WEBVTT - French Market Volatility, EV Forecast 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.480 Eastern on Effo card Playing and broyd Otto with the 0:00:17.520 --> 0:00:21.320 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:23.320 or watch us live on YouTube. 0:00:24.920 --> 0:00:26.920 The Bloomberg Dollar Index is that the highs of the 0:00:27.000 --> 0:00:29.640 year so far. You're a dollar is one oh seven. 0:00:29.720 --> 0:00:31.280 You have, Yes, the year is a little bit stronger 0:00:31.280 --> 0:00:33.120 against the dollar. But man, it was a really tough 0:00:33.200 --> 0:00:36.840 week over the last week with the turmoil in French politics. 0:00:36.920 --> 0:00:40.400 Luckily we have an expert with us. Marcus Ashworth is 0:00:40.520 --> 0:00:43.800 joining us. He is from Bloomberg Opinion. I haven't talked 0:00:43.800 --> 0:00:46.840 to you Marcus in I don't know ten months. 0:00:47.840 --> 0:00:50.520 Yeah, it's been ages too long, too long. 0:00:50.640 --> 0:00:52.640 It is so good to hear your voice. Okay. We 0:00:52.760 --> 0:00:55.840 love about you is because you have opinions. What do 0:00:56.000 --> 0:00:58.640 you make of what's unfolding in France right now? 0:01:00.200 --> 0:01:01.920 Such a shy retiring title on it. 0:01:02.400 --> 0:01:03.200 How what do I make of it? 0:01:03.360 --> 0:01:07.880 I mean, look, it's not a crisis yet anyway. I 0:01:07.959 --> 0:01:11.560 think it's a problem which was three years out in 0:01:11.600 --> 0:01:14.440 the future in twenty seven. Whoever's going to replace mac Rol, 0:01:14.920 --> 0:01:17.120 he's just rolled the dice and brought it forward by 0:01:17.200 --> 0:01:20.520 three years. It's trying to solve for probably a bigger 0:01:20.640 --> 0:01:25.279 problem now earlier and getting a better result, perhaps he hopes. 0:01:26.480 --> 0:01:29.040 What it has highlighted is that there's been a long, 0:01:29.440 --> 0:01:34.280 deep seated, ever growing fiscal problem in France where they've 0:01:34.319 --> 0:01:36.280 they've hidden essentially, I mean, not how to get away 0:01:36.319 --> 0:01:38.520 with it for ages and ages. First, we had a 0:01:38.560 --> 0:01:41.520 Fitch down grade in October, we got a S and 0:01:41.600 --> 0:01:44.880 P down grade in the end of May, and we've 0:01:44.880 --> 0:01:47.199 got Moodies now having a sort of little think about 0:01:47.280 --> 0:01:50.440 really do do they genuinely think France is worth a 0:01:50.480 --> 0:01:54.400 double A two? So that's because the fiscal deaths in 0:01:54.480 --> 0:01:56.960 France has risen to five point five percent of GDP, 0:01:57.160 --> 0:02:01.800 and more importantly, it's debt g UP is starting to rise. 0:02:01.840 --> 0:02:02.200 It again. 0:02:02.280 --> 0:02:05.160 They had this been great hope of this downward glide 0:02:05.200 --> 0:02:08.359 path of both France and Italy. That's not happening. It 0:02:08.440 --> 0:02:10.799 hadn't done happen at all last year when quite the 0:02:10.880 --> 0:02:12.640 other way, and doesn't look like it's going to get 0:02:12.680 --> 0:02:15.760 better for least down for this twenty twenty seventh period. 0:02:15.880 --> 0:02:20.720 So no one thinks that even the current situation would 0:02:20.800 --> 0:02:24.799 own seen any physical improvement with potential of a non 0:02:24.960 --> 0:02:29.720 Macron sort of controlled prime minister and government. That means 0:02:29.760 --> 0:02:31.880 that quite the reverse is going to get even worse, 0:02:32.040 --> 0:02:35.080 and that isn't great use for France, isn't great use 0:02:35.120 --> 0:02:38.880 to the European Union. They hate political volitility. They get 0:02:39.000 --> 0:02:43.280 very spooky, particularly of a potentially eurosceptic or you know, 0:02:43.760 --> 0:02:46.520 pro leaving the European Unions it once worked party might 0:02:46.560 --> 0:02:49.320 get into some form of power. They get very antsy. 0:02:49.400 --> 0:02:51.760 So that's why you're best to sell or get that 0:02:52.080 --> 0:02:55.280 or stay out of France until it settles down. June 0:02:55.360 --> 0:02:57.880 seventh will get the June July seventh, Sorry, we'll get 0:02:57.919 --> 0:03:02.840 the second round final results the parliamentary elections. Macron's staying 0:03:02.840 --> 0:03:03.799 around with other three years. 0:03:04.360 --> 0:03:07.160 I love the whole snap election thing. I like because 0:03:07.200 --> 0:03:09.640 we're over here in the US, We're going month after 0:03:09.760 --> 0:03:14.280 month year just to get to November. So I kind 0:03:14.320 --> 0:03:16.840 of like this whole snap election thing here. But what's 0:03:16.919 --> 0:03:20.760 behind Marcus? Do you think that the rise of Marine 0:03:21.080 --> 0:03:23.680 le pen and the far right? Is it what we're 0:03:23.720 --> 0:03:27.080 seeing just around the world. Is it political, is it economical? 0:03:27.280 --> 0:03:28.360 What's kind of really dru. 0:03:28.520 --> 0:03:31.040 I mean, I don't think you can call her far right. 0:03:31.120 --> 0:03:34.600 To my mind, she's a socialist. She's pretty hard left, okay, 0:03:34.639 --> 0:03:38.120 and the fact that she's a national so called champion, 0:03:38.520 --> 0:03:40.960 and that's what she wants to push, you know, French 0:03:41.120 --> 0:03:46.640 pension rights, welfare rights, she's very pro union. So in 0:03:46.760 --> 0:03:49.000 some senses, I know it's easy to label them far right. 0:03:49.080 --> 0:03:50.600 But the point here is is that you know what 0:03:50.880 --> 0:03:55.800 clearly she's standing for. It is a sense of enough 0:03:55.920 --> 0:04:01.360 already from the French people on mass immigrant This is 0:04:01.440 --> 0:04:03.520 happening in Italy, this has definitely happened in the UK, 0:04:04.040 --> 0:04:06.640 It's happening ever in Europe, and it's happening in the US. 0:04:06.800 --> 0:04:09.560 So look, this is a global problem. Isn't going to 0:04:09.600 --> 0:04:11.760 get solved anytime soon, but you know you're going to 0:04:11.840 --> 0:04:14.360 get Look what's happened in the UK. We're getting Richie 0:04:14.360 --> 0:04:17.160 Sinak going to get bounced out because he's failed to 0:04:17.240 --> 0:04:20.000 live up to anything he said he would do. But 0:04:20.160 --> 0:04:23.680 we're having similar across the European elections, where the results 0:04:23.880 --> 0:04:27.159 tended to favor the more should we say, anti immigration 0:04:27.360 --> 0:04:29.680 parties whether some of them are left or right is 0:04:30.320 --> 0:04:34.520 a subjective point. But look, it's this is just bad 0:04:34.640 --> 0:04:39.720 fiscal situations getting worse combined with you know, that awful 0:04:39.760 --> 0:04:43.320 thing that European politics really doesn't like is that fear 0:04:43.360 --> 0:04:47.000 that the European Union, that euro project might come under question. 0:04:48.160 --> 0:04:51.000 And that's when investors, which you believe very much in 0:04:51.040 --> 0:04:54.400 this whole France German bedrock and that eving has been 0:04:54.440 --> 0:04:56.680 calmed down. We've got the EU isshing bonds by the 0:04:56.760 --> 0:05:01.919 gazillion in the middle, lots of pandemic programs spraying money everywhere, 0:05:02.000 --> 0:05:05.680 and yet it isn't enough. And that's a little bit 0:05:05.680 --> 0:05:07.600 of a worry. I personally, I see it as a 0:05:07.680 --> 0:05:11.360 little reality check and maybe in the long run this 0:05:11.520 --> 0:05:13.400 might be better for Europe if they can get their 0:05:13.440 --> 0:05:15.840 act together. I don't see it as a proper euro 0:05:16.000 --> 0:05:17.160 crisis or anything like it. 0:05:17.920 --> 0:05:21.720 Have you noticed or are you hearing flows coming out 0:05:21.760 --> 0:05:25.640 of Europe into the US because of the political issues there. 0:05:25.800 --> 0:05:27.279 I mean, we have our own mess. 0:05:27.160 --> 0:05:30.320 But what we do have is Convidiot, Alex, you've got 0:05:30.360 --> 0:05:32.200 it all already. What more do you want? You can't 0:05:32.200 --> 0:05:33.080 want more of our money? 0:05:33.560 --> 0:05:35.520 Yes I do, I want all of your money. 0:05:36.279 --> 0:05:39.560 Everyone in Europe is already already over the way in 0:05:39.839 --> 0:05:42.520 the US. Look I mean, I would say it's more 0:05:42.640 --> 0:05:45.600 like the US investors who might have been tempted to 0:05:45.640 --> 0:05:48.920 get out of the US and diversified long last, coming 0:05:49.000 --> 0:05:52.720 up to your elections, may have been tempted to sort 0:05:52.760 --> 0:05:55.320 of go into Europe and have a little sniff, particularly 0:05:55.360 --> 0:05:57.800 around banks and things like that. That's why the worst 0:05:57.839 --> 0:05:59.960 performance so far being French banks. They're being able to 0:06:00.040 --> 0:06:02.600 He's spanked. For the reason why I've been spank is 0:06:02.640 --> 0:06:06.120 because I think there's a very popular situation for US 0:06:06.279 --> 0:06:11.360 investors looking to play the old rebound there, and that 0:06:11.600 --> 0:06:14.479 I think is what we've seen. We've seen some fast 0:06:14.520 --> 0:06:19.360 money exit stays left. I don't think European investors are 0:06:19.440 --> 0:06:22.719 going to go anywhere. I think Japanese had already long 0:06:23.440 --> 0:06:26.640 thought very carefully about the so called budden plus strategy, 0:06:26.640 --> 0:06:30.480 where you bought French bonds, you locked him like with Germany, 0:06:30.520 --> 0:06:32.120 you've got in an extra bit of yield that works 0:06:32.240 --> 0:06:35.279 a few years ago, not so much anymore, but yeah, 0:06:35.320 --> 0:06:37.159 there may be a little bit. And so I was saying, 0:06:37.200 --> 0:06:38.800 is I just don't think any new money is going 0:06:38.880 --> 0:06:41.760 to come in until July seventh. Why would it. It's 0:06:41.839 --> 0:06:44.200 crazy to take more risks you need to, and you've 0:06:44.200 --> 0:06:47.200 got no visibility on the outcome. There's likely to be 0:06:47.279 --> 0:06:49.400 one or two more bumps in the road before we 0:06:49.480 --> 0:06:51.799 have a clear idea of the way the French system works. 0:06:52.240 --> 0:06:54.760 You have this first round on June the thirtieth, and 0:06:54.920 --> 0:06:56.799 then and only then you get it clear out clarity 0:06:56.839 --> 0:06:59.600 of what who goes forward into the second round and 0:06:59.680 --> 0:07:02.080 you can work out which personalities are going to be 0:07:02.160 --> 0:07:05.680 doing probably better or worse with more accurate polling. But 0:07:05.800 --> 0:07:07.640 that will come clearer as it days go by. I 0:07:07.720 --> 0:07:10.880 know that this afternoon actually France has thunder a little 0:07:10.880 --> 0:07:14.800 bit better against Germany. French yels have actually gone nowhere 0:07:14.920 --> 0:07:16.360 in the last week of a bit. It's just the 0:07:16.560 --> 0:07:20.400 German yields have fallen hard because they're following, Yes, you've 0:07:20.440 --> 0:07:23.120 got Alex, they're following the US deals lower. It's all 0:07:23.160 --> 0:07:23.720 about the US. 0:07:24.200 --> 0:07:26.080 Seem told you told you, hey, Marcus. 0:07:26.160 --> 0:07:29.160 It was just a few weeks ago when mister maccron 0:07:29.200 --> 0:07:33.360 hosted a basically come back to France conference where David 0:07:33.440 --> 0:07:36.160 Solomon Goldman Sachs was there and mister moynihand. 0:07:35.720 --> 0:07:36.600 From Bank of America. 0:07:37.440 --> 0:07:41.920 I mean, is France open for business? Are people investing in? 0:07:42.200 --> 0:07:45.239 They're still mark the spot. This is where Jamie Diamond stood. 0:07:45.520 --> 0:07:48.640 Now we have a little competition. Funnily off, the first 0:07:48.720 --> 0:07:51.800 thing that a labor government, almost certain in the UK, 0:07:52.240 --> 0:07:54.640 are going to do is good, do exactly this. Come 0:07:54.680 --> 0:07:56.840 to the UK. Everything's brilliant, come back to your business. 0:07:57.280 --> 0:07:59.520 So that part has been very good at this and 0:08:00.000 --> 0:08:02.920 definitely there's been some signs that not so much that 0:08:03.080 --> 0:08:06.040 the city's losing jobs, but that France is attracting more 0:08:06.120 --> 0:08:09.440 financial jobs. It's quite great tax breaks to go there. 0:08:09.920 --> 0:08:12.840 At the same time, clearly they want to promote all 0:08:13.200 --> 0:08:19.960 foreign direct investment and arguably financial big movers you know, Silhadel, 0:08:20.080 --> 0:08:23.520 JP Morgan, Back of American et cetera. Are responding a 0:08:23.560 --> 0:08:25.680 little bit to the challenge. And one interesting thing is 0:08:25.760 --> 0:08:28.240 I think that Macromo is going to relax a bit 0:08:28.280 --> 0:08:30.880 on the how much that severance pay has to be 0:08:31.000 --> 0:08:33.439 in France. Whi's one of the big things that the 0:08:33.600 --> 0:08:35.720 banks don't like is that the cost of actually losing 0:08:35.760 --> 0:08:38.839 people and they change their minds on their expansion plans. 0:08:38.840 --> 0:08:40.280 But for the moment, Yeah, I think they've done a 0:08:40.320 --> 0:08:44.960 good job in France and probably outside of London. Paris 0:08:45.120 --> 0:08:47.439 is the logical place for the most financial companies and 0:08:47.520 --> 0:08:50.800 banks are particularly to go. But you know, again they 0:08:50.840 --> 0:08:52.959 don't need this att of published It's not very good 0:08:53.000 --> 0:08:53.200 for them. 0:08:54.040 --> 0:08:56.600 Mark's always a pleasure. It was so good to chat 0:08:56.679 --> 0:08:59.199 with you. Definitely miss all your commentary. Marcus Ashworth of 0:08:59.240 --> 0:09:01.360 Bloomberg Opinion, And I have to say my Father's Day 0:09:01.360 --> 0:09:04.560 dinner last night, for some reason, doing business in France 0:09:04.679 --> 0:09:07.400 came up in the conversation and about unions and I 0:09:07.600 --> 0:09:09.520 was like, what does this mean? Like are are we 0:09:09.600 --> 0:09:13.000 a peak union? Like what is the significance of regular 0:09:13.040 --> 0:09:14.760 people on the upper West side talking about. 0:09:14.600 --> 0:09:16.679 Yeah, I mean again, we had that conference, you know, 0:09:16.920 --> 0:09:19.599 in Paris or in France a few weeks ago, and 0:09:19.640 --> 0:09:22.840 again all the big heavyweight from Wall Street Global Wall 0:09:22.880 --> 0:09:25.400 Street were there and it just said basically we were 0:09:25.440 --> 0:09:27.640 open for business. And you know a lot of the 0:09:27.679 --> 0:09:31.440 big financial firms have moved some jobs out of London 0:09:31.679 --> 0:09:35.559 into Paris in additions to other European capitals. But you 0:09:35.720 --> 0:09:38.080 just think about the taxes and some of the social 0:09:38.160 --> 0:09:43.120 programs and is it really open for business, and can 0:09:43.200 --> 0:09:47.440 they attract significant foreign global investment into that country? 0:09:47.600 --> 0:09:47.640 So? 0:09:48.120 --> 0:09:50.280 Or is it like the open more open? It's going 0:09:50.320 --> 0:09:53.480 to be versus other countries, right, like the cleaner shirt. 0:09:53.520 --> 0:09:55.959 And I'm saying now it's everything's on hold until July. 0:09:56.120 --> 0:09:57.160 Yeah, we get that vote. 0:10:00.000 --> 0:10:04.160 Listening to the Bloomberg Intelligence Podcast catch us live weekdays 0:10:04.200 --> 0:10:07.440 at ten am Eastern on applecar Play and Android Auto 0:10:07.559 --> 0:10:10.480 with the Bloomberg Business. You can also listen live on 0:10:10.600 --> 0:10:13.839 Amazon Alexa from our flagship New York station, Just say 0:10:13.960 --> 0:10:16.559 Alexa play Bloomberg. Eleven thirty. 0:10:18.120 --> 0:10:20.800 One stock that's doing some stuff is Micron. It got 0:10:20.880 --> 0:10:23.920 some price targets raised, it's going to report earnings next week, 0:10:23.960 --> 0:10:26.760 and it is just having an awesome day and an 0:10:26.800 --> 0:10:29.600 awesome ride. Let's get to take care from Kim Forrest. 0:10:29.800 --> 0:10:32.480 She is founder in CIO Book of Capital Partners. She 0:10:32.679 --> 0:10:35.280 joins us, Now, hey, Kim, Micron, what do you think 0:10:35.280 --> 0:10:35.559 about it? 0:10:36.920 --> 0:10:40.560 I absolutely love it, but maybe not at an entry 0:10:40.679 --> 0:10:43.480 point right now. It goes up and it goes down. 0:10:43.520 --> 0:10:45.920 This is a very volatile stock, but it's certainly one 0:10:46.000 --> 0:10:48.079 to keep your eye on. And you can ask me 0:10:48.160 --> 0:10:51.000 why why. I have two letters for you. 0:10:51.240 --> 0:10:55.160 AI okay, but why like to tell me more? Tell 0:10:55.200 --> 0:10:55.480 me more? 0:10:56.720 --> 0:11:00.439 Because of AI? This company makes the device is that 0:11:00.720 --> 0:11:07.360 build out data center memory? Okay? Or you know where 0:11:07.600 --> 0:11:08.480 data lives. 0:11:08.960 --> 0:11:12.080 And if there's one thing I know about AI, it's 0:11:12.120 --> 0:11:15.120 that it eats data like you wouldn't believe. So if 0:11:15.200 --> 0:11:18.080 you believe in AI, you should believe in the makers 0:11:18.280 --> 0:11:21.840 of nand and de ram memory devices. 0:11:22.000 --> 0:11:25.480 So there you go. That's why I like it, he kim. 0:11:26.000 --> 0:11:27.719 At a cocktail party, so many comes up to you 0:11:27.800 --> 0:11:30.120 and says, how do I invest in AI? 0:11:31.600 --> 0:11:32.400 Where do you steer them? 0:11:32.720 --> 0:11:34.720 Or you're at the wrong cocktail party? But go ahead? 0:11:35.200 --> 0:11:38.640 Yes, actually you know I try to go incognito at 0:11:38.720 --> 0:11:39.520 cocktail parties. 0:11:39.559 --> 0:11:40.240 But that's okay. 0:11:43.200 --> 0:11:45.959 Well, I always say invest carefully and I have a 0:11:46.040 --> 0:11:48.960 reasonable timeline. And I think those are the two things 0:11:49.040 --> 0:11:53.199 that people right now are probably forgetting by I don't know, 0:11:53.360 --> 0:11:56.440 making in video go up by thirty percent since the split? 0:11:56.600 --> 0:11:59.400 Does that seem right to you? I'm thinking no? But whatever. 0:12:00.120 --> 0:12:02.719 So what you really have to look for is the 0:12:02.920 --> 0:12:07.319 chain of areas that AI touches. And again, one of 0:12:07.400 --> 0:12:12.440 them is in Nvidia the tip that drives the models, 0:12:13.120 --> 0:12:15.439 and that's certainly important, but there's going to be a 0:12:15.480 --> 0:12:18.920 whole lot more infrastructure around it, and even things like 0:12:19.120 --> 0:12:21.839 I know this could be a big irol, but Telecom 0:12:22.080 --> 0:12:27.120 is probably going to have to markedly increase its capacity 0:12:27.360 --> 0:12:31.920 for wireless consumers because we're going to be consuming a 0:12:31.960 --> 0:12:34.720 lot more data, storing a lot more data, and these models, 0:12:34.720 --> 0:12:39.000 as I say, use a ton of data. So anything 0:12:39.080 --> 0:12:43.400 in that chain is fair game right now for investing 0:12:43.440 --> 0:12:43.800 in AI. 0:12:44.280 --> 0:12:48.160 We would never irol you for saying Telecom, but based 0:12:48.200 --> 0:12:49.840 on the fact that you say, you know Micron can 0:12:49.880 --> 0:12:51.800 be really volatile, you don't want to buy at these levels. 0:12:51.840 --> 0:12:53.800 You want to buy on dips. Are you noticing a 0:12:53.920 --> 0:12:57.640 lack of dips a our dips becoming less frequent at 0:12:57.679 --> 0:12:58.080 this point? 0:12:59.240 --> 0:12:59.440 Yes? 0:12:59.679 --> 0:13:02.679 And I think it's because you know, we're what are 0:13:02.760 --> 0:13:06.400 we thirty six months into discovering chat or not even 0:13:06.480 --> 0:13:10.160 that long, eighteen months into discovering chat, GPT, something like that, 0:13:10.920 --> 0:13:13.520 So people are really still looking for how do I 0:13:14.040 --> 0:13:14.440 how do I. 0:13:14.520 --> 0:13:16.360 Invest in that? You can't buy open AI. 0:13:16.960 --> 0:13:19.640 You can buy in video, but that feels a little stretched, 0:13:19.720 --> 0:13:23.000 So where else do you look? And I say, and 0:13:24.200 --> 0:13:28.000 AMD is also fair for this because they're going to 0:13:28.360 --> 0:13:31.760 not only be a competitor for Nvidia, but also make 0:13:31.920 --> 0:13:34.360 some of the products that go on an end device. 0:13:34.760 --> 0:13:37.560 We keep forgetting, like the user has to be able 0:13:37.640 --> 0:13:40.800 to connect to these models, and that's really important in 0:13:41.000 --> 0:13:45.920 your search for where the outsized growth may be. 0:13:47.400 --> 0:13:51.760 So, Kim, what is NetApp and why do you like it? 0:13:52.040 --> 0:13:54.440 Other than the fact that it's up forty one percent 0:13:54.559 --> 0:13:55.000 year to date. 0:13:55.920 --> 0:14:02.080 Well, I mean that's really helpful, right, but all joshing aside, 0:14:02.720 --> 0:14:05.280 you know, the nerdiest. I mean, it's almost like a 0:14:05.360 --> 0:14:07.480 math joke, right, like a finance joke. 0:14:07.640 --> 0:14:13.600 But I digress. No, seriously, it's back to storage, storage 0:14:13.640 --> 0:14:14.440 of data. Now. 0:14:14.520 --> 0:14:18.199 Net app makes enterprise storage devices, and I think the 0:14:18.440 --> 0:14:20.360 enterprise is going to have to store a whole lot 0:14:20.440 --> 0:14:23.640 more data to be made to make AI work for it. 0:14:24.200 --> 0:14:26.800 So that's why we really like net app, and just 0:14:26.920 --> 0:14:31.720 the trends in the world becoming more digitized. Businesses need 0:14:31.960 --> 0:14:39.000 to have stable, safe and reliable storage appliances and that's 0:14:39.040 --> 0:14:40.400 what net app provides. 0:14:42.440 --> 0:14:45.200 Kim, what else do you like aside from the AI trend? Like, 0:14:45.280 --> 0:14:47.480 if that's a nice trend, you got the momentum, you know, 0:14:47.560 --> 0:14:50.240 you got to find your levels et cetera. Aside from that, 0:14:50.360 --> 0:14:51.880 if I wanted to buy stuff. 0:14:51.600 --> 0:14:55.120 Where would it be, buy stuff in tech or not? 0:14:55.480 --> 0:14:56.440 No, outside of tech. 0:14:57.320 --> 0:15:02.080 Outside of tech, well, I'm kind of loving because I 0:15:02.240 --> 0:15:04.800 like to buy low and sell high. I'm looking at 0:15:04.960 --> 0:15:09.320 energy and I like Exxon Mobile because it has just 0:15:09.400 --> 0:15:13.800 bought some land in the Permian base through its recent acquisition, 0:15:14.040 --> 0:15:17.880 so that's good. And I'm somebody that believes in giving 0:15:17.960 --> 0:15:20.680 yourself some margin, some room for error. 0:15:21.080 --> 0:15:21.960 And we might like. 0:15:23.720 --> 0:15:27.800 Ev cars, but it's unclear that, you know, automobiles and 0:15:27.880 --> 0:15:30.520 trucks are going to go away immediately, so I think 0:15:30.600 --> 0:15:34.080 the timeline for energy is much longer. And the big 0:15:34.240 --> 0:15:39.720 energy companies are also investing heavily in alternative energy as well. 0:15:40.000 --> 0:15:43.000 So we're going to always need energy. We like our 0:15:43.120 --> 0:15:45.880 things that use it. Yeah, so I like to invest 0:15:45.960 --> 0:15:46.640 in that as well. 0:15:46.880 --> 0:15:50.160 Yeah, And you have the gross yield three point five percent, 0:15:50.240 --> 0:15:53.160 so you're still getting something there, Kim. I'm wondering, though, 0:15:53.840 --> 0:15:56.840 in energy, do you feel like you can own more 0:15:56.920 --> 0:15:59.960 than one stock, because in talking to people on the street, 0:16:00.560 --> 0:16:02.400 it feels like part of the reason behind all the 0:16:02.480 --> 0:16:06.760 consolidation that's not fundamental is that portfolio managers just can 0:16:06.880 --> 0:16:08.960 on a lot of them. So those companies need to 0:16:09.040 --> 0:16:11.880 make themselves very attractive people like you to be like, 0:16:11.920 --> 0:16:15.400 I'm gonna pull the trigger on this guy right now. 0:16:15.520 --> 0:16:17.160 I don't feel like I want to have a huge 0:16:17.240 --> 0:16:21.000 overweight to it. We run a sector neutral model for 0:16:22.040 --> 0:16:25.960 our flagship product, and what we do is we have 0:16:26.240 --> 0:16:29.880 one energy pick because I like concentrated positions, so we 0:16:30.160 --> 0:16:33.520 enter a position around three percent. And that's why I 0:16:34.320 --> 0:16:37.320 always try to go for best in class because this 0:16:37.480 --> 0:16:39.520 is a commodity. You're not going to be able to 0:16:39.600 --> 0:16:43.240 catch the wave on buying low and selling high because 0:16:43.360 --> 0:16:47.240 you know oil is doing whatever it's doing. So I 0:16:47.400 --> 0:16:49.720 just try to go for the very best company with 0:16:49.880 --> 0:16:54.040 the widest range of products. And that to me is 0:16:54.120 --> 0:16:57.160 excellent because it takes everything from getting it out of 0:16:57.200 --> 0:17:00.880 the ground into your truck, into your car. But also 0:17:01.240 --> 0:17:04.240 they do chemicals as well, so they have a very 0:17:04.400 --> 0:17:08.560 large product suite that addresses a lot of needs. 0:17:08.920 --> 0:17:09.639 That's why I like it. 0:17:10.560 --> 0:17:13.680 Kim, how do you feel about just valuation kind of 0:17:13.720 --> 0:17:16.120 across the market here? I mean a lot of folks 0:17:16.160 --> 0:17:18.760 are saying this is the market's rally really hard over 0:17:18.840 --> 0:17:21.320 the last you know, call it nine twelve months, we've 0:17:21.359 --> 0:17:24.399 seen good earnings growths, you know, certainly, but has the 0:17:24.480 --> 0:17:26.639 earnings growth has been good enough to kind of keep 0:17:26.680 --> 0:17:27.520 pace with where we are? 0:17:27.560 --> 0:17:29.280 So how do you think about valuation? 0:17:30.640 --> 0:17:32.879 Well, I think the valuation. 0:17:34.000 --> 0:17:38.840 You can talk yourself into things being barely or even 0:17:38.880 --> 0:17:42.320 a little bit below valuation if you believe, and this 0:17:42.480 --> 0:17:44.920 is a big if the Feed is going to cut rates. 0:17:45.280 --> 0:17:47.560 And this is the math part of the segment here. 0:17:48.800 --> 0:17:51.920 Once we have lower rates, we get higher multiples. It's 0:17:52.040 --> 0:17:55.240 just how it works because we discount those cash flows 0:17:55.320 --> 0:17:59.320 back at a lower interest rate, not a higher interest rate, 0:17:59.600 --> 0:18:01.600 and you have to accept higher multiples. 0:18:01.880 --> 0:18:03.119 And I think that's part of. 0:18:03.160 --> 0:18:06.040 This game in this market right now is just about 0:18:06.119 --> 0:18:10.679 every last person, retail investor and institutional investors are all 0:18:10.760 --> 0:18:13.640 assuming the fed's going to cut sooner rather than later. 0:18:15.000 --> 0:18:17.879 When the FED cuts, what then looks interesting in a 0:18:17.920 --> 0:18:20.000 way that it doesn't look now like is that when 0:18:20.080 --> 0:18:21.840 small caps finally get some action. 0:18:23.160 --> 0:18:23.760 I hope so. 0:18:24.160 --> 0:18:26.200 I love small caps, and I think you should be 0:18:26.760 --> 0:18:30.200 invested in small caps regardless of what the FED is doing. 0:18:30.680 --> 0:18:33.680 It was awfully hard when the FED was raising rates 0:18:33.720 --> 0:18:38.640 and being into small caps, but good things happen to small, highly. 0:18:39.960 --> 0:18:41.280 High quality companies. 0:18:41.440 --> 0:18:43.280 And what I mean by that is they either grow 0:18:43.320 --> 0:18:46.600 into big companies because they have what it takes to 0:18:46.720 --> 0:18:51.240 satisfy customers and grow, or they get bought by larger companies. 0:18:51.359 --> 0:18:53.840 And both of those things are going to happen when 0:18:54.160 --> 0:18:57.880 rates decrease. That is, companies being more willing to buy 0:18:58.359 --> 0:19:01.639 to acquire product life or companies that they want to 0:19:01.920 --> 0:19:06.879 add to their portfolio, or just growth in general should 0:19:07.640 --> 0:19:11.320 start going once that rate cut happened. So all good 0:19:11.400 --> 0:19:13.679 things come from rate cuts, apparently. 0:19:16.119 --> 0:19:21.399 Kim Farrest, founder and chief investment officer, Capital Partners, located 0:19:21.440 --> 0:19:25.000 in Pittsburgh. Kim Forest, Founder, chief investment officer there. So, uh, 0:19:25.280 --> 0:19:30.480 there's another investor loving the AI trade. M And you know, 0:19:30.640 --> 0:19:33.240 I guess it's not just the chips. You can go 0:19:33.440 --> 0:19:35.520 software places, whether it's Microsoft or somebody else. 0:19:36.960 --> 0:19:39.400 You know, some of the sele exactly we seed. 0:19:39.440 --> 0:19:41.280 Some hardware companies call it out. 0:19:42.200 --> 0:19:46.600 So the telecom angle that you had, the energy angle, which. 0:19:46.440 --> 0:19:49.040 We have the energy angle on utilities and in the 0:19:49.080 --> 0:19:52.240 power trade, it just seems like you can bend this 0:19:52.320 --> 0:19:53.439 thing any way you like to. 0:19:53.680 --> 0:19:54.719 Support where you are. 0:19:55.080 --> 0:19:57.080 And I feel like The theory is that you know, 0:19:57.359 --> 0:19:59.000 at some point we'll come back down to earth. But 0:19:59.040 --> 0:20:01.760 then you have Julian and Manual all upgrading. His forecast 0:20:01.840 --> 0:20:03.920 is six thousand, being like the A I trade. It's 0:20:04.000 --> 0:20:07.440 just it's it's too sticky. Yep, and that I feel 0:20:07.440 --> 0:20:10.359 like you're finally seeing that analyst capitulation at the end 0:20:10.400 --> 0:20:11.920 of the day to the broader market angle. 0:20:12.080 --> 0:20:12.240 Yep. 0:20:12.359 --> 0:20:15.040 Absolutely, And we look at the markets today for Lisa 0:20:15.119 --> 0:20:16.160 Bromwo's listening. 0:20:16.240 --> 0:20:19.320 Who hates this term punched on the SMP five hundred. 0:20:19.359 --> 0:20:21.880 Nothing happening near the Dallas AF fifty nine points, nastas 0:20:21.880 --> 0:20:22.440 off one point. 0:20:22.760 --> 0:20:24.600 Not a lot of happening out there on the e greyfront, 0:20:24.600 --> 0:20:25.080 but that's okay. 0:20:26.560 --> 0:20:30.400 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:20:30.520 --> 0:20:33.880 weekdays at ten am Eastern on Focarplay and Android Auto 0:20:33.960 --> 0:20:36.840 with the Bloomberg Business app. Listen on demand wherever you 0:20:36.960 --> 0:20:39.920 get your podcasts, or watch us live on YouTube. 0:20:41.520 --> 0:20:44.240 We're just talking about AI. Let's siguius. 0:20:44.280 --> 0:20:46.760 Tom Keen would say right to some more AI discussioner 0:20:47.040 --> 0:20:49.960 Mark Bergan. He is a technology reporter for Bloomberg News, 0:20:50.400 --> 0:20:53.520 joining us from zoom from London. Which is a technology 0:20:53.560 --> 0:20:56.120