> 00:28:27,320
Speaker 9: a pretty decent quarter. They did raise their full year

613
00:28:27,320 --> 00:28:30,520
Speaker 9: outlook for adjusted operating income off of strength in the

614
00:28:30,600 --> 00:28:34,080
Speaker 9: chicken segment, which has been long awaited. But the stock

615
00:28:34,240 --> 00:28:37,360
Speaker 9: is trading down, likely on commentary that they may see

616
00:28:37,440 --> 00:28:40,320
Speaker 9: third quarter be weaker than fourth quarter, which would buck

617
00:28:40,440 --> 00:28:43,040
Speaker 9: historical trends. And so a little bit of a mixed

618
00:28:43,040 --> 00:28:45,960
Speaker 9: report coming out of Tyson today, but generally a pretty

619
00:28:45,960 --> 00:28:46,560
Speaker 9: solid quarter.

620
00:28:46,840 --> 00:28:50,400
Speaker 6: Is the current quarter usually strong because we're getting into summer,

621
00:28:50,480 --> 00:28:53,200
Speaker 6: We got Memorial Day coming up, we buy the meat

622
00:28:53,200 --> 00:28:56,400
Speaker 6: for the barbecue. I mean, why is it typically stronger?

623
00:28:57,400 --> 00:29:01,440
Speaker 9: So it's seasonally stronger for meats like you like your chicken,

624
00:29:01,560 --> 00:29:06,200
Speaker 9: or you're in historically for beef specifically because of grilling season.

625
00:29:06,240 --> 00:29:09,960
Speaker 9: But that does translate into a weakness for prepared foods

626
00:29:10,000 --> 00:29:13,760
Speaker 9: and for the pork segment generally, And so they're saying

627
00:29:13,800 --> 00:29:17,040
Speaker 9: that the weakness in prepared foods and pork may outweigh

628
00:29:17,440 --> 00:29:20,200
Speaker 9: the strength coming for the grilling season for chicken and

629
00:29:20,320 --> 00:29:22,520
Speaker 9: for and for beef.

630
00:29:22,720 --> 00:29:26,640
Speaker 3: All right, I'm looking at the PGeo function for Tyson

631
00:29:26,680 --> 00:29:30,040
Speaker 3: Food TSN. Is the ticker percentage of revenue thirty seven

632
00:29:30,080 --> 00:29:34,160
Speaker 3: percent beef, thirty three percent chicken, nineteen percent prepared foods

633
00:29:34,200 --> 00:29:37,920
Speaker 3: and nine percent pork. Which business do you like? Which

634
00:29:37,960 --> 00:29:40,440
Speaker 3: business does the street like? Is one better than the other?

635
00:29:40,480 --> 00:29:42,680
Speaker 3: Better margins, better growth? How do we think about that?

636
00:29:43,560 --> 00:29:46,880
Speaker 9: So, historically speaking, prepared foods is a much higher margin

637
00:29:47,280 --> 00:29:50,040
Speaker 9: business within the company, and there were intents from Tyson

638
00:29:50,080 --> 00:29:53,880
Speaker 9: to grow that considerably. That has great long term potential,

639
00:29:54,480 --> 00:29:56,880
Speaker 9: but they are going through a little bit of short

640
00:29:56,960 --> 00:30:01,200
Speaker 9: term turbulence with regards to additional startup costs associated with

641
00:30:01,360 --> 00:30:04,360
Speaker 9: new plant lines and things like that. The chicken segment,

642
00:30:04,480 --> 00:30:07,280
Speaker 9: which is a big part of the company's business, has

643
00:30:07,320 --> 00:30:11,120
Speaker 9: been underperforming for years, and so what's encouraging coming out

644
00:30:11,160 --> 00:30:14,400
Speaker 9: of today's earnings is that the chicken segment is finally

645
00:30:14,480 --> 00:30:19,640
Speaker 9: showing improvement. Margins are up they're doing better with efficiencies,

646
00:30:19,680 --> 00:30:22,440
Speaker 9: and even though overall volume is down, it's a much

647
00:30:22,560 --> 00:30:26,920
Speaker 9: healthier margin that they're achieving out of that chicken business. Now,

648
00:30:26,960 --> 00:30:30,240
Speaker 9: remember they've closed a bunch of plants recently, They've been

649
00:30:30,360 --> 00:30:34,520
Speaker 9: resizing their processing footprint, so all the things that they

650
00:30:34,560 --> 00:30:36,560
Speaker 9: need to do seem to be underway to help make

651
00:30:36,600 --> 00:30:39,240
Speaker 9: that a much more profitable and bigger contributor to the

652
00:30:39,280 --> 00:30:40,040
Speaker 9: overall company.

