00:00:00 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app, Listen on demand wherever you get your podcasts, or watch us live on YouTube. 00:00:27 Speaker 2: Alicia Levine is far too young to remember this. Your mother would throw at you a book called The Intelligent Investor. And one of the great themes of The Intelligent Investor is if you're not in the game, you don't get to win. And there's this whole modern disease of market timing where that if you're not in the game, you don't get to win. She's b Andy. Can we just say, Paul Jeffrey you Elisia Levine Solidine, It's like the mathematics involved your folks is prodigious, Alicia, what's the damage to people who aren't enjoying this bull market? 00:01:03 Speaker 3: So like permanent, it's not permanent, but you can't make up what you've lost. One of the most important statistics is that the best month of the year always follows the worst month of the year, and so we show our clients in various ways, like you try to time the market. You're likely to miss that massive rally like we had yesterday because you were so fearful of what was going on. From June and July, the favorites were underperforming, Tech was over. I mean essentially, if you go back thirty years and you missed the best month of the year, you're underperformed by five hundred bases on. 00:01:49 Speaker 2: I go to a Capitol group out in Los Angeles who've done great studies on this. You got to be in the market. We all know that. But you were weaned to Chicago, the land of Fama and French where you off to play. 00:02:01 Speaker 3: You discuss that, discuss as my three male children would tell me, you miss all the shots you don't take, and I think it there is there. As you say it's a disease of trying to time the market, I'll say this, people can be pretty good at selling more or less near Like you know, local peaks right well, you can see deterioration. You can see it per set of SMP advanced to client linzing. You can kind of see you could be headed into a nice little sell off or consolidation phase wherever you want to call it, and then you never get back in and that's the issue because the lows are ugly. If you think about last Thursday, it just looked like the apocalypse. Actually it turned out to be a clearing event, and you know, Citadel did great on that, but I'm sure a lot of people were selling right into it. And it's just it's too emotional. It doesn't matter how many years you've been doing this, but people fall for it. The same time. You're not going to save yourself anything. You're going to damage your forward returns. The only time you really want to think about next twelve months possibly being lower is if you think a recession's coming. We haven't had a proper recession since two thousand and eight. The one in twenty twenty was man made. It was man made, Okay, that's stunning the market. The market since twenty ten is up fourteen percent annualize. Okay, that includes the twenty five percent sell off in twenty twenty two. That includes the down six percent in twenty eighteen. So trying to time it is it's fruitless. It's from a different era when you actually had recessions every five to seven years, and coming out of the market perhaps saved you some losses. So you know, the most important thing is is their recession looming? This market, this economy, there's no recession. And by the way, the banks are doing terrific. When banks do great, you're not going into recession. They're the forward leading indicator. 00:03:56 Speaker 4: Technology AI focusing on returns on AI capfex. 00:04:01 Speaker 5: How do you guys think about that theme right now? 00:04:03 Speaker 3: So I think that's the most important theme in the market. And that, of course was the clearing was the earnings that we had from some of the hyper scalers, you know, even where the market was disappointed in some of the others, the revenue was going much higher on the cloud business. And what we saw was the one question. There are two questions, ken kind of equities rally with the four point five percent bogie on the tenuere being breached, right, And the answer was like, yeah, actually it was kind of fine. It was fine. Okay, So that question was answered. So look, Yalds probably could get to five percent here simply because between the inflation numbers and you know, from the questioning of the FED reaction function and the uncertainty in Iran, they ran. So that's number one. But equities are fine. The second big question is new ROI on spending, and that could have killed the entire market. You would have wound up with healthcare, you know, utilities and staples working. And the answer is, actually, the business model is working, even if free cash flow is going negative in the short term, even if they have to sell debt to fund it, they're reaccelerating the core business, which is cloud and so it's working. And once you answer that question, you're off to the race. It's the whole complex can rally. 00:05:19 Speaker 2: Alicia Levine with this B and y thrilled with us today across America, around the world. Futures Up twenty eight. Paul asked a question because I got to go nerd here in a moment, Paul Sweeney with Alisia Levine. 00:05:30 Speaker 4: Alicie, you say industrials attractive entry point and we had great numbers out of Catapillar yesterday, So boy, that's a great time. 00:05:38 Speaker 3: So you have, like it's a perfect storm. You have the capex incentives from the one big beautiful Bill which are rolling through the economy and are definitely helping hard assets that's industrials, as well as the funding from the hyperscalers. So if you think about what you need to build a data center or what you need to kind of to build out the AI. On the hard asset side, the projections for next year is one trillion dollars in spending that is going directly into the P and L of twenty percent of the S and P. So that's why we like it. I mean, industrials have been actually the best, the best sector of the year, so we think that continued. 00:06:21 Speaker 2: To give us your targets here quickly. 00:06:22 Speaker 3: Okay, eight thousand with risks, but risk to the upside here right Okay? Forward earnings are growing at thirty percent. 00:06:29 Speaker 2: Okay, cheez. 00:06:30 Speaker 3: The multiples lower than it was June second, with the market peak before. 00:06:33 Speaker 2: If I look at two sets of different equations on the X axis and I look at all this capex all these tech companies are spending and matched against, that is the same timeline of their huge cash flows and profitability. I say, they've only got to go out one quarter, two quarters, three quarters, four quarters after the CAPEX expense to be made whole. 00:06:56 Speaker 5: Yes, Is that in the zeitgeist now? 00:06:58 Speaker 2: I don't think so. 00:06:59 Speaker 3: So we've been running my models on it, and it looks like they return to cash flow positive in about eighteen to twenty four months. 00:07:06 Speaker 2: Okay, so that's six quarters. 00:07:08 Speaker 3: And then it explodes again. Then it explodes, Then they become the bond will positively, it explodes, the cash flow becomes positive, and then it explodes to the upsidecause they're monetizing the investment. 00:07:22 Speaker 2: This is the first one who's done this. Thank you. What's the fan distribution of outcomes twenty four quarters or whatever? 00:07:30 Speaker 3: Okay, let's call it. Let's call it. We're in twenty twenty six, let's call it twenty twenty nine. So you're looking at about flat twenty eight to twenty nine, and then it explodes by twenty thirty, okay, because you're monetizing it, because cloud is necessary to build this out. 00:07:45 Speaker 2: I mean, Paul, this is this is like nascent. I would say, it's sort of like the China dominance in ay, we don't really know, give one. 00:07:52 Speaker 5: More, yeah, exactly. So what are you thinking about valuation here? 00:07:56 Speaker 4: I mean, the earnings are coming through so strong for the past several quarters. 00:08:01 Speaker 5: Valuation we're okay here. 00:08:02 Speaker 3: I think we're okay. You know, Sunday night, exceptter Friday's close, the tech sector was trading at twenty times forward earnings. So it's trading exactly where the market is. That's the lowest relative value in fifteen years, So I think valuations are fine. Actually, non tech is trading at higher valuations than tech because people were hiding in other areas feeling it was a concentrated market. Like hello, folks, there's one trade. The entire market is AI. It's about fifty percent of the market. Very hard to hide anywhere here. Again, the fear will be expressed in you know, staples, which have been moribund because the economy is good enough and is growing and the labor market is stable. So that's where you go to hide. Everywhere else it's it's an AI trade. 00:08:49 Speaker 2: But do you hold meetings in the Hamptons during the week? Do you just drive out to the Hamptons to hang out with people? 00:08:55 Speaker 3: We do not. We go to our offices in Midtown. 00:08:58 Speaker 2: We take from office. 00:09:00 Speaker 3: We were from office. 00:09:01 Speaker 2: Very good. 00:09:02 Speaker 3: We have meetings in office. 