WEBVTT - Alphabet and Microsoft Kickoff Earnings Season for Big Tech 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:25.240 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:25.520 --> 0:00:29.560 Yes, all right, just like our TV colleagues, we're going 0:00:29.640 --> 0:00:31.680 to stay with earnings right now, guys, and we've got 0:00:31.680 --> 0:00:34.960 a great voice. Microsoft alphabet so many out with earnings, 0:00:35.040 --> 0:00:37.080 few others. Lucky for us, we have someone who invested 0:00:37.159 --> 0:00:40.920 these names. He's like a gold mine. James Chackmak is 0:00:40.920 --> 0:00:43.600 back with us partner and technology Alice at Clockwise Capital 0:00:43.600 --> 0:00:46.159 three hundred and forty five million in assets under management. 0:00:46.200 --> 0:00:49.800 But you check his holdings. These are the names Microsoft, Google, Visa, 0:00:49.920 --> 0:00:50.440 so many. 0:00:51.520 --> 0:00:51.880 James. 0:00:51.880 --> 0:00:53.840 Great to have you back with Tim and myself. How 0:00:53.920 --> 0:00:54.279 are you. 0:00:55.760 --> 0:00:57.720 I'm doing great? How are you doing? 0:00:57.760 --> 0:01:00.960 Okay, let's pick Microsoft first. It's rallying big time in 0:01:01.000 --> 0:01:03.600 the after hours. Walk us through earnings. 0:01:03.640 --> 0:01:05.280 I know you're just break. You're going through them just 0:01:05.319 --> 0:01:06.959 like we are. What jumps out for you? 0:01:08.760 --> 0:01:10.240 Yeah, I mean the big thing there is that you 0:01:10.280 --> 0:01:12.000 continue to see resiliency on the. 0:01:12.240 --> 0:01:13.520 On the cloud side. 0:01:13.920 --> 0:01:18.760 While the legacy parts of their business anniversary the tougher 0:01:18.800 --> 0:01:21.600 comps and come out stronger. So and at the same 0:01:21.600 --> 0:01:24.280 time while being able to manage the bottom line. And 0:01:24.400 --> 0:01:27.959 obviously it's a juggernaud it's ten percent of the queues 0:01:28.240 --> 0:01:30.880 and so it's a big way of important stock for 0:01:30.959 --> 0:01:35.520 the market. But the main thing is that the growth 0:01:35.560 --> 0:01:40.360 sector factor continues to be where the money will likely 0:01:40.400 --> 0:01:43.639 continue to flow and coming out of the value area. 0:01:44.040 --> 0:01:46.800 Okay, let's go to alphabet because shares are getting punished 0:01:46.800 --> 0:01:48.840 in the after hours. Right now, we have three quarter 0:01:48.840 --> 0:01:51.680 cloud revenue coming in below estimates eight point four to 0:01:51.720 --> 0:01:55.360 one billion. Estimates were for eight point six billion dollars. 0:01:55.440 --> 0:02:00.400 Alf BET third quarter revenue excluding traffic acquisition costs did 0:02:00.440 --> 0:02:02.720 beat estimates, though, what's sticking out to you? 0:02:04.600 --> 0:02:07.000 Yeah, I mean the big thing there is with the byside, 0:02:07.000 --> 0:02:10.480 expectations were a little bit ahead of where the street was, 0:02:10.639 --> 0:02:12.799 you know, so the whisper numbers were looking for and 0:02:12.880 --> 0:02:15.480 upwards of ten to fifteen percent upside of revision to 0:02:15.480 --> 0:02:19.040 earnings as you look into next year, and you know, 0:02:19.040 --> 0:02:21.120 with cloud coming in a little bit softer, you know 0:02:21.200 --> 0:02:24.240 that may and then being a high margin you know contributor. 0:02:24.280 --> 0:02:26.520 As you look down the road, you know that that 0:02:26.600 --> 0:02:28.919 may be posing somewhat of aheadwind. We got to look 0:02:28.919 --> 0:02:30.480 to the call to see, you know, what the what 0:02:30.520 --> 0:02:33.760 the color is on things. But overall, you know, Alphabet's 0:02:33.800 --> 0:02:36.799 not going anywhere. Google's not going anywhere, and you know, 0:02:36.880 --> 0:02:38.720 we just need to see how much of a blip 0:02:38.800 --> 0:02:41.399 this is. You know, is it a single quarter thing 0:02:41.560 --> 0:02:43.960 or you know, doesn't have several quarters to work through. 