WEBVTT - US Factory Activity Contracts, OPEC Meeting 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.480 Eastern on fo card Playing and Broun Auto with the 0:00:17.520 --> 0:00:21.320 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:23.320 or watch us live on YouTube. 0:00:24.880 --> 0:00:27.520 All right, we had some ism manufacturing data came out 0:00:27.840 --> 0:00:29.360 just this morning, a little bit weakerd then expect it. 0:00:29.400 --> 0:00:31.480 Let's bring in Tim Fury, used the chair for the 0:00:31.520 --> 0:00:35.040 Institute for Supply Management. The kids know that. As im 0:00:36.280 --> 0:00:38.280 Tim talk to us about the data we saw today. 0:00:38.280 --> 0:00:39.800 I'm just looking at the headlines. Came in a little 0:00:39.800 --> 0:00:42.400 bit below forecast, a little bit below last period as well. 0:00:43.520 --> 0:00:44.640 Yeah, hi jeessipeball. 0:00:44.760 --> 0:00:47.239 So the best way to describe this report, although our 0:00:47.320 --> 0:00:56.240 number is contracting again, is stable, stagnant, stock sluggish and flat. 0:00:57.520 --> 0:00:59.840 You know the preponderance of the common comments in the 0:01:00.200 --> 0:01:02.040 over the last couple of months, we're kind of on 0:01:02.160 --> 0:01:05.440 the plateau. As you know, your listeners. We started to 0:01:05.520 --> 0:01:07.880 see a grow out back in January. It was a 0:01:07.959 --> 0:01:10.440 week grow out, not a very strong growout. But in 0:01:10.440 --> 0:01:12.640 the month of April and then again the month of May, 0:01:13.040 --> 0:01:16.280 we're basically stuck, and it feels the reason why we're 0:01:16.280 --> 0:01:18.960 stuck is that there is very little demand. And the 0:01:19.000 --> 0:01:21.280 reason that there's very little demand is because people are 0:01:21.319 --> 0:01:24.680 waiting for ray cuts. So when we started the year, 0:01:24.760 --> 0:01:27.560 the ray cuts were actually a tailwind. Now with the 0:01:27.680 --> 0:01:30.120 lack of tail of ray cuts, we're actually. 0:01:29.920 --> 0:01:30.800 Looking at a headwind. 0:01:30.920 --> 0:01:36.240 So the manufacturing sector is pretty much frozen, and they're 0:01:36.319 --> 0:01:40.120 unwilling to really invest in capex and in working capital, 0:01:40.319 --> 0:01:44.000 and to some extent, in people until the horizon clears up. 0:01:45.400 --> 0:01:47.880 So Tim, what does this mean more broadly for the economy? 0:01:49.920 --> 0:01:51.760 Well, you know, I think we're just we're six to 0:01:51.840 --> 0:01:54.960 nine months out ahead of the general economy. So you know, 0:01:55.040 --> 0:01:56.760 we started to grow out in January, as I said, 0:01:56.880 --> 0:01:59.400 which would indicate that maybe the general economy would start 0:01:59.440 --> 0:02:02.240 to see a a better uplift in the fall. But 0:02:02.360 --> 0:02:05.040 with this plateauing, this could be just a manufacturing plateau 0:02:05.120 --> 0:02:07.040 depending on what the FED does on the right side. 0:02:07.600 --> 0:02:10.359 But I don't think we're going to see much movement here. 0:02:10.560 --> 0:02:12.679 I mean, as time goes on and there's a lack 0:02:12.720 --> 0:02:14.800 of demand, there's going to be a lack of work. 0:02:15.200 --> 0:02:17.359 One of the really positive things here the report is 0:02:17.400 --> 0:02:20.280 that we were stable on a revenue basis month to month, 0:02:20.320 --> 0:02:24.040 which is good. But we've been expanding slightly for the 0:02:24.160 --> 0:02:26.959 last three or four months and now we're stable, which 0:02:27.040 --> 0:02:31.280 really means that as your pipeline your backlog declines, you 0:02:31.360 --> 0:02:33.359 have less to work on. We could see that production 0:02:33.480 --> 0:02:37.240 number going to contraction, which would be a whole different story. 0:02:37.400 --> 0:02:40.640 So that's the first story here. I already mentioned a demand. 