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Speaker 3: The story that does not have any issues with its
Speaker 3: network is in Vidia again posted a big print last
Speaker 3: night as a Nora's just reporting, and everybody was focused
Speaker 3: on the revenue guidance, and they did not disappoint there
Speaker 3: given a revenue guidance that was substantially above where the
Speaker 3: street was yet again, and that's kind of all the
Speaker 3: bulls needed here. So Emily, let's bring in Kun John Sohani.
Speaker 3: He's a senior analyst. He covers the semi conductors for
Speaker 3: Bloomberg Intelligence. He joins us via zoom. He's in San Francisco. Kunjohn,
Speaker 3: you're the grizzled veteran. You see these semi conductor companies
Speaker 3: come and go. What you make of Nvidia last night?
Speaker 4: I mean, look for any earning surprise from Nvidia is
Speaker 4: no longer a surprise. We have come to sort of
Speaker 4: expect this to be a new norm. But there were
Speaker 4: a lot of positive reassuring things. On the supply side,
Speaker 4: we saw supply coming up really strong. More importantly, supply
Speaker 4: getting diversified and the benefits for which we're seen in
Speaker 4: their gross margin, which beat the estimates. But more important
Speaker 4: was the assurance that demand continues to stay strong and
Speaker 4: they expected to stay strong in twenty twenty four, and
Speaker 4: not just from the large cloud players. We all are
Speaker 4: aware of how much money they're spending, but Remand's strength
Speaker 4: was broad based across their enterprise customers, across different verticals,
Speaker 4: so that really reassures us for the twenty twenty four
Speaker 4: What did you.
Speaker 5: Make of the CEO's statement that Generative AI has hit
Speaker 5: the tipping point. I saw that headline and I didn't
Speaker 5: actually really understand what that meant. So what did you
Speaker 5: think of that?
Speaker 4: I mean, look, it's really Jensen. If you have been
Speaker 4: following the company for the past ten years, at every junction,
Speaker 4: that's what his messaging always is in whatever they're working on.
Speaker 4: So but apart from that, I would really, you know,
Speaker 4: ask investors to look into the end data points rather
Speaker 4: than what just he's saying. I mean, he's a very
Speaker 4: important person right now, but we look at the end
Speaker 4: data points. The customers are really increasing their AI spend. Right,
Speaker 4: the IT total capex budgets are increasing, but the AI
Speaker 4: portion within that is also increasing. And it's not just
Speaker 4: at the chip level. The contracts that they have with
Speaker 4: their software customers, even those customers are guiding up their
Speaker 4: revenue targets.
Speaker 6: Hey, Kun, John, I love their customer list that they
Speaker 6: read off.
Speaker 3: It's kind of a who's who of Silicon Valley, you know, Facebook, Google,
Speaker 3: whatever their new names are.
Speaker 6: What's the next? Is there a next set of customers out.
Speaker 3: There above and beyond kind of the household names that
Speaker 3: we all know that maybe they're targeting.
Speaker 4: Yes, an enterprise segment is sort of the new the
Speaker 4: next area that they're really targeting. Right, They already have
Speaker 4: the big large spenders, but now they want to diverse
Speaker 4: if I and expand the reach across enterprises. And the
Speaker 4: second big target now is sort of governments and reach
Speaker 4: sovereign governments and solign wells. Right, that's what they're targeting
Speaker 4: that they believe AI will be, you know, because of
Speaker 4: geopolitical and trade issues will be more regional and every
Speaker 4: big economy will need to spend on that.
Speaker 5: Are there any headwinds that investors need to be looking
Speaker 5: out for, because I just looked on the A and
Speaker 5: R function on Bloomberg and there are zero cells for
Speaker 5: in video. There was one last night from morning Star,
Speaker 5: and now he's upgraded to a hold.
Speaker 7: Yeah.
Speaker 4: I mean, look, if you look at just what the
Speaker 4: data says, usually the stock price follows the analyst price targets.
Speaker 4: It seems here the price targets are following the stock price.
Speaker 4: When we look at the fundamentals, right, there was really
Speaker 4: nothing that to highlight as a risk factor in the
Speaker 4: earnings and really in the near term for twenty twenty four.
Speaker 4: But if you were, if we were to form a
Speaker 4: bare thesis, a couple of things that would you would
Speaker 4: look at as risk factors for the long term. One
Speaker 4: is the China risk. We did see China revenue almost
Speaker 4: reduced by half versus three q in this quarter, right,
Speaker 4: and we know this problem is not going away, if
Speaker 4: at all getting worse. So right now they are easily
Speaker 4: able to offset what they could have shipped to China
Speaker 4: while shipping to other customers in the US and other regions.
Speaker 4: But at some point when the demand supply sort of
Speaker 4: normalizes and the growth rates become more of a normal
Speaker 4: run rate. You know, this is taking a bite out
Speaker 4: of that opportunity that they could have served in China.
Speaker 4: So that's one risk factor on the long term. The
Speaker 4: second being their largest customers, which are the cloud players,
Speaker 4: have started to design their own ships. So again this
Speaker 4: is far out, but at some point this still takes
Speaker 4: a bite out of the apple that n media could
Speaker 4: have served.
Speaker 3: So that's kind of where I wanted to go, Ko John,
Speaker 3: I mean just the competitive environment. You know, can you
Speaker 3: explain why these guys are the only game in town?
Speaker 3: That seems odd to me.
Speaker 4: I mean, it's not by an accident. These guys were
Speaker 4: sort of the inventor, if you will, for the GPU.
Speaker 4: They have been working on a GPU for decades and
Speaker 4: out investing everyone, being at the leading edge. So you know,
Speaker 4: this was the same question when we talked about gaming
Speaker 4: and when we talked about crypto, right the last two
Speaker 4: waves which drove the growth for this company. It was
Speaker 4: not by accident. They have been at this forefront of
Speaker 4: these new applications where the application suddenly realized, well, GPU
Speaker 4: is the best case compute platform, and that's why they
Speaker 4: adopted GP. Same thing what we're saying with AI so
Speaker 4: this was not by accident. If you look at that
Speaker 4: R and D spend, which they guided to being growing
Speaker 4: by mid thirties next year, it's a significant amount of
Speaker 4: R and NE dollars they continue to spend and to
Speaker 4: keep again being at the leading edge of the next
Speaker 4: cycle of innovation.
Speaker 5: Can you talk a little bit also about the gaming
Speaker 5: revenue here, because I'm looking at your report you said
Speaker 5: gamings better than seasonal top line, But what was really
Speaker 5: driving that? Because I actually don't really know if I
Speaker 5: know anything about in Video's gaming involvement.
Speaker 4: Yeah, so the last quarter was if you look at
Speaker 4: typical seasonality, it would be we expected it to be
Speaker 4: a down quarter at least by mid single digits, but
Speaker 4: it came in flat right. So and the strength the
Speaker 4: reason driver for there was better demand for their RTX products.
Speaker 4: These are their gaming cards you know in dex stops
Speaker 4: and what gamers get. So this is what came in
Speaker 4: better than they had expected due to the holiday season.
Speaker 4: Now this is again a temporary move and sort of
Speaker 4: not no longer a big focus for investors, but that
Speaker 4: was still good to see that in a typical down
Speaker 4: seasonal quarters they were still able to do better than seasonality.
Speaker 3: Could John talk to me your your investment research channels.
Speaker 3: You care about valuation, It's not just all hype for you.
Speaker 3: Give us a sense of how this stock is valued.
Speaker 3: It's up a good jillion and one percent. Don't we
Speaker 3: have like concerns about value here?
Speaker 4: Yeah, we do. Just like any other stock which has
Speaker 4: a premium valuation. We do one thing that gives us
Speaker 4: a little bit comfort. Now, like when you look at
Speaker 4: the valuation multiples now versus as it says six months ago,
Speaker 4: they have come down to a sort of now it's
Speaker 4: a reasonable premium above socks and in sort of in
Speaker 4: line or slightly better than it's peers. And look, it
Speaker 4: is still the fastest growing story in same as it
Speaker 4: is at this size. It is still the de fact
Speaker 4: on name when it comes to AI. As of today,
Speaker 4: it is taking almost entire wallet share of AI spending,
Speaker 4: so it does deserve that premium.
Speaker 5: We're about to speak to the executive director of the
Speaker 5: Port of Los Angeles YEP in just a few minutes,
Speaker 5: Gene Soroca. So I imagine we're going to be talking
Speaker 5: about the supply chain. Could you give us a sense
Speaker 5: of how Nvidia is dealing with the snirled global supply chain,
Speaker 5: any challenges there.
Speaker 4: They have done an absolutely amazing job at bringing up
Speaker 4: supply right the last year, for every quarter, the biggest
Speaker 4: concern was not demand but supply, because usually when you
Speaker 4: try to bring up supply so fast so quick, you
Speaker 4: do run into hiccups. We didn't see any hiccups throughout
Speaker 4: every quarter last year. In fact, you know the gross
Speaker 4: margin upside. A key driver for that was lower component cost.
Speaker 4: And what we did from that is that they were
Speaker 4: able to get more suppliers online. They were they were
Speaker 4: able to expand and diversify supply and enjoyed the benefits
Speaker 4: of the pricing that comes with it. So they've done
Speaker 4: an absolute amazing job bringing up supply this quick.
Speaker 3: All right, So in a chip space, the play here
Speaker 3: for AI is in Vidia. Is there a number two
Speaker 3: play that I can try to, you know, jump onto?
Speaker 4: I wouldn't. I cannot commend of regarding the valuation, But
Speaker 4: from the fundamental point of view, A couple of other
Speaker 4: names we really like in terms of AI and Semi's
Speaker 4: are a MD and Broadcom and to some extend, Marvell.
Speaker 3: All right, Kunjohn, thanks so much for joining us quon
Speaker 3: John Sabani, Senior analyst on semiconductors for Bloomer Intelligency, joins
Speaker 3: us on Zoom from San Francisco, and again, just a
Speaker 3: great print out of in video and that's something that
Speaker 3: the stock had to have because it's up over two
Speaker 3: hundred and forty percent over the last year, and it's up,
Speaker 3: you know, fifty percent.
Speaker 6: Year to date, So that was a high bar.
Speaker 3: Of expectations for the street. And stock's up fifteen percent
Speaker 3: on the print. So market's tonya. They like what they
Speaker 3: heard last night.
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Speaker 3: It's all about Nvidia today, up fifteen percent, taking the
Speaker 3: markets high. Our next guest had this name on our list,
Speaker 3: so I'm guessing a good good day for her. Shana Sissel,
Speaker 3: president and CEO of Van Ryan Capital Management, joins us
Speaker 3: via that Zoom thing also the Internet in Chicago, Illinois.
Speaker 3: So Shana, thanks so much for joining us. I know
Speaker 3: in your notes, you had up in videos one of
Speaker 3: your names A y. I think I understand now, but
Speaker 3: what do you make of the quarter last night?
Speaker 8: So I've followed in video my entire career. When I
Speaker 8: first started in the business, it wasn't even in the
Speaker 8: s and P five hundred, but it traded in a
Speaker 8: very like predictable pattern, So it was just a stock
Speaker 8: I kind of clung on to when I was learning
Speaker 8: the ropes, and I've followed it ever since. In twenty seventeen,
Speaker 8: I attended a private equity conference where every single speaker
Speaker 8: talked about how important in video was for you know,
Speaker 8: artificial intelligence, autonomous vehicles, data centers, and I thought at
Speaker 8: that time, like I should own this stock. And I've
Speaker 8: been a bull ever since. So I've been pretty happy
Speaker 8: with how the stock's done, and I keep trying to
Speaker 8: come up with a barecase because I'm one of those
Speaker 8: people that if it's too good to be true, there's
Speaker 8: got to be something wrong. And I still haven't been
Speaker 8: able to come up with a really solid barecase for
Speaker 8: the stock. I'm not surprised by their killer earnings last night.