653
00:30:40,120 --> 00:30:43,080
Speaker 6: It was interesting to hear Noura, and actually I would

654
00:30:43,120 --> 00:30:45,560
Speaker 6: say we had I don't know if you Jen heard this,

655
00:30:45,640 --> 00:30:48,640
Speaker 6: but we had kind of an interesting conversation about Tyson

656
00:30:48,720 --> 00:30:51,000
Speaker 6: Foods just moments before we came to you, because Nora

657
00:30:51,120 --> 00:30:54,200
Speaker 6: chose it as one of her market movers, and we

658
00:30:54,240 --> 00:30:56,880
Speaker 6: all were all talking, well, we don't necessarily know necessarily

659
00:30:57,040 --> 00:31:00,400
Speaker 6: the brand of whatever we're buying when we're in the store,

660
00:31:00,440 --> 00:31:04,080
Speaker 6: and Tyson has much more than just Tyson Foods. Is

661
00:31:04,120 --> 00:31:09,000
Speaker 6: this at its core a commodity company? Or do the

662
00:31:09,000 --> 00:31:14,160
Speaker 6: brands Sarah Lee, Ballpark Hillshar Farm, Jimmy Dean, Tyson, Bosco's

663
00:31:15,040 --> 00:31:17,280
Speaker 6: Gallo Salami do these matter to consumers?

664
00:31:18,400 --> 00:31:21,680
Speaker 9: The brands do matter, and it depends on which consumer

665
00:31:21,720 --> 00:31:25,880
Speaker 9: demographic you're talking about but Tyson has intentionally over the

666
00:31:25,920 --> 00:31:28,560
Speaker 9: past several years moved away from being a strictly commodity

667
00:31:28,640 --> 00:31:31,920
Speaker 9: driven company. That has helped smooth out earnings volatility. That

668
00:31:32,000 --> 00:31:36,040
Speaker 9: helps make it a much healthier margin profile overall. And

669
00:31:36,280 --> 00:31:38,920
Speaker 9: so that progress I think is going to continue. So

670
00:31:38,960 --> 00:31:43,400
Speaker 9: those brands are very central to that long term, that

671
00:31:43,480 --> 00:31:46,800
Speaker 9: long term plan that side. You're right, there is a

672
00:31:46,840 --> 00:31:48,760
Speaker 9: lot of Tyson meat out there that you eat and

673
00:31:48,800 --> 00:31:51,200
Speaker 9: you don't even realize it's Tyson. They you know, obviously

674
00:31:51,280 --> 00:31:53,800
Speaker 9: will supply retailers that then have that as their private

675
00:31:53,840 --> 00:31:58,480
Speaker 9: label brand. There are things like that that happen. But overall,

676
00:31:59,120 --> 00:32:04,080
Speaker 9: what we're seeing is the consumer, especially lower income households,

677
00:32:04,360 --> 00:32:06,360
Speaker 9: have been trading more into private label and that has

678
00:32:06,480 --> 00:32:10,080
Speaker 9: left these brands a little bit lower in terms of

679
00:32:10,120 --> 00:32:13,400
Speaker 9: overall volume that they're being that's that's being sold. So

680
00:32:13,400 --> 00:32:15,120
Speaker 9: so that's where we're seeing a little bit of a

681
00:32:15,120 --> 00:32:19,320
Speaker 9: little bit of that brand volatility in the last few quarters.

682
00:32:19,720 --> 00:32:22,000
Speaker 4: Jen, you need to talk to investors in this company.

683
00:32:22,040 --> 00:32:23,040
Speaker 5: What's the call here?

684
00:32:23,160 --> 00:32:25,160
Speaker 3: I mean, are they do they own it for the dividend?

685
00:32:25,200 --> 00:32:27,960
Speaker 3: Did they own it because they're bullush on Chicken? And

686
00:32:28,120 --> 00:32:31,200
Speaker 3: I mean what's the investment call for owning a food

687
00:32:31,200 --> 00:32:31,840
Speaker 3: company like this.

688
00:32:32,840 --> 00:32:36,280
Speaker 9: Well, the dividend has been something that's been of appeal

689
00:32:36,400 --> 00:32:39,680
Speaker 9: in recent years. The good news is that Tyson is

690
00:32:39,720 --> 00:32:42,120
Speaker 9: back to where their free cash flower generation will cover

691
00:32:42,200 --> 00:32:46,160
Speaker 9: the dividend, so that's that That also appeases some concern

692
00:32:46,200 --> 00:32:49,520
Speaker 9: that the dividend might be cut. So generally it's been

693
00:32:49,960 --> 00:32:53,440
Speaker 9: it's been along those lines. There is also long term growth.

694
00:32:53,880 --> 00:32:58,800
Speaker 9: You know, Tyson has been slowly expanding international operations. When

695
00:32:58,840 --> 00:33:01,440
Speaker 9: they get the formula right, meaning they get the right

696
00:33:01,480 --> 00:33:04,560
Speaker 9: productivity and the plants that they've opened up overseas, there's

697
00:33:04,600 --> 00:33:07,760
Speaker 9: a long runway for potential growth for Tyson outside the

698
00:33:07,880 --> 00:33:10,560
Speaker 9: United States as well as within the United States. So

699
00:33:10,720 --> 00:33:12,400
Speaker 9: that's a little bit of the appeal as well if

700
00:33:12,440 --> 00:33:15,680
Speaker 9: you're a longer term perspective investor.

701
00:33:16,160 --> 00:33:18,120
Speaker 6: Anything that investors have to keep their eyes on when

702
00:33:18,120 --> 00:33:21,240
Speaker 6: it comes to supply issues out there, any bird flu

703
00:33:21,320 --> 00:33:24,800
Speaker 6: avian flu type stuff that's getting into their production line

704
00:33:24,840 --> 00:33:27,160
Speaker 6: that we've seen hit other types of companies.

