1 00:00:05,080 --> 00:00:08,880 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Lisa A. Bromoids, 2 00:00:08,920 --> 00:00:11,879 Speaker 1: along with Tom Keen and Jonathan Ferrell. Join us each 3 00:00:11,960 --> 00:00:15,760 Speaker 1: day for insight from the best in economics, geopolitics, finance 4 00:00:15,800 --> 00:00:19,520 Speaker 1: and investment. Subscribe to Bloomberg Surveillance un demand on Apple, 5 00:00:19,600 --> 00:00:22,840 Speaker 1: Spotify and anywhere you get your podcasts, and always on 6 00:00:22,880 --> 00:00:26,360 Speaker 1: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:26,400 --> 00:00:29,880 Speaker 2: From a beautiful Newport Beach, California, I'm Jonathan Ferrow, PIMCO, 8 00:00:30,000 --> 00:00:34,159 Speaker 2: publishing its secular outlook, The Aftershock Economy, writes, quote, we 9 00:00:34,159 --> 00:00:36,640 Speaker 2: see a window to step in as a senior lender 10 00:00:36,640 --> 00:00:40,200 Speaker 2: in areas once occupied by regional banks, such as consumer lending, 11 00:00:40,520 --> 00:00:44,440 Speaker 2: mortgage credit, and various forms of asset based finance. I'm 12 00:00:44,520 --> 00:00:46,120 Speaker 2: very pleased to say that we can have that conversation 13 00:00:46,159 --> 00:00:49,560 Speaker 2: now with the man himself, the boss, Pimco CEO, Manny 14 00:00:49,600 --> 00:00:50,200 Speaker 2: Roman Money. 15 00:00:50,200 --> 00:00:51,479 Speaker 3: Good morning to you, Thanks for having. 16 00:00:51,320 --> 00:00:52,800 Speaker 4: Us morning Tolism. Nice to see you. 17 00:00:52,960 --> 00:00:55,480 Speaker 2: That quote feels like your kind of language. We're going 18 00:00:55,560 --> 00:00:58,040 Speaker 2: to step in. My first thought when I read that was, 19 00:00:58,040 --> 00:00:59,960 Speaker 2: why don't you just buy a bank? There's many banks 20 00:01:00,160 --> 00:01:01,880 Speaker 2: sale right now. Why don't you just buy a bank? 21 00:01:02,160 --> 00:01:04,240 Speaker 5: What I think there are going to be many assets 22 00:01:04,240 --> 00:01:06,560 Speaker 5: to buy, and maybe the best way I have to 23 00:01:06,600 --> 00:01:09,200 Speaker 5: describe it is banks are going to be tight for capital. 24 00:01:10,160 --> 00:01:12,440 Speaker 5: And when the type for capital, they have two ways 25 00:01:12,440 --> 00:01:15,240 Speaker 5: of solving the problem. They can either raise more capital 26 00:01:15,720 --> 00:01:19,039 Speaker 5: or they can sell assets. And the most likely scenario 27 00:01:19,760 --> 00:01:23,400 Speaker 5: is there will be assets to sell in area where 28 00:01:23,440 --> 00:01:28,600 Speaker 5: we have a big footprint mortgagers commercial with the state bonds, 29 00:01:29,400 --> 00:01:34,000 Speaker 5: municipal bonds. Dan said that earlier today that he was 30 00:01:35,040 --> 00:01:38,520 Speaker 5: very keen on mortgagers. They'll be mortgagers to sell and 31 00:01:38,760 --> 00:01:40,559 Speaker 5: will be there to step in and. 32 00:01:40,560 --> 00:01:41,240 Speaker 4: Try to buy them. 33 00:01:41,360 --> 00:01:43,080 Speaker 2: Are you looking at buying a franchise to do that 34 00:01:43,160 --> 00:01:44,440 Speaker 2: or is that just something that happens. 35 00:01:44,160 --> 00:01:46,520 Speaker 4: Is something that we've built over the past twenty years. 36 00:01:46,840 --> 00:01:49,400 Speaker 5: And you know, there's good news and bad news when 37 00:01:49,440 --> 00:01:52,520 Speaker 5: you have a tougher economic cycle. I think the better 38 00:01:52,600 --> 00:01:55,400 Speaker 5: news is that the expected him goes up and they 39 00:01:55,440 --> 00:01:57,360 Speaker 5: are significant block of assets to sell. 40 00:01:58,080 --> 00:02:00,600 Speaker 4: You know, it could be for example, equipment loans. 41 00:02:00,640 --> 00:02:02,800 Speaker 5: You know, one of the bank who was very big 42 00:02:02,840 --> 00:02:05,800 Speaker 5: in equipment loans is out of business all of a sudden. 43 00:02:06,360 --> 00:02:07,760 Speaker 4: There's going to be a lot for us to do. 44 00:02:08,120 --> 00:02:10,639 Speaker 2: I hear this from other people too. I hear apollot 45 00:02:10,680 --> 00:02:12,400 Speaker 2: side banks are going to step back. We're going to 46 00:02:12,440 --> 00:02:14,760 Speaker 2: step back in. How competitive is this going to be? 47 00:02:14,880 --> 00:02:16,919 Speaker 2: Can you give me some size and make the pie 48 00:02:16,919 --> 00:02:17,400 Speaker 2: it's going to be. 49 00:02:17,600 --> 00:02:19,680 Speaker 5: It is going to be competitive because the seller has 50 00:02:19,720 --> 00:02:23,840 Speaker 5: a fiduciary duty and there will be enough for some 51 00:02:23,880 --> 00:02:27,640 Speaker 5: of us to do a lot and put money to 52 00:02:27,800 --> 00:02:31,520 Speaker 5: work and be patient and wait for the right opportunity 53 00:02:31,680 --> 00:02:33,760 Speaker 5: to do so. And I think I think the cycle 54 00:02:33,880 --> 00:02:38,200 Speaker 5: is usually long, and so there's no rush to put 55 00:02:38,240 --> 00:02:41,359 Speaker 5: money to work. There is a very discipline and systematic 56 00:02:41,400 --> 00:02:44,000 Speaker 5: way to look at your opportunity, and some will look 57 00:02:44,040 --> 00:02:46,680 Speaker 5: better than the other. It may very well be that 58 00:02:46,800 --> 00:02:49,760 Speaker 5: the single best asset turns out to be real estate 59 00:02:49,800 --> 00:02:51,560 Speaker 5: where we have a big foot print, or it may 60 00:02:51,639 --> 00:02:55,239 Speaker 5: very well be that it turns out to be commercial 61 00:02:55,280 --> 00:02:58,520 Speaker 5: real estate. And you know mortgagers in this whole segment and. 62 00:02:58,680 --> 00:03:01,040 Speaker 2: Commercial redista is something you've brought up, and I've heard 63 00:03:01,080 --> 00:03:02,960 Speaker 2: it from Dan. I spoke to Mark about it just 64 00:03:03,000 --> 00:03:06,400 Speaker 2: moments ago. Should I be worried about commercial real estate? 65 00:03:06,400 --> 00:03:08,320 Speaker 2: Can you talk me, just take me into the halls 66 00:03:08,360 --> 00:03:10,800 Speaker 2: of this place this building. Have you all sat around 67 00:03:10,840 --> 00:03:13,400 Speaker 2: a table, gone through every single portfolio and thought about 68 00:03:13,400 --> 00:03:15,600 Speaker 2: what you don't want exposure to right now related to 69 00:03:15,600 --> 00:03:16,760 Speaker 2: this one particular sector. 70 00:03:17,080 --> 00:03:19,080 Speaker 5: Well, I think we have, and I think we've seen 71 00:03:19,080 --> 00:03:22,120 Speaker 5: the playbook before, and it is everything else being. 72 00:03:22,040 --> 00:03:22,960 Speaker 4: Equal a slow cycle. 73 00:03:23,080 --> 00:03:26,079 Speaker 5: So the banks will look at the portfolio and slowly 74 00:03:26,120 --> 00:03:29,600 Speaker 5: but surely mark their books. I think you have a 75 00:03:29,720 --> 00:03:33,119 Speaker 5: microstructure of the commercial real estate market, which is quite 76 00:03:33,120 --> 00:03:36,600 Speaker 5: different depending on the city, depending on the places. Some 77 00:03:36,720 --> 00:03:40,760 Speaker 5: places are clearly tested, some of them are doing just fine. 78 00:03:40,800 --> 00:03:43,280 Speaker 5: I mean you can look at Austin, for example. You're 79 00:03:43,320 --> 00:03:46,720 Speaker 5: hard praised to find an empty office in Austin. And 80 00:03:47,200 --> 00:03:51,480 Speaker 5: the overall trend is going to be that people somehow 81 00:03:51,880 --> 00:03:54,520 Speaker 5: come back to work one way or the other. But 82 00:03:54,760 --> 00:03:58,160 Speaker 5: there's a transition period where for sure there will be 83 00:03:58,760 --> 00:04:01,760 Speaker 5: distress seller and people who have the wrong financing. 84 00:04:01,800 --> 00:04:03,120 Speaker 4: And I think the financing part. 85 00:04:03,000 --> 00:04:05,800 Speaker 5: Is really really important because it's one of the segments 86 00:04:05,800 --> 00:04:09,040 Speaker 5: where we're very involved and people have borrows shot term 87 00:04:10,240 --> 00:04:12,720 Speaker 5: in the past with very low rates. All of a 88 00:04:12,800 --> 00:04:16,640 Speaker 5: sudden the financing is expiring, spreads are higher, and of 89 00:04:16,680 --> 00:04:19,200 Speaker 5: course rates a much higher, and so then we need 90 00:04:19,240 --> 00:04:22,320 Speaker 5: to address the situation either by selling or by refunding 91 00:04:22,360 --> 00:04:23,560 Speaker 5: at more attractive terms for. 92 00:04:23,600 --> 00:04:26,039 Speaker 2: Us, Clearly, this business is going to change compared to 93 00:04:26,080 --> 00:04:29,440 Speaker 2: what it was several decades ago. We've had a multi 94 00:04:29,480 --> 00:04:32,799 Speaker 2: decade bond ballmarket. Most people assume that's now over based 95 00:04:32,839 --> 00:04:36,080 Speaker 2: on the last twelve months. Can you tell me how 96 00:04:36,400 --> 00:04:39,000 Speaker 2: this business will be different with that in mind? What 97 00:04:39,040 --> 00:04:41,440 Speaker 2: you need to position for now versus what this firm 98 00:04:41,520 --> 00:04:44,200 Speaker 2: was positioned for in the previous several decades. 