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Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Let's get some thoughts on both the equity market and
Speaker 2: the bond market. We're joined for our Drive to the
Speaker 2: Clothes with Sylvia Jablonski, CEO and chief Investment officer over
Speaker 2: at Defiance ETFs. She joins us from New York City.
Speaker 2: Also with us for the bond side.
Speaker 3: We love this Bloomberg Intelligence Chief US Interest rate Strategist
Speaker 3: Ira Jersey joining us from New Jersey. All right, Ira,
Speaker 3: I want to kick it off with you the decision,
Speaker 3: the rate market reaction, walk us through the day, what
Speaker 3: happened with CPI, and then what we got from the
Speaker 3: Fed and what really stands out for you in terms
Speaker 3: of the fundamentally kind of backdrop on inflation and FED think,
Speaker 3: and then how investors are perceiving it and traders are.
Speaker 4: You're asking me for a whole dissertation here, but defend.
Speaker 3: That's right.
Speaker 4: So for CPI. Obviously, the better than expected CPI number,
Speaker 4: I think gave a lot of people relief, particularly in
Speaker 4: the bond market, and you saw a big rally in
Speaker 4: uh all across the yield curve, so you had two
Speaker 4: year yields and ten year yields both lower by about
Speaker 4: fifteen basis points at one point. And we kind of
Speaker 4: hovered there until we got the Summary of Economic projections
Speaker 4: because the statement didn't really change, meaning you know, there
Speaker 4: was basically one word of any significance that changed there.
Speaker 4: But the summary of Economic projections I think surprised some
Speaker 4: people in the rate market, with only one cut now
Speaker 4: being the median dot this year, and four members who
Speaker 4: think that the Fed's not going to do anything this year,
Speaker 4: that they're going to remain on hold, so, you know,
Speaker 4: a little bit more hawkish there, sold off a little
Speaker 4: bit than Jay Powell starts to talk half an hour later,
Speaker 4: and we wound up with him being a little bit
Speaker 4: more hawkish. In fact, we have a natural language processing
Speaker 4: model that parses all the words, and we looked at
Speaker 4: his opening remarks this morning for this afternoon seems like
Speaker 4: this morning, the last two hours, this has been absolutely crazy.
Speaker 4: But he was a little bit more hawkish than he
Speaker 4: was in May, and then the markets sold off a
Speaker 4: little bit more. So now we've given back about half
Speaker 4: of the gains in the bond market that we made
Speaker 4: after the CPI report, And I think that, you know,
Speaker 4: traders are still trying to figure out, you know, is
Speaker 4: the Fed actually going to cut and if so, you
Speaker 4: know when and how much? Yeah, you know, that really
Speaker 4: affects the two year note. The longer end, what we
Speaker 4: saw was was basically the Fed pushing out their more
Speaker 4: rate cuts into twenty twenty six. Now, because you have
Speaker 4: two less cuts this year than was in the dots,
Speaker 4: the same number of cuts next year, but then the
Speaker 4: terminal rate for twenty twenty six is exactly the same.
Speaker 4: So so basically for the long end of the curve,
Speaker 4: you know, if people think that the dots are going
Speaker 4: to be realized, which they don't, right, No one actually
Speaker 4: thinks that that what the Fed says is actually going
Speaker 4: to happen. Yeah, exactly, they had to at least take
Speaker 4: some profits before before the end of the day.
Speaker 3: You passed the oral examination for your dissertation. You are
Speaker 3: now doctor Jersey. All right, let's get to Sylvia Doblonski
Speaker 3: and get her view on this break it down for
Speaker 3: us in terms of what we got from J. Powell
Speaker 3: and Company and what that means in terms of the
Speaker 3: investing environment.
Speaker 5: Sylvia Hiker, great to be here with you today. Yeah,
Speaker 5: tough to follow the lead on data dissertation there today.
Speaker 5: But you know, I think that in terms of what
Speaker 5: happened today, it's pretty much what the market expected, right,
Speaker 5: we didn't necessarily get a cut today. It's good news
Speaker 5: that CPI data is cooling off.
