Loading summary
Transcript222 lines
- [00:00]
Brian Belsky
So there's a lot of noise about AI, but time's too tight for more promises.
- [00:04]
Tom Keene
So let's talk about results.
- [00:06]
Brian Belsky
At IBM, we work with our employees
- [00:08]
Tom Keene
to integrate technology right into the systems they need.
- [00:11]
Brian Belsky
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
- [00:22]
Tom Keene
get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Lets create smarter business.
- [00:29]
Etsy Chef
IBM Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole
- [00:52]
Ray Mitrian
person how you need it.
- [00:53]
Etsy Chef
Optum is helping make healthcare work as one for everyone. Learn more@business.optum.com wise is the smart way
- [01:01]
Tom Keene
to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me.
- [01:21]
Eric Balchunas
It's simple and free to sign up
- [01:23]
Tom Keene
when you download the Wise app. Be smart, Get Wise T's and C's Apply
- [01:32]
Bloomberg Announcer
Bloomberg Audio Studios Podcasts Radio News. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [01:57]
Tom Keene
Perfect time now to recalibrate. He wrote 400 pages June 29th. He's ripped it up. Change it. Invesco has for a rewrite. How do you rewrite your mid year?
- [02:06]
Brian Levitt
Brian Levitt I would change it all that significantly after the inflation reports? Yeah, I mean our view was that inflation expectations were already falling. Our view was that the Federal Reserve was not going to raise interest rates. And our view is that would be supportive of this broadening in markets that we've seen. And I don't see any need to change that. In fact, the inflation reports were favorable to that view. What we saw this week and a little bit of the chatter out of the FOMC was favorable to that view. At least sounding a Little bit less hawkish this week.
- [02:38]
Tom Keene
Is a disinflation vector in place? To me it is.
- [02:41]
Brian Levitt
I believe.
- [02:41]
Tom Keene
I don't know how long it's going
- [02:42]
Brian Levitt
to take, but yeah, I believe it is. I mean, look, you're going to have some disruption with regards to the Middle east. But I'm not setting monetary policy based on where the price of oil is going, based on where supply shocks are. Goods prices are relatively contained, shelters coming down, wages aren't robust. So to me that's not an environment you want to raise interest rates.
- [03:04]
Eric Balchunas
Brian, we did hear from Fed Chairman Walsh over the past couple of days in front of the House and the Senate here. Any takeaways for you here?
- [03:11]
Brian Levitt
Yeah, my view is that the Federal Reserve will be on hold this year. I think actually the next move would be a cut. I do think that the economy slows a bit here with higher commodity costs. Back again, you're seeing slowdown in the emerging markets in China and so that's not the environment you want to raise interest rates into.
- [03:33]
Eric Balchunas
We're getting right into the teeth of the earnings we had the big banks earlier this week. First quarter is a tough act to follow. What's your expectations for the second quarter and kind of the back half guidance?
- [03:44]
Brian Levitt
It's a tough act to follow, but so far so good. And it looks like we're on pace for the 15th consecutive quarter of double digit earnings growth, which is just remarkable. You don't get that typically in the middle part of a cycle. You usually get that coming out of a recession. So what we're seeing has been nothing short of remarkable. And it's not just the tech sector. Of course tech and energy will lead this time, but it is broad based, like you said, it's across financials, it's going to be across most sectors positive for markets.
- [04:13]
Tom Keene
How does a retirement plan do higher highs? How do they, how do you do momentum in a long term conservative plan?
- [04:23]
Brian Levitt
The reality is if you look at markets, you know, everybody always says buy low, sell high. The reality of markets is buy high, sell higher. If you look at broad markets, you're hitting new all time highs pretty much once every once every 15, 16 days going back to 1957. So that's the way markets historically move. Typically 75 to 85% of the time you should be positive on markets unless the economy is meaningfully deteriorating or central banks are raising rates rates significantly. We've actually Tom, had a little bit of a momentum sell off since June 22nd. Momentum high beta down 16, 17%. That's pretty big.
- [05:04]
Tom Keene
See how he does that. If you go to Michigan, you just throw around alphas and betas and.
- [05:10]
Brian Levitt
And my daughter's joining in August.
- [05:12]
Eric Balchunas
Oh, is that right?
- [05:13]
Brian Levitt
Yeah, it's awesome.
- [05:14]
Eric Balchunas
The next generation.
- [05:15]
Tom Keene
Next generation.
- [05:15]
Eric Balchunas
Go blue. All right, Brian, so what are we doing here?
- [05:19]
Tom Keene
Us? You missed a punch. Is she getting name image like this one
- [05:25]
Eric Balchunas
for the economics degree? What are we doing us versus non us?