0:02:40.919 --> 0:02:43.280 It's the weakest new order number we've had in a year. 0:02:43.840 --> 0:02:46.639 Last May's worse at forty two, which is a lot 0:02:46.720 --> 0:02:49.360 worse than forty five, by the way, but so okay, 0:02:49.400 --> 0:02:51.840 we're not as bad as last May. And then you know, 0:02:51.919 --> 0:02:54.919 the positive thing here is on the prices number, where 0:02:54.960 --> 0:02:57.680 although we're still expanding, we're not expanding as much as 0:02:57.800 --> 0:03:01.320 we were in April. And we just finished our forecast 0:03:01.440 --> 0:03:04.000 and our respondents have indicated that for the whole year 0:03:04.520 --> 0:03:06.960 twenty twenty four, we're looking at a one point nine 0:03:07.000 --> 0:03:10.200 percent price growth on the cost of things that they buy, 0:03:10.800 --> 0:03:13.040 of which we've already seen one point six percent so 0:03:13.200 --> 0:03:16.160 far this year. So if you take that, it really 0:03:16.240 --> 0:03:20.280 says that we're looking at essentially not much more of 0:03:20.360 --> 0:03:22.840 a price increase as we close on the year, and 0:03:22.960 --> 0:03:25.440 you know, hopefully that will spur some demand here, but 0:03:26.120 --> 0:03:28.600 I think you know everybody's waiting for a little bit 0:03:28.639 --> 0:03:31.680 more solidity and some positive news here so that people 0:03:31.720 --> 0:03:34.359 will move on. In the meantime, we've gone from a 0:03:34.440 --> 0:03:38.600 profit focused performance here to a profit focused performance here 0:03:38.680 --> 0:03:40.960 with a bigger priority on making sure you're liquid in 0:03:41.000 --> 0:03:43.680 the event something wrong happens. And that's kind of where 0:03:43.680 --> 0:03:44.560 we're at all right. 0:03:44.640 --> 0:03:46.680 Tim, thanks so much for joining us as appreciate getting 0:03:46.680 --> 0:03:50.000 your thoughts here. On ism day, Tim Fury, Chair for 0:03:50.120 --> 0:03:52.960 the Institute for Supply Management, talking about these ice and 0:03:53.040 --> 0:03:55.920 manufacturing numbers came in lighter than expecting. Again, the one 0:03:55.960 --> 0:03:58.800 that jumped out of me, Jess was a new orders 0:03:59.000 --> 0:04:02.320 came into forty five five point four. Consensus was forty 0:04:02.440 --> 0:04:05.200 nine point four, so a big miss there. Last period 0:04:05.360 --> 0:04:07.840 was forty nine point one. So the new orders kind 0:04:07.880 --> 0:04:09.400 of gives you a little bit of a leaning indicator 0:04:09.520 --> 0:04:10.520 weaker than expected. 0:04:12.080 --> 0:04:15.920 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:16.040 --> 0:04:19.560 weekdays at ten am Eastern on applecar Play and Android 0:04:19.600 --> 0:04:22.320 Auto with the Bloomberg Business app. You can also listen 0:04:22.480 --> 0:04:25.560 live on Amazon Alexa from our flagship New York station. 0:04:25.960 --> 0:04:28.679 Just say Alexa playing Bloomberg eleven thirty. 0:04:30.560 --> 0:04:32.680 It's stop technology, Let's do it. Why not? 0:04:33.200 --> 0:04:35.920 Also apparently with the New York Post calls the best 0:04:36.000 --> 0:04:36.719 dressed man on. 0:04:37.000 --> 0:04:40.200 Well, that's debatable, dude. I mean, I actually have a 0:04:40.279 --> 0:04:42.280 problem with his wardrobe, and I just I tend to 0:04:42.320 --> 0:04:44.440 look past it. Dan ives joined just because he's a 0:04:44.440 --> 0:04:46.640 big Penn State fan, So I look past it. Dan 0:04:46.680 --> 0:04:49.560 I's managing director Senior Equity analys for web Boast Securities. 0:04:50.440 --> 0:04:53.760 Hey Dan, thanks so much for joining us here. Let's 0:04:53.839 --> 0:04:57.280 talk about chips. And we talked about AI, and you've 0:04:57.320 --> 0:04:59.760 been on front of this AI trade and really getting 0:04:59.760 --> 0:05:02.240 people up the speed on on AI and how to 0:05:02.279 --> 0:05:05.320 play it. But are we still focusing on the chips? Here? 0:05:05.480 --> 0:05:07.159 Is it in video and everybody else? 0:05:08.440 --> 0:05:12.040 I mean, look is there? Ultimately it's Jensen and Nvidia's world. 0:05:12.160 --> 0:05:15.960 Everyone else paying rent? And if you because just plays out, 0:05:16.080 --> 0:05:21.200 no Amduisa, Sue, potentially Intel, others in the semi food chain, 0:05:21.320 --> 0:05:24.200 they will start to see a benefit twenty twenty five, 0:05:24.720 --> 0:05:27.920 twenty six. But for now, there's only one game in town, 0:05:28.400 --> 0:05:31.640 and that's in video and right I just continue to 0:05:31.680 --> 0:05:34.960 see an autobond type of path for Jensen and video. 0:05:35.400 --> 0:05:38.400 Yeah, if anyone watching our YouTube feed can see Dan, 0:05:38.520 --> 0:05:40.480 now it's kind of in a cotton candy sort of 0:05:40.560 --> 0:05:42.800 colored shirt right now, but. 0:05:42.880 --> 0:05:47.920 You know its charcoal gray suit very exactly. That's the 0:05:47.960 --> 0:05:49.440 way I was brought up a long fan. 0:05:49.839 --> 0:05:52.280 Can't You can't get the investment banker out of him? 0:05:52.440 --> 0:05:55.280 No, Dan brings much more color to the whole game. No, Damn. 0:05:55.360 --> 0:05:59.080 Dan always does so speaking, but sucks. Look at the 0:05:59.200 --> 0:06:03.279 socks this morning, the Philadelphia City Conductor Index that moving higher. 0:06:03.320 --> 0:06:06.440 Obviously it houses Bellweather's like in Nvidia, AMD and Intel. 0:06:06.760 --> 0:06:09.200 But talk to us more about TSMC and some of 0:06:09.279 --> 0:06:12.560 these other Nvidia suppliers in Asia and what that really 0:06:12.640 --> 0:06:15.000 means for the development coming off of the back of 0:06:15.080 --> 0:06:17.719 Obviously we're gonna have that ten for one stock split 0:06:17.800 --> 0:06:20.960 for in Nvidia coming to Fruition right before the opening 0:06:21.000 --> 0:06:24.200 of trading on June tenth, So not too far away here, Yeah. 0:06:24.240 --> 0:06:26.760 Jess, I mean our team was in Taiwan last week. 0:06:27.160 --> 0:06:31.040 Parties just getting started, and for TSMC for the for 0:06:31.160 --> 0:06:34.520 the other semi players, I mean, we're seeing demand well 0:06:35.320 --> 0:06:38.559 into twenty twenty five and this is not double ordering. 0:06:38.600 --> 0:06:42.359 I think it just shows this AI revolution is kicked 0:06:42.400 --> 0:06:44.920 off and it's not just the big tech players that 0:06:44.960 --> 0:06:47.839 are going to benefit now, it's the second, third, fourth derivatives. 0:06:48.360 --> 0:06:50.200 And that's what we're seeing play out in tech. I 0:06:50.320 --> 0:06:54.159 have and I have nos that's clearly playing out across NASNAC. 0:06:55.040 --> 0:06:57.440 Hey, Dan, you know, just look looking ahead a little 0:06:57.480 --> 0:06:59.320 bit here. A week from today, I believe that we're 0:06:59.320 --> 0:07:03.279 gonna have that developed conference for Apple. It just seems 0:07:03.360 --> 0:07:06.840 to me that there's a the expectations there. I think 0:07:06.920 --> 0:07:10.280 investors want to be kind of wowed a little bit 0:07:10.400 --> 0:07:14.640 by Apple and maybe some AI discussion. Are we gonna 0:07:14.680 --> 0:07:16.240 get that or are we going to be disappointed? Do 0:07:16.280 --> 0:07:16.520 you think? 0:07:17.440 --> 0:07:19.280 Yeah, Look, we'll be there a week from now. And 0:07:19.880 --> 0:07:23.720 I think it's the biggest event for Cooking Cooper Tino 0:07:24.160 --> 0:07:27.240 in over a decade because this is AI coming app. 0:07:27.320 --> 0:07:31.400 I think most consumers their interaction with generative AI is 0:07:31.440 --> 0:07:33.280 going to be through an Apple device. So this is 0:07:33.360 --> 0:07:36.680 important for developers to lay out the stack, what the 0:07:36.840 --> 0:07:39.600 feature functionality looks like. I think it's your early start 0:07:39.640 --> 0:07:42.320 of an AI app store, and then the drum roll 0:07:42.720 --> 0:07:46.120 to an AI driven iPhone in terms of iPhone sixteen 0:07:46.160 --> 0:07:48.520 will ultimately be iPhone seventy. I think to run us 0:07:48.600 --> 0:07:51.920 on to growth, it's a massive event for Apple. 