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John.
Great to have you back with us. There is a lot coming out investors. There is this laundry list. What's most important to you when you think about the investment environment and what shapes your strategy right now?
Well, I'm just sicking keying off of this monetary policy discussion. I just have to say that the big piano hanging over our heads to me is a federal budget deficit. And since I saw you last, we actually got some pretty good news for fiscal twenty five that as a percent of GDP, the budget deficit had fallen from six and a half percent to five point nine percent. I've been focusing very much on the year that we just started on October first, because I think, you know, that's
the big risk, right the FED. You know, the federal government has to borrow or pay a trillion dollars a year as sure, the FED governor, you know, affects that. But what the Marcus think matters a lot too. And if we can reduce that pressure by having better finances, that's really good news for the market, I think.
But that's not an argument for having not an independent FED, right, you still want to Fed. No, No, that does monetary policy according to inflationary pressures and labor pressure.
Right, but what what you know, these the wonky economists on Wall Street don't want is to have so much debt that you basically are forcing the FED to use something like Japan did yield curve control or some really
extraordinary measures that would really be unwelcome. So, you know, we can talk about the personalities and everything, but right now, the direction of movement is good compared to coming into the year where we had a lot of fiscal concerns and the FED chair would have had a lot more on this plate.
You when you were on with us last it was about a month ago. It was just before the government shutdown, and we asked you about whether or not a government shutdown actually matters to markets. Well, here we are.
A month later, and it's amazing.
It is amazing. I mean, it's the second longest shutdown in history entering you know, it's it's remarkable to see. Do you you said it didn't matter, right, Do you stand by it?
Yeah? I mean I don't think that there's any evidence that has mattered. I think what's really worrisome though, is the fact that what.
The dysfunctional government. You have a Washington of the government that isn't working.
That they don't care, right, neither party really cares if something bad is happening, if they feel like the other party can get the blame. And again, you know, I mean I only talk about the debt problem, but you know that's really what we all worry about at the end, Like, well we never solve social security? Will we cut Social Security payments in twenty thirty three like we're scheduled to? Yeah, I mean, you know, those are the longer term concerns.
When you look at this market environment. The other things that are coming, and these are obviously the ones that we just talked about, are super super big. But I do think about our focus on you know, these mag seven earnings. We get a big drop this week and we'll learn once again whether these AI investments are off. Last time around, we saw it with Medow and some of the other big hyperscalers that these investments seem to make sense at this point the AI trade.
Where are you on that it's going to AI? We have a compute shortage that's very visible to the whole world. And you know what's really interesting, I did some research on this since we last talked, and open ai is really emerging as the giant in this area. So they have eight hundred million monthly active users. The next biggest, Gemini,
has four hundred and fifty but much more interesting. So, your average website is now getting basically traffic coming from the AI chats somewhere between let's call it one percent at the low end and seventeen percent at the high end. Of the traffic that's going to your average website like the Bloomberg website or the van k website.
We're not average million.
I can't believe I said that. But of that traffic, open is generating over ninety percent of that traffic. They are completely dominating the other mag seven companies when it comes to you know that now on the flip side, they are trying to build out a ton of this compute and they don't have the money, right. All the other hyperscalers have a lot of revenue not public right, and the revenue is only forty to fifty billion, so and they want to spend hundreds of billions on compute.
So that's the one thing that I look at as a potential weakness in this AI trade. But otherwise we've got at least two calendar years of demand to deal with.
So you're not seeing ghosts of the late nineties tech crash here.
As I said, the only vulnerability I see isn't this sort of systemic thing. It's one company that's spending a ton of money and so far they've been able to raise it. Everyone else has got the revenue to cover their spend, right, I mean, they've got the cash flow, and.
I'm sure in opening I can keep raising money. It seems like there's plenty of demand or maybe even do are you are you doing chat GPT right now?
Kara?
No, no no, I was actually no, no, no no, I've.
Just grabbed my phone.
I did describe my phone, which is such a no noe when you're on air. Lisa Bramowitz, who we all she's incredible on surveillance on the TV side, and she said the Max seven stocks have accounted for almost half of the S and P five hundred and fifteen percent
game this year. Microsoft, Alphabet, Amazon Meta expected to post a combined three hundred and sixty billion CAPEX in their current fiscal years and nearly four hundred and twenty billion next year So what I'm just wondering is the market we've talked about that we feel like in the earning season we're seeing breath expand. But again, these companies are still so important right to the trade.
Yeah, they're really I mean, we want to ask ourselves why do they have such a high percent of the S and P five hundred and we have an answer because their profit dynamos. Not only is the revenue going up, but they're caught their employee bases are flat if it's not shrinking, so rising revenue, flat costs because one of the big beneficiars obviously are software companies.
We have thirty seconds on gold.
This is where you are going to go there?
Yeah?
Is that where you were going to going to go? Com so down eight percent from its peaks, from its peak, further to go?
Yeah, twenty percent correction in the bull market would be my base case.
That's your call. Thirty five dollars?
Yes, okay, still not a bad year, right.
Great, great year. I think the question is, you know, everyone's impatient already looking at their phones and during interviews, the question is how long does gold consolidate? Right?
We're the goodness of the show.
Twelve A whole twelve months of consolidation would bore the market. So we may have one of those situations, but still I you know, we like it long term, you know, for the next decade.
Always fund when you join us, come back soon again. Jan van Ki is, of course, chief executive officer of venex joining us here in studio.