Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple car Play or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Our next guest, Sarah Hunt joins is chief market strategist for Alpine Saxon, which he joins us here in our studio. Thank you so much for joining us. Sarah, You've got a nice note in your line in your notes that I really like from quote you're not spending enough too. Wow, that's a lot of Capex. Was a short trip. We did see a little bit of, I guess concern this week. We had Google up their Capex stock trades up. Meta ups their Capex stock trades down dramatically, So not all
Capex is the same. What are we learning here?
I think it's showing you that there's a question really about who's going to be able to put that Capex to most effective use. And I think unfortunately for Meta, because they've had some issues in the past spending a lot of money where it didn't always come to fruition, I think they have more of a penalty box than some of the other players in the space. And I think, I mean, the Capex boom has been so dramatic that the fear then becomes what happens when the second derivative
goes negative. Right, it's up, but it's not up as much as it was last year, and right now that's not as much of a problem, but it's coming as the law of large numbers gets larger and larger, and the question is going to start to become what are you getting for that Capex?
And if margins are.
Going to be affected, then people are going to be a little less excited than they were when it looked like that Capex was going to drive margins. So I think that's the tension right now, that's what people are trying to figure out.
Yeah, and in your note, I liked how you said it's going to be about show me the money right when it comes to Capex spending on AI, let's talk about the names that are not beating. Some of the companies that are not Wall Street disappointing on either the top, bottom or both lines. They're really getting beaten up. Do you think it's being a little overdone when you look at those individual names.
If I want to add to the things that go on the wall of worry, the fact that stocks can get cut in half for bad news as opposed to down ten or fifteen percent. It seems to me one of those things where there's very much of a knee jerk reaction and there's a wholesale selling and there's not a lot of looking into what's wrong. Now, in some cases there were things that were wrong, people have cut guidance.
I mean, I'm looking at companies like FMC or five Serve where there were big issues going on, but those are really big moves, and those kind of moves I think are a little bit should warn you that there could be more volatility ahead, because that is more than you usually get even for problems within an earning season.
So does that tell you that investors are just looking for a reason to get out.
I think it's almost like there's either either it's over owned for some reason or people are just getting out to say I want to go back to this, or I just want to get out of that. But some of them are not the big tech companies. I mean, met as the exception for this earning season so far. But I think that that is a little bit worrying to see that much volatility in names where you shouldn't expect to see that much volatility.
And one of the ones yesterday that kind of got my attention was because it's near and dear to my heart is Chipotle. Actually, I stock got crushed yesterday on some bad numbers, and that's my Wednesday go to right. I mean, you go to the one on Third Avenue and they do a great job. So I was little well, and that's the.
Concern about you know, you've got to cut earnings three times in a row, and or those prices and those costs are going up faster than you anticipated that they were. I mean, I don't know if that is individual to them where they didn't have a handle on it, or if it just kept the bad news just kept coming.
But that's that's.
Also something where the underlying is Peter Cheer was just saying before some of those tariffs, some of those impacts are coming next year. They're not here yet, and we have this sort of feeling that it's all okay, and I have concerns that going into next year you're going to see some.
More of that. We had Michael Halen on yesterday. He's the restaurant analyst or of Bloomberg Intelligence, and he called out the company big time. He says, for them to blame the economy is not accurate because all their peers are doing pretty darn well. So he called it out as a company thing, and he heard from the company yesterday. So where are we going here as we think about twenty twenty six, Sarah Boom. We're turning in the calendar
on November tomorrow. What are we thinking for twenty twenty six here?
Well?
I think that. So there's the plus side for twenty twenty six is you've got some fiscal stimulus, arguably with what happened with the legislation that was try asked, you've got and the tension is that you've got the trade situation where you're finally going to start seeing some of that. It's going to be about earnings. It's going to be about margins. You're already seeing some of the big tech companies lay people off, so that's also I think about margins.
No matter how you want to slice that. If Amazon is saying, well we have too much, well you didn't have too much last year. So it's going to be a margin issue.
If you know what's interesting about Amazon edged I just was just reading they had about seven hundred and fifty thousand employees in twenty nineteen. They came out of twenty and they have one point five million now. So they edited during the pandemic, a pandemic as we all did much more e shopping, And so I guess are they liking a couple two, three, four hundred thousand people out? Maybe? I don't know.
Well, I just think it speaks to markets are driven by earnings, ns are driven by margins. The AI revolution that is supposed to add productivity, what does that really mean, Well, it generally means that there's less people working, so there's an issue. There's another tension there. How that all plays out through twenty twenty six.
Is going to matter a lot. Night, Sarah, thank you so much for joining us. We always appreciate having you come in our studios here. Sarah Hunt, chief market strategists for Alpine Saxon Woods, stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am. Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
This is how you when you're a gentleman on a certain agent Wall Street Friday, blue jeans, popper shirt, blue blazer solid. I love it. This guy comes in and blows up the entire studio. I mean there were clashing in so many different directions. I don't even know where to go. But Dan Ives is here. He does all the tech stuff for wet Bush Securities. Dan, you've been busy this week. We've had a ton of tech earnings.
I just want to start with Apple last night. The iPhone seventeen is a thing, isn't it.
Look it's a surprise upgrade cycle. I mean that's the reality. And for so long we've always talked about, you know, these upgrade cycles, a potential supercycle, and this is a surprise upgrade cycle. And I think especially what we're seeing in China, well, China was a decliner. Now you start to see that increasing year of a year. That's something
streets coming up in terms of numbers. The New York City cab driver's embarrassment Apple last six nine months, so that's this is a bullish scenario, especially leading into what I believe now will be the year of AI. Ultimately Google partners for Apple seventy five hundred dollars.
To go back to that, What is Apple's AI strategy going to be or should be? Do you think today? It's invisible? Right today?
In the AI party that started at nine pm, it's now ten thirty pm. That party goes to four am, cook an Apple. They're on the outside, looking behind the velvet ropes. They're looking through the party through the window. But what I believe they're going to do now once Google won that DOJ suit, that clears the road for them to do a significant Gemini partnership where ultimately the consumer AI revolution goes through Cooper Tino.
Well, look, we're talking AI spend. We've got to talk Meta because they're the complete opposite of Apple. Right, they're just throwing the kitchen sink at AI right now. But Wall Street are they approving of the spending Meta is doing in that space?
Look, in my opinion, it's a table pounder when that stocks sold off Yestad, because my whole view is this is an AI arms race. You want companies to spend now, Look, free cash for earnings obviously gets hit. But the reality is is that this is a fourth Industrial Revolution, and you want all these coming from Microsoft to Google to Meta to what we see with Amazon.
But guess what they're.
Fueling the AI revolution. That's obviously bullish for Nvidia, AMD and others. I love what Meta's doing. I think it's a four digit stock, and I think what you're seeing now it's spreading. Look at Amazon. Finally, Jassey saying, don't forget about us. It just shows in streak continues to underestimate the scope and scale of this fourth Industrial Revolution.
So and Alexi saw yesterday Meta the stock did sell off. They went out and I sold thirty billion dollars worth of bonds one hundred and twenty five billion dollars Demand one. I was doing that business a five or ten billion dollar deals were monster, right, thirty billion and I bet you had made five phone calls LA last night and sold that deal. Believe I bet you that's what happened. Dan, talk to us about Amazon, boy that the stocks up twelve percent pre market trading. Here, talk to us about
where they are with their cloud business. Visa v Microsoft, Visa v Google. Where's the cloud horizon for Amazon for the last few years.
Right, if you look at the top of that mountain, it's Microsoft in the della and then of course Google what they've been done with GCP, and that's been huge, the rerating that we've seen with Google. But if you look at Amazon outside, looking at right, I mean Jase, even though he's in AWSK, really anthropics been the opportunity underwhelming last night. I think it's an inflection point quarter for Amazon. I think this now is going to change the view of Amazon when it comes to the.
Cloudiest cool some of the parts.
That's how you get the three forty three and fifty dollars stock And this is a very very important quarter for the two mag seventy. If you the Apple and Amazon both sort of like they're sitting at the table by the kitchen, like at the wedding, like with the random friends they get put that random table.
They want to be at the cool table. Now they're there.
Look, there's so much to talk about with Dan ives, right, because you just I just I want to tick through some of these things we have you here in studio Tesla. Are these shareholders going to vote for this huge compensation package? November six or elon Musk.
There's a better chance to me not eating chocolate sour Patch kids tonight. Then this thing actually getting voted down. I mean, the point is this thing is getting one hundred percent getting voted for. The reality is that Musk is Tesla. Tesla is Musk. He's a wartime CEO right now.
You need him in this AI chapter.
And then also I think they'll they're gonna vote for the XAI ownership piece, which speaks to Tesla isn't a on it. It is an autonomous and robotics play. It is not about deliveries. In my opinion, I think that's why this is so important for shareholders when it comes to Musk.
All Right, we got it before, we let you go, Happy Valley. Turbulent times in Happy Valley, Penn State, we don't have a coach, but boy, is that a good seat. What do you think Penn State's going to do in terms of hiring it.
Look, in my opinion, it's the number Obviously you could say bias. I think, especially after the LSU Governors team, I think it's the number one coaching spine all of college football above Florida to me, you know, Paccraft there's no better athletic director I think right now in the world than him, And I think they're going to go for Elka at Texas A and M I think you go for Clark Lee at Vanderbilt, manny DA, potentially Brahm and
others there. Look, this is it's obviously been a very very you know, disaster year, but it's our view we need the right person to ultimately take us to the next level.
There you go. Dan, I is very He's a proud Penn State alum, very involved in the athletic department there at Penn State. And I think he also does some tech research on and he looks.
Like Florida, the state of Florida walking.
Badly, badly. It's a total sign there.
Guys like Sweeney, they're the ones that give out the full chocolate bar for Halloween. So that remember that continues to be you know, obviously someone.
That are many, none of the many, and we can't see you can't do. Dan, thanks so much for joining us. We really appreciate it. Dan Ive's global head of tech research and Webush Securities. Stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
That brings us to Peter Cheer. We want to get a sense of what we're doing with this Marketer. He's had a macro strategy at Academy Securities, and I'm guessing he is a Patriots fan. Yeah, okay, and they're back by the way for what it's true, you know, and not being a Patriots fan. If Peter, what do you
make of this market? We were just talking to Dan Ives and web bullshavette all the spending that we're seeing a lot of these tech companies do on artificial intelligence, and I think people are supportive of it, but at the same time a little bit wary because these numbers are numbers we've never seen before from any industry.
So that basically describes me to a t so, which is why we've been really focusing our investment on what we've been calling production for security, and we're really looking at areas that are going to benefit from a real focus on growth of domestic business.
I think electricity production is a huge part of that.
Right, if you look wherever the AI winners are, losers are, whatever the valuations are, we're going to need a lot more electricity coming online in the next three, five, ten years than it's currently scheduled. So we're huge believers in that. I really think the rarest and critical minerals, the processing and refining of those, is going to be brought domestically. You're going to see chip industry, You're going to see space.
So I kind of like this what we've been calling pro sac or production for security, that is going to be the investment thesis. And I think it's actually going to replace ESG as a driving force for the next five to ten years.
Yeah. Yes, gene boy, that took a turn.
Came and went right.
Yeah.
And I think it's and I think this is almost an evolution. I think we're just rethinking sustainability.
Right.
Sustainability meant one thing, and I think now it's much more of a hard look. If we want to be sustainable as a country or as a company, you need
to be in control of certain things. So I think when I look at this, we're going to produce x amount domestically then you're going to want to produce some amount with your close allies and friends, and then sure you can buy some on the open market because who cares, but you can adjust that, but you need this core base to be truly secure and sustainable as a nation.
I think that's going to go to the corporate level, and I think it's going to spread globally as every country across the globe realizes this.
So I think this is not a but I grew up in and you grew up in a world where it was globalization and the net result are One of the net results is low costs, low levels of inflation. We're buying stuff because we're making it where it's the most efficient slash cheapest. Then I guess the pandemic said, uh oh, there's some weaknesses there in terms of, you know, getting supply chain reliability, And I guess that's kind of where we're trying to figure out, now what that miss?
Yeah, And I think first it was COVID where we realized supply chains were kind of broken for a variety of reasons, not necessarily in affarias. Then you saw Russian invade Ukraine, where you saw a really bad actor the first time in our lives behave badly, and now I think you have this ongoing friction with where we're want and it's clear China as a bottleneck. And you know, one of our general's work with Spider Marks is great.
He's been talking about us moving to a pre war world, and I've never really thought about it that way, but we've kind of since World War Two lived in a post war world. We had this luxury, then the Soviet Union crashed and we have the true we're basking the peace divid end, and now we're moving to a pre war mentality. And I think there's three things that are good and important about that. One is it creates a
sense of urgency. So some of these problems that we've been talking about five ten years and no one did anything, now we do it. It creates a sense of sacrifice, So I think people are maybe willing to do things, maybe give up on some regulatory things that they were really wanted to let this occur. And if it's successful, pre war leads to no war. And I think that's
the key, right, It's kind of like deterrence. If we now realize we need to protect ourselves and make sure that China doesn't want to mess with us.
We have to do these things, and I think we're on those stages, you know.
Speaking of trends during this earning season, certainly AI spend is one of them. But something I'm not hearing a lot of is companies talking about the impact of tariffs. It's sort of been a non event. Why do you think that is? And do you think that's going to continue?
So I think it's kind of natural if you look at it. We've only been paying an extra twenty five to thirty billion a month since kind of April, so cumulative it's been about one hundred and eighty billion, So it's not a big deal in the state of the economy.
Two, I think.
The large corporations had the working capital and the clout to get a lot of products brought in before tariff. So I think it's only going to start slowly affecting, you know, the large companies who that's who we tend to get the data from. That's who we tend to see going, you know, in the coming quarters. I think from the you know, smaller companies, it's already hitting, but we don't see that right. It's you know, the individual companies,
small LLCs got hit, So I think it's there. We're going to start seeing I think creep into the data in Q one and Q two, And the other thing is, let's be you know, I think fairly honest here is that companies are very reluctant to attract attention to themselves on tariffs because the administration doesn't like that.
So I think it's a Q one Q two story next year.
I think it's there, but it's kind of being suppress and as we roll into the new year.
That's when it's going to be harder to hold back. Is that a headwind for the markets if we start seeing more inflation data coming out? Yeah, I think it's a headwind for markets.
And again I think this transition, as you pointed out, we benefit from globalization, made everything cheaper. I think it made things cheaper at the suspense of true sustainability and security. That I think is going to be the trade off that we're going to have better job security, but there is going to be this higher cost.
I don't see a way around that.
And is it a headwind for the Fed come December?
You know, I think that's a tough one because I do think you know, we are going to get to something more neutral rates. So I think we get to three percent, come hell or high water on FED funds, and I think the ten year stays below four percent. Maybe it's in that three sixty to three eighty sort
of range, and I think that's enough. And I think the one big tailwind that if I'm right and we really get this production for security, the big beautiful Bill had accelerated depreciation, so that really encourages that aggressive growth. So I think we've got some headwinds on one side, tailwinds on the other. But that's why my portfolio. I just see the need to produce electrons or electricity being such a high thing. No matter who wins on the AI,
I want to own that. I want to own energy production. I want to own the chip manufacturers. Domestic, domestic, domestic is kind of the focus. So I think there's going to be opportunities, less downside, decent amount of upside.
All right, Peter, thank you so much for We appreciate it as always. Peter Chuer, head of macro strategy at Academy Securities during this year and wearing a blue jay's hat and we're in a blue Jay's hat exactly right. So again again lat tonight here to see you. But exactly where is Waterloo? It's about an hour southwest of Toronto, right towards Detroit. Okay, very good, So there we go, So Waterloo, Canada. That's from mister Cheer hung his hat there for a while. All right, Peter Cheer had a
Macro Strategy Academy security. Stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us Live weekday afternoons from seven to ten am Eastern. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us Live on.
YouTube back by popular demand. This is Lisa Matteo. And they'll look at the newspapers. What do you have today these? Okay?
This has to do with the pending cuts to the SNAP program because of the government shutdown. It's actually changing what people are handing out to tricker treaters today.
So this was in the Associated Press. Kind of interesting.
It's happening in like working class neighborhoods where people are giving out shelf stable food instead of candy sometimes so like ramen instead of Reese's or Mac of cheese boxes, okay, because they're worried, like their neighbors are losing some of the food that they rely on.
So I see, yeah, he's yes.
So sometimes they're doing it instead of but other times they're giving the kids the candy. But on a side table they have out things like the mac and cheese or diapers or wipes.
Or things like that. I like this stuff.
Imagine the kid's face they throw a diaper in there. Yeah, I was hoping for a Reese's peanut butter.
Correct.
So now they have like kind of a table on the side so that parents, if they need it, they can kind of take it.
That's community coming together.
That's awesome, exactly, exactly, especially in a lot of the middle class neighborhoods.
So I love, love, love that story. Yeah, I'm looking at the price of coco just because it's gone up over the last several years so much. But it is down forty five percent year to date, so a little bit of a pull back in there, the price of cocoa and chocolate and things like that. So there you go.
I know, I haven't gotten my chocolate yet, but I don't get many trigger treaders. Yeah, yeah, no, okay, this one's in the New York Times. The bidding is open for New York Penn Station, right, the transformation Okay, yes, no, it's still going up.
I'm sixty one years old and I've heard this every year of my life.
Well, the problem is that six months ago, right, the Trump administration took over control of it. So now the Federal Department translation, they're looking for proposals to transform it in about two years.
That's what they're saying. Two years that's going to happen.
And I didn't even realize Amtrak owns Penn Station.
I didn't realize that. So because every time you get delayed, yeah, it's because of your second class citizen in New Jersey transits. They get there right away, they get that's there, you go.
So Amchak was kind of official, was talking to the New York Times about it and even saying for the fate of Madison Square Garden because.
It sits on top of the station.
You know what happens you know with that too, So that's under question.
But I'll tell you the Moynihan station across the street is awesome. They did what they did renovate so far is really good. Unfortunately that's not me New Jersey Transit's still in the in the dump, in.
The duck, you know, I mean dark Dolans will want to redo MSG now.
They had the opportunity to go to the West Side. They had the opportunity to go to the West Side as part of a big project to build a football stadium and things like that. Was gonna be awesome day to move so and so that's not happening. But anyway, if President trumpets again and put his weight behind it, go for it.
So maybe it looks bigger push we'll see, okay. And this last one is actually on the terminal. It's a deep look into the world of travel baseball for kids. How much parents are spending thousand dollars. They got bats, gloves, clea showcases, camps, travel team itself. Then you have to dry and fly to the games and tournaments, hotel stays, rental cars.
I understand this, I live it.
And then you have the drip, right, you gotta have one hundred and twenty five dollars batting gloves, right, the eighty five dollars sliding miss It's ridiculous, but it does point out this one story. There is a sixteen year old kid, his name Miss Striker Pence. He's about six foot six. He throws one hundred mile per hour fastball. Okay, but he's seen as like the MLB's next top pick.
He's sixteen, and his parents are saying they've spent about one hundred thousand dollars between him and his He has two younger brothers too, taking them to all these things and showcasing them and putting them off, and they have a batting cage in the backyard and all this stuff. But they say it's going to pay off because hopefully their son.
Is going to Maybe that ROI is going to pay off better than sending them to college.
I don't know all he says. He's basically that said, he's spent just about.
As much as a college education already, so we'll see.
But it's like this huge, huge, big business. I mean, the one I think is the most egregious is high hockey. What hockey parents do for their kids. And they drive. So where are you going this weekend? They're going to like eerie Pennsylvania. Where I'm going to Toronto. You live in New Jersey, You're going to Toronto for ten year old hockey tournament.
That is when you fly to these places and then you play a team from New Jersey. Yes, like, if you're kidding me, I'm flowing to Florida to play in New Jersey to team No.
It's a scam, but time expensive. All right, there you go. That's Lisa Matteo and her and newspapers. It never fails to impress.
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