0:07:52.720 --> 0:07:55.400 What about switching it up and looking over to Tesla 0:07:55.480 --> 0:07:57.280 because I know that's a name that I believe you 0:07:57.400 --> 0:07:59.920 took off of one of your conviction lists earlier this year. 0:08:00.120 --> 0:08:01.560 Where do you see that stuckheaded from here? 0:08:02.440 --> 0:08:04.760 Yeah, it's been in category five storm, but I think 0:08:04.800 --> 0:08:07.160 they're starting to get through it. I think if you 0:08:07.320 --> 0:08:12.800 could demand in China's stabilized and ultimately checked by check, 0:08:12.880 --> 0:08:14.800 I think they're getting rid of some of the overhangings 0:08:14.840 --> 0:08:17.320 That one is late next week. Does must get that 0:08:17.800 --> 0:08:21.400 twenty eighteen compactage approved? I think it does get approved. 0:08:21.520 --> 0:08:23.800 I think that's been a bit of an overhang, and 0:08:23.880 --> 0:08:27.040 then it's really about demand stabilizing and the next part 0:08:27.080 --> 0:08:29.880 of the store, the sub thirty kvehicle as well as 0:08:30.040 --> 0:08:32.920 FSD taking hold. I think that's a big part of 0:08:32.960 --> 0:08:35.800 the valuation to the Tesla store. 0:08:36.960 --> 0:08:40.079 So for it's for Tesla and a you know, a 0:08:40.320 --> 0:08:42.679 lower price car, whether it's sub thirty thousand, whatever the 0:08:42.720 --> 0:08:46.600 price tag is. I mean, and you're modeling, dan, can 0:08:46.679 --> 0:08:49.280 they make money on a per unit basis at that 0:08:49.400 --> 0:08:50.120 price point. 0:08:50.720 --> 0:08:53.079 They can't. I think they can make money up to 0:08:53.200 --> 0:08:57.400 about twenty three to twenty four k. But that's look 0:08:57.480 --> 0:09:00.800 that the scale and scope that's been that's been the 0:09:00.840 --> 0:09:03.960 whole key of success. I mean, despite everything that we've seen, 0:09:04.720 --> 0:09:07.480 it used to be fifty five thousand. Now they can 0:09:07.559 --> 0:09:10.280 make money at twenty two to twenty four thousand. So 0:09:10.360 --> 0:09:14.559 I think that's really something that you're seeing across I 0:09:14.640 --> 0:09:18.920 think the industry, their ability to scale, that's a huge 0:09:19.040 --> 0:09:21.199 part of their advantage. And of course not just here 0:09:21.559 --> 0:09:23.640 but especially in China and around the world. 0:09:24.480 --> 0:09:27.600 Are there particular technical levels you're watching for Tesla's stock 0:09:28.080 --> 0:09:30.000 to see like if the worst of the pain is 0:09:30.040 --> 0:09:30.720 already passed. 0:09:31.880 --> 0:09:36.680 Yeah, I think Look in my mind from a sentiment perspective, 0:09:37.000 --> 0:09:40.160 it has just been as negative as I've seen it 0:09:40.559 --> 0:09:43.360 in a number of years. I think as we get passed, 0:09:43.360 --> 0:09:47.240 wait next week the shareholder meeting, you start see stabilization 0:09:48.040 --> 0:09:49.800 in two Q and three Q, and then I think 0:09:49.840 --> 0:09:52.360 investors start to look into next year. But again, betting 0:09:52.480 --> 0:09:55.560 against Musk, betting against Tesla, that's been the wrong bet. 0:09:56.120 --> 0:09:58.280 Despite you know, I think many that are piled on 0:09:58.960 --> 0:10:01.560 and I think yet it again, this will be proven 0:10:01.720 --> 0:10:04.360 to be more of a golden opportunity to own Tessa 0:10:05.040 --> 0:10:06.960 rather in the start of a negative decline. 