WEBVTT - Day 2 of COMPUTEX Taiwan: Nvidia vs. AMD 0:00:00.120 --> 0:00:09.880 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.960 --> 0:00:14.760 This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis 0:00:14.760 --> 0:00:17.479 along with Doug Krisner. Join us each day for the 0:00:17.520 --> 0:00:20.920 stories making news and moving markets in the Asia Pacific. 0:00:21.120 --> 0:00:23.560 You can subscribe to the show anywhere you get your 0:00:23.560 --> 0:00:27.520 podcasts and always on Bloomberg Radio, the Bloomberg Terminal and 0:00:27.560 --> 0:00:28.920 the Bloomberg Business App. 0:00:29.480 --> 0:00:33.199 Chip makers in Vidia and Advanced micro Devices are squaring 0:00:33.240 --> 0:00:36.800 off in the fight to control artificial intelligence. We have 0:00:36.840 --> 0:00:38.880 more from Bloomberg's Johan Wog in Hong Kong. 0:00:39.280 --> 0:00:42.000 The two company CEOs fleshed out there are different tacks 0:00:42.040 --> 0:00:45.640 on AI. At the world's largest computing conference in Taipei 0:00:45.880 --> 0:00:49.360 and Vidias Jensen Wang headlined his presentation by teasing a 0:00:49.440 --> 0:00:52.880 new rubenship and visions for twenty twenty six. He spoke 0:00:52.880 --> 0:00:57.240 about the company's dominance in generative AI AMDs. Lisa Sue 0:00:57.320 --> 0:01:00.960 focused on the design of neuroprocessors that run AI surfaces 0:01:00.960 --> 0:01:05.400 directly from laptops. She matched Hwang's annual upgrade timeline by 0:01:05.440 --> 0:01:08.800 announcing new chips for twenty twenty five and twenty twenty six. 0:01:09.200 --> 0:01:12.720 Deta Gates at Huang's performance rove home and Vidia's dominance, 0:01:12.959 --> 0:01:15.080 and that AMD has a long way to go to 0:01:15.200 --> 0:01:17.839 catch up in Hong Kong. Join Wang Bloomberg Radio. 0:01:18.280 --> 0:01:21.480 Joining us now on the program is Daniel Newman, CEO 0:01:21.600 --> 0:01:24.280 of the Futureroom Group, with a close I look at 0:01:24.280 --> 0:01:27.639 the computext Tech show in Taiwan, which is turning out 0:01:27.880 --> 0:01:30.560 to be quite the show. Daniel. We not only heard 0:01:30.600 --> 0:01:33.560 from Jensen Huang who cheated a little bit and went 0:01:33.600 --> 0:01:37.600 early before the keynote from Lisa Sue, and then you 0:01:37.680 --> 0:01:41.880 also had the qualcom CEO, Christiano Amone, and then we've 0:01:41.920 --> 0:01:44.640 got Pat Gelsinger coming up later this morning. I think 0:01:44.680 --> 0:01:47.600 one of the key questions for everybody coming out of 0:01:47.640 --> 0:01:51.160 this will be is there any sign of Nvidia peaking 0:01:51.680 --> 0:01:54.560 in the selling of these AI accelerator chips or is 0:01:54.560 --> 0:01:56.080 that a long ways in the future. 0:01:56.320 --> 0:01:58.840 Look, I think there's a significant opportunity right now to 0:01:58.920 --> 0:02:01.520 consider how my which frontloading the market is doing in 0:02:01.600 --> 0:02:03.800 terms of all this CAPEX investment, and how much of 0:02:03.840 --> 0:02:05.320 this is going to be sold through, how much of 0:02:05.360 --> 0:02:06.000 this is being used. 0:02:06.000 --> 0:02:08.280 We've got five hyperscalers. 0:02:07.920 --> 0:02:11.280 Making up a big component of in Videa's overall revenue. 0:02:11.520 --> 0:02:13.800 But having said that, the company has what seems like 0:02:13.840 --> 0:02:16.520 a multi year, if not really a decade lead in 0:02:16.520 --> 0:02:19.240 some of these accelerated compute capabilities. And they really did 0:02:19.280 --> 0:02:21.959 a good job at this particular computext reiterating that one 0:02:22.000 --> 0:02:25.400 year cadence they teased out the Ruben and the Ruben Ultra, 0:02:25.800 --> 0:02:28.160 and I think they really cemented for both their investors 0:02:28.160 --> 0:02:30.040 and their customers that they have a plan to. 0:02:30.040 --> 0:02:31.200 Really stay the course. 0:02:31.639 --> 0:02:34.919 Of course, hearing from the other side, Lisa seu is saying, hey, 0:02:35.000 --> 0:02:37.160 don't count us out yet, I expect that Pat Gelsinger 0:02:37.200 --> 0:02:38.840 is going to say the same thing today. So on 0:02:38.960 --> 0:02:41.000 the data centerside of video has got a great advantage, 0:02:41.080 --> 0:02:43.720 but it does have concentration with customers, and there is 0:02:43.800 --> 0:02:45.200 really still pretty early innings. 0:02:45.440 --> 0:02:48.400 So if nvidio is being so aggressive Daniel as to 0:02:48.639 --> 0:02:52.600 upgrade AI accelerators every year, how costly is that? That's 0:02:52.680 --> 0:02:55.440 a pretty expensive endeavor I would imagine, am I right? 0:02:55.480 --> 0:02:56.640 Oh yeah, so you know you. 0:02:56.680 --> 0:02:59.200 Even Salilon Musk tweeted out something yesterday that kind of 0:02:59.240 --> 0:03:02.960 talked about how he is intending his CAPEX between moving 0:03:03.000 --> 0:03:05.639 generation to generation from his H one hundred cluster, which 0:03:05.680 --> 0:03:08.200 is one of the more recent advanced in vidio chips 0:03:08.200 --> 0:03:10.840 to their B two hundreds and how many he intends 0:03:10.880 --> 0:03:12.359 to buy. He also put a dollar in a price 0:03:12.400 --> 0:03:14.359 tag next that they could see just billions of dollars 0:03:14.360 --> 0:03:16.760 by a single company in order to invest in Having 0:03:16.800 --> 0:03:18.800 the AI capabilities that they will need to lead a 0:03:18.840 --> 0:03:21.720 market a year over year is going to put companies 0:03:21.720 --> 0:03:25.000 in position, whether it's an AWS, whether it is a 0:03:25.080 --> 0:03:27.720 Microsoft or Google, in a position to decide when do 0:03:27.760 --> 0:03:30.600 they invest when do they also invest in their own 0:03:30.680 --> 0:03:32.640 homegrun soaken, which many of these companies are doing it 0:03:32.680 --> 0:03:34.080 as well, but they're going to have to stay up 0:03:34.080 --> 0:03:35.720 to date to compete. And of course AMD and Intel 0:03:35.720 --> 0:03:37.520 and others want a piece of that. And in video 0:03:37.600 --> 0:03:38.960 is winning the market and it's going to be hard 0:03:38.960 --> 0:03:39.720 to take away later. 0:03:40.160 --> 0:03:43.560 They're just minting cash. It's very interesting and curious what 0:03:43.600 --> 0:03:46.040 to do with all that cash. But it's also on 0:03:46.120 --> 0:03:48.640 the other side in terms of all those people buying. 0:03:48.680 --> 0:03:51.800 He's got a catchy phrase that he Jensen Wong does 0:03:51.840 --> 0:03:55.960 that he rolled out a number of times recently, which 0:03:56.000 --> 0:03:57.840 is the more you spend, the more you save. 0:03:58.160 --> 0:04:00.280 Yeah, I mean, look, he's looking at how much ect 0:04:00.280 --> 0:04:03.760 a computing can add capacity, drive efficiencies and productivity inside 0:04:03.760 --> 0:04:05.960 of businesses, and of course we're seeing that move now 0:04:06.040 --> 0:04:08.640 from the data center to the edge and interestingly enough 0:04:08.640 --> 0:04:11.920 in the computext capacity. This show has been all about 0:04:11.960 --> 0:04:13.920 moving it to the edge and onto the devices. So 0:04:13.920 --> 0:04:17.440 you're seeing Qualcom, Microsoft, AMD, Intel, So the data center, 0:04:17.560 --> 0:04:20.200 Jensen's really has that in a good place right now, 0:04:20.200 --> 0:04:22.160 and Intel and AD are going to fight, but at 0:04:22.160 --> 0:04:24.320 the edge and on these PCs. It's actually much more 0:04:24.320 --> 0:04:26.920 exciting seeing what Qualcom's doing. And Microsoft is sort of 0:04:27.040 --> 0:04:29.680 minting and king making right now a little bit with 0:04:29.720 --> 0:04:32.120 QUALCMM and Itstey architectures, and of course Intel AMD there 0:04:32.160 --> 0:04:34.039 again are trying to fight to keep up and stay 0:04:34.040 --> 0:04:34.880 in this conversation. 