705
00:33:27,960 --> 00:33:31,760
Speaker 9: Yeah, so the bird flu or avian flu is certainly

706
00:33:31,760 --> 00:33:35,120
Speaker 9: something that's in the headlines lately. It's been impacting. It's

707
00:33:35,200 --> 00:33:37,800
Speaker 9: you know, we've seen outbreaks in very specific areas. Thus

708
00:33:37,840 --> 00:33:40,720
Speaker 9: far hasn't really had a major impact on Tyson this year,

709
00:33:41,560 --> 00:33:44,720
Speaker 9: but we are watching that very carefully. One of the

710
00:33:44,760 --> 00:33:47,320
Speaker 9: longer term issues Tyson's going to face is just the

711
00:33:47,360 --> 00:33:50,680
Speaker 9: beef cattle cycle. We're at the bottom of a cycle.

712
00:33:51,160 --> 00:33:56,120
Speaker 9: There's very limited animal availability, and once that he starts

713
00:33:56,160 --> 00:33:58,000
Speaker 9: to rebuild, things are going to get a little bit

714
00:33:58,000 --> 00:34:01,080
Speaker 9: worse before they get better. With regards to apply, that

715
00:34:01,200 --> 00:34:04,480
Speaker 9: means that the profitability of the cattle, of the beef

716
00:34:04,480 --> 00:34:07,560
Speaker 9: segment within Tyson is going to remain pressured well into

717
00:34:07,600 --> 00:34:08,439
Speaker 9: twenty twenty five.

718
00:34:08,640 --> 00:34:10,720
Speaker 4: Wait a minute, are we are there not enough cows

719
00:34:10,760 --> 00:34:11,200
Speaker 4: out there?

720
00:34:12,160 --> 00:34:13,280
Speaker 9: Well, no, no, there.

721
00:34:13,560 --> 00:34:15,239
Speaker 6: There are slaughtering them for food.

722
00:34:15,280 --> 00:34:19,280
Speaker 9: That's the problem exactly. We're at the bottom of the cycle,

723
00:34:19,280 --> 00:34:22,719
Speaker 9: which means that the supply is just very limited and

724
00:34:22,760 --> 00:34:25,320
Speaker 9: because you know, cows take eighteen months two years to

725
00:34:25,680 --> 00:34:29,439
Speaker 9: reach slaughter size, it's a slow rebuild and right now

726
00:34:29,440 --> 00:34:33,560
Speaker 9: we're not seeing the initial signs of herd rebuilding that

727
00:34:33,600 --> 00:34:35,560
Speaker 9: we need to really to.

728
00:34:35,320 --> 00:34:39,400
Speaker 3: To really research analysts, How do how do you decide

729
00:34:39,400 --> 00:34:42,360
Speaker 3: as an analyst how the herds are like you go

730
00:34:42,440 --> 00:34:45,120
Speaker 3: out and cow cows out in Montana.

731
00:34:45,440 --> 00:34:48,279
Speaker 9: Well, no, I look at USDA data, you know, so

732
00:34:48,360 --> 00:34:51,879
Speaker 9: that's that's you know, USDA expectations. But you also talk

733
00:34:51,920 --> 00:34:54,600
Speaker 9: to people who are who are in the industry right

734
00:34:54,840 --> 00:34:56,800
Speaker 9: and there are things that affect you know, when those

735
00:34:56,960 --> 00:34:59,520
Speaker 9: those herds are going to be rebuilt, the price of hay,

736
00:35:00,360 --> 00:35:03,960
Speaker 9: the drought conditions, interest rates, you know, all of these

737
00:35:04,000 --> 00:35:07,080
Speaker 9: things impact ranchers and their ability to take on the

738
00:35:07,120 --> 00:35:10,640
Speaker 9: cost of rebuilding herds. And so you know, once those

739
00:35:10,640 --> 00:35:12,759
Speaker 9: things start to optimize a little bit, then you'll start

740
00:35:12,800 --> 00:35:15,440
Speaker 9: to see herds grow. Then you'll start to see a

741
00:35:15,520 --> 00:35:21,080
Speaker 9: much higher in terms of supply that'll be coming to

742
00:35:21,120 --> 00:35:22,400
Speaker 9: market in the next couple of years.

743
00:35:22,480 --> 00:35:24,960
Speaker 6: What's the and this kind of goes back to Paul's question,

744
00:35:25,040 --> 00:35:27,640
Speaker 6: But I thought chicken was like the hottest thing out

745
00:35:27,680 --> 00:35:30,799
Speaker 6: there right now in terms of what consumers want. We

746
00:35:30,840 --> 00:35:33,520
Speaker 6: saw Chipotle, Chick fil A running low. Chick fil A

747
00:35:33,640 --> 00:35:37,480
Speaker 6: is huge, raising canes is absolutely huge right now. Why

748
00:35:37,600 --> 00:35:40,239
Speaker 6: is chicken only gone in twenty nineteen from thirty two

749
00:35:40,239 --> 00:35:42,760
Speaker 6: point two percent of revenue to thirty three point seven

750
00:35:42,800 --> 00:35:45,560
Speaker 6: percent of revenue That was twenty nineteen to twenty twenty three.

