November 17, 2025 • 41 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street traders gearing up for Nvidia Corp.’s earnings and the jobs report shunned riskier assets as both events will be key in shaping the global financial outlook throughout the rest of 2025.
Just days ahead of tests of the two main pillars of the bull market — prospects for artificial intelligence and Federal Reserve rate cuts — equities fell alongside crypto. The S&P 500 lost over 1% — breaching a technical level seen by many as a gateway to a deeper pullback. The gauge is set to snap 138 sessions during which it held above its 50-day moving average — its second-longest stretch this century.
Nvidia’s report Wednesday will come out amid investor uneasiness about stratospheric AI valuations even though the chipmaker is widely expected to deliver another earnings beat. Options traders are pricing in a 6.5% swing in either direction for the stock, which would be the highest implied move in a year.
Then there’s the September jobs report, which will be released Thursday after a delay due to the US shutdown. Fed Vice Chair Philip Jefferson said he sees risks to the labor market as skewed to the downside, but warned policymakers need to proceed slowly.
Scrutiny of Walmart Inc. and Target Corp. results will also be heightened as investors seek clues on consumer appetite and the broader economy. More than 400 shares in the S&P 500 fell, with the gauge hovering near 6,650. Nvidia slipped as Peter Thiel’s hedge fund Thiel Macro LLC sold off its entire stake in the chipmaker last quarter. Alphabet Inc. climbed as Warren Buffett’s Berkshire Hathaway Inc. built a $4.9 billion stake in the third quarter.
Today's show features:
- R.C. “Chris” Whalen, Chairman, of Whalen Global Advisors, on the US economic and monetary policy outlook
- Aaron Jagdfeld, Chairman, President and CEO of Generac, on the company's most recent earnings and the health of the American power grid
- Laura Chambers, Chief Executive Officer of Mozilla Corporation on the growing presence of AI in our day-to-day web browsing experience and Internet and data privacy challenges
- Sevasti Balafas, Founder and CEO at GoalVest Advisory on investing strategies amid macro uncertainty
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Hey, one of Wall Street's bond kings is spotting overpriced
assets almost everywhere that he looks. In an episode of
the Odd Lots podcast recorded to mark the show's ten
year anniversary, Jeff Gunlock called out nosebleed valuations in the
equity market. He also warned investors Tim against incredibly speculative bets.
Speaker 3 (00:50):
The Double Line Capital founder joined the host of Odlots
Joe Wisenthal and Tracy Alloway.
Speaker 4 (00:55):
In recent years, the garbage lending has not gone to
the public markets. The garbage lending has gone to these
private markets. Next big crisis in the financial markets is
going to be private credit has the same trappings as
subprime mortgage repackaging. Head back in twenty twenty oh six,
(01:17):
the health of the equity market in the United States
is it's among the least healthy in my entire career
in terms of the PE ratio, the cape ratio, all
the classic valuation metrics are off the charts, all right.
Speaker 5 (01:32):
Just three snippets from that interview.
Speaker 2 (01:34):
That's Double Line Capital founder Jeff Gunlock with the hosts
of Odd Lots, Joe Wisenthal and Tracy Alloway. Highly recommend
you check it out on the Bloomberg and at Bloomberg
dot com. We want to stay on the markets and
the outlook for financial assets in particular, and what is
kind of a tricky time it feels like for US
financial market.
Speaker 5 (01:51):
It's great to have with us.
Speaker 2 (01:52):
Chris Whalen, He's chairman of Whale and Global Advisors. He's
also editor of The Institutional Risk Analyst. It's a weekly
newsletter that looks at the intersection of financial markets and
public policy, dissects and analyzes bank balance sheets. Chris's author
of Inflated Money, Debt and the American Dream, among others.
That book originally published back in twenty ten, second edition
(02:13):
released in May of this year. We could go on
and on on his background. He's so well known to
the Bloomberg audience, and he really was a go to
us during the Great Financial Crisis. Chris joins us here
in New York. Chris, it is great to have you here,
and I feel like there are so many places to
begin with, and I kind of want to begin with
what we just heard from some of the interview that
(02:34):
Jeff Gunlock did with the Odd Lots team. How he's
keeping his strategy simple, loading up on cash, staying away
from private credit due to garbage lending, and on health evaluations.
Speaker 5 (02:43):
His words, the notes.
Speaker 2 (02:45):
You shared with our team, you point out in the
credit markets, the wreckage and private equity and credit continues
to accumulate cumulate. Wreckage is a big word in my world.
So what do you mean by wreckage?
Speaker 6 (02:58):
The loss rates on any of these assets, Carol, and
thank you for having me is quite astounding. Remember that
you had not just big private equity firms diving into
private credit, but you had retail firms selling this to
individual investors for the past couple of years. I think
it just speaks to a decline in standards in the
(03:21):
investment world. I've been an investment banker for thirty years,
member of FINRA, and I've got to tell you, most
of my astute clients the banks I really have respect
for don't see anything that they like. They're using their
private markets to lay off credit risk, They're selling assets
(03:43):
to raise cash, and I think that's frankly and very
consistent with what Jeff Gunlach is saying, which is that
there's so much out there that needs to be fixed
and the loss rates could be rather considerable. So I
think it's only getting started. You saw the story in
Blue this morning about blue Owl. We're going to see
a lot more of that. So you just take that
(04:05):
example and multiply it across the entire spectrum of private equity.
What an interesting statistics I saw it in the last
couple of weeks is that something like two thirds of
the existing private equity firms are never going to be
able to raise money again because the losses on their
portfolio are so profound. So I think we're seeing something episodic.
(04:26):
And as good Luck said, this is a commercial story
this time. This is not about consumers and mortgages. This
is purely institutional.
Speaker 3 (04:34):
So well, the question I have is how it manifests,
and do you believe it manifests in some sort of crisis.
Does it become something that is systemic and has an
effect on the entire financial system. Is it that big
of an issue.
Speaker 6 (04:49):
It is that big. But remember this is institutional investors,
so a lot of it goes on behind the scenes,
lawyers and bankers sitting in conference rooms trying to figure
out how to extract value from a situation. So when
it impacts a public company, yes, when a bank has
to fess up about a loss. You just saw one
(05:11):
with Blackstone, a telecom company, which is going to cost
them one hundred and fifty million dollars. Looks like the
whole thing was a fraud from the word go. But
over time, yes, you're going to see more disclosure from
the public players, but the amount of loss is going
to be much larger than what the typical investor, the
typical media person actually sees because so much of it
(05:35):
is private. Like give you an example, it is a
really great publication called The Real Deal that covers commercial
real estate. They can't even begin to cover all of
the things that are going on. If you just read
their headlines every morning, you get a sense for just
how much restructuring there is going on in some pretty
important and well located assets here in New York City
(05:58):
and other cities around the US and it just continues.
And yet the funny part is you have new investors
jumping in to buy these assets after they've been barked down,
thinking that they're getting a deal. Well we'll see, you.
Speaker 2 (06:10):
Know, well we will see, right. I mean, does the
AI spending frenzy play into.
Speaker 6 (06:16):
This, Oh very much. I covered Silicon Valley for years.
Carol is a banker, and I have a lot of
respect for real technologists as opposed to salespeople. I don't
think AIS it's described to most investors today is going
to amount to anything except the convenience for consumer users
(06:39):
of the Internet. When you talk about real intelligence on
the part of a machine that is based on its
ability to observe and integrate new information, that's not what
we're doing here. We're simply taking existing language, existing words,
and putting massive horsepower behind search summarize the first page
(07:01):
of Google results. That's it.
Speaker 3 (07:03):
So that is to be fair, just and to make
sure I understand this right, you're arguing that what we're
seeing right now with LLLM such as chat GPT from
open Ai and Claude from Tropic, that's the extent of
the innovation that we're going to see when it comes
to the investment in AI.
Speaker 6 (07:21):
The head of AI at Meta, who's really smart man.
I was watching some of his videos yesterday over the weekend,
and you know, he just dismisses this entire phase. And
I understand what he's talking about. I used to cover
companies that did what we call natural language processing, where
we were trying to teach computers words and then be
(07:44):
able to integrate those words. We're not even doing that
with AI. We're just simply throwing muscular search at it
and say, okay, what's the top ten search results. Let's
build a summary. That's not intelligence. So I think a
lot of the spend you've heard this from other people
is going to end up being wasted when it comes
to AI. That's a lot of even.
Speaker 3 (08:05):
That's a lot of money, and that's a lot of
big bets in your view and interview will not don't
get me wrong. Well, I've made a lot of money
in the.
Speaker 6 (08:12):
Video, so go ahead. Well I don't think it will
generate revenue proportional to the spend. Let's put it that way.
So okay, So I made a lot of money on Nvidio.
Don't get me wrong. And I love that stock, I
love the company, but I think, you know, the desire
for investable assets has just overwhelmed these opportunities. We see
(08:35):
inflation everywhere we look in the financial markets today, and
that is defined as too much money chasing too few opportunities.
Speaker 2 (08:43):
I just want I want to push back a little bit, Chris,
Like you know, I've been talking about this piece that
was on sixty minutes last night about the founder of Anthropic, Yeah,
Dario Amado, right, And he talks specifically about how like
AI in healthcare.
Speaker 5 (09:00):
And I've talked to doctors too.
Speaker 2 (09:02):
We just did actually even on Friday, we were at
Boston Children's about the use of you know, they can't
keep up to date on everything, and that how AI
can data points and so on really come together to
help create in terms of diagnoses, treatment and also in
terms of innovation. But on the day saying on sixty minutes,
(09:25):
basically he's talking about this thing of condensing. Basically, let
me just look what he says, the compressed twenty first century, that's.
Speaker 5 (09:33):
The phrase you use, is just to describe what could happen.
Speaker 2 (09:36):
He says, the idea would be the point that we
can get as systems to this level of power where
they're able to work with the best human scientists. Could
we get ten times the rate of progress and therefore
compress all the medical progress that's going to happen throughout
the entire twenty first century in five or ten years.
I realize it's his book, but I mean those of
us who've started playing around with it are kind of
blown away with it in terms of what it can do.
(09:57):
But again, do you think it's just a productivity tool
or something more that maybe creates this stage.
Speaker 6 (10:03):
Yes, it's remember in the old days where Chris Wilde
was one of the early advocates of AI, and he said, well,
it's not intelligence, it's simulated cognition, and he was right,
but then he had so many people throwing money at
him to go to conferences and speak that over time
he adopted a more liberal, more you know, I guess
(10:25):
accepting view of this technological phenomenon. But to me as
a writer, when I use AI to use Google, for example,
it's it's nice if you know what you're looking for specifically,
but I'll always ask the machine two or three times
the same question differently worded, Yeah, and you always get
different outputs. So let me give you another example. Imagine
(10:48):
using AI from mortgage lender to deal with customers who
are calling, you know, for a variety of reasons, and
you want to use it to try and sift through
those inquiries. Answer are the ones that you can in
a reliable fashion. Also use it to do submations of
phone calls that have to be reviewed and okay before
(11:09):
they're you know, finalized. Right, These are all valid functions.
But ultimately, all we're really doing here is summarizing. And
that's what computers do. They sort, they do summations and
averages and everything else. But it's not intelligence. It's not
the ability to learn on the fly, and particularly without
(11:29):
a monitor and a companion, if you will, in a
human sense. So for a lot of companies, say, look
at the horsepower, they look at the speed and the
robustness of these AI tools, right, but they don't quite
get there in terms of rolling it out because of
the high error rates. Well that's the thing.
Speaker 2 (11:48):
Okay, Tim and I are like fighting who gets to
ask the next question? Go ahead, Tim, because I'm gracious.
Speaker 3 (11:52):
So are you out of Nvidia then? Because if this
doesn't amount to.
Speaker 2 (11:56):
Everybody seems to be adding a lot of people.
Speaker 6 (11:59):
I got it a long while ago. I wrote it up,
then I got out, then I got back in, and
each time it went up so much it got to
be such a big percentage of my portfolio that I
had to sell.
Speaker 2 (12:11):
Well, the thing I want to ask you, Chris, is
how does this end? Because I'm looking at a day
where Amazon did a big their first US dollar bond
offering in three years, looking to raise twelve billion, but
attracts about eighty billion of water on fifteen.
Speaker 3 (12:25):
Billion, the size of the US dollar bond offering fifteen billion.
Speaker 5 (12:28):
It's like, and meta did it? So how does this end?
Speaker 2 (12:31):
I mean, I mean it when we turned to you
so many times during the Great Financial Crisis and this
was something that there was so much fomo and people
you know, didn't want to miss the gains.
Speaker 5 (12:42):
But we know how it all ended. So how do you?
Speaker 2 (12:45):
I don't want to be alarmisted, I want to be
smart here. How does this potentially end? The AI component
who's impacted?
Speaker 6 (12:52):
I think you're going to see a correction in some
of these valuations simply because they've gone up so much
in a relatively short period of time. Me give you
another interesting example company I actually like a lot. So
Fi so far is the best performing bank stock in
the United States. It has been for the last eighteen months.
You know what the next one is? By the way,
among big banks city the rest of the big guys
(13:14):
have fallen behind. So why did so FI do so well? Well, slowly,
they're growing into their overhead. Their overhead was massive. It's
still too high relative to the size of the bank.
It's about fifty billion dollars in assets now. But they
had a tech component, a Silicon Valley component, a little
bit of bitcoin, you know, all of these pieces that
made equity managers love it, and they drove the thing
(13:37):
up over one hundred percent over the last twelve months.
I think stories like that are going to cool off.
I think bitcoin, frankly, is in big trouble because it
was kind of co opted by Wall Street. When you
see ETFs with bitcoin, it's not a good thing. This
was supposed to be a means of exchange, remember, you know.
So I think all of these markets are going to
(13:59):
have to retrieve a little bit. Carol, Will they go
down way much like two thousand and eight, No, because
there's still too many dollars chasing these opportunities.
Speaker 5 (14:09):
Yeah, there's a lot of liquidity out there.
Speaker 2 (14:11):
Chris so so glad already where my team is like,
when can we get Chris back?
Speaker 5 (14:16):
Thank you so much.
Speaker 3 (14:17):
Really, I'm to rebook out. We have lots of follow
up questions.
Speaker 5 (14:21):
We have lots of follow up so fi.
Speaker 2 (14:22):
By the way, it's up almost it's up about seventy
four percent year to date. City Group's up about forty percent. Comparison.
JP Morgan also having a good year, but again of
about twenty five percent year to date. Chris Whale and
thank you, Thank you so appreciate it. Chris's chairman of
Whale and Global Advisors, author of Inflated Money Debt in
the American Dream, which we didn't even get to talk about.
Speaker 3 (14:41):
That's why we're going to rebook him because it's.
Speaker 5 (14:43):
So relevant to today. Coming up, the CEO of Generak.
That's next.
Speaker 3 (14:47):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (14:55):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us a Love weekday afternoons from two to five ES.
During that listen on Apple, Karplay and Android Otto with
the Bloomberg Business app, or watch us Live on YouTube.
Speaker 5 (15:09):
All right, we want to switch gears. Talk a little
bit about the company, Generak.
Speaker 2 (15:13):
Shares of Generak are well off their highs this year,
drop off nearly thirty percent since mid August and slumping
about twenty one percent since the company reported earnings late October. Now,
those earnings from the power equipment company, you know who
they are. They make generators and a lot more stuff
included the company cutting its adjusted IBADA margin and net
sales growth forecast for the full year. The firm also
(15:36):
posted adjusted profit and net sales for the third quarter
that fell short of expectations. We had so much fun
last time Matt was here, Matt Miller, and we talked
with the company's chairman and CEO and president.
