1 00:00:01,800 --> 00:00:04,440 Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm 2 00:00:04,440 --> 00:00:07,280 Speaker 1: Bloomberg Quick Takes Tim Stanivk. We're here every day bringing 3 00:00:07,280 --> 00:00:09,799 Speaker 1: you the latest news from the world of business and finance, 4 00:00:09,840 --> 00:00:13,640 Speaker 1: plus technology, politics, economics, all partnessing the power of Business 5 00:00:13,640 --> 00:00:17,119 Speaker 1: Week reporters and editors, not to mention our journalists and 6 00:00:17,160 --> 00:00:20,000 Speaker 1: analyst in more than one twenty countries. You can download 7 00:00:20,000 --> 00:00:23,239 Speaker 1: Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 8 00:00:23,400 --> 00:00:25,160 Speaker 1: You can also listen to our radio show at two 9 00:00:25,160 --> 00:00:27,840 Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on 10 00:00:27,880 --> 00:00:33,639 Speaker 1: YouTube search Bloomberg Global News. We saw it very clearly 11 00:00:33,840 --> 00:00:36,400 Speaker 1: after the company reported earnings after the close yesterday. The 12 00:00:36,400 --> 00:00:39,600 Speaker 1: stock dropping we're seeing in today's trade. We're talking about Microsoft, 13 00:00:39,840 --> 00:00:42,199 Speaker 1: those shares having the biggest intro trade drop since mar 14 00:00:43,600 --> 00:00:45,879 Speaker 1: So this is just as the pandemic was getting underway. 15 00:00:46,120 --> 00:00:49,120 Speaker 1: The company giving a lackluster forecast for sales growth and 16 00:00:49,120 --> 00:00:52,319 Speaker 1: it's Azure cloud computing services businesses, which is Tim as 17 00:00:52,360 --> 00:00:54,880 Speaker 1: you know going into it, we were all going to 18 00:00:54,880 --> 00:00:56,960 Speaker 1: be watching that very closely because it tells you about 19 00:00:56,960 --> 00:00:59,319 Speaker 1: corporate demand. Yeah, we got Dina Bass with us. She's 20 00:00:59,320 --> 00:01:01,520 Speaker 1: Seattle bureau chief for Bloomberg News. She joins us on 21 00:01:01,560 --> 00:01:04,040 Speaker 1: the phone from our Seattle bureau follower on Twitter at 22 00:01:04,120 --> 00:01:06,800 Speaker 1: Dina Bassna. Good to have you with us. We've had 23 00:01:06,840 --> 00:01:10,080 Speaker 1: what not quite twenty four hours to digest these numbers 24 00:01:10,120 --> 00:01:13,560 Speaker 1: from Microsoft, But can you tell us some details when 25 00:01:13,560 --> 00:01:16,520 Speaker 1: it comes to the sales forecast from Microsoft Azure the 26 00:01:16,520 --> 00:01:19,920 Speaker 1: company's cloud computing division? Is that right that it's sort 27 00:01:19,920 --> 00:01:23,520 Speaker 1: of a bigger story about the global economy because so 28 00:01:23,560 --> 00:01:28,080 Speaker 1: many companies rely on Microsoft, It's a little hard to 29 00:01:28,080 --> 00:01:30,080 Speaker 1: tell at this point, So I think just narrowing it 30 00:01:30,120 --> 00:01:32,840 Speaker 1: down a little bit to Microsoft, I think this is 31 00:01:32,880 --> 00:01:35,479 Speaker 1: a number that is very closely watched and is seeking 32 00:01:35,560 --> 00:01:38,280 Speaker 1: on outside. Is important important in terms of what it 33 00:01:38,400 --> 00:01:41,320 Speaker 1: is about Microsoft prospects. It is the only number that 34 00:01:41,319 --> 00:01:44,319 Speaker 1: the company releases about it as your cloud computing business, 35 00:01:44,319 --> 00:01:47,520 Speaker 1: which is something that people focus on quite a bit 36 00:01:47,640 --> 00:01:50,040 Speaker 1: as the future of the company. Um since they've been 37 00:01:50,080 --> 00:01:53,440 Speaker 1: transitioning to cloud services. The question you ask is whether 38 00:01:53,560 --> 00:01:56,560 Speaker 1: this means that demand is slowing, that that companies are 39 00:01:56,600 --> 00:02:00,720 Speaker 1: holding off on purchases. Is harder to answer because the 40 00:02:00,720 --> 00:02:04,160 Speaker 1: way Microsoft position this is um that what they're seeing 41 00:02:04,240 --> 00:02:07,360 Speaker 1: is companies try to sort of optimize their spend with 42 00:02:07,440 --> 00:02:09,680 Speaker 1: the word they used, which means, you know, make sure 43 00:02:09,760 --> 00:02:11,800 Speaker 1: that they're not spending more than they should be, that 44 00:02:11,840 --> 00:02:15,640 Speaker 1: they're running their cloud applications efficiently. So what that indicates 45 00:02:15,639 --> 00:02:19,000 Speaker 1: is that Microsoft is seeing companies be careful about their spending. 46 00:02:19,520 --> 00:02:22,840 Speaker 1: They the company has has not said and told me 47 00:02:22,919 --> 00:02:25,200 Speaker 1: it's not the case. The companies are actually large companies 48 00:02:25,200 --> 00:02:27,519 Speaker 1: at least are actually holding off on spending or holding 49 00:02:27,560 --> 00:02:30,760 Speaker 1: off on cloud deal, holding off on Azure deals. But 50 00:02:30,880 --> 00:02:34,440 Speaker 1: that's what everyone's wondering. So so not necessarily tightening the belt, 51 00:02:34,560 --> 00:02:37,639 Speaker 1: but kind of I don't know, looking for coupons. I 52 00:02:37,639 --> 00:02:39,600 Speaker 1: don't know what's what's the right way to think about this. 53 00:02:39,600 --> 00:02:42,240 Speaker 1: They're thinking about whether or not, Carol, we actually need 54 00:02:42,320 --> 00:02:44,639 Speaker 1: something well and and you know, DNA attempt speak to 55 00:02:44,680 --> 00:02:46,160 Speaker 1: a good point because I feel like whenever we talk 56 00:02:46,200 --> 00:02:48,760 Speaker 1: to strategists and they talk about tech spending, I t 57 00:02:48,919 --> 00:02:51,000 Speaker 1: spending there like it's so crucial for our companies in 58 00:02:51,080 --> 00:02:53,480 Speaker 1: terms of their businesses. So how do we think about 59 00:02:53,480 --> 00:02:57,440 Speaker 1: it in terms of how do we gauge what this says? 60 00:02:57,520 --> 00:03:00,200 Speaker 1: I mean, Microsoft still selling a ton of stuff us 61 00:03:01,840 --> 00:03:05,400 Speaker 1: that's correct, clearly companies are still spending a lot on 62 00:03:05,520 --> 00:03:11,040 Speaker 1: Azure and also on Microsoft's Office cloud software. The note 63 00:03:11,040 --> 00:03:14,280 Speaker 1: of caution here those worth watching. So that's the exact 64 00:03:14,320 --> 00:03:16,760 Speaker 1: question as you put in, our companies trying to save 65 00:03:16,919 --> 00:03:19,520 Speaker 1: to do more with less or are they actually cutting 66 00:03:19,919 --> 00:03:23,519 Speaker 1: or holding off at some point or freezing. People will 67 00:03:23,560 --> 00:03:27,080 Speaker 1: also be looking on Thursday to Amazon Web Services results 68 00:03:27,120 --> 00:03:29,800 Speaker 1: to see what that means for cloud demand. The place 69 00:03:29,840 --> 00:03:33,560 Speaker 1: that we we clearly have seen cuts is in the 70 00:03:33,600 --> 00:03:37,280 Speaker 1: other part of Microsoft business, to the PC software. Uh 71 00:03:37,280 --> 00:03:40,640 Speaker 1: and that also has impact on UM. You know, that 72 00:03:40,680 --> 00:03:44,000 Speaker 1: has impact on the on the overall numbers because Microsoft 73 00:03:44,240 --> 00:03:47,000 Speaker 1: PC business is so much more profitable. Those are still 74 00:03:47,040 --> 00:03:49,800 Speaker 1: very high profit margin businesses to cloud businesses of lower 75 00:03:49,840 --> 00:03:53,200 Speaker 1: profit margins. So the other problem that investors have to 76 00:03:53,200 --> 00:03:56,040 Speaker 1: grapple with on Microsoft is the Azure growth rate forecast 77 00:03:56,080 --> 00:03:58,760 Speaker 1: was below what investors might have folks, and that's the 78 00:03:58,840 --> 00:04:01,920 Speaker 1: more profitable part of the business asure as are in 79 00:04:01,920 --> 00:04:04,320 Speaker 1: the Office cloud sales. I love what you wrote, new story, 80 00:04:04,360 --> 00:04:05,760 Speaker 1: and when you talk about Azure, you know a few 81 00:04:05,800 --> 00:04:08,119 Speaker 1: years ago the division was doubling sales every quarter. Growth 82 00:04:08,240 --> 00:04:11,080 Speaker 1: rates have slowed as total revenue became large enough to 83 00:04:11,120 --> 00:04:14,000 Speaker 1: make gains of that magnitude were challenging. I mean, this 84 00:04:14,080 --> 00:04:18,760 Speaker 1: was coming I believe was that from the was a 85 00:04:18,880 --> 00:04:22,120 Speaker 1: the CFO actually talking about that. Um. But it's interesting, 86 00:04:22,279 --> 00:04:25,960 Speaker 1: you know because right, it's these businesses when they first 87 00:04:25,960 --> 00:04:28,359 Speaker 1: come out of the gate, right, the growth numbers and 88 00:04:28,360 --> 00:04:32,279 Speaker 1: the growth rates are pretty dramatic. Um. So still a 89 00:04:32,320 --> 00:04:35,159 Speaker 1: solid business, it's just not the same growth rate. Okay, 90 00:04:35,320 --> 00:04:37,240 Speaker 1: there's a couple of factors. They're right. It's harder to 91 00:04:37,320 --> 00:04:41,120 Speaker 1: double every quarter when your business is north of ten billion, right, 92 00:04:41,560 --> 00:04:44,320 Speaker 1: the right, So that's some of it. But but yes, 93 00:04:44,360 --> 00:04:46,960 Speaker 1: the CFO Amy Hoode was flagging that that Again, what 94 00:04:47,000 --> 00:04:50,080 Speaker 1: they're seeing is that they're trying to offer what she said, 95 00:04:50,279 --> 00:04:54,360 Speaker 1: optimized companies beds optimized with the word she's she said 96 00:04:54,400 --> 00:04:57,159 Speaker 1: that Microsoft, uh, you know, customer support teams are actually 97 00:04:57,200 --> 00:04:59,760 Speaker 1: proactively going out to customers to do that because they 98 00:04:59,800 --> 00:05:02,440 Speaker 1: knew that in the economy that we're facing right now, 99 00:05:02,440 --> 00:05:05,640 Speaker 1: customers are worried about spend. Microsoft would rather go in 100 00:05:05,680 --> 00:05:08,480 Speaker 1: and say, let's help you figure out how you can 101 00:05:08,560 --> 00:05:11,320 Speaker 1: meet your budgets and still do what you need, then 102 00:05:11,400 --> 00:05:14,039 Speaker 1: have those customers just that frozen and not spend at 103 00:05:14,080 --> 00:05:16,440 Speaker 1: all or or you know, cut as you're spending, so 104 00:05:16,480 --> 00:05:19,240 Speaker 1: that the idea there is that they want to help 105 00:05:19,279 --> 00:05:21,120 Speaker 1: those customers that have to save. And she made the 106 00:05:21,160 --> 00:05:24,320 Speaker 1: same point to me about electrical costs, right, so, uh, 107 00:05:24,320 --> 00:05:28,080 Speaker 1: you know, all these cloud computing services are very um electricity, 108 00:05:28,440 --> 00:05:31,200 Speaker 1: heating and cooling intensive. So Microsoft flagged that they're going 109 00:05:31,240 --> 00:05:34,640 Speaker 1: to be seeing additional costs to run these services, particularly 110 00:05:34,640 --> 00:05:37,960 Speaker 1: because of power prices, particularly in Europe. And uh, you know, 111 00:05:38,120 --> 00:05:40,240 Speaker 1: and could also flag to me that they are going 112 00:05:40,240 --> 00:05:43,320 Speaker 1: out to customers who are worried about the electrical costs 113 00:05:43,320 --> 00:05:45,760 Speaker 1: that they're facing and trying to help them figure out 114 00:05:45,800 --> 00:05:47,960 Speaker 1: how they can save money. Now, what Microsoft means by 115 00:05:48,000 --> 00:05:50,200 Speaker 1: that is the pitch to the customer is you move 116 00:05:50,240 --> 00:05:52,080 Speaker 1: your stuff to the cloud, we will run it for 117 00:05:52,240 --> 00:05:54,279 Speaker 1: you and will pay the electricity bill you don't have 118 00:05:54,279 --> 00:05:56,640 Speaker 1: to run in your own data set. There. Well, incredible 119 00:05:56,680 --> 00:05:59,000 Speaker 1: reporting as always, and DNA, thank you so much for 120 00:05:59,080 --> 00:06:01,279 Speaker 1: checking in with us. Bloomberg New Seattle Bureau chief Daina 121 00:06:01,320 --> 00:06:04,240 Speaker 1: Bass joining us on the phone from Seattle. You're listening 122 00:06:04,279 --> 00:06:08,080 Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick 123 00:06:08,160 --> 00:06:12,120 Speaker 1: Takes Tim Stinovic on Bloomberg Radio. As we said, it 124 00:06:12,200 --> 00:06:14,159 Speaker 1: is a most read story in the Bloomberg and super 125 00:06:14,160 --> 00:06:17,240 Speaker 1: fun to read on the Bloomberg terminal or online because 126 00:06:17,240 --> 00:06:19,479 Speaker 1: of the visuals and how it comes to life. Great 127 00:06:19,560 --> 00:06:21,480 Speaker 1: video package along with it too, And it is about 128 00:06:21,480 --> 00:06:23,360 Speaker 1: New York City's secret weapon when it comes to the 129 00:06:23,400 --> 00:06:26,880 Speaker 1: finance industry, and the secret weapon is actually make the 130 00:06:26,920 --> 00:06:29,760 Speaker 1: office better than your home. Our secret weapon is Gordon. 131 00:06:29,960 --> 00:06:31,640 Speaker 1: Our secret weapon is a Manda Gordon. She's here with 132 00:06:31,720 --> 00:06:33,440 Speaker 1: us right now, and that's what she wrote about in 133 00:06:33,640 --> 00:06:37,040 Speaker 1: Bloomberg News. She's Wealth Team reporter for Bloomberg News. She's 134 00:06:37,040 --> 00:06:39,440 Speaker 1: with us right now in the Bloomberg Interactive broker's studio. 135 00:06:40,040 --> 00:06:42,200 Speaker 1: So we're talking about Park Avenue here and a couple 136 00:06:42,200 --> 00:06:44,800 Speaker 1: of new buildings, well one new building in particular, but 137 00:06:44,839 --> 00:06:48,360 Speaker 1: a big revamp there to an existing building as well. Um, 138 00:06:48,400 --> 00:06:50,839 Speaker 1: what are the buildings and how do the architects and 139 00:06:50,880 --> 00:06:54,480 Speaker 1: the companies make them better than these people's homes. Well, 140 00:06:54,480 --> 00:06:57,359 Speaker 1: the sea for this story is I've walked up and 141 00:06:57,400 --> 00:07:02,240 Speaker 1: down Park Avenue most of my career, and certainly during 142 00:07:02,240 --> 00:07:05,840 Speaker 1: the pandemic. Coming into the office and seeing it more 143 00:07:05,880 --> 00:07:10,040 Speaker 1: desolate than ever meant that I appreciated the buildings and 144 00:07:10,080 --> 00:07:14,120 Speaker 1: started looking at them closely. I watched to seventy Park 145 00:07:14,200 --> 00:07:18,680 Speaker 1: Avenue be deconstructed, and now they're building a new tower 146 00:07:19,240 --> 00:07:22,840 Speaker 1: by Foster and Partners. I watched all those construction workers 147 00:07:23,320 --> 00:07:26,840 Speaker 1: filling up the bays with their tools, and then I 148 00:07:26,840 --> 00:07:31,320 Speaker 1: saw for Park, about ten blocks north being finished and 149 00:07:31,440 --> 00:07:37,760 Speaker 1: becoming this glistening, gleaming uh presence on the avenue. And 150 00:07:37,800 --> 00:07:40,240 Speaker 1: I could not wait for the final things and the 151 00:07:40,640 --> 00:07:43,360 Speaker 1: cranes and so on to go down. And when they 152 00:07:43,480 --> 00:07:47,520 Speaker 1: did a few weeks ago, I was just so taken aback. 153 00:07:47,760 --> 00:07:50,640 Speaker 1: And to me, you know, it's not just their their 154 00:07:50,720 --> 00:07:56,560 Speaker 1: new buildings, but there are new buildings alongside iconic landmarked buildings. 155 00:07:56,640 --> 00:08:01,320 Speaker 1: The first glass all glass skyscrapers and York that started 156 00:08:01,320 --> 00:08:06,280 Speaker 1: in with lever House. And when that building went up, 157 00:08:07,120 --> 00:08:09,800 Speaker 1: Louis Mumford and the New Yorker wrote it was the 158 00:08:09,880 --> 00:08:13,440 Speaker 1: eighth wonder of the world. He said that people would 159 00:08:13,480 --> 00:08:16,840 Speaker 1: direct their taxi cabs to go down Park so they 160 00:08:16,880 --> 00:08:20,120 Speaker 1: could look at it, and that sense of spectacle and 161 00:08:20,200 --> 00:08:24,600 Speaker 1: delight and sort of historic Moving forward, I felt looking 162 00:08:24,640 --> 00:08:28,120 Speaker 1: at Park, and for this story I got to explore 163 00:08:28,440 --> 00:08:32,280 Speaker 1: a few other buildings. So the big picture is that 164 00:08:32,760 --> 00:08:36,600 Speaker 1: right near Grand Central and then close to Street you 165 00:08:36,640 --> 00:08:41,199 Speaker 1: have two new buildings designed by Norman Foster's Foster and Partners, 166 00:08:41,679 --> 00:08:44,880 Speaker 1: And although they were designed before the pandemic, they have 167 00:08:45,040 --> 00:08:50,079 Speaker 1: all the bells and whistles that developers and ceo s 168 00:08:50,160 --> 00:08:53,120 Speaker 1: think will help bring their employees back to the office, 169 00:08:53,559 --> 00:08:57,960 Speaker 1: like wine fridges and basketball courts where I was like, 170 00:08:58,080 --> 00:09:00,960 Speaker 1: are you guys gonna be working here? Or the library 171 00:09:01,120 --> 00:09:04,520 Speaker 1: like it's studying. They're fun spaces. There are also a 172 00:09:04,559 --> 00:09:08,280 Speaker 1: lot of wellness features, so literally the way that the 173 00:09:08,360 --> 00:09:12,040 Speaker 1: air comes into the building and gets cleaned, and that 174 00:09:12,120 --> 00:09:15,840 Speaker 1: there's so much fresh air circulating. It sounds like something 175 00:09:15,880 --> 00:09:20,040 Speaker 1: designed just when COVID hit, but it was an idea 176 00:09:20,280 --> 00:09:25,640 Speaker 1: that was laid down years before. And I have to say, 177 00:09:25,720 --> 00:09:28,120 Speaker 1: having you know, spent a couple of hours in the 178 00:09:28,160 --> 00:09:32,000 Speaker 1: building with the developer David Levinson. He said at one point, 179 00:09:32,520 --> 00:09:36,119 Speaker 1: don't you feel good? And honestly I did feel good. 180 00:09:36,880 --> 00:09:38,839 Speaker 1: So how much of these shift things around a man 181 00:09:38,880 --> 00:09:41,720 Speaker 1: as they were going because of the pandemic, and you know, 182 00:09:42,200 --> 00:09:44,720 Speaker 1: the work from home, the hybrid work, the conversations and 183 00:09:44,800 --> 00:09:48,640 Speaker 1: also thinking about air quality because of you know all 184 00:09:48,679 --> 00:09:51,959 Speaker 1: the concerns that were raised by the pandemic. Well, I 185 00:09:52,000 --> 00:09:54,360 Speaker 1: think that you know, they are eager to have with 186 00:09:54,400 --> 00:09:57,840 Speaker 1: these beautiful spaces, they're eager to see people use them. 187 00:09:58,559 --> 00:10:02,360 Speaker 1: And I think that a social component is important, because 188 00:10:03,160 --> 00:10:04,960 Speaker 1: the idea is that you come to work and that 189 00:10:05,000 --> 00:10:09,640 Speaker 1: you're around there's a culture of your firm um, and 190 00:10:09,760 --> 00:10:14,439 Speaker 1: there's a way of learning around people. And these spaces 191 00:10:14,480 --> 00:10:19,120 Speaker 1: are just sort of breathtaking stages. And and you know, 192 00:10:19,200 --> 00:10:22,720 Speaker 1: I've heard that although Citadel won't be moving in most 193 00:10:22,760 --> 00:10:25,440 Speaker 1: of its employees until the summer, you know, they're all 194 00:10:25,720 --> 00:10:28,240 Speaker 1: working out of other offices right now on Park Avenue 195 00:10:28,280 --> 00:10:30,480 Speaker 1: and they're looking at that and they all can't wait 196 00:10:30,520 --> 00:10:32,680 Speaker 1: to get in there. So I kind of want to 197 00:10:32,840 --> 00:10:36,080 Speaker 1: go careful, I said, library, But it's actually there's this 198 00:10:36,120 --> 00:10:38,680 Speaker 1: great line lounge right, it's art books. I mean, it 199 00:10:38,720 --> 00:10:44,160 Speaker 1: looks like it's just stunning. So is it going to work, Well, 200 00:10:44,280 --> 00:10:47,720 Speaker 1: oh yeah, there's I think that the reason why I 201 00:10:47,760 --> 00:10:51,920 Speaker 1: focused on Park Avenue Um is that Park Avenue works. 202 00:10:52,360 --> 00:10:56,080 Speaker 1: Park Avenue worked during the pandemic. If you look at 203 00:10:56,080 --> 00:11:00,760 Speaker 1: a firm like Blackstone, they had an investment professionals back 204 00:11:00,760 --> 00:11:04,560 Speaker 1: in the office as early as September. A lot of 205 00:11:04,559 --> 00:11:07,480 Speaker 1: the bloom terms Jamie Diamond has been a strong proponent 206 00:11:07,800 --> 00:11:11,440 Speaker 1: that was before Delta. Excuse me, those those buildings um 207 00:11:11,960 --> 00:11:15,719 Speaker 1: have had workers. And if you walk today, I'm not 208 00:11:15,800 --> 00:11:18,679 Speaker 1: joking about the food carts. There really are like very 209 00:11:18,760 --> 00:11:21,600 Speaker 1: long lines for them. And that's one of the things 210 00:11:21,679 --> 00:11:24,480 Speaker 1: I love about Park Avenue. It's not just social spaces 211 00:11:24,520 --> 00:11:28,839 Speaker 1: that they're creating with these lounges. The sidewalk itself is 212 00:11:28,880 --> 00:11:30,840 Speaker 1: a place where you run into people. You know. It's 213 00:11:30,840 --> 00:11:32,320 Speaker 1: such a great part of New York City, and I 214 00:11:32,320 --> 00:11:34,880 Speaker 1: have to say that the JP Morgan building man really 215 00:11:34,920 --> 00:11:36,840 Speaker 1: homage to kind of old New York as well as 216 00:11:36,880 --> 00:11:39,560 Speaker 1: looking very very new. Amanda Gordon, thank you so much. 217 00:11:40,040 --> 00:11:44,079 Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg 218 00:11:44,160 --> 00:11:48,200 Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Well, a most 219 00:11:48,200 --> 00:11:51,240 Speaker 1: read story. Another most read story, I should say, are 220 00:11:51,280 --> 00:11:54,559 Speaker 1: among the those on the Bloomberg terminal right now. It 221 00:11:54,640 --> 00:11:56,520 Speaker 1: has to do with and it's something we talked about 222 00:11:56,520 --> 00:11:59,320 Speaker 1: a lot of energy. I t when we're thinking about sustainability, 223 00:11:59,360 --> 00:12:03,000 Speaker 1: green energy and just how things are innovating and disrupting 224 00:12:03,040 --> 00:12:05,680 Speaker 1: to create a greener climate and what role does the 225 00:12:05,679 --> 00:12:07,880 Speaker 1: government or should the government take when it comes to 226 00:12:08,000 --> 00:12:12,080 Speaker 1: funding this type of progress. Well, writing about that in 227 00:12:12,280 --> 00:12:15,800 Speaker 1: Bloomberg business Week is Ellen Hewitt. Uh. She writes all 228 00:12:15,800 --> 00:12:18,240 Speaker 1: about California's tech millionaires and how they're split on this 229 00:12:18,360 --> 00:12:21,199 Speaker 1: tax plan to fund e VS. We got with us 230 00:12:21,200 --> 00:12:24,360 Speaker 1: this afternoon, Mark Million, technology Managing editor for Bloomberg News. 231 00:12:24,400 --> 00:12:26,720 Speaker 1: He joins us from New York City. Also with us 232 00:12:26,760 --> 00:12:29,480 Speaker 1: in the Bloomberg Interactive Broker Studio is Joel Weber. He's 233 00:12:29,520 --> 00:12:33,360 Speaker 1: the editor of Bloomberg business Week. Joel. Growing up in California, 234 00:12:33,840 --> 00:12:36,040 Speaker 1: if there's one thing I remember when I accompanying my 235 00:12:36,080 --> 00:12:40,359 Speaker 1: parents to the to the polls was yes knows on propositions. 236 00:12:40,600 --> 00:12:42,680 Speaker 1: And it's like, if you if you look at the 237 00:12:42,679 --> 00:12:45,800 Speaker 1: way that the state governs itself, it's like it gives 238 00:12:45,840 --> 00:12:48,680 Speaker 1: so much power to voters to make legislation, take it 239 00:12:48,679 --> 00:12:51,719 Speaker 1: to the people. Yeah, and we're gonna see better for worse, right, 240 00:12:51,920 --> 00:12:54,520 Speaker 1: And and we're gonna see what happens with this most 241 00:12:54,520 --> 00:12:58,640 Speaker 1: recent example, Prop thirty, which be on the ballot here Uh, 242 00:12:58,920 --> 00:13:02,760 Speaker 1: just around the corner um in November. Uh. What it 243 00:13:02,760 --> 00:13:06,720 Speaker 1: really pits is um Uh know on a yes side, 244 00:13:07,040 --> 00:13:10,680 Speaker 1: as you would expect, Lift being um, perhaps the most 245 00:13:10,720 --> 00:13:14,760 Speaker 1: noteworthy player here. Um they've been. They're really pushing hard 246 00:13:14,800 --> 00:13:18,079 Speaker 1: for this um and it gets to the fact that 247 00:13:18,200 --> 00:13:22,080 Speaker 1: California is requiring um you know, basically all of these 248 00:13:22,080 --> 00:13:25,240 Speaker 1: miles traveled to be electric and so this would be 249 00:13:25,280 --> 00:13:27,800 Speaker 1: really beneficial for a company like Lift because it would 250 00:13:27,840 --> 00:13:31,200 Speaker 1: help build the network that that writers in in their 251 00:13:31,200 --> 00:13:34,760 Speaker 1: network of vehicles would would be able to benefit from. Uh. 252 00:13:34,960 --> 00:13:37,040 Speaker 1: But to pay for that, you basically have to tap 253 00:13:37,080 --> 00:13:40,040 Speaker 1: into rich Californians and they're the ones that are kind 254 00:13:40,040 --> 00:13:43,160 Speaker 1: of pushing back on it, uh fairly publicly. UM So, 255 00:13:43,160 --> 00:13:46,680 Speaker 1: so Mark, this is again, uh it seems like the 256 00:13:46,880 --> 00:13:51,520 Speaker 1: tech industry uh rideshare companies like all of these um 257 00:13:51,840 --> 00:13:56,320 Speaker 1: uh and very prominent um names here that uh you 258 00:13:56,360 --> 00:13:59,439 Speaker 1: know are in this. Really he did fight in California, 259 00:13:59,480 --> 00:14:02,080 Speaker 1: which Sue has always been on the forefront of like 260 00:14:02,120 --> 00:14:05,400 Speaker 1: auto policy, but now is also you know, wrestling with 261 00:14:05,400 --> 00:14:07,880 Speaker 1: with climate change. So which way is the wind really 262 00:14:07,920 --> 00:14:12,440 Speaker 1: blowing there? Yeah? Well, the thing is like, on its face, 263 00:14:12,720 --> 00:14:15,640 Speaker 1: it actually sounds like kind of nice. I mean, like 264 00:14:15,720 --> 00:14:18,680 Speaker 1: to to your point, Californians love to have a say 265 00:14:18,679 --> 00:14:22,720 Speaker 1: in policy and they love all things green, and so 266 00:14:22,840 --> 00:14:28,480 Speaker 1: like the proposals. Um, you know, electric charging infrastructure seems 267 00:14:28,520 --> 00:14:33,600 Speaker 1: like something we need. Subsidizing electric cars for UH, low 268 00:14:33,880 --> 00:14:38,880 Speaker 1: and middle income residents, that sounds good. Wildfire prevention all 269 00:14:38,960 --> 00:14:44,160 Speaker 1: sounds good. Um. And so this is actually in polling, UM, 270 00:14:44,240 --> 00:14:49,200 Speaker 1: it's been a pretty popular proposal. UM. But again to 271 00:14:49,280 --> 00:14:52,000 Speaker 1: the point that Joel was making about, I mean this 272 00:14:52,280 --> 00:14:54,400 Speaker 1: all those things, for the most part kind of playing 273 00:14:54,520 --> 00:14:58,920 Speaker 1: lift favor, Like their drivers are typically low in middle 274 00:14:58,960 --> 00:15:02,440 Speaker 1: income and in lieu of paying the more so that 275 00:15:02,480 --> 00:15:08,040 Speaker 1: they could afford to buy electric vehicles. The argument against Prop. 276 00:15:08,120 --> 00:15:11,320 Speaker 1: Thirty is that they're just asking for rich people to 277 00:15:11,400 --> 00:15:16,800 Speaker 1: subsidize something that should be done through through paying these 278 00:15:16,880 --> 00:15:19,640 Speaker 1: drivers more money to get the vehicles that they're going 279 00:15:19,680 --> 00:15:23,280 Speaker 1: to be required to drive. Um. And so that's like 280 00:15:23,520 --> 00:15:26,960 Speaker 1: sort of the nuance of the debate and why Governor Newsom, 281 00:15:27,680 --> 00:15:30,720 Speaker 1: who often doesn't weigh in on props, this is one 282 00:15:30,760 --> 00:15:33,240 Speaker 1: of only two that he's taken a public stance on. 283 00:15:33,280 --> 00:15:36,480 Speaker 1: And he's not he's he's with the billionaires. He's he's no, 284 00:15:36,680 --> 00:15:38,880 Speaker 1: we should not, we should not be doing this. There 285 00:15:38,920 --> 00:15:42,040 Speaker 1: are better ways to do a policy like this. What's 286 00:15:42,040 --> 00:15:45,160 Speaker 1: so interesting is that it's being essentially bankrolled by this 287 00:15:45,240 --> 00:15:49,200 Speaker 1: single company Lift as you, as Ellen writes about it's 288 00:15:49,200 --> 00:15:51,880 Speaker 1: fundy coming just from left. As I was reading the story, 289 00:15:51,920 --> 00:15:56,920 Speaker 1: I was thought to myself, where's Uber in this UM. 290 00:15:57,120 --> 00:16:01,560 Speaker 1: Uber likes to pick its battles UM, and I think 291 00:16:01,600 --> 00:16:05,680 Speaker 1: they're happy to let Lift get the potentially bad pr 292 00:16:05,760 --> 00:16:08,280 Speaker 1: involved with trying to pull the strings on another proposition. 293 00:16:08,320 --> 00:16:12,440 Speaker 1: I mean they heavily drove this, UH, this other earlier 294 00:16:12,720 --> 00:16:15,960 Speaker 1: proposition which was much more core of their business UM 295 00:16:16,000 --> 00:16:20,000 Speaker 1: a couple of years ago, UH to enshrine their driver 296 00:16:20,200 --> 00:16:23,160 Speaker 1: contractor status, which Lift and door Dash and other kid 297 00:16:23,200 --> 00:16:28,280 Speaker 1: economy companies were also supporting financially. But they've they've as 298 00:16:28,320 --> 00:16:30,040 Speaker 1: far as we can tell, they've stayed out of the 299 00:16:30,040 --> 00:16:32,520 Speaker 1: prey on this one. And this is this is Lift 300 00:16:33,040 --> 00:16:35,840 Speaker 1: carrying the charge, notably with a couple of billionaires who 301 00:16:35,840 --> 00:16:38,640 Speaker 1: are on their side, but many more billionaires are lined 302 00:16:38,720 --> 00:16:40,600 Speaker 1: up in the no category. Well, Mark, let's get to 303 00:16:40,600 --> 00:16:43,440 Speaker 1: that billionaire Frey, because there are some well known folks 304 00:16:43,440 --> 00:16:47,760 Speaker 1: in Silicon Valley UH and billionaires themselves who are on 305 00:16:47,880 --> 00:16:49,560 Speaker 1: Lift side, as you said, and then there are some 306 00:16:49,640 --> 00:16:51,720 Speaker 1: that are not. I mean it's turning into a battle 307 00:16:51,800 --> 00:16:56,120 Speaker 1: of kind of the Silicon Valley billionaires as well. Yes, 308 00:16:56,480 --> 00:17:00,840 Speaker 1: uh so Lift has alliance with John on Door, who 309 00:17:00,920 --> 00:17:03,840 Speaker 1: is you know, one of the legends of venture capital, 310 00:17:03,960 --> 00:17:08,400 Speaker 1: and Tom Steyer, who is very public you know, pro 311 00:17:08,600 --> 00:17:13,080 Speaker 1: pro green person as his door. Um the Nose are 312 00:17:13,240 --> 00:17:19,040 Speaker 1: well notably, Um, there was there was Ron Conway who flipped, 313 00:17:19,080 --> 00:17:22,600 Speaker 1: who supported it at first and then changed his mind. Um. 314 00:17:22,680 --> 00:17:25,480 Speaker 1: Also in the no category Mike Moritz, who is another 315 00:17:25,560 --> 00:17:29,120 Speaker 1: legend of venture capital with with Conway and Door, um 316 00:17:30,440 --> 00:17:35,640 Speaker 1: the Netflix CEO Rehastings into it, founder Scott Cook all 317 00:17:35,720 --> 00:17:39,480 Speaker 1: in the no category. UM. And and you know this 318 00:17:39,560 --> 00:17:42,320 Speaker 1: is sort of it's kind of a funny like battle 319 00:17:42,359 --> 00:17:44,679 Speaker 1: of the billionaires that's taking place here, and it's like 320 00:17:44,720 --> 00:17:49,960 Speaker 1: one of the flashpoints within the Silicon Valley elite UM 321 00:17:50,000 --> 00:17:54,439 Speaker 1: in this election cycle. So Mark, I'm curious as to 322 00:17:54,560 --> 00:17:59,200 Speaker 1: like how uh this is even trending in in polls, 323 00:17:59,280 --> 00:18:05,600 Speaker 1: we have any really data on how voters feel about this. Yeah, 324 00:18:05,640 --> 00:18:09,480 Speaker 1: I mean voters are are pretty supportive. I mean it's 325 00:18:09,720 --> 00:18:13,520 Speaker 1: these always come down to the wire and um news 326 00:18:14,040 --> 00:18:18,280 Speaker 1: Now taking a public stance could affect things. Um. But 327 00:18:19,000 --> 00:18:23,040 Speaker 1: there was a. There was a September poll um that 328 00:18:23,200 --> 00:18:27,359 Speaker 1: the Los Angeles Times and the Berkeley Institute ran that 329 00:18:27,440 --> 00:18:32,560 Speaker 1: found of voters supported it um, which you know is 330 00:18:32,600 --> 00:18:35,600 Speaker 1: not a majority, but only thirty seven percent were posed 331 00:18:35,640 --> 00:18:39,080 Speaker 1: and then the rest were undecided. So there's still still 332 00:18:39,119 --> 00:18:42,800 Speaker 1: time for people to swing. But um, you know, like 333 00:18:42,840 --> 00:18:45,400 Speaker 1: I said at the beginning, like this sounds really good, 334 00:18:45,600 --> 00:18:49,920 Speaker 1: like electric charting infrastructure, more car, more electric cars for 335 00:18:50,080 --> 00:18:53,080 Speaker 1: poorer people, like wildfire preventre and all these things are 336 00:18:53,119 --> 00:18:57,040 Speaker 1: important to Californians. It's just sort of the the nuance 337 00:18:57,320 --> 00:19:00,600 Speaker 1: and as the no people see kind of a crosseness 338 00:19:00,680 --> 00:19:05,359 Speaker 1: of corporate influence that that they're against. But we're watching 339 00:19:05,359 --> 00:19:07,879 Speaker 1: California because often as California goes, so does you know 340 00:19:07,920 --> 00:19:14,440 Speaker 1: the rest of the country eventually when it comes to regulations. Yes, yeah, alright, 341 00:19:14,480 --> 00:19:17,840 Speaker 1: Mark great read Mark Millian, he his technology managing editor 342 00:19:17,920 --> 00:19:20,280 Speaker 1: Bloomberg News. You just saw on YouTube and quick take 343 00:19:20,320 --> 00:19:22,359 Speaker 1: because he was joining us via zoom in New York City. 344 00:19:22,359 --> 00:19:24,560 Speaker 1: And our thanks as always to the editor of Bloomberg 345 00:19:24,600 --> 00:19:28,040 Speaker 1: Business Week, Joel Weber. Here in our Interactive Broker studio, 346 00:19:28,520 --> 00:19:32,119 Speaker 1: you're listening to Bloomberg Business Week with Carol Messer and 347 00:19:32,200 --> 00:19:37,120 Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Overall trade 348 00:19:37,280 --> 00:19:39,119 Speaker 1: looking a lot better than it did this morning, although 349 00:19:39,160 --> 00:19:41,160 Speaker 1: we have been I gotta say, well, we're bouncing around 350 00:19:41,200 --> 00:19:43,239 Speaker 1: because we're definitely off ourhighs of this session. But if 351 00:19:43,240 --> 00:19:45,159 Speaker 1: you look at some of the individual names, something like 352 00:19:45,160 --> 00:19:49,160 Speaker 1: a Microsoft or Alphabet, those stocks are really way down. 353 00:19:49,400 --> 00:19:52,040 Speaker 1: Mega underperformance today. Yeah, they're really right weighing down the 354 00:19:52,320 --> 00:19:54,760 Speaker 1: major averages. I mean, we got tech just weighing everything 355 00:19:54,760 --> 00:19:58,000 Speaker 1: down on the SMP. Microsoft responsible for sixteen points in 356 00:19:58,040 --> 00:20:02,080 Speaker 1: the decline, Alphabet's six points, Apple five point eight points. 357 00:20:02,080 --> 00:20:04,000 Speaker 1: So we got a lot to get to right now. 358 00:20:04,000 --> 00:20:07,040 Speaker 1: With Ryan last Deelica, he's equities reporter focuses on tech 359 00:20:07,160 --> 00:20:09,320 Speaker 1: for Bloomberg News. He's usually in Chicago, but he's with 360 00:20:09,400 --> 00:20:12,400 Speaker 1: us in the Bloomberg Interactive Broker's studio. Ryan, welcome. It's 361 00:20:12,400 --> 00:20:14,480 Speaker 1: awesome to have you here. Nice to finally meet you 362 00:20:14,520 --> 00:20:16,560 Speaker 1: for the first time in person too. I've read your 363 00:20:16,600 --> 00:20:19,000 Speaker 1: stuff for years, so it's good to have you here. Um, 364 00:20:19,040 --> 00:20:21,800 Speaker 1: you've got a story out that talks about three billion 365 00:20:21,840 --> 00:20:24,199 Speaker 1: dollar megacap route. We haven't heard from Apple yet. We 366 00:20:24,200 --> 00:20:26,280 Speaker 1: haven't heard from Amazon yet. We haven't heard from meta 367 00:20:26,280 --> 00:20:28,800 Speaker 1: platforms yet, but they're all lower. As we see a 368 00:20:28,880 --> 00:20:31,800 Speaker 1: sell off in in tech overall today. What's going on? Yeah, Well, 369 00:20:31,840 --> 00:20:34,080 Speaker 1: so far the tech results have not been what you 370 00:20:34,080 --> 00:20:35,879 Speaker 1: would want to see for a group of stocks that 371 00:20:35,880 --> 00:20:39,119 Speaker 1: have been down pretty heavily so far this whole year. Um, 372 00:20:39,160 --> 00:20:42,480 Speaker 1: there's concerns that growth is slowing. We have some valuations 373 00:20:42,520 --> 00:20:44,480 Speaker 1: that remain above their long term averages. So there's still 374 00:20:44,520 --> 00:20:46,120 Speaker 1: a lot of concern that, like as a fat keep 375 00:20:46,200 --> 00:20:49,040 Speaker 1: raising rates as we have concerns about um, you know, 376 00:20:49,119 --> 00:20:51,240 Speaker 1: higher yields and so forth. These is going to be 377 00:20:51,280 --> 00:20:54,240 Speaker 1: a group that continues to uh just come under pressure. 378 00:20:54,280 --> 00:20:56,119 Speaker 1: And there was a hope that their growth would be 379 00:20:56,119 --> 00:20:58,480 Speaker 1: strong enough to offset some of these headwinds. So far, 380 00:20:58,560 --> 00:21:00,720 Speaker 1: it doesn't really look like that's the case. Well, and 381 00:21:00,800 --> 00:21:02,320 Speaker 1: this is what it gets to. I mean, this is 382 00:21:02,320 --> 00:21:03,960 Speaker 1: a thing we talked about a lot, Ryan is a 383 00:21:04,040 --> 00:21:06,159 Speaker 1: valuation reset, right, and this is what you want to 384 00:21:06,200 --> 00:21:08,240 Speaker 1: understand the business where it is today, but really where 385 00:21:08,240 --> 00:21:11,159 Speaker 1: it's going and ultimately how much should I pay for it? 386 00:21:11,160 --> 00:21:13,280 Speaker 1: Certainly when you're looking at a publicly held company like 387 00:21:13,720 --> 00:21:17,119 Speaker 1: an Alphabet or Microsoft, Yeah, Alphabet actually looks cheap by 388 00:21:17,119 --> 00:21:19,320 Speaker 1: most valuation metrics right now. But if we are going 389 00:21:19,400 --> 00:21:21,600 Speaker 1: into a period where the AD market is slower than 390 00:21:21,640 --> 00:21:23,600 Speaker 1: it used to be, where you just have all these 391 00:21:23,680 --> 00:21:27,480 Speaker 1: various headwindes to valuations, um and multiples, and we are 392 00:21:27,600 --> 00:21:29,600 Speaker 1: potentially going into a recession. When you have all these 393 00:21:29,600 --> 00:21:32,480 Speaker 1: things right now, the fact that it's cheap relative to 394 00:21:32,480 --> 00:21:34,720 Speaker 1: its own history and even cheaper than the market, that 395 00:21:34,760 --> 00:21:36,480 Speaker 1: may not be enough to disturb people to go in 396 00:21:36,520 --> 00:21:39,360 Speaker 1: and buy, especially if you know, like we saw last night, 397 00:21:39,440 --> 00:21:41,800 Speaker 1: the results is aren't strong enough. What about from Microsoft 398 00:21:41,800 --> 00:21:44,200 Speaker 1: in terms of valuation? That one is still a little 399 00:21:44,200 --> 00:21:46,600 Speaker 1: bit elevated relative to the broader market, So that might 400 00:21:46,600 --> 00:21:47,879 Speaker 1: be one that has a little bit more froth. I 401 00:21:47,920 --> 00:21:50,240 Speaker 1: don't think it would be qualified as a value stock 402 00:21:50,280 --> 00:21:52,040 Speaker 1: in the way that you can probably made the case 403 00:21:52,040 --> 00:21:54,959 Speaker 1: for Alphabet interesting Okay, So what does it portend for 404 00:21:55,080 --> 00:21:57,120 Speaker 1: the companies that we haven't yet heard from? Meta platforms? 405 00:21:57,119 --> 00:22:01,040 Speaker 1: Is consumer discretionary? Um? But we also Apple tomorrow and 406 00:22:01,040 --> 00:22:03,920 Speaker 1: then we have Amazon as well. Um, how should we 407 00:22:03,920 --> 00:22:05,680 Speaker 1: be what are analysts saying? How should we be thinking about? 408 00:22:05,760 --> 00:22:07,440 Speaker 1: Especially you know, and I say meta platforms, I know 409 00:22:07,440 --> 00:22:09,080 Speaker 1: you're about to answer, I'm sorry, but I think you 410 00:22:09,119 --> 00:22:11,280 Speaker 1: know Snap last week, did we get a little preview 411 00:22:11,320 --> 00:22:13,680 Speaker 1: for what's going to happen. Yeah. Absolutely, So we'll just 412 00:22:13,720 --> 00:22:15,960 Speaker 1: take those one by one. Meta platforms U two real 413 00:22:16,000 --> 00:22:17,920 Speaker 1: things that are going on right there. Uh. It is 414 00:22:17,960 --> 00:22:20,199 Speaker 1: also very exposed to the online ad market. If that 415 00:22:20,320 --> 00:22:22,160 Speaker 1: is weaker as we saw with Alphabet, as we saw 416 00:22:22,200 --> 00:22:24,320 Speaker 1: the Snap, that's not good news for Meta. Meta is 417 00:22:24,320 --> 00:22:26,920 Speaker 1: also spending a lot of money on its Metaverse initiative. 418 00:22:27,000 --> 00:22:30,960 Speaker 1: That is, um people are growing increasingly skeptical about CAPEX 419 00:22:30,960 --> 00:22:33,080 Speaker 1: and a market like this. They want to see lower costs, 420 00:22:33,080 --> 00:22:35,359 Speaker 1: they want to see higher profitability. To the extent it 421 00:22:35,400 --> 00:22:37,159 Speaker 1: pulls back on that our discusses and thin that's going 422 00:22:37,200 --> 00:22:40,119 Speaker 1: to be highly in focus when it comes to Amazon. 423 00:22:40,480 --> 00:22:42,240 Speaker 1: That's kind of in the sweet spot of both companies 424 00:22:42,280 --> 00:22:44,719 Speaker 1: of Microsoft and Alphabet. It also has a very big 425 00:22:44,760 --> 00:22:48,040 Speaker 1: cloud computing division. It has a growing advertising division. So 426 00:22:48,080 --> 00:22:49,920 Speaker 1: these are two areas that if it's seem those same 427 00:22:49,920 --> 00:22:52,679 Speaker 1: pressures that might also be a pressure to the stock 428 00:22:53,040 --> 00:22:55,360 Speaker 1: going on from here. And of course, as we see 429 00:22:55,400 --> 00:22:58,480 Speaker 1: just broader concerns about consumer discretionary spending and so forth. 430 00:22:58,520 --> 00:23:00,760 Speaker 1: As a major online retailer. Does that mean for them? 431 00:23:00,880 --> 00:23:03,440 Speaker 1: We'll have to see. But you know, is in terms 432 00:23:03,480 --> 00:23:06,200 Speaker 1: of what we get from these companies, what we've already 433 00:23:06,240 --> 00:23:08,680 Speaker 1: got Microsoft and Google. I think about what's come, what's 434 00:23:08,680 --> 00:23:10,960 Speaker 1: to come tomorrow? You know, how do we think about 435 00:23:11,000 --> 00:23:14,159 Speaker 1: it in terms of a market, you know, an equity 436 00:23:14,200 --> 00:23:16,920 Speaker 1: market reset, Ryan, and how you think about it going 437 00:23:16,960 --> 00:23:18,480 Speaker 1: forward and maybe the kind of reporting you want to 438 00:23:18,480 --> 00:23:21,040 Speaker 1: be doing off of these results, which are so important 439 00:23:21,080 --> 00:23:23,080 Speaker 1: in terms of how they can sway you know, certainly 440 00:23:23,080 --> 00:23:25,840 Speaker 1: market sentiment, but also the actual trade. Yeah, it's a 441 00:23:25,840 --> 00:23:28,840 Speaker 1: good question. I mean, it's kind of growth that these 442 00:23:28,840 --> 00:23:30,240 Speaker 1: companies are going to be expected to see. This is 443 00:23:30,280 --> 00:23:32,480 Speaker 1: what people have been focusing on really all year, and 444 00:23:32,520 --> 00:23:36,080 Speaker 1: people keep hoping that because of their place in the economy, 445 00:23:36,320 --> 00:23:39,240 Speaker 1: because they are in such like dynamic markets, that they're 446 00:23:39,240 --> 00:23:41,119 Speaker 1: gonna be able to pull it out. They've been market 447 00:23:41,200 --> 00:23:43,200 Speaker 1: leaders just for years and years, but this year they 448 00:23:43,240 --> 00:23:45,760 Speaker 1: are now leading on the downside as people have found 449 00:23:45,800 --> 00:23:49,480 Speaker 1: more opportunity in sectors like energy and so forth. So 450 00:23:49,720 --> 00:23:51,400 Speaker 1: where this goes from here, it's it's really hard to say, 451 00:23:51,400 --> 00:23:52,920 Speaker 1: but so far they're not making the case just purely 452 00:23:52,920 --> 00:23:54,920 Speaker 1: on a fundamental basis, just based on the results that 453 00:23:54,960 --> 00:23:57,560 Speaker 1: they've seen and where the stock has been trading. Is 454 00:23:57,600 --> 00:24:00,200 Speaker 1: this like a regime shift? I mean, when we think 455 00:24:00,240 --> 00:24:02,159 Speaker 1: big picture, if we think over the last decade, low 456 00:24:02,200 --> 00:24:07,200 Speaker 1: interest rates, the NaSTA Actress performing so well, where are 457 00:24:07,240 --> 00:24:09,640 Speaker 1: we as you talk to analysts looking forward here? That's 458 00:24:09,640 --> 00:24:11,159 Speaker 1: a great question. This is something I do make a 459 00:24:11,200 --> 00:24:12,800 Speaker 1: point of asking everyone I talk to you, just because 460 00:24:12,800 --> 00:24:14,960 Speaker 1: I am kind of curious about it myself. I guess 461 00:24:14,960 --> 00:24:17,000 Speaker 1: I would say one thing I hear a lot is 462 00:24:17,080 --> 00:24:20,560 Speaker 1: that when the market eventually recovers, most people expect it 463 00:24:20,600 --> 00:24:23,080 Speaker 1: to be different leaders than we saw in the previous one, 464 00:24:23,200 --> 00:24:25,520 Speaker 1: which would suggest that maybe it's not going to be 465 00:24:25,600 --> 00:24:28,080 Speaker 1: tech this time. However, if you look at a long 466 00:24:28,240 --> 00:24:32,040 Speaker 1: term growth picture, people still see very strong growth potential 467 00:24:32,080 --> 00:24:36,000 Speaker 1: for cloud computing, for software, for online retail, for all 468 00:24:36,040 --> 00:24:38,439 Speaker 1: of these different categories that you expect that these companies 469 00:24:38,440 --> 00:24:40,520 Speaker 1: have been emitted from for for years and years. So 470 00:24:40,560 --> 00:24:42,920 Speaker 1: I do think that no one is really ready to 471 00:24:42,960 --> 00:24:45,440 Speaker 1: throw in the towel, at least on big tech, which 472 00:24:45,480 --> 00:24:48,760 Speaker 1: is so dominant, has such strong market positions. I think 473 00:24:48,760 --> 00:24:50,840 Speaker 1: they're more respectultive parts of tech that people are like 474 00:24:51,520 --> 00:24:54,080 Speaker 1: you know, maybe not quite yet. I think about three 475 00:24:54,119 --> 00:24:56,080 Speaker 1: companies big in my life, and that has to do 476 00:24:56,160 --> 00:25:01,600 Speaker 1: with Google, Alphabet, Apple and Amazon, like every day. I'm 477 00:25:01,640 --> 00:25:04,600 Speaker 1: just kidding anymore, right, Ryan, Thank you so much. Ryan 478 00:25:04,720 --> 00:25:07,399 Speaker 1: the Stellica Equities reporter at Bloomberg News normally in Chicago, 479 00:25:07,480 --> 00:25:15,480 Speaker 1: but lucky for us here in our studio, I'm Robb journal. Yeah, 480 00:25:15,560 --> 00:25:18,080 Speaker 1: but you let me drive? No, no, no, who's going 481 00:25:18,200 --> 00:25:26,320 Speaker 1: to home? Please? I'll do. I want to drive. It's 482 00:25:26,359 --> 00:25:32,280 Speaker 1: a good question. Drive. This is the drive to the 483 00:25:32,359 --> 00:25:38,560 Speaker 1: clothes on bloom Bird Radio. All right, everybody, just about 484 00:25:38,640 --> 00:25:41,560 Speaker 1: nine minutes left in today's trading session. We're just about 485 00:25:41,640 --> 00:25:44,120 Speaker 1: thirteen minutes away, I think from Meta earnings. We're also 486 00:25:44,160 --> 00:25:46,840 Speaker 1: going to hear from Ford. Who am I missing service? Now? 487 00:25:47,440 --> 00:25:50,480 Speaker 1: I don't know. I was reading notes you said, Ford. 488 00:25:50,960 --> 00:25:54,119 Speaker 1: Oh yeah, of course, thank you a yeah on it. 489 00:25:54,520 --> 00:25:56,080 Speaker 1: But Met is a big one that we really want 490 00:25:56,080 --> 00:25:58,800 Speaker 1: to know when it comes to add spending and gonna tomorrow? 491 00:25:59,000 --> 00:26:03,080 Speaker 1: What Alpha can yesterday? Apple tomorrow and Amazon? Come on, 492 00:26:03,280 --> 00:26:06,000 Speaker 1: yeah we can, but okay, I'll try. All Right, Meta 493 00:26:06,080 --> 00:26:07,840 Speaker 1: by the way down six or seven percent, as we've 494 00:26:07,880 --> 00:26:11,560 Speaker 1: seen big tech, right, Microsoft, Google really under pressure underperforming. 495 00:26:11,800 --> 00:26:13,960 Speaker 1: Even though the NAZAC down to present, they're down a 496 00:26:14,040 --> 00:26:17,480 Speaker 1: lot more today. Okay, So dragging down the NASDAC one hundred, 497 00:26:17,480 --> 00:26:19,840 Speaker 1: the NASTAC can posit the SMP five hundred. Doesn't say 498 00:26:19,840 --> 00:26:22,560 Speaker 1: anything bigger about the economy and about other companies. That's 499 00:26:22,560 --> 00:26:24,800 Speaker 1: the question we're going to post a David Coudlaw, founder 500 00:26:24,880 --> 00:26:28,520 Speaker 1: and CEO and chief investment Strategies as well at Mainstay 501 00:26:28,560 --> 00:26:32,040 Speaker 1: Capital Management, close to four billion dollars in assets under management. 502 00:26:32,280 --> 00:26:34,679 Speaker 1: David joining us on the phone from Michigan. David, how 503 00:26:34,720 --> 00:26:38,240 Speaker 1: are you good? Good afternoon, Tim, Good afternoon, Carol, good, 504 00:26:38,480 --> 00:26:40,480 Speaker 1: good afternoon. So we're in the midst of it. We 505 00:26:40,600 --> 00:26:43,399 Speaker 1: had an alphabet of course, and Microsoft yesterday. Those shares 506 00:26:43,480 --> 00:26:47,160 Speaker 1: just tanking today and dragging down the indusseries. Uh does 507 00:26:47,200 --> 00:26:49,239 Speaker 1: it say something bigger? And asked this question to our 508 00:26:49,280 --> 00:26:52,040 Speaker 1: Dina Bass a little earlier, But I'm curious what you think. 509 00:26:52,480 --> 00:26:55,119 Speaker 1: Do these results say anything bigger about the U S 510 00:26:55,160 --> 00:26:59,440 Speaker 1: economy and the global economy. Uh, they're saying something bigger 511 00:26:59,440 --> 00:27:02,440 Speaker 1: about and and and they have such a you know, 512 00:27:02,520 --> 00:27:06,040 Speaker 1: these two stocks alone have such a waiting on both 513 00:27:06,080 --> 00:27:10,159 Speaker 1: the SNP and especially the NaSTA composite. Alphabet and Microsoft 514 00:27:10,240 --> 00:27:13,399 Speaker 1: together make up nine point four percent of the waiting 515 00:27:14,000 --> 00:27:17,000 Speaker 1: for the SMP five hundred and seventeen point two percent 516 00:27:17,040 --> 00:27:20,600 Speaker 1: for the NaSTA composite. So certainly, as much as both 517 00:27:20,680 --> 00:27:23,520 Speaker 1: of them are down today, they're weighing down those indexes 518 00:27:23,520 --> 00:27:29,280 Speaker 1: a lot. But what we've seen with UM, with Alphabet, Google, YouTube, Snap, 519 00:27:29,400 --> 00:27:32,520 Speaker 1: we've seen that advertising revenues are following, and I think 520 00:27:32,560 --> 00:27:34,160 Speaker 1: it says, you know, this is a big tech week 521 00:27:34,240 --> 00:27:37,760 Speaker 1: for earnings, and it's saying more about what's happening with 522 00:27:38,520 --> 00:27:42,359 Speaker 1: AD revenue for some of these big tech companies, and 523 00:27:43,119 --> 00:27:47,560 Speaker 1: the revenue on AD AD spending is falling. Revenue is 524 00:27:47,600 --> 00:27:51,720 Speaker 1: falling as a result of that UM. We're we've seen that, 525 00:27:51,840 --> 00:27:54,120 Speaker 1: you know, these companies have been the big leaders there 526 00:27:54,160 --> 00:27:59,840 Speaker 1: now looking at hiring freezes, maybe even cutting staff. So, uh, 527 00:28:00,160 --> 00:28:02,080 Speaker 1: you know, certainly we're seeing the impacts of the broader 528 00:28:02,119 --> 00:28:05,000 Speaker 1: economy impacting these companies. What did it tell you about 529 00:28:05,000 --> 00:28:09,520 Speaker 1: the broader economy, David, Well, Uh, if if we if 530 00:28:09,600 --> 00:28:12,520 Speaker 1: we broaden out in terms of you know what, you know, 531 00:28:12,600 --> 00:28:15,160 Speaker 1: we expected in the third quarter that we would start 532 00:28:15,240 --> 00:28:20,240 Speaker 1: to see earnings impacted more and certainly earnings were revised 533 00:28:20,280 --> 00:28:23,040 Speaker 1: down for the third quarter. Earnings were as high as 534 00:28:23,119 --> 00:28:26,159 Speaker 1: nine point eight percent back on June anticipated for the 535 00:28:26,240 --> 00:28:28,440 Speaker 1: third quarter that we're down about one and a half 536 00:28:28,480 --> 00:28:32,960 Speaker 1: percent expected. So on those lower expectations, seventy companies are 537 00:28:33,000 --> 00:28:35,200 Speaker 1: beating that have reported so far, but we've only had 538 00:28:35,600 --> 00:28:41,479 Speaker 1: a little more than s and companies reporting. Um. Certainly, uh, 539 00:28:41,680 --> 00:28:44,680 Speaker 1: you know, as we look into next year, we'll see 540 00:28:44,920 --> 00:28:48,280 Speaker 1: we expect the economy and effect earnings more as was 541 00:28:48,360 --> 00:28:51,240 Speaker 1: expected this quarter, but didn't really see it yet. Um. 542 00:28:51,560 --> 00:28:54,160 Speaker 1: But but but certainly we're seeing that. You know, what 543 00:28:54,320 --> 00:28:56,720 Speaker 1: the Fed is doing is certainly have an impact on 544 00:28:56,800 --> 00:29:00,640 Speaker 1: the economy, right exactly, all right, So you know, um, 545 00:29:00,920 --> 00:29:02,920 Speaker 1: we can all we do this on a regular basis, 546 00:29:02,960 --> 00:29:05,160 Speaker 1: as you probably know. But it's like, you know, are 547 00:29:05,240 --> 00:29:07,080 Speaker 1: we bought me out though on the equity trade and 548 00:29:07,120 --> 00:29:09,320 Speaker 1: how much of the bad news or expectations around it 549 00:29:09,880 --> 00:29:12,160 Speaker 1: is factored in? Are we topping out for rates? We 550 00:29:12,240 --> 00:29:14,880 Speaker 1: can have those conversations, but at the same time, you 551 00:29:15,000 --> 00:29:17,640 Speaker 1: guys and everybody else you know, has to put money 552 00:29:17,720 --> 00:29:19,360 Speaker 1: to work or you can park get in cash or 553 00:29:19,440 --> 00:29:21,960 Speaker 1: some cash like investment. What are you doing in this 554 00:29:22,120 --> 00:29:27,040 Speaker 1: environment environment? So we had this. Uh you know, we 555 00:29:27,200 --> 00:29:29,800 Speaker 1: had a low at the beginning of October, a lower 556 00:29:29,880 --> 00:29:32,720 Speaker 1: low than we had in June. Uh and we don't 557 00:29:32,760 --> 00:29:34,960 Speaker 1: know yet. I'm not even willing to say that it's 558 00:29:35,080 --> 00:29:37,560 Speaker 1: the low for this cycle, but it's certainly an intermediate 559 00:29:37,720 --> 00:29:42,040 Speaker 1: term low and an investible low because uh, you know, 560 00:29:42,160 --> 00:29:46,160 Speaker 1: we have uh you know, encouraging data in the settings 561 00:29:46,240 --> 00:29:48,480 Speaker 1: report that we didn't think. I think the you know, 562 00:29:48,880 --> 00:29:52,280 Speaker 1: the broader impact earnings as we talked about, has been 563 00:29:52,320 --> 00:29:55,600 Speaker 1: pushed out into the fourth quarter or next year. Uh. 564 00:29:55,800 --> 00:29:58,600 Speaker 1: So we're seeing this rally because we see the as 565 00:29:58,640 --> 00:30:02,600 Speaker 1: the terminal rate for the is approaching um whether we 566 00:30:02,680 --> 00:30:04,760 Speaker 1: call it a pivot or a pause or whatever it 567 00:30:04,880 --> 00:30:08,560 Speaker 1: may be. Uh. And at at the same time, you know, 568 00:30:09,040 --> 00:30:12,280 Speaker 1: we're seeing these decent earnings, So we think that that 569 00:30:12,720 --> 00:30:16,160 Speaker 1: we've got an investible rally here. We are invested in 570 00:30:16,320 --> 00:30:20,880 Speaker 1: growth and value. What's become more attractive more recently is 571 00:30:21,160 --> 00:30:24,240 Speaker 1: small cap stocks that we've added to our portfolio. But 572 00:30:24,360 --> 00:30:27,640 Speaker 1: we're we've got our portfolio hedges in place still because 573 00:30:27,680 --> 00:30:30,680 Speaker 1: we know there's more volatility ahead. So help us understand 574 00:30:30,760 --> 00:30:33,040 Speaker 1: how you're looking at the FEDS terminal rate not in 575 00:30:33,240 --> 00:30:34,600 Speaker 1: terms of what you think it's going to be. But 576 00:30:34,680 --> 00:30:36,960 Speaker 1: how long the Fed is gonna is going to leave 577 00:30:37,000 --> 00:30:39,400 Speaker 1: interest rates? And look, I know everything is context and 578 00:30:39,480 --> 00:30:42,440 Speaker 1: historical context here, but I would argue that in my lifetime, 579 00:30:42,480 --> 00:30:45,320 Speaker 1: this is high for the federal reserve. U would you 580 00:30:45,400 --> 00:30:47,680 Speaker 1: say that, how long would you say that federal the 581 00:30:47,720 --> 00:30:54,320 Speaker 1: Fed will leave rates high? Well, it's it's a tough question. 582 00:30:55,200 --> 00:30:59,120 Speaker 1: And I say that because the Fed has has never 583 00:30:59,200 --> 00:31:03,000 Speaker 1: stopped the hike cycle with headline and core inflation above 584 00:31:03,080 --> 00:31:06,560 Speaker 1: the Fed funds rate, They've always reached a positive real rate. 585 00:31:07,560 --> 00:31:10,200 Speaker 1: We're a long way away from that right now. Uh, 586 00:31:10,520 --> 00:31:12,640 Speaker 1: you know, we'll see what our next inflation rate is. 587 00:31:12,720 --> 00:31:15,720 Speaker 1: We'll see what that trend becomes. But you know, if 588 00:31:15,720 --> 00:31:18,560 Speaker 1: we're talking about a terminal rate, if it's somewhere between 589 00:31:18,640 --> 00:31:21,520 Speaker 1: four and a half to five percent right now, Uh, 590 00:31:21,800 --> 00:31:24,520 Speaker 1: maybe a little bit higher depending on whose prediction you 591 00:31:25,040 --> 00:31:29,160 Speaker 1: you believe, Um, that doesn't get us above the inflation 592 00:31:29,280 --> 00:31:32,760 Speaker 1: rate on headline or core. And so that means there's 593 00:31:32,840 --> 00:31:37,440 Speaker 1: more to go. Now, what could happen is inflation and 594 00:31:37,560 --> 00:31:41,080 Speaker 1: specifically core starts to come down more. We're certainly seeing 595 00:31:41,200 --> 00:31:44,320 Speaker 1: we're seeing rents come down, we're seeing housing come down. 596 00:31:44,360 --> 00:31:47,560 Speaker 1: We're seeing used car prices come down. Uh, some falling, 597 00:31:47,760 --> 00:31:51,040 Speaker 1: some areas of the economy falling precipitously. So we're seeing 598 00:31:51,080 --> 00:31:55,760 Speaker 1: those impacts and and those inflation inputs coming down. Hey, David, 599 00:31:55,880 --> 00:31:58,920 Speaker 1: just quickly, um thirty seconds here, you said it's an 600 00:31:58,920 --> 00:32:02,640 Speaker 1: investible rally. Is something like Google and Microsoft with those 601 00:32:02,640 --> 00:32:04,440 Speaker 1: shares down? Is that something you would invest in in? 602 00:32:04,560 --> 00:32:09,000 Speaker 1: Just quickly, yeah, I think I think for a trade certainly, uh, 603 00:32:09,120 --> 00:32:12,080 Speaker 1: and longer term, these are the secular growth stories. I 604 00:32:12,160 --> 00:32:15,120 Speaker 1: think the differences as we look further out, you know, 605 00:32:15,240 --> 00:32:16,960 Speaker 1: what are going to be the leaders There's been this 606 00:32:17,080 --> 00:32:20,840 Speaker 1: conversation about, uh, will it be technology has been for 607 00:32:20,880 --> 00:32:23,560 Speaker 1: the last ten years, or will be their other leadership? 608 00:32:23,600 --> 00:32:27,440 Speaker 1: But certainly for a trade, Uh, these are certainly investable. 609 00:32:27,600 --> 00:32:30,280 Speaker 1: All right, good to know. I really appreciate your time today. 610 00:32:30,360 --> 00:32:33,400 Speaker 1: David Coudla, who's founder, CEO and c I O of 611 00:32:33,600 --> 00:32:37,240 Speaker 1: the mainstay capital management firm. They've got some three point 612 00:32:37,320 --> 00:32:39,720 Speaker 1: eight billion in assets under management, joining us once again 613 00:32:39,760 --> 00:32:43,120 Speaker 1: on the phone from Michigan. Thanks for listening to Bloomberg 614 00:32:43,160 --> 00:32:46,840 Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud or Bloomberg 615 00:32:46,920 --> 00:32:48,720 Speaker 1: dot com and you can also listen to our radio 616 00:32:48,800 --> 00:32:51,360 Speaker 1: show at two pm Eastern on Bloomberg Radio, or watch 617 00:32:51,440 --> 00:32:53,760 Speaker 1: us on YouTube search Bloomberg Global News