This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always I'm Bloomberg Radio,
the Bloomberg Terminal, and the Bloomberg Business App. Look how out of the net right now? Helping us here with the markets? What do you do at thirty eight thousand or UBS one?
By and large, you're prepared for a consolidation given the strength of the run, but you prepare for hire. Really is our view or view coming into the year, is that the surprise of the year, the thing that markets weren't expecting, would be that stocks actually in a soft landing less than any other major asset class, and that stocks could rise hit pressure record highs without getting much help from lower bond yields. So far, that's what happened.
What we expect the next leg will be you know, possibly after some consolidation, is a more broadening out of that rally. So it's not just you know, on the backs of the of the few.
So kay, we got industrials coming out and it's pretty shaky this morning. We didn't J and J did well, but others really pretty rocky morning. Do you subdivide into the day to day grind the tech growthy profitable companies, cash flow companies like Microsoft from everybody else, or do you pull them together?
So our view for for a while now has been that given just the extent of earnings out performance you're getting from some of these names intact, you just you can't you can't be short them. You really cannot be short some of these cast generating machines. And you know we have no overweight to technology and sector ETFs where we have that ability. So it the short answer is is yes, still still enjoy those, still separate them. However, you know, our view is more towards the broadening out.
Want to have betting on a lot of different winners, whether that's in US financials, whether that's in you know, em ex China, whether that's in Japan. I really do think the story is the soft landing and narrative is a boon to risk assets the world over.
Hey, look, you know we had that great run to end the year last year in kind of November December. I don't recall earnings expanding that much during that period. We have a valuation risk here in the marketplace. Given that run we had.
Certainly at a valuation risk. You could also say that since the start of twenty twenty two and theory valuations have also improved mildly, So you can you know, you can play that off one way or another. Valuation is clearly not the best market timing tool. What it is very good at is kind of delineating how close to the money you might want your stop to be at a very very rich valuation. You might want to stop a little closer to the money at something that you
know has a little more evaluation support. You might be a little more consistent to be able to bear out a weaker stretch.
So you mentioned merging markets here. I've heard Japan mentioned, not to Japan's on merging market, but I've heard Japan mentioned more in the last six months that I have in the last twenty years. What's going on in Japan.
There's a lot of different elements here I think you can tie together. I think first, there's been a long story of trying to get to corporate Japan to improve its shareholder return programs that actually became serious. You actually really start to see more concrete steps around that, you know, let's call it February March of last year, and really start to see that ramp up and the market glom
onto that. The second is Japan is probably the best levered play to nominal growth that you have out there. It's you're predominantly export oriented the earnings outlook, and it's also benefited from, at the same time having the end as weak as it is. The third element, Sorry I have to, but the third element is is it just definitely the fact that from an Asian perspective, if it's China or Japan, I think that rotational flow has been a very important story.
The heart of the matter is this debate over cash or deep into January, and everybody knows there's six eight trillion out there, bringing up literally in every conversation because all of our listeners and viewers are looking at cash, where's it going to go? Is there a UBS formula that says x percent of it goes back to deposits.
I would say the just speaking generally into longer duration assets. So this is something that even at the start of last year, because I would say the macromood was a lot lower. Going to the start of last year, A big thing I was pounding the table on was reinvestment risk. Reinvestment risk, You're not going to be able to get this yield on cash forever. Well, now that's actually more teed up. I think people are a lot more aware
of what's what's coming down the pipe here. So it's it's effectively we are going to see some flows into whether it's longer duration or whether it's into the equity market. We would expect some more support on a flow basis as it becomes more apparent that cuts and the yield on cash is going down for good news reasons, a soft landing, falling inflation, rather than bad news reasons a stumbling, a deteriorating economy.
All right, so Tom's been all over this magnificent seven. He's just been printing it in twenty twenty three.
How about for the rest of us.
I mean I missed that trade, no surprise, my new Jersey municipals have done just fine, thank you. But where do I go now? I mean, do I chase those magnificent seven yere I miss?
