Big Tech Earnings & Election Momentum

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We're gonna do an audible right now. This is a joy.

This could be a three hour interview. Monica Guerra is at Morgan Stanley. She's looking at bigger Washington policy, the election and all that. She comes out of the trenches of Fitch ratings and had a tour of duty. And I mean this is like the Marines coming out of the trenches. For the City of New York. As Director of Capital, Budget and Economic Development, I gotta go to an audible here.

I don't want you to comment on the political mess in the City of New York.

I do want you is by far and away the number one expert we have on the future fiscal integrity of this great city.

How does it look to Monica.

Aguera, Well, to me, I think that it does ultimately look good. One of the things that the city does they have this midnight budgeting move where they never have money. There's all this fighting in fighting within the city council and then at the last minute they'll come through with

People move on.

Okay, LaGuardia dump of America. Can no excuse me, Newark is dump.

Of America, Thank you very much, Number tians dump of America.

LaGuardia just rated best airport in the country. It costs eight billion. Whatever to do do we have the big city vision to maintain the growth rate, the little g to take care of our fiscal proclivities.

Here in New York City, there is you know, a pendulum that swings right. So we went from you know, I guess to name check Bloomberg since we're here, from a very you know, pro business environment, something that was more socially focused. And we see that at the federal level as well, right where there are changes and trends, and so I don't think that this is you know, a dead end right where we can definitely continue to capitalize on everything that makes itst I got to do.

His disclaimer here, of course. Michael Bloomberg, of course, signing the checks for me and Paul, not Lisa's check that's signed by someone else. Mister Bloomberg, of course, a part of what.

We do each and every day. The former mayor of New York and future owner of the New York Yan.

Case Monica, what are you telling your client's Morgan Stanley Wealth managtrain. I'm sure you get it a thousand times a day over the last several months. How do you game out this election? How do you position your portfolio? What are you telling your clients here? Because we're going to have an election next Tuesday, whether we like it or not.

Right well, one of the things that I emphasize over and over and over again is that Congress is ultimately more important in those sector and industry outlooks. The President sets the tone essentially, you know, is a big part in those final deal making measures. But we have to see what happens in the House and Senate, and right now as we stand, obviously I'm not calling the election. Things could change the Senate looks like it's going to go to the GOP. The House looks like it's going

So how do you think this is if we do have that kind of split government?

Here?

We are you telling them we're in Stanley clients to do here? Is it just like, don't worry about it, stick with your if your long equities or long bonds or whatever. What are you telling the clients there? What do you What are the advisors asking you?

I guess yeah, in the in the near term, it stick to that long term strategy because around election day you're going to have increased volatility. We could have rolling volatility until the election is decided. And even though we have created both Democratic and Republican long baskets, and the Republican long baskets have been out performing the Democratic baskets by thirteen percent. We don't say pilot the Republican yes.

And what's a Republican basket?

So the Republican basket includes twelve different ETFs that cover every central sectors and industries, sectors and industries that would benefit right from policy proposes that come out of the GOP. So those would be things.

What's a democratic basket look like.

A Democratic basket?

It would be you know, your clean energy, no like lead energy, things like you know, Medicare, managed care, beneficiaries, et cetera.

And on the GOP side, you're looking at traditional energy. Sort of a real justice.

I'm just gonna go to the zeitgeist right now. I got eight ways to go here.

But Obamacare supposedly under some threat I see in the zeitgt Exios and others. David Gera telling me the Republicans begging the Trump campaign to stay away from Obamacare?

Is Obamacare a sacred cow?

I think it's symbolic the you know, there's not much more that can be done to undercut Obamacare in the ACA.

What does Obamacare cost Lisa Mateo on her ten to forty text form. The belief is I'm paying for Obamacare. Am I is Lisa Matteo paying for Obamacare.

You can opt in right through these state exchanges, and so that's the that's the important thing. You can opt in and so it's a broader exchange that you can participate in. Now, the you know what we are all paying for is the is the me Care, medicaids or tax. So that's a set a set number. Now, one of the things that I do want to highlight as far as broader risk is, you know, folks are looking or sort of signaling that there might be tides moving towards

I mean, how are you thinking about the timing of this. I mean we might not know for days or even weeks. Some people are suggesting about how this is. So that's just another level of risk for.

Investors to deal with, right heightened volatility. But again it's just emphasizing from especially from wealth perspective. When we're talking to retail, point in time, stay focused and disciplined.

You're like, you can just tell to choose glass. I mean she's in a meeting.

There's no there's no zoom.

Meetings with Monica girl. What are you gonna do with the New York Yankees? I mean you go down to Tampa here in spring training? What is the Monica Guera prescription for the dreaded.

New York Yankees? I don't have one. I don't I don't follow baseball.

Sorry, good here, all sorry.

All right.

Let me ask you this guy for our John Tucker congestion U correspondent. What happened to our congestion text? I mean, get all these cameras up on election tonight.

Okay, you can have a mimosa.

Yeah yeah, I mean when I when I've been smoking, so it will we'll see.

Very good, Monica Guarer, Thank you so much for your ahead of US policy of Morgan Stanley Wolf Management.

You're listening to the Bloomberg Surveillance podcast. Catch us Live weekday afternoons from seven to ten am. Easter Listen on Apple car Play and Android Auto with a Bloomberg Business app, or watch US live on you Tube.

Dannice joins us now as a report from Yankee Stadium.

How was that fifth inning, mister Rives?

Ah, that was That was a brutal fifth inning as a Yankee fan, but it was Look, it was wild to watch. Congrats a Dodgers, but just an exciting, exciting night at the stadium.

Spin the wheel of fortune right now for Amazon and Apple this afternoon after what you've seen in mag seven.

What's the wheel of fortune look like for those two stocks this afternoon?

I think wheel fortune's bullsh specifically for Amazon on the cloud side. I think that's gonna be the upside there as well as advertising.

And for Apple. You know, as we've.

Talked about, this will be a better than expected iPhone number, and I think optimistic in terms of cook going into what I believe is just going to be a monster December holiday season for iPhone sixteen AI driving that.

Yeah, I upgraded so I gotta figure everybody else's too. It took me five years upgrade. How about let's go back to Microsoft. Last night, I thought this was the number of solid across the board. I mean, and I know people a little bit concerned about maybe the cloud business. Give us your read on our friends from Microsoft.

Oh, I mean, I'm more bullish today than I was twenty four hours ago. I think it's a pound the table because asure you're seeing growth accerating from an AI perspective. I think Street will kind of try to pick hairs here, split hairs in terms of the numbers. This is when you walk away more bullish. I would be shocked if this is a stock that's not up twenty four hours from now, given what we see in terms of core numbers.

So how do you think about the Microsoft story and specifically in the cloud. Just give us a sense of their competitive positioning versus Amazon, versus Google and some of the other players there.

Sure to get perspective.

Let's say a year ago, no growth essentially from AI that that's attributed to Azure.

Maybe one percent.

Today twelve percent of the growth is AI driven. So in terms of their backyard on the enterprise, thirty four percent growth. AI's driving that now. Now others are getting in on that party.

Google. I see what we'll see from Amazon tonight. But it just speaks to the AI revolution. It's only the second inning. As it all plays on.

You can meta look at that cap back to I mean, they're spending money like a nineteen eight is rock Star.

But that's great for Nvidia and great for AI.

I mean, Dan, foreigners are loving the growth, and I think American Wall Street said, well, look we took the CFA, we did this course, we did this course. This isn't good. I got a pe on Microsoft to thirty five. I got a forward p tod June of next year of thirty three. Ish to me, the issue which you're good at, and even people less optimistic than you are.

Good at, is the X axis. How do we treat the terminal value of our analysis of the mag seven?

What would happen if Dodgers didn't spend the last two years they do, they have a chip right now. The point is you look at what's happening in terms of where this is all going. I mean, in my opinion, some of the parts the AI piece could ultimately add.

Thirty to forty dollars per share.

You know, when as is all plays out in terms of the story, because I think the street is underestimating the next two three four years of free cashwa growth and what AI ultimately is going to do the story.

I mean, help me with Call of Duty. They just came out with it here, I saw sixty one percent for that. Nobody talks about this, and I just think it's an absolute sleeper.

The new Call of Duty's killing it right black Op six.

Oh boy, Yeah, look if you look look at Activision, I mean what they've done there.

I mean there's so many growth levers in the Microsoft story, more than we've ever seen leading AI. You got Activision in the back pocket, and now what you really they're seeing just a massive upgrade across enterprise, which is bullish for Google, bullish for Amazon, and of course very bullish for godfather of Ai.

Jens and a video.

And the last piece of that puzzle is the consumer AI revolution.

We hear from Cooper Tino tonight in Cook I.

Mean Paul, the zombies, the Liberty Falls zombies and the New Call of Duty.

I was on there for like two hours less.

Oh I'm sure you when you're not on the Gram or on Facebook meta platforms. Let's switch scars there, Dan, that's been kind of the best performing you know, a big cap stock here, up sixty seven percent year to date. Digital advertising it's still a thing, isn't it.

I mean that that's the hearts and lungs of the story. And I think now you could criticize them for what they're gonna spend capex in terms of AI, but that's the next level of the growth story.

So when you get meta, I think.

We're only sort of still in the early days of this growth transformation. And that's very important as this all plays out. We see from that, we see from them, we see from Google, and we see from Amazon as well.

So you got a paragraph like, you know, see if a one oh one risk factors?

What's dan? I mean, wicked, bullish? I get it. People making fun of your opinion out of Dan.

I mean, were people coming up with you last night asking for price targets on Microsoft like this?

I will tell you when I was. I will tell you when I was.

I was going to get a beverage of the Yankees game and someone said, hey, should I be worried about Apple? So there is some nervousness, But again, that just creates the opportunity.

This is a techbole market that's gonna go on.

Okay, what's your lead So we gotta go what's your lead risk factor? Here on Apple or Amazon today there's a paragraph Dan Ice major risk factor.

Is lead risk factor is just good, But maybe conservative guidance will kind of read into that knee jerk.

That just creates the golden buying opportunity. Hit pound the table.

How do the Mets look next year? Dan, gotta go, how do the Mets look?

I'm optimistic on Mets. Hopefully Mets. You know they'll be in the world.

Come on, Steve Cohen won Sodo Matchmade in Heaven exactly.

Thank you, dear that it's good.

Good websh This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play and Android Auto with a Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.

Brian Love It with Us Now, Chief market strategist in Vesco.

Good morning to you. You walked in and you said you're really not focused on the election. Get us beyond the election, frankly, get us beyond the inauguration. What does that do to give you confidence to participate in the equity markets?

Yeah.

I always tell people that the things I like to focus on is the direction of the economy and what the Federal Reserve is going to do, and so I try to avoid a lot of the other noise that enters unless the outcomes to certain things meaningfully change the direction of the economy or what the Fed's going to do.

Earnings matter. As a former equity analyst, I like to think earnings matter. It's not just the Fed. What have you seen so far from this earning cycle? What do you think the market needs to see?

Well, there's been a lot of focus on the megacaps, and it's been a little bit mixed with the megacaps, and yet the irony of it is you're seeing the numbers come in with double digit growth, just perhaps slightly below what the expectation was, or maybe a little bit of weaker guidance. The reality is those names which been driving the markets right now, our multi year stories, it's hard to look at them as a quarter over quarter story.

There we do?

Why do we? Is it just the industry? Yeah, it's just the industry, you do?

Yeah, I mean, because you know, it's a sentiment gets out ahead of itself and we you know, we we either rare it back in or you know, take it further. But but the reality is those are companies you should be looking at over multi year periods. But in terms of thinking about it tactically, yeah, good, good economic backdrop.

Let's go to Paul Sweeney on this. I'm going to ask right now if I can do the math. I'm waiting for the durbim to move, and I got to pay the terminal. I know I'm behind it.

There's sixty nine opinions on Microsoft, Paul Sweeney, do we need sixty nine opinions on any given stock?

No?

That just goes to the inefficiencies of Wall Street. Here, do we need sixty nine voices on Microsoft? Probably not. Maybe ten of them are getting paid probably, Brian, uh, talk to us about kind of something.

Whoo wha.

It was a little bit of folks inside baseball. Yeah, exactly right.

What have you seen here? What are some of the sectors that screen well for you guys? If the economy is generally in a pretty good space, rates are coming down, what sector screen well for you guys?

Yeah, if you believe that we're going to get through this environment, you know, the with the economy intact and rates coming down, you want to be more cyclical in your exposure. And so you know, we've had a period of here where our tactical indicator said, you know, be a little bit more defensive in here. Things are going

Financials what's it call in financials? Just because I saw some Jamie Dimond Brian mollinhan putting up some big numbers, big numbers, and we.

Would expect M and A activity to pick up some animal spirits. And you know this normalization of the Yelk curve, which certainly helps helps the banks.

Is cash an asset? It's really what it comes down to.

I mean, people's let's assume most people are behind SPX this year.

What do you do with cash? How do you deploy right now?

The funny thing, Tom is we've been telling people to get out of cash now for a year and a half. So I guess at some point the well, look, I mean the S and P five hundred up twenty something percent this year, the cash looks good. The problem you have with it, of course, is the reinvestment risk. And you know, every time yields come down, you think investors lost their chance to lock in the four or five percent. And I guess this is the third bite at that apple.

How about credit risk here? How much credit risk going? Do I want to take use and fix some space there? Spreads still like records, super tight?

Right yea, spreads are tight, but yields are reasonably attractive and the fundamentals look quite good. I mean, usually when you look at you're going into a worrisome credit backdrop. Usually see double digit borrowing growth. We're nowhere near that right now.

We got a metal bar folks around our desk here. We have the nicest radio studio in all of radio. Don fin screens up here and thanks, it's really And what what you don't know is the metal bar is here to take our heart rate. The average heart rate of Mateo, Levitt and Swingy is like a forty nine, you know, and it's it's Lisa helped me here. Peloton's up twenty five percent the.

Yeah, and they just announced the new CEO.

New CEO.

They go from one hundred and sixty to three. You told me to buy I remember you told me to buy I did not. I mean, Brian Levitt, you're so cut? Do I need the bike plus from Peloton? Is that the new Peloton? The way to go?

Here? Well?

I mean I think is as long as you eat healthy and you and you move, that's that's my at least, regardless regardless of how we do.

It sitting on barstool in an Irish pope.

That's not the way.

It doesn't seem like the best approach, but you know, that's how I'm going, Lisa.

It seems like the fun approach is.

The exuberance there to investco across a huge platform you have. Is there individual stock exuberance to pick on PTO N or to pick on Microsoft or Apple Amazon today? Are people engaged in the market or not? I don't see it.

They're not. I mean, it's not the irrational exuberance that you usually see at the end of cycles. There's still a lot of money. I mean, you can look at seventeen trillion in deposits, you can look at six and a half trillion in money markets. That's a lot of money that's still sitting there. I talk to our portfolio managers every time I go and grab a cup of coffee.

And Brian, we don't care.

The only reason we had you when we need an outside expert on Penn State, Ohio State Michigan. It is the line seven and zero, but against the heritage, a juggernaut of the buck Eyes.

What do you think I think I'm going buck Eyes on this one.

But probably pretty I don't know. I'm gonna stick with it. My pen stake State, Yeah, I mean, got a great coach is my producer will attest, and you know, we'll stick with it.

We'll see.

But they're always waiting for the for the Ohio State Michigan game. That's what even a whole year comes down.

We are and we're going And if anyone has tickets, let me know, because the price on those things are still.

As where It's like where we're playing shar Is.

We're playing in Columbus, oh Okay. And when you're going, We're going, and we had a fly to Cincinnati and drive to Columbus because there's just it's impossible to get there and there's no tickets to be found right now.

Wow, Well they could be found. You're just paying a pretty.

Price for it in Michigan. That's what it's all about.

Your Penn State, Ohio state, Michigan update. There everything for the surveillance we're rebuilding.

Your correspondent, Brian Levitt Investco. Thank you so much.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.

This is the conversation with someone with deep experience on trade. I want you to push aside every single pundit and expert. The path here is from my Michael Froman to Robert Leiittheiser, and these are the two individuals that have most studied and affected a trade policy for the United States of America.

Well, I think the old Washington Consensus, which was really about hyper globalization and all the benefits of global integration, I think that has very much been weekend. I think we have the beginnings of a new consensus, but there

But the heart of it within the polarization of America, and we see this with the minted Nobel laureates Smoglar, Robinson, and Johnson. The heart of the matter is the separation of America into elites looking for some form of post world to benevolent, egalitarian trade policy, and everybody else saying we're getting killed. How do we bring that, how do we amend that together beside permanent polarization.

Well, I think first we should recognize that, on one hand, globalization has achieved some of the most significant gains in human history in terms of reducing poverty, lifting hundreds of millions a billion or more people out out of poverty, increased a competitiveness, spread technology around the world. There have

So is globalization dead? I mean, there's probably a couple of generations of us that have grown up with the whole concept of globalization.

Where are we?

Is this a bump on the roads and something more fundamental?

Well, first of all, it's certainly not dead. The trade is as at an all time high. It's not growing as much as it was before, used to outstrip global growth. Now it's somewhat behind global growth, but it is still growing. And what we're seeing are changing patterns of trade. And so rather than being overly dependent on China, we're seeing

Uh terrifs. Boy, they're not just one party talking terrorists. It seems like everybody's talking tariffs these days, to varying degrees. How do you view tariffs?

Well, Teriffs, first of all, are ultimately.

Paid that whether it's the consumer consumer product, or whether it's the importer, perhaps a manufacturer in the US, who's paying a tariff on an input they.

Need for their for their production, for their production process. So it makes things more expensive. And when it comes to the consumer income, consumers spend the disproportionate amount of their income on tradable goods like clothing and flipwear and things of that sort, and so it's really a regressive tax on them.

Mike, I got time for one more question. Nick Burns is nailing diplomacy in China. His Twitter feed is a State Department mandate read. He's on the train.

He's driving all over China on the train, going to see things, moving it forward. Is Nick Burns on.

Your short list if we do get a President Harris as Secretary of State.

Nobody's asking me for my list, but Nick Burns is an incredible diplomat, incredible public servant. So doing a fantastic job there as he's done in his previous jobs, and he would be a great asset to any administration.

Is Michael Frohman on your short list for secreturs State?

I'm busting. I'm very happy at the Council.

I'm very happy at the Council on Formulations, and I'm honored to have served and governments and I'm alighted to be at the Council.

Whoever, returning again to Bloomberg Surveillance, Michel froman with the Council on FORID Relations, I can't say enough about the essays and foreign affairs. Whatever your politics, folks, it's just absolutely fabulous.

This is the Bloomberg Surveillance podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal