WEBVTT - Instant Reaction: Microsoft, Meta, Qualcomm Earnings Results 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is a breaking news updated from Bloomberg instant reaction

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<v Speaker 2>and analysis from our three thousand journalists and analysts around

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<v Speaker 2>the world. We got a lot of companies that are

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<v Speaker 2>reporting right now. Meta platform shares up by three point

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<v Speaker 2>six percent. The company posted first quarter sales that beat

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<v Speaker 2>Wall Street estimates. Signed the company's advertising businesses so far

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<v Speaker 2>weathering the Trump Administration's ongoing trade war. We got with

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<v Speaker 2>us Amandeep Singh's Bloomberg Intelligence senior tech industry analysts. He

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<v Speaker 2>joins us here in the Bloomberg Interactive Brokers studio, Mandy,

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<v Speaker 2>But I want to start with Look, I want to

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<v Speaker 2>start with meta platforms. I think there was a little

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<v Speaker 2>bit of concern yesterday with the Snap earnings, not really

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<v Speaker 2>like for like when we think about the companies, but

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<v Speaker 2>if there's concerns about advertising and pullback, then naturally the

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<v Speaker 2>response is, wait, is this going to hit meta platforms?

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<v Speaker 1>Did it? No?

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<v Speaker 3>It did not end. Look, we knew one Q would

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<v Speaker 3>be solid, but the fact that they gave us a

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<v Speaker 3>two Q guide and that too was in line with

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<v Speaker 3>almost in line with consensus, tells you they have more

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<v Speaker 3>visibility about the impact of the pullback from Chinese advertisers

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<v Speaker 3>their deminimus rule that everyone has been talking about, and

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<v Speaker 3>they think it would have a very limited impact on

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<v Speaker 3>the business. Obviously there'll be more details.

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<v Speaker 2>On their own. I mean, I'll pull back from like

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<v Speaker 2>a Sian, that's right.

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<v Speaker 3>And so look, even though they have almost a ten

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<v Speaker 3>percent revenue exposure, the fact that you know it's an

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<v Speaker 3>auction model meant that they would have more of an

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<v Speaker 3>impact on the ad pricing, and this guidance suggests that

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<v Speaker 3>that ad pricing impact is fairly negligible.

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<v Speaker 4>What does this tell you about?

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<v Speaker 5>It's just interesting that we go into this earning season, right,

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<v Speaker 5>and you have companies maybe in the traditional kind of economy,

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<v Speaker 5>whether it's airlines and others, who are giving a couple

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<v Speaker 5>of different scenarios, and then bam, you have something like

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<v Speaker 5>a meta and we'll talk maybe Microsoft in just a moment.

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<v Speaker 4>These are strong numbers.

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<v Speaker 3>These are very strong.

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<v Speaker 4>Can they do?

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<v Speaker 1>Like?

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<v Speaker 4>How do we make sense of that?

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<v Speaker 3>Well? I think one these are the highest ROI ad platforms.

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<v Speaker 3>So if you are an online business, you don't have

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<v Speaker 3>a choice but to spend your ad dollars on Google

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<v Speaker 3>and on meta platforms.

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<v Speaker 5>And if you're worried about the your economy or recession,

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<v Speaker 5>this is where you're going to do.

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<v Speaker 3>This is where you are going to go to engage

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<v Speaker 3>with your customers, to show and add to your customers,

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<v Speaker 3>because every company is an online business and this is

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<v Speaker 3>the highest ROI now, you're absolutely right that Snap last

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<v Speaker 3>night didn't sound very confident about how to Q and

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<v Speaker 3>that that was the reason why they didn't guide for

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<v Speaker 3>the second quarter. So I am surprised by the fact

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<v Speaker 3>that they did guide, and it was really a very

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<v Speaker 3>healthy guide given the macro backdrop, and it sounds like

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<v Speaker 3>they are much more confident about their advertiser base, which

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<v Speaker 3>is predominantly small businesses. So when you think about meta platforms,

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<v Speaker 3>they have over ten million small businesses that advertise on

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<v Speaker 3>the platform.

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<v Speaker 5>So explain that's what they don't.

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<v Speaker 2>Is it a meta platform story? I mean, you told

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<v Speaker 2>us last week that Google is a very efficient way

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<v Speaker 2>to advertise, so you weren't surprised to see the numbers

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<v Speaker 2>that we saw from Alphabet last week. Is it the

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<v Speaker 2>same thing when it comes to meta platforms, like this

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<v Speaker 2>is just such a good way to advertise that even

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<v Speaker 2>if small businesses see a pullback they still see value

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<v Speaker 2>when it comes to spending money on this platform.

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<v Speaker 3>Yeah, so in terms of the pecking order, you are

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<v Speaker 3>probably still gonna spend on Meta, but you may pull

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<v Speaker 3>back on Reddit, on Pinterest, on Snapchat, and we don't know.

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<v Speaker 3>We know snap didn't do very well. We don't know

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<v Speaker 3>about the other two. But in terms of pecking order,

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<v Speaker 3>Meta is the highest priority ad spend for any advertiser.

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<v Speaker 3>And I'm surprised SMBs are still continuing because I would have.

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<v Speaker 4>Small and medium sized business.

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<v Speaker 3>Small and medium sized businesses because the tariffs would have

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<v Speaker 3>caused a lot of uncertainty.

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<v Speaker 5>And look, that's why I'm asking you. I'm trying to

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<v Speaker 5>understand an environment where so many companies are like, we're

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<v Speaker 5>not even going to give you an outlok or we're

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<v Speaker 5>going to give you two scenarios. And then you've got

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<v Speaker 5>a company like this that's willing to commit but also

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<v Speaker 5>plays to the small business community.

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<v Speaker 4>I'm just trying to understand it does.

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<v Speaker 3>And look, the advantage of having such a fragmented advertiser basis,

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<v Speaker 3>even if a few advertisers do pull back, you have

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<v Speaker 3>a majority of the other advertisers that may double down

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<v Speaker 3>given they have favorable conditions. So it sounds like in

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<v Speaker 3>this case, some retail advertisers may have pulled back, but

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<v Speaker 3>then you know, you have other pockets within the economy,

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<v Speaker 3>like financial services that may actually have double down. Thinking

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<v Speaker 3>the aslots are much cheaper right now compared to where

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<v Speaker 3>they were ninety days back, and so that is a

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<v Speaker 3>phenomenon that's always there with digitalized platforms that somebody else

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<v Speaker 3>may step up because as a much cheaper right now.

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<v Speaker 4>You know.

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<v Speaker 2>I'm looking at the press release and one thing that

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<v Speaker 2>I saw that kind of surprised me a little bit

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<v Speaker 2>was Mark Zuckerberg at the top said we're making good

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<v Speaker 2>progress on AI glasses and meta AI, which now has

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<v Speaker 2>almost a billion monthly actives. We'll get to the number

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<v Speaker 2>in a second, but that's what he chose to highlight

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<v Speaker 2>at the top. He didn't choose to highlight the strength

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<v Speaker 2>of the advertising business making a mistake. This is a

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<v Speaker 2>company because he's raising the Kapex.

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<v Speaker 3>So the Capex guide ran from sixty to sixty five.

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<v Speaker 4>So what does that tell you.

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<v Speaker 3>Well, it tells me that they are really going big

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<v Speaker 3>in terms of setting up this AI data center infrastructure

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<v Speaker 3>for rolling out more AI on their family of apps,

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<v Speaker 3>and they see a lot of ROI when it comes

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<v Speaker 3>to the AI span.

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<v Speaker 2>What does it mean that it has a billion, almost

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<v Speaker 2>a billion monthly actives? What's he talking about there?

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<v Speaker 3>Well, so Meta Platforms has three point five billion monthly

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<v Speaker 3>actives across their family.

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<v Speaker 2>WhatsApp, Instagram, Facebook, Message.

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<v Speaker 3>So one billion of those, predominantly through WhatsApp, are using

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<v Speaker 3>meta AI. I don't think there is a lot of

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<v Speaker 3>Meta AI on Instagram or the Blue app yet, which

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<v Speaker 3>I was surprised by given how much they tout Meta AI.

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<v Speaker 3>But it's predominantly on WhatsApp.

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<v Speaker 2>Right now, what are they using it for? On WhatsApp?

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<v Speaker 2>Are they using it like an LLM? Are they using

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<v Speaker 2>it like a chat GPT?

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<v Speaker 3>Yeah, it is a form of search on WhatsApp where

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<v Speaker 3>you can sift through your messages. You can actually do

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<v Speaker 3>a lot of group kind of correspondences using METAA.

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<v Speaker 2>So it's basically an assistant for the app.

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<v Speaker 6>That's right.

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<v Speaker 3>But still I would say I see it more on

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<v Speaker 3>WhatsApp than on their Instagram and Blue App.

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<v Speaker 5>Yeah, all right, so metas still up about three point

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<v Speaker 5>four percent.

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<v Speaker 2>Should we talk Microsoft?

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<v Speaker 4>Let's talk at bit.

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<v Speaker 5>About Microsoft, because this one was just kind of off

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<v Speaker 5>and running in a big way in the aftermarket. The

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<v Speaker 5>stock is up about five point six percent. Here again

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<v Speaker 5>some strong numbers.

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<v Speaker 4>Let me just pull it up.

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<v Speaker 5>Here, the company in terms of it posted strong revenue

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<v Speaker 5>growth Cloud United expansion. This one also seemed really strong.

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<v Speaker 1>Yeah, so.

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<v Speaker 3>Azure thirty three percent when everyone was thinking, oh, Google

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<v Speaker 3>had a slightly lower number on the cloud side, I mean,

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<v Speaker 3>thirty three percent is a very impressive number cloud revenue right,

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<v Speaker 3>cloud revenue. And again, this is the one company that

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<v Speaker 3>has benefited the most when it comes to AI infrastructure

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<v Speaker 3>and actually monetizing it. In the case of Meta, you

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<v Speaker 3>still don't see the monetization on AI.

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<v Speaker 4>Meaning what specifically, so.

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<v Speaker 3>The AI inferencing revenue. So that is what shows up

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<v Speaker 3>in the Azure growth number. And in that thirty three percent,

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<v Speaker 3>your AI contribution is north of fifteen percent right now,

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<v Speaker 3>So fifteen percent of that thirty three percent growth is

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<v Speaker 3>all AI revenue.

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<v Speaker 2>Hold on, do we care about these numbers if we

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<v Speaker 2>don't have the guidance yet? Oh, Vester certainly do after

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<v Speaker 2>hours sending shares higher, but we're not going to get

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<v Speaker 2>guidance until the call.

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<v Speaker 3>This is recurring revenue.

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<v Speaker 2>So when you think about as long as people keep paying.

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<v Speaker 3>Yeah, and enterprises don't really pull back, like.

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<v Speaker 2>If they had side I will say if they have

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<v Speaker 2>fewer employees, they would pull back if they lay off employees, wouldn't.

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<v Speaker 3>They Still you need AI infrastructure, you do, Okay? I

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<v Speaker 3>think of what they are doing with the AI infrastructure.

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<v Speaker 3>They're rolling out chat bots, AI agents. So even if

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<v Speaker 3>they are retrenching in terms of headcount, you still need

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<v Speaker 3>more AI agents because.

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<v Speaker 2>Everything is awesome.

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<v Speaker 5>One last question, so same thing my question to Meta,

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<v Speaker 5>like when I'm trying to understand what is going on

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<v Speaker 5>in a lot of other companies, obviously they're not these

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<v Speaker 5>big tech companies, Like, is this telling us a different

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<v Speaker 5>story in terms of what's going on in the economy

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<v Speaker 5>and the impact of some of the White House policies.

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<v Speaker 3>Well, so companies are clearly prioritizing AI initiatives right now,

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<v Speaker 3>regardless of what is going on in the macroeconomy and

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<v Speaker 3>the tariff situation. Everyone is concerned, but no one has

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<v Speaker 3>pulled back on AI related projects, and clearly this is

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<v Speaker 3>an illustration of that. We will wait for the guide.

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<v Speaker 3>I mean these are one Q numbers, so we don't

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<v Speaker 3>know how they guide to for two Q, but one

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<v Speaker 3>QU numbers are strong from both companies.

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<v Speaker 2>Okay, Man, Deep, you got to go. We appreciate you

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<v Speaker 2>sticking around and hang it with us. You appreciate it.

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<v Speaker 2>Not just Microsoft and meta platforms reporting Qualcom. In the

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<v Speaker 2>after hours, shares are bouncing around a little bit. The

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<v Speaker 2>company did give a tepid revenue prediction for the current quarter.

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<v Speaker 2>It underscored concerns about tariffs that will hurt demand for

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<v Speaker 2>its products. As soon as these numbers crossed, we did

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<v Speaker 2>see shares in the after hours move lower, down about

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<v Speaker 2>four point eight percent as we speak right now. Kunjohn

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<v Speaker 2>Sabani is Bloomberg Intelligence senior semiconductor analysts. He joins us

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<v Speaker 2>once again from San Francisco Bureau. John, your reaction to

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<v Speaker 2>the numbers tepid.

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<v Speaker 6>Not surprising to us. In fact, the results and the

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<v Speaker 6>outlook turned out exactly how we had called in our preview.

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<v Speaker 6>We thought that actual reported quarter might see a beat,

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<v Speaker 6>likely due to strength in China Android and from the

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<v Speaker 6>results VRC also seeing some better than expected IoT, which

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<v Speaker 6>is really a positive sign. But that sort of inline

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<v Speaker 6>outlook with the comment that you know they're taking a

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<v Speaker 6>conservative approach, that's what we had expected, so not really

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<v Speaker 6>surprising anything what we have seen so far.

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<v Speaker 5>They're also saying, the CEO, Christiano Aman, saying, as we

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<v Speaker 5>navigate the current macroeconomic and trade environment, we remain focused

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<v Speaker 5>on the critical factors we can control.

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<v Speaker 4>Our leading technology.

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<v Speaker 5>Roadmap, best in class product portfolio, strong customer relationships, and

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<v Speaker 5>operational efficiencies. It sounds a little bit like c spe

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<v Speaker 5>C sweet speak. But what you know they are saying

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<v Speaker 5>that there's some navigating through this macroeconomic andronment is that

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<v Speaker 5>in trade environment that's just all the stuff coming out

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<v Speaker 5>of DC.

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<v Speaker 6>Well, yeah, and remember this smartphone market is sort of

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<v Speaker 6>the most susceptible to any uncertainty or a recessionary scenario

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<v Speaker 6>or a tariff impact given a totally consumer based and

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<v Speaker 6>both the key regions where they sell right, US and

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<v Speaker 6>China both are sort of directly or indirectly getting impacted

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<v Speaker 6>by tariff. The second thing you remember is this is

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<v Speaker 6>the year starting with even the spring iPhone launch, where

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<v Speaker 6>Apple started sourcing their internal modem and swapping out Qualcom.

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<v Speaker 6>You're going to expect to see this more in the

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<v Speaker 6>upcoming iPhone launch in fall. So they're already even if

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<v Speaker 6>you take out the tariffs and uncertainty. They already had

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<v Speaker 6>these headwinds of loss of revenue. It's significant billions of dollars,

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<v Speaker 6>not maybe this year, but starting to happen this year.

0:11:47.880 --> 0:11:51.520
<v Speaker 6>They really needed an offsetting positive catalyst. And when you

0:11:51.520 --> 0:11:56.160
<v Speaker 6>put in uncertain macron top of it, maybe impacting smartphone

0:11:56.200 --> 0:11:59.079
<v Speaker 6>growth overall, that's sort of not the best situation they

0:11:59.080 --> 0:12:00.000
<v Speaker 6>want to be in. Right now.

0:12:00.120 --> 0:12:02.960
<v Speaker 2>We'll hear from Apple tomorrow after the bell, but shares

0:12:03.000 --> 0:12:05.480
<v Speaker 2>in the after hours down about two tenths of one percent.

0:12:05.800 --> 0:12:08.840
<v Speaker 2>Can we get any sort of preview from these numbers?

0:12:08.880 --> 0:12:12.560
<v Speaker 2>Given that Qualcomm does get twenty two percent of its

0:12:12.640 --> 0:12:15.199
<v Speaker 2>revenue from Apple, not.

0:12:15.280 --> 0:12:20.240
<v Speaker 6>These specific numbers right the spring of phone launch. That's

0:12:20.280 --> 0:12:24.040
<v Speaker 6>a very small volume, so we can't expect or predict anything.

0:12:24.080 --> 0:12:27.520
<v Speaker 6>The real indication will come from the fall launch. Again,

0:12:27.720 --> 0:12:30.679
<v Speaker 6>the numbers there are very difficult to predict at this point.

0:12:30.840 --> 0:12:32.719
<v Speaker 6>The other point I want to add ad is right

0:12:32.720 --> 0:12:36.040
<v Speaker 6>there in this weird situation where if because of tariff's situations,

0:12:36.080 --> 0:12:39.360
<v Speaker 6>and if because of significant tariff on China, if Apple

0:12:40.360 --> 0:12:43.600
<v Speaker 6>loses share whether in China on US, that indirectly can

0:12:43.640 --> 0:12:46.080
<v Speaker 6>be actually good for Qualcom at the same time that

0:12:46.120 --> 0:12:48.439
<v Speaker 6>they're swapping qual Comb out. You know that share if

0:12:48.480 --> 0:12:51.080
<v Speaker 6>picked up by Android, that could be actually better for Qualcom,

0:12:51.559 --> 0:12:53.360
<v Speaker 6>not just on those revenue side, but also on the

0:12:53.400 --> 0:12:57.480
<v Speaker 6>margin side, because Android is a higher margin business for them.

0:12:57.720 --> 0:13:00.599
<v Speaker 2>Okay, that's good to know. Anything else, Coonjohn, that you

0:13:00.640 --> 0:13:01.560
<v Speaker 2>can glean from this?

0:13:01.600 --> 0:13:03.760
<v Speaker 5>Oh, go ahead, And I'm thinking, what's the number one question?

0:13:03.800 --> 0:13:05.080
<v Speaker 5>I know I always like to throw this out, but

0:13:05.120 --> 0:13:06.440
<v Speaker 5>what do you want to hear on the call? Or

0:13:06.440 --> 0:13:07.439
<v Speaker 5>what would you be asking?

0:13:09.200 --> 0:13:11.360
<v Speaker 6>I'd be asking a very difficult question, is that. Look,

0:13:11.440 --> 0:13:14.760
<v Speaker 6>we know that the Apple share loss is coming. Estimates

0:13:14.800 --> 0:13:18.240
<v Speaker 6>have in build some of the loss, Like what is

0:13:18.320 --> 0:13:21.959
<v Speaker 6>the offsetting catalyst here? Where can you grow or minimize

0:13:21.960 --> 0:13:24.040
<v Speaker 6>this loss, especially in this current environment?

0:13:24.600 --> 0:13:26.840
<v Speaker 5>All right, got to leave it there, Love it, Love

0:13:26.880 --> 0:13:30.520
<v Speaker 5>it Kunjohn Sabani. He is Bloomberg Intelligence Senior Semiconductor analys

0:13:30.640 --> 0:13:32.920
<v Speaker 5>joining us from our bureau in San Francisco. Couonjohn, thank

0:13:32.960 --> 0:13:35.720
<v Speaker 5>you so much. We'll look forward to his research hitting

0:13:35.720 --> 0:13:37.040
<v Speaker 5>the Bloomberg a little bit later on.

0:13:37.160 --> 0:13:38.439
<v Speaker 4>We got to get to our other love.

0:13:38.559 --> 0:13:40.520
<v Speaker 2>Yeah, let's bring an ed Love though he's actually here

0:13:40.559 --> 0:13:43.000
<v Speaker 2>in New York City. He's the co host of Bloomberg

0:13:43.080 --> 0:13:45.960
<v Speaker 2>Technology with more on the tech earnings that just crossed.

0:13:46.080 --> 0:13:49.920
<v Speaker 2>Microsoft posted strong revenue growth on cloud unit expansion, Meta

0:13:49.960 --> 0:13:53.960
<v Speaker 2>revenue beat estimates on advertising stability. Meta coming out and

0:13:53.960 --> 0:13:56.680
<v Speaker 2>giving a guide that please investors. Microsoft. We don't know

0:13:56.720 --> 0:13:58.600
<v Speaker 2>what they're guiding yet. We'll find out on the call.

0:13:58.800 --> 0:13:59.640
<v Speaker 2>Where do you want to start?

0:14:00.040 --> 0:14:01.920
<v Speaker 7>Let's go and Meta, you know, just because it's actually

0:14:01.960 --> 0:14:06.040
<v Speaker 7>an easier story to understand. Meta makes money from advertising.

0:14:06.080 --> 0:14:10.000
<v Speaker 7>Anyone that's been on Instagram or Facebook increasingly other apps

0:14:10.040 --> 0:14:12.400
<v Speaker 7>will know that. And so the outlook for the current

0:14:12.440 --> 0:14:15.680
<v Speaker 7>period shows that in everything that's going on right now,

0:14:15.800 --> 0:14:18.840
<v Speaker 7>they're holding our own they're holding up. The ad market

0:14:18.880 --> 0:14:22.520
<v Speaker 7>is basically conviction driven, so if there is economic uncertainty,

0:14:22.840 --> 0:14:25.840
<v Speaker 7>advertisers are usually a little bit cautious and tepid. So

0:14:25.880 --> 0:14:29.200
<v Speaker 7>that's really interesting. Meta always gives a guidance or an

0:14:29.200 --> 0:14:31.240
<v Speaker 7>outlook for the current period. Last night, I think you

0:14:31.360 --> 0:14:34.320
<v Speaker 7>covered it right, Snapah did not, And what happens when

0:14:34.320 --> 0:14:37.320
<v Speaker 7>you don't. Your stock fall's fifteen percent. So that was interesting.

0:14:37.640 --> 0:14:39.840
<v Speaker 7>But I think there is something to understand in the

0:14:39.840 --> 0:14:43.960
<v Speaker 7>capital expenditures because people misunderstand what it is META does

0:14:43.960 --> 0:14:46.000
<v Speaker 7>with that money. So maybe we go there next, Well,

0:14:46.000 --> 0:14:50.600
<v Speaker 7>where do Yeah? So, Meta is not a cloud computing company.

0:14:50.680 --> 0:14:53.760
<v Speaker 7>It is a social media company that's working on AI

0:14:54.040 --> 0:14:57.000
<v Speaker 7>and AIS, product generative AI and AI to drive the

0:14:57.080 --> 0:14:59.880
<v Speaker 7>value of its ADS. But it does own and operate

0:15:00.040 --> 0:15:04.160
<v Speaker 7>its own data centers. They've dramatically raised the capex guidance

0:15:04.200 --> 0:15:07.400
<v Speaker 7>for this year. Yeah, sixty four to seventy two billion. Sorry,

0:15:07.440 --> 0:15:08.000
<v Speaker 7>I'm not look on.

0:15:07.920 --> 0:15:09.960
<v Speaker 5>The sixty four to seventy two If they had seen

0:15:10.080 --> 0:15:13.040
<v Speaker 5>sixty to sixty five billion, the estimate was just below

0:15:13.080 --> 0:15:14.000
<v Speaker 5>sixty billion.

0:15:13.800 --> 0:15:15.560
<v Speaker 7>So what does that mean? They're going to put more

0:15:15.600 --> 0:15:18.320
<v Speaker 7>money than they said they were into data centers, more

0:15:18.400 --> 0:15:21.520
<v Speaker 7>data centers, cutting edge chips in those data centers. More

0:15:21.600 --> 0:15:24.720
<v Speaker 7>likely they'll drive development in AI. But the single line

0:15:24.760 --> 0:15:28.360
<v Speaker 7>in the statement that is so critically important is the

0:15:28.440 --> 0:15:31.080
<v Speaker 7>majority will go into the core business. They will invest

0:15:31.080 --> 0:15:32.320
<v Speaker 7>in the things that support ADS.

0:15:32.520 --> 0:15:34.480
<v Speaker 2>Well, that's okay, that's exactly where I wanted to go.

0:15:34.520 --> 0:15:37.200
<v Speaker 2>Because Mark Zuckerberg called out Meta AI, he called out

0:15:37.240 --> 0:15:40.800
<v Speaker 2>the hardware in the top of the press release, Mandy

0:15:41.160 --> 0:15:43.400
<v Speaker 2>smartly pointing out, well, that's because there raise capex, so

0:15:43.400 --> 0:15:46.280
<v Speaker 2>he wants to draw attention to the strength there look, look,

0:15:46.280 --> 0:15:49.840
<v Speaker 2>this is an advertising business, no question, yea. What is

0:15:49.920 --> 0:15:52.960
<v Speaker 2>going to go toward developing new products like products that

0:15:52.960 --> 0:15:55.960
<v Speaker 2>we can wear, products that we walk around with, versus

0:15:56.080 --> 0:15:59.680
<v Speaker 2>making the ads more effective to sell us things, which

0:15:59.680 --> 0:16:00.600
<v Speaker 2>is met core business.

0:16:00.640 --> 0:16:03.160
<v Speaker 7>Yeah, it's a real quick We're making the distinction between hardware,

0:16:03.160 --> 0:16:05.840
<v Speaker 7>which is a consumer electronic one wears on their person,

0:16:06.200 --> 0:16:09.120
<v Speaker 7>and infrastructure, which is data status. And that's really important.

0:16:09.520 --> 0:16:13.680
<v Speaker 7>So right now, Meta AI is a generative AI function

0:16:13.760 --> 0:16:15.680
<v Speaker 7>that you can use through a standalone app as of

0:16:15.720 --> 0:16:16.120
<v Speaker 7>this week.

0:16:16.240 --> 0:16:18.040
<v Speaker 2>Yeah, that's brand now, or you can use it.

0:16:18.000 --> 0:16:20.320
<v Speaker 7>Through Facebook, WhatsApp, and Instagram. I use it a lot

0:16:20.360 --> 0:16:22.080
<v Speaker 7>through Instagram for whatever reason.

0:16:22.240 --> 0:16:24.160
<v Speaker 2>Yeah, more so than you'd use chat GPT.

0:16:24.280 --> 0:16:26.480
<v Speaker 7>But no, I use chat EPT more than any of

0:16:26.520 --> 0:16:28.000
<v Speaker 7>the others. But it's ane.

0:16:28.400 --> 0:16:30.080
<v Speaker 2>So before I just want to pause you just to

0:16:30.080 --> 0:16:33.320
<v Speaker 2>see so everybody understands, what are you using AI on

0:16:33.360 --> 0:16:35.320
<v Speaker 2>Instagram for that you're not using ONGP.

0:16:35.800 --> 0:16:37.920
<v Speaker 7>I find it analogous, right, because one of the strengths

0:16:37.960 --> 0:16:40.640
<v Speaker 7>of meta AI is you can say, meta AI, please

0:16:40.760 --> 0:16:44.600
<v Speaker 7>take this photograph of me and turn it into an

0:16:44.600 --> 0:16:47.560
<v Speaker 7>animated image where I am depicted amongst the team of

0:16:47.600 --> 0:16:49.640
<v Speaker 7>my favorite football team. Something like that, right, And it's

0:16:49.640 --> 0:16:52.280
<v Speaker 7>analogous with Instagram, but it does much of the same

0:16:52.320 --> 0:16:55.520
<v Speaker 7>things that chat GPT does. It answers questions up until

0:16:55.560 --> 0:16:57.640
<v Speaker 7>the date on which the data was trained. Now the

0:16:57.680 --> 0:17:01.120
<v Speaker 7>hardware component is that Meta doesn't make a smartphone. It

0:17:01.160 --> 0:17:04.280
<v Speaker 7>has dabbled in some other home devices, but the principal

0:17:04.320 --> 0:17:07.040
<v Speaker 7>way that you engage with the AI is through ray

0:17:07.119 --> 0:17:09.800
<v Speaker 7>ban metas, glasses you wear on your face that have

0:17:10.000 --> 0:17:13.879
<v Speaker 7>the computer electronics integrated with cameras and I use them

0:17:13.880 --> 0:17:16.280
<v Speaker 7>all the time. And you basically say hey, Meta, and

0:17:16.320 --> 0:17:19.320
<v Speaker 7>then it goes whoa, and then you ask it questions

0:17:19.359 --> 0:17:23.040
<v Speaker 7>and with audio it responds back. And this has been

0:17:23.040 --> 0:17:26.440
<v Speaker 7>a massive surprise to Meta. It started as a gimmick. Frankly,

0:17:26.880 --> 0:17:29.200
<v Speaker 7>and tying this to earnings, I think what Zucker saying

0:17:29.200 --> 0:17:31.320
<v Speaker 7>in the statement is hint, hint. I'm going to talk

0:17:31.320 --> 0:17:33.439
<v Speaker 7>a bit about this on the call because the sales

0:17:33.480 --> 0:17:35.800
<v Speaker 7>of that product have been better than expected. But they

0:17:35.840 --> 0:17:38.600
<v Speaker 7>also have to tell a story of well, what's your thing?

0:17:38.840 --> 0:17:40.679
<v Speaker 7>How are we going to interact with you in the future.

0:17:40.720 --> 0:17:43.760
<v Speaker 7>If people aren't using smartphone applications.

0:17:43.160 --> 0:17:45.440
<v Speaker 5>As much I mean as you have used them, I mean,

0:17:45.560 --> 0:17:48.480
<v Speaker 5>is it a product that could be mass adopted.

0:17:48.680 --> 0:17:51.560
<v Speaker 7>In your view, yes, in so far as the sales

0:17:51.560 --> 0:17:54.120
<v Speaker 7>have been surprising. They don't break out clear data, right,

0:17:54.160 --> 0:17:56.280
<v Speaker 7>they don't say, oh, well they might actually maybe they're

0:17:56.280 --> 0:17:58.840
<v Speaker 7>surprised uspect. They don't say, like, we have sold ten

0:17:58.960 --> 0:18:01.320
<v Speaker 7>million of these, and that would be helpful if they did.

0:18:01.400 --> 0:18:02.919
<v Speaker 5>But as you play around with it, are you like

0:18:02.960 --> 0:18:04.080
<v Speaker 5>I could see a.

0:18:04.280 --> 0:18:06.479
<v Speaker 7>Yes, but the sales, we know, the sales have invested

0:18:06.480 --> 0:18:09.239
<v Speaker 7>and expected. Now here's the investor Wall Street bit. For

0:18:09.280 --> 0:18:12.680
<v Speaker 7>a really long time, the unit that was responsible for

0:18:12.840 --> 0:18:16.680
<v Speaker 7>us as humans, our engagement with the first the metaverse

0:18:16.680 --> 0:18:20.160
<v Speaker 7>and our AI is Facebook Reality Labs. And for many

0:18:20.240 --> 0:18:22.800
<v Speaker 7>quarters it would lose billions of dollars and investors would say,

0:18:22.840 --> 0:18:25.480
<v Speaker 7>stop losing billions of dollars. And then they just stopped.

0:18:25.560 --> 0:18:28.040
<v Speaker 7>They started looking past it. And part of that was

0:18:28.119 --> 0:18:31.360
<v Speaker 7>that the hardware started getting out there and people could

0:18:31.440 --> 0:18:34.639
<v Speaker 7>see the distant future where we all wear these devices.

0:18:35.560 --> 0:18:37.159
<v Speaker 7>The metaverse is still a thing. I mean, if we

0:18:37.200 --> 0:18:39.159
<v Speaker 7>can go there, if you want. But at the end

0:18:39.200 --> 0:18:41.280
<v Speaker 7>of the day, it's a story of massive investment to

0:18:41.320 --> 0:18:44.840
<v Speaker 7>develop AI the software, and then catching up with the

0:18:44.840 --> 0:18:47.560
<v Speaker 7>company's self to say this is how we think all

0:18:47.600 --> 0:18:49.600
<v Speaker 7>of our billions of users around the world of our

0:18:49.720 --> 0:18:52.800
<v Speaker 7>apps will interact with that AI in the future.

0:18:53.160 --> 0:18:56.200
<v Speaker 2>Okay, so let's stick on that AI theme here on

0:18:56.240 --> 0:18:59.600
<v Speaker 2>the Let's say I'm an analyst. I want to know great,

0:19:00.119 --> 0:19:02.280
<v Speaker 2>well and good that you're spending this money. It's all

0:19:02.320 --> 0:19:04.119
<v Speaker 2>well and good that you've made these developments when it

0:19:04.160 --> 0:19:07.240
<v Speaker 2>comes to hardware. Let's get back to ads. How does

0:19:07.280 --> 0:19:09.480
<v Speaker 2>that make the ads better that are targeted ed on

0:19:09.520 --> 0:19:10.960
<v Speaker 2>Instagram when he's using AI.

0:19:11.359 --> 0:19:13.880
<v Speaker 7>So some of the some of the metrics.

0:19:13.960 --> 0:19:16.160
<v Speaker 2>Certainly it's more engaging. You're spending more time on the platform,

0:19:16.200 --> 0:19:17.040
<v Speaker 2>so that's a positive.

0:19:17.320 --> 0:19:21.280
<v Speaker 7>So people will look at metas mesas core data like

0:19:21.359 --> 0:19:25.040
<v Speaker 7>the daily active users and add impressions that gives us

0:19:25.040 --> 0:19:27.879
<v Speaker 7>a sense of how healthy and competitive that market is.

0:19:28.200 --> 0:19:30.440
<v Speaker 7>Listen out on the call. I would wager that Mark

0:19:30.480 --> 0:19:33.600
<v Speaker 7>Zuckerberg gives some different data to try and justify why

0:19:33.720 --> 0:19:37.240
<v Speaker 7>metas ads are better in a tough economic environment because

0:19:37.240 --> 0:19:39.920
<v Speaker 7>of the investments in AI. Go back to the earning statement,

0:19:40.480 --> 0:19:43.280
<v Speaker 7>we will invest the majority of capex into core business.

0:19:43.320 --> 0:19:45.280
<v Speaker 7>In other words, we're putting a lot into AI because

0:19:45.320 --> 0:19:46.880
<v Speaker 7>we think it will grow the value of our ads.

0:19:46.960 --> 0:19:48.040
<v Speaker 7>That's what I think will happen.

0:19:48.240 --> 0:19:49.560
<v Speaker 4>This is what I feel like. We talked with man

0:19:49.600 --> 0:19:50.679
<v Speaker 4>Deep about this.

0:19:50.720 --> 0:19:53.760
<v Speaker 5>What I do like, if you're going to spend money,

0:19:53.920 --> 0:19:55.600
<v Speaker 5>you're going to go to where you get the biggest

0:19:55.720 --> 0:19:56.640
<v Speaker 5>ROI right.

0:19:56.760 --> 0:19:58.800
<v Speaker 7>In terms of think of it as a sheer competition

0:19:58.880 --> 0:19:59.440
<v Speaker 7>for eyeballs.

0:20:00.400 --> 0:20:02.080
<v Speaker 5>Hey, two things we want to get to before you

0:20:02.160 --> 0:20:05.280
<v Speaker 5>have to run. Let's just talk Microsoft real quickly. I mean,

0:20:06.080 --> 0:20:08.040
<v Speaker 5>off the chart still up about six percent here.

0:20:08.160 --> 0:20:10.600
<v Speaker 7>So analogous with Meta and Google is that if your

0:20:10.640 --> 0:20:13.960
<v Speaker 7>core business performs and you are committing to spending on AI,

0:20:14.119 --> 0:20:17.000
<v Speaker 7>investors will reward you. And that's very much the story here.

0:20:17.520 --> 0:20:20.400
<v Speaker 7>Thirty three percent top line growth for cloud and that's

0:20:20.400 --> 0:20:23.359
<v Speaker 7>what it comes down to, right Yep. I always have

0:20:23.440 --> 0:20:26.280
<v Speaker 7>this line. Microsoft, which I've had a relationship with since

0:20:26.320 --> 0:20:27.959
<v Speaker 7>I was a child and I learned to use a computer,

0:20:28.480 --> 0:20:30.600
<v Speaker 7>was always good at getting people to pay for software

0:20:30.600 --> 0:20:33.440
<v Speaker 7>that others will give away for free. That's a true story.

0:20:33.880 --> 0:20:37.160
<v Speaker 7>But they're showing that their core business is cloud computing

0:20:37.160 --> 0:20:40.280
<v Speaker 7>and Azure whether they the market number two again, it's

0:20:40.280 --> 0:20:43.880
<v Speaker 7>the same as Meta. Does your core business justify your

0:20:44.000 --> 0:20:47.679
<v Speaker 7>rights to spend on AI development through hardware or infrastructure

0:20:47.760 --> 0:20:50.840
<v Speaker 7>data centers. The Microsoft numbers tell that story very clearly.

0:20:50.880 --> 0:20:53.920
<v Speaker 5>It did Mandy say that, actually, it's showing the monetization

0:20:54.000 --> 0:20:56.320
<v Speaker 5>of AI that I think in that thirty three percent,

0:20:56.400 --> 0:20:58.440
<v Speaker 5>almost half of it are close to half of it

0:20:58.680 --> 0:21:02.800
<v Speaker 5>was the result of yeah, red.

0:21:02.680 --> 0:21:05.920
<v Speaker 7>Flip, and the criticism was they released Microsoft co Pilot,

0:21:06.119 --> 0:21:08.119
<v Speaker 7>and many people thought that was prematurely. If you're in

0:21:08.200 --> 0:21:13.040
<v Speaker 7>everyday tech worker, what am I going to use this for? Nonetheless,

0:21:13.160 --> 0:21:15.560
<v Speaker 7>the numbers show that people are paying for it, and

0:21:15.600 --> 0:21:16.440
<v Speaker 7>that's impressive.

0:21:16.680 --> 0:21:19.920
<v Speaker 2>Hey, Ed, we're going to hear from Microsoft on the call.

0:21:20.119 --> 0:21:23.800
<v Speaker 2>We'll get some guidance there obviously, that will help people

0:21:24.000 --> 0:21:25.920
<v Speaker 2>get informed about how the company is thinking about the

0:21:25.920 --> 0:21:29.600
<v Speaker 2>current quarter, in the future, Apple tomorrow, Oh gosh.

0:21:29.640 --> 0:21:29.880
<v Speaker 7>Yeah.

0:21:29.920 --> 0:21:32.879
<v Speaker 2>Mark German said, I don't care about the numbers for

0:21:32.960 --> 0:21:35.080
<v Speaker 2>the most recent quarter. I just want to hear the

0:21:35.160 --> 0:21:37.320
<v Speaker 2>Q and A. I want to hear about tariffs. I

0:21:37.320 --> 0:21:39.440
<v Speaker 2>want to hear about the supply chain. I want to

0:21:39.440 --> 0:21:42.160
<v Speaker 2>hear Tim Cook's comments there you agree, Yeah.

0:21:42.280 --> 0:21:45.600
<v Speaker 7>Tim Cook famously says periodically I'm not an economist, but

0:21:45.800 --> 0:21:47.120
<v Speaker 7>and then we'll give us something about.

0:21:47.080 --> 0:21:49.000
<v Speaker 2>He's not an economist, but he's a supply chain expert.

0:21:49.320 --> 0:21:52.479
<v Speaker 7>Yeah, like story is about totally the hardware companies can

0:21:52.640 --> 0:21:56.040
<v Speaker 7>think people that make tangible physical stuff. They're built from

0:21:56.080 --> 0:21:58.240
<v Speaker 7>components that move from A to B all over the world,

0:21:58.240 --> 0:22:00.320
<v Speaker 7>and there are cost indications. And there is no better

0:22:00.359 --> 0:22:03.560
<v Speaker 7>microcosm of what's happening right now in global trade than Apple.

0:22:03.600 --> 0:22:06.479
<v Speaker 7>And I get what German saying, but remember that Apple

0:22:06.560 --> 0:22:09.080
<v Speaker 7>is the master of managing the bottom line. So if

0:22:09.119 --> 0:22:11.960
<v Speaker 7>you are a value long term whatever you want to

0:22:12.000 --> 0:22:14.639
<v Speaker 7>call it, people do pay attention to that because Apple

0:22:14.760 --> 0:22:16.440
<v Speaker 7>is brilliant at boosting profit.

0:22:16.800 --> 0:22:19.800
<v Speaker 2>You know, Apple has Markerman has reported over and over

0:22:19.800 --> 0:22:22.280
<v Speaker 2>again that Apple has struggled with AI, and we see

0:22:22.320 --> 0:22:24.720
<v Speaker 2>that with what has happened with Siri. Do you think

0:22:24.720 --> 0:22:27.560
<v Speaker 2>they should buy or would buy? Oh my goodness, standalone AI?

0:22:27.560 --> 0:22:29.600
<v Speaker 7>Come for those listening are radio only. I was smirking

0:22:29.640 --> 0:22:32.199
<v Speaker 7>and nodding, going yeah, yeah, I mean Siri, you know

0:22:32.280 --> 0:22:33.359
<v Speaker 7>has been a bit of a flop.

0:22:33.520 --> 0:22:36.719
<v Speaker 2>Oh say a bit of a flop, a huge flop.

0:22:36.880 --> 0:22:39.760
<v Speaker 7>Yeah, And you know I have covered some of his

0:22:39.800 --> 0:22:42.240
<v Speaker 7>stories there. I lose track, but I think that there

0:22:42.320 --> 0:22:46.560
<v Speaker 7>was some discussion by Alphabet about working with Apple and

0:22:46.600 --> 0:22:51.160
<v Speaker 7>Gemini their model going forward, Apple's looking at third parties

0:22:51.240 --> 0:22:54.640
<v Speaker 7>to provide the underlying model that powers all of this.

0:22:55.600 --> 0:22:58.440
<v Speaker 7>And as Mark has reported, the consequence of the poor

0:22:58.520 --> 0:23:01.680
<v Speaker 7>rollout is they've now restructured that company at the top,

0:23:02.040 --> 0:23:05.639
<v Speaker 7>leadership changes, organizational changes to get back on track. I

0:23:05.680 --> 0:23:08.760
<v Speaker 7>still love my iPhone, but I do not use Siri ever.

0:23:09.880 --> 0:23:10.440
<v Speaker 2>Yeah.

0:23:10.520 --> 0:23:10.720
<v Speaker 1>Same.

0:23:10.840 --> 0:23:13.760
<v Speaker 5>Hey, before you go, we did talk Apple and Trump

0:23:13.840 --> 0:23:16.639
<v Speaker 5>and tariffs. You've got a scoop when it comes to

0:23:16.840 --> 0:23:17.400
<v Speaker 5>Vian and.

0:23:17.280 --> 0:23:18.040
<v Speaker 4>What they've been up to.

0:23:18.359 --> 0:23:21.600
<v Speaker 7>Yes, So, prior to the US election in November, Rivian

0:23:21.680 --> 0:23:25.399
<v Speaker 7>arranged with a Chinese battery supply called Goshen to move

0:23:25.640 --> 0:23:30.040
<v Speaker 7>a supply of LFP batteries from outside of the United

0:23:30.080 --> 0:23:33.080
<v Speaker 7>States into the United States. And they paid for it upfront,

0:23:33.320 --> 0:23:35.919
<v Speaker 7>which is unusual for an automaker to do. You know,

0:23:36.480 --> 0:23:38.000
<v Speaker 7>you don't sort of say okay, I'm not going to

0:23:38.080 --> 0:23:39.760
<v Speaker 7>use these for a while, but I'll pay for them anyway.

0:23:39.960 --> 0:23:42.320
<v Speaker 7>And it did that to have a strategic stockpile as

0:23:42.359 --> 0:23:45.920
<v Speaker 7>a hedge, an insurance against the election. Then more recently

0:23:45.960 --> 0:23:49.760
<v Speaker 7>I found out Samsung SDI it's Korean supplier. They said, Samsung,

0:23:50.000 --> 0:23:52.439
<v Speaker 7>before these tariffs hit, we need you to move a

0:23:52.560 --> 0:23:55.679
<v Speaker 7>very large inventory of battery sales from Korea to the US.

0:23:55.920 --> 0:23:59.679
<v Speaker 7>Samsung did so they have this hedge against potential tariff impact.

0:23:59.720 --> 0:24:02.760
<v Speaker 7>But it's it's not really about money. It's anxiety that

0:24:02.800 --> 0:24:05.960
<v Speaker 7>at borders goods get stopped and then you're left short.

0:24:06.200 --> 0:24:07.520
<v Speaker 5>This is why when we look through some of the

0:24:07.520 --> 0:24:11.520
<v Speaker 5>economic numbers, kind of the pull through in advance of tariffs,

0:24:12.119 --> 0:24:13.800
<v Speaker 5>you got to keep that in mind. Note in terms

0:24:13.840 --> 0:24:14.920
<v Speaker 5>of economic activity.

0:24:14.960 --> 0:24:16.600
<v Speaker 2>Hey, yeah, real quick, we have it's been a while

0:24:16.640 --> 0:24:18.199
<v Speaker 2>since we've gotten to talk to you and since you've

0:24:18.200 --> 0:24:21.399
<v Speaker 2>been here in New York. On Rivian on everything happening

0:24:21.440 --> 0:24:25.520
<v Speaker 2>in the administration. Given Elon Musk's close proximity to the president,

0:24:25.560 --> 0:24:30.159
<v Speaker 2>has Rivian been a net gainer or a net loser?

0:24:30.680 --> 0:24:31.400
<v Speaker 2>Given in the.

0:24:31.359 --> 0:24:33.840
<v Speaker 7>Story we just reported at and read the details, I

0:24:33.880 --> 0:24:35.720
<v Speaker 7>put a lot of detail in the report, they made

0:24:35.760 --> 0:24:39.879
<v Speaker 7>a shrewd move. The question that every AUTO CEO, I

0:24:40.040 --> 0:24:43.120
<v Speaker 7>know this, every CEO is asking is is the net

0:24:43.160 --> 0:24:46.240
<v Speaker 7>result that Elon must secure something that is specifically good

0:24:46.280 --> 0:24:50.159
<v Speaker 7>and beneficial to Tesla, a carved out exemption, or in

0:24:50.240 --> 0:24:52.760
<v Speaker 7>so doing, does Elon must get an exemption for Tesla

0:24:52.880 --> 0:24:55.920
<v Speaker 7>or some kind of benefit that has a wider positive

0:24:55.960 --> 0:24:58.679
<v Speaker 7>impact on those that make evs, and I think the

0:24:58.760 --> 0:25:00.440
<v Speaker 7>latter is where people are hanging their hat.

0:25:00.560 --> 0:25:02.920
<v Speaker 5>Yeah, kind of a fascinating da where I think everybody's speculating.

0:25:02.960 --> 0:25:04.600
<v Speaker 5>It did feel like a little bit of the present

0:25:04.680 --> 0:25:08.200
<v Speaker 5>saying not necessarily goodbye to Elon, but kind of him

0:25:08.200 --> 0:25:10.440
<v Speaker 5>wrapping up certainly his tenure.

0:25:11.080 --> 0:25:13.400
<v Speaker 2>Which data will reminded us. We all knew was coming,

0:25:13.480 --> 0:25:15.560
<v Speaker 2>given his status as a special government employee.

0:25:15.600 --> 0:25:16.360
<v Speaker 4>Exactly right.

0:25:16.400 --> 0:25:17.560
<v Speaker 2>It was just a surprise time.

0:25:17.760 --> 0:25:19.000
<v Speaker 4>It was just a matter of time.

0:25:19.880 --> 0:25:22.840
<v Speaker 5>Yeah, pretty wild and tough questions top of mind in

0:25:22.880 --> 0:25:24.480
<v Speaker 5>terms of the earnings that we've seen this dump.

0:25:24.680 --> 0:25:25.440
<v Speaker 2>Oh yeah today.

0:25:25.440 --> 0:25:28.479
<v Speaker 7>You know, like Alphabet, Google, they don't give guidance, they

0:25:28.480 --> 0:25:30.560
<v Speaker 7>don't give detail, they don't tell you about anything in

0:25:30.560 --> 0:25:33.359
<v Speaker 7>the economy. I would think that Meta and Microsoft would

0:25:33.359 --> 0:25:36.680
<v Speaker 7>go a lot further, specifically like industries, geographies, and we

0:25:36.720 --> 0:25:38.840
<v Speaker 7>would learn a lot about what they see in the world,

0:25:39.080 --> 0:25:41.080
<v Speaker 7>and so not just Apple. Those other names will give

0:25:41.119 --> 0:25:44.240
<v Speaker 7>us value, I think in the economic context.

0:25:44.320 --> 0:25:46.639
<v Speaker 5>All right, good stuff, as always, Ed Ludlow, thank you

0:25:46.680 --> 0:25:49.040
<v Speaker 5>so much, so appreciated. Ed Ludlo, of course, his co

0:25:49.080 --> 0:25:52.879
<v Speaker 5>host of Bloomberg Technology catch him and Caroline Hyde. They

0:25:52.880 --> 0:25:56.200
<v Speaker 5>are on Bloomberg Television at eleven am Wall Street time

0:25:56.280 --> 0:25:59.399
<v Speaker 5>Monday through Friday. So am I assuming this coverage will

0:25:59.440 --> 0:26:00.520
<v Speaker 5>continue into tomorrow.

0:26:00.640 --> 0:26:02.760
<v Speaker 2>In the meantime, I do want to bring in James Chockmack.

0:26:02.760 --> 0:26:05.760
<v Speaker 2>He's partner and chief investment officer at Clockwise Capital. He

0:26:05.840 --> 0:26:08.600
<v Speaker 2>joins us from Miami. He's got the Clockwise Core Equity

0:26:08.600 --> 0:26:11.600
<v Speaker 2>and Innovation ETF. It's down about eight percent so far

0:26:11.680 --> 0:26:15.080
<v Speaker 2>this year. It does include Apple, Microsoft, Amazon, and Nvidia

0:26:15.440 --> 0:26:18.560
<v Speaker 2>among its top holdings. And that's exactly James where I

0:26:18.600 --> 0:26:21.680
<v Speaker 2>want to start. Given what we just heard from Microsoft.

0:26:21.840 --> 0:26:24.159
<v Speaker 2>We got the numbers there from ed investors happy in

0:26:24.200 --> 0:26:27.280
<v Speaker 2>the after hours, the company will give guidance on that call.

0:26:27.560 --> 0:26:28.359
<v Speaker 2>What are your thoughts?

0:26:30.359 --> 0:26:32.480
<v Speaker 1>Yeah, I think from a big pictures standpoint, you know,

0:26:32.600 --> 0:26:35.440
<v Speaker 1>we went into tonight kind of ranking the mega cap

0:26:35.480 --> 0:26:39.320
<v Speaker 1>earnings remaining as Microsoft as the least risky, moving to

0:26:39.400 --> 0:26:42.680
<v Speaker 1>Meta and then finally to Amazon is the riskiest of

0:26:42.720 --> 0:26:45.720
<v Speaker 1>the three, and I think so far as playing out

0:26:45.760 --> 0:26:49.399
<v Speaker 1>as such, Microsoft, you know, the big number there that

0:26:49.440 --> 0:26:51.199
<v Speaker 1>the Bogie wing he wanted to see was north of

0:26:51.240 --> 0:26:55.960
<v Speaker 1>thirty percent Azure revenue. You know, we were looking like

0:26:56.840 --> 0:27:00.159
<v Speaker 1>the momentum continues to be there. I think, you know,

0:27:00.200 --> 0:27:03.560
<v Speaker 1>when you look at the megacap earnings megacap companies, you know,

0:27:03.840 --> 0:27:05.840
<v Speaker 1>really what we try to focus on, which ones are

0:27:05.840 --> 0:27:09.120
<v Speaker 1>the most immune to tariffs, which ones have the most resiliency,

0:27:09.520 --> 0:27:14.200
<v Speaker 1>and which ones have evaluation that supports some level of support.

0:27:15.240 --> 0:27:19.040
<v Speaker 1>So I think microscot underscores all three of those. And

0:27:19.920 --> 0:27:22.159
<v Speaker 1>you know, we liked what we saw, and you know,

0:27:22.280 --> 0:27:27.840
<v Speaker 1>Meta that was a you know, not the best of outlooks,

0:27:27.880 --> 0:27:32.719
<v Speaker 1>but expectations had come down substantially, particularly following SNAPS results

0:27:32.800 --> 0:27:35.000
<v Speaker 1>last night. So the fact that they're even giving an

0:27:35.000 --> 0:27:39.240
<v Speaker 1>outlook isn't that positive? And that one has come in

0:27:39.280 --> 0:27:41.960
<v Speaker 1>a lot from evaluation standpoint. So I think.

0:27:42.720 --> 0:27:45.320
<v Speaker 2>Standards like listen to like the fact that they even

0:27:45.359 --> 0:27:48.720
<v Speaker 2>give an outlook, isn't that positive. That's the environment we're in.

0:27:48.840 --> 0:27:50.440
<v Speaker 4>This is what we're trying to get our head around.

0:27:50.480 --> 0:27:53.600
<v Speaker 5>I mean, James, I'm looking at shares of Microsoft still

0:27:53.640 --> 0:27:56.600
<v Speaker 5>up about six point two percent. If I look at Meta,

0:27:56.680 --> 0:27:59.760
<v Speaker 5>it's up just shy of six percent. And I pulled

0:27:59.800 --> 0:28:02.080
<v Speaker 5>up Amazon, which in twenty four hours we're going to

0:28:02.080 --> 0:28:04.960
<v Speaker 5>be all over Amazon's earnings. It's up about two point

0:28:05.040 --> 0:28:06.840
<v Speaker 5>eight percent here in the aftermarket.

0:28:06.880 --> 0:28:09.000
<v Speaker 4>But I'm trying to get my head around what these

0:28:09.000 --> 0:28:09.800
<v Speaker 4>companies are.

0:28:09.680 --> 0:28:12.679
<v Speaker 5>Saying and doing versus kind of it feels like so

0:28:12.840 --> 0:28:17.879
<v Speaker 5>much uncertainty in the rest of the you know, public universe,

0:28:18.000 --> 0:28:20.840
<v Speaker 5>or so much uncertainty our companies not giving an outlook

0:28:20.880 --> 0:28:23.960
<v Speaker 5>or companies giving two outlooks. So do we set these

0:28:23.960 --> 0:28:27.400
<v Speaker 5>companies apart or does this say something more strongly about

0:28:27.640 --> 0:28:30.280
<v Speaker 5>what's going on in the US economy and the global economy.

0:28:32.119 --> 0:28:35.000
<v Speaker 1>Yeah, we're not going to be too quick to judge,

0:28:35.080 --> 0:28:37.160
<v Speaker 1>you know, how these companies are doing over the very

0:28:37.200 --> 0:28:41.160
<v Speaker 1>short term about the broader macro implications. We still see

0:28:41.280 --> 0:28:43.920
<v Speaker 1>US as at a fifty to fifty market at best.

0:28:44.360 --> 0:28:47.239
<v Speaker 1>You know, yes, the results have been largely coming in

0:28:48.120 --> 0:28:51.360
<v Speaker 1>on par maybe slightly better than expectations, but you know,

0:28:51.440 --> 0:28:53.720
<v Speaker 1>we're not out of the woods by any means. You know,

0:28:53.800 --> 0:29:00.920
<v Speaker 1>you still have reinflation risk, recession risk. The behavioral changes

0:29:00.960 --> 0:29:03.760
<v Speaker 1>haven't even really hit the consumer yet. Yeah, that from

0:29:03.800 --> 0:29:07.800
<v Speaker 1>VISAS results this morning. So you know, you're seeing some

0:29:08.720 --> 0:29:12.400
<v Speaker 1>repositioning from a business standpoint. The businesses adapt, try to

0:29:12.440 --> 0:29:15.440
<v Speaker 1>adapt as best as possible, but it hasn't hit the consumer.

0:29:15.520 --> 0:29:17.840
<v Speaker 1>There's a lot of unknowns. The only thing I'd say

0:29:17.880 --> 0:29:20.920
<v Speaker 1>that isn't net positive is that you've been seeing the

0:29:22.080 --> 0:29:26.760
<v Speaker 1>FOMC members start to posture their rhetoric to a more

0:29:26.840 --> 0:29:32.080
<v Speaker 1>dubbish posture as we have the main meeting coming up.

0:29:32.520 --> 0:29:35.360
<v Speaker 1>So that could help provide some level of support to

0:29:35.400 --> 0:29:38.160
<v Speaker 1>the broader market, but it doesn't help in any way,

0:29:38.160 --> 0:29:41.360
<v Speaker 1>shape or form provide that much incremental confidence as it

0:29:41.400 --> 0:29:44.160
<v Speaker 1>relates to the earnings outlook for the balance of the year.

0:29:44.320 --> 0:29:45.920
<v Speaker 2>James, one of the reasons we like talking to you

0:29:46.080 --> 0:29:48.720
<v Speaker 2>is not just because you are an analyst or have

0:29:48.760 --> 0:29:52.000
<v Speaker 2>an analyst background covering all of these companies, but also

0:29:52.000 --> 0:29:54.239
<v Speaker 2>because you put your money where your mouth is. With

0:29:54.320 --> 0:29:59.479
<v Speaker 2>the portfolio management of the ETF the clockwise core equity

0:29:59.480 --> 0:30:03.800
<v Speaker 2>and innovation, Apple's your top holding. Dollar General is your

0:30:03.800 --> 0:30:07.520
<v Speaker 2>second biggest holding. Explain that are you essentially trying to

0:30:07.520 --> 0:30:10.960
<v Speaker 2>grab every type of consumer out there. You've got the

0:30:11.000 --> 0:30:13.480
<v Speaker 2>high end consumer with Apple and then you've got everybody

0:30:13.520 --> 0:30:14.360
<v Speaker 2>at Dollar General.

0:30:16.120 --> 0:30:17.880
<v Speaker 1>Well, the way we look at it is, you know,

0:30:17.960 --> 0:30:22.640
<v Speaker 1>a periods of maximum uncertainty require maximum adaptability. So what

0:30:22.640 --> 0:30:24.840
<v Speaker 1>we're trying to do is in a fifty to fifty

0:30:24.880 --> 0:30:27.400
<v Speaker 1>market play things down the middle. But that means is

0:30:27.400 --> 0:30:30.640
<v Speaker 1>we're taking a Barbelle approach where for every dollar of

0:30:30.760 --> 0:30:33.880
<v Speaker 1>beta of higher beta, you know, we're adding a dollar

0:30:34.000 --> 0:30:37.840
<v Speaker 1>of much lower beta. And that's where the Apple and

0:30:38.000 --> 0:30:40.680
<v Speaker 1>Dollar General kind of equal weightings come into play. But

0:30:41.000 --> 0:30:44.480
<v Speaker 1>a more extreme example that I'd point out is, you know,

0:30:44.840 --> 0:30:48.440
<v Speaker 1>we have the equal weight with micro strategy or Strategy

0:30:48.680 --> 0:30:52.520
<v Speaker 1>now as we do with Dollar General. So I wouldn't

0:30:52.560 --> 0:30:54.920
<v Speaker 1>read that much into Apple. I mean that has something

0:30:55.000 --> 0:30:56.480
<v Speaker 1>to do with the fact that it's such a big

0:30:56.520 --> 0:30:58.920
<v Speaker 1>weight in the index. But I think micro strategy is

0:30:58.920 --> 0:31:04.400
<v Speaker 1>a better example of you know, how we're how polarized.

0:31:04.400 --> 0:31:06.120
<v Speaker 1>You know, the bar bell is that we're playing.

0:31:06.240 --> 0:31:09.280
<v Speaker 2>Wish to remind everybody is a levered play on bitcoin.

0:31:10.960 --> 0:31:13.680
<v Speaker 1>Yes, I mean I we think that crypto single handle.

0:31:13.760 --> 0:31:17.000
<v Speaker 1>It's the number one asset class that I have confidence

0:31:17.040 --> 0:31:19.480
<v Speaker 1>and for twenty twenty five, I think it's Bitcoin is

0:31:19.480 --> 0:31:21.960
<v Speaker 1>going to be the single largest contributor to returns in

0:31:22.000 --> 0:31:25.080
<v Speaker 1>twenty twenty five. I can't say that the same about

0:31:25.120 --> 0:31:25.960
<v Speaker 1>any other sector.

0:31:26.360 --> 0:31:29.640
<v Speaker 4>Is partial to really why.

0:31:29.880 --> 0:31:36.080
<v Speaker 1>Yes, institutional adoption, building awareness, there's going to be crypto

0:31:36.120 --> 0:31:42.280
<v Speaker 1>related services. You had the fed, you know, remove barriers

0:31:42.320 --> 0:31:45.600
<v Speaker 1>as to what banks can do as it relates to crypto.

0:31:46.400 --> 0:31:50.240
<v Speaker 1>So I think that as the regulations come off, awareness builds,

0:31:50.320 --> 0:31:54.760
<v Speaker 1>institutions build. You know, Black Croc says that it should

0:31:54.760 --> 0:31:58.520
<v Speaker 1>be two percent of portfolios, you know, across the board.

0:31:59.080 --> 0:32:01.040
<v Speaker 1>You know, we completely we agree with that. All our

0:32:01.080 --> 0:32:05.960
<v Speaker 1>client portfolios have at least a two percent position in bitcoin.

0:32:06.440 --> 0:32:09.280
<v Speaker 1>And you know, as we look to the balance of

0:32:09.280 --> 0:32:12.280
<v Speaker 1>the year, and we just don't have confidence in really

0:32:12.360 --> 0:32:15.560
<v Speaker 1>any other sector to the same degree. You know, we're

0:32:15.600 --> 0:32:19.560
<v Speaker 1>we're we like tech, the cheaper tech, We like commodities,

0:32:19.960 --> 0:32:22.880
<v Speaker 1>you know, we like utilities, and we like staples. You know,

0:32:22.960 --> 0:32:28.480
<v Speaker 1>where the valuation makes sense. But crypto no hesitation and

0:32:28.800 --> 0:32:30.120
<v Speaker 1>its full steam ahead.

0:32:30.520 --> 0:32:31.080
<v Speaker 4>Interesting.

0:32:31.200 --> 0:32:34.360
<v Speaker 5>So so it sounds like you have been putting money

0:32:34.440 --> 0:32:37.840
<v Speaker 5>to work over the last month or two amid the volatility.

0:32:37.960 --> 0:32:41.920
<v Speaker 4>Yes, yes, and then yeah.

0:32:41.800 --> 0:32:45.680
<v Speaker 1>Yeah, yeah, we're putting money to work where when and

0:32:45.720 --> 0:32:48.280
<v Speaker 1>where we can. You know, we've been selling a lot

0:32:48.320 --> 0:32:52.200
<v Speaker 1>of the megacap names into any opportunity we have into strength,

0:32:52.280 --> 0:32:54.040
<v Speaker 1>you know, just to give you a sense. You know,

0:32:54.080 --> 0:32:56.400
<v Speaker 1>the top ten weights of the Nasdaq are about fifty

0:32:56.400 --> 0:32:59.920
<v Speaker 1>percent of the total index. We're about forty percent of that.

0:33:00.080 --> 0:33:03.960
<v Speaker 1>You know, we're at about twenty percent, so you know,

0:33:04.080 --> 0:33:08.400
<v Speaker 1>we are under exposed on megacap, so selling it to strength,

0:33:09.040 --> 0:33:12.080
<v Speaker 1>utilizing that cash to diversify into more value names like

0:33:12.120 --> 0:33:15.760
<v Speaker 1>Dollar General, which you pointed out to Tim and and

0:33:16.080 --> 0:33:19.240
<v Speaker 1>uh and keeping the pressure on on the crypto front

0:33:19.840 --> 0:33:23.920
<v Speaker 1>as as best as possible on any pullback that we see.

0:33:24.400 --> 0:33:27.400
<v Speaker 5>But you did like I'm just looking. You've owned micro strategy,

0:33:27.400 --> 0:33:28.520
<v Speaker 5>Are you out completely?

0:33:30.240 --> 0:33:33.520
<v Speaker 1>Oh no, we've been grossing it up every single time

0:33:33.560 --> 0:33:34.120
<v Speaker 1>it pulls back.

0:33:34.160 --> 0:33:35.840
<v Speaker 4>Oh I'm sorry, so that one you've been moving it?

0:33:35.960 --> 0:33:38.960
<v Speaker 1>Yeah, yeah, yeah, it's the it's the megacap names, you know,

0:33:39.000 --> 0:33:42.080
<v Speaker 1>the Microsoft's, Amazon's that as you know, those are all

0:33:42.440 --> 0:33:46.480
<v Speaker 1>significantly underweight relative to the index. And we think it's

0:33:46.520 --> 0:33:48.920
<v Speaker 1>proven to stay there until we have better clarity on

0:33:49.400 --> 0:33:53.640
<v Speaker 1>business spending and the consumer. We just don't know exactly

0:33:53.680 --> 0:33:55.960
<v Speaker 1>where we Amazon's going to be a big tail tomorrow.

0:33:56.160 --> 0:33:59.480
<v Speaker 1>You know, you can argue that the cloud services Google

0:33:59.600 --> 0:34:02.280
<v Speaker 1>was better than expected, Microsoft better than expected, So business

0:34:02.280 --> 0:34:06.400
<v Speaker 1>spending is there, but it certainly you're not seeing you know,

0:34:06.640 --> 0:34:09.520
<v Speaker 1>Sincis results would tell you a completely different story last night.

0:34:09.640 --> 0:34:12.000
<v Speaker 1>So so much uncertainty.

0:34:12.080 --> 0:34:14.480
<v Speaker 5>So just going back meta reporting today, it's up about

0:34:14.480 --> 0:34:17.480
<v Speaker 5>six percent here in the after market. We just talked

0:34:17.480 --> 0:34:21.759
<v Speaker 5>about it. So revenue beating estimates on advertising stability. I'm

0:34:21.800 --> 0:34:24.680
<v Speaker 5>looking at Microsoft up about six percent here in the

0:34:24.719 --> 0:34:30.120
<v Speaker 5>after hours again, third quarter revenue topping estimates. Amazon has

0:34:30.200 --> 0:34:33.120
<v Speaker 5>moved up ahead of its earnings tomorrow after the close,

0:34:33.200 --> 0:34:36.719
<v Speaker 5>up about three and a half percent. Qual calms down

0:34:36.760 --> 0:34:40.680
<v Speaker 5>about nine percent here in the after market following its numbers.

0:34:40.680 --> 0:34:42.880
<v Speaker 5>It gave a soft revenue forecast in the face of

0:34:43.840 --> 0:34:47.279
<v Speaker 5>all the trade turmoils. So we're seeing anything here that's

0:34:47.280 --> 0:34:49.520
<v Speaker 5>of interest or this is again not the way you

0:34:49.520 --> 0:34:50.520
<v Speaker 5>want to play it right now?

0:34:52.120 --> 0:34:57.560
<v Speaker 1>Yeah, I mean we we increase our Microsoft position the

0:34:57.640 --> 0:35:02.279
<v Speaker 1>moment the numbers came out, we haven't we you know,

0:35:02.600 --> 0:35:05.720
<v Speaker 1>we derisked it into the quarter. Now that the numbers

0:35:05.760 --> 0:35:08.240
<v Speaker 1>are out, we got we've got it up a couple percent.

0:35:09.239 --> 0:35:12.399
<v Speaker 2>But does that story change potentially when we hear from

0:35:12.400 --> 0:35:14.239
<v Speaker 2>the company on its earnings call and they talk about

0:35:14.239 --> 0:35:16.680
<v Speaker 2>guidance or are you confidence and confident and guidance.

0:35:17.760 --> 0:35:21.040
<v Speaker 1>Microsoft was the only one of that group that you know,

0:35:21.120 --> 0:35:24.000
<v Speaker 1>we liked into the quarter, which is why it was

0:35:24.120 --> 0:35:27.640
<v Speaker 1>weighted slightly more than both Meta and Amazon, but we

0:35:27.760 --> 0:35:30.400
<v Speaker 1>decided to take it back to where it was prior

0:35:30.440 --> 0:35:33.640
<v Speaker 1>to the quarter, just because we believe it's the most

0:35:33.680 --> 0:35:39.440
<v Speaker 1>insulated from all of the noise geopolitical and otherwise. While

0:35:39.520 --> 0:35:43.440
<v Speaker 1>Meta and Amazon, you know, we would wait for the

0:35:43.480 --> 0:35:45.719
<v Speaker 1>exact commentary on the call to be able to make

0:35:45.800 --> 0:35:46.440
<v Speaker 1>that decision.

0:35:46.440 --> 0:35:49.200
<v Speaker 2>Okay, hey, how do you just a big picture? How

0:35:49.200 --> 0:35:50.560
<v Speaker 2>do you think the economy is doing, how do you

0:35:50.560 --> 0:35:52.080
<v Speaker 2>think the consumer is doing? How do you think they're

0:35:52.080 --> 0:35:54.719
<v Speaker 2>going to weather these tariffs?

0:35:56.440 --> 0:35:58.640
<v Speaker 1>I don't know. I mean I can give you anecdotes,

0:35:58.800 --> 0:36:00.560
<v Speaker 1>you know, like I went to you know, get my

0:36:00.600 --> 0:36:03.480
<v Speaker 1>haircut yesterday and my barber was telling me that business

0:36:03.480 --> 0:36:04.919
<v Speaker 1>has been slowing dramatically.

0:36:05.120 --> 0:36:05.319
<v Speaker 3>You know.

0:36:06.560 --> 0:36:08.759
<v Speaker 1>You know, you hear from companies like Visa and they'll

0:36:08.760 --> 0:36:12.839
<v Speaker 1>tell you otherwise. But companies like Amazon come out and say,

0:36:12.920 --> 0:36:15.359
<v Speaker 1>you know, Amazon Andy Jassical was saying that, you know,

0:36:15.400 --> 0:36:21.200
<v Speaker 1>you're seeing trade down of purchases to lower ticket items.

0:36:21.200 --> 0:36:24.359
<v Speaker 1>So it's a mixed message. And the thing about it

0:36:24.400 --> 0:36:26.640
<v Speaker 1>is that we're really not going to get a sense

0:36:26.680 --> 0:36:29.799
<v Speaker 1>of from the from an economic data standpoint, nor from

0:36:29.840 --> 0:36:34.400
<v Speaker 1>a company standpoint. On the exact uh repercussions on the

0:36:34.719 --> 0:36:38.719
<v Speaker 1>on the consumer for another thirty to forty five days. So,

0:36:39.120 --> 0:36:41.439
<v Speaker 1>you know, it's a lot of question marks out there.

0:36:41.480 --> 0:36:43.960
<v Speaker 1>But I think that the bottom hasn't fallen out of

0:36:44.000 --> 0:36:47.279
<v Speaker 1>the consumer yet. The behavior has kept up, but how

0:36:47.320 --> 0:36:49.560
<v Speaker 1>long will it last? You know, we don't want to

0:36:49.600 --> 0:36:53.120
<v Speaker 1>wait around to see and find out. We rather, you know,

0:36:53.360 --> 0:36:56.680
<v Speaker 1>just be proactive and be balanced in the areas that

0:36:56.719 --> 0:36:59.520
<v Speaker 1>we have conviction in with the value areas that we

0:36:59.560 --> 0:37:04.879
<v Speaker 1>think can withstand a downturn, and increase hedges where we can,

0:37:04.960 --> 0:37:08.960
<v Speaker 1>because right now it's impossible to say or lean in

0:37:08.960 --> 0:37:14.080
<v Speaker 1>in either direction. We're just getting incremental data points. You know,

0:37:14.280 --> 0:37:18.360
<v Speaker 1>they'll build up to a full, more formulated story in

0:37:18.400 --> 0:37:19.279
<v Speaker 1>the next couple of weeks.

0:37:19.360 --> 0:37:21.359
<v Speaker 5>Yeah, it's fascinating Bloomberg and I know other people talk

0:37:21.400 --> 0:37:24.560
<v Speaker 5>about it, but it's something like the beauty salon index,

0:37:24.640 --> 0:37:26.480
<v Speaker 5>but basically there Atwater.

0:37:26.160 --> 0:37:28.480
<v Speaker 2>Sent me a message on Twitter about this today on

0:37:28.840 --> 0:37:31.120
<v Speaker 2>x It's William and Mary.

0:37:31.960 --> 0:37:34.399
<v Speaker 5>I love that you wrote that because it's it's kind

0:37:34.440 --> 0:37:36.560
<v Speaker 5>of people's salons have been talking about how people are

0:37:36.560 --> 0:37:39.279
<v Speaker 5>trading down on services, they're not doing as much, they're

0:37:39.280 --> 0:37:42.360
<v Speaker 5>cutting back and so It's just kind of one of

0:37:42.400 --> 0:37:47.200
<v Speaker 5>those unofficial indicators of maybe what people are doing, kind

0:37:47.239 --> 0:37:49.840
<v Speaker 5>of conserving their spending because maybe they want to or

0:37:49.880 --> 0:37:53.759
<v Speaker 5>maybe because they have to, uh and in anticipation of

0:37:53.800 --> 0:37:54.479
<v Speaker 5>what's to come.

0:37:55.920 --> 0:37:57.080
<v Speaker 4>Top question for any.

0:37:56.920 --> 0:37:59.120
<v Speaker 1>Regardless of the economy. I had to I had to

0:37:59.120 --> 0:38:00.759
<v Speaker 1>get on my haircut because I'm going to the Grand

0:38:00.800 --> 0:38:01.399
<v Speaker 1>Prix this week.

0:38:02.160 --> 0:38:07.040
<v Speaker 2>So that's that's uh, well, yeah, that's a necessity. Is

0:38:07.080 --> 0:38:09.720
<v Speaker 2>that a discretionary expense changer? Is that a business expense?

0:38:09.760 --> 0:38:10.360
<v Speaker 2>How do you look at that.

0:38:11.320 --> 0:38:15.200
<v Speaker 1>I'm incredibly passionate about Formula one. Actually we own Formula

0:38:15.239 --> 0:38:19.680
<v Speaker 1>one uh in the fund f wank. We think that

0:38:19.680 --> 0:38:22.880
<v Speaker 1>that is a resilient business that's going to continue to grow.

0:38:23.840 --> 0:38:30.200
<v Speaker 1>But it's discretionary. But it's also something I'm incredibly passionate about,

0:38:30.480 --> 0:38:32.799
<v Speaker 1>passionate enough to actually own the underlying stock.

0:38:32.920 --> 0:38:34.000
<v Speaker 4>Love it pretty cool stuff.

0:38:34.040 --> 0:38:36.200
<v Speaker 5>Hey, just going back to the companies that have reported

0:38:36.239 --> 0:38:39.320
<v Speaker 5>after the close, as we mentioned Microsoft, you know rallying

0:38:39.520 --> 0:38:43.879
<v Speaker 5>soaring in the aftermarket, Meta is higher. We did talk

0:38:43.960 --> 0:38:47.080
<v Speaker 5>Qualcom taking a big hit down about nine percent in

0:38:47.120 --> 0:38:51.520
<v Speaker 5>the aftermarket. Pick a CEO, pick a company, what might

0:38:51.560 --> 0:38:53.680
<v Speaker 5>you want to ask them? Go anywhere you want.

0:38:56.800 --> 0:38:59.560
<v Speaker 1>I mean, the biggest question mark we have is on

0:38:59.600 --> 0:39:02.560
<v Speaker 1>the consumer. So I go straight to Amazon, to Andy

0:39:02.640 --> 0:39:07.000
<v Speaker 1>Jesse and basically give us ask him to try to

0:39:07.000 --> 0:39:09.320
<v Speaker 1>give us more color than what we got from Visa.

0:39:09.480 --> 0:39:11.640
<v Speaker 1>You know, you know, what is the degree of trade

0:39:11.680 --> 0:39:15.640
<v Speaker 1>down and purchases? You know what, how has the patterns

0:39:15.719 --> 0:39:18.239
<v Speaker 1>changed from day to day, you know, over the course

0:39:18.280 --> 0:39:21.680
<v Speaker 1>of airpril you know, just we need we just need

0:39:21.719 --> 0:39:24.680
<v Speaker 1>more color on what's happening underneath the hood. And we're

0:39:24.760 --> 0:39:28.080
<v Speaker 1>just not sure about it. But you know, business spending,

0:39:28.239 --> 0:39:31.400
<v Speaker 1>you know, seems to be there for the most part,

0:39:31.480 --> 0:39:35.880
<v Speaker 1>but the consumer drives the economy, you know, or spending economy,

0:39:35.920 --> 0:39:39.719
<v Speaker 1>And any clarity you can provide on that would help

0:39:39.800 --> 0:39:42.400
<v Speaker 1>us ascertain exactly what we need to do going forward.

0:39:42.520 --> 0:39:45.520
<v Speaker 2>So one of my questions, and one of my questions

0:39:45.520 --> 0:39:48.719
<v Speaker 2>to you James before you go, is you know, you

0:39:48.760 --> 0:39:51.440
<v Speaker 2>answered my question about the economy. What about when it

0:39:51.440 --> 0:39:54.240
<v Speaker 2>comes to a long term trade war standoff with China

0:39:54.400 --> 0:39:58.440
<v Speaker 2>sort of a stalemate here one ands, we've heard about

0:39:58.440 --> 0:40:01.840
<v Speaker 2>factory activity possibly slowing down there. I know that some

0:40:01.880 --> 0:40:04.759
<v Speaker 2>of the big box CEOs here are concerned about what

0:40:04.920 --> 0:40:07.759
<v Speaker 2>happens if we start to see empty shelves, how do

0:40:07.800 --> 0:40:09.080
<v Speaker 2>you look at that specifically?

0:40:11.080 --> 0:40:13.920
<v Speaker 1>Yeah, I mean the empty shelves thing is a big deal,

0:40:14.080 --> 0:40:17.000
<v Speaker 1>you know. You know, in about two weeks time, you know,

0:40:17.480 --> 0:40:20.160
<v Speaker 1>we may come to a situation where people can't get

0:40:20.160 --> 0:40:24.680
<v Speaker 1>their goods. So that's a real risk, you know, when

0:40:24.719 --> 0:40:28.720
<v Speaker 1>we think about the broader tariff risks and whatnot and

0:40:28.520 --> 0:40:31.359
<v Speaker 1>the consequences of that. You know, we do think that

0:40:31.440 --> 0:40:33.960
<v Speaker 1>the tail risks in the market are much more prevalent

0:40:34.000 --> 0:40:37.759
<v Speaker 1>today than in many, many years. You know, we're looking at,

0:40:37.880 --> 0:40:40.800
<v Speaker 1>you know, issues with our national debt, you know, issues

0:40:40.840 --> 0:40:44.840
<v Speaker 1>with credit risk, credit downgrades. You know, the yields have

0:40:45.080 --> 0:40:48.480
<v Speaker 1>continued to rise. You know, you hear from the administration

0:40:48.719 --> 0:40:51.840
<v Speaker 1>that foreign investment continues to stay strong. But if you

0:40:51.880 --> 0:40:54.239
<v Speaker 1>look under the hood at the actual auctions, you see

0:40:54.360 --> 0:40:58.719
<v Speaker 1>foreign purchases of US treasury bonds falling as a percentage

0:40:59.080 --> 0:41:02.680
<v Speaker 1>of the total, with much more coming from direct buyers

0:41:03.239 --> 0:41:06.520
<v Speaker 1>who are based here in the US. So foreign demand

0:41:06.560 --> 0:41:09.480
<v Speaker 1>is following the dollar is falling. In the meantime, you

0:41:09.600 --> 0:41:14.320
<v Speaker 1>really have to watch Japan because Japan you have strengthening again,

0:41:14.960 --> 0:41:17.920
<v Speaker 1>you have rising interest rates there, and you could totally

0:41:17.960 --> 0:41:21.520
<v Speaker 1>have a Japanese carriage Try two point zero as well.

0:41:21.600 --> 0:41:25.040
<v Speaker 1>So tail risks in the market are more prevalent now

0:41:25.080 --> 0:41:28.040
<v Speaker 1>than ever, and it's certainly something that we're monitoring constantly.

0:41:28.120 --> 0:41:30.840
<v Speaker 1>So you're both short term risks with the recession and

0:41:30.920 --> 0:41:31.600
<v Speaker 1>long term months.

0:41:31.800 --> 0:41:35.200
<v Speaker 5>Great perspective on the specifics of these companies and so

0:41:35.280 --> 0:41:37.800
<v Speaker 5>much more. James Chochmak, thank you so much, partner and

0:41:37.840 --> 0:41:41.719
<v Speaker 5>chief investment officer at Clockwise Capital, joining us here to

0:41:41.760 --> 0:41:43.560
<v Speaker 5>break down some of the earnings