This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Yes, all right, just like our TV colleagues, we're going to stay with earnings right now, guys, and we've got a great voice. Microsoft alphabet so many out with earnings, few others. Lucky for us, we have someone who invested these names. He's like a gold mine. James Chackmak is back with us partner and technology Alice at Clockwise Capital three hundred and forty five million in assets under management. But you check his holdings. These are the names Microsoft, Google, Visa, so many.
James.
Great to have you back with Tim and myself. How are you.
I'm doing great? How are you doing?
Okay, let's pick Microsoft first. It's rallying big time in the after hours. Walk us through earnings.
I know you're just break. You're going through them just like we are. What jumps out for you?
Yeah, I mean the big thing there is that you continue to see resiliency on the.
On the cloud side.
While the legacy parts of their business anniversary the tougher comps and come out stronger. So and at the same time while being able to manage the bottom line. And obviously it's a juggernaud it's ten percent of the queues and so it's a big way of important stock for the market. But the main thing is that the growth sector factor continues to be where the money will likely continue to flow and coming out of the value area.
Okay, let's go to alphabet because shares are getting punished in the after hours. Right now, we have three quarter cloud revenue coming in below estimates eight point four to one billion. Estimates were for eight point six billion dollars. Alf BET third quarter revenue excluding traffic acquisition costs did beat estimates, though, what's sticking out to you?
Yeah, I mean the big thing there is with the byside, expectations were a little bit ahead of where the street was, you know, so the whisper numbers were looking for and upwards of ten to fifteen percent upside of revision to earnings as you look into next year, and you know, with cloud coming in a little bit softer, you know that may and then being a high margin you know contributor. As you look down the road, you know that that
may be posing somewhat of aheadwind. We got to look to the call to see, you know, what the what the color is on things. But overall, you know, Alphabet's not going anywhere. Google's not going anywhere, and you know, we just need to see how much of a blip this is. You know, is it a single quarter thing or you know, doesn't have several quarters to work through.
Yeah, down five percent right now, Carol.
Yeah, And what's interesting we initially saw Meta I think, take a little bit of a hit in the after hours, but right now metas back up, but shares Alphabet still down about five percent here all right, So in terms of these are all important numbers and certainly they can sway what we see in the overall market. Microsoft and Google, what.
Are what is it?
Tim?
I'm sorry, Snap is crossing right now, so I wanted to make sure to get this in. We got a red heat third quarter revenue for Snap coming in above estimates one point one nine billion estimates for for one point one one Snap just absolutely surging in the after hours right now, up twenty percent. I think, Carol, this is because the company authorized up to five hundred million dollars in share buybacks. Also, James, I know you're following along live with us. The CEO, Jerry Hunter is set
to retire. Fourth quarter view is internal forecast, though we should note is not a formal guidance. Some of those headlines what sticks.
Out to you well, and I'll just say they also did talk about the fourth quarter. Fourth quarter revenue one point thirty two billion to one point thirty eight billion. The estimate is one point thirty three So.
Upside there not formal guidance.
Not formal guidance, but they're at least giving us some numbers, So go ahead, James, take it away.
Yeah, I mean, Snap actually had their numbers leak, you know, a couple of weeks ago, and you know, so good numbers were expected, you know, out of that this quarter.
You know, I think the bigger pick your story is that digital advertising continues to gain share versus legacy media, and that trend is just going to be you know, increased in full force with the assistance of AI and the contributions of AI into the creation of content and the creation of ads, which will drive down costs and in turn likely increase the amount of ad spent that's placed on digital platforms, and niche platforms like a Snap
will benefit. But at the end of the day, we think that scale matters most, and companies like Meta and Alphabet and to somewhat of a lesser extent, Amazon, you know, will benefit. So the niche platforms are in a rising times lifts all both situations right now. But as you look, you know, a little bit further down the road, we think scale is going to win out over niche.
I'm just going to say Snap is down about eighty eight percent from its September.
Twenty twenty one high.
And yes, even though it's rallying in the after hours up about twelve percent as we speak, it's a below ten dollars stock. It's no longer you know, it used to be up above the eighties. So a little as you say, what is it.
Went in went in down, zoom out. I mean, But but speaking of I mean, I want to go to James on this, because James, you've been covering Snap for years. I mean, even in your previous role as a an analyst solely focused on tech. I mean, I think you were covering the company even before when it went at iPod. You have a long history with that company. When did you sour on it?
