November 19, 2024 • 39 mins
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Marc Champion, Bloomberg Opinion Columnist, discusses Ukraine carrying out its’ first strike with U.S missiles in Russia. Emily Cohn, Bloomberg Consumer Team Leader, talks Walmart earnings. Chris Watling, CEO and Chief Market Strategist of Longview Economics, discusses the latest on the markets. Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst, discusses the DOJ pushing Google to sell Chrome. David Bahnsen, Chief Investment Officer at the Bahnsen Group, discusses his outlook for the markets. Woo Jin Ho, Bloomberg Intelligence Senior Technology Analyst, discusses Super Micro computer’s compliance plan.
Hosts: Paul Sweeney and Alix Steel
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
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Speaker 3 (00:23):
Geopolitical News front End Center again. Today, the Ukraine carries
out first strike with US missiles in Russia, you know,
and then we had some rudder coming out of the
Russian Foreign Minister down at the G twenty Mark really
spooky markets.
Speaker 4 (00:38):
Mark Champion joins us.
Speaker 3 (00:39):
He's a calmnist for Bloomberg Opinion. He's located in London
and he is one of our resident experts on geopolitics,
particularly in that part of the world. Here, Mark, it
just feels like, you know, today was not a good
day for the folks that were looking to try to
move towards a resolution there in Ukraine. What's your latest
view on what's happening in that part of the world.
Speaker 5 (01:01):
Yeah, I mean, you know what we the kind of
trajectory we have is that the Ukrainians are very much
on the back foot in on the battlefield, and at
the moment they have been for some months. You know,
obviously you have a new US president coming in who
says he wants to end it all in a day.
But you know, the question is at this point, you know,
(01:23):
everybody is agreed, including Voladimir's Zelenski, that the you know,
this needs to come to an end next year. You know,
the question is which day? Uh? And you know which
end of the year. And you know, how do you
get President put into the negotiating tables as you know,
(01:44):
opposed to just offering to accept Ukraine surrender, you know,
in the current circumstance or what the Ukrainians want to do,
what the Biden administration seems to be, you know, trying
to help it to do is to change the facts
on the ground such that you know Putin will have
some incentive to actually negotiate.
Speaker 6 (02:04):
Well, I was gonna say, who has the upper hand
at this moment.
Speaker 5 (02:09):
Well, there's no question the Russians do. They're moving, you know,
every day, they're moving forward along the front lines, and
it's it's not a collapse. It's not a kind of
sudden you know, end of days. But you know, there's
there's no doubt about you know, which side has the
initiative at the moment. You know, that has kind of
(02:29):
flipped from one side to the other, you know, throughout
the war, and it could flip again. But at the moment,
the Ukrainians simply lack the number of personnel the manpower
to do it. They were late with the mobilization and
they are in a pretty bad state. So what they're
asking for is different ways of helping them so that
(02:53):
they can stabilize the line, perhaps even change the momentum
a little bit, and then importantly strike behind the Russian
lines to increase the cost of continuation for President Putin
so that he actually has a reason to say, Okay, i'll.
Speaker 3 (03:09):
Talk between now and inauguration day. It seems like a
day at a time period where each side will be
trying to just improve their position, with the understanding that
it looks like, whether we want or not, we're going
to the negotiating table.
Speaker 5 (03:24):
Is that kind of the view, Yeah, I think that's
exactly what's going to happen. And you know, that's the
context in which to say, to look at the sort
of Russian sabers rattling again on the nuclear issue at
the moment, I mean, the reasons for not pushing the
nuclear button have not changed, and there are real hurdles
(03:44):
and costs involved in doing so. And you know President
Putin didn't do that when Russia was losing on the battlefield,
and he's very unlikely to do it when they're winning.
But it does tell you that he's trying to shape
what the the US in particular does between now and
next year. And this is one tool which he has
(04:07):
to do it. He has others, and you know, yes,
absolutely both sides will be trying to maximize their position
for when they actually have to make some kind of deal.
Speaker 6 (04:17):
And does that deal is that contingent on say President
Trump or you think, regardless of who's in the White House,
this is the way it was going.
Speaker 5 (04:26):
It was. It's going to probably get there faster because
of the arrival of Donald Trump, but yes, that's where
it was going. You you know, Zolenski, if you look
at Zelenski's victory plan, which you know is often miss construed,
if you actually read it, you know he's got a
five point plan there. None of them talk about territory.
None of them say we have to get crimea back
(04:47):
or we have to get this back, or that it's
four points which are just about security. How do we
secure Ukraine to make sure that when we agree to
a cease fire it's just not a little interlude for
the Russians attack again. And then a final one which
is a sort of you know, just a bid to
interest Donald Trump in particular, but you know the West
(05:10):
in general in what they can get out of helping
Ukraine in terms of resources and so on.
Speaker 3 (05:17):
All right, Mark Champion, thank you so much. We really
appreciate getting your thoughts there. Mark Champion, he's a calmness
for Bloomberg Opinion, joining us from London via zoom giving
us the latest thoughts on Ukraine. Again, the thinking now
is perhaps in twenty twenty five that might be a
period for some type of truth to come to that
part of the world. We'll have more reporting on that.
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(06:16):
which is hosted by our partners material Fill it out
now at YouTube dot com slash Bloomberg Podcasts. All right,
let's get back to the market here. So we may
have some geopolitical risk shaking in the market, but if
you take a look at some of the equities, like
a Walmart still holding up fairly well, that stock now
are on the highs of the session, up almost five percent.
Joining us how to discuss as Emily Cohne and Bloomberg
(06:37):
Consumer team leader, I mean, she heads all the stuff
of consumer stocks. She joins us now in studio. Emily,
wonderful to see you.
Speaker 8 (06:43):
Thanks, Alich.
Speaker 6 (06:45):
What do we make about the reaction to Walmart stock?
Because consensus was already high, the stock had already moved
like we kind of knew it was going to be good.
Speaker 1 (06:53):
So when you think about Walmart Walmart is a bellweather
of the American economy, of the American consumer.
Speaker 8 (06:59):
What is Walmart? Or tell us about that.
Speaker 1 (07:02):
Walmart beat expectations today sent a really strong signal that
the holiday season is off to a solid start, and
the market was excited about that.
Speaker 8 (07:13):
The growth in the number.
Speaker 1 (07:14):
Of transactions or checkouts slowed, the growth rate slowed a
little bit. Ticket the average ticket, the amount people were
paying in each checkout, was up, and a lot of
that growth was coming from higher income shoppers, people in
households making more than one hundred thousand dollars a year.
That cohort made up roughly seventy five percent of the
(07:37):
share gains.
Speaker 8 (07:39):
So this was good. It was a solid start to
the holiday.
Speaker 1 (07:42):
Season, and the stock is up a lot. Four and
a half percent is up a lot for a company.
Speaker 3 (07:49):
That Big stopstocks at all time high of sixty seven
percent year today, which I had no idea their e
commerce business. Talk to us about their e commerce business.
I know it's big, but Amazon's pretty big too, So
how did they talk about their e commerce business?
Speaker 1 (08:04):
When they talk about e commerce, they just talk about
the potential to grow. It is big, but there is
still so much room to grow. So just in the
last couple of months, we saw them branching into categories
that you wouldn't find in a typical Walmart store. Pre
owned watches, collectible sneakers, stuff you would typically go to
(08:25):
another retailer for, but now you can buy at Walmart online. Also,
they're adding benefits to their services, like Walmart Plus. You
can now get discounts of Burger King if you're a
Walmart Plus member. So they're really expanding their offering there.
Deliveries can get faster, and they see just endless potential there.
Speaker 8 (08:45):
It's always growing.
Speaker 6 (08:47):
My question I had before the break was those people
that make over one hundred thousand dollars or more, are
they sticky as in, once the economy save recovers or
once they feel better about inflation or et cetera, do
they flee than to go to Target or somewhere else,
or go to the fancy drug store or do they
stay at Walmart.
Speaker 1 (09:04):
I think that's a really good question and something we're
definitely watching for. You know, spending across the board at
Walmart was consistent. The growth, as you said, was coming
from these wealthier households. Maybe it's a shopper who typically
shops at Whole Foods, but is feeling particularly pinched right
now and is going to Walmart for value? Do those
people stick around when they get a raise in their
(09:24):
next paycheck or their paycheck in the next couple of quarters.
That's something we're definitely watching for. I think it does
have limits.
Speaker 3 (09:33):
So are they still opening stores? Isn't there Walmart pretty
much in every town USA these days?
Speaker 8 (09:39):
It's a good question.
Speaker 1 (09:41):
I think, like when they talk about growth now, they're
talking about e commerce growth. I think that's where they
see the highest potential for growth, and they needed to
get profitable. That's something we heard the CEO talk about today.
Not that they're racing to it, but it's a long
term game they want their e commerce division to.
Speaker 3 (10:00):
So they feel them pretty okay about a holiday shopping
season because.
Speaker 1 (10:04):
Yeah, holiday, right, Yeah, holiday shopping is off to a
strong start. So the interesting thing about the holiday season
this year is that it's.
Speaker 8 (10:12):
Shorter than in most years.
Speaker 1 (10:15):
Thanksgiving is following later in the month of November. So
the answer to that is that they triggered the deals
even earlier than than usual.
Speaker 6 (10:26):
Coming in to Paul Knows and I shop on the sales,
let's go to Low's because that is interesting as well.
That stock is off the loads of the session, but
still down over three percent. What did Lo say?
Speaker 1 (10:36):
So? Lowe's years fell before the bell and quarterly comps
were better than expected but still declining. So high interest
weight rates and a week housing market means people are
moving less than they were before. It means they're spending
less on big ticket home renovations. But despite blooming gloomy,
(11:00):
Lowe's actually raised its forecast for the year, seeing positive
growth in its professional business so selling goods to contractors
and builders, also in e commerce, and spending on smaller.
Speaker 8 (11:13):
Ticket outdoor projects. Last week we.
Speaker 1 (11:16):
Saw Home Depot similarly say that the weather was actually
a bright spot for its sales. So hurricane led to
higher sales for Home Depot. Warm weather meant that people
were spending more on grills because the Great Grilling Season
was getting longer.
Speaker 8 (11:34):
So in general, for these loes, Home Depot.
Speaker 1 (11:39):
Sales are down, but the outlook got a little bit
better this quarter.
Speaker 3 (11:43):
Where do we see the weakness in the consumers like
in the dollar stores? Because I mean I can I
see a strong number from Walmart to me that is America?
So where is the American consumer hurting, is it? I
guess it's even a lower end than.
Speaker 1 (11:57):
Wal Yeah, the lower end is definitelyfering. The dollar stores
are suffering. They don't offer the variety that Walmart offers.
Walmart sixty percent of Walmart's business today is in groceries
and you can go, wow, uh, you know some pretty
good stuff at Walmart these days, gluten free items and
(12:18):
organic produce and stuff that like you're not going to
necessarily find out your dollar store. And that's really really
helping them, especially when it comes to growing an e
commerce business where people are looking for a one stop
shop for everything.
Speaker 3 (12:31):
So before I let you I have a gluten free friend.
Speaker 8 (12:33):
And it's a good job.
Speaker 4 (12:34):
It's a thing.
Speaker 6 (12:35):
It is a thing.
Speaker 8 (12:36):
I have multiple friends.
Speaker 3 (12:39):
I didn't know it was. Oh I've been educated.
Speaker 6 (12:41):
You've been educated for that one friend.
Speaker 8 (12:43):
Before I let you go.
Speaker 6 (12:44):
We get a lot of retailers out this week as well.
What are you going to be focusing on? The consumer trends? Land?
Speaker 1 (12:49):
Definitely the holiday season? What are people seeing that's the
big question this year. Are people spending as much as
they usually spend? Are they buying as many gifts as
a usually by also Thanksgiving for the grocers. I think
a lot of people are just worn out from paying
really high prices for food.
Speaker 8 (13:09):
They're also worn out from.
Speaker 1 (13:12):
Cooking a lot more than they have been since they're
eating out less. So how is that showing up in
consumer sales? Definitely trying to get a sense of how
the consumer is feeling about what is the most significant
shopping season of the year.
Speaker 6 (13:27):
I know my husband's getting a little burnt by all
the cooking he's doing. I'm really good at ordering takeout.
He's the chef in the family. All Right, thanks so much,
it's really I really appreciate it. It was wonderful to have
you at Emily Cohen joining us. She has consumer trends
coverage for Bloomberg News.
Speaker 2 (13:43):
You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 6 (13:58):
All right, taking a look at the markets again. Get
the smp is down by about four tens of one
percent of the nasdag off just slightly. What do you
do in the market when there is a slight safe
haven bit. I say slight because we've definitely backed off
some of the levels that we've seen earlier in the session.
Chris Walling is CEO and chief market strategist along View Economics,
and he's here in studio to discuss his latest calls. Chris,
(14:19):
we're getting all the twenty twenty five calls out now.
Everyone's looking pretty bullish. But the bear case and then
the bull case seems to be super wide. What are
you guys modeling right now?
Speaker 4 (14:30):
Well, I think what's really interesting is what we're seeing
in terms of the global economy next year. When you
sort of whip around the world, you look at China,
you look at Europe, the UK, and the States. Obviously
with this new government, there's all sorts of stimulus coming.
I mean, if you look at a raft of ninety
central banks around the world, the vast majority of them
the cutting, and they're in cutting very few raising weights.
That's normally a very good environment for equity markets. So
(14:52):
tons of stimulus lots coming. Yes, there's a lot to
worry about. That's why you get those wide ranges on
those forecasts. There's a lot of left to fail with
the new administration, and one's got to think about those
tariffs and the like, and appointments still to come, so
one doesn't really know how that's going to play out.
But I generally think that the thrust is good, and bizarrely,
we could actually absent those risks. We could actually have
(15:14):
a year where volatility falls and sort of got you
remember twenty thirteen or twenty seventeen. Volatility collapses because everyone's
cutting rates. There's a lot of equality around, so I
can't get my l's out there.
Speaker 3 (15:27):
So in that kind of environment, long stocks, my long credit.
How do you think they play it here?
Speaker 4 (15:36):
Well, I think your long equities and your long bonds. Bizarrely,
I think our government bonds are oversold. And actually, I mean,
I know the data is distorted today, but housing's just struggling.
Speaker 1 (15:47):
You know.
Speaker 4 (15:47):
They're parts of the US economy that need lower rates
to get it going. And the fiscal impulse is dying
as we go into next year, and we'll have to
wait until you get another fiscal package, and we don't
know what the size of it will be. So I
think long stocks and long bonds, and I want you
want to play the cyclical parts of the market, which
I think you know, when you get that cyclical week acceleration,
it's that's a great place to put money. So Mag's
(16:08):
seven dominance is slowly dying in my opinion. But then
on the.
Speaker 6 (16:11):
Flip side, you'll say, I'll hear things like, yeah, but
retail sale are holding up, the job market's still holding up,
inflation stills holding up, So maybe we're not going to
get the kind of rad cutting cycle that we might expect.
Speaker 4 (16:21):
Well, yes, yes, and no. I mean inflation, in my
opinion is dying. I mean that this was a classic
monetary surge of inflation. People like to compare it to
the seventies, but they're much better comparisons going further back.
We're m two surgees and then two collapses, and that's
really what we've had. And that's the kind of inflation
outcome we're going to get where inflation is going to dissipate.
So that'll encourage the fete, I think, to do a
(16:42):
little bit more than people expect.
Speaker 3 (16:45):
The event tomorrow, presumably just on the earnings front, will
be in video after the close.
Speaker 6 (16:50):
I was like, what event.
Speaker 4 (16:50):
Yes, Yeah, we've kind of got it.
Speaker 3 (16:52):
We've been talking about it since, you know, earning season began,
you know, four or five weeks ago. How important is
zach is? It seemed like for twenty twenty three, for
most off not all of this year, the AI trade
has been powering this market.
Speaker 4 (17:05):
It feels like maybe it's fading a little bit. But
how important is in video tomorrow? You well, in video
is important, but it is only one stock. I mean,
it doesn't feel like only one stock. If it feels
like the whole market, but it's only one stock. And
really the MAG seven has become the sort of MAG
one or two, So there's a limit to how much
the market can be paid high by a couple of stocks.
(17:25):
And I think that's the point. And the other thing
about in video is, you know, the second duvetive of
earning's growth is slowing, So it's kind of when stocks
like that, you need the first two to be fast,
and that's now slowing. I wonder if margins are topye,
So you know, I think MAG seven as a whole
is topy on margins, and video of course is exciting,
but I don't think it has the influence it had
(17:47):
last year.
Speaker 6 (17:48):
So based on that, and then you talk about the
rate cutting cycle really being front and foremost and sort
of how you view the market. Is that an ex
US equity situation or is that a US and or is.
Speaker 8 (17:59):
That just US?
Speaker 4 (18:01):
So I think it's it's a global cyclical trade, which
and of course the large gap US is dominated by
mag seven, So I think what we'll find is they've
become a source of funds to buy into cyclical parts
of the global stock market. So in the US mid
and small caps, some of the cyclical areas of the market,
for sure, people talk about financials tick. But outside the US,
(18:21):
tons of stuff, you know, there's so much cheap stuff
that cyclical we're going into sort of nominal GDP growth.
This is all good for those parts of the world.
We like the UK. We like Spain. Bizarrely sort of
no one's talked about Spain for a long long time
because Spain's spent fifteen years getting his house in order,
and Germany's the sick man of Europe, which means rates
are lower in Europe and the otherwise would be in
(18:42):
Spain gets cheap money. So it's a lovely little combo.
And Spain's doing really well this year. There's four out
of fifty countries in the world that are a more
than fifty cent discount of the US, and they're only
scor faster over the last few years. Places like that
are going to do really, really well. Greece is one
of them. I mean, who talks about Greeen.
Speaker 6 (19:00):
Nobody, Nobody sunys about green That's amazing. That's on equity side.
So for spanding, Greece is on the equity side, not
the bond side.
Speaker 4 (19:06):
That's all. The equity side absolutely bonds, you know, I
mean fine, US bond's great, exactly.
Speaker 3 (19:13):
All right, So you woke up two weeks ago in
London South the Americans elect themselves in your president. We
now know that how the Congress is going to look like.
Did that change your view at all about how to invest?
Speaker 4 (19:24):
Well? At the margin? Potentially you get a bit more
fiscal and a bit less sort of consumption growth out
of the States, So there's a bit of a risk
at that, but actually made me feel more bullish, you know.
I'm I'm a political, I'm a bridge so I don't
have nothing to do with me. But looking at it objectively,
it seems much more pro growth with the with the
with the exception of the tariff's risk basically, So yeah,
(19:47):
maybe more bullish cyclcal stuff, but.
Speaker 6 (19:49):
I guess what it does matter is the fiscal side
and the fiscal policy. In which case, where do you
invest in small caps?
Speaker 9 (19:55):
Say?
Speaker 4 (19:56):
Well, you know, I think the consumers going to do well.
There's there's untapped wealth in the US and the UK
and southern Europe, and so I like consumer cyclicals, and
I think bonds are coming down, so I like housing
related stuff. So all of that I think is good.
I'd be cautious on the biotech because there's also some
policy changes coming around the corner. But yeah, I think
(20:17):
I think there's a lot to go for in the
mid and smalls.
Speaker 6 (20:21):
All right, Chris, it's always good to see you. Thanks
for coming by. Great to see you in person at
Chris Watlin, CEO and chief market strategist of lomuew Economics.
I read read their weekly report every Friday. Good really
eleven thirty in the morning. But I'm focused. It's just
paying commercial breaky. You gotta stay car around to engage.
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We bring you all the have news in business, economics
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They cover two thousand companies in one hundred and thirty
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Man keep saying, Bloomberg Intelligence, senior tech industry analyst.
Speaker 8 (21:12):
He joins us.
Speaker 6 (21:13):
Now, a lot of things to pick about here. Obviously
in Vidia tomorrow definitely part of the story. But one
is Google and the DOJ pushing Google to sell Chrome
to break up its search monopoly.
Speaker 8 (21:25):
How seriously do.
Speaker 6 (21:26):
We need to take this concerning there's gonna be like
a new White House and a new DOJ in a
few months.
Speaker 1 (21:31):
Yeah.
Speaker 9 (21:32):
Look, I think it's still uncertain who President and Elect
Trump is going to appoint to run the agency, and
a lot depends on how hard they want to go
against the likes of Alphabet and Meta. But in this case,
the fact that DOJ is proposing and we know the
Vice President elect he is not opposed to, you know,
(21:54):
breaking up these big tech companies. So clearly it is
a risk, and I think when you look at what
they're proposing, you know, breaking Chrome. You could argue there
are independent browser companies out there, like Mozilla, so Chrome
could exist as an independent company. But it's very hard
(22:16):
to see how you can make a business model out
of Chrome. And then it does hurt, you know, Google's engagement.
In the end. This is the distribution for Google, the
owning the Android operating system and owning the browser. You
take out the browser, their distribution for search goes away.
I mean, Google Search will still be the dominant search engine.
(22:38):
But in the Internet world it's about owning distribution. That's
why Apple has so much cloud, That's why you know,
owning Android and Chrome or the crown jewels. When it
comes to Alphabet as a franchise, so many deep just
painted is a pretty dire picture there.
Speaker 3 (22:55):
Guess what stocks up today? Why because people like gen
who covers litigation for us, this is her sense. I
know you didn't write this exactly, I know her writing.
If Alphabet were forced by the DOJ to sell its
Chrome browser Comma, which we view as unlikely. So that's
kind of the takeaway there soon, Jenry tells me it's
kind of unlikely, but still I guess we have to
(23:17):
expect or I guess Google investors have to expect some
types of modifications to behavior in their business models. But
I guess on the margin the market saying it's not
going to be that material.
Speaker 4 (23:27):
It's reflected in the stock.
Speaker 9 (23:28):
In the end, it comes down to what is the
valuation right now? What is baked into the stock, and
all the bad news around regulation is in the stock.
That's why alphabet is not trading at thirty times earning.
It's trading at a discount to the likes of Microsoft.
So look, I mean, I think they will have to
make remedies, even if it's not a forced syvestiture. They're
(23:52):
already starting to pair back when it comes to at targeting,
how much data they mix and match across their family,
whether it's YouTube, maps, search. So from that perspective, I
think they are going to try and do these measures
on their own, and you know, just to convince the
regulators that owning the browser is not something that gives
(24:16):
them an advantage, and maybe they have to expose the
data that they're using for targeting the users. When it
comes to ads, that's the other part of the remedy here.
Speaker 6 (24:26):
And this just means like then they're getting ahead of it,
right then they're getting ahead of anything that may come
from DC or Europe at any time. In essence, what
are you going to be looking kind of go to
video now it's it's been a two minutes, okay, so
tomorrow in video? Or what am I looking at?
Speaker 9 (24:42):
I mean, there's so many things when it comes to
the continuation of this Genni wave. This is the Belvether company.
And look, when it comes to data center spend, it's
all about how scalable the models are going to be
in terms of you know, whether it's Chat, GPT or
(25:02):
Google Gemini, how big of a cluster they want to
create for next year. Because right now everyone is looking
at the compute that you know, open Ai has used
for GPT four and they're saying they already have a
trillion plus parameter model. Can it get any bigger? The
answer from Nvidia is yes, we are giving you a
(25:23):
more powerful chip and you can create a bigger cluster
next year to train your models. So if that's the case,
then the computer requirements continue to scale up, which is
what they are betting on. In terms of the data center.
Upward revisions we have seen the whole of this year,
and they think the scaling of the foundational models is
going to continue. The moment you hear about a plateauing
(25:46):
of the foundational models, that's when you know, you know
you're not going to see the upward revisions we have
seen for in radio's data center in video.
Speaker 3 (25:55):
Stock is up three percent today, up one hundred and
ninety percent year to date with a three point five
trillion dollar market cap. Dan Eyes and what Push Securities
was at with a tweet this morning saying he believes
that they will beat on revs by two billion dollars
to take their guidance up by another two billion dollars.
Speaker 4 (26:11):
You cause that that dropped the mic, so.
Speaker 9 (26:14):
That may not be enough to drive the multiple. See
that's the thing.
Speaker 3 (26:17):
Yeah, we're talking about earnings what is.
Speaker 9 (26:20):
Reflected in the stock. In the case of Nvidia, last
time around when they reported earnings, the stock had a
fifteen percent downroad draft because everyone had such high expectations
that even though they had a beaten raise, there wasn't enough.
Speaker 3 (26:34):
So the play man. Yeah, so, but even you came
in here probably six quarters ago and said, as long
as they keep doing it, the stock will keep working.
But at some point with that that quarter's gonna come
where they're going.
Speaker 9 (26:46):
To because it's not recurring revenue. And in the end
the moment you're talking about digestion. Okay, if we have
had enough in terms of scaling. Now we are focusing
on inferencing and you know, deploying this. We're not getting
the Bengal for mark when it comes to scaling the models.
That's when Nvidia has to find another way to you know,
(27:06):
keep driving to growth.
Speaker 6 (27:08):
All Right, Mandy, we appreciate you and good to see you.
Thank you so much. Man keep saying, no doubt we'll
see him every day for the next few days. He's
senior technology analyst over at Bloomberg Intelligence.
Speaker 2 (27:18):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa Play Bloomberg eleven thirty.
Speaker 3 (27:36):
Alex Deel, Paul Swening. We're live here in our Bloomberg
Interactive Proker Studio. We're streaming live on YouTube as well
as a head over to YouTube dot com and search
Bloomberg Podcast and that's where you'll find us. David Bonsen
joints us here. He's the chief vessel officer at Bonson Group.
They about six and a half billion dollars assets under management. David,
thanks so much for joining us here. You woke up,
(27:58):
you know, two weeks ago almost we have a new
president in the White House in starting January, we're going
to have a new Congress as well. Did that change
your outlook, your investment outlook at all?
Speaker 10 (28:11):
It did not, in the sense that the primary things
that drive markets we felt were not going to move
a ton, which is around the earnings profile, earnings expectations,
and the monetary policy. However, within the weeds, it reinforced
our optimism in the energy sector, which has certainly been
very validated over the last couple of weeks, and the
(28:34):
financial sector. That was an area where we thought policy
would make a difference, and particularly some of President Trump's
policies more favorable in those two sectors, and Vice President
Harris is less so.
Speaker 3 (28:47):
From the earnings perspective, you mentioned earnings obviously driving stocks here.
We're just kind of finishing up with some of the
retailers this week. What is your view of the earnings
profile this S and P five hundred these days?
Speaker 10 (28:59):
I think that the earning this profile is obviously very good,
and that the growth of earnings next year is very good,
and that that is fully and completely priced in the market,
and so the risk is really very little that earnings disappoint.
