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I've Ben find stuff joins us with Tigris this morning. He survived Boston University Finance and accounting, one of the great grinds of college academics. Ivan, I'm going to cut to the chase. You've got a very very constructive note on a quote classic shakeout of crowded AI trades. Do you load the boat on Microsoft? What's the character of your enthusiasm to acquire shares?
Well, first of all, I think this negative view of this software stocks is just way overdone. Even Jensen Long has said that software drives the functionality of hardware.
But look, it's still.
AI is a powerful investment theme, and we're going to see things get to have themselves like we saw this run up in arm, run up in Micron, run up
in SanDisk. But yet this is a very powerful theme that I think has still long to run, and the next phase is going to be the evolution of smart devices that just have an AI operating system, and instead of on your phone using different apps to do different functions, you're going to have an overall AI interactive operating system that then will drive agents to use different apps to
accomplish what you want. Like for example, if you're interested in, you know, you want to eat Italian food, where's the best place to go to where I am. It'll give you some suggestions and all you have to do is say, all right, book me a table at seven point thirty for four people at this restaurant, and it will do that rather than you having to go to Rezi or to one of the other apps to both interaction.
And this is what qualcomm.
In fact, I'm going to be attending quill Common investerday today, but is using their processors, data centers, and most important, the power of this is computing at the edge.
Okay, now, yeah, but hold on, Paul, help me there? Can AI get me a table at rows?
I don't think there?
I know, yes, he I doesn't have that much juice at least right now.
Ivan frame mount kind of your conversations with your clients about software broadly defined, because again we've had a sell off in this sector, particularly for the SaaS names that a lot of people did not see coming. And it's been such a strong, strong sector to be in for decades because of the recurring revenue and a free cash flow. What's your view of software broadly defined these days.
I think there's a lot of opportunity in the database software companies like Mango dB and like Monday dot Com. I think the software the infrastructure providers like Oracle, as well as the process of providers like Nvidia and memory. Look, there's a tremendous shortage of memory because of the huge demand to build out these data centers, and memory prices have tripled and quadrupled over the past year, and that's
what's been driving things like Micron at sand Disc. So, but this is a powerful theme that will go on for some time.
Microsoft down twenty three percent year to date. You don't see that very often here, which your view there of just kind of Microsoft and some of these software names.
I think Microsoft is a tremendous buy here. We've seen this trend before where all of a sudden the market turns negative on Microsoft because years ago they weren't in the cloud. They are a cloud leader. They weren't INAI, they are in AI leader, and they still command ninety percent of all computer desktops. So this is a huge infrastructure provider and I think a tremendous buy here.
And look the state of this and the catalyst of it. What is the earning season going to look like? Is it can convey that all these companies, these believe you tech companies are still.
Thriving, absolutely and with each report an increasing capital investment in AI.
We saw it. So with the you know Q four and full.
Year results of all the big tech companies, the five or six major tech companies have committed over six on close to seven hundred billion dollars in capital investment for this year, close to fifty percent from last year. So capital investment in AI infrastructure and data centers and in all the different factors or cloud computing, edge computing and the access to this. Now I bring up WELLcom because
they recently announced we're they're working with open Ai. Last year, open ai hired Johnny Ives from Apple to lead device creator. Johnny Ives was the developer of the original iPhone. So you're going to see devices from all of these companies. It's going to be you know handheld desk connected devices. The Meta just announced a new line of smart glasses. It's going to be all these different devices that help you interact right and get your questions answered by using AI agent.
I've ad finds this wonderful and technology at Tigers. Stay with us. More from Bloomberg Surveillance coming up after this.
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We are just thrilled in Chad Wayne with us with Vanguard. The academic path is her Beijing University in China that she stumbled on the duke peaked at peached a duke and then I wandered by Stanford to pick up the people. What was your first day like at Duke to come from China? Did you know who UNC was? Did you have any Indiana Duke un see when you walked in the door.
Well, my memory is still vivid when I actually come to North Carolina, Blue Devil right, you know, fos keyboy is the number one thing, and I still remember oil price was ninety nine cents at that moment. That was back in nineteen ninety seven.
Surely that's just.
Too short a visit today. But I've just got to cut to the chase. The state of Hong Kong. We have a huge platform there Stephen Engel, Yvonne and Dan and all the team at Bloomberg. There the state of government in Hong Kong on right now.
M Yeah, I think Hong Kong actually is you know, stabilizing right after quite a few years of uh, you know uncertainty, right, you know, this kind of uncertainty about the political landscape there Hong Kong. Actually, I think the economy, the market is finally coming back, so some of the regulatory uncertainty is actually fading. We do see the finance industry and the labor market is actually starting coming back, especially with this Ai story.