99 00:04:44,360 --> 00:04:47,760 Speaker 5: What a very big change, and Dan mentioned this before 100 00:04:48,200 --> 00:04:52,120 Speaker 5: is generative AI and how technology can change our business 101 00:04:52,279 --> 00:04:56,520 Speaker 5: and thing for example, about the real estate market. We 102 00:04:56,560 --> 00:04:59,479 Speaker 5: can hire one hundred people to go from city to 103 00:04:59,560 --> 00:05:03,080 Speaker 5: city and kind of look at every single lease or 104 00:05:03,279 --> 00:05:07,600 Speaker 5: every single property. Or we can use technology to give 105 00:05:07,680 --> 00:05:11,360 Speaker 5: us a better grasp of where the alpha is and 106 00:05:11,360 --> 00:05:14,039 Speaker 5: where we think the opportunity is. When we think about 107 00:05:14,040 --> 00:05:19,279 Speaker 5: communication with client, we can invest significantly in generative AI 108 00:05:19,400 --> 00:05:23,679 Speaker 5: and actually give a better risk report, better customized report 109 00:05:23,720 --> 00:05:25,520 Speaker 5: to clients and so on and so forth. And I 110 00:05:25,520 --> 00:05:29,000 Speaker 5: think it's incredibly exciting. I see the work that we 111 00:05:29,080 --> 00:05:32,320 Speaker 5: do with open AI and Microsoft as important as. 112 00:05:32,279 --> 00:05:34,600 Speaker 4: The birth of the Internet. I mean, is it is 113 00:05:34,680 --> 00:05:35,279 Speaker 4: that it is. 114 00:05:35,279 --> 00:05:37,240 Speaker 5: You think it's that powerful, It is that powerful, and 115 00:05:37,279 --> 00:05:40,880 Speaker 5: it will change your job also change your job too potentially. 116 00:05:41,279 --> 00:05:43,039 Speaker 4: Yeah, no, no, of course, of course. I mean I 117 00:05:43,040 --> 00:05:43,800 Speaker 4: mean in a good way. 118 00:05:43,880 --> 00:05:45,839 Speaker 5: I think it will make us row up more productive 119 00:05:46,120 --> 00:05:47,560 Speaker 5: and I think that's a really, really good thing. 120 00:05:47,680 --> 00:05:49,359 Speaker 3: Is that a challenge to your secular outlook? 121 00:05:50,080 --> 00:05:55,880 Speaker 5: I think secular on a super secular basis, everything else 122 00:05:55,920 --> 00:05:56,520 Speaker 5: is being equal. 123 00:05:56,600 --> 00:05:58,120 Speaker 4: I think it means rates. 124 00:05:57,839 --> 00:06:00,760 Speaker 5: Are lower, but it also I think you should say 125 00:06:00,760 --> 00:06:03,960 Speaker 5: that with a humongous amount of humble pie in a 126 00:06:04,000 --> 00:06:06,960 Speaker 5: sense that the dispersion of events is going to be 127 00:06:07,040 --> 00:06:09,120 Speaker 5: very big, and we don't know what we don't know, 128 00:06:09,760 --> 00:06:11,760 Speaker 5: and it's easy for me to make prediction about what 129 00:06:11,760 --> 00:06:13,520 Speaker 5: will happen ten years from that that. 130 00:06:13,520 --> 00:06:14,320 Speaker 4: I'd be very wrong. 131 00:06:14,640 --> 00:06:18,760 Speaker 2: Let's measure success AUM over the last ten years, and 132 00:06:18,839 --> 00:06:21,839 Speaker 2: let's go back a decade. PIMCO was at about two 133 00:06:21,880 --> 00:06:25,120 Speaker 2: trillion dollars AM, not too far away from the likes 134 00:06:25,120 --> 00:06:28,480 Speaker 2: of Black Rock Black Rocks. AUM since then has more 135 00:06:28,480 --> 00:06:34,320 Speaker 2: than doubled. The AM here is steady, steady, with some volatility, 136 00:06:34,400 --> 00:06:37,080 Speaker 2: tons of volatility along the way, but it's basically unchanged 137 00:06:37,120 --> 00:06:38,039 Speaker 2: in the last decade. 138 00:06:38,880 --> 00:06:39,960 Speaker 3: What do you think that reflects? 139 00:06:41,839 --> 00:06:45,320 Speaker 5: It reflects the decision we made is that we try 140 00:06:45,320 --> 00:06:47,039 Speaker 5: to be very focused and do one thing and do 141 00:06:47,080 --> 00:06:49,479 Speaker 5: it very well. And I think we went through a 142 00:06:49,480 --> 00:06:54,520 Speaker 5: period of time where maybe fixed income wasn't as attractive. 143 00:06:53,920 --> 00:06:54,839 Speaker 4: As it is right now. 144 00:06:55,960 --> 00:07:01,400 Speaker 5: And we have the view that if we perform, if 145 00:07:01,440 --> 00:07:04,560 Speaker 5: we significantly beat the passive benchmark, if we do better 146 00:07:04,600 --> 00:07:07,960 Speaker 5: than appears, they will come. And we don't measure our 147 00:07:08,000 --> 00:07:10,520 Speaker 5: success by the amount of assets where we have. We 148 00:07:10,600 --> 00:07:14,120 Speaker 5: measure our success bet the returns we give to our 149 00:07:14,120 --> 00:07:17,560 Speaker 5: investors in what is a very competitive market, and so 150 00:07:17,720 --> 00:07:22,280 Speaker 5: and so and so. The real scene of asset manager 151 00:07:22,920 --> 00:07:25,040 Speaker 5: is to try to be bigger for the sake of 152 00:07:25,080 --> 00:07:25,760 Speaker 5: being bigger. 153 00:07:26,080 --> 00:07:29,120 Speaker 4: Because of economy of scale. We don't it's not a goal. 154 00:07:29,200 --> 00:07:30,440 Speaker 4: Just to be clear, it's not a goal. 155 00:07:30,440 --> 00:07:30,920 Speaker 3: It's not a goal. 156 00:07:30,960 --> 00:07:31,560 Speaker 4: We're here to. 157 00:07:31,600 --> 00:07:33,800 Speaker 5: Perform with the money we've been trusted and if we 158 00:07:33,880 --> 00:07:35,120 Speaker 5: do a good job, we'll be fine. 159 00:07:35,120 --> 00:07:36,920 Speaker 2: Well, let's talk about that good job. There have been 160 00:07:36,960 --> 00:07:39,160 Speaker 2: a couple of difficulties. I want to talk about one 161 00:07:39,160 --> 00:07:41,160 Speaker 2: specific name, which is Columbia properly trust. 162 00:07:41,920 --> 00:07:44,200 Speaker 3: What do I need to know about that? What happened. 163 00:07:44,200 --> 00:07:45,600 Speaker 3: Can you just give me a better idea of what 164 00:07:45,680 --> 00:07:46,160 Speaker 3: happened there? 165 00:07:46,280 --> 00:07:48,600 Speaker 5: Well, I think I think for obvious reasons, we don't 166 00:07:48,720 --> 00:07:51,880 Speaker 5: specifically come on names. But of course we have a 167 00:07:51,880 --> 00:07:55,720 Speaker 5: big portfolio of assets across the globe, and when you 168 00:07:55,760 --> 00:07:59,040 Speaker 5: have a recession, some are going to be doing less well, 169 00:07:59,200 --> 00:08:02,000 Speaker 5: and we're gonna work on trying to bet to get 170 00:08:02,000 --> 00:08:06,160 Speaker 5: the best possible dot com. And the reality of fund 171 00:08:06,200 --> 00:08:09,120 Speaker 5: management is you have, at any point in time things 172 00:08:09,160 --> 00:08:12,160 Speaker 5: doing great and things doing less great, and we focus 173 00:08:12,200 --> 00:08:14,240 Speaker 5: on the one doing let's great, and making sure we 174 00:08:14,280 --> 00:08:15,360 Speaker 5: have the best possible dot com. 175 00:08:15,400 --> 00:08:17,080 Speaker 2: So is that just a reflection of being so big 176 00:08:17,120 --> 00:08:19,080 Speaker 2: there across everything or was that a canary in the 177 00:08:19,080 --> 00:08:21,720 Speaker 2: coal mine on a certain issue at a certain time. 178 00:08:21,960 --> 00:08:23,880 Speaker 5: No, I think it's a reflection of us having a 179 00:08:23,880 --> 00:08:27,600 Speaker 5: diverse port for you. And I think you heard one 180 00:08:27,640 --> 00:08:32,320 Speaker 5: of my competitor at Milkin's saying that very yeah well, 181 00:08:32,440 --> 00:08:34,520 Speaker 5: saying that when you have a big realestate port for you, 182 00:08:34,720 --> 00:08:37,360 Speaker 5: at any point in time, not everything is going to 183 00:08:37,400 --> 00:08:40,400 Speaker 5: do great. And I think we're willing to do that 184 00:08:40,480 --> 00:08:43,360 Speaker 5: as long as the net result for our investors is. 185 00:08:43,320 --> 00:08:45,200 Speaker 4: Going to be the right one. Some thing that's what matters. 186 00:08:45,280 --> 00:08:47,079 Speaker 2: One last issue that we need to discuss as well. 187 00:08:47,120 --> 00:08:49,440 Speaker 2: And understand that perhaps you can't offer a great degree 188 00:08:49,440 --> 00:08:52,520 Speaker 2: of clarity in detail because of litigation issues, But you 189 00:08:52,600 --> 00:08:54,400 Speaker 2: know what name is going to come up in conversation now, 190 00:08:54,440 --> 00:08:55,040 Speaker 2: credit sweets. 