WEBVTT - McDonalds Sales Fall, US Tech Earnings 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:16.360 Eastern on Affo card playing Android Auto with the Bloomberg 0:00:16.400 --> 0:00:19.720 Business App. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.320 or watch us live on YouTube. 0:00:23.320 --> 0:00:26.360 Just men sitting in for Alex Steele here today. I'm 0:00:26.360 --> 0:00:28.880 pol swhen you're live here on a Bloomberg Interactive Brokers Studio. 0:00:30.000 --> 0:00:33.360 Earnings Day, Big Earning, State's Big earnings week actually coming 0:00:33.400 --> 0:00:35.320 up a lot of tech names. We'll keep an eye 0:00:35.360 --> 0:00:37.000 on that. The story of the morning is, I think 0:00:37.040 --> 0:00:39.720 kind of just from the earning's perspective, is Ben McDonald's. 0:00:39.840 --> 0:00:43.440 It's been in the news a lot recently with Coli breakout, 0:00:44.000 --> 0:00:48.080 cole Ye break up. Anyway, Stock put out some numbers today. 0:00:48.080 --> 0:00:50.440 I thought they were okay, but some international weakness. Same 0:00:50.479 --> 0:00:53.880 store sales still negative. That's a challenge for them. They 0:00:53.880 --> 0:00:56.800 try to build traffic there. Again, this quarter does not 0:00:56.880 --> 0:00:59.680 include some of the concerns that they've seen over recent weeks. 0:00:59.720 --> 0:01:02.440 Michael Halen joins US senior restaurant in food service analysts 0:01:02.400 --> 0:01:05.320 for Bloomberg Intelligence. Hey Mike, what did you make from 0:01:05.400 --> 0:01:08.400 McDonald's in the latest quarter, and then like, maybe more importantly, 0:01:08.440 --> 0:01:10.639 what is management saying about kind of what they expect 0:01:11.040 --> 0:01:12.400 their fourth quarter traffic. 0:01:12.080 --> 0:01:12.520 To look like. 0:01:14.560 --> 0:01:18.160 Yeah, Unfortunately, they didn't give us too much information about 0:01:18.160 --> 0:01:21.039 the fourth quarter. I'd say the biggest takeaway from this 0:01:21.200 --> 0:01:24.120 call and the reason why the stock is up right now, 0:01:24.160 --> 0:01:26.399 although it's you know, not knocking to cover off the ball, 0:01:27.160 --> 0:01:31.039 is the fact that they their initiatives, including the five 0:01:31.080 --> 0:01:35.440 dollar value meal Buntdill, the five dollars meal deal I 0:01:35.440 --> 0:01:39.480 should say, the Chicken Big Mac, and some of the 0:01:39.480 --> 0:01:43.280 other initiatives better operations, had actually led to a mid 0:01:43.319 --> 0:01:46.959 single digit same store sales increase and positive traffic for 0:01:47.000 --> 0:01:50.840 the first three weeks of October, and so the streets 0:01:50.880 --> 0:01:54.320 kind of taken that as a positive. Right now, in 0:01:54.440 --> 0:01:56.840 terms of the fourth quarter, it was, you know, they 0:01:56.840 --> 0:01:59.680 didn't give us much information. We did get a nice 0:01:59.720 --> 0:02:03.320 report from Bloomberg second measured Data yesterday that showed Seamstar 0:02:03.400 --> 0:02:06.680 sales were down nine percent last week, so that basically 0:02:06.720 --> 0:02:09.400 wiped out the mid signal digit gain and they're probably 0:02:09.440 --> 0:02:12.679 a little bit from like flat to upp modestly here 0:02:13.480 --> 0:02:18.440 in October, right And so yeah, it's it was kind 0:02:18.480 --> 0:02:21.760 of a good news bad news last couple of days 0:02:21.560 --> 0:02:22.720 for McDonald's. 0:02:22.760 --> 0:02:24.880 Well, John, you were asking, what is a five dollars 0:02:25.000 --> 0:02:29.280 meal deal include? It includes a micdouble or a McChicken sandwich, 0:02:29.720 --> 0:02:33.440 small fries, four piece chicken, McNuggets, and a small soft 0:02:33.520 --> 0:02:34.480 drink that's. 0:02:34.280 --> 0:02:35.400 Solid for five dollars. 