What is it's my great mentor Michael Elliott who had lost way too early from Time Magazine Up the mountain, up the hill. Is the capitalistic spirit still in Hong Kong.
I think this is where what you would see in Hong Kong is more this kind of socialist style, right, you know, uh market economy, right, That's where I think to a certain stand Hong Kong is so unique to China, right, it still remains the window, you know, for China to
connect to the rest of the world. Right, So that's where I would say you would continue to see this kind of free capital flow, free market economy that will remain to be the uniqueness about Hong Kong that is actually different from the mainland China.
Talk to us about the economy on mainland China. How do you see it today and what are the key drivers going forward?
Do you think?
Well, I think when you look at the Chinese economy, I think on the headline, you see that the real economic growth seems to be pretty good, right, you know, they are able to achieve their growth target last year and this year four point five to five percent is not that difficult to achieve either. But I think underline that headline you see significant divergence between supply and demand. At this moment, most of the economy driver is really exports,
Right Is that sustainable? I don't think so, right, because that's going to create a lot of global friction, right, protectionism from US, Europe even other emergent markets. Well, on the other hand, if you look at the domestic demands and consumer retail sales just you know contracted last months, right, and then you know, fixed investment housing is in this persistent long term. I don't see a decisive turn yet at this moment without you know, significant government intervention or
leverage in central government balance sheet. So housing market hasn't bottom yet.
How does China view the US in terms of these trade negotiations? I kind of it just feels like to me as an outsider, both sides kind of need each other. It seems like, how does China view it?
Yeah?
I think that's you know one thing especially I think with President Trump's visit to China. You know, they talk about this kind of strategic stability, and to me, it's more of a transactional relationship. Right. That's where the world and the US realized that, yeah, we still need China, especially at this moment when we are doing all those build out right AI you know, and the rest work Green transition, and you still need that kind of manufacturing capacity from China.
Help us with the dollar. The basics in vanguard courses front and center. Honest, we need a weak dollar to have international equity investment go. That's been disproving here recently. Do we need a week dollar, Do we need a strong yuan?
Yeah?
I think I definitely think one actually is somewhat undervalue. You know, if you look at the fundamental the purchase and power, the record high you know, current council plus right, you know, one point two treaty and last year and then this year is likely to remain elevated. I do think, you know, there's room for reman be yuan to appreciate and to a certain stand I think that aligns with the strategic goal of the Chinese government, right. They want
to push in them and be internationalization. They want to boost up people's confidence in the Chinese economy and assets. A stronger rum will actually help them. But I think it's the question is really about the pace of appreciation. I don't think China will ever let the pace of appreciation or depreciation to be that fast, right, So anything is in the controlled, managed, you know, pace by the central bankan government.
Tariffs were however long we're into the whole tariff regime. Here, President Trump, here, what's the view in China? What's the impact been on China? How are they viewing this tariff environment?
Yeah, I mean that's an interesting part because I've been you know, visiting you know, China manufacturing sector, you know, in Guangdong, in Huatyang, you know, every year, right, And you know, last year at the peak of the tariff, when I was talking to a lot of manufacturers, I think, you know, many of them feel like, you know what, we see this coming, right, Like the trade war actually started in twenty eighteen, and Chinese factories manufacturing has been
preparing for this for quite a few years. They've been diversifying their you know, export market and moving their factories right out of China. And also China is so competitive, right, the cost is so low, so they can bear the target, you like, way Lee of black Rock.
There's just such an authentic reality of China away from the media myths in America. What's the number one thing Americans get wrong about the state of China right now?
Well, I think you know, for a long time, we as economists has been arguing that, you know, does China's model work, right, the kind of you know, a government plant or you know, socialist style of market economy does not work at all, I mean, including industry policy, right. I mean, you know, at some point people start to realize, Yeah, it worked to a certain extent. Right, It's so at
some point it needs to be a you know combination. Right, maybe the government can need to help, right, need to support the economy to a certain extent, but at the same time they also need to let the market economy play their role in areas that you know, otherwise you could end up with over capacity as we are seeing today and you kind of distort you know, the economy, which is not sustainable.
This has been wonderful. Thank you so much for the effort to get here, and a long travels. Chang Wing is with this chief Asia Pacific economist at Vanguard driving all of their economics worldwide. Stay with us. More from Bloomberg Surveillance coming up after this.
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YouTube Massive Rip up the script and we can do this with Libby Cantrol of Pimco as well. The Secondary of Treasury is over on a death start given the Republican line off the elections last night this is Bessent. Last night we saw ma'm donnie is Leader of Democrats. Laura Nemaias picked that up for Bloomberg with Naka Kitan and Samuel Church this morning, talking about anti establishment anger is the Progressive Democrats, the Social Democrats, the new Mumdanni angle.
This is not Jacob Javits, this is not this is not Hubert Humphrey. This isn't even John Lindsay, is it.
No?
I mean this is so I think a couple of things. One is that just remember politics are local, so we're talking about one of, if not the most liberal city in America. But what this does show you what sort of the what the primary results show you last night is one, Mumdanni has incredible star power. He went three for three in terms of endorsing folks who ended up winning. But two, there is a lot of anti incumbent anger and.
You saw this.
You've seen this on the Republican side just as a reminder, and now you're seeing it on the Democratic side as well. And then number three is that the Democratic Socialist at least here in New York City, are much better organized than the party. So grassroots outreach, that all that stuff still matters. I think this is very much expected that the Republicans will sort of demagogue this, they'll make this
sort of the face of the Democratic Party. I think it is also important just to remember that other folks, more moderate candidates actually won last night, and on the Democratic side in Utah and upstate New York, down in Maryland. So I'm not sure that we should be extrapolating massive themes about kind of the future of the Democratic Party.
But what is clear from on the Republican side and Democratic side, and people are angry and they're mad at incumbents and they're taking them out on this sort of the political class, if you will.
Democratic socialists not really even sure what that is. But is that a national thing?
Well again I think, I mean, it's definitely a thing in the urban cities. So what you've seen in LA, what you're seeing in Washington, DC, and you can hear in New York. So and again, what do democratic socialist stand for? I think it is pretty amorphous, honestly. But their their outreach, their grassroots, they're organizing, I mean, it has been you know, seller and as a result they
are doing well in these cities. Again, I would just be were I would not extrapolate necessarily to national politics. New York City, LA, Washington, d C. Obviously very you know, very different. The only the other thing I think just to remember is that, like we haven't gotten the final voter turnout figures, but it's like ten percent of voters voted last night.
If that okay, I get it.
That forty two people voted.
Were you one of them?
Okay? But here's the sub sub headline in the Washington Post. How can Jeffries back candidates lose key primary races? How do the Jeffries How does a mainstream Democrat in Michigan adapt and adjust to this anger? This is Laura says, this anti establishment anger.
Well, so again, I mean I think they'll try to tap into this. I mean, this is a theme. We're just seeing this. So whatever your labels you put on it, you're seeing that voters are angry about gas and groceries and housing and healthcare and now AI is the new boogeyman. And so you know, I think that what democrats who are moderate, who are winning and need to win and kind of purple, if not reddish districts, they'll try to kind of tap into the bigger themes and try to
stay away from the labels. Now, of course, question if they can do that. Think Republicans are going to try to be smart about pinning Mamdani on the entire Democratic Party. As we know, Democrats are a big tent, so they'll think they'll try to they'll try to use that as their kind of rationalization.
Please, So, most of our viewers and listeners were just enjoying the early early days of summer, but boy, the midterms are right around the corner. What's the feeling these days about how this might lay out in mid terms?
Well, look, I think that Well, again, anti incumbency, I think this, and so you know, I would argue that Democrats, we are a casualty of this. In twenty twenty four, voters were angry. Then they put President Trump obviously pretty unequivocally into the White House. Republicans won both chambers. I think you're going to see a little bit of a reversal of that now the Democrats or Democrats probably winning the House. I think those Republicans will still keep the Senate.
But again, I think that the overall theme is that the political establishment is not working for voters, and voters will take that out on either party, with all parties.
With all your connections, with all your heritage to Washington. If there's a four box dilemma, the basic idea that if the Democrats mess this up mid term in presidential twenty eight, that the Republicans will win again. Can the Democrats get their act together and coalesce into a winning message?
They have to be something other than just anti Trump. And because they are kind of a bunch of cats and dogs, a big umbrella party, I viewers, that's the history. Of course, it's a big tent. You know, this is sort of the heritage of the Democratic Party. You know very well, Tom. So you can they though, coalesce around several key themes or key messages that are not just anti Trump. That has been the glue for the party
since twenty sixteen. I think it's a it's a pretty fragile base in order to win a launch.
Can you come back tomorrow?
Well, I promise, well, ye, we'll talk to thanks tomorrow.
Let me caret. Thank you so much for that. Stay with us. More from Bloomberg Surveillance coming up after this.
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Our guest here I'm Detroit, but also on his Cleveland Cavaliers. Jared Fleischer joins us right now the pet and Bogs with Bedrock Detroit. I want to talk about Detroit, but what I really want to talk about is Dan Gilbert. Like his father or grandfather lily washed cars. Yes, they started out classically with next to nothing. How did that affect you? Every day? That the big guy owns the Cleveland Cavalies and others, they there's an internal energy there like no other.
I think Dan Gilbert represents the American dream, but also the best of America. You know, came from nothing. His parents owned a bar in a in a rough area of Detroit. That's how he grew up. Left himself up by the bootstraps, you know, went to Michigan State University, ran a little gambling room out of his dorm, gambling ring out of his dorm room to make some money when he was at MSU. This is this is a
guy's a hustler. Started a little brick and mortar mortgage company, and it was the first to see the vision of bringing mortgages national and online. And really basically, you know, from basically is his basement, built the largest mortgage lender in the United States of America, bigger than the big banks, and took the profits from that and turned around Detroit and turned around.
Ross Family in Miami. From day one, he gave it back population growth in Detroit in twenty twenty five, what's the final catalyst to get people in Gross Point to move back into Detroit?
Before Dan, the last time Detroit grew is nineteen fifty seven. Detroit's peak population is one point nine million, trunk all the way to six hundred and thirty thousand. With Dan's investments in the city, it's growing for the first time starting in twenty twenty four. It's leading the state of
Michigan in growth. In Dan's whole thesis is if we invest in place and we turned Detroit into a cool city we were talking earlier, making it like you know, Williamsburg in Brooklyn, where the young people want to be. It works. You create that kind of place the young people come. When you have talented young people, then you get business and you create a virtuous cycle. That's what we're seeing in Detroit and Cleveland.
Talk to us about just the economic drivers of Detroit has many of our listeners and viewers, they'll think auto industry much like I think Texas energy. But it's different.
Now.
Talk to us about the economic drivers in Detroit.
Yeah.
So, uh, you know, the auto industry still dominates our state, you know, the home of the Big three and the whole and the supply chains. You know, our region is still a big economic region four point one million people. But what you saw, you know, over a generation, was all that economic activity leave Detroit and as you saw kind of broader de industrialization and the globalization the auto industry, you saw, you know, the whole economic footprint in Michigan's shrink.
And so what we're trying to do is diversify our economy. Mortgage is a big part of our economy in Michigan. Increasingly tech it's a big part of our economy. Heads and meds, you know, with innovation and healthcare is a big part of our economy. But Dan's whole thesis is it starts with place. If we turned Detroit, we just got great bones, such history on the river all for
sports teams, downtown great bars, restaurants. If we build you know, the kind of Williamsburg like environment that attracts young people. That's how you start the engine.
Okay, you're tan inrested from working in patent bogs in Washington. You go out to the war zone there. Can you explain to Detroit into Michigan that the Gordi Hell Bridge is not open cold you be here?
You know the Gordie how Bridge, which is a connection between Detroit and Windsor, Canada, the busiest overland trade corridor in the country or the second busiest. Canada financed the construction of the bridge one percent. Canada even built the toll plaza on the US side. And the deal is so that can say, put up all the money they get the tolls from.
Utreo exactly.
That was the deal until they get paid back. And uh, there's some people, you know at sixteen hundred Pennsylvania Avenue who think that was not a good deal and are holding up the opening of the bridge. Not quite sure you can get a better deal than somebody paying for something.
Yeah, so what's next for Detroit here? Talk to us about kind of how you guys are thinking about the next five years, ten years.
Yeah.
So the last ten years Dan's focus in Detroit was on our north South corridor, which is we call it Woodward Avenue, think about it like Fifth Avenue here your main avenue. And then for the next ten to fifteen years it's on our riverfront, on our riverfront, which our east west axis. The big anchor of our riverfront is the Renaissance Center, which to give you a sense how big this building is, it's twice the size of the
Empire State Building built by Henry Ford. The second former home of the General Motors Corporation, big empty, empty office complex looming over the riverfront. We're going to do the most ambitious and complex adaptive reuse project in the country, bring that thing back to life and redevelop our whole riverfront in Detroit. You know, there's a lot of models of how New York is brought back its riverfront. We're gonna try to do the same in Detroit.
Chure Fleas, sure, thank you. So this is don't be a stranger Bedrock Detroit on one of the great great comebacks in America.
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