191 00:08:55,720 --> 00:08:55,880 Speaker 3: Now. 192 00:08:55,920 --> 00:08:58,360 Speaker 2: I just wonder from your perspective the future of the 193 00:08:58,400 --> 00:09:02,040 Speaker 2: at one market continued convertibles. 194 00:09:01,280 --> 00:09:03,480 Speaker 3: After the events of the last couple of months. 195 00:09:03,520 --> 00:09:05,760 Speaker 2: As a firm, and if you don't want to talk 196 00:09:05,800 --> 00:09:08,360 Speaker 2: directly about that institution, we don't have to. But as 197 00:09:08,400 --> 00:09:12,920 Speaker 2: a firm, have you rethought about that particular class of securities. 198 00:09:13,280 --> 00:09:17,720 Speaker 5: Well, the banks, especially in Europe have a big need 199 00:09:18,160 --> 00:09:23,880 Speaker 5: to issue eighty one as a way to raise enough 200 00:09:23,880 --> 00:09:27,720 Speaker 5: equity to pass the stress test, and so there needs 201 00:09:27,720 --> 00:09:32,240 Speaker 5: to be clear rule of engagement from both the banks 202 00:09:32,280 --> 00:09:37,360 Speaker 5: and the regulator. And you've seen in the recent months 203 00:09:37,640 --> 00:09:40,839 Speaker 5: the Bank of England and the ECB being incredibly vocal 204 00:09:40,920 --> 00:09:43,320 Speaker 5: about what they think the rules of the game are 205 00:09:43,800 --> 00:09:48,560 Speaker 5: and what a well functioning market has to offer to 206 00:09:48,600 --> 00:09:53,079 Speaker 5: make it attractive for investors to participate. And if the 207 00:09:53,160 --> 00:09:55,440 Speaker 5: rules of the game are attractive and the price is right, 208 00:09:56,000 --> 00:09:59,320 Speaker 5: you'll see plenty of people coming into this market and 209 00:10:00,040 --> 00:10:02,800 Speaker 5: Pinco will be one of them. And if the rules 210 00:10:02,840 --> 00:10:05,720 Speaker 5: of the games are biased or unclear or at the 211 00:10:05,800 --> 00:10:09,760 Speaker 5: expense of investors, then maybe we'll decide to step. 212 00:10:09,559 --> 00:10:10,000 Speaker 4: Out of it. 213 00:10:10,120 --> 00:10:11,320 Speaker 3: Do you think that bars an unclear? 214 00:10:11,360 --> 00:10:16,800 Speaker 5: Now depends on the jurisdiction. We have welcomed the comments 215 00:10:16,800 --> 00:10:18,040 Speaker 5: made by the ECB. 216 00:10:17,920 --> 00:10:18,920 Speaker 4: And the Bank of England. 217 00:10:19,240 --> 00:10:21,000 Speaker 2: Manley, it's good to see. It's good to see you 218 00:10:21,080 --> 00:10:23,280 Speaker 2: the hostingers. I appreciate it. Thank you very much. We 219 00:10:23,320 --> 00:10:24,960 Speaker 2: got to do this again next year as well. Money 220 00:10:25,000 --> 00:10:26,320 Speaker 2: Rum and the pin cut. 221 00:10:36,840 --> 00:10:40,760 Speaker 1: Julian Emmanuel, chief equity Derivatives and quant strategists at Evercore 222 00:10:40,840 --> 00:10:44,360 Speaker 1: ISA for the ISI for the hour. And this comes 223 00:10:44,360 --> 00:10:46,320 Speaker 1: in the time when we are seeing this twenty percent 224 00:10:46,360 --> 00:10:49,040 Speaker 1: potential gain on the S and P since the lows 225 00:10:49,040 --> 00:10:51,400 Speaker 1: that we saw in October. Is this rally real? 226 00:10:52,520 --> 00:10:55,480 Speaker 6: We think it is. Actually, we don't want to put 227 00:10:55,679 --> 00:10:58,959 Speaker 6: the label bull market on it, okay, because frankly, our 228 00:10:59,000 --> 00:11:01,640 Speaker 6: base case is that sometime in the next twelve to 229 00:11:01,679 --> 00:11:04,600 Speaker 6: eighteen months you're going to have a recession, which means 230 00:11:04,640 --> 00:11:07,400 Speaker 6: you're going to have a sizeable pullback. But this is 231 00:11:07,440 --> 00:11:11,080 Speaker 6: a cyclical rally where we think the hallmark of the 232 00:11:11,160 --> 00:11:14,000 Speaker 6: last week or so is a broadening of participation. 233 00:11:14,120 --> 00:11:15,760 Speaker 1: What is it about the labels? You don't want to 234 00:11:15,760 --> 00:11:17,480 Speaker 1: call it a bull market. You don't want to call 235 00:11:17,520 --> 00:11:19,440 Speaker 1: it a pause, You want to whole call it a 236 00:11:19,520 --> 00:11:20,880 Speaker 1: skip Like why does it matter? 237 00:11:21,080 --> 00:11:23,800 Speaker 6: Well, it matters a lot. If you go back to 238 00:11:23,880 --> 00:11:28,760 Speaker 6: the two tech bubble burst bear market, you had several 239 00:11:28,960 --> 00:11:32,560 Speaker 6: rallies of forty and fifty percent in the NASDAC before 240 00:11:32,559 --> 00:11:35,440 Speaker 6: you made the final bottom. It is one of those 241 00:11:35,480 --> 00:11:39,160 Speaker 6: things where rather than labeling, you have to think about 242 00:11:39,280 --> 00:11:41,920 Speaker 6: how you want to think about the long term as 243 00:11:41,960 --> 00:11:45,440 Speaker 6: either an individual investor or an active manager. And frankly, 244 00:11:45,520 --> 00:11:48,560 Speaker 6: this is one of these times where those considerations are 245 00:11:48,600 --> 00:11:49,240 Speaker 6: a bit different. 246 00:11:49,480 --> 00:11:50,400 Speaker 1: Is this a fun time? 247 00:11:51,520 --> 00:11:55,680 Speaker 6: It's a tough time, but look at the end, we're 248 00:11:55,720 --> 00:11:57,200 Speaker 6: happier when equities go up. 249 00:11:57,240 --> 00:11:59,800 Speaker 1: I think we're seeing also a lot of potential risks 250 00:12:00,080 --> 00:12:03,280 Speaker 1: of a bigger picture scale, whether it's what we saw 251 00:12:03,360 --> 00:12:05,640 Speaker 1: over in Ukraine with that dam bursting and what it's 252 00:12:05,679 --> 00:12:08,200 Speaker 1: doing some of these concerns about and escalating war there, 253 00:12:08,520 --> 00:12:11,800 Speaker 1: or if it's ratcheting up of tensions in China between 254 00:12:11,800 --> 00:12:14,760 Speaker 1: the US and China. How much are you looking at 255 00:12:14,840 --> 00:12:16,880 Speaker 1: potential tail risks or do you think that that's what's 256 00:12:16,960 --> 00:12:19,040 Speaker 1: damp in some of the valuations at this point that 257 00:12:19,160 --> 00:12:21,120 Speaker 1: sort of set up for what you're talking about. 258 00:12:21,360 --> 00:12:24,680 Speaker 6: It's definitely damp in the valuations. And this, again, the 259 00:12:24,800 --> 00:12:27,520 Speaker 6: period we believe we're entering, is one of those times 260 00:12:27,559 --> 00:12:30,959 Speaker 6: where despite those risks, we do think we're going to 261 00:12:31,000 --> 00:12:34,360 Speaker 6: see a little bit of multiple expansion, which is a 262 00:12:34,400 --> 00:12:37,800 Speaker 6: bit counterintuitive but frankly what it does. And again going 263 00:12:37,880 --> 00:12:42,359 Speaker 6: back to our options expertise, the VIX with a fourteen 264 00:12:42,440 --> 00:12:48,079 Speaker 6: handle is absolutely fabulous in terms of protecting either downside 265 00:12:48,160 --> 00:12:51,760 Speaker 6: risk or for some who are underperforming and may get 266 00:12:51,840 --> 00:12:54,120 Speaker 6: pulled into a chase upside risks. 267 00:12:54,160 --> 00:12:56,080 Speaker 1: We're kind of bearing the lead here. On Sunday. You 268 00:12:56,120 --> 00:12:59,120 Speaker 1: made a pretty big move. You upgraded, you increased your 269 00:12:59,120 --> 00:13:01,280 Speaker 1: expectation for the S and PAY to forty four to 270 00:13:01,280 --> 00:13:04,439 Speaker 1: fifty and potentially you might see that as soon as July. 271 00:13:05,800 --> 00:13:09,840 Speaker 6: Explain that's the hallmark of a momentum market, and I 272 00:13:09,840 --> 00:13:12,960 Speaker 6: think look, clearly, the NASDAC has been in a momentum 273 00:13:13,000 --> 00:13:16,480 Speaker 6: market essentially since the end of March, and for us 274 00:13:16,520 --> 00:13:19,840 Speaker 6: the last week or so is encouraging because the S 275 00:13:19,880 --> 00:13:23,160 Speaker 6: and P broadly has joined with that in its clear 276 00:13:23,240 --> 00:13:25,839 Speaker 6: move above the forty two hundred level, which had been 277 00:13:25,840 --> 00:13:30,079 Speaker 6: basically six or seven months versus of resistance. We're actually 278 00:13:30,120 --> 00:13:32,360 Speaker 6: starting to see a little bit of broadening into the 279 00:13:32,400 --> 00:13:36,520 Speaker 6: small caps, which is very encouraging. But frankly, again, this 280 00:13:36,600 --> 00:13:41,960 Speaker 6: is an environment where the momentum takes on a life 281 00:13:41,960 --> 00:13:45,120 Speaker 6: of its own, and that's also a function of the 282 00:13:45,120 --> 00:13:48,040 Speaker 6: fact that if you look at it, sentiment, whether you're 283 00:13:48,120 --> 00:13:50,920 Speaker 6: measuring it in terms of the stock market or the 284 00:13:50,960 --> 00:13:55,760 Speaker 6: economy or again thinking about risk, is incredibly, incredibly poor. 285 00:13:56,160 --> 00:13:58,400 Speaker 6: And yet at the same time we're