I soured on it maybe one or two quarters out out of the gate, because essentially, you know, they had positioned themselves as you know, a camera company, and you know, we we took that bait and ran with it, because you know, the the DNA of a company matters, and their points of differentiation matter, especially when you're going at after a company like Meta and Alphabet, so you have to be differentiated in some way. And you know, they came up with the whole vertical camera and we're leading
into that. But you know, you'll read the first line of their perspectives it said it's a camera company. But when you looked at what Evan Spiegel was actually trying to do was they were trying to be everything to everyone, which is what Meta is, you know, a full scale player like Meta, and they didn't embrace, embrace their their niche different points of differentiation.
And if you try to be everything to everyone is a niche.
Player, you lose. You know, Twitter tried to do that. They lost snaps trying to do that. I mean, going back to their IPO, you know they've lost tremendously, you know, despite the recent rally. So you know, you got to know your DNA.
We've got to.
Embrace it and don't be something that you don't be something that, yeah, you say you're not.
So let's just remind everybody Alphabet at with earnings. It is down about five percent in the aftermarket this after those third quarter results.
What we're seeing that.
Traders are focusing on is the cloud unit reporting sales missing estimates. So third quarter Google Cloud revenue of eight point forty one billion, the estimate was eight point six billion. And then you've got Microsoft going in the other direction, up about five percent after their first quarter revenue tops estimates in a big way. And then you've got Snapstoring up about thirteen percent. There are third quarter revenue topping estimates, but keep in mind it's a stock that is way
way down from where it was a little perspective. So some of the big tech names that we're seeing, and we've also got Texas Instruments out.
Yeah, really notable moves from some of these companies. I want to go back to alphabet and talk a little bit a bit more about what you get your thoughts on alphabet as Carol mentioned James down six percent right now in the postmarket. I know we have to wait for the call. What's the question that you would ask on the call if you were able to join.
For me, it would be about just continued cost discipline. I'm not worried about the top line. You're going to have ebbs and clothes in the cloud, especially with the uncertainty around the macro picture. You know, the sales cycles of migrations and so.
Where do you want to see that cost discipline? Do you want to see it in like you know, the free massages at work type of thing, and free lunches at work, like the thing that these tech companies are known for. Do you want to see it in sort of not investing as much as they're investing in new projects.
And both ideally, but obviously the big drag continues to be in other projects that you know may or may not come to fruition, and then most times they don't, So continue discipline there and then tightening the belt around their gn A the general operating expenses wherever they can, because you know, with this kind of margins, well with this kind of revenue and this kind the potential of
the incremental margins afforded by advertising dollars. You know, they should be able to continue to trend earnings in a powerful way higher from where they are right now.
So I mean, my my offen focus on the bottom line.
Hey, James, these are names that you have in your portfolio, Microsoft, Alphabet, anything in these reports that make you want to go out and buy some shares or sell some shares.
Well, we grossed up both Alphabet and Microsoft going into the print. At the end of the day, though it seems like a wash between those trades. You know, you can't win them all if we try to win fifty one percent of the time.
But the no, I don't think that it really changes.
You know, we are underweight Microsoft relative to the index, but we feel comfortable with our waiting there, and we grossed up, you know, in anticipation of a potentially strong quarter. Alphabet were marginally underweight relative to the index. Feel comfortable with that. There need to get more color on it. But you know, the other big ones are Meta, Tomorrow and Amazon. You know, Thursday I leave. That will really kind of define what the rest of the year looks like for the cues.
James Chockmack he's still with us. He's partner in Technology Analystic Clockwise Capital. They about three hundred and forty five million dollars in assets under management. He joins us once again on from Miami. We're talking today's Megacap Tech earnings out just now and some other companies as well, and for today's weekly Bloomberg Plugged in segment when we dig into the ev space. We've got a lot to talk about with Tesla when it comes to Tesla, and we're
gonna do that with James. Tesla, James a top holding in your portfolio. We want to get your thoughts on that earnings call last week and Elon Musk Carol described his mood I think as dour. I think that's fair to say.
It's a bit of a bummer.
It was a bit of a bummer. What did you What did you make of it?
Yeah, it was pretty bad.
I mean it was as bad as you think.
