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Speaker 2: This is incredibly well timed for the news. Laurie Calvesina
Speaker 2: with this.
Speaker 3: At RBC in where they work at Credit Squeeze.
Speaker 2: Over the years, Lauriae, I've never seen this where once
Speaker 2: again vix out three big figures, and I just don't
Speaker 2: see the sweat that I should see with a vix
Speaker 2: out three big figures. We're just weaned. We're hardwired by
Speaker 2: in the dip, aren't we.
Speaker 4: So it's interesting, Tom, if you look at aaii net bowls,
Speaker 4: they dropped like a stone, sunk like a stone. I
Speaker 4: guess I should stay in August. And the last time
Speaker 4: we saw that was the first quarter of this year,
Speaker 4: which predated the tariff sell off that we got. But
Speaker 4: in retrospect was an indication that maybe that by the
Speaker 4: mentality wasn't going to be rushing in to save the day.
Speaker 4: So you know, it's funny, Tom, we're having sort of
Speaker 4: a red day or red morning to start the week.
Speaker 4: I'm a little surprised, you know, by the timing of
Speaker 4: it necessarily, but you know, of this particular day. But
Speaker 4: that being said, we had been telling people, you know,
Speaker 4: back in August AAI I had sung valuations were stretched
Speaker 4: and seasonalities poor in September and October.
Speaker 2: Well, I've been remiss and mentioned it's the Nasdaq one
Speaker 2: hundred a negative one point five percent this morning.
Speaker 5: Absolutely, So let's let's just start with valuation. How are
Speaker 5: you thinking about valuation here?
Speaker 6: Is that?
Speaker 7: Is that a cost for concern as we think about it?
Speaker 8: So?
Speaker 9: I think it is.
Speaker 4: And if you look at just plain old fashioned vanilla
Speaker 4: forward pe multiples, a market cap weighted s and P
Speaker 4: five hundred number has been bumping up against recent highs
Speaker 4: and started to stall. We've seen the same thing on
Speaker 4: the Nasdaq one hundred, even if you look at it
Speaker 4: on an equal weighted basis, And you know, the way
Speaker 4: we put it is that we sort of hit a
Speaker 4: valuation ceiling and things get a little bit tougher, and
Speaker 4: it really just represents a headwind that you're kind of
Speaker 4: not really vulnerable to good news anymore, but you are
Speaker 4: vulnerable to bad news, and this morning the bad news
Speaker 4: seems to be the bond market acting out.
Speaker 5: Yeah, exactly, We've got the ten year treasure yields out
Speaker 5: about six basis points four point two nine percent here,
Speaker 5: so we do have a FED that presumably is going
Speaker 5: to start easing. How does that play into your outlook?
Speaker 4: So it's a great question, Paul, and I'll tell you.
Speaker 4: We have a you know, sort of a top down
Speaker 4: valuation model where we project where the PE should be
Speaker 4: at the end of the year on a trailing basis,
Speaker 4: and three inputs into that are inflation, the FED, and
Speaker 4: ten year yields. The FED cutting, you know, getting some
Speaker 4: relief there should give you some upward lift to that PE,
Speaker 4: but inflation moving up should give you some downward pressure.
Speaker 4: And we'll see you know, TBD on the ten year yield,
Speaker 4: but it tends to be more of an inversely correlated factor.
Speaker 4: So even if we have cuts coming off, ten year
Speaker 4: yields are moving up.
Speaker 3: The way the.
Speaker 4: Math works says, you know, at best, they sort of
Speaker 4: net out, you know, at the end of the day
Speaker 4: if you throw inflation and may give you some downward pressure.
Speaker 5: Right, So how do you screen here in this kind
Speaker 5: of market? Again where it's a most people call it
Speaker 5: an expensive market, but it's supported by some pretty solid
Speaker 5: earnings out there.
Speaker 7: How do you screen here? You screen by industry, by factor.
Speaker 4: How do you think so we you know, we tend
Speaker 4: to do less work on factors. I tend to do
Speaker 4: more work on sectors and industries. And I'll tell you
Speaker 4: I put another chart into the weekly this week. I'm
Speaker 4: sounding like a broken record, but it comes back to
Speaker 4: the financials and we did some work around ism prices
Speaker 4: paid last week, just looking at its relationship to the
Speaker 4: stock market, and then I ran it against sector performance
Speaker 4: and guess what financials comes out as your top sector.