751
00:35:46,640 --> 00:35:48,880
Speaker 9: Well, a lot of that has been priced depreciation, so

752
00:35:49,200 --> 00:35:52,880
Speaker 9: there's been oversupply in the market. When that happens, prices

753
00:35:52,880 --> 00:35:56,160
Speaker 9: are down. That's great for consumers. It's great for restaurant

754
00:35:56,239 --> 00:35:58,719
Speaker 9: chains in terms of buying, but it's not great for

755
00:35:58,800 --> 00:36:02,600
Speaker 9: the producers. And so, you know, part of what we're

756
00:36:02,600 --> 00:36:05,759
Speaker 9: looking for is, you know that prices start to stabilize

757
00:36:05,760 --> 00:36:08,319
Speaker 9: a little bit, which will lead to, you know, opportunity

758
00:36:08,360 --> 00:36:12,000
Speaker 9: for revenue growth to renew in the chicken segment.

759
00:36:12,120 --> 00:36:14,160
Speaker 6: I'm sorry, Paul, did you just say priced appreciation? I

760
00:36:14,160 --> 00:36:15,320
Speaker 6: thought everything was getting.

761
00:36:15,040 --> 00:36:17,719
Speaker 4: More expensive, Yeah, the commodities, I guess.

762
00:36:17,840 --> 00:36:21,760
Speaker 3: So what I learned here, Jen is chickens are short cycle,

763
00:36:22,320 --> 00:36:23,360
Speaker 3: cows are long cycle.

764
00:36:24,080 --> 00:36:25,600
Speaker 4: Correct, all right, boom so you.

765
00:36:25,680 --> 00:36:30,239
Speaker 3: Learned something farm great stuff senior retail anels for Bloomberg Intelligence.

766
00:36:30,440 --> 00:36:32,400
Speaker 3: I do remember for my days living down in Virginia,

767
00:36:32,480 --> 00:36:35,480
Speaker 3: North Carolina. You know, you're out on the interstate and

768
00:36:35,600 --> 00:36:39,400
Speaker 3: flatbed after flatbed after flatbed of these trucks would have

769
00:36:40,280 --> 00:36:43,640
Speaker 3: chicken crates strapped on there and feathers are coming out

770
00:36:43,640 --> 00:36:45,640
Speaker 3: all over the places, so you can't trap behind them,

771
00:36:45,960 --> 00:36:47,640
Speaker 3: and it's not a good day for the chickens. I

772
00:36:47,640 --> 00:36:49,560
Speaker 3: don't think the chickens going is not a good place

773
00:36:49,600 --> 00:36:51,839
Speaker 3: for you. Yeah, but that's where I think you get

774
00:36:51,840 --> 00:36:53,240
Speaker 3: a lot of chickens some North Carolina.

775
00:36:53,280 --> 00:36:54,920
Speaker 6: Not a truck you want to be on Necessarily. I

776
00:36:54,920 --> 00:36:56,479
Speaker 6: thought you were going to go somewhere else with the whole,

777
00:36:56,520 --> 00:36:58,680
Speaker 6: like you know out in Colorado. You know you've got

778
00:36:58,800 --> 00:37:01,000
Speaker 6: family out in Colorado. Like you go north of Boulder

779
00:37:01,000 --> 00:37:06,080
Speaker 6: to Fort Collins, Greeley area, huge cattle area, right and

780
00:37:05,560 --> 00:37:08,320
Speaker 6: you can you can smell it, Yeah, you can smell

781
00:37:08,360 --> 00:37:10,920
Speaker 6: it exactly. Same with the central part of California.

782
00:37:11,040 --> 00:37:12,239
Speaker 4: Yep, yep, very good.

783
00:37:12,280 --> 00:37:14,239
Speaker 3: So anyway, we learned what we needed to learn about

784
00:37:14,320 --> 00:37:18,400
Speaker 3: chickens and cows and pork bellies. You know, I always

785
00:37:18,400 --> 00:37:20,759
Speaker 3: have to look at the pork belly, all right, I

786
00:37:20,760 --> 00:37:22,920
Speaker 3: was Jim bartash Is talking about Tyson's food.

787
00:37:25,000 --> 00:37:28,879
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

788
00:37:28,960 --> 00:37:32,480
Speaker 2: weekdays at ten am Eastern on applecar Play and Android

789
00:37:32,520 --> 00:37:35,680
Speaker 2: Auto with the Bloomberg Business. You can also listen live

790
00:37:35,800 --> 00:37:38,960
Speaker 2: on Amazon Alexa from our flagship New York station, Just

791
00:37:39,040 --> 00:37:42,640
Speaker 2: Say Alexa Play Bloomberg eleven thirty.

792
00:37:43,480 --> 00:37:46,040
Speaker 3: Tim Stenovick sitting in for Alex Steel here this morning

793
00:37:46,040 --> 00:37:48,120
Speaker 3: on Paul Sweeney. We're live here in our Bloomberg Interactive

794
00:37:48,120 --> 00:37:51,000
Speaker 3: Brokers studio. This is the Bloomberg Intelligence Show. We also

795
00:37:51,080 --> 00:37:55,480
Speaker 3: stream this thing live on the introweb. That would be YouTube,

796
00:37:55,480 --> 00:37:58,040
Speaker 3: dot com search Bloomber Podcast, and that's where you'll find us.