- [05:29]
Brian Levitt
Brian, I would be still favoring the US here because of some weakness, because of some slowdown here. You're still a little bit of strong dollar on the macro side. So that's a short term view. Ultimately, I think the dollar is going to moderate. Investors are still overweight. The US what really stopped that dollar weakness story was the war in Iran. If you get the Fed back on its easing path, I think the dollar can moderate. What that starts to do is unlock more of the value outside the US Right now that's a little bit challenged in here, but ultimately I think we're back on that path.
- [06:10]
Tom Keene
Brian, thank you so much. Brian Levitt Invesco with us today. Your daughter's in Michigan.
- [06:15]
Brian Levitt
Thank you. She's incoming freshman.
- [06:18]
Tom Keene
And what's the major we're going to do?
- [06:19]
Brian Levitt
Broadcast journalism. You're looking for someone?
- [06:23]
Eric Balchunas
Always.
- [06:24]
Brian Levitt
Four years, I'll ask you.
- [06:25]
Tom Keene
Four years you said? Okay.
- [06:29]
Brian Levitt
Everybody has to have a dream.
- [06:30]
Tom Keene
She's got to do a double miner. Come on. You got to get her like we'll
- [06:33]
Brian Levitt
get her in marketing or something.
- [06:34]
Tom Keene
Yeah, you know.
- [06:35]
Etsy Chef
Yeah.
- [06:35]
Tom Keene
I remember when the middle child took microeconomics. Dad, this is really hard.
- [06:41]
Brian Levitt
It is really hard. I like when people ask me to tutor them.
- [06:44]
Dan Ives
Nailed it.
- [06:45]
Tom Keene
Stay with us. More from Bloomberg Surveillance coming up after to this.
- [06:53]
Eric Balchunas
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 Investing Brokerage services by Open to the Public Investing Inc.
- [07:52]
Tom Keene
Member FINRA and SIPC Advisory Services by Public Advisors, LLC.
- [07:57]
Eric Balchunas
SEC registered advisor complete disclosures available at
- [08:00]
Tom Keene
public.com disclosures Amazon Health AI presents painful thoughts why did I search the Internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic sores
- [08:16]
Etsy Chef
in various stages of ooze.
- [08:19]
Ray Mitrian
I can clear my search history, but
- [08:22]
Tom Keene
I can never unsee that. Don't go down the rabbit hole. Amazon Health AI gets you the right care fast. Health care just got less painful.
- [08:32]
Brian Belsky
He's dribbling the ball with everything on the line. He's driving down the pitch.
- [08:35]
Eric Balchunas
He's facing price hikes and cuts past him. Carrier contracts tries to block him.
- [08:39]
Tom Keene
Oh, he leaves him in the dust.
- [08:40]
Brian Belsky
He's at the edge of the box. He cuts past the nonstop group chat. He clears on goal. He shoots Go unlimited data for $25 a month forever.
- [08:51]
Tom Keene
Visit your local Boost Mobile store today to get unlimited data with a price that never changes. Boost mobile after 30gb, customers may experience lower speeds. Customers will pay $25 a month as long as they remain active on the Boost $25 Unlimited plan.
- [09:07]
Bloomberg Announcer
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [09:20]
Tom Keene
A lot of good conversations today, but I saw this may be the most important one. She has a psychology degree from the University of Damien Sassour.
- [09:28]
Eric Balchunas
Yep.
- [09:28]
Tom Keene
I mean that's just. It's incredible.
- [09:30]
Eric Balchunas
I was on campus there for the first time about a year ago.
- [09:34]
Tom Keene
It's unbelievable. So no one does not have a BMW. Yes, that's how I look at Rand Mitchell joins us now. Family office down in West Pal something or other. If I read Justin Beer's Fidelity House of Fidelity, it's fabulous. No one sees the next bear market coming. How all in are your clients on the great American bull market?
- [09:57]
Ray Mitrian
Good morning. It's it's been obviously a great last few years and there are a lot of reasons why it can continue. But there are also parts of the market that do look a little bit frothy have been extended. So our clients are having some of those concerns. We are having those conversations around what can we be doing? How can we protect? But overall we're still pretty optimistic.
- [10:19]
Tom Keene
Do you lighten up on those or do you outright hedge? Because what I see in Bears book is nobody's Hedging, it's all in the bull market's great. Let's go, let's go. Are you hedging into the, into a slowdown?
- [10:32]
Ray Mitrian
We're not necessarily hedging. We, our view is we don't see a slowdown coming, so we do see the broadening out to potentially continue. So we expect that other parts of the market could do better going forward rather than the tech that we've seen really, really leading the market recently. So we're moving into areas like small caps, emerging markets, shifting into value. I mean, looking across sectors, there's more of a 30% differential between the best performing sector in the S and P and the worst right now. So there are a lot of parts of the market that are high quality companies that have really been left behind and we do think there's opportunity for some of that rotation to continue.
- [11:09]
Eric Balchunas
What's your. I don't know if you have a model asset allocation or something you kind of start with when you sit down with a client. How do you think about asset allocation these days?
- [11:16]
Ray Mitrian
A lot of it starts with risk tolerance and really having conversations. Every client has a different circumstance, so everything's customized. But we do like to have a broad diversified portfolio. And so if you come in and have maybe a moderate aggressive profile, we'll have a good portion in public equities that we have a tax efficient overlay to, as well as pairing that with fixed income with a lot in private markets and other alternatives and really just kind of building that out so that we have a diversified portfolio.
- [11:47]
Eric Balchunas
I'm always surprised that alternatives, I would think the allocation, I kind of grew up with the allocation kind of 5%, maybe 10. But I hear a lot of registered investment advisors take that much higher. How do you guys think about alternatives in terms of a portfolio?
- [12:02]
Ray Mitrian
Yeah, so our client base is primarily ultra high net worth. So we work with ultra high net worth, multigenerational type time horizons. So you're able to really dial that up a little bit and benefit from the return premiums that you can get in those illiquid markets. So we do in a lot of cases have maybe 20 to 30% in alternatives for the right clients.
- [12:22]
Eric Balchunas
Yep, that's right.
- [12:24]
Tom Keene
People over diversify. I mean, I just see everybody and all the wealth managers in that and they're doing do this, do this, do this. Shouldn't we just be a little more concentrated and have confidence in our bets?
- [12:36]
Ray Mitrian
I mean, hindsight's 20 20. If you've been concentrated the last few years, obviously that would have Been a better place to be. It's the problem of being concentrated is you have to make the right bets. So the way we like to play it on the equity side is pair a tax efficient, low cost passive allocation with some concentrated active satellite managers that are investing in a portfolio of maybe 20 to 30 companies that they do have high.
- [13:00]
Tom Keene
How's that worked out? Is that active approach beating passive?
- [13:04]
Ray Mitrian
Not recently. Quality has certainly been underperforming, so we're seeing a little bit of the rotation and broadening out could help that. But it's been difficult.
- [13:14]
Tom Keene
In the Justin Bier book, guess who shows up like page 142. Who's that? Jack Bogle. That's right. Exactly. Oh, hello.
- [13:22]
Eric Balchunas
Yep, exactly.
- [13:24]
Tom Keene
There it is. Passive.
- [13:25]
Eric Balchunas
What are you doing in the fixed income market here? Are you taking credit risk? Are you suggesting your clients take credit risk here or do you just sit and clip those treasury coupons, which is they've been as good as they've been in a long time.
- [13:36]
Ray Mitrian
Yeah, most of our fixed income allocations on the traditional side really are high quality investment grade. A lot of it's in muni bonds. Given that we work with taxable investors, we do have some exposure in the high yield within that space. And then we do pair it some with private credit opportunities where we think we can get an incremental benefit and get some diversified exposure there.
- [13:58]
Eric Balchunas
So what's the number one top your clients call you about? You don't call them, they call you.
- [14:05]
Ray Mitrian
Right now a lot of it really is talking about the momentum trade. And should we be concerned about these chip stocks and the tech exposure and should we be rebalancing our portfolios which we have been doing, but there's still some concern about how much more room there is to run in that space.
- [14:21]
Tom Keene
How often do you rebalance? Do you do it formulaic or is it ad hoc?
- [14:25]
Ray Mitrian
No, it's. It's really. I mean we do do it periodically. I'd say probably once a quarter. But it's not formulaic. So it's. We take into account a lot of the tax consequences and the benefits from doing it and each individual client.
- [14:36]
Dan Ives
Right.
- [14:37]
Ray Mitrian
So a lot of it really is done with the tax.
- [14:39]
Tom Keene
The media is a Florida booms off. Come on, you're in the heart of it. Okay? You're. I mean, when she's not here, she's wearing Lily Pulitzer. Yeah, but is the Florida boom off?
- [14:49]
Ray Mitrian
It's tapering off. I'd say it's still crowded down there. We still have a lot of businesses there. But we're seeing it's definitely been slowing down.
- [14:58]
Tom Keene
Okay, this has been great. Don't be a stranger. Ray and Mitrian, thank you so much. Callan Family office in our studios. Stay with us. More from Bloomberg Surveillance coming up after this.
