1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,240 --> 00:00:12,119 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:12,200 --> 00:00:14,920 Speaker 2: weekdays at ten am Eastern on Apple car Playing and 4 00:00:15,040 --> 00:00:17,919 Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand 5 00:00:17,960 --> 00:00:22,280 Speaker 2: wherever you get your podcasts, or watch us live on YouTube. 6 00:00:23,760 --> 00:00:28,640 Speaker 3: Geopolitical News front End Center again. Today, the Ukraine carries 7 00:00:28,680 --> 00:00:33,040 Speaker 3: out first strike with US missiles in Russia, you know, 8 00:00:33,080 --> 00:00:34,519 Speaker 3: and then we had some rudder coming out of the 9 00:00:34,760 --> 00:00:38,080 Speaker 3: Russian Foreign Minister down at the G twenty Mark really 10 00:00:38,120 --> 00:00:38,840 Speaker 3: spooky markets. 11 00:00:38,840 --> 00:00:39,800 Speaker 4: Mark Champion joins us. 12 00:00:39,800 --> 00:00:42,920 Speaker 3: He's a calmnist for Bloomberg Opinion. He's located in London 13 00:00:43,000 --> 00:00:46,640 Speaker 3: and he is one of our resident experts on geopolitics, 14 00:00:46,680 --> 00:00:49,400 Speaker 3: particularly in that part of the world. Here, Mark, it 15 00:00:49,479 --> 00:00:52,120 Speaker 3: just feels like, you know, today was not a good 16 00:00:52,159 --> 00:00:54,360 Speaker 3: day for the folks that were looking to try to 17 00:00:54,400 --> 00:00:57,880 Speaker 3: move towards a resolution there in Ukraine. What's your latest 18 00:00:57,960 --> 00:00:59,520 Speaker 3: view on what's happening in that part of the world. 19 00:01:01,360 --> 00:01:04,680 Speaker 5: Yeah, I mean, you know what we the kind of 20 00:01:04,760 --> 00:01:08,200 Speaker 5: trajectory we have is that the Ukrainians are very much 21 00:01:08,240 --> 00:01:10,880 Speaker 5: on the back foot in on the battlefield, and at 22 00:01:10,880 --> 00:01:14,480 Speaker 5: the moment they have been for some months. You know, 23 00:01:14,520 --> 00:01:16,680 Speaker 5: obviously you have a new US president coming in who 24 00:01:16,680 --> 00:01:19,920 Speaker 5: says he wants to end it all in a day. 25 00:01:19,959 --> 00:01:23,400 Speaker 5: But you know, the question is at this point, you know, 26 00:01:23,480 --> 00:01:28,440 Speaker 5: everybody is agreed, including Voladimir's Zelenski, that the you know, 27 00:01:28,480 --> 00:01:33,120 Speaker 5: this needs to come to an end next year. You know, 28 00:01:33,160 --> 00:01:36,360 Speaker 5: the question is which day? Uh? And you know which 29 00:01:36,440 --> 00:01:39,440 Speaker 5: end of the year. And you know, how do you 30 00:01:39,520 --> 00:01:44,319 Speaker 5: get President put into the negotiating tables as you know, 31 00:01:44,360 --> 00:01:49,720 Speaker 5: opposed to just offering to accept Ukraine surrender, you know, 32 00:01:50,160 --> 00:01:53,360 Speaker 5: in the current circumstance or what the Ukrainians want to do, 33 00:01:53,560 --> 00:01:56,360 Speaker 5: what the Biden administration seems to be, you know, trying 34 00:01:56,400 --> 00:01:59,400 Speaker 5: to help it to do is to change the facts 35 00:01:59,400 --> 00:02:01,640 Speaker 5: on the ground such that you know Putin will have 36 00:02:01,720 --> 00:02:04,280 Speaker 5: some incentive to actually negotiate. 37 00:02:04,800 --> 00:02:07,440 Speaker 6: Well, I was gonna say, who has the upper hand 38 00:02:07,560 --> 00:02:08,600 Speaker 6: at this moment. 39 00:02:09,639 --> 00:02:12,880 Speaker 5: Well, there's no question the Russians do. They're moving, you know, 40 00:02:12,960 --> 00:02:16,520 Speaker 5: every day, they're moving forward along the front lines, and 41 00:02:16,560 --> 00:02:18,560 Speaker 5: it's it's not a collapse. It's not a kind of 42 00:02:18,600 --> 00:02:23,160 Speaker 5: sudden you know, end of days. But you know, there's 43 00:02:23,200 --> 00:02:26,600 Speaker 5: there's no doubt about you know, which side has the 44 00:02:26,639 --> 00:02:29,680 Speaker 5: initiative at the moment. You know, that has kind of 45 00:02:29,680 --> 00:02:32,000 Speaker 5: flipped from one side to the other, you know, throughout 46 00:02:32,040 --> 00:02:34,840 Speaker 5: the war, and it could flip again. But at the moment, 47 00:02:34,919 --> 00:02:40,600 Speaker 5: the Ukrainians simply lack the number of personnel the manpower 48 00:02:41,040 --> 00:02:45,560 Speaker 5: to do it. They were late with the mobilization and 49 00:02:45,600 --> 00:02:49,200 Speaker 5: they are in a pretty bad state. So what they're 50 00:02:49,240 --> 00:02:53,200 Speaker 5: asking for is different ways of helping them so that 51 00:02:53,240 --> 00:02:57,200 Speaker 5: they can stabilize the line, perhaps even change the momentum 52 00:02:57,360 --> 00:03:02,080 Speaker 5: a little bit, and then importantly strike behind the Russian 53 00:03:02,120 --> 00:03:06,240 Speaker 5: lines to increase the cost of continuation for President Putin 54 00:03:06,320 --> 00:03:09,320 Speaker 5: so that he actually has a reason to say, Okay, i'll. 55 00:03:09,160 --> 00:03:13,440 Speaker 3: Talk between now and inauguration day. It seems like a 56 00:03:13,520 --> 00:03:16,200 Speaker 3: day at a time period where each side will be 57 00:03:16,240 --> 00:03:19,800 Speaker 3: trying to just improve their position, with the understanding that 58 00:03:20,200 --> 00:03:22,440 Speaker 3: it looks like, whether we want or not, we're going 59 00:03:22,480 --> 00:03:23,760 Speaker 3: to the negotiating table. 60 00:03:24,280 --> 00:03:27,639 Speaker 5: Is that kind of the view, Yeah, I think that's 61 00:03:27,680 --> 00:03:30,760 Speaker 5: exactly what's going to happen. And you know, that's the 62 00:03:30,840 --> 00:03:34,040 Speaker 5: context in which to say, to look at the sort 63 00:03:34,040 --> 00:03:37,520 Speaker 5: of Russian sabers rattling again on the nuclear issue at 64 00:03:37,560 --> 00:03:41,200 Speaker 5: the moment, I mean, the reasons for not pushing the 65 00:03:41,280 --> 00:03:44,800 Speaker 5: nuclear button have not changed, and there are real hurdles 66 00:03:44,840 --> 00:03:48,560 Speaker 5: and costs involved in doing so. And you know President 67 00:03:48,600 --> 00:03:52,279 Speaker 5: Putin didn't do that when Russia was losing on the battlefield, 68 00:03:52,320 --> 00:03:54,400 Speaker 5: and he's very unlikely to do it when they're winning. 69 00:03:55,360 --> 00:03:58,440 Speaker 5: But it does tell you that he's trying to shape 70 00:03:59,360 --> 00:04:03,320 Speaker 5: what the the US in particular does between now and 71 00:04:03,440 --> 00:04:07,160 Speaker 5: next year. And this is one tool which he has 72 00:04:07,200 --> 00:04:10,640 Speaker 5: to do it. He has others, and you know, yes, 73 00:04:10,680 --> 00:04:14,200 Speaker 5: absolutely both sides will be trying to maximize their position 74 00:04:14,360 --> 00:04:16,880 Speaker 5: for when they actually have to make some kind of deal. 75 00:04:17,400 --> 00:04:20,520 Speaker 6: And does that deal is that contingent on say President 76 00:04:20,560 --> 00:04:23,560 Speaker 6: Trump or you think, regardless of who's in the White House, 77 00:04:23,600 --> 00:04:24,480 Speaker 6: this is the way it was going. 78 00:04:26,520 --> 00:04:29,920 Speaker 5: It was. It's going to probably get there faster because 79 00:04:30,520 --> 00:04:33,039 Speaker 5: of the arrival of Donald Trump, but yes, that's where 80 00:04:33,040 --> 00:04:35,920 Speaker 5: it was going. You you know, Zolenski, if you look 81 00:04:35,920 --> 00:04:40,440 Speaker 5: at Zelenski's victory plan, which you know is often miss construed, 82 00:04:40,480 --> 00:04:43,200 Speaker 5: if you actually read it, you know he's got a 83 00:04:43,200 --> 00:04:45,800 Speaker 5: five point plan there. None of them talk about territory. 84 00:04:45,880 --> 00:04:47,800 Speaker 5: None of them say we have to get crimea back 85 00:04:47,960 --> 00:04:50,039 Speaker 5: or we have to get this back, or that it's 86 00:04:50,080 --> 00:04:52,600 Speaker 5: four points which are just about security. How do we 87 00:04:52,680 --> 00:04:56,080 Speaker 5: secure Ukraine to make sure that when we agree to 88 00:04:56,080 --> 00:05:00,200 Speaker 5: a cease fire it's just not a little interlude for 89 00:05:01,080 --> 00:05:03,960 Speaker 5: the Russians attack again. And then a final one which 90 00:05:04,000 --> 00:05:06,320 Speaker 5: is a sort of you know, just a bid to 91 00:05:06,920 --> 00:05:09,960 Speaker 5: interest Donald Trump in particular, but you know the West 92 00:05:10,000 --> 00:05:14,080 Speaker 5: in general in what they can get out of helping 93 00:05:14,160 --> 00:05:15,880 Speaker 5: Ukraine in terms of resources and so on. 94 00:05:17,120 --> 00:05:18,800 Speaker 3: All right, Mark Champion, thank you so much. We really 95 00:05:18,839 --> 00:05:21,679 Speaker 3: appreciate getting your thoughts there. Mark Champion, he's a calmness 96 00:05:21,680 --> 00:05:25,080 Speaker 3: for Bloomberg Opinion, joining us from London via zoom giving 97 00:05:25,160 --> 00:05:29,200 Speaker 3: us the latest thoughts on Ukraine. Again, the thinking now 98 00:05:29,279 --> 00:05:31,240 Speaker 3: is perhaps in twenty twenty five that might be a 99 00:05:31,279 --> 00:05:34,240 Speaker 3: period for some type of truth to come to that 100 00:05:34,279 --> 00:05:35,960 Speaker 3: part of the world. We'll have more reporting on that. 101 00:05:37,560 --> 00:05:41,440 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 102 00:05:41,520 --> 00:05:44,039 Speaker 2: weekdays at ten am Eastern on Apple. 103 00:05:43,800 --> 00:05:46,600 Speaker 7: Car Play and Androight Outo with the Bloomberg Business. 104 00:05:46,960 --> 00:05:49,800 Speaker 2: You can also listen live on Amazon Alexa from our 105 00:05:49,800 --> 00:05:54,200 Speaker 2: flagship New York station Just Say Alexa, playing Bloomberg eleven thirty. 106 00:05:55,560 --> 00:05:58,440 Speaker 6: This is Bloomberg Intelligence Radio. We are broadcasting to live 107 00:05:58,480 --> 00:06:02,039 Speaker 6: from our interactive Brooker studio right here in midtown Manhattan, 108 00:06:02,320 --> 00:06:04,800 Speaker 6: and we want to know what would you like to 109 00:06:04,839 --> 00:06:07,520 Speaker 6: hear about on Bloomberg Radio. This helps make shows like 110 00:06:07,520 --> 00:06:10,640 Speaker 6: ours even better. By taking our Bloomberg Audience survey, visit 111 00:06:10,680 --> 00:06:13,440 Speaker 6: YouTube dot com slash Bloomberg podcast and click the link 112 00:06:13,480 --> 00:06:15,920 Speaker 6: in our profile or community section to take the survey, 113 00:06:16,120 --> 00:06:18,840 Speaker 6: which is hosted by our partners material Fill it out 114 00:06:18,839 --> 00:06:22,279 Speaker 6: now at YouTube dot com slash Bloomberg Podcasts. All right, 115 00:06:22,320 --> 00:06:23,880 Speaker 6: let's get back to the market here. So we may 116 00:06:23,880 --> 00:06:27,280 Speaker 6: have some geopolitical risk shaking in the market, but if 117 00:06:27,279 --> 00:06:28,880 Speaker 6: you take a look at some of the equities, like 118 00:06:28,920 --> 00:06:31,960 Speaker 6: a Walmart still holding up fairly well, that stock now 119 00:06:31,960 --> 00:06:34,320 Speaker 6: are on the highs of the session, up almost five percent. 120 00:06:34,800 --> 00:06:37,000 Speaker 6: Joining us how to discuss as Emily Cohne and Bloomberg 121 00:06:37,040 --> 00:06:39,680 Speaker 6: Consumer team leader, I mean, she heads all the stuff 122 00:06:39,760 --> 00:06:42,400 Speaker 6: of consumer stocks. She joins us now in studio. Emily, 123 00:06:42,440 --> 00:06:43,320 Speaker 6: wonderful to see you. 124 00:06:43,560 --> 00:06:44,159 Speaker 8: Thanks, Alich. 125 00:06:45,000 --> 00:06:48,040 Speaker 6: What do we make about the reaction to Walmart stock? 126 00:06:48,080 --> 00:06:51,359 Speaker 6: Because consensus was already high, the stock had already moved 127 00:06:51,400 --> 00:06:52,839 Speaker 6: like we kind of knew it was going to be good. 128 00:06:53,800 --> 00:06:56,640 Speaker 1: So when you think about Walmart Walmart is a bellweather 129 00:06:56,720 --> 00:06:59,080 Speaker 1: of the American economy, of the American consumer. 130 00:06:59,160 --> 00:07:01,400 Speaker 8: What is Walmart? Or tell us about that. 131 00:07:02,520 --> 00:07:07,359 Speaker 1: Walmart beat expectations today sent a really strong signal that 132 00:07:07,440 --> 00:07:10,960 Speaker 1: the holiday season is off to a solid start, and 133 00:07:11,000 --> 00:07:12,520 Speaker 1: the market was excited about that. 134 00:07:13,600 --> 00:07:15,000 Speaker 8: The growth in the number. 135 00:07:14,800 --> 00:07:18,960 Speaker 1: Of transactions or checkouts slowed, the growth rate slowed a 136 00:07:18,960 --> 00:07:23,240 Speaker 1: little bit. Ticket the average ticket, the amount people were 137 00:07:23,280 --> 00:07:27,360 Speaker 1: paying in each checkout, was up, and a lot of 138 00:07:27,360 --> 00:07:30,880 Speaker 1: that growth was coming from higher income shoppers, people in 139 00:07:30,920 --> 00:07:33,680 Speaker 1: households making more than one hundred thousand dollars a year. 140 00:07:34,000 --> 00:07:37,040 Speaker 1: That cohort made up roughly seventy five percent of the 141 00:07:37,120 --> 00:07:37,880 Speaker 1: share gains. 142 00:07:39,200 --> 00:07:41,200 Speaker 8: So this was good. It was a solid start to 143 00:07:41,680 --> 00:07:43,000 Speaker 8: the holiday. 144 00:07:42,600 --> 00:07:47,520 Speaker 1: Season, and the stock is up a lot. Four and 145 00:07:47,520 --> 00:07:50,000 Speaker 1: a half percent is up a lot for a company. 146 00:07:49,600 --> 00:07:53,160 Speaker 3: That Big stopstocks at all time high of sixty seven 147 00:07:53,160 --> 00:07:56,400 Speaker 3: percent year today, which I had no idea their e 148 00:07:56,440 --> 00:07:58,760 Speaker 3: commerce business. Talk to us about their e commerce business. 149 00:07:58,880 --> 00:08:02,080 Speaker 3: I know it's big, but Amazon's pretty big too, So 150 00:08:02,400 --> 00:08:04,520 Speaker 3: how did they talk about their e commerce business? 151 00:08:04,520 --> 00:08:06,360 Speaker 1: When they talk about e commerce, they just talk about 152 00:08:06,400 --> 00:08:09,840 Speaker 1: the potential to grow. It is big, but there is 153 00:08:09,880 --> 00:08:13,600 Speaker 1: still so much room to grow. So just in the 154 00:08:13,640 --> 00:08:16,240 Speaker 1: last couple of months, we saw them branching into categories 155 00:08:16,280 --> 00:08:20,400 Speaker 1: that you wouldn't find in a typical Walmart store. Pre 156 00:08:20,520 --> 00:08:25,120 Speaker 1: owned watches, collectible sneakers, stuff you would typically go to 157 00:08:25,160 --> 00:08:30,200 Speaker 1: another retailer for, but now you can buy at Walmart online. Also, 158 00:08:30,240 --> 00:08:33,040 Speaker 1: they're adding benefits to their services, like Walmart Plus. You 159 00:08:33,040 --> 00:08:35,360 Speaker 1: can now get discounts of Burger King if you're a 160 00:08:35,360 --> 00:08:39,240 Speaker 1: Walmart Plus member. So they're really expanding their offering there. 161 00:08:39,840 --> 00:08:45,640 Speaker 1: Deliveries can get faster, and they see just endless potential there. 162 00:08:45,880 --> 00:08:46,960 Speaker 8: It's always growing. 163 00:08:47,240 --> 00:08:49,640 Speaker 6: My question I had before the break was those people 164 00:08:49,720 --> 00:08:52,800 Speaker 6: that make over one hundred thousand dollars or more, are 165 00:08:52,800 --> 00:08:56,719 Speaker 6: they sticky as in, once the economy save recovers or 166 00:08:56,760 --> 00:08:59,120 Speaker 6: once they feel better about inflation or et cetera, do 167 00:08:59,200 --> 00:09:01,480 Speaker 6: they flee than to go to Target or somewhere else, 168 00:09:01,600 --> 00:09:03,200 Speaker 6: or go to the fancy drug store or do they 169 00:09:03,200 --> 00:09:03,960 Speaker 6: stay at Walmart. 170 00:09:04,080 --> 00:09:06,040 Speaker 1: I think that's a really good question and something we're 171 00:09:06,080 --> 00:09:10,440 Speaker 1: definitely watching for. You know, spending across the board at 172 00:09:10,480 --> 00:09:13,880 Speaker 1: Walmart was consistent. The growth, as you said, was coming 173 00:09:13,880 --> 00:09:16,920 Speaker 1: from these wealthier households. Maybe it's a shopper who typically 174 00:09:16,960 --> 00:09:20,319 Speaker 1: shops at Whole Foods, but is feeling particularly pinched right 175 00:09:20,360 --> 00:09:22,640 Speaker 1: now and is going to Walmart for value? Do those 176 00:09:22,679 --> 00:09:24,920 Speaker 1: people stick around when they get a raise in their 177 00:09:24,960 --> 00:09:28,120 Speaker 1: next paycheck or their paycheck in the next couple of quarters. 178 00:09:28,640 --> 00:09:31,600 Speaker 1: That's something we're definitely watching for. I think it does 179 00:09:31,640 --> 00:09:32,840 Speaker 1: have limits. 180 00:09:33,640 --> 00:09:37,679 Speaker 3: So are they still opening stores? Isn't there Walmart pretty 181 00:09:37,720 --> 00:09:39,480 Speaker 3: much in every town USA these days? 182 00:09:39,800 --> 00:09:40,600 Speaker 8: It's a good question. 183 00:09:41,000 --> 00:09:43,000 Speaker 1: I think, like when they talk about growth now, they're 184 00:09:43,040 --> 00:09:46,199 Speaker 1: talking about e commerce growth. I think that's where they 185 00:09:46,240 --> 00:09:50,840 Speaker 1: see the highest potential for growth, and they needed to 186 00:09:50,880 --> 00:09:54,520 Speaker 1: get profitable. That's something we heard the CEO talk about today. 187 00:09:55,240 --> 00:09:56,959 Speaker 1: Not that they're racing to it, but it's a long 188 00:09:57,040 --> 00:09:59,079 Speaker 1: term game they want their e commerce division to. 189 00:10:00,880 --> 00:10:03,560 Speaker 3: So they feel them pretty okay about a holiday shopping 190 00:10:03,600 --> 00:10:04,440 Speaker 3: season because. 191 00:10:04,360 --> 00:10:08,840 Speaker 1: Yeah, holiday, right, Yeah, holiday shopping is off to a 192 00:10:08,880 --> 00:10:11,400 Speaker 1: strong start. So the interesting thing about the holiday season 193 00:10:11,440 --> 00:10:12,640 Speaker 1: this year is that it's. 194 00:10:12,480 --> 00:10:15,360 Speaker 8: Shorter than in most years. 195 00:10:15,360 --> 00:10:19,839 Speaker 1: Thanksgiving is following later in the month of November. So 196 00:10:19,920 --> 00:10:23,360 Speaker 1: the answer to that is that they triggered the deals 197 00:10:23,400 --> 00:10:25,400 Speaker 1: even earlier than than usual. 198 00:10:26,679 --> 00:10:28,960 Speaker 6: Coming in to Paul Knows and I shop on the sales, 199 00:10:29,320 --> 00:10:31,600 Speaker 6: let's go to Low's because that is interesting as well. 200 00:10:31,679 --> 00:10:33,440 Speaker 6: That stock is off the loads of the session, but 201 00:10:33,440 --> 00:10:36,040 Speaker 6: still down over three percent. What did Lo say? 202 00:10:36,880 --> 00:10:40,360 Speaker 1: So? Lowe's years fell before the bell and quarterly comps 203 00:10:40,360 --> 00:10:47,000 Speaker 1: were better than expected but still declining. So high interest 204 00:10:47,080 --> 00:10:50,400 Speaker 1: weight rates and a week housing market means people are 205 00:10:50,640 --> 00:10:53,640 Speaker 1: moving less than they were before. It means they're spending 206 00:10:53,720 --> 00:10:59,840 Speaker 1: less on big ticket home renovations. But despite blooming gloomy, 207 00:11:00,640 --> 00:11:03,920 Speaker 1: Lowe's actually raised its forecast for the year, seeing positive 208 00:11:03,960 --> 00:11:10,280 Speaker 1: growth in its professional business so selling goods to contractors 209 00:11:10,280 --> 00:11:14,080 Speaker 1: and builders, also in e commerce, and spending on smaller. 210 00:11:13,760 --> 00:11:16,640 Speaker 8: Ticket outdoor projects. Last week we. 211 00:11:16,600 --> 00:11:21,800 Speaker 1: Saw Home Depot similarly say that the weather was actually 212 00:11:21,840 --> 00:11:25,240 Speaker 1: a bright spot for its sales. So hurricane led to 213 00:11:25,320 --> 00:11:28,600 Speaker 1: higher sales for Home Depot. Warm weather meant that people 214 00:11:28,640 --> 00:11:32,600 Speaker 1: were spending more on grills because the Great Grilling Season 215 00:11:32,679 --> 00:11:33,559 Speaker 1: was getting longer. 216 00:11:34,559 --> 00:11:38,080 Speaker 8: So in general, for these loes, Home Depot. 217 00:11:39,440 --> 00:11:41,800 Speaker 1: Sales are down, but the outlook got a little bit 218 00:11:41,800 --> 00:11:42,520 Speaker 1: better this quarter. 219 00:11:43,280 --> 00:11:46,720 Speaker 3: Where do we see the weakness in the consumers like 220 00:11:46,760 --> 00:11:48,880 Speaker 3: in the dollar stores? Because I mean I can I 221 00:11:48,880 --> 00:11:53,280 Speaker 3: see a strong number from Walmart to me that is America? 222 00:11:53,400 --> 00:11:56,199 Speaker 3: So where is the American consumer hurting, is it? I 223 00:11:56,240 --> 00:11:57,800 Speaker 3: guess it's even a lower end than. 224 00:11:57,679 --> 00:12:01,079 Speaker 1: Wal Yeah, the lower end is definitelyfering. The dollar stores 225 00:12:01,120 --> 00:12:05,920 Speaker 1: are suffering. They don't offer the variety that Walmart offers. 226 00:12:06,040 --> 00:12:09,600 Speaker 1: Walmart sixty percent of Walmart's business today is in groceries 227 00:12:09,880 --> 00:12:13,640 Speaker 1: and you can go, wow, uh, you know some pretty 228 00:12:13,720 --> 00:12:17,199 Speaker 1: good stuff at Walmart these days, gluten free items and 229 00:12:18,240 --> 00:12:21,000 Speaker 1: organic produce and stuff that like you're not going to 230 00:12:21,120 --> 00:12:25,000 Speaker 1: necessarily find out your dollar store. And that's really really 231 00:12:25,040 --> 00:12:27,080 Speaker 1: helping them, especially when it comes to growing an e 232 00:12:27,080 --> 00:12:29,839 Speaker 1: commerce business where people are looking for a one stop 233 00:12:29,840 --> 00:12:30,840 Speaker 1: shop for everything. 234 00:12:31,040 --> 00:12:33,120 Speaker 3: So before I let you I have a gluten free friend. 235 00:12:33,600 --> 00:12:34,520 Speaker 8: And it's a good job. 236 00:12:34,640 --> 00:12:35,079 Speaker 4: It's a thing. 237 00:12:35,240 --> 00:12:35,880 Speaker 6: It is a thing. 238 00:12:36,760 --> 00:12:38,640 Speaker 8: I have multiple friends. 239 00:12:39,360 --> 00:12:41,880 Speaker 3: I didn't know it was. Oh I've been educated. 240 00:12:41,960 --> 00:12:43,360 Speaker 6: You've been educated for that one friend. 241 00:12:43,720 --> 00:12:44,320 Speaker 8: Before I let you go. 242 00:12:44,320 --> 00:12:46,439 Speaker 6: We get a lot of retailers out this week as well. 243 00:12:46,480 --> 00:12:48,640 Speaker 6: What are you going to be focusing on? The consumer trends? Land? 244 00:12:49,200 --> 00:12:53,400 Speaker 1: Definitely the holiday season? What are people seeing that's the 245 00:12:53,400 --> 00:12:57,200 Speaker 1: big question this year. Are people spending as much as 246 00:12:57,200 --> 00:12:59,760 Speaker 1: they usually spend? Are they buying as many gifts as 247 00:12:59,800 --> 00:13:04,960 Speaker 1: a usually by also Thanksgiving for the grocers. I think 248 00:13:05,000 --> 00:13:07,199 Speaker 1: a lot of people are just worn out from paying 249 00:13:07,280 --> 00:13:09,360 Speaker 1: really high prices for food. 250 00:13:09,600 --> 00:13:13,280 Speaker 8: They're also worn out from. 251 00:13:12,000 --> 00:13:14,000 Speaker 1: Cooking a lot more than they have been since they're 252 00:13:14,000 --> 00:13:17,079 Speaker 1: eating out less. So how is that showing up in 253 00:13:18,160 --> 00:13:22,319 Speaker 1: consumer sales? Definitely trying to get a sense of how 254 00:13:22,320 --> 00:13:25,719 Speaker 1: the consumer is feeling about what is the most significant 255 00:13:25,960 --> 00:13:27,200 Speaker 1: shopping season of the year. 256 00:13:27,400 --> 00:13:28,960 Speaker 6: I know my husband's getting a little burnt by all 257 00:13:28,960 --> 00:13:31,680 Speaker 6: the cooking he's doing. I'm really good at ordering takeout. 258 00:13:32,240 --> 00:13:34,920 Speaker 6: He's the chef in the family. All Right, thanks so much, 259 00:13:34,920 --> 00:13:36,800 Speaker 6: it's really I really appreciate it. It was wonderful to have 260 00:13:36,880 --> 00:13:40,000 Speaker 6: you at Emily Cohen joining us. She has consumer trends 261 00:13:40,040 --> 00:13:41,960 Speaker 6: coverage for Bloomberg News. 262 00:13:43,480 --> 00:13:47,360 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 263 00:13:47,440 --> 00:13:50,080 Speaker 2: weekdays at ten am Eastern on Apple card Play and 264 00:13:50,080 --> 00:13:53,160 Speaker 2: Android Auto with the Bloomberg Business app. Listen on demand 265 00:13:53,200 --> 00:13:58,040 Speaker 2: wherever you get your podcasts, or watch us live on YouTube. 266 00:13:58,640 --> 00:14:00,240 Speaker 6: All right, taking a look at the markets again. Get 267 00:14:00,240 --> 00:14:03,240 Speaker 6: the smp is down by about four tens of one 268 00:14:03,280 --> 00:14:05,520 Speaker 6: percent of the nasdag off just slightly. What do you 269 00:14:05,520 --> 00:14:07,040 Speaker 6: do in the market when there is a slight safe 270 00:14:07,040 --> 00:14:09,360 Speaker 6: haven bit. I say slight because we've definitely backed off 271 00:14:09,559 --> 00:14:11,840 Speaker 6: some of the levels that we've seen earlier in the session. 272 00:14:11,920 --> 00:14:15,880 Speaker 6: Chris Walling is CEO and chief market strategist along View Economics, 273 00:14:15,880 --> 00:14:19,440 Speaker 6: and he's here in studio to discuss his latest calls. Chris, 274 00:14:19,520 --> 00:14:21,920 Speaker 6: we're getting all the twenty twenty five calls out now. 275 00:14:22,080 --> 00:14:25,800 Speaker 6: Everyone's looking pretty bullish. But the bear case and then 276 00:14:25,840 --> 00:14:28,360 Speaker 6: the bull case seems to be super wide. What are 277 00:14:28,400 --> 00:14:29,640 Speaker 6: you guys modeling right now? 278 00:14:30,440 --> 00:14:32,320 Speaker 4: Well, I think what's really interesting is what we're seeing 279 00:14:32,360 --> 00:14:34,400 Speaker 4: in terms of the global economy next year. When you 280 00:14:34,440 --> 00:14:36,280 Speaker 4: sort of whip around the world, you look at China, 281 00:14:36,320 --> 00:14:38,440 Speaker 4: you look at Europe, the UK, and the States. Obviously 282 00:14:38,480 --> 00:14:41,640 Speaker 4: with this new government, there's all sorts of stimulus coming. 283 00:14:41,760 --> 00:14:43,800 Speaker 4: I mean, if you look at a raft of ninety 284 00:14:43,840 --> 00:14:46,320 Speaker 4: central banks around the world, the vast majority of them 285 00:14:46,320 --> 00:14:49,000 Speaker 4: the cutting, and they're in cutting very few raising weights. 286 00:14:49,200 --> 00:14:52,120 Speaker 4: That's normally a very good environment for equity markets. So 287 00:14:52,320 --> 00:14:55,160 Speaker 4: tons of stimulus lots coming. Yes, there's a lot to 288 00:14:55,200 --> 00:14:57,040 Speaker 4: worry about. That's why you get those wide ranges on 289 00:14:57,080 --> 00:14:59,680 Speaker 4: those forecasts. There's a lot of left to fail with 290 00:14:59,720 --> 00:15:02,040 Speaker 4: the new administration, and one's got to think about those 291 00:15:02,120 --> 00:15:05,880 Speaker 4: tariffs and the like, and appointments still to come, so 292 00:15:06,240 --> 00:15:08,080 Speaker 4: one doesn't really know how that's going to play out. 293 00:15:08,120 --> 00:15:12,240 Speaker 4: But I generally think that the thrust is good, and bizarrely, 294 00:15:12,320 --> 00:15:14,600 Speaker 4: we could actually absent those risks. We could actually have 295 00:15:14,640 --> 00:15:17,360 Speaker 4: a year where volatility falls and sort of got you 296 00:15:17,360 --> 00:15:21,560 Speaker 4: remember twenty thirteen or twenty seventeen. Volatility collapses because everyone's 297 00:15:21,600 --> 00:15:24,640 Speaker 4: cutting rates. There's a lot of equality around, so I 298 00:15:24,640 --> 00:15:25,720 Speaker 4: can't get my l's out there. 299 00:15:27,560 --> 00:15:33,080 Speaker 3: So in that kind of environment, long stocks, my long credit. 300 00:15:34,480 --> 00:15:35,720 Speaker 3: How do you think they play it here? 301 00:15:36,000 --> 00:15:39,680 Speaker 4: Well, I think your long equities and your long bonds. Bizarrely, 302 00:15:39,840 --> 00:15:43,600 Speaker 4: I think our government bonds are oversold. And actually, I mean, 303 00:15:43,640 --> 00:15:46,800 Speaker 4: I know the data is distorted today, but housing's just struggling. 304 00:15:47,040 --> 00:15:47,200 Speaker 1: You know. 305 00:15:47,240 --> 00:15:49,240 Speaker 4: They're parts of the US economy that need lower rates 306 00:15:49,240 --> 00:15:51,920 Speaker 4: to get it going. And the fiscal impulse is dying 307 00:15:51,920 --> 00:15:53,880 Speaker 4: as we go into next year, and we'll have to 308 00:15:53,880 --> 00:15:56,240 Speaker 4: wait until you get another fiscal package, and we don't 309 00:15:56,280 --> 00:15:58,000 Speaker 4: know what the size of it will be. So I 310 00:15:58,000 --> 00:16:00,360 Speaker 4: think long stocks and long bonds, and I want you 311 00:16:00,400 --> 00:16:02,880 Speaker 4: want to play the cyclical parts of the market, which 312 00:16:02,920 --> 00:16:05,359 Speaker 4: I think you know, when you get that cyclical week acceleration, 313 00:16:05,480 --> 00:16:08,680 Speaker 4: it's that's a great place to put money. So Mag's 314 00:16:08,680 --> 00:16:11,720 Speaker 4: seven dominance is slowly dying in my opinion. But then 315 00:16:11,720 --> 00:16:11,960 Speaker 4: on the. 316 00:16:11,880 --> 00:16:14,040 Speaker 6: Flip side, you'll say, I'll hear things like, yeah, but 317 00:16:14,120 --> 00:16:16,640 Speaker 6: retail sale are holding up, the job market's still holding up, 318 00:16:16,720 --> 00:16:18,720 Speaker 6: inflation stills holding up, So maybe we're not going to 319 00:16:18,760 --> 00:16:20,880 Speaker 6: get the kind of rad cutting cycle that we might expect. 320 00:16:21,960 --> 00:16:24,280 Speaker 4: Well, yes, yes, and no. I mean inflation, in my 321 00:16:24,320 --> 00:16:26,800 Speaker 4: opinion is dying. I mean that this was a classic 322 00:16:26,880 --> 00:16:28,880 Speaker 4: monetary surge of inflation. People like to compare it to 323 00:16:28,880 --> 00:16:32,200 Speaker 4: the seventies, but they're much better comparisons going further back. 324 00:16:32,600 --> 00:16:34,920 Speaker 4: We're m two surgees and then two collapses, and that's 325 00:16:34,960 --> 00:16:37,440 Speaker 4: really what we've had. And that's the kind of inflation 326 00:16:37,720 --> 00:16:40,160 Speaker 4: outcome we're going to get where inflation is going to dissipate. 327 00:16:40,240 --> 00:16:42,720 Speaker 4: So that'll encourage the fete, I think, to do a 328 00:16:42,800 --> 00:16:44,200 Speaker 4: little bit more than people expect. 329 00:16:45,120 --> 00:16:48,680 Speaker 3: The event tomorrow, presumably just on the earnings front, will 330 00:16:48,680 --> 00:16:49,880 Speaker 3: be in video after the close. 331 00:16:50,000 --> 00:16:50,760 Speaker 6: I was like, what event. 332 00:16:50,960 --> 00:16:52,240 Speaker 4: Yes, Yeah, we've kind of got it. 333 00:16:52,800 --> 00:16:54,680 Speaker 3: We've been talking about it since, you know, earning season began, 334 00:16:54,800 --> 00:16:58,240 Speaker 3: you know, four or five weeks ago. How important is 335 00:16:58,280 --> 00:17:01,160 Speaker 3: zach is? It seemed like for twenty twenty three, for 336 00:17:01,360 --> 00:17:03,880 Speaker 3: most off not all of this year, the AI trade 337 00:17:03,880 --> 00:17:05,639 Speaker 3: has been powering this market. 338 00:17:05,680 --> 00:17:07,320 Speaker 4: It feels like maybe it's fading a little bit. But 339 00:17:07,359 --> 00:17:09,720 Speaker 4: how important is in video tomorrow? You well, in video 340 00:17:09,760 --> 00:17:12,760 Speaker 4: is important, but it is only one stock. I mean, 341 00:17:12,760 --> 00:17:15,119 Speaker 4: it doesn't feel like only one stock. If it feels 342 00:17:15,160 --> 00:17:17,960 Speaker 4: like the whole market, but it's only one stock. And 343 00:17:18,000 --> 00:17:20,160 Speaker 4: really the MAG seven has become the sort of MAG 344 00:17:20,240 --> 00:17:23,160 Speaker 4: one or two, So there's a limit to how much 345 00:17:23,520 --> 00:17:25,840 Speaker 4: the market can be paid high by a couple of stocks. 346 00:17:25,840 --> 00:17:27,320 Speaker 4: And I think that's the point. And the other thing 347 00:17:27,320 --> 00:17:29,720 Speaker 4: about in video is, you know, the second duvetive of 348 00:17:29,760 --> 00:17:33,040 Speaker 4: earning's growth is slowing, So it's kind of when stocks 349 00:17:33,080 --> 00:17:35,560 Speaker 4: like that, you need the first two to be fast, 350 00:17:36,080 --> 00:17:39,200 Speaker 4: and that's now slowing. I wonder if margins are topye, 351 00:17:39,280 --> 00:17:41,879 Speaker 4: So you know, I think MAG seven as a whole 352 00:17:42,000 --> 00:17:45,640 Speaker 4: is topy on margins, and video of course is exciting, 353 00:17:45,680 --> 00:17:47,479 Speaker 4: but I don't think it has the influence it had 354 00:17:47,560 --> 00:17:48,040 Speaker 4: last year. 355 00:17:48,480 --> 00:17:50,200 Speaker 6: So based on that, and then you talk about the 356 00:17:50,240 --> 00:17:53,120 Speaker 6: rate cutting cycle really being front and foremost and sort 357 00:17:53,119 --> 00:17:55,320 Speaker 6: of how you view the market. Is that an ex 358 00:17:55,520 --> 00:17:59,720 Speaker 6: US equity situation or is that a US and or is. 359 00:17:59,680 --> 00:18:00,800 Speaker 8: That just US? 360 00:18:01,280 --> 00:18:04,680 Speaker 4: So I think it's it's a global cyclical trade, which 361 00:18:04,720 --> 00:18:07,600 Speaker 4: and of course the large gap US is dominated by 362 00:18:07,640 --> 00:18:09,800 Speaker 4: mag seven, So I think what we'll find is they've 363 00:18:09,800 --> 00:18:12,359 Speaker 4: become a source of funds to buy into cyclical parts 364 00:18:12,359 --> 00:18:14,719 Speaker 4: of the global stock market. So in the US mid 365 00:18:14,800 --> 00:18:17,119 Speaker 4: and small caps, some of the cyclical areas of the market, 366 00:18:17,160 --> 00:18:21,679 Speaker 4: for sure, people talk about financials tick. But outside the US, 367 00:18:21,680 --> 00:18:24,160 Speaker 4: tons of stuff, you know, there's so much cheap stuff 368 00:18:24,200 --> 00:18:27,560 Speaker 4: that cyclical we're going into sort of nominal GDP growth. 369 00:18:27,600 --> 00:18:29,120 Speaker 4: This is all good for those parts of the world. 370 00:18:29,160 --> 00:18:32,760 Speaker 4: We like the UK. We like Spain. Bizarrely sort of 371 00:18:32,800 --> 00:18:34,520 Speaker 4: no one's talked about Spain for a long long time 372 00:18:35,240 --> 00:18:37,840 Speaker 4: because Spain's spent fifteen years getting his house in order, 373 00:18:38,119 --> 00:18:40,520 Speaker 4: and Germany's the sick man of Europe, which means rates 374 00:18:40,520 --> 00:18:42,080 Speaker 4: are lower in Europe and the otherwise would be in 375 00:18:42,080 --> 00:18:44,719 Speaker 4: Spain gets cheap money. So it's a lovely little combo. 376 00:18:46,080 --> 00:18:49,200 Speaker 4: And Spain's doing really well this year. There's four out 377 00:18:49,200 --> 00:18:51,399 Speaker 4: of fifty countries in the world that are a more 378 00:18:51,400 --> 00:18:53,760 Speaker 4: than fifty cent discount of the US, and they're only 379 00:18:53,760 --> 00:18:56,560 Speaker 4: scor faster over the last few years. Places like that 380 00:18:56,600 --> 00:18:59,280 Speaker 4: are going to do really, really well. Greece is one 381 00:18:59,280 --> 00:19:00,760 Speaker 4: of them. I mean, who talks about Greeen. 382 00:19:00,840 --> 00:19:03,920 Speaker 6: Nobody, Nobody sunys about green That's amazing. That's on equity side. 383 00:19:03,920 --> 00:19:05,679 Speaker 6: So for spanding, Greece is on the equity side, not 384 00:19:05,720 --> 00:19:06,240 Speaker 6: the bond side. 385 00:19:06,359 --> 00:19:09,159 Speaker 4: That's all. The equity side absolutely bonds, you know, I 386 00:19:09,200 --> 00:19:13,600 Speaker 4: mean fine, US bond's great, exactly. 387 00:19:13,640 --> 00:19:16,040 Speaker 3: All right, So you woke up two weeks ago in 388 00:19:16,080 --> 00:19:19,359 Speaker 3: London South the Americans elect themselves in your president. We 389 00:19:19,400 --> 00:19:21,040 Speaker 3: now know that how the Congress is going to look like. 390 00:19:21,040 --> 00:19:23,959 Speaker 3: Did that change your view at all about how to invest? 391 00:19:24,320 --> 00:19:27,880 Speaker 4: Well? At the margin? Potentially you get a bit more 392 00:19:27,880 --> 00:19:30,520 Speaker 4: fiscal and a bit less sort of consumption growth out 393 00:19:30,520 --> 00:19:32,000 Speaker 4: of the States, So there's a bit of a risk 394 00:19:32,000 --> 00:19:34,720 Speaker 4: at that, but actually made me feel more bullish, you know. 395 00:19:34,840 --> 00:19:37,479 Speaker 4: I'm I'm a political, I'm a bridge so I don't 396 00:19:37,280 --> 00:19:40,920 Speaker 4: have nothing to do with me. But looking at it objectively, 397 00:19:41,240 --> 00:19:43,880 Speaker 4: it seems much more pro growth with the with the 398 00:19:44,000 --> 00:19:47,000 Speaker 4: with the exception of the tariff's risk basically, So yeah, 399 00:19:47,080 --> 00:19:49,560 Speaker 4: maybe more bullish cyclcal stuff, but. 400 00:19:49,560 --> 00:19:51,680 Speaker 6: I guess what it does matter is the fiscal side 401 00:19:51,720 --> 00:19:53,960 Speaker 6: and the fiscal policy. In which case, where do you 402 00:19:53,960 --> 00:19:55,119 Speaker 6: invest in small caps? 403 00:19:55,119 --> 00:19:55,520 Speaker 9: Say? 404 00:19:56,920 --> 00:20:00,720 Speaker 4: Well, you know, I think the consumers going to do well. 405 00:20:00,920 --> 00:20:03,800 Speaker 4: There's there's untapped wealth in the US and the UK 406 00:20:03,880 --> 00:20:06,639 Speaker 4: and southern Europe, and so I like consumer cyclicals, and 407 00:20:06,680 --> 00:20:08,439 Speaker 4: I think bonds are coming down, so I like housing 408 00:20:08,440 --> 00:20:10,840 Speaker 4: related stuff. So all of that I think is good. 409 00:20:10,960 --> 00:20:13,960 Speaker 4: I'd be cautious on the biotech because there's also some 410 00:20:14,080 --> 00:20:17,600 Speaker 4: policy changes coming around the corner. But yeah, I think 411 00:20:17,680 --> 00:20:19,960 Speaker 4: I think there's a lot to go for in the 412 00:20:19,960 --> 00:20:20,840 Speaker 4: mid and smalls. 413 00:20:21,000 --> 00:20:22,640 Speaker 6: All right, Chris, it's always good to see you. Thanks 414 00:20:22,640 --> 00:20:24,479 Speaker 6: for coming by. Great to see you in person at 415 00:20:24,520 --> 00:20:27,520 Speaker 6: Chris Watlin, CEO and chief market strategist of lomuew Economics. 416 00:20:27,520 --> 00:20:31,760 Speaker 6: I read read their weekly report every Friday. Good really 417 00:20:31,800 --> 00:20:33,760 Speaker 6: eleven thirty in the morning. But I'm focused. It's just 418 00:20:33,760 --> 00:20:36,760 Speaker 6: paying commercial breaky. You gotta stay car around to engage. 419 00:20:38,280 --> 00:20:42,160 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 420 00:20:42,240 --> 00:20:44,760 Speaker 2: weekdays at ten am Eastern on Apple. 421 00:20:44,520 --> 00:20:47,320 Speaker 7: Card Play and Android Otto with the Bloomberg Business. 422 00:20:47,680 --> 00:20:50,520 Speaker 2: You can also listen live on Amazon Alexa from our 423 00:20:50,520 --> 00:20:55,200 Speaker 2: flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 424 00:20:56,480 --> 00:20:59,320 Speaker 6: Alex steal alongside Pulse. We need this Bloomberg and Talidence Radio. 425 00:20:59,359 --> 00:21:01,560 Speaker 6: We bring you all the have news in business, economics 426 00:21:01,600 --> 00:21:03,720 Speaker 6: and finance. There are lens of our Boomberg Intelligence folks. 427 00:21:03,760 --> 00:21:05,920 Speaker 6: They cover two thousand companies in one hundred and thirty 428 00:21:06,000 --> 00:21:09,480 Speaker 6: industries worldwide, and here is one of the best of them. 429 00:21:09,560 --> 00:21:12,440 Speaker 6: Man keep saying, Bloomberg Intelligence, senior tech industry analyst. 430 00:21:12,800 --> 00:21:13,320 Speaker 8: He joins us. 431 00:21:13,359 --> 00:21:16,360 Speaker 6: Now, a lot of things to pick about here. Obviously 432 00:21:16,400 --> 00:21:19,760 Speaker 6: in Vidia tomorrow definitely part of the story. But one 433 00:21:19,880 --> 00:21:23,360 Speaker 6: is Google and the DOJ pushing Google to sell Chrome 434 00:21:23,800 --> 00:21:25,320 Speaker 6: to break up its search monopoly. 435 00:21:25,880 --> 00:21:26,760 Speaker 8: How seriously do. 436 00:21:26,720 --> 00:21:28,440 Speaker 6: We need to take this concerning there's gonna be like 437 00:21:28,440 --> 00:21:30,800 Speaker 6: a new White House and a new DOJ in a 438 00:21:30,840 --> 00:21:31,520 Speaker 6: few months. 439 00:21:31,960 --> 00:21:32,160 Speaker 1: Yeah. 440 00:21:32,200 --> 00:21:36,320 Speaker 9: Look, I think it's still uncertain who President and Elect 441 00:21:36,320 --> 00:21:40,560 Speaker 9: Trump is going to appoint to run the agency, and 442 00:21:40,720 --> 00:21:43,320 Speaker 9: a lot depends on how hard they want to go 443 00:21:44,280 --> 00:21:47,480 Speaker 9: against the likes of Alphabet and Meta. But in this case, 444 00:21:47,520 --> 00:21:50,800 Speaker 9: the fact that DOJ is proposing and we know the 445 00:21:50,920 --> 00:21:54,280 Speaker 9: Vice President elect he is not opposed to, you know, 446 00:21:54,320 --> 00:21:57,879 Speaker 9: breaking up these big tech companies. So clearly it is 447 00:21:57,920 --> 00:22:02,000 Speaker 9: a risk, and I think when you look at what 448 00:22:02,040 --> 00:22:06,120 Speaker 9: they're proposing, you know, breaking Chrome. You could argue there 449 00:22:06,200 --> 00:22:10,679 Speaker 9: are independent browser companies out there, like Mozilla, so Chrome 450 00:22:10,760 --> 00:22:16,080 Speaker 9: could exist as an independent company. But it's very hard 451 00:22:16,119 --> 00:22:19,240 Speaker 9: to see how you can make a business model out 452 00:22:19,240 --> 00:22:23,080 Speaker 9: of Chrome. And then it does hurt, you know, Google's engagement. 453 00:22:23,400 --> 00:22:27,240 Speaker 9: In the end. This is the distribution for Google, the 454 00:22:27,520 --> 00:22:31,000 Speaker 9: owning the Android operating system and owning the browser. You 455 00:22:31,080 --> 00:22:34,720 Speaker 9: take out the browser, their distribution for search goes away. 456 00:22:34,760 --> 00:22:38,119 Speaker 9: I mean, Google Search will still be the dominant search engine. 457 00:22:38,480 --> 00:22:43,119 Speaker 9: But in the Internet world it's about owning distribution. That's 458 00:22:43,160 --> 00:22:46,720 Speaker 9: why Apple has so much cloud, That's why you know, 459 00:22:47,200 --> 00:22:50,639 Speaker 9: owning Android and Chrome or the crown jewels. When it 460 00:22:50,680 --> 00:22:53,119 Speaker 9: comes to Alphabet as a franchise, so many deep just 461 00:22:53,119 --> 00:22:55,080 Speaker 9: painted is a pretty dire picture there. 462 00:22:55,600 --> 00:22:59,880 Speaker 3: Guess what stocks up today? Why because people like gen 463 00:23:00,320 --> 00:23:02,720 Speaker 3: who covers litigation for us, this is her sense. I 464 00:23:02,720 --> 00:23:04,840 Speaker 3: know you didn't write this exactly, I know her writing. 465 00:23:05,119 --> 00:23:07,520 Speaker 3: If Alphabet were forced by the DOJ to sell its 466 00:23:07,560 --> 00:23:11,640 Speaker 3: Chrome browser Comma, which we view as unlikely. So that's 467 00:23:11,720 --> 00:23:14,000 Speaker 3: kind of the takeaway there soon, Jenry tells me it's 468 00:23:14,040 --> 00:23:17,520 Speaker 3: kind of unlikely, but still I guess we have to 469 00:23:17,560 --> 00:23:20,560 Speaker 3: expect or I guess Google investors have to expect some 470 00:23:20,600 --> 00:23:23,560 Speaker 3: types of modifications to behavior in their business models. But 471 00:23:23,760 --> 00:23:25,639 Speaker 3: I guess on the margin the market saying it's not 472 00:23:25,640 --> 00:23:27,240 Speaker 3: going to be that material. 473 00:23:27,080 --> 00:23:28,560 Speaker 4: It's reflected in the stock. 474 00:23:28,840 --> 00:23:31,439 Speaker 9: In the end, it comes down to what is the 475 00:23:31,560 --> 00:23:34,879 Speaker 9: valuation right now? What is baked into the stock, and 476 00:23:35,240 --> 00:23:38,200 Speaker 9: all the bad news around regulation is in the stock. 477 00:23:38,280 --> 00:23:41,000 Speaker 9: That's why alphabet is not trading at thirty times earning. 478 00:23:41,080 --> 00:23:44,280 Speaker 9: It's trading at a discount to the likes of Microsoft. 479 00:23:44,359 --> 00:23:48,800 Speaker 9: So look, I mean, I think they will have to 480 00:23:48,800 --> 00:23:52,879 Speaker 9: make remedies, even if it's not a forced syvestiture. They're 481 00:23:52,920 --> 00:23:56,800 Speaker 9: already starting to pair back when it comes to at targeting, 482 00:23:56,960 --> 00:23:59,800 Speaker 9: how much data they mix and match across their family, 483 00:24:00,400 --> 00:24:05,199 Speaker 9: whether it's YouTube, maps, search. So from that perspective, I 484 00:24:05,240 --> 00:24:09,320 Speaker 9: think they are going to try and do these measures 485 00:24:09,359 --> 00:24:12,520 Speaker 9: on their own, and you know, just to convince the 486 00:24:12,600 --> 00:24:16,800 Speaker 9: regulators that owning the browser is not something that gives 487 00:24:16,840 --> 00:24:19,520 Speaker 9: them an advantage, and maybe they have to expose the 488 00:24:19,640 --> 00:24:23,560 Speaker 9: data that they're using for targeting the users. When it 489 00:24:23,600 --> 00:24:26,200 Speaker 9: comes to ads, that's the other part of the remedy here. 490 00:24:26,040 --> 00:24:27,879 Speaker 6: And this just means like then they're getting ahead of it, 491 00:24:28,240 --> 00:24:30,200 Speaker 6: right then they're getting ahead of anything that may come 492 00:24:30,359 --> 00:24:35,240 Speaker 6: from DC or Europe at any time. In essence, what 493 00:24:35,320 --> 00:24:37,040 Speaker 6: are you going to be looking kind of go to 494 00:24:37,160 --> 00:24:39,919 Speaker 6: video now it's it's been a two minutes, okay, so 495 00:24:40,000 --> 00:24:41,960 Speaker 6: tomorrow in video? Or what am I looking at? 496 00:24:42,400 --> 00:24:44,639 Speaker 9: I mean, there's so many things when it comes to 497 00:24:44,920 --> 00:24:49,840 Speaker 9: the continuation of this Genni wave. This is the Belvether company. 498 00:24:49,880 --> 00:24:53,680 Speaker 9: And look, when it comes to data center spend, it's 499 00:24:53,800 --> 00:24:58,840 Speaker 9: all about how scalable the models are going to be 500 00:24:59,040 --> 00:25:02,480 Speaker 9: in terms of you know, whether it's Chat, GPT or 501 00:25:02,760 --> 00:25:06,560 Speaker 9: Google Gemini, how big of a cluster they want to 502 00:25:06,640 --> 00:25:10,399 Speaker 9: create for next year. Because right now everyone is looking 503 00:25:10,440 --> 00:25:13,880 Speaker 9: at the compute that you know, open Ai has used 504 00:25:13,880 --> 00:25:16,760 Speaker 9: for GPT four and they're saying they already have a 505 00:25:16,840 --> 00:25:20,359 Speaker 9: trillion plus parameter model. Can it get any bigger? The 506 00:25:20,480 --> 00:25:23,520 Speaker 9: answer from Nvidia is yes, we are giving you a 507 00:25:23,600 --> 00:25:26,919 Speaker 9: more powerful chip and you can create a bigger cluster 508 00:25:27,040 --> 00:25:30,119 Speaker 9: next year to train your models. So if that's the case, 509 00:25:30,480 --> 00:25:33,520 Speaker 9: then the computer requirements continue to scale up, which is 510 00:25:33,560 --> 00:25:35,879 Speaker 9: what they are betting on. In terms of the data center. 511 00:25:36,280 --> 00:25:38,800 Speaker 9: Upward revisions we have seen the whole of this year, 512 00:25:38,880 --> 00:25:42,280 Speaker 9: and they think the scaling of the foundational models is 513 00:25:42,320 --> 00:25:45,920 Speaker 9: going to continue. The moment you hear about a plateauing 514 00:25:46,520 --> 00:25:50,240 Speaker 9: of the foundational models, that's when you know, you know 515 00:25:50,400 --> 00:25:52,879 Speaker 9: you're not going to see the upward revisions we have 516 00:25:52,960 --> 00:25:55,680 Speaker 9: seen for in radio's data center in video. 517 00:25:55,720 --> 00:25:57,480 Speaker 3: Stock is up three percent today, up one hundred and 518 00:25:57,520 --> 00:25:59,960 Speaker 3: ninety percent year to date with a three point five 519 00:26:00,119 --> 00:26:03,000 Speaker 3: trillion dollar market cap. Dan Eyes and what Push Securities 520 00:26:03,080 --> 00:26:05,280 Speaker 3: was at with a tweet this morning saying he believes 521 00:26:05,920 --> 00:26:08,119 Speaker 3: that they will beat on revs by two billion dollars 522 00:26:08,119 --> 00:26:11,120 Speaker 3: to take their guidance up by another two billion dollars. 523 00:26:11,160 --> 00:26:14,199 Speaker 4: You cause that that dropped the mic, so. 524 00:26:14,320 --> 00:26:16,760 Speaker 9: That may not be enough to drive the multiple. See 525 00:26:16,800 --> 00:26:17,280 Speaker 9: that's the thing. 526 00:26:17,560 --> 00:26:20,120 Speaker 3: Yeah, we're talking about earnings what is. 527 00:26:20,040 --> 00:26:22,640 Speaker 9: Reflected in the stock. In the case of Nvidia, last 528 00:26:22,680 --> 00:26:25,199 Speaker 9: time around when they reported earnings, the stock had a 529 00:26:25,320 --> 00:26:30,840 Speaker 9: fifteen percent downroad draft because everyone had such high expectations 530 00:26:31,080 --> 00:26:33,920 Speaker 9: that even though they had a beaten raise, there wasn't enough. 531 00:26:34,280 --> 00:26:37,520 Speaker 3: So the play man. Yeah, so, but even you came 532 00:26:37,560 --> 00:26:40,520 Speaker 3: in here probably six quarters ago and said, as long 533 00:26:40,560 --> 00:26:42,520 Speaker 3: as they keep doing it, the stock will keep working. 534 00:26:42,560 --> 00:26:45,479 Speaker 3: But at some point with that that quarter's gonna come 535 00:26:45,480 --> 00:26:46,040 Speaker 3: where they're going. 536 00:26:46,040 --> 00:26:49,240 Speaker 9: To because it's not recurring revenue. And in the end 537 00:26:49,400 --> 00:26:52,520 Speaker 9: the moment you're talking about digestion. Okay, if we have 538 00:26:52,640 --> 00:26:55,760 Speaker 9: had enough in terms of scaling. Now we are focusing 539 00:26:55,800 --> 00:26:59,520 Speaker 9: on inferencing and you know, deploying this. We're not getting 540 00:26:59,560 --> 00:27:02,760 Speaker 9: the Bengal for mark when it comes to scaling the models. 541 00:27:03,040 --> 00:27:06,439 Speaker 9: That's when Nvidia has to find another way to you know, 542 00:27:06,560 --> 00:27:07,960 Speaker 9: keep driving to growth. 543 00:27:08,000 --> 00:27:10,240 Speaker 6: All Right, Mandy, we appreciate you and good to see you. 544 00:27:10,280 --> 00:27:11,919 Speaker 6: Thank you so much. Man keep saying, no doubt we'll 545 00:27:11,960 --> 00:27:13,800 Speaker 6: see him every day for the next few days. He's 546 00:27:13,800 --> 00:27:17,240 Speaker 6: senior technology analyst over at Bloomberg Intelligence. 547 00:27:18,800 --> 00:27:22,680 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 548 00:27:22,760 --> 00:27:26,679 Speaker 2: weekdays at ten am Eastern on Applecarplay and Android Auto 549 00:27:26,720 --> 00:27:29,480 Speaker 2: with the Bloomberg Business app. You can also listen live 550 00:27:29,560 --> 00:27:32,760 Speaker 2: on Amazon Alexa from our flagship New York station. Just 551 00:27:32,800 --> 00:27:35,720 Speaker 2: say Alexa Play Bloomberg eleven thirty. 552 00:27:36,800 --> 00:27:38,920 Speaker 3: Alex Deel, Paul Swening. We're live here in our Bloomberg 553 00:27:38,960 --> 00:27:41,679 Speaker 3: Interactive Proker Studio. We're streaming live on YouTube as well 554 00:27:41,680 --> 00:27:43,840 Speaker 3: as a head over to YouTube dot com and search 555 00:27:43,880 --> 00:27:46,679 Speaker 3: Bloomberg Podcast and that's where you'll find us. David Bonsen 556 00:27:46,720 --> 00:27:50,600 Speaker 3: joints us here. He's the chief vessel officer at Bonson Group. 557 00:27:51,240 --> 00:27:54,680 Speaker 3: They about six and a half billion dollars assets under management. David, 558 00:27:54,680 --> 00:27:57,440 Speaker 3: thanks so much for joining us here. You woke up, 559 00:27:58,160 --> 00:28:01,320 Speaker 3: you know, two weeks ago almost we have a new 560 00:28:01,320 --> 00:28:04,639 Speaker 3: president in the White House in starting January, we're going 561 00:28:04,680 --> 00:28:07,760 Speaker 3: to have a new Congress as well. Did that change 562 00:28:07,760 --> 00:28:11,240 Speaker 3: your outlook, your investment outlook at all? 563 00:28:11,640 --> 00:28:14,240 Speaker 10: It did not, in the sense that the primary things 564 00:28:14,240 --> 00:28:16,680 Speaker 10: that drive markets we felt were not going to move 565 00:28:16,720 --> 00:28:21,560 Speaker 10: a ton, which is around the earnings profile, earnings expectations, 566 00:28:21,640 --> 00:28:28,040 Speaker 10: and the monetary policy. However, within the weeds, it reinforced 567 00:28:28,119 --> 00:28:31,199 Speaker 10: our optimism in the energy sector, which has certainly been 568 00:28:31,320 --> 00:28:34,560 Speaker 10: very validated over the last couple of weeks, and the 569 00:28:34,560 --> 00:28:38,000 Speaker 10: financial sector. That was an area where we thought policy 570 00:28:38,040 --> 00:28:41,160 Speaker 10: would make a difference, and particularly some of President Trump's 571 00:28:41,200 --> 00:28:44,840 Speaker 10: policies more favorable in those two sectors, and Vice President 572 00:28:44,880 --> 00:28:45,720 Speaker 10: Harris is less so. 573 00:28:47,120 --> 00:28:51,040 Speaker 3: From the earnings perspective, you mentioned earnings obviously driving stocks here. 574 00:28:51,080 --> 00:28:52,480 Speaker 3: We're just kind of finishing up with some of the 575 00:28:52,480 --> 00:28:56,440 Speaker 3: retailers this week. What is your view of the earnings 576 00:28:56,440 --> 00:28:58,520 Speaker 3: profile this S and P five hundred these days? 577 00:28:59,200 --> 00:29:02,440 Speaker 10: I think that the earning this profile is obviously very good, 578 00:29:02,920 --> 00:29:05,480 Speaker 10: and that the growth of earnings next year is very good, 579 00:29:06,000 --> 00:29:09,160 Speaker 10: and that that is fully and completely priced in the market, 580 00:29:09,640 --> 00:29:14,160 Speaker 10: and so the risk is really very little that earnings disappoint. 