WEBVTT - The Fed, Big Tech Earnings, Apple, and Barbie (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com Slash podcast. 0:00:21.000 --> 0:00:23.119 Let's turn to economics because we've got a lot of 0:00:23.200 --> 0:00:25.320 eco data this week. We've got a lot of central 0:00:25.400 --> 0:00:28.640 banks meeting around the globe. I think the Bank of Japan, 0:00:28.720 --> 0:00:31.600 the ECB coming this week, along with the US Bank 0:00:31.640 --> 0:00:33.680 of England next week. So a lot to chew on 0:00:33.680 --> 0:00:36.159 there from the central bank perspective. Let's break it down 0:00:36.159 --> 0:00:39.960 with Liz McCormick, chief correspondent of Global macro Markets at 0:00:39.960 --> 0:00:43.240 Bloomberg News, and Michael McKee, international Economics and Policy correspondent 0:00:43.479 --> 0:00:46.400 with Bloomberg News, who joins us here in studio. Mike, 0:00:46.479 --> 0:00:48.080 just want to start with you. We had the the 0:00:48.400 --> 0:00:51.239 PMIS come out. I don't they didn't look that good 0:00:51.280 --> 0:00:51.479 to me. 0:00:51.720 --> 0:00:53.080 I mean, what do you. 0:00:52.720 --> 0:00:57.400 Know, I'm manufacturing service. The composite PMI slowed from last month. 0:00:57.600 --> 0:00:59.480 What do you reading to these types of numbers. 0:00:59.280 --> 0:01:02.240 Well, the economy is slowing, which we expected. The question 0:01:02.360 --> 0:01:05.440 is how fast does it slow. The Bloomberg most recent 0:01:05.440 --> 0:01:11.440 Bloomberg Economic survey that just came out last Friday, suggests 0:01:11.440 --> 0:01:13.920 that economists think that the US economy is going to 0:01:13.959 --> 0:01:18.360 fall off cliff starting in this quarter, but that includes July, 0:01:18.640 --> 0:01:22.000 and that's not kind of what the story the data 0:01:22.080 --> 0:01:24.720 are telling at this point. Now you look at a 0:01:24.840 --> 0:01:30.880 number that's forty nine for manufacturing, the PMI is not 0:01:31.240 --> 0:01:34.720 a great number. It's below the level in theory that 0:01:34.920 --> 0:01:40.039 is break even. But we still see services above healthily 0:01:40.120 --> 0:01:45.759 above fifty, and composite above fifty. So things have slowed down, 0:01:45.840 --> 0:01:47.840 but they don't seem to match up with what people 0:01:47.880 --> 0:01:49.080 are expecting to happen. 0:01:49.120 --> 0:01:52.160 Okay, so you're a glass half full type of person. 0:01:52.520 --> 0:01:55.840 I'm wait until the waitress comes around. 0:01:57.120 --> 0:01:58.120 Fill it up again. 0:02:00.000 --> 0:02:02.640 We got GDP numbers on Thursday, and we get the 0:02:02.720 --> 0:02:05.400 latest spending numbers on Friday, so we'll have a much 0:02:05.440 --> 0:02:09.280 better view by Friday of where the economy is. Unfortunately, 0:02:09.360 --> 0:02:10.760 for the Fed, they're meeting Wednesday. 0:02:11.000 --> 0:02:11.400 Yeah. 0:02:11.480 --> 0:02:14.160 Well, speaking of that optimism, I wonder Liz, if you 0:02:14.160 --> 0:02:18.840 can talk us through this Nirvana scenario that we're hearing about, and. 0:02:19.120 --> 0:02:20.760 Is that what we're gonna see? 0:02:21.240 --> 0:02:23.880 Well, you know I love ed Yar Denny, but Nirvana 0:02:23.960 --> 0:02:25.119 we all wanted show. 0:02:25.840 --> 0:02:26.400 That's great. 0:02:26.600 --> 0:02:30.480 But yeah, well, I mean clearly there is some like 0:02:30.560 --> 0:02:34.160 Mike just said, some of the dire predictions many thought 0:02:34.200 --> 0:02:36.680 we might be in a recession already haven't panned out. 0:02:36.720 --> 0:02:40.400 So the market is kind of kind of more so 0:02:40.440 --> 0:02:43.200 saying hey, there's a possibility we could get through this. 0:02:43.280 --> 0:02:46.079 I mean, we've got five hundred basis points of tightening already. 