Speaker 8: They've been doing this now for several quarters, and it
Speaker 8: seems like they are the rocket ship that's keeping the market,
Speaker 8: you know, afloat.
Speaker 5: So what do you tell someone that, unlike you, has
Speaker 5: not owned in Vidia and is just looking at the
Speaker 5: stock now and the earnings now and thinking, oh my gosh,
Speaker 5: should I should I buy this stock right now? Is
Speaker 5: this a time that you know, people can be adding
Speaker 5: more to Nvidia and maybe entering the position, or is
Speaker 5: it more a time to be holding on to what
Speaker 5: you already have.
Speaker 8: Well, I've always people ask me this all the time,
Speaker 8: and I'm always hesitant to say, yes, buy it at
Speaker 8: this entry point because it feels really frothy. I know
Speaker 8: I'm personally not adding to it, but my cost spaces
Speaker 8: is like two hundred and fifty dollars, so you know,
Speaker 8: and that you know, I have no reason to at
Speaker 8: this point. It's hard to say. The momentum is there,
Speaker 8: and I don't think there's anything that's going to be
Speaker 8: a headwind to the stock in the near future. We're
Speaker 8: really early in this artificial intelligence trend, maybe second inning,
Speaker 8: and so I think that there's a real possibility this
Speaker 8: stock could be, you know, twelve hundred dollars a year
Speaker 8: from now. So I don't think it's a bad idea
Speaker 8: if you don't have a position to enter it now.
Speaker 8: But I would be careful and maybe look for buying
Speaker 8: it on weakness, like I would have bought it ahead
Speaker 8: of earnings when it was at six fifty as opposed
Speaker 8: to today where it's really benefiting from the news. I
Speaker 8: might look to find some good entry points. But it's
Speaker 8: hard because every time I say that, the stock just
Speaker 8: keeps going up, and then people get mad at me
Speaker 8: because they missed the opportunity to buy in when it
Speaker 8: was cheaper.
Speaker 9: Shane, how about Cisco.
Speaker 3: That's kind of what I consider kind of a you know,
Speaker 3: old school tech name here, and I look at the
Speaker 3: over the last five years and it's had a compounded
Speaker 3: annual growth of about only about two and a half percent,
Speaker 3: with S and P up about fourteen and a half
Speaker 3: percent compounded. What's been the story at Cisco in terms
Speaker 3: of its underperformance from your perspective.
Speaker 8: Well, primarily it's been that they just haven't kept up
Speaker 8: with the trends. The technology that they provide isn't relevant
Speaker 8: to a lot of the latest and greatest trends like
Speaker 8: artificial intelligence. But they're trying to pivot and become more
Speaker 8: relevant and the stock is really cheap. So in my opinion,
Speaker 8: it's a stock that I've looked at and I own
Speaker 8: a small position, and it is a stock that I
Speaker 8: do like, but it is a stock that I don't
Speaker 8: know if I'm completely a bull, but it's just so
Speaker 8: cheap and they are trying hard to become more relevant
Speaker 8: in the space that I think they have an opportunity
Speaker 8: to at least improve their growth rate going forward, which
Speaker 8: should help the stock. It's trading at an ridiculously cheap multiple,
Speaker 8: especially when you consider tech as a whole, So I
Speaker 8: don't think there's a ton of downside in the stock,
Speaker 8: but you know, I'm still not sure it's a go
Speaker 8: to the moon like Nvidio kind of thing, But I
Speaker 8: do think there is an opportunity with the management chain
Speaker 8: really looking to focus and pivot the business to be
Speaker 8: more relevant in current trends today.
Speaker 5: What are you looking at in the pharmaceutical sector?
Speaker 8: So I really like Novartis and Veritex's pharmaceuticals. You know,
Speaker 8: one of the things that I find really interesting is
Speaker 8: if you haven't figured this out yet, I like looking
Speaker 8: at what the new emerging trends are, what's going to
Speaker 8: be the thing that you know, changes the world going forward.
Speaker 8: And when you look at drug development, there's really interesting
Speaker 8: things going on right now, especially in things like cancer research.
Speaker 8: So Novartists in particular has some absolutely groundbreaking oncology drugs.
Speaker 8: And the speed at which we're seeing new drugs come
Speaker 8: to the market that are really changing the game and cancer,
Speaker 8: where it's changing cancer from you know, a terminal illness
Speaker 8: to more like a chronic illness is remarkable. Novartis is
Speaker 8: kind of at the forefront for that. In the case
Speaker 8: of ver attacks. They have a very strong cystic fibrosisline
Speaker 8: which really doesn't have any competitors, and they really are
Speaker 8: trying to focus on those key areas where they have
Speaker 8: a true edge. So those that's why I like those
Speaker 8: two stocks in particular. But you know, we have like
Speaker 8: Nova Noordis and Eli Lilly who are benefiting from, you know,
Speaker 8: the ozembic trends, and Eli li also has some great
Speaker 8: oncology drugs. It's just a little pricey right now, which
Speaker 8: is why it's not on my list.
Speaker 3: How about energy here, I'm looking at WTI crude oil
Speaker 3: at seventy eight dollars per barrel. How do you think
Speaker 3: about the energy space here. The stocks have been quite
Speaker 3: good over the last several years. Hey, what do you
Speaker 3: think going forward here?
Speaker 8: Well, inflation has helped energy stocks, and if you looked
Speaker 8: at the latest PPI and CPI numbers, energy was one
Speaker 8: of the main reasons why some of those numbers are
Speaker 8: one of the only areas that we saw decline in
Speaker 8: inflation if you look at it with energy and food.
