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A bit of a roller coaster ride in shares of Amazon, from a rally right after earnings to a drop on the analys call last night to some selling today, but it's definitely off its lows of the session. Amazon though, seeing some pressure after warning that growth in its cloud computing business is cooling. So let's get into it because Amazon is a massive company with a lot of moving parts.
To break it down, Spencer Soaper is with us Bloomberg News Technology and e Commerce reporter on zoom out there in Seattle, along with Punham Goyle Senior Alas for e commerce eth leisure at leisure excuse me off price retail at Bloomberg Intelligence. She is on the phone in New Jersey. Guys, thank you so much for being with Mattie me. Spencer kick it off for us in terms of the story that is Amazon on this Friday.
Yeah, well yesterday it was a head scratcher. You know, we got.
The earnings release came out after market closed, and there's a lot of good.
News in it.
You know, they beat pretty much across the board and all their businesses more than analysts were expecting, both from the cloud computing revenue side, you know, on its e commerce business, on its advertising business.
Everything was looking really good.
And then about ninety minutes later on the analyst call, they divulged that you know, give you know clo cloud computing sales are actually slowing down a little bit so far in April in the market.
That really jobs of the market. People got nervous and shared started going down from there.
So it really was a reaction to just the outlook of Amazon's cloud computing business.
Is what the what the market reacted to today put.
On What was the moment on the earnings call where the tenor started to shift from extreme excitement.
To oh no, I'd agree with sponsor here. You know, as soon as they say that there's a five hundred pace point acceleration in AWS in the month of April, that was it. I mean, that was really the big drawback on the earnings column. From there, it didn't matter what they.
Said, well, as I said, like Amazon, massive company, a lot of moving parts, some are more important than others, bring a lot more in in terms of the top and bottom line. Back to you, Spencer for a moment. Cloud, I mean, it is so important to Amazon and the story. Is there any kind of okay, guys, twenty four hours later,
a little bit of perspective, there's still it's big. But we've all been kind of worried a little bit about cloud or is it just a little rough Considering some of the other big tech names aka Microsoft and their cloud business this week, well.
There were some questions more broadly about Amazon, you know, so there was the slowing the cloud, but also questions about whether it could be losing its competitive position and even concerns about, you know, what's the fate of like the voice activated assistant alexta now that we've got things like chat GP and things coming along that have kind of relegated the voice activated stuff kind of to the sidelines. So yeah, there's there's definitely concerns beyond simply slowing cloud sales.
But that's still the predominant thing is if businesses are cutting or spending and Amazon's saying that, and they're saying, yes, our cloud customers are trying to reduce costs or looking for other ways to store data that are less expensive. We're trying to help accommodate them that basically, this uh, this slowdown will persist and could get.
Worse, all right, guys, And I also want to kind of pivot to AI.
Right.
This has been the you know words, catch phrases if you will, that I feel like in this earning season that every CEO to some extent has to drop, especially if you're in the tech space.
So punam in terms of what they had to say.
And I know you really focus on the retail side of the business, but what did we How much was Amazon kind of pushed and asked and queried about when it came to AI.
You know, AI is something that they are going to continue to put across all of their businesses, So it's just not on the cloud side, but also on the retail side. AI is very important because if you think about how consumers shop, if Amazon can get smarter about their search queries about how they pitch product to the customer, then that can lead to higher conversion. So I don't
think AI is just about the cloud. You know, we've heard a lot about generative AI and so forth, and it's a topic that we think they will definitely push hard on along with other retailers in space. Everyone is focused on AI just to really use data to make better decisions across every piece of the organization, not just you know, when it comes to product, but also on the back end side, whether it's distribution, logistics, back office, et cetera.
I guess the way I think about it though, is that the cloud is sort of the bones that allow for the generative AI to do its thing. Spencer, when you look at Amazon, Microsoft and Google this week in terms of what we learned in earnings, which do you feel has has the best bones when it comes to the cloud that's needed to run generative AI.
Well that's the That's the thing that Amazon's CEO Jesse was trying to say to analysts last night is Listen, all of this stuff runs on the cloud, and Amazon is the market leader uh there and has the data space and the infrastructure, and it's always tried to position itself more as kind of the the back end of it and the tools that people could utilize, and that's
where it's positioning itself now. They don't necessarily not in the forefront, but some consumer facing thing that people are using, but providing the tools to help sharpen and home these technological advancements going forward. But yet folks still seem to be a little worried about about Amazon's Amazon's place place
in it. But I think I think generally the tenor on the on the market reaction is more just about the basic cloud computing business and just folks businesses in general cut cutting their costs, including in their in their cloud infrastructure.
Yeah, it's just kind of interesting because I do feel like we're increasingly using more and more cloud space, whether it's personally or professionally. Put them come on in on the retail side of their business and what we saw there, because things have really changed since the pandemic. It's a story we've been telling for some time.
Yeah, you know, the retail side of the businesses and mixed it was better than expected this quarter. But I think what we have to think about is the one P versus three P part of Amazon, and it's the three P which continues to show outsized growth and we think will be a big driver to GMB going forward. For Amazon. You know, buy with Prime is a big initiative that they have in place that can really bring more sellers using their services onto the platform and just
open Amazon up to other people. It's been a huge success from what we've heard from them, and I think it'll just really help them also solve their distribution slash warehousing initiatives where they can use some of that space non to to non prime merchandise.
Yeah, and I thought, well, forgive me, and I thought the advertising right services business, And I'm not sure if this is what you are specifically talking about. I mean, this has really been a growth area punam for the company.
Yeah, advertising is separate from the online piece, but it definitely has been an area that they're growing. And keep in mind, the advertising business is also a very profitable business, so you know there they've said in their shareholding water that they want to go after grocery, and grocery is laser thin profit margins, low single digits at best, whereas
the advertising business carries fifty percent plus profit margins. It's a lucrative, just like the cloud business, which has very high profit margins and contributes almost entirely to all of Amazon's profits.
Yeah, I mean it makes sense then on all of those headlines that Amazon was on such a terror after the earnings came out yesterday. Spencer, We've got about a minute left on this here. I'm wondering when you look at today's trade, the share price is basically a little bit over where they were at before earnings even came out, so still up on the week. But do you think that that performance is that justified by the earnings or do you think it's a result of Microsoft doing so
well and then Amazon coming out later? What do you make of the trade impact?
Yeah, I mean basically right back where they started, right so there might have been some encouragement among investors based on the Microsoft news, and we saw kind of a run up as that they progressed in amazon As share price before the earnings, and then once they double the cloud news a tank. So I mean who knows. But the big worry now is does the April slow down and cloud sales persist? And that is that just you know, a sign of course things to come later.
Hey guys, really quickly twenty seconds each, Spencer. Did Amazon answer all your questions.
On the call? And if not, what would you have wanted to know more about?
Yeah?
I mean they addressed they address most things.
And Punham just real quickly your thoughts too.
I think they kind of gave a good outline and their press release and on their call and all their business segments, so they did do a good job of explaining it. I'd just love to see what else they're going to do on grocery following up on the shareholders letter, just the path to how they will make grocery a bigger piece of Amazon.
All right, guys, thank you so much covering all sides of Amazon. Spencer Sober Tech and e Commerce reporter at Bloomberg News there on Zoom from Seattle, and of course our Putam Goyle, senior analysts for e commerce, ath leisure, off price retail at Bloomberg Intelligence on the phone in New Jersey. As we said, Amazon shares, they're down, but they're definitely off their loads.
Of the session.
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. Come on Royal.
All right, everybody, just catching up on the market clothes here with our TV colleagues remain in Scarlett. One of the things we did talk about, and we saw some really strong outperformance today, was the energy names. Energy stocks were the top performing major industry group out of eleven in the S and P five hundred today at Exon a mobile and Chevron rooping profits not seen since oil topped one hundred and forty five dollars in Maryland two
thousand and eight. It's kind of wild considering where oil trades today. So let's get to it a round table. Bloomberg News US Oil reporter Kevin Crowley is on the phone from Houston. Also with US is Simone Foxman, Blueberg News reporter here in our Bloomberg Interactive Brokers studio. A lot to get through. Let me just get some initial thoughts from you, Simone in terms of what we got from these two players.