797
00:37:58,360 --> 00:38:00,160
Speaker 4: You know, Tim, A lot of folks were saying, you know,

798
00:38:00,239 --> 00:38:00,839
Speaker 4: coming off of.

799
00:38:00,760 --> 00:38:04,240
Speaker 3: That October base level had that big twenty five percent

800
00:38:04,280 --> 00:38:06,040
Speaker 3: plus move up in the S and P five hundred,

801
00:38:06,120 --> 00:38:07,600
Speaker 3: A lot of folks are saying, well, we could use

802
00:38:07,600 --> 00:38:10,880
Speaker 3: a nice pullback that would be healthy percent.

803
00:38:11,480 --> 00:38:12,319
Speaker 6: Did we get it, Paul?

804
00:38:12,400 --> 00:38:13,960
Speaker 4: I don't know. We kind of don't think we did.

805
00:38:14,000 --> 00:38:15,960
Speaker 3: From the end of March through you know, kind of

806
00:38:16,200 --> 00:38:18,080
Speaker 3: mid April we kind of had a four or five

807
00:38:18,080 --> 00:38:20,000
Speaker 3: percent pull down, but here we are moving higher.

808
00:38:20,760 --> 00:38:22,719
Speaker 4: Was that it was? I don't know, man.

809
00:38:22,880 --> 00:38:24,960
Speaker 6: Yeah, I mean with these with these pullbacks, it's kind

810
00:38:24,960 --> 00:38:25,920
Speaker 6: of like blink and you'll miss it?

811
00:38:26,160 --> 00:38:26,640
Speaker 4: Can you miss it?

812
00:38:26,680 --> 00:38:31,040
Speaker 3: Christina Hooper joins US chief Global market Strategist for in Vesco.

813
00:38:31,320 --> 00:38:34,480
Speaker 4: She looks at the big picture for a huge pool

814
00:38:34,640 --> 00:38:35,360
Speaker 4: of money.

815
00:38:35,640 --> 00:38:37,440
Speaker 3: Christina, what do you make of that little pullback we

816
00:38:37,480 --> 00:38:39,520
Speaker 3: had in the SP five hundred, What did you make

817
00:38:39,560 --> 00:38:39,759
Speaker 3: of that?

818
00:38:39,840 --> 00:38:42,080
Speaker 4: And did we just march higher from here?

819
00:38:44,040 --> 00:38:48,200
Speaker 1: Well, I think that pullback and the quick ending of

820
00:38:48,200 --> 00:38:52,600
Speaker 1: that pullback reflects just the changing views on the path

821
00:38:52,640 --> 00:38:57,399
Speaker 1: of monetary policy this year. When markets got pessimistic and

822
00:38:57,520 --> 00:39:02,320
Speaker 1: they felt that cut was far away and that potentially

823
00:39:02,360 --> 00:39:06,279
Speaker 1: a hike could come sooner, we saw a sell off.

824
00:39:06,520 --> 00:39:09,560
Speaker 1: But the problem with the sell off was that there's

825
00:39:09,600 --> 00:39:13,520
Speaker 1: an awful amount of cash sitting on sidelines, and many

826
00:39:13,560 --> 00:39:17,160
Speaker 1: investors are overweight cash, and so the reality is that

827
00:39:17,719 --> 00:39:22,399
Speaker 1: with fundamentals looking fairly good, earning season going well, it's

828
00:39:22,480 --> 00:39:25,040
Speaker 1: hard to sit on the sidelines if you see something

829
00:39:25,080 --> 00:39:28,440
Speaker 1: of a bargain, even if it's not a kmart level

830
00:39:28,480 --> 00:39:33,680
Speaker 1: blue light special. And so as a result, this was

831
00:39:33,880 --> 00:39:37,040
Speaker 1: not necessarily the sell off that many wanted to see.

832
00:39:37,080 --> 00:39:39,319
Speaker 1: But I think it's a function of the environment we're in.

833
00:39:39,560 --> 00:39:42,239
Speaker 6: Where's that cash on the sidelines, Christina? Is it in

834
00:39:42,520 --> 00:39:45,840
Speaker 6: high yield savings accounts that are still giving us five percent?

835
00:39:46,000 --> 00:39:47,680
Speaker 6: Is it in money market funds?

836
00:39:47,719 --> 00:39:48,239
Speaker 2: Where is it?

837
00:39:49,360 --> 00:39:54,360
Speaker 1: Interestingly, it's in a combination of places, and so certainly

838
00:39:54,440 --> 00:40:00,440
Speaker 1: some are enjoying higher yields, but not all relatively speaking.

839
00:40:01,239 --> 00:40:04,279
Speaker 1: But the key is that I think this money was

840
00:40:04,320 --> 00:40:09,839
Speaker 1: never intended for a long term cash savings. It always

841
00:40:10,160 --> 00:40:14,800
Speaker 1: was sitting waiting or at least had a good chance

842
00:40:14,840 --> 00:40:19,040
Speaker 1: of going back into the stock market once investors felt

843
00:40:19,120 --> 00:40:21,640
Speaker 1: more comfortable. And I think we've gotten to that point,

844
00:40:21,760 --> 00:40:25,759
Speaker 1: especially with last week, where the narrative has changed somewhat,

845
00:40:25,960 --> 00:40:29,520
Speaker 1: and I think we'll see more cash moving into equities

846
00:40:29,960 --> 00:40:33,640
Speaker 1: as investors get more comfortable with this changing narrative.