You get it. It's the call that you never hoped for. It was how should I frame it?
Basically, every area of opportunity, an optionality to the upside was met with a caveat and.
You know, kicking the can down the road on.
The realization of those opportunities, whether it be the expansion of margin on the power side of the business, whether it be the cadence on the rollout of the of the cyber truck, or the productivity gains and the margin improvements on the production side, you know, all those things, you know, push the can down the road, Which essentially means that our twenty twenty three targets moved to twenty twenty four, or our twenty twenty four price targets moved
to twenty twenty five, So essentially that call did a one year reset on our valuations.
Wow.
Well, you know, in the EV world, I feel like James, a year from now is going to be even more interesting potentially as we see more entrance into the EV space right and more competition for Elon. So is do we have to start thinking differently about this company that maybe I don't know, I don't want to say viability, but just what its role is in its place and its share of the market going forward.
No, I think, you know, as you look at the company fundamentally with a multi year horizon, which is increasingly difficult to do in this market environment, and we kind of, you know, our time frames have moved from five years to three years to one year.
Now we're looking at more like one.
Month, sometimes even one week at this point, just given the volatility. But you know, if you are able to take that multi year review, we think that it still continues to be a tremendously undervalued asset relative to its potential, the ability, the amount of dat it is amassed, relative to the entire industry, every other competitor in the industry combined that head start, there is something that is insurmountable, and we think that they will continue to have the
opportunity there to monitor tis that. And at the same time, the power business is still in infancy stages and has truly it's only about ten percent utilized right now of their capacity that they've built out, So you know, there's tremendous margin opportunity from that side as well, and I think that people will increasingly stopped looking at Tesla as an auto manufacturer and more as a holistic play on on data and power.
We just want to mention Tom Emmer ends his speakership bid, becoming the third GOP nominee to fail.
Nominee to fail. There's been a lot I.
Think he was making it pretty far earlier. Today.
I feel like there's a lot of horse trading going on in closed rooms.
Yeah, exactly.
But Jays, we're not gonna we're not. Don't worry. We're not going to ask for your thoughts. Maybe, hey, maybe, Speaker.
Of the House, what's easier, what's easier to figure out Elon in his world or what's going on in the House of Representatives?
James to Washington.
Eli is easier, I'll tell you that.
Oh wow, Hey, James, a couple more Tesla questions. Uh, you mentioned the cyber truck. How are you valuing the cyber truck when it comes to your analysis? And this is a category that you know, Ford absolutely just dominates in here in the US GM as well in many companies over the last twenty thirty years have tried to come in and take market share. It hasn't They haven't necessarily succeeded. How do you think about the cyber truck?
Yeah, I mean it's a separate line item that we use. You know, we break it out by the model three and three slash y and then X slash s and then the cyber truck. So that's how we kind of build it out and basically, you know, what we learned from the call is that the cadence may not be as steep as originally hoped or anticipated.
So that's a problem.
And it's a high cost, you know, it's it's a high cost production vehicle, and if you're not pushing volume through, it's going to hurt your margins. And and ultimately, you know, the problem with Tesla near term is on the margin side. And if you get lumpiness on the power business, which is their fastest growing segment, as well as their highest margin segment, which is a higher margin than their auto segment.
Then you just have uncertainty. Uncertainty, unfortunately leads the multiple compression.
Hey, and you're fine on your clockwise core equity uh and innovation ETF. Tesla's definitely a big holding. Have you been buying or selling shares of Tesla?
Uh?
No, it's about a four percent weight. You know, our top holdings are around six.
Like uh, Amazons by Yeah, have you as of.
No, No, we've we've we've we we held out to the full position basically here, you know, you know, just looking at fundamentally, you know, you had downside of about two hundred dollars technically downside of about two ten. You know, we tested the technical limits on the downside, bounced off of those. But you know, we may look the trim because fundamentally, like I said, the valuation has been pushed out one year and there may be better opportunities to
deploy capital. So if we get a broader market balance, which we do anticipate is a high probable scenario, especially after earnings this week, I think Tesla can be along for the ride and at which point will likely make that determination to trim and rotate into some of the faster growth and potentially higher beta names.
Hey James, it's interesting here. You're you're up thirty three point eight percent year to date in the ETF so it's been a really good year. I'll performing the NASDAC and the S and P five hundred. I was interested to see that your top holding is one to three month t bells.
What's that?
What's up with that?
Well, what we typically like to do is we keep ten percent cash on hand in a normal market environment, and you know, if if we see risk, you know that cash position can go from fifteen to twenty percent. But you know, with the yields that we're seeing in the market right now. I'm not going to just hold it in pure cash. I park the cash that I have in the portfolio in BIL instead of just leaving it in cash, because I can pick up super safe yield and why not. So it's just a way.
That money as much money market fund essentially.
Yeah, I mean, if I need cash to buy positions, I use BIL as a source of cash. But it's basically just a way to add additional yield for investors.
Hey, real quickly, thirty seconds, that's all we've got. Visa's up almost two percent in the after hours. It reported a massive twenty five billion dollar buy back raise his corely dividend. What do we need to know about Visa just quickly?
Yeah, I mean it's an oligopoly between that and MasterCard, you know there as long as you know, the broader consumer continues to remain healthy, which we think will be the case. We don't see anything breaking just yet, hopefully not. But as long as it continues to be the case, there will be a beneficiary. And it's just the buyback and dividend increases just music to my ears.
So we continue to like it.
Yeah, that CEO and the press release saying we as we enter a new fiscal year, I'm confident in our ability to deliver against a backdrop of geopolitical and economic uncertainty. Talks about tremendous opportunity ahead.
So there you have it.
Is he headed to Washington to be Speaker of the House.
You're chalk mark, You're done, choc Mack. You can go home now.
Next Speaker of the House, James Chockmock over at Clockwise Capital.
This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
Just real quickly the latest on the Israel Hamas conflict, because the headlines continue to cross as we speak. You and Secretary General calling for an immediate ceasefire in Gaza at the Security Council, President bind Tim saying humanitarian aid is not getting into Gaza fast enough. Secret Tape State Anthony Blinkln saying pauses in the conflict may be needed to organize help for civilians. As Israel extended its bombing campaign, so as we said, the headlines continue.
And the conflict continues. Also, this was a must read for US today on the Israel Hamas conflict, especially as the most would argue that it is yes about what happens next in terms of the expected Israel ground invasion in response to Hamasa's surprise and deadly attack on Israel now more than two weeks ago, and then what happens after that, what's the future of Israel and Palestine existing side by stide one state, two states, and what could it have been a generation ago? Carol.
Yeah, someone who has a very informed view on that is the man who withdrew from Gaza some eighteen years ago and had has a plan. I guess you could say we are so appreciative to have with us. Bloomberg News International Affairs columnist Mark Champion, he's on the road. As he continues to report on the conflict, he joins us now on the phone from Israel. First stop, Mark, how are you and what are you seeing on a daily and hourly basis?
Well, I mean fine, it's like a lot of war zones,
it's very calm in most of the country. There was, you know, some alerts today in Tel Aviv, because there was quite a big rocket shower, but generally, you know, quite calm, quite quiet, and of course, you know, not at all in Gaza and immediately around Gaza, where the Israeli armed forces are, you know, gathering in very large numbers, and then up in the north where there's been some you know, increasing exchanges of fire between Hezbollah and the Israeli defense forces.
I want to get to your column in just a second mark and dedicate significant time to it because it's it's such an important and it's such a great read. But first I want to just ask you your opinion on whether or not you think Israel is already fighting a two front war will be fighting a two front war soon.
Well, you know, that is in a way the immediate question. So they are not yet fighting a two front war. They are conducting, you know, fairly limited skirmishes and exchanges of fire with Hezbollah. Hesbela is a large force. It is not as big as the IDF, but it is a large force, around one hundred thousand troops or so. They have, you know, an estimated one hundred one hundred and fifty thousand rockets and precision guided missiles. Many of those missiles are much larger than what Hamas has to
fire at Israel. So if that becomes a second front, it will be a very significant war and the Israelis will have no alternative other than to go in and to try and destroy you know, the rocket launchers, et cetera at source. So it will be a ground war and it will be large, much larger than what is going to happen in the south where Hamas is embedded in a density urban area, so they are very difficult
to get out. There's all these tunnels that they have spent years digging in preparation for exactly this event, and so it will be difficult, but they are in much smaller force, all right.
So Mark, so as we contemplate the possibility or likelihood of a large, dense ground war there in Israel and in Gaza, we do need to and many would argue, we need to think about what happens next, what's the plan?
Afterwards?
You had an hour long approximately conversation with a former Israeli Prime minister. Can you talk to us about that and his plan and his thinking about one state to state.
What has to happen?
Yes, I mean this is a hot omer and he was the Prime minister. Just immediately after, Israel withdrew from Gaza. So they took all the settlers out who had been the Jewish settlers who had been in Gaza. They took them out, not very willingly, and they also withdrew the army because they had been occupying Gaza since nineteen s sixty seven in the Sixth Day War, and it decided, you know, this is what it was telling me, And what I really wanted to understand was so why, you know,
why did they do this? What did they hope would happen? And then obviously something went wrong? So what went wrong? And essentially what you said was, look, it had become clear to us that the occupation needed to end because it was damaging obviously the Palestinas, but it was damaging us too because it was it is extremely unhealthy and it makes you do things, you know, to other people that are just are not good for you yourself. So
society we felt we needed to start doing this. We have been trying to negotiate an agreement and agreed to state solution and it wasn't happening. So we decided to just pull out and you know, separate and so then he became prime minister, you know, immediately after that he had actually been his brain child. But Arielsa sar on his bars and the prime minister had a stroke, and so he took over, and then he was not in
power for very long before. So in two thousand and eight they had came probably closer than they ever have to an agreement with the Palestinians, and so that was what he was trying to do, to use this as a way to kind of force the pace on a tuesdate solution. He then was out of power and Nyahou took over, and we've had fifteen years of a very different policy which is essentially not aimed as a two state solution.
Well, and this I just want to go to in your column that he believes that it was Benjamin Nettnah whose decision to build up a Maas and weaken its West Bank rival the Palestinian authority to eliminate any credible partner to continue settlement negotiations that change the whole direction of travel. Does Benjamin Netanya who have to go in order for there to be some kind of two state solution, Which sounds like that's what he's arguing for or it is what he's arguing for.
Well, I mean that would definitely be Omett's point of view. He thinks omet himself resigned he either there were corruption charges against him and he was eventually convicted, but he resigned, and he feels that Netta who should do exactly the same, and he said that, you know, the longer he leaves it,
the messier it will be. But I think the real issue here is that who's at the head of a coalition government which is the most right wing that Israel has had, and it has been extremely aggressive in terms of, you know, pressing settlements into the West Bank and has
not pursued any kind of to state agreement. So if you're going to have a solution, if you're going to have a strategy that envelops the military campaign and offers some kind of end state for the Palestinians who will suffer during this, then it's going to be difficult for this government to deliver it.
Well, Mark, we just have one minute left. But in your opinion or in Ulmart's opinion, it is even possible moving forward given what's happened over the last fifteen years with the rise in settlements, especially in the West Bank.
It will be extremely difficult and some of those settlements will have to go, just like they did in Gata. And that's his point. You know it can be done, but it takes some very strong leadership.
Is their political will within Israel to do this?
At this point I can't see it, but you know there is going to be a huge reckoning with Netna and his government over the security laps that led talks over seven and we will have a new government, perhaps a new situation that would make it possible.
Incredible column, and you know, you remind us of a lot of hatred and hostility among the Palestinians, and so you understand maybe their anger here, but you also get into how they are a rising population so demographically very important, which is why maybe a one state would not work. It's brilliant and it really is a very smart part of the conversation when we think about what happens next.
Stay safe, Mark Champion, Bloomberg News, International Affairs Communists. Mark Champion joining us on this Tuesday on the phone where it's getting lead there in Israel. All right, you are listening and watching Bloomberg Business Week. I'm Carol Masser along with Tim Staneveek.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just say Alexa playing Bloomberg eleven thirty.
Okay, something.
We talk about a lot, a lot wrong with the Internet at the moment. The big social media platforms have embraced efficiency, and you've got moderators who once made sure that our feeds had a rough correspondence to.
The truth have actually lost their jobs.
So leaving regular users to sift through an ever accumulating pile of the misinformation. Rage baden heads for chiechen chonga.
Do you see those in your on your ex?
Do you see those, Carol so frustrated with X like I don't even I'm not even on it one.
Over and over again.
Yeah, yeah, I mean, you know, I hear they're very relaxing, great wind algorithm's not working.
