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Let's get started in an incredibly busy we are going to be jumping around the theme to a theme, and we start with what you're focused on. As Lisa Matteo mentioned the tech earnings, that tech juggernaut is here writing a brilliant note for Wills Fargo is Chris Harvey. He is their head of equity strategy, really sharp.
Dense note.
Is your note top down or bottom up?
It's bottom up them. But we do obviously we spread in a little bit of macro, maybe a little bit more than a little bit.
I took a toothpaste company and you know it's like what we learned to Graham Dot in Coddle somebody is out this week were the best ten books to read? And there's Graham Dot and Coddle, you know, edition forty two whatever it is.
And it's boring, boring, boring.
And the ebit does like six percent, twelve percent whatever Microsoft's ebit does three four or five times. Describe the profit making machinery of these selected Magnificent six.
Yeah. The the thing about the Magnificent six or seven or the megacaps is they have fortress balance sheets, they have annuity like businesses, they have pricing power, and they have global brands. It's they are. They are the new Lovall. They are. The market use them as a new Lovall. The market views them as the panacea. The market use them as the stocks that they go to. It's the all weather stock this.
Last week, and mister Harvey just identified it, folks, for those of you that don't have a fancy degree like Chris Harvey.
Paul, annuity like cash flows.
That's what we heard last week, and that's what we start with on this Monday with Chris Harvey exactly.
And so Chris, I mean for the folks that maybe missed that trade last year, What do you tell them this year? Here? I mean, do I try to jump on there? Where do I got to look for some other areas that maybe haven't you know, participated.
So, Paul, I think if you missed it last year, obviously you just don't want to chase and Chase and chase. I think the best place to put your money if you're looking for tech, and we do think growth is still a pretty good area to be is in the communication space. You do get a lot of your media companies, whether it's Meta, whether it's Google, Disney and things as such.
But these are companies that again they have great balance sheets, they have the new to like businesses, but the valuations are very reasonable and what we call them are momentum garb right growth at a reasonable price. And they are working and we think they'll continue to work because the underlying fundamentals are still good and valuation, unlike a lot of the other space, is still pretty attractive.
And I saw your analyser Media Anaal, Steve Cahal at Wells, Fargar just down Greater Warner Brothers, Discovery. So there's lots of issues there in a traditional media space. How about earnings we're kind of just kind of in the thick of earnings. We're really going to get some of the big tech earnings here. What if have you seen so far this earning cycle? What are you looking for maybe even this week with some of the big tech names.
What we've seen initially was a bit of the selling news right last week it was a better reaction, but overall, they'll seen a little bit of his selling news. What we're also seeing, and what you would expect, is just people are managing guidance. They're not saying, Okay, this is going to be They're saying it's going to be a great year, but they're not not backing it up with
guidance raises. They're being more conservative, which is what we would expect going forward and causing a little bit of chop in the market right now.
You know, I look at what to buy hearing, you know, I like the idea and the big tech in that. What do you listen for in the conference calls today?
Do you need this week?
I should say, do you need a validation of where the Fortress balance sheet is, what they've done or is it a complete Chris Harvey focus on Q three Q four This year.
Tom, We're looking for tons of things in earnings. We really just want to see what's going on. What people are saying, what's the hot button right now? From financial companies, what they're saying is our clients are re risking. Is that good, bad, and different? We're not sure just yet. What are we hearing from some of the consumer companies. We're hearing, hey, we're more the client or the consumer
is more value oriented. We're also seeing that the difference between the high end and low end is still there. High ends much better than the low end. And then what we're seeing from companies or what we're looking for companies is are they managing expectations and how well take it?
Take this is brilliant? Take it over to the tech companies.
Yeah, to the tech companies, we're still going to We're going to get that right. And what we expect to see is a management of expectations. You had a great year last year. You just don't want to say, hey, I don't expect these companies to come out and say this year, we're raising numbers, raising guidance. What they want
to do is they want to manage expectations. What they want to tell you it's a good year, but they want to be able to progressively step over those expectations because the one thing we are hearing is there's not as much visibility as you would think, and people still concerned about the macro.
Twenty twenty four, it's an election year. How do you kind of factor that into your calculus?