0:02:44.120 --> 0:02:45.960 Yeah, down five percent right now, Carol. 0:02:46.080 --> 0:02:48.160 Yeah, And what's interesting we initially saw Meta I think, 0:02:48.160 --> 0:02:49.680 take a little bit of a hit in the after hours, 0:02:49.720 --> 0:02:52.799 but right now metas back up, but shares Alphabet still 0:02:52.800 --> 0:02:56.640 down about five percent here all right, So in terms 0:02:56.720 --> 0:02:59.120 of these are all important numbers and certainly they can 0:02:59.160 --> 0:03:04.840 sway what we see in the overall market. Microsoft and Google, what. 0:03:04.840 --> 0:03:05.480 Are what is it? 0:03:05.480 --> 0:03:05.679 Tim? 0:03:05.800 --> 0:03:07.959 I'm sorry, Snap is crossing right now, so I wanted 0:03:07.960 --> 0:03:09.040 to make sure to get this in. We got a 0:03:09.040 --> 0:03:10.880 red heat third quarter revenue for Snap coming in above 0:03:11.040 --> 0:03:13.760 estimates one point one nine billion estimates for for one 0:03:13.840 --> 0:03:16.560 point one one Snap just absolutely surging in the after 0:03:16.600 --> 0:03:19.520 hours right now, up twenty percent. I think, Carol, this 0:03:19.600 --> 0:03:22.000 is because the company authorized up to five hundred million 0:03:22.040 --> 0:03:25.160 dollars in share buybacks. Also, James, I know you're following 0:03:25.160 --> 0:03:27.799 along live with us. The CEO, Jerry Hunter is set 0:03:27.840 --> 0:03:31.040 to retire. Fourth quarter view is internal forecast, though we 0:03:31.040 --> 0:03:33.640 should note is not a formal guidance. Some of those 0:03:33.680 --> 0:03:34.800 headlines what sticks. 0:03:34.520 --> 0:03:36.000 Out to you well, and I'll just say they also 0:03:36.040 --> 0:03:38.200 did talk about the fourth quarter. Fourth quarter revenue one 0:03:38.200 --> 0:03:40.440 point thirty two billion to one point thirty eight billion. 0:03:40.480 --> 0:03:42.000 The estimate is one point thirty three So. 0:03:42.080 --> 0:03:44.480 Upside there not formal guidance. 0:03:44.160 --> 0:03:46.640 Not formal guidance, but they're at least giving us some numbers, 0:03:46.680 --> 0:03:48.600 So go ahead, James, take it away. 0:03:50.040 --> 0:03:52.480 Yeah, I mean, Snap actually had their numbers leak, you know, 0:03:52.480 --> 0:03:54.640 a couple of weeks ago, and you know, so good 0:03:54.720 --> 0:03:57.040 numbers were expected, you know, out of that this quarter. 0:03:57.880 --> 0:04:00.960 You know, I think the bigger pick your story is 0:04:01.000 --> 0:04:07.280 that digital advertising continues to gain share versus legacy media, 0:04:07.560 --> 0:04:11.720 and that trend is just going to be you know, 0:04:12.240 --> 0:04:17.560 increased in full force with the assistance of AI and 0:04:17.720 --> 0:04:21.640 the contributions of AI into the creation of content and 0:04:21.680 --> 0:04:24.120 the creation of ads, which will drive down costs and 0:04:24.320 --> 0:04:28.240 in turn likely increase the amount of ad spent that's 0:04:28.480 --> 0:04:31.800 placed on digital platforms, and niche platforms like a Snap 0:04:31.839 --> 0:04:33.800 will benefit. But at the end of the day, we 0:04:33.839 --> 0:04:40.520 think that scale matters most, and companies like Meta and 0:04:40.720 --> 0:04:45.720 Alphabet and to somewhat of a lesser extent, Amazon, you know, 0:04:45.800 --> 0:04:49.279 will benefit. So the niche platforms are in a rising 0:04:49.360 --> 0:04:52.320 times lifts all both situations right now. But as you look, 0:04:52.400 --> 0:04:54.200 you know, a little bit further down the road, we 0:04:54.240 --> 0:04:56.520 think scale is going to win out over niche. 0:04:56.600 --> 0:04:58.679 I'm just going to say Snap is down about eighty 0:04:58.720 --> 0:05:01.040 eight percent from its September. 