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At Marsh, we believe that perspective powers progress. That's why our individual businesses have come together as one company, a new Marsh built to solve the world's most complex challenges and uncover new opportunities for our clients. We're better positioned than ever to help your business navigate obstacles and unlock potential across risk, reinsurance and capital, people and investments and management consulting. Learn more@visitmarsh.com podcast.
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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stenbeck on Bloomberg.
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Radio so looking at shares of Goldman Sachs up about four and a half percent and then let me bring up Morgan Stanley on the Bloomberg it's up almost 5. It is up 5.7% to almost 6%. So surging both following earnings this morning at Goldman blowing through expectations for equities trading revenue, posting an all time Wall street record of $4.31 billion in the final three months of last year. Morgan Stanley's debt bankers increased revenue 93% in the fourth quarter, by far the biggest jump on Wall street capping a record year for Sounds pretty good Tim.
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C
It does sound pretty good and look at the way that the investment community is responding right now with what you need to know. Bloomberg News chief Wall street correspondent Srinatharajan joins us in the studio. We're going to talk about what Carol just mentioned, but I think what both of us are interested in David Solomon, is what David Solomon said about prediction markets on this call. This was really fascinating to me. He's met with in the last couple of weeks he said he's met with the leaders of the two leading prediction markets platforms, Polymarket and Kalshi is what.
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D
Wheelers do is what we think unless we have no idea of how the rankings work.
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C
Okay. I'm just thinking in my head that would be logical. Why?
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D
Well, it is fascinating right when you just think about the prediction market space, which is just betting markets if you had to really simplify it and how it has gone from the shadows to the mainstream now. You don't have to go that far back 15 months ago the FBI was knocking down the door of Polymarket CEO Shane Copeland. Since then a platform that was banned in the US has seen all its legal troubles disappear, is making a big splash in the US Calci is already there and there is just a much greater embrace of these platforms Especially as they get into the sports wagers. The question for us is on Wall street, what is the value to this? And if you talk to a lot of executives out there, they point a, at least they paint a picture that tells you that this could be a platform that has very interesting benefits. If you see institutional investors jump into this space tomorrow, you could see some of these wages acting like a good tool to hedge your positions. Because the bets right now are will Joe Biden's make a gaffe before the end of the month or will Donald Trump tell us how whole milk is spelled again before the end of March?
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Will Tim eat a banana during Bloomberg Businessweek?
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C
But would you know? Because I'm going to do it and nobody will know.
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A
Only if I say it exactly.
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D
My point is like six months later it could very well be will the unemployment rate inch up? Will the Fed cut rates by 25 basis points or 50 basis points? And then when it becomes derivatives that are regulated by cftc, you know, you can attract institutional investors and then what's the difference? You can make it behave like any other financial instrument these people are used to. And when that's the case, you can see why people like Goldman Sachs are interested. And perhaps other market makers like Citadel securities has been out there talking about how there could be value to a tool like this.
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C
Well, as you were talking about the challenges that at least Polymarket and its founder faced in the last two years or so, I just occurred to me, the New York Times has a story out about how Both Kalsheet and Polymarket have this commonality and it's that Donald Trump Jr. Is an advisor to both companies.
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A
Okay, so interesting.
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C
Yeah, just interesting.
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A
No, it is. Listening. I was thinking, was David Solomon watching the Golden Globes because polymarket was a part of that broadcast and talk about having a global audience. So I, I'm curious that there are concerns about transparency, there are concerns about insider trading or you know, manipulation. Would a Goldman owning one of these platforms make it perhaps more legitimate?
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D
One of these platforms?
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C
Well, they already have a partnership with one.
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A
Just saying that if they were involved, I mean these are SM firms, they understand regulation in a big way. They remember the financial crisis in a big way. So careful.
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D
So two things. What?
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A
Actually you guys both came at me.
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D
What I'm really trying to figure out is when the Goldman Sachs or say eventually a Citadel securities or Morgan Stanley JP Morgan get into this space, are they looking at partnerships with the Polymarkets and Calgary, they are the rails and then run their trades on those systems or could they actually be a competing product? That's one thing I would like to fig out. But also what we cannot forget is what David Solomon said towards the end of his comments, which is while it's good to be all excited about it and all the pundits are talking about it, this kind of change and embrace will take time. So don't get too impatient. So it's not something you're expecting to see in six months, especially for the challenges you mentioned because there are questions about transparency, there are questions about the rules based system we have on these platforms. Those need to evolve, those need to become more standardized. That is when you can get the biggest financial institutions to play.
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A
All right, we got to run. Sorry. But we know there'll be more on this. Thank you so much. Really appreciate Bloomberg News chief Wall street correspondent Srinatarajan joining us right here in studio. We're staying on financials. We got to talk a little bit about BlackRock because it pulled in $342 billion of total client cash in the fourth quarter, pushing the firm to a record $14 trillion of assets. As it integrates a string of recent acquisitions to become a force in private markets. We want to dig a little bit deeper into their results.
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C
Shares up 6% right now. Following BlackRock over at CFR Research is Kathy Seiford, senior vice president and equity analyst of CFR Research. She joins us from New Jersey. Shares rallying big time highlights for the quarter. What were they?
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E
Well, I think one of the things to take away from the quarter was the breadth of the strength this quarter. You mentioned that asset inflows were 342 billion equity ETFs kind of pace that rise. But they also had fixed income inflows, alternative asset inflows. And so, you know, I think the, the thing that encourages me and I have a buy recommendation on the stock was the breadth of the strength this quarter.
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A
So specifically so. Okay. Because it's interesting how much they Kathy, are transforming themselves, right. Stocks, bonds, public markets into one of the largest firms when it private credit and infrastructure markets globally. Private markets. I'm just curious about that impact. What read through did you get on that? And kind of where it's going, you.
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E
Know, there had been some criticism that perhaps they might be late to this party that maybe they overpaid for some of their acquisitions. I mean, I've kind of heard, you know, some of that chatter. But I think the results this quarter should offer a little bit of relief to those who were worried about that because all of the firms that they acquired certainly contributed to the quarter and to the quarter's asset inflows. And then the technology, Aladdin and Prequin also posted significantly higher revenues as those systems are becoming more and more embedded in this ecosystem, if you will.
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Well, speak of that ecosystem. Citigroup is kind of part of that ecosystem. And I think this is really interesting, you know, kind of an outsourcing deal, Citigroup handing BlackRock about 80 billion in the bank's wealthy clients investment assets to manage. How big a deal is this for that firm? And are more deals like this to come?
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E
That's that was a pretty typical deal, if you will, you know, and again, also encouraging because BlackRock had in previous quarters lost some mandates. So it's nice to see not only retail inflows, but large institutional deals like the Citi deal. And so again, it was just another component of what was a really strong, solid and encouraging quarter.
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A
Yeah. And we certainly see it in the share price as we continue to watch this stock trade. Really some outperformance in today's session. Kathy, thanks so much. Kathy Seifert, senior vice president, equity analyst over at CFR Research, joining us on this Thursday.
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Stay with us. More from Bloomberg businessweek Daily Coming up after this.
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Business challenges and opportunities are never one dimensional. At Marsh, we believe that to thrive, you need perspective. That's why our individual businesses have come together as one company, a newmarsh where each layer of our organization works even more closely together to provide you with a stronger, more panoramic perspective. We're now one firm solving the world's most complex challenges and unlocking opportunities for you across risk, reinsurance and capital, people and investments and management consulting. As business continues to evolve, Marsh will always be here to help you overcome new challenges, answer new questions and take advantage of new opportunities. We're better positioned than ever to provide the perspective you need to fuel progress forward.
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See how@visitmarsh.com podcast you're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTub.
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C
I'm taking a look at what's going on with oil right now, Carol. We're seeing WTI down close to $3, ICE Brent down close to $3.59 for WTI Brent crude at 63 60.
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A
Yeah, I mean, I think it's safe to say with maybe the president pulling back a little bit when it comes to Iran. That has certainly helped the energy markets. But it's certainly something we keep a watch on.
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C
So shale billionaire Harold Ham said oil companies need guarantees that their assets won't someday be seized by Venezuela if they help revive the nation's crude production. I want to remind everybody that President Trump has called on US oil companies to invest at least $100 billion in order to revive production in Venezuela after years of corruption, underinvestment and neglected ravaged output.
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Now, as we know, and we've done a lot of follow through in reporting since that event in the East Room of the White House last week. Crude producers, however, are moving cautiously. ExxonMobil's CEO Dar woods telling President Trump at the meeting that the country is currently uninvestable. And I remember on that day, on that meeting, I think we saw Chevron shares higher. But ExxonMobil under pressure and whether or not that had to play into it, who knows? But it was kind of interesting to see that dispersion.
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C
Curious what Andrek Bernatova thinks about all this. She's founder and CEO of the blank check company, Dynamics Corporation. It focuses on companies in natural resources, digital infrastructure and power. Early in her career she's been at companies including the oilfield wastewater management company Goodnight Midstream, the power gen company Enchanted Rock. She joins us from Texas. You've also done investment banking when it comes to energy as well. So you have an idea about what it takes to actually make this stuff work. First, I just want to start big picture before we get to sort of your thesis about the smaller companies benefiting is is Venezuela on investable like Darren Wood says?
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F
Yeah. Tim and Carol, thank you for having me. First of all, good to be back on. You know, I think thinking about Venezuela, essentially there are two components of that story. Number one is historical component. And you know, obviously Exxon, Conoco and super majors had had significant losses as a, you know, consequence of the nationalization in the kind of 2000s by Hugo Chavez. And those losses are, you know, in the range of 30 plus billion with Conoco itself, you know, about 10 to 12 billion as a single company. So obvious, real money that's, that is real money that is still being you know, subject of negotiations. And I think companies, super majors by definition have to be cautious in entering back into a country like that. So that's thinking about sort of the historical component now, the current component. And I know you all mentioned meeting at the White House, some of the oil and gas companies. There needs to be sort of a framework set of the companies going back into territory like Venezuela. And I know there Was some ask about US guarantees in terms of some of the super majors, specifically going back into Venezuela. Obviously, Venezuela, it is the country with the largest oil resource on this planet with about 300 billion barrels, you know, even before Saudi Arabia with about 260 billion barrels. So very significant resource. I would say the other piece that's going to play a role is, is obviously oil prices themselves. I mean, right now we are right about, you know, 60 bucks if you think about, you know, the history. And again, some of the very similar examples, I would say Exxon, for example, their operations in Guyana, you know, they entered the country securing their position in 1998 and it really took them until 2015 to drill their first well. And that was in an oil price environment that was at 140 bucks for periods of time. So oil price is certainly going to play a role because if you want to take that risk and go back into a country like Venezuela, you know, really, you really need to see sort of higher sustained oil prices.
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A
Yeah, that's what I want to get to the smaller players because if some of the big players, the major integrated oil companies are a little suspect and cautious because with good reason, some of them have been burned and we're talking about billions of dollars already at risk that they've seen. How is it that smaller companies, who, I think it's safe to say their balance sheets are more fragile, that they would be in a position to benefit maybe in this situation when it comes to Venezuela?
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F
It's a great question, Carol. You know, we, we have really good sort of examples in the region itself in the form of Colombia and Argentina for example, where, you know, in Colombia you did see some of the smaller players entering the country and really, you know, showing the ability one to be more entrepreneurial to, you know, find sources of capital that may be more of a sort of, you know, willing to take some of that risk, you know, like large, you know, family offices, etc. And we are certainly seeing that in the market. You know, from our perspective today, you're.
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A
Seeing family offices that are willing to risk exposure to building out the Venezuelan energy, energy infrastructure.
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F
We have seen that for a while at this point, Carol. So yes, you know, obviously, you know, a lot of the oil and gas or natural resources or mining specific family offices that, you know, have been in the territory of historically, you know, putting money on the line and taking significant risk and frankly, you know, building ultra large family offices as a consequence of that sort of exploration or counter risk are, you know, going to be probably very interesting and Maybe unexpected to your point, players potentially, you know, sort of scooping the territory and maybe being, you know, even the first entrance back into Venezuela.
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But it sounds like one.
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E
It's something.
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C
Yeah.
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Oh, I'm sorry. Please, go ahead.
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F
You know, one more component that's interesting. Obviously, Venezuela, this is a figure that's been quoted number of times in the past couple of weeks. But 8 million of the population of Venezuela is outside of Venezuela. You know, a large portion of that population is highly educated, you know, engineers and geologists and finance people, etc. So, you know, you have a very competent workforce that knows the region, has worked in the region before, maybe outside of the region, and may have the ability to attract capital again, you know, maybe some of those ultra large family offices to get back into the region. So having the combination of the risk appetite of some of the large family offices and, and a workforce, you know, that may be able to attract that capital knows the region could be very interesting combination.
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C
As somebody who follows the oil market closely and has worked in the industry, I'm just curious about just general demand trends and, and what you think they will be. How when does demand peak in your view? I mean, 20 years ago we were talking about peak oil. We obviously didn't reach that and a lot has shifted since then. When do you think demand peaks and when are we sort of on the other side of that hill where we see like less demand? Because this, these investments, these are decades.
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F
Yes, 100%. And it's a great question, Tim. And we think about this deeply. I mean, I remember being a young analyst, you know, at Blackstone, and we had conversations 20 years ago about peak demand and really, you know, nothing has materialized to your point. You know, in our opinion, what's interesting trajectory is kind of the interconnectivity of oil and gas. And obviously, you know, one of the biggest topics right now globally is pushing the boundaries of inventory and the cost of actually, you know, extracting oil being pushed obviously upwards. So, you know, our thesis is, you know, slightly, I think, differentiated. We are on both sides of the story on oil and gas side as well as the renewable side. And so naturally, as you guys are going to see renewable pricing coming down and oil extraction prices breakeven prices coming up, that's sort of where we see the territory where demand for oil and gas is going to slow down and we are going to see the intersection of those two. So, yeah, whether it's five years or 10 years or 20 years, I don't know that.
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A
Andreka. We've Got to run. And Drake A. Bernatova. Thank you so much. Appreciate it.
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B
You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live live on YouTube.
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C
I'm looking at the terminal pulling up the ADRs of TSMC. Yeah, 5%. I know.
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A
Out of the gate. Yeah, yeah. Everybody's been talking about this overnight into this morning and we've seen, if you look at the stocks, it's also rallying.
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C
They were up as much as 7% earlier in the session. The chip makers results and forecasts were seen as a strong underscoring that demand trends related to AI remain robust. I want to bring in Mandeep Singh. He's Bloomberg Intelligence global head of technology research. He's back from Las Vegas. He's back from see. He joins us here in the Bloomberg Interactive brokers studio. The key number here seems like $56 billion. It's the high end of the range on how much the firm is earmarking for capital spending this year. It's up about a quarter from last year. A sign that everything's good.
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G
Yeah. And look, the trickle down that you're seeing in terms of hyperscalers spending the money, the capex for Microsoft Meta, all these companies would be north of 100 billion. Now you see that trickle down in terms of the fab companies spending capex in terms of building the fabs. And so clearly the narrative around AI super cycle is being validated by these kind of numbers and TSMC not only printing great numbers, but raising their CapEx.
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C
So yeah, but, but the company CEO saying, quote, I'm very nervous about whether AI demand is real or not. How do you, how do you sort of square that circle?
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G
Well, I look at, you know, the numbers, the advanced nodes make up 77% of their revenue now.
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C
Now what that tells you what that is?
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G
Yeah. So basically TSMC is generating almost 80% of their revenue from 2 nanometer and 3 nanometer. And that is where all that data center chip demand from Nvidia, which I wouldn't be surprised if they are largest customer now for TSMC. So Apple used to be the largest customer at 25% off TSMC's revenue. Probably Nvidia surpasses them this year. So that just goes to show. And look, Apple is also using the advanced nodes. So it's not as if smartphone chips are made on a trailing node, but it just goes to show the concentration. We talk about for all these companies. TSMC has it as well.
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A
I guess logically this makes sense to me, that they have to build out. We keep talking about demand that's out there. We keep talking about demand that's not met because they just can't make them fast enough. And so ultimately it was going to have to come to TSM eventually, right?
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G
Yeah.
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A
But I agree, like, when do we know this party? It's just like this almost hamster trail of like just keeps going. How do we know that this is all still real?
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G
Right now there is a demand spillover to intel and Samsung because TSMC cannot fulfill all the demand themselves. So think about this. They cannot make PC chips or some other type of auto chips because they don't have the advanced node capacity. And that's where the PC chips right now are coming back to intel because TSMC doesn't have the capacity. So the whole world, all these different sectors need chips right now. Data centers are getting prioritized, smartphones are getting prioritized, but everything else is getting pushed back.
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A
You know, it's just kind of wild on a day where we kicked off kind of our 2pm hour talking about Amazon and this copper mine in Arizona. And it just seems like this grab. Does something like that make sense to you? That they too, whether it's raw materials, critical minerals, like everybody needs this because it's about data centers in the build and AI.
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G
Yeah. And also power. And I think one of the things they highlighted was probably it makes sense for them to expand in Arizona. One because of the geopolitical tensions, but also because of the power availability. And that is a recurring theme that keeps coming up. I believe we are going to hear more of that this earnings season, where power is the real constraint and with the longest lead time.
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A
So you're saying where you build a data center, you want to make sure you have access to power. Because we did this story. Bloomberg did a story.
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H
Right.
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About a data center that didn't have the power. Yeah, get it up.
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C
And yeah, two in Silicon Valley, actually, both of those in San Jose. They're just built, but they're not hooked up. That was a few months ago. I don't know if there's been an update there.
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A
Right.
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C
So, Mandeep, you mentioned Arizona. When you were out in Las Vegas. You didn't get a chance to fly down or drive down to Phoenix and see what TSMC has done there now. Okay, but. But tell us about that plant and whether to what extent, because the geopolitical tensions are certainly top of Mind to what extent what is done at that plant is the same or different than what's done in Taiwan.
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G
They are looking to add advanced node capacity and the yields which is one of the most important metrics in when you are running a fab that the, you know the number of chips you are making are of high quality and you don't have to discard them. So the yields are close to what they are doing in Taiwan. So from that perspective, I mean I don't know if they brought over more talent.
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C
I was just going to ask that.
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G
Right. So the yields that high for, for a new location because remember the 55 or 56 billion they're going to invest this year, it's going to result in a fab two to three years down the line. That's how long it takes. So and then you need to bring over people, you know, assemble everything in place. So from that perspective all the investments they made three years back are resulting in, you know, this capacity that they have at the Arizona Fab and it's a pretty high yield.
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A
So there's a risk because it takes two to three years to build this out that in two to three years the fundamentals around the demand could change.
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C
And would that mean they would a cyclical industry?
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A
We hear this over and over, right. There's demand when it comes to anything in semiconductors in that space. Then there's the investment, the build out which takes a few years and then there's oversupply. Could it, could we get there or you don't seem.
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G
Not really. Because what I heard from the executives last night was the reason for raising the capex is because you know they're able to raise prices right now a lot of they are forecasting 30% growth. Guess what, they are having 20% ASP growth. So it's not just the capacity expansion but pricing is getting a real lift here similar to what we are seeing on the memory side. So all the components are getting bid up because of that under supply situation. Now how long does it take to resolve two to three years? Who knows. But for now we are in an environment where there is gross undersupply of things that people need at the data center.
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C
So we in our last hour the news broke about the US and Taiwan clinching the deal to cut tariffs and boost chip investment. And we're getting some more details on that now. Thanks to Josh Wingrove and Yin Lee for Bloomberg News. Part of this is Taiwanese semiconductor companies will increase financing for American operations. So does that mean TSMC in Arizona or is there other, are there other companies?
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G
I mean, so far what we gathered was it's going to be more of an Arizona expansion. But my guess is Samsung has picked up another location, so there could be more.
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C
Okay, yeah. The deal includes relief from future tariffs for Taiwanese semiconductors companies building new US operations able to import product tariff free during construction and cap sector specific US tariffs on certain products from Taiwan at 15%. Does this clear everything up for you as an analyst? That okay, now we kind of have this, this regulatory overhang or the tariff overhang behind us because we know what's going on.
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G
Yeah. If tariffs was affecting them, the first place where it would show up is the gross margins.
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C
Well, that was big today. Over 60%.
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G
Yes. And so a fast company doing fine. Doing fine. I mean there is no tariff impact and they didn't guide to anything like that. So clearly they are doing very well in terms of maneuvering this political situation.
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C
I want to talk about ces.
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A
Do we talk about the memory shortage?
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C
We did not today. We have done that before. Yeah, go ahead, go ahead.
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A
Well, we just. Because it was a story that was out there, the memory shortage to hit Nvidia China approvals. Is that something we need to worry about? And also, you know, is that a serious story? I don't know.
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G
Well, so the way I look at it is Nvidia has managed its supply chain so well over the last four to six quarters because they saw this demand coming. And Jensen at the CES said demand is really strong 10 times during a financial analyst Q and A. So he's telling us that, you know, he saw this coming, he prepared for it. And so from that perspective, a company like Nvidia has long term agreements with all of the three major memory providers, sk, Hynix, Samsung and Micron. And so even though prices are going up, I think it's going to affect the PC makers more than someone like Nvidia, which clearly has the scale right now.
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A
All right. And sounds like the leverage. Right. In terms of their deals. All right, go ahead ces, let's do it.
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C
You walked in here and said this.
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A
Is the first time we see you.
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C
Since coming back from ces. And you said you were kind of blown away by robotics.
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G
The number of demos that I came across in robotics, I mean there was.
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C
We sure there weren't people inside those suits?
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G
No, no. And in fact it was all AI inf. And look, I mean everyone is very optimistic that they will be able to distill the intelligence in these large language models into humanoid form. Factor or robotics that can be used in warehouses. And that's where people are very excited about a new market that can be created. And the biggest, I would say constraint so far in terms of robotics was how do you make sure that the degrees of freedom can be managed right? You can pre program everything. With AI, we seem to have solved that problem that these robots can understand language, human language, because large language models are very good at that and they can be maneuvered in a way where there is control and guardrails in place in terms of how they act when things don't go according to plan.
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C
So we're not quite cooked yet.
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G
Yeah, it'll be a lot of I think, iterations around this.
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H
How soon?
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G
I mean everyone is trying to pick a specialized use case, whether it's folding laundry, cooking. Like there are a lot of consumer robots as well. But the form factor will evolve and AI is the key to making the robot smarter.
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C
Hey, we have a couple of redheads crossing the Bloomberg terminal. We only have like 10 seconds for you on this. Replit is one of them. It's an AI coding startup. It's nearing a deal for a new round of funding that would roughly triple its valuation to $9 billion, including the money raised, according to people familiar with the matter. 10 seconds on repl it.
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G
I mean again, another example of a company that has leveraged large language models, created a new category and these companies are growing, err, much faster than the SaaS names that have been beaten up. So that's your reason why SAS names are doing poorly.
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A
We're just going to keep you here because everything that seems to come across.
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C
Robot Man Deep and then he doesn't need to be here with us.
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A
We want both.
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F
We want both.
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A
Mandeep. Thank you. Mandeep Singh, Bloomberg Intelligence Global Head of Technology Research.
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C
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [30:53]
B
You're listening to the Bloomberg Businessweek daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
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A
Let's get to Emily Green as we drive to the cliffs. Head of private wealth management at Elvis firm has about 1.1 billion in assets under management. Emily, good to have you here. Happy New Year. Jamie Dimon. What do you want to hear from him? Or what would you want to hear from him?
- [31:22]
H
You know, I think I follow actually the, the main economist at JP Morgan, Michael Sunblast, who's worked there for a long time, very, very closely and I know Works very closely with Jamie and, and how we're looking at things. You know, I think from the news today we look at the potential deal with Taiwan and you know, it's interesting. I think the news sounds very excited about it. You think that there's a lot still to be determined within there. And so thinking about what does that actually mean, look at the security concerns of that, you know, what's, what's happening with that, how do we think about that? You know, just as well as you know what's going on, there's a lot of news just about TSMC today as well. And so, you know, what does this all mean for AI stocks after coming off some hot years in the market?
- [32:18]
C
Well, Emily, I'll pose the question to you or sort of answer, you know, what markets have been telling us at least about geopolitics is that we don't care. Why.
- [32:28]
H
Yeah, yeah, they don't care. It's been a wild year so far of geopolitical risk. But then there, and you know you did see the market trading up slightly today as you saw the looks like we were backing off of the risk with Iran. And so, you know, you are seeing some volatility, like slight volatility when you're looking at these. You know, I think with Venezuela that was a really quick blip. I was amazed when I on Monday morning after that, the markets really didn't react to that at all. I think the markets are still, you know, we keep talking about that the trade is over and people are not focused on it. I think people are still so focused on it. Like, you know, you look at what's going on with Iran today and then you look at what happened with TSMC earnings and like that overtook everything very quickly within there. People stopped talking about Iran and started talking about this one company, tsmc very quickly. And so I think that focus on AI and what that means for the future, future is still there.
- [33:29]
A
Well, that's what we certainly talked about with our Mandeep Singh, global head of technology research for our Bloomberg Intelligence team. I mean that's what he said. I mean they are now, the capex is now moving to them in order to build out their capabilities to help all of the chip companies meet their demand, especially when it comes to build up.
- [33:49]
C
Right.
- [33:49]
A
Like so it's, it's interesting to see that. Is there a trade for you on this? Is it Nvidia? Is it Tsunami? You know, the stocks is up. Most of the names in that index are higher today.
- [34:00]
H
You know, I do think, I think in 2026, you know, we, we've seen a lot of concentration in how the trades have played out over the past couple of years within here. And I do think that if we move forward, you know, there's a lot, we focused a lot on the Magic 7 for many years. You actually look at last year and a lot of the Mag 7 stocks actually underperformed, you know, when we think about it. And so people, I think like the general public still focuses on those companies because a lot of those are just like what we use on a day to day basis. But you know, I really look forward that the, the trade to widen within here. And so we've had such concentration in the stock market, like a huge amount of concentration when we look at it. And so we think about, you know, the past five decades, the top 10 companies by market cap used to be like 20% of the S&P 500. They're hovering closer to 40. And so that's an enormous change within here. I expect this to widen. As we look at things, we look at infrastructure to come in, we look at energy, we look at cybersecurity, start to play a big role in this. And so I think that the, the trade is going to widen from what we saw in 2025.
- [35:08]
C
I want to go back to TSMC. Did we get, did we get mixed signals from CCY, the company's CEO? Here's what he said, quote, you're trying to ask us whether AI demand is real or not. I'm also very nervous about it. He said this in response to an analyst question on a conference call. On the conference call, quote, we're investing 52 to 56 billion dollars in capex. Right. If we don't do it carefully, that'd be a big disaster for tsmc.
- [35:33]
H
Yeah, I mean you even, you've seen him even talk about what they're doing in Arizona and actually how it's so much less efficient than what we're doing in Taiwan. And so you think about just how they're deploying capital and you know, just the announcement today of the Taiwan deal between the administration is you do think about what does that mean for the future. And you know, you look at Michael Semblance talked a lot about this in his paper earlier this year. But the real kind of scary part of AI demand if you look at even the next five years is will energy be able to sustain what we're doing within here? And so we don't talk about it a ton, but will we actually have enough energy to be able to actually look at the demand.
- [36:20]
A
I don't.
- [36:21]
H
The demand seems to be there, but, you know, will we have enough energy to be actually to, to get to that point?
- [36:29]
A
How are you thinking about 2026 at this point? Do you feel like the narratives are still being developed here in terms of investment investments, or do you, are you already kind of getting a feeling of, of what's likely to play out this year?
- [36:45]
H
I mean, you know, I think it's interesting. I know some, we know some of the things that we need to figure out like the Supreme Court ruling on the tariffs. We need to see what happens there. There's a lot of expectations that will happen there and so that, that will get pulled back. The administration will put them in, in some other way and we'll kind of end up somewhere in the middle of where we are. And so, you know, what we've seen from this administration is everything we expect seems to not happen within here. So I think, you know, like, always proceed with caution with what we all expect to happen within there. And so, you know, thinking about what that means, I think we've seen a lot more geopolitical risk than we expected from this administration within here. And so in internationally. You know, this is just not what was told that we were going to play out within here. We're really starting to look at that. And then, you know, I think one of the real risks that we have that we see playing out in real time of like a risk is the immigration policies within here. And that's not a risk. You know, it's more from looking at the labor market. And so we're still continuing to see that play out. So I think we know some of the top line risks now. I'm sure there will be things to come that we don't know about today.
- [37:51]
A
All right, going to leave it on that note. Some things certainly to think about. It's still early in the new year, we know that, but certainly things to keep on our radar. Emily Greene, head of private wealth management at Elvest. The firm has about 1.1 billion in assets under management.
- [38:05]
B
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