- [15:11]
Eric Balchunas
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 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 at public.com disclosures Amazon Health
- [16:21]
Tom Keene
AI presents painful thoughts I I can't stop scratching my downtown. Mm, yeah, but I'm not itching to
- [16:31]
Eric Balchunas
go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud.
- [16:40]
Tom Keene
There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Healthcare just got less painful.
- [16:50]
Brian Belsky
He's dribbling the ball with everything on the line. He's driving down the pitch.
- [16:53]
Eric Balchunas
He's facing price hikes and cuts past him. Carrier contracts tries to block him.
- [16:57]
Tom Keene
Oh, he leaves him in the dust.
- [16:58]
Brian Belsky
He's at the edge of the box. He cuts past the non stop group chat trash talk.
- [17:02]
Tom Keene
He clears on goal.
- [17:03]
Brian Belsky
He shoots no unlimited data for $25 a month forever.
- [17:09]
Tom Keene
Visit your local Boost Mobile store today to get unlimited data with a price that never changes. Boost mobile after 30gb, customers may experience lower speeds. Customers will pay $25 a month as long as they remain active on the Boost $25 Unlimited plan.
- [17:26]
Bloomberg Announcer
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [17:39]
Tom Keene
This is a great Joy to have Dan Ives with us with all he's done and this huge bull market in technology and Brian Belsky with an incredibly terse, superior note, encouraged to be in the market. To have them in here together is wonderful. Dan, I got to start with you. George Steer going after you last night in the Financial Times. It was a love note about your New Yorkville Ives investment company. Two questions to get that out of the way. Are you going to do only research at this company? Are you going to be involved in merchant banking?
- [18:10]
Dan Ives
Oh, no, just in research. I mean, like my role is going to be as head of tech research, doing what I've done, doing what you've done, doing my whole career. And again, as we always say, look, haters hate. You know, you're going to have the
- [18:23]
Brian Belsky
Hallmark is going to hate.
- [18:24]
Dan Ives
Hey, you're going to have the Hallmark car cards there. But the reality that for me, my role is essentially unchanged in terms of what I'll do as research gets.
- [18:32]
Tom Keene
I got to get this final question in your Sweeney's dying to talk to Belsky about the market. Dan, what's so important here is George correctly looks at the manufactured moonshot of meme stocks and SPACs. They go up and then they come down. How do our listeners avoid that madness?
- [18:51]
Dan Ives
Look, to me, it's like, and it's really what we're going to build as a modern merchant bank. It's looking at companies that are growth and it's separating the ones that ultimately say they're AI from ones that really have the products. And I think in terms of meme stocks and some of the stuff that we've seen in the market, look, it's everything we've talked about for years. It's trying to understand where the trends are, what the themes are and to make sure our clients, our investors are the ones that they're in the right, the winners in this AI revolution.
- [19:21]
Tom Keene
One final news question I've got to ask you, and as you piece this together, have you done any discussions with any of the Trump family or their business interests? Are they separate from this or are they intimately involved?
- [19:33]
Dan Ives
No. And first of all, if you look at Yorkville, I think in 6% of deals that they've done since inception are related in some ways to Trump. Then on the other hand, look at hydrogen names like Plug Power, 400 million in terms of what they do on the other side of it, look, we're capitalistic, you know that that's separate from, from ultimately Yorkville, Ives. But, but it speaks to our view like we're apolitical. We're going to go after deals across the board. And to me, it's one where I'm doing this with partners that I've known for decades to create what I believe is going to be a modern merchant bank that's going to change Wall Street.
- [20:10]
Eric Balchunas
Brian, on these markets here, what are we doing here? Are we broadening this thing out here? Are we focusing on a handful of chip names? What are we doing here in the back half of the year?
- [20:21]
Brian Belsky
We're investing. And I think that's the difference between what we've seen, really. You know, if you think about the month of June, let's go chase up, let's chase up memory. And then July opens up, let's sell memory. And that's not investing to us. I think that you don't have to own everything. That's the key thing in tech especially. You got to be selective. And when we've had the very good fortune of outperforming in our S&P 500 focused portfolios that because we don't own everything, number one, Number two, we are broadening out. That's the answer to your question. We are. Small cap stocks are for real. If you take a look at inherent fundamentals with respect to cash flow in earnings, in earnings discernibility in terms of how consistent they are, Paul, it's amazing. They look amazing still. And there's still a long Runway to go.
- [21:05]
Tom Keene
Paul, let me interrupt. Oil lifts fractionally up to 8,504. The headline, Iran and the Houthis of Yemen to shut Red Sea distant west from the Persian Gulf to shut Red Sea if US hits power network. That from Reuters this morning.
