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- [00:00]
CBOE Representative
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- [00:19]
Public.com Representative
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- [00:36]
Dan Ives
Bank of America Open or enroll your
- [00:39]
Public.com Representative
account@bankofamerica.com B of A rewards bank of
- [00:42]
Dan Ives
America Corporation all rights reserved.
- [00:46]
IBM Representative
So there's a lot of noise about AI, but time's too tight for more promises, so let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM
- [01:18]
Rebecca Babin
Bloomberg Audio Studios Podcasts Radio News.
- [01:27]
Podcast Host (Jonathan Ferro)
This is the Bloomberg Surveillance Podcast. Jonathan I'm Jonathan Ferro, along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business App.
- [01:52]
Podcast Host (Lisa Abramowicz)
Begin this hour with stocks holding steady following a rally in tech. John Stoltzfitz of Oppenheimer, one of the bulls, writing with S&P 500Q2 earnings season several weeks away, news FL Eco Data and developments in the Middle east are likely to drive market sentiment. John joins us now for more. John, great to see you.
- [02:08]
John Stoltzfitz
Great to see you as well.
- [02:10]
Podcast Host (Lisa Abramowicz)
Driving sentiment up or driving sentiment down?
- [02:13]
John Stoltzfitz
Well, you know, driving sentiment up, I'd say right now we'll have to see the way the jobs number looks at the end of the week or on Thursday, a little bit early this this week. But we have to say things are still remarkably good and I think the operative word remains resilient. Resilient doesn't mean robust. It means resilient, not unchallenged. And every time we get the Challenges towards that resilience. Whether it's an economic data piece, piece, a piece of information related to a setback in the negotiations in the Middle east or whatever have you, it seems to be overcome by that resilience factor that either shows earnings better than expected debt in better situation than it actually was thought to be. When the bears and the skeptics start trying to drag things down and fundamentals remain very positive and that's, that's what you got. We watch the fundamentals where I don't go after the technicians, I respect them, but I'm intermediate to longer term investments. And you know, we're all on the upgrade cycle in terms of tech. Whenever the drama and the headlines are against technology, I tell my team that it's many years younger than I am. I tell them, I said, let's sell the, throw away the PC and the laptop, let's look for an abacus and for a slide rule. Be all sad, I see what you're doing. And forget about the gps. When you get in the car, you need a yellow legal pad, write it in pencil, get a flashlight, get a map, you know, we're not going back.
- [03:40]
Podcast Host (Lisa Abramowicz)
I can already see the fights ensuing in the car as you try to figure out the directions. Because any of us old enough to remember that at the parents in the front, either way. I am wondering though if there has been a shift in tone and whether we've seen that with respect to a real question about how much spending there actually can be on semiconductors. Given the expense of, given the pushback that you're seeing in markets and given the fact that debt investors are certainly a little pickier.
- [04:05]
John Stoltzfitz
I think without a doubt you feel it and you see it. And it goes in this operation where you go day to day, risk on, risk off, tack on, tack off, back and forth. It's an argument. But the good thing is I think it puts players on notice that be careful what you're doing, relating what your expectations are on this. And for investors, the idea is you have to be aware that there will be failures, there will be things that will not work out in AI and other things that will. Just think back on the Internet and this is, we don't think this is like the Internet bubble. This is very different. Both business and the consumer have tech deeply embedded. We're dependent on tech in our lives. So, you know, overall we just think it's uncertainty is very common in life and it's always in the markets. There's an old adage that the markets don't like uncertainty. They love uncertainty. The traders have an opportunity to go after the next vanity plate for the, for the next new trophy automobile. And for, and for intermediate to long term investors, look for babies that get thrown out with the bathwater.
- [05:06]
Annmarie Horden
Do you see this as a 2026 story? Is this really more of a 2027, 2028 story?
- [05:11]
John Stoltzfitz
I think it's genuinely 2026 story. I think we have to see how 2027 develops going forward because the changes today happen so much more quickly than ever before. As you know, I always say show. I've been in this business for 43 years. I've been every boom, bust and recovery cycle since 1983 and the markets today because of the news flow and the accessibility of news flow on organizations like, like Bloomberg. As a result of that, the markets discount both bad news and good news very quickly. And it's a remarkable thing. It's actually a benefit to the markets, as I said, keeps everybody honest. You get shaken up every so often and you realize trees don't grow to the sky. It's like, you know, you don't like. Well, I'm not going to mention some of the people from the other busts in the past, they don't want to fight with, with people from the past, some of whom are in their graves listening. But the point is, is the reality is this is a different world today. You have to look at structure and the structure of everything has changed by a social media technology that's utilized in business for pleasure, leisure, what have you. And it's a dramatic change. And, but, but you know, there's a whole generation that believes that we never had payphones or we never had rotary dials on telephones.