0:05:00.560 --> 0:05:01.760 Twenty twenty one high. 0:05:01.760 --> 0:05:05.960 And yes, even though it's rallying in the after hours 0:05:06.040 --> 0:05:08.080 up about twelve percent as we speak, it's a below 0:05:08.120 --> 0:05:10.200 ten dollars stock. It's no longer you know, it used 0:05:10.240 --> 0:05:12.400 to be up above the eighties. So a little as 0:05:12.440 --> 0:05:13.480 you say, what is it. 0:05:14.000 --> 0:05:15.600 Went in went in down, zoom out. I mean, But 0:05:15.600 --> 0:05:16.920 but speaking of I mean, I want to go to 0:05:17.000 --> 0:05:19.719 James on this, because James, you've been covering Snap for years. 0:05:19.720 --> 0:05:22.800 I mean, even in your previous role as a an 0:05:22.800 --> 0:05:24.599 analyst solely focused on tech. I mean, I think you 0:05:24.640 --> 0:05:28.440 were covering the company even before when it went at iPod. 0:05:28.839 --> 0:05:31.160 You have a long history with that company. When did 0:05:31.160 --> 0:05:32.560 you sour on it? 0:05:33.640 --> 0:05:36.080 I soured on it maybe one or two quarters out 0:05:37.279 --> 0:05:40.800 out of the gate, because essentially, you know, they had 0:05:40.839 --> 0:05:44.920 positioned themselves as you know, a camera company, and you know, 0:05:45.000 --> 0:05:48.360 we we took that bait and ran with it, because 0:05:48.920 --> 0:05:51.960 you know, the the DNA of a company matters, and 0:05:52.279 --> 0:05:55.320 their points of differentiation matter, especially when you're going at 0:05:55.480 --> 0:06:00.080 after a company like Meta and Alphabet, so you have 0:06:00.120 --> 0:06:02.600 to be differentiated in some way. And you know, they 0:06:02.920 --> 0:06:06.119 came up with the whole vertical camera and we're leading 0:06:06.120 --> 0:06:08.080 into that. But you know, you'll read the first line 0:06:08.080 --> 0:06:10.599 of their perspectives it said it's a camera company. But 0:06:10.720 --> 0:06:14.000 when you looked at what Evan Spiegel was actually trying 0:06:14.040 --> 0:06:16.360 to do was they were trying to be everything to everyone, 0:06:16.800 --> 0:06:19.560 which is what Meta is, you know, a full scale 0:06:19.640 --> 0:06:22.960 player like Meta, and they didn't embrace, embrace their their 0:06:23.040 --> 0:06:24.920 niche different points of differentiation. 0:06:25.440 --> 0:06:27.640 And if you try to be everything to everyone is 0:06:27.640 --> 0:06:28.320 a niche. 0:06:28.040 --> 0:06:30.640 Player, you lose. You know, Twitter tried to do that. 0:06:30.720 --> 0:06:34.680 They lost snaps trying to do that. I mean, going 0:06:34.720 --> 0:06:37.839 back to their IPO, you know they've lost tremendously, you know, 0:06:38.040 --> 0:06:40.599 despite the recent rally. So you know, you got to 0:06:40.640 --> 0:06:41.880 know your DNA. 0:06:42.200 --> 0:06:42.680 We've got to. 0:06:42.640 --> 0:06:45.599 Embrace it and don't be something that you don't be 0:06:45.760 --> 0:06:48.560 something that, yeah, you say you're not. 0:06:48.800 --> 0:06:51.440 So let's just remind everybody Alphabet at with earnings. It 0:06:51.480 --> 0:06:54.719 is down about five percent in the aftermarket this after 0:06:54.760 --> 0:06:56.039 those third quarter results. 0:06:56.560 --> 0:06:57.960 What we're seeing that. 0:06:58.240 --> 0:07:01.040 Traders are focusing on is the cloud unit reporting sales 0:07:01.080 --> 0:07:03.760 missing estimates. So third quarter Google Cloud revenue of eight 0:07:03.760 --> 0:07:06.719 point forty one billion, the estimate was eight point six billion. 