Yeah, well, Exon clearly the stand out as opposed to Chevron if we're comparing, But both of these oil majors beating expectations by a wide margin, and we're seeing profits from these companies that we haven't seen since two thousand and eight. Remember two thousand and eight, one hundred and forty five dollars a barrel. Think about where we are with crude right now. We're looking at eighty dollars a barrel seventy nine to fifty four at the close for Brent,
so clearly a different region. Exon seems to have made bank a little bit by investing a lot of money pre pandemic. That was something that its investors were very concerned about. But now now that there's higher oil prices, we're seeing a lot of demand. Meanwhile, Chevron, you know, the concerning thing here for investors was.
That production dropped in the first quarter.
That said, you know, we still ended up for the day, so and generally, as you said, energy strong today.
All right, So Kevin, come on in on this. So how is it that they are able to be so profitable in a very different, fundamentally oil priced market.
Well, really, I mean, I think we have to go back to the pandemic because both of these companies they really cut expenditure a lot during COVID nineteen when we all remember crude went negative one day, and really since coming out of COVID, obviously we've the demand was rowed back, but these company spending levels have not come back as quickly. They're actually both both eggs on a chevron are both spending a lot less than they were in twenty nineteen
before COVID. So really you have you have pretty strong income from decent commodity prices, but you have that very low spending on the and there's been a real hesitancy to build, to build major projects around the world, and that's why they're really they're really making that making that margin. At the moment I.
Forgot, you know, that the prices went negative, which was really crazy.
It was such a nutty time.
Kevin continued with us for a moment, because we know that it's really important for the energy companies to spend and to invest. I mean, at this point, even though we're shifting to a renewable world increasingly, we're still largely dependent on fossil fuel. So if there isn't a spend, that makes me a little nervous about what kind of supplies we'll see in the future.
Yeah, and that's that was that's what was so interesting about today. Actually, for the last say three or four years, really production growth has been a bit of a dirty word in the in the oil business because a it means money going out the door, and the energy transition. But we're starting to see a bit of a change. And you know, we talked about the difference in share price performance today between Egxon and Chevron, and it's pretty interesting.
The reasons why Eggson's been growing production quite strongly Guyana and the Permian actually, you know, those those two those two regions up forty percent in the in the past year. Where Chevron has really been struggling. They've production dropped in the first quarter, you know, had some issue had The Permian is growing for them, but they've had some issues there, and really the Permian forisch everyone is simply making up for the clients else elsewhere in the world. So you
have one company's growing another company that's not. And what's interesting now is that the company that's growing ex or Mobile is the one that's being rewarded in the stock market. I remember a few weeks ago, bp of pivoted their strategy to invest a bit more in fossil fuels, and
the investors also rewarded them. So I think I think we're starting to detect a bit of a change of sentiment now where the investment community are looking towards towards sort of long towards are starting to value growth and fossil fuels once again because of those shortages that we've talked about.
Can you simone help me square still we've been talking about this, but help me square the barrel price with these great earnings.
I think it's about demands. There are just question marks, ongoing question marks about how much demand, whether it's from China, whether it's from the US, whether it's from Europe. At least in the near term, I think when you look farther out, the story kind of changes. But it's this question you know that we've been grappling with across the
economic data. We don't know how strong the consumer is, we don't know how much the central banks are going to continue hiking rates, most especially the FED, and therefore it's very difficult to predict where oil prices go. But you know, to what Kevin was saying one thing before I mentioned this, Kevin wrote ten bylines today since like six fifteen am. And so that is really impressive, Kevin.
You on the live blog today, as these earnings are, it's pretty impressive.
Yeah, plus live blog not counting that. But I would say, you know what he's what he's kind of saying about you know, shareholders rewarding investment in a way they haven't before. You know, this is kind of the dichotomy as well that we are hearing between the IEA, which is a major international agency backed by some of the Western countries, and OPEK. You know, opek is saying, y'all haven't invested enough in natural gas or in oil for a long time.
That's why we're seeing all the volatility in the market. And then here you have there's more consumer consumer related organization saying actually.
It's just you guys. You guys are the issue.
Well, yeah, and that's a really good point. You know, I brought up in the past, you know, having gone up to the Baka like several years ago when shale and just the amount of drilling that we were doing in the United States and everybody was like, look at the US, you know, they're becoming energy independent.
Kevin, where is the United States and all of this?
Yeah, so the US, the US US is the worl's biggest oil producer at the moment because opek Is has cut back a little bit. But what's very different to now compared with the days when I mentioned you went out to the bark and is that companies are being much more restrained. They're looking very much at the at the future. They're looking at how many and the wells they can drill on their acres. They're looking at moderating
production growth. They're very, very focused on their near term cash flows, making sure that they're profitable today rather than trying to drill baby drill and just you know, ramp up production just for the just for the sake of it. So so there's a lot more there's a lot more caution in the in the shale patch compared to compared to what we saw a few years ago. And that's why OPEK now is the fields at Liberty to cut
production like they did at the beginning of April. They cut a million bows a day, and because they no longer see that threat, the market share threat from from shale and and relics of shell producers are quite happy for that. They're happy for OPEC to cut production and keep price inside.
What's the likelihood of more cuts from them?
The one earlier this this month was a huge surprise, so I certainly wouldn't rule anything out. And if it hasn't really impacted the market that much, it's definitely big concerns over over economic growth, the effect of the effect of rising interest rates here in the US and around the world. And you know, China was the big It's supposed to roar back this year and swallow up a huge amount of oil demand. Hasn't really happened yet. People say,
maybe happen in the second half, but we're not. We're not seeing it quite well.
And we have a story of US oil heading for a six monthly drop because as demand outlook worse, and so we've seen like the trend line, no doubt about someone. You're just back from the Middle East.
I am, And that's why I'm going to ask about natural gas because I was in Klaser, you know, one of the world's largest producers of natural gas. Actually this is for Kevin. You know, we heard this major bullish outlook from some of these oil field contractors SLB, Baker, Hughes, Halliburton and a lot of them mentioning how much natural gas was going to be part of their business. I feel like we heard less of that today from these oil majors, even though some of them are moving into the space.
Yeah, what what's the thinking there?
Why?
You know, what's your take?
Kevin just got about twenty seconds.
Yeah, the majors are interested in gas, but they want liquified batual gas. They want the big projects that they can ship around the world. They're not too interested in the local market for gas because the value is a lot lower, but definitely big projects where they can ship gas around the world.
Okay, very got it.
Kevin, We got to run Kevin Crowley and Simon Foxman, so appreciate it.
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Well transparency. This next guest came to us because Mattie's mom works for this company. She's head of marketing. But what we love, Maddie about this when you pitched it in and I'm like, we got to talk to them. They're a small business. They're in the business of moving people around. So in many ways, it's a great indicator of the economy, you know, beyond the official statistics like the batch we got today. It's just another way of trying to figure out where we are.
Yeah, Carol, you and I love a good low key economic indicator when it comes to this show, so we're going to get to it. We've got Nick Friedman here. He is, of course, the co founder of College Hunks Hauling Junk. He's going to talk with us about the business of moving people and removing their stuff, and he joins us on zoom from Tampa. Nick, great to have
you on the show. Thanks for being here. Besides the fact that you obviously have the best marketing team in the entire world, talk to me about the business for the people who may not be familiar. I know started right out of college, hence the name. Tell me about the size of the scope and how business is doing. Yeah.
So, our company, College Hunks Hauling Junks, started when I was in college with just a beat up cargo van. Fast forward almost twenty years, twenty year overnight success. We've gotten now two hundred franchise locations around the country, approaching three hundred million in an annual sales, over five thousand employees, and it's moving in junk removal, like you said, and we've made HUNKS into an acronym which stands for honest, uniform, nice, knowledgeable service.
Okay, So besides the acronym, though, Nick, talk to me about the business side itself, right, We talk a lot about the current craziness in the housing market. Where have you seen the biggest impact when it comes to those macro factors impacting the moves that you're doing.
Well, we saw a big boom coming out of COVID. We were expecting twenty thirty forty percent year over year growth coming out of COVID, and then this year, probably about middle of last year, we saw a significant deceleration in that growth. So we actually budgeted this year for what we could call a conservative ten percent year over
year growth. We're actually falling slightly short of that. More so impacted on our side with the junk removal service, which, as you might imagine from a consumer standpoint, if you're holding back on some of your consumer spending disposable income, the likelihood of paying to get rid of items would
be less. But also even on the move moving side, if people are moving less, obviously the interest rates are higher, the moving volume statistics are down, and so we're impacted by that as well, and we're still growing year every year in that business, but not quite as much as we as we had hoped for.
Nick, I'm wondering economic indicators. What really, like, what do you watch?
If any? Is it labor statistics?
I'm thinking, you know, here we are, we're focused on a Friday afternoon. You've got First Republic, which has been a troubled regional bank, and it's crashing once again in the aftermarket. You've got Reuters reporting that the FDI see getting ready to place it into receivership. You know, we watch the bank sector. It creates nervousness. What is it that you watch specifically to say, Okay, maybe this is where our business might go, or just kind of an indication of the outlook.
Yeah, I mean I look closely at housing market trends. I look closely at consumer spending because we are a consumer brand primarily, and really just the overall S and
P five hundred is a good end indicator. I mean, I look back at sort of the two thousand and eight crash, and some of the early tremors of that are similar to me in terms of what we're seeing with some of the banking falls that you just mentioned, And so when there's bad news on Wall Street, when there's you know, ticks up in the interest rate and people are not buying homes or selling them for the price that they were a year ago, that's going to
trickle down to companies like ours that are in the home services space. And we're sort of that first call they make when they are moving or when they want to upgrade their furniture, clean out their garage, they're calling us. And if that's not happening as much, or they're holding on to their wallet because their portfolios down, that's kind of could be as in demand as as it has been coming out of COVID.
I know, Maddie shared with us, you guys are over two hundred locations. You know, some of them are small, some of them bring in several million dollars a year. I am curious when you look at the outlook, do you think recession or do you think not recession.
I don't want to put a direct label on it, but I will tell you we're being much more conservative. You know, where one of the mantras we say within our company has always been revenue is vanity, profit is sanity, and cash flow is king well we came up with another one. If cash flow is king, then lean is queen, and so we want to be lean and disciplined with
our spending. Maybe not be as aggressive with you know, testing new marketing options, but be very more laser focused with how we're going to acquire clients, how we're going to convert those clients and turn those into repeat and referral business. So, because of what we've experienced in the past,
what i'd say twelve months, we're being more conservative. We're being more disciplined, maybe hesitating before we invest in that new piece of equipment or new piece new key hire, because we want to make sure we focus on the cash flow and sort of be lean coming through this uncertain, volatile market.
Are you also lean because you're concerned about access to capital and the higher cost of capital?
Absolutely, asolutely, without a doubt. We've got to be lean in terms of cash flow, and that has a cost of capital as well. So we're being more conservative about how much we borrow, more conservative about how much we extend ourselves. Whereas maybe the past two years before things slowed down, it was all about grow, grow, grow, you know, burn the cash, burn the fuel. Let's let's let's, you know, keep pushing forward. And I studied economics in college, so
I know a little enough to be dangerous. And you know, inflation happens because we pumped a lot of money into the economy, and now you know, the FED is ticking
up interest rates to try to slow things down. And so as a small business, medium sized business, we're sort of feeling the effects of like the push forward and now sort of the pull back, and we're just having to make sure you know that those that climate is going to impact everybody, and so we just got to be more smart and strategic than everybody else.
Hey, Nick, talk to me a little bit about the demo of your customers and how it's changed, because I know you guys are kind of like the FED, where bad economic news is really good for you. During COVID, you did really well coming out of that. How has your demo changed in terms of the customer and how have their moves changed?
Yeah, I mean I think we're actually getting a lot more moves right now for apartments, which was maybe not what we were experiencing coming out of COVID because people were buying and selling homes, you know, like it was going out of fashion the past couple of years, and now with the housing market slowing down, people are staying in apartment communities are moving, apartment communities are moving within. We're starting to see a tick up and demand there.
There's still disposable income there. That's not to say that maybe there's not an income level there that's able to hire our services. Because once you fall below a certain threshold, people are going to do this themselves. They're going to move their own furniture or they're going to get rid of their own junk. But if you're looking to hire a full service solution, they have to have some level of disposable income to be able.
To do that.
Well, Nick, a great perspective on what's going on. I so appreciate your time. Nick Friedman.
He's co founder of College Hunk's Hauling Junk. Joining us via zoom from Tampa, Florida. Thank you so much, brother Marc a journal Now about you?
Let me drive? No, no, no, no, honey, please how do the driving gravel?
Let's mate, I want to try it. It's a good question time. This is good drive to the.
Clothes dot Com for me.
A thing well by Don on Bloomberg Radio all right, everybody, we have just under eighteen minutes left in today's trading session. It is time for the drive to the closed. And you heard Charlie giving you the numbers. We're pretty much holding on to our gains here when it comes to the equity side of thing, and we're counting down to the FED meeting next week. A lot of earnings we've been getting through. We are on track though, for some weekly gains when it comes to the major equity averages.
So let's get to it.
Our market guest on this Friday, Katerina Semonetti. She's senior vice president and private wealth advisor over at Morgan Stanley Private Wealth Management, joining us once again on Zoom from Philadelphia.
Katerina, I don't know about you, but I am exhausted. It's been quite a week.
It's just a lot of stuff coming at us, you know, when it comes to earnings, economic news, just kind.
Of where we are going. So here we are, we sit on a Friday. Equity seem rather enthusiastic. How do you see it?
Carolin and madisone. Thank you for having me on the show and happy Friday, and I agree with you. Boy, what a week and the question is, you know, are we looking at the market that is showing all the sorts of resilience in face of the mixed earnings and face of the risk and all the uncertainty that we seemingly are facing. And is this the sign of the health of the economy that we are maybe not accounting
for or is it being foolishly optimistic? And unfortunately, this is the difficult part for the investors because that's where
they find themselves in these two camps. Because you have one camp that is getting ready for the decline in the market, getting ready for all the risks, the pressures on earnings, the stickness of the inflation that he remains high to the point where FED is not really ready to declare victory yet, possibility of economic procession, and generally the unknown of what the delete effect the FED action
is going to yield. And then the other camp that is so excited about the fact that market has been positive this year so far despite of earnings.
All right, so which camp are you in? Are you in the more optimistic that, hey, earnings seeming pretty good? Mohammedel Arian He was on our error earlier and said, you know, there's no guarantee that we have to go to recession, and if you look at earnings, it would point to otherwise that maybe we'll avoid it.
Are you in that camp?
Are you in the camp that youo folks, you know your expectations about where we are, and especially in terms of what the Fed is going to do in the slow down that you know you're missing it. So which one are you in?
I'm in the camp that the bear market is not over yet, and I think it will be smart to not ignore the warnings of the market and specifically the earnings, specifically the fact that effect that this this regional bank situation might have on the availability of the liquidity and potential credit crunch that it might pause. We cannot spend the way we have been spending in this high interest rate environment, neither consumers or the institutions. And this is
going to have a long lasting effect. Now in the longer run, I'm absolutely optimistic no bear market lasts forever. We just have to have a somewhat longer view on equities and also take advantage of the higher yields that are you know, finally are available to us on the fixed income side.
So bigger picture than on the financials are you advising to stay away for now because of concerns about that credit tightening.
Well, we have to be very selective. We generally have to be very selective with equities right now, but specifically with financials. There's some financial institutions that are showing tremendous strength and quite frankly are trading below where they should be, so they present some attractive buying opportunities. But there are certain parts of the financial sectors, you know, where we have to be very cautious.
You know, it is such an interesting environment at this point, and we keep reminding everybody that Fed policy there's no exact science to it, and it's not uncommon for the Fed, you know, overdo it, miss the mark if you will, And so we do wonder, you know, what's going to
happen from here. Having said that, and we were just talking a little bit about the financials, do you feel like as investors, are you guys are at Morgan Stanley kind of shelving the banking crisis for now and you feel like, all right, we've got this, that's one thing that we can maybe take off the wall of worry list or not yet.
Well, to your point, what we tell clients is that the current environment is like trying to stop the fast moving train that has no breaks, right, you know, and you're throwing well, everything we have added and Federal Reserve is really trying to control the situation. But the question is how effective they're going to be. And we see it that while they're not round raising rates yet, we're already talking about the rate cuts. Are we going to
get them later this here or possibly next year? So this banking situation isn't going to have effect absolutely, we are just gauging how deep of an effect it's going to be. And if we look back at two thousand and eight, we emerged from two thousand and eight as the healthier, much better positioned financial system, and I think the lessons are going to be learned from this crisis as well, and hopefully we move forward without making these mistakes.
So you think that lesson will be, what more regulation on the bank similar to kind of the recommendations we got from the federport on SVB today.
Well, I think the main lesson is going to be not underestimating interest rate risk and having sufficient levels of liquidity, but also the regulation that will be applied to all the banks so old levels because the consumers here in the United States, you know, should be able to comfortably walk into the bank and expect the bank to be regulated on the same level as the bank across the street.
So you say, stay defensive. So you're talking healthcare, energy, utilities, consumers, staples.
Is that fair?
That absolutely is fair, and just generally stocks that pay dividends, that have strong competitive positioning, that have strong time the buying power and pricing power, and the same power in this market. It is really important these days to understand what we own, the simple conscience investment strategy that allows
investors to pivot based on the ever changing environment. So when we get to the end of the week like this, we can actually act accordingly, possibly have some cash on the sidelines, take advantage of the higher yields, and be prepared that if this market where to drop, that we can actually act and take advantage of the dips in the market.
Cattery know what about big technology? I mean Microsoft, I'm looking at about a seven percent gain for the week. I'm just throwing one name out there, I think it's safe to say. And Amazon, we just talked about a lot that there was kind of a you know, some concerns, certainly about the cloud business. But you know, overall this week, big tech, you know, really came in very strongly group that everybody keeps saying, forget it, forget it, It's time to look at other things. What is your read on
big technology. Are you telling your clients, your wealthy clients, that they need to stay away from tech or that they should be all in, especially when we're talking so much about AI as being the next growth driver.
Well, we are absolutely not telling them to stay away because technology is here to stay. Technology drives every single aspect of our life. But like with everything else, we have to be selective and we have to understand why the position in tech that we're taking on is going to be here a year from now, ten years for now, potentially thirty years for now. What is that competitive advantage and what is that ability for that technology company to
generate consistently generate earnings. We can just view tech as this great, successful, wonderful sector that cannot fail, you know anything, Any sector in the market has its ups and its downs, So it's really important to own quality within technology.
All right, got to leave it on that note, Katerina, thank you so much, appreciate it, have a great weekend. Katerina Seminetti shes Senior VP, private Wealth Advisor of at Morgan Stanley Private Wealth Management on Zoom from Philadelphia. Interesting, a little bit more defensive, saying that the bear market or the bear cycle isn't.
Over tech, it's here to stay.
Yeah, well that's fair, right, Yeah, when we look at our lives and it makes it a heck of a lot of sense.
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