WEBVTT - Bloomberg Surveillance TV: April 21st, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.120 Terminal and the Bloomberg Business app. We begin the South 0:00:37.120 --> 0:00:39.680 with our top story, Apple's Tim Kirk stepping down following 0:00:39.800 --> 0:00:42.720 fifteen years of the helm, naming John Turners as its 0:00:42.760 --> 0:00:45.239 next leader. Tom Ford of Max and grew with this 0:00:45.320 --> 0:00:47.320 to say, the naming of mister Turners as CEO is 0:00:47.320 --> 0:00:50.479 an indication that Apple still considers itself as a halfware 0:00:50.520 --> 0:00:53.680 first company. We look to see how well Apple capitalizes 0:00:53.840 --> 0:00:56.320 on AI. Tom joins us now for more. Tom, welcome 0:00:56.320 --> 0:00:58.920 to the program. Is this a continuity candidate and is 0:00:58.960 --> 0:01:00.000 that what this company needs? 0:01:00.880 --> 0:01:03.960 Now? This is absolutely a continuity candidate as you're referring 0:01:04.000 --> 0:01:08.000 to it. I believe Tim cook handcooked handpicked John Turnas 0:01:08.000 --> 0:01:12.640 to succeed him, as Steve Jobs handpicked Tim Cook to 0:01:12.640 --> 0:01:17.320 precede him beforehand. Does Apple need a continuity candidate? So 0:01:17.360 --> 0:01:20.240 I think that we'll be measuring John Turnas's tenure at 0:01:20.240 --> 0:01:24.520 Apple on the company's ability to capitalize on AI. How 0:01:24.600 --> 0:01:27.720 long can he extend the iPhone life cycle it's already 0:01:27.800 --> 0:01:32.080 nineteen years? And will he be more like Steve Jobs 0:01:32.080 --> 0:01:34.880 and less like Tim Cook and be able to determine 0:01:34.920 --> 0:01:38.039 what the next device the consumers want that they may 0:01:38.040 --> 0:01:41.920 not know that they want smart glasses, foldable iPhones, Will 0:01:41.959 --> 0:01:44.760 they give the car another attempt? Will they work on 0:01:44.800 --> 0:01:48.480 more connected home devices? So those are the things we'll 0:01:48.480 --> 0:01:51.080 be measuring John's performance in the future. Tom. 0:01:51.080 --> 0:01:51.640 Why now? 0:01:51.840 --> 0:01:54.240 Why is Tim Cook stepping down at a time of 0:01:54.480 --> 0:01:58.520 tumult ahead of what could be the biggest revolutionary aspect 0:01:58.600 --> 0:02:00.880 or evolution in technology? 0:02:01.720 --> 0:02:04.000 I think you could argue, Lisa that why now? 0:02:04.640 --> 0:02:08.640 Tim Cook has got the company in an amazing position 0:02:09.320 --> 0:02:12.639 when you think of the challenges it faces. He's diversified 0:02:12.680 --> 0:02:15.520 the supply chain, so they're less dependent on China. They 0:02:15.560 --> 0:02:19.240 now rely on China and India and Vietnam at least 0:02:19.280 --> 0:02:22.880 on a near term basis. He's addressed the AI challenges 0:02:23.000 --> 0:02:26.960 by having a strategic partnership with Google to ultimately enable 0:02:27.000 --> 0:02:29.880 them to enhance Siri, and he hands over a very 0:02:29.880 --> 0:02:32.920 strong company. When you think about that twenty percent growth 0:02:33.280 --> 0:02:36.720 in iPhone revenue in the December quarter, So I think, 0:02:36.800 --> 0:02:41.320 why now He's handing off a very strong Apple to John, 0:02:41.720 --> 0:02:44.280 and he's addressed a lot of the near term challenges 0:02:44.320 --> 0:02:44.920 for the company. 0:02:45.520 --> 0:02:47.400 One thing Tom that we've been noting for a number 0:02:47.440 --> 0:02:49.560 of months now is that the other big tech companies 0:02:49.560 --> 0:02:52.600 have all been investing hundreds of billions of dollars into 0:02:52.600 --> 0:02:56.840 the tech evolution. Apple's been relatively investment light. They have 0:02:57.000 --> 0:03:00.680 kept their kind of capital light profile. Well, do you 0:03:00.720 --> 0:03:03.280 expect that to change as Apple tries to be more 0:03:03.320 --> 0:03:05.119 forward looking and come up with new products. 