I must have missed it when Tom left the Triple Lover doll Hash Fund in favor of Greener your.
Pastors, now Stealth's move into market.
Are our views things like US mid caps, US financials, EMX, China. Those are some of the areas where you are seeing some more relative earning support valuations a heck of a lot supportive. So if you if you're looking at things that have been relative laggards, have a lot of catch up potential if the risk gone mood stays going. Those are probably some of the spaces where we expectator.
Love Kawa talk. Now we got to go to hockey. You know, there's a great video out there, folks of a really magnificent moment and I lived it in that Michigan when I played was number one in the nation with that question. Red Berenson was the force there and I had the privilege of talking to him as he said, Tom, you're not good enough. You're not going to escape from Michigan. Somebody else was and it's one of the most famous
goals in NCAA history. Your father and I went back and forth, Lukala the other day on one of the greatest goals the NCD he went around Jim Craig and put the Urban the net and they lost to Wisconsin in the finals. But so lot, that's Wisconsin, a bunch of Canadians. But what a joy growing up with Ben Kawa. What was that like? I mean, was he do you have you in the backyard doing sprints?
Not not sprints? But man, they're still next to his his dad just turned one hundred this year. They're still an outdooryard right in the park beside their place where he remembers skating as early as hell in some years. And you know, now, I think it's well into the new year before that thing freezes over. To make what you will. But yeah, no, what a what a great guy, what a great coach. And it's been, you know, great getting to banter with him on hockey over the years, as it is with you as well.
Okay, well, thanks so much, Lukawa with us in good morning to Ben Koa and mister Kyler Senior. One hundred years old, one hundred years very cool. Carl Ricadonna is at VMP Perry Bob, and he knows that you read Blinder in ballmart at fourteenth edition at Princeton, because that is gospel.
And if you go to.
Chapter eighteen, they talk about factors of production and other bow tie stuff involving productivity. Carl, productivity right now is a mystery. How does our mystery of productivity marginal productivity theory, how does that into what I believe is a fully employed America.
Well, we good morning all, first of all, and as we think about the productivity numbers, it's really kind of a snow globe at the moment post polgetic, because we've had wild swings in both directions, and so this is really a residual measure of economic performance. And I think we won't understand the productivity trend until we get to more steady state performance in the economy, which I'm optimistic
that will be the case in twenty twenty four. But typically as you have a kind of labor scarcity episodes and high wage inflation, that creates the type of capital investment which does lead to higher productivity numbers. That being said, as we look at forward indicators of capital spending and whatnot. They don't look great. Capex intentions look pretty poor for
the economy at the moment. So there really is kind of a two way narrative or two way discussion that we'll have to filter through over the course of this year.
I love, love, love the Rick Adonna snow Globe analog. We will steal that and use that, Carl. If that is the case, we're a fully employed America. But Paul Sweeney and I are getting emails by the hour saying, you guys are nuts. How can we have a four percent sub four percent unemployment rate and we're getting the emails we're getting.
How does that happen?
Well, what's interesting if we look at the last jobs report, there was some peculiar behavior in labor force participation. Had we not seen those moves, the unemployment rate would indeed be moving above four percent. So there's definitely a down vector on the labor market at the moment. It's been pretty steadily decelerating for the last twenty four months really, and so this may be creating some perceptions of economic weakness.
But tying into today's events in New Hampshire and as we think about the presidential cycle, there's weak economic sentiment from the public. But I think that over the course of this year, as it becomes more apparently that inflation has moderated and it becomes more apparent that the labor market is still on a relatively healthy footing, this economic messaging, I think is going to play favorably into incumbent politicians, most importantly the top of the ticket. The presidential races
are very sensitive to economic conditions. Ronald Reagan said it in nineteen eighty asking voters, are you better off than four years ago? And Bill Clinton also honed in on that message in ninety two with his unofficial campaign slogan of it's the economy stupid, and I think it's the economy is going to resonate with voters, and maybe we saw kernels of that in the last Michigan sentiment survey as well.