They are productive.
Okay. There is an exception to all of this, though, a shining beacon to the glory days of the Internet and maybe even to knowledge in general. We're talking about Wikipedia. It's the online encyclopedia. Of course, it doesn't collect personal information about readers. It doesn't have any advertising. It does make some appeals for you know, people to don'tate the time. Yeah, it does. There are no influencers, and Carol, there's no
cat turd. I just want to google it. I just wanted to say cat turd on the radio.
It's probably a Wikipedia entry on it, so let's get to it. Max Chafkin writes about it in today's edition.
Of Those were his words. I was just reading, right, don't blame me for k at his.
Desk, and he just chuckles his way through these things. It's the BW Daily, the Bloomberg Business Week newsletter. It gives you the power Business Week in a handy dandy form. Sign up at Bloomberg dot com slash Newsletters. You can also read Max's story on the Bloomberg. He's here in our studio.
Whoever thought Wikipedia?
Well, you know, it's one of these. It's like a part of Internet that I think we all take for granted that I, you know, have I've been only been thinking about this over the last week or so because Elon Musk has spent a lot of the last week attacking Wikipedia. He's in something of a tiff with the founder.
I just tell you he's ticked off at everything.
Well he's a.
Tiff prone, we should say.
But in any case, you know, Wikipedia is super interesting because you know, it's been around since two thousand and one. People who are about my age, you know, I'm forty one, will remember that. You know, college professors, high school librarians were very down on Wikipedia when it was launched in its early years, but over the years there's been basically study after studies showing that it's very accurate or compares
well to traditional research sources. And I think, really importantly, as he said in that intro, tim it's doesn't it doesn't do a lot of the stuff that we've come to associate with the negative parts of the Internet. There's no ads, there's not a lot of rage bait, and
there's a real care about about the truth. And and what's super interesting when you look at sort of recent research about Wikipedia is it's actually gotten less fringy over the years, So sour our normal thought about social media is it sort of tends to suck people into these far right or far left or just weird and kooky
rabbit holes. Wikipedia has actually become less like that, which is which is super interesting and I think, you know, maybe worthy of acknowledgment, if not outright celebration.
So the question is is how Yeah.
So it's a couple of things. I mean, one one big reason I think is the business model. You don't have this engagement driven uh business model that depends on getting people to stay there for a really long time. So if your goal was to like maximize ad spend, what you'd probably want to do is have lots of controversial articles about you know, about the wildest topics you know, so conspiracy theories or just like friends stuff. Wikipedia doesn't
do that. The other thing is there was a conscious choice made by you know, moderators that these these people who work essentially for free totain Wikipedia to favor you know, mainstream news outlets and academic journals over kind of what you might think of as the do your own research school of a fact finding. And that, of course is in marked contrast to the trend that we've seen, not just from Elon Musk right, who's been in this kind
of long running battle with the mainstream media. As he sees it, but also Facebook and all of the other social networks, they've all moved away from news. They've all moved towards this kind of like favoring influencers essentially over you know, academic papers and mainstream news organizations.
And I think that's.
Had a negative impact on the sort of truthfulness of what you find on the Internet.
Not going to name names, but I think it's fair to say that people in the media business, maybe a few on air, you know, anchors and talent, occasionally are like, oh, Wikipedia, I've just been jammed a story, like let me quickly look there.
Having said that isn't accurate, like is it reliable?
So and when you talk to people who have studied this, the answer broadly is yes. It compares well to you know, traditional news and information sources. That said, it kind of depends what you're looking at. So well trafficked Wikipedia entries are extremely accurate. I talked to an academic, Amy Bruckman at Georgia Tech, who said it's the most accurate information source ever created in human history for topics that are
sort of well trafficked, and that includes controversial topics. So if you look at the page for like the the the war in Israel. Right now, you will see a you know, a thorough fair minded, very fact filled entry for stuff that's more niche, where you maybe only have one or two editors. Mean, it's a lot less reliable.
I don't even have I don't even think I have a Well, you're gonna have to change that. Maybe someone one of these you know, tens of thousands of editors can go and do that. But but it actually brings up a good point, Carol brings up a good point, Max, is what happens when maybe a previously unknown presidential candidate wants to jump into the spotlight and uh, you know, hires some interns to go and try to you know, kind of edit the Wikipedia entry a little bit.
