WEBVTT - Elon Musk, Tech, Retail Sales, and Subway (Podcast) 0:00:00.080 --> 0:00:06.600 We want to talk tech podcast Countery Business Day, we 0:00:06.720 --> 0:00:11.080 bring you interview with market Rose and Bloomberg experts. We 0:00:11.080 --> 0:00:17.720 don't know what the Center podcast or wherever you listen 0:00:17.760 --> 0:00:22.520 to podcast, and that Bloomberg big cricket fin out Dan 0:00:22.640 --> 0:00:24.560 Ives as much of a cricket you don't think, Fan, 0:00:24.800 --> 0:00:28.400 I'm just well, he wasn't. He went to State College Pennsylvania, 0:00:28.400 --> 0:00:29.880 which is no mean feat by the way, from New 0:00:29.960 --> 0:00:34.000 York to watch wrestling and State Wrestling. Now, granted they're 0:00:34.000 --> 0:00:35.400 one of the best in the country, but Dan Ives 0:00:35.400 --> 0:00:39.479 he covers technology, uh for wet Bush Securities and mandep 0:00:39.520 --> 0:00:41.000 siting here from Bloomberg and in Tellvision they're in our 0:00:40.960 --> 0:00:44.960 Bloomberg and act the broker studio. Dan, let's start with you, Tesla. 0:00:45.560 --> 0:00:47.360 I follow you on Twitter, and by the way, folks 0:00:47.360 --> 0:00:49.840 follow Dan Ives on Twitter. He's got a good Twitter 0:00:49.920 --> 0:00:53.360 game there, um, and you're not too happy with him 0:00:53.360 --> 0:00:57.760 sticking around at Twitter. El So Tesla. So the problem 0:00:57.800 --> 0:01:01.000 is Elon Musk is supposed to run Tesla, right, but 0:01:01.120 --> 0:01:04.959 he's obsessed with Twitter to the point where he like 0:01:05.080 --> 0:01:07.560 changes the algorithms that we all have to read all 0:01:07.600 --> 0:01:10.360 of his tweets. He said, he was gonna pick someone 0:01:10.360 --> 0:01:13.080 else stand down before Christmas, and now it's like the 0:01:13.200 --> 0:01:16.360 end of this year, maybe beginning of four. Dan, what 0:01:16.600 --> 0:01:19.000 is the deal with your dog? Yeah? I mean look 0:01:19.080 --> 0:01:21.720 the goal post from Musk because we've seen four continue 0:01:21.720 --> 0:01:23.240 to get pushed out. And I think when it comes 0:01:23.280 --> 0:01:25.960 to Twitter, you know clearly that's been less of an 0:01:26.000 --> 0:01:29.400 overhanging the last few months. But I think investors want 0:01:29.440 --> 0:01:33.040 to see Musts Weezer focused on Tesla, on SpaceX and 0:01:33.080 --> 0:01:34.680 some of them. Any kind of focus doesn't have to 0:01:34.680 --> 0:01:37.280 be a laser, just a little bit of focus on Tesla. 0:01:37.400 --> 0:01:40.440 Right it was, And I think what we've seen the 0:01:40.480 --> 0:01:42.920 last few months like part of why Tesla stockstone where 0:01:42.920 --> 0:01:45.520 it has it. They meet strategic decision in terms of 0:01:45.560 --> 0:01:48.160 the price cuts, which have been massive home run successes. 0:01:48.560 --> 0:01:50.000 But I think when you will get the Twitter cut 0:01:50.080 --> 0:01:53.320 prices and they raise prices, what are they doing over there? Look, 0:01:53.360 --> 0:01:56.720 I think they're trying to find the equilibrium unsupplied the man. 0:01:56.840 --> 0:01:59.680 I mean, I think in China throwing spaghetti at the wall. 0:02:00.040 --> 0:02:02.960 I mean, come on, man, it's Tesla. Why don't you 0:02:02.960 --> 0:02:05.400 just make a decision and stick to it? Because there's 0:02:05.400 --> 0:02:07.400 so many questions I have. I'm so glad you came 0:02:07.440 --> 0:02:09.440 in here. Dan, It's great, it's great. I was listening 0:02:09.440 --> 0:02:12.320 to Ross Gerber last night. He was on Bloomberg Business 0:02:12.320 --> 0:02:15.160 Week with Carol Master, and I think he made a 0:02:15.200 --> 0:02:18.240 ton of great points without being a jerk, you know. 0:02:18.320 --> 0:02:20.240 I mean, he doesn't want to offend Elon, but he 0:02:20.440 --> 0:02:23.440 is a big shareholder who's trying to get a board 0:02:23.480 --> 0:02:27.240 seat right now, and he was saying, we gotta rain 0:02:27.320 --> 0:02:29.919 this guy in, we gotta get him back to Tesla, 0:02:30.080 --> 0:02:32.080 and we need a succession plan, right because if anything 0:02:32.120 --> 0:02:34.880 happens to Elon. Musk talk about key man risk, he 0:02:34.919 --> 0:02:37.480 has nobody in place. Kimball is not gonna come and 0:02:37.560 --> 0:02:40.320 run it. Right. Look, I think the bigger thing, as 0:02:40.440 --> 0:02:43.600 Ross has talked about, is really more as competition grows, 0:02:44.120 --> 0:02:46.760 you know, in the U S and globally, you just 0:02:46.840 --> 0:02:50.400 want to make sure that strategically they're both defensive and 0:02:50.480 --> 0:02:54.160 offensively positioned. And I think from Musk, you know, his investors, 0:02:54.280 --> 0:02:56.120 that's a huge part of the premium. We saw what 0:02:56.240 --> 0:02:59.280 happened with the Twitter situation, you know, call it from 0:02:59.280 --> 0:03:02.960 October to December. Big part that was the Twitter overhang. 0:03:03.320 --> 0:03:06.120 But that's why you need sure that strategy and it 0:03:06.280 --> 0:03:08.639 must is going to talk. We'll be there in austin 0:03:08.760 --> 0:03:11.560 March first the big plan. So I think investors are 0:03:11.600 --> 0:03:13.040 trying to see what is that? What does that mean 0:03:13.040 --> 0:03:15.600 about production in the future? All right, so good. I 0:03:15.639 --> 0:03:17.600 mean there's a ton of tech news out there. We 0:03:17.600 --> 0:03:19.600 could just spend all day on this stuff. The one 0:03:19.639 --> 0:03:22.880 that got my attentionous Airbnb. I've used it once and 0:03:23.040 --> 0:03:25.799 it was because it was a Bloomberg sponsored Airbnb. I'm 0:03:25.800 --> 0:03:27.840 still in the hotel mode, man, Dave, talk to me 0:03:27.840 --> 0:03:31.400 about Airbnb, their business. I mean, I mean the stock 0:03:31.440 --> 0:03:34.200 at great number, stock up twelve point four percent today, well, 0:03:34.240 --> 0:03:37.840 and talking about raising prices. This is a company that 0:03:37.880 --> 0:03:42.680 has benefited from you know, pent up travel demand price increases. 0:03:42.800 --> 0:03:45.360 They don't have to take down prices to drive demand. 0:03:45.440 --> 0:03:48.680 And look, it's a very robust business model. Out of 0:03:48.840 --> 0:03:53.280 all the marketplace companies you you don't include Ruber, Lift, Door, Dash, 0:03:53.400 --> 0:03:57.320 this is the model that generates over even dumb margins 0:03:57.440 --> 0:04:00.560 and and that is what investors like it can convert 0:04:00.640 --> 0:04:03.320 you know, free cash flow. On our ten billion dollar 0:04:03.400 --> 0:04:05.840 run rate, you've got two billion in free cash flow 0:04:05.920 --> 0:04:09.040 every year. Now, granted, they're going to run into tougher 0:04:09.120 --> 0:04:12.440 comps because they did very well during the pandemic. Well 0:04:12.560 --> 0:04:15.440 guess what, coming out of the pandemic, they did even better. 0:04:15.720 --> 0:04:19.200 And so now they are running into tougher comps even 0:04:19.240 --> 0:04:22.720 though they have the category leadership in alternative accommodations and 0:04:22.760 --> 0:04:25.080 they are adding users like you and they will continue 0:04:25.120 --> 0:04:27.680 to do. No, no, they're not adding Paul's money. Is 0:04:27.720 --> 0:04:30.640 not an alternative accommodation. I'm a four seasons guy, but 0:04:30.760 --> 0:04:34.159 I did stay at a Verbo condo out in Veil 0:04:34.480 --> 0:04:37.440 last week. But that's only because I didn't make the reservation. Somebody, well, 0:04:37.440 --> 0:04:40.600 how was it awesome? Fantastic? But that's just because Veil 0:04:40.680 --> 0:04:43.440 was amazing. Yeah, but I mean, are you guys like 0:04:43.480 --> 0:04:48.320 Airbnb people? Are you? I have gone both ways in 0:04:48.440 --> 0:04:52.320 terms of accommodation, and um, yeah, I don't really. I'm 0:04:52.360 --> 0:04:54.640 like you, though I would prefer to stay at like 0:04:54.680 --> 0:04:57.520 the bierssha half. I don't need I don't need to 0:04:57.520 --> 0:04:59.560 stay in somebody else's apartment. But there are a lot 0:04:59.600 --> 0:05:03.200 of shitsu wations where people have some sit condos that 0:05:03.279 --> 0:05:07.080 they're they're only investing in to do. Airbnb or Verbo 0:05:07.279 --> 0:05:10.720 is Airbnb who owns verbo. Verbo is owned by Expedia. 0:05:11.680 --> 0:05:14.880 And look, they have competition, but the repeat rates in 0:05:14.880 --> 0:05:18.520 that eighteen to thirty four year old cohors that's what 0:05:18.560 --> 0:05:22.040 my kids. That is where Airbnb is really hitting off, 0:05:22.160 --> 0:05:24.800 and and they continue to do very well the repeat transactions. 0:05:24.839 --> 0:05:27.320 That too, they don't have to spend much on sales 0:05:27.320 --> 0:05:30.880 and marketing. The Google marketing span for Airbnb is the 0:05:31.000 --> 0:05:33.200 least out of all the O t A. So it's 0:05:33.240 --> 0:05:35.680 that's why you see that high leverage in the business model. 0:05:35.880 --> 0:05:38.680 That's it. My daughter travels the world nothing but Airbnb. 0:05:38.760 --> 0:05:40.680 I don't know actually does it Anyway? Dan, what's your 0:05:40.680 --> 0:05:44.560 best idea out there? Credit card? No, they are off 0:05:44.600 --> 0:05:46.839 the doll They're off the doll. I was very good 0:05:46.839 --> 0:05:50.080 for the first X number of years. Alright, So Dan, 0:05:50.120 --> 0:05:51.919 what's your best idea that you're talking to clients about 0:05:51.920 --> 0:05:54.240 these days? And well, I mean, look, Tack, as we've 0:05:54.279 --> 0:05:56.680 talked about, it's is under own is either going to 0:05:56.760 --> 0:05:59.440 the year since two thousand nine? Is that right? Yeah? 0:05:59.440 --> 0:06:03.440 I mean look to sell off. Right. The New York 0:06:03.480 --> 0:06:06.440 City cab driver was barrassed on tech coming into this year, 0:06:06.920 --> 0:06:09.880 and that's why in my opinion, I still look at 0:06:09.960 --> 0:06:14.120 names like Microsoft. I look at names like Salesforce, which 0:06:14.200 --> 0:06:16.560 is one where I think activism puts a floor in 0:06:16.640 --> 0:06:18.920 and I think there's a huge some of the parts 0:06:18.960 --> 0:06:21.920 that you could see significant movement there. And our top 0:06:21.960 --> 0:06:24.200 pick continues to be Apple. I think it will again 0:06:24.320 --> 0:06:26.920 regain that three trillion mark cap. Are you ever gonna 0:06:26.920 --> 0:06:29.960 get an Apple car? Is this ever gonna happen? Look, 0:06:30.000 --> 0:06:31.960 I think the big thing now as you're talking about 0:06:32.000 --> 0:06:36.360 this AI arms race, Game of Thrones, Chat, GPT, Microsoft, Google, 0:06:36.440 --> 0:06:40.120 the disaster last week with bard Apple, They're gonna come 0:06:40.120 --> 0:06:44.480 out we believe this summer, you know, with significant AI functionality. 0:06:44.520 --> 0:06:47.840 But it all is leading and Germans talked about this, 0:06:48.240 --> 0:06:50.520 you know, we believe the car. It's a matter of 0:06:50.560 --> 0:06:54.560 when not if that comes out. Two thous What are 0:06:54.600 --> 0:06:57.279 they gonna do with their AI product? We've had Siri 0:06:57.440 --> 0:07:02.160 for more than a decade, right, and she's not very smart? Um, 0:07:02.240 --> 0:07:05.279 not nice? Well, I don't know if she's intended to 0:07:05.279 --> 0:07:09.159 be as smart as like an AI chat bot. Um, 0:07:09.200 --> 0:07:11.760 But does that mean series gonna be able to do 0:07:11.880 --> 0:07:15.960 stuff beyond you know, say, shall I google that for you? Well? 0:07:16.000 --> 0:07:18.200 I think Look, they've been spending. We've eight to ten 0:07:18.240 --> 0:07:21.200 billion on AI and they have something that no other 0:07:21.320 --> 0:07:23.720 company in the world has. It's two billion, and that's 0:07:23.760 --> 0:07:26.480 the installed base. So I think when you comes to AI, 0:07:26.560 --> 0:07:29.840 this is something I think Cooper Tino is extremely focused on. 0:07:30.320 --> 0:07:32.440 And it just goes back to many of the innovations 0:07:32.480 --> 0:07:36.120 in rear view mirror. Yet again, Cook and Apple, you know, 0:07:36.240 --> 0:07:38.000 proved the naysayer is wrong. Man, Deep One are the 0:07:38.000 --> 0:07:41.000 