Hey Carl, what are you? And the good people at BNP parabal what are you? Quick're econom a call here for twenty four A you in the soft landing camp?
Where are you guys?
It's some version of soft landing, So maybe we'll say soft ish landing, because when you have the fastest and most aggressive fed tightening campaign in four decades. Just to think that comes in for a perfect landing, I think is maybe a little bit too optimistic. So we are cognizant that there will be some tensions here between still very restrictive monetary policy, rising real rates in the economy at the same time that the labor market and income
trends are decelerating. So I think it will be a bumpier version of soft landing that plays out, but I think it will still fall short of what would be called a recession by the Business Cycle Dating Committee. So all in all, it looks to be a decent year ahead.
Hey, Carl, we just saw some earnings from some of the industrial companies, whether it's General Electric or three AM. A little bit of softness there, and we've seen softness in the manufacturing economy for many months now. But boy, the consumers hanging in there. What's your call on the consumer here for the year.
So the consumers hanging in there, And just to take one step back looking at those big industrials, rights, as a macroeconomist puts on his equity strategist hat, right, we focus on the nominal GDP trend and rather than margins, we look at inflation, right, there, they're measuring the same thing essentially, and when we think about the twenty twenty four outlook, it will be a year where nominal GDP is slower than what we've seen in the recent years.
Doesn't mean it's contracting, but it's definitely decelerating. And also, as inflation moderates, that's going to put pressure on corporate margins. So if you have slowing top line growth and margin compression, that's a challenging year, you know, a challenging outlook for for equities. Now, the other side of that is that consumers are relatively healthy. We still have a tight labor market,
we still have a persistent wage pressure. So one way to think of that is it delays the fed's rate cut plans, but you know, wage pressures are still running. It effectively four percent four point six percent is measured by the Employment cost Index, and this is, you know, bad news for the FED that wants to get quickly back to two percent inflation, but it's good news for the resilience of consumer activity in a car.
I use a ten year inflation adjusted yield to real yield, folks, is sort of my you know, it's like the Gilbert Kem set to correct donated years ago in the basement, and I look, Carl, the tenure really yield one point eight zero to break out above one point eight six is new territory. Are you suggesting a sustained higher real yield is where at one point eighty three right now?
I think if we have a sustained higher real yield, that is going to put downward pressure on economic activity. And I like to think of it in Fed funds terms. So if we take the you know, five and a half Fed funds rate, we look what's happening in core inflation. Pick your poison, whether you want to look at inflation expectations, core CPI, core PC deflator, which we'll get another look
at this Friday. In that type of measure, it's telling you that the policy rate is moving higher and maybe too high for kind of a soft landing type of play out for the year. And so I think that
means that there has to be a course correction. I don't think at the March meeting, but I think by the time the second quarter rolls around, we will have more confidence that the economy is moderating, the labor market is coming into better balance, inflation pressures have moved lower, so they still need to continue pushing on inflation with real rates well above our star so at two percent real rate. But there will be a time for a recalibration around the middle of this year.
Well, we're our start FREEO on Tuesday, Carlson in short here, thank you so much. Carl Rick. Odona is a BNP paradi. She did the Gabelli track, that's what we call it here. If you go to BC and then Fordham, yep, we call that the Mario Gabelli.
That's a good track. And this is this is a.
Really important conversation, folks, because she came off the derivatives desk at Deutsche Bank and it's socked Gen, which is owned European derivatives. Sock Gen invented the math trading gaining and losing here on equity derivatives. Sylvia Jablonski joins us with Defiance this morning. Sylvia, let me just start out with Defiance ETFs. I love your cruise ETF. You know it's it's been great. It's a triple leverage all cruise ETF love it. But why did you guys choose not to do a bitcoin ETF.
Let's go right there, good, good morning time, Thanks for having me. Well, you know, I think it's at ETFs A lot of times it's a it's a first movers market, and there were a whole lot of first movers yeah here. You know, so once you start hearing that black rocks in the game, you know you had to great scale people converting GBTC. It's just you know, you have to make sound business decisions and know where you're going to win.