Yeah, you know, Vivik Ramaswami, he got caught out essentially hiring somebody. This was actually disclosed on the Wikipedia page, so totally above board. But but I think that's a good example because he was called out number one and
number two. It essentially called attention to the thing that that he was interested in, you know, kind of affecting the Wikipedia entry on which which was this fellowship he had received from a Soros connected uh nonprofit and and I think this is this tends to happen a lot. People will actually get caught trying to manipulate Wikipedia, and it sort of does a Streisand thing where it where it essentially calls attention to the ways that the truth is.
Being manipula effective.
Yeah, that's the idea that when you deny something or you try to cover it up, but it only calls more attention.
Barbara Streisand try to do it with one of our homes, you know, years ago, and then everybody was like, oh, Barbara Streisand's home, let's go find it.
And so so rich guys and power powerful people are constantly stepping in it, either trying to edit their own Wikipedia pages that's like kind of amateur hour, or like hiring someone to do it, which is the case that happened here. And again I should say this was disclosed and that's part of why we found out about it. But Wikipedia has a very transparent system for showing you how stuff is edited. So one thing that's great is that if some false fact or conspiracy theories shows up
on Wikipedia, it'll be taking care of. It'll be disappeared very quickly. That's the opposite of social media right where you see these kind of engagement bait headlines and so on just circulate widely even after they've been debunked on Wikipedia, they go away and you have this paper trail essentially where you can go back and see what happens, so you can see was it deleted appropriately, what is the
truth of it? And so when you get into you know, well trafficked topics such as presidential candidates, you're not necessarily going to get the most the best article, but you're going to get something that is likely to be mostly factually true, relatively fair and balanced, and importantly something that you can kind of audit yourself. Right, they're these citations. You can go through it, you can decide, hey, how true is this? How much do I trust them?
It's like amazing, right in this kind of mess of policing when it comes to social media, that there's kind of these puritans or a I don't know if that's the right.
I know non page very idealistic. Yes, it's a throwback to the the way the Internet was in.
Surly Max doesn't have a Wikipedia page, but he cited many times on Peter Tial's Wikipedia page that.
I'm not noteworthy enough, and that's a whole that's another big debate that that happens on.
You're noteworthy enough that means also read his book about Peter Teal's good.
We could write. All I'm going to tell you is you also have to check out his story.
Either go to ex or Twitter or at Chafkin, or go to the Bloomberg or Bloomberg dot com. Because there's just one thing in there, because this is a family show, but about Elon offering a billion dollars.
But there was a name change, it would be called So we're gonna leave that on the table, shall we. Sounds good, it'll make you chuckle though. Way, all right, we gotta run next check in. Yes, you deserve a Wikipedia page and so much more. He is calumnist for Bloomberg Business Week.
Also the author of the Contrarian Peter Teale and Silicon Valley's Pursuit of Power.
I'm brother Marc, a journal Now about you? Let me drive?
Oh no, no, no, no, who's gone to drive?
Alright?
Please, I'll do the gravels.
Let's wait, I want to try.
It's good question that.
This is the drive to the clothes dot com.
Thick, we'll dround yeld down on Bloomberg Radio.
All right, TikTok, everybody, we've got just under eighteen minutes left in today's trading session on this Tuesday, October twenty four. Some big earnings coming out after the closing bell. Interesting story that just crossed on the Bloomberg. The last time US yield drew so much it sank the economy twice, we're talking about going back to I guess it is the eighties.
Maybe I got to look into this story.
But no, Yeah, it's the biggest increase since the nineteen eighties when pulled Volker's efforts to slay inflation. Push the ten year it's nearly double sixteen percent, Carol.
Yeah.
See, so we've got a ways to go, folks.
We do.
But you know what's coming sooner?
Yeah, hopefully earnings.
Earnings. Yeah, after the bell, we got a handful of earnings. We got Alphabet, we got Visa, we got Texas Instruments, Carol, we got Microsoft as well. No one better to talk about all these companies and the greater markets. And Sam Stove All chief investment strategist at CFRA. He joins us on Zoom from Allentown, Pennsylvania. Sam how are you, hey, Tim,
Good to talk to you, Hi, Carol, Hi. I want to we'll get to earnings in just a second, because they're going to be crossing fast and furious in just about seventeen minutes. But first got to get your take on the resilience of the US economy. Here we hear it over and over again, especially focused on the US consumer yields above five percent, pretty much across the curve. What's your take?
Well, and I think we're going to get an additional eyes on Thursday when we see the GDP number come out for the third quarter.
You think it'll be what do you think it'll be?
Well?
Street estimate is about four and a half. Our economists are saying four point eight, and the most recent Atlanta Fed GDP now forecast was for five point four. So it really seems as if it's going to be a very strong quarter. That said, however, I think we're going to be slipping back to around the one percent area for the final quarter of this year and the first half of next.
Yeah.
So it was like, not what you did for me like yesterday, but what are you doing for me today?
Sam?
Hey? So having said that, all right, so we're reporting, you know, for the most part, third quarter earnings. We're getting those reports. We are continuing to be surprised by the resiliency in the economy. As you said, earnings. What has surprised you most about what we've seen so far this year when it comes to corporate earnings, well.
As you said, just the resiliency of it all. Because when you think about the brick wall in a sense of higher oil prices, higher interest rates that these companies have been running into instead of bouncing off, they've been breaking through them. So it looks as if this will end up being another quarter in which we have the
actual results exceed end of quarter estimates. You know, we thought it was going to be down one and a half percent, but it looks as if it could be swinging into the positive.
So what does that mean for some of the companies that you follow, Well, what it certainly means is.
That we're going to be sticking with the more growth side of the equation that we've been sticking with since the beginning of the year, so communications services, consumer discretionary technology, and more recently energy, because we're looking for good growth now. But also it gives us optimism for the market itself in twenty twenty four, since all eleven sectors are expected to post year on year gains and five of them were expected to show double growth.
Wait a second, Carol, I thought higher interest rates were supposed to kill those growth companies.
I don't know, Sam, that's for you, Okay, Well, it would kill the growth if at or growth companies, if the interest rates were to exceed profit growth, et cetera. But with the economy doing so well, with the jobs numbers holding up quite nicely, I mean, let's face it, the unemployment rate that we're seeing today is well below what economists thought was the full employment rate many many years ago.
Well, therein lies the rub, right Like if higher rates alone maybe not problematic, especially if people are working. But you know, as our Gina Martin Adams talked with this earlier in the week, she said, you know, margins have held up because inflation backed off. If we start to see inflation kind of rearing its ugly head again, that could potentially show that the cost equation of doing business will show up in margins being squeezed. I'm just curious if that's on your radars.
Well, well, we did see the backup in inflation over the last couple of CPI and PPI reports. Yet more encouragingly, however, the PCE, the one that the Fed really likes to look at, has actually been descending quite nicely. Expectations for later this week are that again we'll see a three point seven percent year on year change for the core reading of PCE, and that'll be down from the three to nine of the month before and four to three
from the month before that. So the trend is still our friend in that regard.
Can I ask you about the trend in terms of the four megacaps? I'm talking about the big guys Meta, Amazon, Microsoft, Google combined generated fifty three billion in profits last quarter, about fifteen percent of the earnings generated by the other four hundred and thirty seven s and.
P five hundred companies combined.
If you back out financial companies, you talk about it, We talk about it.
You know about the the you know over waited.
Impact if you will, of a few good names, if you will when it comes to the markets, How do you think about that when it comes to earnings? And I wonder if there's so much left out, as you say, maybe that that provides investment opportunities going forward.
Well, certainly, you know, the question is, gee, what have we been doing in terms of the megacaps. The Magnificent seven really ruling the day in terms of price changes, earnings growth, et cetera. And they have continued to do relatively well. Looking last Friday at those sub industries and there are one hundred and fifty three of them in the S and P fifteen hundred and only eight percent fewer than ten were above their fifty day and two
hundred day moving averages. And the interactive media and services where you would find Alphabet system software, where you find microsoftware were still among those. And I think it's because analysts are expecting very strong earnings growth rates and looking at the performance thus far in the year, Actually, what we've been seeing is pretty good growth for the market as a whole, but also for some of the sub
industries and some of the companies in them. Even though the big Magnificent seven are the ones that really have been driving everything, you've had participation with a good fifty to sixty percent of the other companies within the SMP, So it's not just those magnificent seven.
Eric always good to check in with you bwaw SAMs Doviell, chief investment strategists over at CFR.
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