- [06:29]
Annmarie Horden
So if you're concerned though, are a little bit concerned with the trade, how are you hedging against this?
- [06:34]
John Stoltzfitz
Well, what I'm, what I'm doing is for instance, we have a dividend opportunity portfolio that I'm the manager of and I can't tell you what we own in it, but I can't give you this idea. We barbell it. So we have tech, we have, we also have telephone companies, you know, we have utility companies and it's all 11 sectors. It's diversified and it, it has, it has an ability so far over the nine years that it's been in existence to weather significant volatility and bounces very well like a healthy count bounces, not like a dead count bounce.
- [07:07]
Podcast Host (Lisa Abramowicz)
Do you think that the rotation that we've been seeing with the equal weight in the Russell 2000 outperforming can continue. Do you think it has to keep performing in order to reach some of your targets?
- [07:17]
John Stoltzfitz
No, you know, I think, I think the. I don't think it's the end for large caps. I just think. And I don't think it's either the, the end for this run that we've seen in small caps. I think there's room on the stage for large mids and smalls. We believe you have to be selective. You got to look out for the junk, look out for the value traps. We like growth year value and GARP growth, which is growth at a reasonable price. So in technology, for instance, we don't necessarily own some of the names you think of right away in tech, but we own other names that most people don't think of that support those names.
- [07:52]
Podcast Host (Lisa Abramowicz)
You've been in the business for more than 40 years. As you were saying, can you characterize this moment to give us a sense of how different it is? I mean, or how similar it is to previous cycles of booms and busts just in terms of sentiment and in terms of novelty that a lot of people feel?
- [08:07]
John Stoltzfitz
Great question. It's. I think markets are often considered to be mostly about fear and greed. And they're not. It's fear, greed and need. Genuine need. And today one of the things that structurally has changed the market so much is that the private investor who for many years was treated with, with disregard by the institutions today is in many ways more important than the institutions when it comes to the amount of direct investments and indirect investments that the private investor holds. It used to be when if you worked for a wirehouse as they used to call them, they would tell you if you find a qualified client, offer them five stocks for diversification, maybe a tax free municipal bond or a mutual fund. Today, with the products that are available today and experience that advisor can build a portfolio for an individual or for a family office that will rival major, major institutions or that can rival major institutions. And they're investing seriously. It's not for cocktail party chatter. When the private investor used to come in, usually once the market was up 15 or 20%, they'd rise it up, they'd ride the last 5 or 10%, then get disappointed. Today they come in much earlier and they stay, they realize, recognize that studies that have said that, that it's more important to be in the market, that time in the market is more important than timing the market for intermediate to longer term investors. And they're investing because Social Security will likely not be anywhere near what it was for the prior generations. And lastly on this is the other. The other part of this is you no longer have defined benefit retirement plans for most for most companies. So people need to make investment decisions that are serious.
- [09:55]
Podcast Host (Jonathan Ferro)
Stay with us. More Bloomberg surveillance coming up after this.
- [10:02]
CBOE Representative
When your options are limited so your opportunities at cibo, the global exchange that pioneered options trading, we offer more ways to move with the market from VIX and SPX options to global market data solutions. CBOE helps investors diversify, manage risk and stay ahead of whatever the market does next. CBOE Life is better with options. Your investments could be too. There are risks associated with CBOE Company products. Review the disclosures and disclaimers@cboe.com USDISclaimers so
- [10:33]
IBM Representative
there's a lot of noise about AI, but time's too tight for more promises, so let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [11:02]
Public.com Representative
IBM support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [11:59]
John Stoltzfitz
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures available@public.com disclosures.
- [12:17]
Podcast Host (Lisa Abramowicz)
US Stocks on the verge of completing their best quarter in six years. Tech however, on track for its worst month Since March of 2025, Dan Ives of Wedbush writing tech stocks have way oversold in June. They ultimately represent major buying opportunities as these bearish Narratives have overshadowed the future massive growth prospects. Dan joins us now and of course we're talking about tech, we're talking about hyperscalers in particular which have been the huge losers until yesterday where you actually saw a little bit of a turnaround. Why do you reject the notion that people are pushing back back against the spending plans of some of these tech behemoths?
- [12:51]
Dan Ives
Look, the hyperscalers is 700 billion. I mean that's what's funding the revolution. I mean when you talk about memory chips, Nvidia, everything else, but that's just the first phase because what the hyperscalers are doing is this is the build out, it's Vegas strip building in 1955. But ultimately the monetization now is going to come. I mean when you look at Meta, they're not just spending to spend. You can Microsoft, they essentially own the enterprise Alphabet. 5% of their customers have gone to the path. Same thing with Amazon. So my whole point is you've had this tech rally but mag7 right now penalty box essentially I think it's significantly outperformed second half of the year and I think earnings season as you see in July and this we huge validation movement for big tech.
- [13:37]
Podcast Host (Lisa Abramowicz)
So the biggest drip maybe is a decent analogy on the just actuality of it, not in the scale. I mean we're talking JP Morgan expecting five and a half trillion dollars of spend on capex spend for AI heading out to 2030. We're talking about massive numbers that are accelerating, not decelerating and capacity constrained companies. Right. I mean some of these companies have said we can't give you all the compute you're looking for. So how do you see them monetizing without raising prices enough to really trickle into the cost of what everybody is spending on an everyday basis?
- [14:08]
Dan Ives
Yeah, well first of every dollar spent on let's say an Nvidia chip, there's an 8 to $10 multiplier across the rest of tech. So that's extremely important in terms of what you see. In terms of you talk about some of the single stock moves, just a broadening out what we're seeing in terms of tech. And you could argue for names like Caterpillar and others, but when it comes to hyperscalers, look, it's an arms race. That's why the question is can they actually cut capex? They can't. In other words, like you're diving the deep end of the pool because if they cut back then they go behind others in line that will clearly go ahead of them. Anthropic open I ultimately they go public, they'll just have more and more cash and I think that's the reality right now. And to those the bears would be like odds spending to nowhere. It's the opposite. I mean you're essentially building out a new economy for consumers enterprises and for the first time in 30 years the US is ahead of China when it comes to tech.
- [15:03]
Annmarie Horden
But what about demand destruction? Does that happen especially to see something like Apple come out and across the entire suite having to raise prices?
- [15:11]
Dan Ives
Sure. Look, I mean there's going to be negatives just like we see with memory because there's a limited amount of memory chip players. You can just.
- [15:18]
Annmarie Horden
So there is a breaking point though.
- [15:20]
Dan Ives
There is a breaking point to a point where okay, if you continue at these prices eventually there's cannibalization, there's churn for Apple at these levels, 100bps of churn. Maybe when it comes to iPhone there'll be 150, $200 price increase but then there'll be subsidies from carriers and others. But good. Now you actually you're seeing where it's called RAM and getting or what we're seeing in terms of memory prices. That is going to have an impact but I view it as it's paying a small tax on the broader ecosystem that's being built out by big tech.
- [15:58]
Annmarie Horden
But if there is a little bit of a breaking point, when does it happen?
- [16:02]
Dan Ives
Look, I think in the next six to nine months is where you need to see some sort of stabilization when it comes to prices. You need to see scale, you need to see ultimately what we're seeing in terms on to on the token side where you need to see like prices start to come down. Capex will be about trillion dollars to big tech next year but then the monetization starts. So essentially you start to actually now see the monetization piece which is very important to just investors feeling like Metta. They're not just spending like 1980 rock stars for no reason.
- [16:34]
Podcast Host (Lisa Abramowicz)
There's one story that really caught my attention over the past couple of weeks. It's the idea of Microsoft shifting to Chinese large language models that are open source and that are cheaper. It's the idea of opening I pushing back their IPO and a question of how much opening and how quickly the anthropics of the world can monetize given the cheaper competition overseas. How much do you see that as a pressure point that hasn't fully been realized or even actualized in terms of people's idea ideas?