seeing data that 286 00:13:58,520 --> 00:14:02,000 Speaker 6: says there's a chance that this recession gets pushed out, 287 00:14:02,080 --> 00:14:04,559 Speaker 6: it keeps getting pushed out, in may end up getting 288 00:14:04,559 --> 00:14:05,880 Speaker 6: pushed out to twenty four. 289 00:14:05,960 --> 00:14:09,360 Speaker 1: And right now we're seeing basically a range bound market 290 00:14:09,400 --> 00:14:12,480 Speaker 1: ahead of yet another day of quiet period for the 291 00:14:12,480 --> 00:14:15,280 Speaker 1: Federal Reserve. But anything but when it comes to some 292 00:14:15,400 --> 00:14:17,839 Speaker 1: of the international fluctuations, you see about a tenth of 293 00:14:17,880 --> 00:14:19,720 Speaker 1: a percent decline on the S and P forty two 294 00:14:19,760 --> 00:14:21,960 Speaker 1: seventy five, still on the forty three hundred watch we 295 00:14:22,040 --> 00:14:25,520 Speaker 1: didn't quite get there. Ongoing weakness over in the euro 296 00:14:25,600 --> 00:14:28,360 Speaker 1: but it's basically bit around one oh six eight for 297 00:14:28,480 --> 00:14:30,800 Speaker 1: quite a while, with a bit of a stronger dollar 298 00:14:31,040 --> 00:14:34,680 Speaker 1: and tenyure yields lowered just to touch after those ISM 299 00:14:34,840 --> 00:14:38,880 Speaker 1: services data that came out yesterday, kind of disappointing, even 300 00:14:38,920 --> 00:14:42,160 Speaker 1: though still an expansion crewed a little bit off earlier lows. 301 00:14:42,200 --> 00:14:44,640 Speaker 1: I want to note I said John's on the beach. 302 00:14:44,840 --> 00:14:48,000 Speaker 1: He's actually in Newport Beach. He's hosting the open from 303 00:14:48,040 --> 00:14:50,480 Speaker 1: pimco's headquarters, which is the reason why he ditched me 304 00:14:50,840 --> 00:14:53,640 Speaker 1: along with Tom. He'll be speaking with CEO Emmanuel Roman, 305 00:14:54,120 --> 00:14:57,840 Speaker 1: CIO Dan Ivison, and former FED Vice chair Rich Claredo, 306 00:14:57,880 --> 00:15:02,120 Speaker 1: who's their head economic out they're at PIMCO. That's all 307 00:15:02,160 --> 00:15:05,120 Speaker 1: coming up today starting at nine am Eastern today, annual 308 00:15:05,160 --> 00:15:08,440 Speaker 1: shareholder meetings will happen for Zillow, Urban Outfitters, Palanteer, and 309 00:15:08,480 --> 00:15:11,440 Speaker 1: Freeport macbere And I say this because we actually saw 310 00:15:11,600 --> 00:15:15,920 Speaker 1: some really interesting guidance out of Taiwan Semiconductor Manufacturing Company, 311 00:15:15,960 --> 00:15:20,360 Speaker 1: basically downwardly revising some of their expectations. You're seeing shares 312 00:15:20,400 --> 00:15:23,120 Speaker 1: off today, so it's sort of interesting to see some 313 00:15:23,200 --> 00:15:25,400 Speaker 1: of the commentary coming out of these meetings at a 314 00:15:25,400 --> 00:15:28,560 Speaker 1: time of such fluctuation and today I know that you 315 00:15:28,640 --> 00:15:31,080 Speaker 1: love talking politics, Julian, so I really wanted to get 316 00:15:31,120 --> 00:15:33,760 Speaker 1: you on this. Former New Jersey Governor Chris Christy is 317 00:15:33,800 --> 00:15:36,520 Speaker 1: expected to jump into the race to become Republican candidate 318 00:15:36,560 --> 00:15:39,320 Speaker 1: for president. He has been called in one New York 319 00:15:39,320 --> 00:15:41,600 Speaker 1: Times article the Trump's layer, people saying he has no 320 00:15:41,720 --> 00:15:43,840 Speaker 1: chance to win, but his complete objective is to act 321 00:15:43,840 --> 00:15:46,320 Speaker 1: as an attack dog on the stage in debates with 322 00:15:46,480 --> 00:15:49,360 Speaker 1: the former President Trump. A pretty crowded field in the 323 00:15:49,400 --> 00:15:51,960 Speaker 1: Republican race, potentially twelve candidates by July. 324 00:15:52,280 --> 00:15:54,920 Speaker 6: Well, you do wonder if Governor Christy is going to 325 00:15:54,920 --> 00:15:58,440 Speaker 6: announce with a pair of everlast boxing gloves on his hands. 326 00:15:58,640 --> 00:16:00,080 Speaker 1: Essentially, yes, QUI. 327 00:16:00,040 --> 00:16:04,040 Speaker 6: Question about it. Look, this is healthy at least I 328 00:16:04,080 --> 00:16:06,960 Speaker 6: think you can call it healthy. Let's see what happens. 329 00:16:07,040 --> 00:16:10,160 Speaker 6: My question is and hopefully we'll have someone help us 330 00:16:10,200 --> 00:16:15,360 Speaker 6: answer it is. You know who among the field aside 331 00:16:15,360 --> 00:16:19,120 Speaker 6: from Trump and DeSantis, could potentially rise to sort of 332 00:16:19,160 --> 00:16:22,960 Speaker 6: create a three way race. That's the big question. 333 00:16:23,120 --> 00:16:26,040 Speaker 1: And a lot of people are looking down to Virginia 334 00:16:26,200 --> 00:16:29,080 Speaker 1: potentially for that, And we will get into that later. 335 00:16:29,400 --> 00:16:30,800 Speaker 1: I do want to get to what we heard over 336 00:16:31,120 --> 00:16:35,080 Speaker 1: in China, a recommendation that state owned banks start to 337 00:16:35,200 --> 00:16:39,720 Speaker 1: reduce their deposit rates to encourage lending and to increase 338 00:16:39,760 --> 00:16:42,840 Speaker 1: their margins. Joining us now is Bloomberg's Tom mackenzie, who 339 00:16:42,840 --> 00:16:46,320 Speaker 1: covered China for more than a decade. He's in London, Tom, 340 00:16:46,480 --> 00:16:48,480 Speaker 1: what do you make of this and also what do 341 00:16:48,520 --> 00:16:50,360 Speaker 1: you make of the fact that it's not a mandate, 342 00:16:50,480 --> 00:16:51,440 Speaker 1: it's a recommendation. 343 00:16:53,280 --> 00:16:55,000 Speaker 7: Yeah, there's a final line between a mandate and a 344 00:16:55,040 --> 00:16:57,760 Speaker 7: recommendation when it comes to official policies out of aging 345 00:16:57,760 --> 00:17:00,040 Speaker 7: when they lean on those state banks. Of course, the 346 00:17:00,080 --> 00:17:02,280 Speaker 7: build u when we were talking about last week, Lisa, around 347 00:17:02,720 --> 00:17:04,880 Speaker 7: the measures being put in place, at least the proposals 348 00:17:04,920 --> 00:17:07,560 Speaker 7: being discussed, according to Bloomberg reporting to kind of shore 349 00:17:07,640 --> 00:17:10,600 Speaker 7: up the real estate market. Now you have more piecemeal 350 00:17:10,640 --> 00:17:13,960 Speaker 7: efforts to try and put a floor under the growth 351 00:17:14,040 --> 00:17:16,359 Speaker 7: that has come through from China, less strong, of course 352 00:17:16,400 --> 00:17:19,119 Speaker 7: than many had expected. So leaning on the banks to 353 00:17:19,200 --> 00:17:22,160 Speaker 7: reduce those deposit rates, it means that the banks can 354 00:17:22,200 --> 00:17:26,080 Speaker 7: then look to lower the loan rates and provide more liquidity. 355 00:17:26,160 --> 00:17:28,719 Speaker 7: We did see loans new un loans that credit impulse 356 00:17:28,760 --> 00:17:30,440 Speaker 7: came through in the first quarter, but then it dropped 357 00:17:30,480 --> 00:17:33,680 Speaker 7: on April, and clearly there was concern about the fact 358 00:17:33,720 --> 00:17:35,760 Speaker 7: that there wasn't that traction going forward in terms of 359 00:17:35,800 --> 00:17:39,520 Speaker 7: liquidity and that demand for loans. Households, businesses, they're shoring 360 00:17:39,600 --> 00:17:41,960 Speaker 7: up their balance sheets, households are paying down their mortgages. 361 00:17:42,280 --> 00:17:45,399 Speaker 7: The question really is is there the demand even if 362 00:17:45,440 --> 00:17:47,840 Speaker 7: it becomes easier to take out a loan and to 363 00:17:47,920 --> 00:17:50,600 Speaker 7: access to that liquidity, is that they're really the demand 364 00:17:50,760 --> 00:17:52,800 Speaker 7: to kind of tap into that and then support the economy. 365 00:17:52,920 --> 00:17:55,240 Speaker 1: On one hand, this is kind of stimulus light and 366 00:17:55,280 --> 00:17:57,879 Speaker 1: that's positive potentially for growth. On the other hand, this 367 00:17:57,960 --> 00:18:00,639 Speaker 1: indicates that perhaps the Chinese Communist Party sees a bigger 368 00:18:00,680 --> 00:18:02,880 Speaker 1: problem than they're letting on, which is it. 369 00:18:04,440 --> 00:18:06,399 Speaker 7: Well, it's interesting. I was speaking to How Hong, who 370 00:18:06,520 --> 00:18:09,800 Speaker 7: was formerly a BOCOM, a really respected strategist there, and 371 00:18:10,080 --> 00:18:12,480 Speaker 7: he said, look, this seems to me like a government 372 00:18:12,520 --> 00:18:17,480 Speaker 7: that's running out of ideas. Bloomberg economics are they now 373 00:18:17,560 --> 00:18:20,560 Speaker 7: view the chances of a benchmark rate cut. So for 374 00:18:20,640 --> 00:18:23,960 Speaker 7: the one year and the five year medium term lending facilities, 375 00:18:24,400 --> 00:18:27,720 Speaker 7: they expect those to be reduced, possibly as early as 376 00:18:27,800 --> 00:18:30,119 Speaker 7: the middle of June. But there's a debate about that 377 00:18:30,200 --> 00:18:32,960 Speaker 7: Jones Lang Lacel. Economists there say they actually think this 378 00:18:33,119 --> 00:18:35,360 Speaker 7: action to lean on the banks to reduce deposit rates 379 00:18:35,400 --> 00:18:38,080 Speaker 7: and therefore give them the scope to reduce loan rates, 380 00:18:38,200 --> 00:18:41,639 Speaker 7: that that probably pushes back a benchmark rate cut for 381 00:18:42,000 --> 00:18:44,560 Speaker 7: the PBOC. By the way, for the context, they've cut 382 00:18:44,640 --> 00:18:47,119 Speaker 7: just fifty basis points, just half of percent since the 383 00:18:47,160 --> 00:18:49,040 Speaker 7: start of the pandemic in twenty twenty, so they do 384 00:18:49,080 --> 00:18:51,800 Speaker 7: have that dry powder. But again they have this massive 385 00:18:52,119 --> 00:18:54,800 Speaker 7: debt pile, and there's that concern of course in terms 386 00:18:54,840 --> 00:18:56,600 Speaker 7: of just adding to that if they go with a 387 00:18:56,600 --> 00:18:59,879 Speaker 7: broad benchmark cut. But it's certainly something that now the 388 00:19:00,040 --> 00:19:02,840 Speaker 7: buloving big economics seem things it's possibly likely. 389 00:19:02,680 --> 00:19:05,359 Speaker 1: Mid Jude Tommy Kenzie, thank you so much of Bloomberg. 390 00:19:05,480 --> 00:19:08,920 Speaker 1: Joining us from London, Julian Emmanuel, have evercore as Isi 391 00:19:09,119 --> 00:19:11,400 Speaker 1: here with me for the hour. What do you make 392 00:19:11,440 --> 00:19:13,280 Speaker 1: of what's going on in China and the fact that 393 00:19:13,320 --> 00:19:15,320 Speaker 1: the growth is sort of running out of steam to 394 00:19:15,440 --> 00:19:17,720 Speaker 1: such a degree. Do you feel like a lot of 395 00:19:17,720 --> 00:19:19,919 Speaker 1: that story has been priced in and is really on 396 00:19:19,960 --> 00:19:20,920 Speaker 1: the wayne. 397 00:19:20,840 --> 00:19:24,440 Speaker 6: So we actually think that you're it's the bumpy path 398 00:19:24,880 --> 00:19:28,320 Speaker 6: to a more sustainable number it's not six percent or 399 00:19:28,359 --> 00:19:31,399 Speaker 6: north of six percent, but it may settle in towards 400 00:19:31,400 --> 00:19:34,480 Speaker 6: five percent. The issue here is a couple of things. 401 00:19:34,960 --> 00:19:38,680 Speaker 6: First off, the way that China wants and will likely 402 00:19:38,760 --> 00:19:43,120 Speaker 6: grow is unlike the last twenty years, we are making 403 00:19:43,200 --> 00:19:48,440 Speaker 6: the transition to a domestic consumer led economy. And the 404 00:19:48,480 --> 00:19:51,240 Speaker 6: issue is is that you know, you've had a second 405 00:19:51,240 --> 00:19:54,439 Speaker 6: COVID wave over the last five or six weeks, and 406 00:19:54,480 --> 00:19:56,840 Speaker 6: it's hard to say, I think right now just how 407 00:19:56,960 --> 00:20:01,400 Speaker 6: much of a dampening effect that has. But you know, 408 00:20:02,040 --> 00:20:06,360 Speaker 6: in hearing the suggestion that banks reduce their rates, I'm 409 00:20:06,400 --> 00:20:11,600 Speaker 6: reminded of that phrase moral suasion that I suspect you'll 410 00:20:11,640 --> 00:20:16,640 Speaker 6: get a degree greater of moral suasion if things don't 411 00:20:16,680 --> 00:20:20,240 Speaker 6: pick up. And obviously the government is very, very in 412 00:20:20,240 --> 00:20:21,919 Speaker 6: tune with the pulse. 413 00:20:22,200 --> 00:20:24,520 Speaker 1: The beatings will continue until morale improves a bit of that. 414 00:20:25,040 --> 00:20:27,640 Speaker 1: I mean, there is this question though, going forward, about 415 00:20:27,720 --> 00:20:30,199 Speaker 1: how much of a tailwind or a headwind China will be. 416 00:20:30,680 --> 00:20:34,119 Speaker 1: And as you talk about upgrading your forecast for US equities, 417 00:20:34,160 --> 00:20:36,320 Speaker 1: do you see US as sort of being I don't 418 00:20:36,359 --> 00:20:38,520 Speaker 1: want to say a haven, but a new sort of 419 00:20:38,600 --> 00:20:41,879 Speaker 1: spot of focus. After everyone was looking international for the 420 00:20:41,920 --> 00:20:42,800 Speaker 1: first half of the year. 421 00:20:42,960 --> 00:20:45,879 Speaker 6: Well, again, it is a mixed bag because if you 422 00:20:45,960 --> 00:20:49,720 Speaker 6: look at some of the consumer focus names selling into China, 423 00:20:50,160 --> 00:20:53,480 Speaker 6: they have sold off in the last month, even as 424 00:20:53,520 --> 00:20:57,080 Speaker 6: the rest of the market has stabilized, and obviously parts 425 00:20:57,080 --> 00:21:00,000 Speaker 6: of it have rallied quite strongly, and that tells you 426 00:21:00,119 --> 00:21:03,159 Speaker 6: that it is an open question. The one thing that 427 00:21:03,240 --> 00:21:06,439 Speaker 6: does seem clear is that this whole idea that China 428 00:21:06,520 --> 00:21:12,119 Speaker 6: is going to be this very discreete reason for inflation 429 00:21:12,520 --> 00:21:16,359 Speaker 6: to take another leg higher that we don't subscribe. 430 00:21:15,880 --> 00:21:18,600 Speaker 1: To every morning. In your morning meetings, what do they 431 00:21:18,640 --> 00:21:20,679 Speaker 1: seem like? Do people kind of sit around They're like, well, 432 00:21:20,720 --> 00:21:22,840 Speaker 1: it's the same kind of waiting game. We're not sure, 433 00:21:22,840 --> 00:21:26,080 Speaker 1: but today we see more games. I mean, is it 434 00:21:26,119 --> 00:21:29,120 Speaker 1: sort of a momentum kind of discussion. Well, it is. 435 00:21:29,200 --> 00:21:32,159 Speaker 6: But and again when you think about it, ed Heiman 436 00:21:33,080 --> 00:21:37,679 Speaker 6: has been absolutely on the forefront of the view that 437 00:21:37,760 --> 00:21:41,400 Speaker 6: inflation is going to come in faster than people expect. 438 00:21:41,560 --> 00:21:43,800 Speaker 6: Now the last month or two it's been a little 439 00:21:43,840 --> 00:21:46,199 Speaker 6: bit choppier, and we look ahead to next week, we 440 00:21:46,280 --> 00:21:47,680 Speaker 6: think that's likely to be assigned. 441 00:21:47,760 --> 00:21:49,880 Speaker 1: We certainly saw that from the ECB and their consumer 442 00:21:50,000 --> 00:21:54,480 Speaker 1: inflation release that they put out today. Julian Emmanuel, chief 443 00:21:54,520 --> 00:22:02,520 Speaker 1: Equity Derivatives and quant strategists at Evercore ISA, our next guest, 444 00:22:02,880 --> 00:22:05,920 Speaker 1: has been talking about in earnings recession. He's also been 445 00:22:05,960 --> 00:22:08,639 Speaker 1: talking about how you could see a soft landing and 446 00:22:08,720 --> 00:22:11,800 Speaker 1: yet you could also see companies really have to ratch 447 00:22:11,960 --> 00:22:13,480 Speaker 1: back what their profits are going to be. As Ander 448 00:22:13,520 --> 00:22:17,440 Speaker 1: Sheet's chief cross asset strategistic Morgan Stanley, wonderful to have 449 00:22:17,480 --> 00:22:19,520 Speaker 1: you on. Let's just start first in your thoughts and 450 00:22:19,520 --> 00:22:20,800 Speaker 1: what Neil was talking about earlier. 451 00:22:22,359 --> 00:22:25,920 Speaker 8: Well, look, I do think that we should acknowledge this 452 00:22:25,960 --> 00:22:29,520 Speaker 8: is an unusual time in markets. And again I think 453 00:22:29,520 --> 00:22:31,600 Speaker 8: in that opening clip showed you know, we have some 454 00:22:31,640 --> 00:22:33,760 Speaker 8: of the highest core inflation since the eighties. 455 00:22:33,800 --> 00:22:34,240 Speaker 4: We have the. 456 00:22:34,200 --> 00:22:37,600 Speaker 8: Most inverted yield curve in the US in forty years, 457 00:22:37,880 --> 00:22:41,080 Speaker 8: in Germany in thirty years. We have won of the 458 00:22:41,119 --> 00:22:43,399 Speaker 8: lowest unemployment rates we've seen in the US since the 459 00:22:43,480 --> 00:22:46,960 Speaker 8: nineteen sixties. So we're dealing investors are dealing with some 460 00:22:47,040 --> 00:22:47,919 Speaker 8: unusual data. 461 00:22:48,359 --> 00:22:48,520 Speaker 4: You know. 462 00:22:48,600 --> 00:22:51,080 Speaker 8: Our view is that that the economy is going to 463 00:22:51,160 --> 00:22:53,040 Speaker 8: slow in the US and Europe in the second half 464 00:22:53,040 --> 00:22:55,359 Speaker 8: of the year, that the full effect of tightening has 465 00:22:55,400 --> 00:22:57,520 Speaker 8: not yet been felt by the economy, but that tightening 466 00:22:57,560 --> 00:23:01,199 Speaker 8: will continue to play out, and that even if you 467 00:23:01,240 --> 00:23:04,800 Speaker 8: don't get a recession, the effect of slowing growth effect, 468 00:23:05,240 --> 00:23:08,600 Speaker 8: especially the effect of slowing nominal GDP, is going to 469 00:23:08,600 --> 00:23:10,879 Speaker 8: be bad for operating leverage, is going to put some 470 00:23:10,920 --> 00:23:13,840 Speaker 8: pressure on earnings and mean that current expectations for earnings 471 00:23:13,840 --> 00:23:16,200 Speaker 8: growth we think are still high for this year, which 472 00:23:16,240 --> 00:23:18,840 Speaker 8: creates some near term downside. Now I think as you 473 00:23:18,880 --> 00:23:21,480 Speaker 8: look further out, the picture looks a little bit better, 474 00:23:21,560 --> 00:23:23,439 Speaker 8: but near term, I think the market still has to 475 00:23:23,440 --> 00:23:25,080 Speaker 8: get through a number of key challenges. 