0:02:46.360 --> 0:02:48.760 FED says they're going to do some more markets pricing 0:02:48.800 --> 0:02:51.720 in a little that could we have this you know, 0:02:51.800 --> 0:02:55.160 I call it the nebulous soft landing on that possibly 0:02:55.560 --> 0:02:58.120 the market is pricing in some easy next year, but 0:02:58.160 --> 0:03:01.600 the FED could ease a bit even if we're not 0:03:01.600 --> 0:03:03.680 in a recession, just to get things better in line 0:03:03.720 --> 0:03:07.079 to normalize policy. So I would say there's still kind 0:03:07.160 --> 0:03:11.040 of a camps out there hard landing policy mistake from 0:03:11.080 --> 0:03:13.880 the FED is coming. They should have stopped to the 0:03:14.480 --> 0:03:16.720 h Maybe they'll pull this off kind of thing, and 0:03:16.800 --> 0:03:19.200 you know, we'll have to talk in maybe six months 0:03:19.200 --> 0:03:19.639 in a year. 0:03:19.919 --> 0:03:21.360 See it was right right. 0:03:21.720 --> 0:03:25.959 All right, So Michael, you're the international guy here. Bank 0:03:26.000 --> 0:03:29.280 of Japan this week, ECB this week, Bank of England 0:03:29.440 --> 0:03:32.800 next week. How does a market look at some of 0:03:32.840 --> 0:03:37.800 these other international national banks visa v what kind of 0:03:37.800 --> 0:03:38.480 what the FED does? 0:03:38.720 --> 0:03:42.120 Don't forget the Bank of Ghana which raised rates today. 0:03:42.320 --> 0:03:44.200 Oh good to know to thirty percent. 0:03:45.760 --> 0:03:48.160 Inflation is running at forty two and a half percent 0:03:48.160 --> 0:03:50.560 a year there, so they're a little bit above that 0:03:50.600 --> 0:03:55.080 two percent target. Yeah, But the FED is driving everything 0:03:55.120 --> 0:03:58.560 in the sense that we are the by far biggest economy, 0:03:58.560 --> 0:04:02.480 and it's the most influential central bank, and it is 0:04:03.440 --> 0:04:07.480 where the US rate settles, is what drives currency trading. 0:04:07.840 --> 0:04:12.000 So everybody's watching that, and then they'll be perhaps more 0:04:12.040 --> 0:04:15.880 eyes on. At this point the ECB, they're in the 0:04:15.920 --> 0:04:18.640 sort of same situation as the Fed. Christine and the 0:04:18.680 --> 0:04:21.600 Guard has to and company have to decide whether they're 0:04:21.640 --> 0:04:24.200 one and done. They're going to do one more and 0:04:24.240 --> 0:04:26.960 then they will hold and wait and see what happens, 0:04:27.480 --> 0:04:30.600 or do they promise to do a series of rate 0:04:30.680 --> 0:04:33.800 hikes still because they're still concerned about where inflation is 0:04:34.120 --> 0:04:37.719 the Bank of Japan, the consensus is that a huge 0:04:37.839 --> 0:04:40.800 change is coming the end of yield curve control, but 0:04:40.960 --> 0:04:44.720 not now, so it's a question of when do they 0:04:44.760 --> 0:04:46.880 get there. What'll be interesting with the Bank of Japan 0:04:46.960 --> 0:04:49.680 is to see what their economic forecasts are, because the 0:04:50.640 --> 0:04:53.120 reporting from Bloomberg is that what we're going to see 0:04:53.279 --> 0:04:56.839 is a big increase in the Bank of Japan's inflation outlook. 0:04:56.839 --> 0:05:00.320 They're going to raise their inflation view, which is kind 0:05:00.320 --> 0:05:02.240 of the opposite of what the other central banks want 0:05:02.279 --> 0:05:05.320 to do, but it's what the Bank of Japan wants 0:05:05.360 --> 0:05:06.080 to see happen. 0:05:06.520 --> 0:05:09.560 So as we head into this kind of triple header 0:05:09.680 --> 0:05:12.159 of central banks, which do you think we'll learn the 0:05:12.160 --> 0:05:14.679 most from in terms of where we're heading. 0:05:15.640 --> 0:05:18.560 Well, it depends, And this is a good question for 0:05:18.640 --> 0:05:22.400 Liz because it's a it's a matter of interpretation. What 0:05:22.440 --> 0:05:25.080 everybody wants to know from the FED and the ECB 0:05:25.400 --> 0:05:28.520 is what next and how specific are they going to 0:05:28.560 --> 0:05:31.520 be about what next? Whereas the Bank of Japan is 0:05:31.520 --> 0:05:33.640 not going to really do anything and probably won't say 0:05:33.680 --> 0:05:36.520 a whole lot, but if they do raise their inflation 0:05:36.640 --> 0:05:38.600 forecasts a lot, that's going to set up a lot 0:05:38.640 --> 0:05:42.120 to talk about what do they do next, how much closer. 0:05:42.160 --> 0:05:44.440 Are we to the end of your curve control? 0:05:45.360 --> 0:05:48.880 So, Liz, again, what's kind of the market. Does the 0:05:48.920 --> 0:05:52.200 market feel like this Federal Reserve is still behind the curve? 0:05:52.279 --> 0:05:55.080 I mean when you look at the trading week, the week, month, 0:05:55.120 --> 0:05:58.039 the month here, it's felt like for a long time 0:05:58.800 --> 0:06:00.480 the market wasn't listening to the Fed. 0:06:01.200 --> 0:06:03.640 Yeah, I think, well, I think the market has kind 0:06:03.640 --> 0:06:05.880 of thought the Fed was behind a curve on both ends. 0:06:05.960 --> 0:06:09.440 Obviously late to the party to realize inflation wasn't transitory, 0:06:09.480 --> 0:06:11.839 so they were slow to tight and slow to stop 0:06:11.839 --> 0:06:16.240 their quantitative easing. And then there are some who feel 0:06:16.279 --> 0:06:18.960 like Fed is going too far, like the market is 0:06:19.040 --> 0:06:22.000 only priced for one more quarter point hike. We know 0:06:22.040 --> 0:06:24.840 the Fed's dots have said two. It'd be interesting to 0:06:24.920 --> 0:06:27.920 see if Chairman Powell, which he's been really you know, 0:06:28.000 --> 0:06:31.039 kind of doubling down and saying to whoever he talks 0:06:31.040 --> 0:06:33.960 to Congress, whomever, there's two more hikes coming. That's what 0:06:34.080 --> 0:06:35.680 a lot of our officials are signaling. 0:06:35.720 --> 0:06:37.119 Does he tone that down a little. 0:06:37.160 --> 0:06:40.680 I think he clearly doesn't want to, just like Christine Legard, 0:06:40.720 --> 0:06:42.719 like Mike was saying, they don't want to kind of 0:06:43.400 --> 0:06:46.320 gin up animal spirits too much to say we were done, 0:06:46.440 --> 0:06:49.400 we've won the battle, because they're pivotal, you know, at 0:06:49.720 --> 0:06:51.760 not a key inflection point, but getting there. 0:06:51.760 --> 0:06:53.479 But inflation is above both. 0:06:53.279 --> 0:06:58.240 Their targets, right, So maybe somebody called it endgame communication, like, 0:06:59.000 --> 0:07:01.640 you know, how far are we How do we kind 0:07:01.640 --> 0:07:04.240 of gingerly get us into even if it's higher for 0:07:04.320 --> 0:07:06.480 longer that they get to wherever and they stay there 0:07:06.480 --> 0:07:08.280 for a while. That's the next thing. But I think 0:07:08.279 --> 0:07:11.960 that's what they're trying to say. We're getting closer, maybe 0:07:11.960 --> 0:07:14.840 more work to do, but we're not for sure done. 0:07:15.000 --> 0:07:15.200 You know. 0:07:15.280 --> 0:07:16.960 They don't want to signal that, and I think that's 0:07:17.240 --> 0:07:19.040 why the market is in price for two hikes. 0:07:19.120 --> 0:07:21.600 When you said does the market think the FED is 0:07:21.600 --> 0:07:23.880 still behind the curve? I was thinking, well, it depends 0:07:23.920 --> 0:07:24.840 on what day of the week it. 0:07:24.840 --> 0:07:28.400 Is, right exactly. Well, and it's such a great point 0:07:28.400 --> 0:07:29.920 that they were too late to the party and now 0:07:29.920 --> 0:07:32.800 people think they're too late to leave. It sounds like, Liz, 0:07:32.840 --> 0:07:34.960 based on what we were saying with Mike earlier about 0:07:34.960 --> 0:07:36.800 this triple header this week, what are you going to 0:07:36.840 --> 0:07:38.160 be looking at the most? 0:07:38.480 --> 0:07:41.440 Well, I probably since I live here, have to say 0:07:41.480 --> 0:07:45.480 the Fed, because I mean like they do move all boats. 0:07:45.480 --> 0:07:47.320 I mean for a while, like Edna Current and I 0:07:47.360 --> 0:07:48.920 were talking the other day, for a while we all 0:07:48.960 --> 0:07:51.680 thought maybe boj is right the most exciting this week, 0:07:51.720 --> 0:07:53.920 and then we had that great reporting from our folks 0:07:53.920 --> 0:07:56.720 saying not this time. Like Mike said, that's like a 0:07:56.720 --> 0:08:00.280 waiting on GOODO. We keep thinking that you'll curve control, change, 0:08:00.320 --> 0:08:03.560 tweak whatever is coming. So I really think it's the Fed. 0:08:04.480 --> 0:08:07.600 You know, how do they signal? Does is there a 0:08:07.640 --> 0:08:10.600 way they can you know, get the market to price 0:08:10.720 --> 0:08:12.559 up a little bit? I think, you know, Pow wants 0:08:12.560 --> 0:08:15.160 as much optionality, but this bond market really kind of 0:08:15.160 --> 0:08:15.920 wants to rally. 0:08:16.320 --> 0:08:17.280 So we'll see how. 0:08:17.640 --> 0:08:18.320 He does with that. 0:08:18.760 --> 0:08:21.280 And Michael, just for our friends who maybe don't have 0:08:21.480 --> 0:08:24.560 a good understanding of kind of inflation in Europe, why 0:08:24.600 --> 0:08:27.080 is it so much worse there? It seems like even 0:08:27.080 --> 0:08:29.720 though everybody's over there traveling, you know, that's. 0:08:29.680 --> 0:08:31.680 Well, it's based on a few different things. 0:08:31.840 --> 0:08:37.640 Especially energy has been an issue there, and their indexes 0:08:37.679 --> 0:08:39.800 are constructed a little bit differently from ours, so they're 0:08:39.840 --> 0:08:45.560 not directly comparable, but they do show the problems that 0:08:45.559 --> 0:08:49.640 we've had and they have had much bigger rate increases 0:08:49.640 --> 0:08:52.000 with some of the pattern barketing they have that people 0:08:52.000 --> 0:08:55.040 are worried about. But can it come down fast? Well, 0:08:55.160 --> 0:08:57.960 inflation's coming, I mean energy prices are coming down. So 0:08:58.000 --> 0:09:01.560 as long as that happens, inflation should come down. And 0:09:01.559 --> 0:09:03.600 when you look at the PMI to take us back 0:09:03.600 --> 0:09:08.160 to where we started for Germany thirty eighty for manufacturing, 0:09:08.200 --> 0:09:11.360 that suggests you're going to see some price pressures. 0:09:11.360 --> 0:09:11.640 Ease. 0:09:12.280 --> 0:09:14.400 Okay, great stuff, great having you both in here. I 0:09:14.440 --> 0:09:16.839 looked up and Liz was right there. I was expecting zoom, 0:09:16.840 --> 0:09:19.360 but Liz was right there. LIZI McCormick, chief correspondent of 0:09:19.360 --> 0:09:22.320 Global macro Markets with Bloomberg News, and Michael McKee, International 0:09:22.320 --> 0:09:25.760 Economics and Policy correspondent, both the Bloomberg News, joining us 0:09:25.800 --> 0:09:28.600 both here in our Bloomberg Interactive Broker studio. And on Monday, 0:09:28.960 --> 0:09:31.160 by the way, I mean usual on a Monday, you 0:09:31.160 --> 0:09:33.640 get the Bloomberg salespeople because they have their big morning 0:09:33.679 --> 0:09:35.840 media on Monday, so all the kids are and you 0:09:35.880 --> 0:09:38.160 get us and we get some of the economists. 0:09:38.240 --> 0:09:39.319 And that's how it works. 0:09:39.320 --> 0:09:42.000 Like Liz is doing an incredible Q and A session. 0:09:42.040 --> 0:09:46.719 I think tomorrow today I'm. 0:09:45.800 --> 0:09:46.600 Going to be front row. 0:09:46.760 --> 0:09:53.359 I can't wait for all internally, ask me anything. 0:09:53.720 --> 0:09:56.000 Liz McCormick and the benefit of her experience. 0:09:57.600 --> 0:09:58.800 You're listening to the team. 0:09:59.120 --> 0:10:02.959 Ken's are lying Bloomberg Markets weekdays at ten am Eastern 0:10:03.160 --> 0:10:06.480 on Bloomberg dot com, the iHeartRadio app and the Bloomberg 0:10:06.520 --> 0:10:09.840 Business App, or listen on demand wherever you get your podcasts. 0:10:11.800 --> 0:10:14.880 Madison Mills, Paul Sweeney here in our Bloomberg Interactive Broker Studio. 0:10:14.920 --> 0:10:18.360 Big big earnings week, technology coming in to focus. I'm 0:10:18.480 --> 0:10:22.120 talking Microsoft, Alphabet, Meta, a bunch of others, and I 0:10:22.240 --> 0:10:25.240 tell you what these com be is better delivered. Nastac 0:10:25.360 --> 0:10:28.000 is up about thirty four percent just a year to date. 0:10:28.080 --> 0:10:30.880 So anticipation in the market for really strong performance. It's 0:10:30.880 --> 0:10:32.280 see if they can deliver. Dan Ives. 0:10:32.320 --> 0:10:33.120 He always delivers. 0:10:33.160 --> 0:10:36.199 Dan Ives as managing director and senior equities analysts for 0:10:36.240 --> 0:10:37.079 web Bush Security. 0:10:37.120 --> 0:10:40.120 So Dan, a big week for tech. What do you expect. 0:10:41.000 --> 0:10:42.920 I think it's get out the popcorn. I mean, in 0:10:42.960 --> 0:10:46.440 my opinion, we're going to see an uptick and it spend. 0:10:46.760 --> 0:10:49.200 I think Cloud's going to be strong from the likes 0:10:49.760 --> 0:10:53.480 of the behemoths Microsoft as well as Alphabet and I 0:10:53.480 --> 0:10:56.000 think it's all about AI spend. We're starting to see 0:10:56.080 --> 0:10:59.840 monizations sooner arrive than later. I mean, Paul in my opinion, 0:11:00.280 --> 0:11:02.439 Bright green Light, Dome and Tech I think up twelve 0:11:02.440 --> 0:11:04.319 to fifteen percent second half of the year. 0:11:04.520 --> 0:11:06.679 Wow, Dan, how much are you going to be looking 0:11:06.800 --> 0:11:10.680 at capital allocation when it comes to overall it spend 0:11:10.720 --> 0:11:14.520 companies that are portioning off a larger chunk of that pie, 0:11:14.679 --> 0:11:17.720 specifically to AI. And are there any companies that could 0:11:17.760 --> 0:11:21.079 be hurt or dinged because of that allocation? 0:11:22.200 --> 0:11:24.640 Yeah, it's a great question. That's why right now the 0:11:24.720 --> 0:11:27.920 trophy case at the top of the mountain is in Redmond. 0:11:28.120 --> 0:11:30.880 I mean, if you look with Nadella and the team 0:11:30.920 --> 0:11:33.040 have done, I mean they are in pole position to 0:11:33.040 --> 0:11:35.400 gain more and more share budget. We believe next year 0:11:35.400 --> 0:11:38.439 we're hearing eight to ten percent a budget to AI 0:11:38.600 --> 0:11:41.920 driven this year less than one percent. And that's that's 0:11:41.960 --> 0:11:44.800 the drum roll, that's the super Bowl what everyone's waiting for. 0:11:45.559 --> 0:11:49.480 The actual quarters are almost the backstory to really the 0:11:49.520 --> 0:11:52.000 forecast and the outlook going into next year. 0:11:52.800 --> 0:11:56.680 How about the companies that rely upon digital advertising, Dan, 0:11:56.720 --> 0:12:00.800 that's kind of been, you know, a wobbly business even 0:12:01.080 --> 0:12:03.880 you know, even amongst all the other key growth drivers 0:12:03.920 --> 0:12:06.840 in technology. So we're talking about Meta and you know 0:12:07.080 --> 0:12:09.160 Alphabet that really rely up on digital advertising. 0:12:09.160 --> 0:12:10.280 How is that's looking right now? 0:12:11.200 --> 0:12:14.240 I mean we're seeing upticks. I think stabilization is going 0:12:14.320 --> 0:12:17.120 to be the sort of word that we hear from Meta, 0:12:17.120 --> 0:12:21.560 from Alphabet, and you combine it all, we're starting to 0:12:21.600 --> 0:12:25.800 now see a less cautious spending environment. They'll be you know, 0:12:26.000 --> 0:12:29.600 probably toned in terms of how they talk about things 0:12:29.679 --> 0:12:33.199 over the coming quarters. But I think digital advertising we're 0:12:33.200 --> 0:12:37.360 seeing stabilization, cloud and uptick and overall it spint I 0:12:37.400 --> 0:12:40.040 think you saw that from Arvin and IBM. I view 0:12:40.080 --> 0:12:42.240 this as sort of a table pounder of view into 0:12:42.320 --> 0:12:45.120 tech this week. I do not view the reactions of 0:12:45.240 --> 0:12:48.600 Netflix and Tassa as a brahma for what we're going 0:12:48.679 --> 0:12:51.520 to see this week. That's why, in my opinion, getting 0:12:51.520 --> 0:12:53.480 the popcorn ready, and I believe it will be a 0:12:53.480 --> 0:12:54.360 strong week for tech. 0:12:54.640 --> 0:12:57.280 Okay, so if it's not Netflix and Tesla, Dan, what 0:12:57.640 --> 0:13:00.840 is the bell weather that you've looked into to indicate 0:13:00.960 --> 0:13:03.640 how happy you're gonna be able to be this week. 0:13:04.080 --> 0:13:07.959 It's tomorrow night. When you look at Alphabet, you look 0:13:08.000 --> 0:13:12.240 at Microsoft. That's that's the key. That's that's the messy 0:13:12.320 --> 0:13:16.079 moment for earnings for tech because of what we ultimately 0:13:16.160 --> 0:13:19.920 see in cloud, in digital advertising, and if you look 0:13:20.040 --> 0:13:22.559 going back to the Nvidio guidance heard around the world 0:13:22.559 --> 0:13:25.840 the last quarter, Now we start to see the optics 0:13:26.000 --> 0:13:29.400 in spend in terms of the forecast, no better. Everyone 0:13:29.440 --> 0:13:33.000 will be listening to Nadella and Microsoft's called that is 0:13:33.080 --> 0:13:35.480 going to be the one that they not just tech, 0:13:35.520 --> 0:13:37.280 but all the street's going to be focused on to 0:13:37.320 --> 0:13:40.120 see what we're seeing monization of cloud. We think a 0:13:40.160 --> 0:13:42.400 trillion dollars incremental spend next decade. 0:13:43.160 --> 0:13:45.240 Hey, Dan, you know the Nvidia results. 0:13:45.320 --> 0:13:47.040 I think it was the last quarter that just really 0:13:47.080 --> 0:13:50.760 shook the market, reset the market, woke up people like 0:13:50.840 --> 0:13:53.800 me who really wasn't paying attention to this AI thing. 0:13:54.200 --> 0:13:56.800 How much of the AI budget over the next several 0:13:56.840 --> 0:13:58.719 years do you think it's going to be incremental tech 0:13:58.800 --> 0:14:01.400 spending or maybe just taken it from all the parts 0:14:01.400 --> 0:14:01.880 of the stack. 0:14:03.280 --> 0:14:07.080 Why we think about thirty to forty percent incremental. The 0:14:07.160 --> 0:14:10.240 rest will be taking from the stack. That's why the ciscos. 0:14:10.320 --> 0:14:13.439 You could argue the intels, maybe the hp is obviously 0:14:13.520 --> 0:14:16.559 will back in so on the hardware side. But I 0:14:16.600 --> 0:14:19.520 think it's incremental because in our opinion, it's a nineteen 0:14:19.600 --> 0:14:23.480 ninety five moment. It's an Internet moment. Companies are actually 0:14:23.600 --> 0:14:27.600 changing their view of spend and two letters have all 0:14:27.720 --> 0:14:29.720 changed in terms of AI and that's why, unless you 0:14:29.760 --> 0:14:33.240 have a telescope, you're not seeing a recession out there. 0:14:33.280 --> 0:14:35.000 And I think that's gonna be innarratable here in the 0:14:35.040 --> 0:14:36.120 next week or two. 0:14:36.800 --> 0:14:40.160 So if it is ninety five all over again, how 0:14:40.160 --> 0:14:41.560 are you not worried about a bubble? 0:14:41.640 --> 0:14:41.800 Dan? 0:14:43.360 --> 0:14:45.440 Well, first off, I think if you look at the 0:14:45.480 --> 0:14:49.000 actual evaluations, it's we're not talking pets dot com movement. 0:14:49.000 --> 0:14:53.000 In other words, these are now the star wards that 0:14:53.280 --> 0:14:55.560 ultimately I view. When I look at Microsoft, I could 0:14:55.680 --> 0:14:58.120 argue this is a three and a half four trillion 0:14:58.200 --> 0:15:01.040 dollar company in next two to three years. I think 0:15:01.080 --> 0:15:03.120 the difference when you go back to the bubble ninety 0:15:03.160 --> 0:15:05.480 nine two thousand, I mean a lot of that was hype. 0:15:05.960 --> 0:15:08.800 This is different because the fundamental and the real business 0:15:08.800 --> 0:15:10.760 cases are there. I'm not saying, oh, there's not gonna 0:15:10.760 --> 0:15:14.400 be fraud from losers that fall by the wayside. But 0:15:14.440 --> 0:15:17.160 I believe this is an AI gold rush. It's real. 0:15:17.240 --> 0:15:19.880 And then's why this week I think the Bears go 0:15:20.080 --> 0:15:24.240 back into their hibernation mode after how little win last 0:15:24.240 --> 0:15:26.800 week to what's been a brutal six months for him. 0:15:27.360 --> 0:15:32.520 Hey Dan, in the context of this AI discussion, it's 0:15:32.520 --> 0:15:35.040 going to accelerate once again this week with these earnings. 0:15:35.360 --> 0:15:38.560 How does Apple fit into an AI discussion. 0:15:40.720 --> 0:15:43.480 I mean, they're not gonna be on the outside looking in, 0:15:43.560 --> 0:15:45.840 and we've talked about them. I mean, they're spending almost 0:15:45.880 --> 0:15:48.400 the equivalent of what Microsoft did with Open Ai in 0:15:48.440 --> 0:15:51.440 turn on on AI. This is all the drum all 0:15:51.440 --> 0:15:53.640 to what I believe. I'm in German's hand, had a 0:15:53.720 --> 0:15:57.440 bit to their They're gonna roll out AI within their ecosystem. 0:15:57.440 --> 0:16:00.880 I ultimately believe it's an AI app store for Apple, 0:16:01.720 --> 0:16:04.640 which I believe could add thirty to forty dollars per share. 0:16:04.960 --> 0:16:09.400 And again Cook continues to play chess while others are 0:16:09.400 --> 0:16:11.320 at the kids table playing checkers. 0:16:11.880 --> 0:16:14.360 Wait, say more about the AI app store. 0:16:14.520 --> 0:16:18.680 What are you anticipating a separate app store that's gonna 0:16:18.680 --> 0:16:22.040 be AI driven developers? I believe it started off with 0:16:22.160 --> 0:16:25.280 Vision pro in terms of, you know, actually building a 0:16:25.360 --> 0:16:30.320 separate almost app store. It's gonna be AI driven health, fitness, 0:16:30.600 --> 0:16:33.040 AI apps will be in that app store, and that 0:16:33.240 --> 0:16:35.960 for Apple, that's just gonna be a whole nother opportunity 0:16:36.000 --> 0:16:40.600 to further penetrate the base that has an unparalleled install base. 0:16:40.640 --> 0:16:43.560 And I believe right now the valuation is not reflecting 0:16:43.960 --> 0:16:47.760 what I'll call AI multiple and that's why I believe 0:16:47.840 --> 0:16:50.680 this is a four trillion dollars markap by twenty twenty five. 0:16:50.960 --> 0:16:53.200 Dan, you mentioned the headset, and this earnings call is 0:16:53.200 --> 0:16:55.520 gonna be the first time folks have the opportunity to 0:16:55.560 --> 0:16:58.480 ask Apple about that headset. Do you think they're gonna 0:16:58.800 --> 0:17:02.120 get killed for invent staying in a headset when people 0:17:02.120 --> 0:17:04.000 have moved on to focusing on AI. 0:17:05.080 --> 0:17:08.000 Because ultimately is not about the headset. Because my view 0:17:08.040 --> 0:17:10.359 is that this is really just the start ar v 0:17:10.560 --> 0:17:13.240 R to what ultimately is going to be the next 0:17:13.320 --> 0:17:16.280 vision around AI, and that's going to be integrated more 0:17:16.280 --> 0:17:19.800 and more within that ecosystem for Apple, and I think 0:17:19.880 --> 0:17:23.800 ultimately investors who are focused more on iPhone fifteen, we 0:17:23.840 --> 0:17:26.840 think ultimately units are going to be higher and this 0:17:26.880 --> 0:17:29.920 is a mini super cycle. That's the long game right now. 0:17:29.960 --> 0:17:33.640 It's all about developers build out for what I view 0:17:33.760 --> 0:17:37.320 is sort of the next evolution of the Coupertino ecosystem. 0:17:38.040 --> 0:17:40.639 Hey, Dan, I just want to talk Tesla for just 0:17:40.640 --> 0:17:44.400 a moment because Bloomberg News Stephan and Nicola is out 0:17:44.440 --> 0:17:48.200 with a great story saying Tesla is lapping Germany's automakers 0:17:48.200 --> 0:17:50.560 in the global ev race. And so you know, we 0:17:50.640 --> 0:17:53.160 heard from all the big German manufacturers over the last 0:17:53.160 --> 0:17:55.040 several years how they're going all in on EI. But 0:17:55.119 --> 0:17:57.960 Tesla delivered almost eight hundred and ninety thousand cars in 0:17:58.000 --> 0:18:00.000 the first half of the year. That's more electric vehicles 0:18:00.040 --> 0:18:03.439 the Volkswagen, BMW, Mercedes or Porsche combined. 0:18:04.119 --> 0:18:05.359 So how do you think. 0:18:05.200 --> 0:18:08.440 About Tesla and just kind of their competitive position as 0:18:08.480 --> 0:18:10.080 everybody else tries to ramp up. 0:18:11.480 --> 0:18:15.360 I mean, it's Tesla's world, everyone else paying rent. If 0:18:15.359 --> 0:18:18.879 you look at electric vehicles and from a scaling scope perspective, 0:18:19.000 --> 0:18:24.280 battery technology, super charger, and I ultimately believe the FSDAI. 0:18:24.760 --> 0:18:26.520 That's why I think last week you got the knee 0:18:26.560 --> 0:18:29.320 jerk sell off after just a parabolic move this year. 0:18:29.800 --> 0:18:33.200 I think this is still early to middle innings of 0:18:33.280 --> 0:18:37.320 the broader Tesla story build out and this ev green title, 0:18:37.600 --> 0:18:41.200 the five trillion dollars green title. There's been many winners. 0:18:41.320 --> 0:18:44.119 The three win three are Code GM four, the European 0:18:44.160 --> 0:18:47.840 players at the China players. But ultimately, if you look 0:18:47.880 --> 0:18:51.639 the biggest beneficiary is gonna be muscling us really quickly. 0:18:51.760 --> 0:18:55.880 Dan, are you team Twitter formerly or now x formerly 0:18:55.960 --> 0:18:57.840 to Twitter? Or team threads? 0:18:58.600 --> 0:18:58.800 Oh? 0:18:58.880 --> 0:19:01.200 I stayed Twitter, and again I go back to thread? 0:19:01.280 --> 0:19:03.840 Did rathery broccoli from the full data the trench? 0:19:05.400 --> 0:19:05.840 Very good? 0:19:05.880 --> 0:19:08.320 There you go, Dan, conviction of nothing else. Dan I 0:19:08.440 --> 0:19:12.360 was managing director and senior equity analyst at Webbush Securities. 0:19:12.400 --> 0:19:14.600 Appreciate getting that roundup on Tech is again a big, 0:19:14.640 --> 0:19:17.560 big earnings week here for a lot of industries and 0:19:17.600 --> 0:19:19.760 most notably tech and is the biggest sector in the SMP. 0:19:20.160 --> 0:19:23.280 You're listening to the tape cats are live program Bloomberg 0:19:23.359 --> 0:19:26.960 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:19:27.000 --> 0:19:29.080 tune in app, Bloomberg dot Com. 0:19:28.800 --> 0:19:30.240 And the Bloomberg Business App. 0:19:30.280 --> 0:19:33.080 You can also listen live on Amazon Alexa from our 0:19:33.119 --> 0:19:38.200 flagship New York station. Just say Alexa Play Bloomberg eleven thirty. 0:19:39.520 --> 0:19:45.080 Let's talk about some of the industrial companies and because 0:19:45.119 --> 0:19:47.320 they're reporting numbers today, but you know, I looked at 0:19:47.359 --> 0:19:52.000 the PMIS today for the manufacturing PMI came in at 0:19:52.040 --> 0:19:53.720 forty six point two. 0:19:54.600 --> 0:19:57.080 That's not good on the number fronts. A. It's below fifty, 0:19:57.119 --> 0:20:00.680 suggesting contraction, and it was blowed the concent of forty 0:20:00.760 --> 0:20:03.320 nine and it was below just kind of in line 0:20:03.359 --> 0:20:03.920