Politics are probably as difficult to handicap as we've seen in some time. The one thing that we do know, and the one thing that we've looked at is the most important thing for an investor is who controls the Senate. If the GOP controls the Senate, usually we have a much better two year run than we do the Democrats control the Senate. The other thing that we're talking about a lot, and I'm sure your guests have been talking
about this, this is a big year. People expect this to be a big year for M and A. If we do see the GOP not just control the Senate, but the ascuse me, but the White House, we could see M and A late in the year really take another level up.
And you're Denny making a lot of press calling for the Roaring twenties. Does Wills Fargo see this like you'r Denny out with a huge bullish call off the Roaring twenty twenties. I, Tom, we can go a bunch of different ways.
We do think you're going to have a little bit more. We're surprised we haven't seen downside just yet, and so as a result, we can see the market going one to two ways. We can see the market just kind of muddle along, but we can also see a situation where we do have irrational exuberance toward the end of the year with M and A and things of a such.
Too short Chris Harvey, thank you so much. With Wills Fargo this morning. Joining us now on a matter of national import Gregory Vllier. Greg I'm not going to mince words and strevat us out with a mustard on Bloomberg opinion about what.
To do here.
But Gregory, it has too many echoes of Lebanon and President Reagan. What will be the response of President Biden to the wounded, to the killed and far East Jordan?
Well, good morning, Tom. He has to respond, he said he would respond. So the US is sort of going to box into a corner. We can't not do anything. And I think if it's just an airstrike. That's not enough. It's got to be a robust I recommend to all of your listeners. The Wall Street Journal lead editorial this morning talking about what we have to do. It's got to be a robust response.
Is the Pentagon communicating with a White House? I think there's a lot of people listening, both Democrats and Republicans would say if our valier response is run out of the White House, that could be problematic. Are the adults going to take over the adults at the Pentagon?
Yeah, I think they will. We heard the top general over the weekend say, you know, we don't want to be disproportionate. We don't want this to spin out of control. But it's also a political story, is you know, Tom, and I think that politically Biden has to do something muscular. He can't have one little whimpy attack, and if he does, that's going to make his re election prospects even more difficult.
That's kind of where I wanted to go, Greg. I mean, this is, you know, a political year, an election year typically in your experience, how does that factor into the calculus of these types of decisions.
Well, it politicizes everything, and I think on this there has to be something that would convince the American public that the Iranians have been punished on this and what we've seen since the seventh of October is little hit here, a little hit there, nothing all that big. And what that does is simply embolden the Iranians.
And Greg to what extent, I mean, this is all a function of what happened on October seventh? Is you mentioned here? To what extent do you think the US should be pressuring Israel to kind of wind this thing down? Or is that not on the table at this point?
Oh? I think I think off the record, there's there's communications between the US and Israel, with the US saying let's cool it, you know, let's let's have a cease fire for a while, let's get some of these hostages back. I think from a pr standpoint, that would be quite positive for Israel and the US.
So, I mean, is this something the new normal? I guess Greg here in the Middle East? Is what happened on October seventh. This is going to portend multiple years of just a higher level of unrest. Is this kind of the new normal for this next?
It could be that that's a distressing conclusion, Paul, But I do think that the Hooties have changed a lot. I'm not sure the Hoodies are totally under the control of the Iranians. Yemen is now part of the narrative. So you've got some new players here, and I think because of that, I'll bets her off.
Greg, you mentioned the election here. I just want to go to the military as well.
One of the discussions that James Travitas today in an out bet in Bloomberg Opinion really lays out a detailed military response is a third carrier in the region. I'm sorry, Greg, it's starting on accountable basis.
It's starting to look like a war. Yeah, and it's like the Philippines in forty two.
You have to say, Tom that this now gets us into the debate on how much we're spending on defense, and a lot of Hawks are saying not enough. We've got problems in the South China Sea, We've got problems in the Red Sea and the Persian Gulf. So I think there's going to be more spending on defense.
Okay, I'll go with that. But the idea here that we're gonna have supposedly three carriers in one region draws resources away from other areas, and I guess the basic idea is out there somewhere is an adversary, that there's one or two carriers or four carriers, But they don't do they. I mean, who are we going after in terms of military threats here?
Well, the enemy is illusory and that's a problem. They don't have uniforms that we can pinpoint. And I would add tom one other complicating factor and that's the growing sense of isolationism in the US in the Republican Party. We still don't see any aid for Ukraine. We don't see any aid for Israel, for Taiwan, and I do think this mood of isolationism makes it a lot more difficult for Biden.
And that kind of goes to just I haven't really seen a lot of reporting on this. I just wonder where the American populace is in this, because, again, if you really think about it, there are a couple hot wars out there that we're kind of involved in, and then there's a lot of other stuff that's out there in terms of uneasy, whether it's Taiwan and so on and so forth. Any sense of where the American public is here, I.
Think the public is conflicted. There's no strong consensus. We obviously don't want to see gasoling prices go higher or anything with the supply chain become a problem, But I think the American public also has a view that we need to spend money on domestic issues.
Well, the domestic issues. Let's go to the domestic moment, Greg Villier, What does Nikki Haley.
Need to do this week?
Is she moves forward to Nevada the Carolinas in Super Tuesday.
She has to hammer away. I think if she doesn't do well on Super Tuesday on March fifth, she's out. But she's got some time, and I think she'll make good use of the time she's gotten under Trump's skin. At least there might be more of an attack by her. I still think she will not be the nominee, but she still has momentum.
Greg, thank you for the time.
On short notes is Gregory Villier with AGF today. Dennis Gartman joins us now because he wanted to talk about the parallels here to the sixties and the failure of the nifty to fifty in the seventies. How nifty to fifty, Dennis Gartman, are our Magnificent six.
The fact that we had fifty at the one time now we only have six is the big qualifier at this point, Tom, But it does remind me so much of what happened in the nifty to fifty, when you had to buy simplicity patterns, when you had to buy Luberzol, when you had to buy IBM, when you had to buy any of the name of the fifty, and it was to be put away forever. Those names have all basically disappeared, or a great good number of them have disappeared.
And from nineteen seventy two to four you had a great bear market.
So be careful when when you're comparing the nifty to fifty to the Magi and seven.
The similarities are awfully alike.
The conceit here of a low tech nifty to fifty is a technological certitude of Deck Digital Equipment Corporation. From where you sit, Dennis Gartman into the Magnificent six have features of the collapse of Deck Wayne Labs in control data.
I'm loving this. This is my childhood. I'm bringing out Tennis.
It was our childhood.
We were both barely into the business at the time I joined the business in nineteen seventy two, and remember the nifty to fifty very clearly, And the similarities to me are very distinct and very clear. I'm reminded of the Tulla Balmania. You and I were a little too young to remember the fifteenth century. We have the same
circumstances that prevail. The fact that you were supposed to buy the Magnificent six or Magnificent seven and hold them to forever just seems too similar to too frightening, too disconcerting to me. Stocks to me seem extremely overbought. But then again, I thought they were overbought in November, and I thought they were overbought in December, and I thought they were overbought in January.
So Dennis, that's kind of where I wanted to go here. I had that big rip in the marketplace at the end of last year I think took even you know, some of the biggest bulls by surprise in terms of the movement here. And if I think back, I remember seeing earnings move up at a commensurate at pace to the stocks. So where are we in terms of valuation?
Here?
Is this market overbought from evaluation perspective? In your opinion?
To me, take a look at I think the real test is Tesla selling you know what fifty sixty seventy times earnings? Ford and General Motors sell it. What five and six times earnings? Should Tesla be ten times the valuation of Ford and General Motors? I think not, But thus far I've been wrong, So you have to take that with a great, very large grain of salt. But
this does remind me very much. I've thought about it for a long time, very much of the nifty to fifty, the same circumstances, of the same psychology, the same type of phenomenon, and it bothers me greatly, no question about that.
Paul Thursday, Friday, Dan Eyes, who's been constructively optimistic and must Tesla really.
Made an adjustment and attitude.
I'm not going to say capitulated, Maybe that's too strong, but he made a massive adjustment and tone of that conference.
He absolutely did. It was noticeable here. So, Dennis, where where do investors go from here? I mean, did they sit in their two year churches at four point three percent? Or do they try to come to the stock market and look for some values. What are you kind of thinking at this point?
Well, I'm seventy three, so I've got so much.
Eighty five percent of what I on is is in two and three year Treasury notes. At this point, I own a little bit of gold, but I'm seventy three.
If I were fifty, I'd be looking for value.
I'd be avoiding the magnificent six and seven, and I'd be looking for value out there. I'd be looking atris, I'd be looking at utilities, I'd be looking at regional banks. I'd be looking at the things that are unloved at this point, and they will be loved again sometime in the future. So if I were fifty, i'd be looking for value. Seventy three, I'm looking for safety.
Good morning, Lincoln, Nebraska.
Thank you so much for emailing in, they said, Tom pick One talked to gartment about gold or red weed. Redwat doesn't cut at Dennis. Let's talk gold right now. If I get the Bank of Japan to capitulate and I get masses strong, damien sas our Japanese yen do I want to be in gold in yen?
You want to be gold in dollar terms. You want to be gold in euro terms. You want to be golden in yen terms. You want to be golden Swiss. Well, i'd avoid Swiss Franks at this point, but I think you need to be involved in gold in US dollars and non US dollars. I think this is going to be a move quietly to the upside in the gold market. It's been a bull market for several years. It's been completely unloved. Nobody's talking about it, and I think that's that's consequential.
Dennis, I'm going mental. I mean, even Sweeney's criticized me. He's vicious, folks, I have camera. Paul is tough, and Dennis, I'm going to cut to the chase. Gold has an underlying eleven percent industrial use, forty some percent jewelry use. Do you know that gold is you used the jewelry?
That's what I didn't know that.
Good morning, Elsa Peretti, thank you so much for listening this morning. Dennis Gartman, gold is an underlying use. Does bitdog have an underlying use?
No?
Bitcoin has no underlying use other than for rank speculation, and that's all. It is nothing more than that. And I would avoid it with at all costs, and especially there might be some reason to own bitcoin because there's a a finite amount of it to be created, but ethereum and the rest of them can be created ad infinitum. So if you have to buy a cryptocurrency, and I think you shouldn't under any circumstance, but you have no choice if you just can't avoid the the the rush
to own it. But well, it doesn't have any value, No, doesn't have any reason.
It's like a duke Paul.
He goes up to Akron, Ohio where Martine's costs five dollars, and Gartman's sitting there on the trust the board, you know, the trustees board with millions and millions of dollars, and there's some student representative with three ear rings in there. There're no saying their ears whatever, saying mister Gartman, please, we've got to have some you know, four or five interest in bitcoin.
Yep.
Can you imagine a coming off the desk from Gartman.
Yeah, I don't think that's good.
I would reach across the desk and hit him.
There you go. Uh, Dennis, we got geopolitics, unfortunately, front and center once again for investors to have to deal with in the Middle East and of course in Eastern Europe. As you look at that kind of risk out there, how do you think investors should you know, kind of factor in geopolitical rest which seems to be a little bit hot right now.
It's a reason to be less involved in the stock market, and the reason to be more quietly involved in the gold market, and a reason to be more quietly involved or more dramatically involved in the US treasury market. At this point, I think geopolitics is back on the on the front. It's moved from the right and left wings of the stage to the center stage, and I think it's going to become far more important over of course
the next six months. Watch what Hasbola does in the level on Remember Hesbola and Hamas are are themselves enemies one with the other. They may hate us, but they hate each other too, And so you're putting a lot of people in a very small geographic area, and it's going to become more problematic, not less so.
Dennis, thanks for the brief.
Dennis Gartman there with his optimism on the American economic experiment.
She had like four lists.
You know, there's so much now slow going on this morning, Lisa said, time I got four lists, Would you look at him? I said, no, I'm having my first tang of the morning. I said, I can't do that, so she just picked one out.
What do you got tell me?
We're lions free, We're a lions free. Has been battered enough. I'll leave them be. But this is something actually, you guys have been talking a lot about the whole streaming wars Amazon. Today is the day. This is a fight in the Mateo household. Today they start adding those ads to their service for Prime. So if you don't want to see the ads, you have to pay three.
Dollars more on the Prime video.
On the Prime Video.
Yes, so they've always had ads on Amazon dot Com. That's been a huge business for them. Fifty billion dollars now and you watch Amazon.
Prime, Yes, Amazon Prime, thank you, Paul.
Yeah.
So they're estimating this is Bank of America. They're saying that the new business will generate five billion in annual revenue for Amazon from that three billion ad sales additional one point eight billion from Amazon Prime subscribers. So they're hoping it can push viewers to the shop from their TVs. It's this whole thing where you can kind of so I'm going to go to a movie, I'm.
Going to go to four hours long Academy word Leonardo DiCaprio, Indians killers of the whatever, and they want me to buy, you know, toothpaste off of that.