- [21:23]
Eric Balchunas
Back and forth, back and forth. All right, so again, Brian, here we're getting into the teeth of earnings here.
- [21:29]
Brian Belsky
Yeah, that's a tough.
- [21:30]
Eric Balchunas
The first quarter is a tough bar to exceed. I mean, earnings in the first quarter at The S&P 500 were so strong. How do you think about this?
- [21:37]
Brian Belsky
It is a tough bar and there was many people talking about that potentially being an earnings peak and then the next move in earnings would be the second derivative last. I think that still could be the case in terms of having this trend of less positive, a positive, still positive double digit earnings growth, still double digit earnings growth. And what we've shown in our history in terms of studying markets, we have a double digit, we have a double digit performance in the market coming following this type of move in earnings as well.
- [22:02]
Dan Ives
And also to Belski's, it comes down to it's about the second, third, fourth derivatives of AI now playing out in the market. Tech is ultimately going to lead in two keys.
- [22:10]
Tom Keene
They're like Newton and Leibdis. You know, the two of them, the way they go after calculus.
- [22:15]
Dan Ives
Yeah, but Belsky is a better dresser.
- [22:16]
Tom Keene
Okay, just, just help me here with my buying Space X. I loaded the boat at 208. Yeah, okay, help me here with a round trip on IPO. SpaceX.
- [22:28]
Dan Ives
Dan Ives, you look when Amazon went public, look when Facebook went public. It's my view that if you take the narrow view over months or six months or nine, these are names that are transformational names that are going to be a huge part of the fourth industrial revolution. When you look at SpaceX, I get the volatility and obviously what we've seen in terms of the headwinds. The reality is longer term investors that own this, they own it for what's going to be AI data, they own it for what's really going to be in terms of starlink and to really what musk broader vision? We've said there's over an 80% chance that they ultimately acquire Tesla.
- [23:10]
Eric Balchunas
So Brian, what are we doing here just in terms of thinking about opportunities out of AI? Can we even think about opportunities out of AI? Do I go out and buy health care banks? I mean, the banks put up some monster numbers. Where else in this market do we look?
- [23:24]
Brian Belsky
You know, you think about a day like today with United Healthcare, right? Everybody thought UnitedHealthcare was done and we were very patient. In fact, I think it was on your broadcast talking about the new CEO coming in and bringing more discipline. And that's exactly what happened. So UnitedHealthcare would be one of them that we stuck with and we're a long term investor and kind of like what Dan talks about. You got to believe in the stories and proceed with your fundamentals. Healthcare is gonna, I think, be pockets of their financials look amazing. You don't need a direct hit on for AI, for financials, but I think you're gonna see a broadening out of financials into the small banks and into insurance companies and the asset managers. This, this financial move is still very, very early. We're talking the next several years financials.
- [24:04]
Tom Keene
That's where I wanted to go. Let me go to you, Brian Bielski first on this. And we've all experienced this. It's a party, it's great, and then it ends. I don't see the framework where it ends for Wall street other than the Fed screwing up. I mean, other than A high interest rate regime, or as you mentioned, calculus, the first derivative of the real yield. I mean, this just keeps on going, right?
- [24:29]
Dan Ives
And it's 11pm at the party. That goes to 4am that goes to
- [24:32]
Brian Belsky
4am and everyone's waiting for the last shot at three. But. But everyone's gonna teeing this up, Tommy, to blame the Fed. It's easy to blame the Fed. Everyone's waiting for blame the Fed.
- [24:45]
Tom Keene
The Dow futures are popping 53,000.
- [24:49]
Brian Belsky
That's what I'm talking about. That's what I'm talking about. So guess what? This, this bull market, this big giant secular bull market that we've been Talking about since 2009 is not gonna be. It's not gonna be ended by AI bubble. It's not. It's gonna be something else. It's. And I don't know what it is, could be a new emerging market. It's going to be a commodity super cycle. Something that we're not expecting.
- [25:10]
Tom Keene
What you just heard there, folks? Bronze and forget about Ives. What Belsky just said, you'd never know what it's going to be. Boy, is that just the truth. Paul Sweeney with Dan Ives.
- [25:21]
Eric Balchunas
Dan, one of the names in your space that just fascinates me is a kind of an old morning one, which is Microsoft. This thing sold off hard with a lot of the other software stocks. I've noticed it's kind of climbing its way back. You're up 13, 14% off of that June low here. What's the story of Microsoft?