0:04:35.440 --> 0:04:39.239 Speaking of conversations, Daniel, I'm curious about the conversation around 0:04:39.240 --> 0:04:43.440 diversifying chip production out of Taiwan. Is that a do 0:04:43.480 --> 0:04:45.000 you think high on the mind of a lot of 0:04:45.000 --> 0:04:45.960 people in the industry. 0:04:46.279 --> 0:04:48.400 I think it's high on the mind and by a 0:04:48.400 --> 0:04:51.520 lot of people here. Sorry I'm in Taiwan today, but 0:04:51.560 --> 0:04:54.120 in the United States, I mean it's definitely top of mind, 0:04:54.279 --> 0:04:57.520 you know, having zero percent of our leading edge capacity manufactured. 0:04:57.520 --> 0:05:00.600 There's a lot of geopolitical and macroeconomic risks. I mean, 0:05:00.640 --> 0:05:07.000 our partnership with TSMC are various bablist makers is strong. 0:05:07.080 --> 0:05:09.680 They all value that relationship very much. But the chips acts. 0:05:09.680 --> 0:05:12.040 The fifty plus billion dollars spending to not only support 0:05:12.080 --> 0:05:15.520 Intel's growth but also TSMC and Samsung and others to 0:05:15.520 --> 0:05:18.800 build capacity in the US is critical because there is 0:05:18.880 --> 0:05:21.640 too much risk in the entire economy right now seems 0:05:21.640 --> 0:05:24.120 to be determined by how fast we could move in 0:05:24.240 --> 0:05:25.919 silicon and semiconductor advancement. 0:05:27.120 --> 0:05:30.159 So it seems like you've got some companies that are 0:05:30.279 --> 0:05:33.080 really at the forefront for all of this. You can 0:05:33.080 --> 0:05:35.720 correct me if you think I'm wrong, But in Nvidia's 0:05:35.720 --> 0:05:38.200 at the top, and you've got Broadcom, which is in there. 0:05:38.279 --> 0:05:42.719 You've got obviously AMD, TSMC. I mean those four right 0:05:42.760 --> 0:05:47.160 there are just, you know, sort of in insane positions. 0:05:47.520 --> 0:05:52.440 Microsoft because it can come up with applications to interact 0:05:52.480 --> 0:05:56.080 with basically the enterprise sector and maybe meta with the 0:05:56.120 --> 0:05:58.599 consumer sector. The one thing that I'm curious about with 0:05:58.640 --> 0:06:02.560 Microsoft is it had a great quarter, the sales and 0:06:02.680 --> 0:06:05.039 the profits, but the stock has been down over the 0:06:05.040 --> 0:06:07.280 past couple of months, and you wonder whether or not 0:06:07.760 --> 0:06:11.440 that's because you know, it's got this weird relationship with 0:06:11.480 --> 0:06:15.560 open Ai. It turns so much of what's happening in 0:06:15.600 --> 0:06:18.480 the future to open Ai, but it doesn't control the company. 0:06:18.520 --> 0:06:21.880 It's not part of Microsoft. You know, how delicate is that. 0:06:22.080 --> 0:06:23.799 Yeah, well, you've seen some of the comments from Satia 0:06:23.880 --> 0:06:26.359 Adella about sort of how deeply entrenched it is with 0:06:26.440 --> 0:06:28.479 open Ai, and of course its products have embedded in. 0:06:28.640 --> 0:06:29.760 Its ability to advance the. 0:06:29.760 --> 0:06:34.960 Copilot across its enterprise and consumer stack has been somewhat prolific. 0:06:35.040 --> 0:06:36.760 How quickly they were able to get this into market. 0:06:36.839 --> 0:06:39.200 At the same time, I think there's two things really 0:06:39.240 --> 0:06:41.720 at stake here. One is what does Microsoft need to 0:06:41.720 --> 0:06:44.200 build on its own I think you saw recently they 0:06:44.279 --> 0:06:46.599 started launching some of their own large language models. They've 0:06:46.600 --> 0:06:49.440 discussed building more of their own large language models and 0:06:49.520 --> 0:06:53.000 small language models for enterprises, and that's a big stake. 0:06:53.040 --> 0:06:54.839 And then, of course, on the other side is you know, 0:06:54.839 --> 0:06:57.040 there's been a lot of controversy around Sam Altman. You've 0:06:57.080 --> 0:07:01.680 seen top lieutenants of the company leaving citing concerns about 0:07:01.720 --> 0:07:05.720 the company's privacy and security and trust, and this has 0:07:05.720 --> 0:07:07.760 brought question marks. Of course, Microsoft tried to be and 0:07:07.760 --> 0:07:10.400 focuses on me very ethical, very progressive that way under 0:07:10.400 --> 0:07:13.960 Sati Nadella's leadership, and there's all kinds of controversies right now, 0:07:14.400 --> 0:07:17.200 and it seems to be following Sam Altman, and I 0:07:17.200 --> 0:07:19.080 think they want to hedge that. And so I think 0:07:19.120 --> 0:07:21.200 to some extent, Microsoft has to hedge that, and I 0:07:21.200 --> 0:07:23.280 think they're doing it, you know, with the excitement und copilot, 0:07:23.280 --> 0:07:25.080 plus with building open AI and Azure in their own 0:07:25.120 --> 0:07:28.360 models of open you know, democratizing models, bringing in third parties, 0:07:28.600 --> 0:07:31.520 building their own, building their own silicon. And I also 0:07:31.520 --> 0:07:33.760 think to some extent, you know, right now the market's 0:07:33.760 --> 0:07:35.880 a little tough on software. But I do think the 0:07:35.880 --> 0:07:37.520 market's kind of getting that one wrong. 0:07:38.440 --> 0:07:41.280 Well, what do you think the market is overlooking or 0:07:41.440 --> 0:07:44.560 maybe not focusing squarely enough on when it comes to 0:07:44.600 --> 0:07:47.960 the application of artificial intelligence. Is it how it may 0:07:48.080 --> 0:07:53.400 impact drug development, is it management of the electrical grid? 0:07:53.440 --> 0:07:53.960 What is it? 0:07:55.320 --> 0:07:58.520 I think the long term we are seeing it largely correct. 0:07:58.520 --> 0:08:00.360 I think right now the market has a little bit 0:08:00.400 --> 0:08:02.880 over rotated to hardware. You know, if you actually look 0:08:02.880 --> 0:08:04.320 at a lot of the deep value that's in do 0:08:04.400 --> 0:08:06.920 Vidia or AMD, It is in the software. If you 0:08:06.920 --> 0:08:09.840 look at what these new aipcs coming from Microsoft, Qualcom 0:08:09.840 --> 0:08:12.320 and others, it is the software that makes these things possible. 0:08:12.320 --> 0:08:14.080 But also you look at enterprise software last week, you 0:08:14.080 --> 0:08:16.120 looked at the sell offs of Salesforce, you looked at 0:08:16.120 --> 0:08:18.600 the selloffs of service now in these other companies. These 0:08:18.640 --> 0:08:22.600 companies have hundreds of thousands of diversified customers that are 0:08:22.720 --> 0:08:25.440 in sticky contracts where AI is going to add value. 0:08:25.520 --> 0:08:27.400 But I think the market's uncertain of how much to 0:08:27.560 --> 0:08:31.600 software add net dollar retention and value to a customer 0:08:31.680 --> 0:08:33.400 versus how much AI has to be baked in just 0:08:33.400 --> 0:08:35.720 to keep a customer. And if the market can show 0:08:35.760 --> 0:08:38.000 some clarity there, I could see more dollars rotating to 0:08:38.120 --> 0:08:41.800 software because they're very durable, and I think you're getting 0:08:41.880 --> 0:08:43.640 kind of the wrong deal right now. 0:08:43.960 --> 0:08:45.800 I've been thinking about that a lot in the past 0:08:45.880 --> 0:08:48.440 couple of weeks, seeing those huge sell offs and wondering 0:08:48.440 --> 0:08:51.440 whether or not software might be an interesting place for 0:08:51.559 --> 0:08:54.640 investors to think about deploying money going forward, at least 0:08:54.640 --> 0:08:55.480 over the next quarter. 0:08:55.720 --> 0:08:58.480 Yeah, I mean the concentration of the hardware companies and 0:08:58.600 --> 0:09:00.680 especially some of these chip makers. You know, I've seen 0:09:00.720 --> 0:09:03.160 data points that some of these shipmakers, like the Nvidia 0:09:03.240 --> 0:09:05.160 has you know, two customers generateing over ten percent of 0:09:05.160 --> 0:09:06.000 their entire revenue. 0:09:06.040 --> 0:09:07.480 Five that's generating more than half. 0:09:07.760 --> 0:09:10.120 That doesn't mean it's not an incredibly valuable company with 0:09:10.160 --> 0:09:10.920 a great product. 0:09:11.240 --> 0:09:12.360 But like I said, you look at an. 0:09:12.360 --> 0:09:16.480 Oracle, or a salesforce or a service now fifty one hundred, 0:09:16.520 --> 0:09:20.360 two hundred thousand plus customers that really can't pivot. So 0:09:20.400 --> 0:09:21.959 AI is going to get added, They're going to be 0:09:21.960 --> 0:09:23.600 able to charge for it. And I see a lot 0:09:23.600 --> 0:09:25.320 of value in that, but I don't know what the 0:09:25.360 --> 0:09:29.000 market is seeing clear concrete value from AI. And everybody 0:09:29.040 --> 0:09:31.360 wants to say your growth, your margin, your expansion, your 0:09:31.360 --> 0:09:34.400 revenue is somehow tied to AI, and really in Nvidia 0:09:34.640 --> 0:09:36.440 is the only company really showing that right now. 0:09:37.080 --> 0:09:38.960 Yeah, a lot of these stocks are down like twenty 0:09:39.040 --> 0:09:42.840 twenty five thirty percent. It's a pretty interesting story. Daniel, 0:09:42.840 --> 0:09:45.520 thank you very much for joining us. Daniel Newman, CEO 0:09:45.559 --> 0:09:49.080 of the Futureroom Group, with us from the Computechs Tech 0:09:49.160 --> 0:09:50.640 Show in Taiwan. 0:09:57.720 --> 0:10:00.800 Let's talk markets now with our guest Robert he joins 0:10:00.880 --> 0:10:03.720 us in the New York studio Robert Is Cio at 0:10:03.800 --> 0:10:07.160 Blank Ye Shine Wealth Management. Good of you to join us, 0:10:07.160 --> 0:10:09.400 Thanks for stopping by. I want to begin. We can 0:10:09.400 --> 0:10:11.680 talk about the macro, the fed, all of it in 0:10:11.760 --> 0:10:13.440 a moment, but I want to begin with the election 0:10:13.520 --> 0:10:16.080 because I was struck today by the note from the 0:10:16.120 --> 0:10:19.720 strategist over at Morgan Stanley saying that this year's election 0:10:20.480 --> 0:10:23.040 has the potential to impact markets in a major way, 0:10:23.200 --> 0:10:26.320 and a couple of things maybe at risk. One is 0:10:26.320 --> 0:10:28.800 the fact that we've got these macro trades that seem 0:10:28.840 --> 0:10:31.280 to be very popular right now, and the closer we 0:10:31.320 --> 0:10:34.240 get to November, Morgan believes there's a risk that they 0:10:34.280 --> 0:10:37.600 could get unwound pretty quickly. One is being long the 0:10:37.679 --> 0:10:40.800 dollar versus some of the other currencies that we talk 0:10:40.840 --> 0:10:44.320 about on this show, like the end. The other is 0:10:44.400 --> 0:10:48.559 being underweight longer term treasuries. Does the election have the 0:10:48.600 --> 0:10:50.240 potential to really rattle the market? 0:10:50.280 --> 0:10:52.040 Do you think? You know? 0:10:52.080 --> 0:10:54.640 It's funny because every time we have every four years 0:10:54.720 --> 0:10:59.040 or even a mid cycle election cycle, there's a lot 0:10:59.040 --> 0:11:01.280 of sides that weigh in, right, and there's a lot 0:11:01.280 --> 0:11:03.360 of money that's being shifted and moved around. If you 0:11:03.400 --> 0:11:06.160 look at election sort of calculus in the math today, 0:11:06.280 --> 0:11:08.600 it would show that Trump beats Biden, right, But we've 0:11:08.600 --> 0:11:11.160 got a lot of room to run, and there's a 0:11:11.160 --> 0:11:14.080 lot of stuff that could happen between now in November, 0:11:14.120 --> 0:11:17.319 and quite frankly, much like what we saw at the 0:11:17.320 --> 0:11:20.800 beginning of the year, where everyone anticipated multiple rate cuts, 0:11:21.400 --> 0:11:24.520 all bets are off. Everyone's wrong, even the experts. So 0:11:24.640 --> 0:11:28.280 I'm almost inclined to take the opposite of this trade 0:11:28.320 --> 0:11:31.120 the counter of this simply because you could have the 0:11:31.160 --> 0:11:35.520 Fed conceivably rate cut back end of the year. Right, 0:11:35.559 --> 0:11:38.520 what does that do the dollar? You could have a 0:11:38.559 --> 0:11:41.800 lot of different sort of aspects that will play out 0:11:42.480 --> 0:11:46.120 that are completely unknown. While it feels good to make 0:11:46.120 --> 0:11:48.280 that trade or that call right now, you know, if 0:11:48.280 --> 0:11:49.959 you look at the baskets, you know, if Trump were 0:11:50.000 --> 0:11:53.040 to win today, those baskets of stocks, if you will, 0:11:53.520 --> 0:11:56.240 a lobbying basket, if what I'm referring to of stocks 0:11:56.240 --> 0:12:00.400 that would benefit if he was in the office, are 0:12:00.640 --> 0:12:02.880 doing better than the Biden index. The strategy just puts 0:12:02.960 --> 0:12:04.920 up a great pay piece as it relates to that, 0:12:05.240 --> 0:12:07.720 but it's bounced around back and forth, and it's as 0:12:07.800 --> 0:12:10.199 volatile as anything else. So as much as we'd like 0:12:10.280 --> 0:12:12.679 to say, okay, this is sort of the way of proceeding, 0:12:13.240 --> 0:12:13.920 i'd be careful. 0:12:14.840 --> 0:12:18.280 One of the interesting sort of inflection points that we 0:12:18.320 --> 0:12:20.920 could talk about is it appears the market is switching 0:12:20.960 --> 0:12:26.120 its concern from sticky inflation to growth. It's kind of 0:12:26.120 --> 0:12:29.040 a combination of the data that we've seen manufacturing week, 0:12:29.080 --> 0:12:32.679 consumer spending, weaker than expected, labor with a few notes 0:12:32.720 --> 0:12:36.480 of caution there. It's not exactly a growth scare yet, 0:12:36.720 --> 0:12:38.400 is it. But is that where we're heading. 0:12:39.000 --> 0:12:41.680 Yeah, we just talked them before we got on the 0:12:41.760 --> 0:12:43.760 radio just now, which is you know, right now we're 0:12:43.800 --> 0:12:46.800 in that sweet spot of bad news is good news 0:12:46.800 --> 0:12:49.480 for the equity market. But when does bad news become 0:12:49.480 --> 0:12:52.120 bad news for the equity market? As we're seeing with 0:12:52.160 --> 0:12:56.280 the ism, you could, you know, tease out some good 0:12:56.320 --> 0:13:00.720 information from it, but it's a softening economy and I 0:13:00.760 --> 0:13:03.800 think but we were also discussing if you travel around 0:13:03.800 --> 0:13:07.079 some certain cities there are some booms and bustling and 0:13:07.520 --> 0:13:10.040 everything that we're seeing and it doesn't meet the eye. 0:13:10.080 --> 0:13:12.280 And then you add in I know, it's the story 0:13:12.320 --> 0:13:14.319 of twenty twenty four and it will be for twenty 0:13:14.360 --> 0:13:16.920 twenty five. But the AI, I mean, if you look 0:13:16.960 --> 0:13:20.400 at what AI is contributing and what everyone has to 0:13:20.440 --> 0:13:22.280 do just in the s and P. Five hundred to 0:13:22.320 --> 0:13:25.679 increase their capex spending, you know, it's a game of 0:13:26.000 --> 0:13:28.959 it's it's a game of war right now with regards 0:13:29.000 --> 0:13:31.439 to everyone has to play catch up and everything they 0:13:31.440 --> 0:13:35.480 had set for like, okay, let's be conservative and cautious everyone. 0:13:35.600 --> 0:13:38.240 You know, the primal spirits are playing out right now 0:13:38.440 --> 0:13:39.360 with all the competition. 0:13:39.520 --> 0:13:43.559 The question is on ROI in AI do you expect that. 0:13:45.320 --> 0:13:48.800 It will but not from a profitability standpoint, sooner than 0:13:48.840 --> 0:13:50.559 everyone like it to be. I mean, they're gonna they're 0:13:50.559 --> 0:13:54.240 gonna overspend and outspend, and you know, quite frankly, aren't 0:13:54.240 --> 0:13:58.280 they just buying chips and sitting on them. And that's 0:13:58.280 --> 0:14:00.600 just to keep your competition off the on the sidelines. 0:14:01.080 --> 0:14:04.280 I mean, that's what's happening right now. So but if 0:14:04.280 --> 0:14:06.480 you have the war chest the cash to do it, 0:14:06.720 --> 0:14:10.640 which we're seeing certain companies are doing it, you're basically 0:14:10.800 --> 0:14:13.200 you know, sitting on your little brother. Well you're taking 0:14:13.200 --> 0:14:15.719 off you know, for the for the races, and you know, 0:14:15.760 --> 0:14:17.880 everyone's gonna say it's unfair fight, but when has it 0:14:17.920 --> 0:14:18.280 not been? 0:14:18.920 --> 0:14:20.760 So I don't worry that much about rates at the 0:14:20.760 --> 0:14:24.800 moment because I'm focused on earnings. That's one view. And 0:14:24.880 --> 0:14:27.640 so if you look at the three important areas Robert 0:14:27.680 --> 0:14:31.400 for investors, and we're looking at stocks, you've got earnings, valuations, 0:14:31.800 --> 0:14:35.640 and then the macro backdrop rank them in order of 0:14:35.680 --> 0:14:37.160 importance for you at the moment. 0:14:37.720 --> 0:14:39.920 It's funny you say that because it depends what week 0:14:39.920 --> 0:14:42.720 we're in. Right at the start of the year. You know, 0:14:42.760 --> 0:14:44.160 at the beginning of the year, it's you know, it's 0:14:44.200 --> 0:14:48.000 the FED, and interest rates would run that week sort 0:14:48.000 --> 0:14:51.520 of you know, how we would finish on all indices, 0:14:52.040 --> 0:14:55.240 and now we're looking at you know, AI and AI 0:14:55.400 --> 0:14:58.360 spend and so that would then be the trend. And 0:14:58.440 --> 0:15:01.040 so last week it was the and sort of the 0:15:01.040 --> 0:15:04.160 soft numbers that we're getting economically. I think at the 0:15:04.240 --> 0:15:06.520 end of the day, both of those are important, but 0:15:06.600 --> 0:15:07.760 earnings is number one. 0:15:07.960 --> 0:15:11.040 So I'm curious as to how you're viewing markets offshore 0:15:11.120 --> 0:15:13.160 right now. We may get a rate cut from the ECB, 0:15:14.040 --> 0:15:16.600 and you could make a case that Europe right now 0:15:16.680 --> 0:15:20.040 is showing signs of maybe modest recovery. Do you want 0:15:20.080 --> 0:15:22.160 to pull some money out of the US and it'd 0:15:22.200 --> 0:15:25.280 be more exposed to other parts of the world right now. 0:15:25.480 --> 0:15:28.320 Yeah, it's mixed in terms of the recovery in Europe 0:15:28.600 --> 0:15:31.200 right places like Germany are still kind of pulling out 0:15:31.200 --> 0:15:35.360 of it, but then Japan and India show signs of strength. 0:15:35.880 --> 0:15:38.440 So yeah, you definitely want to take an opportunity to 0:15:38.480 --> 0:15:42.720 see what's out there internationally speaking, and we do that 0:15:42.760 --> 0:15:45.920 for our clients. We're always looking for those opportunities. But yeah, 0:15:45.960 --> 0:15:50.400 it broadened the portfolio look for opportunities internationally, and the 0:15:50.520 --> 0:15:52.880 US conceivably is going to be the last to cut 0:15:53.720 --> 0:15:56.920 in this rate cut cycle, so we're seeing that, you know, 0:15:56.960 --> 0:15:57.680 play out. 0:15:57.960 --> 0:16:01.840 The FED on hold seems to now be the best scenario. 0:16:02.600 --> 0:16:06.800 Both cuts and hikes cause concerns. But as you were, 0:16:07.000 --> 0:16:09.880 as Doug asked you a question about one trade, which 0:16:09.920 --> 0:16:12.600 is you know, dollar strength, and maybe that turns around. 0:16:14.440 --> 0:16:17.440 You know, for international markets, what would they want to 0:16:17.480 --> 0:16:19.960 see from the Fed? They probably want to see some cuts, right, 0:16:20.680 --> 0:16:21.480 get a weaker dollar. 0:16:21.720 --> 0:16:24.920 Yeah, everyone wants to see cuts, and that's the challenge 0:16:24.960 --> 0:16:27.480 and even the FED knows that and they have to be. 0:16:27.720 --> 0:16:30.240 You know, when I was in the studio right before Christmas, 0:16:30.240 --> 0:16:33.040 at the end of the year, I said, higher for longer. 0:16:33.080 --> 0:16:35.880 We positioned our portfolios for our clients, higher for longer, 0:16:36.920 --> 0:16:39.560 and that was you know, everyone's asking me, Well, no, 0:16:39.640 --> 0:16:41.880 we were looking about five or five maybe six cuts 0:16:41.920 --> 0:16:44.880 for twenty twenty four. And the reason why is because 0:16:44.920 --> 0:16:46.520 eighty seven percent of the time, if you look at 0:16:46.520 --> 0:16:49.840 the last waves of inflation, there's always been two waves. 0:16:50.120 --> 0:16:52.000 And that's what the FED has to do. They have 0:16:52.040 --> 0:16:54.760 to hold as long as they possibly can for fear 0:16:54.760 --> 0:16:56.880 of inviting inflation in right. 0:16:57.200 --> 0:16:59.920 So talk to me about how you are balanced right 0:17:00.120 --> 0:17:03.960 now on the equity side versus fixed income. Yeah, maybe 0:17:04.240 --> 0:17:07.920 it's kind of up to each investor, each portfolio. I mean, 0:17:07.920 --> 0:17:10.960 I'm sure that's a very specific ratio, but broadly speaking, 0:17:11.000 --> 0:17:12.399 what's that balance in your mind? 0:17:12.520 --> 0:17:15.440 Ideally in a market like this, we like sixty percent equities, 0:17:15.520 --> 0:17:19.480 thirty percent fixed income, and ten percent alternatives. Alternatives are 0:17:19.480 --> 0:17:23.080 looking really attractive in the private markets, especially the ones 0:17:23.080 --> 0:17:26.439 that we've been able to source. But alternatives might not 0:17:26.480 --> 0:17:29.040 be right for everybody, But for the most part, yeah, 0:17:29.200 --> 0:17:33.600 balance portfolio is sixty forty overall is a good mix 0:17:33.680 --> 0:17:37.000 right now because the fixed income again is sexy again 0:17:37.000 --> 0:17:38.800 because it's paying you four and a half five percent, 0:17:38.920 --> 0:17:42.320 right And also, once we see volatility return in the 0:17:42.359 --> 0:17:45.240 equity market, because we really haven't seen that, we usually 0:17:45.280 --> 0:17:48.359 strategic rebalance, which means we'll take out of maybe the 0:17:48.400 --> 0:17:51.240 treasuries that we're sitting on clipping five percent and then 0:17:51.320 --> 0:17:53.640 buy some equities that are down ten, fifteen, twenty percent 0:17:53.680 --> 0:17:54.679 that we like cap gain. 0:17:54.640 --> 0:17:55.920 Right yo, yeah, big time. 0:17:56.600 --> 0:17:58.800 Yeah. Well, let's talk a little bit about those alternatives 0:17:58.800 --> 0:18:01.600 as well that you just mentioned. Sometimes people put property 0:18:01.640 --> 0:18:04.160 in there. You don't have to, but what looks best 0:18:04.280 --> 0:18:05.520 among the alternatives for you? 0:18:06.359 --> 0:18:08.960 Yeah, we avoid you know, we're from California in terms 0:18:09.000 --> 0:18:11.600 of most of our clients, and so most of the 0:18:11.600 --> 0:18:14.159 clients made money in real estate. So really when we 0:18:14.200 --> 0:18:16.200 look at an asset allocation for a client, we take 0:18:16.240 --> 0:18:19.439 in a big picture consideration of their portfolio. So we 0:18:19.440 --> 0:18:22.240 don't need to add in private real estate, if you will, 0:18:22.280 --> 0:18:24.760 because most, if not have their own private rates that 0:18:24.800 --> 0:18:28.200 they've accumulated or commercial that they have built for many years. 0:18:28.240 --> 0:18:31.880 So we avoid the fixed the excuson the real estate 0:18:31.960 --> 0:18:35.119 side of the private equity you know, but there's others 0:18:35.119 --> 0:18:38.080 out there that have really cracked the code of diversification 0:18:38.240 --> 0:18:39.159 within private equity. 0:18:39.320 --> 0:18:41.040 I will leave it there, Robert, good of you to 0:18:41.119 --> 0:18:44.720 join us. Robert Chine is the CIO at blanky Shine 0:18:44.720 --> 0:18:47.919 Wealth Management. Joining us here at the Bloomberg Interactive Broker 0:18:48.000 --> 0:18:49.080 Studio in New York. 0:18:53.680 --> 0:18:58.879 Bloomberg Opinion informed perspectives and expert data driven commentary on 0:18:59.040 --> 0:19:00.119 Breaking New y. 0:19:01.640 --> 0:19:01.760 Hi. 0:19:01.840 --> 0:19:04.560 Everybody, Good morning from Hong Kong. It is nine forty 0:19:04.640 --> 0:19:07.800 three in the morning here nine forty three pm on 0:19:07.880 --> 0:19:10.640 Wall Street time to check in with Bloomberg Opinion. Were 0:19:10.680 --> 0:19:14.840 joined by opinion columnists Karishma Vaswani, who is writing about 0:19:15.000 --> 0:19:19.000