Speaker 5 (15:48):
And he's back with us to talk about the business
and the outlook.
Speaker 2 (15:51):
Aaron yekfelt he is, as we said, the president, CEO
and chairman of Generak, and he joins us from Wisconsin. Aaron,
it is good to have you back here on Bloomberg
Business Daily.
Speaker 7 (16:00):
How are you good? How are you guys doing doing okay?
Speaker 2 (16:04):
It's I can't believe that it's already November of twenty
twenty five.
Speaker 5 (16:08):
I know it's been a lot.
Speaker 2 (16:10):
Hey talk to us about earnings because investors seem pretty
disappointed in the results. What do we need to know
now that it's a couple weeks since.
Speaker 8 (16:21):
Yeah, So, you know, we have two parts of our business,
right the part that probably most people know us for
the residential machines that we that we build here in
Wisconsin and around the US home backup systems. You know,
it was a soft season this year, really driven by
two things.
Speaker 7 (16:36):
I would say.
Speaker 8 (16:36):
The first thing is just we actually had really nice
weather most of the summer in the fall, no landed hurricanes,
which is great for the people who live along the coast,
but if you're in a business like ours, obviously.
Speaker 7 (16:47):
That does impact demand.
Speaker 8 (16:48):
So demand was softer just on the back of you know,
basically nicer weather. And secondarily, we're starting to see some
demand destruction I think with the consumer, you know, just
we've had to put more pricing into the marketplace over
the last five years, coming off COVID response to the
you know, the tariff environment today, and that is starting
to wear on the consumer and starting to impact our
business a bit.
Speaker 3 (17:08):
The demand destruction that you're talking about, I want to
home in on that a little bit. What specifically is
is being hurt right now? Is it the purchasing power
of the consumer? Talk a little bit more about that
what you're seeing in the in the marketplace right now now?
Speaker 7 (17:23):
Thanks Tim specifically for us.
Speaker 8 (17:25):
You know, this is any this is a home improvement project,
right for the most part, So because it's tied to
the home and investment in the home, I think you know,
there's there's a I think housing just in general has
just been slower, right So the number of sales and
you know, purchases of homes, new construction of homes, all
of those statistics are are lower than I think we
(17:45):
would like to see them at this point. We're not
we're not making enough housing in this country unfortunately, and
and people investing in their homes, you know, picking those
types of projects. I think there's just a reticent right now,
given some uncertainty, you know, just where's the economy headed.
More broadly, as we as we turn the page on
twenty twenty five, are.
Speaker 2 (18:02):
You a little bit more subdued then, like as you
look into twenty twenty six, I mean it's just around
the corner of the.
Speaker 8 (18:06):
Ear certainly in our residential business, I would say that's
the case. I think, interestingly enough, in our commercial and
industrial business, where we make larger generators for backup manufacturing plants, hospitals, hotels,
and data centers, which is a new market for us,
we're actually seeing you know, some very nice indicators of
strength obviously on all of the capex spending and data
(18:27):
centers in that market with me and driven by AI
of course, as you guys super reported and everybody's reporting on.
But we're getting swept up in that a bit, and
that is I think go to offset largely be a
nice counterweight for what we do and what we're probably
going to see here in the residential market.
Speaker 3 (18:42):
What is the connection between severe weather patterns, outages and
then you know, a few weeks or a few months
later you're own sales.
Speaker 7 (18:50):
Yeah, typically for us what you would see.
Speaker 8 (18:52):
So if you go back, you wind the clock back
to last year, we had a very strong hurricane season,
three landed storms starting in July, and then we had
two storms and knocked over and one one in October
one and November. Typically you would see a pattern of
increased demand for a couple of quarters after that, which
we did see first half of last year and kind
of coming actually into the season this year in anticipation
(19:13):
for another season we thought was going to be active
based on all the long range forecasts, but it just
didn't play out that way. So the weather patterns were
a lot more mild, and as a result, you know,
we didn't see products sell through at the same rate.
Speaker 3 (19:26):
Hey, I want to take a bigger kind of step
back and look at the big picture environment of what
you sell into the US energy grid, because we talk
a lot each and every day about the new data
centers that are coming along, the increased demand that we're
seeing not just from consumers but from companies when it
comes to energy, increasing energy prices, and we understand the
(19:46):
grid is definitely cobbled together, and what a grid looks
like in one community is not what it looks like
in another community. But how would you characterize the resilience
of the US energy grid right now?
Speaker 8 (19:58):
Well, you know, they we do grade the grid and
the grid a lot of the major infrastructure every year,
and I think the grid got a D this year.
So you know, I think when you when you look
at the that's a report from the civil engineers, who we.
Speaker 3 (20:10):
Should note are the ones that want to be you know,
building and building this stuff, so we take those grids
with the grain of salt.
Speaker 7 (20:15):
I think, well, I think you're right on that.
Speaker 8 (20:18):
But still nonetheless, I mean, outages have been on the rise, right,
maybe this year, this this past season was a pretty
mild one, but outages are on the rise in terms
of the frequency of the outages and also the duration.
And you know, it used to be weather delivered a
lot of those knockout punches to the grid in terms
of eighty percent of all outages caused by something driven
by weather directly, you know, hurricanes, ice storms, things like that.
Speaker 7 (20:40):
What we've been seeing is.
Speaker 8 (20:42):
Is an ongoing trend here, a trend that's been forming
around outages that are happening because you've got constraints of
supply where demand is overwhelming supply. If you go back,
probably the best case we can give you example is
February of twenty twenty one in Texas with the freeze
down there, right, so you had just very cold, you know,
temperatures down in Texas's not historically cold, but very cold,
(21:03):
and all of the heat is you know, either electrical
in nature, heat pump or baseboard heating, and it overwhelmed
the amount of supply that was available, and what you
saw there is Urkot, the grid operator was you know,
they basically had to make a tough choice to turn
everybody off. You know, they took the decision to disconnect
you know, millions of homes and businesses to save you know,
(21:25):
the major elements of the grid from long term destruction.
And so we're seeing these types of patterns. You know,
you mentioned, we're seeing demand growing at a rate that
it hasn't that we haven't seen in two decades. So
you know, they're only talking about a couple of percentage
points increase and it sounds like something small to you
and I, but when you talk about the grid and
kind of the greater context, a couple of percentage points
(21:46):
of increases in demand is a lot. It's projected, especially
with when you look at the data center build out,
one hundred gigwatts of power is going to be needed
over the next five years, and so you know, that's
like the equivalent of adding twenty New York cities. Like
so if you think about just the amount of power
that that is, the raw power on the grid that's
going to be needed, and it's happening at a time
when we're actually retiring a lot of older assets, full
(22:08):
fired plants and some other things like that.
Speaker 2 (22:11):
Well, you know one thing I want to ask you
erin just to like provide some synergy with our earlier
guest Chris Wallen, a well and global advisor, someone who
we've talked to since the Great Financial Crisis. He analyzes banks,
the financial system, but we talked a lot about AI
and the spend that's going on, and he's got a
little bit more subdued view of the impact that AI
(22:32):
will have on us longer term, that maybe it won't
be as innovative or disruptive as some are saying. If
it's not like, how do you think about that that?
What if it isn't as big as everybody says? How
do you, as a CEO of a company think about
smartly what your exposure, what your build or what your
spend should be in the exposure to that when there
(22:54):
is still the TBD is a big TVD.
Speaker 8 (22:58):
Yeah, I'm sure as the case with Generac and other companies.
You know, a lot of bordering conversations around this topic. Right,
is it a bubble? How long will it last?
Speaker 7 (23:06):
Is it? You know, is it a five year run?
A ten year run, a two year run.
Speaker 8 (23:10):
You know, I think what we know now and we
can look kind of look at our own business how
we're deploying it. Right, So we're using AI in our
operations in the manufacturing floor, We're using in our customer
support functions. We're using it across the business to drive optimizations,
and we're doing that as a trade off for adding heads.
Speaker 9 (23:26):
Right.
Speaker 8 (23:26):
So I think a lot of businesses are looking at
AI as a way to okay, can we gain enough
efficiencies where we don't have to add as many as
many new heads into the business.
Speaker 7 (23:35):
And so I think those trends are very well pronounced.
Speaker 8 (23:37):
In fact, you know, we have a bunch of conversations
and a lot of projects that are ongoing to utilize
AI in that fashion. So I look inward and we
see we're using it, and we see a lot of
opportunity in the future to use AI even more deeply
in our operations. And every company in America is going
through this same process, large and small. And you know,
I think, personally, I think this is a you know,
(23:59):
something that is a game changer obviously for businesses and
the way we are productive and how productive we can
be as a business and the impact it can have
on our customers and the impacts can have on our
products as well. So, you know, when I look at
that and you look at the kind of game changing
nature of it, I think even if let's let's say,
for the sake of argument, that maybe it's not going
to play out over the next two years the same
way we all know, different forecasts have said it's going
(24:21):
to be, you know, dramatically higher than than anything we've
ever seen.
Speaker 7 (24:25):
Let's say it doesn't turn out that way.
Speaker 8 (24:27):
I do think over time you're talking about this is
a game changer in terms of the technology and the
way it's being deployed. And I don't think there's any
you know, there's any reason to believe that this isn't
going to be something that's going to you know, obviously
have a tremendous amount of spending underpinning it for a
long time.
Speaker 3 (24:43):
But the connection to your business and what it does
for from people and companies that want to buy machines
from from Generac. Does it mean the grid becomes more
resilient and more reliable because it needs these upgrades and
upgrades in order to support the power demand. Is that
net not so great for your business because well, things
are more reliable.
Speaker 7 (25:04):
Yeah, that's very true.
Speaker 8 (25:05):
I think on the context of a broader grid kind
of network, right, the ability to kind of shift if
you've got a problem in one part of the network
to a part of the network that doesn't have a problem.
I think in our business though, frankly, what happens is
it's kind of the last mile, right, So you're that
that line that connects, you know, directly to your home.
Right if a tree falls on that line, there's not
(25:26):
a lot of that AI is going to be able
to do for you personally, for your home or your business,
And that really is at the heart of our you know,
kind of our resiliency part of our business. I would
say that, you know, the other side of this coin,
of course, is as we put more data centers on
the ground and you see that demand for power continue
to increase, if we don't have enough supply, you know,
I do think that we're going to have continued problems here.
(25:48):
The Texas example that I gave you is an example
from several years ago. But what we're seeing is localized pockets, Yeah,
where there's just not enough power.
Speaker 7 (25:56):
That's a problem Aaron.
Speaker 5 (25:57):
Someone listening watching right now.
Speaker 2 (26:00):
But hey, ask Aaron when the twenty eight kill a
watch generator that you were talking about when you were
on with us in August, when that's.
Speaker 5 (26:09):
Going to I guess be available. Just got about thirty seconds.
Speaker 8 (26:12):
Yeah, today, we just open shipping for the product today.
So it's a brand new product line for us, and
it's the largest air cooled homestand by generator in the market.
Speaker 7 (26:21):
So great product.
Speaker 5 (26:22):
All right, good stuff, good stuff. Hey listen, We always
appreciate time with you.
Speaker 1 (26:26):
Be well.
Speaker 2 (26:27):
Aaron Yackfelt join us, Chairman, president and CEO of Generak
joining us from Wisconsin on this Monday.
Speaker 3 (26:34):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:42):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (26:56):
Want to get to our conversations from the c suite?
Continuing on this Monday, and something that caught our attention
was from our Bloomberg Law team, and they wrote about
open ai and its most recent update to its usage policies.
For Chatchipt that provides kind of a window into the
company's efforts to insulate itself from potential liability for handing
out legal advice to its users. Tim the company's update,
(27:18):
they treat policies about how Chatchipt and other products can
be used to provide legal and medical device and although
some lawyers prematurely and inaccurately celebrate the changes as an
outright ban on giving legal advice.
Speaker 5 (27:31):
The update was more a change in wording.
Speaker 2 (27:34):
Chatchipt still produces legal advice, including drafting contracts if asked
to do so.
Speaker 3 (27:39):
Okay, so a brave new world. Don't take legal advice
from us. Now choose whether or not you want to
take it from a large language model. Curious what Laura
Chambers has to say about this and sort of everything
that is this layer of technology that's kind of underlying
everything in our ecosystem right now. She's CEO of Mozilla Corporation.
She joins us from a sam. Mozilla's the global nonprofit
(28:02):
dedicated to ensuring the Internet remains open, inclusive and equitable.
And you might know the company from its Firefox web browser.
And that's really where I want to start and sort
of understanding this layer of technology that we're talking about
so much that so many of us are using, And
I wonder how you look at it as a way
that it's part of the ecosystem Now, Laura, is this
(28:24):
like is it a web browser? Is it like internet
access was in the nineteen nineties. Are there going to
be no such thing as like, you know, AI companies
because everything is going to be an AI company? How
should we be thinking about it?
Speaker 9 (28:35):
Yeah, it's a moment of tremendous change. One of the
big shifts we're seeing is a really renewed interest in
browsers as a category. Perplexity just launched their Comet browser.
Open Ai just launched their Atlas browser, and it makes sense.
The browser has been around for decades and it's a
product we use all the time, but we don't think
(28:56):
about it very often, and it's not surprising that AI
companies are getting into this space. The browser has incredible
access into credentials, your tabs, where you're browsing, how you're
spending your time, and as you know, AI companies are
very hungry for that information. So it is it is
sort of a moment of resurgence for the browser right now.
Speaker 3 (29:15):
Is the browser the gateway to all of this or
is it not? Because we're using apps like Claude or
chat GPT.
Speaker 9 (29:24):
What we're finding is that the folks that created those
apps are feeling that the interface is a little clunky
right now.
Speaker 10 (29:30):
That you might be in a.
Speaker 9 (29:31):
Browser and then you have to go to another tab
and back and forth a little bit. And so I
think that there will be a role to play for apps.
But what we're certainly seeing from open ai and others
is that they're really interested in getting into the browser space.
But I think the browser is changing. The browser has
traditionally been a container. You know, you have a URL
(29:51):
and a search bar, you have some tabs, and the
browser renders content on the web for you. The shift
that we're expecting to see is that the browser will
be become more of an agent to actually do work
on your behalf in that browser interface. But with that
shift becomes a big shift in power of data as well.
You know, the ais now have more information about your credentials,
(30:13):
where you're spending your time, while you're spending your money,
and we know that people are worried about that. Sixty
percent of people in the US are really worried about
privacy with AI, and the other forty percent probably should
be as well. And so I think to be successful
in this space, people are going to have to go
back to those values that Mozilla and Firefox are really
built on, which is around privacy and choice and control
(30:33):
over your experience and your data.
Speaker 2 (30:35):
Do you feel like it's it's difficult to compete against
the behemoths that are out there.
Speaker 9 (30:41):
It's always challenging to be a smaller company. The big
tech companies consolidate a lot of power, They lock you in,
they have vertical integration. But it's something that is incredibly
important to do. The Internet, if left to its own devices,
would always trend to being closed, to being expensive, and
to just have.
Speaker 10 (30:59):
A few players.
Speaker 9 (31:00):
And that's why it's important to have open source solutions.
It's important for alternatives for Firefox, like Firefox to be there.
You know, we have our own browser engine called Gecko.
There are only three browser engines left microsoften Opera. Everyone
else moved over to Chromium. It's expensive to run a
browser engine. I know why they did it, but we
(31:22):
think it's incredibly important to invest in options like that
because very quickly, otherwise you end up in a very
very sort of monopolistic world, which is bad for the
health of the Internet and it's bad for the users
of the Internet.
Speaker 3 (31:35):
So is are you creating a web browser? Are you
changing Firefox in order to be an AI first browser
so it can compete with whatever browser OpenAI ultimately has
whatever browser Perplexity ultimately offers in the way Chrome change
is from Alphabet's Google.
Speaker 9 (31:51):
Yeah, Firefox, we always adapt to where users are going
and what they need. And not all of our users
want AI. About twelve percent of of users in the
US actually don't want AI, so they'll always be an
experience for them. But we are actually we just launched
smart Windows. We have sign ups for those available right now,
which will be our version of AI. But it's going
to be centered on privacy, on trust, and on transparency.
(32:14):
So it will be you'll be able to have a
great eye experience in the five Fox browser, but it's
going to be one that is really oriented around what
users really need and how we can do a great
job of protecting the data.
Speaker 2 (32:26):
Yeah, I am curious too about you know, you're thinking
about who actually owns the data. We know the data
is what's going to make AI and LM's really powerful.
So I'm just thinking about you know, is some of
your concerns too about certain companies again going back to
the big guys, the big players, that they will have
(32:47):
the access to most data out there as more and
more folks use their search within their their AI chat engines,
if you.
Speaker 9 (32:55):
Will, Yeah, I think the users should be really thoughtful
about the data.
Speaker 7 (32:59):
Now.
Speaker 9 (32:59):
The good about data as it can create great experiences, right,
You've seamless, faster experiences. There's a lot of good things
that data can can do. But as you give away
more and more data, you're actually giving away control. And
so the big tech companies control what you see, you know,
where you spend your time, how you spend your money,
by sort of the algorithms of what they decide.
Speaker 7 (33:19):
To show you.
Speaker 9 (33:21):
And so even though on the internet it feels like
you have a lot of choice, actually that choice has
already been pre narrowed, and it's pre narrowed by the
data that's been collected for you. So I think it's
incredibly important for users to think about who's got my data,
how is it shaping what I'm seeing, what I'm buying,
how I'm spending my time, how I'm spending my money
and to not sort of give that data away without
(33:41):
really thinking it through, and to make choices that help
to preserve privacy.
Speaker 2 (33:46):
Yeah, certainly, lots of issues. We're kind of finding our
way through all of this. Really good to get your perspective.
Laura Chambers, she's chief executive officer of Mozilla, joining us
from San Francisco.
Speaker 3 (33:56):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (34:04):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (34:17):
Yes, indeed, everybody, we're driving to the clothes on this Monday.
Just I know, time flies seventeen minutes until we wrap
up the trade and what's going to be a super
busy week. As we've mentioned in Nvidia, on Wednesday, we
get their results, we get fed minutes. Also on Wednesday,
we've got retail earnings coming our way, and then we.
Speaker 5 (34:34):
Get delayed, much delayed September.
Speaker 2 (34:38):
Jobs report now that the government is back open and running,
so we'll get that on Thursday.
Speaker 5 (34:42):
In the meantime, we've got some selling here on Monday.
Speaker 3 (34:44):
Yeah, we do taking a look as we just heard
from Charlie at the S and P five hundred seeing
it down one point three percent, just off our worst
levels of the session, the S and P five or
excuse me, one point two five percent and has Deck
and Posit down one point three percent, the Dow down
one point four percent.
Speaker 2 (34:57):
Yeah, most names in the S and P are lower. Hey,
let's get two with us. Back with us is seventy Balafast.
She's founder and CEO at gul Veast Advisory. The firm
has about seven hundred and twenty million in assets under management,
and great to have her back here in our Bloomberg
Interactive Broker's studio.
Speaker 5 (35:11):
It's been a little while. Good to have you.
Speaker 10 (35:13):
Thank you.
Speaker 5 (35:14):
How are you and.
Speaker 2 (35:14):
How are you thinking about? I mean, I can't believe
we're almost ready to wrap up twenty twenty five. But
the market environment we talked about bitcoin that's pulling back.
We've seen stocks pullback, questioning of the AI trade. There's
concerns about we don't get at another FED rate cut
come December.
Speaker 5 (35:31):
How do you sum up the market environment right now?
Speaker 11 (35:34):
Look, this is a healthy breather. I think it's been
a great market. We have to remember that we're still
up double digits on the S and P over you know,
thirteen or fourteen percent, and tech is up even more so.
A lot of clients that had a greater percentage of
tech in their portfolios.
Speaker 10 (35:49):
They're doing great.
Speaker 11 (35:50):
Even bonds are up if you look at the aggregate
bond innext up over six or seven percent for the year.
So yes, we've had a little bit of a pullback.
I think it's a healthy breather, but a good good
results so far for the year.
Speaker 3 (36:02):
You said healthy breather a couple of times there. Yeah,
where are we in the breath? Like the beginning of
the deep breath or like is this the end of
the deep breath we're breathing out now?
Speaker 11 (36:10):
We'll find out more from Navidia on Wednesday we mentioned that.
But I think we're still early on in the AI trade.
Speaker 5 (36:17):
Your believer.
Speaker 11 (36:17):
I am a believer. This is just early innings. We're
still early innings. And there was some recent commentary of
you know, some prominent people shorting some stocks and taking
a look and like really questioning do we have the
energy capacity that we will need do we have all
of this? So I think it's healthy. But at the
same time, and we'll hear this on Wednesday. I mean,
(36:39):
it was just last month that the CEO of the
video was talking about over five hundred billion dollars of
commitments that he's already seeing for next year. So I
think we're still early innings in this AI trade.
Speaker 2 (36:50):
But how do we know it's just not an overspend?
And we talk about the circular financing that we seem
to be seeing of companies linking up and they do
a deal, I'll open AI or and video and then
they're I don't know, spending on in Vidia like chips
like it's just it seems a little close.
Speaker 10 (37:07):
That's some part of the market.
Speaker 11 (37:08):
And I'll say some companies like Oracle, for example, are
getting uh their stock prices are down more than others
like Microsoft that are seeing real earnings and real return
on their investment already. So I think it's not going
to be the same for anyone. They're going to be
winners and losers, and that's not clear already today. But
there are some that you can see, so Oracle taking
(37:31):
on some debt that maybe they don't you know, that's
raising some alarms, but there are companies that are making
real return on their investments.
Speaker 2 (37:37):
I mean, how do we know that companies aren't signing
up to make sure they have access to data centers
and are playing around or having access to lms, and
that they're playing around with it now, but that they're
gonna say, eh, that's pretty expensive, I don't really need
to be doing this, and so we start to see
(37:58):
some fallout at some point.
Speaker 11 (38:00):
We might see that followed at some point, but for
what we're seeing even into next year, the capital expenditures
that companies had talked about aren't there, and so companies
have been.
Speaker 10 (38:09):
Talking about that CEOs.
Speaker 11 (38:11):
So you know, it's kind of hard to tell what's
going to happen three years out, five years out. But
I think if we take a shorter term view, even
in the next twelve months, that's real money that's there.
So at some point it will be an over investment.
But I don't think we're there yet, and we just
don't have clarity. As a result, what do you do?
You can't be invested in only tech, right, That's where
(38:32):
that's where the diversification needs to come in.
Speaker 3 (38:34):
We just spoke with Zach Pandele, head of research over
at the crypto asset manager Grayscale Investments. I know you
caught part of the conversation. He was talking about the
crypto being treated like an alternative inside a portfolio. Are
you doing that?
Speaker 10 (38:47):
No, we're no, we're not there yet.
Speaker 11 (38:50):
No, we're not using bitcoin similar to maybe what we
were talking about earlier. You were mentioning earlier, Like I
also either your believer or you're not quite there yet.
And the people that are believers, they're they're backing bitcoin
and see it as an alternative investment. I think there
are other better ways to capture alternative INPCTY.
Speaker 2 (39:12):
Is it a way that we ultimately are all transacting
and so that we all will have access to it?
Speaker 10 (39:17):
Like I don't see the need yet. Yeah, I don't
see the need yet.
Speaker 11 (39:20):
I can't explain it to my clients why you're going
to hold this asset that's based on price, you know,
the supply and demand. Maybe the price goes up, maybe
the price comes down as it is now. I have
a hard time explaining to my clients what the fundamental
value is. Where's the cash flow? Where is it going
to get to?
Speaker 5 (39:36):
Which is what you were kind of asking.
Speaker 3 (39:38):
Yeah, I mean it was what I was asking, but
maybe a better question for him. And I'll ask you
this question now because I thought of it just now.
Is do you have gold in their portfolios?
Speaker 10 (39:45):
Okay, we do have gold in our portfolio.
Speaker 3 (39:47):
So how do you explain the use of gold?
Speaker 11 (39:49):
Okay, So more recently and since the Ukraine invasion that
happened a few years ago, now, you have been seeing
large funds, large central bank buying of gold and portfolios,
and I think that continues. I don't think we're done
with that. So you're seeing more adoption and you're seeing
more of that buying. And that was a big driver
of gold along with inflation. And gold has been around
(40:12):
a lot longer than bitcoin, and so we've seen the correlation. Also,
if we're worried about inflation, and yes, that is something
that we worry about in behalf of our clients, then
gold is another better way to put it in your
portfolio as an alternative.
Speaker 2 (40:26):
But could society at some point like rethink of what
crypto is and think of it as really like gold,
and so we shift it could be about perception perception
or is it real value?
Speaker 11 (40:39):
Well, I think it's about perception and the adoption. How
much will people start using bitcoin? I think that's a
big part of it, and that's why some people are
taking the approach. Again, we haven't done this for our
clients at this point, but some people are taking the
approach of saying, why wouldn't you take depending on your
total acid allocation, take a percent, take two percent. It's
like a lottery ticket if it does get to that.
(41:01):
You know, some smart people Kathy Wood are talking about
bitcoin at you know, over a million dollars, So yeah,
why not take a small percentage and put it in there?
Speaker 7 (41:09):
All right?
Speaker 5 (41:09):
Seven? Steve Blafast, thank you so much. I've gol best advisory.
She's the CEO.
Speaker 1 (41:14):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
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(41:35):
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Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Hey, one of Wall Street's bond kings is spotting overpriced
assets almost everywhere that he looks. In an episode of
the Odd Lots podcast recorded to mark the show's ten
year anniversary, Jeff Gunlock called out nosebleed valuations in the
equity market. He also warned investors Tim against incredibly speculative bets.
Speaker 3 (00:50):
The Double Line Capital founder joined the host of Odlots
Joe Wisenthal and Tracy Alloway.
Speaker 4 (00:55):
In recent years, the garbage lending has not gone to
the public markets. The garbage lending has gone to these
private markets. Next big crisis in the financial markets is
going to be private credit has the same trappings as
subprime mortgage repackaging. Head back in twenty twenty oh six,
(01:17):
the health of the equity market in the United States
is it's among the least healthy in my entire career
in terms of the PE ratio, the cape ratio, all
the classic valuation metrics are off the charts, all right.
Speaker 5 (01:32):
Just three snippets from that interview.
Speaker 2 (01:34):
That's Double Line Capital founder Jeff Gunlock with the hosts
of Odd Lots, Joe Wisenthal and Tracy Alloway. Highly recommend
you check it out on the Bloomberg and at Bloomberg
dot com. We want to stay on the markets and
the outlook for financial assets in particular, and what is
kind of a tricky time it feels like for US
financial market.
Speaker 5 (01:51):
It's great to have with us.
Speaker 2 (01:52):
Chris Whalen, He's chairman of Whale and Global Advisors. He's
also editor of The Institutional Risk Analyst. It's a weekly
newsletter that looks at the intersection of financial markets and
public policy, dissects and analyzes bank balance sheets. Chris's author
of Inflated Money, Debt and the American Dream, among others.
That book originally published back in twenty ten, second edition
(02:13):
released in May of this year. We could go on
and on on his background. He's so well known to
the Bloomberg audience, and he really was a go to
us during the Great Financial Crisis. Chris joins us here
in New York. Chris, it is great to have you here,
and I feel like there are so many places to
begin with, and I kind of want to begin with
what we just heard from some of the interview that
(02:34):
Jeff Gunlock did with the Odd Lots team. How he's
keeping his strategy simple, loading up on cash, staying away
from private credit due to garbage lending, and on health evaluations.
Speaker 5 (02:43):
His words, the notes.
Speaker 2 (02:45):
You shared with our team, you point out in the
credit markets, the wreckage and private equity and credit continues
to accumulate cumulate. Wreckage is a big word in my world.
So what do you mean by wreckage?
Speaker 6 (02:58):
The loss rates on any of these assets, Carol, and
thank you for having me is quite astounding. Remember that
you had not just big private equity firms diving into
private credit, but you had retail firms selling this to
individual investors for the past couple of years. I think
it just speaks to a decline in standards in the
(03:21):
investment world. I've been an investment banker for thirty years,
member of FINRA, and I've got to tell you, most
of my astute clients the banks I really have respect
for don't see anything that they like. They're using their
private markets to lay off credit risk, They're selling assets
(03:43):
to raise cash, and I think that's frankly and very
consistent with what Jeff Gunlach is saying, which is that
there's so much out there that needs to be fixed
and the loss rates could be rather considerable. So I
think it's only getting started. You saw the story in
Blue this morning about blue Owl. We're going to see
a lot more of that. So you just take that
(04:05):
example and multiply it across the entire spectrum of private equity.
What an interesting statistics I saw it in the last
couple of weeks is that something like two thirds of
the existing private equity firms are never going to be
able to raise money again because the losses on their
portfolio are so profound. So I think we're seeing something episodic.
(04:26):
And as good Luck said, this is a commercial story
this time. This is not about consumers and mortgages. This
is purely institutional.
Speaker 3 (04:34):
So well, the question I have is how it manifests,
and do you believe it manifests in some sort of crisis.
Does it become something that is systemic and has an
effect on the entire financial system. Is it that big
of an issue.
Speaker 6 (04:49):
It is that big. But remember this is institutional investors,
so a lot of it goes on behind the scenes,
lawyers and bankers sitting in conference rooms trying to figure
out how to extract value from a situation. So when
it impacts a public company, yes, when a bank has
to fess up about a loss. You just saw one
(05:11):
with Blackstone, a telecom company, which is going to cost
them one hundred and fifty million dollars. Looks like the
whole thing was a fraud from the word go. But
over time, yes, you're going to see more disclosure from
the public players, but the amount of loss is going
to be much larger than what the typical investor, the
typical media person actually sees because so much of it
(05:35):
is private. Like give you an example, it is a
really great publication called The Real Deal that covers commercial
real estate. They can't even begin to cover all of
the things that are going on. If you just read
their headlines every morning, you get a sense for just
how much restructuring there is going on in some pretty
important and well located assets here in New York City
(05:58):
and other cities around the US and it just continues.
And yet the funny part is you have new investors
jumping in to buy these assets after they've been barked down,
thinking that they're getting a deal. Well we'll see, you.
Speaker 2 (06:10):
Know, well we will see, right. I mean, does the
AI spending frenzy play into.
Speaker 6 (06:16):
This, Oh very much. I covered Silicon Valley for years.
Carol is a banker, and I have a lot of
respect for real technologists as opposed to salespeople. I don't
think AIS it's described to most investors today is going
to amount to anything except the convenience for consumer users
(06:39):
of the Internet. When you talk about real intelligence on
the part of a machine that is based on its
ability to observe and integrate new information, that's not what
we're doing here. We're simply taking existing language, existing words,
and putting massive horsepower behind search summarize the first page
(07:01):
of Google results. That's it.
Speaker 3 (07:03):
So that is to be fair, just and to make
sure I understand this right, you're arguing that what we're
seeing right now with LLLM such as chat GPT from
open Ai and Claude from Tropic, that's the extent of
the innovation that we're going to see when it comes
to the investment in AI.
Speaker 6 (07:21):
The head of AI at Meta, who's really smart man.
I was watching some of his videos yesterday over the weekend,
and you know, he just dismisses this entire phase. And
I understand what he's talking about. I used to cover
companies that did what we call natural language processing, where
we were trying to teach computers words and then be
(07:44):
able to integrate those words. We're not even doing that
with AI. We're just simply throwing muscular search at it
and say, okay, what's the top ten search results. Let's
build a summary. That's not intelligence. So I think a
lot of the spend you've heard this from other people
is going to end up being wasted when it comes
to AI. That's a lot of even.
Speaker 3 (08:05):
That's a lot of money, and that's a lot of
big bets in your view and interview will not don't
get me wrong. Well, I've made a lot of money
in the.
Speaker 6 (08:12):
Video, so go ahead. Well I don't think it will
generate revenue proportional to the spend. Let's put it that way.
So okay, So I made a lot of money on Nvidio.
Don't get me wrong. And I love that stock, I
love the company, but I think, you know, the desire
for investable assets has just overwhelmed these opportunities. We see
(08:35):
inflation everywhere we look in the financial markets today, and
that is defined as too much money chasing too few opportunities.
Speaker 2 (08:43):
I just want I want to push back a little bit, Chris,
Like you know, I've been talking about this piece that
was on sixty minutes last night about the founder of Anthropic, Yeah,
Dario Amado, right, And he talks specifically about how like
AI in healthcare.
Speaker 5 (09:00):
And I've talked to doctors too.
Speaker 2 (09:02):
We just did actually even on Friday, we were at
Boston Children's about the use of you know, they can't
keep up to date on everything, and that how AI
can data points and so on really come together to
help create in terms of diagnoses, treatment and also in
terms of innovation. But on the day saying on sixty minutes,
(09:25):
basically he's talking about this thing of condensing. Basically, let
me just look what he says, the compressed twenty first century, that's.
Speaker 5 (09:33):
The phrase you use, is just to describe what could happen.
Speaker 2 (09:36):
He says, the idea would be the point that we
can get as systems to this level of power where
they're able to work with the best human scientists. Could
we get ten times the rate of progress and therefore
compress all the medical progress that's going to happen throughout
the entire twenty first century in five or ten years.
I realize it's his book, but I mean those of
us who've started playing around with it are kind of
blown away with it in terms of what it can do.
(09:57):
But again, do you think it's just a productivity tool
or something more that maybe creates this stage.
Speaker 6 (10:03):
Yes, it's remember in the old days where Chris Wilde
was one of the early advocates of AI, and he said, well,
it's not intelligence, it's simulated cognition, and he was right,
but then he had so many people throwing money at
him to go to conferences and speak that over time
he adopted a more liberal, more you know, I guess
(10:25):
accepting view of this technological phenomenon. But to me as
a writer, when I use AI to use Google, for example,
it's it's nice if you know what you're looking for specifically,
but I'll always ask the machine two or three times
the same question differently worded, Yeah, and you always get
different outputs. So let me give you another example. Imagine
(10:48):
using AI from mortgage lender to deal with customers who
are calling, you know, for a variety of reasons, and
you want to use it to try and sift through
those inquiries. Answer are the ones that you can in
a reliable fashion. Also use it to do submations of
phone calls that have to be reviewed and okay before
(11:09):
they're you know, finalized. Right, These are all valid functions.
But ultimately, all we're really doing here is summarizing. And
that's what computers do. They sort, they do summations and
averages and everything else. But it's not intelligence. It's not
the ability to learn on the fly, and particularly without
(11:29):
a monitor and a companion, if you will, in a
human sense. So for a lot of companies, say, look
at the horsepower, they look at the speed and the
robustness of these AI tools, right, but they don't quite
get there in terms of rolling it out because of
the high error rates. Well that's the thing.
Speaker 2 (11:48):
Okay, Tim and I are like fighting who gets to
ask the next question? Go ahead, Tim, because I'm gracious.
Speaker 3 (11:52):
So are you out of Nvidia then? Because if this
doesn't amount to.
Speaker 2 (11:56):
Everybody seems to be adding a lot of people.
Speaker 6 (11:59):
I got it a long while ago. I wrote it up,
then I got out, then I got back in, and
each time it went up so much it got to
be such a big percentage of my portfolio that I
had to sell.
Speaker 2 (12:11):
Well, the thing I want to ask you, Chris, is
how does this end? Because I'm looking at a day
where Amazon did a big their first US dollar bond
offering in three years, looking to raise twelve billion, but
attracts about eighty billion of water on fifteen.
Speaker 3 (12:25):
Billion, the size of the US dollar bond offering fifteen billion.
Speaker 5 (12:28):
It's like, and meta did it? So how does this end?
Speaker 2 (12:31):
I mean, I mean it when we turned to you
so many times during the Great Financial Crisis and this
was something that there was so much fomo and people
you know, didn't want to miss the gains.
Speaker 5 (12:42):
But we know how it all ended. So how do you?
Speaker 2 (12:45):
I don't want to be alarmisted, I want to be
smart here. How does this potentially end? The AI component
who's impacted?
Speaker 6 (12:52):
I think you're going to see a correction in some
of these valuations simply because they've gone up so much
in a relatively short period of time. Me give you
another interesting example company I actually like a lot. So
Fi so far is the best performing bank stock in
the United States. It has been for the last eighteen months.
You know what the next one is? By the way,
among big banks city the rest of the big guys
(13:14):
have fallen behind. So why did so FI do so well? Well, slowly,
they're growing into their overhead. Their overhead was massive. It's
still too high relative to the size of the bank.
It's about fifty billion dollars in assets now. But they
had a tech component, a Silicon Valley component, a little
bit of bitcoin, you know, all of these pieces that
made equity managers love it, and they drove the thing
(13:37):
up over one hundred percent over the last twelve months.
I think stories like that are going to cool off.
I think bitcoin, frankly, is in big trouble because it
was kind of co opted by Wall Street. When you
see ETFs with bitcoin, it's not a good thing. This
was supposed to be a means of exchange, remember, you know.
So I think all of these markets are going to
(13:59):
have to retrieve a little bit. Carol, Will they go
down way much like two thousand and eight, No, because
there's still too many dollars chasing these opportunities.
Speaker 5 (14:09):
Yeah, there's a lot of liquidity out there.
Speaker 2 (14:11):
Chris so so glad already where my team is like,
when can we get Chris back?
Speaker 5 (14:16):
Thank you so much.
Speaker 3 (14:17):
Really, I'm to rebook out. We have lots of follow
up questions.
Speaker 5 (14:21):
We have lots of follow up so fi.
Speaker 2 (14:22):
By the way, it's up almost it's up about seventy
four percent year to date. City Group's up about forty percent. Comparison.
JP Morgan also having a good year, but again of
about twenty five percent year to date. Chris Whale and
thank you, Thank you so appreciate it. Chris's chairman of
Whale and Global Advisors, author of Inflated Money Debt in
the American Dream, which we didn't even get to talk about.
Speaker 3 (14:41):
That's why we're going to rebook him because it's.
Speaker 5 (14:43):
So relevant to today. Coming up, the CEO of Generak.
That's next.
Speaker 3 (14:47):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (14:55):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us a Love weekday afternoons from two to five ES.
During that listen on Apple, Karplay and Android Otto with
the Bloomberg Business app, or watch us Live on YouTube.