I mean, that's always possible, there's always issues that could
disrupt expectations. We happen to have a very very good
(29:21):
track record in our financial markets, so being able to
project earnings. However, you're paying twenty two, twenty three times
next year's best case earnings right now, and so I
find that problematic.
Speaker 8 (29:35):
So where else would you go?
Speaker 9 (29:37):
Then?
Speaker 6 (29:37):
If that feels too expensive?
Speaker 10 (29:39):
We would not buy the entire index, especially where it's
cap weighted, especially where a lot of the big tech
names that are big profit earners are trading it over
fifty times, and if you're looking at trading earnings, they're
trading at seventy or eighty times earnings. Therefore, you have
to be more selective, and we're more value biased at
(30:01):
our firm and very divid and growth oriented. But some
of the healthcare names, some of the financial names I
mentioned energy. You know, right now, if everything goes perfectly
for mag seven, it's about twenty one percent of next
year's earns. It's thirty three percent of the financial So
the only two sectors thanks projections are more than what
(30:25):
they represent within the S and P. So we just
recommend people be more bottom up right now.
Speaker 3 (30:30):
All right, So within let's save energy, for example, where
in the energy space are you seeing opportunities.
Speaker 10 (30:38):
Very very heavily in midstream? And that's kind of interesting
to say, because it's had a heck of a year,
and really since November of twenty twenty has had quite
a great tear. But it was doing so from just
decimated prices out of COVID. Now not only have the
pricing environment and the psychology and investor sentiment got better,
but the fundamentals are dramatically better. Way less debt, less leverage,
(31:01):
way more cash flow coverage, and certainly right now a
policy you can see from the new Secretary of Energy
coming in the Secretary of Interior. There is a philosophical
bend that is pro our ability to get permits for
new oil and gas pipeline and to export LNG. These
two things are huge growth sectors.
Speaker 6 (31:20):
Yeah, meaning that you can actually put a shovel in
a ground to build a pipeline.
Speaker 4 (31:24):
Maybe that's right.
Speaker 10 (31:26):
And so what you have right now is a lot
of value in the current pipelines because they're all we have.
And then now you get the opportunity to build new pipelines,
which I think adds to the growth profile of the sector.
Speaker 3 (31:39):
So, Dave, how about in financials here? I mean, do
you stick with the JP Morgan's Goldman Sachs is of
the day or do you try to get little bit
more specialized.
Speaker 10 (31:47):
Well, so we own JP Morgan and have owned it
since March two thousand and nine, and it's one of
the most profitable investments we've ever made, and we have
had to tick down our waiting a little bit because
it has just done so well. But we're not abandoning it.
They're the cream of the crop and there isn't another
big bank we want to own. We also as far
(32:07):
as big commercial banks, Morgan Stanley is the name we own,
not Goldman Sachs. They're actually both fantastic companies, great brands,
great franchises. It's just the dividend growth. We think Ted Pick,
the new CEO at Morgan Stanley. I joke, he's the
person in America second most passionate about dividend growth, with
myself being first. And we think Morgan Stanley's got a
(32:30):
great fee oriented business that's much less lumpy and much
less you know, dependent upon institutional securities and investment banking
versus Goldman Sachs. They are They're wealth management and asset
management are really annuittized at Morgan Stanley.
Speaker 6 (32:47):
David, we really appreciate it. We always love your perspective
on this. David Bonson, Chief in Estment Officer at the
Bonson Group, Thank you very much.
Speaker 2 (32:55):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten Eastern on applecar.
Speaker 7 (33:01):
Play and Android Otto with the Bloomberg Business App.
Speaker 2 (33:04):
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 6 (33:12):
One of the best performing stocks in the S and
P today yesterday, you name it is super Micro. Here
with the latest is Wujin Hoo Bloomberg Intelligence Senior technology Analyst.
So the latest is bdo that's going to be their
new auditor. That's not like a giant, huge name though, right.
Are you disappointed in the name or is it just
the fact that hey, they have someone?
Speaker 11 (33:32):
Yeah, Hey, Alex, thanks for having me on the fact
that they actually had got an auditor, given what they've
gone through over the last two to three months, is
actually positive news for them.
Speaker 3 (33:44):
Which when I kind of just look at this story again,
they've had some real concerns with their auditors, and some
of the auditors concerns about the risk controls.
Speaker 5 (33:51):
I guess at the company.
Speaker 3 (33:52):
Can you give us your opinion of management of this
company and the board of this company.
Speaker 11 (33:58):
Yeah. You know, one of the reasons why I and
Y resigned as an auditor as part of the AK
filing was that there were some integrity issues that they
found as part of trying to get some financial documents.
You know, Paul, I haven't seen the word integrity issues
(34:19):
in an AK filing or an auditor resignation since back
in the Enron days. I'm not saying that this isn't Enron,
but this is something that you don't typically find in filing.
So you know, I have called for you may need
an overhaul of the board or greater independence and possibly
change of the CFO, because this is not the first
(34:40):
rodeo of having delayed filings.
Speaker 6 (34:43):
Do you feel like the stock move is justified or
does it have more to go? I mean, I'm taking
a look at them move in the last couple of
days and it's tremendous. But if you look at a
one year chart, this move is at pittance.
Speaker 11 (34:55):
Yeah. So if we think about the recent moves, there's
actually been more headline risk that's been driving this doct
than the fundamentals. I think much of this is more
of a relief rally that they're not going to get delisted. Now,
delisting would have meant a couple of things. First of all,
for they get delisted and it is going to start
(35:17):
some force selling, but it also potentially well it would
have forced the removal of the S and P five hundred,
which would have been another round of force selling when
the rebalancing comes in December the fifth, So that eliminates
that risk for super micro So there is some relief there,
but they're still not out of the woods.
Speaker 3 (35:37):
Where does this company fit into kind of your part
of the tech stack? Wouge in terms of being a
supplier of you know, hardware and components and things like that,
because I mean it's got twenty five billion of I
guess revenue. I'm just looking at the FA function forecasted
for June twenty five.
Speaker 4 (35:51):
I mean it's a big company.
Speaker 11 (35:53):
Yeah. Look, it's all about AI AI AI. I'm in
Hotlanta today for an A I conference and quite frankly,
super Micro is going to take a prominent role at
this conference to get customers. The question I have is
how reliable are those estimates. Keep in mind there's been
(36:13):
several suspend coverage suspensions, and I don't know how up
to date those estimates are.
Speaker 6 (36:19):
Who are the customers for super Micro?
Speaker 11 (36:22):
Yeah, so we do know that there are a couple
of large There's one large cloud customer which we suspect
is Meta, but it's a tier two custom Tier two
cloud customers company that may be filing for an IPO
called core Weave, and also Tesla's x AI. They bought
probably about one point five billion dollars in equipment from
(36:45):
super Micro this past year.
Speaker 3 (36:47):
And which to your point about the analyst coverage, I
just pulled up the A and R function for analysts recommendations.
Most or a lot of the annals have suspended coverage
or not rate is kind of what we see.
Speaker 2 (37:01):
So we of the.
Speaker 3 (37:02):
Ones that do have a rating on their three buys,
seven holds, and two sells. So it sounds like this
company has a lot of ground ahead of it to
rebuild confidence from the analyst community, probably their customers, and
from investors. Is that kind of your.
Speaker 11 (37:15):
Thought, Yeah, yeah, I mean, look, I think some of
the headline risk has been eliminated for now, or at
least extended. You know, they only received an extension from
the Nasdaq. The next milestone, quite frankly, is probably February
twenty fifth, when if they don't file their filings on
time by that time, the delisting questions will start arising again.
(37:39):
They essentially kick the can down the road.
Speaker 6 (37:42):
This might be a super silly question. At one point
I probably knew the answer to this, But where does
super Micro sit in the AI play stack?
Speaker 11 (37:50):
Yeah, so they're actually in the server space. It's the
hardware equipment that helps run the models. Among the US vendors,
they actually at the largest amount of AI service sales,
larger than Dell and larger than HPE.
Speaker 6 (38:05):
So they're very much like needed in this market, Like
it's going to be hard to replace them either way, right,
Like they're needed essential.
Speaker 11 (38:13):
Well, that's that's a good comment and good question. Competition
has grown. Dell is actually strengthening their AI chops quite
a bit. But I came back from a couple of
conferences recently and we're starting to see other companies with
similar capabilities that we'll be making it much more competitive.
And one of the evidence there so far is the
(38:35):
lower gross margin. They peaked their gross margin at around
seventeen percent a couple of years back when they with
the sole player, and now that you have more players
coming in, their gross margin in the last couple of
quarters went from went to about thirteen percent and eleven percent.
Speaker 3 (38:52):
Wow, I'm just going to the dees function. March nineteenth,
twenty twenty four, the company sold two million shares at
eight hundred and seventy five dollars per sure. Coleman Sex,
thank you very much, Wuginho, thank you for joining us
at Woojin. Host is senior technology channels for Bloomberg Intelligence.
I mean that is just amazing.
Speaker 2 (39:08):
This is the Bloomberg Intelligence podcast, available on Apples, Spotify,
and anywhere. Else you'll get your podcasts. Listen live each weekday,
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Speaker 2 (00:08):
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Speaker 3 (00:23):
Geopolitical News front End Center again. Today, the Ukraine carries
out first strike with US missiles in Russia, you know,
and then we had some rudder coming out of the
Russian Foreign Minister down at the G twenty Mark really
spooky markets.
Speaker 4 (00:38):
Mark Champion joins us.
Speaker 3 (00:39):
He's a calmnist for Bloomberg Opinion. He's located in London
and he is one of our resident experts on geopolitics,
particularly in that part of the world. Here, Mark, it
just feels like, you know, today was not a good
day for the folks that were looking to try to
move towards a resolution there in Ukraine. What's your latest
view on what's happening in that part of the world.
Speaker 5 (01:01):
Yeah, I mean, you know what we the kind of
trajectory we have is that the Ukrainians are very much
on the back foot in on the battlefield, and at
the moment they have been for some months. You know,
obviously you have a new US president coming in who
says he wants to end it all in a day.
But you know, the question is at this point, you know,
(01:23):
everybody is agreed, including Voladimir's Zelenski, that the you know,
this needs to come to an end next year. You know,
the question is which day? Uh? And you know which
end of the year. And you know, how do you
get President put into the negotiating tables as you know,
(01:44):
opposed to just offering to accept Ukraine surrender, you know,
in the current circumstance or what the Ukrainians want to do,
what the Biden administration seems to be, you know, trying
to help it to do is to change the facts
on the ground such that you know Putin will have
some incentive to actually negotiate.
Speaker 6 (02:04):
Well, I was gonna say, who has the upper hand
at this moment.
Speaker 5 (02:09):
Well, there's no question the Russians do. They're moving, you know,
every day, they're moving forward along the front lines, and
it's it's not a collapse. It's not a kind of
sudden you know, end of days. But you know, there's
there's no doubt about you know, which side has the
initiative at the moment. You know, that has kind of
(02:29):
flipped from one side to the other, you know, throughout
the war, and it could flip again. But at the moment,
the Ukrainians simply lack the number of personnel the manpower
to do it. They were late with the mobilization and
they are in a pretty bad state. So what they're
asking for is different ways of helping them so that
(02:53):
they can stabilize the line, perhaps even change the momentum
a little bit, and then importantly strike behind the Russian
lines to increase the cost of continuation for President Putin
so that he actually has a reason to say, Okay, i'll.
Speaker 3 (03:09):
Talk between now and inauguration day. It seems like a
day at a time period where each side will be
trying to just improve their position, with the understanding that
it looks like, whether we want or not, we're going
to the negotiating table.
Speaker 5 (03:24):
Is that kind of the view, Yeah, I think that's
exactly what's going to happen. And you know, that's the
context in which to say, to look at the sort
of Russian sabers rattling again on the nuclear issue at
the moment, I mean, the reasons for not pushing the
nuclear button have not changed, and there are real hurdles
(03:44):
and costs involved in doing so. And you know President
Putin didn't do that when Russia was losing on the battlefield,
and he's very unlikely to do it when they're winning.
But it does tell you that he's trying to shape
what the the US in particular does between now and
next year. And this is one tool which he has
(04:07):
to do it. He has others, and you know, yes,
absolutely both sides will be trying to maximize their position
for when they actually have to make some kind of deal.
Speaker 6 (04:17):
And does that deal is that contingent on say President
Trump or you think, regardless of who's in the White House,
this is the way it was going.
Speaker 5 (04:26):
It was. It's going to probably get there faster because
of the arrival of Donald Trump, but yes, that's where
it was going. You you know, Zolenski, if you look
at Zelenski's victory plan, which you know is often miss construed,
if you actually read it, you know he's got a
five point plan there. None of them talk about territory.
None of them say we have to get crimea back
(04:47):
or we have to get this back, or that it's
four points which are just about security. How do we
secure Ukraine to make sure that when we agree to
a cease fire it's just not a little interlude for
the Russians attack again. And then a final one which
is a sort of you know, just a bid to
interest Donald Trump in particular, but you know the West
(05:10):
in general in what they can get out of helping
Ukraine in terms of resources and so on.
Speaker 3 (05:17):
All right, Mark Champion, thank you so much. We really
appreciate getting your thoughts there. Mark Champion, he's a calmness
for Bloomberg Opinion, joining us from London via zoom giving
us the latest thoughts on Ukraine. Again, the thinking now
is perhaps in twenty twenty five that might be a
period for some type of truth to come to that
part of the world. We'll have more reporting on that.
Speaker 2 (05:37):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
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(06:16):
which is hosted by our partners material Fill it out
now at YouTube dot com slash Bloomberg Podcasts. All right,
let's get back to the market here. So we may
have some geopolitical risk shaking in the market, but if
you take a look at some of the equities, like
a Walmart still holding up fairly well, that stock now
are on the highs of the session, up almost five percent.
Joining us how to discuss as Emily Cohne and Bloomberg
(06:37):
Consumer team leader, I mean, she heads all the stuff
of consumer stocks. She joins us now in studio. Emily,
wonderful to see you.
Speaker 8 (06:43):
Thanks, Alich.
Speaker 6 (06:45):
What do we make about the reaction to Walmart stock?
Because consensus was already high, the stock had already moved
like we kind of knew it was going to be good.
Speaker 1 (06:53):
So when you think about Walmart Walmart is a bellweather
of the American economy, of the American consumer.
Speaker 8 (06:59):
What is Walmart? Or tell us about that.
Speaker 1 (07:02):
Walmart beat expectations today sent a really strong signal that
the holiday season is off to a solid start, and
the market was excited about that.
Speaker 8 (07:13):
The growth in the number.
Speaker 1 (07:14):
Of transactions or checkouts slowed, the growth rate slowed a
little bit. Ticket the average ticket, the amount people were
paying in each checkout, was up, and a lot of
that growth was coming from higher income shoppers, people in
households making more than one hundred thousand dollars a year.
That cohort made up roughly seventy five percent of the
(07:37):
share gains.
Speaker 8 (07:39):
So this was good. It was a solid start to
the holiday.
Speaker 1 (07:42):
Season, and the stock is up a lot. Four and
a half percent is up a lot for a company.
Speaker 3 (07:49):
That Big stopstocks at all time high of sixty seven
percent year today, which I had no idea their e
commerce business. Talk to us about their e commerce business.
I know it's big, but Amazon's pretty big too, So
how did they talk about their e commerce business?
Speaker 1 (08:04):
When they talk about e commerce, they just talk about
the potential to grow. It is big, but there is
still so much room to grow. So just in the
last couple of months, we saw them branching into categories
that you wouldn't find in a typical Walmart store. Pre
owned watches, collectible sneakers, stuff you would typically go to
(08:25):
another retailer for, but now you can buy at Walmart online. Also,
they're adding benefits to their services, like Walmart Plus. You
can now get discounts of Burger King if you're a
Walmart Plus member. So they're really expanding their offering there.
Deliveries can get faster, and they see just endless potential there.
Speaker 8 (08:45):
It's always growing.
Speaker 6 (08:47):
My question I had before the break was those people
that make over one hundred thousand dollars or more, are
they sticky as in, once the economy save recovers or
once they feel better about inflation or et cetera, do
they flee than to go to Target or somewhere else,
or go to the fancy drug store or do they
stay at Walmart.
Speaker 1 (09:04):
I think that's a really good question and something we're
definitely watching for. You know, spending across the board at
Walmart was consistent. The growth, as you said, was coming
from these wealthier households. Maybe it's a shopper who typically
shops at Whole Foods, but is feeling particularly pinched right
now and is going to Walmart for value? Do those
people stick around when they get a raise in their
(09:24):
next paycheck or their paycheck in the next couple of quarters.
That's something we're definitely watching for. I think it does
have limits.
Speaker 3 (09:33):
So are they still opening stores? Isn't there Walmart pretty
much in every town USA these days?
Speaker 8 (09:39):
It's a good question.
Speaker 1 (09:41):
I think, like when they talk about growth now, they're
talking about e commerce growth. I think that's where they
see the highest potential for growth, and they needed to
get profitable. That's something we heard the CEO talk about today.
Not that they're racing to it, but it's a long
term game they want their e commerce division to.
Speaker 3 (10:00):
So they feel them pretty okay about a holiday shopping
season because.
Speaker 1 (10:04):
Yeah, holiday, right, Yeah, holiday shopping is off to a
strong start. So the interesting thing about the holiday season
this year is that it's.
Speaker 8 (10:12):
Shorter than in most years.
Speaker 1 (10:15):
Thanksgiving is following later in the month of November. So
the answer to that is that they triggered the deals
even earlier than than usual.
Speaker 6 (10:26):
Coming in to Paul Knows and I shop on the sales,
let's go to Low's because that is interesting as well.
That stock is off the loads of the session, but
still down over three percent. What did Lo say?