Speaker 6: It looks like inflation is trending downwards, and this is
Speaker 6: really what the market wants to hear. I actually think
Speaker 6: that we're in the sweet spot now where equities are
Speaker 6: going to kind of continue to rally because we do
Speaker 6: have great cuts coming. Maybe we don't get as many
Speaker 6: as we thought this year, maybe gets push off, but
Speaker 6: we're just talking a couple of months here, so ray
Speaker 6: cuts are coming eventually, and this is kind of you know,
Speaker 6: stocks really performing on this news, and so I think
Speaker 6: overall it's good for the markets. This feels a little
Speaker 6: bit like a soft landing. You have inflation coming down,
Speaker 6: jobs numbers for you know, maybe a little bit hotter
Speaker 6: than they should be but certainly you know, stable wages
Speaker 6: are stable, economic growth slowed but more or less in
Speaker 6: line with expectations. Corporate earnings are good. I think we're
Speaker 6: in a good spot in the market, and today doesn't
Speaker 6: change a whole lot.
Speaker 3: But it's a great data point. Quick question to both
Speaker 3: of you. First to you, Sylvia, just quickly. I don't
Speaker 3: think I was listening to all of it, taking lots
Speaker 3: of notes. But did I miss anything? Did I hear
Speaker 3: anything about a rate increase?
Speaker 2: No, no talks a break I resultso shaking his head.
Speaker 2: I can see them shaking his head, saying, no, well
Speaker 2: you passed the test too for doing a good job listening.
Speaker 6: You are kind of.
Speaker 3: Glued, like we like run the makeup, we run to
Speaker 3: the bathroom, like we've got to earbuds, it like everything
Speaker 3: because we want to hear all of it and the tone.
Speaker 3: But I reset significant that we didn't hear anything. Sorry, Tim,
Speaker 3: I you know she rate there a great reveal of
Speaker 3: what happens behind them.
Speaker 2: Just so you guys know, they actually play Bloomberg Radio
Speaker 2: in the bathrooms here at Bloomberg News, so in the
Speaker 2: whole building.
Speaker 3: So it's amazing that people come out like that was
Speaker 3: a great interview. Iira having said that significant that we
Speaker 3: didn't hear anything about a rate increase, and again their
Speaker 3: data dependence, so it could change.
Speaker 4: Yeah, well, you know, the chances of a changing I
Speaker 4: think is pretty low because you know, Ja Powell has
Speaker 4: been very reluctant. Even when directly asked at the main
Speaker 4: meeting whether or not a rate hike was possible, he
Speaker 4: basically said no. He said, at this point, based on
Speaker 4: all of their forecasts and everything else, they're much more
Speaker 4: likely to remain on hold than they would be to
Speaker 4: cut rates. So it is a bit asymmetric, right to.
Speaker 3: Raise rates, more likely to be on hold and raise rates.
Speaker 4: Yeah, correct, to be on hold and raise rates. So
Speaker 4: so basically they're going to be on hold if inflation
Speaker 4: increases significantly, and then cut rates if the economy starts
Speaker 4: to deteriorate further, or if infliction keeps coming down, and
Speaker 4: it's at asymmetry that's keeping the yield curve inverted and
Speaker 4: and will likely continue to keep the yield curve inverted
Speaker 4: until they actually start to cut interest rates. And I
Speaker 4: think that that's you know, someone pointed out to me
Speaker 4: today one of our customers was like two years to
Speaker 4: today is when the two tens curve first inverted, and
Speaker 4: so we're at basically, uh the the longest period of
Speaker 4: the yield curven version ever and that's likely to persist
Speaker 4: I think until close to the end of the year.
Speaker 4: The other the other thing that's come out of this
Speaker 4: when in my quick discussions with customers after after Jay
Speaker 4: Powell spoke, is there's a lot of people who think
Speaker 4: that a September cut is very possible. I don't think
Speaker 4: that's true at all. Maybe if they cut twice, but
Speaker 4: why cut in September. You know you're only going to
Speaker 4: get two more months of data points basically between July
Speaker 4: and September, So why you know, why bother, why not
Speaker 4: wait until after the election. They move the meeting of November.
Speaker 4: It's now going to be on a Thursday, so they
Speaker 4: have way to having a meeting on election day and
Speaker 4: they can cut rates then and six weeks in the
Speaker 4: grand scheme of things from the longer term, thinking that
Speaker 4: you know, we're markets people, right, we think about what
Speaker 4: the market's doing every second. The FED is thinking more
Speaker 4: longer term, so six weeks in the grand scheme doesn't
Speaker 4: really matter. So I think that they would hold off
Speaker 4: until then. They could still cut twice this year. That's
Speaker 4: completely possible if the economy's falling out of bed. But
Speaker 4: you know, we were unlikely to see that prior to
Speaker 4: election day, at least in my view.