476 00:23:25,160 --> 00:23:27,520 Speaker 1: Andrew, you just put out a report talking about S 477 00:23:27,520 --> 00:23:30,520 Speaker 1: and P earnings declining about sixteen percent through the end 478 00:23:30,520 --> 00:23:32,879 Speaker 1: of this year. What have been some of the responses 479 00:23:32,880 --> 00:23:35,520 Speaker 1: that you've gotten. How have you explained why you see 480 00:23:35,520 --> 00:23:37,680 Speaker 1: that even though people have in revising upwards some of 481 00:23:37,720 --> 00:23:38,960 Speaker 1: those earnings expectations. 482 00:23:40,000 --> 00:23:43,240 Speaker 8: Yeah, so I think investors are skeptical of that sort 483 00:23:43,240 --> 00:23:47,040 Speaker 8: of earnings move, which is understandable. It's a below consensus estimate, 484 00:23:47,080 --> 00:23:50,360 Speaker 8: so the consensus is understandably higher. But also I think 485 00:23:50,400 --> 00:23:53,600 Speaker 8: you have investors who say, look, you've had economic data 486 00:23:53,600 --> 00:23:56,240 Speaker 8: that's held up. Okay, So far, you've had very good 487 00:23:56,280 --> 00:23:59,320 Speaker 8: performance from some of the largest companies in the market, 488 00:23:59,400 --> 00:24:02,359 Speaker 8: and so that isative of investors being more optimistic that 489 00:24:02,440 --> 00:24:05,200 Speaker 8: earnings can be stronger going forward. And so I guess 490 00:24:05,240 --> 00:24:07,399 Speaker 8: what we'd say to that is a couple of things. First, 491 00:24:07,640 --> 00:24:10,840 Speaker 8: you know, we do run kind of forward earnings indicators, 492 00:24:10,880 --> 00:24:14,040 Speaker 8: forward earnings estimates, and those estimates, those models have been 493 00:24:14,119 --> 00:24:16,760 Speaker 8: pretty good at predicting the events so far, and those 494 00:24:16,800 --> 00:24:19,679 Speaker 8: models are saying that there's going to be more downside 495 00:24:19,720 --> 00:24:23,440 Speaker 8: to consensus than what the consensus expects. I'd think if 496 00:24:23,440 --> 00:24:25,280 Speaker 8: you look at some of those larger cap names that 497 00:24:25,320 --> 00:24:29,080 Speaker 8: about performing, their actual earnings growth has not been particularly strong. 498 00:24:29,640 --> 00:24:31,919 Speaker 8: And even if for the market, overall earnings growth is 499 00:24:32,000 --> 00:24:35,200 Speaker 8: rapidly approaching kind of flat year every year. So this 500 00:24:35,240 --> 00:24:37,399 Speaker 8: is a market that, even is still a pretty strong 501 00:24:37,480 --> 00:24:40,840 Speaker 8: nominal GDP environment, is struggling to grow overall earnings. And 502 00:24:40,880 --> 00:24:43,280 Speaker 8: we think that will get more difficult as you move ahead, 503 00:24:43,280 --> 00:24:46,119 Speaker 8: as the market confronts the laged defect of rate hikes 504 00:24:46,160 --> 00:24:48,800 Speaker 8: and the legged defect of some further tightening in bank 505 00:24:48,840 --> 00:24:49,560 Speaker 8: credit conditions. 506 00:24:50,359 --> 00:24:54,400 Speaker 9: So Andrew High, this is Neil, can you explain exactly 507 00:24:54,440 --> 00:24:58,439 Speaker 9: how the long and variable lags work. I mean, because 508 00:24:59,680 --> 00:25:03,040 Speaker 9: you know, you've been hearing this argument now for you know, 509 00:25:03,080 --> 00:25:07,720 Speaker 9: really since since last year, and you know, I would 510 00:25:07,760 --> 00:25:11,479 Speaker 9: expect to see significant slowing in credit areas of the 511 00:25:11,840 --> 00:25:16,800 Speaker 9: credit sensitive areas of the economy. But that's not what 512 00:25:16,840 --> 00:25:20,439 Speaker 9: we're seeing. I mean, you know, housing autos, I mean, 513 00:25:20,600 --> 00:25:22,480 Speaker 9: they look like they've been doing a little bit better. 514 00:25:22,520 --> 00:25:26,399 Speaker 9: So can you explain you know, how that how that 515 00:25:26,440 --> 00:25:30,280 Speaker 9: will actually work when it's been you know, several quarters 516 00:25:30,359 --> 00:25:32,920 Speaker 9: now that they've been hiking and and some of these 517 00:25:32,920 --> 00:25:35,119 Speaker 9: credit sensitive areas are actually picking up. 518 00:25:36,359 --> 00:25:38,919 Speaker 8: Yeah, So look, I think that's the challenge. The challenge 519 00:25:38,920 --> 00:25:41,719 Speaker 8: with long and variable legs is that they're long and 520 00:25:41,760 --> 00:25:44,720 Speaker 8: they're variable, and so if we think about our estimates 521 00:25:44,720 --> 00:25:47,560 Speaker 8: for that, we think that rate hikes you feel the 522 00:25:47,560 --> 00:25:51,760 Speaker 8: full effect maybe with a twelve month leg, which means 523 00:25:51,840 --> 00:25:54,879 Speaker 8: that if we had, you know, rate hikes starting at 524 00:25:54,880 --> 00:25:58,840 Speaker 8: the beginning of last year, you are only now starting 525 00:25:58,880 --> 00:26:01,960 Speaker 8: to feel the full effect of those rate hikes in 526 00:26:02,000 --> 00:26:05,320 Speaker 8: the US and Europe. So we've not yet felt the 527 00:26:05,320 --> 00:26:08,200 Speaker 8: full effect. The full effect is still to come. Moreover, 528 00:26:08,320 --> 00:26:10,879 Speaker 8: if we think about the real policy rate, right, the 529 00:26:11,200 --> 00:26:16,040 Speaker 8: interest rate relative to inflation that is still going through 530 00:26:16,040 --> 00:26:20,280 Speaker 8: some of its larger largest increases over the next several 531 00:26:20,440 --> 00:26:23,440 Speaker 8: months as inflation finally falls, and we think the FED 532 00:26:23,480 --> 00:26:25,720 Speaker 8: and the ECB keyp rates high. So I think the 533 00:26:25,720 --> 00:26:29,040 Speaker 8: first element is we haven't yet seen enough time to 534 00:26:29,040 --> 00:26:30,920 Speaker 8: see the full effect of those rate hikes play through 535 00:26:30,920 --> 00:26:33,440 Speaker 8: the economy, and we have actually haven't seen the full 536 00:26:33,480 --> 00:26:36,600 Speaker 8: effect of rates relative to inflation. Now, I think as 537 00:26:36,640 --> 00:26:39,840 Speaker 8: it relates to the more credit sensitive sectors of the economy, again, 538 00:26:39,960 --> 00:26:42,840 Speaker 8: I think that's pretty fascinating because again, as we've talked 539 00:26:42,840 --> 00:26:46,080 Speaker 8: about at the opening, the equity market overall is very strong. 540 00:26:46,600 --> 00:26:49,520 Speaker 8: The most credit sensitive parts of the market, say the 541 00:26:49,600 --> 00:26:53,720 Speaker 8: Russell two thousand small caps, more cyclical stocks, have really struggled. 542 00:26:54,200 --> 00:26:57,720 Speaker 8: Commercial real estate credit sensitive has really struggled. So I 543 00:26:57,760 --> 00:27:00,320 Speaker 8: think we are starting to see some of the act 544 00:27:00,440 --> 00:27:02,960 Speaker 8: of that tighter policy play out. It hasn't played out 545 00:27:03,000 --> 00:27:05,159 Speaker 8: at the overall market cap level, but I think it's 546 00:27:05,160 --> 00:27:07,320 Speaker 8: playing out below the surface, and I think we still 547 00:27:07,359 --> 00:27:09,640 Speaker 8: have some of that to come, which is a reason 548 00:27:09,680 --> 00:27:12,280 Speaker 8: why we think growth decelerates further into the second half 549 00:27:12,280 --> 00:27:12,640 Speaker 8: of the year. 550 00:27:12,760 --> 00:27:15,880 Speaker 1: Andrew just quickly, how does this idea of a deceleration 551 00:27:16,000 --> 00:27:18,440 Speaker 1: in earnings growth pair with a soft landing. 552 00:27:20,000 --> 00:27:21,639 Speaker 8: So I think they're actually quite compatible. 