WEBVTT - Palantir Reports Record Quarterly Revenue, Hikes Forecasts 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.760 --> 0:00:34.879 Well, let's see what Max Chafkin has to say Bloomberg 0:00:34.880 --> 0:00:37.559 business Week Senior Report. He's also co host of the 0:00:37.640 --> 0:00:41.479 Everybody's Business podcast, author of the contrarian Peter tele and 0:00:41.600 --> 0:00:43.600 Silicon Valley's Pursuit of Power. He joins us right here 0:00:43.640 --> 0:00:47.600 in our Bloomberg Interactive Brokers studio. This is Peter Teal's company. 0:00:48.320 --> 0:00:51.280 What are you making of this? It sounds like just Gangbusters. 0:00:51.360 --> 0:00:53.159 Yeah, I mean this is a company where you have 0:00:53.320 --> 0:00:56.680 a couple of trends working in its favor. One is, 0:00:56.880 --> 0:01:01.960 and we heard it mentioned earlier, aivolunteer is marketing itself 0:01:02.040 --> 0:01:06.280 as like essentially a way for big companies to incorporate 0:01:06.560 --> 0:01:09.880 artificial intelligence in their workflows. That's obviously something lots and 0:01:09.920 --> 0:01:12.200 lots of companies are spending huge sums of money. On 0:01:13.000 --> 0:01:16.240 the other thing is this is a big defense contractor 0:01:16.760 --> 0:01:19.360 and it happens to be and you mentioned Peter Teele's 0:01:19.400 --> 0:01:23.000 name earlier. He's co founder of the company. You know, 0:01:23.080 --> 0:01:25.080 it is a it is a company that is very 0:01:25.080 --> 0:01:27.360 close to the Trump administration. So so it's both a 0:01:27.400 --> 0:01:30.840 company that is sort of well positioned to in its 0:01:30.920 --> 0:01:34.120 government business at least in the US, and well positioned 0:01:34.160 --> 0:01:35.080 in its commercial business. 0:01:35.120 --> 0:01:36.399 You've seen in revenue grow now. 0:01:36.400 --> 0:01:39.240 I think what what you see skeptical analysts say, and 0:01:39.240 --> 0:01:41.000 this is a company where there's a bit of a 0:01:41.040 --> 0:01:45.480 divide between how professionals see it and the kind of 0:01:45.560 --> 0:01:48.080 masses you know, who are who are trading, you know, 0:01:48.120 --> 0:01:50.600 on platforms like Robinhood. I think a lot of a 0:01:50.640 --> 0:01:53.080 lot of analysts feel like this stock is wildly overvalued. 0:01:53.160 --> 0:01:55.559 You're talking about you know, even at four billion dollars 0:01:55.600 --> 0:01:57.559 of anual revenue, it's not a huge amount of money 0:01:57.720 --> 0:01:59.720 for a company that's worth like a half a trillion 0:01:59.760 --> 0:02:03.560 dollar in terms of market cap. But for now, you know, 0:02:03.640 --> 0:02:06.440 the market likes it. This has become you know, it's 0:02:06.440 --> 0:02:08.520 almost a cliche to say, but it is a meme stock. 0:02:08.560 --> 0:02:08.840 It is. 0:02:08.919 --> 0:02:12.400 It is a company that has a real business but 0:02:12.520 --> 0:02:16.880 also a company. It's interesting, has this very very you know, 0:02:17.520 --> 0:02:18.560 dedicated following. 0:02:18.800 --> 0:02:20.239 Why would you call it a memestock. I mean, you 0:02:20.320 --> 0:02:21.760 kind of answered the question right then, you said as 0:02:21.760 --> 0:02:23.880 a dedicated following. But this is a company that has 0:02:23.960 --> 0:02:26.840 an increase in revenue of sixty three percent. Analyst on 0:02:26.880 --> 0:02:31.120 average estimated one point zho nine billion dollars in terms 0:02:31.120 --> 0:02:34.200 of revenue increase went to one point one eight billion 0:02:34.240 --> 0:02:37.800 dollars average projection of one point one to nine billion 0:02:37.840 --> 0:02:40.240 dollars for sales for the current quarter that the company 0:02:40.280 --> 0:02:42.320 says it'll come in at one point three three billion. 0:02:42.600 --> 0:02:44.799 There's some real numbers here that I think critics would say, Okay, 0:02:44.800 --> 0:02:48.320 well memestocks don't have those kind I mean, it's. 0:02:48.160 --> 0:02:51.480 Different from like, haha, this is totally a joke. That's 0:02:51.520 --> 0:02:53.280 not what I'm saying at all. What I'm saying is 0:02:53.320 --> 0:02:57.079 that the demand for this stock is happening at the 0:02:57.120 --> 0:03:00.480 retail level, just like Tesla Motors where you see you know, that, 0:03:00.520 --> 0:03:04.360 which is another stock with similarly like very elevated private 0:03:04.440 --> 0:03:07.799 The price earnings ratio on this company is huge, It's 0:03:07.919 --> 0:03:09.040 really really high. 0:03:09.160 --> 0:03:12.840 Six hundred and ninety one the forward pt F forward 0:03:12.840 --> 0:03:13.760 pe excuse me, it's. 0:03:13.639 --> 0:03:14.440 Three hundred and twenty. 0:03:14.480 --> 0:03:17.040 I mean, like what you said before about how much 0:03:17.080 --> 0:03:19.920 in revenues and what the market cap is, it's going 0:03:20.000 --> 0:03:21.880 to take a lot of growth. 0:03:21.600 --> 0:03:25.519 Over and ocet for multiple qu dspe ratio is sixty 0:03:25.560 --> 0:03:27.320 point five seay, yeah, even. 0:03:27.160 --> 0:03:29.720 For a tech company, even for a high growth tech company. 0:03:29.880 --> 0:03:34.040 We're talking about a very very very expensive stock. And 0:03:34.080 --> 0:03:37.600 that you know, that stock either reflects the kind of 0:03:37.840 --> 0:03:41.200 new dynamics that that certain equities are trading it where 0:03:41.320 --> 0:03:42.080 where where if. 0:03:42.000 --> 0:03:43.440 There's demand on social media? 0:03:43.480 --> 0:03:45.480 And the Bloomberg story that was published gets into some 0:03:45.520 --> 0:03:49.480 of this, you know, investor Alex Karp, the CEO of Palenteer, 0:03:49.600 --> 0:03:51.520 is this kind of almost like a cult like figure, 0:03:51.520 --> 0:03:55.080 a cultural figure. Certainly shareholders call him Daddy Carp, you know, 0:03:55.160 --> 0:03:57.600 and he has he has these antics right like it's 0:03:57.760 --> 0:04:00.839 he is this kind of larger than life figure. There 0:04:00.920 --> 0:04:04.000 is also a business story. It's not like it's totally 0:04:04.080 --> 0:04:08.360 just hot air, right. The idea is that artificial intelligence 0:04:08.880 --> 0:04:11.000 is becoming more and more important. 0:04:11.000 --> 0:04:13.520 Palenteer is positioned, well. 0:04:13.600 --> 0:04:15.160 What exactly do they do? 0:04:15.640 --> 0:04:19.600 They build software that essentially makes it easier for companies 0:04:19.640 --> 0:04:21.320 to organize their data and. 0:04:21.279 --> 0:04:23.400 So and make decisions. 0:04:23.480 --> 0:04:26.400 Now, the thing you've probably most people have probably heard 0:04:26.440 --> 0:04:31.280 most about with Palenteer is the military and intelligence agencies 0:04:31.600 --> 0:04:36.039 incorporated software in their sort of in like searching out 0:04:36.160 --> 0:04:38.400 terrorist cells and that sort of thing. Now, there's a 0:04:38.400 --> 0:04:41.760 lot of debate about just how sort of automated this is, 0:04:42.160 --> 0:04:44.800 how important it is, but it is a piece of 0:04:44.839 --> 0:04:49.080 software that is being used in more and more big 0:04:49.080 --> 0:04:52.400 companies to handle data. And that's a valuable thing because like, 0:04:52.480 --> 0:04:55.279 once the software is being used by a given entity, 0:04:55.279 --> 0:04:56.920 it's kind of hard to take it out. It's kind 0:04:56.920 --> 0:05:01.080 of same dynamics that protect lots of of sellers of 0:05:01.200 --> 0:05:02.360 enterprise software max. 0:05:02.400 --> 0:05:03.920 This is a company that was founded back in two 0:05:03.920 --> 0:05:07.600 thousand and four. Facebook was also founded back in two 0:05:07.640 --> 0:05:09.680 thousand and four. I think a lot of people would 0:05:09.680 --> 0:05:12.039 say this was kind of a late bloomer for a 0:05:12.080 --> 0:05:14.360 lot of years, it kind of just like got by 0:05:15.279 --> 0:05:19.200 until then suddenly it was on everybody's radar. Why was 0:05:19.240 --> 0:05:21.000 it so slow to grow? 0:05:21.120 --> 0:05:23.240 Well, I mean it took them a very long time 0:05:23.320 --> 0:05:27.240 to figure out a product, and the company was founded 0:05:27.400 --> 0:05:31.440 essentially with the idea of providing you know, intelligence gathering 0:05:31.520 --> 0:05:35.680 software to the military, adapting some of the security tools 0:05:35.720 --> 0:05:37.880 that Peter Teel and his co founders had used at 0:05:37.880 --> 0:05:40.880 PayPal and applying in other areas. That was the pitch. 0:05:41.400 --> 0:05:43.680 It took them a really long time to find a 0:05:43.680 --> 0:05:48.720 customer base, but once they did, and as they've been 0:05:48.720 --> 0:05:50.440 able to kind of build a brand and take the 0:05:50.440 --> 0:05:53.520 company public and benefit from some of these trends that 0:05:53.839 --> 0:05:58.320 I'm talking about, these cultural trends, it's really it's gone 0:05:58.600 --> 0:05:59.680 gone very very well. 0:06:00.240 --> 0:06:01.200 You know, it's interesting too. 0:06:01.240 --> 0:06:03.600 And I'm looking at the FA page on the Bloomberg 0:06:03.760 --> 0:06:06.240 So at the end of last year, about almost fifty 0:06:06.279 --> 0:06:08.840 five percent of their revenue was government and then about 0:06:08.880 --> 0:06:11.640 forty five percent was commercial. And I'm just thinking they 0:06:11.640 --> 0:06:14.800 compete with right like Microsoft, Amazon, Google, and then some 0:06:14.880 --> 0:06:18.479 of these data specialist companies out there, whether it's Snowflake 0:06:18.480 --> 0:06:20.960 and others. I mean, is there somebody who could ultimately, 0:06:22.440 --> 0:06:25.320 you know, take over their business? I mean, do they 0:06:25.360 --> 0:06:26.800 really own their niche? 0:06:27.000 --> 0:06:29.400 No, there are other there are other players in this space. 0:06:29.960 --> 0:06:31.719 I think a lot also a lot of the companies, 0:06:31.760 --> 0:06:35.560 a lot of those competitors companies are buying both palenter 0:06:35.600 --> 0:06:37.520 at Microsoft it's not like you're buying one it at 0:06:37.520 --> 0:06:39.200 the ex sense of the other. I mean, you know, 0:06:39.240 --> 0:06:42.279 Palenteer is i think very recently got into some litigation 0:06:42.400 --> 0:06:45.600 with a copycat product. There are other companies that are 0:06:45.640 --> 0:06:48.680 attempting to offer sort of similar kind of like data 0:06:48.720 --> 0:06:52.840 integration services. We've also seen critics over the years sort 0:06:52.880 --> 0:06:55.960 of say like this company, this is actually a consulting company. 0:06:55.640 --> 0:06:56.440 Kind of masquerading. 0:06:56.839 --> 0:06:59.599 There's some there's there's a lot of debate over just 0:06:59.760 --> 0:07:03.719 how how how much it is like a product company 0:07:03.760 --> 0:07:06.080 and should be valued that way, although of course, like 0:07:06.160 --> 0:07:09.080 on Wall Street or sorry, on the stock market, that 0:07:09.080 --> 0:07:11.680 debate is long gone because it's being traded, you know, 0:07:11.720 --> 0:07:14.600 at multiples that are much higher than even some very 0:07:14.680 --> 0:07:16.400 very successful software companies. 0:07:16.560 --> 0:07:18.680 How big of a deal is it that this administration 0:07:18.880 --> 0:07:23.440 has or members of this administration have been aligned at 0:07:23.520 --> 0:07:26.120 least philosophically with leadership at Palatineer. 0:07:26.320 --> 0:07:29.440 If you if you listen to Palenteer, they're going to say, no, 0:07:29.560 --> 0:07:33.480 this is not political. That where people the government is 0:07:33.520 --> 0:07:34.160 just choosing. 0:07:33.880 --> 0:07:35.200 Our product because it's the best product. 0:07:35.480 --> 0:07:38.360 I think if you look historically, the last Trump administration 0:07:38.600 --> 0:07:40.400 was an incredible time for Palenteer. 0:07:40.760 --> 0:07:42.240 The company grew a lot, it. 0:07:42.200 --> 0:07:45.400 Managed to go public, won lots and lots of contracts, 0:07:45.440 --> 0:07:48.480 including taking some contracts from some other big tech companies. 0:07:48.880 --> 0:07:51.480 And if you look at what has happened over the 0:07:51.520 --> 0:07:54.680 past whatever it is, ten months of the Trump administration, 0:07:54.960 --> 0:07:56.120 it's great for Palenteer. 0:07:56.160 --> 0:07:56.920 You had this dough. 0:07:57.000 --> 0:07:59.440 I mean, obviously the Doje effort, we haven't heard. 0:07:59.360 --> 0:07:59.760 Much about it. 0:07:59.760 --> 0:08:03.640 But the idea of building these databases that are better 0:08:03.720 --> 0:08:08.760 going to integrate information across different agencies, that is like 0:08:08.960 --> 0:08:11.840 right up Pallenteers Alley, and you know you're seeing Alex 0:08:11.920 --> 0:08:13.520 carb show up at the White House, show up at 0:08:13.560 --> 0:08:16.320 these dinners. They are punching above their weight in terms 0:08:16.320 --> 0:08:16.960 of influence. 0:08:17.080 --> 0:08:19.520 We should point out though, shares of Palenteer now down 0:08:19.760 --> 0:08:22.160 about a quarter of a percent here in the aftermarket, 0:08:22.240 --> 0:08:24.320 so they've definitely pulled off their highs of this session. 0:08:24.680 --> 0:08:25.880 Hey Max, thank you so much. 0:08:27.360 --> 0:08:30.160 Stay with us. More from Bloomberg Business Week Daily coming 0:08:30.240 --> 0:08:31.120 up after this. 0:08:35.880 --> 0:08:39.720 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:08:39.800 --> 0:08:42.000 us live weekday afternoons from two to five. 0:08:42.040 --> 0:08:42.199 Yes. 0:08:42.280 --> 0:08:45.280 During this listen on Applecarplay and Android Otto with the 0:08:45.360 --> 0:08:48.920 Bloomberg Business app or watch us live on YouTube. 0:08:49.720 --> 0:08:51.800 Let's do it. Megan Horneman has to say she's back 0:08:51.800 --> 0:08:52.080 with us. 0:08:52.080 --> 0:08:55.560 She's chief investment officer in Verden's Capital Advisors, from has 0:08:55.679 --> 0:08:58.480 more than four billion in assets under management. Once again 0:08:58.520 --> 0:09:02.120 with us from Hunt Valley, Maryland. Megan, good to have 0:09:02.200 --> 0:09:05.160 you here. It has been quite a bounce back from 0:09:05.200 --> 0:09:08.320 the lows back in early April. How do you describe 0:09:08.320 --> 0:09:09.839 the market environment right now? 0:09:11.400 --> 0:09:14.160 I think there's a lot of over optimism about several things. 0:09:14.400 --> 0:09:16.719 We did get the FED the cut rates, and that's 0:09:16.760 --> 0:09:20.280 what really you know, the markets we're focusing on Prior 0:09:20.320 --> 0:09:23.040 to September. We got the Fed cutting rates. We got 0:09:23.080 --> 0:09:25.880 two of them this year. The jury is still kind 0:09:25.880 --> 0:09:28.440 of out for the December number. But we also have 0:09:28.480 --> 0:09:31.160 seen some thawing in the trading tension since that you 0:09:31.200 --> 0:09:34.000 know April tiff, I guess tariff tiff, and now you 0:09:34.120 --> 0:09:36.760 have the AI taking back over again. So you have 0:09:36.840 --> 0:09:39.960 this momentum trade that's driving these markets higher into the 0:09:40.080 --> 0:09:40.480 year end. 0:09:40.520 --> 0:09:40.679 Here. 0:09:40.840 --> 0:09:46.720 Worried about valuations, absolutely, we are very worried specifically from 0:09:46.800 --> 0:09:51.280 the mag seven the technology. These are all looking a 0:09:51.280 --> 0:09:53.960 little bit bubble like. I'm not saying this is a 0:09:54.000 --> 0:09:56.760 dot com bubble, but there is the risk here for 0:09:56.800 --> 0:10:00.280 some valuation correction. Keep in mind that these valuations have 0:10:00.400 --> 0:10:03.880 driven higher on this, you know, pricing and perfection, the 0:10:03.960 --> 0:10:08.160 perfect soft landing of the economy, the perfect I'm fixed 0:10:08.200 --> 0:10:11.559 to inflation and the FED coming in and easing policy. 0:10:11.920 --> 0:10:14.120 This is something that's really up in the air into 0:10:14.160 --> 0:10:16.920 twenty twenty six. That there is no certainty, and I 0:10:16.920 --> 0:10:19.120 think the FED is pretty clear about that when they 0:10:19.200 --> 0:10:22.199 mentioned that the December meeting is not a foregone conclusion. 0:10:22.360 --> 0:10:25.440 Megan, you say, it's not akin to the Internet bubble, 0:10:25.440 --> 0:10:26.440 but it does bubble like. 0:10:26.520 --> 0:10:29.000 But it looks bubble like. But why do you say that? 0:10:29.160 --> 0:10:29.360 Is it? 0:10:29.440 --> 0:10:31.120 You know what we always hear as well, Wait, there's 0:10:31.120 --> 0:10:33.760 companies that actually have revenues and earnings, and I get that. 0:10:34.040 --> 0:10:36.679 But the company that I feel like is the nucleus 0:10:37.360 --> 0:10:40.120 of this AI trade Open AI. We have yet to 0:10:40.160 --> 0:10:43.319 really see their books, right, It's a privately held company. 0:10:43.360 --> 0:10:46.760 They're tying up with everybody. There's this massive spend. 0:10:47.200 --> 0:10:49.679 It's hard not to feel like this is a bit 0:10:49.800 --> 0:10:52.640 heady and wonder where it all ends. 0:10:54.160 --> 0:10:57.440 Yeah, you said it exactly. There's not a lot of clarity. 0:10:57.520 --> 0:11:00.760 This is what we're seeing is just more this euphoria 0:11:00.920 --> 0:11:05.240 around this changing technology. And we completely believe in that. 0:11:05.240 --> 0:11:06.760 And AI is going to change the way we do 0:11:06.800 --> 0:11:08.200 a lot of things. It's going to make a lot 0:11:08.240 --> 0:11:10.760 of things, a lot of things efficient. But we've seen 0:11:10.800 --> 0:11:14.400 this before in other market bubble type of situations where 0:11:14.640 --> 0:11:17.640 the markets just have this overly optimistic view. You can 0:11:17.679 --> 0:11:20.120 even go back to some of the times when people said, oh, 0:11:20.160 --> 0:11:22.560 home prices will never go down. I heard that and 0:11:22.600 --> 0:11:25.440 the EITO nine crisis. So good, good. 0:11:25.600 --> 0:11:26.960 Well, the one thing I want to ask you about 0:11:27.000 --> 0:11:29.319 with the AI trade, and like I said, there are 0:11:29.400 --> 0:11:31.600 companies and we know with the hyperscalers where we see 0:11:31.600 --> 0:11:33.679 an ROI and we were just talking with our own man, 0:11:33.720 --> 0:11:36.120 Deep Singh about some of the numbers that we see. 0:11:36.120 --> 0:11:38.439 I think it was specifically was it in Google and 0:11:38.520 --> 0:11:41.480 so on? So we do see payoffs. But having said that, 0:11:41.920 --> 0:11:43.880 the other thing we were just talking with a member 0:11:44.360 --> 0:11:48.360 of the Google and Alphabet team is about jobs that 0:11:48.480 --> 0:11:51.959 could be lost, whether it's encoding in other places. If 0:11:52.000 --> 0:11:56.000 we have an economy where a lot of people are 0:11:56.040 --> 0:11:58.320 put out of work and there's a dislocation, be it 0:11:58.400 --> 0:12:00.920 for a year, two years, five, five year, seven years, 0:12:00.960 --> 0:12:02.880 who knows, maybe a generation. 0:12:03.200 --> 0:12:04.440 That's got to be a problem. 0:12:04.520 --> 0:12:08.880 No, I think, But we're not as negative on what 0:12:08.920 --> 0:12:11.320 AI can do to the job market as some people are. 0:12:11.600 --> 0:12:13.480 Let's keep in mind that some jobs will. 0:12:13.320 --> 0:12:17.120 Be replaced by AI, and these may be some. 0:12:16.440 --> 0:12:17.640 Clerical type of jobs. 0:12:17.679 --> 0:12:19.280 But then if you look at a lot of other 0:12:19.400 --> 0:12:22.199 areas in this market, in the labor market, some of 0:12:22.240 --> 0:12:25.480 these jobs may just get better at productivity, efficiency will just. 0:12:25.480 --> 0:12:27.040 Improve by the use of AI. 0:12:27.240 --> 0:12:29.720 So I'm not ready to say that this is a 0:12:29.760 --> 0:12:33.040 really detrimental thing to the labor market going forward. I 0:12:33.080 --> 0:12:35.520 think that it can actually help improve quite a bit. 0:12:36.280 --> 0:12:40.360 Okay, So how do you advise clients to, I mean, 0:12:40.679 --> 0:12:44.680 what to do in this bubble like environment that we're in. 0:12:44.760 --> 0:12:46.840 Sit on their hands and do nothing, or move a 0:12:46.840 --> 0:12:49.439 little bit away from some of these MAG seven companies? 0:12:50.640 --> 0:12:50.840 Yeah? 0:12:50.840 --> 0:12:53.079 Absolutely. First of all, look at your allocation. 0:12:53.600 --> 0:12:57.480 Are you overweighted to these MAG seven to these growth sectors, 0:12:57.760 --> 0:13:00.840 because keep in mind, just the market movement may have 0:13:01.040 --> 0:13:04.160 you allocated to this a lot more than you should be, 0:13:04.280 --> 0:13:07.040 So rebalance. And I know that may seem kind of boring, 0:13:07.080 --> 0:13:09.840 but it's the end of the year. Rebalance portfolios where 0:13:09.880 --> 0:13:14.480 you think is necessary, where it's overrun. The growth technology names, 0:13:14.520 --> 0:13:16.319 these are the most at risk. So any of these 0:13:16.360 --> 0:13:18.840 big high flyers that you've seen this year, those with 0:13:18.960 --> 0:13:21.600 really high multiples, these are the ones that we would 0:13:21.640 --> 0:13:25.120 start reducing. Make sure that you're more diversified than just 0:13:25.200 --> 0:13:26.160 holding on to those. 0:13:26.280 --> 0:13:28.079 Because what we have seen in. 0:13:28.200 --> 0:13:32.040 Historical pullbacks or corrections in the market that sometimes when 0:13:32.080 --> 0:13:35.439 there's a valuation correction, the biggest winners are the ones 0:13:35.520 --> 0:13:38.360 that get sold because they're just turns. It turns into 0:13:38.440 --> 0:13:41.200 this indiscriminate selling where you're selling all the winners. 0:13:41.280 --> 0:13:45.160 So be very careful there. Make sure that your portfolios. 0:13:44.720 --> 0:13:47.000 Balance where you want to be and don't be overweighted 0:13:47.240 --> 0:13:50.560 a substantial amount to these growth and technology large cap names. 0:13:50.640 --> 0:13:53.320 And then yet, having said that, those large cap tech 0:13:53.400 --> 0:13:56.760 names are the ones that continue to you know, provide 0:13:57.000 --> 0:13:59.320 you know, you see the growth top and bottom line 0:13:59.720 --> 0:14:00.560 over and over again. 0:14:00.679 --> 0:14:02.320 It's kind of interesting that everybody's. 0:14:01.960 --> 0:14:03.960 Like, wait time to back off, and then we see 0:14:04.000 --> 0:14:06.880 once again another quarter or another year where that's where 0:14:06.880 --> 0:14:10.160 the momentum is. So how do you be smart about 0:14:10.480 --> 0:14:14.400 not just chasing maybe games that won't happen or realizing 0:14:14.440 --> 0:14:16.640 the reality of our world is a big tech world 0:14:16.760 --> 0:14:18.840 and you look at those companies and they are part 0:14:18.880 --> 0:14:22.920 of really almost all of our lives in a big way. 0:14:23.000 --> 0:14:25.840 Yeah, just be careful of what you're paying the price 0:14:25.880 --> 0:14:28.640 that you're paying for these names. Are you paying for 0:14:28.760 --> 0:14:31.600 earnings that are now two years forward? And that's what 0:14:31.640 --> 0:14:33.040 we see. When you look at the S and P 0:14:33.120 --> 0:14:36.320 five hundred, which is primarily your mag seven stocks, you 0:14:36.360 --> 0:14:39.920 can see that earnings estimate's going on to twenty twenty seven. 0:14:40.160 --> 0:14:41.920 You put a reasonable valuation on that. 0:14:41.960 --> 0:14:44.360 There's really not much upside if you're looking at the 0:14:44.400 --> 0:14:47.040 fair value the SAP five hundred, and that's in twenty 0:14:47.080 --> 0:14:50.200 twenty seven. So just be very careful what level of 0:14:50.240 --> 0:14:52.720 earnings you're paying for and how far out because there 0:14:52.760 --> 0:14:55.360 is a lot of uncertainty between now in twenty twenty seven, 0:14:55.480 --> 0:14:57.880 so be careful paying up for that momentum. 0:14:58.200 --> 0:14:59.840 You're happy with earnings thus far? 0:15:01.200 --> 0:15:03.280 Thus far, yes, earnings have been great, but let's also 0:15:03.360 --> 0:15:05.680 keep in mind that earnings tend to beat off the 0:15:05.880 --> 0:15:09.160 estimates between three and five percent every earning season. I'm 0:15:09.160 --> 0:15:11.400 more concerned about what we see for next year and 0:15:11.440 --> 0:15:12.840 then now that we are starting to get some of 0:15:12.840 --> 0:15:15.280 those estimates for twenty seven, what are people looking at 0:15:15.280 --> 0:15:15.960 going forward? 0:15:16.040 --> 0:15:17.440 What do you think is the biggest risk in a 0:15:17.440 --> 0:15:19.880 week where we have the Supreme Court taking up a 0:15:19.960 --> 0:15:24.720 case against President Trump's tariffs, if that gets undone, what would. 0:15:24.440 --> 0:15:26.760 That mean for financial markets? 0:15:28.080 --> 0:15:30.320 I think the markets are looking for any kind of 0:15:30.360 --> 0:15:33.320 news because we don't really have the economic data obviously 0:15:33.360 --> 0:15:36.480 with the government shut down, so they're looking for any catalyst, 0:15:36.520 --> 0:15:38.920 whether it's to the upside or downside. Unfortunately, we think 0:15:38.920 --> 0:15:41.120 there's more downside risks in the near term. 0:15:41.160 --> 0:15:43.920 But if that tariff gets undone, what would that mean 0:15:43.960 --> 0:15:47.240 for financial market? It's just got about twenty seconds, I. 0:15:47.160 --> 0:15:50.480 Think, just just volatility instability, because then we've all got 0:15:50.560 --> 0:15:53.120 to go back and kind of reprice what the teriff 0:15:53.160 --> 0:15:55.800 expectations may be. So and then what will the Trump 0:15:55.840 --> 0:15:58.480 administration do. What's the next lever that they may have 0:15:58.560 --> 0:16:00.360 to pull in order to get the terror through. 0:16:00.440 --> 0:16:03.120 It'd be kind of messy, that's for sure, all right, Megan, 0:16:03.160 --> 0:16:03.800 thanks so much. 0:16:04.240 --> 0:16:08.120 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:16:08.200 --> 0:16:11.360 us live weekday afternoons from two to five eastering. Listen 0:16:11.400 --> 0:16:15.000 on Apple Karplay and Android Auto with the Bloomberg Business app, 0:16:15.200 --> 0:16:17.720 or watch us live on YouTube. 0:16:19.120 --> 0:16:22.160 Ryan Gould is Bloomberg News USIPO and Deal's reporter. Red 0:16:22.160 --> 0:16:24.480 Brown is Bloomberg News Consumer Reporter. They both join us 0:16:24.520 --> 0:16:27.520 here in the Bloomberg Interactive Broker's studio. Kenview surging as 0:16:27.560 --> 0:16:29.840 much as twenty percent earlier in the session, Kimberly Clark 0:16:30.160 --> 0:16:33.280 following as much as fourteen and a half percent earlier 0:16:33.320 --> 0:16:35.520 in the session, now down just fourteen percent, but still 0:16:35.800 --> 0:16:38.800 investors are sending the message. When I heard this news 0:16:38.840 --> 0:16:42.120 this morning, I'm thinking of myself, where did this come from? Well, 0:16:42.160 --> 0:16:44.440 we're on the call, We're on our editorial call, and 0:16:45.000 --> 0:16:48.560 I'm saying, who wants to deal with the litigation that 0:16:48.720 --> 0:16:51.320 tail and all could potentially see as a result of 0:16:51.360 --> 0:16:55.720 being front and center in this These comments that President 0:16:55.800 --> 0:16:58.720 Trump and RFK said at the White House earlier this year, 0:16:59.200 --> 0:17:03.120 read ken View is not just talent, al zertech listing, 0:17:03.720 --> 0:17:07.320 band aid, nutrient GENA and more. But what's the litigation 0:17:07.480 --> 0:17:09.320 risk here for Kimberly Clark. 0:17:10.560 --> 0:17:12.719 It's obviously it's hard to say right now, Like this 0:17:12.800 --> 0:17:15.040 is a very fast moving story when it comes to Tiland, 0:17:15.160 --> 0:17:18.520 like we have just that one lawsuit right now in Texas. 0:17:19.160 --> 0:17:22.840 There's been some asks, some some some petitions, some some 0:17:23.200 --> 0:17:26.560 consumer petitions to have label changed on Thailand as well. 0:17:27.480 --> 0:17:29.879 But I think what you're getting in the reaction in 0:17:30.000 --> 0:17:33.080 Kimberly Clark shares today do kind of underline that that 0:17:33.160 --> 0:17:35.600 is what is on people's mind, right, is this legal risk? 0:17:36.720 --> 0:17:38.520 There is there is a there's an argument you made 0:17:38.520 --> 0:17:40.760 that like ken View is a really great property, like 0:17:40.840 --> 0:17:43.520 tim you just named off all of those like Marquee brands, right, 0:17:43.600 --> 0:17:46.320 so you know, I think there's a kind of a 0:17:46.359 --> 0:17:49.840 consensus among the analysts that this is probably a long 0:17:49.920 --> 0:17:52.359 term play, like potentially maybe getting a really good deal 0:17:52.400 --> 0:17:56.159 here considering how like how poorly can your shares have 0:17:56.200 --> 0:17:58.840 done so far this year. That's not just the legal risk, 0:17:58.880 --> 0:18:00.960 it's also just kind of bad performance as well, but 0:18:01.440 --> 0:18:04.120 remains to be seen. I guess on this legal risk question, we. 0:18:04.040 --> 0:18:06.440 Should remind everybody this is the consumer products division of 0:18:06.520 --> 0:18:08.439 Johnson and Johnson. It was spun off back in twenty 0:18:08.440 --> 0:18:12.399 twenty three. Shares have struggled this year. There's the Bayer 0:18:12.440 --> 0:18:16.040 Monsanto situation that one analyst brought up Carol earlier today 0:18:17.119 --> 0:18:20.280 read in company writing that vital knowledge is Adam chris 0:18:20.320 --> 0:18:22.960 A fully said that there could be concerned about whether 0:18:23.000 --> 0:18:26.320 the Kleenex maker is getting itself into a Bayer Monsanto situation, 0:18:26.400 --> 0:18:29.159 referring to Bayer's acquisition of Monsanto back in twenty eighteen, 0:18:29.640 --> 0:18:32.320 which laid in the German pharmaceutical company with legal costs. 0:18:32.320 --> 0:18:32.800 Could it would have? 0:18:32.800 --> 0:18:33.080 Should? 0:18:33.080 --> 0:18:34.400 I like, we have to guess. I guess see how 0:18:34.440 --> 0:18:35.240 it like plays out. 0:18:35.320 --> 0:18:37.640 Ultimately we should point out shares of ken View down 0:18:37.680 --> 0:18:38.760 twenty three percent year to date. 0:18:38.840 --> 0:18:39.840 Ryan, come on in on this. 0:18:40.000 --> 0:18:43.199 I mean they are paying a forty six premium to 0:18:43.440 --> 0:18:46.080 ken VU's closing price on Friday. Mind you, this share 0:18:46.160 --> 0:18:47.920 has been the share price has been beaten up a 0:18:47.960 --> 0:18:48.360 little bit. 0:18:49.240 --> 0:18:49.800 What's the thinking? 0:18:49.840 --> 0:18:51.719