- [25:36]
Dan Ives
Look, and we've talked about it really for months. This is one major penalty box stock. I think investors viewed it the relationship with OpenAI, competition from Google and everyone else in terms of the hyperscalers. The reality is the AI revolution doesn't happen without Microsoft with Nadella, because if you look at it, it's their core backyard as enterprises move to AI deployments. I just think focus in this earnings season is going to be the hyperscaler growth that we see from Amazon, Google and Microsoft. Because right now the New York City cab drivers bearish in the hyperscalers. But that it comes down to earnings
- [26:14]
Brian Belsky
and they're Jason Micron still, Right?
- [26:17]
Dan Ives
Exactly. Look, and I think to that point, memory stocks are the golden child, but it spreads to the second, third, fourth derivative and it goes to a me and you've talked.
- [26:25]
Tom Keene
I got to wrap up with two key questions. One to Mr. Ives, one to Mr. Belsky. When are you going to publish at your new fair? Everybody, are you going to be like
- [26:34]
Dan Ives
normal, sell side Publication normal sell side.
- [26:37]
Tom Keene
When do we see that?
- [26:38]
Dan Ives
Over the coming months. You know as. As I ultimately launch and all the names.
- [26:42]
Tom Keene
Are you going to have people. Have you hired people?
- [26:44]
Dan Ives
Yeah, we've already, we've already hired a handful of people. Obviously the inbound interest is, you know, is insane in terms of. Great because we're trying to, you know, I try to get. Belsky won't come. You know whatever. But, but to read. But the reality is we want to build a modern merge. I found great partners to do with and it's something we're in 25 plus years on Wall street to create something I think is going to transform in terms on the research bank into everything else.
- [27:09]
Tom Keene
Okay, so I got, I got the kid over the. The piers, 8 year old kid and I go, you got to go to the Yankees. So we're sitting by the dugout of the Minnesota Twins.
- [27:18]
Brian Belsky
Oh yeah. And they won the series.
- [27:20]
Tom Keene
They won the series and they're rocking. And like now we go into the all to break in there where the Red Sox are. They're like one or two games below 500. You gotta play to win. You're not going to trade it away.
- [27:31]
Brian Belsky
Totally. Here's the speculation. I'll be at the Target field next Friday night to watch the game. But are they going to buy?
- [27:38]
Tom Keene
Because they need.
- [27:39]
Brian Levitt
They've got room.
- [27:40]
Brian Belsky
They have room in the bullpen. They traded everybody away last year in the bullpen and they've got this beautiful core of great young players akin to the early 2000s, I would say. And they've got a shot. They've got a shot but they need some, they need some back end help,
- [27:55]
Tom Keene
you know, for him.
- [27:56]
Dan Ives
But Belski's, Belski's Minnesota to what you wear to the games. I think we can do like an Instagram on. Yeah.
- [28:04]
Brian Belsky
Home opener.
- [28:06]
Dan Ives
Unbelievable. He's a fashion icon.
- [28:08]
Tom Keene
I have to say, folks, for those of you worldwide, there's stars and they're stars. Josh Bell comes out of the dugout and he's just spectacular.
- [28:19]
Brian Belsky
Can he carry them when he swings? I think it's. I probably. I think it's going to be Buxton. Buxton when he comes back. He has reaffirmed that he never wants to be traded. He said, I want to be Joe Ma. I want to be Derek Jeter. I want to stay with one ball club. He's the true leader of that club. And now with Korea gone, obviously they traded him last year. He is the true leader. So you get bucks and back and you get this Luke Keal guy. Watch him because they moved him out of the infield, put him in the outfield. He is going to be a player. He can hit the ball.
- [28:47]
Dan Ives
It's like MLB Network listening to you. Yes, it's fascinating. Swiss Army.
- [28:52]
Bloomberg Announcer
All right.
- [28:52]
Eric Balchunas
Since we're talking sports, it, it's, it's July. Summer camps are going to be opening up for football. Talk to us Penn state, give us 30 seconds.
- [28:58]
Dan Ives
Look, I was there last week. You know, I, I mean I just love what Campbell and the staff have done. And, and I think we are going to shock college football world because these are guys that are phenomenal evaluators of talent. I think we're going to actually contend for Big Ten championship this year. They will like. And then when Belsky's at a game for the wideout usc, we'll be, we'll be celebrating. I remember, not official, but I believe
- [29:23]
Brian Belsky
that will maybe kind of.
- [29:26]
Tom Keene
We're going to go to Scott Kirby here of United Air. It's great he's a pilot. You know, bastion on the other day, the airlines is something that everybody in America is wrapped into. I remember the day they took Northwest out of Minneapolis. I can't remember the exact story, but you know, the airlines, are they investable?