0:02:36.639 --> 0:02:40.320 So that's what I missed. The proper dollar menu, Yes 0:02:41.240 --> 0:02:43.000 they were, but I was always a big fan of 0:02:43.000 --> 0:02:44.680 that in college. But I would point out, like in 0:02:44.720 --> 0:02:47.080 twenty fifteen, you saw other companies like Chipotle that were 0:02:47.120 --> 0:02:50.079 hit by E. Coli outbreaks and unfortunately at that time, 0:02:50.160 --> 0:02:53.359 chapotely had to temporary close a number of restaurants on 0:02:53.400 --> 0:02:54.800 the West Coast. What do you think we can glean 0:02:54.840 --> 0:02:57.560 from other instances when this has happened in the restaurant 0:02:57.560 --> 0:02:59.840 industry and how quickly this could be cleared up? 0:03:01.680 --> 0:03:04.240 Yeah, well we think this is very different than Chipotle. 0:03:04.440 --> 0:03:08.040 So a big part of it is just the operational differences. 0:03:08.240 --> 0:03:11.760 You know, McDonald's is a clothes kitchen. You know, it 0:03:11.800 --> 0:03:14.960 turned out to be the slivered onions, and so it 0:03:15.000 --> 0:03:18.600 was one item it wasn't you know, beef patties spread 0:03:18.639 --> 0:03:21.520 across many different products. Right, it was just the onions 0:03:21.560 --> 0:03:24.480 served in the quarter pounders with cheese. So we think 0:03:24.520 --> 0:03:26.680 this outbreak will be smaller than we saw with a 0:03:26.680 --> 0:03:31.480 lot of other chains. Chipotle was also unique. Chipotle same 0:03:31.520 --> 0:03:33.639 star sales dropped for five straight quarters. They were down 0:03:33.680 --> 0:03:38.240 twenty percent that first year. But you know, their food 0:03:38.320 --> 0:03:40.960 is out in the open, right, it's behind a sneeze guard, 0:03:41.080 --> 0:03:44.640 but you know it can get you know, contaminated by 0:03:44.720 --> 0:03:49.440 multiple different employees, even some of the customers potentially, right. 0:03:49.520 --> 0:03:54.280 So it's a much harder operation to get right at Chipotle, 0:03:54.400 --> 0:03:56.680 And for some of those reasons, we think it's gonna 0:03:56.680 --> 0:03:58.800 be a lot shorter, and it's gonna be a lot shallower, 0:03:58.880 --> 0:04:01.080 you know. That being said, I think fourth quarter same 0:04:01.120 --> 0:04:03.080 store sales are definitely going to take a hit. I 0:04:03.120 --> 0:04:05.160 think people are going to be turned off from McDonald's. 0:04:05.160 --> 0:04:07.400 I think it will probably spread a little bit into 0:04:07.440 --> 0:04:10.760 the first quarter next year. But McDonald's is working hard 0:04:10.880 --> 0:04:13.840 to get those same US same store sales kind of 0:04:13.840 --> 0:04:16.359 back on the right trunk. You know, it's gonna be 0:04:16.360 --> 0:04:18.360 about value. There's gonna be more, you know, the five 0:04:18.400 --> 0:04:20.360 dollars meal deal is going to go through your end 0:04:20.400 --> 0:04:23.160 and expect to see more of those type promotions next year. 0:04:23.320 --> 0:04:25.680 They're gonna roll out in everyday Value menu in the 0:04:25.680 --> 0:04:30.960 first quarter. That's should should help boost results next year. 0:04:31.080 --> 0:04:33.960 You know, better operations, more chicken sales like the Chicken 0:04:34.000 --> 0:04:37.560 Big Mac, more digital sales, and they even hinted at 0:04:37.600 --> 0:04:42.440 some fourth quarter food innovation coming out. So they're working 0:04:42.440 --> 0:04:45.360 hard to try to try to course correct here. 0:04:45.960 --> 0:04:48.200 Something with McDonald's I always like to keep an eye 0:04:48.240 --> 0:04:51.000 on for a telltale sign of consumer confidence is the 0:04:51.040 --> 0:04:53.680 French fry indicator because you can tell if how French 0:04:53.680 --> 0:04:55.360 fries are done and how the number of people or 0:04:55.560 --> 0:04:58.040 fries can indicate sort of sentiment, what do you think 0:04:58.080 --> 0:05:00.760 with sort of the latest earnings and what you can 0:05:00.760 --> 0:05:02.960 glean from that and what that really means when it 0:05:03.000 --> 0:05:05.880 comes to what consumer confidence can tell us when the 0:05:05.960 --> 0:05:07.440 French freredicator. 