WEBVTT - Market Outlook Post-CPI and a Tech Breakdown 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.840 the Bloomberg Terminal, and the Bloomberg Business App. From Massachusetts, 0:00:47.920 --> 0:00:53.920 The Charles River, Katie Kaminski joins chief research Strategist Alpha Simplex. Katie, 0:00:53.960 --> 0:00:57.160 if we reaffirmed a bullmarket, you and I are trend based. 0:00:57.640 --> 0:01:02.480 I'm looking at all sorts of percolations. Parabolics, are climate 0:01:02.600 --> 0:01:06.000 exponential moving averages, and the vector's pointing up? 0:01:06.200 --> 0:01:07.640 Do you agree? 0:01:08.000 --> 0:01:11.520 I agree on equities, but I'm still really nervous on. 0:01:11.480 --> 0:01:14.360 The other asset classes, so that I'd say yes and no. 0:01:15.440 --> 0:01:19.800 What's it is not a radio answer? 0:01:20.200 --> 0:01:23.440 You say yes on TV on radio and yes. 0:01:23.520 --> 0:01:24.800 I agree for equities. 0:01:24.880 --> 0:01:27.440 Yes, I mean I think there's still a moderate and 0:01:27.560 --> 0:01:32.040 sort of given what happened last month, signals abated, volatility 0:01:32.080 --> 0:01:34.760 came in and dissipated some of the strength that we 0:01:34.800 --> 0:01:37.120 saw earlier this year, and we're going to continue to 0:01:37.160 --> 0:01:40.399 see some sort of we've seen some recovery, so we're 0:01:40.480 --> 0:01:45.160 some somewhat moderately long you know, long views and equities. 0:01:45.640 --> 0:01:47.119 But when you look. 0:01:47.000 --> 0:01:50.360 At the other asset classes, that's what's been making me nervous. 0:01:50.480 --> 0:01:51.880 Because you've seen. 0:01:51.760 --> 0:01:56.279 Strong fixed income long signals, you've seen short commodity views. 0:01:56.320 --> 0:01:59.960 You're seeing long gold and short. 0:02:00.480 --> 0:02:02.800 The dollar has been under pressure too, so that that's 0:02:02.840 --> 0:02:03.800 a little defensive. 0:02:05.160 --> 0:02:07.920 You mentioned the dollar, Kdie, I mean again, we've seen 0:02:08.000 --> 0:02:12.080 weakness here in the dollar here. I mean I've always 0:02:12.120 --> 0:02:15.200 asked my FX folks here, is there ever a case 0:02:15.360 --> 0:02:18.359 a bear case for the US dollar? Is this a 0:02:18.360 --> 0:02:20.639 bear market for the US dollar or is this just 0:02:20.880 --> 0:02:22.240 some short term trading pressure. 0:02:23.320 --> 0:02:25.720 So I think there is definitely a case right now. 0:02:25.760 --> 0:02:29.040 With monetary policy going in with cuts, that's naturally going 0:02:29.080 --> 0:02:31.960 to put pressure on the dollar. And that's been the 0:02:32.040 --> 0:02:34.000 key theme for the last two or three months, and 0:02:34.040 --> 0:02:37.000 we've seen I'll just be honest, with you. Currencies has 0:02:37.040 --> 0:02:40.520 been the toughest asset class this year to trend because 0:02:40.560 --> 0:02:44.440 the signals have been much more volatile, and so you've 0:02:44.440 --> 0:02:46.680 seen a lot of back and forth, which is not 0:02:47.160 --> 0:02:49.760 you know, has not been an easy trend to trade. 0:02:50.080 --> 0:02:55.079 So the signal noise ratio has been low, but more recently. 0:02:54.720 --> 0:02:56.680 Especially the last two months, definitely with. 0:02:56.760 --> 0:02:59.639 The theme of you know, US cutting rates, that has 0:02:59.639 --> 0:03:00.560 put pressure. 0:03:00.320 --> 0:03:01.440 On the dollar, Katie. 0:03:01.480 --> 0:03:06.040 From a CTA standpoint, people that follow trends, is it 0:03:06.080 --> 0:03:09.880 a good time? Are trends efficacious now? Or is it 0:03:10.000 --> 0:03:13.640 still what the pro say, folks, it's so stochastic that 0:03:13.720 --> 0:03:15.840 you just can't get conviction. 0:03:17.720 --> 0:03:20.639 I think I actually think it's a good time because 0:03:20.800 --> 0:03:22.920 what happens a trend is as we go through a 0:03:22.960 --> 0:03:27.360 period of inflection. So when signals reduce and then pivot 0:03:27.960 --> 0:03:32.799 and you see a positioning move from one theme to another, 0:03:33.520 --> 0:03:36.000 that's when you have this opportunity. 0:03:35.360 --> 0:03:36.080 To break out. 0:03:36.400 --> 0:03:39.320 And so what we've been watching is some of the 0:03:39.400 --> 0:03:42.400 key things that have been building in our signals, and 0:03:42.440 --> 0:03:46.400 that's been a focus on potential for a harder landing, 0:03:46.760 --> 0:03:50.480 potential for economic weakness, and that is seen outside of 0:03:50.520 --> 0:03:53.800 the equity markets, and I think for me, when you 0:03:53.840 --> 0:03:57.640 look at past reversal periods, those other asset classes is 0:03:57.680 --> 0:04:01.080 where you have something to you know, to edge opportunities 0:04:01.120 --> 0:04:04.320 if we should find some difficulties this fall. 0:04:04.600 --> 0:04:06.520 Do you have a belief on gold? I've never asked 0:04:06.560 --> 0:04:08.840 you this, does Katie Kaminski look at gold? I mean, 0:04:09.120 --> 0:04:11.360 what was it, Paul record high yesterday? Where are we 0:04:11.840 --> 0:04:15.920 twenty five? We're almost a twenty six hundred on gold? 0:04:16.400 --> 0:04:16.960 On gold? 0:04:17.839 --> 0:04:20.680 So gold is I mean, it's amazing. I think the 0:04:20.760 --> 0:04:24.599 recent rally may be attributed to the dollar being weaker 0:04:25.360 --> 0:04:28.400 and real rates going down, but you know, really, if 0:04:28.440 --> 0:04:30.599 you look at that trend, it's just, you know, we 0:04:30.640 --> 0:04:33.200 should just be buying gold this year. You know, it's 0:04:33.240 --> 0:04:35.880 it's really it's been very strong and it's been very 0:04:35.920 --> 0:04:40.200 resilient throughout the entire year, So you know, it's the 0:04:40.200 --> 0:04:42.760 one that kind of sticks out versus other commodities that 0:04:42.800 --> 0:04:46.080 are more demand focus, like energies and metals. 0:04:46.200 --> 0:04:48.600 Well, I don't know much about commodities. I'm pretty proud 0:04:48.640 --> 0:04:50.159 of that butt, by the way. But the function I 0:04:50.240 --> 0:04:53.200 do know is BCom b COO and the Bloomer Commodities 0:04:53.320 --> 0:04:57.520 Index and BOIL US down ten percent just over the summer. 0:04:57.600 --> 0:04:59.919 I guessed, I mean, what's that telling you, Katie. 0:05:00.920 --> 0:05:04.120 So that's part of what this defensive narrative that I've 0:05:04.160 --> 0:05:06.440 been concerned about. It feels a little bit like the 0:05:06.520 --> 0:05:10.000 trends right now are hedge. So there's still long equity 0:05:10.120 --> 0:05:15.440 views and trends, but that's coupled with short positioning and commodities. 0:05:16.279 --> 0:05:19.320 What I'm worried about is what happens after cuts next week, 0:05:19.480 --> 0:05:21.240 once we start having cutts. 0:05:21.440 --> 0:05:24.400 Does the market pivot again or do we continue? 0:05:24.839 --> 0:05:28.000 Kay, this has been wonderful. Our theme today, Catherine is 0:05:28.720 --> 0:05:31.599 Notre Dame got they were? They lost, And in my 0:05:31.720 --> 0:05:33.080 agreement with Bloomberg, I. 0:05:33.040 --> 0:05:34.640 Have to talk of Purdue football. 0:05:34.760 --> 0:05:37.680 So today we're looking at like, you know, pro football, 0:05:38.120 --> 0:05:41.200 like what they play out in South Bend and West Lafayette. 0:05:41.320 --> 0:05:46.120 I noticed Katie Kaminski that the fighting Mit Crew they 0:05:46.160 --> 0:05:50.279 beat Bridgewater State Football, and I was looking at Carson 0:05:50.320 --> 0:05:51.960 Phelps of Wichita, Kansas. 0:05:52.000 --> 0:05:54.679 I mean, this kid, Katie, he's a math major. 0:05:55.440 --> 0:05:58.920 He's like he's like real Mit Like, Katie, like, you know, 0:05:59.200 --> 0:06:02.680 this kid never would be in his in his life, Katie. 0:06:02.720 --> 0:06:05.159 Is there a fight song at M I t is 0:06:05.160 --> 0:06:07.040 there a fight song there? 0:06:07.040 --> 0:06:10.640 It actually is, and it's basically a math fight song 0:06:11.200 --> 0:06:14.400 and it has like E to the X pie I 0:06:14.440 --> 0:06:15.560 wish I remembered it. 0:06:15.560 --> 0:06:20.800 But it's got math team go go go k. 0:06:21.200 --> 0:06:24.520 It's a lot of Does does it have oilers function 0:06:24.640 --> 0:06:27.000 in it where the minus one stuck on the right side? 0:06:27.839 --> 0:06:30.080 I think it does. Actually, it's it does. 0:06:30.520 --> 0:06:34.200 It does have to the x y co sign sign 0:06:34.360 --> 0:06:35.760 something like that, but look it up. 0:06:35.800 --> 0:06:39.120 It's really it's it's it's a great math chance. 0:06:39.080 --> 0:06:43.160 Runs Ka Kaminski, Thank you so much from the shores 0:06:43.200 --> 0:06:45.400 of the Charles River, Eve the pie I. 0:06:45.600 --> 0:06:46.800 Or whatever it is. 0:06:57.960 --> 0:07:01.440 It all sorts of different views, starting with Michael Purvis's 0:07:01.520 --> 0:07:02.560 lyft of fifty. 0:07:02.240 --> 0:07:04.560 Eight hundred NSPX this morning. 0:07:04.600 --> 0:07:05.280 But they have the. 0:07:05.279 --> 0:07:08.840 Quant of mathematics, the epsilon, the Greek letters. 0:07:08.480 --> 0:07:09.520 Of Katie Kaminski. 0:07:10.400 --> 0:07:13.920 Let's get real this weekend, over a beverage of your choice. 0:07:14.240 --> 0:07:17.040 Maybe you're at the beach, Maybe you're at a kitchen 0:07:17.080 --> 0:07:18.880 table trying to figure out what to do about the 0:07:18.920 --> 0:07:19.720 rent increase. 0:07:20.400 --> 0:07:22.560 You want to listen to Emily Rowland. 0:07:23.000 --> 0:07:26.360 Co, Chief investment strategists for a small shop up in Boston, 0:07:26.560 --> 0:07:28.280 they have. They have two toes. They have old Johnny 0:07:28.240 --> 0:07:32.200 Hancock and new Johnny Hank. I like, yeah, there's a 0:07:32.240 --> 0:07:35.880 lot of and all that. Emily joins us this morning. Emily, 0:07:36.080 --> 0:07:40.560 you have nailed by quality by America. 0:07:41.080 --> 0:07:42.840 Try to push aside all. 0:07:42.680 --> 0:07:47.320 The noise we've renoised after the first week of August. 0:07:47.840 --> 0:07:51.000 How do you reset for twenty twenty five? 0:07:52.480 --> 0:07:55.360 We continue tom to have our eye on the ball here. 0:07:56.040 --> 0:07:59.800 We are continuing to emphasize high quality stocks. We think 0:08:00.080 --> 0:08:03.080 in this late cycle environment, where the lagged impact of 0:08:03.200 --> 0:08:06.800 FED tightening hasn't tipped us into recession, we continue to 0:08:06.880 --> 0:08:10.679 spend like crazy in the United States. Not a political statement, 0:08:10.720 --> 0:08:14.360 by the way, It's just happening, and that's extending the cycle. 0:08:14.440 --> 0:08:16.880 We want to be careful of reaching too far for risk. 0:08:17.000 --> 0:08:19.600 We want to start even legging into more some more 0:08:19.640 --> 0:08:22.640 defensive parts of the market, and we continue to want 0:08:22.640 --> 0:08:26.280 to embrace the income that's available now in high quality bonds. 0:08:26.920 --> 0:08:29.480 What's the for you guys at State Street? What is 0:08:30.040 --> 0:08:32.400 quality legging into the quality part of the market. What 0:08:32.440 --> 0:08:33.320 does that mean for you guys? 0:08:34.080 --> 0:08:36.920 Yeah, so it's companies with great balance sheets, they have 0:08:36.960 --> 0:08:40.280 a ton of cash, great return on equity. Think about 0:08:40.280 --> 0:08:42.960 a company with the limited need to tap the capital 0:08:43.000 --> 0:08:45.280 markets in order to grow, and with the cost of 0:08:45.320 --> 0:08:49.000 capital still elevated. You know, companies are now contending with 0:08:49.120 --> 0:08:52.920 margin pressure. Revenue growth was awesome during the height of 0:08:52.920 --> 0:08:56.360 that pandemic, as companies could pass those higher prices along. 0:08:56.480 --> 0:08:58.920 Now record revenue growth is slowing. 0:08:58.920 --> 0:09:02.079 Margins are compressed, and the companies that are going to 0:09:02.160 --> 0:09:04.800 do the best are the ones that can defend those margins. 0:09:04.800 --> 0:09:07.320 And we're finding a lot of that in the quality 0:09:07.520 --> 0:09:10.719 factor and most notably in technology. 0:09:10.800 --> 0:09:11.160 Emily. 0:09:11.160 --> 0:09:12.920 It's a way from your remit, but let's keep the 0:09:12.920 --> 0:09:15.480 theme going. I need to have trick right now, and 0:09:15.760 --> 0:09:18.280 that is we had two opinions earlier this week separate 0:09:18.320 --> 0:09:25.040 into screete reaffirming double digit earnings growth. I assume you're there, 0:09:25.080 --> 0:09:28.520 but can you state to us that you see persistency 0:09:28.600 --> 0:09:32.160 of quality margins that lead to double digit earning growth. 0:09:33.120 --> 0:09:35.400 Yeah, I think it's you can find it, but it's 0:09:35.400 --> 0:09:37.440 going to be concentrated. 0:09:36.720 --> 0:09:37.880 In those companies. 0:09:38.000 --> 0:09:42.360 Luckily, the quality factor has concentration in megacap tech, and 0:09:42.400 --> 0:09:44.800 of course those names are dominating the market. 0:09:44.880 --> 0:09:46.920 If you look at earnings growth, just this quarter. 0:09:47.400 --> 0:09:50.240 Half of it was driven by the communications services and 0:09:50.320 --> 0:09:53.959 technology sector. Revenue growth is coming from those areas of 0:09:54.000 --> 0:09:55.680 the market. So as long as you can see that 0:09:55.760 --> 0:09:57.480 holding up, I think you can get there now. 0:09:57.559 --> 0:10:01.080 Tom. The great news is the bar for Q three 0:10:01.200 --> 0:10:02.040 is really low. 0:10:02.320 --> 0:10:05.760 Analysts are penciling in three point eight percent year over 0:10:05.880 --> 0:10:08.080 year earnings ago. So I think we should just enjoy 0:10:08.120 --> 0:10:10.439 it while we can, Like you guys are enjoying the 0:10:10.520 --> 0:10:12.440 Yankees right now, beating the Red soxing. 0:10:12.640 --> 0:10:12.959 Enjoy it. 0:10:13.600 --> 0:10:15.640 Armela, you're killing me. Stop it. 0:10:15.720 --> 0:10:17.720 You know, we might get better. 0:10:19.080 --> 0:10:20.000 I mean you could. 0:10:19.800 --> 0:10:22.679 See from the new John Hancock, if you go up higher, 0:10:23.040 --> 0:10:26.559 you could see the lack of offense. Oh but it's like 0:10:26.600 --> 0:10:30.440 a cloud over Fenwick Park. Paul in Nvidia, Paul, you 0:10:30.440 --> 0:10:30.960 were on this. 0:10:31.160 --> 0:10:33.440 Yeah, so from the peak down twenty one percent, I know. 0:10:33.920 --> 0:10:36.760 And Tim rays a great question, Emily. If you think 0:10:36.760 --> 0:10:39.240 about Nvidia, think about AI. That's been such a driver 0:10:39.320 --> 0:10:42.400 of the stock market performance for the last almost two years. 0:10:42.440 --> 0:10:44.040 Here, if the AI. 0:10:43.840 --> 0:10:45.960 Trade has kind of played out, does that bring some 0:10:46.080 --> 0:10:48.080 risk into the marketplace that we need to account for. 0:10:48.920 --> 0:10:50.720 Yeah, it does because of that concentration. 0:10:50.800 --> 0:10:54.000 And look, we're bumping up on thirty times forward earnings 0:10:54.040 --> 0:10:56.800 for the US technology sector. That's about as high as 0:10:56.840 --> 0:10:59.319 we've gotten over the course of this cycle. Now, of 0:10:59.400 --> 0:11:02.200 course it's not the fifty times forward earnings we saw 0:11:02.280 --> 0:11:04.720 in the late nineteen nineties, but certainly there's been a 0:11:04.720 --> 0:11:07.440 lot of multiple expansion there. The good news is if 0:11:07.480 --> 0:11:09.319 you do the math. You guys seem to be doing 0:11:09.320 --> 0:11:11.680 a lot of math this morning. So let me just 0:11:11.720 --> 0:11:14.720 get in on the party to look at the PE ratio. 0:11:14.960 --> 0:11:18.559 We would focus on the denominator, look at the earnings, 0:11:18.600 --> 0:11:20.560 and you can blame a lot of things for any 0:11:20.640 --> 0:11:24.280 reset in the technology sector, but it's multiple compression. 0:11:24.360 --> 0:11:26.400 It is not earnings. The earnings are there. 0:11:26.480 --> 0:11:29.040 The fundamental case for AI is there. It's just the 0:11:29.160 --> 0:11:31.240 love affair with it is probably. 0:11:30.880 --> 0:11:31.439 A bit extent. 0:11:31.760 --> 0:11:37.480 Paul, in Vidia, fifty six times PE forward PE only 0:11:37.559 --> 0:11:41.000 to January of next year is a forty. 0:11:40.760 --> 0:11:43.400 Two yeah, and it gets to a thirty handle on 0:11:43.760 --> 0:11:45.880 the following year. So this is a company that's earning 0:11:45.920 --> 0:11:48.040 its way into its multiple. That's what the bulls will 0:11:48.040 --> 0:11:53.080 tell you here exactly exactly. So I mean this Federal Reserve, Emily, 0:11:53.160 --> 0:11:56.520 it seems like it's ready to begin a cutting cycle. 0:11:56.559 --> 0:11:59.720 How does that kind of impact how you guys are 0:11:59.720 --> 0:12:02.960 thinking that stocks, bonds, commodities, all that kind of stuff. 0:12:03.800 --> 0:12:06.800 Well, Paul, it comes down to what's already priced in 0:12:06.840 --> 0:12:09.360 to the bond market. You know, the bond market is 0:12:09.640 --> 0:12:12.199 putting pressure on the FED right now because we've got 0:12:12.240 --> 0:12:15.840 five rate cuts priced in for this year. So if 0:12:15.880 --> 0:12:19.200 you start to hear the Fed coming out on next 0:12:19.240 --> 0:12:23.040 Wednesday as even a little bit more hawkish than what's 0:12:23.080 --> 0:12:25.320 already priced in the market, I think you might see 0:12:25.320 --> 0:12:28.200 a repricing there. You'd see bond yields backing up. That 0:12:28.280 --> 0:12:30.840 would likely cause the dollar to appreciate. It would be 0:12:30.880 --> 0:12:34.679 it would put some you know, some pressure on equity markets, 0:12:34.760 --> 0:12:37.199 very likely here. So we've got to hear a more 0:12:37.280 --> 0:12:39.720 dubbish FED just to fit in with what the market 0:12:39.760 --> 0:12:41.040 is already pricing in. 0:12:41.320 --> 0:12:42.240 What are you doing with cash? 0:12:42.280 --> 0:12:45.439 I get thirty seconds cash five percent, it's going to 0:12:45.480 --> 0:12:46.920 be four point ninety nine percent? 0:12:46.960 --> 0:12:48.360 What happens, Emily Roland? 0:12:48.559 --> 0:12:51.320 Yeah, cash is subject to massive reinvestment risk. 0:12:51.360 --> 0:12:51.520 Here. 0:12:51.559 --> 0:12:53.559 We would go out into the belly of the curve, 0:12:53.760 --> 0:12:57.560 lock in higher rates there. The AG is yielding above 0:12:57.640 --> 0:13:00.240 four percent, Still still get it? While you can and 0:13:00.600 --> 0:13:02.800 income income income get paid to wait. 0:13:03.200 --> 0:13:05.240 Emily Rowland, thank you for the brief. Really love it. 0:13:05.240 --> 0:13:07.360 That's what we love to do in surveillance. Folks have 0:13:07.440 --> 0:13:10.640 someone like Katie Kaminski and is doing total Greek letter 0:13:10.760 --> 0:13:14.280 math nerdfest and they go to Emily Rowland, who's talking 0:13:14.760 --> 0:13:19.199 really basic block and tackle believe for the three. 0:13:19.080 --> 0:13:32.839 Year holding pattern, five year holding pattern. It's okay. 0:13:32.880 --> 0:13:34.920 The way it works at Bloomberg, folks is man Deep 0:13:34.960 --> 0:13:37.360 Sing and a Agarana can't be in the same building 0:13:37.800 --> 0:13:40.400 at the same time. So Mandeep Sing's working from ame 0:13:40.760 --> 0:13:43.920 legit because an Igarana darkened the door of our world. 0:13:43.640 --> 0:13:45.160 Headquarters here in New York. 0:13:45.200 --> 0:13:47.680 Use me based out of Chicago to say he see 0:13:47.800 --> 0:13:50.520 the tech analyst barely describes it the oracle. 0:13:51.160 --> 0:13:54.560 I'm looking at the phone service now. Good things come 0:13:54.559 --> 0:13:55.439 to those who wait. 0:13:55.559 --> 0:13:58.680 Demand is high right now, Please hang tight in this 0:13:58.840 --> 0:13:59.959 waiting room. 0:14:00.040 --> 0:14:01.080 When it's your turn. 0:14:00.920 --> 0:14:04.200 To shop, we'll redirect you automatically. 0:14:04.440 --> 0:14:06.520 Does everybody need a new iPhone this morning? 0:14:07.400 --> 0:14:09.520 It happens a lot the first day when it goes 0:14:09.559 --> 0:14:11.680 to up sales. I've been waiting for the last few 0:14:11.720 --> 0:14:14.280 hours for them to open orders. Which started it at 0:14:14.320 --> 0:14:17.160 eight am Eastern time, and I honestly, in the fifteen 0:14:17.200 --> 0:14:19.320 minutes I was able to get through. I'll pick it 0:14:19.400 --> 0:14:21.320 up next Friday. I'm very happy about it. 0:14:21.480 --> 0:14:25.560 How much memory should we get in our phone? You're 0:14:25.560 --> 0:14:29.120 a pro, You're downloadtle secret files and all that. Now 0:14:29.240 --> 0:14:30.840 much in our iPhone sixteen? 0:14:31.080 --> 0:14:33.320 I go with the basic because I have the premium 0:14:33.360 --> 0:14:36.000 iCloud prep plan, so it doesn't matter to me. 0:14:36.640 --> 0:14:37.880 So what am I getting again? 0:14:38.480 --> 0:14:39.440 The sixteen pro? 0:14:39.560 --> 0:14:39.880 Okay? 0:14:39.880 --> 0:14:41.880 Thank you? So hon Rock, he's got a day job 0:14:41.920 --> 0:14:43.280 being like the tech gurul for Bloomberg. 0:14:43.600 --> 0:14:44.520 We on a side job. 0:14:44.920 --> 0:14:47.040 Is my personal iPhone shop? Right, Just get my credit 0:14:47.080 --> 0:14:47.520 card and he goes. 0:14:47.760 --> 0:14:49.760 So you may have the iclouds so you don't have 0:14:49.800 --> 0:14:52.760 to spend up for all that RAM. Yeah, Like if 0:14:52.800 --> 0:14:55.120 I want to get the complete season of Slow Horses 0:14:55.160 --> 0:14:57.480 on there, all four seasons, I'm not going to use 0:14:57.560 --> 0:14:58.760 up all the RAM and the phone. 0:14:58.880 --> 0:15:01.960 Now, you I have never in the last fifteen years, 0:15:01.960 --> 0:15:05.560 I've never seen any storage issues. You go with the 0:15:05.600 --> 0:15:07.800 basic model, it's not a problem. But you want to 0:15:07.800 --> 0:15:10.960 get the iCloud premium plan so that you're not looking 0:15:11.000 --> 0:15:12.960 at things at LISTA do you have the iCloud. 0:15:13.960 --> 0:15:16.200 But here's the thing, I'm paying these extra dollar ninety 0:15:16.240 --> 0:15:18.400 nine to ninety nine a month for all this extra 0:15:18.480 --> 0:15:20.880 extra storage. Did I do it the wrong way? And 0:15:21.160 --> 0:15:23.120 was I supposed to go your way? 0:15:23.960 --> 0:15:24.120 No? 0:15:24.120 --> 0:15:25.960 No, he's my personal iPhone real. 0:15:26.200 --> 0:15:29.760 So when you really buy a I don't know, a 0:15:29.840 --> 0:15:31.920 Rolls Royce, you don't worry about like you know the 0:15:31.960 --> 0:15:34.040 price of oil and these things. So I really don't 0:15:34.080 --> 0:15:37.040 like you need to get the premium plans for these 0:15:37.040 --> 0:15:39.760 things to just work seamlessly. You don't want any headache, 0:15:39.800 --> 0:15:42.360 you don't want any time anything not sinking properly. 0:15:42.760 --> 0:15:46.680 So some of this intelligent conversation, this is the most 0:15:46.720 --> 0:15:49.120 important conversation we've had today. 0:15:49.400 --> 0:15:52.880 With the phrase a I. Where does this. 0:15:53.000 --> 0:15:56.560 Madness fit in to your day job? The future of 0:15:56.600 --> 0:15:58.080 this AI world. 0:15:58.200 --> 0:15:59.840 So one of the things that we have said that 0:16:00.040 --> 0:16:02.560 when you look at Apple, it has probably the most 0:16:03.000 --> 0:16:06.440 valuable distribution arm of any kind of device at this 0:16:06.520 --> 0:16:09.600 point because it's usually very rich people who would own 0:16:09.800 --> 0:16:13.880 this particular product. Over the next two years, we will 0:16:13.880 --> 0:16:17.000 see a lot of AI applications come in and you 0:16:17.040 --> 0:16:19.520 would need a phone like an iPhone sixteen for those 0:16:19.520 --> 0:16:22.320 to run. You may not want to upgrade this year, 0:16:22.360 --> 0:16:24.720 maybe you will upgrade it next year, but within the 0:16:24.720 --> 0:16:26.920 next two years we will see a lot of phones 0:16:26.960 --> 0:16:29.800 being refreshed. We think it's a little more biased towards 0:16:29.800 --> 0:16:31.720 next year because the phone model is going to be 0:16:32.120 --> 0:16:34.360 a lot different than this one, which is very much 0:16:34.400 --> 0:16:36.920 like the last year's model. But the next two years 0:16:36.920 --> 0:16:40.720 are really good for this entire iPhone family. 0:16:41.560 --> 0:16:44.680 So talk to us about what's going on. If I 0:16:44.720 --> 0:16:47.080 want to get exposure to AI. I mean, Tom's own 0:16:47.200 --> 0:16:49.880 in Nvidia since day one, so he's fine. But for 0:16:49.880 --> 0:16:51.520 the rest of us, we want to get exposure to 0:16:51.920 --> 0:16:55.040 AI in a software space because I like the software space. 0:16:55.080 --> 0:16:57.040 I'll add the recurring revenue that you've always taught us 0:16:57.080 --> 0:16:58.840 about where do we go in software? 0:16:58.920 --> 0:16:59.960 For AI experts? 0:17:00.240 --> 0:17:02.360 You know, we think it is still the biggest cloud 0:17:02.360 --> 0:17:05.560 players because you are not going to see companies do 0:17:05.640 --> 0:17:08.280 a lot of this in house. They will be using 0:17:08.520 --> 0:17:14.160 either Microsoft, Open Eye Relationship, Amazon and Thropic Relationship. Oracles 0:17:14.200 --> 0:17:17.439 also benefiting because it's getting the bypass of all of 0:17:17.480 --> 0:17:20.719 these companies. Google has Google and Gemini, so it is 0:17:20.800 --> 0:17:23.280 all of these big companies, And I mean as much 0:17:23.320 --> 0:17:26.080 as you dislike, But these big companies are only going 0:17:26.160 --> 0:17:29.040 to get bigger over the next five years, much bigger. 0:17:29.560 --> 0:17:30.000 How about this? 0:17:30.200 --> 0:17:32.080 I guess one of the issues with AI just come 0:17:32.080 --> 0:17:34.879 into the marketplace maybe over the last three to six months, 0:17:34.880 --> 0:17:38.919 is Okay, we've got through the efuria of people spending 0:17:38.960 --> 0:17:40.760 money on A and getting exposured to AA and that 0:17:40.840 --> 0:17:42.720 drove and Vidi and drove a lot of other companies. 0:17:43.000 --> 0:17:45.639 Now the discussion has become wa, wa, whooh, what's my 0:17:45.680 --> 0:17:46.760 return on this investment? 0:17:46.760 --> 0:17:48.480 Again? What's the how do you? 0:17:48.560 --> 0:17:48.879 How's that? 0:17:48.920 --> 0:17:49.800 What's that discussion go? 0:17:49.960 --> 0:17:50.040 Like? 0:17:50.280 --> 0:17:52.239 So when you look at somebody like an Nvidia, they 0:17:52.280 --> 0:17:55.480 are all these cloud players are buying chips from that 0:17:55.600 --> 0:17:58.240 something over like forty percent of the chips are bought 0:17:58.240 --> 0:18:00.720 by the cloud providers. The cloud white is are then 0:18:00.840 --> 0:18:03.800 going to companies. They're going to healthcare companies, banks and 0:18:03.840 --> 0:18:06.560 saying will help you develop an AI chat, bought an 0:18:06.600 --> 0:18:10.439 AI application that would help you drive productivity. 0:18:10.200 --> 0:18:13.440 Barclays with a brilliant report, just like the serious work 0:18:13.480 --> 0:18:17.760 you're doing in a Bloomberg intelligence on the electrical usage 0:18:17.880 --> 0:18:22.040 the electricity utility build out. To make a long story short, folks, 0:18:22.040 --> 0:18:24.240 in three cups of coffee. It's going to be at 0:18:24.359 --> 0:18:28.000 least nine percent of the nation's electricity. A sentence from 0:18:28.000 --> 0:18:32.920 Barclays Northern Virginia Good Morning ninety nine one FM, which 0:18:32.960 --> 0:18:39.040 currently accounts for over twenty percent of US data center capacity. 0:18:40.000 --> 0:18:45.199 Can we build out the electrical need responsibly and appropriately 0:18:45.480 --> 0:18:48.880 without Lisa Matteo's utility bill going to the moon? 0:18:49.320 --> 0:18:51.000 I think that is going to be the single most 0:18:51.000 --> 0:18:53.480 important thing, the capacity to run a lot of these 0:18:53.480 --> 0:18:56.800 AI applications. My call it omit just did a very 0:18:56.840 --> 0:19:02.760 brilliant podcast on tech disruptors for Schneider Electric CEO. Highly 0:19:02.800 --> 0:19:05.520 recommend people listening to it. It was phenomenal in the 0:19:05.560 --> 0:19:10.320 way the world's energy needs or electric needs electrification is improving, 0:19:10.640 --> 0:19:12.640 and how much they are doing. 0:19:12.440 --> 0:19:15.600 To solve the drownouts in Texas. So the Texas has 0:19:15.640 --> 0:19:20.320 got their whacko utility structure. I mean when John Tucker 0:19:20.480 --> 0:19:23.920 logs on in the Lincoln Tunnel Staten Island dims, are 0:19:23.960 --> 0:19:24.720 we ready for this? 0:19:24.800 --> 0:19:25.360 Santa Rock? 0:19:25.880 --> 0:19:28.280 I think money will need to be spent at a 0:19:28.280 --> 0:19:31.600 federal level to help the cause because transmission lines are 0:19:31.600 --> 0:19:35.399 not there. The electricity generation needs to be there. Nobody 0:19:35.400 --> 0:19:37.080 wants to build the nuclear plants the Center. 0:19:37.119 --> 0:19:40.160 Warren at the Commonwealth of Massachusetts and a few other 0:19:40.240 --> 0:19:43.000 Republicans are going to say, you guys are making all 0:19:43.000 --> 0:19:47.280 the money, you build the capacity. Why shouldn't Microsoft and 0:19:47.320 --> 0:19:50.119