biggest AI bets right now. I mean, it's been so 0:07:41.160 --> 0:07:43.680 huge in the news. Dan talks about the cab driver 0:07:44.200 --> 0:07:46.880 negative on tech, but has got to be positive on 0:07:46.960 --> 0:07:50.360 chat GPT, right, I mean, everybody's tried this thing. I 0:07:50.400 --> 0:07:53.280 think there is that hype aspect around chat GPT. But 0:07:53.640 --> 0:07:56.600 at the same time, you can't take Google or Alphabet 0:07:56.640 --> 0:07:58.960 out of the equation. I mean, I know their disaster, 0:07:59.080 --> 0:08:02.320 it was a disaster, the bar demo, but look, this 0:08:02.400 --> 0:08:05.640 company still is the leader when it comes to the data. 0:08:05.800 --> 0:08:08.360 The number of apps that have over a billion dollars 0:08:08.720 --> 0:08:11.920 billion users, you know, so they have almost five or 0:08:11.920 --> 0:08:14.160 six of their apps that have over a billion users, 0:08:14.520 --> 0:08:17.120 has a lot of proprietary data. I mean, how can 0:08:17.160 --> 0:08:20.560 you be negative on Alphabet if you're positive on chat GPT. 0:08:20.840 --> 0:08:23.720 They have a monopoly of search, so I mean, who 0:08:23.720 --> 0:08:26.560 doesn't want a monopoly? And and look I I think 0:08:26.680 --> 0:08:29.440 I mean it talks about incremental you know, negative in 0:08:29.560 --> 0:08:31.920 terms of being taking some share. But I still think 0:08:31.960 --> 0:08:35.800 Google is the powerhouse when it comes today. I learned 0:08:35.840 --> 0:08:39.800 from their Cardshact moment last week that ultimately to improve 0:08:39.880 --> 0:08:42.640 on the AI functionality. But it just shows that's why 0:08:42.679 --> 0:08:46.440 Amazon and Jassy Apple they're not rushing anything out, but 0:08:46.480 --> 0:08:49.200 no doubt in the della popping the champagne. In terms 0:08:49.200 --> 0:08:54.040 of Chat GPT, Hey mendep just real quickly, um, Meta, Google, 0:08:54.200 --> 0:08:56.720 Digital advertising? What's the call for this year? I think 0:08:57.000 --> 0:08:59.800 the sentiment is too negative talking about you know, tech 0:09:00.160 --> 0:09:02.559 under owned. I had the pocket that has done the 0:09:02.679 --> 0:09:05.800 worst is digital ad companies and Meta has been a 0:09:05.800 --> 0:09:08.439 cost cutting story so far. But I think there will 0:09:08.480 --> 0:09:11.199 be a cyclical rebound at some point with digital ads, 0:09:11.240 --> 0:09:14.240 and it's more likely given what we are seeing, you know, 0:09:14.320 --> 0:09:17.080 in terms of the overall sentiment that these companies have 0:09:17.559 --> 0:09:20.120 hit trough valuations and now it's about just you know, 0:09:20.360 --> 0:09:23.240 sequential increase in top one well Meta just picking that stock. 0:09:23.280 --> 0:09:25.640 It's kind of the poster child for digital advertising. Still 0:09:25.679 --> 0:09:28.640 down to a trial and twelve month basis. That's a 0:09:28.640 --> 0:09:30.640 bad news. The good news is it's up forty seven 0:09:30.720 --> 0:09:34.000 percent this year in so maybe some of the buyers 0:09:34.040 --> 0:09:36.200 coming into this name on a longer term basis. Sorry, 0:09:36.200 --> 0:09:39.040 good stuff. Tech round Table kicking off this two hours 0:09:39.040 --> 0:09:42.720 segment with Dan I've senior equity analysts at wed Bush Securities, 0:09:42.840 --> 0:09:45.559 wearing the casual wear very well today in the Bloomberg 0:09:45.600 --> 0:09:48.360 in an Actor broker studio, plus Mandy of Saint Bloomberg Intelligence, 0:09:48.360 --> 0:09:50.480 senior tech anles. We're like getting these guys together, they 0:09:50.520 --> 0:09:52.640 know what they're talking about. I'll be like the round 0:09:52.679 --> 0:09:55.640 table off things tech. We're gonna more coming up. This 0:09:56.000 --> 0:10:02.800 is Bloomberg. Good Morning. We had some pretty strong retail 0:10:02.840 --> 0:10:04.920 sales number the consumers still out there, so maybe the 0:10:04.960 --> 0:10:08.080 Fed can uh, you know, maybe keep rates higher for longer. 0:10:08.120 --> 0:10:09.319 That's kind of seems to be a little bit of 0:10:09.320 --> 0:10:11.880 a bet out there. Robert Teeter, head of Investment Policy 0:10:11.880 --> 0:10:14.679 and Strategy Group at Silver Crust Asset Management Joints us 0:10:14.720 --> 0:10:17.880 here in our Bloomberg Interactive Broker Studio. So Robert, busy 0:10:17.920 --> 0:10:19.920 time for you professionals out there, We've got lots of 0:10:20.000 --> 0:10:22.880 earnings to deal with. We've got lots of ECO data, 0:10:23.120 --> 0:10:26.520 CPI yesterday, retail sales today. When you put it all together, 0:10:26.840 --> 0:10:29.240 what are you telling your clients these days? I think 0:10:29.280 --> 0:10:31.680 we're sort of sorting through a matrix here of on 0:10:31.800 --> 0:10:34.400 the economy side, are are things getting better or worse? 0:10:34.559 --> 0:10:36.400 And things seem to be getting a little bit better. 0:10:36.840 --> 0:10:39.319 And on the inflation side, which is a critical influence 0:10:39.360 --> 0:10:42.080 for evaluation, uh, things seem to be slowing a bit 0:10:42.160 --> 0:10:44.280 in terms of their improvement, but also getting better. And 0:10:44.320 --> 0:10:46.200 so I think that the back and forth here is 0:10:46.280 --> 0:10:49.880 largely between the interaction between those two and assessing whether 0:10:49.920 --> 0:10:52.199 this this good news that you get on the economy side, 0:10:52.200 --> 0:10:54.400 how bad is that for inflation right now? I don't 0:10:54.400 --> 0:10:55.920 think it's too bad. But you see some of the 0:10:55.920 --> 0:10:58.079 reaction that we had yesterday to the CPI data, the 0:10:58.120 --> 0:11:00.720 reaction today to strong retail sales. I think that tells 0:11:00.720 --> 0:11:01.760 me we're going to be in a bit of a 0:11:01.760 --> 0:11:03.520 tug of war here as we continue to fight through 0:11:03.559 --> 0:11:05.600 these two issues. Well, doesn't the Fed have to raise 0:11:05.720 --> 0:11:10.000 rates further? I mean, I got a great message um yesterday, 0:11:10.040 --> 0:11:12.120 who what NEIL data sent me a message saying, like, 0:11:12.160 --> 0:11:14.040 what does the FED have to show for four or 0:11:14.080 --> 0:11:16.840 seventy five basis points of break takes? I mean stocks 0:11:16.840 --> 0:11:21.120 are down what fifercent from their highs, So that's that's 0:11:21.160 --> 0:11:23.960 one thing, I guess. But um unemployments at three point 0:11:24.000 --> 0:11:28.760 four percent, right, we're all spending like crazy. Airbnb has 0:11:29.600 --> 0:11:31.880 after the last month they were up. I mean, that's 0:11:31.920 --> 0:11:34.160 just a sign of what's going on out there. It 0:11:34.480 --> 0:11:36.360 sure is, and I do think it indicates that the 0:11:36.360 --> 0:11:38.880 FED will will certainly continue to increase. I think in 0:11:38.920 --> 0:11:41.920 twenty five basis point increments, maybe another fifty or seventy 0:11:41.920 --> 0:11:44.400 five in total, and stay there for a long time. 0:11:44.640 --> 0:11:46.320 I have a little bit of a contrarian take on 0:11:46.320 --> 0:11:48.480 the economic side of things, and that I feel that 0:11:48.480 --> 0:11:51.719 that each month that the economy UH stays robust, it's 0:11:51.760 --> 0:11:53.920 more time for inflation to come down. So well, all 0:11:53.920 --> 0:11:55.800 those things that you stated are true. The FED hasn't 0:11:55.800 --> 0:11:59.120 made progress in financial conditions, hasn't made progress in uh, 0:11:59.160 --> 0:12:01.480 you know, softening the labor market, but there has been 0:12:01.480 --> 0:12:03.400 progress in inflation, and I think so long as that 0:12:03.440 --> 0:12:05.920 continues without the economy falling apart, we have a chance 0:12:05.920 --> 0:12:08.280 for a pretty good outcome. All right, we're about I 0:12:08.280 --> 0:12:13.040 don't know away through this earning season. Um, what are 0:12:13.040 --> 0:12:15.120 you takeaways? Yeah, I think there's been a lot of 0:12:15.120 --> 0:12:17.720 strong signals from earning seasons. So while earnings haven't been 0:12:17.760 --> 0:12:20.240 that exciting, under the surface, there have been some pockets 0:12:20.280 --> 0:12:22.480 of strength, and I think the strength is coincided with 0:12:22.480 --> 0:12:25.120 the message we're hearing from the economy. So consumer discretionary 0:12:25.160 --> 0:12:27.560 has clearly been a strong source of earnings. You've heard 0:12:27.559 --> 0:12:30.240 from the banks in terms of the consumer remaining resilient. 