WEBVTT - Stocks Trade Near Record Highs 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Wicks. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:20.160 at Bloomberg dot com. Well, what a year it's been 0:00:20.200 --> 0:00:24.279 for equity investors, all three major US innescies all up 0:00:24.400 --> 0:00:29.200 north of twenty fantastic performance. What is driving this? In 0:00:29.360 --> 0:00:32.240 fact even more risk? People seem to be more willing 0:00:32.280 --> 0:00:34.520 to take on more risk just over the last several weeks. 0:00:34.560 --> 0:00:35.879 To get a sense of what is driving this, we 0:00:35.880 --> 0:00:39.120 welcome our next guest, Jeff you Ubs, Wealth manager's head 0:00:39.120 --> 0:00:41.519 of the UK Investment Office. Jeff, thanks so much for 0:00:41.600 --> 0:00:43.960 joining us. Give us your sense of kind of what 0:00:44.200 --> 0:00:48.239 is driving this embracing of risk we've seen really just 0:00:48.320 --> 0:00:50.040 over the last four or five weeks that's taken this 0:00:50.280 --> 0:00:54.080 market even a leg higher. Well, I think she thinks, 0:00:54.080 --> 0:00:56.640 firstly in a context is quite important. I think as 0:00:56.640 --> 0:00:58.440 we approach her and you know, people are going to 0:00:59.320 --> 0:01:01.920 ride up until so Christmas Eve, people are going to 0:01:01.960 --> 0:01:04.959 see quite strong divergences between their year on year numbers 0:01:05.040 --> 0:01:07.920 versus their year to date numbers, right, And you know 0:01:07.959 --> 0:01:09.959 that does tell you we started the year on a 0:01:10.000 --> 0:01:13.920 relatively risk offfitting positioning was soft and the things I'm 0:01:13.920 --> 0:01:16.000 just going to turn out, you know, not quite as 0:01:16.000 --> 0:01:19.920 bad as expected, helped by doses of monastery policy. Of course, 0:01:20.400 --> 0:01:24.280 while the trade issue continue to linger throughout, there are 0:01:24.440 --> 0:01:27.319 some signs, or world more than some signs that this 0:01:27.520 --> 0:01:30.080 might just get to a point where we don't have 0:01:30.120 --> 0:01:33.000 to worry as much about further escalation from here. So 0:01:33.040 --> 0:01:35.520 I think you know that there's a plus, a combination 0:01:35.600 --> 0:01:37.360 of you know, okay numbers, you know, both in the 0:01:37.440 --> 0:01:41.039 macro micro level just kept people in risk. How much 0:01:41.080 --> 0:01:42.960 can you focus on what's going on around the rest 0:01:42.959 --> 0:01:45.640 of the world given everything that's going on right where 0:01:45.680 --> 0:01:47.960 you are, with the election coming up in less than 0:01:47.960 --> 0:01:51.080 a months, right, So I mean now that we heard 0:01:51.080 --> 0:01:54.280 the Prime Minister speak today in front of businesses, and 0:01:55.440 --> 0:01:59.920 clearly people on the ground who have been a sad 0:02:00.000 --> 0:02:03.000 certain by the uncertainty from Brexit of last three years 0:02:03.080 --> 0:02:06.120 or so, they would like to see some clarity up ahead, 0:02:06.360 --> 0:02:09.400 So of course you know all parties offering out, you 0:02:09.400 --> 0:02:13.000 know their campaign and policies, and right now I think 0:02:13.040 --> 0:02:15.760 most companies and individuals will take up with a grain 0:02:15.800 --> 0:02:18.200 of salt and that again the hope is that cloud 0:02:18.200 --> 0:02:20.400 of uncertainty from Brexit and the life will be lifted. 