I'm serious.
Absolutely, can you.
See the ad for toothpased Maybe you will.
Adam Spencer Sofa writing this up for bloom Today, big long article. Ad push aims to turn TVs into shopping cards. I love what they did over digit I said Joseph about how they're going to sell ads. Do we know what we're gonna see today?
No?
They said, it's not going to be as many ads as say. You know, when you were watching regular TV and you saw the millions of commercials would come up. You know, it's not going to be as many, but you're still going to see those commercials. They're just hoping it's going to get you.
To And the reason they're doing this is because if you look at Magnet Global, which is probably the independent source for all advertising, Magnet Global saying by twenty twenty seven more advertising will be online video versus television, first time ever.
But help me here, how much is it?
How much is it to get rid of this problem?
It's gonna gosha three dollars more a month.
Okay, so wait a minute to get thirty six dollars. That's a that's not even a price of Ken Fellow. You will help me here. That's not even a price of a martini at the Carlisle, is it?
I mean?
I mean I can't even get out of there with a negroaning for forty two large for thirty six bucks a year, this problem goes away.
Well, here's the thing that gets me is that netl took a different approach, right Paul. So Netflix, they're laying subscribers opt into that lower cost. You know, you can pay less if you want to see the ads. But Amazon's not doing that. They're just saying you're gonna pay more if you don't want to see.
The com This is the future advertising video on demand. Think about it that way. There you go.
Next, all right, Next, we're talking about New York City restaurant owners because there's a bill being pushed to abolish the tip credit. Okay, and they want to have the weight staff in the city, Long Island, Westchester pace be it paid seventeen dollars an hour by twenty twenty six. So there's a survey ninety five percent of restaurant tours they oppose that bill. Okay, they think that tip credit that allows owners to pay the weight staff who own
tips less than minimum wage. They're saying it could lead to higher menu prices if it's gone. They said it could lead to layoffs, it could even shut them down. So this report is out there, it's saying it's going to cost them about twelve thousand more a year to employ a full time tipped employee if this bill goes through.
Yeah, this is potentially upsetting the entire ECO system of dining. You know, I don't know why when you get Europeans to come to the US there, like, what's this tipping thing you guys?
Do? You know?
So I don't know, but whatever it is, that's how we do it in this country. And I would not want to try to mess with that situation here. But by the same token, I'm tipping everywhere these days. Everywhere they turn the screen around to you and say what do you want to tip?
Are you tipping.
Or whatever?
Yeah, it's just.
I'm not you.
Feel the pressure because there's the screen.
I know it's but this story here again, it's in the New York Post about you know, if you can make you pay your weight staff a minimum wage as opposed to what you do now, which is blow minimum wage. But but they get the tips net net. I don't know how it all works out, but it just seems like you're can be shifting the cost back on to the restaurant owner, and that could be an issue.
So last one, what do you go?
Empty nesters there putting big bucks? They want to pay coaches to help them through their emotional plan. Okay, so this is from the Wall Street Journal there.
I mean, if I get rid of afterthought, I'm an empty nester and that's a trauma.
That's it's a trauma. Two hundred and fifty dollars an hour coaches are paying.
I was fifty the dishwasher.
Yeah, but you have continued, all right, I've got a pair of twenty seven year olds and in their lifetime the Great financial crisis that impacted them just in terms of the household and how, and then and then the pandemic. So, I mean, they've had to endure some stuff that I'm not sure my generation did. It feels like maybe my parents' generation with the depression, in a war and things that. I mean, they've had some stuff that I haven't had
to deal with. So I don't know, but I'm just you know, it's definitely, you know it is.
But they the parents are the ones who are going through the trauma, and the parents need the coaching and the and the help from the professionals. It's become an actual business. I mean, there are empty nests, coaches. It is just training, certifications. This is a whole big business and TikTok Street book everywhere you've.
Seen Michael Barr more than we have this morning. You're back in our sequestered surveillance studios, which you're off from our beautiful class studio.
Here is he okay, He's okay. He's taking a break right now. I'm gonna go pat his forehead a little bit.
Make sure did you talk to missus Barr? Is the marriage in one piece?
She's feeling great?
Yeah?
I think what she won. I mean, you know, he mortgaged the house. I know it's painful to say the least. This is a 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 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.