Speaker 2: Okay, Sylvia, I want to go to you and just
Speaker 2: get you know, you have this thesis where things look
Speaker 2: pretty good. We're in the sweet spot for equities right now.
Speaker 2: I'm wondering what derails that thesis, Like what data could
Speaker 2: you see over the next few months that says, wait
Speaker 2: a second, things are not going the way that we
Speaker 2: think they should be going.
Speaker 6: Yeah, and look that certainly happened, right. We get these
Speaker 6: events out out of left field that we don't expect
Speaker 6: and they move markets. And so I think that those
Speaker 6: events remain the same. If inflation, for example, where to
Speaker 6: suddenly start increasing or just you know, does a budge
Speaker 6: for long periods of time, I think that, you know,
Speaker 6: kind of challenges my narrative. The other thing is, of course, geopolitics.
Speaker 6: This is you know, over the last few years, it's
Speaker 6: it's the first time where we have two very active,
Speaker 6: you know, global wars going on that are you know,
Speaker 6: taking time bomb, could be taking time bombs at any moment,
Speaker 6: and I think that that's something that we always have
Speaker 6: to think about China and Taiwan, what happens during the election, tariffs,
Speaker 6: things like this. So I think it's any of these
Speaker 6: kind of you know, unexpected events that have to do
Speaker 6: with geopolitics and politics. I'll say, I don't think inflation
Speaker 6: is going to be the thing, to be honest, it's
Speaker 6: something like that.
Speaker 3: We are data dependent too, We kind of move from
Speaker 3: data point to data point to FED speak to FED speak.
Speaker 3: Just got about forty seconds really quickly, Sylvia, twenty seconds
Speaker 3: for you. Your next focal point, just quickly.
Speaker 6: Yeah, I mean I'm still looking to build out the
Speaker 6: AI trade and look for those opportunities, so starting to
Speaker 6: expand it to things that AI will benefit, like health care,
Speaker 6: like the materials uranium, copper, things like that. So for
Speaker 6: some new investment ideas around that theme.
Speaker 3: Ten seconds for you are at next focal point.
Speaker 4: Yeah, it's all about the data, so it's retail sales
Speaker 4: and then the PC data at the end of the month.
Speaker 3: All right, so appreciate dynamic duo. Both of you passed
Speaker 3: the oral examination, so really good stuff. I'm great set
Speaker 3: up for us papers do tonight. I don't know. Now
Speaker 3: you go celebrate right our jersey chief you has interest
Speaker 3: rate strategies at Bloomberg Intelligence, and Sylvia Deablonski, she's CEO
Speaker 3: and chief investment Officer, defines ETFs.
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Speaker 3: Beneficials, as you know, pencil laying in just one interest
Speaker 3: rate cut this year, forecast more cuts for twenty twenty five,
Speaker 3: reinforcing policymakers calls to keep borring costs, hire for longer
Speaker 3: to suppress inflation. Fetch your j Powell at today's press
Speaker 3: conference after the decision.
Speaker 7: We do see today's We see today's report as progress
Speaker 7: and as you know, building confidence. But we don't see
Speaker 7: ourselves as having the confidence that would warrant you know,
Speaker 7: that would warrant beginning to loosen policy at this time.
Speaker 3: Hi for longer, that is, Jacob, I've.
Speaker 2: Heard that before.
Speaker 3: Yep, it's a narrative.
Speaker 2: He's not I would say he's not full of surprises.
Speaker 2: No studies which is probably what a FED market a
Speaker 2: chair should do.
Speaker 3: Yet right, Yeah, exactly, So I'm curious about like how
Speaker 3: it impacts the investing environment. So let's get to that.
Speaker 3: Alexander Brown is with us. She's senior managing Director, chief
Speaker 3: Development officer at the family office wealth manager Leedo Advisors.
Speaker 3: They have some nineteen billion in assets under management. She
Speaker 3: does us here in our Bloomberg Interactive Broker studio. Ali, Welcome, welcome, Welcome,
Speaker 3: What if anything? And I am curious about We obsess
Speaker 3: as you would expect and as you just heard about
Speaker 3: the FED and which Jay Powell has to say, but
Speaker 3: it does move markets. So what about what we got
Speaker 3: in terms of the FED decision? What he had to
Speaker 3: say about kind of color on the economy and the
Speaker 3: outlook impacts kind of your world?
Speaker 8: Oh absolutely, it's everything that we do. But understanding and
Speaker 8: educating yourself is one piece. Where were we six months ago?
Speaker 8: Like we projected six maybe seven rate cuts. We haven't
Speaker 8: had one, and yet the market's hitting new ultra ultra highs. Right,
Speaker 8: So the question is how do we I think everyone's
Speaker 8: waiting for that first cut.
Speaker 9: When is that first cut going to be?
Speaker 8: I do think if we would have seen signs from
Speaker 8: the press conference of having a second cut this year,
Speaker 8: we might.
Speaker 9: Have seen stronger futures be producing now. But it absolutely
Speaker 9: plays a role.
Speaker 8: But I think where we are now, it's proceed with caution,
Speaker 8: And how do we proceed with caution?
Speaker 9: How do we build the portfolios to look like that?
Speaker 8: It's interesting because I one would argue in the wealth
Speaker 8: management space, pre inflation, it was a hard world to
Speaker 8: retire in. Right when you when you exit your the
Speaker 8: workforce and you move from the accumulation phase of your
Speaker 8: life to the withdrawal out of the fixed income side
Speaker 8: of things, it was either you or your out.
Speaker 9: Either you're making money or your making nothing.
Speaker 2: But at the same time, you know, stocks were up
Speaker 2: double digits year on year with the exception of just
Speaker 2: a couple of years because of that low rate environment.
Speaker 8: Exactly yet but yet we raised rates substantially in twenty
Speaker 8: twenty two. The stock market soared in twenty three, is
Speaker 8: still soaring in twenty four.
Speaker 9: So how do we how do we look at that.
Speaker 3: I'm curious about your clients. They're high net worth individuals,
Speaker 3: family offices, you know, family money maybe passing on to generation.
Speaker 3: Where is it that they typically like to invest in
Speaker 3: your world. Because we Tim and I spent a lot
Speaker 3: of time talking about increasingly family offices wanting to be
Speaker 3: in the private markets. But I'm curious about where a
Speaker 3: lot of your investors ultimately, you know, invest and they
Speaker 3: tend to park it then for a long time.
Speaker 8: Sure, but it's also understanding there's so much similarities between
Speaker 8: the family office space and the retail space.
Speaker 9: Let's put it into perspective. You've got to you sell
Speaker 9: a business and now you have five hundred million dollars
Speaker 9: a lot of wealth.
Speaker 4: Right.
Speaker 8: I have yet in my career to see a five
Speaker 8: hundred million dollar family have sixty percent in stocks, forty
Speaker 8: percent in bonds and rebalancing once a quarter.
Speaker 3: So what where are they?
Speaker 10: Yeah?
Speaker 6: So what is their goal?
Speaker 9: Their goal is to build in control?
Speaker 8: How do I build in more control around outcomes like
Speaker 8: we're seeing today that we have zero control around whether
Speaker 8: it's building in alternatives within the portfolio with real estate. Right,
Speaker 8: It's amazing you look at a real estate investor, they're
Speaker 8: typically very heavy into real estate and cash.
Speaker 4: Right.
Speaker 9: Why because there's a lot more control in that aspect.
Speaker 8: So building in control, whether it be using alternatives and
Speaker 8: there's ways to building control in the.
Speaker 3: Chiwn like where are alternatives? Do you find like your
Speaker 3: folks wanting to put their money in this environment?
Speaker 9: We like the alternatives.
Speaker 8: We work in all aspects, so whether it's we we
Speaker 8: buy real estate, we lend on real estate, private equity,
Speaker 8: and middle market lendings being the topic of every conversation lately,
Speaker 8: all the way up to hedge funds right, which is
Speaker 8: an interesting factor if you see the amount of money
Speaker 8: pouring into hedge funds now, because one is arguing, is
Speaker 8: that tactical, active, single stock management beneficial?
Speaker 9: Are you getting value there?
Speaker 2: What's a typical allocation to alternatives in a portfolio?
Speaker 9: So it very much depends upon the client.
Speaker 8: With the clients seeking I think the big thing that
Speaker 8: we look at on our end is the need for liquidity.
Speaker 8: What people don't realize is that you know, you don't
Speaker 8: need one hundred percent of your money liquid on a
Speaker 8: daily basis, especially when you look at building alternatives into
Speaker 8: tax deferred accounts that have longer timeframes. So it's all
Speaker 8: about the client, the need, the desire where it's fitting
Speaker 8: from a tax perspective.
Speaker 9: I'll give you a quick example.
Speaker 8: A client that you know maybe has a one of
Speaker 8: the long aged pensions, right that's completely covering their income needs.
Speaker 8: Their portfolio can be a lot more aggressive and a
Speaker 8: lot less liquid than maybe someone who's needing to pull
Speaker 8: out of their portfolio on a consistence.
Speaker 2: So they might have a higher concentration of alternatives because
Speaker 2: alternatives are less liquid, right, and they.
Speaker 3: Can play because they've already got something kind of as
Speaker 3: their safety net, if you will. Having said that, I
Speaker 3: am curious among the wealth clients that you guys work with,
Speaker 3: what is it that they ask you about the most?
Speaker 3: Is it something like Nvidia? Is it Ai? Is it
Speaker 3: fed policy? Is it the fixed income air?
Speaker 6: Like?
Speaker 3: I'm just curious where they are, Like, wait a minute,
Speaker 3: is that an opportunity for listen?
Speaker 10: AI?
Speaker 8: We can't ignore without question. It is just a it's
Speaker 8: the way we're seeing it promote itself. I mean, look
Speaker 8: at this week, for example, with what happened with Apple.
Speaker 3: Do you say get into Apple now?
Speaker 8: I would say proceed with caution. It's all about everything
Speaker 8: has a place within a portfolio. It's a matter of
Speaker 8: how much and where and understanding. So clients that come
Speaker 8: to me and say I want private equity exposure because
Speaker 8: they heard about it at the golf course, right, you know,
Speaker 8: it's it educ covers a lot, which covers a lot,
Speaker 8: and what sector and how liquid is and so's there's
Speaker 8: a big, big education around the alternative space and what
Speaker 8: goes into that bucket.
Speaker 2: How do you give clients exposure to private equity?
Speaker 8: Yes, first of all, we need to educate them, right,
Speaker 8: they hear the word yeah.
Speaker 2: Right, But I mean you can get exposure to private
Speaker 2: equity by buying the stock of a publicly traded firm
Speaker 2: that is in private equity. But you can also go
Speaker 2: to an alternative asset manager, which a lot of wealth
Speaker 2: managers work with, and then buy into their funds as well.
Speaker 2: What do you guys do we.
Speaker 8: Do a combination of both, I would say more the latter.
Speaker 8: The private equity space that we do is in the
Speaker 8: private space. They're very opportunistic though.
Speaker 3: And so I think you're buying KKR, you're buying no, yeah, no.
Speaker 8: No, And it's opportunistic. We have a deal, the deal
Speaker 8: closes quickly, right, you know. So it's a client that
Speaker 8: we're build. Hey, listen, we're going to build an allocation
Speaker 8: for private equity, and this deal that may come around
Speaker 8: this week may work and it may not, and we'll
Speaker 8: reevaluate when the next one comes around.
Speaker 3: What do you say in terms of how you think
Speaker 3: it's smart for your clients to get exposure to AI?
Speaker 3: And these are folks that will park money for a while,
Speaker 3: So is it? What is it?
Speaker 9: I don't think we can ignore it. It's going to touch.
Speaker 3: AI is not just tech. But how do you play
Speaker 3: it then? Or how do you suggest.
Speaker 8: There's ways to get exposure to AI with controlled outcomes right,
Speaker 8: whether it's using a combination of options saying listen, I
Speaker 8: want to participate in this space. I want to grow
Speaker 8: in this space, but I don't know if I necessarily
Speaker 8: want to take very directive risks. So I like to
Speaker 8: get exposure, but how do I build in protection? We
Speaker 8: do a lot of options in house, like against specific
Speaker 8: equity name I against but very.
Speaker 9: Or with right.
Speaker 8: So options I think get a huge negative connotation in
Speaker 8: the market as the meeting, And I didn't.
Speaker 3: Mean it like that because theo's two sides.
Speaker 8: Yeah, yeah, yeah, no absolutely, So is there a way
Speaker 8: that we can get exposure to a certain number of
Speaker 8: AI stocks right where we can participate if things go up,
Speaker 8: but have some protection if we're wrong to avoid that
Speaker 8: timing component.
Speaker 2: Speaking of AI, we are getting Broadcom earnings right now,
Speaker 2: second quarter adjusted earnings per share beat estimates. We're seeing
Speaker 2: stock move higher in the after hours right now after
Speaker 2: that eight percent Wow, yeh, stock moving higher in the
Speaker 2: after hours. He's fiscally your revenue approximately fifty one billion
Speaker 2: dollars beating estimates of fifty point six billion dollars.
Speaker 3: Yeah, we'll be looking for some more color when it
Speaker 3: comes to certainly AI and chip.
Speaker 2: But twenty seconds, do you use AI at your firm yet?
Speaker 9: Yes, in different types of ways.
Speaker 3: But were you using AI for years?
Speaker 9: We are doing more and more.
Speaker 8: It's all educating ourselves and how to incorporate it effectively.
Speaker 1: You know.
Speaker 8: Being in the finance world, we're so regulated, so as finance,
Speaker 8: because AI gets more regulated, I'm interesting to see how
Speaker 8: it bleeds into finance.
Speaker 3: Thank you, really appreciate it. Ali Brown. She's senior Managing
Speaker 3: Director and Chief Development Officerver at Leedo Advisors. Joining us
Speaker 3: here in our Bloomberg Interactive Broker Studio. More on Broadcom
Speaker 3: that's coming your way in a moment.
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Speaker 2: Rock com just out with earning. Scroll share is sitting
Speaker 2: an all time high ahead of results, also rallying big
Speaker 2: time after market.
Speaker 3: Up nine percent.
Speaker 1: Right now, look at that?
Speaker 2: Yeah, this after an upbeat fiscal year revenue forecast. Let's
Speaker 2: get right on over to Kun John Sabanni, Bloomberg Intelligence
Speaker 2: senior semiconductor analysts, joining us from our San Francisco bureau.
Speaker 2: Kun John, I mean a lot of the chatter ahead
Speaker 2: of these results said that yes, the numbers would exceed expectations.
Speaker 2: Did they exceed even your expectations?
Speaker 10: They did, And in fact, it seems like we don't
Speaker 10: have the segment details yet they will be given in
Speaker 10: the call, but seems like they expected on the two
Speaker 10: fronts which were the most important. One is on the
Speaker 10: AI side. It looks like the AI revenues beat what
Speaker 10: we thought it should be in the quarter, and the
Speaker 10: biggest beat seems to have come from the infrastructure solutions,
Speaker 10: which could be driven by better than expected VMware numbers,
Speaker 10: and maybe the non VMware business, which was supposed to
Speaker 10: be weaker quarter over quarter, was not as weak as psix. Well.
Speaker 3: Remind Ku John I always think about this when we
Speaker 3: speak with you or we talk with our Ian king,
Speaker 3: that not every chip company is the same. Remind everybody
Speaker 3: what Broadcom is all about, right, because there are chip
Speaker 3: supplier for Apple and some other big tech companies. But
Speaker 3: what type of chips they are specifically.
Speaker 10: Well, they are almost like a conglogomerate when it comes
Speaker 10: to chips, like look for about forty to forty five
Speaker 10: percent of their business is actually software, so you can't
Speaker 10: even call it a chip company. But they have a
Speaker 10: huge business with about twenty with Apple, which goes in
Speaker 10: the smartphone business. Now they have a growing business in networking,
Speaker 10: which is regular enterprise networking all the connectivity chips in
Speaker 10: the data centers. But a big pie of that, which
Speaker 10: is supposed to be ten billion this year is the
Speaker 10: new air revenues, which we will be looking forward to hearing.
Speaker 10: And then they have an industrial business. They have their
Speaker 10: regular storage business, they have an industrial business. So a
Speaker 10: lot of combination of a lot of business. But the
Speaker 10: key three biggest largest are the wireless to Apple, the
Speaker 10: networking and now the VMware with the software.
Speaker 2: How safe is that Apple is part of the business,
Speaker 2: given that increasingly Apple's looking to do a lot of
Speaker 2: its own ship development in house. I thought dot Com too.
Speaker 10: Yeah. Out of all the chip suppliers to Apple, I
Speaker 10: think this, according to US, is the strongest relationship. So
Speaker 10: we'd like I would fear other companies losing out before
Speaker 10: I would start worrying about Broadcom in short, getting out
Speaker 10: of Apple.