0:02:20.520 --> 0:02:22.320 But then, of course, and for an open economy like 0:02:22.360 --> 0:02:25.480 the UK, the global environment matters just as much, um 0:02:25.560 --> 0:02:28.000 so with anie on the elections here, but also hoping 0:02:28.040 --> 0:02:30.440 that the international economy picks up as well, not least 0:02:30.440 --> 0:02:33.840 helped by by any upcoming face one trade deal. I'm 0:02:33.840 --> 0:02:37.920 struggling to sort of put into perspective the plan proposed 0:02:38.080 --> 0:02:41.600 by the liberals, by by Labor, the idea for a 0:02:41.639 --> 0:02:44.720 big fiscal spending plan that is being viewed by at 0:02:44.800 --> 0:02:48.880 least Sterling as a negative but potentially is being viewed 0:02:49.000 --> 0:02:51.720 as a way to jump start the economy as what 0:02:51.800 --> 0:02:54.560 do you think of it? Well, there are two sides 0:02:54.600 --> 0:02:56.960 of this, you know. Certinly, um I would acknowledge it's 0:02:57.040 --> 0:02:59.840 very hard to sell a currency and index or in 0:02:59.880 --> 0:03:03.400 a economy into a fiscal similar right, um So those 0:03:03.400 --> 0:03:05.560 who are positioned negatively and towards the end of two 0:03:05.600 --> 0:03:09.639 thousand and seventeen will have strong memories of that. Say, now, 0:03:09.680 --> 0:03:12.560 that could be a tailwin, you know, for the UK economy. 0:03:12.760 --> 0:03:14.480 But on the other hand, it's some of the other 0:03:14.560 --> 0:03:18.120 issues in which you could be considered you know, quite 0:03:18.160 --> 0:03:21.200 a novel, right, you know, such those near share ownership plans, 0:03:21.240 --> 0:03:24.080 you know, such as the nationalization of certain sectors, those 0:03:24.080 --> 0:03:27.600 things with which have been branded around and which over 0:03:27.600 --> 0:03:29.880 the medium to longer term on a structural basis and 0:03:30.000 --> 0:03:33.560 may be interpreted as no less some positive. So I 0:03:33.639 --> 0:03:36.120 think that put together is I'm taking a bit of 0:03:36.160 --> 0:03:39.640 a gloss off any potential of fiscal stimulusum But again 0:03:39.720 --> 0:03:42.240 I think in general, heading into an election right now, 0:03:42.480 --> 0:03:44.600 people will take any promises with the grain of salt. 0:03:44.800 --> 0:03:48.360 But both parties do have expansionary policies on the spending side, 0:03:48.600 --> 0:03:50.480 that has to be clear, and I think, you know 0:03:50.520 --> 0:03:52.680 that there's a hope that could jumps out the economy 0:03:52.920 --> 0:03:56.240 on top of them some sort of finalization with the 0:03:56.440 --> 0:03:59.320 relationship with Europe. Jeff, one of the data points that 0:03:59.320 --> 0:04:01.520 we've received only is that it maybe we're getting some 0:04:01.760 --> 0:04:04.920 stabilization in some of the key European economies. We kind 0:04:04.920 --> 0:04:07.280 of saw some data in October that was you know, 0:04:07.600 --> 0:04:10.680 not worse kind of less bad? Is that the beginning 0:04:10.720 --> 0:04:13.680 of a trend, do you think or not? We are 0:04:13.760 --> 0:04:17.760 not ready to jump on that yet, right, So you 0:04:17.800 --> 0:04:21.400 know two things there. Firstly, it's stabilization on an absolute 0:04:21.400 --> 0:04:24.000 but also relative basis as well. So if you look 0:04:24.000 --> 0:04:26.880 at most expectations in the still world, the most surprising disease, 0:04:27.080 --> 0:04:29.320 I think expectations have been very very weak, you know, 0:04:29.360 --> 0:04:31.960 throughout the last and a few courses or so in Europe. 0:04:31.960 --> 0:04:34.320 You know, as a result, it becomes less hard to 0:04:34.480 --> 0:04:36.839 you know, surprise you know, to the upside, or at 0:04:36.880 --> 0:04:39.080 least it becomes harder to surprise at the downside. By one, 0:04:39.160 --> 0:04:43.080 expectations and positioning is solo. Secondly, you know there is 0:04:43.120 --> 0:04:46.320 a clear difference between no more downside versus upside. Right. 0:04:46.520 --> 0:04:48.719 So there again we need to see a fiscal pickup, 0:04:48.800 --> 0:04:50.719 we need to see a demand pick up. And given 0:04:50.720 --> 0:04:53.400 our China growth forecast that you know, five five point 0:04:53.480 --> 0:04:56.840 some percent also um which is very important to the 0:04:56.839 --> 0:04:58.880 Euros in economy, and our US growth forecast is not 0:04:58.960 --> 0:05:01.640 that strong either. So I think put together with a 0:05:01.760 --> 0:05:05.480 cyclical with an export external demand exposed to economy, such 0:05:05.520 --> 0:05:08.640 as the eurozones, the global environment next year is just 0:05:09.040 --> 0:05:12.040 not let's just say hot enough a comfort yet Eurozone 0:05:12.040 --> 0:05:16.040 policymakers and UM also the government officials looking at fiscal 0:05:16.160 --> 0:05:17.600 I think they still have a lot of work to do. 0:05:17.920 --> 0:05:21.000 Not hard enough for comfort, certainly for President Trump. Just 0:05:21.040 --> 0:05:23.840 putting out a tweet about this meeting that we've been 0:05:23.880 --> 0:05:26.440 reporting that he had with FED Chair J. Powell. Just 0:05:26.480 --> 0:05:28.479 finished a very good and cordial meeting at the White 0:05:28.480 --> 0:05:31.480 House with J. Powell the Federal Reserve. Everything was discussed, 0:05:31.520 --> 0:05:35.800 including interest rates, negative interest low inflation, easing, dollar strength 0:05:35.800 --> 0:05:41.120 and its effect on manufacturing, trade with China, EU and others, etcetera. 0:05:41.520 --> 0:05:45.040 Do you have any thoughts on that? Um, Well, it's interesting, 0:05:45.200 --> 0:05:47.240 UM so, I haven't seen the tweet myself that it's 0:05:47.279 --> 0:05:50.360 interesting that the negative interest rates have popped into the conversation. 0:05:50.480 --> 0:05:53.720 So um. Clearly the President will have a view on this, 0:05:53.960 --> 0:05:57.120 um looking at how it's being implemented around the world, 0:05:57.480 --> 0:05:59.280 but the Fed might still want to push back against it. 0:05:59.839 --> 0:06:02.599 I dea being so just not hot enough. That seems 0:06:02.640 --> 0:06:05.120 to be the theme from central banks. How much can 0:06:05.279 --> 0:06:08.440 an ultra accommodative and sort of re upping of another 0:06:08.480 --> 0:06:14.040 easing cycle. How much cannot boost markets from here? Well, um, 0:06:14.080 --> 0:06:16.320 I think the would. I wouldn't say that there's a 0:06:16.360 --> 0:06:19.080 consensus on this right now that there's a strong body 0:06:19.120 --> 0:06:21.160 for opinion. If you even look at the divergence in 0:06:21.160 --> 0:06:24.360 the UCB the viewers, Um, you need demand from the 0:06:24.400 --> 0:06:28.920 fiscal side, so drugs, you know, parting um um uh 0:06:29.600 --> 0:06:32.080 shot if you want to call it. That was actually 0:06:32.120 --> 0:06:35.480 to the establishment. So monetary policy can achieve its objectives, 0:06:35.560 --> 0:06:37.680 you know, can get closer to inflation, you know, maybe 0:06:37.680 --> 0:06:40.640 funemployment in the U S context, once fiscal starts to 0:06:40.680 --> 0:06:44.719 do its job right, So monetary policy creative conditions for 0:06:44.960 --> 0:06:47.480 I would say, structure reform and fiscal policies to actually 0:06:47.560 --> 0:06:49.960 jumpstart demand. So thinking that that's where it's you know, 0:06:50.000 --> 0:06:52.680 I'll be interesting. I don't believe Chairman Powell will want 0:06:52.720 --> 0:06:55.279 to in your tweet in as many words that would 0:06:55.279 --> 0:06:57.919 stressing them. Maybe some changes in the government spending side 0:06:58.200 --> 0:07:01.080 that could be very very helpful towards effect achieving its 0:07:01.080 --> 0:07:03.120 objectives as well. So I think you know, need to 0:07:03.120 --> 0:07:04.880 have some given take it. But of course we're only 0:07:05.000 --> 0:07:08.080 hearing what can monetary policy give Where a central bankers 0:07:08.080 --> 0:07:10.560 would say, well, what can the politicians provide as well? 0:07:10.840 --> 0:07:14.160 That part of the equation is always missing somewhat. Thank 0:07:14.160 --> 0:07:16.400 you so much for being with us and for commenting 0:07:16.560 --> 0:07:18.320 on the tweet that I sprung upon you that we 0:07:18.320 --> 0:07:21.000 were all sprung up a President Trump. Jeff You at 0:07:21.040 --> 0:07:24.600 UBS Wealth Management, head of UK Investment Office joining us 0:07:24.760 --> 0:07:43.360 from London. Steve Judash has joining us for his season 0:07:43.360 --> 0:07:48.120 of Prediction. I HT Wealth Chief executive Officer, Steve. I'm 0:07:48.120 --> 0:07:52.440 watching the capitulation of Morgan Stanley and other bears saying, 0:07:52.480 --> 0:07:55.800 you know, next year might not be so bad in markets? 0:07:56.400 --> 0:07:59.120 Do you agree? Do you think something substantial has shifted 0:07:59.160 --> 0:08:02.400 to make you more optimistic about what we should see 0:08:02.400 --> 0:08:06.640 tomorrow next year? I think the only difference, maybe say 0:08:06.720 --> 0:08:08.880 from nine months ago, is how many interest rate hikes 0:08:09.000 --> 0:08:11.280 or um cuts that we've actually seen, because no one 0:08:11.360 --> 0:08:13.960 was predicting that a year ago. But aside from that, 0:08:14.000 --> 0:08:17.360 we've got to help the economy. That has changed a 0:08:17.360 --> 0:08:20.440 whole lot. Fundamentally. The big unknown has been the trade war, 0:08:20.480 --> 0:08:22.680 but I think just about everyone is predicting that that 0:08:22.880 --> 0:08:25.240 and has been predicting that that would work out eventually. 0:08:25.280 --> 0:08:28.000 You've got the two biggest economies. They have to work 0:08:28.000 --> 0:08:30.600 out terms at some point. It's not gonna happen overnight. 0:08:30.640 --> 0:08:34.040 But I don't think anything is fundamentally changed to say, 0:08:34.080 --> 0:08:35.840 oh my, oh my, I think next year is gonna 0:08:35.880 --> 0:08:38.800 be wonderful. I think we should start expecting a little 0:08:38.800 --> 0:08:41.200 bit more stability and a little bit more leveling out 0:08:41.800 --> 0:08:45.160 of market returns. We're not going to see another tax cut, 0:08:45.520 --> 0:08:47.240 and we're not going to see three more raid cuts 0:08:47.280 --> 0:08:50.160 next year, So I don't see anything fundamentally that's massively 0:08:50.160 --> 0:08:52.920 different for next year. What I find interesting is we've 0:08:52.920 --> 0:08:55.000 actually seen maybe over the last four or five weeks, 0:08:55.400 --> 0:08:59.720 people rotating out of defensive sectors and maybe take on 0:08:59.720 --> 0:09:01.719 a little a bit more risk was some cyclicals, and 0:09:01.760 --> 0:09:04.240 I found that interesting. And given how late we are 0:09:04.880 --> 0:09:06.719 in the economic cycle, what do you how do you 0:09:06.800 --> 0:09:09.720 view that? The only thing that I would argue on 0:09:09.760 --> 0:09:12.680 that is how late we are in the economic cycle, 0:09:12.960 --> 0:09:16.199 because we've had a lot of false stimulus that's pushed 0:09:16.280 --> 0:09:18.520 us through this. So it's not like we've had a 0:09:18.520 --> 0:09:21.800 ten year run of just normal, stable growth or anything 0:09:21.800 --> 0:09:23.800 like that. We've had lots of brake cuts, we've had 0:09:23.800 --> 0:09:25.480 a lot of tax changes over the years, We've had 0:09:25.480 --> 0:09:27.839 a lot of FED helping out the situation a lot. 0:09:27.880 --> 0:09:30.160 So this isn't your run of the mill, you know, 0:09:30.240 --> 0:09:32.439 three to five year cycle that it goes up and down. 0:09:33.000 --> 0:09:35.600 Our economy right now, the world economy right now is 0:09:35.600 --> 0:09:38.320 in a good place, and so sustaining that for a 0:09:38.400 --> 0:09:41.880 number of years in the future, barring massive events, isn't 0:09:41.920 --> 0:09:46.240 out of It isn't unreasonable to believe that. I think again, 0:09:46.480 --> 0:09:48.360 I think it's unreasonably believe we're gonna see a twenty 0:09:48.360 --> 0:09:50.480 percent return again next year. I think that's just silly. 0:09:50.480 --> 0:09:53.319 Do we even predict something like that? But but we're 0:09:53.360 --> 0:09:56.040 in a nice place here, So getting out of the 0:09:56.080 --> 0:09:58.920 defensive side and going more on the aggressive is something 0:09:58.920 --> 0:10:01.120 that we've actually been preaching about a year now. So 0:10:01.160 --> 0:10:06.240 what's your highest conviction trade heading into Okay, I'm not 0:10:06.280 --> 0:10:08.560 gonna harder percent tell you this is my highest conviction, 0:10:08.600 --> 0:10:10.400 but I think it's the most interesting trade, and that's 0:10:10.440 --> 0:10:12.840 the streaming wars that are going on. It's the biggest 0:10:12.840 --> 0:10:15.880 shake up in the entertainment industry that maybe since cable 0:10:15.920 --> 0:10:18.840 tv um. It used to be Netflix and nobody. Now 0:10:18.840 --> 0:10:21.960 it's Netflix and virtually everyone, and so there's going to 0:10:22.000 --> 0:10:24.800 massive winners and there's gonna be some massive losers in there, 0:10:25.040 --> 0:10:27.439 and that's what we've been focusing a lot of our time, 0:10:27.520 --> 0:10:31.040 g Ion. You've got companies like Netflix, who you know, frankly, 0:10:31.040 --> 0:10:32.560 when we're looking at companies, we look at them, do 0:10:32.600 --> 0:10:34.240 you make money today? Are you going to make more 0:10:34.240 --> 0:10:37.640 money tomorrow? Netflix is losing money today when they had 0:10:37.679 --> 0:10:40.720 no competition. Now everyone's in the game. There's only so 0:10:40.760 --> 0:10:44.079 many eyeballs, there's only so many hours people can stream. 0:10:44.120 --> 0:10:45.800 It's hard to see how they're going to continue to 0:10:45.800 --> 0:10:47.920 be a winner in that sector. Whereas you've got other 0:10:47.960 --> 0:10:51.880 companies like Disney um who have tons of content and 0:10:51.920 --> 0:10:53.960 have the ability to absorb losses that they're all going 0:10:54.000 --> 0:10:55.920 to lose money and streaming in the next five years. 0:10:56.080 --> 0:10:58.360 Anyone who says otherwise is lying to you. They're going 0:10:58.400 --> 0:11:01.000 to lose money, but it's gonna be who can sustain 0:11:01.040 --> 0:11:03.760 those losses with other parts of their companies and then 0:11:03.800 --> 0:11:06.320 be the ultimate big winner at the end. That's where 0:11:06.320 --> 0:11:09.800 it's been fun and that's where we've been focusing a lot. So, 0:11:10.280 --> 0:11:11.679 you know, one of the big questions, and we talk 0:11:11.720 --> 0:11:14.160 about these streaming wars, is to get a sense of 0:11:14.240 --> 0:11:16.120 how this is all going to shake out over the 0:11:16.120 --> 0:11:19.640 next you know, five plus years, how many operators will 0:11:19.679 --> 0:11:22.600 actually be in the market, How much can this market support? 0:11:22.760 --> 0:11:25.720 How many players do you think ultimately will be left 0:11:26.000 --> 0:11:29.760 making money in this business? That's the key point. He 0:11:29.840 --> 0:11:33.160 disnailed it. They're making money because you've got companies like 0:11:33.200 --> 0:11:36.400 Amazon and Apple that can float their streaming forever essentially 0:11:36.440 --> 0:11:38.520 because they make so much money on other parts. How 0:11:38.559 --> 0:11:41.080 long are they willing to sustain those losses? I think 0:11:41.080 --> 0:11:43.440 this is where you see a normal new sector or 0:11:43.480 --> 0:11:47.640 new part of an industry develop. Everyone jumps in. You'll 0:11:47.640 --> 0:11:49.640 start seeing the shaking out, and then you'll start seeing 0:11:49.640 --> 0:11:52.560 consolidating like we saw in network TV and things along 0:11:52.600 --> 0:11:57.960 those lines when cable came out. Um, three four players 0:11:58.080 --> 0:12:00.000 at most right now, what are we projected for next? 0:12:00.080 --> 0:12:01.880 You're nine players that are going to be in the game. 0:12:02.600 --> 0:12:05.080 That's not sustainable. So are you a Netflix bear? Is 0:12:05.080 --> 0:12:08.360 that what this is? I'm not. I'm not gonna sit 0:12:08.400 --> 0:12:09.840 here and tell you I think Netflix is bad. I'm 0:12:09.840 --> 0:12:11.920 gonna tell you that I have a real problem problem 0:12:12.000 --> 0:12:14.320 getting into a company that loses money and it doesn't 0:12:14.360 --> 0:12:15.800 show me a clear path on how they're going to 0:12:15.880 --> 0:12:19.520 make money in the future. Netflix, to me, is a 0:12:19.640 --> 0:12:22.800 very dangerous play. They need to hit some massive home runs, 0:12:23.000 --> 0:12:25.360 massive massive, and I don't like the gamble. So in 0:12:25.360 --> 0:12:27.880 that situation, I think Netflix is a gamble right now. 0:12:28.120 --> 0:12:29.480 If they hit a bunch of home runs, that they 0:12:29.520 --> 0:12:33.160 get some massively popular content that everyone jumps on board with, 0:12:33.520 --> 0:12:35.839 they could sustain this. They can make it through. But 0:12:35.960 --> 0:12:38.360 but you're betting. You're betting on the home run, and 0:12:38.360 --> 0:12:40.560 that's a tough bat right now. It's a very tough 0:12:40.600 --> 0:12:42.199 But Steve, how do you think Apple is going to 0:12:42.280 --> 0:12:45.000 play this business? Do you expect them to? Kind of? 0:12:45.160 --> 0:12:47.200 I think they said they're gonna invest six billion dollars 0:12:47.200 --> 0:12:50.000 in programming, and that's a big number, but it's quick. Frankly, 0:12:50.240 --> 0:12:51.800 one could argue it's not big enough. Do you think 0:12:51.840 --> 0:12:53.559 they need to go out and make a big acquisition 0:12:54.160 --> 0:12:57.640 in the entertainment space? I do. I completely agree with 0:12:57.640 --> 0:12:59.600 what you said. It's a big number, but I don't 0:12:59.640 --> 0:13:01.800 know if that it's necessarily big enough. I mean, how 0:13:01.840 --> 0:13:04.240 much money is Disney put into it, not just right now, 0:13:04.280 --> 0:13:07.439 but over the last ten years buying content. Apple doesn't 0:13:07.440 --> 0:13:09.200 really have any content well, I mean, they've got some, 0:13:09.240 --> 0:13:12.040 but they don't have enough content right now what could 0:13:12.040 --> 0:13:14.600 be interesting? This is way speculation because you were saying 0:13:14.600 --> 0:13:16.800 in the beginning you're looking for the season of speculation. 0:13:17.200 --> 0:13:19.240 What happens when Netflix is losing money for a couple 0:13:19.240 --> 0:13:20.920 of years and Apple has a bunch of cash sitting 0:13:20.960 --> 0:13:23.400 on the sidelines and they need content. Well, that's this 0:13:23.480 --> 0:13:26.080 is what people are expecting. That it's some or putting 0:13:26.120 --> 0:13:30.200 out there postulating that what happens if Apple buys Netflix? 0:13:30.240 --> 0:13:33.000 Short of that, though, I'm wondering if you on the 0:13:33.040 --> 0:13:37.400 flip side are a Disney bull I am. I like 0:13:37.480 --> 0:13:39.240 companies that make money and that show me how they're 0:13:39.240 --> 0:13:41.000 going to make more money in the future. Right now, 0:13:41.080 --> 0:13:44.040 they have more content than just about anybody. They've got 0:13:44.120 --> 0:13:46.800 so many different paths to make money on that content 0:13:47.640 --> 0:13:51.120 that even if right now no one really talks about 0:13:51.160 --> 0:13:53.200 this enough, I don't think right now everyone's okay with 0:13:53.240 --> 0:13:56.760 buying a whole bunch of different streaming products, you know, five, six, seven, 0:13:56.800 --> 0:13:58.959 whatever different areas and you're paying thirty bucks a month 0:13:59.000 --> 0:14:01.800 for this and forty for that whatever. Um, what happens 0:14:01.800 --> 0:14:04.199 when the economy isn't doing so well, what happened when 0:14:04.280 --> 0:14:06.960 unemployment isn't at record lows and people have to start 0:14:06.960 --> 0:14:08.960 cutting back a little bit? You know, your your rank 0:14:09.000 --> 0:14:11.840 and file. People are going to have seven eight streaming 0:14:11.960 --> 0:14:15.240 things anymore, They're gonna have three, maybe two, And so 0:14:15.320 --> 0:14:18.160 that is where I want to be positioned for the 0:14:18.200 --> 0:14:21.800 companies that can sustain that. So yes, to answer your question, Um, 0:14:21.880 --> 0:14:24.120 Disney is an attractive company because even if they lose 0:14:24.120 --> 0:14:26.240 money on streaming, they make so much more money on 0:14:26.320 --> 0:14:28.800 everything else that it doesn't really matter. And they can 0:14:28.800 --> 0:14:31.680 write out that storm because right now we're in goldilocks situation. 0:14:32.240 --> 0:14:35.400 What happens when we're not in the goldilocks situation anymore? Steve, 0:14:35.440 --> 0:14:37.520 thanks so much for joining us giving us your thoughts 0:14:37.560 --> 0:14:40.840 on kind of what you're looking for out to twenty 0:14:41.280 --> 0:14:43.280 as we start thinking about rolling over the calendar. Here 0:14:43.280 --> 0:14:46.680 Steve doodash I HT Wealth Management, Chief executive Officer, joining 0:14:46.720 --> 0:15:05.520 us on the phone once again. This year in technology 0:15:05.640 --> 0:15:08.240 stocks are leading the market. We have the nastack up 0:15:08.800 --> 0:15:12.080 eight percent this year. Let's talk tech. Let's and we 0:15:12.120 --> 0:15:14.240 do that. We do with Dan Ives from web Best 0:15:14.440 --> 0:15:17.120 we web Bush Securities. Dan thanks so much for joining 0:15:17.200 --> 0:15:20.320 us Technology again has been the big, big driver of 0:15:20.360 --> 0:15:23.280 this move up in equity markets this year. Let's start 0:15:23.280 --> 0:15:26.360 with Apple. You know, it's just a fantastic story up 0:15:26.400 --> 0:15:30.720 six year to date. It's just amazing. The big issue 0:15:30.800 --> 0:15:34.760 I have is this company, as you we've talked about before, 0:15:34.880 --> 0:15:37.880 is really making a big pivot from a phone reliant 0:15:37.920 --> 0:15:40.480 company to a services company. But that's a lot of 0:15:40.560 --> 0:15:42.560 risk in that story there, But it seems like the 0:15:42.600 --> 0:15:46.280 markets giving Apple more than the benefit of the doubt. Yeah, 0:15:46.320 --> 0:15:49.080 and you're not alone. And I think when I look 0:15:49.160 --> 0:15:52.160 at Apple, it's the one to punch the rocket. Gibraltar 0:15:52.320 --> 0:15:55.080 continues to be iPhone, and I think what you're seeing 0:15:55.120 --> 0:16:00.520 here at iPhone eleven tracking head expectations. It all about 0:16:00.520 --> 0:16:04.600 the install base and now it's about monetizing that through services. 0:16:04.720 --> 0:16:07.760 And that's part of the rereading that we're seeing with Apple. 0:16:08.120 --> 0:16:10.440 And that's why right now the bears continue to be 0:16:10.520 --> 0:16:14.840 in hibernation mode and termed to what's happened with stock. Okay, 0:16:14.920 --> 0:16:18.480 so you see more positivity ahead, Yet whenever we see 0:16:18.480 --> 0:16:21.120 a trade headline that's negative, the tech socks are the 0:16:21.160 --> 0:16:23.640 ones that sell off. First. What if we do not 0:16:23.760 --> 0:16:26.160 get a trade truce what how much does that affect 0:16:26.160 --> 0:16:29.880 your outlook? Yeah, that's fifteen dollars per share in terms 0:16:29.920 --> 0:16:34.000 of right now what I view as the overall overhang 0:16:34.280 --> 0:16:38.440 from trade on Apple. It's the poster child in terms 0:16:38.440 --> 0:16:41.000 of the US trying to trade war, but it's about 0:16:41.000 --> 0:16:44.040 a fifteen overhang right now. So I think if we 0:16:44.120 --> 0:16:47.360 do not get any sort of deal, that's sort of 0:16:47.400 --> 0:16:50.080 how I've used sort of a risk speak into the stock. 0:16:50.880 --> 0:16:53.280 So Dan, let's go back to the old, you know, 0:16:53.520 --> 0:16:56.440 trying to true phone business for Apple. Give us a 0:16:56.480 --> 0:17:00.000 sense of how big five G could be two Apple. 0:17:00.080 --> 0:17:02.880 We hear so much now across so many different technology 0:17:03.000 --> 0:17:05.040 verticals about five G and how it's gonna be the 0:17:05.040 --> 0:17:06.879 next big thing in tech. What does it mean for 0:17:06.920 --> 0:17:11.040 the likes of Apple? In my opinion, the best five 0:17:11.160 --> 0:17:14.880 G play is Apple because when you look at five 0:17:14.920 --> 0:17:18.400 G and how their position going to think about nine 0:17:18.920 --> 0:17:22.160 million consumers right now. In terms of the install based 0:17:22.480 --> 0:17:25.359 we think about four million of those are gonna upgrade 0:17:25.400 --> 0:17:27.840 over the next twelve day tea months. The first part's 0:17:27.880 --> 0:17:30.399 gonna be out from eleven, But five G I believe 0:17:30.400 --> 0:17:33.000 it's really gonna be a super cycle for for Apple. 0:17:33.359 --> 0:17:35.920 That's why I still view this is a stock. I 0:17:36.000 --> 0:17:37.560 think it's gonna have a three in front of it 0:17:37.640 --> 0:17:40.520 going into next year. Can you walk through that a 0:17:40.560 --> 0:17:44.520 little bit more. How five G will sort of supercharge 0:17:44.520 --> 0:17:47.760 Apple shares? Yeah, A lot of it is really the 0:17:47.800 --> 0:17:51.520 applications in the infrastructure. It's gonna be five G related. 0:17:52.000 --> 0:17:55.520 And for the average consumer, especially within the install base, 0:17:55.680 --> 0:17:58.280 to get access to that five G, you're gonna need 0:17:58.320 --> 0:18:01.280 to be in a five G phone. We think next year, 0:18:01.720 --> 0:18:05.440 based on our checks throughout China and Taiwan, there's gonna 0:18:05.480 --> 0:18:09.480 be four or five G footes. So for a consumer, 0:18:09.720 --> 0:18:12.879 they're gonna upgrade on five get Apple and that what 0:18:13.080 --> 0:18:18.000 that's really doing giving them a renaissance of growth. That's 0:18:18.000 --> 0:18:22.119 the highway. The highway to five G is a smart phone. 0:18:22.400 --> 0:18:26.280 I'm struggling to understand five G applications as being so 0:18:26.800 --> 0:18:29.160 incredibly different. I mean, basically, it's a robot gonna get 0:18:29.200 --> 0:18:31.479 beamed into my home and make me breakfast. I mean, 0:18:31.920 --> 0:18:34.240 or how how different is this going to be from 0:18:34.240 --> 0:18:38.840 four and three G. It's I think it's a paradigm 0:18:38.960 --> 0:18:41.400 change in terms of five gene. I think the best 0:18:41.440 --> 0:18:45.639 way of thing about is more smart cities, autonomous capabilities. 0:18:45.800 --> 0:18:48.800 I'm talking about a lot of technologies that today are 0:18:48.880 --> 0:18:52.679 more on the white board. Over the next five ten years, 0:18:52.760 --> 0:18:54.600 it's really gonna be five G n E. But then 0:18:54.640 --> 0:18:56.720 that's why when you look at the leader and that 0:18:56.880 --> 0:18:59.800 at the Apple. Obviously Samsung continues to be there as 0:18:59.800 --> 0:19:02.200 well as the Chinese consumers. But that's why I thought 0:19:02.440 --> 0:19:05.240 is so important in terms of where Apple sits in 0:19:05.280 --> 0:19:08.720 the stock Well, Dan, one part of the services story 0:19:08.760 --> 0:19:12.000 for Apple that's less clear to me is their video strategy, 0:19:12.040 --> 0:19:15.320 their TV strategy. I know they have Apple tv Plus 0:19:15.320 --> 0:19:18.800 and there's some shows there, but to me, that's not it. 0:19:18.960 --> 0:19:22.040 I mean, that's not gonna cause me to switch or 0:19:22.119 --> 0:19:24.760 to add to my Netflix and to my Disney Plus. 0:19:25.040 --> 0:19:28.119 What do you really think is the play for Apple 0:19:28.160 --> 0:19:31.560 in the video business? Yeah, I think the first part 0:19:31.600 --> 0:19:34.240 of the play is distribution. They want to be the 0:19:34.400 --> 0:19:38.760 distribution platform for screaming. That's the first step. And then 0:19:39.320 --> 0:19:41.720 I think if you look at it right now, that's 0:19:41.720 --> 0:19:43.800 why the bundling is so important in terms of the 0:19:43.800 --> 0:19:46.680 new iPhone. In terms of the video side, right now, 0:19:46.680 --> 0:19:49.240 they lack content. But I do not believe that that 0:19:49.240 --> 0:19:51.359 would be like that in a year from now, I 0:19:51.359 --> 0:19:54.560 think they're going to dedicate six billion per year and 0:19:54.640 --> 0:19:58.280 I still think they acquire more of a content play 0:19:58.520 --> 0:20:01.520 an MGM, A Sony, a mind Gate over the next year. 0:20:03.040 --> 0:20:05.000 Who's the big loser from five G who's not going 0:20:05.080 --> 0:20:08.600 to keep up? Look, I think in terms of the 0:20:08.600 --> 0:20:12.160 big loser right now, in terms of five G, this 0:20:12.240 --> 0:20:14.679 is really going to be an Apple verse Samsung. I 0:20:14.720 --> 0:20:17.440