Speaker 8: So obviously gas prices have come down. That's good for
Speaker 8: the consumer. And so I don't know if there's a
Speaker 8: huge till end to the entire sector, but I do
Speaker 8: like a stock like saying like Diamondback Energy because they
Speaker 8: don't need oil to be one hundred dollars a barrel
Speaker 8: to have good revenue and good profitability. I think their
Speaker 8: break even is fifty dollars a barrel, and so there's
Speaker 8: quite a bit of opportunity for a stock like Fang
Speaker 8: to do well in an environment where other energy companies
Speaker 8: aren't doing as well.
Speaker 5: Paul, I don't know if you know this, but Shana
Speaker 5: actually has a nickname. It doesn't have to deal with
Speaker 5: single stocks. She is also known as the Queen of Alternatives.
Speaker 5: Oh nice, So let's get your perspective on the outlook
Speaker 5: for alts in twenty twenty four. Is there anything in
Speaker 5: particular that jumps out to you as attractive for this year.
Speaker 8: Yeah, I think that. You know, we've spent a lot
Speaker 8: of time over the last couple of years being really
Speaker 8: excited about that venture capital and private equity space, and
Speaker 8: we're not seeing as much of a tailwind in either
Speaker 8: one of those spaces right now. Private equity has not
Speaker 8: performed as well as the overall public markets, and venture
Speaker 8: capital has a ton of headwinds to it. So you
Speaker 8: gotta think a little bit outside the box. And there's
Speaker 8: areas in the alternative space that I think are really interesting,
Speaker 8: some of the more diversifying kind of names in the
Speaker 8: hedge fund space, like equity market neutral, some event driven
Speaker 8: things of that nature. But also if you look at
Speaker 8: private credit and private debt in the environment we're in now,
Speaker 8: where I think we're at peak interest rates. I'm not
Speaker 8: saying that I think the Fed's going to cut anytime soon,
Speaker 8: because I don't think that, but I do think there's
Speaker 8: better opportunity for yield than some of the private credit
Speaker 8: and private debt markets because banks as a whole are
Speaker 8: not as open to smaller businesses and to startups and
Speaker 8: things of that nature. So they're going to other markets,
Speaker 8: and the biggest beneficiary of that are private debt, debt
Speaker 8: and private credit.
Speaker 3: Yeah, that's certainly been just a tremendous area of growth
Speaker 3: really over the last ten to twelve years, private credit.
Speaker 3: As you know, the banks have kind of pulled back
Speaker 3: after the posts after the financial crisis. So a big,
Speaker 3: big market there. Shanna Sisso, thanks so much for joining us.
Speaker 3: Shana is president and CEO fan Ryan Capital Management. She
Speaker 3: joins us via zoom from Chicago, Illinois.
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Speaker 9: Ye boy, it is Nvidia day.
Speaker 3: To say, the leases impacting not only at stock that sector,
Speaker 3: any overall market.
Speaker 4: Here.
Speaker 3: Let's get some perspective on it as only one b
Speaker 3: rid Holts can do. Barry Ridolt's host of Masters in
Speaker 3: Business on Bloomberg Grit. It's a little podcast like a
Speaker 3: jillion people will listen to every week. He gets great
Speaker 3: guests but his day job, he's a founder of a
Speaker 3: rid Holt's Wealth Management. Barry, I mean you and I
Speaker 3: we've been in this market a long time. I'm struggling
Speaker 3: to find a stock that had such an impact for
Speaker 3: such a period of time as in video.
Speaker 9: What do you make of it?
Speaker 10: Well, you know, I'm always perplexed when I see people
Speaker 10: sort of shrugging off new technology, new companies, shifts in
Speaker 10: how we operate. We should just stick with the you know,
Speaker 10: imagine someone in the nineteen twenty saying, what's with these
Speaker 10: new fangled you know, telephone and radio and aueomobiles. Let's
Speaker 10: just stick with the steam and leather belt companies. They've
Speaker 10: done great for so long. Hey, you know, technology is
Speaker 10: how wealth is created, how society moves forward, how humans
Speaker 10: dominate the planet. And it's pretty clear. Yeah, there's a
Speaker 10: lot of hype. I'll go back to computer companies in
Speaker 10: the eighties or automobile companies in the twenties. I can't
Speaker 10: tell you which of those companies are going to be
Speaker 10: the winners. And there's always hundreds of them, remember Gateway Computing.
Speaker 10: But somebody out of that complex is going to be
Speaker 10: a big winner, and it's going to drive a lot
Speaker 10: of the economic activity that takes place.
Speaker 5: Barry, what have you learned from in Video's earnings in
Speaker 5: terms of whether Nvidia is going to emerge as one
Speaker 5: of those winners. Paul's been asking pretty much every guest
Speaker 5: on this show today, you know what makes in video
Speaker 5: so different? Why are their chips attractive to so many
Speaker 5: corporations versus IBM's broad cooms. So where are we right
Speaker 5: now in terms of assessing weather and video is really
Speaker 5: going to emerge as one of these winners?
Speaker 10: Aig so caveat. I'm not a semiconductor analyst. However, if
Speaker 10: we look at the history of chips and how they've
Speaker 10: developed over time, at one point it was all Intel
Speaker 10: and nobody else had a whole lot to say. Then
Speaker 10: we started looking at more complex calculations. We went from
Speaker 10: reduced instruction sets to more complex to floating point, and
Speaker 10: then it was graphic generators and games and then mobile
Speaker 10: and so there's this been this progression, and along that
Speaker 10: progression in Vidia has been extremely innovative and ahead of
Speaker 10: the curve from their bigger competitors, or at least once
Speaker 10: bigger competitors. You can't can't say that anymore. And so
Speaker 10: this is all about GPUs and cycles. I'm going to
Speaker 10: tell you what I think a lot of people are
Speaker 10: afraid to say. I have no idea if Nvidia is
Speaker 10: ultimately going to be the winner ten or twenty years
Speaker 10: from now. The technology changes so quickly, the upstarts come
Speaker 10: along and disrupt the environment so much, it's very difficult
Speaker 10: to make that be that said, go back. You don't
Speaker 10: even have to go back twenty five years. Go back
Speaker 10: five years, and video was that disruptor. I can't tell
Speaker 10: you who might be the disruptor to in video or
Speaker 10: if they're going to dominate. Very few companies dominate for decades.
Speaker 10: Look at Microsoft as an example. That's the exception, not
Speaker 10: the rule. We've gone through Armholdings and AMD and Intel
Speaker 10: and Qualcomm and one semi company after another. So it's
Speaker 10: really really difficult to make that bad.
Speaker 3: So Barry, I would say, you can correct me here
Speaker 3: on the number of years here, But it seems like
Speaker 3: for the last twenty plus years tech has been leading
Speaker 3: this market.
Speaker 9: Is there any scenario why why shouldn't that be overweight
Speaker 9: Tech long term? And just no scenario is there?
Speaker 10: So first let me correct you. It's not twenty years.
Speaker 10: It's forty years, right, go back to the nineteen eighties.
Speaker 9: Well you're a lot older than me Berry's.
Speaker 10: So you move from from mainframe computing to desktop computing
Speaker 10: and the rise of software with that, and then eventually
Speaker 10: you moved to gaming and mobile, and now AI is
Speaker 10: a software that's driving a lot of this. You know,
Speaker 10: what we think of as a separate space of technology.
Speaker 10: I love to look at the books about investing from
Speaker 10: like the early twentieth century, and they talk about telegrams
Speaker 10: and telephones and rails the way we talked about chips
Speaker 10: and software and internet. You know, in the nineteen thirties, forties, fifties,
Speaker 10: there were no telephone companies other than ma Bel. Everybody
Speaker 10: used a telephone. So the way we describe internet companies,
Speaker 10: I think that's going to fade and everybody's going to
Speaker 10: be an Internet using company. Everybody is going to end
Speaker 10: up being an AI company. The question is are you
Speaker 10: providing the picks and shovels? Like, it wasn't the the
Speaker 10: you know, the gold miners who got money, who got wealthy,
Speaker 10: It was the company selling them dungarees and picks and shovels.
Speaker 10: And so we kind of think of Nvidia that way,
Speaker 10: that's the appeal, But that's a long way to answer.
Speaker 10: I'm not uncomfortable being overweight technology. You want to be
Speaker 10: a little you know, advantageous in the way you purchase it.
Speaker 10: The one thing that is so counterintuitive about all time
Speaker 10: highs that we just reached. All time highs tend to
Speaker 10: be very bullish and historically have done well.
Speaker 9: Before we let you go because of your extension age.
Speaker 3: The Nike all time high since nineteen eighty nine, that's perspective.
Speaker 10: Isn't it that that's bullish and and you know people
Speaker 10: have a tendency to look at last year is a
Speaker 10: perfect example. Oh my god, the nasdak up fifty percent,
Speaker 10: the SMB of twenty five percent. You have to have
Speaker 10: context and say over two years, twenty two and twenty three,
Speaker 10: those in the seas are flat. So as much as
Speaker 10: it looks like we've come too far, too fast, you're
Speaker 10: really just making up. Kind of reminds me of you know,
Speaker 10: the rally in nine to ten, making up the losses
Speaker 10: from seven oh eight. So Japan is a whole nother world.
Speaker 3: Our friends until could deserve a shout out. I mean,
Speaker 3: it's been nineteen eighty nine.
Speaker 9: Good for them. Remember Barry, back early in our career.
Speaker 3: You had to be a part of that whole Japanese
Speaker 3: market and then boy for just nothing for a long time.
Speaker 3: Barry Ridolts, host of Masters in Business on Bloomberg Radio.
Speaker 3: Great podcast, go check it out. His great guests every week,
Speaker 3: some of the leaders in finance. It's also founder of
Speaker 3: rid Holts Wealth Management. Some good stuff there.
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Speaker 3: You know, during the pandemic Emily, one of the economic
Speaker 3: issues that really became apparent is supply chains and how
Speaker 3: you know, susceptible supply chains are to disruptions and boy
Speaker 3: shutting down the world's economy and then reopening it creates
Speaker 3: some disruptions. And one of the people we leaned on
Speaker 3: for kind of analysis and explanations about how this whole
Speaker 3: thing works is Jeene Soroca. He is the executive director
Speaker 3: of the Port of Los Angeles.
Speaker 9: Yes, that port.
Speaker 3: The Port of Los Angeles is one of the world's
Speaker 3: busiest seaports and the leading gateway for international trade in
Speaker 3: North America. So Gene was so good to us during
Speaker 3: the pandemic and the logistics and all the stuff you
Speaker 3: had to worry about supply chain during that period. So
Speaker 3: we appreciate getting some of Gene's time. So, Jean, I
Speaker 3: know we're back to normal. I know you guys in
Speaker 3: the Port of Los Angeles settled your labor issues last year.
Speaker 9: Talk to us about global trade. What's it like in
Speaker 9: a day at the Port of Los Angeles? Died these days?
Speaker 9: How's business Paul Emily, Good morning.
Speaker 11: Business is really good. We're running it about seventy five
Speaker 11: to eighty percent of full capacity at the Port of
Speaker 11: Los Angeles. Anything butt normal though around the world, with
Speaker 11: issues in the Panama Canal, with respect to drought in
Speaker 11: the Middle East, with concerns around safety and security, and
Speaker 11: broader looks at how this US economy is going to
Speaker 11: continue to propel itself thanks to the American consumer. So
Speaker 11: let's start off with where we're at right now. Six
Speaker 11: consecutive months of growth, the second best January ever up
Speaker 11: eighteen percent compared to last year, and our first quarter
Speaker 11: outlook is it about two point two million containers or
Speaker 11: twenty percent year on year increase compared to Q one
Speaker 11: of last year.