00:09:03 Speaker 2: We do very That's a good thing. People know where I stand on this. Alicia Levigne, thank you. Back to your office. Cio b ny Wealth. Stay with us. More from Bloomberg Surveillance coming up after this. 00:09:23 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern. Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube. 00:09:36 Speaker 2: Ben Cook with Us with Hennessy. He's got just a brilliant acuity here on American oil, in our oil independence. But I got to digress here. I just did a thing on Ned Johnson and Justin Bearer's wonderful book on fidelity. One of my heroes was a guy named William H. Miller, the Third who came out of Washington Lee and Johns Hopkins and did better than good at Legg Mason and you darkened the door at Johns Hopkins, where he just committed a ginormous amount of money to physics and astronomy. It's amazing what Bill Miller's done for the school. Explain why we need fifty million dollars to go to physics and astronomy, to nonscience America. 00:10:18 Speaker 6: I'll tell you Johns Hopkins is a great institution, tom and obviously a great history. But I think you know, going forward, we need to be competitive as an economy, and that's where we're building the next generation of experts to compete on a global scale. 00:10:32 Speaker 2: Am I right that physics is what made American oil independence in that we took physical mathematics and technology and brought it over law help me Landman season two? Help me here, that we brought it over to fracking and all that all came from stuff like what Bill Miller's funding at Johns Hopkins. That's absolutely right, Tom. 00:10:56 Speaker 6: You know, we're seeing increased improved technology increase the output the efficiency of the industry. Industry is able to do more with less. That's in turn translating to good financial results from many of the companies that we invest in, and we expect that to continue as AI becomes a bigger part of the drilling and completion process. 00:11:15 Speaker 4: You guys think about AI as it overlay to all your energy investments, because it just seems like to me, at least, as I think about and here, all these people talk about data centers here, data centers there, we're going to need so much power power, so gaining issue. It just feels like we're going to need every source of energy going forward, whether it's fossil fuels, renewables. 00:11:33 Speaker 5: How do you guys think about it? 00:11:34 Speaker 6: Yeah, you know, as part of our repeatable investment process and managing the Hennessy Energy Transition Fund. We're looking at natural gas really as a primary beneficiary and really the bridge fuel to nuclear as being a major contributor to the baseload power that's required to fuel these data centers on a twenty four hour basis. So from an investors standpoint, the opportunity to invest in many of these names across the hydrocarbon value chain is attractive to us today because of the demand drivers for that power going forward, and we'll see a lot of opportunity emerge as the need for energy continues to grow. 00:12:08 Speaker 4: So talk to us about Texas. You're in Dallas. You guys have your own grid. I mean, Texas is unto itself. We know that you guys are like you do your own thing. 00:12:18 Speaker 5: How is that grid set up? 00:12:19 Speaker 4: Because every day I hear about a new company relocating to Texas. Do you guys have the grid to deal with all that? 00:12:25 Speaker 2: You know? We do? 00:12:26 Speaker 6: You know, as a byproduct of the major winter storm ury several years ago, Urkott did a lot to shore up additional capacity to ensure that we didn't have future outages. And we're benefiting from that today. You know, the AI race as many are calling it today, you know, is requiring a build out of power gen faster than the utility sector can provide. So we're seeing a ton of behind the meter of power generation projects. So the industry is solving its power needs by pursuing these power projects on a co located basis. 00:12:58 Speaker 2: I saw this just I'm so sorry, folks. I don't have it here in front of me to site. But somebody said we're getting AI wrong and that mostly it's an energy bottleneck. Discuss that. 00:13:10 Speaker 6: Yeah, you know, if you think about the demand trend associated with AI compute, we're going to need a tremendous amount of electricity and to generate those electrons, we're going to need a lot of natural gas and other fuel sources to generate that power. So the bottleneck as many see it today, really is the ability to produce the electrons. I was out in West Texas just recently drove out through Abilene and ultimately Amarillo and up towards Colorado. A number of major projects being developed alongside renewable power sources, wind farms that we're generating electricity for the grid are going to be dedicated to generating power for data centers. It's an amazing trend. 00:13:48 Speaker 5: Talk about nuclear I hear a lot more about that. I'm old enough to remember Three Mile Island they sent us home school. Then how much how does nuclear player role here going forward? Because it's been so out of the picture. 00:14:02 Speaker 2: For so long it has. 00:14:03 Speaker 6: Been you know, it's been a year since the Trump administration issued in executive order to mandate the acceleration of developing additional nuclear resources in this country. You know, we have you know, a proven concept in AP one thousand by Westinghouse that'll be the primary model for large scale nuclear development. There's a lot of science projects underway with small scale modular reactors. We'll start to see some contribution from those those models here over the next five to six years. But on a larger scale, it's. 00:14:35 Speaker 2: Going to take time. 00:14:36 Speaker 6: It takes a significant amount of capital in ten plus years. 00:14:38 Speaker 2: So there's upstream drilling, old school, downstream refineries, distill it's and all that, and this thing I really don't understand midstream. Where's the investible future among those three categories of oil? 00:14:53 Speaker 6: Yeah, you know, the in terms of the value chain, really we see a lot of potential in all of the areas. I think midstream is a natural base. Midstream is the really the connection of the source of supply to the end users. 00:15:07 Speaker 5: Oh it's no, it's pipes. I think it's like the pipelines. 00:15:11 Speaker 4: It is the pipe hundred thirty six, Okay, gathering, storage, transportation, ultimately liquefaction the operators of the AKA. 00:15:21 Speaker 2: So you've got a data center in the middle of nowhere west to Abilene. It sounds like, you know, sleep at the wheels song. Sure, So you got a data center out west to Abilenehos, Dallas, grows up to Oklahoma. They need net gas. It's just pipelines, right. 00:15:36 Speaker 6: Just pipelines, absolutely, And you know, the West Texas region of the Permian Basin is a logical source of supply of that energy. In a lot of cases, natural gas is still being flared as a biproductive. 00:15:48 Speaker 2: But what about a data center outside Washington, d C. Twelve miles you know, not twelve twenty miles. There's dulles. 00:15:55 Speaker 6: Yeah, there's an ocean of gas in Appalachia that's a waiting for end use markets, including. 00:16:00 Speaker 2: What about not in my backyard? 00:16:02 Speaker 6: You know, you know, there are some issues pushback on data centers and communities that the reality is scarce. Resources like land and water are an issue. First, we need local policy. 00:16:11 Speaker 4: We need pipelines to get the new England, Tom, because you you can't get your games there. 00:16:16 Speaker 2: Quebec saves us, like you know every I mean, just what's your signal best buy? Is it Excellon? We like Exxon. 00:16:24 Speaker 6: The integrated business model of Fords flexibility and a commodity environment is volatile. You've got a refining asset footprint on a global stap. 00:16:32 Speaker 2: Do they have a new attitude about distributing cash to shareholders? 00:16:35 Speaker 6: They the old days they do. This is a group that is returning cash to investors and spades, and it will continue as the commodity price environment continues to be buoyant. 00:16:44 Speaker 5: In our view, I'm going down to West Texas, Tom, I'm going to bring a drill. I'm just just make money. I mean, because these oil companies they won't drill. They have discipline. 00:16:52 Speaker 4: Now they want to return cash shareholders. I'm going down and be a wildcatters how to do it? 00:16:59 Speaker 2: I Steve don't even know where to go. You just want to go meet the angelin Norris. 00:17:03 Speaker 5: Yes, you darn right, absolutely. 00:17:06 Speaker 2: Cook I have no idea who angelin Norris is, Paul does. Ben Cook with Hennessy Energy Transitions funds in from Dalla's week, thank come on home, stay with us. More from Bloomberg Surveillance coming up after this. 00:17:27 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube. 00:17:40 Speaker 5: Nisha Mittels, she knows what I'm talking about. 00:17:41 Speaker 4: SMA, portfolio manager of Parametric, talk to us about the muni space. Shirk is one of the things that's it seems like a headwind for the muni spaces. There's a ton of issuance out there. I mean, twenty four was a record year, twenty five was a record year. How's twenty six looking for new issuance in your municipal bond market. 00:17:57 Speaker 7: Yes, that's that's completely right, Paul. So we've seen a surge of issuance this year too. So this is almost the third year. We're on pace to actually break last year's record. So we almost are looking at about three hundred billion UH in the first half. If you analyze that, you know, kind of street estimates are close to six hundred billion, so that has been a major headwind. But I think the difference this year now, keep in mind, we just gave back a good amount of performance in July, right, so the kind of the broad MUNI index was down, you know about uh, we're slightly positive now for the year, so we gave a lot of it back. A lot of that had to do though, with the treasury rate volatility right in the movement there, so this was not a credit issue. And then again treasury rate volatility couple with supply, that's what's really kind of created this negative overlay for munis. But again, I think when you look at the technicals, it's about supply, but it's about can that be absorbed, So then it's also demand. So demand has actually been fairly robust this year, so if we see that trend continue, that can help absorb some of this supply, which is very different than what we saw last year where demand wasn't keeping up with the amount of supply of the market saw. 00:19:15 Speaker 4: But all that being said, though absolute yields are on a taxi just the basis are really attractive for a lot of people right. 00:19:23 Speaker 5: Like, yes, high take high exercisions. 00:19:28 Speaker 7: Yes, that's exactly right. So we were seeing that already before this recent repricing. Now where we see you know, I would say the curve remains very steep, right, especially relative the treasury market, So you're getting paid to take on duration. The belly of the curve, though, particularly has sold off the most so far this year. So think about that as a ten year part of the curve. A lot of the issuance has been in that part of the curve, so that part of the curve has sold off even more than the long end. So now before you had to maybe go out fifteen twenty years to get you know, I think getting I don't want to take get paid for a duration, but to really find that relative value, you don't have to go out that far. So your ten year bond New Jersey, let's say roughly three and a half percent yield, high tax state, you're looking at, you know, kind of six and a half seven percent all in, which is extremely attractive. So as we talk about this equity melt up, tom seven percent locked in high quality bonds that looks very attractive on a risk reward basis. In my view. 00:20:31 Speaker 2: How is parametric different from the big houses in mini bonds? What are you people doing it? Exactly? 00:20:37 Speaker 7: So two things we manage separately, severally manage accounts. So what that means is each of our accounts are customized. We manage roughly ninety thousand different accounts. So, Tom, you give us an account, Paul, you give us an account, You give us a parameters round what you want us to invest in? So being New Jersey for you, you. 00:20:54 Speaker 2: Go Tom for bonds. 00:20:56 Speaker 7: Correct. Now, we do ladders. You talked about laddering. It's a great way to take beta exposure, but we also do Wait. 00:21:02 Speaker 2: They were a great band beta exposure. They played Devo like nobody, what a god's name is beta exposure? 00:21:09 Speaker 7: Well, that means, look, you can't match the index perfectly in Muni's right. It is very tough to recreate a Muni index. But by saying, hey, I would like it, let's say one to ten year ladder New Jersey specific, we can create that market exposure to Muni's. Now we can also manage to toll return component. But bottom line, Tom, the number one thing that we are doing is customizing these accounts for our clients. Number two muni's are already inherently tax efficient. We are overlaying this with a component of taxos harvesting. So Parametric manages over seven hundred and fifty billion across equities and fix income. Taxos harvesting is another element of tax efficiency that we can create for our clients at Parametric. 00:21:51 Speaker 5: That's credit quality out there in the municipal bond world. 00:21:53 Speaker 4: I don't hear any stories like a, I don't know, Chicago or Puerto Rico blowing up then causing all kinds of problems house credit. 00:22:01 Speaker 5: Quality out there. 00:22:02 Speaker 7: Credit quality is fairly stable. And look, I would say boring is okay, right, So, but I think you have pockets in certain areas, at certain sectors that you do see a little bit more credit bifurcation, So private education, I would say, healthcare in the lower quality space. Obviously you want that credit oversight, right, making sure you're getting paid for that additional yield. But think about the economy, right, I mean, the economy's been fairly strong. Tax collections are strong, so you're looking at a fairly robust profile generally across the board. In the investment grade space. Now you may start to see headline risk. Now I would say you're seeing that with some states, with some cities. Dare I say New York City given the budget gaps right that are projected some of the one time measures they're considering. But we remind our clients that fundamentally the credit remains strong. Headline risk is very different than the ability to repay debt. This still remains a high quality issue. 00:23:01 Speaker 2: Interview Mishah, thank you, Thank you so much, Nicha Patel with this parametric this morning, I'm taking advantage of tax free bond. She lifts the equity market. Heich just known to do that. Stay with us. More from Bloomberg Surveillance coming up after this. 00:23:23 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube. 00:23:36 Speaker 2: Dan, it's joins us right now. Dan, I really want to focus on Microsoft, the amount of inertial force to get that jump condition in Microsoft. Where did that inertial force come from? 00:23:49 Speaker 8: I mean, I think first of all, the market was painting it wrong relative to where they were on the AI Revolution, the mondzation piece, and like I've said, I mean I leave what Microsoft should in that quarter. I think that's an inflection point for all of tech because it shows what's happening in monization, the hyperscalurs. It's not just so important for Microsoft, I think important for the overall sector. 00:24:12 Speaker 2: We're going to look. 00:24:12 Speaker 8: Back and this is gonna be a monumental sort of turning point. 00:24:17 Speaker 5: Hey, Dan, it's we had SpaceX last night. 00:24:22 Speaker 4: I'd love for you to frame out what the SpaceX story is now versus maybe what it was at the IPO, because obviously there's been a lot of volatility in the stock. It's obviously a very long term story, and it's obviously a big big. 00:24:34 Speaker 5: Play on Elon Musk himself. 00:24:36 Speaker 4: What did you take away from the earnings release and the call last night? 00:24:39 Speaker 8: Look, I think part of it is that there's a longer term vision that's all to me investors that bardy on the IPO. That's the view in terms of the broader AI space story and what Musk is going to do over the coming years. And when it comes to quarters, Look, there's no number that they're going to show that you could say, neighborhood calm nerves right in the lock up and just given some of the nervous in you're seeing right. But for them it's the bounce because cap X is how they're going to narrow the gaps Open AI and anthrop and that continues to be the tuggle Ward. 00:25:13 Speaker 2: Did Bill Ackman get this going? Because I had the clearest memory in Q one he stepped in with. You know, for Bill Ackman, an odd lot, you know, I mean it was it was a piece of change. Yep. Five point seven million shares two point one billion, that's an odd lot for Bill Ackman's a big one. Did he get it started? Dan Ice? It was like, OMG, Bill Ackman's long ostadgy Microsoft. 00:25:38 Speaker 8: Oh, I think, I mean Ackman saw around the corner because investors were massively discounting what the monization story was going to be with Azure and I think ultimately counting out Nadella because some of the Open AI stuff and sort of the narrative, and I think it just speaks to him. We've talked about it obviously so much with you guys in the show. So this is good. We're gonna have white knuckle moments, whether it's Microsoft, whether it's Tech. But the reality is this earning season shows you you're in the third inning. I can even even say bottom of the second. You must go back to where this is all playing out. Roative demonization, especially on the hyperscalars. 00:26:18 Speaker 2: Up thirty eight percent from the end of March. 00:26:21 Speaker 5: Yeah, just extraordinary. 00:26:23 Speaker 4: Hey, Dan, So where are we broadly defined on this AI conversation in the marketplace? 00:26:28 Speaker 5: What is the narrative in the marketplace? 00:26:29 Speaker 4: Because we had, you know, big tech earnings last week and a couple companies stock reacted really positively, in Microsoft being one of them, Amazon and some others did not. Where What's what's the street thinking about AI these days? 00:26:43 Speaker 8: So I'd say, let's put it like a Jenga puzzle. Okay, So the hyperscalars have these good double down in capax demonization. You now see whether it's outfit, Amazon, Microsoft, the software piece, I think Palenteer Front and Center is showing you the enterprise use cases are accelerated. Even when you look at AMD despite what you saw, it just shows chips. We've said demand the spy twelve to one, thirteen to one. Obviously in video front and center, when you piece it all together, enterprise are accelerating the hyperscale or see it that ultimately is a key catalyst for chipstocks. And I think what you're essentially seeing now is that the second, third, fourth derivatives of this AI revolution cybersecurity, among others. Now it's starting to spread. This is real and you can't even deny it, Okay. 00:27:33 Speaker 2: Dan, The reality is you're in the Hamptons because he's living large, so we all know that we are in Barns. And you know it's like a thing. Dan, you need to go up the coast, do Main to Roke Bluff, Rogue Bluff. It's almost like where FDR Summer Place was on the border with Canada. Like they're more Montreal Canadian fans out there than they are Boston Bruin fans. And Dan, we got a question here that absolutely brilliant from Rogue Bluff's main I hope I'm pronouncing that right at it. Does the innovation of AI is its circuitous? Does it feed on itself into secondary and tertiary uses? 00:28:19 Speaker 8: That's our whole first, It's a great question, and that's our whole thesis, is that what essentially happened it is not about the models open AI and anthropic It's about the data, the derivatives, the data center build out, the Capax. But that's going to do to energy and it goes back to like for the first time in thirty years, the US is added China. 00:28:40 Speaker 2: Okay, industrial guy, how does it? I mean Caterpillar just blew out numbers. You're gonna tell me it's data centers. What's Danaives's X axis for all these tertiary companies advantage by your AI world? 00:28:55 Speaker 8: Well, I think that's where when you look at Caterpillar, you look on the energies like manergs Iquanta. I'm just giving example of companies that are playing into the buildouts, to the data centers, the Capex buildouts. This is remember, for every dollar in Cappex, there's a five to six dollars multiply across the rest of TAP and I think that just continues to be our THEA And I think this earning season, earnings now caught up maybe to where some shocks were. 00:29:25 Speaker 4: So what's the what's the next thing that you think the streets looking for over the next two, three, four quarters? Then is it more ROI the evidence is it eight scaling back in Capex? 00:29:38 Speaker 5: What do you think that the street's looking for monization. 00:29:42 Speaker 8: You want to now see, like as King with the X acts, you want to now see go the baton hander from Capex to monization. And I also think there's just a laser focus what's going on in Koupertino because the consumer AI revolution runs through Rupertina. What they do on the consumer it's by memory chips and everything. All that is so important to their own strategy. 00:30:05 Speaker 2: Dan is a twenty two dollars ultimate breakfast burrito at the Golden Pear Cafe. Is that a little rich for you? I mean just a breakfast burrito twenty two dollars? 00:30:15 Speaker 8: Wow, Look, I do think Golden Power. I'd say argue maybe some of the best coffee in the United States. But I will say that that burrito, you know, I think it's price high, but I think well worth it, you know, for those that have never tried it. 00:30:30 Speaker 2: I mean, the chicken panini is just unbelievable. It's a charge more for that. Okay, you can't even get in the door there half the time, right Dan. 00:30:37 Speaker 8: Dan, it is, But I mean keen he would you'd have VIP accents. But for others, yeah, you know, but for others, the regular people, the non keen. 00:30:48 Speaker 2: They have to wait out God, can you see me out there happens? 00:30:52 Speaker 8: I could picture it, the bow tie going into Golden power. 00:30:55 Speaker 2: I see the scene, Bill and I the science guy, busted my chops on it like the Nerd Patrol and nice go away in the Hamptons. Thank you so much for the perspective, particularly on Microsoft. 00:31:08 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apples, Spotify, and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal