WEBVTT - Bloomberg Surveillance: Nvidia Powers Global Rally 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.120 --> 0:00:46.600 the Bloomberg Terminal, and the Bloomberg Business Apps. Let's go 0:00:46.600 --> 0:00:49.800 over our new digital distribution. We do this for David Kirkpatrick, 0:00:49.840 --> 0:00:52.600 who is so out front on the new digital and 0:00:52.640 --> 0:00:55.880 the new digital for us as simple folks. YouTube. We're 0:00:55.880 --> 0:00:59.480 committed to it. Bloomberg Podcasts, We're working on it. We 0:00:59.560 --> 0:01:02.160 got radio tubes driving the bus here, but we got 0:01:02.200 --> 0:01:04.679 like ten people working on it. You're going to see 0:01:04.720 --> 0:01:07.080 all sorts of podcasts and this, that and the other 0:01:07.160 --> 0:01:10.039 thing planned out. We're doing it in a slow method 0:01:10.080 --> 0:01:13.880 agal with great support of Google. I should mentioned as 0:01:14.000 --> 0:01:17.800 well Apple car Play and Android, but mostly Apple Bloomberg 0:01:18.160 --> 0:01:22.160 Business app. It's free and downloaded, car plays booming, no 0:01:22.240 --> 0:01:24.119 other way to put it, and it's in twenty other 0:01:24.200 --> 0:01:30.800 countries as well. Twelve years ago he changed journalism in 0:01:30.920 --> 0:01:35.600 Silicon Valley. Most of it was oh breathless, Oh my god, 0:01:35.640 --> 0:01:38.479 we had lattes and we did this. And he wrote 0:01:38.560 --> 0:01:43.039 just a real climpic, simple clear book of how in 0:01:43.080 --> 0:01:47.360 a ranch house on in Silicon Valley they invented Facebook. 0:01:47.760 --> 0:01:50.000 And it was just amazing. The end of the book 0:01:50.080 --> 0:01:53.000 to make you cry where Zuckerberg's looking out at the 0:01:53.000 --> 0:01:56.760 whole new world after all from his driveway. David Kirkpatrick 0:01:56.840 --> 0:02:01.200 here on the Nvidia Effect. I am so honored. 0:02:01.240 --> 0:02:03.280 I remember the day I gotta be on your show 0:02:03.360 --> 0:02:07.720 more time hearing there's a photo of you and me 0:02:07.800 --> 0:02:13.000 and Paul Kodrowski where you absolutely nailed the future of Facebook. 0:02:13.000 --> 0:02:15.120 I think it was the day they went public, really 0:02:15.200 --> 0:02:18.760 really a great moment. We're here with the Nvidia Effect. 0:02:19.160 --> 0:02:21.760 If you were to write the book what is your 0:02:22.120 --> 0:02:24.480 Nvidia Effect. 0:02:24.360 --> 0:02:26.240 That's a great way to ask the question. Tom. 0:02:26.360 --> 0:02:28.720 I was thinking about how they're really you know Facebook. 0:02:28.720 --> 0:02:32.440 Of course, Meta is my longtime expertise, and here we 0:02:32.520 --> 0:02:34.960 have a company that's really taking a role in the 0:02:35.040 --> 0:02:37.880 industry that is not dissimilar to the role that Facebook 0:02:37.919 --> 0:02:42.360 had in those days of supercharged you know, domination and growth. 0:02:42.880 --> 0:02:46.600 In fact, interestingly, I think you know, just two weeks 0:02:46.600 --> 0:02:50.079 ago or so, Facebook gained more in one day than 0:02:50.160 --> 0:02:52.240 any company ever had when they went up one hundred 0:02:52.280 --> 0:02:54.280 and ninety seven billion, which is hard to say and 0:02:54.320 --> 0:02:55.639 believe they did that. 0:02:56.280 --> 0:02:59.000 I suspect today in video will go up more than that. 0:03:00.400 --> 0:03:04.120 So we have these records being just shattered by these companies. 0:03:06.680 --> 0:03:09.840 It isn't the same. It's a chip company, but it's interesting. 0:03:09.880 --> 0:03:14.079 It's also still run by its founder. It's a company 0:03:14.080 --> 0:03:17.400 that has its founder has had a long term view 0:03:17.600 --> 0:03:22.840 the entire time, which he is in extraordinary fashion realizing 0:03:24.000 --> 0:03:29.919 after thirty years of methodical development in a way that's 0:03:29.960 --> 0:03:32.840 not dissimilar from how Facebook was at the center of 0:03:33.800 --> 0:03:37.640 the change in global communications as the dominant company in 0:03:37.720 --> 0:03:41.680 social media, and Nvidia is now increasingly at the center 0:03:41.760 --> 0:03:47.000 of global not just communications but analysis and systems management 0:03:47.200 --> 0:03:52.320 and computation generally as the central company in the AI 0:03:52.440 --> 0:03:56.720 revolution in terms of at least dollars I mean open Aiyes, 0:03:56.760 --> 0:03:59.440 out there doing this stuff, but these are the guys 0:03:59.440 --> 0:03:59.960 making the money. 0:04:00.240 --> 0:04:02.960 Yeah, hey, David, you know, first of all, thank you 0:04:03.000 --> 0:04:04.680 for the notes you sent us this morning, and if 0:04:04.720 --> 0:04:08.440 you have not yet published them, please publish them somewhere 0:04:08.640 --> 0:04:09.480 on your social media. 0:04:09.600 --> 0:04:11.760 I thought those were not as good as my usual no. 0:04:11.920 --> 0:04:13.960 No, this, and I'll tell you what, just because for 0:04:14.000 --> 0:04:16.080 the average investor who wants to get a little perspective, 0:04:16.320 --> 0:04:19.560 your simple notes here today are very very helpful. You know, 0:04:19.640 --> 0:04:22.960 there are some folks out there, David that are suggesting 0:04:23.000 --> 0:04:28.560 that AI could be as big or bigger than the Internet. 0:04:28.839 --> 0:04:30.719 Can you help us put some perspective on that. 0:04:32.279 --> 0:04:35.640 Well, it's not a crazy statement. I think we don't 0:04:35.720 --> 0:04:37.920 really know how big or even. 0:04:37.720 --> 0:04:38.800 What AI is. 0:04:40.600 --> 0:04:44.240 It's still at such an early stage of gestation that 0:04:44.320 --> 0:04:48.800 we are processing in real time. Even Jensen Wang, even 0:04:48.839 --> 0:04:51.800 Sam Altman are processing in real time. 0:04:51.680 --> 0:04:52.640 What this could be. 0:04:55.160 --> 0:04:58.960 But there's no question that what we're seeing and I 0:04:59.040 --> 0:05:00.800 was actually this is a point that I didn't put 0:05:00.839 --> 0:05:03.400 in the notes. That is, you're keying up. You know 0:05:03.560 --> 0:05:06.119 what happened when the Internet came along was the entire 0:05:06.240 --> 0:05:11.000 industry reconfigured around this new opportunity, and we are seeing 0:05:11.040 --> 0:05:16.480 something exactly like that now for a much, much, much 0:05:16.560 --> 0:05:20.560 bigger industry, which is that in that sense even more impressive. 0:05:21.040 --> 0:05:24.240 You know, we have that the aggregate market cap of 0:05:24.279 --> 0:05:27.600 this industry is somewhere getting up close probably to ten 0:05:27.720 --> 0:05:31.360 trillion dollars. Maybe it's more than that. I haven't done 0:05:31.400 --> 0:05:34.599 the math, but that's the range we're talking about. You know, 0:05:34.680 --> 0:05:37.839 at the time the Internet came along, the tech industry 0:05:38.000 --> 0:05:42.960 in the most broad definition, might have been worth two 0:05:43.040 --> 0:05:45.480 hundred and fifty billion, three hundred billion. 0:05:45.480 --> 0:05:47.440 I don't know. Maybe maybe I'm a little low. 0:05:47.320 --> 0:05:49.920 There, but it was not a more a trillion, and 0:05:51.000 --> 0:05:54.240 so in a sense it's more important now than the 0:05:54.279 --> 0:05:57.400 Internet was. If it's true that we are entering a 0:05:57.440 --> 0:06:01.800 new phase of computation and social change based on computation, 0:06:01.880 --> 0:06:04.160 which is I essentially think the way you need to 0:06:04.200 --> 0:06:05.880 think of it, and this is it's like the Internet, 0:06:06.320 --> 0:06:08.320 a social change based on computation. 0:06:08.560 --> 0:06:10.080 Right, that's what we're going through again. 0:06:10.160 --> 0:06:12.840 Now, what's the free lunch on this, David Kirkpatrick, I've 0:06:12.839 --> 0:06:15.880 been looking at the thermodynamics of this. Everybody knows my 0:06:16.040 --> 0:06:18.680 view on bitdog. I'm not a fan. I think the 0:06:18.680 --> 0:06:22.679 thermodynamics of it is just bogus. But I don't believe 0:06:22.680 --> 0:06:25.760 that you're AI. But I'm ignorant. I mean, we're talking 0:06:25.800 --> 0:06:28.679 here about a massive infrastructure build out, a massive drag 0:06:28.720 --> 0:06:31.680 on electricity. It's just too much of a free lunch. 0:06:31.800 --> 0:06:35.679 David Kirkpatrick, what's the not the dark side, but what's 0:06:35.720 --> 0:06:39.039 the cost of this AI boom? 0:06:39.320 --> 0:06:40.560 There are so many costs. 0:06:40.560 --> 0:06:44.360 But again it's something that nobody yet really fully understands. 0:06:45.080 --> 0:06:48.719 I mean, it's interesting when you heard this crazy thing 0:06:48.760 --> 0:06:52.640 of Altman going out supposedly trying to get seven trillion 0:06:52.720 --> 0:06:55.840 invested in this arena, you know, which is a ridiculous, 0:06:55.920 --> 0:07:00.840 hyperbolic effort, but it suggests the scale of the resources 0:07:00.920 --> 0:07:05.600 that are going to be employed here. And yes, from 0:07:05.640 --> 0:07:07.880 an electricity point, you know, one of the reasons Sam 0:07:07.920 --> 0:07:10.640 Altman is the biggest investor in one of the fusion 0:07:10.760 --> 0:07:14.880 startups is because Altman believes that without fusion, without nuclear 0:07:14.920 --> 0:07:18.320 fusion power, we won't be able to affordably get enough 0:07:18.360 --> 0:07:21.760 power for AI. That's the kind of things that people 0:07:21.800 --> 0:07:26.360 in the industry are saying. So I actually think, though 0:07:26.360 --> 0:07:29.960 it's a two sided coin, happily as the Internet was 0:07:30.000 --> 0:07:32.120 in some ways, that we will get tons of social 0:07:32.160 --> 0:07:35.720 benefit and actually cost savings and efficiencies out of the 0:07:35.760 --> 0:07:38.920 application of this technology which is so expensive to run. 0:07:39.120 --> 0:07:42.480 David my CEO last year, had to be Mark Zuckerberg 0:07:42.520 --> 0:07:45.400 the way he reversed around from that tobacco. Paul's covered 0:07:45.440 --> 0:07:48.720 this better than me. What's the next step for mister 0:07:48.800 --> 0:07:50.880 Zuckerberg and the conversation. 0:07:51.960 --> 0:07:55.480 Well, obviously he's pivoted fully away from the metaverse in 0:07:55.520 --> 0:07:58.240 the short term. I do think, you know, one thing 0:07:58.240 --> 0:08:00.000 he's right about, and you know how critical I am 0:08:00.120 --> 0:08:02.120 with him. I wrote a piece in Time magazine which 0:08:02.200 --> 0:08:05.200 was unbelievably negative on their twentieth birthday two weeks ago. 0:08:05.360 --> 0:08:06.560 Missus arbor. 0:08:07.760 --> 0:08:12.200 I called it a tragedy. But but you know, they also. 0:08:12.080 --> 0:08:14.960 Understand augmented reality in the same way that Apple does. 0:08:15.000 --> 0:08:16.800 And even though they're not going to have devices as 0:08:16.800 --> 0:08:19.880 good as Apple's. You know what's going to be interesting 0:08:19.920 --> 0:08:22.240 in this AI era is what the plat, what the 0:08:22.520 --> 0:08:25.080 interface is going to be. That's one of the key 0:08:25.160 --> 0:08:29.200 questions that isn't resolved. I think Facebook Meta may actually 0:08:29.240 --> 0:08:33.080 be positioning itself pretty well for the interface of the 0:08:33.160 --> 0:08:38.920 AI revolution as they pivoted toward augmented reality through Oculus, 0:08:38.920 --> 0:08:42.160 et cetera. So it's not about the metaverse. It's about 0:08:42.200 --> 0:08:45.760 some kind of verse that is AI driven, and we're 0:08:45.760 --> 0:08:47.360 going to have to learn how to interact with it, 0:08:47.440 --> 0:08:47.800 all of us. 0:08:48.080 --> 0:08:51.800 David, it's like Kirkpatrick. He's actually aged well. Read the 0:08:51.840 --> 0:08:55.400 Facebook Effect, trust me, folks, it's aged well. It's out 0:08:55.440 --> 0:08:58.960 in paperback now. The hardcover is a collector's item, like 0:08:59.040 --> 0:09:02.160 David Kirkpatrick. But thank you so much. We look forward 0:09:02.200 --> 0:09:15.800 to the Nvidia effect. John Levin joins us. He's a 0:09:15.880 --> 0:09:19.440 chartered financial analyst as well, and he writes for Bloomberg 0:09:19.520 --> 0:09:23.480 Opinion and he's written for in Vidia, and he basically says, 0:09:23.800 --> 0:09:27.360 America first, Thank you for joining us this morning on 0:09:27.400 --> 0:09:31.480 this historic day. John, why is it American first with Nvidia? 0:09:33.440 --> 0:09:34.600 Good morning Tom. Yeah. 0:09:34.960 --> 0:09:36.959 So my take this morning was, you know, I hear 0:09:36.960 --> 0:09:40.319 a lot of people saying the US is getting too expensive. 0:09:40.400 --> 0:09:43.480 Let me take another look at Europe, you know, let 0:09:43.559 --> 0:09:44.040 me take a. 0:09:44.000 --> 0:09:45.040 Look at Japan. 0:09:45.360 --> 0:09:50.800 And the fact of the matter is, nowadays choices about 0:09:51.080 --> 0:09:55.320 geographic allocation are really kind of like choices about sector 0:09:55.360 --> 0:09:58.079 in disguise, right, And what you're saying when you take 0:09:58.120 --> 0:10:00.280 a look over at a lot of these markets is 0:10:00.440 --> 0:10:05.120 I want to underweigh tech, right, you know, Europe you're 0:10:05.240 --> 0:10:11.319 like overweighting financials and discretionary, you're overweighting industrials in Japan. 0:10:12.040 --> 0:10:15.120 If that's what you're really going for, you can achieve 0:10:15.160 --> 0:10:18.120 that right here at home. Right, you can achieve it 0:10:18.440 --> 0:10:21.920 by going equal weight SMP five hundred, or maybe you 0:10:22.000 --> 0:10:24.880 take a flyer on some of these unloved sectors here 0:10:24.960 --> 0:10:29.080 here in the United States. But I don't get geographic 0:10:29.280 --> 0:10:32.840 diversification for geographic diversification's sake. 0:10:33.360 --> 0:10:36.800 You know, I'm just looking at your opinion piece here today, Jonathan, 0:10:36.800 --> 0:10:39.480 and then just reaffirms something I learned from Tim Craighead, 0:10:39.480 --> 0:10:42.320 who runs a strategy for Bloomberg Intelligence out of London. 0:10:42.520 --> 0:10:43.839 I keep saying to Tim, how come the. 0:10:43.800 --> 0:10:46.960 European markets, the UK markets, there's so much cheaper. 0:10:46.640 --> 0:10:47.199 Than the US. 0:10:47.480 --> 0:10:49.280 And he says, no, Nuts, it's because we don't really 0:10:49.280 --> 0:10:51.600 have a tech sector over here. And you back out 0:10:51.640 --> 0:10:53.559 the tech sector and the market's not, you know, so 0:10:54.080 --> 0:10:57.319 cheap here. So for the US, I guess you get 0:10:57.320 --> 0:10:58.880 what you pay for, right, Jonathan. 0:10:59.720 --> 0:11:03.600 Yeah, exactly. I mean, you know, look, this isn't a 0:11:03.640 --> 0:11:07.160 profound statement, but you know, the reason that the US 0:11:07.200 --> 0:11:09.840 has outperformed the world for the past fifteen years is 0:11:09.880 --> 0:11:14.040 because we have Silicon Valley, and because we have the 0:11:14.120 --> 0:11:17.640 mag seven and so, you know, our fortunes are our 0:11:17.679 --> 0:11:19.360 wagon has hitched to these folks. 0:11:19.520 --> 0:11:21.880 And uh, if you. 0:11:21.840 --> 0:11:25.240 Know, the sector starts starts to tumble, Uh, you know, 0:11:25.679 --> 0:11:30.199 we can go down too. But in the meantime, we're enjoying, Uh, 0:11:30.400 --> 0:11:32.920 we're enjoying all of the upside. 0:11:32.760 --> 0:11:35.280 Right now, Paul up two hundred and fifty one down points. 0:11:35.280 --> 0:11:40.040 We're quoting to Dell our surveillance. Dow Jones Industrial Average 0:11:40.040 --> 0:11:44.120 correspondent Jonathan Farrell insists, but on a percentage basis, folks, 0:11:44.160 --> 0:11:47.360 Dow up six tens a percent, SMB five hundred, up 0:11:47.400 --> 0:11:50.920 one point two percent, with up two percent futures right 0:11:50.960 --> 0:11:54.160 now the nastack here four minutes into trading up one 0:11:54.200 --> 0:11:55.600 point nine percent. 0:11:55.920 --> 0:11:58.440 So, Jonathan, you know, is there a concern here? I 0:11:58.480 --> 0:12:02.880 mean that may mean there's too much tech in this marketplace. 0:12:02.920 --> 0:12:05.160 I mean I kind of think tech has been, you know, 0:12:05.200 --> 0:12:07.840 it has been, you know, the leader for these markets 0:12:08.160 --> 0:12:11.480 for the last you know, fifteen twenty years, And I 0:12:11.480 --> 0:12:13.000 don't necessarily think that's a bad thing. 0:12:13.240 --> 0:12:15.480 Are you concerned about there's too much concentration in tech? 0:12:16.760 --> 0:12:20.079 Well, I mean, I mean, look, another obvious statement is that, 0:12:20.920 --> 0:12:24.400 you know tech is is very cyclical. You know, we're 0:12:24.440 --> 0:12:27.600 more susceptible to a downturn or something like this. And 0:12:28.000 --> 0:12:30.200 you know, let's face it, like I get, I get 0:12:30.200 --> 0:12:35.360 the handwringing. There is a lot tied to, for instance, 0:12:35.440 --> 0:12:38.200 a single name. Right if you just if you just 0:12:38.240 --> 0:12:42.200 look at the spread of cell side expectations around around 0:12:42.280 --> 0:12:45.640 na video, right, Like the most bullish call on the 0:12:45.679 --> 0:12:48.439 street versus the most bearish call on the street can 0:12:48.520 --> 0:12:51.880 swing the entire outcome for the index over the next 0:12:51.920 --> 0:12:55.040 twelve months by something like four percentage points. You know, 0:12:55.440 --> 0:12:59.440 that's that's big for a single a single name. So 0:12:59.480 --> 0:13:01.720 I get it. But you know, at the end of 0:13:01.720 --> 0:13:05.080 the day, Uh, there are other ways to manage risk 0:13:05.240 --> 0:13:07.160 than than going abroad. 0:13:07.280 --> 0:13:09.360 So how do you do that? If skew is so low? 0:13:09.480 --> 0:13:11.680 It's one of the Greek letters here, folks, I'm trying 0:13:11.720 --> 0:13:13.920 to impress it in here with a little bit of 0:13:13.960 --> 0:13:18.400 crossbow and analysis. John, It's simple. Does a derivative strategy 0:13:18.440 --> 0:13:21.400 work as hedging work here? Or do your risk missing 0:13:21.480 --> 0:13:24.320 a boom. 0:13:23.200 --> 0:13:27.640 Oh the old UH tailhage those out of the money 0:13:27.679 --> 0:13:32.680 protective puts. I don't know, you know, that's that's uh. 0:13:32.840 --> 0:13:35.840 I don't want to miss mischaracterize this, but. 0:13:36.559 --> 0:13:39.960 Bloomberg surveillance we allow you to mischaracterize continue. 0:13:40.800 --> 0:13:43.200 But you know, I mean it's sort of sort of 0:13:43.240 --> 0:13:49.240 like the old uh Mark Spitznagel Universal Universe take, you know, 0:13:49.480 --> 0:13:55.960 like why bother UH deworsifying into UH into the bond market. 0:13:56.000 --> 0:13:58.679 I guess this was his take back when bonds were 0:13:58.720 --> 0:14:02.400 paying one percent and you could you could just keep 0:14:02.480 --> 0:14:06.200 enjoying that upside and sell yourself some some protective puts. 0:14:06.559 --> 0:14:08.160 It's a possible, it's a possibility. 0:14:08.840 --> 0:14:11.320 Do you rebail? Do you believe in rebail? I mean, 0:14:11.400 --> 0:14:13.600 I mean you're on the dark side with the Bloomberg opinion, 0:14:13.679 --> 0:14:16.240 But I mean, what do you do your rebail in video? 0:14:16.320 --> 0:14:16.440 Here? 0:14:16.480 --> 0:14:21.680 Your rebail Microsoft? I don't think. So what do you 0:14:21.720 --> 0:14:25.320 mean sell it out to bring the down in a portfolio? 0:14:27.120 --> 0:14:27.400 Yeah? 0:14:27.920 --> 0:14:31.200 I mean yeah, so, like I said, I think an 0:14:31.240 --> 0:14:34.160 obvious and very simple strategy here is as you just 0:14:34.160 --> 0:14:35.440 go equal way right? 0:14:36.240 --> 0:14:38.240 Yeah, all right, but I mean here, you know, it's 0:14:38.320 --> 0:14:41.120 what's interesting in your opinion piece, Jonathan is that tech 0:14:41.160 --> 0:14:43.920 stocks are expensive here in the US, but they're also 0:14:44.320 --> 0:14:47.160 expensive in other parts of the world as well. It's 0:14:47.160 --> 0:14:49.040 just that we have more of them. I guess there's 0:14:49.080 --> 0:14:49.960 a way to think about it. 0:14:51.240 --> 0:14:55.280 Yeah, one hundred percent. I mean, a very simple and 0:14:55.680 --> 0:15:00.360 sort of illuminating exercise is, you know, just look at 0:15:00.720 --> 0:15:06.280 is in US tech versus MSCI world x US. It's 0:15:06.280 --> 0:15:09.520 the same, you know, Uh, it's the It's the same 0:15:09.800 --> 0:15:12.400 exact thing. So if you think that there's a bubble 0:15:12.440 --> 0:15:14.960 in US tech, you're going to find the same thing 0:15:15.160 --> 0:15:16.280 everywhere else in the world. 0:15:16.480 --> 0:15:18.640 Have you been to the fund and Blow Hotel? Recently 0:15:18.720 --> 0:15:22.080 we're talking to Belchunis and Greidfeld. They spent like a 0:15:22.120 --> 0:15:24.760 week at the Fontain Blow Hotel. That part of the. 0:15:25.360 --> 0:15:28.120 John I was, I was not. 0:15:28.280 --> 0:15:30.760 I'm not one of these fancy Bloomberg people that hang 0:15:30.840 --> 0:15:35.160 out over in Miami Beach. I'm like a core Miami guy. 0:15:35.360 --> 0:15:38.840 I'm on the mainland here, Tom, Jonathan. 0:15:38.160 --> 0:15:41.120 Thank you so much, greatly appreciate it. In Miami, they're 0:15:41.160 --> 0:15:48.760 writing for Bloomberg Opinion. I've got a really important conversation 0:15:48.920 --> 0:15:54.320 coming up here in the Interactive Brokers Studios with Dana Telsey. 0:15:54.360 --> 0:15:58.520 This is going to be hugely, timely, really important conversation. 0:15:58.760 --> 0:16:00.920 Yesterday I brought this up early, but I'll bringing up again. 0:16:01.000 --> 0:16:04.720 Tony Capiano has this pulse on what we do with 0:16:04.800 --> 0:16:08.040 their money. He runs a small hotel shop. It's not 0:16:08.160 --> 0:16:11.760 Motel Cease, it's Marriott, but Marriott's way more than Marriott. 0:16:11.840 --> 0:16:13.920 Yeah, lots of brands like. 0:16:14.800 --> 0:16:16.720 You say, what do they what do they not own? 0:16:17.240 --> 0:16:17.800 Maybe you got a. 0:16:17.760 --> 0:16:20.640 Clear and you were lobbying for a choice hotel suite in. 0:16:20.680 --> 0:16:22.960 Paris for the Olympics and I got nowhere with them. 0:16:23.000 --> 0:16:24.560 We'll see you're trying to bribe. 0:16:24.400 --> 0:16:27.240 Them, but you know. Anyways, his insight, which goes to 0:16:27.320 --> 0:16:30.800 Dana Telci's world at the Telsi Advisory Group, is they 0:16:30.880 --> 0:16:34.520 misjudged luxury. And what he said is luxury is just 0:16:34.640 --> 0:16:37.480 killing it. So let's take a given luxury stock. This 0:16:37.600 --> 0:16:41.160 is Lewis viewton it's the r No family and there's 0:16:41.200 --> 0:16:44.280 this gloom and Dana saying, stop it, don't give me 0:16:44.320 --> 0:16:47.440 this china. We're all gonna die stuff. Since the middle 0:16:47.440 --> 0:16:51.440 of January, Loose viewtont LVMH has a pop of twenty 0:16:51.480 --> 0:16:55.800 eight percent Dana Telcea with their luxury the rest. 0:16:55.560 --> 0:16:59.080 Of the year in retail, Hi, how are you thank 0:16:59.120 --> 0:17:00.040 you so much for how. 0:17:01.280 --> 0:17:04.479 Well give me? Give me LVMH and luxury and the 0:17:04.520 --> 0:17:06.119 rest of it is that where you want to be 0:17:06.160 --> 0:17:06.720 in retail. 0:17:07.600 --> 0:17:11.040 I mean, I think the luxury, particularly LVMH is where 0:17:11.080 --> 0:17:13.400 you want to be in retail. And the reason why 0:17:13.440 --> 0:17:16.000 you want to be there in retail is because the 0:17:16.040 --> 0:17:19.679 brands that they own, the innovation and creativity that they have. 0:17:20.200 --> 0:17:23.719 Look at their distribution that they have, and they basically 0:17:24.000 --> 0:17:26.640 when you think about Sephora, right all the way up 0:17:26.680 --> 0:17:29.760 to whether it's wines and spirits or to whether it's jewelry, 0:17:30.200 --> 0:17:32.560 they have brands that people want to own and want 0:17:32.560 --> 0:17:35.280 to buy. And let's not forget this is also the 0:17:35.359 --> 0:17:38.359 year of the paras Olympics, and they're a sponsor of 0:17:38.359 --> 0:17:39.480 those paras Olympics. 0:17:39.640 --> 0:17:42.879 I mean, I look Dana, first of all, Dana on Sophora, 0:17:43.040 --> 0:17:47.520 can you have Sephora pay cash to teenagers to throw 0:17:47.600 --> 0:17:50.320 out one third of the bottles in their bathroom so 0:17:50.359 --> 0:17:53.000 that they'll buy more Sophora? I think that would be. 0:17:52.920 --> 0:17:55.720 Only yes, only if they'd buy more at higher prices, 0:17:55.760 --> 0:17:56.360 and there you go. 0:17:56.520 --> 0:17:58.360 They got to do that, and they will do that. 0:17:58.440 --> 0:18:01.520 We know that, Dana. I'm luxury here and it's critical. 0:18:01.880 --> 0:18:06.879 Can you make money and luxury gaming the fashion designers? 0:18:06.960 --> 0:18:10.200 I say this with a beyond fabulous The new Look 0:18:10.760 --> 0:18:13.280 with Coco Chanel and Christian d Or have you seen 0:18:13.320 --> 0:18:15.280 it on ample TV data? Do you love it? 0:18:15.359 --> 0:18:15.560 Yes? 0:18:15.600 --> 0:18:15.800 I have? 0:18:16.160 --> 0:18:18.000 Yeah, it looks terrific. 0:18:17.840 --> 0:18:18.480 Looks terrific. 0:18:18.560 --> 0:18:21.480 Can you game? Can you make money and luxury based 0:18:21.520 --> 0:18:24.120 on gaming this designer or that designer? 0:18:25.600 --> 0:18:27.679 It's a little harder to do, I think when you 0:18:27.760 --> 0:18:30.600 have something like it, and the reason why take a 0:18:30.640 --> 0:18:33.320 look at Gucci. You can't bet on the designers. Look 0:18:33.359 --> 0:18:37.440 what Caring basically doesn't have the same stable of designers 0:18:37.480 --> 0:18:41.280 that LVMH has when you're operating seventy five brands. So 0:18:41.320 --> 0:18:44.080 I don't necessarily think you bet on one designer or 0:18:44.119 --> 0:18:46.919 another designer. I think it's the health of the brand, 0:18:47.240 --> 0:18:52.000 and some brands are even more illustrious than just the 0:18:52.080 --> 0:18:54.840 designer themselves. Look at our Mez. You don't know who 0:18:54.880 --> 0:18:58.800 the designer is, but doesn't everyone want anything or MEZ. 0:18:58.880 --> 0:19:01.480 Makes Dana, you know, I want to ask you about 0:19:01.480 --> 0:19:04.280 the Chinese consumer, where we talk about luxury, that just 0:19:04.320 --> 0:19:06.320 seems to be one of the key key variables. And 0:19:06.359 --> 0:19:09.080 I'll walk home here to the Penn station today and 0:19:09.080 --> 0:19:11.200 I'll walk down Fifth Avenue. I'll walk down Madison Avenue 0:19:11.200 --> 0:19:14.159 and I'll see a ton of European tourists. I'm not 0:19:14.200 --> 0:19:16.919 seeing many Chinese tours here, and I know how critical 0:19:16.920 --> 0:19:18.520 they are to some of those big shops there on 0:19:18.720 --> 0:19:21.160 Madison and Fifth. Talk to us about the Chinese consumer. 0:19:21.200 --> 0:19:22.479 Where is he or she? 0:19:23.560 --> 0:19:26.159 I think they're staying local. I think they're staying in China. 0:19:26.200 --> 0:19:28.240 I don't think they're traveling as much as they had 0:19:28.240 --> 0:19:31.480 in the past. You're absolutely right, you're not seeing them. 0:19:31.560 --> 0:19:34.440 I am seeing a little bit more Europeans. I think 0:19:34.480 --> 0:19:38.200 that they're spending also, whether it's on vacations or other 0:19:38.720 --> 0:19:42.960 in going things and having experiences rather than just some 0:19:43.080 --> 0:19:45.639 of the goods. So it's spending on local brands, it's 0:19:45.680 --> 0:19:50.560 spending on experiences. And almost every single luxury house has 0:19:50.960 --> 0:19:54.280 mentioned the impact of that Chinese consumer when they come 0:19:54.320 --> 0:19:58.160 back is anyone's guests. But it is incumbent upon every 0:19:58.200 --> 0:20:02.040 luxury brand to continue to drive the most innovation and 0:20:02.119 --> 0:20:05.520 continue to update and enhance their stores in China in 0:20:05.600 --> 0:20:06.680 order to remain relevant. 0:20:06.880 --> 0:20:07.360 Interesting. 0:20:07.400 --> 0:20:09.320 All right, let's back away from luxury get to where 0:20:09.359 --> 0:20:12.480 I tend to traffic here with the regular folk here. 0:20:12.560 --> 0:20:14.639 Just talk to us about the US consumer here. What 0:20:14.680 --> 0:20:17.399 are you seeing, you know, coming out of the holiday season, 0:20:17.520 --> 0:20:19.840 kind of plowing into spring season. What what are you 0:20:19.880 --> 0:20:21.280 seeing from the US consumer? 0:20:22.280 --> 0:20:26.720 I think overall you can use the words discerning, cautious, choiceful. 0:20:27.160 --> 0:20:31.080 They're definitely whatever you want to call it. They're definitely 0:20:31.119 --> 0:20:36.119 more careful about their spending, whether it's discretionary or essentials. 0:20:36.359 --> 0:20:40.200 We all saw Walmart's announcement the other day and their sales, 0:20:40.440 --> 0:20:44.520 and they reported very strong holiday results with momentum exiting 0:20:44.520 --> 0:20:47.119 the business with you look at their US trends with 0:20:47.200 --> 0:20:49.880 a comp of four percent, I think there's a trade 0:20:49.920 --> 0:20:52.840 down that's happening, and you're seeing that trade down. Even 0:20:52.880 --> 0:20:55.960 look at the off pricers, whether it's TJX, Burlington or 0:20:56.040 --> 0:20:59.840 Ross stores. Anytime their same store sales are above three percent, 0:21:00.240 --> 0:21:02.440 I always think they get the benefit of the trade down. 0:21:02.640 --> 0:21:04.600 They were that way in the third quarter. When they 0:21:04.600 --> 0:21:06.880 begin reporting next week, I think we're going to see 0:21:06.920 --> 0:21:07.240 that again. 0:21:07.280 --> 0:21:09.600 If you're with us on Bloomberg survants Dana Telsey, the 0:21:09.640 --> 0:21:13.280 Telsey Advisory grew up here on YouTube Bloomberg podcasts, Thank You, 0:21:13.400 --> 0:21:16.879 what Chat? They're having fun with that today HJJ, good morning, 0:21:17.160 --> 0:21:20.480 and also on Apple car Play. We're out there with 0:21:20.480 --> 0:21:23.040 the Bloomberg Business app. It's free, you sign up for 0:21:23.080 --> 0:21:25.919 Apple CarPlay. Dana, I don't want to catch on awares here, 0:21:25.960 --> 0:21:27.760 but you're such a trooper, I'm going to go there. 0:21:28.440 --> 0:21:32.679 I drove by Nordstrom's the other day. This is a 0:21:32.720 --> 0:21:37.160 ten year track record of negative seven percent per year. 0:21:38.240 --> 0:21:41.280 What in God's name did they do with that iconic 0:21:41.440 --> 0:21:46.480 Western brand? What does Nordstrom do to salvage itself? 0:21:47.720 --> 0:21:49.760