Speaker 3: Okay, you know it's interesting too. I mean when you
Speaker 3: look at like different chip names, I mean, what is
Speaker 3: this a barometer for more broadly in the semiconductor industry, cujohon.
Speaker 10: Typically because of the way they run their business, which
Speaker 10: is a fifty two week long lead time, you know,
Speaker 10: they seem to have less volatility, a less sort of
Speaker 10: channel inventory build up, and less sort of this whip
Speaker 10: kind of a demand. So it is generally a good
Speaker 10: indicator of long term, an year out or more out,
Speaker 10: how the demand is looking. More and more it has
Speaker 10: become an indicator of how the AI demand from the
Speaker 10: A six side is looking. So what I mean is
Speaker 10: whether how much are Google, Microsoft, Facebook, et cetera. All
Speaker 10: of these companies spending or going to spend in their
Speaker 10: own custom silicon programs because Protcom is one of the
Speaker 10: biggest supplier to the largest cloud providers in their acy businesses.
Speaker 2: We're seeing second quarter revenue from AI products coming at
Speaker 2: three point one billion dollars. How does that sort of
Speaker 2: gel kun, John, with how you're thinking about that of
Speaker 2: the business.
Speaker 10: Yeah, we did expect this to be in a sort
Speaker 10: of in the two point seven to two point nine
Speaker 10: ish rangs, so definitely came above. One thing I would
Speaker 10: be very focused on is their fullier guide only came
Speaker 10: above five hundred million than what was on the street.
Speaker 10: You know it would have been. Investors were hoping for
Speaker 10: a higher upside to their ten billion air revenue target
Speaker 10: for the full escale year, as well as some higher
Speaker 10: upside to the twelve billion VMware target. So at this
Speaker 10: point I guess because the upside is only five hundred million,
Speaker 10: I'm likely that both of these areas did not sort
Speaker 10: of hit it out of the park, but still still
Speaker 10: an upside to the numbers we were expecting.
Speaker 3: Hey, top of mine, as we get ready for the
Speaker 3: analyst call with Broadcom, what are you going to be
Speaker 3: listening for what would be your top question to the
Speaker 3: executives there?
Speaker 10: Yeah, again, the three key areas would be more upside
Speaker 10: or engagements on the AI business, especially with Google's TPU
Speaker 10: five and six ramps expected in the future, More upside
Speaker 10: or clarity on the VMware integration, and how the rest
Speaker 10: of the year looks like. You want to hear better
Speaker 10: or above that twelve billion number if possible. And just
Speaker 10: third on the non the cyclical areas, there's no sort
Speaker 10: of non sexy but still a decent percentage of their business,
Speaker 10: which is broadband, regular, enterprise, spending, server, industrial. If Q
Speaker 10: two will mark the bottom or not, or we or
Speaker 10: if we expect continuous weakness into three Q.
Speaker 2: I hesitate even to go here because it's not about fundamentals.
Speaker 2: But the company also announced a ten for one forward
Speaker 2: stock split, this coming just the same week that we
Speaker 2: signed video stock. Do a ten for one split?
Speaker 3: Do you care what share?
Speaker 2: That's that's that part's important. But you care at all
Speaker 2: about the stock split?
Speaker 10: I mean you would think, and today's say you would not.
Speaker 10: But we saw the reaction. Nvidia got right and Broadcom
Speaker 10: is one of the other AI names here and doing
Speaker 10: the same thing. So definitely, I think of the reaction
Speaker 10: could be driven by that ten to one stocks.
Speaker 2: Come John, Thank you so much, Kun, John Sabonnie Bloomberg
Speaker 2: Intelligence Senior semiconductor analysts. We're gonna let you get back
Speaker 2: to covering Broadcom because I know you got some reports.
Speaker 3: Right, just quick rehash shares a broad come up about
Speaker 3: nine and a half percent in the aftermarket. This as
Speaker 3: the company's latest result in annual forecast top to animate estimates.
Speaker 3: Excuse me out there on the street, lifted by robust
Speaker 3: demand for artificial intelligence products. So definitely some upbeats. So
Speaker 3: we'll look for some more commentary when the call begins.
Speaker 2: Yeah, shares hire right now. Look at that, Carol, change
Speaker 2: from the open up nine percent today, change from previous
Speaker 2: regular session close eleven twelve percent, and that's.
Speaker 3: Building on a more than thirty percent gain three zero
Speaker 3: percent gain here in twenty twenty four.
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