0:07:06.920 --> 0:07:09.120 And then you've got Microsoft going in the other direction, 0:07:09.240 --> 0:07:13.480 up about five percent after their first quarter revenue tops 0:07:13.680 --> 0:07:16.000 estimates in a big way. And then you've got Snapstoring 0:07:16.040 --> 0:07:19.239 up about thirteen percent. There are third quarter revenue topping estimates, 0:07:19.240 --> 0:07:21.480 but keep in mind it's a stock that is way 0:07:21.520 --> 0:07:24.240 way down from where it was a little perspective. So 0:07:24.280 --> 0:07:25.800 some of the big tech names that we're seeing, and 0:07:25.880 --> 0:07:28.080 we've also got Texas Instruments out. 0:07:27.880 --> 0:07:30.080 Yeah, really notable moves from some of these companies. I 0:07:30.080 --> 0:07:32.320 want to go back to alphabet and talk a little 0:07:32.360 --> 0:07:34.200 bit a bit more about what you get your thoughts 0:07:34.200 --> 0:07:37.160 on alphabet as Carol mentioned James down six percent right 0:07:37.200 --> 0:07:39.280 now in the postmarket. I know we have to wait 0:07:39.280 --> 0:07:40.920 for the call. What's the question that you would ask 0:07:40.960 --> 0:07:42.280 on the call if you were able to join. 0:07:44.640 --> 0:07:47.560 For me, it would be about just continued cost discipline. 0:07:47.600 --> 0:07:49.640 I'm not worried about the top line. You're going to 0:07:49.680 --> 0:07:52.960 have ebbs and clothes in the cloud, especially with the 0:07:53.040 --> 0:07:57.800 uncertainty around the macro picture. You know, the sales cycles 0:07:57.840 --> 0:07:59.600 of migrations and so. 0:07:59.560 --> 0:08:01.560 Where do you want to see that cost discipline? Do 0:08:01.600 --> 0:08:02.720 you want to see it in like you know, the 0:08:02.720 --> 0:08:05.480 free massages at work type of thing, and free lunches 0:08:05.520 --> 0:08:07.240 at work, like the thing that these tech companies are 0:08:07.240 --> 0:08:09.120 known for. Do you want to see it in sort 0:08:09.160 --> 0:08:13.560 of not investing as much as they're investing in new projects. 0:08:15.240 --> 0:08:19.440 And both ideally, but obviously the big drag continues to 0:08:19.480 --> 0:08:21.800 be in other projects that you know may or may 0:08:21.840 --> 0:08:23.880 not come to fruition, and then most times they don't, 0:08:24.960 --> 0:08:28.280 So continue discipline there and then tightening the belt around 0:08:28.280 --> 0:08:31.840 their gn A the general operating expenses wherever they can, 0:08:31.960 --> 0:08:35.720 because you know, with this kind of margins, well with 0:08:35.920 --> 0:08:38.720 this kind of revenue and this kind the potential of 0:08:38.880 --> 0:08:42.920 the incremental margins afforded by advertising dollars. You know, they 0:08:42.920 --> 0:08:45.440 should be able to continue to trend earnings in a 0:08:45.480 --> 0:08:48.800 powerful way higher from where they are right now. 0:08:48.880 --> 0:08:52.080 So I mean, my my offen focus on the bottom line. 0:08:52.200 --> 0:08:56.280 Hey, James, these are names that you have in your portfolio, Microsoft, Alphabet, 0:08:56.640 --> 0:08:59.520 anything in these reports that make you want to go 0:08:59.559 --> 0:09:01.480 out and buy some shares or sell some shares. 0:09:02.679 --> 0:09:06.680 Well, we grossed up both Alphabet and Microsoft going into 0:09:06.679 --> 0:09:08.839 the print. At the end of the day, though it 0:09:08.880 --> 0:09:13.000 seems like a wash between those trades. You know, you 0:09:13.040 --> 0:09:15.480 can't win them all if we try to win fifty 0:09:15.480 --> 0:09:16.400 one percent of the time. 0:09:17.480 --> 0:09:21.960 But the no, I don't think that it really changes. 0:09:22.200 --> 0:09:26.280 You know, we are underweight Microsoft relative to the index, 0:09:27.040 --> 0:09:30.560 but we feel comfortable with our waiting there, and we 0:09:30.720 --> 0:09:34.000 grossed up, you know, in anticipation of a potentially strong quarter. 0:09:34.440 --> 0:09:38.520 Alphabet were marginally underweight relative to the index. Feel comfortable 0:09:38.559 --> 0:09:40.440 with that. There need to get more color on it. 0:09:41.400 --> 0:09:45.120 But you know, the other big ones are Meta, Tomorrow 0:09:45.200 --> 0:09:49.600 and Amazon. You know, Thursday I leave. That will really 0:09:49.920 --> 0:09:51.440 kind of define what the rest of the year looks 0:09:51.440 --> 0:09:52.160 like for the cues. 0:09:52.440 --> 0:09:54.880 James Chockmack he's still with us. He's partner in Technology 0:09:54.880 --> 0:09:57.000 Analystic Clockwise Capital. They about three hundred and forty five 0:09:57.000 --> 0:09:59.440 million dollars in assets under management. He joins us once 0:09:59.440 --> 0:10:03.959 again on from Miami. We're talking today's Megacap Tech earnings 0:10:03.960 --> 0:10:07.280 out just now and some other companies as well, and 0:10:07.320 --> 0:10:09.920 for today's weekly Bloomberg Plugged in segment when we dig 0:10:09.960 --> 0:10:11.600 into the ev space. We've got a lot to talk 0:10:11.640 --> 0:10:15.559 about with Tesla when it comes to Tesla, and we're 0:10:15.559 --> 0:10:18.920 gonna do that with James. Tesla, James a top holding 0:10:19.400 --> 0:10:23.640 in your portfolio. We want to get your thoughts on 0:10:23.920 --> 0:10:26.840 that earnings call last week and Elon Musk Carol described 0:10:27.120 --> 0:10:29.160 his mood I think as dour. I think that's fair 0:10:29.200 --> 0:10:29.480 to say. 0:10:29.559 --> 0:10:30.280 It's a bit of a bummer. 0:10:30.559 --> 0:10:31.800 It was a bit of a bummer. What did you 0:10:32.000 --> 0:10:32.800 What did you make of it? 0:10:35.080 --> 0:10:36.120 Yeah, it was pretty bad. 0:10:36.360 --> 0:10:39.319 I mean it was as bad as you think. 0:10:39.360 --> 0:10:43.120 You get it. It's the call that you never hoped for. 0:10:45.040 --> 0:10:50.439 It was how should I frame it? 0:10:50.520 --> 0:10:55.880 Basically, every area of opportunity, an optionality to the upside 0:10:56.000 --> 0:10:58.319 was met with a caveat and. 0:11:00.800 --> 0:11:02.400 You know, kicking the can down the road on. 0:11:03.080 --> 0:11:07.000 The realization of those opportunities, whether it be the expansion 0:11:07.000 --> 0:11:09.800 of margin on the power side of the business, whether 0:11:09.840 --> 0:11:14.520 it be the cadence on the rollout of the of 0:11:14.559 --> 0:11:19.880 the cyber truck, or the productivity gains and the margin 0:11:19.920 --> 0:11:23.800 improvements on the production side, you know, all those things, 0:11:23.920 --> 0:11:26.199 you know, push the can down the road, Which essentially 0:11:26.280 --> 0:11:30.360 means that our twenty twenty three targets moved to twenty 0:11:30.360 --> 0:11:33.079 twenty four, or our twenty twenty four price targets moved 0:11:33.120 --> 0:11:36.560 to twenty twenty five, So essentially that call did a 0:11:36.600 --> 0:11:39.400 one year reset on our valuations. 0:11:39.640 --> 0:11:39.880 Wow. 0:11:40.040 --> 0:11:42.520 Well, you know, in the EV world, I feel like James, 0:11:42.720 --> 0:11:45.160 a year from now is going to be even more 0:11:45.200 --> 0:11:48.760 interesting potentially as we see more entrance into the EV 0:11:49.040 --> 0:11:53.440 space right and more competition for Elon. So is do 0:11:53.480 --> 0:11:56.280 we have to start thinking differently about this company that 0:11:56.320 --> 0:11:59.640 maybe I don't know, I don't want to say viability, 0:11:59.760 --> 0:12:02.560 but just what its role is in its place and 0:12:02.559 --> 0:12:04.320 its share of the market going forward. 0:12:06.080 --> 0:12:08.680 No, I think, you know, as you look at the 0:12:08.679 --> 0:12:12.600 company fundamentally with a multi year horizon, which is increasingly 0:12:12.640 --> 0:12:16.000 difficult to do in this market environment, and we kind of, 0:12:16.440 --> 0:12:19.199 you know, our time frames have moved from five years 0:12:19.240 --> 0:12:20.360 to three years to one year. 0:12:20.440 --> 0:12:22.640 Now we're looking at more like one. 0:12:22.480 --> 0:12:26.480 Month, sometimes even one week at this point, just given 0:12:26.520 --> 0:12:29.360 the volatility. But you know, if you are able to 0:12:29.400 --> 0:12:32.440 take that multi year review, we think that it still 0:12:32.520 --> 0:12:37.120 continues to be a tremendously undervalued asset relative to its potential, 0:12:38.080 --> 0:12:41.400 the ability, the amount of dat it is amassed, relative 0:12:41.480 --> 0:12:46.280 to the entire industry, every other competitor in the industry 0:12:46.320 --> 0:12:51.880 combined that head start, there is something that is insurmountable, 0:12:53.360 --> 0:12:57.960 and we think that they will continue to have the 0:12:58.040 --> 0:13:01.600 opportunity there to monitor tis that. And at the same time, 0:13:01.640 --> 0:13:05.319 the power business is still in infancy stages and has 0:13:05.400 --> 0:13:08.400 truly it's only about ten percent utilized right now of 0:13:08.600 --> 0:13:11.920 their capacity that they've built out, So you know, there's 0:13:12.000 --> 0:13:14.720 tremendous margin opportunity from that side as well, and I 0:13:14.720 --> 0:13:19.480 think that people will increasingly stopped looking at Tesla as 0:13:19.480 --> 0:13:23.440 an auto manufacturer and more as a holistic play on 0:13:23.440 --> 0:13:25.040 on data and power. 0:13:25.760 --> 0:13:28.880 We just want to mention Tom Emmer ends his speakership bid, 0:13:28.960 --> 0:13:31.400 becoming the third GOP nominee to fail. 0:13:31.480 --> 0:13:33.040 Nominee to fail. There's been a lot I. 0:13:33.080 --> 0:13:34.800 Think he was making it pretty far earlier. Today. 0:13:34.880 --> 0:13:36.400 I feel like there's a lot of horse trading going 0:13:36.440 --> 0:13:37.720 on in closed rooms. 0:13:37.800 --> 0:13:38.520 Yeah, exactly. 0:13:38.840 --> 0:13:40.439 But Jays, we're not gonna we're not. Don't worry. We're 0:13:40.440 --> 0:13:43.400 not going to ask for your thoughts. Maybe, hey, maybe, Speaker. 0:13:43.080 --> 0:13:45.640 Of the House, what's easier, what's easier to figure out 0:13:45.640 --> 0:13:47.679 Elon in his world or what's going on in the 0:13:47.920 --> 0:13:48.960 House of Representatives? 0:13:49.320 --> 0:13:50.160 James to Washington. 0:13:50.920 --> 0:13:52.440 Eli is easier, I'll tell you that. 0:13:52.720 --> 0:13:55.960 Oh wow, Hey, James, a couple more Tesla questions. Uh, 0:13:56.000 --> 0:13:58.600 you mentioned the cyber truck. How are you valuing the 0:13:58.640 --> 0:14:01.559 cyber truck when it comes to your analysis? And this 0:14:01.600 --> 0:14:05.119 is a category that you know, Ford absolutely just dominates 0:14:05.120 --> 0:14:07.320 in here in the US GM as well in many 0:14:07.320 --> 0:14:09.280 companies over the last twenty thirty years have tried to 0:14:09.320 --> 0:14:12.199 come in and take market share. It hasn't They haven't 0:14:12.280 --> 0:14:16.000 necessarily succeeded. How do you think about the cyber truck? 0:14:17.559 --> 0:14:20.480 Yeah, I mean it's a separate line item that we use. 0:14:20.520 --> 0:14:23.640 You know, we break it out by the model three 0:14:25.200 --> 0:14:29.040 and three slash y and then X slash s and 0:14:29.080 --> 0:14:32.520 then the cyber truck. So that's how we kind of 0:14:32.520 --> 0:14:35.200 build it out and basically, you know, what we learned 0:14:35.240 --> 0:14:37.960 from the call is that the cadence may not be 0:14:38.040 --> 0:14:41.520 as steep as originally hoped or anticipated. 0:14:41.600 --> 0:14:43.640 So that's a problem. 0:14:43.760 --> 0:14:47.120 And it's a high cost, you know, it's it's a 0:14:47.240 --> 0:14:51.560 high cost production vehicle, and if you're not pushing volume through, 0:14:51.720 --> 0:14:54.360 it's going to hurt your margins. And and ultimately, you know, 0:14:54.400 --> 0:14:58.320 the problem with Tesla near term is on the margin side. 0:14:59.360 --> 0:15:01.800 And if you get lumpiness on the power business, which 0:15:01.840 --> 0:15:04.840 is their fastest growing segment, as well as their highest 0:15:04.840 --> 0:15:08.600 margin segment, which is a higher margin than their auto segment. 0:15:08.560 --> 0:15:12.960 Then you just have uncertainty. Uncertainty, unfortunately leads the multiple compression. 0:15:13.080 --> 0:15:17.200 Hey, and you're fine on your clockwise core equity uh 0:15:17.520 --> 0:15:20.960 and innovation ETF. Tesla's definitely a big holding. Have you 0:15:21.000 --> 0:15:22.960 been buying or selling shares of Tesla? 0:15:24.600 --> 0:15:24.720 Uh? 0:15:24.960 --> 0:15:28.280 No, it's about a four percent weight. You know, our 0:15:28.320 --> 0:15:30.239 top holdings are around six. 0:15:31.600 --> 0:15:36.080 Like uh, Amazons by Yeah, have you as of. 0:15:36.360 --> 0:15:39.560 No, No, we've we've we've we we held out to 0:15:39.680 --> 0:15:43.880 the full position basically here, you know, you know, just 0:15:43.920 --> 0:15:47.000 looking at fundamentally, you know, you had downside of about 0:15:47.000 --> 0:15:50.520 two hundred dollars technically downside of about two ten. You know, 0:15:50.600 --> 0:15:54.000 we tested the technical limits on the downside, bounced off 0:15:54.080 --> 0:15:56.400 of those. But you know, we may look the trim 0:15:56.720 --> 0:15:59.880 because fundamentally, like I said, the valuation has been pushed 0:16:00.080 --> 0:16:03.560 out one year and there may be better opportunities to 0:16:03.600 --> 0:16:06.720 deploy capital. So if we get a broader market balance, 0:16:06.760 --> 0:16:12.040 which we do anticipate is a high probable scenario, especially 0:16:12.120 --> 0:16:14.720 after earnings this week, I think Tesla can be along 0:16:14.760 --> 0:16:17.760 for the ride and at which point will likely make 0:16:17.800 --> 0:16:21.160 that determination to trim and rotate into some of the 0:16:21.520 --> 0:16:24.360 faster growth and potentially higher beta names. 0:16:24.440 --> 0:16:27.600 Hey James, it's interesting here. You're you're up thirty three 0:16:27.600 --> 0:16:31.240 point eight percent year to date in the ETF so 0:16:31.280 --> 0:16:34.320 it's been a really good year. I'll performing the NASDAC 0:16:34.600 --> 0:16:37.560 and the S and P five hundred. I was interested 0:16:37.560 --> 0:16:41.200 to see that your top holding is one to three 0:16:41.240 --> 0:16:42.600 month t bells. 0:16:43.280 --> 0:16:43.880 What's that? 0:16:43.920 --> 0:16:44.560 What's up with that? 0:16:45.960 --> 0:16:48.480 Well, what we typically like to do is we keep 0:16:48.560 --> 0:16:53.000 ten percent cash on hand in a normal market environment, 0:16:53.520 --> 0:16:56.320 and you know, if if we see risk, you know 0:16:56.400 --> 0:16:59.040 that cash position can go from fifteen to twenty percent. 0:16:59.680 --> 0:17:02.440 But you know, with the yields that we're seeing in 0:17:02.480 --> 0:17:04.280 the market right now. I'm not going to just hold 0:17:04.320 --> 0:17:07.280 it in pure cash. I park the cash that I 0:17:07.359 --> 0:17:11.120 have in the portfolio in BIL instead of just leaving 0:17:11.160 --> 0:17:13.760 it in cash, because I can pick up super safe 0:17:13.800 --> 0:17:16.960 yield and why not. So it's just a way. 0:17:16.840 --> 0:17:19.800 That money as much money market fund essentially. 0:17:20.280 --> 0:17:24.000 Yeah, I mean, if I need cash to buy positions, 0:17:24.040 --> 0:17:26.600 I use BIL as a source of cash. But it's 0:17:26.640 --> 0:17:30.119 basically just a way to add additional yield for investors. 0:17:30.240 --> 0:17:32.879 Hey, real quickly, thirty seconds, that's all we've got. Visa's 0:17:32.920 --> 0:17:35.440 up almost two percent in the after hours. It reported 0:17:35.520 --> 0:17:40.040 a massive twenty five billion dollar buy back raise his 0:17:40.119 --> 0:17:42.359 corely dividend. What do we need to know about Visa 0:17:42.440 --> 0:17:42.959 just quickly? 0:17:44.320 --> 0:17:47.080 Yeah, I mean it's an oligopoly between that and MasterCard, 0:17:47.160 --> 0:17:50.440 you know there as long as you know, the broader 0:17:50.600 --> 0:17:53.720 consumer continues to remain healthy, which we think will be 0:17:53.800 --> 0:17:57.639 the case. We don't see anything breaking just yet, hopefully not. 0:17:58.560 --> 0:18:00.159 But as long as it continues to be the case, 0:18:00.200 --> 0:18:02.920 there will be a beneficiary. And it's just the buyback 0:18:03.400 --> 0:18:05.560 and dividend increases just music to my ears. 0:18:05.560 --> 0:18:07.280 So we continue to like it. 0:18:07.520 --> 0:18:09.920 Yeah, that CEO and the press release saying we as 0:18:09.920 --> 0:18:11.600 we enter a new fiscal year, I'm confident in our 0:18:11.640 --> 0:18:16.080 ability to deliver against a backdrop of geopolitical and economic uncertainty. 0:18:16.160 --> 0:18:18.280 Talks about tremendous opportunity ahead. 0:18:18.480 --> 0:18:19.480 So there you have it. 0:18:20.800 --> 0:18:22.520 Is he headed to Washington to be Speaker of the House. 0:18:22.640 --> 0:18:25.080 You're chalk mark, You're done, choc Mack. You can go 0:18:25.119 --> 0:18:25.600 home now. 0:18:26.600 --> 0:18:29.399 Next Speaker of the House, James Chockmock over at Clockwise Capital. 0:18:29.440 --> 0:18:30.160 This is Bloomberg. 0:18:32.200 --> 0:18:35.760 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:35.800 --> 0:18:39.159 live weekday afternoons from three to six Eastern Listen on 0:18:39.200 --> 0:18:43.240 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:18:43.520 --> 0:18:45.800 or watch us live on YouTube. 0:18:46.560 --> 0:18:49.399 Just real quickly the latest on the Israel Hamas conflict, 0:18:49.400 --> 0:18:52.320 because the headlines continue to cross as we speak. You 0:18:52.359 --> 0:18:55.840 and Secretary General calling for an immediate ceasefire in Gaza 0:18:55.840 --> 0:18:59.720 at the Security Council, President bind Tim saying humanitarian aid 0:18:59.800 --> 0:19:02.480 is not getting into Gaza fast enough. Secret Tape State 0:19:02.520 --> 0:19:05.760 Anthony Blinkln saying pauses in the conflict may be needed 0:19:06.080 --> 0:19:09.360 to organize help for civilians. As Israel extended its bombing campaign, 0:19:09.359 --> 0:19:12.560 so as we said, the headlines continue. 0:19:12.080 --> 0:19:15.040 And the conflict continues. Also, this was a must read 0:19:15.080 --> 0:19:17.960 for US today on the Israel Hamas conflict, especially as 0:19:18.000 --> 0:19:21.359 the most would argue that it is yes about what 0:19:21.400 --> 0:19:24.280 happens next in terms of the expected Israel ground invasion 0:19:24.320 --> 0:19:27.240 in response to Hamasa's surprise and deadly attack on Israel 0:19:27.600 --> 0:19:30.080 now more than two weeks ago, and then what happens 0:19:30.119 --> 0:19:33.080 after that, what's the future of Israel and Palestine existing 0:19:33.119 --> 0:19:35.960 side by stide one state, two states, and what could 0:19:36.000 --> 0:19:37.879 it have been a generation ago? Carol. 0:19:38.000 --> 0:19:40.080 Yeah, someone who has a very informed view on that 0:19:40.160 --> 0:19:42.240 is the man who withdrew from Gaza some eighteen years 0:19:42.280 --> 0:19:44.720 ago and had has a plan. I guess you could 0:19:44.760 --> 0:19:47.120 say we are so appreciative to have with us. Bloomberg 0:19:47.160 --> 0:19:50.520 News International Affairs columnist Mark Champion, he's on the road. 0:19:50.520 --> 0:19:52.600 As he continues to report on the conflict, he joins 0:19:52.640 --> 0:19:54.960 us now on the phone from Israel. First stop, Mark, 0:19:55.480 --> 0:19:57.879 how are you and what are you seeing on a 0:19:57.960 --> 0:19:59.480