581 00:29:14,280 --> 00:29:17,800 Speaker 10: I mean, that's always possible, there's always issues that could 582 00:29:17,840 --> 00:29:21,160 Speaker 10: disrupt expectations. We happen to have a very very good 583 00:29:21,200 --> 00:29:24,080 Speaker 10: track record in our financial markets, so being able to 584 00:29:24,080 --> 00:29:29,000 Speaker 10: project earnings. However, you're paying twenty two, twenty three times 585 00:29:29,080 --> 00:29:33,040 Speaker 10: next year's best case earnings right now, and so I 586 00:29:33,320 --> 00:29:34,720 Speaker 10: find that problematic. 587 00:29:35,800 --> 00:29:37,080 Speaker 8: So where else would you go? 588 00:29:37,240 --> 00:29:37,400 Speaker 9: Then? 589 00:29:37,560 --> 00:29:38,760 Speaker 6: If that feels too expensive? 590 00:29:39,760 --> 00:29:43,240 Speaker 10: We would not buy the entire index, especially where it's 591 00:29:43,280 --> 00:29:46,840 Speaker 10: cap weighted, especially where a lot of the big tech 592 00:29:46,960 --> 00:29:50,520 Speaker 10: names that are big profit earners are trading it over 593 00:29:50,600 --> 00:29:54,360 Speaker 10: fifty times, and if you're looking at trading earnings, they're 594 00:29:54,400 --> 00:29:57,760 Speaker 10: trading at seventy or eighty times earnings. Therefore, you have 595 00:29:57,880 --> 00:30:01,640 Speaker 10: to be more selective, and we're more value biased at 596 00:30:01,640 --> 00:30:04,720 Speaker 10: our firm and very divid and growth oriented. But some 597 00:30:04,800 --> 00:30:07,120 Speaker 10: of the healthcare names, some of the financial names I 598 00:30:07,160 --> 00:30:10,720 Speaker 10: mentioned energy. You know, right now, if everything goes perfectly 599 00:30:10,760 --> 00:30:14,760 Speaker 10: for mag seven, it's about twenty one percent of next 600 00:30:14,840 --> 00:30:21,160 Speaker 10: year's earns. It's thirty three percent of the financial So 601 00:30:21,240 --> 00:30:25,880 Speaker 10: the only two sectors thanks projections are more than what 602 00:30:25,960 --> 00:30:28,440 Speaker 10: they represent within the S and P. So we just 603 00:30:28,480 --> 00:30:30,640 Speaker 10: recommend people be more bottom up right now. 604 00:30:30,600 --> 00:30:35,080 Speaker 3: All right, So within let's save energy, for example, where 605 00:30:35,080 --> 00:30:37,640 Speaker 3: in the energy space are you seeing opportunities. 606 00:30:38,120 --> 00:30:40,840 Speaker 10: Very very heavily in midstream? And that's kind of interesting 607 00:30:40,840 --> 00:30:42,520 Speaker 10: to say, because it's had a heck of a year, 608 00:30:42,880 --> 00:30:45,920 Speaker 10: and really since November of twenty twenty has had quite 609 00:30:45,920 --> 00:30:48,680 Speaker 10: a great tear. But it was doing so from just 610 00:30:48,920 --> 00:30:52,760 Speaker 10: decimated prices out of COVID. Now not only have the 611 00:30:52,800 --> 00:30:56,840 Speaker 10: pricing environment and the psychology and investor sentiment got better, 612 00:30:57,120 --> 00:31:01,040 Speaker 10: but the fundamentals are dramatically better. Way less debt, less leverage, 613 00:31:01,360 --> 00:31:04,680 Speaker 10: way more cash flow coverage, and certainly right now a 614 00:31:04,680 --> 00:31:07,080 Speaker 10: policy you can see from the new Secretary of Energy 615 00:31:07,120 --> 00:31:11,080 Speaker 10: coming in the Secretary of Interior. There is a philosophical 616 00:31:11,160 --> 00:31:15,080 Speaker 10: bend that is pro our ability to get permits for 617 00:31:15,160 --> 00:31:18,600 Speaker 10: new oil and gas pipeline and to export LNG. These 618 00:31:18,640 --> 00:31:20,320 Speaker 10: two things are huge growth sectors. 619 00:31:20,600 --> 00:31:22,680 Speaker 6: Yeah, meaning that you can actually put a shovel in 620 00:31:22,760 --> 00:31:24,520 Speaker 6: a ground to build a pipeline. 621 00:31:24,520 --> 00:31:26,280 Speaker 4: Maybe that's right. 622 00:31:26,320 --> 00:31:27,840 Speaker 10: And so what you have right now is a lot 623 00:31:27,840 --> 00:31:30,520 Speaker 10: of value in the current pipelines because they're all we have. 624 00:31:31,080 --> 00:31:34,200 Speaker 10: And then now you get the opportunity to build new pipelines, 625 00:31:34,240 --> 00:31:38,120 Speaker 10: which I think adds to the growth profile of the sector. 626 00:31:39,400 --> 00:31:41,640 Speaker 3: So, Dave, how about in financials here? I mean, do 627 00:31:41,680 --> 00:31:44,120 Speaker 3: you stick with the JP Morgan's Goldman Sachs is of 628 00:31:44,600 --> 00:31:46,040 Speaker 3: the day or do you try to get little bit 629 00:31:46,040 --> 00:31:46,720 Speaker 3: more specialized. 630 00:31:47,560 --> 00:31:50,200 Speaker 10: Well, so we own JP Morgan and have owned it 631 00:31:50,240 --> 00:31:52,400 Speaker 10: since March two thousand and nine, and it's one of 632 00:31:52,440 --> 00:31:56,080 Speaker 10: the most profitable investments we've ever made, and we have 633 00:31:56,320 --> 00:31:58,720 Speaker 10: had to tick down our waiting a little bit because 634 00:31:58,760 --> 00:32:01,680 Speaker 10: it has just done so well. But we're not abandoning it. 635 00:32:01,720 --> 00:32:04,440 Speaker 10: They're the cream of the crop and there isn't another 636 00:32:04,480 --> 00:32:07,600 Speaker 10: big bank we want to own. We also as far 637 00:32:07,600 --> 00:32:11,360 Speaker 10: as big commercial banks, Morgan Stanley is the name we own, 638 00:32:11,480 --> 00:32:15,400 Speaker 10: not Goldman Sachs. They're actually both fantastic companies, great brands, 639 00:32:15,440 --> 00:32:19,120 Speaker 10: great franchises. It's just the dividend growth. We think Ted Pick, 640 00:32:19,160 --> 00:32:22,080 Speaker 10: the new CEO at Morgan Stanley. I joke, he's the 641 00:32:22,120 --> 00:32:26,920 Speaker 10: person in America second most passionate about dividend growth, with 642 00:32:27,040 --> 00:32:30,840 Speaker 10: myself being first. And we think Morgan Stanley's got a 643 00:32:30,880 --> 00:32:35,160 Speaker 10: great fee oriented business that's much less lumpy and much 644 00:32:35,240 --> 00:32:40,400 Speaker 10: less you know, dependent upon institutional securities and investment banking 645 00:32:40,880 --> 00:32:43,640 Speaker 10: versus Goldman Sachs. They are They're wealth management and asset 646 00:32:43,680 --> 00:32:47,000 Speaker 10: management are really annuittized at Morgan Stanley. 647 00:32:47,240 --> 00:32:49,520 Speaker 6: David, we really appreciate it. We always love your perspective 648 00:32:49,520 --> 00:32:51,600 Speaker 6: on this. David Bonson, Chief in Estment Officer at the 649 00:32:51,600 --> 00:32:53,520 Speaker 6: Bonson Group, Thank you very much. 650 00:32:55,120 --> 00:32:59,000 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 651 00:32:59,080 --> 00:33:02,000 Speaker 2: weekdays at ten Eastern on applecar. 652 00:33:01,640 --> 00:33:04,440 Speaker 7: Play and Android Otto with the Bloomberg Business App. 653 00:33:04,520 --> 00:33:07,360 Speaker 2: You can also listen live on Amazon Alexa from our 654 00:33:07,360 --> 00:33:12,040 Speaker 2: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 655 00:33:12,880 --> 00:33:14,480 Speaker 6: One of the best performing stocks in the S and 656 00:33:14,520 --> 00:33:17,840 Speaker 6: P today yesterday, you name it is super Micro. Here 657 00:33:17,840 --> 00:33:21,600 Speaker 6: with the latest is Wujin Hoo Bloomberg Intelligence Senior technology Analyst. 658 00:33:21,880 --> 00:33:24,000 Speaker 6: So the latest is bdo that's going to be their 659 00:33:24,000 --> 00:33:27,920 Speaker 6: new auditor. That's not like a giant, huge name though, right. 660 00:33:27,920 --> 00:33:29,680 Speaker 6: Are you disappointed in the name or is it just 661 00:33:29,720 --> 00:33:31,280 Speaker 6: the fact that hey, they have someone? 662 00:33:32,520 --> 00:33:35,800 Speaker 11: Yeah, Hey, Alex, thanks for having me on the fact 663 00:33:35,840 --> 00:33:39,440 Speaker 11: that they actually had got an auditor, given what they've 664 00:33:39,480 --> 00:33:42,640 Speaker 11: gone through over the last two to three months, is 665 00:33:42,680 --> 00:33:44,280 Speaker 11: actually positive news for them. 666 00:33:44,720 --> 00:33:46,720 Speaker 3: Which when I kind of just look at this story again, 667 00:33:46,760 --> 00:33:49,920 Speaker 3: they've had some real concerns with their auditors, and some 668 00:33:50,000 --> 00:33:51,840 Speaker 3: of the auditors concerns about the risk controls. 669 00:33:51,880 --> 00:33:52,720 Speaker 5: I guess at the company. 670 00:33:52,960 --> 00:33:55,880 Speaker 3: Can you give us your opinion of management of this 671 00:33:55,920 --> 00:33:57,960 Speaker 3: company and the board of this company. 672 00:33:58,920 --> 00:34:02,880 Speaker 11: Yeah. You know, one of the reasons why I and 673 00:34:03,040 --> 00:34:06,880 Speaker 11: Y resigned as an auditor as part of the AK 674 00:34:07,040 --> 00:34:11,160 Speaker 11: filing was that there were some integrity issues that they 675 00:34:11,200 --> 00:34:15,200 Speaker 11: found as part of trying to get some financial documents. 676 00:34:15,239 --> 00:34:18,720 Speaker 11: You know, Paul, I haven't seen the word integrity issues 677 00:34:19,239 --> 00:34:24,000 Speaker 11: in an AK filing or an auditor resignation since back 678 00:34:24,040 --> 00:34:26,680 Speaker 11: in the Enron days. I'm not saying that this isn't Enron, 679 00:34:27,200 --> 00:34:31,280 Speaker 11: but this is something that you don't typically find in filing. 680 00:34:31,400 --> 00:34:33,919 Speaker 11: So you know, I have called for you may need 681 00:34:33,960 --> 00:34:37,880 Speaker 11: an overhaul of the board or greater independence and possibly 682 00:34:38,000 --> 00:34:40,640 Speaker 11: change of the CFO, because this is not the first 683 00:34:40,719 --> 00:34:43,400 Speaker 11: rodeo of having delayed filings. 684 00:34:43,840 --> 00:34:47,520 Speaker 6: Do you feel like the stock move is justified or 685 00:34:47,520 --> 00:34:49,279 Speaker 6: does it have more to go? I mean, I'm taking 686 00:34:49,280 --> 00:34:50,440 Speaker 6: a look at them move in the last couple of 687 00:34:50,480 --> 00:34:52,120 Speaker 6: days and it's tremendous. But if you look at a 688 00:34:52,120 --> 00:34:54,240 Speaker 6: one year chart, this move is at pittance. 689 00:34:55,520 --> 00:34:59,439 Speaker 11: Yeah. So if we think about the recent moves, there's 690 00:34:59,480 --> 00:35:03,920 Speaker 11: actually been more headline risk that's been driving this doct 691 00:35:04,200 --> 00:35:07,319 Speaker 11: than the fundamentals. I think much of this is more 692 00:35:07,360 --> 00:35:11,160 Speaker 11: of a relief rally that they're not going to get delisted. Now, 693 00:35:11,239 --> 00:35:14,840 Speaker 11: delisting would have meant a couple of things. First of all, 694 00:35:15,000 --> 00:35:17,399 Speaker 11: for they get delisted and it is going to start 695 00:35:17,440 --> 00:35:21,439 Speaker 11: some force selling, but it also potentially well it would 696 00:35:21,440 --> 00:35:23,680 Speaker 11: have forced the removal of the S and P five hundred, 697 00:35:24,000 --> 00:35:26,640 Speaker 11: which would have been another round of force selling when 698 00:35:26,680 --> 00:35:31,399 Speaker 11: the rebalancing comes in December the fifth, So that eliminates 699 00:35:31,920 --> 00:35:34,799 Speaker 11: that risk for super micro So there is some relief there, 700 00:35:34,800 --> 00:35:36,200 Speaker 11: but they're still not out of the woods. 701 00:35:37,200 --> 00:35:40,040 Speaker 3: Where does this company fit into kind of your part 702 00:35:40,080 --> 00:35:41,960 Speaker 3: of the tech stack? Wouge in terms of being a 703 00:35:42,000 --> 00:35:45,239 Speaker 3: supplier of you know, hardware and components and things like that, 704 00:35:45,280 --> 00:35:47,880 Speaker 3: because I mean it's got twenty five billion of I 705 00:35:47,920 --> 00:35:50,600 Speaker 3: guess revenue. I'm just looking at the FA function forecasted 706 00:35:50,680 --> 00:35:51,480 Speaker 3: for June twenty five. 707 00:35:51,520 --> 00:35:52,520 Speaker 4: I mean it's a big company. 708 00:35:53,719 --> 00:35:57,880 Speaker 11: Yeah. Look, it's all about AI AI AI. I'm in 709 00:35:57,920 --> 00:36:01,800 Speaker 11: Hotlanta today for an A I conference and quite frankly, 710 00:36:01,880 --> 00:36:05,040 Speaker 11: super Micro is going to take a prominent role at 711 00:36:05,040 --> 00:36:10,680 Speaker 11: this conference to get customers. The question I have is 712 00:36:10,719 --> 00:36:13,759 Speaker 11: how reliable are those estimates. Keep in mind there's been 713 00:36:13,920 --> 00:36:18,160 Speaker 11: several suspend coverage suspensions, and I don't know how up 714 00:36:18,160 --> 00:36:19,239 Speaker 11: to date those estimates are. 715 00:36:19,400 --> 00:36:21,760 Speaker 6: Who are the customers for super Micro? 716 00:36:22,719 --> 00:36:25,200 Speaker 11: Yeah, so we do know that there are a couple 717 00:36:25,200 --> 00:36:28,920 Speaker 11: of large There's one large cloud customer which we suspect 718 00:36:29,000 --> 00:36:32,279 Speaker 11: is Meta, but it's a tier two custom Tier two 719 00:36:32,280 --> 00:36:36,080 Speaker 11: cloud customers company that may be filing for an IPO 720 00:36:36,239 --> 00:36:41,680 Speaker 11: called core Weave, and also Tesla's x AI. They bought 721 00:36:42,120 --> 00:36:45,560 Speaker 11: probably about one point five billion dollars in equipment from 722 00:36:45,600 --> 00:36:46,879 Speaker 11: super Micro this past year. 723 00:36:47,920 --> 00:36:50,160 Speaker 3: And which to your point about the analyst coverage, I 724 00:36:50,320 --> 00:36:53,399 Speaker 3: just pulled up the A and R function for analysts recommendations. 725 00:36:54,000 --> 00:36:58,480 Speaker 3: Most or a lot of the annals have suspended coverage 726 00:36:59,040 --> 00:37:01,680 Speaker 3: or not rate is kind of what we see. 727 00:37:01,719 --> 00:37:02,319 Speaker 2: So we of the. 728 00:37:02,239 --> 00:37:04,120 Speaker 3: Ones that do have a rating on their three buys, 729 00:37:04,280 --> 00:37:07,640 Speaker 3: seven holds, and two sells. So it sounds like this 730 00:37:07,680 --> 00:37:09,600 Speaker 3: company has a lot of ground ahead of it to 731 00:37:09,640 --> 00:37:12,960 Speaker 3: rebuild confidence from the analyst community, probably their customers, and 732 00:37:13,000 --> 00:37:15,520 Speaker 3: from investors. Is that kind of your. 733 00:37:15,400 --> 00:37:19,680 Speaker 11: Thought, Yeah, yeah, I mean, look, I think some of 734 00:37:19,719 --> 00:37:22,520 Speaker 11: the headline risk has been eliminated for now, or at 735 00:37:22,600 --> 00:37:26,920 Speaker 11: least extended. You know, they only received an extension from 736 00:37:26,960 --> 00:37:31,040 Speaker 11: the Nasdaq. The next milestone, quite frankly, is probably February 737 00:37:31,120 --> 00:37:35,080 Speaker 11: twenty fifth, when if they don't file their filings on 738 00:37:35,160 --> 00:37:39,040 Speaker 11: time by that time, the delisting questions will start arising again. 739 00:37:39,480 --> 00:37:41,120 Speaker 11: They essentially kick the can down the road. 740 00:37:42,080 --> 00:37:44,120 Speaker 6: This might be a super silly question. At one point 741 00:37:44,120 --> 00:37:45,880 Speaker 6: I probably knew the answer to this, But where does 742 00:37:45,920 --> 00:37:48,600 Speaker 6: super Micro sit in the AI play stack? 743 00:37:50,040 --> 00:37:53,880 Speaker 11: Yeah, so they're actually in the server space. It's the 744 00:37:54,640 --> 00:37:59,440 Speaker 11: hardware equipment that helps run the models. Among the US vendors, 745 00:37:59,480 --> 00:38:02,840 Speaker 11: they actually at the largest amount of AI service sales, 746 00:38:03,440 --> 00:38:05,120 Speaker 11: larger than Dell and larger than HPE. 747 00:38:05,440 --> 00:38:08,239 Speaker 6: So they're very much like needed in this market, Like 748 00:38:08,280 --> 00:38:11,200 Speaker 6: it's going to be hard to replace them either way, right, 749 00:38:11,280 --> 00:38:12,960 Speaker 6: Like they're needed essential. 750 00:38:13,920 --> 00:38:19,080 Speaker 11: Well, that's that's a good comment and good question. Competition 751 00:38:19,120 --> 00:38:23,480 Speaker 11: has grown. Dell is actually strengthening their AI chops quite 752 00:38:23,520 --> 00:38:25,840 Speaker 11: a bit. But I came back from a couple of 753 00:38:25,880 --> 00:38:28,719 Speaker 11: conferences recently and we're starting to see other companies with 754 00:38:28,800 --> 00:38:32,840 Speaker 11: similar capabilities that we'll be making it much more competitive. 755 00:38:32,880 --> 00:38:35,360 Speaker 11: And one of the evidence there so far is the 756 00:38:35,400 --> 00:38:39,000 Speaker 11: lower gross margin. They peaked their gross margin at around 757 00:38:39,000 --> 00:38:40,960 Speaker 11: seventeen percent a couple of years back when they with 758 00:38:41,000 --> 00:38:43,480 Speaker 11: the sole player, and now that you have more players 759 00:38:43,480 --> 00:38:47,239 Speaker 11: coming in, their gross margin in the last couple of 760 00:38:47,320 --> 00:38:51,320 Speaker 11: quarters went from went to about thirteen percent and eleven percent. 761 00:38:52,280 --> 00:38:55,840 Speaker 3: Wow, I'm just going to the dees function. March nineteenth, 762 00:38:55,960 --> 00:38:58,120 Speaker 3: twenty twenty four, the company sold two million shares at 763 00:38:58,120 --> 00:39:01,000 Speaker 3: eight hundred and seventy five dollars per sure. Coleman Sex, 764 00:39:01,000 --> 00:39:03,440 Speaker 3: thank you very much, Wuginho, thank you for joining us 765 00:39:03,440 --> 00:39:06,360 Speaker 3: at Woojin. Host is senior technology channels for Bloomberg Intelligence. 766 00:39:06,600 --> 00:39:08,480 Speaker 3: I mean that is just amazing. 767 00:39:08,600 --> 00:39:13,120 Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 768 00:39:13,320 --> 00:39:16,960 Speaker 2: and anywhere. Else you'll get your podcasts. Listen live each weekday, 769 00:39:17,120 --> 00:39:20,080 Speaker 2: ten am to noon Eastern on Bloomberg dot Com, the 770 00:39:20,200 --> 00:39:23,640 Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You 771 00:39:23,680 --> 00:39:26,840 Speaker 2: can also watch us live every weekday on YouTube and 772 00:39:27,000 --> 00:39:28,640 Speaker 2: always on the Bloomberg terminal