Speaker 4: If that sort of leading indicator of inflation is moving up,
Speaker 4: things like healthcare and staples tend to underperform.
Speaker 2: Do you have a vector of inflation higher or is
Speaker 2: it a vector level persistent?
Speaker 4: So you know, our economists are looking for inflation on
Speaker 4: a head line basis. I think to move up to
Speaker 4: around two point nine percent at the end of the year,
Speaker 4: So nothing crazy like what we saw in sort of
Speaker 4: the you know, kind of post COVID era or even
Speaker 4: back in the seventies, but you know, certainly far away
Speaker 4: from that two percent target that the FED has, And
Speaker 4: you know, I think this is just going to be
Speaker 4: the question. You know, we've got this real test coming up.
Speaker 4: We know the inflation pressures are there. We don't know
Speaker 4: what the demand picture is really going to be, but
Speaker 4: we know that tariffs are creating some upwards seen into sectors.
Speaker 2: I mean, I like this idea, how quaint sectors If
Speaker 2: I have a persistent inflation, which sectors win?
Speaker 4: So you've actually been seeing energy act a little bit better.
Speaker 4: And that's another one that typically, you know, we've just
Speaker 4: noticed more anecdotally less so in a study like the
Speaker 4: one I mentioned, But if you expect to see you know,
Speaker 4: sort of inflation pressures mount, we often will see the
Speaker 4: commodity sectors do quite well. We actually upgraded materials the
Speaker 4: last time we made sort of our quarterly changes to
Speaker 4: sector bets, and we liked the valuations there. Our analysts
Speaker 4: were pretty enthusiasm. There are clearly some tariff headwinds, but
Speaker 4: there's also a lot of you know, kind of a
Speaker 4: dollar benefit from a weeker dollar.
Speaker 7: I about just the concentration risk in this market.
Speaker 5: Every once in a while, like every other week, maybe
Speaker 5: it gets called out somewhere that boy it's ten percent.
Speaker 5: You know, they're you know, halfu of stocks are really
Speaker 5: responsible for the performance of the S and P five hundred.
Speaker 7: How do you guys think about that?
Speaker 10: So we have one chart in our deck.
Speaker 4: This may be the first time I've ever talked about
Speaker 4: it on TV, but we look at those top ten
Speaker 4: market cap names in the S and P five hundred
Speaker 4: as a percent of net income of the S and P,
Speaker 4: and then we compare it to the percent of market cap.
Speaker 4: And what we're seeing is that the market cap has
Speaker 4: exceeded the net income percentage. But that gap has been
Speaker 4: pretty stable in recent years, so.
Speaker 10: You're getting the premium. I will tell you.
Speaker 4: In August, it did seem like the gap got a
Speaker 4: little bit wider between the two. Nothing super alarming, but
Speaker 4: you could have made the case looking at that chart
Speaker 4: that the concentration, you know, maybe got a little bit
Speaker 4: of ahead of the relationship that have been in place
Speaker 4: the last time.
Speaker 3: So what is I mean?
Speaker 2: Come on, it's September. I believe the quarter in September
Speaker 2: thirty the present and can't change.
Speaker 3: That, right, I don't think so?
Speaker 2: Okay, thank you anyone, but September thirty. JP Morgan is
Speaker 2: October fourteenth. I mean, we got earnings wrong last time
Speaker 2: and the time before. Are we reducing it again?
Speaker 4: Well, look, I will tell you that on earnings this
Speaker 4: last reporting season, I would sort of fade the idea
Speaker 4: that it was the best reporting season ever. I think
Speaker 4: one of my competitors actually said that. And if you
Speaker 4: go through and you look at the data, a lot
Speaker 4: of it was backward looking. And it was because of
Speaker 4: all these tariff impacts that weren't as bad as what
Speaker 4: people had put in in the last reporting season. And
Speaker 4: guess what, everybody figured that out starting in May, right,
Speaker 4: and so it really had already gotten baked in. It
Speaker 4: was a very sort of backward looking beat. If you
Speaker 4: look at, you know, kind of the forward looking growth
Speaker 4: expectations for twenty twenty six, we only saw them go up.
Speaker 4: And you know, if you look at that percentage growth
Speaker 4: rate twenty six over twenty five, it only went up
Speaker 4: for two sectors, tech and materials.
Speaker 10: It went down everywhere else.
Speaker 4: That doesn't mean to me, that doesn't scream that we
Speaker 4: just injected a bunch of optimism into the outlook.
Speaker 2: I have one final quest. I mean, you're so healthy,
Speaker 2: I mean for your children, are you going with the
Speaker 2: leaded cheese or Kraft singles two percent milk American cheese.
Speaker 4: We do not do Kraft, the Kraft singles we do.
Speaker 4: The mozzarella sticks were big.
Speaker 3: Those are very big. Thank you.
Speaker 4: Yeah, the little one likes those.
Speaker 7: Yeah, you gotta keep them happy.
Speaker 2: Who does match sha go long mozzarella sticks.
Speaker 10: Also, we also.
Speaker 4: Have a daily dose of chocolate milk, so very good.
Speaker 3: I like that.
Speaker 2: I like that too. Remember Bosco, come in. You've been Bosco.
Speaker 2: Your mother know you're too young to remember. I remember
Speaker 2: powdered milk. You talk about Death's door. Lauri Calvicina, thank
Speaker 2: you so much, greatly appreciate it.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: Henrietta Trey's briefs This avoiding the speculation of the weekend
Speaker 2: and the president's health. Henrietta, if we have a war department,
Speaker 2: what is the symbolism of going from Harry Truman's defense
Speaker 2: Department back to a renamed War Department.
Speaker 6: I think the most important takeaway here is that Congress
Speaker 6: is about to reinsert itself into the conversation for the
Speaker 6: first time in a month. Recall that the House left
Speaker 6: early at the end of their scheduled the scheduled work period.
Speaker 6: They called it quits early because of the hullabaloo around
Speaker 6: the Epstein files. So now the President is going to
Speaker 6: be facing a serious litany of competition from Congress when
Speaker 6: they get back to talk about, you know, Miron, the
Speaker 6: firing of Cook, the firing of the your Labor Statistics Commissioner,
Speaker 6: the why not rename the War Department. It's a great
Speaker 6: way to have another way to control the narrative, which
Speaker 6: is going to be critical going into a potential government shutdown.
Speaker 6: The fact that the Federal Court of Appeals ruled that
Speaker 6: his aipatas were unlawful, and a whole host of other
Speaker 6: things that he hasn't had to address for five weeks
Speaker 6: and is going to have to starting today.
Speaker 9: So a great way to have a counter cycle.
Speaker 5: Who in Congress is going to drive the agenda over
Speaker 5: the next several weeks and months here the social play.
Speaker 6: Out, well, really we're going to see the government shutdown
Speaker 6: probably start to drive the narrative pretty quickly because it
Speaker 6: is the most pressing issue for them. This month, we're
Speaker 6: going to do the National Defense Authorization Act in the
Speaker 6: Senate this week. We'll get the mirror confirmation hearing in
Speaker 6: the Senate Banking Committee on Thursday. The House is going
Speaker 6: to take up their NDAA next week. Those let's just
Speaker 6: avert a government shutdown narratives are really going to drive
Speaker 6: because that's the most urgent, pressing issue. There will be
Speaker 6: press conferences with Republican Congressman Massy over Epstein.
Speaker 9: They'll try to get that bill to the floor.
Speaker 6: The Senators are going to talk about, you know, whether
Speaker 6: or not they can cobble together an appropriations bill and
Speaker 6: pocket recisions. The driving narrative is really going to be
Speaker 6: the legislative agenda. I love the using the calendar just
Speaker 6: for that purpose. It's all about a shutdown.
Speaker 5: So, Henryette ken you, I feel like I ask you
Speaker 5: this question every six or nine months. What is the
Speaker 5: calendar look like as it relates to a shutdown?
Speaker 7: What is the timing and the milestones we have to
Speaker 7: pay attention to.
Speaker 6: Basically, we need them to come to an agreement to
Speaker 6: keep the lights on by September thirtieth at midnight. Asking
Speaker 6: any more than that is probably unrealistic. The House and
Speaker 6: Senate having come to an agreement on all twelve appropriations
Speaker 6: bills since I want to say Bill Clinton's era in
Speaker 6: ninety six, so you know, any hopes of camaraderie and
Speaker 6: bipartisanship have flown that they are not realistic. But a
Speaker 6: short term staff gap that's going to probably weigh on
Speaker 6: the legislative agenda another one or two times for the
Speaker 6: rest of this year is what we should expect.
Speaker 9: I don't think there will be a shutdown. My odds
Speaker 9: are twenty five percent.
Speaker 6: That's pretty high for me, to be honest, But that's
Speaker 6: because the administration is doing something called a rocket recision
Speaker 6: where they try to cut spending.
Speaker 9: The Congress is already.
Speaker 6: Appropriated, but the shutdown would start at twelve oh one
Speaker 6: on October.
Speaker 3: First, and too short a visit.
Speaker 2: Let me squeeze this in and I got like eight
Speaker 2: ways to go here, folks. We literally could do two
Speaker 2: hours with the Henrietta this morning. How does the imagery,
Speaker 2: the pageantry play of putin g mody all the different
Speaker 2: Bloomberg is a beautiful images g and Putin best pales,
Speaker 2: best buds. How does it play in your world, Henrietta, In.
Speaker 6: My world, which is very much tariff world, it shows
Speaker 6: you the negative consequences of tariffs. You penalize our global allies,
Speaker 6: NATO allies, You push India, who we've tried to foster
Speaker 6: a relationship with for thirty years, that have made incredible
Speaker 6: strides considering their neighboring China.
Speaker 9: Is really really telling.
Speaker 6: And the part that's really striking is how personal the
Speaker 6: President makes his relationships with all of these men, whether
Speaker 6: it's President She, President Putin Modi. The President has gone
Speaker 6: out of his way to explain that he can fix
Speaker 6: the US, the Ukraine Russia war on day one, Gaza
Speaker 6: on day one. He has an incredible relationship with President She,
Speaker 6: an incredible relationship with Mody, and yet we see precisely
Speaker 6: the opposite, this relationship actually not being valid and driving
Speaker 6: those men together because.
Speaker 9: Of the tyriffs.
Speaker 6: It's a obvious consequence, but nonetheless unintended from the administration.
Speaker 2: We got to get you on daily and the new
Speaker 2: slow extraordinary Henry ou to trace, Thank you so much,
Speaker 2: stay with us. More from Bloomberg surveillance coming up after this.
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Speaker 3: Or watch us Live on YouTube. This is the interview
Speaker 3: of the day.
Speaker 2: It is Ernie Tedesky, the Budget lab at you on
Speaker 2: your grocery bill, on the tariffs, on vespas, the tariffs
Speaker 2: that are happening. The Budget lab At, y know, absolutely
Speaker 2: expert under his leadership, Ernie, what inning are we in
Speaker 2: in the impact of tariffs upon us all?
Speaker 3: Is it like the second inning? Or are we like along
Speaker 3: the way?
Speaker 11: I think that we're like in the sixth word. We're
Speaker 11: not quite at the seventh inning stretch. Yet we are
Speaker 11: starting to see impacts on actual economic data. So so
Speaker 11: core goods prices are about two percent higher than they
Speaker 11: would have been based on pre twenty twenty five trend
Speaker 11: and that suggests that like as of June and July,
Speaker 11: consumers were paying about three quarters of the tariffs and
Speaker 11: probably American.
Speaker 8: Businesses the rest.
Speaker 11: There's very little evidence that foreign producers are paying them
Speaker 11: right now.
Speaker 8: So look, there's obviously more to come.
Speaker 11: We expect announcements on things like semiconductors, pharmaceuticals, et cetera.
Speaker 8: But you know, it's we're beyond the beginning of the game.
Speaker 3: Ernie.
Speaker 2: I've been talking a lot about the microeconomics and dynamics
Speaker 2: of the substitution effect, where Paul wants a vest but
Speaker 2: in study by Zah Harley, I get that idea. But
Speaker 2: there's also any income effect. Are you at the budget
Speaker 2: lab at Yale? Are you seeing a diminished appetite for growth?
Speaker 2: Are you seeing a diminished nominal GDP because of this
Speaker 2: tariff tension.
Speaker 11: It's tough to see right now because consumers and businesses
Speaker 11: are timing the tariffs and they're still trying to sort
Speaker 11: out what we're all trying to sort out, which is
Speaker 11: the best time to import things, the best time to buy. So,
Speaker 11: you know, we've seen big declines in consumer spending in
Speaker 11: certain months, especially late last year early this year, that
Speaker 11: seemed to definitely be anticipatory tariff effects. But then they're
Speaker 11: followed by big spikes as there is a tariff pause
Speaker 11: or tariff relief. You know that's temporary, and so people
Speaker 11: try to get their spending in. So it's really clear
Speaker 11: what the ongoing effect is, you know, looking through all
Speaker 11: that noise, we think that ultimately the terriffs that have
Speaker 11: been announced will be the equivalent of, you know, about
Speaker 11: twenty four hundred dollars off of the purchasing power of
Speaker 11: the average American household. But that's going to take about
Speaker 11: two years or three years to get there.
Speaker 2: Paul Harley, this most like a vespa is a Harley
Speaker 2: soft tail, slim oh okay and crimson stonewashed white and
Speaker 2: pearls so solid.
Speaker 5: For the executive, I got the vesta pree tariff Ernie
Speaker 5: talk to us about it. Kind of the nature of
Speaker 5: these tariffs is it as a white house which to
Speaker 5: suggest a one time price adjustment versus maybe a beginning
Speaker 5: of a inflationary trend.
Speaker 11: So that's also really hard to parse right now because
Speaker 11: on the one hand, like the textbook will tell you
Speaker 11: that this is a one time price adjustment. On the
Speaker 11: other hand, when the given the chaotic rollout of the
Speaker 11: tariffs and the gradual rollout of the tariffs, even if
Speaker 11: it is a one time price adjustment, because it's so
Speaker 11: you know, incremental, it feels like true inflation to people
Speaker 11: because they get a little bit one month, they get
Speaker 11: a little bit more the next month, and so it
Speaker 11: doesn't feel like one time, it.
Speaker 8: Feels like it's this ongoing thing.
Speaker 11: Plus there is the FED concern that this is going
Speaker 11: to spill over into supply chains and actually be more
Speaker 11: persistently inflationary. We haven't seen evidence of that yet, but
Speaker 11: you know, like I said, we're it's not the beginning anymore,
Speaker 11: but it's not you know, it's not the late game still,
Speaker 11: so we're still looking for more evidence.
Speaker 5: Well, on the other side, Ernie, I guess it is
Speaker 5: in fact true that the government is raising tariff revenue.
Speaker 3: Is It's correct, no doubt.
Speaker 11: We've raised almost ninety billion dollars this year from just
Speaker 11: the new tariffs that have been announced in twenty twenty five.
Speaker 11: That's not total tariff revenue. That's just from the new
Speaker 11: tariffs that is. Look, that is substantial. We think that
Speaker 11: that is consistent with three trillion dollars new tariff revenue
Speaker 11: over ten years if the tariffs are kept in place.
Speaker 11: Nobody should downplay that is that is a major amount
Speaker 11: of revenue.
Speaker 5: Just to tie it together for our listeners and viewers,
Speaker 5: of that nine twenty billion a month, sixty to eighty
Speaker 5: percent is being paid for by consumers and the rest
Speaker 5: buy American businesses.
Speaker 11: So that's what we think. So this is a tax
Speaker 11: on Americans, let's be clear about that. The other thing
Speaker 11: that's interesting so far, and we're going to start incorporating
Speaker 11: this into our modeling, is that some tariffs are coming
Speaker 11: in much lower than we expected, in particular Canada, where
Speaker 11: ninety two percent of Canadian trade is now tariff free,
Speaker 11: which is much higher than we expected given USMC. So
Speaker 11: it appears that Canadian firms and American importers are taking
Speaker 11: advantage of lots of different I won't say loopholes because
Speaker 11: I'm sure it's all legal, but you know, available authorities
Speaker 11: to bring things in TIF free.
Speaker 2: You know, I know, I knew, haven Ernie, you just
Speaker 2: doing pizza to takeout. I mean, you know that's what
Speaker 2: you're rolling. But I look to groceries this weekend and
Speaker 2: it's just jaw dropping out. Everything's up. Are the price
Speaker 2: of groceries and produce up because of your world of tariffs.
Speaker 11: So a little bit so a couple of things. One,
Speaker 11: we get a lot of produce from Canada and Mexico.
Speaker 11: Mexico in particular, and like fresh produce especially falls under
Speaker 11: us mc A ninety percent of the time. And if remember,
Speaker 11: if something is us mc A compliant, it's tariff free.
Speaker 11: So you know, Mexican avocados are probably not very sensitive
Speaker 11: at all to tariffs. The other thing is that there's
Speaker 11: a lot of non tariff stuff going on in groceries
Speaker 11: right now. Beef obviously, you know that's a whole thing,
Speaker 11: but that's got very little to do with tariffs. That
Speaker 11: has more to do with worldwide drafts, et cetera. So
Speaker 11: so I think that I think the tariff story is
Speaker 11: more on the good side things like appliance, is tronics,
Speaker 11: furniture rather than groceries.
Speaker 2: I know, you to front run your academics, but when
Speaker 2: you have a meeting today with Miss Gimbal and the rest,
Speaker 2: what's the thing that you're thinking about at the Yale
Speaker 2: Budget Lab.
Speaker 11: So the thing is, so we're thinking about we think
Speaker 11: about lots of things all the time, but I mean
Speaker 11: the thing that we're thinking about most is, you know,
Speaker 11: where do we go from here in terms of tariff revenue?
Speaker 11: Because we're we're a fiscal and a macroeconomic think take.
Speaker 11: So you know, we've we've done a lot of work
Speaker 11: on the macroeconomics. We're trying to think about ways that
Speaker 11: you know, we're number one, how much are tariff's actually
Speaker 11: going to raise when all of a sudden done. Two?
Speaker 8: Is there a better, more efficient way of raising the
Speaker 8: same amount of revenue?
Speaker 11: Because look, like I said before, you can't dismiss three
Speaker 11: trillion dollars in revenue over ten years. But is there
Speaker 11: a way to raise the same trill three trillion dollars
Speaker 11: in a way that doesn't hurt business investment the same way?
Speaker 2: Ernie, thank you so much. Journey to this great work.
Speaker 2: I really can't say enough about it. Migrate folks over
Speaker 2: to the budget lab at Yale. Just really real brilliant work.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
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Speaker 2: Fatima Bulani, I need like six bullet points to move
Speaker 2: forward here. You've been doing this since Thomas Weisel. I
Speaker 2: want you to explain. This weekend you're at some family
Speaker 2: get together and everybody's a I A I E I
Speaker 2: E I O. What's the biggest misconception mere mortals have
Speaker 2: about your world at City Group? What's the single thing
Speaker 2: we most get wrong about tech that you cover?
Speaker 12: Look, thanks for having me here to explain what we're
Speaker 12: working through right now to my two year old, which
Speaker 12: I have one, and the eiio lands very well because
Speaker 12: my mind is very preoccupied with nursery rhymes. Is Look,
Speaker 12: the most consequential technology paradigm shift in our lifetime. And
Speaker 12: you know, there have been a lot of analogs made
Speaker 12: towards you know, when the Internet, corporate Internet broke out
Speaker 12: onto the scene twenty five.
Speaker 2: There I have said this. It is so much like
Speaker 2: late ninety four or ninety five. You're saying, it's.
Speaker 10: Bigger, it's bigger, it's better.
Speaker 12: It's far more consequential because you've had a democratization of
Speaker 12: computing that.
Speaker 10: Has compounded over the last three decades. Right.
Speaker 12: Your iPhone today is five thousand, maybe ten thousand times
Speaker 12: more powerful than the first iteration of the computer that
Speaker 12: IBM spun out, you know, thirty forty years ago, right,
Speaker 12: and so just the sheer power of computing infrastructure, and
Speaker 12: you see this from the hyperscalers. It's just at your
Speaker 12: fingertips and that's really what you think is going to
Speaker 12: move the ball forward, and you know, you know it's
Speaker 12: chatting earlier. We are hosting our flagship conference in New
Speaker 12: York City this week. We have, you know, close to
Speaker 12: five hundred investors from some of the biggest asset managers.
Speaker 3: Are you guys taking every room at the Waldorf Astoria?
Speaker 10: I wish it were the Waldorf Astoria. It's the Hilton though.
Speaker 7: So I mean, I'm just looking at your line up here.
Speaker 5: Everybody in tech TMT is going to be the tech, media,
Speaker 5: tech telecom.
Speaker 7: Everybody's going to be there.
Speaker 5: How do you wind the AI theme throughout this three
Speaker 5: day conference that you have.
Speaker 12: We think about it from a supply chain perspective, so
Speaker 12: to speak. Right, So, my colleagues within the tech franchise
Speaker 12: between you know, the individual who covers the media names,
Speaker 12: the individual who covers the telecom and tower names. Myself,
Speaker 12: I cover enterprise software, which is you know, dare I
Speaker 12: say some of the sexiest places should be in technology.
Speaker 12: So just thinking about the AI value chain from a
Speaker 12: supply chain perspective, and I will tell you that the
Speaker 12: number one burning question, the most polarizing debate right now
Speaker 12: is how are companies in the software sphere going to
Speaker 12: be monetizing this trend. We understand, you know, what's going
Speaker 12: to happen, and we are understanding and witnessing what's happening.
Speaker 10: In the power and utility space.
Speaker 12: I mean, AI gear data centers are just hoovering massive
Speaker 12: amounts of power right and data center infrastructure and all
Speaker 12: the adjacent investment around that. So what does the downstream
Speaker 12: monetization path look like? And that is the single largest debate,
Speaker 12: And so that's sort of what we're endeavoring to do
Speaker 12: at the conference, weaving a lot of these themes from
Speaker 12: a subsector.
Speaker 3: Is Apple going to be there? I mean maybe they'll
Speaker 3: learn something.
Speaker 2: Apples so far behind with you, Tyler Radkin the rest
Speaker 2: When you and your team look at how Apple's quote
Speaker 2: unquote behind on AI, what's your response to that.
Speaker 10: Look, we're not ruling Apple out.
Speaker 12: I mean our perspective is purely from the enterprise software standpoint, right, So,
Speaker 12: how are organizations standing up an AI strategy where they
Speaker 12: can operationalize AI in the sense of how do we
Speaker 12: improve business processes? How do we improve customer satisfaction. Right,
Speaker 12: So our perspective in our lens is very much geared
Speaker 12: towards how very large entities and professional organizations are going
Speaker 12: to be deploying this technology as opposed to you know,
Speaker 12: from a consumer angle, if you will, who.
Speaker 7: Loses an AI? We have them because I'm always asked
Speaker 7: the question who wins, Who's when? How do I plan it?
Speaker 7: Who loses in AI?
Speaker 12: You know, I'm glad you asked my team and I
Speaker 12: We've had a big piece come out overnight. You know,
Speaker 12: between Tyler and myself, our team covers close to eighty
Speaker 12: software stocks, right, so there's plenty of nuance to be
Speaker 12: had and thinking about how this is going to be impactful.
Speaker 10: There's going to be some winners, there's going to be
Speaker 10: some losers.
Speaker 12: And the way we've thought about it is, you know,
Speaker 12: if you stratify our software space between applications, so the
Speaker 12: household names there are at Salesforce, dot Com and Adobe
Speaker 12: Infrastructure which is more or less cybersecurity, you know, and
Speaker 12: some other names of where you're building your IT environments
Speaker 12: with these capabilities. You know, we generally think the infrastructure
Speaker 12: software space has more stickiness and teeth to it, So
Speaker 12: in broad strokes, there is a level of insulation around
Speaker 12: the infrastructure names, whereas application there's absolutely trepidation, absolutely fears.
Speaker 3: Around that I'm gonna squeeze this.
Speaker 2: And you're having a cup of coffee right now with
Speaker 2: our of insern of us of Perplexity. I'm absolutely blown
Speaker 2: away at the game changing nature of that, the software
Speaker 2: around it. And what's your number one question to the
Speaker 2: leadership at Perplexity.
Speaker 12: Look, it's really how do you continue to innovate in
Speaker 12: a space where you know, frankly, there's a Cambrian explosion
Speaker 12: of sworts going on in LOI patent pending, and you know,
Speaker 12: the the confluence of the Russia VC.
Speaker 10: Capital, the you know, the the.
Speaker 12: Unabated appetite to become the number one standard bearer and
Speaker 12: AI because you know, to the victor goes the spoiled,
Speaker 12: and the massive amounts of market share. Right so we
Speaker 12: are absolutely in a gold rush phase right now. So really,
Speaker 12: I think the most inquiring minds will want to know,
Speaker 12: you know, how are you keeping up with the rapidly
Speaker 12: changing pace of technology preferences and procurement.
Speaker 2: Wait for sure, you got to come back after the
Speaker 2: technology conference to briefast and It's fifteen year about Bulani
Speaker 2: is coded.
Speaker 3: US software equity research at City Group.
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