0:10:07.559 --> 0:10:09.280 All right, Dan, thanks so much for joining us as 0:10:09.320 --> 0:10:11.840 I always appreciate it. Dan, if he's a managing director 0:10:11.920 --> 0:10:15.560 senior equity analyst at web Bush Securities, joining us here 0:10:15.720 --> 0:10:17.840 talking all things technology. That's one of the great things 0:10:17.840 --> 0:10:19.719 about chatting with Dan. You can kind of go all 0:10:19.800 --> 0:10:24.160 over the tech map and get a conviction comments is 0:10:24.320 --> 0:10:24.520 kind of. 0:10:24.520 --> 0:10:28.640 Way the Wall Street's best dressed according to the New 0:10:28.720 --> 0:10:32.040 York Post. But Paula, we call you the fashion police here. 0:10:32.840 --> 0:10:33.600 Yeah. Total. 0:10:34.200 --> 0:10:38.200 So if you you saw Dan in the Bloomberg headquarters, 0:10:38.240 --> 0:10:40.720 would you stop him last summer? I think somebody came 0:10:40.760 --> 0:10:41.439 in with sandals. 0:10:41.480 --> 0:10:41.680 It was. 0:10:46.080 --> 0:10:48.040 Over your condos clip tops. 0:10:49.720 --> 0:10:51.559 I'd like to come barefoot. 0:10:51.840 --> 0:10:53.920 Yeah, well, Dan, you're right. He was written up in 0:10:53.920 --> 0:10:58.200 the New York Post his uh wonderful wardrobe that he wears. 0:10:59.200 --> 0:11:01.359 Plus it's all around the world because the guy's always. 0:11:01.360 --> 0:11:03.440 All right, you guys a learn about where he buys all. 0:11:03.400 --> 0:11:04.319 Of these up exactly. 0:11:07.000 --> 0:11:10.840 You're listening to the Bloomberg Intelligence Podcast. Catch us Live 0:11:10.960 --> 0:11:14.040 weekdays at ten am Eastern on Apple Car playing Enroud 0:11:14.080 --> 0:11:17.120 Auto with the Bloomberg Business app, Listen on demand wherever 0:11:17.200 --> 0:11:20.360 you get your podcasts, or watch us live on YouTube. 0:11:22.240 --> 0:11:26.439 SPX up about ten eleven percent this year. SPW the 0:11:26.520 --> 0:11:30.280 Equal Weighted Index up about four and a half percent here, 0:11:30.440 --> 0:11:32.720 so still some of those big names kind of driving 0:11:32.760 --> 0:11:33.360 it here a little bit. 0:11:33.480 --> 0:11:35.960 Also, the S and P five hundred up twenty three 0:11:36.280 --> 0:11:38.319 of the past thirty one week, so that since the 0:11:38.440 --> 0:11:40.520 October low, if you want to go back, that was 0:11:40.559 --> 0:11:42.679 around October twenty seventh when the S and P made 0:11:42.679 --> 0:11:45.719 that low, up about coming into today's trading twenty eight 0:11:45.800 --> 0:11:46.559 percent since that. 0:11:47.480 --> 0:11:49.560 Let's see what the pros are doing here. Margi Battel 0:11:49.640 --> 0:11:52.480 is certainly a pro. She's been doing this for some time, 0:11:52.559 --> 0:11:55.320 has some great perspective market. Bettel is a senior portfolio 0:11:55.360 --> 0:12:00.400 managered all Spring Global Investments, joining us from Boston via 0:12:00.520 --> 0:12:04.040 zoom Markie. When you talk to your clients here, what 0:12:04.160 --> 0:12:06.040 do you tell them about these markets? Should they be 0:12:06.120 --> 0:12:09.280 focusing on the big tech names, should they be broadening 0:12:09.320 --> 0:12:11.880 it out to some other sectors. What kind of discussions 0:12:11.880 --> 0:12:13.240 are you having with your clients these days? 0:12:14.920 --> 0:12:17.679 Well, we still think the tech sector is one of 0:12:17.720 --> 0:12:21.040 the leading sectors because they still have secutor growth and 0:12:21.160 --> 0:12:24.120 cyclical growth behind and so we don't think the sector 0:12:24.200 --> 0:12:27.199 is really overvalued. Considering the growth that they should have 0:12:27.360 --> 0:12:30.000 over the next one two three years. We think they 0:12:30.120 --> 0:12:32.640 still pretty fairly priced and it's still going to be 0:12:32.720 --> 0:12:34.280 one of the fastest growing sectors. 0:12:34.600 --> 0:12:36.280 So it's still a market that's selective. 0:12:36.320 --> 0:12:39.679 We see opportunities in some of the industrials, particularly those 0:12:39.760 --> 0:12:42.800 companies that are linked to somebody the mega trends such 0:12:42.840 --> 0:12:47.719 as the move to the cloud and data centers and reindustrialization, 0:12:47.960 --> 0:12:50.840 reshore and things like that, But a more selective market 0:12:50.840 --> 0:12:51.400 I think is going. 0:12:51.400 --> 0:12:55.640 To continue well, Margie. As the calendar just flipped to June, 0:12:56.200 --> 0:13:00.280 obviously there's different ways to cut kind of seasonality different actors. 0:13:00.280 --> 0:13:02.559 I know people like to talk about the juneswoon or 0:13:02.600 --> 0:13:04.600 even Seliman go away, but obviously if you look over 0:13:04.600 --> 0:13:06.640 the last decade really hasn't worked as well. If you 0:13:06.800 --> 0:13:09.679 use the seag go function in the terminal, you can 0:13:09.720 --> 0:13:11.440 see how the S and P five hundreds only been 0:13:11.480 --> 0:13:14.559 down twice in June over the last decade. So in 0:13:14.640 --> 0:13:16.480 twenty twenty two, during that beer market and then in 0:13:16.559 --> 0:13:19.480 twenty fifteen, obviously that correlated with what was going on 0:13:19.679 --> 0:13:22.360 with some manufacturing slowdowns in China and then obviously those 0:13:22.440 --> 0:13:25.600 highly indebted European countries that was worries of default there. 0:13:26.040 --> 0:13:29.520 But in election year periods, typically the summer can actually 0:13:29.559 --> 0:13:31.840 be a stronger period, but that usually comes when there's 0:13:31.840 --> 0:13:33.800 more clarity as far as who the winner would be 0:13:33.920 --> 0:13:36.440 very different kind of setup that we have this time around. 0:13:36.480 --> 0:13:38.240 But I'm wondering over the next few months, where do 0:13:38.320 --> 0:13:40.880 you see stocks headed from your as far as when 0:13:40.920 --> 0:13:42.559 Paul and I were just talking about the rally that 0:13:42.600 --> 0:13:46.080 the SMP has been on since that October left, well, 0:13:46.080 --> 0:13:46.559 I don't. 0:13:46.360 --> 0:13:46.760 Think you can. 0:13:46.760 --> 0:13:49.240 We always look at the history books to give you 0:13:49.360 --> 0:13:51.400 comfort for how this year is going to work out. 0:13:51.760 --> 0:13:53.839 I think we have just a narrow window for the 0:13:53.960 --> 0:13:56.640 Fed to act if they're going to lower rate before. 0:13:56.720 --> 0:13:59.560 They'll want to be quiet before the election. But typically 0:14:00.000 --> 0:14:03.400 election years a strong years. They may waffle around mid 0:14:03.520 --> 0:14:07.520 year like right now, but no matter who wins, they 0:14:07.600 --> 0:14:09.400 seem to have a strong finish to the end of 0:14:09.440 --> 0:14:09.760 the year. 0:14:09.880 --> 0:14:11.800 So we think that we may see a little bit 0:14:11.840 --> 0:14:12.760 of back and forth here. 0:14:12.880 --> 0:14:16.440 Uncertainty of a fed policy over world, the economy continue 0:14:17.360 --> 0:14:20.360 to show any weakening trends, and then the market I 0:14:20.400 --> 0:14:22.040 think will look to the end of the year and 0:14:22.120 --> 0:14:23.360 be pretty optimistic again. 0:14:23.440 --> 0:14:24.840 So we're looking for a strong finish. 0:14:25.720 --> 0:14:28.480 Margie, how much is that strong finish predicated upon earnings? 0:14:28.680 --> 0:14:30.000 I'd love to get your thoughts on kind of what 0:14:30.000 --> 0:14:32.520 we're seeing in the earnings from corporate America this year 0:14:32.560 --> 0:14:34.080 and what you expect for the remainder of the year. 0:14:34.120 --> 0:14:36.320 Can that be a driver of stocks? 0:14:37.840 --> 0:14:40.440 Well, I think it'll be more of the same companies 0:14:40.880 --> 0:14:44.200 just as last year. They're more or less continuing to surprise. 0:14:43.840 --> 0:14:44.720 With better earnings. 0:14:45.120 --> 0:14:47.760 Profit margins are being maintained. I think that's a little 0:14:47.840 --> 0:14:52.040 benefit from this little above average inflation that's helping companies. 0:14:52.280 --> 0:14:54.040 And really, if you look at the first quarterer, we 0:14:54.160 --> 0:14:57.240 had growth in the GDP of one point three s 0:14:57.320 --> 0:15:00.280 and P revenues are up i think four percent officer 0:15:00.360 --> 0:15:02.440 of ten percent, So I think it shows you that 0:15:02.920 --> 0:15:06.760 the standard and poors our Nasdaq companies are not necessarily 0:15:07.080 --> 0:15:10.320 reflective of what you see for the say the GDP numbers, 0:15:10.320 --> 0:15:11.960 and shows companies can still. 0:15:12.120 --> 0:15:15.440 Grind out profits that are way above the GDP growth. 0:15:15.280 --> 0:15:16.720 So we think that's what we're going to see, is 0:15:17.240 --> 0:15:19.680 more something close to that ten percent earnings growth for 0:15:19.720 --> 0:15:20.920 the year or for the rest of the year. 0:15:22.040 --> 0:15:24.280 What are some of your top questions that you're getting 0:15:24.280 --> 0:15:25.320 from clients right now. 0:15:27.480 --> 0:15:31.400 Well, I think everyone is concerned about interest rates, Will 0:15:31.440 --> 0:15:33.640 the Fed act or won't they act? And what influence 0:15:33.680 --> 0:15:36.720 will that have on the economy. I personally don't think 0:15:36.760 --> 0:15:39.520 it's going to have very much a material impact either way. 0:15:39.560 --> 0:15:42.240 A quarter or point I think will really change the 0:15:42.280 --> 0:15:45.360 direction of the economy. It's pretty strong, and people are, 0:15:45.360 --> 0:15:48.840 of course very concerned about the deficit, how where the 0:15:49.320 --> 0:15:52.760 money will come from, what we need from foreign investors. 0:15:52.840 --> 0:15:55.640 Will that cause treasury rates to go up as the 0:15:55.760 --> 0:16:00.040 government needs to finance very large, very large deficits. I 0:16:00.080 --> 0:16:01.920 think those are the things that people are focusing on, 0:16:02.040 --> 0:16:04.920 really more macro rather than any individual sector. 0:16:05.880 --> 0:16:09.600 Margie. For no particular reason, this studio of radio professionals 0:16:09.760 --> 0:16:14.120 feels like they're experts on the industrial the electrical grid here, 0:16:15.120 --> 0:16:17.480 and a lot of folks feel like, you know, maybe 0:16:17.640 --> 0:16:21.640 utilities are a way to play AI and things like that. 0:16:21.720 --> 0:16:24.640 How do you think about the grid, the power grid 0:16:24.680 --> 0:16:26.080 and how it plays into this economy. 0:16:27.720 --> 0:16:28.920 Well, I think it's funny. 0:16:29.000 --> 0:16:31.200 It's one of the most boring parts of the market 0:16:31.240 --> 0:16:33.280 has become one of the most hot and trendy parts. 0:16:34.000 --> 0:16:37.800 I think the utility companies, I think are. 0:16:37.880 --> 0:16:41.480 Rather limited way to play the growth in power consumption 0:16:41.680 --> 0:16:44.240 that we expect we'll see from economic growth and of 0:16:44.320 --> 0:16:47.600 course from the data centers. And I think a more 0:16:47.680 --> 0:16:51.280 interesting way to take advantage of those trends really is 0:16:51.360 --> 0:16:55.320 which companies will participate in the growth of building the infrastructure, 0:16:55.440 --> 0:16:58.520 hardening the grid, things like that. Again, so that says 0:16:58.600 --> 0:17:02.080 more companies in the industrial space rather than the utility space, 0:17:02.280 --> 0:17:04.240 although you could make a case for some of the 0:17:04.880 --> 0:17:08.159 independent power companies that have excess power that will be 0:17:08.240 --> 0:17:12.760 able to help balance the needs between various regions and 0:17:12.880 --> 0:17:18.240 between say unreliable or variable green sources versus space loads 0:17:18.280 --> 0:17:20.479 such as coal or gas or nuclear. 0:17:21.520 --> 0:17:24.440 When you're looking at utilities companies, typically people think of 0:17:24.560 --> 0:17:27.920 them as obviously the consistent dividends that they pay and 0:17:28.040 --> 0:17:30.920 low volatility, but also in addition to the AI sort 0:17:30.960 --> 0:17:34.160 of play with this. Could this be basically investors seeing 0:17:34.359 --> 0:17:36.800 that peak and rates that's happening when you're seeing a 0:17:36.880 --> 0:17:39.520 particular corner like this that has been rallying since it's 0:17:39.920 --> 0:17:43.280 April nineteenth, lows that we solve for that particular sevenst group. 0:17:45.080 --> 0:17:47.320 Well, really, when you look at the utilities, when you 0:17:47.400 --> 0:17:49.959 look at their price earns ratio, and you look at 0:17:50.000 --> 0:17:53.760 their dividend yields on that basis, they aren't really attractive 0:17:54.160 --> 0:17:57.440 as attractors say. It's as they've been historically compared to 0:17:57.520 --> 0:18:01.400 treasury rates. When you have a tender treasury, say four 0:18:01.440 --> 0:18:03.480 and a half, four and threecord or something like that, 0:18:04.520 --> 0:18:08.520 most dividends on utilities are a lot lower. So they 0:18:08.600 --> 0:18:10.639 really are as competitive as say, as it used to 0:18:10.720 --> 0:18:13.399 be some years ago, where there would be more of 0:18:13.400 --> 0:18:16.240 an interest rate played by buying the utilities to get 0:18:16.280 --> 0:18:19.840 the very high dividend. You'll say, just really, I don't 0:18:19.840 --> 0:18:24.080 think can be as competitive, just as intermedia. 0:18:23.680 --> 0:18:30.239 Treasures push that blue button there. Margie, thanks so much 0:18:30.280 --> 0:18:33.440 for joining us here. Market Bettel, senior portfolio management offspring 0:18:33.480 --> 0:18:36.080 of Global Investments, joining us from Boston via zoom. 0:18:37.320 --> 0:18:41.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:41.280 --> 0:18:44.200 weekdays at ten am Eastern on Apple card Play and 0:18:44.320 --> 0:18:47.200 Android Auto. With the Bloomberg Business app, you can also 0:18:47.320 --> 0:18:50.800 listen live on Amazon Alexa from our flagship New York station, 0:18:51.200 --> 0:18:53.920 Just say Alexa playing Bloomberg eleven thirty. 0:18:55.880 --> 0:18:57.879 Jess Mean sitting in for Alex Steele on Paul Sweeney. 0:18:57.920 --> 0:19:00.000 We live here in on our Bloomberg Inactor Brooker Studio. 0:19:00.080 --> 0:19:03.560 You streaming live on the internet, John Tucker, that's the 0:19:03.680 --> 0:19:07.960 internet I've heard of. So I've heard dot com and 0:19:08.000 --> 0:19:10.840 you can search Bielberg podcast and that's where you find it's. 0:19:10.840 --> 0:19:13.280 Peter Vosser joins us. He's the chairman of A b 0:19:13.560 --> 0:19:17.080 b a publicly traded company. A b b N is 0:19:17.200 --> 0:19:17.919 the ticker. 0:19:18.400 --> 0:19:18.520 Uh. 0:19:18.640 --> 0:19:22.920 They are located in Europe and in Zurich. Are good friends? 0:19:22.960 --> 0:19:25.520 Over and switching. My daughter's in Zurich today? Oh really? 0:19:25.680 --> 0:19:28.840 Why on holiday? I have no idea, but that's where 0:19:28.880 --> 0:19:30.720 she has said. I got something. It is it's a 0:19:30.760 --> 0:19:33.840 beautiful city. Peter, talk to us about ABB What are 0:19:33.880 --> 0:19:36.040 the challenges you guys are facing here? So you think 0:19:36.080 --> 0:19:42.199 about to electrify, automate hard, to decarbonize industries. Where's your 0:19:42.200 --> 0:19:43.600 focus of your company these days? 0:19:44.520 --> 0:19:48.200 Well, thanks for having me. It's clearly it's the energy transition, 0:19:49.119 --> 0:19:51.720 which is not only the heart to abate sectors. It's 0:19:51.760 --> 0:19:55.320 in general the move from a more foscile driven and 0:19:55.440 --> 0:20:00.879 that system into electric that you system, and then we 0:20:01.000 --> 0:20:04.560 obviously contribute with our products and systems, which gives us 0:20:04.720 --> 0:20:07.919 energy savings between twenty and forty or even fifty percent. 0:20:08.320 --> 0:20:09.240 So that's one angle. 0:20:09.280 --> 0:20:12.560 The other one is all linked to new technologies around 0:20:12.600 --> 0:20:16.680