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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
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Speaker 2: This is Daniel Ives of Webb Bush. First of all,
Speaker 2: rocket It out of Las Vegas with Aston Martin. For
Speaker 2: those of you in radio, he's got the real jacket on,
Speaker 2: like the kind net Lance Alonzo. We're in all that.
Speaker 2: What in Formula one with all the excitement Apple taking
Speaker 2: over the broadcast, Cadillac coming in next year. When you're
Speaker 2: in the pit like you were, What's what's the thing
Speaker 2: that you don't know when you watch on TV?
Speaker 3: I think, I mean my experience at that point.
Speaker 4: I think the thing that people realizes not just how
Speaker 4: loud it is, but especially when you're in and you
Speaker 4: actually have like the headphones on and you hear them
Speaker 4: talking to the drivers. Just a complexity. I mean, that's
Speaker 4: the thing. It's like, it's it's really amazing.
Speaker 2: Did you change a tire?
Speaker 4: I did, but I will tell you at at indy
Speaker 4: five hundred I came close to almost change the entire.
Speaker 3: Okay, to secure liberty media, you can own Formula one
Speaker 3: fw O. NK is the ticker for Liberty Media. You
Speaker 3: can own it as a publican.
Speaker 2: Why is Apple doing that? Explaining just go to Jesse
Speaker 2: Paul's dying to get to Nvidia and you know the
Speaker 2: Google thing and all that. Why is Apple doing Apple TV?
Speaker 2: It's called dad TV because no one watches it. They
Speaker 2: got some product out, they've had some successes, but why
Speaker 2: waste their time on that?
Speaker 3: Yeah?
Speaker 4: I mean to me, it's really it's all about where
Speaker 4: they're ultimately going to take this. I mean in the future.
Speaker 4: And we'll see as Apple ultimately goes down the past
Speaker 4: with Gemini, and in terms of the AI future, they
Speaker 4: need to have as wide of a con ten lenses possible.
Speaker 4: And I think when you look at Apple TV, it's
Speaker 4: all part of Look, the quality speaks for itself. Quantity
Speaker 4: has been the issue, but for them, it's just they're
Speaker 4: going to continue to.
Speaker 3: Have irons in the fire. That's what they're going to do.
Speaker 2: The TV show Pluribus, it's a sci fi thing. She's
Speaker 2: home all alone. Everybody around her is like a droid.
Speaker 2: She's watching surveillance. It was great, why don't you get
Speaker 2: to a video right example?
Speaker 3: So Dan, the AI story here took a little bit
Speaker 3: of return over the last a couple of days. Here
Speaker 3: Meta placing a big chip order with Google, further calling
Speaker 3: to question the position or the dominance position of Nvidiot.
Speaker 3: Give us your thoughts about that on I mean, look.
Speaker 4: Google TPU if especially with with Broadcomm and TSMC is
Speaker 4: the is the builder that's been around for over a decade, right,
Speaker 4: So it's not that it's new per se. I think
Speaker 4: the issue comes down to demand the spy from video
Speaker 4: chips to twelve to one.
Speaker 3: So the reality is the supply of Nvidio chips twelve
Speaker 3: to one watch.
Speaker 4: So look, when you look at Meta like they're not
Speaker 4: going to be able to get everything they need from
Speaker 4: in video, so they got to look outside. When you
Speaker 4: look with googleized, I'd say it's really it's probut three
Speaker 4: to four years behind where Nvidio is. But again on
Speaker 4: some certain instances it could be good enough. And look
Speaker 4: that's where we're going. I mean, the reality is when
Speaker 4: it comes to AMD, when it comes to big tech,
Speaker 4: eventually you need to see Apple, you know, to see Meta,
Speaker 4: you can to see Microsoft. They'll build their own chips
Speaker 4: as well, but there's one chip in the world fuel
Speaker 4: in the AI revolution that's in video.
Speaker 3: So that's kind of how I thought about yesday. I
Speaker 3: was kind of surprised to see the cell off in
Speaker 3: video because my thought was all I hear from guys
Speaker 3: like you and technology folks coming in here is that
Speaker 3: the demand for AI is just I'm not saying satial,
Speaker 3: but boy, it's outstripping supply for sure, and you got
Speaker 3: to get what you can get when you can get it.
Speaker 4: Look, just spending three weeks in Asia, I mean, we've
Speaker 4: seen demand accelerate thirty percent in the last six months
Speaker 4: for AI. So it comes down to like it's easy
Speaker 4: to call say AIS bubble in the spreadsheet and twenty
Speaker 4: fifty four of New York City office building, but when
Speaker 4: you actually see what's happening there. Look, only three percent
Speaker 4: of enterprise in the US have gone down the AI path,
Speaker 4: none in Europe, ajax, China, and now you've seen sovereigns
Speaker 4: in Middle East, and for the first time in thirty years,
Speaker 4: the US has headed China.
Speaker 3: When it comes tack.
Speaker 2: Your piniata on Wall Street, people love to go after
Speaker 2: you on Twitter. It's the close. It's the act and
Speaker 2: all that underneath it. We know, folks, not only Dan Eyes,
Speaker 2: but webbush, there's some prodigious tech chips, like going to Asia,
Speaker 2: like actually walking in a factory, find out what's going on.
Speaker 2: Here's the reality for our listeners, our viewers worldwide. April three,
Speaker 2: a leading newspaper just reporting the news. Apple Shell's shares
Speaker 2: fell more than nine percent in response to the President's
Speaker 2: plan for steep tariffs on products made a broad let
Speaker 2: as sharp set off in tech stocks, which is loaded
Speaker 2: with technology. OMG April thirds sink near six percent. Apple
Speaker 2: is up sixty five percent, printing two to eighty yesterday.
Speaker 2: How do our listeners in viewers digest the news and
Speaker 2: the day to day panic and yet stay on board
Speaker 2: this historic American path.
Speaker 3: Look, and we've talked about so much on the show.
Speaker 4: Over the years, right, I mean, the reality is is
Speaker 4: that there's no bigger consumer install based in the world
Speaker 4: than Apple two point four billion iOS devices, one point
Speaker 4: five billion iPhones. And it comes down besides just the
Speaker 4: cash generating machine, everything we see in services. When you
Speaker 4: look at the AI revolution, Okay, they've looked, they've watched
Speaker 4: it from the stands so far, but now they're about
Speaker 4: to get into the field and actually do it and
Speaker 4: monetize the install based the consumer AI revolution comes to Apple,
Speaker 4: and I think that's something that we're going to see
Speaker 4: with Google partnership and others and Tom I just continue
Speaker 4: view it as like seventy five to one hundred hours
Speaker 4: per share incremental will be.
Speaker 3: Added to Apple for AI And.
Speaker 4: That's my view, Dave David and also look at this
Speaker 4: iPhone seventeen. It's been a surprise upgrade cycle that no
Speaker 4: one expected with Gemini.
Speaker 2: Is Apple under less pressure to do something this whole
Speaker 2: do something, do something?
Speaker 4: I'd say more pressure, but they couldn't do it till
Speaker 4: Google ultimately won the dojsuit. Once they won the dojsuit,
Speaker 4: that's where the candle ideenter between sun Dar and the
Speaker 4: cook start. And I think that's that ultimately is now
Speaker 4: where that's tracking to what can be a deal that
Speaker 4: couldn't have been until they won that deal. And I
Speaker 4: think that's where they're going to go. They're not buying purplexity,
Speaker 4: They're going with Google. They're going to go down bet
Speaker 4: heavily on them.
Speaker 2: Then I was with Wedbush with us here on Wednesday
Speaker 2: before Thanksgiving, is you get ready to travel, the Horde
Speaker 2: comes over to the house. We say good morning all
Speaker 2: the different ways you listen to us. Thank you for
Speaker 2: discovering Bloomberg's surveillance in two thousand and twenty. Will be
Speaker 2: your Friday, Paul Sweeney, your people. It was a big arguments.
Speaker 2: People went back and forth. Yes, yeah, it will be
Speaker 2: your Friday after Thanksgiving, Paul, and talk.
Speaker 3: To us about Meta a little bit. I think that's
Speaker 3: one of the ones the market is unsure of as
Speaker 3: it relates to the AI play there. Stocks down about
Speaker 3: twenty percent from its recent high, so some concerns there.
Speaker 3: How do you position that?
Speaker 4: I think, I mean it's a table pounder by because
Speaker 4: the reason that stocks off is because Zuk right now
Speaker 4: wartime CEO, focus on increasing cap backs over the next
Speaker 4: year in his arms race, and you're and you're seeing
Speaker 4: obviously pressure in terms of earnings and cashle but that's
Speaker 4: that's what you want to see them do. You were
Speaker 4: talking about monetizing the AI revolution over the coming years,
Speaker 4: the three billion users that they basically have when it
Speaker 4: comes to their consumer ecosism, and that's the smart move
Speaker 4: I think right now, investors, it's very easy knee jerk
Speaker 4: with the bury, the AI bubble, all the worries.
Speaker 3: The reality is.
Speaker 4: That there's two more years and weise left in this
Speaker 4: tech ball market. You're in year three of an eight
Speaker 4: to ten year build and it is truly a fourth
Speaker 4: in dustrial revolution. I think Meta is going to be
Speaker 4: proven that this is the right move what they're doing in.
Speaker 2: The ZEITGEISTI this weekend is the partition that yes, we
Speaker 2: appear to be using AI for search stuff In Paul
Speaker 2: Sweeney the other day goes, should I go with the
Speaker 2: ocean space cranberry or something homemade, you know that kind
Speaker 2: of stuff, or like task driven AI? When do you
Speaker 2: perceive America makes the shift to a more sophisticated use
Speaker 2: of AI.
Speaker 3: Yeah, it's a great qub. But today it's enterprise.
Speaker 4: I mean, the reality is the consumer AI revolution hasn't started.
Speaker 4: Chat GPTAM, we see that, but it's all enterprise. I mean,
Speaker 4: this spending we're talking about called next two to three trillion,
Speaker 4: it's just the enterprise. When it talks about consumer, it's
Speaker 4: our autonomous humanoid robotics.
Speaker 3: It's the future, the consum.
Speaker 4: Goddamn robot to make my cranberry Sauce Switten, you're what's
Speaker 4: happening again? And I continue to meet the call. Keen
Speaker 4: will be in a rubotaxi in your the other day
Speaker 4: that I thought Ludlow and again you never know, it
Speaker 4: could be Ludlow.
Speaker 3: So all right, let's go to that robotics and all
Speaker 3: that kind of stuff, because that's kind of the story
Speaker 3: behind teslaly these days it's not about bending steel and
Speaker 3: making cars and things like that. So the stocks up
Speaker 3: four percent year today, so it's really lagging the market.
Speaker 3: It's come back from I guess the biggest concerns where
Speaker 3: we were several months ago. But when you talk to
Speaker 3: your institutions, our clients, what are they telling you.
Speaker 4: I mean, it's it's all about the future. I believe
Speaker 4: autonomous and ultimately optimists about will be the most important
Speaker 4: chapter ever in Tesla's growth story. And I think now
Speaker 4: must being wartime CEO have in the compackage, you know,
Speaker 4: potentially trillion dollar men. This will now define Tesla. And
Speaker 4: I also think you're gonn see a regulatory road map
Speaker 4: that's going to ease when it comes to autonomous, specifically
Speaker 4: on the robotaxi build out. You're gonna have thirty thirty
Speaker 4: five cities, and I think WIMA is basically going to
Speaker 4: be around the are a relative to where I see Tesla.
Speaker 2: Let's go to our three radio stations. Good Morning ninety
Speaker 2: two nine FM, Boston ninety nine one FM, Nathan Hager
Speaker 2: Radio in Washington, here Bloomberg eleven three zero. How is
Speaker 2: a robotaxi get across the Charles River right by MI
Speaker 2: T How does a robot get turn left there and support?
Speaker 2: How does a robotaxi get around DuPont Circle? How does
Speaker 2: a robotaxi get down Fifth Avenue right outside the Trump Tower?
Speaker 2: I don't get it.
Speaker 4: Look, I mean, do you look at it? It's data driven.
Speaker 4: I mean the reality is is that is.
Speaker 2: Your proof of concept that they can handle normal urban traffic.
Speaker 4: What everything I've seen, and obviously we've been there in Austin,
Speaker 4: You're going to continue to see to expand you know,
Speaker 4: across you know, many cities over the next few months.
Speaker 3: I believe we're there now.
Speaker 4: I'm not saying that there's you're gonna see the GEO
Speaker 4: offense area continued expand, but it's my view next few years,
Speaker 4: twenty percent of cars on the road when you're whether
Speaker 4: it's New York City, whether it's Boston, whether scot you're
Speaker 4: gonna look around and you're gonna and you're not gonna
Speaker 4: see a driver.
Speaker 2: Enough check what's your single best buy right now? Is
Speaker 2: it matter or is something different?
Speaker 4: I mean to me single best buy writ or is
Speaker 4: Microsoft the relative to what we see in terms of
Speaker 4: the stock.
Speaker 3: I sit down because the view that.
Speaker 4: Now Google, now Amazon and others on the hyperscale are
Speaker 4: going to sort of eat their lunch. Gook, what's happening
Speaker 4: Oracle as well? It just look New York City cab
Speaker 4: driver was bearish on Alphabet Google start the year. Today
Speaker 4: they're barish on Microsoft. And I think that's why that
Speaker 4: has one hundred hour upside.
Speaker 2: Okay on Microsoft just is one example. Are they open Ai?
Speaker 2: Sam what's his name, Sam Altman?
Speaker 3: Sam Almon?
Speaker 2: Are they down because they're affiliated with Sam Altman?
Speaker 4: I think, just like just like Oracle, there's that too
Speaker 4: big to fail concept right where anyone that touches open
Speaker 4: AI that's ultimately been an overhang. But it comes down
Speaker 4: to like that would be like me being like, okay,
Speaker 4: if I could have more Peter luger Steak, would I
Speaker 4: have it?
Speaker 3: Or would I rather own white Castle.
Speaker 2: Actually at Bush you gotta be going pay.
Speaker 3: Yeah again, you gotta go Lugers. But the reality is
Speaker 3: that open AI. It's the Peter Lugers of technology.
Speaker 4: You want to be associated with it, not not associated
Speaker 4: those are you on YouTube?
Speaker 2: The interns are in her ears. We got these holiday
Speaker 2: interns and Sweeney's intern It's from Penn State.
Speaker 3: I'm shocked we are. Nobody cares we are.
Speaker 2: Paul Damn Penn State. Go Paul.
Speaker 3: Who's going to be the coach?
Speaker 5: Do you think? I mean?
Speaker 3: Look, I think we'll see it probably Monday. Oh okay,
Speaker 3: that was actual.
Speaker 4: I continue to think it's you know, it's either Chesney
Speaker 4: from JMU did that you know? Or there could be
Speaker 4: a mystery candidate that will see how that emerged over
Speaker 4: the coming days.
Speaker 3: So I think a mystery candle.
Speaker 4: Not no, not no, please, and we better days are
Speaker 4: ahead for Pensate after a dark year.
Speaker 2: Okay, all I asked, you're such a hitter and you're
Speaker 2: so f one. Next time you go to F one,
Speaker 2: take young John Farroll with you, like playing.
Speaker 4: The reason I got into F one it was Netflix
Speaker 4: and Farah.
Speaker 2: Yeah yeah, yeah, I mean he he's like head to
Speaker 2: Toad Ferrari.
Speaker 3: Sure, I mean you know, I mean, you know that's
Speaker 3: how you roll.
Speaker 2: The whole Thing's where's your next f one you're going to?
Speaker 4: I mean I have a few, but uh a few
Speaker 4: on the docket, you know, Mid Middle.
Speaker 3: East and and some other ones.
Speaker 2: Dan, I thank you to extended a conversation, a lot
Speaker 2: of good information there with his single best by the
Speaker 2: gentleman from Microsoft. Stay with us. More from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: We got people out there, really in the trenches about
Speaker 2: thinking of the future of retail. Tiffany joins us right
Speaker 2: now out of pen out of Northwestern their fabulous NBA program.
Speaker 2: She's a Boston consulting group and most she's like not
Speaker 2: every day, but every third day at Highland Park in Dallas. Yeah,
Speaker 2: I mean that's the way she will. Tiffany, thank you
Speaker 2: for joining Surveillance this morning. Let's start. There is Luxury fixed,
Speaker 2: I mean, there's this China. OMG, China is terrible, but
Speaker 2: America is doing great double digit growth. Where does luxury
Speaker 2: fit in for the holiday season?
Speaker 6: Sure, luxury is one of those categories where based on
Speaker 6: our recent survey, we are planning on seeing some recovery
Speaker 6: during the Black Friday season. It was one of the
Speaker 6: categories that when we surveyed across we saw increase and spend.
Speaker 2: Black Friday used to be one hour in front of
Speaker 2: Walmart exact thousand people and Tiffany says, it's a season helpul.
Speaker 3: Yeah, And here's something that surprised me, Tom. In store
Speaker 3: shopping is making a big comeback as fewer only shop online.
Speaker 3: Tiffy talk us about that if I had never gone
Speaker 3: to a store again, I'll be happy.
Speaker 6: Well, what we're actually seeing is that most shoppers are
Speaker 6: planning on shopping both in store and online this holiday season,
Speaker 6: and the reason that they want to go back and
Speaker 6: store is they want to touch and feel the products right,
Speaker 6: they want to be a part of experiential retail. They
Speaker 6: want personalized help as they shop. And it's really in
Speaker 6: line with what we've been seeing all year long with
Speaker 6: mall traffic continuing to come back and store per just
Speaker 6: is coming back as well as the hybrid shopping channel,
Speaker 6: if you will, becomes the norm. And I want to
Speaker 6: emphasize that point on hybrid because we are really seeing
Speaker 6: consumers grow across channels during their shopping journeys, including how
Speaker 6: they're using AI.
Speaker 3: All right, so talk to us about AI. Can AI
Speaker 3: like kind of make my shopping list for me and
Speaker 3: kind of go and buy the stuff for me.
Speaker 2: AI can definitely do both.
Speaker 6: Now that being said, I would say most consumers are
Speaker 6: still using AI more in their initial shopping research and inspiration,
Speaker 6: and we actually found that about fifty percent of consumers
Speaker 6: plan on using AI in this holiday season.
Speaker 2: I'm addicted to it. I did have to do a
Speaker 2: search gyst today. You ready dark chocolate?
Speaker 3: Okay?
Speaker 2: I know nothing about dark chocolate. I grew up with Bosco. Yes, okay,
Speaker 2: dark chocolate. I go to Perplexity, Tiffany, dark chocolate, Boom.
Speaker 2: There's like three types to buy, just like that, Okay, Tiffany.
Speaker 2: The basic BCG question and Paul brought this up yesterday.
Speaker 2: What inning are we in for the growth of online,
Speaker 2: for the growth of Amazon in Walmart. If it's a
Speaker 2: baseball game Della's, does Dallas have a baseball day in
Speaker 2: the Texas range. Oh they did, sure, Yeah, yeah, But Tiffany,
Speaker 2: what inning are we in with our online experience?
Speaker 7: I think it.
Speaker 6: Depends a little bit on what angle you're looking at
Speaker 6: it from. But if you think about where we are,
Speaker 6: I would say we're still in the middle of the game.
Speaker 6: Because you know, you mentioned perplexity, right, large language models
Speaker 6: like chat GBT, they are really changing what the potential
Speaker 6: shopping journey is and that you know, retailers have to
Speaker 6: think about what their strategy is within that it's not
Speaker 6: an all or nothing game, and so how they think
Speaker 6: about you know, showing up in AI search becomes more
Speaker 6: important than ever.
Speaker 3: Now, how are the how are the retailers dealing with
Speaker 3: UH tariffs here and passing along whatever cost increases they
Speaker 3: might be bearing. Are they taking it in their margin?
Speaker 3: Are they trying to pass along customers? How's that playing
Speaker 3: out here? Because we don't hear as much about teriffs
Speaker 3: as we did, you know, maybe the beginning of the year.
Speaker 6: Yeah, I think everyone's settled into sort of this new
Speaker 6: norm when it comes to tariffs, if you will, And
Speaker 6: it's a mixture both definitely, right, They've taken some in
Speaker 6: their margins, they have passed them along through and for.
Speaker 2: This holiday season.
Speaker 6: They know that consumers right still have expectations when it
Speaker 6: comes to discounting promotions, right, and so they're making sure
Speaker 6: that they can meet those expectations pretty quickly.
Speaker 2: Or one final question. Okay, so all of us are
Speaker 2: buying off this affirm kind of thing where it's set
Speaker 2: out in payments. I don't know what you call it,
Speaker 2: like a firm and you know all the others folks.
Speaker 2: If I go into a given store, they want all
Speaker 2: my money now or a charge card. But if I
Speaker 2: buy online, I can spread out the payments. How is it?
Speaker 2: Where do you see that dynamic in two years?
Speaker 6: In five years, sure, we've seen actually a stabilization in
Speaker 6: the buy now, pay later trend. So while there's still
Speaker 6: a consumer and still categories that that's going to play
Speaker 6: a meaningful role. I think we're seeing it balanced with
Speaker 6: those desires to go in the store that I was
Speaker 6: talking about and the benefits that you get when you
Speaker 6: go in store.
Speaker 2: Is Highland Park. I've never been Tiffany in Dallas. Highland
Speaker 2: Park is like that's sort of like where they invented
Speaker 2: one stop luxury.
Speaker 6: Right there, we do have a really lovely shopping center
Speaker 6: in Highland Park that has a lot of great luxury stores.
Speaker 2: Give us one experience. Come on, come on, not using
Speaker 2: the BCG MX, I mean, what's your favorite store?
Speaker 6: Well, I must admit my favorite store in Highland Park
Speaker 6: is actually a bakery. It's called Bakery, and I love
Speaker 6: the I love the bakers there.
Speaker 2: They make an excellent scone.
Speaker 8: Great you get to come back in the show, Michael
Speaker 8: Barr says, bring her back, Tiffany, thank you so much
Speaker 8: with BCG Dallas here to get a sense of where
Speaker 8: we are in this retail season.
Speaker 2: It's a journey, she said, Stay with us. More Fromloomberg
Speaker 2: Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. You can also listen live
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: For the arguments in the kitchen, out in the back porch,
Speaker 2: at the Thanksgiving table, Sure where you're getting an evil
Speaker 2: lie from Grandma about the market. You just wish you
Speaker 2: were sitting at Thanksgiving with Andrew Slimman, Morgan Stanley investment manager.
Speaker 2: He writes one of the most intelligent notes on the street.
Speaker 2: Get it from Morgan Stanley and protect the copyright of
Speaker 2: all our guests. And he's basically saying, forget market timing.
Speaker 2: You have to participate in the American experiment. Andrew skrilled
Speaker 2: to have you on the day before Thanksgiving. How do
Speaker 2: you develop the faith and belief the conviction to own
Speaker 2: equities after this great bull run?
Speaker 9: Well, Tom, Before I begin, I got to say that
Speaker 9: was the most unique introduction I've ever sived.
Speaker 2: So congratulates worst has given me the beverage of her
Speaker 2: choice before she's trying the mold whatever it is. I'm
Speaker 2: here continue, Andrew.
Speaker 9: So I'll give you the answer if I go to
Speaker 9: my Bloomberg terminal and I look at what has worked
Speaker 9: from a style standpoint the last ten years, value growth, dividends.
Speaker 9: What's worked according to your bloom work, It is momentum
Speaker 9: number one and revisions number two. Long down the list
Speaker 9: is things like dividends, quality, value growth. It is momentum
Speaker 9: and revisions. And the reality of the market is that
Speaker 9: earnings i e. Revisions are very strong right now because
Speaker 9: the economy, for all the talk, earnings have come in
Speaker 9: better than what really Wall Street thought, certainly since April,
Speaker 9: but even since the beginning of the year, and.
Speaker 5: So that's the end of day.
Speaker 9: It's a long winded way of saying stocks move with
Speaker 9: the second derivative, which is earnings revisions, because stock prices
Speaker 9: in bed today expectations of the future. You don't buy
Speaker 9: a stock based on what's happened in the past. You
Speaker 9: buy it based in the future. And if the future
Speaker 9: looks better than what is expected, stock prices go up.
Speaker 9: And if it's worse, Tom you know, in other words,
Speaker 9: I've not since I've been in this business, or stocks.
Speaker 5: Don't go up for long when.
Speaker 9: Companies are telling you businesses is as.
Speaker 5: Good as expected.
Speaker 9: So what gives me faith is I see a positive
Speaker 9: for earnings.
Speaker 2: Bottle it. That's the single best idea today.
Speaker 3: Just wonderfully, Andrew, Andrew, I guess we're entering I guess
Speaker 3: what is the fourth year of this current bull market here?
Speaker 3: So I'm sure you get the questions, how much longer
Speaker 3: does this thing go? What do we what needs to
Speaker 3: work to continue this bull market? What do you tell
Speaker 3: folks these days.
Speaker 9: Well, I certainly, certainly earnings have to keep going. The
Speaker 9: market's not cheap at you know, twenty two times earnings.
Speaker 9: But you know, I pushed back a little bit on
Speaker 9: that for two reasons. Number one is, you know, the
Speaker 9: dynamics of what comprised the S and P today is
Speaker 9: far more profitable. Companies are far more profitful than in
Speaker 9: the past, so versus average is a.
Speaker 5: Little misleading, uh, you know.
Speaker 9: And number two is again, valuations are only as powerful
Speaker 9: as the denominated which is the estimate, and that's turned
Speaker 9: out to be too low.
Speaker 5: So I think.
Speaker 9: There's a good backdrop for equities in the fourth year.
Speaker 9: You know what's fascinating is when if a bull market
Speaker 9: makes it to the fourth year. Now, a bull market
Speaker 9: ends when you have a twenty percent pullback, which we
Speaker 9: haven't had. Every time the S and P has made
Speaker 9: it to the fourth year, it's gone up in the
Speaker 9: fourth year.
Speaker 5: It's never had it down year. So that's that's pretty
Speaker 5: powerful perspective. Four equities Andrew two years ago.
Speaker 2: Nice quote from you here, quote Why should I buy
Speaker 2: equities when I can lock in a five percent risk
Speaker 2: fee yield? Discuss?
Speaker 4: Oh?
Speaker 9: I My argument, Tom is the stock market is following
Speaker 9: a classic behavioral path, which is unfortunately, you know that
Speaker 9: the only consistency of this business, and you know this
Speaker 9: bomb as well as I do, is people sell low
Speaker 9: and they buy high. It's the only only market I
Speaker 9: know where when prices go down people want to sell.
Speaker 2: Well, it's just described by the investment strategy.
Speaker 9: Well, it's a triple log cast whatever you have. But look,
Speaker 9: in twenty twenty three, we had just come off a
Speaker 9: twenty five percent declining. Was a wonderful opportunity by stocks.
Speaker 5: But the reason why we had twenty five percent the
Speaker 5: climb was man was raising rates.
Speaker 9: So suddenly now short term rates look attractive and we
Speaker 9: didn't want to buy equity and.
Speaker 2: We gotta go. Are the Chicago Bears for real?
Speaker 5: We're gonna find out tomorrow.
Speaker 9: I know my whole family wants to watch for the
Speaker 9: first time a few years.
Speaker 5: So that's that could because that's.
Speaker 2: A good thing. And just slimon, thank you so much
Speaker 2: as Morgan stanleyder just fabulous. Note again, get that note
Speaker 2: from Morgan, Sandy Joe, stay with us. More from Bloomberg
Speaker 2: Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Stephanie Chen joins us right now. She's absolutely definitive on
Speaker 2: this at Trinity Investments, Los Angeles, and I want to
Speaker 2: really emphasize as folks, if you go to Michigan State
Speaker 2: in a hospitality Paul, I don't know what that's like.
Speaker 2: It's like, you know, religion at the Vaticates or something like.
Speaker 2: It is the program in America for the hospitality business.
Speaker 2: Stephanie in your racket, did everybody get the growth of
Speaker 2: luxury wrong? Did you see it coming? Or is it
Speaker 2: like OMG, now it's here.
Speaker 7: Yeah, No, appreciate the time and thank you for having me.
Speaker 7: You know. I think from a luxury perspective, the trends
Speaker 7: were always very positive, right. I think pre COVID there
Speaker 7: was always a sense of you know, that type of
Speaker 7: demand being there. I think as you noticed, you know,
Speaker 7: from a post COVID environment, the need for experiences has
Speaker 7: definitely skyrocketed. And what we've seen is you know, discretionary
Speaker 7: spending and the want and to really kind of focus
Speaker 7: on travel and experiences has definitely increased significantly.
Speaker 2: What does it mean? Like like Paul's the one I
Speaker 2: don't have a life, Stephanie Sweeney's hit every golf course
Speaker 2: like the jew Marriott Phoenix doesert Rich? Is that in
Speaker 2: your scout steal? Right? I mean these places have become
Speaker 2: ginormous destinations, right, yeah.
Speaker 7: Yeah, no, correct, And I think there's you know, these
Speaker 7: destination what we like to call destination markets, are really
Speaker 7: where we focus our attention just because again, like you noted,
Speaker 7: they're just such a diverse, diversified demand base.
Speaker 9: Right.
Speaker 7: You have the leisure component, you have the group component,
Speaker 7: you have the corporate component, and so I think you know,
Speaker 7: from a leisure perspective, what's really driving customers and consumers
Speaker 7: to travel is the experiences and what you're offering, because
Speaker 7: I think right now what's differentiating the product is what
Speaker 7: you can offer from an experiential perspective.
Speaker 3: Stephanie. So we're at Trinity Investments. Where are you guys
Speaker 3: allocating your capital in the hospitality space these days? Yeah?
Speaker 7: So, like I noted earlier, what we like to call
Speaker 7: destination markets whereby you know, whether that be resort, urban,
Speaker 7: really places where you can focus a lot of the
Speaker 7: kind of group leisure in corporate demand. So a lot
Speaker 7: of the hotels that we focus on are let's call
Speaker 7: it three hundred or four hundred rooms and above. And
Speaker 7: the reason for that is because you know, there's an
Speaker 7: ability to yield, manage the properties and kind of you know,
Speaker 7: when the leisure component is potentially on the lower side,
Speaker 7: you can really drive the group demand. And so a
Speaker 7: lot of the hotels that we focus on are kind
Speaker 7: of larger in scale as a result, and they are
Speaker 7: typically focused and let's call it these destination markets that
Speaker 7: really drive a lot of this type of kind of
Speaker 7: demand base.
Speaker 3: In New York City, for exam, I'm wondering if it's
Speaker 3: another a lot of boutique hotels coming here with names
Speaker 3: like you know, the Delano for example, trying to rebrand
Speaker 3: properties here in New York and maybe brands that are
Speaker 3: working in other parts of the world trying to bring
Speaker 3: their brands to New York and other urban markets. How
Speaker 3: do you guys do you invest in that?
Speaker 7: Yeah, I mean, look, the boutique segment is definitely one
Speaker 7: that has been quite profe and I think a lot
Speaker 7: of that it goes back to the whole experiences, right,
Speaker 7: and I think what the boutique segment has done really
Speaker 7: well is to provide this different experience relative to kind
Speaker 7: of the different niche that they're able to offer. Unfortunately,
Speaker 7: you know, because of the scale of what we like
Speaker 7: to focus on, and because we are value add investors,
Speaker 7: we tend to focus on these larger assets that aren't
Speaker 7: necessarily boutique in nature. But you're right, I mean the
Speaker 7: trend in this boutique style type of segment is definitely
Speaker 7: one that has picked up. And again, I think it
Speaker 7: all goes back to experiences and people wanting to have
Speaker 7: that differentiative type experience.
Speaker 2: Circle back to the airlines I mentioned ed Bastian and
Speaker 2: Delta airlines. I mean, in your world of luxury boom,
Speaker 2: does that filter right back into the airlines where there's
Speaker 2: fewer and fewer economy seats and more and more fancy seats.
Speaker 7: Yeah, I mean, look, there is, and there isn't. I
Speaker 7: would say from a supply demand fundamental perspective in the
Speaker 7: luxury space space, it's still quite favorable, right, And what
Speaker 7: I mean by that is there's still not a lot
Speaker 7: of new supply relative to that kind of let's call
Speaker 7: it luxury sector, and so what that does is obviously
Speaker 7: deem really well from a fundamentals perspective for the existing
Speaker 7: hotels and kind of the segment. So I think the
Speaker 7: supply demand fundamentals, there's still a demand for that, right,
Speaker 7: and we see it from a RevPAR revenue per available
Speaker 7: room performance standpoint, whereby it, you know, through your date
Speaker 7: October of twenty twenty five, RevPAR continues to grow, particularly
Speaker 7: in the luxury and upper up scale segment, and it's
Speaker 7: really kind of like, let's call it the low twenty
Speaker 7: percent improvement relative to where we were in twenty nineteen.
Speaker 7: So I think what that suggests is that consumer is
Speaker 7: still there and wanting to pay that price have that
Speaker 7: type of experience and quality. So yeah, I think that
Speaker 7: the supply and demand fundamentals, however, are still quite favorable
Speaker 7: because there is not a ton of newsify within that sector.
Speaker 2: Stephanie, thank you so much. Stephanie Chen with is Trinity Investments,
Speaker 2: Los Angeles.
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