- [17:04]
Dan Ives
My view and I think you see with OpenAI and anthropic the models eventually will become commoditized and it's not so OpenAI Anthropic. You'll have hundreds of models across the world, vertical, specific, the value being the data, how quickly that they could penetrate enterprise. Microsoft in terms of Nadella, Nadella seen around the corner understanding like you have to ultimately diversify when it comes to models and eventually as it becomes a global sort of game. But when it comes to Anthropic and OpenAI, they understand enterprise is golden goose. That's what they're going after now to some extent part of the reason that Microsoft that you see the stock the way where it is because there's a view like okay, that becomes competitive. They had OpenAI but now where do they sit relative to enterprise? My view is on enterprise. Microsoft will continue to be the ultimate winner, but it just shows it's a convergence what's happening happening across the AI
- [17:59]
Podcast Host (Lisa Abramowicz)
if that's a commoditized resource, the large language models and it really is the data, the data providers are not OpenAI and Anthropic. Well then what's the monetization prospect for some of these companies that potentially are going to IPO $2 trillion.
- [18:11]
Dan Ives
Well for them it's all about, I mean if you look at Anthropic's growth, it's been unlike anything we've ever seen in terms of air. Now for Open Air it's now it's a bullseye on their back. They have to continue to monitor enterprise because Enterprise, when you think about all the data centers being built and all the memory and everything it's being built for what will be the use cases on Enterprise, on the consumer software vendors in my opinion are the ones that it goes back to the second, third derivative, just like cybersecurity. So the part of where I think investors, I don't think it's reflecting their say in the stocks is like they're underestimating the scale and scope of what this is all going to look like. And I think we're just still we've talked about it. It's like party start at 9pm goes to 4am but about 11pm can you
- [18:59]
Annmarie Horden
monetize a model that's currently restricted?
- [19:02]
Dan Ives
No. And that's why when it comes to Anthropic, that's why they're playing, they're starting to play nice. When it comes to government, you're seeing some sort of, you know, compromise or at least some moving of the goal post. And that's important because Anthropic right now, I mean it's. You're talking about the best model in the world. You cannot be on relative to what we see on the DOD and the Pentagon. That's why it's an important time for Dario and Anthropic to get to some sort of compromise when it comes to US Government.
- [19:34]
Podcast Host (Jonathan Ferro)
Stay with us. More Bloomberg surveillance coming up after this.
- [19:42]
Podcast Host (Lisa Abramowicz)
What if you could have even more
- [19:43]
Rebecca Babin
and more and more help to pursue your goals?
- [19:46]
Podcast Host (Lisa Abramowicz)
At LPL Financial, we offer more ways for advisors and their clients to thrive. So what if you could Paid Advertisement Investing involves risk, including potential loss of Principal LPL Financial LLC Member Finra, SIPC
- [19:57]
Public.com Representative
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on Public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [20:53]
John Stoltzfitz
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures available@public.com disclosures
- [21:07]
Public.com Representative
when I scraped my car in that parking garage, I was worried that it could be a long process to take care of it. Like a landscaper's first day trimming a hedge maze.
- [21:15]
John Stoltzfitz
I have definitely already been here.
- [21:18]
Public.com Representative
Now was it left right or right left?
- [21:22]
John Stoltzfitz
Well, maybe I'll cut a path out
- [21:24]
Public.com Representative
and find my way back later. But it wasn't like that. I filed a claim in under two minutes on the Geico app and they handled it from there. It was taken care of almost as quickly as it up.
- [21:34]
Podcast Host (Lisa Abramowicz)
It feels good to get help quick.
- [21:35]
John Stoltzfitz
It feels good to Geico.
- [21:42]
Podcast Host (Lisa Abramowicz)
Crude heading for its biggest quarterly drop since 2020. Morgan Stanley cutting its price forecast for the second time this year as Anne Marie was mentioning earlier, warning of a potential glut. Morgan Stanley of course cutting its oil forecasts looking now for $70 at the end of 2027. So it's not just a new near term forecast, Emory, it's also longer term. What we could potentially be seeing, I
- [22:03]
Annmarie Horden
think the signal from the White House is really clear. We want to make sure that oil continues to flow. They didn't want to go into peak driving season with high prices on the consumer. And even with prices dropping across the United States, the president is still annoyed. They're not not dropping fast enough and actually going after per truth also the last few days retail gasoline owners telling, saying they're gouging and telling consumers, consumers that, you know, you report them and complain.
- [22:28]
Podcast Host (Lisa Abramowicz)
Yeah. Call President Trump with Joe from Sunoco. Rebecca Babin of CIBC Private wealth writing the market may be overestimating the pace of production recovery while underestimating future inventory rebuilding demand. Rebecca joins us now. Rebecca, you're one of the few who are holding on to this view that maybe oil prices are going to go up. How much pushback have you gotten recently?
- [22:49]
Rebecca Babin
So I get a fair amount of pushback. But I would say this, you keep referencing the Morgan stuff Stanley price cuts this morning. Guess what? Their targets are still above the strip of where the strip is currently trading right now. So $70 at the end of 27 is still above where the market has crude right now, which is closer to high 60s. So I think what's happening is some of the analysts that may maybe have overshot of where they thought crude would go are coming back to where the market is now. So in terms of the comment of what I'm making is essentially we are effectively pricing in all of this supply coming back to the market in a very even and measured way. And that demand which has been impacted due to this conflict does not come back. Right. So that's what's being priced right now. And to me that's just a little bit overly optimistic on how quickly the supply is going to come back. We've already seen fits and starts here and we did have a lot of Iranian crude sitting off the coast of China before the sanctions were waived. So that was a move immediate pressure on prompt. Right. And we've also had this spro release has which has helped buffer this conflict. So we've had a lot of prompt supply and we're anticipating that this just carries forward in a very measured way and that the demand drop that came out of China as they cut refinery runs and transitioned away from some of their more fossil fuel intensive petrochemical activities isn't going to rebound. And to me that's just a little bit pessimistic. If you look at the headlines today China has already already said they're going to roll back some of their product export bans immediately that is going to pull forward a little bit more crude demand and I think that we're overestimating the downside just as we had overestimated the upside at the height of the conflict.
- [24:38]
Annmarie Horden
So where do you see prices ending the end of this year Rebecca so
- [24:41]
Rebecca Babin
I think we can look at the end of the year and I can kind of see Brent ti can see 75 ti 80 Brent and I just think that again we don't necessarily see this even distribution of flows resumed to 85 what I think is price is 85% of flows resumed by the end of July is what's priced I think that might get pushed out and we don't necessarily see we are seeing this immediate reaction as ships have transited and Iranian sanctions have been waived. But if that gets pulled back I don't think we see the acceleration of inventory builds that the market's anticipating. So I'm not drastically above the strip. I'm kind of looking 7580 Brent TI
- [25:26]
Annmarie Horden
what do you make of the conventional wisdom that then next year we're going to potentially have another glut?
- [25:32]
Rebecca Babin
So that is a really interesting question. I think 2027 is shaping up to be really challenging from a forecasting perspective. We right now estimates have a surplus of about 4 million barrels a day for 2027. Some analysts are higher, some are lower but that's kind of the midpoint of the range there. That is going to be very indicative of how aggressively countries and decide to stockpile after this event Right. If all of those 4 million barrel surplus is just kind of we don't need to rebuild inventories and it's just considered to be excess surplus in the market. We could see pressure in 2027 and we could see this drip trend kind of closer to that $70 level and ti maybe 65 I tend to think having read the headlines again this morning that India says they're going to increase their strategic petroleum petroleum reserves. China has some rebuilding of stockpiles to do. India also wants to diversify away from Middle Eastern crude. I tend to think that's a scenario we're anticipating this massive surplus but what it going to be as a rebuild in the market might not reflect quite as loose as that number kind of would headline number would it would say so not thinking that we see this dramatic 60s 50s crude scenario next year which I know Some analysts are pointing to I tend to think we hover around this kind of 70, 75 level.
- [27:01]
Annmarie Horden
What has the effect of waivers done for this market? The fact of the matter is a running crude could flow freely at market price.
- [27:09]
Rebecca Babin
This has been a huge factor. Not just the effect, but the fact that you can transact in dollars I think has opened up a lot of Iranian crude to the market. Now what I haven't seen is a tremendous amount of buying outside of China of Iranian crude. But what that does essentially is make Iranian crude available to places like India, which has significantly reduced their imports due to the sanctions and makes it a more compet competitive barrel right in the market that can press other things lower. Typically Iranian crude traded at a huge discount because of those sanctions. It's now a free floating market barrel and that kind of just compress things lower. Now that's this all assumes we were talking about a 60 day waiver here. So we don't know how that shakes out and if it'll get reimposed. But for now it's certainly the reason we're seeing the weakness in the prompt market which I don't necessarily necessarily disagree with. I just when I look at the risk reward here, I think we've priced in a lot of a really optimistic scenario and should that not play out, I think we have more upside than we do downside at current prices.
- [28:18]
Podcast Host (Jonathan Ferro)
This is the Bloomberg Surveillance podcast bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg terminal and the Bloomberg Business applied.