Speaker 1 (10:36):
So? Lowe's years fell before the bell and quarterly comps
were better than expected but still declining. So high interest
weight rates and a week housing market means people are
moving less than they were before. It means they're spending
less on big ticket home renovations. But despite blooming gloomy,
(11:00):
Lowe's actually raised its forecast for the year, seeing positive
growth in its professional business so selling goods to contractors
and builders, also in e commerce, and spending on smaller.
Speaker 8 (11:13):
Ticket outdoor projects. Last week we.
Speaker 1 (11:16):
Saw Home Depot similarly say that the weather was actually
a bright spot for its sales. So hurricane led to
higher sales for Home Depot. Warm weather meant that people
were spending more on grills because the Great Grilling Season
was getting longer.
Speaker 8 (11:34):
So in general, for these loes, Home Depot.
Speaker 1 (11:39):
Sales are down, but the outlook got a little bit
better this quarter.
Speaker 3 (11:43):
Where do we see the weakness in the consumers like
in the dollar stores? Because I mean I can I
see a strong number from Walmart to me that is America?
So where is the American consumer hurting, is it? I
guess it's even a lower end than.
Speaker 1 (11:57):
Wal Yeah, the lower end is definitelyfering. The dollar stores
are suffering. They don't offer the variety that Walmart offers.
Walmart sixty percent of Walmart's business today is in groceries
and you can go, wow, uh, you know some pretty
good stuff at Walmart these days, gluten free items and
(12:18):
organic produce and stuff that like you're not going to
necessarily find out your dollar store. And that's really really
helping them, especially when it comes to growing an e
commerce business where people are looking for a one stop
shop for everything.
Speaker 3 (12:31):
So before I let you I have a gluten free friend.
Speaker 8 (12:33):
And it's a good job.
Speaker 4 (12:34):
It's a thing.
Speaker 6 (12:35):
It is a thing.
Speaker 8 (12:36):
I have multiple friends.
Speaker 3 (12:39):
I didn't know it was. Oh I've been educated.
Speaker 6 (12:41):
You've been educated for that one friend.
Speaker 8 (12:43):
Before I let you go.
Speaker 6 (12:44):
We get a lot of retailers out this week as well.
What are you going to be focusing on? The consumer trends? Land?
Speaker 1 (12:49):
Definitely the holiday season? What are people seeing that's the
big question this year. Are people spending as much as
they usually spend? Are they buying as many gifts as
a usually by also Thanksgiving for the grocers. I think
a lot of people are just worn out from paying
really high prices for food.
Speaker 8 (13:09):
They're also worn out from.
Speaker 1 (13:12):
Cooking a lot more than they have been since they're
eating out less. So how is that showing up in
consumer sales? Definitely trying to get a sense of how
the consumer is feeling about what is the most significant
shopping season of the year.
Speaker 6 (13:27):
I know my husband's getting a little burnt by all
the cooking he's doing. I'm really good at ordering takeout.
He's the chef in the family. All Right, thanks so much,
it's really I really appreciate it. It was wonderful to have
you at Emily Cohen joining us. She has consumer trends
coverage for Bloomberg News.
Speaker 2 (13:43):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple card Play and
Android Auto with the Bloomberg Business app. Listen on demand
wherever you get your podcasts, or watch us live on YouTube.
Speaker 6 (13:58):
All right, taking a look at the markets again. Get
the smp is down by about four tens of one
percent of the nasdag off just slightly. What do you
do in the market when there is a slight safe
haven bit. I say slight because we've definitely backed off
some of the levels that we've seen earlier in the session.
Chris Walling is CEO and chief market strategist along View Economics,
and he's here in studio to discuss his latest calls. Chris,
(14:19):
we're getting all the twenty twenty five calls out now.
Everyone's looking pretty bullish. But the bear case and then
the bull case seems to be super wide. What are
you guys modeling right now?
Speaker 4 (14:30):
Well, I think what's really interesting is what we're seeing
in terms of the global economy next year. When you
sort of whip around the world, you look at China,
you look at Europe, the UK, and the States. Obviously
with this new government, there's all sorts of stimulus coming.
I mean, if you look at a raft of ninety
central banks around the world, the vast majority of them
the cutting, and they're in cutting very few raising weights.
That's normally a very good environment for equity markets. So
(14:52):
tons of stimulus lots coming. Yes, there's a lot to
worry about. That's why you get those wide ranges on
those forecasts. There's a lot of left to fail with
the new administration, and one's got to think about those
tariffs and the like, and appointments still to come, so
one doesn't really know how that's going to play out.
But I generally think that the thrust is good, and bizarrely,
we could actually absent those risks. We could actually have
(15:14):
a year where volatility falls and sort of got you
remember twenty thirteen or twenty seventeen. Volatility collapses because everyone's
cutting rates. There's a lot of equality around, so I
can't get my l's out there.
Speaker 3 (15:27):
So in that kind of environment, long stocks, my long credit.
How do you think they play it here?
Speaker 4 (15:36):
Well, I think your long equities and your long bonds. Bizarrely,
I think our government bonds are oversold. And actually, I mean,
I know the data is distorted today, but housing's just struggling.
Speaker 1 (15:47):
You know.
Speaker 4 (15:47):
They're parts of the US economy that need lower rates
to get it going. And the fiscal impulse is dying
as we go into next year, and we'll have to
wait until you get another fiscal package, and we don't
know what the size of it will be. So I
think long stocks and long bonds, and I want you
want to play the cyclical parts of the market, which
I think you know, when you get that cyclical week acceleration,
it's that's a great place to put money. So Mag's
(16:08):
seven dominance is slowly dying in my opinion. But then
on the.
Speaker 6 (16:11):
Flip side, you'll say, I'll hear things like, yeah, but
retail sale are holding up, the job market's still holding up,
inflation stills holding up, So maybe we're not going to
get the kind of rad cutting cycle that we might expect.
Speaker 4 (16:21):
Well, yes, yes, and no. I mean inflation, in my
opinion is dying. I mean that this was a classic
monetary surge of inflation. People like to compare it to
the seventies, but they're much better comparisons going further back.
We're m two surgees and then two collapses, and that's
really what we've had. And that's the kind of inflation
outcome we're going to get where inflation is going to dissipate.
So that'll encourage the fete, I think, to do a
(16:42):
little bit more than people expect.
Speaker 3 (16:45):
The event tomorrow, presumably just on the earnings front, will
be in video after the close.
Speaker 6 (16:50):
I was like, what event.
Speaker 4 (16:50):
Yes, Yeah, we've kind of got it.
Speaker 3 (16:52):
We've been talking about it since, you know, earning season began,
you know, four or five weeks ago. How important is
zach is? It seemed like for twenty twenty three, for
most off not all of this year, the AI trade
has been powering this market.
Speaker 4 (17:05):
It feels like maybe it's fading a little bit. But
how important is in video tomorrow? You well, in video
is important, but it is only one stock. I mean,
it doesn't feel like only one stock. If it feels
like the whole market, but it's only one stock. And
really the MAG seven has become the sort of MAG
one or two, So there's a limit to how much
the market can be paid high by a couple of stocks.
(17:25):
And I think that's the point. And the other thing
about in video is, you know, the second duvetive of
earning's growth is slowing, So it's kind of when stocks
like that, you need the first two to be fast,
and that's now slowing. I wonder if margins are topye,
So you know, I think MAG seven as a whole
is topy on margins, and video of course is exciting,
but I don't think it has the influence it had
(17:47):
last year.
Speaker 6 (17:48):
So based on that, and then you talk about the
rate cutting cycle really being front and foremost and sort
of how you view the market. Is that an ex
US equity situation or is that a US and or is.
Speaker 8 (17:59):
That just US?
Speaker 4 (18:01):
So I think it's it's a global cyclical trade, which
and of course the large gap US is dominated by
mag seven, So I think what we'll find is they've
become a source of funds to buy into cyclical parts
of the global stock market. So in the US mid
and small caps, some of the cyclical areas of the market,
for sure, people talk about financials tick. But outside the US,
(18:21):
tons of stuff, you know, there's so much cheap stuff
that cyclical we're going into sort of nominal GDP growth.
This is all good for those parts of the world.
We like the UK. We like Spain. Bizarrely sort of
no one's talked about Spain for a long long time
because Spain's spent fifteen years getting his house in order,
and Germany's the sick man of Europe, which means rates
are lower in Europe and the otherwise would be in
(18:42):
Spain gets cheap money. So it's a lovely little combo.
And Spain's doing really well this year. There's four out
of fifty countries in the world that are a more
than fifty cent discount of the US, and they're only
scor faster over the last few years. Places like that
are going to do really, really well. Greece is one
of them. I mean, who talks about Greeen.
Speaker 6 (19:00):
Nobody, Nobody sunys about green That's amazing. That's on equity side.
So for spanding, Greece is on the equity side, not
the bond side.
Speaker 4 (19:06):
That's all. The equity side absolutely bonds, you know, I
mean fine, US bond's great, exactly.
Speaker 3 (19:13):
All right, So you woke up two weeks ago in
London South the Americans elect themselves in your president. We
now know that how the Congress is going to look like.