But we probably would have to be honest if we were had a chance of being first just within the cards.
For us, we understand price volatility, like in cruises during the pandemic. I'm sure your ETF was sport there on a day to day basis. What do you make of price volatility of bitdog forty nine thousand when I stepped into it. Thank you folks that worked out and we're enjoying sub forty thousand this morning, thirty eight thousand and nine sixty one. What will be the ramifications of that price volatility for the billions in bitdog ETFs.
I like the Bitdog ETFs. I think that a whole lot of people are going to buy the bit Dog ETFs pretty soon when it falls to that, you know, thirty seven thousand, maybe even thirty six thousand level before it starts to rally up. I think this is kind
of a classic sell the news thing. And you know, the thing with these bitcoin ETFs and bitcoin in general, you have a lot of people that actually believe in the thesis of the product and that you know, it will be digital gold, that there's a place for it in a portfolio. And if you see these institutions actually allocating that one to two percent, just give it, you know,
give it a go and invest on that thesis. Plus the people who just invest because they think a whole lot of people are going to buy it and the price is going to go up, but have no conviction on it. You know, you can see that bitcoin is going to get some tailwind here in the future because of these ETFs. If you look at the ETF filings, there are so many of them out there now for covered call strategies, for put right strategies and things like this.
So you know, just the sheer amount of volume of stuff that comes in and the amount of people that are willing to give it a.
Try and buy it.
I think we'll move the price.
It's inside baseball. Jabloski's all jargon. I mean there, but can you imagine it covered right now? God, I can't imagine framing out a covered right to bring in premium on bitcoin. I just can't go there.
But I know a lot of people are and either or not because we looked at this that you'd be surprised the actual you know, the actual kind of juiced inness is less there we go than like a vix It's really surprising.
It's kind of surprisingly boring, to be honest. I don't know how it'll change our time, but there's not as much juice in there as you think.
And what's great about this is the way you learn about Jews. You don't learn that like in CFA one oh one. You learn a Marianne Boston and you're going to Boston College.
So Soviet.
I mean, I've just been blown away really over the last ten fifteen years in the growth of the ETF business. It's just been extraordinary. And the more you learn about it, the more sense it makes. And we have some good folks here Bloomberg got are really following the ETF business. Where do we go next, what's the what's the next area of growth? For etfscuse the fun flows there just extraordinary.
Yeah, the fun flows are back. I think, you know, post twenty twenty two, like everything else. ETF sixteen of recovery. You've seen you know, the majority of inflows this year, and I think a lot of the kind of you know, kitchy mean types of products have now been closed and kind of filtered out, and now what you have out there are the classic ETF products. You have some good and invest in things like AI and you know, supercomputing
things like that. We do a lot of that. But the next, you know, the next kind of hurrah for ETF seems to be using options to do different things. So whether it's to generate income, you know, there's been a huge growth and covered call strategies, there's been a huge growth in put right strategies to generate income. You've seen a lot of flows there and you've also seen
you know, different issuers doing creative things with leverage. You're starting to see four beta you know, four x daily rebalanced products, single stock products, and I think that there's appetite there. I mean, billions of dollars have flown into it, so it's it's hard to say there isn't. And I think using the option structure to generate income will be a big theme this year.
You know, Sylvia, I you know, when I first started learning, and I think a lot of people learning about ETFs, it was the whole passive thing y s and P five hundred type of thing, and I got that JET would allow you to operate a really low cost structure type of rapper here. But then you guys introduced you guys being ETF industry introduced active ets and that's kind
of or you lost me here. So is the cost advantage to an active ETF that much better than you know, walking down the street and getting a FID outing mutual fund.