553 00:27:21,760 --> 00:27:21,919 Speaker 4: You know. 554 00:27:21,960 --> 00:27:24,720 Speaker 8: Again, if we think about the types of forecasts that 555 00:27:24,760 --> 00:27:28,760 Speaker 8: we're seeing, we saw a market and earnings really outperform 556 00:27:28,840 --> 00:27:31,640 Speaker 8: the economy over the last eighteen months. And I think 557 00:27:31,640 --> 00:27:33,480 Speaker 8: one way of thinking about our estimates is that in 558 00:27:33,520 --> 00:27:37,359 Speaker 8: the US, earnings in the market underperform the economy somewhat 559 00:27:37,359 --> 00:27:40,359 Speaker 8: as you go forward, and especially because I think we 560 00:27:40,400 --> 00:27:43,160 Speaker 8: think earnings are much more geared and much more linked 561 00:27:43,200 --> 00:27:47,000 Speaker 8: to nominal GDP growth, which is decelerating sharply, maybe more 562 00:27:47,040 --> 00:27:49,800 Speaker 8: so than real growth. Another part of this that's important 563 00:27:50,520 --> 00:27:52,560 Speaker 8: is the labor market. You know, I think if you 564 00:27:52,600 --> 00:27:55,400 Speaker 8: have a soft landing, I think you're inherently talking about 565 00:27:56,000 --> 00:27:58,560 Speaker 8: fewer job losses than you'd have in a recession. Well, 566 00:27:58,800 --> 00:28:02,280 Speaker 8: fewer job losses is great for workers, but it might 567 00:28:02,359 --> 00:28:05,200 Speaker 8: be more of a challenge for margins if the top 568 00:28:05,240 --> 00:28:07,840 Speaker 8: line is slowing and costs aren't being pulled back in. 569 00:28:07,760 --> 00:28:08,280 Speaker 4: The same way. 570 00:28:08,359 --> 00:28:21,240 Speaker 1: After sheets of Morgan Stanley, thank you so much. One 571 00:28:21,240 --> 00:28:24,560 Speaker 1: person who's gotten it right considerably and every single time 572 00:28:24,640 --> 00:28:27,040 Speaker 1: was Dan Ives, who is senior equity out analyst over 573 00:28:27,040 --> 00:28:30,560 Speaker 1: at Wedbush, who has come out with one positive prognostication 574 00:28:30,760 --> 00:28:33,840 Speaker 1: after another. How much do the Bears hate you? 575 00:28:34,400 --> 00:28:34,600 Speaker 7: Oh? 576 00:28:34,640 --> 00:28:37,600 Speaker 10: I mean, it's kind of been a Bear hate party, 577 00:28:37,720 --> 00:28:42,280 Speaker 10: and I like and ultimately, look, I appreciate it, and obviously, look, 578 00:28:42,360 --> 00:28:44,920 Speaker 10: some of the smartest people I know are Bears. I 579 00:28:45,040 --> 00:28:49,040 Speaker 10: just think it's something here where the shorts the Bears, 580 00:28:49,600 --> 00:28:52,080 Speaker 10: they came out of their caves last year, you know, 581 00:28:52,120 --> 00:28:54,480 Speaker 10: and obviously feeling really good going into the air. And 582 00:28:54,680 --> 00:28:56,640 Speaker 10: my view is just it was going to be a 583 00:28:56,640 --> 00:28:59,280 Speaker 10: lot better than fear in terms of overall tech spending. 584 00:28:59,760 --> 00:29:01,560 Speaker 10: But it was our v and we've talked about it 585 00:29:01,600 --> 00:29:05,160 Speaker 10: that it's the most transformational trend we've seen in tech 586 00:29:05,400 --> 00:29:07,720 Speaker 10: since the late nineties, and I think you just can't 587 00:29:08,040 --> 00:29:10,320 Speaker 10: fight that, and that's why I think names like Microsoft 588 00:29:10,320 --> 00:29:13,480 Speaker 10: and n Video, Apple and others continue to go higher. 589 00:29:13,640 --> 00:29:15,640 Speaker 1: I have to say that some of my best friends 590 00:29:15,640 --> 00:29:18,400 Speaker 1: are Bears. Was always sort of the prelude too, is 591 00:29:18,560 --> 00:29:22,000 Speaker 1: something negative that's pretty significant. I'm curious, though, after the 592 00:29:22,040 --> 00:29:24,480 Speaker 1: announcement yesterday, you're still doubling down on some of the 593 00:29:24,560 --> 00:29:29,120 Speaker 1: artificial intelligence embarkments of Apple, saying that this is where 594 00:29:29,160 --> 00:29:32,240 Speaker 1: they're going next. A lot of other people didn't necessarily 595 00:29:32,320 --> 00:29:36,320 Speaker 1: take that away from the conference. What gives you confidence 596 00:29:36,360 --> 00:29:39,440 Speaker 1: that that's kind of the next phase of their explosion 597 00:29:39,480 --> 00:29:41,160 Speaker 1: and valuation and gross And I think. 598 00:29:41,040 --> 00:29:43,600 Speaker 10: That's typical, right, I mean for Apple for many years, 599 00:29:43,640 --> 00:29:45,640 Speaker 10: I mean for the last decade. There's many people I 600 00:29:45,720 --> 00:29:48,520 Speaker 10: know they've sort of fought it because they'll go to 601 00:29:48,600 --> 00:29:51,480 Speaker 10: a conference, they'll just see a leaf. They don't see 602 00:29:51,480 --> 00:29:54,440 Speaker 10: the forest through the trees. And I think essentially what Cooper, 603 00:29:54,520 --> 00:29:58,600 Speaker 10: Tino and Cook are building here, it's another ecosystem within 604 00:29:58,680 --> 00:30:01,200 Speaker 10: the app store. And it all because, at least right now, 605 00:30:01,240 --> 00:30:04,600 Speaker 10: there's a battle, a game of thrones for developers between 606 00:30:04,680 --> 00:30:07,800 Speaker 10: Google Microsoft in terms of what we're seeing in terms 607 00:30:07,800 --> 00:30:11,800 Speaker 10: of this eight hundred billion dollar AI revolution. Apple understands 608 00:30:11,800 --> 00:30:14,320 Speaker 10: that that's why they have the gold install base and 609 00:30:14,360 --> 00:30:17,360 Speaker 10: they have the developers. This is the first step on 610 00:30:17,400 --> 00:30:21,880 Speaker 10: a broader strategy really to build another mood for developers 611 00:30:21,960 --> 00:30:22,720 Speaker 10: and consumers. 612 00:30:23,360 --> 00:30:28,280 Speaker 6: So Dan obviously the Big five, Big seven, However, many 613 00:30:28,520 --> 00:30:33,480 Speaker 6: stocks you want to target who have really capitalized on 614 00:30:33,560 --> 00:30:37,160 Speaker 6: this last number of months of AI momentum, Who among 615 00:30:37,360 --> 00:30:41,200 Speaker 6: sort of the second tier of maybe those companies that 616 00:30:41,360 --> 00:30:45,040 Speaker 6: haven't yet fully realized the potential do you see as 617 00:30:45,080 --> 00:30:48,000 Speaker 6: being most attractive first? And then the second question is 618 00:30:48,560 --> 00:30:51,800 Speaker 6: what industries and specific do you think are likely to 619 00:30:51,880 --> 00:30:53,880 Speaker 6: benefit over the next year or two. 620 00:30:54,120 --> 00:30:56,680 Speaker 10: Yeah, a great question because I think right now, okay, 621 00:30:56,680 --> 00:31:01,080 Speaker 10: the first derivative the New York City cab Grevens, Microsoft, Navidia. 622 00:31:01,160 --> 00:31:04,160 Speaker 10: But so now it's like who the second third derivatives. 623 00:31:04,600 --> 00:31:07,040 Speaker 10: I think ultimately salesforce is going to be a big 624 00:31:07,080 --> 00:31:09,640 Speaker 10: derivative that no one's talking about. I think you have 625 00:31:09,760 --> 00:31:12,160 Speaker 10: names like pal and Teer, which is another on the 626 00:31:12,280 --> 00:31:14,640 Speaker 10: on the AI front, and I think what you're really 627 00:31:14,680 --> 00:31:18,920 Speaker 10: starting to see right now from a cybersecurity perspective, it's 628 00:31:19,080 --> 00:31:22,000 Speaker 10: really as more and more moves to the cloud, more 629 00:31:22,080 --> 00:31:24,840 Speaker 10: moves to AI, you're gonna have huge benefits there names 630 00:31:24,880 --> 00:31:27,960 Speaker 10: like pow Out, though Ford Net and others. That's why 631 00:31:28,000 --> 00:31:31,520 Speaker 10: I believe this is not just today, it's five seven, 632 00:31:31,680 --> 00:31:35,280 Speaker 10: ten stocks when we look out over the next one, two, 633 00:31:35,400 --> 00:31:37,960 Speaker 10: three years. I think this is really what I've views 634 00:31:38,040 --> 00:31:41,680 Speaker 10: like a nineteen ninety five moment and iPhone moment relative 635 00:31:41,680 --> 00:31:43,800 Speaker 10: to where we see it over the coming years. Obviously 636 00:31:43,920 --> 00:31:47,400 Speaker 10: macro aware in terms of what we're seeing in that 637 00:31:47,440 --> 00:31:51,040 Speaker 10: but I can tell you if from talking to developers enterprises, 638 00:31:51,040 --> 00:31:53,600 Speaker 10: what we see in spending, I continue to U as 639 00:31:53,600 --> 00:31:55,479 Speaker 10: a green light for overall tech stocks. 640 00:31:55,560 --> 00:31:57,280 Speaker 1: So this is a faith based kind of bet though 641 00:31:57,440 --> 00:31:59,480 Speaker 1: at a certain point, right, this is faith that AI 642 00:31:59,640 --> 00:32:02,280 Speaker 1: is going to be a transformational moment more than say 643 00:32:02,880 --> 00:32:06,720 Speaker 1: the adoption of thirty five hundred dollars, you know, augmented 644 00:32:06,720 --> 00:32:09,800 Speaker 1: reality sets that people are maybe not going to buy 645 00:32:09,840 --> 00:32:12,520 Speaker 1: their children for the holidays. I'm just saying personally, but 646 00:32:12,600 --> 00:32:15,280 Speaker 1: I'm just wondering from your perspective. You know, it's not 647 00:32:15,360 --> 00:32:18,480 Speaker 1: about one product. It's about sort of engaging in a 648 00:32:18,520 --> 00:32:21,400 Speaker 1: whole new way of doing business and getting out front 649 00:32:21,640 --> 00:32:25,440 Speaker 1: so that different companies can use your technology, software, whatever 650 00:32:25,480 --> 00:32:28,280 Speaker 1: you have in a way that transforms the way they 651 00:32:28,280 --> 00:32:28,960 Speaker 1: do business. Correct. 652 00:32:29,200 --> 00:32:32,480 Speaker 10: Yeah, I think it was faith based till the guidance 653 00:32:32,520 --> 00:32:36,040 Speaker 10: heard around the world the Nvidia, the four billion dollar raise. 654 00:32:36,600 --> 00:32:40,880 Speaker 10: That's where basically all the bears went into hibernation mood 655 00:32:41,000 --> 00:32:44,120 Speaker 10: for the winner. And that really is what really changed 656 00:32:44,200 --> 00:32:48,160 Speaker 10: everything for tech because that that was the numbers. And 657 00:32:48,200 --> 00:32:52,120 Speaker 10: now in redmen, we're going to see it. Google, We're 658 00:32:52,120 --> 00:32:54,960 Speaker 10: going to see these next few quarters, and that's why. 659 00:32:55,240 --> 00:32:56,640 Speaker 10: I can tell you a lot of investors they're not 660 00:32:56,760 --> 00:32:59,560 Speaker 10: looking at the next one to two quarters, they're looking 661 00:32:59,640 --> 00:33:02,600 Speaker 10: out of the next one two years. And that's why 662 00:33:02,640 --> 00:33:05,720 Speaker 10: this really created the opportunity in terms of, you know, 663 00:33:05,720 --> 00:33:08,040 Speaker 10: a market where I think many is still yelling fire 664 00:33:08,040 --> 00:33:08,760 Speaker 10: in a crowd theater. 665 00:33:09,280 --> 00:33:10,960 Speaker 6: What do you say to the clients who are worried 666 00:33:10,960 --> 00:33:12,000 Speaker 6: about valuations. 667 00:33:12,480 --> 00:33:14,720 Speaker 10: So it's the same clients that I've talked over the 668 00:33:14,760 --> 00:33:18,000 Speaker 10: last twenty two years where I'll sit down there, like 669 00:33:18,320 --> 00:33:22,640 Speaker 10: on transformational tech names, on the Amazons, the Googles, the 670 00:33:22,760 --> 00:33:25,400 Speaker 10: test was if you look out over the next year 671 00:33:25,480 --> 00:33:30,200 Speaker 10: on transformational tech companies, you'll miss every transformational tech stock 672 00:33:30,560 --> 00:33:32,600 Speaker 10: the last twenty years and in the next twenty years. 673 00:33:32,720 --> 00:33:35,920 Speaker 10: It's doing different than coming out of two thousand draft 674 00:33:36,000 --> 00:33:40,360 Speaker 10: six round out of Michigan, Brady that first camp being like, 675 00:33:40,560 --> 00:33:42,480 Speaker 10: I just don't know if it's going to work. So 676 00:33:42,520 --> 00:33:44,280 Speaker 10: I think that's sort of my view in terms of 677 00:33:44,320 --> 00:33:47,120 Speaker 10: how you have to look at these transformational tech names. 678 00:33:47,440 --> 00:33:50,520 Speaker 1: So from your perspective, Julian, are you sort of buying 679 00:33:50,600 --> 00:33:52,680 Speaker 1: into this? Do you feel like you kind of have 680 00:33:52,800 --> 00:33:55,320 Speaker 1: to be overweight tech? Even after the rally. 681 00:33:55,640 --> 00:33:58,080 Speaker 6: So we've taken a little bit of a different tech right. 682 00:33:58,160 --> 00:34:01,960 Speaker 6: So so for us we realize is that the momentum aspect, 683 00:34:02,200 --> 00:34:04,960 Speaker 6: whether it's nineteen ninety five, and frankly, if you think 684 00:34:04,960 --> 00:34:07,120 Speaker 6: about it, if Dan's right that this is nineteen ninety 685 00:34:07,160 --> 00:34:09,960 Speaker 6: five and not ninety eight or ninety nine, we have 686 00:34:10,080 --> 00:34:13,400 Speaker 6: a lot further to run. Or if it's later in 687 00:34:13,400 --> 00:34:16,759 Speaker 6: the cycle, we like the kinds of names that have 688 00:34:17,000 --> 00:34:21,319 Speaker 6: actually shown both price momentum, earnings momentum. And for us, 689 00:34:21,600 --> 00:34:27,720 Speaker 6: very importantly in a momentum driven market, is still defensive positioning, okay, 690 00:34:27,840 --> 00:34:32,719 Speaker 6: and by that whether it's a bid to puts or 691 00:34:33,000 --> 00:34:35,920 Speaker 6: high short interest. And actually you get a number of 692 00:34:35,960 --> 00:34:39,400 Speaker 6: sort of the second and third tier technology names that 693 00:34:39,800 --> 00:34:44,160 Speaker 6: Dan mentioned, as well as actually other industrial names that 694 00:34:44,400 --> 00:34:47,759 Speaker 6: may or may not end up using AI more directly 695 00:34:47,960 --> 00:34:49,040 Speaker 6: in the immediate term. 696 00:34:49,280 --> 00:34:51,160 Speaker 1: When you talk about positioning, that is what a lot 697 00:34:51,160 --> 00:34:53,880 Speaker 1: of people talk about. The overweights right now, for the 698 00:34:53,880 --> 00:34:57,600 Speaker 1: big tech names have gotten fairly extreme. Suddenly everyone's piling 699 00:34:57,880 --> 00:34:59,920 Speaker 1: in because as much as the bears might be more 700 00:35:00,040 --> 00:35:01,719 Speaker 1: vocal and the ones reaching out to you to say 701 00:35:01,760 --> 00:35:03,440 Speaker 1: no way, and with all sorts of hate mail with 702 00:35:03,520 --> 00:35:05,759 Speaker 1: lots of expletives, most people are saying, all right, we 703 00:35:05,800 --> 00:35:08,080 Speaker 1: buy it, We're in. How much is that going to 704 00:35:08,080 --> 00:35:10,720 Speaker 1: potentially challenge the ability for these shares to really rally 705 00:35:10,760 --> 00:35:12,240 Speaker 1: even if people buy into the story. 706 00:35:12,520 --> 00:35:16,279 Speaker 10: Look, but I still think institutionally speaking, many have been 707 00:35:16,320 --> 00:35:19,680 Speaker 10: sitting on the sidelines with their six reasons to be negative, 708 00:35:19,719 --> 00:35:22,560 Speaker 10: and now they're like, maybe they could focus on the weather. 709 00:35:22,840 --> 00:35:26,200 Speaker 10: Hurricane season is a reasonably negative and I'm just trying 710 00:35:26,200 --> 00:35:29,480 Speaker 10: to think about like other reasons negative. But so I 711 00:35:30,239 --> 00:35:32,799 Speaker 10: think what's really starting to happen now is you looking 712 00:35:32,840 --> 00:35:35,400 Speaker 10: at the derivatives. You get apple from some of the 713 00:35:35,400 --> 00:35:38,360 Speaker 10: parts perspective. I know this doc that continues to go 714 00:35:38,520 --> 00:35:41,480 Speaker 10: much higher you look at now the macro is not 715 00:35:41,640 --> 00:35:42,920 Speaker 10: rosy and rainbows. 716 00:35:43,000 --> 00:35:43,560 Speaker 1: We know that. 717 00:35:43,960 --> 00:35:45,960 Speaker 10: But I think what's starting to happen here when you 718 00:35:46,000 --> 00:35:48,160 Speaker 10: look out the next four to six quarters. If you 719 00:35:48,239 --> 00:35:50,960 Speaker 10: pick look, there's gonna be fakes, there's gonna be names 720 00:35:50,960 --> 00:35:54,520 Speaker 10: that basically like ultimately feake it and then ultimately that's. 721 00:35:54,320 --> 00:35:55,600 Speaker 4: The froft that will come off. 722 00:35:55,760 --> 00:35:58,200 Speaker 10: But if you pick the winners, you pick what I've 723 00:35:58,280 --> 00:36:01,960 Speaker 10: used the fundamental names to really own in cloud, CyberSecure 724 00:36:02,000 --> 00:36:04,080 Speaker 10: and AI, and that's how you win here. 725 00:36:03,960 --> 00:36:06,560 Speaker 1: Ten seconds, When has Apple become a four trillion dollar company? 726 00:36:06,760 --> 00:36:09,160 Speaker 10: Look, I think I believe right now you carash On 727 00:36:09,160 --> 00:36:10,719 Speaker 10: it is three and a half trillion. I think by 728 00:36:10,800 --> 00:36:14,359 Speaker 10: twenty twenty five we're looking at a four trillion dollar 729 00:36:14,560 --> 00:36:15,160 Speaker 10: or sooner. 730 00:36:15,680 --> 00:36:19,000 Speaker 1: Dan, I have of Wedbush. Subscribe to the Bloomberg Surveillance 731 00:36:19,040 --> 00:36:22,600 Speaker 1: podcast on Apple, Spotify, and anywhere else you get your podcasts. 732 00:36:22,920 --> 00:36:25,799 Speaker 1: Listen live every weekday starting at seven am Eastern, on 733 00:36:25,840 --> 00:36:29,200 Speaker 1: Bloomberg dot com, the iHeartRadio app tune In, and the 734 00:36:29,200 --> 00:36:32,400 Speaker 1: Bloomberg Business app. You can watch us live on Bloomberg 735 00:36:32,440 --> 00:36:36,120 Speaker 1: Television and always on the Bloomberg terminal. Thanks for listening. 736 00:36:36,160 --> 00:36:38,520 Speaker 1: I'm Lisa Abramowitz, and this is Bloomberg