- [29:44]
Brian Belsky
Brian Belsky, man, it's really hard not to say it's different this time. But you think about the structural changes that the airlines have made, number one. Number two, like Delta, for instance, bought a refiner over a decade ago. United has done an amazing job. Kirby's done an amazing job with Delta, number one. United's a close number two. They've done great. Now what's going to happen with American will be interesting.
- [30:06]
Tom Keene
I mentioned this yesterday and I thought of you are the big banks basically technology companies that happen to have Christmas club accounts. I mean they're winning on technology.
- [30:16]
Dan Ives
Right? That's. And I think that's the thing that I think a lot of investors have really overlooked is in terms of what they're doing. When you talk about a revolution, about this fourth industrial everything, it's really financials that are leading and you're seeing across the board. It's just a start. And for the first time in 30 years, the US is ahead of China when it comes to tech.
- [30:36]
Eric Balchunas
That's.
- [30:36]
Tom Keene
Guys, this has been wonderful daylight. Thank you so much. Congratulations on your new feared. Ryan Belsky. Thank you so much. To have the two of you together is great. Can we be sure, Eric, can you be sure that we have the Bloomberg of the official photo, the one that has a Hasselblad you know, medium format so the lens, you know, the only one with the lens won't break with eyes. Maybe we get a photo opportunity here. So it'll be like Ives pale, pasty, white, Belski tanned and rested. It'll be a great photo.
- [31:04]
Dan Ives
We'll see the Naples had the Naples Belsky 10.
- [31:08]
Brian Belsky
That's right. Naples paradise, man.
- [31:10]
Tom Keene
Thank you so much.
- [31:11]
Dan Ives
Thank you.
- [31:12]
Tom Keene
Stay with us. More from Bloomberg Surveillance coming up after this.
- [31:19]
Eric Balchunas
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 of 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 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 at public.com disclosures Amazon Health
- [32:29]
Tom Keene
AI Presents Painful Thoughts I I can't stop scratching my downtown. Yeah, but I'm not itching to go
- [32:39]
Eric Balchunas
downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud.
- [32:48]
Tom Keene
There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Healthcare just got less painful.
- [32:59]
Eric Balchunas
The official language of football is trash talk, late night group chats, memes and unbelievable highlight clips.
- [33:07]
Tom Keene
That's why Boost Mobile brings you our new Global Connection plan, the first plan
- [33:12]
Eric Balchunas
ever made for WhatsApp. Get unlimited data, talk and text, international
- [33:16]
Tom Keene
roaming and calls to over 100 countries for just $40 a month. $40 price includes five dollar a month autopay discount after 40 gigabytes of premium high speed data speeds will be lowered. Coverage not available everywhere.
- [33:27]
Eric Balchunas
Visit store or boost mobile.com for details.
- [33:34]
Bloomberg Announcer
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [33:46]
Tom Keene
Love having her in the studio. Etsy Chef joins Chief Credit Officer Moody's here right now. When you guys look at the Social Security Security angst or just simply the debt and deficit angst, how do you process that?
- [34:01]
Etsy Chef
Well, two ways. One, we look at it from the sort of fiscal perspective and what it means for the US Government. And what it means is that the US Government is on the hook for payments to people that were promised and does not have all the funding that it needs to do that. So that's one way to look at it. The other way to look at it is from the perspective of people who are today eligible for Social Security and are getting their payments, but the ones who will be eligible a decade from now. And that's where the real angst is, that if the funding isn't there, will the payments actually come?
- [34:35]
Eric Balchunas
How do you and your colleagues at Moody's view this technology wave of new issuance? Because there's a lot of companies that, you know, historically have not accessed the debt markets, or if they did it, they did it just because they could. Now they need to. So it's a little bit different metric there. How do you guys view that?
- [34:53]
Etsy Chef
Yeah, this is. And we're seeing this, that on the one side, there is the demand from the hyperscalers and the issuers of this debt, but on the supply side, the market is willing to fund this. So I think the underlying story here is that both those who are issuing the debt and those who are buying it really believe in this technology. They believe that this kind of capex, which is billions moving to trillions, will generate the kind of productivity and revenue needed to repay that debt and justify that capex. We think there's a chance it will, but we don't know for sure that it will. So that's how we're looking at it. We're monitoring very closely.
- [35:29]
Eric Balchunas
Again, I kind of look at some of these big technology issuers, and they did have some debt out there, but it was just because why not? You know, they didn't need it. They had jillions of dollars of cash on their balance sheets, but now they're coming and they kind of need it. So if I'm sitting on the other side of the table, I'm like, okay, the last deals I did for you, those are different. Now I want some covenants, I want some protections and things. Is that happening or is it still just whatever you guys need, here's the money?
- [35:54]
Etsy Chef
Yeah, And I think it's happening in different ways. So, first of all, you're absolutely right that the hyperscalers, very low history of capex, they didn't need to do it, but very strong history of cash flow. So they are sitting on a pile of cash. Over time, as they keep issuing more and more, that pile of cash obviously erodes in terms of what it's promised for. So what we're seeing is very complex instruments being structured to your point to ensure that, that, you know, the debt is structured in ways that allows for the technology and the revenues to catch up to repay that debt.
- [36:28]
Tom Keene
Were you in a meeting and you know, I don't want the inside dirt, it's rude of me. But I think our audience is fascinated where they shake when Etsy Chef walks in the room. And you have to figure out what to do with SpaceX corporate paper. How does that work?
- [36:46]
Etsy Chef
Well, you know, it works the same way as with any other institution. In this case, we look at the various businesses that the company has. There is a telecom business that is very profitable and then there's capex that's going into another business, the rocket business that is expected to generate profits in the future. So we look at cash in hand, we look at the kind of leverage that's being asked for and we look at the capacity to repay that debt.
- [37:14]
Tom Keene
Okay, do you respond to the price decline that we've seen across? I mean, I've been monitored day by day. Let's just. Let me, let me paraphrase. It's ugly. How does Moody's or any other credit team respond to that?
- [37:27]
Etsy Chef
I'm so glad you asked that because one of the things that we do absolutely in every rating committee is we don't look at things the way they are that day or the way they were five years ago or the last year. We run scenario analysis and one of the scenarios we run is volatility in the markets. And the rating has to be able to withstand the fact that buyers are going to choose not to buy, sellers are going to choose to sell and that's going to have price impact. So absolutely, that's something.
- [37:53]
Tom Keene
Can we announce a credit downgrade for SpaceX here on Bloomberg?
- [37:56]
Etsy Chef
We cannot, we have not, we will not.
- [38:00]
Tom Keene
I was taking a chance on that. A little bit more time with Nazi Seth of Moody's here. Very quickly, the hyperscaler bonds move. Do you pay attention to the insatiable demand for a bond or is that just like after the fact and Moody's doesn't care that it was eight times oversubscribed?
- [38:18]
Etsy Chef
We don't you know, we don't care in terms of that's not a fundamental metric that we look at. But we do aim to understand the market for any particular type of instrument. And one of the reasons why I talked about sort of the way these instruments are being structured is because some of them are not just being sold to the public markets, they're being sold to the private markets as well. So this insatiable demand that you speak is coming from two different sources and one is a newer source.
- [38:43]
Tom Keene
Thank you so much. Really, really appreciate it. Don't be a stranger. Seth, Chief Credit Officer for Moody's Ratings.
- [38:51]
Bloomberg Announcer
This is the Bloomberg Surveillance Surveillance podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 7 to 10am Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [39:22]
Tom Keene
Big transfer news today. Who's moving me to the couch with Domino's? Best deal ever since they just added stuffed crust.
- [39:29]
Eric Balchunas
Any pizza, any toppings? Now with stuffed crust for 9.99.
- [39:32]
Tom Keene
It's a long term contract with no Release clause. Only 9.99.
- [39:37]
Eric Balchunas
Yeah, that sounds like the move. I'm heading straight to Dom Minnows.
- [39:42]
Tom Keene
Prices higher for some locations. Excludes exhales. Specialty pizzas select this offer from 6:15
- [39:46]
Brian Levitt
through 7:26 online only.
- [39:48]
Tom Keene
Size availability varies by crust type. Max 7 topping 6 for pan and New York style crust.
- [39:52]
Brian Levitt
Minimum purchase required for delivery.
- [39:53]
Tom Keene
Prices, participation, delivery area and charges may vary.
- [39:58]
Eric Balchunas
MM's popped caramel do sound different.
- [40:02]
Tom Keene
Oh no.
- [40:02]
Eric Balchunas
People are gonna be obsessed.
- [40:04]
Tom Keene
What do you mean?
- [40:06]
Eric Balchunas
People hate the sound of chewing. Maybe they won't like the crunch.
- [40:10]
Tom Keene
Maybe we're saved.
- [40:12]
Eric Balchunas
Wait a minute.
- [40:13]
Tom Keene
Yellow.
- [40:16]
Eric Balchunas
Have you been eating them this whole time?
- [40:19]
Bloomberg Announcer
Mmm.
- [40:19]
Tom Keene
So tasty.
- [40:21]
Eric Balchunas
Hands off us.
- [40:23]
Tom Keene
M&M's popped caramel. It's more fun together. Across America, money is being abandoned. By taking a few seconds to check Lyft before your next ride, you can give money a better home inside your wallet. Save the money. Check Lyft.