Well, it depends on the fun right. I mean, mutual funds were sort of historically classically expensive. Some of them have cut their fees because of what ETFs have done. And it depends on the performance, right. I think on a lot of these active ETFs, if you're getting you know, twenty forty sixty percent returns, you don't really care that you're paying one percent, which is arguably on the high side for ETFs, right, So it's all about what the
ETF actually delivers. And then ETFs are just but you know, they're just better. I mean they are they are a better mousetrape. You can buy and sell them all day long. You know, you can arbitrage them. You can go to a market maker, you know, get filled that nav. I mean, they're just a better product.
Sylvia question off the market. This goes to SoC Gen. I spent a lot of time with SoC Gen animals
in London. There was a Cuban there's a Cuban cigar bar and warder Stream, which is basically the cafeteria for SoC Gen. This is a few This is before Sylvia's said she's too young to remember this, but you know it's Satcha and you guys are pros it trying to figure out where the shadows are and leverage right now, away from Defiance and your great work there, what do you worry about within the shadows of the derivative space
right now? The leveraging up the notion? What what's the shadow out there that concerns you?
You know, I think if the in terms of the structure of those products, you know, I think that they've become kind of more stable and safe. I was actually at SoC Gen, you know, shortly around the time that you had the leam and crashing things like that. I was working on the swaps desk when all of that was going on, So that was you know, that was eye opening, right, And people learn that you kind of have to have a third party holding the overnight collateral.
You have to have you know a lot of kind of like good Monte Carlo simulation before you take certain things on and swap and things like this. So I think that the risk standards are a lot higher. I think, you know, having having actual cash and physical funds at a third party matters. I worry more about the client. You know, if you get a big market move and you have a four X product, I mean you gompe bout the fund in a day, right, But all of us yeah, I mean, you know, so I haven't actually
seen that. I spend a lot of time at Direction the three X you know place too. And even during COVID when we had these massive moves, the company itself took the leverage point from three to two to kind of protect the protect people from themselves really and and you know, the volcility and things like that, and so you hope companies do that.
But yeah, that's the risk.
This is you hugely, hugely valuable. She's a defiance ETF Sylvia Jablanski with US joining US no op tech wizards who figured out YouTube decades ago. Gene Munster joins US co founder deep Water Asset Management, Gane I've got like eight ways to go. Let's start at sixty thousand feet. I'm in the theme that if any broke, don't fix it. The Magnificent seven had a magnificent twenty twenty three. I just don't buy the idea it ends. Will it continue into this year and.
Next for the year, I think it absolutely will. And what we're seeing as a gravitational pull when it comes to the AI opportunity with Magnificent seven and also what I would call the Ordained fifteen, which are the private late stage AI companies, and I think that's where all the traction is going to happen. I would say, there's a mag seven on the public side, there's also going to be this Magnificent seven or ten on the private side. But yes, Tom, I think it's going to continue, I
would caution, and continue for the year. I would caution this earnings period is going to be a lot of intensity, a lot of focus from investors related to commentary about AI contribution in twenty twenty four. I think that is the a topic that's going to orbit around the mag seven for this earnings period, and I suspect that the commentary is going to be relatively muted, or the commentary will be we expect some contribution the good news, so I think that that could cause a new term pause
in some of these stocks. I think the good news for a lot of these for the companies, if you look at the estimates for the December quarter for the growth rates and then for the full year of twenty twenty four, December twenty three and twenty twenty four, analysts aren't really expecting much contribution from AI. I think psychologically it's a bigger topic than it is relative to the numbers. But I just I think that these companies are going to continue to do well.
I do.
Anticipate this earnings period to be mixed in terms of the stock reaction.
Early Gene Monster monsters so large. There's early gene Monster, middle Gene Monster, and later Gene Monster. Early Gene Monster was fourteen page or some pipe Jeffrey which came in at four pm and you had to read it by dinner you couldn't focus. And in the back of it, he always had these brilliant some of the parts analysis gene Monster for the Magnificent seven, for Apple and Microsoft in particular. Whats the sum of the parts look like right now?
