1
00:00:02,720 --> 00:00:10,560
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,560 --> 00:00:14,520
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

3
00:00:14,560 --> 00:00:18,479
Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

4
00:00:18,600 --> 00:00:21,840
Speaker 1: Listen on demand wherever you get your podcasts, or watch

5
00:00:21,920 --> 00:00:23,960
Speaker 1: us live on YouTube.

6
00:00:24,520 --> 00:00:27,040
Speaker 2: Here are the latest headlines on the Bloomberg. The fierce

7
00:00:27,040 --> 00:00:31,400
Speaker 2: winds expended to continue in southern California, exacerbating wildfires and

8
00:00:31,440 --> 00:00:34,960
Speaker 2: putting lives at risk. And the number of dead that

9
00:00:35,000 --> 00:00:38,120
Speaker 2: we know about right now, it is up to twenty

10
00:00:38,159 --> 00:00:41,159
Speaker 2: four and that's expected to climb. Let's get the update

11
00:00:41,200 --> 00:00:44,080
Speaker 2: on all this. Will Wade is the Bloomberg Energy and

12
00:00:44,200 --> 00:00:49,000
Speaker 2: climate reporter here at Bloomberg. Will put things into perspective

13
00:00:49,800 --> 00:00:52,440
Speaker 2: for those of us on the East Coast. How much

14
00:00:52,640 --> 00:00:53,519
Speaker 2: has burned?

15
00:00:53,920 --> 00:00:56,160
Speaker 3: A lot? I mean a whole lot. We're up to

16
00:00:56,600 --> 00:00:59,279
Speaker 3: about forty thousand acres. I know that sounds like kind

17
00:00:59,280 --> 00:01:02,240
Speaker 3: of a random number. So here's some perspective. Forty thousand

18
00:01:02,240 --> 00:01:04,760
Speaker 3: acres is a little bit bigger than Staten Island.

19
00:01:05,319 --> 00:01:05,520
Speaker 4: Wow.

20
00:01:05,840 --> 00:01:09,880
Speaker 5: Well, what do we know so far about the origins

21
00:01:09,920 --> 00:01:10,759
Speaker 5: of these fires?

22
00:01:11,000 --> 00:01:11,160
Speaker 3: Oh?

23
00:01:11,440 --> 00:01:12,480
Speaker 6: It started, and.

24
00:01:13,319 --> 00:01:15,240
Speaker 3: You know what we don't know a whole lot about that.

25
00:01:15,360 --> 00:01:19,040
Speaker 3: I was just talking to my teammates. We cover utilities,

26
00:01:19,120 --> 00:01:22,360
Speaker 3: so obviously we've seen in the past a lot of

27
00:01:23,600 --> 00:01:27,040
Speaker 3: power lines get blamed for fires, and so often it's

28
00:01:27,080 --> 00:01:30,280
Speaker 3: the case we Pgenie went bankrupt a few years ago

29
00:01:30,440 --> 00:01:34,000
Speaker 3: because they started a terrible fire. Today we don't know

30
00:01:34,120 --> 00:01:38,720
Speaker 3: that utility in Southern California, Southern California Edison, and they

31
00:01:38,760 --> 00:01:41,600
Speaker 3: are looking at their power lines. There's no evidence now,

32
00:01:41,800 --> 00:01:46,160
Speaker 3: but they've fielded some of these requests to retain evidence.

33
00:01:46,319 --> 00:01:48,680
Speaker 3: So that's definitely where people are checking.

34
00:01:48,760 --> 00:01:52,480
Speaker 2: First, we've heard a lot of blame being pointed at

35
00:01:52,680 --> 00:01:56,720
Speaker 2: the mayor, at the governor. Is there any legitimacy to

36
00:01:56,840 --> 00:01:59,080
Speaker 2: any of that at all? As far as you.

37
00:01:59,000 --> 00:02:02,160
Speaker 3: Can tell, As far as I can tell, it seems

38
00:02:02,280 --> 00:02:06,680
Speaker 3: like a lot of politicization. I may turn out to

39
00:02:06,720 --> 00:02:10,200
Speaker 3: be wrong on that, but for today, I'd say, don't

40
00:02:10,240 --> 00:02:11,960
Speaker 3: pay too much attention to that stuff.

41
00:02:12,400 --> 00:02:17,520
Speaker 5: So you're the energy and climate reporter for us folks

42
00:02:17,520 --> 00:02:20,959
Speaker 5: out here in New York. Help us kind of understand

43
00:02:21,120 --> 00:02:25,080
Speaker 5: the climate in California.

44
00:02:24,200 --> 00:02:28,120
Speaker 3: Not only the geography, but just the winds.

45
00:02:27,840 --> 00:02:31,120
Speaker 5: And the weather that they have that kind of propelled

46
00:02:31,240 --> 00:02:33,720
Speaker 5: this fire and is causing it to spread so quickly.

47
00:02:33,960 --> 00:02:36,600
Speaker 3: Sure, I mean, I know this really well. I grew

48
00:02:36,680 --> 00:02:40,440
Speaker 3: up in California the fall and winter months, the Santa

49
00:02:40,440 --> 00:02:44,080
Speaker 3: Ana winds. They come every year. But what's happened in

50
00:02:44,120 --> 00:02:47,680
Speaker 3: the past several years is, you know, with climate change,

51
00:02:47,680 --> 00:02:52,840
Speaker 3: we've got longer, hotter summers. We've been had droughts, so

52
00:02:53,000 --> 00:02:56,840
Speaker 3: you've get these hillsides that are just baked dry all

53
00:02:56,880 --> 00:03:01,040
Speaker 3: summer long, all fall long. There's nothing there but dry

54
00:03:01,120 --> 00:03:05,120
Speaker 3: bush and trees, and it's fuel for fires. And then

55
00:03:05,120 --> 00:03:08,919
Speaker 3: the winds come and any tiny spark can trigger it,

56
00:03:09,040 --> 00:03:11,520
Speaker 3: and the winds are going to just blow these blazes

57
00:03:11,560 --> 00:03:14,440
Speaker 3: all over the place. That's was the problem. A week

58
00:03:14,480 --> 00:03:18,760
Speaker 3: ago when there were like ninety mile an hour winds.

59
00:03:19,080 --> 00:03:21,160
Speaker 3: They died down for a few days, but they started

60
00:03:21,200 --> 00:03:24,519
Speaker 3: back up again. Now it's supposed to last through Wednesday,

61
00:03:25,080 --> 00:03:27,080
Speaker 3: could be more after that. I think they're up to

62
00:03:28,000 --> 00:03:31,480
Speaker 3: seventy mile per hour gusts coming this week. So it

63
00:03:31,560 --> 00:03:34,640
Speaker 3: blows sparks, it fans the flames, it makes it harder

64
00:03:34,680 --> 00:03:35,640
Speaker 3: to put them out.

65
00:03:35,920 --> 00:03:38,280
Speaker 2: What is the What do we know in terms of

66
00:03:38,280 --> 00:03:39,760
Speaker 2: the economic damage so far?

67
00:03:40,040 --> 00:03:42,160
Speaker 3: Oh, it's a big number. I just saw a number

68
00:03:42,200 --> 00:03:44,840
Speaker 3: this morning. We're looking at two hundred and fifty to

69
00:03:44,880 --> 00:03:47,920
Speaker 3: two hundred and seventy five billion dollars in damages. That's

70
00:03:47,960 --> 00:03:51,840
Speaker 3: from damages, lost wages, supply chain disruptions, sort of the

71
00:03:51,880 --> 00:03:54,120
Speaker 3: whole package. But that's that's a lot of money.

72
00:03:54,600 --> 00:03:57,360
Speaker 2: That would place this at I mean, correct me if

73
00:03:57,360 --> 00:03:59,960
Speaker 2: I'm wrong, it would be the in terms of the cost,

74
00:04:00,200 --> 00:04:04,160
Speaker 2: the worst natural disaster in history in the US history.

75
00:04:04,560 --> 00:04:06,480
Speaker 2: I suspect it could be.

76
00:04:06,560 --> 00:04:08,560
Speaker 3: I haven't seen a ranking on that, but certainly it's

77
00:04:08,560 --> 00:04:10,560
Speaker 3: going to be up there. This is a this is

78
00:04:10,560 --> 00:04:12,880
Speaker 3: a big fire, and we're not done yet. I mean,

79
00:04:12,920 --> 00:04:15,800
Speaker 3: the two main fires are the Palisades Fire and the

80
00:04:15,880 --> 00:04:20,600
Speaker 3: Eaten Fire. Palisades is about fourteen percent contained. Eton is

81
00:04:20,680 --> 00:04:23,159
Speaker 3: about thirty something percent contained.

82
00:04:24,240 --> 00:04:26,120
Speaker 2: Okay, what does that mean?

83
00:04:26,560 --> 00:04:28,919
Speaker 3: Like fourteen percent contained?

84
00:04:29,440 --> 00:04:30,560
Speaker 2: Does that mean that.

85
00:04:31,040 --> 00:04:34,479
Speaker 5: It's likely to just continue to keep spreading? Like what

86
00:04:34,600 --> 00:04:37,599
Speaker 5: is the definition of a contained fire?

87
00:04:39,360 --> 00:04:39,680
Speaker 7: You know what?

88
00:04:39,720 --> 00:04:42,479
Speaker 3: I don't know exactly what it means, but it certainly

89
00:04:42,520 --> 00:04:45,400
Speaker 3: means that they are not even close to under control

90
00:04:45,520 --> 00:04:47,520
Speaker 3: yet They're probably going to get bigger.

91
00:04:49,680 --> 00:04:53,039
Speaker 2: That's the economic toll the damage is. There's also a

92
00:04:53,080 --> 00:04:56,640
Speaker 2: psychological aspect of it. You know people out there, you're

93
00:04:56,680 --> 00:04:59,800
Speaker 2: from that area, I do what's going through their minds.

94
00:05:00,080 --> 00:05:02,240
Speaker 3: Well, I'll tell you about my aunt because I was

95
00:05:02,279 --> 00:05:05,760
Speaker 3: texting with her yesterday. Her house is about two and

96
00:05:05,800 --> 00:05:08,080
Speaker 3: a half blocks from the front lines of the Eton

97
00:05:08,200 --> 00:05:11,720
Speaker 3: Fire in North Pasadena. She evacuated a week ago last

98
00:05:11,760 --> 00:05:15,240
Speaker 3: Tuesday night. She was allowed to go home briefly to

99
00:05:15,279 --> 00:05:17,240
Speaker 3: pick up some stuff over the weekend, but she is

100
00:05:17,360 --> 00:05:23,039
Speaker 3: just really rattled. It looks like her house might be safe,

101
00:05:23,040 --> 00:05:24,719
Speaker 3: at least from what I've been looking at today. It

102
00:05:24,800 --> 00:05:28,440
Speaker 3: hasn't encroached on it anymore in the past several days,

103
00:05:28,640 --> 00:05:31,840
Speaker 3: and I hope that stays true. But if she loses

104
00:05:31,880 --> 00:05:33,920
Speaker 3: her house, it's going to be really serious for her.

105
00:05:34,600 --> 00:05:36,560
Speaker 2: And this is an area where it's just like you

106
00:05:36,600 --> 00:05:39,320
Speaker 2: grow up, you live there, and then the landscape just

107
00:05:39,480 --> 00:05:42,480
Speaker 2: like in a few days, completely changes. That's going to

108
00:05:42,560 --> 00:05:45,400
Speaker 2: have a tremendous impact on your psyche.

109
00:05:45,600 --> 00:05:48,040
Speaker 3: Oh yeah, I mean I know this area. I was

110
00:05:48,080 --> 00:05:51,000
Speaker 3: there last summer. My mom texted me last week, She's like,

111
00:05:51,040 --> 00:05:53,400
Speaker 3: remember that place we went for brunch last June when

112
00:05:53,400 --> 00:05:54,839
Speaker 3: you were here. Yeah, it's gone.

113
00:05:55,440 --> 00:05:59,440
Speaker 5: Yeah, even the I've seen photos of some houses on

114
00:05:59,520 --> 00:06:03,160
Speaker 5: blocks are the one house left standing, which, in that sense,

115
00:06:03,279 --> 00:06:06,359
Speaker 5: I guess you can feel lucky if that was your house.

116
00:06:06,440 --> 00:06:09,080
Speaker 5: But then what happens Then you move back into your

117
00:06:09,080 --> 00:06:11,719
Speaker 5: house and all your neighbors are gone, and then you're

118
00:06:11,760 --> 00:06:13,320
Speaker 5: just on an empty block.

119
00:06:13,400 --> 00:06:16,200
Speaker 3: I mean that's devastating. I would think that would really

120
00:06:16,360 --> 00:06:19,640
Speaker 3: be hard to live there, just to look around at

121
00:06:19,720 --> 00:06:22,599
Speaker 3: the community that you used to know, and now it's gone,

122
00:06:22,680 --> 00:06:25,279
Speaker 3: and it'll rebuild, but it'll be different.

123
00:06:26,080 --> 00:06:28,960
Speaker 2: What is your sense of what has to happen in

124
00:06:29,080 --> 00:06:32,600
Speaker 2: terms of rebuilding and what happens in the future. I mean,

125
00:06:33,200 --> 00:06:36,159
Speaker 2: can you really make your house and your property fire proof?

126
00:06:37,520 --> 00:06:40,479
Speaker 3: I mean, you can build it out of concrete. But

127
00:06:41,440 --> 00:06:43,840
Speaker 3: the thing is, I've been writing about climate change for

128
00:06:44,680 --> 00:06:48,839
Speaker 3: years and it just gets worse and people more people

129
00:06:48,920 --> 00:06:51,560
Speaker 3: talk about it now, but we still need to see

130
00:06:51,880 --> 00:06:56,520
Speaker 3: behavioral changes. There are places that are no longer as

131
00:06:56,600 --> 00:06:58,039
Speaker 3: safe as they used to be.

132
00:06:58,560 --> 00:07:00,680
Speaker 2: Well, I mean behavioral changes in terms of what.

133
00:07:01,040 --> 00:07:03,360
Speaker 3: In terms of thinking should I live here? Should I

134
00:07:03,440 --> 00:07:06,000
Speaker 3: not live here? You know, there's a lot of coastal

135
00:07:06,000 --> 00:07:10,720
Speaker 3: communities that are you know, the local agencies are saying

136
00:07:10,720 --> 00:07:13,240
Speaker 3: we're not going to pay to keep rebuilding the roads

137
00:07:13,280 --> 00:07:17,240
Speaker 3: when the oceans overturn it every summer, and you're going

138
00:07:17,280 --> 00:07:19,320
Speaker 3: to have to think about how you want to live there.

139
00:07:19,760 --> 00:07:22,720
Speaker 2: Well, maybe you know, we should all move to Vermont. Oh,

140
00:07:22,720 --> 00:07:25,600
Speaker 2: but wait, part of it was washed out because of

141
00:07:25,600 --> 00:07:28,720
Speaker 2: the heavy rains. Maybe I should move to Florida. But oh,

142
00:07:28,760 --> 00:07:30,680
Speaker 2: I'm going to get hit with you know, where'd he go?

143
00:07:30,880 --> 00:07:31,520
Speaker 2: What's safe?

144
00:07:31,560 --> 00:07:31,800
Speaker 4: Now?

145
00:07:32,240 --> 00:07:34,320
Speaker 3: I wish I had a better answer for you. What

146
00:07:34,360 --> 00:07:37,760
Speaker 3: I know is that climate change is real and it's

147
00:07:37,800 --> 00:07:39,280
Speaker 3: a bigger threat than it ever was.

148
00:07:39,760 --> 00:07:41,480
Speaker 2: Do you get a lot of pushback when you say

149
00:07:41,480 --> 00:07:42,440
Speaker 2: something like that.

150
00:07:42,760 --> 00:07:44,880
Speaker 3: Sometimes when I talk to my relatives in the South.

151
00:07:45,520 --> 00:07:50,440
Speaker 2: Yeah, well, always a pleasure. Thanks Will Wait, Bloomberg Energy

152
00:07:50,480 --> 00:07:53,640
Speaker 2: and Climate Reporter, the Los Angeles wildfires.

153
00:07:55,400 --> 00:07:59,280
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch the program

154
00:07:59,360 --> 00:08:02,760
Speaker 1: lives a ten am Eastern on Apple, Cocklay and Android

155
00:08:02,800 --> 00:08:05,800
Speaker 1: Auto with the Bloomberg Business App. You can also listen

156
00:08:05,920 --> 00:08:09,160
Speaker 1: live on Amazon Alexa from our flagship New York station.

157
00:08:09,720 --> 00:08:13,640
Speaker 1: Just say Alexa play Bloomberg eleven thirty Tech.

158
00:08:13,480 --> 00:08:18,160
Speaker 2: Heavy NASDAK down another one percent in today's trading. So

159
00:08:18,400 --> 00:08:21,680
Speaker 2: what's next. Let's put that question to Kim Forrest, a

160
00:08:21,720 --> 00:08:26,880
Speaker 2: founder at thee Cio Boca Capital Partners. It's kind of

161
00:08:26,920 --> 00:08:30,160
Speaker 2: safe to describe you as something of a tech geek

162
00:08:30,520 --> 00:08:33,920
Speaker 2: considering your background. What's on your Bingo card right now?

163
00:08:35,000 --> 00:08:40,719
Speaker 8: Sure, well, let's just make a mixed metaphor here my

164
00:08:40,800 --> 00:08:44,320
Speaker 8: Bingo card, and I was a software engineer. I became

165
00:08:44,400 --> 00:08:48,680
Speaker 8: a cell side analyst that followed computer company.

166
00:08:48,840 --> 00:08:51,200
Speaker 2: I didn't mean that as a pejorative, but you know,

167
00:08:51,559 --> 00:08:52,200
Speaker 2: I know, no.

168
00:08:52,720 --> 00:08:54,240
Speaker 6: No nervous like a good thing.

169
00:08:54,280 --> 00:08:57,720
Speaker 8: Man, I love it, okay, But anyhow, just giving people background,

170
00:08:58,200 --> 00:09:01,520
Speaker 8: and so I do look at tech and tech you

171
00:09:01,520 --> 00:09:04,320
Speaker 8: know it drove the market. Actually, one company really drove

172
00:09:04,360 --> 00:09:06,719
Speaker 8: the market last year. I was looking at some statistics.

173
00:09:07,040 --> 00:09:08,679
Speaker 8: Do you know that the S and P five hundred

174
00:09:08,760 --> 00:09:10,439
Speaker 8: is fifteen percent in Vidia?

175
00:09:10,520 --> 00:09:12,400
Speaker 6: Holy cow? How'd that get to be there?

176
00:09:12,880 --> 00:09:16,840
Speaker 8: Well, because in Vidia grew, right, But going to is

177
00:09:16,960 --> 00:09:18,520
Speaker 8: in Vidia going to grow this year?

178
00:09:18,880 --> 00:09:20,040
Speaker 6: Probably a little.

179
00:09:19,760 --> 00:09:22,840
Speaker 8: Bit, but not like it did in twenty three for sure,

180
00:09:22,880 --> 00:09:26,000
Speaker 8: and maybe not as it did in twenty four. So

181
00:09:27,000 --> 00:09:29,320
Speaker 8: but should you throw out tech? I don't think so.

182
00:09:29,440 --> 00:09:32,679
Speaker 8: I think there's a lot of smaller companies and probably

183
00:09:33,800 --> 00:09:36,880
Speaker 8: companies that you don't think are in the bullseye of.

184
00:09:36,880 --> 00:09:38,640
Speaker 6: AI that you could take a look at.

185
00:09:38,720 --> 00:09:41,600
Speaker 8: So that's what I do if you are a tech investor,

186
00:09:42,120 --> 00:09:46,280
Speaker 8: But I'd also be very, very concerned about what's happening

187
00:09:46,320 --> 00:09:49,440
Speaker 8: in bonds. And you don't expect a computer person or

188
00:09:49,800 --> 00:09:52,719
Speaker 8: a software person to be concerned with that. But it

189
00:09:52,800 --> 00:09:56,920
Speaker 8: really will affect the market if bond rates go higher

190
00:09:56,960 --> 00:09:57,760
Speaker 8: from here.

191
00:09:58,120 --> 00:10:03,079
Speaker 2: Because the text in particular depend on future earnings and

192
00:10:03,800 --> 00:10:07,080
Speaker 2: yields are going to put it into that party pretty quickly.

193
00:10:07,120 --> 00:10:10,440
Speaker 8: I suppose, yes, yes, I would love to be able

194
00:10:10,440 --> 00:10:13,600
Speaker 8: to escape you know, math and math modeling, but it

195
00:10:13,679 --> 00:10:17,760
Speaker 8: really does limit earnings whenever, you know, rates go up.

196
00:10:18,200 --> 00:10:22,560
Speaker 8: It is the thing that the tenure is the number

197
00:10:22,640 --> 00:10:27,880
Speaker 8: that everybody discounts forward cash flows at. So the higher

198
00:10:27,920 --> 00:10:31,400
Speaker 8: that goes, the lower multiple that you can expect. Is

199
00:10:31,440 --> 00:10:32,520
Speaker 8: it really that easy?

200
00:10:32,880 --> 00:10:37,960
Speaker 9: Sadly it is, okay, But you know, I'm just trying

201
00:10:38,000 --> 00:10:42,640
Speaker 9: to think about years where you know, in the last

202
00:10:42,679 --> 00:10:45,400
Speaker 9: maybe two years or so, there was a lot of

203
00:10:45,440 --> 00:10:48,400
Speaker 9: talk about higher rates and how that was going to

204
00:10:48,480 --> 00:10:51,400
Speaker 9: dent textocs and it hasn't yet.

205
00:10:51,640 --> 00:10:54,960
Speaker 5: I'm wondering if something has changed now that we're in

206
00:10:55,200 --> 00:10:57,920
Speaker 5: what could be I guess a good news for the

207
00:10:57,960 --> 00:11:01,520
Speaker 5: economy means bad news for textiles because rates are higher

208
00:11:01,559 --> 00:11:03,800
Speaker 5: because you know, we were kind of saying that last

209
00:11:03,880 --> 00:11:09,000
Speaker 5: year and it didn't actually play out that way.

210
00:11:08,000 --> 00:11:11,800
Speaker 8: Right, And I agree with you one hundred percent that

211
00:11:11,880 --> 00:11:15,600
Speaker 8: things change and we should never ever just accept like

212
00:11:16,040 --> 00:11:20,319
Speaker 8: those old sayings of Wall Street because every year is different.

213
00:11:20,720 --> 00:11:23,720
Speaker 8: We have different investors, we have different companies, we have

214
00:11:23,760 --> 00:11:26,600
Speaker 8: a different rate environment. There's so much going on. So

215
00:11:27,080 --> 00:11:29,800
Speaker 8: at the basis I agree with you on that. I

216
00:11:29,920 --> 00:11:33,280
Speaker 8: believe if you would have taken out the Magnificent seven,

217
00:11:33,760 --> 00:11:37,040
Speaker 8: which are all growing well mostly you know, we'll kick

218
00:11:37,040 --> 00:11:41,840
Speaker 8: out Netflix and Apple are mostly growing on AI, right,

219
00:11:41,960 --> 00:11:44,959
Speaker 8: the theory that AI is going to drive these things

220
00:11:45,040 --> 00:11:46,359
Speaker 8: higher in perpetuity.

221
00:11:47,920 --> 00:11:49,839
Speaker 6: I think most of tech was down.

222
00:11:49,960 --> 00:11:53,680
Speaker 8: And remember tech spending used to equal business it spending,

223
00:11:54,160 --> 00:11:57,640
Speaker 8: so that's where the higher rates kind of come into play.

224
00:11:57,760 --> 00:11:59,839
Speaker 8: It was businesses are not going to spend on it,

225
00:12:01,080 --> 00:12:03,320
Speaker 8: and you know, because they're going to pull back and

226
00:12:03,440 --> 00:12:07,320
Speaker 8: just not build for the future. So that's kind of

227
00:12:07,360 --> 00:12:10,920
Speaker 8: one driver there. But I also think in Nvidia has

228
00:12:10,960 --> 00:12:15,080
Speaker 8: had such an outweighed emphasis on the market on tech

229
00:12:15,160 --> 00:12:18,200
Speaker 8: and specifically for the last two years. If you go

230
00:12:18,320 --> 00:12:21,440
Speaker 8: and look at their quarterly earnings and just look at

231
00:12:21,440 --> 00:12:24,960
Speaker 8: the revenue. That tells you the entire reason why everybody

232
00:12:24,960 --> 00:12:28,240
Speaker 8: has piled into in Vidia and why it became, you know,

233
00:12:28,440 --> 00:12:31,760
Speaker 8: a less than trillion dollar company surely and now the

234
00:12:31,760 --> 00:12:35,199
Speaker 8: biggest company in the S and P five hundred right

235
00:12:35,320 --> 00:12:37,680
Speaker 8: by market waiting and.

236
00:12:39,440 --> 00:12:39,800
Speaker 6: Price.

237
00:12:40,080 --> 00:12:44,600
Speaker 8: So it's been a completely outsized move because it had

238
00:12:44,640 --> 00:12:47,439
Speaker 8: a completely outside moved in its revenues.

239
00:12:48,320 --> 00:12:52,200
Speaker 2: Okay, so what's a spending going to look like from

240
00:12:52,200 --> 00:12:52,880
Speaker 2: here on out?

241
00:12:53,920 --> 00:12:55,920
Speaker 6: Right? Well, you get you get a kind of a picture.

242
00:12:56,080 --> 00:12:58,640
Speaker 8: Looking at Microsoft, they say they're going to They said

243
00:12:58,640 --> 00:13:01,160
Speaker 8: they're going to spend eighty billion dollars this year, this

244
00:13:01,160 --> 00:13:04,760
Speaker 8: fiscal year. I think it was JP Morgan did a

245
00:13:04,840 --> 00:13:09,400
Speaker 8: quick assessment on how much Meta, Google, Amazon, and Microsoft

246
00:13:09,440 --> 00:13:12,599
Speaker 8: is spent. It looks like Microsoft was on track to

247
00:13:12,640 --> 00:13:15,240
Speaker 8: spend about eighty billion dollars last year because they did

248
00:13:15,320 --> 00:13:19,640
Speaker 8: it from January to August, and I just annualized, you know,

249
00:13:19,679 --> 00:13:21,760
Speaker 8: whatever the run rate was, So that brings us to

250
00:13:21,840 --> 00:13:26,160
Speaker 8: eighty billion. Now, let's not sneeze at eighty billion dollars.

251
00:13:26,200 --> 00:13:29,040
Speaker 8: That's a lot of money, but it's going from eighty

252
00:13:29,320 --> 00:13:32,400
Speaker 8: seventy eight billion in twenty twenty four to eighty billion.

253
00:13:32,800 --> 00:13:38,120
Speaker 8: So I don't know that the big spenders in AI

254
00:13:38,400 --> 00:13:41,120
Speaker 8: are going to increase like they did in the last

255
00:13:41,160 --> 00:13:44,440
Speaker 8: couple of years again because they could. Right they were

256
00:13:44,480 --> 00:13:47,240
Speaker 8: spending zero on it and now they're spending a lot

257
00:13:47,240 --> 00:13:49,040
Speaker 8: on it. But I don't know that they're going to

258
00:13:49,120 --> 00:13:49,880
Speaker 8: double it again.

259
00:13:51,000 --> 00:13:53,880
Speaker 2: Kim boys your pleasure. Thanks for being here. I appreciate it.

260
00:13:54,360 --> 00:13:58,280
Speaker 2: Kim Forrest, founder CIO Boca Capital Partners.

261
00:14:00,080 --> 00:14:03,760
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

262
00:14:03,840 --> 00:14:06,920
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

263
00:14:06,920 --> 00:14:10,240
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

264
00:14:10,280 --> 00:14:13,840
Speaker 1: you get your podcasts, or watch us live on YouTube.

265
00:14:14,480 --> 00:14:18,640
Speaker 10: Matt Miller here sitting in for Alex Emily Graffeo sitting

266
00:14:18,679 --> 00:14:22,280
Speaker 10: in for Paul Sweeney on a day when the markets

267
00:14:22,320 --> 00:14:26,880
Speaker 10: are down again. I looked this morning at the open, Emily,

268
00:14:26,880 --> 00:14:29,720
Speaker 10: we were looking at fifty seven eighty two on the

269
00:14:29,760 --> 00:14:31,960
Speaker 10: S and P five hundred. You know what's interesting, that's

270
00:14:32,000 --> 00:14:36,920
Speaker 10: exactly the closing level on November fifth, really, yes, the

271
00:14:37,040 --> 00:14:40,360
Speaker 10: day of the US election. After that, of course we

272
00:14:40,520 --> 00:14:45,000
Speaker 10: rallied higher. I think we were in the fifty nine

273
00:14:45,080 --> 00:14:49,040
Speaker 10: hundreds already by the morning the open of November sixth,

274
00:14:49,080 --> 00:14:52,880
Speaker 10: but we've erased all of those games and then some

275
00:14:53,680 --> 00:14:56,880
Speaker 10: since we knew that Donald Trump won the presidential election

276
00:14:56,920 --> 00:14:59,440
Speaker 10: on November fifth. We were also at four twenty five

277
00:14:59,560 --> 00:15:02,000
Speaker 10: on the ten year yield back on November fifth, and

278
00:15:02,040 --> 00:15:07,120
Speaker 10: now we're looking at four seventy seven, So for actually no.

279
00:15:07,240 --> 00:15:10,080
Speaker 10: Four seventy nine to sixty four right now on the

280
00:15:10,160 --> 00:15:16,000
Speaker 10: ten year yield, so we're up a solid sixty five

281
00:15:16,040 --> 00:15:19,640
Speaker 10: points from our fifty five points from there. The Bloomberg

282
00:15:19,680 --> 00:15:24,120
Speaker 10: Dollar Index also much higher right now at thirteenenty twenty two.

283
00:15:24,200 --> 00:15:28,360
Speaker 10: We were closer to twelve twenty back on November fifth.

284
00:15:28,440 --> 00:15:33,360
Speaker 10: So we've seen all the wrong assets rise in terms

285
00:15:33,360 --> 00:15:35,520
Speaker 10: of I guess bond yields, and the dollar in the

286
00:15:35,600 --> 00:15:37,440
Speaker 10: right ones fall in terms of the stocks.

287
00:15:37,640 --> 00:15:39,040
Speaker 7: I want to bring in Guarev Moleague to.

288
00:15:39,040 --> 00:15:42,720
Speaker 10: Talk a little bit about this, chief investment officer over

289
00:15:42,760 --> 00:15:47,400
Speaker 10: at Palace Capital Advisors. Does this repricing make sense to you, Guarrev.

290
00:15:50,040 --> 00:15:51,560
Speaker 2: I wouldn't say that it makes sense.

291
00:15:51,600 --> 00:15:53,560
Speaker 4: I mean it's it's hard to make much sense of

292
00:15:53,600 --> 00:15:56,400
Speaker 4: the markets these days, with a lot being driven by sentiment.

293
00:15:57,000 --> 00:15:59,280
Speaker 4: I think if you look at fundamentals from our standpoint

294
00:15:59,280 --> 00:16:02,040
Speaker 4: from November five till now, in terms of actually what

295
00:16:02,080 --> 00:16:05,480
Speaker 4: has occurred, nothing much has changed. I think we still

296
00:16:05,520 --> 00:16:07,880
Speaker 4: expect that we're going to see a pretty solid Q

297
00:16:08,080 --> 00:16:12,440
Speaker 4: four earning season. We remain excited about earnings for twenty

298
00:16:12,440 --> 00:16:16,080
Speaker 4: twenty five. I think the places where most investors taking

299
00:16:16,120 --> 00:16:20,320
Speaker 4: pause is really what's the action the incoming Trim administration

300
00:16:20,400 --> 00:16:22,440
Speaker 4: is going to take on the policy front. So in

301
00:16:22,480 --> 00:16:24,040
Speaker 4: some areas, I would say, yeah, a bit of a

302
00:16:24,080 --> 00:16:26,720
Speaker 4: surprise to see the uprally and then the downtrended markets.

303
00:16:26,760 --> 00:16:30,360
Speaker 4: But from a fundamental standpoint, I think for stocks and earnings,

304
00:16:30,400 --> 00:16:31,640
Speaker 4: we haven't seen much change.

305
00:16:31,920 --> 00:16:35,960
Speaker 5: So even after Friday's jobs report and the moves that

306
00:16:36,000 --> 00:16:40,680
Speaker 5: we've seen in treasury rates, you're still optimistic and it

307
00:16:40,720 --> 00:16:43,640
Speaker 5: sounds like on the outlook for stocks for twenty twenty

308
00:16:43,680 --> 00:16:45,320
Speaker 5: five we are.

309
00:16:45,480 --> 00:16:47,920
Speaker 4: I think that, you know, as we look at the

310
00:16:47,960 --> 00:16:51,840
Speaker 4: fundamental drivers, which from a macro level we think about

311
00:16:51,920 --> 00:16:54,280
Speaker 4: what's going to occur with GDP growth, I think that

312
00:16:54,320 --> 00:16:58,760
Speaker 4: looks pretty solid when we think about company's own projections,

313
00:16:58,800 --> 00:17:00,280
Speaker 4: and again as we get through Q four, see some

314
00:17:00,320 --> 00:17:01,960
Speaker 4: will get a sense of how they're advising as we

315
00:17:02,000 --> 00:17:06,080
Speaker 4: look at twenty twenty five, but again, expectation of about

316
00:17:06,080 --> 00:17:09,760
Speaker 4: five to six percent revenue growth. Margins for the S

317
00:17:09,800 --> 00:17:13,119
Speaker 4: and P are at all time highs, which justifies, frankly,

318
00:17:13,200 --> 00:17:16,840
Speaker 4: the multiple we're seeing at twenty one. So many things

319
00:17:16,880 --> 00:17:19,640
Speaker 4: I would say that don't worry us too much. I

320
00:17:19,680 --> 00:17:26,280
Speaker 4: think yes, on inflation and yields, A bit more surprised

321
00:17:26,359 --> 00:17:28,960
Speaker 4: on that front since November. I mean again, you know,

322
00:17:29,000 --> 00:17:32,040
Speaker 4: but the market has been so volatile with incoming macro

323
00:17:32,119 --> 00:17:35,000
Speaker 4: data that you know, in the morning, I was talking

324
00:17:35,040 --> 00:17:37,679
Speaker 4: with our investment team. We're talking about what's the projection

325
00:17:37,760 --> 00:17:38,879
Speaker 4: for the end of the year, and I said, you know,

326
00:17:38,960 --> 00:17:42,440
Speaker 4: I'm just nervous about making a projection because the economic

327
00:17:42,520 --> 00:17:44,560
Speaker 4: data that has been coming in and bond voltarty, frankly,

328
00:17:44,600 --> 00:17:45,440
Speaker 4: has been in so high.

329
00:17:46,040 --> 00:17:49,960
Speaker 5: What about if we were to get I'm not making

330
00:17:49,960 --> 00:17:53,919
Speaker 5: a prediction here, but a FED hike, because when you

331
00:17:53,920 --> 00:17:56,119
Speaker 5: look at to your yields, that is certainly what some

332
00:17:56,320 --> 00:18:01,159
Speaker 5: bond investors are expecting to come. Do we need a

333
00:18:01,400 --> 00:18:05,760
Speaker 5: cut for your kind of optimistic view to continue to

334
00:18:05,800 --> 00:18:08,880
Speaker 5: play out, or if we were to get a hike,

335
00:18:09,200 --> 00:18:11,360
Speaker 5: could we still see stock staying resilient?

336
00:18:12,480 --> 00:18:16,240
Speaker 4: So hike seems something that would shock markets frankly, right,

337
00:18:16,359 --> 00:18:19,520
Speaker 4: So now you're talking about a slightly different way to

338
00:18:19,600 --> 00:18:21,920
Speaker 4: view that situation. That would indicate to us that the

339
00:18:21,960 --> 00:18:24,359
Speaker 4: fact doesn't know what they're doing. Right so far, they

340
00:18:24,440 --> 00:18:27,320
Speaker 4: mean guiding us towards this fact that, Okay, we think

341
00:18:27,359 --> 00:18:29,560
Speaker 4: infation is going to be under control. Now again that's

342
00:18:29,560 --> 00:18:31,720
Speaker 4: been pushed off a little bit. Perhaps we're expecting a

343
00:18:31,720 --> 00:18:34,360
Speaker 4: two percent number would have showed up by twenty twenty five,

344
00:18:34,359 --> 00:18:37,320
Speaker 4: and I think that's looking more like twenty twenty six expectations.

345
00:18:37,760 --> 00:18:41,360
Speaker 4: But direction is indicating that they're still in a mode

346
00:18:41,640 --> 00:18:43,919
Speaker 4: where monetary policy is tight and they're going to keep

347
00:18:43,960 --> 00:18:47,760
Speaker 4: it at that level. So a change in direction on

348
00:18:47,800 --> 00:18:50,040
Speaker 4: that side to say we're going to certainly start doing

349
00:18:50,119 --> 00:18:53,520
Speaker 4: hikes to tighten it even more, I think that would

350
00:18:53,600 --> 00:18:55,800
Speaker 4: send a signal marketplace the fact doesn't know what it's doing,

351
00:18:55,880 --> 00:18:59,600
Speaker 4: and then you're looking certainly at a spiraling effect on

352
00:18:59,640 --> 00:19:00,320
Speaker 4: stock market.

353
00:19:00,480 --> 00:19:02,120
Speaker 2: So I think that would be very concerning.

354
00:19:02,760 --> 00:19:04,960
Speaker 10: So, I mean, we get a couple of data points

355
00:19:04,960 --> 00:19:06,639
Speaker 10: over the next couple of days that are going to

356
00:19:07,000 --> 00:19:09,520
Speaker 10: mean a lot to the Federal Reserve, at least they

357
00:19:09,760 --> 00:19:12,480
Speaker 10: mean a lot to how markets forecast what the Fed

358
00:19:12,520 --> 00:19:16,200
Speaker 10: is going to do. We get PPI tomorrow and we're

359
00:19:16,200 --> 00:19:19,760
Speaker 10: looking for three point eight percent on the core year

360
00:19:19,840 --> 00:19:23,520
Speaker 10: over year. It's pretty high, right, And we get CPI

361
00:19:23,720 --> 00:19:26,440
Speaker 10: on Wednesday and there we're still looking for three point

362
00:19:26,480 --> 00:19:27,640
Speaker 10: three percent.

363
00:19:28,720 --> 00:19:30,200
Speaker 7: On the core number year over year.

364
00:19:30,280 --> 00:19:33,720
Speaker 10: The Fed wants these numbers to be two, so they're

365
00:19:33,800 --> 00:19:38,359
Speaker 10: still pretty far away. Don't rates need to be restrictive.

366
00:19:40,080 --> 00:19:42,199
Speaker 4: Rates do need to be restrictive, But again, you know,

367
00:19:42,280 --> 00:19:46,200
Speaker 4: when you think about the lagged effect of policy changes,

368
00:19:46,240 --> 00:19:49,959
Speaker 4: both on the up and the down, still maintaining rates

369
00:19:50,000 --> 00:19:52,240
Speaker 4: at a four point two five four point five handle

370
00:19:53,160 --> 00:19:54,800
Speaker 4: for the Fed is still tight.

371
00:19:55,440 --> 00:19:57,359
Speaker 2: So maybe that isn't room for one more.

372
00:19:57,320 --> 00:20:01,200
Speaker 4: Rate thought, which clearly market is also icing in at

373
00:20:01,240 --> 00:20:03,120
Speaker 4: most one rate cutting out of the end of the year.

374
00:20:03,359 --> 00:20:05,280
Speaker 3: I think that's still in restrictive territory.

375
00:20:06,440 --> 00:20:06,800
Speaker 2: Now.

376
00:20:07,040 --> 00:20:10,080
Speaker 4: The inflation picture is also sort of clouded by the

377
00:20:10,080 --> 00:20:12,080
Speaker 4: fact that there's a huge difference between what's occurring on

378
00:20:12,119 --> 00:20:14,399
Speaker 4: the services side and on the good side. You know,

379
00:20:14,480 --> 00:20:18,040
Speaker 4: on the good side, we're saying disinflation. We're seeing disinflation

380
00:20:18,080 --> 00:20:19,760
Speaker 4: occurring in most of the post of the world. On

381
00:20:19,800 --> 00:20:21,960
Speaker 4: the good side, right, that's going to flow through to

382
00:20:22,040 --> 00:20:25,160
Speaker 4: some extent, again, notwithstanding what's the bard that trumped regetation

383
00:20:25,320 --> 00:20:29,959
Speaker 4: takes on datifs. But again that's an effect that is disinflationary.

384
00:20:30,040 --> 00:20:32,000
Speaker 4: So the real question that leaves us where there is

385
00:20:32,240 --> 00:20:34,879
Speaker 4: what's going to court on the services side. And I

386
00:20:34,920 --> 00:20:37,320
Speaker 4: think at a four point two five four point five

387
00:20:38,040 --> 00:20:40,960
Speaker 4: level policy is restrictive enough that we will see a

388
00:20:41,040 --> 00:20:44,560
Speaker 4: lack of effect showed through in inflation numbers. Now again,

389
00:20:44,680 --> 00:20:46,679
Speaker 4: not to say that we'll get to just retrading the

390
00:20:46,680 --> 00:20:48,320
Speaker 4: fact that, not to say we'll get to a two

391
00:20:48,320 --> 00:20:50,159
Speaker 4: handle in twenty twenty five, I think that's not in

392
00:20:50,200 --> 00:20:52,359
Speaker 4: the cards, that we don't see that occurring, but I

393
00:20:52,400 --> 00:20:54,520
Speaker 4: think it gives us some confidence to say that two

394
00:20:54,640 --> 00:20:57,040
Speaker 4: is a number that's possible when you look out at

395
00:20:57,080 --> 00:20:58,480
Speaker 4: the end of twenty twenty six.

396
00:20:59,200 --> 00:21:00,879
Speaker 7: All right, g thanks so much for joining us.

397
00:21:00,920 --> 00:21:05,080
Speaker 10: Appreciate your Insightguarov Malik there is the chief investment officer

398
00:21:05,200 --> 00:21:07,520
Speaker 10: at Palace Capital Advisors.

399
00:21:08,000 --> 00:21:12,679
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

400
00:21:12,880 --> 00:21:16,360
Speaker 1: and anywhere else you get your podcasts. Listen live each

401
00:21:16,359 --> 00:21:20,120
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com.

402
00:21:20,240 --> 00:21:23,800
Speaker 1: The iHeartRadio app tune In, and the Bloomberg Business app.

403
00:21:24,200 --> 00:21:27,280
Speaker 1: You can also watch us live every weekday on YouTube

404
00:21:27,520 --> 00:21:30,560
Speaker 1: and always on the Bloomberg terminal