0:03:06.040 --> 0:03:09.120 I don't expect it to change unless John pivots the 0:03:09.200 --> 0:03:14.480 strategy and Apple changes its emphasis on AI to focus 0:03:14.520 --> 0:03:17.760 perhaps on services or things where they need more rock 0:03:17.800 --> 0:03:21.079 compute power. When you think of the heavy investment spend, 0:03:21.400 --> 0:03:26.200 a lot of it's by the hyperscalers Amazon, Google, Microsoft, 0:03:26.720 --> 0:03:29.480 and a lot of it's come from meta platforms. 0:03:30.160 --> 0:03:33.200 So that the question is for John turnas how long can. 0:03:33.040 --> 0:03:37.760 Apple maintain this hybrid model called capital light relative to 0:03:37.760 --> 0:03:40.560 its peers and AI and I would say it depends 0:03:40.600 --> 0:03:43.800 on how much rock compute power he intends and if 0:03:43.840 --> 0:03:46.760 he wants to offer AIS more of a services, including 0:03:46.760 --> 0:03:48.480 at the enterprise level. 0:03:48.520 --> 0:03:52.280 How much bandwidth will turnus actually have with of course 0:03:52.320 --> 0:03:56.000 still having Tim Cook as the executive chairman. 0:03:56.480 --> 0:03:58.720 I think he's going to have tremendous bandwidth. So when 0:03:58.760 --> 0:04:03.240 you think about Tim's cook success at Apple, He's managed 0:04:03.400 --> 0:04:08.600 the governments of US and China beautifully. He was a 0:04:08.640 --> 0:04:11.920 steady hand following the untimely passing of Stee Jobs in 0:04:11.960 --> 0:04:15.760 twenty eleven. So I think that Tim Cook as executive 0:04:15.840 --> 0:04:19.320 chairman will be very supportive to John, but ultimately be 0:04:19.360 --> 0:04:21.960 John's vision for the future that I think drives Apple 0:04:22.000 --> 0:04:23.520 shares from here to him. 0:04:23.640 --> 0:04:26.839 Just finally, Tim Cook, I was going through the numbers yesterday, 0:04:26.880 --> 0:04:28.920 just how much stock has he brought back over the 0:04:29.000 --> 0:04:31.520 last fifteen years. Just how much has that company changed 0:04:31.560 --> 0:04:32.719 from that vantage point. 0:04:33.920 --> 0:04:37.880 I don't think they ever achieved cash flow neutrality or 0:04:38.600 --> 0:04:40.800 that sort of thing, but yes, he has done an 0:04:40.839 --> 0:04:44.159 amazing job of returning that tremendous free cash flow to 0:04:44.279 --> 0:04:48.479 shareholders initiating a dividend buying backstock. I like to think 0:04:48.520 --> 0:04:51.520 of the four trillion from three hundred and fifty billion 0:04:52.160 --> 0:04:54.440 performance in his tenure, which is truly superb. 0:04:55.320 --> 0:04:58.760 Stay with us more Bloomberg Surveyman's coming up after this. 0:05:08.120 --> 0:05:10.160 The President of the United States telling Bloomberg the US 0:05:10.200 --> 0:05:13.400 around seas far expars. Tomorrow night, the Vice President Jadvance 0:05:13.440 --> 0:05:15.800 expected to travel to Pakistan for a second round of talk. 0:05:15.880 --> 0:05:18.719 Steve Yates of the Heritage Foundation ranked in. The President 0:05:18.920 --> 0:05:20.719 made clear that he has a lot of cards, and 0:05:20.760 --> 0:05:23.000 he's willing to use them. We have the last gas 0:05:23.040 --> 0:05:25.640 of the IRGC trying to flex their muscles, but they're 0:05:25.720 --> 0:05:28.080 really at this point no match. And pleased to say that. 0:05:28.080 --> 0:05:30.640 Steve joins the program now for more. Steve, welcome to 0:05:30.680 --> 0:05:32.720 the show. It's good to see you, sir. Let's talk 0:05:32.720 --> 0:05:35.240 about this messy kind of moment that we're in right now, 0:05:35.320 --> 0:05:37.240 where both sites trying to find a bit of leverage. 0:05:37.279 --> 0:05:39.720 Why do you believe the US is in a stronger position. 0:05:40.279 --> 0:05:43.680 Well, basically because everything the United States has sought to 0:05:43.760 --> 0:05:49.279 do in unwinding this multi decade intractable problem has worked 0:05:49.360 --> 0:05:52.640 better than someone could reasonably expect at the beginning of 0:05:52.680 --> 0:05:57.680 the process. There has been overwhelming military dominance. Strategically, there's 0:05:57.720 --> 0:06:01.520 been tactical hits that have come back from time to 0:06:01.560 --> 0:06:05.120 time when you start looking at going from a strategic 0:06:05.240 --> 0:06:09.799 force on the cusp of multiple nuclear weapons, as international 0:06:09.920 --> 0:06:14.560 assessors and inspectors have account reported, not just American sources, 0:06:15.040 --> 0:06:17.560 and you look at the large number of. 0:06:18.000 --> 0:06:19.520 Organized military forces. 0:06:19.920 --> 0:06:23.640 You have a divide now in Iran between regular military 0:06:23.680 --> 0:06:27.680 and the IRGC. All of them, from leadership down to 0:06:27.800 --> 0:06:32.040 true capabilities are degraded, and we have new tools that. 0:06:32.000 --> 0:06:33.080 Have been opened up. 0:06:33.160 --> 0:06:36.919 Between Round one of negotiations and whether we get to 0:06:37.000 --> 0:06:39.240 Round two in the next day or two or it 0:06:39.279 --> 0:06:43.280 takes longer. There's been an immense toolbox of financial tools 0:06:43.320 --> 0:06:45.440 that have opened up to Secretary Vesant that. 0:06:45.520 --> 0:06:48.080 Really aren't open to public scrutiny. 0:06:48.160 --> 0:06:51.760 That are because Iran lashed out at allies and so 0:06:51.960 --> 0:06:55.800 international financial access and tools that could be just as 0:06:55.800 --> 0:07:01.160 crippling economically as the military has been intrategic sense, this 0:07:01.200 --> 0:07:04.400 is a correlation of forces that can push for a change. 0:07:04.440 --> 0:07:06.640 The question is what kind of a change if you're 0:07:06.640 --> 0:07:09.440 not going in to occupy and run a country, which 0:07:09.440 --> 0:07:12.360 we absolutely are not doing this time around. You're going 0:07:12.360 --> 0:07:15.760 to end up with this messy situation of a disaggregated 0:07:15.840 --> 0:07:19.239 leadership that is a bit schizophrenic on communications, some elements 0:07:19.320 --> 0:07:21.920 lashing out, and you have to manage that de escalation 0:07:22.040 --> 0:07:22.559 over time. 0:07:22.840 --> 0:07:24.960 Well, that's the Iran we're left with. What does that 0:07:25.040 --> 0:07:26.840 mean for stabilization of the region. 0:07:27.480 --> 0:07:30.680 Well, in some ways the region is much stronger if 0:07:30.720 --> 0:07:34.440 you look at the Arab allies that have a lot 0:07:34.440 --> 0:07:36.720 of capital, that are determined to invest in a number 0:07:36.720 --> 0:07:39.520 of different ways, first and foremost in their own capabilities. 0:07:39.960 --> 0:07:43.480 Having strong independent allies is actually a net benefit to 0:07:43.520 --> 0:07:45.720 the United States if we have to surge anywhere in 0:07:45.760 --> 0:07:49.280 the world, from the Endopacific to our own hemisphere, it 0:07:49.440 --> 0:07:53.600 helps greatly if we have very strong, vested and determined 0:07:53.680 --> 0:07:57.280 allies who can somewhat keep the lawn mode in their 0:07:57.320 --> 0:07:59.520 own region without us having to be there for a 0:07:59.560 --> 0:08:00.440 daily manis maintenance. 0:08:01.040 --> 0:08:01.960 Doesn't mean we leave. 0:08:02.480 --> 0:08:04.840 It just means that it's a much better set of 0:08:04.880 --> 0:08:08.240 options for us and for the allies for that matter. 0:08:08.760 --> 0:08:10.680 I think there's been a clearing. 0:08:10.360 --> 0:08:14.720 Of the air somewhat on where there are real powers 0:08:14.880 --> 0:08:18.800 and abilities to influence United Nations has been a wall 0:08:18.960 --> 0:08:22.880 in this. Europe in many ways has not influenced things 0:08:23.040 --> 0:08:26.880 very much beyond going on television or public events, and 0:08:26.960 --> 0:08:30.000 some allies in Asia are stepping in to balance things 0:08:30.040 --> 0:08:33.640 in different ways too. So some of these changes, if 0:08:33.760 --> 0:08:37.080 they are sustained, changes in energy dependence and flows, that 0:08:37.080 --> 0:08:40.920 could greatly affect China's geostrategy and the US relative power 0:08:40.920 --> 0:08:42.320 there on those negotiations. 0:08:42.600 --> 0:08:44.160 So a lot still to unfold. 0:08:44.240 --> 0:08:46.840 But I think on balance, there's a lot of geopolitics 0:08:46.840 --> 0:08:49.319 that are net advantage, while there's still a lot of. 0:08:49.320 --> 0:08:50.000 Risk to manage. 0:08:50.120 --> 0:08:53.520 Steve, As you know, the Iranis are notoriously famous for 0:08:53.640 --> 0:08:56.079 dragging their feet when it comes to negotiations. Do you 0:08:56.080 --> 0:08:57.720 even think we have talks tomorrow. 0:08:58.120 --> 0:09:00.160 I'd give it about a fifty to fifty chance, but 0:09:00.200 --> 0:09:02.480 I don't think it matters in the long run. I 0:09:03.000 --> 0:09:06.679 admire the administration's willingness to do this. It's one of 0:09:06.720 --> 0:09:08.439 the things that kind of goes counter to a lot 0:09:08.440 --> 0:09:11.880 of the cartoon caricatures of President Trump in his style. 0:09:12.160 --> 0:09:14.400 This has been a very gradual. 0:09:13.920 --> 0:09:18.720 Escalation of power and use of tools. It's been somewhat patient, 0:09:19.480 --> 0:09:22.679 It's much different than sort of the flash bang of 0:09:22.760 --> 0:09:28.080 going into Iraq before and pushing for regime change and depathification. 0:09:28.880 --> 0:09:32.280 There's a higher tolerance to work with remnants that is 0:09:32.400 --> 0:09:35.040 kind of more of a centrist and pragmatic approach than 0:09:35.320 --> 0:09:36.800 people might have assumed. 0:09:37.600 --> 0:09:39.360 And so I think. 0:09:39.160 --> 0:09:42.240 That it doesn't matter as much if the talks happen 0:09:42.280 --> 0:09:44.400 in the next twenty four to forty eight hours. That 0:09:44.600 --> 0:09:47.680 is great if there is a sustained deal that comes 0:09:47.679 --> 0:09:49.680 of it, But I'm very much in the don't trust, 0:09:49.840 --> 0:09:53.520 just verify category when it comes to who you're negotiating with. 0:09:53.520 --> 0:09:57.040 With all due respect, there's this question about the impulsivity 0:09:57.200 --> 0:09:59.120 or whether this was orchestrated, or whether this was a 0:09:59.120 --> 0:10:01.679 patient effort, gi fact that a lot of allies were 0:10:01.679 --> 0:10:05.360 not aligned or aware of exactly what was happening. And 0:10:05.640 --> 0:10:08.520 now there's a lot of pushback, at least publicly from 0:10:08.520 --> 0:10:11.560 both Europeans as well as from some of the Golf allies, 0:10:11.960 --> 0:10:15.400 talking about how you made this mess, now clean it up? 0:10:15.679 --> 0:10:16.800 How do you see it differently? 0:10:17.760 --> 0:10:20.679 Just the facts of the on the ground are completely 0:10:20.720 --> 0:10:23.720 counter to that narrative. We have politicians in a lot 0:10:23.760 --> 0:10:28.440 of geographies whose audience is larger than their ability to influence. 0:10:29.200 --> 0:10:32.360 They have meetings about meetings about someday going in and 0:10:32.400 --> 0:10:35.679 protecting freedom of navigation, but the whole world can watch 0:10:35.760 --> 0:10:39.160 that they are all dance and no music. And in 0:10:39.200 --> 0:10:41.719 the golf there are definitely some mixed messages that come 0:10:41.720 --> 0:10:45.960 from different capitals, but real centers of power among those 0:10:45.960 --> 0:10:49.520 golf allies are saying publicly that they are on the 0:10:49.559 --> 0:10:53.280 American side of this longer term and ultimately they don't 0:10:53.320 --> 0:10:56.559 think that the Iranians are free. 0:10:56.400 --> 0:10:57.640 Of responsibility and all this. 0:10:57.760 --> 0:11:00.199 Ultimately, Iran has been a profound threat to them, and 0:11:00.240 --> 0:11:03.440 they've seen everything that's been tried in recent decades is 0:11:03.480 --> 0:11:07.800 being insufficient to the task. I don't like the ugliness 0:11:07.840 --> 0:11:11.200 of the missiles coming their way. They would rather have 0:11:11.240 --> 0:11:14.120 greater certainty, greater access. But they see this as having 0:11:14.160 --> 0:11:17.640 been a necessary issue to address, whether they liked the 0:11:17.679 --> 0:11:21.760 timing or the pre operation consultation. Also, not everyone who 0:11:21.800 --> 0:11:23.640 is consulted says so publicly. 0:11:23.920 --> 0:11:26.600 Steve, there's also a question you mentioned that you think 0:11:26.640 --> 0:11:29.960 that it aligns the United States in a better position geopolitically, 0:11:30.080 --> 0:11:31.800 even with respect to China. There are a number of 0:11:31.800 --> 0:11:35.280 people who say that China is trying to actually reinforce 0:11:35.440 --> 0:11:38.079 its influence in the Middle East as the major oil 0:11:38.120 --> 0:11:40.840 buyer from the region, and that you're seeing actually some 0:11:40.880 --> 0:11:43.719 of the oil traded in the region from Iran transacted 0:11:43.800 --> 0:11:46.400 in Runman B. What do you make of that, The 0:11:46.440 --> 0:11:51.280 idea that China's actually gained leverage during this process. 0:11:51.200 --> 0:11:55.720 Well, it's I think very incidental leverage, and it's really 0:11:56.200 --> 0:12:00.600 exposed two huge vulnerabilities for China that haven't really factored 0:12:00.640 --> 0:12:03.000 into a lot of people's long term assessments of China's 0:12:03.000 --> 0:12:06.719 powered influence. One is China is entirely dependent on being 0:12:06.720 --> 0:12:09.880 an export led economy. There has been no transition to 0:12:10.040 --> 0:12:12.840 a consumption economy in China, and where they have to 0:12:12.880 --> 0:12:15.439 export is to the world's largest consumer market, which is 0:12:15.480 --> 0:12:16.319 the United States. 0:12:16.600 --> 0:12:18.240 That's a huge complication for them. 0:12:18.280 --> 0:12:22.320 The other part is that China remains hugely dependent on 0:12:22.440 --> 0:12:25.839 imported fossil fuel. There's been a lot of chatter about 0:12:25.840 --> 0:12:28.960 them racing ahead on solar and maybe they are, but 0:12:29.080 --> 0:12:32.640 when it comes to being a cutting edge AI driven 0:12:33.080 --> 0:12:36.880 export tech economy, it's just impossible for them to even 0:12:36.960 --> 0:12:42.320 function at a survivable rate without that dependence on imported energy. 0:12:42.360 --> 0:12:46.079 And especially fossil fuel, and so their risks have gone 0:12:46.120 --> 0:12:50.160 significantly up. We've had exposure on rare earths, they have 0:12:50.360 --> 0:12:51.800 much bigger vulnerabilities. 0:12:51.960 --> 0:12:53.600 Really both have to address those. 0:12:53.640 --> 0:12:56.760 But America's options are getting gradually better. 0:12:57.120 --> 0:12:58.720 I think China's options are not. 0:13:00.640 --> 0:13:12.719 More Bloomberg surveillance coming up after this, We begin this 0:13:12.800 --> 0:13:15.400 sound with stocks holding their all time high. Civita Supermanium, 0:13:15.440 --> 0:13:17.520 a bank for America writing we see a big proportion 0:13:17.600 --> 0:13:20.440 of halves in financials and a good chunk of halves 0:13:20.480 --> 0:13:24.599 in tech, and see both sectors as rife with idiosyncratic opportunity. 0:13:24.720 --> 0:13:26.720 Civita joins us now for more Civita, good morning, get. 0:13:26.600 --> 0:13:27.600 To see you, Good morning. 0:13:27.760 --> 0:13:29.800 The mood on Wall Street by the depths. I seen 0:13:29.840 --> 0:13:31.720 this across the border, seen it from a range of 0:13:31.760 --> 0:13:33.600 banks that every time you get a big bit of 0:13:33.640 --> 0:13:34.840 weakness you should buy it. 0:13:34.840 --> 0:13:37.960 It's that your approach to this moment not necessarily. 0:13:38.200 --> 0:13:41.560 I think you can use this opportunity to buy certain stocks. 0:13:41.600 --> 0:13:43.760 And you mentioned tech and financials. Those are areas where 0:13:43.760 --> 0:13:45.679 we think a lot of stocks have been sort of 0:13:45.760 --> 0:13:50.320 summarily rejected because of geopolitical risk and haven't necessarily come 0:13:50.400 --> 0:13:54.880 back I think that for the index overall, I worry 0:13:55.400 --> 0:13:59.520 because there are some supply shocks in terms of equity 0:14:00.120 --> 0:14:03.319 coming up. We've got a lot of private capital sitting 0:14:03.320 --> 0:14:07.160 on the sidelines waiting to IPO, especially in technology, which 0:14:07.200 --> 0:14:09.439 is the biggest chunk of the s and P five 0:14:09.520 --> 0:14:13.600 hundred of the US equity market. I also think that 0:14:13.720 --> 0:14:18.679 the direction from here is really what's the next positive 0:14:18.720 --> 0:14:22.280 surprise versus negative surprise? And you know, we're done with 0:14:22.320 --> 0:14:24.760 that whole geopolitical thing, it seems. 0:14:24.640 --> 0:14:27.120 But are we? You know? I think that's the question. 0:14:28.080 --> 0:14:30.240 And then on top of that, we're starting to see 0:14:30.800 --> 0:14:37.160 the potential impact of higher oil prices in consumer companies 0:14:37.280 --> 0:14:38.160 forward guidance. 0:14:38.200 --> 0:14:41.680 So I think the risk is the. 0:14:41.600 --> 0:14:44.640 Impact of oil shocks takes a while to play through. 0:14:44.800 --> 0:14:47.080 So far, what we've seen is that consumers are spending 0:14:47.080 --> 0:14:50.360 more on gas and oil, but the actual hit to 0:14:50.480 --> 0:14:53.360 discretionary and you know, kind of the rest of the 0:14:53.440 --> 0:14:57.040 stack could be three quarters out. That's what we found 0:14:57.080 --> 0:14:59.680 in our data. So I think this is a moment 0:14:59.680 --> 0:15:01.600 where you have to think about what are the positive 0:15:01.680 --> 0:15:04.640 versus negative surprises? And I guess I don't see as 0:15:04.760 --> 0:15:07.880 much likelihood of positive surprises in these big bell weather 0:15:07.960 --> 0:15:09.200 sectors like tech. 0:15:10.080 --> 0:15:11.600 Like you know, even industrials. 0:15:11.600 --> 0:15:14.760 I think industrials is now trading at a really lofty multiple. 0:15:15.120 --> 0:15:16.080 It's pretty crowded. 0:15:16.560 --> 0:15:20.200 Sure, tons of tailwinds, capbecs alive, and well everything is 0:15:20.280 --> 0:15:24.000 hunky dory defense. You know, you've got oil plays in 0:15:24.040 --> 0:15:26.560 the sector. But I do think that, you know, there 0:15:26.560 --> 0:15:30.600 are areas of the market that were basically bought to 0:15:31.240 --> 0:15:36.280 hedge against geopolitical risk, industrials being the classic case. 0:15:37.280 --> 0:15:38.160 I mean, it's interesting. 0:15:38.160 --> 0:15:41.320 So I'll give you a little anecdote. I was marketing 0:15:41.360 --> 0:15:44.760 in Europe a couple of weeks ago, and as you know, 0:15:44.840 --> 0:15:48.440 it's hard for global investors to buy fossil fuels. So 0:15:48.480 --> 0:15:52.360 I think that, you know, there is this this frustration because. 0:15:52.120 --> 0:15:54.800 You can't buy oil stocks. Oil is surging, so I. 0:15:54.800 --> 0:15:59.960 Think there was this sort of industrials closet energy demand, 0:16:00.120 --> 0:16:04.200 and because if you look at the correlation of industrials companies, 0:16:04.440 --> 0:16:06.960 they're basically they act like energy. A lot of them 0:16:07.080 --> 0:16:09.480 look like energy and act like energy stocks, but aren't 0:16:09.520 --> 0:16:11.760 in the energy sector. So they're a good way to 0:16:11.800 --> 0:16:16.320 get exposure to a commodities upcycle without actually having. 0:16:16.040 --> 0:16:20.440 To buy the energy companies. Sorry, long, long of it. 0:16:20.480 --> 0:16:23.120 So the headwinds and the threat at the index level, yes, 0:16:23.200 --> 0:16:26.360 you know today capital IPOs being one, the land effect 0:16:26.360 --> 0:16:29.400 from higher oil prices being two. There's a third from 0:16:29.440 --> 0:16:32.600 tracking your research that you didn't mention, and that was buybecks. 0:16:33.200 --> 0:16:35.400 Ah, yes, yes, thanks changing. 0:16:35.320 --> 0:16:37.720 And why is that becoming a biggerhead wind to this index? 0:16:37.960 --> 0:16:40.560 So, I mean there's a lot more claims on capital 0:16:40.640 --> 0:16:44.200 for companies. Thank you for remembering that. For me, buybacks 0:16:44.200 --> 0:16:46.680 are a big deal. I think that what we're seeing now, 0:16:47.240 --> 0:16:50.400 they're still happening. And in certain sectors like financials and tech, 0:16:50.440 --> 0:16:54.840 you're seeing really sustained levels of contribution to earnings for 0:16:54.920 --> 0:16:58.040 share from buybucks. But for other sectors we are starting 0:16:58.080 --> 0:17:00.680 to see a bit of a slowdown. And you know, 0:17:00.720 --> 0:17:02.920 I think that what we're seeing right now in that 0:17:03.000 --> 0:17:08.199 megacab tech complex suggests cost cutting and you're seeing this 0:17:08.320 --> 0:17:11.960 with layoffs. Buybacks are slowing down. There's a lot more 0:17:12.080 --> 0:17:15.679 money earmarked for capbas like kind of mandatory capback. So 0:17:15.720 --> 0:17:17.960 I think that's the problem right now is you've got 0:17:18.440 --> 0:17:21.760 higher interest rates, You've got this environment where the cost 0:17:21.760 --> 0:17:26.080 of capital has increased pretty aggressively could go up even 0:17:26.160 --> 0:17:31.040 further for ig investment grade debt. You know in some 0:17:31.119 --> 0:17:34.320 of these tech areas where you're seeing supply issuance, as 0:17:34.359 --> 0:17:36.639 we were talking about, So, I think this is in 0:17:36.680 --> 0:17:39.280 a moment where you really want to think hard about 0:17:39.320 --> 0:17:42.560 what companies are doing with their capital, by the ones 0:17:42.760 --> 0:17:45.679 that are getting the cap bax, not spending the cappax, 0:17:46.160 --> 0:17:48.800 and by the companies that are continuing to have this 0:17:49.080 --> 0:17:53.479 share buyback or cash return focus, because that is starting 0:17:53.480 --> 0:17:54.959 to wane rather than wax. 0:17:55.000 --> 0:17:56.600 It feels like it's sort of a good moment for 0:17:56.640 --> 0:17:58.520 Tim Cook to step aside as a share buyback, the 0:17:58.600 --> 0:18:01.040 king of share buy back stepping down at a time, 0:18:01.080 --> 0:18:02.399 and maybe that's not going to be as much of 0:18:02.400 --> 0:18:06.080 a driver. You pair the potential negative technical with the 0:18:06.160 --> 0:18:08.560 positive that everyone who comes in the show keeps talking about, 0:18:08.600 --> 0:18:09.440 which is earnings. 0:18:09.600 --> 0:18:13.080 They've beats the upside tremendously. Earnings are great. Why it's 0:18:13.119 --> 0:18:13.800 not enough of you. 0:18:14.040 --> 0:18:16.880 Earnings are not the problem. Earnings are great. I mean, 0:18:17.119 --> 0:18:20.560 so far, so good. Q one coming in strong, more 0:18:20.600 --> 0:18:22.680 beats than misses by a big margin. 0:18:23.920 --> 0:18:26.280 I think. So, you know, when you think about what. 0:18:26.160 --> 0:18:29.120 Markets react to, it's not necessarily actual earnings. 0:18:29.119 --> 0:18:32.399 It's a surprise element. So you know, what we've found. 0:18:32.160 --> 0:18:34.800 Is that during years of really strong earnings and strong 0:18:34.880 --> 0:18:38.399 GDP growth, the market actually turns in sort of you know, 0:18:38.720 --> 0:18:42.080 average returns. It's not necessarily the greatest year for the market. 0:18:42.080 --> 0:18:44.640 The markets to generally anticipate these recoveries. 0:18:45.280 --> 0:18:47.440 And now the question is our earning is going. 0:18:47.359 --> 0:18:49.920 To surprise as much as they did last year or 0:18:50.000 --> 0:18:50.719 the year before. 0:18:51.240 --> 0:18:53.720 I don't know. I think it's harder at this point. 0:18:53.960 --> 0:18:55.679 What do you have to see next week from the 0:18:55.680 --> 0:18:58.800 big tech players to potentially change your view and suddenly 0:18:58.880 --> 0:19:02.320 upgrade to seventy six hundred, say, you know what dat right? 0:19:02.480 --> 0:19:06.200 Right by the dips? By the dips. Look, I think 0:19:06.240 --> 0:19:08.840 that tech is still you know, the. 0:19:08.760 --> 0:19:12.679 Future right and it's it's some of these companies belong 0:19:13.160 --> 0:19:15.280 as core holdings in our portfolios. 0:19:15.600 --> 0:19:16.200 But I think that. 0:19:16.200 --> 0:19:20.560 The idea that all of the Magnificent seven can go 0:19:20.640 --> 0:19:22.640 to infinity is hard to imagine. 0:19:22.680 --> 0:19:22.720 Me. 0:19:22.840 --> 0:19:25.239 There are going to be winners and losers, and you know, 0:19:25.480 --> 0:19:27.320 I guess I want to see how long it takes 0:19:27.400 --> 0:19:30.080 to really monetize AI because if you look at the 0:19:30.160 --> 0:19:34.560 telecom bubble back in the nineties two thousands obviously very different, 0:19:34.640 --> 0:19:38.040 much more extreme valuations, a lot more leverage. But during 0:19:38.119 --> 0:19:43.639 that buildout cycle, the companies couldn't fund themselves and last 0:19:43.800 --> 0:19:48.640 long enough to enjoy the fruits of their labor, which 0:19:48.720 --> 0:19:51.000 is all that fiber they laid in the ground that 0:19:51.040 --> 0:19:53.920 we are using now, but they're not around to actually 0:19:53.960 --> 0:19:57.720 recoup the benefit. So I think the longer this buildout 0:19:57.760 --> 0:20:00.640 cycle takes, and the longer it takes to actually monetize 0:20:01.119 --> 0:20:05.080 these efficiency tools, the more at risks some of these 0:20:05.080 --> 0:20:07.200 companies are, especially the ones that are having to lever 0:20:07.359 --> 0:20:09.960 up to extend that that Capbax machine. 0:20:10.119 --> 0:20:12.600 Something that struggling to research was you say, there's better 0:20:12.680 --> 0:20:16.640 low low income consumer for affordability measures. The same time, 0:20:16.640 --> 0:20:18.800 what I'm seeing in polling is that the lower income 0:20:18.840 --> 0:20:20.880 consumer is struggling right now at higher guests with. 0:20:20.880 --> 0:20:21.800 Higher gas and oil. 0:20:21.960 --> 0:20:24.400 Yeah, So, I mean, I think that's the one kind 0:20:24.440 --> 0:20:27.679 of uh dark spot. But when you think about the 0:20:27.680 --> 0:20:30.520 lower income consumer in general, I think what we've seen 0:20:31.160 --> 0:20:34.760 outside of energy is a slowdown in some of the 0:20:34.760 --> 0:20:39.000 inflationary measures for you know, food at home versus food 0:20:39.040 --> 0:20:41.359 away from home, like things that are skewed more to 0:20:41.440 --> 0:20:43.879 that lower income wallet. I think, you know, one of 0:20:43.880 --> 0:20:46.480 the benefits as we move towards the midterm elections is 0:20:46.520 --> 0:20:49.399 if we start to see a renewed focus on this 0:20:49.520 --> 0:20:52.880 affordability agenda, and you know, that could that could get 0:20:52.880 --> 0:20:56.439 the wheels turning again for the consumer. But but I 0:20:56.440 --> 0:20:59.520 think you know, we're we're we were surprised by this 0:20:59.600 --> 0:21:03.800 sort of inflation shock rather than a disinflation affordability shock 0:21:04.119 --> 0:21:05.280 at the beginning of the year. 0:21:05.320 --> 0:21:07.600 So I think that's the spanner in the work. 0:21:07.680 --> 0:21:09.320 Yeah, how we start the year and how we kicked 0:21:09.320 --> 0:21:12.199