Speaker 5: So how would you assess then, the overall health of
Speaker 5: the global supply chain relative to what we saw during
Speaker 5: the pandemic, because, like Paul said, it seemed like everyone
Speaker 5: was suddenly talking about the supply chain and where are
Speaker 5: we relative to just a few years ago.
Speaker 11: Emily, I think we're in a lot better shape. We've
Speaker 11: learned a lot from what we saw then too, But
Speaker 11: we're front of mind now to so many people outside
Speaker 11: our general industry, whether it's us looking for our packages,
Speaker 11: what's on the store shelves, or just the general consciousness
Speaker 11: about how this port supply chain and trade business impacts
Speaker 11: economies and jobs around the world. What we see in
Speaker 11: Los Angeles is that there are a couple things happening
Speaker 11: right now. The stability of that labor contract has given
Speaker 11: us about a four percentage point boost in market share,
Speaker 11: So some of that cargo that we lost during the
Speaker 11: protracted negotiations has started to come back, not all of it.
Speaker 11: Much more work to do, but good trajectory now with
Speaker 11: the Panama Canal suffering drought and the concerns of safety
Speaker 11: in the Middle East. With respect to the Hoothy going
Speaker 11: after the ships and the cargo and oil tankers, you're
Speaker 11: starting to see more cargo shifted our way, not services
Speaker 11: being collapsed, not new vessels coming in, but higher levels
Speaker 11: of capacity and utilization, and importers and exporters saying I
Speaker 11: may not want to take that much time, but the
Speaker 11: bigger difference is the gap between cargo that's moving east
Speaker 11: and Gulf Coast versus the West Coast is wider from
Speaker 11: a freight cost perspective. That's important because we're right now
Speaker 11: in the middle of our annual contracting season for freight.
Speaker 3: All right, So right on the Port of Los Angeles
Speaker 3: on the West Coast, you probably have the best of
Speaker 3: you of anybody trade with China.
Speaker 9: What's what's it like now?
Speaker 3: What's your expectation for that important route of trade coming
Speaker 3: from China to your port.
Speaker 11: Paul, it's still our most dominant trading partner. Fifty three
Speaker 11: percent of Port of Los Angeles business is with China.
Speaker 4: Now.
Speaker 11: That's down from fifty seven percent at the end of
Speaker 11: year twenty twenty two, and it may drop into the
Speaker 11: mid forties as many supply chain executives are continuing with
Speaker 11: their China plus one strategy, looking at other locations to
Speaker 11: source and produce goods in. But still forty five fifty
Speaker 11: years of supply chain relationships exist. You don't tear that
Speaker 11: apart overnight.
Speaker 5: Just the other day, the White House said that they
Speaker 5: were concerned that more than two hundred ship to shore
Speaker 5: cranes at US ports are manufactured by China and can
Speaker 5: be serviced and programmed remotely, creating a cybersecurity vulnerability. What
Speaker 5: did you make of those comments? How legitimate are the
Speaker 5: White House's concerns?
Speaker 11: It's also very important to us. The Port of Los Angeles,
Speaker 11: Emily was the first in the nation to create a
Speaker 11: cyber security operations center back in twenty fourteen with the
Speaker 11: help of the Department of Homeland Security. Today that system
Speaker 11: is stopping more than sixty million cyber intrusion attempts per month.
Speaker 11: It also gave us awareness to create a cyber resilient center.
Speaker 11: Also one of the first in the world to bring
Speaker 11: in the private sector partners with US that co helped
Speaker 11: with the IBM folks. It has now stopped to have
Speaker 11: a dozen cyber intrusion attempts to private sector interests that
Speaker 11: they were otherwise unaware of. So this work must continue.
Speaker 9: It gives that up there. You mentioned the Panama Canal.
Speaker 6: Fascinated by the Panama canaw I read a.
Speaker 9: Great book on it. I'll fundy author later.
Speaker 3: It's phenomenal how they built that thing. So what's wrong
Speaker 3: with the Panamac There's a drought and so the water
Speaker 3: levels are lower, so they're not taking the amount of
Speaker 3: freight they typically take.
Speaker 11: That's exact lead it. And you think about a vessel
Speaker 11: at full capacity. They can't load to the top, and
Speaker 11: the transits through the canal are down some twenty three
Speaker 11: percent according to published reports thus far this year. Now
Speaker 11: the port authority folks switched on. They're railing cargo from
Speaker 11: the Atlanta from the Pacific side to the Atlantic for
Speaker 11: onward carriage to Europe and North America. But it's just
Speaker 11: not enough. And that's that's why this capacity issue is
Speaker 11: so important.
Speaker 3: The path between the seas. David McCollough, that's the book
Speaker 3: phenomenal about the history of the Panamakete.
Speaker 9: It's a weekend.
Speaker 3: It's more than a weekend, it's a beast all right, So, Gene,
Speaker 3: so is your business, I mean it's a GDP business?
Speaker 3: Is that how you kind of plan it out here?
Speaker 3: And so do you get a sense of are your
Speaker 3: customers are they telling you? What are they telling me
Speaker 3: about their sense of the economy?
Speaker 11: Broadly speaking, most are upbeat. Seventy percent of our GDP
Speaker 11: is tied to you and me buying goods now. Although
Speaker 11: the consumer purchasing was down a little bit of Jamanuary,
Speaker 11: it was not unexpected. Great sales for the holiday season
Speaker 11: nearly a trillion dollars up three point eight percent last year.