Well, there's some of the parts. It's ultimately when you think about Apple, it's about services, it's about from you put all this together, I think it's better than a three trillion dollar company. I think the iPhone business today it's just over half of their total revenue. I think in aggregate that should be should trade at essentially a thirty five multiple. I think that multiple is justified given even though it doesn't grow much. I think it's justified
because these devices have become substance to our life. We can't live without these Basically half the people in the US can't live without these devices. And so I think that you put this together, I think this is a three plus trillion dollar company. I think that there is a lot of uncertainty related to Apple at this time. I haven't I haven't recalled a time in Apple's history when there's been as much concern really going into this
to a quarter, there's concern about the iPhone demand. He's concerned about some of the delays that they've had or taking some of that watch aff off the table because of the blood oxygen monitoring. And there's also some concerns related to how their app store policies are changing, specifically related to steering in the impact on the app store revenue. But I think that I think that you know when you when you course these out, I think that this
is a three plus trillion dollar company. And when it comes to Microsoft, from some of the parts, there's two basic parts to it. There's their cloud business. That business say they have twenty two percent market share. Microsoft in total is of two hundred and twenty billion dollar revenue company.
It's going to grow about fifteen percent this year. But as you think about and aggregate, their cloud business is worth even though it's called fifteen percent of total revenue, given the profitability, it's thirty plus percent of the valuation.
The biggest lever when it comes to Microsoft over the next year in terms of the some of the parts is related to what's going on with the upside and uptake with Microsoft their copilot and office that contribution, so they of course have raised the price call going from fifteen to thirty dollars a month that started back in November. There's about three hundred and fifty million office office users, so the office business today is about a sixty five
million dollar business. Of that two hundred and twenty total in revenue, But you could build a case if ten if a third of those people pay up for colpile, which I think is conservative, you know that that can increase revenue by ten percent. And that's probably the biggest sum of the parts. Lever when it comes to Microsoft is what the uptake is going to be. They haven't broken out what those numbers have been. As I mentioned,
it's started in November. All they've said is that they know they've had a positive reception from their early corporate beta testers with this coal Pilot, and I suspect this is going to be a hit product that's going to help you compose emails, help you do powerpoints.
Exactly.
Yeah, taxes potentially.
So you thought that was funny, Lisa, Yeah, you want to jump in here. What would you use co pilot for, Lisa, mateo.
Let's see, I know what my kids would use it.
For help with the homework.
Of course, we're talking to Gene Monster managing partner and co founder deep Water Asset Management.
Hey, Gene, I.
Think you know that in twenty twenty three, not just in tech, but for the whole stock market, AI was such a driver of positive sentiment, and I think what a lot of investors who are pulling away and just saying, let me just take a look at this AI story. And the question I hear most often is how much of this spending across tech over the next several years for AI will be actually incremental to what was already kind of a base case for tech spending in general.
Do you have an idea how that might look?
So, yes, the answer is that it's it's a substantial amount the twenty to twenty to thirty percent range. Meta last week had some commentary about what their spend is going to be on GPUs and if you look at what their baseline spend was before they announced that, it's a thirty percent increase and spend is these you know, there was this talk about pause in AI last summer. There was this letter that went around that a bunch of people, including ironically Elon, must signed and there has
been no pause. Is that this has been these companies continue to aggressively go after this, and I think that that is one of the I think one of the clearest signs how much investment is going on from these companies that this AI, that the AI substance is ultimately going to exceed the hype. It may take several years to get there, but yes, there the infrastructure spend is remarkable,
especially with the Magnificent seven. And of course that infrastructure spend helps a lot of companies, many companies, potentially most companies to enable AI in their products in the years to come.
Hey, Gene, one of the things that I think some investors are waiting for when you think about AI is that defining IPO. Like maybe Google was a defining IPO for the search business, Facebook was the defining IPO for the social media business. And you mentioned some private companies. Do you see something like that in the next year or two of a company or a group of companies that say, wow, AI has really arrived as a standalone kind of investment opportunity.
Absolutely, I think that's going to be the next leading class. I think it's probably two to three years away. But I think that that you know, these companies that are AI first companies, so we look at the Magnificent seven. I talked about the upside related to copile at Microsoft and saying that that could add ten percent to their revenue. Well, these companies that are AI peer plays, they're growing at three hundred percent off small bases, but approaching more than
a billion in revenue some of them. And I think that these AI peer plays, there will be this moment ultimately when you put it together at deep Water, we think we are going to enter an AI bubble in the next three to five years. We don't think we're anything close to it right now. We put this in and put we think we're in like nineteen ninety five and we still have five more years to go before
this really escalates. But I think that's going to be one of those moments where it really gets some excitement in the market once we get some of these IPOs and who are they? You know it could be open AI data Bricks is one hugging face. Those are mid journey. Those are kind of the four most obvious ones that would be published.
That's a secret world of gene Monster there Gane. The fact of the matter is, mister Nadella is firing on all cylinders. You mentioned co pilot and all the applications that we're seeing of actual money coming in twenty dollars a person, ten dollars, thirty dollars a person, and I'm enjoying a thirty eight multiple, and maybe my monster guestimate four squeezes down to a thirty five multiple. What do you do with a tech stock when all the good news is in, like in Microsoft right now.
Well, if your view is that all the good news is in, you probably sell it. And I think in the case of you know that you know owning, that is a great way to build wealth, is to own and have people agree with you later. And if you there's generally a consensus that the good times are going to continue for these large companies, and so I think that if you have a view that maybe this is as good as it gets, that this is absolutely the
time to sell because you'll get multiple compression. I of course don't believe that that's the case, and I just want to put one put some a little bit of perspective on that in terms of, you know, how on Earth I really strive to be level headed when it comes to these tech trends and making sure that I'm not getting carried away. Yeah, and some of the overall
hype on it. And when I think of A I'm in the camp that electricity is one hundred, the mobile phones of twenty five in terms of scale of importance, the Internet's of fifteen. I think AI is probably a ninety. I think this is ultimately wow. And if in fact that ends up playing out, then we really haven't seen.
I'll give you another example is that we were buying Meta over the last couple of years and it's done well recently, and we debated about internally about should we use this a stock that we should sell ted a good run, let's take our money and go other places. But then we just thought more about the impact that I was going to have in their business, and it just felt like this is one to continue to hold. And so that's what we're doing.
Single most important inside of the week. You just heard it from Geen at Monster with war wounds of selling too soon, and he said he has a winner in Facebook. Guess what he and his team said, extend that and that Paul, you and I know how much money have I left on the table. I'm in triple levers dog cash coveraged up with a fifteen percent gross and I go now lighting up and I'm wrong every time.
Hey, Gene one of the I'm just trying to think of some headwinds here for the tech space. I mean, do I have to worry about Washington DC here in terms of regulations more just broadly defined on tech and maybe even specific for AI. How are you guys framing that risk out?
Well, when it comes to AI, there's going to be more regulation. Of course, we've got that letter that I mentioned. Tim Cook has been he hasn't said anything in the prepared commentary on their earnings calls in twenty twenty three related to AI. He has made comments more recently outside of the earnings calls and said that regulation is important.
He's mentioned that also in their Q and A. I think when you have a company like Apple inviting regulation in I think it's probably something that is going to play out as far as the impact on the business and how profound this growth can be. I don't think
it's going to have an impact on that. I think that a lot of the regulation is going to come around things like water marking related to images to try to help prevent deep fakes, and the use of AI for you know whether it's for for malice behavior, but I don't think that. I think that this aggressive investment
cycle is ultimately going to continue. The broader topic beyond AI and regulation in Washington is something that has orbited obviously for years, and we have at the end of this month, Meta and Snapchat and TikTok is are They're all going to be and on Capitol Hill and talk about some of the latest issues related to some of
the targeting that's going on on those platforms. The simple answer is that regulation sounds bad, and really the substance of it hasn't played out, and it's a little bit hard for me to imagine why now this is the time when this would have it start to have an impact.
Really generous time with us today gene Monster, Thank is so much deepwater asset management there on your view of tech. This is the Bloomberg Surveillance Podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in
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