0:05:08.360 --> 0:05:10.680 Well, listen, I'm not looking at the French fry indicator 0:05:10.720 --> 0:05:12.920 to be honest, you know, but but you know what 0:05:12.920 --> 0:05:15.559 we're seeing and what we think will continue to see 0:05:15.640 --> 0:05:19.480 is low income consumers struggling. And so McDonald's that their 0:05:19.560 --> 0:05:21.920 strong result in the first three weeks of October. A 0:05:21.920 --> 0:05:23.719 lot of that was driven by being able to track 0:05:23.800 --> 0:05:26.880 low income consumers in with a very strong price point. 0:05:27.160 --> 0:05:31.240 And you know, but inflation continues to hurt these low 0:05:31.279 --> 0:05:34.400 income consumers. Right we see this ke shaped economy where 0:05:35.040 --> 0:05:38.159 low income consumers are really pulling back on their restaurants spending. 0:05:38.200 --> 0:05:41.839 But right now, asset prices are near you know, a 0:05:41.839 --> 0:05:43.800 lot of them are near all time high. Stock the 0:05:43.880 --> 0:05:46.520 US stock markets near an all time high, Gold and 0:05:46.520 --> 0:05:49.680 silver have been ripping higher, bitcoins approaching another all time high. 0:05:49.680 --> 0:05:52.599 Home prices have held in throughout the higher rates and 0:05:52.600 --> 0:05:54.760 everything else in our near all time highs. And so 0:05:55.279 --> 0:05:57.920 we think, you know, upper middle income, middle income, high 0:05:58.120 --> 0:06:02.040 higher income consumers are all doing well and spending, and 0:06:02.600 --> 0:06:05.479 you know, our chains are trying to attract those customers. 0:06:05.800 --> 0:06:08.320 So, Mike, you, in your research coverage universe, what's kind 0:06:08.320 --> 0:06:10.240 of the best name or two or three that kind 0:06:10.279 --> 0:06:12.240 of standout as or sector in a restaurant business that 0:06:12.720 --> 0:06:13.800 you like better than others? 0:06:16.000 --> 0:06:16.279 Yeah? 0:06:16.360 --> 0:06:21.640 Yeah, Well, I think past Casual is kind of outperformed 0:06:21.680 --> 0:06:23.799 a bit that some of the names we cover anyway, 0:06:23.839 --> 0:06:28.040 not that the entire industry, but Wingstop has done a 0:06:28.040 --> 0:06:33.520 great job attracting both younger and higher income consumers into 0:06:33.560 --> 0:06:36.200 their brand and they're absolutely knocking to cover off the ball. 0:06:37.320 --> 0:06:39.040 You know, Chipotle has done a great job with their 0:06:39.040 --> 0:06:42.600 digital sales and strategic part pricing and they're continuing to 0:06:42.760 --> 0:06:46.240 draw consumers that see value on the plate there. And 0:06:46.279 --> 0:06:49.720 then Texas Roadhouse is another one that's absolutely crushed it. 0:06:49.760 --> 0:06:51.120 You know, we're not super. 0:06:50.920 --> 0:06:55.120 High on casual dining, but they've been a machine man. 0:06:55.240 --> 0:06:59.000 They're they're driving people into the restaurant with a lot 0:06:59.000 --> 0:07:01.680 of value on that plate, right, and a very good experience. 0:07:01.760 --> 0:07:04.600 And that's another one that's that's killing it. I think 0:07:04.600 --> 0:07:06.960 there's Seams sourch sales are actually even better than Chipotle's 0:07:06.960 --> 0:07:08.679 over the last five years, trailing. 0:07:08.760 --> 0:07:09.760 So okay, all. 0:07:09.720 --> 0:07:10.000 Right, Mike. 0:07:10.200 --> 0:07:11.600 Always good to catch up with you and get the 0:07:11.640 --> 0:07:13.920 latest on the restaurant biz. And McDonald's here today with 0:07:13.960 --> 0:07:17.200 their earnings stock trading a little bit higher. Here McMichael Halem. 0:07:17.280 --> 0:07:20.240 He's a senior restaurant and food service analysts for Bloomberg Intelligence. 0:07:21.880 --> 0:07:25.760 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:07:25.840 --> 0:07:28.360 weekdays at ten am Eastern on Apple. 0:07:28.120 --> 0:07:31.120 Card Play and Android Auto with the Bloomberg Business app. 0:07:31.240 --> 0:07:34.120 You can also listen live on Amazon Alexa from our 0:07:34.120 --> 0:07:38.840 flagship New York station. Just say Alexa playing Bloomberg eleven thirty. 0:07:39.560 --> 0:07:41.800 Jess meant sitting in for Alex Steele on Paul Sweeney. 0:07:41.840 --> 0:07:44.320 We are live here on Bloomberg Interactive Brokers Studio, streaming 0:07:44.360 --> 0:07:47.840 live on YouTube as well. So go check us out there. 0:07:48.400 --> 0:07:51.160 Big Tech Earnings it starts today after the close with 0:07:51.320 --> 0:07:54.320 your friends at Google, and then we're gonna hear from 0:07:54.360 --> 0:07:56.800 you know, Meta and everybody else along the line, Apple 0:07:56.840 --> 0:07:58.560 and Amazon and all that kind of good good stuff. 0:07:58.640 --> 0:08:00.400 So when you want to talk tech company, you want 0:08:00.360 --> 0:08:02.320 to talk tech earnings, you need to talk to Gene Monster, 0:08:02.680 --> 0:08:05.400 managing partner and co founder at Loop Ventures. I think 0:08:05.400 --> 0:08:11.520 one of the more tenured reasonable voices on all things technology. Gene, 0:08:11.520 --> 0:08:13.640 thanks so much for joining us here. Let's start with Google. 0:08:13.640 --> 0:08:15.920 We're gonna hear from them after the close. Year This 0:08:15.960 --> 0:08:18.400 stacks ABO up a little over twenty percent, but it 0:08:18.560 --> 0:08:20.880 just feels like there's some concerns around Google in their 0:08:20.880 --> 0:08:25.080 core search business, perhaps under some type of threat from AI. 0:08:25.200 --> 0:08:27.520 How do you position the Google story here and what 0:08:27.520 --> 0:08:28.400 will you be looking for? 0:08:29.800 --> 0:08:31.760 Paul, you nailed it. I mean that is what I 0:08:31.800 --> 0:08:34.440 would identify as the pressure point, the single piece that 0:08:34.520 --> 0:08:37.120 matters the most. This is more important than the Google 0:08:37.120 --> 0:08:39.520 Cloud number. A lot of investors are going to be 0:08:39.559 --> 0:08:43.040 focusing on the Google Cloud, but keep in mind clouds 0:08:43.080 --> 0:08:46.200 call it twelve percent of revenue. Search is just over 0:08:46.360 --> 0:08:49.839 fifty and cloud is not in front of some existential 0:08:49.920 --> 0:08:54.800 threat related to AI. And so the quick backstory is 0:08:54.840 --> 0:08:57.560 that Google Search in the March quarter was up fourteen 0:08:57.600 --> 0:09:00.920 percent year of year. It was up fourteen percent in 0:09:00.960 --> 0:09:05.720 the June quarter, so showed some surprising strength quarter to quarter. 0:09:05.760 --> 0:09:08.719 There the streets looking for plus twelve. But this is 0:09:08.760 --> 0:09:12.120 where the plot thickens is that in the September quarter, 0:09:12.559 --> 0:09:16.000 this will be the first full quarter where AI overviews 0:09:16.120 --> 0:09:19.920 powered Google Search in the US. They launched in May, 0:09:20.000 --> 0:09:22.439 so it got a partial quarter in the June quarter, 0:09:22.440 --> 0:09:25.400 but we're going to see the first full quarter. And 0:09:25.440 --> 0:09:30.400 then they launched another one hundred countries in the month 0:09:30.440 --> 0:09:33.040 of October, so that's going to impact the December results. 0:09:33.040 --> 0:09:36.319 But the reason why this search number is so important 0:09:36.520 --> 0:09:40.200 is that if in fact the US search business holds 0:09:40.240 --> 0:09:43.400 together for the first full quarter, that would be the 0:09:43.559 --> 0:09:47.559 most I think substantial data point that Google investors can 0:09:47.720 --> 0:09:51.040 have to feel comfortable about how this transition over the 0:09:51.040 --> 0:09:54.200 next one two five years is going to go for Google, 0:09:54.240 --> 0:09:56.800 that they're not going to lose share to the likes 0:09:56.840 --> 0:10:00.640 of Open Ai, and so I'm really focused on that number. 0:10:00.720 --> 0:10:04.920 Just one other kind of the inside baseball here. Google 0:10:04.960 --> 0:10:08.640 doesn't break out US search revenue, so we're not going 0:10:08.720 --> 0:10:10.800 to get really a clean look at that number. It's 0:10:10.800 --> 0:10:14.320 just a global number. They do break out Google revenue 0:10:14.320 --> 0:10:19.880 in the US. It was up eighteen percent in the 0:10:20.000 --> 0:10:22.560 Just Reporter quarter. It's expected to be up twelve percent 0:10:23.240 --> 0:10:25.840 in the September quarter. So if they do better than 0:10:25.840 --> 0:10:27.280 that twelve I think it's going to be a good 0:10:27.360 --> 0:10:31.360 view of AI overviews and keep Google investors confident that 0:10:31.440 --> 0:10:33.920 this company can navigate this seismic change. 0:10:34.040 --> 0:10:35.920 Of course, as you know, Gene, we're going to have 0:10:36.160 --> 0:10:39.440 meta platforms after the bell on Wednesday, And when you 0:10:39.480 --> 0:10:41.800 look here to date for Meta up about sixty six 0:10:41.880 --> 0:10:45.560 percent compared to about twenty percent roughly for Google. What 0:10:45.600 --> 0:10:47.160 are you watching when it comes to meta and the 0:10:47.160 --> 0:10:51.840 AI story. 0:10:49.760 --> 0:10:52.240 I mean, then the bars much higher the plus twenty 0:10:52.320 --> 0:10:55.080 four the streets looking for I think eighteen percent growth 0:10:55.080 --> 0:11:00.240 for this quarter or twenty two I should say it 0:11:00.280 --> 0:11:02.959 peaked at twenty four percent. Growth is at twenty two percent. 0:11:03.600 --> 0:11:05.600 I mean, it really comes down to their advertising growth 0:11:05.600 --> 0:11:07.839 and ultimately if they can continue to keep that going, 0:11:08.760 --> 0:11:11.960 you know, as impacting all their business. Another important factor 0:11:12.040 --> 0:11:15.000 is their daily active users three point three billion. I mean, 0:11:15.000 --> 0:11:19.160 this remarkable number, up six percent year of a year, 0:11:19.240 --> 0:11:21.720 is up seven percent in the previous quarter. They just 0:11:21.840 --> 0:11:25.520 keep cranking, and I think it's testimony to how addictive 0:11:25.640 --> 0:11:28.400 Metas products are just really incredible. 0:11:29.200 --> 0:11:31.839 And the stock market agrees with the genius stocks up. 0:11:31.880 --> 0:11:33.800 You know, it's been one of the best performers of 0:11:33.880 --> 0:11:35.360 kind of the big tech. 0:11:35.440 --> 0:11:38.520 It games, particularly twenty four percent YEP over the past 0:11:38.600 --> 0:11:41.160 three months, NAZEKX up seven Paul, Yeah, and it's just 0:11:41.320 --> 0:11:44.040 continued to power forward. And I just I would stress 0:11:44.120 --> 0:11:47.080 that point that the bar is high from Meta going 0:11:47.080 --> 0:11:50.320 into this earnings UH trades at twenty four times. But 0:11:50.840 --> 0:11:54.880 this is just an overall revenue growth story. And Zuckerberg 0:11:54.960 --> 0:11:57.640 has kind of made the case to investors more recently 0:11:57.679 --> 0:12:00.960 at their dev day that you know, they're just going 0:12:01.040 --> 0:12:02.720 to be AI across all of their. 0:12:02.600 --> 0:12:05.920 Products and gene There was a time not too far 0:12:05.960 --> 0:12:09.439 ago long ago when people are worre concerned about the 0:12:09.480 --> 0:12:13.560 spending at Meta, particularly on the metaverse, what's the thinking 0:12:13.640 --> 0:12:15.720 now about how management's thinking about that. 0:12:17.400 --> 0:12:20.800 Well, they've gotten to pass because the growth is accelerated 0:12:20.920 --> 0:12:23.160 essentially to a kind of had bottom that right around 0:12:23.160 --> 0:12:25.760 twelve percent and then accelerated up to twenty four percent 0:12:25.800 --> 0:12:28.280 over the past year and a half. And so that 0:12:28.440 --> 0:12:32.960 kind of, as I think, kept investors in a comfortable place. 0:12:33.600 --> 0:12:36.240 But the spending on reality labs, this is the group 0:12:36.280 --> 0:12:41.160 that's predominantly working on some form of AI glasses, something 0:12:41.200 --> 0:12:43.360 that's more like the ray bands that they have. They're 0:12:43.440 --> 0:12:46.480 very different than Apple's Vision Pro, but the spending on 0:12:46.520 --> 0:12:49.920 that group continues to be aggressive, and specifically is that 0:12:49.960 --> 0:12:54.400 they're expected to lose about twenty billion dollars this year. 0:12:54.520 --> 0:12:57.120 I mean to put that into perspective is that on 0:12:57.200 --> 0:12:59.719 a similar type of initiative for Vision Pro, Apple will 0:12:59.760 --> 0:13:02.280 spend about two billion dollars in development a year. And 0:13:02.320 --> 0:13:05.520 so we're talking about kind of a ten x magnitude 0:13:05.640 --> 0:13:08.760 of investment that they're making. And the answer question, Paul, 0:13:08.800 --> 0:13:11.920 is that investors are giving Meta a pass right now. 0:13:12.559 --> 0:13:16.480 I see their aggressive spending in reality labs as a 0:13:16.480 --> 0:13:20.040 win win for Meta long term. If in fact these 0:13:20.080 --> 0:13:22.800 wearables do take off with their oryan project in the 0:13:22.840 --> 0:13:25.360 next few years, then you're going to see some revenue 0:13:25.360 --> 0:13:27.720 growth and that would be viewed as a positive. And 0:13:27.800 --> 0:13:29.960 if they don't, if this doesn't take off, they're going 0:13:30.040 --> 0:13:32.200 to cut spending and that should be good for earnings. 0:13:32.240 --> 0:13:36.319 And so, in kind of a strange twist of events, 0:13:36.440 --> 0:13:39.240 this Reality Labs is actually setting up to be a 0:13:39.360 --> 0:13:41.400 positive for the stock in the next couple of years 0:13:41.679 --> 0:13:42.400 when it comes. 0:13:42.280 --> 0:13:46.120 To people talking about the AI potential slowdown in growth. 0:13:46.240 --> 0:13:48.120 But of course there are all those base effects right 0:13:48.160 --> 0:13:51.079 when it comes to big tech, because in twenty twenty two, 0:13:51.160 --> 0:13:53.480 obviously there was such a low bar. We were in 0:13:53.559 --> 0:13:56.120 a bear market. Earnings projections were a lot lower than 0:13:56.160 --> 0:13:59.439 obviously last year. Once in Nvidia had that gangbuster revenue 0:13:59.440 --> 0:14:03.280 forecast last May in twenty twenty three, obviously the base 0:14:03.320 --> 0:14:05.680 effects were a lot more dramatic. So when you're looking 0:14:05.760 --> 0:14:07.880 at the kind of year over year growth, the numbers 0:14:07.920 --> 0:14:10.840 around twenty percent for the BAG seven obviously not quite 0:14:10.880 --> 0:14:13.040 as high as the average more than thirty percent growth 0:14:13.040 --> 0:14:15.400 in twenty three, But what do you make of that 0:14:15.440 --> 0:14:17.720 when you see more of the growth stocks and in 0:14:17.760 --> 0:14:20.400 the projections for their profit growth coming more in line 0:14:20.520 --> 0:14:22.240 with the rest of the S and P five hundred 0:14:22.280 --> 0:14:22.720 next year. 0:14:24.800 --> 0:14:27.960 I think investors are missing this. I think that this 0:14:28.560 --> 0:14:31.200 may be kind of an uncomfortable I believe this is 0:14:31.440 --> 0:14:34.080 going to be an uncomfortable truth around AI, and what 0:14:34.080 --> 0:14:36.760 it means for big tech is that this is going 0:14:36.840 --> 0:14:40.000 to be more significant than what I think. Investors believe. 0:14:40.040 --> 0:14:42.960 It's going to grow faster for longer, and I think 0:14:43.000 --> 0:14:46.040 what you just described agree with all those facts, and 0:14:46.200 --> 0:14:49.760 ultimately there's this sense for investors that were just one 0:14:49.840 --> 0:14:52.280 quarter away from some sort of data point that's going 0:14:52.320 --> 0:14:55.000 to show that AIS the substance is not going to 0:14:55.400 --> 0:14:58.480 reach the hype, and I suspect that, well, we may 0:14:58.560 --> 0:15:02.520 get occasional data points that are to kind of the 0:15:02.520 --> 0:15:05.760 barish case of AI. The overwhelming body of evidence we're 0:15:05.760 --> 0:15:07.600 going to see in the quarters ahead are going to 0:15:07.640 --> 0:15:12.880 suggest that this trend is unstoppable. And that's some pretty 0:15:13.000 --> 0:15:15.720 high bars I like to be measured in my expectations, 0:15:15.720 --> 0:15:18.720 but I do believe that these companies, most of them, 0:15:18.800 --> 0:15:20.920 are going to see growth higher than what investors think. 0:15:21.000 --> 0:15:23.800 I'm already tuned into the twenty twenty six growth numbers. 0:15:24.280 --> 0:15:26.160 Most of them for these big companies are kind of 0:15:26.160 --> 0:15:28.760 in the low teens range, and I suspect that the 0:15:28.800 --> 0:15:30.400 growth will be mid to high teens. 0:15:30.680 --> 0:15:32.680 Gene, thanks so much for joining us. Really appreciate getting 0:15:32.680 --> 0:15:34.760 a few minutes of your time. As always, Gene Mounster. 0:15:35.080 --> 0:15:37.240 He's a managing partner. He's a co founder at Loop 0:15:37.400 --> 0:15:39.320 Ventures based in Minneapolis. 0:15:40.680 --> 0:15:44.560 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:15:44.640 --> 0:15:46.400 weekdays at ten am Eastern on. 0:15:46.560 --> 0:15:49.520 Fo card Playing and Broudoto with the Bloomberg Business app. 0:15:49.520 --> 0:15:52.720 Listen on demand wherever you get your podcasts, or watch 0:15:52.800 --> 0:15:54.760 us live on YouTube. 0:15:55.400 --> 0:15:58.680 Custumer competence data came out one away point seven. The 0:15:58.680 --> 0:16:02.680 consensus was ninety nine point five prior period was revised 0:16:02.760 --> 0:16:04.760 up to ninety nine point two. So a big, big 0:16:04.840 --> 0:16:07.600 jump here relative to expectations in the last period. Let's 0:16:07.640 --> 0:16:10.520 break it down. Jess re checking with Dana Peterson, chief 0:16:10.560 --> 0:16:14.000 economists at the Conference Board. Dana put this number into 0:16:14.040 --> 0:16:16.920 context for us. It seems certainly really good relative to 0:16:16.920 --> 0:16:18.200 what the market was expecting. 0:16:19.440 --> 0:16:23.520 Yes, definitely, consumers were on the whole pretty happy in 0:16:23.560 --> 0:16:27.400 October certainly they think the present situation is better. And 0:16:27.520 --> 0:16:31.920 also expectations and notably expectations for jobs were positive for 0:16:31.960 --> 0:16:34.000 the first time in almost a year and a half. 0:16:34.520 --> 0:16:36.200 So there's really good news out there. 0:16:37.120 --> 0:16:38.760 So what do you think this means as far as 0:16:38.760 --> 0:16:42.040 the direction of the economy here, Well, the. 0:16:42.120 --> 0:16:45.479 US economy has been doing quite well, and indeed consumers 0:16:45.480 --> 0:16:47.520 have been driving it. We saw on the tracking data 0:16:47.560 --> 0:16:51.960 from retail sales and also from the BEA that consumers 0:16:52.000 --> 0:16:55.280 are buying goods, they're buying services. That's certainly supporting growth, 0:16:55.560 --> 0:16:58.200 and we're seeing that finally show up in confidence. Indeed, 0:16:58.200 --> 0:17:00.480 consumers were getting a little bit worried about the labor 0:17:00.520 --> 0:17:03.280 market over the summer, but then we had those blockbuster 0:17:03.360 --> 0:17:06.960 payrolls numbers. Most consumers are seeing their incomes rise because 0:17:07.000 --> 0:17:10.119 wages are elevated. Most consumers are working. We are seeing 0:17:10.160 --> 0:17:12.240 a little bit of layoffs here and there, but again, 0:17:12.800 --> 0:17:15.840 the predominant sense among consumers, at least for this month, 0:17:15.920 --> 0:17:16.840 is that they're okay. 0:17:18.680 --> 0:17:21.040 How much data do you think is impacted at all 0:17:21.080 --> 0:17:23.880 by the Fed cutting rates? Does that come into your 0:17:24.320 --> 0:17:25.120 calculation here? 0:17:26.320 --> 0:17:29.200 Absolutely? We have one question where we ask about interest 0:17:29.280 --> 0:17:33.760 rate expectations, and that measure actually ticked up. And we 0:17:33.800 --> 0:17:36.560 do have items where consumers said that they're not as 0:17:36.600 --> 0:17:38.879 convinced that rates are going to come off. But then 0:17:38.920 --> 0:17:40.760 we did see some who were saying, look, the Fed 0:17:40.840 --> 0:17:42.840 has cut interest rates. We're seeing a little bit of 0:17:42.880 --> 0:17:46.040 improvement in that. So certainly we're going to need more 0:17:46.160 --> 0:17:49.199 interest rate cuts before consumers pretty come out, probably come 0:17:49.240 --> 0:17:52.040 out strongly and say yes, we're confident in this rate 0:17:52.080 --> 0:17:54.880 cutting cycle. But consumers are starting to get out there 0:17:54.920 --> 0:17:57.720 and buy big ticket items because they're cheaper, not so 0:17:57.800 --> 0:18:00.600 much because interest rates are lower, but as streets ball, 0:18:00.680 --> 0:18:03.240 we think they'll buy more cars and furniture, things that 0:18:03.280 --> 0:18:04.200 they need to finance. 0:18:04.560 --> 0:18:06.600 All right, some pretty solid numbers also know the Conference 0:18:06.640 --> 0:18:09.960 Board Expectations data point came in at eighty nine point one. 0:18:10.240 --> 0:18:13.200 That's versus revised eighty two point eight from last month. 0:18:13.240 --> 0:18:16.000 So also in terms of expectations, better than expected. Dana Peterson, 0:18:16.119 --> 0:18:18.560 thanks so much for joining us. Dana Peterson a chief 0:18:18.600 --> 0:18:20.679 economist at the Conference Board. 0:18:22.240 --> 0:18:26.119 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:26.200 --> 0:18:29.720 weekdays at ten am Eastern on applecar Play and Android 0:18:29.760 --> 0:18:32.520 Auto with the Bloomberg business app. You can also listen 0:18:32.640 --> 0:18:35.720 live on Amazon Alexa from our flagship New York station 0:18:36.080 --> 0:18:40.639 Just Say Alexa playing Bloomberg eleven thirty. 0:18:40.480 --> 0:18:42.320 Jess Meant and sitting in for Alex Steel today, I'm 0:18:42.320 --> 0:18:44.679 Paul Scoeneyer live here in our bloomergen Director Broker Studio. 0:18:44.680 --> 0:18:47.720 We're streaming live on YouTube as well. YouTube dot com 0:18:47.760 --> 0:18:50.880 head there, search Bloomberg Podcast or Bloomberg Live Radio. That's 0:18:50.880 --> 0:18:53.439 where you'll find us. Speaking of YouTube, what would you 0:18:53.600 --> 0:18:56.439 like to hear on Bloomberg Radio? Help make shows like 0:18:56.480 --> 0:19:00.480 ours even better by taking our Bloomberg audience, Sir, visit 0:19:00.560 --> 0:19:04.160 YouTube dot com slash Bloomberg Podcasts and click the link 0:19:04.200 --> 0:19:06.879 in our profile or community sector to take the survey, 0:19:06.880 --> 0:19:09.280 which is host to buy our partners over at material 0:19:09.760 --> 0:19:13.879 Fill it out now at YouTube dot com slash Bloomberg Podcast. 0:19:13.960 --> 0:19:15.640 Our next guest. This is how it's gonna work post. 0:19:15.840 --> 0:19:17.719 I'm gonna ask a question and I'm gonna turn off 0:19:17.800 --> 0:19:19.040 my Mike and John and I are going to sit 0:19:19.080 --> 0:19:20.439 here and listen and try to get a little bit 0:19:20.440 --> 0:19:22.840 smarter and take notes and take notes. Neil Grossman. He's 0:19:22.840 --> 0:19:24.920 a co founder and former CIO of K n G 0:19:25.119 --> 0:19:28.119 Capital joints us here in our Bloomberg Interactive Broker studio. 0:19:28.119 --> 0:19:29.560 We're in a suit today. Can remember last time I 0:19:29.600 --> 0:19:30.320 saw you in a suit? 0:19:31.080 --> 0:19:31.359 Neil. 0:19:31.800 --> 0:19:33.600 We got a lot of economic data, we got right 0:19:33.680 --> 0:19:36.040 smack in the middle of earnings. All that's important. But 0:19:36.200 --> 0:19:37.800 I think since we have you here, I would just 0:19:37.840 --> 0:19:40.439 love to get your opinions about how you think the 0:19:40.640 --> 0:19:45.960 markets are digesting a big, pretty big election next Tuesday. 0:19:46.480 --> 0:19:48.960 Are you when you talk to clients, are you saying, hey, 0:19:48.960 --> 0:19:52.439 if Trump wins, think this, if Harris wins, think that, 0:19:52.760 --> 0:19:54.119 how are you kind of positioning all that? 0:19:55.359 --> 0:19:58.000 Well? I think there's two levels to this. But by 0:19:58.000 --> 0:19:59.600 the way, thank you very much for having me. It's 0:19:59.600 --> 0:20:05.000