Speaker 11: There was going to be a little bit of a
Speaker 11: lull in January, but the forward look is strong. The
Speaker 11: Atlanta Fed is currently estimating first quarter GDP around two
Speaker 11: point nine percent, healthier than SIT expected, and fourth quarter
Speaker 11: GDP came in beyond expectations. Again, what we see and
Speaker 11: the forward look is an order cycle that runs about
Speaker 11: six months ahead of when we actually buy things in
Speaker 11: the store online. That inventory flow is a leading economic indicator.
Speaker 11: Appears good.
Speaker 3: So, Geene, I'm the captain of this big monstership. I
Speaker 3: got my containers all over the place.
Speaker 9: At how they don't fall off?
Speaker 3: I have no idea I come into your port, how
Speaker 3: long am I there before I get back on my way.
Speaker 11: I look at these vital statistics as I call on
Speaker 11: Paul every morning, and we're at or better than when
Speaker 11: we were pre COVID. The largest ships that come into
Speaker 11: the Port of Los Angeles average twelve thousand containers on
Speaker 11: and off, best in the industry. Every call four and
Speaker 11: a half days is the amount of time a ship
Speaker 11: is in port working. That's right where it should be.
Speaker 9: All right, So I just I think those things.
Speaker 3: All my bucket list is to go on a cruise
Speaker 3: on one of those big things. And then when every
Speaker 3: time I say that, every time I say that, people
Speaker 3: will email in says that you.
Speaker 9: Do not want to go in one of those strips
Speaker 9: because it's not like.
Speaker 3: You're going on to the Queen Mary or anything. It's
Speaker 3: tough conditions for those folks that work on their ships.
Speaker 3: Gene Sroka, thanks so much for joining us.
Speaker 9: Geen S.
Speaker 3: Troka is the Executive Director of the Port of Los Angeles.
Speaker 3: Joining us live here in our Bloomberg Intreactive Broker Studio.
Speaker 3: Appreciate getting some of his time. He was critical and
Speaker 3: helping us kind of understand the global supply chain back
Speaker 3: in the day when that was front.
Speaker 9: Of mine for everybody.
Speaker 6: Everybody kind of had to get smart on that.
Speaker 5: Oh yeah, I mean even just friends and family were bringing.
Speaker 3: The first time I noticed it during the pandemic because
Speaker 3: when I went in to get a bicycle and then
Speaker 3: Guy's like, no, they all come from Asia. Done, it
Speaker 3: can't get them.
Speaker 5: So I recently ordered a couch and it still took
Speaker 5: like two months.
Speaker 9: To get to Yeah, exactly, exactly, so global supply chain.
Speaker 1: You're listening to the Bloomberg and Intelligence Podcast. Catch us
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Speaker 1: York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 3: There is another big company out with a really good
Speaker 3: print on their release that was Moderna. mRNA, the pharmaceutical
Speaker 3: company put out some good number. Stock is up about
Speaker 3: nine percent today. This is a thirty billion dollars thirty
Speaker 3: six billion dollar market cap stock and this is important company.
Speaker 3: It's one of the companies that delivered the COVID nineteen vaccines.
Speaker 3: So always have a special place in my heart for sure,
Speaker 3: along with a couple of others. Sam Fizzelli, he covers
Speaker 3: his stock, he covers his sector. He's a director of
Speaker 3: research for Global Industries. He's a senior farmer analyst, one
Speaker 3: of the best in the city of London for Bloomberg Intelligence.
Speaker 3: So Sam, looks like a really good quarter for Moderner.
Speaker 3: What stood out for you.
Speaker 7: In Nvidia stood out for your pole.
Speaker 12: After two days of shenanigans in the walket's about how
Speaker 12: high numbers? Well, but anyway, we're not talking at any
Speaker 12: video has nothing to do with me.
Speaker 7: Well, they're not.
Speaker 12: Clearly they beat in four Q. I mean were they were?
Speaker 12: They given guidance and LISTA followed the guidance. They were
Speaker 12: looking for a certain number and then four Q beat
Speaker 12: as like I said on the terminal in MDL twelve
Speaker 12: point four percent, right, and they turned the profit a
Speaker 12: small one in four Q.
Speaker 7: So that was particularly good. The thing is it's just
Speaker 7: one quarter.
Speaker 12: It doesn't really change the dynamic of what's going on
Speaker 12: in twenty twenty four to twenty twenty five and beyond.
Speaker 5: Tell us a little bit about that dynamic as you
Speaker 5: look ahead for Maderna, how exactly are they pivoting away
Speaker 5: from being a company that people see the name Maderna
Speaker 5: and they just think COVID.
Speaker 7: Yeah, so they've got a lot going on.
Speaker 12: They have one more COVID sales potentially coming up, you know.
Speaker 12: Apparently they've told us today that the European Union is
Speaker 12: looking for contracts for thirty six million doses per year
Speaker 12: in the next few years. You know, that's a lot
Speaker 12: of doses. And this is always the question here right
Speaker 12: this European Union. They don't like to pay for much,
Speaker 12: as we all know. So then they've got a vaccine
Speaker 12: for RSV, which is another respiratory virus pretty much a
Speaker 12: major issue in younger kids and older adults. Then you
Speaker 12: have a flu vaccine that's in development. They have a
Speaker 12: CMV vaccine, which is not an infection we talk about
Speaker 12: very often, but it's an issue for newborns, particularly if
Speaker 12: the mother's got the virus. And of course in the
Speaker 12: oncology setting in cancer, they've got a trial that has
Speaker 12: been successful. Now they're trying to figure out whether they
Speaker 12: want to they'll be able to file it this year
Speaker 12: for melanoma. So quite a lot going on. Twenty twenty
Speaker 12: four is a pretty important year.
Speaker 7: For this company.
Speaker 3: So I want to go to that cancer angle, sayings,
Speaker 3: I know you've talked about that before. Is this something
Speaker 3: where the mRNA technology can be which works so well
Speaker 3: for delivering the COVID vaccine, maybe this technolo you can
Speaker 3: be used to deliver other therapeutics, like perhaps for cancer.
Speaker 12: Yes, so in this case it's still being used in
Speaker 12: a kind of a vaccine setting. They used to call
Speaker 12: it personalized cancer vaccine, where they changed it to I
Speaker 12: and T individualized the neo antigen therapy. I think they
Speaker 12: wanted to get away from the word vaccine, but in reality,
Speaker 12: what they're doing is they're using bioinformatics and systems that
Speaker 12: they've been doing. And I just want to plug a
Speaker 12: podcast that my colleague Man Deep saying and I did
Speaker 12: talking to the head of AI at moderna and as
Speaker 12: the Tech Disruptors podcast. I was honored to be invited
Speaker 12: first time RAPP for the first time. Yeah, and then
Speaker 12: so we had that conversation. We talked about what they're doing,
Speaker 12: and one of the thing that they do is that
Speaker 12: they identify new things in the tumor of the patient
Speaker 12: and use that to create an m R and I
Speaker 12: injected back in just as if it was a COVID
Speaker 12: vaccine shot to.
Speaker 7: Raise any new in response.
Speaker 12: And that's partner with with merk sorry, and you know
Speaker 12: it's it's shown some really interesting data in first phase two,
Speaker 12: so the hope is that it will continue to show
Speaker 12: strong data in phase three.
Speaker 5: So, Sam, did you just say that Moderna is leveraging AI.
Speaker 5: I'll definitely have to listen to that podcast. But they're
Speaker 5: using AI.
Speaker 12: Is there a company that's not? I mean, isn't that
Speaker 12: why n video is going to the sun? Forget the
Speaker 12: move We passed the moon already, right, you know, is
Speaker 12: there a single company if you do a search for
Speaker 12: you know, we have a function on terminal which is
Speaker 12: quite cute, which is nt that you can look.
Speaker 7: At mentions of words.
Speaker 12: I think you'll find that AI in transcripts from calls
Speaker 12: earning scolls is I don't think there is an earning
Speaker 12: scoll during a year that hasn't mentioned AI.
Speaker 7: Every company is using it.
Speaker 3: Sam, let's step back from just Moderna per se and
Speaker 3: just say what in your space is kind of really
Speaker 3: the most exciting for you?
Speaker 9: Is it?
Speaker 3: Is it cancer therapy, is the dementia? What are some
Speaker 3: of the big areas that you're seeing a lot of
Speaker 3: money being spent and you're spending some time looking at.
Speaker 12: Yes, So Paul, I think with what's going on in
Speaker 12: pharmaceuticals and drug development and drug discovery and the pace
Speaker 12: of science, frankly, I can pick any area.
Speaker 7: Maybe CNS.
Speaker 12: The nervous system is a little bit more more because
Speaker 12: of the black box and the complexity that has. But
Speaker 12: even that is seeing very interesting developments. As you've heard
Speaker 12: about Alzheimer's is from ELI lily from biogen.
Speaker 7: In cancer, there isn't a single cancer that.
Speaker 12: We're now, as you know, we're doing deep dives in
Speaker 12: cancer across the board that I look at that there
Speaker 12: isn't some innovation coming and more innovation coming. Then you
Speaker 12: go to immune inflammation and immunology, you know, XMI, et cetera.
Speaker 12: A whole bunch of this is all the fruits of
Speaker 12: two things, genomics and the ability to sequence the you know,
Speaker 12: really cheaply, really rapidly.
Speaker 7: That's what's come together.
Speaker 12: And then of course you got bioinformatics next to it
Speaker 12: that enables you to analyze that massive data set.
Speaker 5: We don't have a ton of time left, but I
Speaker 5: am curious when you compare the results that we got
Speaker 5: from MODERNA. How are you thinking about MODERNA versus its competitors,
Speaker 5: I'm thinking.
Speaker 12: Piser, Yeah, so you're thinking Pfizer, BioNTech. I mean the
Speaker 12: you know, Pfizer obviously has a lot more going on
Speaker 12: than just COVID vaccines. Biontic is probably the one to
Speaker 12: look to look at, So it'd be interesting to see.
Speaker 7: What they report, Bob.
Speaker 12: We kind of know already what they're going to report
Speaker 12: because they get the revenues from Pfizer, and Pizer has
Speaker 12: already reported, so I don't expect any fireworks there. Of course,
Speaker 12: with biontach is a slightly different approach to taking a
Speaker 12: challenge at tackling their future.
Speaker 7: They've gone much more broad than MODERNA.
Speaker 12: MODERNA is pretty much stuck with its m r n
Speaker 12: A capabilities. Biontic is expanding rapidly.
Speaker 3: Emily sam is a well known wine enthusiast who lives
Speaker 3: in France.
Speaker 9: He's usually not impressed with the wine I drink, but
Speaker 9: I think I got him last time. Are you foot
Speaker 9: thousand Chateau Rothchild? How good was that?
Speaker 7: Yes?
Speaker 12: Shield well done? I mean and drinking it out of
Speaker 12: a plastic cop Yes, at a.
Speaker 3: Brooklyn Nets game of all places. So that's kind of
Speaker 3: how I roll. Not quite in the circles that Sam
Speaker 3: rolls in in London, in the rare confines of France,
Speaker 3: but that's kind of how I do it. Sam Fazzelli,
Speaker 3: thanks so much for joining us. Sam Fazzelli is the
Speaker 3: director of Research for Global Industries. He's also a senior
Speaker 3: pharmaceuticals analyst for Bloomberg Intelligence. He's becoming a pharm of
Speaker 3: space in the city of London for decades. He was
Speaker 3: absolutely instrumental during the pandemic pandemic helping us understand the
Speaker 3: virus and then just as importantly, maybe more importantly, understanding
Speaker 3: the vaccines and the companies and what they were doing there.
Speaker 3: So that was a critical so we appreciate his time today.
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