0:12:30.320 --> 0:12:32.720 I think that's encouraging. And we've seen some strength in 0:12:32.760 --> 0:12:34.920 the industrial space as well, and I think that plays 0:12:34.920 --> 0:12:37.000 into a couple of themes that are unfolding right now. 0:12:37.200 --> 0:12:39.440 You know, first and foremost among those reshoring, and so 0:12:39.480 --> 0:12:41.599 I think there are some pockets of remaining strength in 0:12:41.640 --> 0:12:43.560 the economy. I think you have to be very careful 0:12:43.559 --> 0:12:45.480 in terms of earnings. That top line number might not 0:12:45.559 --> 0:12:47.520 be too exciting, but there are some areas to find 0:12:47.600 --> 0:12:49.240 a good earning scrop. It's intu. I'm just looking at 0:12:49.240 --> 0:12:52.760 the a function that hooked me up with a while. Uh. 0:12:52.800 --> 0:12:56.800 And for the SP five hundred, again we're about companies 0:12:56.840 --> 0:13:00.400 in SP FID of reported five point three sales growth 0:13:00.480 --> 0:13:03.600 your year, but earnings declined by two point four percent. 0:13:03.679 --> 0:13:07.080 So there's that margin pressure. Certainly is some margin pressure, 0:13:07.120 --> 0:13:09.280 and I think coming back a bit to normal. So 0:13:09.440 --> 0:13:11.280 you know, my mapping of it is to say margins 0:13:11.280 --> 0:13:13.360 get back to where they were in twenty nineteen, which 0:13:13.360 --> 0:13:15.840 says there's still a little bit of downside pressure on margins. 0:13:16.000 --> 0:13:18.199 I think revenues will continue to remain strong in those 0:13:18.240 --> 0:13:20.480 areas that I mentioned, and so it does playing a 0:13:20.520 --> 0:13:23.120 picture of you know, basically flat earnings growth in terms 0:13:23.160 --> 0:13:25.760 of outlook for this year, but with some opportunities below 0:13:25.760 --> 0:13:30.120 the surface. Flat. So SMP earnings flat from two. That's 0:13:30.120 --> 0:13:31.960 better than a stick in the eye, right, I think 0:13:31.960 --> 0:13:33.800 it is, I really do. I think there's there are 0:13:33.800 --> 0:13:35.960 a lot of transformations going on. And so whether it's 0:13:35.960 --> 0:13:38.000 this theme of a you know, a rolling recession or 0:13:38.040 --> 0:13:39.640 I prefer to think of it as different parts of 0:13:39.640 --> 0:13:42.520 the economy, in different parts of the economic cycle. There 0:13:42.559 --> 0:13:45.120 are these areas that are continuing to produce strong earnings growth. 0:13:45.160 --> 0:13:47.360 It's just not enough to boost the overall level. Consumer 0:13:47.400 --> 0:13:50.960 discretionary industrials are pretty small relative to tech and financials. Yeah, 0:13:50.960 --> 0:13:54.200 I'm looking at energy just again on this e A function, earnings, 0:13:54.200 --> 0:13:57.360 a revenue of fifteen percent year over year, earnings up 0:13:57.400 --> 0:13:59.280 sixty seven percent year of a year or so. You know, 0:13:59.320 --> 0:14:01.920 it's kind of goes the question, boy, energy has been 0:14:01.960 --> 0:14:03.720 good for the first time in a long time over 0:14:03.760 --> 0:14:06.240 the last couple of years. Have I missed it totally? 0:14:06.760 --> 0:14:09.280 Just go back into my you know, two year treasury 0:14:09.360 --> 0:14:12.959 yield at four points six. It's it's an interesting question 0:14:13.000 --> 0:14:14.920 to ponder. I mean, I don't think that the upside 0:14:15.640 --> 0:14:17.200 is going to be what it was in the past. 0:14:17.240 --> 0:14:19.640 But I think if you look through all those all 0:14:19.640 --> 0:14:21.080 those sectors on there, and I love the e A 0:14:21.200 --> 0:14:23.800 function as well, Uh, the areas that have had strength, 0:14:23.840 --> 0:14:26.040 all indications are that they will continue to have strength. 0:14:26.080 --> 0:14:28.760 So the key question is just valuation. And in my view, 0:14:28.760 --> 0:14:31.120 the overall valuation on the market will be influenced a 0:14:31.160 --> 0:14:33.280 lot more by the interest rate and inflation picture, which 0:14:33.280 --> 0:14:35.000 I see improving. So to answer your question, I do 0:14:35.040 --> 0:14:37.640 think there's still some opportunity in energy as well as 0:14:37.640 --> 0:14:40.080 those other areas that are showing learnings growth. What do 0:14:40.160 --> 0:14:42.880 you think about other regions? I mean, we focus on 0:14:42.920 --> 0:14:46.520 the US obviously because we're here, but um, there could 0:14:46.600 --> 0:14:49.800 be you know, something we're missing out on. Overseas. E 0:14:49.960 --> 0:14:51.960 M was very popular at the beginning of the year. 0:14:52.040 --> 0:14:55.280 Everyone said, Oh, Europe's gonna avoid this recession. How does 0:14:55.320 --> 0:14:57.400 it look to you now? I think all of those 0:14:57.440 --> 0:15:00.160 have been an an interesting sort of one time time 0:15:00.200 --> 0:15:02.120 trade that maybe has a little bit of of of 0:15:02.320 --> 0:15:05.440 legs left to it in terms of evaluation disparity against 0:15:05.480 --> 0:15:07.600 the U S and that recovery in Europe, the reopening 0:15:07.600 --> 0:15:09.800 of China playing into e M. So I do think 0:15:09.800 --> 0:15:12.160 there's still a bit of opportunity there, but longer term, 0:15:12.200 --> 0:15:15.080 when we step back and look at the demographic picture, 0:15:15.120 --> 0:15:17.200 when we look at the productivity picture, where we look 0:15:17.240 --> 0:15:20.120 at where companies are locating that are producing growth, most 0:15:20.160 --> 0:15:21.960 of those opportunities are in the U S. Yeah, I 0:15:21.960 --> 0:15:25.240 mean we're talking to e A function. So I noticed 0:15:25.280 --> 0:15:28.120 obviously there's a yellow drop down box you can choose 0:15:28.120 --> 0:15:30.280 your index. I put in the stock six D instead 0:15:30.280 --> 0:15:34.040 of the S and P five and it's dramatically different. Um, 0:15:34.080 --> 0:15:37.400 and well, look it's the same trend but stronger. So 0:15:37.480 --> 0:15:41.560 sales growth is like super boosted up twelve percent, and 0:15:41.640 --> 0:15:44.200 earnings the declines are only one and a half percent, 0:15:44.280 --> 0:15:46.520 So I guess that's really kind of a reopening story 0:15:46.560 --> 0:15:48.520 for Europe as well. I think it is. I think 0:15:48.520 --> 0:15:50.640 both Europe and Asia a little bit behind the US 0:15:50.680 --> 0:15:53.240 in terms of the reopening cycle, the reopening cycle from 0:15:53.280 --> 0:15:55.640 from the economy, So again, there may be a little 0:15:55.640 --> 0:15:58.280 bit more opportunity there, but longer term, the demographic picture 0:15:58.320 --> 0:16:00.360 and productivity in the US just looks a lot. By 0:16:00.360 --> 0:16:03.800 the way, are you worried coming back home, um about 0:16:03.800 --> 0:16:08.960 the housing situation here, because we really haven't had, um uh, 0:16:09.120 --> 0:16:13.400 any serious injuries from raised rates so far. Right, six 0:16:13.480 --> 0:16:17.240 percent seven percent Mortgage rates make affordability kind of off 0:16:17.240 --> 0:16:19.360 the charge, so anybody who wanted to sell is gonna 0:16:19.400 --> 0:16:22.280 maybe rent instead, and anybody who wanted to buy, um 0:16:22.320 --> 0:16:24.840 the same goes for them. But if we start to 0:16:24.840 --> 0:16:27.720 see job losses, we could start to see four sales 0:16:27.760 --> 0:16:30.600 and then big price drops. That's that's a great area 0:16:30.680 --> 0:16:32.440 of focus for US. I think we're not in the 0:16:32.520 --> 0:16:34.800 danger zone yet, but we could be if these rates 0:16:34.800 --> 0:16:37.160 continue to remain high towards the end of the year 0:16:37.200 --> 0:16:39.080 and if we don't see progress on inflation by the 0:16:39.120 --> 0:16:41.160 end of the year. For now, you have a situation 0:16:41.200 --> 0:16:43.920 where a lot of people who bought homes are are 0:16:43.960 --> 0:16:46.240 still in very good shape. They bought them, you know, 0:16:46.280 --> 0:16:48.920 to three years ago, before the move higher in prices, 0:16:49.240 --> 0:16:51.360 and you have a slowdown and activity. Of course, we 0:16:51.400 --> 0:16:53.320 saw a few green shoots in housing earlier in the 0:16:53.360 --> 0:16:55.160 year when rates cooled a bit, so we think there's 0:16:55.160 --> 0:16:56.960 the potential for that to happen again as we get 0:16:57.040 --> 0:16:59.680 later into the year, more progress on inflation. Well, look, 0:16:59.760 --> 0:17:02.040 I about to close on a property. Uh, and I'm 0:17:02.080 --> 0:17:04.359 paying a much higher mortgage rate than I would like 0:17:04.480 --> 0:17:05.919 or I would have paid a year ago, but I 0:17:05.960 --> 0:17:09.119 fully expect to refinance in twelve months, so hopefully that 0:17:09.400 --> 0:17:10.840 still works up. I look, you know, I'm trying to 0:17:10.880 --> 0:17:12.879 get Tom Keene out of the triple leverage all cash 0:17:13.240 --> 0:17:14.720 fun and now I'm saying, hey, you can go buy 0:17:14.760 --> 0:17:18.239 a two year note and get four point six. How 0:17:18.280 --> 0:17:21.239 are you guys thinking about fixed income ine after just 0:17:21.320 --> 0:17:24.720 a brutal Yeah, I think there are some good opportunities 0:17:24.720 --> 0:17:26.320 in fixed income, and you don't have to be too 0:17:26.320 --> 0:17:28.560 aggressive on the duration or credit front to pick up 0:17:28.560 --> 0:17:31.040 pretty good returns. So that's an area where we've been 0:17:31.240 --> 0:17:34.560 constructive and encouraging clients to to not go into all cash, 0:17:34.600 --> 0:17:36.679 but rather to go out a little bit. Uh, not 0:17:36.760 --> 0:17:38.520 be long duration. You don't have to be to get 0:17:38.520 --> 0:17:40.880 good returns and not take a lot of excessive credit risk. 0:17:40.920 --> 0:17:43.199 There's no reason to. And it plays a much more 0:17:43.240 --> 0:17:47.359 constructive role into portfolio than it did three years ago. See. Yeah, no, 0:17:47.480 --> 0:17:49.800 I've this is what we've been hearing U and it 0:17:49.840 --> 0:17:53.399 makes sense to me for sure. Um, I just wonder 0:17:53.560 --> 0:17:56.360 it doesn't really help financial conditions if I'm getting four 0:17:56.400 --> 0:17:59.280 point six percent of my two year right, So the 0:17:59.280 --> 0:18:01.720 fed I inc Is going to be the variable that 0:18:02.680 --> 0:18:06.440 could blow down this house of cards because they either 0:18:06.560 --> 0:18:09.760 have to keep raising or we have to all wait 0:18:09.880 --> 0:18:14.080 through what another year of another two years of inflation 0:18:14.080 --> 0:18:16.639 that's just unacceptably high. I mean, we have the smartest 0:18:16.640 --> 0:18:18.320 people in the world coming out and now suggesting they 0:18:18.400 --> 0:18:20.760 raise the target, and I'm thinking, wait, this is not good. 0:18:20.960 --> 0:18:23.840 Two percent is already too much inflation, so three percent 0:18:23.920 --> 0:18:26.640 is worse. Yes, I think that's right. I don't think 0:18:26.640 --> 0:18:28.200 it makes a lot of sense to raise the target. 0:18:28.240 --> 0:18:29.560 I think you hit on the key theme, though we 0:18:29.840 --> 0:18:31.679 do have to be patient. I don't think inflation is 0:18:31.680 --> 0:18:34.040 coming down quickly, but as long as it's heading in 0:18:34.040 --> 0:18:35.679 the right direction, I think it gives people a lot 0:18:35.720 --> 0:18:38.080 of encouragement in terms of planning for businesses or planning 0:18:38.080 --> 0:18:41.560 its consumers. While the problem is is getting better, that's 0:18:41.640 --> 0:18:43.520 much more important at the pace. I agree with you, 0:18:43.560 --> 0:18:44.879 it may take a while, and so we may be 0:18:44.920 --> 0:18:46.840 looking at a situation where we're getting out towards the 0:18:46.880 --> 0:18:48.680 end of the year and we're still not uh near 0:18:48.720 --> 0:18:50.920