Did that change your view at all about how to invest?
Speaker 4 (19:24):
Well? At the margin? Potentially you get a bit more
fiscal and a bit less sort of consumption growth out
of the States, So there's a bit of a risk
at that, but actually made me feel more bullish, you know.
I'm I'm a political, I'm a bridge so I don't
have nothing to do with me. But looking at it objectively,
it seems much more pro growth with the with the
with the exception of the tariff's risk basically, So yeah,
(19:47):
maybe more bullish cyclcal stuff, but.
Speaker 6 (19:49):
I guess what it does matter is the fiscal side
and the fiscal policy. In which case, where do you
invest in small caps?
Speaker 9 (19:55):
Say?
Speaker 4 (19:56):
Well, you know, I think the consumers going to do well.
There's there's untapped wealth in the US and the UK
and southern Europe, and so I like consumer cyclicals, and
I think bonds are coming down, so I like housing
related stuff. So all of that I think is good.
I'd be cautious on the biotech because there's also some
policy changes coming around the corner. But yeah, I think
(20:17):
I think there's a lot to go for in the
mid and smalls.
Speaker 6 (20:21):
All right, Chris, it's always good to see you. Thanks
for coming by. Great to see you in person at
Chris Watlin, CEO and chief market strategist of lomuew Economics.
I read read their weekly report every Friday. Good really
eleven thirty in the morning. But I'm focused. It's just
paying commercial breaky. You gotta stay car around to engage.
Speaker 2 (20:38):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple.
Speaker 7 (20:44):
Card Play and Android Otto with the Bloomberg Business.
Speaker 2 (20:47):
You can also listen live on Amazon Alexa from our
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Speaker 6 (20:56):
Alex steal alongside Pulse. We need this Bloomberg and Talidence Radio.
We bring you all the have news in business, economics
and finance. There are lens of our Boomberg Intelligence folks.
They cover two thousand companies in one hundred and thirty
industries worldwide, and here is one of the best of them.
Man keep saying, Bloomberg Intelligence, senior tech industry analyst.
Speaker 8 (21:12):
He joins us.
Speaker 6 (21:13):
Now, a lot of things to pick about here. Obviously
in Vidia tomorrow definitely part of the story. But one
is Google and the DOJ pushing Google to sell Chrome
to break up its search monopoly.
Speaker 8 (21:25):
How seriously do.
Speaker 6 (21:26):
We need to take this concerning there's gonna be like
a new White House and a new DOJ in a
few months.
Speaker 1 (21:31):
Yeah.
Speaker 9 (21:32):
Look, I think it's still uncertain who President and Elect
Trump is going to appoint to run the agency, and
a lot depends on how hard they want to go
against the likes of Alphabet and Meta. But in this case,
the fact that DOJ is proposing and we know the
Vice President elect he is not opposed to, you know,
(21:54):
breaking up these big tech companies. So clearly it is
a risk, and I think when you look at what
they're proposing, you know, breaking Chrome. You could argue there
are independent browser companies out there, like Mozilla, so Chrome
could exist as an independent company. But it's very hard
(22:16):
to see how you can make a business model out
of Chrome. And then it does hurt, you know, Google's engagement.
In the end. This is the distribution for Google, the
owning the Android operating system and owning the browser. You
take out the browser, their distribution for search goes away.
I mean, Google Search will still be the dominant search engine.
(22:38):
But in the Internet world it's about owning distribution. That's
why Apple has so much cloud, That's why you know,
owning Android and Chrome or the crown jewels. When it
comes to Alphabet as a franchise, so many deep just
painted is a pretty dire picture there.
Speaker 3 (22:55):
Guess what stocks up today? Why because people like gen
who covers litigation for us, this is her sense. I
know you didn't write this exactly, I know her writing.
If Alphabet were forced by the DOJ to sell its
Chrome browser Comma, which we view as unlikely. So that's
kind of the takeaway there soon, Jenry tells me it's
kind of unlikely, but still I guess we have to
(23:17):
expect or I guess Google investors have to expect some
types of modifications to behavior in their business models. But
I guess on the margin the market saying it's not
going to be that material.
Speaker 4 (23:27):
It's reflected in the stock.
Speaker 9 (23:28):
In the end, it comes down to what is the
valuation right now? What is baked into the stock, and
all the bad news around regulation is in the stock.
That's why alphabet is not trading at thirty times earning.
It's trading at a discount to the likes of Microsoft.
So look, I mean, I think they will have to
make remedies, even if it's not a forced syvestiture. They're
(23:52):
already starting to pair back when it comes to at targeting,
how much data they mix and match across their family,
whether it's YouTube, maps, search. So from that perspective, I
think they are going to try and do these measures
on their own, and you know, just to convince the
regulators that owning the browser is not something that gives
(24:16):
them an advantage, and maybe they have to expose the
data that they're using for targeting the users. When it
comes to ads, that's the other part of the remedy here.
Speaker 6 (24:26):
And this just means like then they're getting ahead of it,
right then they're getting ahead of anything that may come
from DC or Europe at any time. In essence, what
are you going to be looking kind of go to
video now it's it's been a two minutes, okay, so
tomorrow in video? Or what am I looking at?
Speaker 9 (24:42):
I mean, there's so many things when it comes to
the continuation of this Genni wave. This is the Belvether company.
And look, when it comes to data center spend, it's
all about how scalable the models are going to be
in terms of you know, whether it's Chat, GPT or
(25:02):
Google Gemini, how big of a cluster they want to
create for next year. Because right now everyone is looking
at the compute that you know, open Ai has used
for GPT four and they're saying they already have a
trillion plus parameter model. Can it get any bigger? The
answer from Nvidia is yes, we are giving you a
(25:23):
more powerful chip and you can create a bigger cluster
next year to train your models. So if that's the case,
then the computer requirements continue to scale up, which is
what they are betting on. In terms of the data center.
Upward revisions we have seen the whole of this year,
and they think the scaling of the foundational models is
going to continue. The moment you hear about a plateauing
(25:46):
of the foundational models, that's when you know, you know
you're not going to see the upward revisions we have
seen for in radio's data center in video.
Speaker 3 (25:55):
Stock is up three percent today, up one hundred and
ninety percent year to date with a three point five
trillion dollar market cap. Dan Eyes and what Push Securities
was at with a tweet this morning saying he believes
that they will beat on revs by two billion dollars
to take their guidance up by another two billion dollars.
Speaker 4 (26:11):
You cause that that dropped the mic, so.
Speaker 9 (26:14):
That may not be enough to drive the multiple. See
that's the thing.
Speaker 3 (26:17):
Yeah, we're talking about earnings what is.
Speaker 9 (26:20):
Reflected in the stock. In the case of Nvidia, last
time around when they reported earnings, the stock had a
fifteen percent downroad draft because everyone had such high expectations
that even though they had a beaten raise, there wasn't enough.
Speaker 3 (26:34):
So the play man. Yeah, so, but even you came
in here probably six quarters ago and said, as long
as they keep doing it, the stock will keep working.
But at some point with that that quarter's gonna come
where they're going.
Speaker 9 (26:46):
To because it's not recurring revenue. And in the end
the moment you're talking about digestion. Okay, if we have
had enough in terms of scaling. Now we are focusing
on inferencing and you know, deploying this. We're not getting
the Bengal for mark when it comes to scaling the models.
That's when Nvidia has to find another way to you know,
(27:06):
keep driving to growth.
Speaker 6 (27:08):
All Right, Mandy, we appreciate you and good to see you.
Thank you so much. Man keep saying, no doubt we'll
see him every day for the next few days. He's
senior technology analyst over at Bloomberg Intelligence.
Speaker 2 (27:18):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
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Speaker 3 (27:36):
Alex Deel, Paul Swening. We're live here in our Bloomberg
Interactive Proker Studio. We're streaming live on YouTube as well
as a head over to YouTube dot com and search
Bloomberg Podcast and that's where you'll find us. David Bonsen
joints us here. He's the chief vessel officer at Bonson Group.
They about six and a half billion dollars assets under management. David,
thanks so much for joining us here. You woke up,
(27:58):
you know, two weeks ago almost we have a new
president in the White House in starting January, we're going
to have a new Congress as well. Did that change
your outlook, your investment outlook at all?
Speaker 10 (28:11):
It did not, in the sense that the primary things
that drive markets we felt were not going to move
a ton, which is around the earnings profile, earnings expectations,
and the monetary policy. However, within the weeds, it reinforced
our optimism in the energy sector, which has certainly been
very validated over the last couple of weeks, and the
(28:34):
financial sector. That was an area where we thought policy
would make a difference, and particularly some of President Trump's
policies more favorable in those two sectors, and Vice President
Harris is less so.
Speaker 3 (28:47):
From the earnings perspective, you mentioned earnings obviously driving stocks here.
We're just kind of finishing up with some of the
retailers this week. What is your view of the earnings
profile this S and P five hundred these days?
Speaker 10 (28:59):
I think that the earning this profile is obviously very good,
and that the growth of earnings next year is very good,
and that that is fully and completely priced in the market,
and so the risk is really very little that earnings disappoint.
I mean, that's always possible, there's always issues that could
disrupt expectations. We happen to have a very very good
(29:21):
track record in our financial markets, so being able to
project earnings. However, you're paying twenty two, twenty three times
next year's best case earnings right now, and so I
find that problematic.
Speaker 8 (29:35):
So where else would you go?
Speaker 9 (29:37):
Then?
Speaker 6 (29:37):
If that feels too expensive?
Speaker 10 (29:39):
We would not buy the entire index, especially where it's
cap weighted, especially where a lot of the big tech
names that are big profit earners are trading it over
fifty times, and if you're looking at trading earnings, they're
trading at seventy or eighty times earnings. Therefore, you have
to be more selective, and we're more value biased at
(30:01):
our firm and very divid and growth oriented. But some
of the healthcare names, some of the financial names I
mentioned energy. You know, right now, if everything goes perfectly
for mag seven, it's about twenty one percent of next
year's earns. It's thirty three percent of the financial So
the only two sectors thanks projections are more than what
(30:25):
they represent within the S and P. So we just
recommend people be more bottom up right now.
Speaker 3 (30:30):
All right, So within let's save energy, for example, where
in the energy space are you seeing opportunities.
Speaker 10 (30:38):
Very very heavily in midstream? And that's kind of interesting
to say, because it's had a heck of a year,
and really since November of twenty twenty has had quite
a great tear. But it was doing so from just
decimated prices out of COVID. Now not only have the
pricing environment and the psychology and investor sentiment got better,
but the fundamentals are dramatically better. Way less debt, less leverage,
(31:01):
way more cash flow coverage, and certainly right now a
policy you can see from the new Secretary of Energy
coming in the Secretary of Interior. There is a philosophical
bend that is pro our ability to get permits for
new oil and gas pipeline and to export LNG. These
two things are huge growth sectors.
Speaker 6 (31:20):
Yeah, meaning that you can actually put a shovel in
a ground to build a pipeline.
Speaker 4 (31:24):
Maybe that's right.
Speaker 10 (31:26):
And so what you have right now is a lot
of value in the current pipelines because they're all we have.
And then now you get the opportunity to build new pipelines,
which I think adds to the growth profile of the sector.
Speaker 3 (31:39):
So, Dave, how about in financials here? I mean, do
you stick with the JP Morgan's Goldman Sachs is of
the day or do you try to get little bit
more specialized.
Speaker 10 (31:47):
Well, so we own JP Morgan and have owned it
since March two thousand and nine, and it's one of
the most profitable investments we've ever made, and we have
had to tick down our waiting a little bit because
it has just done so well. But we're not abandoning it.
They're the cream of the crop and there isn't another
big bank we want to own. We also as far
(32:07):
as big commercial banks, Morgan Stanley is the name we own,
not Goldman Sachs. They're actually both fantastic companies, great brands,
great franchises. It's just the dividend growth. We think Ted Pick,
the new CEO at Morgan Stanley. I joke, he's the
person in America second most passionate about dividend growth, with
myself being first. And we think Morgan Stanley's got a
(32:30):
great fee oriented business that's much less lumpy and much
less you know, dependent upon institutional securities and investment banking
versus Goldman Sachs. They are They're wealth management and asset
management are really annuittized at Morgan Stanley.
Speaker 6 (32:47):
David, we really appreciate it. We always love your perspective
on this. David Bonson, Chief in Estment Officer at the
Bonson Group, Thank you very much.
Speaker 2 (32:55):
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Speaker 7 (33:01):
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Speaker 2 (33:04):
You can also listen live on Amazon Alexa from our
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Speaker 6 (33:12):
One of the best performing stocks in the S and
P today yesterday, you name it is super Micro. Here
with the latest is Wujin Hoo Bloomberg Intelligence Senior technology Analyst.
So the latest is bdo that's going to be their
new auditor. That's not like a giant, huge name though, right.
Are you disappointed in the name or is it just
the fact that hey, they have someone?
Speaker 11 (33:32):
Yeah, Hey, Alex, thanks for having me on the fact
that they actually had got an auditor, given what they've
gone through over the last two to three months, is
actually positive news for them.
Speaker 3 (33:44):
Which when I kind of just look at this story again,
they've had some real concerns with their auditors, and some
of the auditors concerns about the risk controls.
Speaker 5 (33:51):
I guess at the company.
Speaker 3 (33:52):
Can you give us your opinion of management of this
company and the board of this company.
Speaker 11 (33:58):
Yeah. You know, one of the reasons why I and
Y resigned as an auditor as part of the AK
filing was that there were some integrity issues that they
found as part of trying to get some financial documents.
You know, Paul, I haven't seen the word integrity issues
(34:19):
in an AK filing or an auditor resignation since back
in the Enron days. I'm not saying that this isn't Enron,
but this is something that you don't typically find in filing.
So you know, I have called for you may need
an overhaul of the board or greater independence and possibly
change of the CFO, because this is not the first
(34:40):
rodeo of having delayed filings.
Speaker 6 (34:43):
Do you feel like the stock move is justified or
does it have more to go? I mean, I'm taking
a look at them move in the last couple of
days and it's tremendous. But if you look at a
one year chart, this move is at pittance.
Speaker 11 (34:55):
Yeah. So if we think about the recent moves, there's
actually been more headline risk that's been driving this doct
than the fundamentals. I think much of this is more
of a relief rally that they're not going to get delisted. Now,
delisting would have meant a couple of things. First of all,
for they get delisted and it is going to start
(35:17):
some force selling, but it also potentially well it would
have forced the removal of the S and P five hundred,
which would have been another round of force selling when
the rebalancing comes in December the fifth, So that eliminates
that risk for super micro So there is some relief there,
but they're still not out of the woods.
Speaker 3 (35:37):
Where does this company fit into kind of your part
of the tech stack? Wouge in terms of being a
supplier of you know, hardware and components and things like that,
because I mean it's got twenty five billion of I
guess revenue. I'm just looking at the FA function forecasted
for June twenty five.
Speaker 4 (35:51):
I mean it's a big company.
Speaker 11 (35:53):
Yeah. Look, it's all about AI AI AI. I'm in
Hotlanta today for an A I conference and quite frankly,
super Micro is going to take a prominent role at
this conference to get customers. The question I have is
how reliable are those estimates. Keep in mind there's been
(36:13):
several suspend coverage suspensions, and I don't know how up
to date those estimates are.
Speaker 6 (36:19):
Who are the customers for super Micro?
Speaker 11 (36:22):
Yeah, so we do know that there are a couple
of large There's one large cloud customer which we suspect
is Meta, but it's a tier two custom Tier two
cloud customers company that may be filing for an IPO
called core Weave, and also Tesla's x AI. They bought
probably about one point five billion dollars in equipment from
(36:45):
super Micro this past year.
Speaker 3 (36:47):
And which to your point about the analyst coverage, I
just pulled up the A and R function for analysts recommendations.
Most or a lot of the annals have suspended coverage
or not rate is kind of what we see.
Speaker 2 (37:01):
So we of the.
Speaker 3 (37:02):
Ones that do have a rating on their three buys,
seven holds, and two sells. So it sounds like this
company has a lot of ground ahead of it to
rebuild confidence from the analyst community, probably their customers, and
from investors. Is that kind of your.
Speaker 11 (37:15):
Thought, Yeah, yeah, I mean, look, I think some of
the headline risk has been eliminated for now, or at
least extended. You know, they only received an extension from
the Nasdaq. The next milestone, quite frankly, is probably February
twenty fifth, when if they don't file their filings on
time by that time, the delisting questions will start arising again.
(37:39):
They essentially kick the can down the road.
Speaker 6 (37:42):
This might be a super silly question. At one point
I probably knew the answer to this, But where does
super Micro sit in the AI play stack?
Speaker 11 (37:50):
Yeah, so they're actually in the server space. It's the
hardware equipment that helps run the models. Among the US vendors,
they actually at the largest amount of AI service sales,
larger than Dell and larger than HPE.
Speaker 6 (38:05):
So they're very much like needed in this market, Like
it's going to be hard to replace them either way, right,
Like they're needed essential.
Speaker 11 (38:13):
Well, that's that's a good comment and good question. Competition
has grown. Dell is actually strengthening their AI chops quite
a bit. But I came back from a couple of
conferences recently and we're starting to see other companies with
similar capabilities that we'll be making it much more competitive.
And one of the evidence there so far is the
(38:35):
lower gross margin. They peaked their gross margin at around
seventeen percent a couple of years back when they with
the sole player, and now that you have more players
coming in, their gross margin in the last couple of
quarters went from went to about thirteen percent and eleven percent.
Speaker 3 (38:52):
Wow, I'm just going to the dees function. March nineteenth,
twenty twenty four, the company sold two million shares at
eight hundred and seventy five dollars per sure. Coleman Sex,
thank you very much, Wuginho, thank you for joining us
at Woojin. Host is senior technology channels for Bloomberg Intelligence.
I mean that is just amazing.
Speaker 2 (39:08):
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