847
00:40:34,400 --> 00:40:37,080
Speaker 3: Christina, I know what investco. You guys really take a

848
00:40:37,080 --> 00:40:40,840
Speaker 3: global view broadly defined. You know, given where the various

849
00:40:40,840 --> 00:40:43,520
Speaker 3: central banks are in terms of their posture aback cutting rates,

850
00:40:43,520 --> 00:40:45,760
Speaker 3: it seems like the ECB and the Bank of England,

851
00:40:45,760 --> 00:40:47,480
Speaker 3: maybe even a little head of the FED here.

852
00:40:47,520 --> 00:40:49,560
Speaker 4: How do you think about the US versus non US?

853
00:40:51,320 --> 00:40:54,200
Speaker 1: Well, the US has clearly been more resilient. It has

854
00:40:54,320 --> 00:41:01,280
Speaker 1: been not as significantly impacted by aggressive rate high and

855
00:41:01,400 --> 00:41:05,000
Speaker 1: so as a result, we are at a place where

856
00:41:05,600 --> 00:41:08,560
Speaker 1: the Bank of England and in particular the ECB look

857
00:41:08,719 --> 00:41:12,239
Speaker 1: poised to move sooner and I think that's going to

858
00:41:12,280 --> 00:41:12,840
Speaker 1: be the case.

859
00:41:12,880 --> 00:41:14,360
Speaker 5: It's just a.

860
00:41:14,640 --> 00:41:18,439
Speaker 1: Function of the greater resilience of the US economy, which

861
00:41:18,440 --> 00:41:20,719
Speaker 1: in turn has to do with in my opinion, two

862
00:41:20,800 --> 00:41:26,480
Speaker 1: key reasons First, the US gave its households more fiscal stimulus.

863
00:41:26,920 --> 00:41:30,200
Speaker 1: Certainly there was fyscal stimulus flowing in Europe and the UK,

864
00:41:30,840 --> 00:41:34,640
Speaker 1: but it was more significant in the UUs. In addition,

865
00:41:35,160 --> 00:41:40,319
Speaker 1: we have this wonderful phenomenon called long term fixed rate

866
00:41:40,400 --> 00:41:45,000
Speaker 1: mortgages that not a lot of other countries can participate in,

867
00:41:45,640 --> 00:41:50,800
Speaker 1: that can enjoy, and as a result, one key part

868
00:41:50,960 --> 00:41:56,640
Speaker 1: of household finances, one's mortgage payment wasn't impacted by the

869
00:41:56,800 --> 00:42:00,359
Speaker 1: very aggressive rate high cycle we experienced. We can't say that,

870
00:42:00,400 --> 00:42:04,920
Speaker 1: for example, for our Canadian neighbors and for European neighbors,

871
00:42:05,000 --> 00:42:10,040
Speaker 1: they experienced changes or increases in mortgage payments for the

872
00:42:10,040 --> 00:42:11,640
Speaker 1: most part.

873
00:42:11,760 --> 00:42:14,760
Speaker 6: Christina, we spoke earlier to Brian Crowees over at Sharp

874
00:42:14,840 --> 00:42:19,280
Speaker 6: Investments and he said that investors here in the US

875
00:42:19,800 --> 00:42:23,319
Speaker 6: are too optimistic when it comes to tech. Do you

876
00:42:23,320 --> 00:42:23,799
Speaker 6: agree with that?

877
00:42:26,600 --> 00:42:28,759
Speaker 1: Well, I think you have to ask the question what

878
00:42:28,960 --> 00:42:32,720
Speaker 1: timeframe are you talking about? Because we've seen this before

879
00:42:32,840 --> 00:42:36,040
Speaker 1: where investors can get very excited and if they have

880
00:42:36,080 --> 00:42:40,759
Speaker 1: a short time horizon, they can easily be disappointed. But

881
00:42:41,120 --> 00:42:44,600
Speaker 1: for those investors that have a long time horizon and

882
00:42:44,719 --> 00:42:52,239
Speaker 1: are employing some kind of selectivity in their investments could

883
00:42:52,320 --> 00:42:55,239
Speaker 1: very well benefit a lot of it. Though, is having

884
00:42:55,320 --> 00:42:59,040
Speaker 1: that patience, having that longer time horizon, Because we could

885
00:42:59,040 --> 00:43:02,799
Speaker 1: see periods where tech stocks become very highly valued, we

886
00:43:02,880 --> 00:43:05,880
Speaker 1: could see periods of disappointment in terms of earnings, but

887
00:43:05,960 --> 00:43:08,840
Speaker 1: certainly there's a lot of innovation going on in tech.

888
00:43:09,239 --> 00:43:12,480
Speaker 1: Reminds me very much of the late nineteen nineties and

889
00:43:12,520 --> 00:43:16,400
Speaker 1: the excitement over the Internet. Investors through their money at

890
00:43:16,440 --> 00:43:20,400
Speaker 1: Internet stocks. Some worked, some didn't, and it was about

891
00:43:20,960 --> 00:43:25,520
Speaker 1: essentially ferreting out the areas of opportunity and sticking with

892
00:43:25,560 --> 00:43:29,960
Speaker 1: them even though there were some certainly periods of disappointment

893
00:43:29,960 --> 00:43:30,360
Speaker 1: in there.

894
00:43:31,520 --> 00:43:33,200
Speaker 4: Christina, our listeners are viewers.

895
00:43:33,200 --> 00:43:37,080
Speaker 3: They've been hearing this term a lot recently, stagflation. What

896
00:43:37,120 --> 00:43:40,279
Speaker 3: does stagflation mean to you and is it a concern

897
00:43:40,440 --> 00:43:41,160
Speaker 3: for investors?

898
00:43:43,160 --> 00:43:45,360
Speaker 1: Well, I think that Jay Powell closed the book on

899
00:43:45,400 --> 00:43:49,080
Speaker 1: that last week, although I will say that we did

900
00:43:49,080 --> 00:43:52,800
Speaker 1: see a lot of internet searches on the term stagflation before.

901
00:43:53,280 --> 00:43:56,759
Speaker 1: To me, it's an environment like the nineteen seventies right

902
00:43:56,880 --> 00:44:03,080
Speaker 1: where growth is really disappointing. It's stagnant, but inflation is

903
00:44:03,200 --> 00:44:07,640
Speaker 1: high and it's very sticky. And while We've certainly seen

904
00:44:07,960 --> 00:44:12,239
Speaker 1: some kind of aspects of some components of inflation that

905
00:44:12,280 --> 00:44:17,040
Speaker 1: have been stickier. This disinflation journey has been very imperfect.

906
00:44:17,560 --> 00:44:19,839
Speaker 1: I don't think this is an environment where we have

907
00:44:20,080 --> 00:44:23,239
Speaker 1: high sticky inflation. I think we're going to see some

908
00:44:23,520 --> 00:44:28,880
Speaker 1: nice progress in disinflation this year, and we can't say

909
00:44:28,960 --> 00:44:33,640
Speaker 1: that growth is stagnant. Certainly, there are some cracks appearing

910
00:44:34,320 --> 00:44:36,800
Speaker 1: in the US economy, but that's what the FED wanted.

911
00:44:36,840 --> 00:44:40,640
Speaker 1: It wanted to cool a relatively hot economy that has

912
00:44:40,719 --> 00:44:45,480
Speaker 1: had sub four percent unemployment for a very significant period

913
00:44:45,520 --> 00:44:45,839
Speaker 1: of time.

914
00:44:46,239 --> 00:44:48,480
Speaker 6: Christin, where do you think we'll see that disinflation? I mean,

915
00:44:48,480 --> 00:44:52,759
Speaker 6: it's been pretty stubborn in many areas, and certainly the

916
00:44:52,840 --> 00:44:54,759
Speaker 6: last mile has proven to be just as tough as

917
00:44:54,800 --> 00:44:55,680
Speaker 6: many people thought it would.

918
00:44:57,840 --> 00:45:01,960
Speaker 1: So we're starting to see a little easing in wage growth.

919
00:45:02,120 --> 00:45:07,799
Speaker 1: If April's jobs report suggests a trend, I think it does.

920
00:45:08,719 --> 00:45:12,040
Speaker 1: I think that will filter into and also I think

921
00:45:12,040 --> 00:45:15,920
Speaker 1: we are seeing an increase in unemployment. I think that

922
00:45:16,040 --> 00:45:20,200
Speaker 1: all filters into moderation and services spending. I mean, we're

923
00:45:20,200 --> 00:45:22,680
Speaker 1: already hearing in a number of earnings reports that the

924
00:45:22,680 --> 00:45:26,440
Speaker 1: consumer has become even more selective in their purchases, is

925
00:45:26,600 --> 00:45:31,080
Speaker 1: even more concerned about expenses and the prices they pay

926
00:45:31,120 --> 00:45:34,000
Speaker 1: for certain items. So I think that we'll continue to

927
00:45:34,040 --> 00:45:38,280
Speaker 1: see progress in terms of disinflation on the services side

928
00:45:38,640 --> 00:45:42,200
Speaker 1: that has been I think unusually hot for a long

929
00:45:42,239 --> 00:45:45,160
Speaker 1: period of time, and over the course of the year,

930
00:45:45,440 --> 00:45:47,800
Speaker 1: I think the situation will get significantly better.

931
00:45:48,560 --> 00:45:51,040
Speaker 3: Christina, just looking at today's price action, we've got the

932
00:45:51,080 --> 00:45:52,440
Speaker 3: S and P up a half of one percent, but

933
00:45:52,480 --> 00:45:55,239
Speaker 3: the rustle is up about one point two percent. How

934
00:45:55,239 --> 00:45:57,520
Speaker 3: do you think about some of the small MidCap names

935
00:45:57,520 --> 00:45:59,880
Speaker 3: here Visa VI, you know, the big tech names that

936
00:46:00,120 --> 00:46:02,640
Speaker 3: been such powerhouses for this market.

937
00:46:04,920 --> 00:46:08,480
Speaker 1: Well, I think there's room for more participation, and I

938
00:46:08,600 --> 00:46:12,799
Speaker 1: look specifically at smaller cap names as an area of

939
00:46:12,880 --> 00:46:16,880
Speaker 1: real opportunity. If one believes, as I do, that we

940
00:46:16,960 --> 00:46:20,520
Speaker 1: are going to see a stabilization, that this slowdown is

941
00:46:20,560 --> 00:46:23,640
Speaker 1: going to be relatively brief. We're going to see a

942
00:46:23,719 --> 00:46:28,759
Speaker 1: reacceleration in economic growth, and that's a reacceleration globally. By

943
00:46:28,800 --> 00:46:31,879
Speaker 1: the way, the OECD you've been updated it's forecast last

944
00:46:31,880 --> 00:46:36,399
Speaker 1: week for global growth. That's that creates a real opportunity

945
00:46:36,440 --> 00:46:39,040
Speaker 1: for small caps, and I think that's why we're already

946
00:46:39,320 --> 00:46:42,160
Speaker 1: seeing improved performance from smaller cap stocks.

947
00:46:42,320 --> 00:46:44,919
Speaker 6: It's so interesting, Paul. I'm just looking at the top

948
00:46:44,960 --> 00:46:47,680
Speaker 6: function here in Bloomberg and one of these stories that

949
00:46:47,760 --> 00:46:50,160
Speaker 6: just came out is this great story bi own Michael

950
00:46:50,200 --> 00:46:53,880
Speaker 6: mackenzie and Liz Capa McCormick at two million dollars per minute.

951
00:46:53,880 --> 00:46:57,920
Speaker 6: Treasuries are minting cash like never before. Finally, for the

952
00:46:57,920 --> 00:47:00,960
Speaker 6: first time in nearly a generation, fixed income is living

953
00:47:01,040 --> 00:47:03,440
Speaker 6: up to its name. Christina, how much does that hold

954
00:47:03,520 --> 00:47:05,000
Speaker 6: back equities?

955
00:47:07,840 --> 00:47:10,080
Speaker 1: As I said, there's a lot of cash on sidelines,

956
00:47:10,200 --> 00:47:12,720
Speaker 1: so there are a lot of places for that cash

957
00:47:12,760 --> 00:47:18,520
Speaker 1: to go, and it's not a mutually exclusive situation. Investors

958
00:47:18,520 --> 00:47:22,360
Speaker 1: can put money into bonds and can put money into equities,

959
00:47:22,480 --> 00:47:24,879
Speaker 1: and I suspect that's what we're going to see. There's

960
00:47:24,880 --> 00:47:28,200
Speaker 1: a growing recognition and actification.

961
00:47:28,640 --> 00:47:31,040
Speaker 6: I'm just curious, like, if we do see rates come down,

962
00:47:31,520 --> 00:47:33,919
Speaker 6: do we see that cash then move off the sidelines

963
00:47:34,440 --> 00:47:37,640
Speaker 6: and into equities or is that the type of cash

964
00:47:37,719 --> 00:47:40,719
Speaker 6: that wants to stay in something that's more predictable.

965
00:47:42,760 --> 00:47:45,600
Speaker 1: I think the cash will probably the majority of it

966
00:47:45,640 --> 00:47:49,360
Speaker 1: will go into equities, but I suspect that it's also

967
00:47:49,520 --> 00:47:52,120
Speaker 1: going to go into fixed income, just because there's a

968
00:47:52,200 --> 00:47:55,680
Speaker 1: recognition that that fixed income is more attractive than it's

969
00:47:55,760 --> 00:47:59,320
Speaker 1: been in years and years, and that's going to continue.

970
00:47:59,680 --> 00:48:01,680
Speaker 1: And also I think we're going to see more money

971
00:48:01,680 --> 00:48:03,000
Speaker 1: going into alternatives.

972
00:48:03,040 --> 00:48:03,279
Speaker 10: Again.

973
00:48:03,400 --> 00:48:07,759
Speaker 1: Diversification is so important, and I think investors are recognizing

974
00:48:07,800 --> 00:48:11,120
Speaker 1: that more and more as they see the unpredictability of

975
00:48:11,760 --> 00:48:13,040
Speaker 1: the larger environment.

976
00:48:13,800 --> 00:48:15,960
Speaker 4: Christina Hooper, thank you so much for joining us. Always

977
00:48:15,960 --> 00:48:17,600
Speaker 4: appreciate getting your thoughts. Christina Hooper.

978
00:48:17,600 --> 00:48:21,480
Speaker 3: She's a chief Global market Strategist at Invesco.

979
00:48:21,760 --> 00:48:26,279
Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,

980
00:48:26,480 --> 00:48:29,680
Speaker 2: and anywhere else you'll get your podcasts. Listen live each

981
00:48:29,719 --> 00:48:33,080
Speaker 2: weekday ten am to noon Eastern on Bloomberg dot com,

982
00:48:33,200 --> 00:48:36,600
Speaker 2: the iHeartRadio app, tune In, and the Bloomberg Business app.

983
00:48:36,719 --> 00:48:39,840
Speaker 2: You can also watch us live every weekday on YouTube

984
00:48:39,920 --> 00:48:41,760
Speaker 2: and always on the Bloomberg terminal.