Speaker 5 (15:09):
All right, we want to switch gears. Talk a little
bit about the company, Generak.
Speaker 2 (15:13):
Shares of Generak are well off their highs this year,
drop off nearly thirty percent since mid August and slumping
about twenty one percent since the company reported earnings late October. Now,
those earnings from the power equipment company, you know who
they are. They make generators and a lot more stuff
included the company cutting its adjusted IBADA margin and net
sales growth forecast for the full year. The firm also
(15:36):
posted adjusted profit and net sales for the third quarter
that fell short of expectations. We had so much fun
last time Matt was here, Matt Miller, and we talked
with the company's chairman and CEO and president.
Speaker 5 (15:48):
And he's back with us to talk about the business
and the outlook.
Speaker 2 (15:51):
Aaron yekfelt he is, as we said, the president, CEO
and chairman of Generak, and he joins us from Wisconsin. Aaron,
it is good to have you back here on Bloomberg
Business Daily.
Speaker 7 (16:00):
How are you good? How are you guys doing doing okay?
Speaker 2 (16:04):
It's I can't believe that it's already November of twenty
twenty five.
Speaker 5 (16:08):
I know it's been a lot.
Speaker 2 (16:10):
Hey talk to us about earnings because investors seem pretty
disappointed in the results. What do we need to know
now that it's a couple weeks since.
Speaker 8 (16:21):
Yeah, So, you know, we have two parts of our business,
right the part that probably most people know us for
the residential machines that we that we build here in
Wisconsin and around the US home backup systems. You know,
it was a soft season this year, really driven by
two things.
Speaker 7 (16:36):
I would say.
Speaker 8 (16:36):
The first thing is just we actually had really nice
weather most of the summer in the fall, no landed hurricanes,
which is great for the people who live along the coast,
but if you're in a business like ours, obviously.
Speaker 7 (16:47):
That does impact demand.
Speaker 8 (16:48):
So demand was softer just on the back of you know,
basically nicer weather. And secondarily, we're starting to see some
demand destruction I think with the consumer, you know, just
we've had to put more pricing into the marketplace over
the last five years, coming off COVID response to the
you know, the tariff environment today, and that is starting
to wear on the consumer and starting to impact our
business a bit.
Speaker 3 (17:08):
The demand destruction that you're talking about, I want to
home in on that a little bit. What specifically is
is being hurt right now? Is it the purchasing power
of the consumer? Talk a little bit more about that
what you're seeing in the in the marketplace right now now?
Speaker 7 (17:23):
Thanks Tim specifically for us.
Speaker 8 (17:25):
You know, this is any this is a home improvement project,
right for the most part, So because it's tied to
the home and investment in the home, I think you know,
there's there's a I think housing just in general has
just been slower, right So the number of sales and
you know, purchases of homes, new construction of homes, all
of those statistics are are lower than I think we
(17:45):
would like to see them at this point. We're not
we're not making enough housing in this country unfortunately, and
and people investing in their homes, you know, picking those
types of projects. I think there's just a reticent right now,
given some uncertainty, you know, just where's the economy headed.
More broadly, as we as we turn the page on
twenty twenty five, are.
Speaker 2 (18:02):
You a little bit more subdued then, like as you
look into twenty twenty six, I mean it's just around
the corner of the.
Speaker 8 (18:06):
Ear certainly in our residential business, I would say that's
the case. I think, interestingly enough, in our commercial and
industrial business, where we make larger generators for backup manufacturing plants, hospitals, hotels,
and data centers, which is a new market for us,
we're actually seeing you know, some very nice indicators of
strength obviously on all of the capex spending and data
(18:27):
centers in that market with me and driven by AI
of course, as you guys super reported and everybody's reporting on.
But we're getting swept up in that a bit, and
that is I think go to offset largely be a
nice counterweight for what we do and what we're probably
going to see here in the residential market.
Speaker 3 (18:42):
What is the connection between severe weather patterns, outages and
then you know, a few weeks or a few months
later you're own sales.
Speaker 7 (18:50):
Yeah, typically for us what you would see.
Speaker 8 (18:52):
So if you go back, you wind the clock back
to last year, we had a very strong hurricane season,
three landed storms starting in July, and then we had
two storms and knocked over and one one in October
one and November. Typically you would see a pattern of
increased demand for a couple of quarters after that, which
we did see first half of last year and kind
of coming actually into the season this year in anticipation
(19:13):
for another season we thought was going to be active
based on all the long range forecasts, but it just
didn't play out that way. So the weather patterns were
a lot more mild, and as a result, you know,
we didn't see products sell through at the same rate.
Speaker 3 (19:26):
Hey, I want to take a bigger kind of step
back and look at the big picture environment of what
you sell into the US energy grid, because we talk
a lot each and every day about the new data
centers that are coming along, the increased demand that we're
seeing not just from consumers but from companies when it
comes to energy, increasing energy prices, and we understand the
(19:46):
grid is definitely cobbled together, and what a grid looks
like in one community is not what it looks like
in another community. But how would you characterize the resilience
of the US energy grid right now?
Speaker 8 (19:58):
Well, you know, they we do grade the grid and
the grid a lot of the major infrastructure every year,
and I think the grid got a D this year.
So you know, I think when you when you look
at the that's a report from the civil engineers, who we.
Speaker 3 (20:10):
Should note are the ones that want to be you know,
building and building this stuff, so we take those grids
with the grain of salt.
Speaker 7 (20:15):
I think, well, I think you're right on that.
Speaker 8 (20:18):
But still nonetheless, I mean, outages have been on the rise, right,
maybe this year, this this past season was a pretty
mild one, but outages are on the rise in terms
of the frequency of the outages and also the duration.
And you know, it used to be weather delivered a
lot of those knockout punches to the grid in terms
of eighty percent of all outages caused by something driven
by weather directly, you know, hurricanes, ice storms, things like that.
Speaker 7 (20:40):
What we've been seeing is.
Speaker 8 (20:42):
Is an ongoing trend here, a trend that's been forming
around outages that are happening because you've got constraints of
supply where demand is overwhelming supply. If you go back,
probably the best case we can give you example is
February of twenty twenty one in Texas with the freeze
down there, right, so you had just very cold, you know,
temperatures down in Texas's not historically cold, but very cold,
(21:03):
and all of the heat is you know, either electrical
in nature, heat pump or baseboard heating, and it overwhelmed
the amount of supply that was available, and what you
saw there is Urkot, the grid operator was you know,
they basically had to make a tough choice to turn
everybody off. You know, they took the decision to disconnect
you know, millions of homes and businesses to save you know,
(21:25):
the major elements of the grid from long term destruction.
And so we're seeing these types of patterns. You know,
you mentioned, we're seeing demand growing at a rate that
it hasn't that we haven't seen in two decades. So
you know, they're only talking about a couple of percentage
points increase and it sounds like something small to you
and I, but when you talk about the grid and
kind of the greater context, a couple of percentage points
(21:46):
of increases in demand is a lot. It's projected, especially
with when you look at the data center build out,
one hundred gigwatts of power is going to be needed
over the next five years, and so you know, that's
like the equivalent of adding twenty New York cities. Like
so if you think about just the amount of power
that that is, the raw power on the grid that's
going to be needed, and it's happening at a time
when we're actually retiring a lot of older assets, full
(22:08):
fired plants and some other things like that.
Speaker 2 (22:11):
Well, you know one thing I want to ask you
erin just to like provide some synergy with our earlier
guest Chris Wallen, a well and global advisor, someone who
we've talked to since the Great Financial Crisis. He analyzes banks,
the financial system, but we talked a lot about AI
and the spend that's going on, and he's got a
little bit more subdued view of the impact that AI
(22:32):
will have on us longer term, that maybe it won't
be as innovative or disruptive as some are saying. If
it's not like, how do you think about that that?
What if it isn't as big as everybody says? How
do you, as a CEO of a company think about
smartly what your exposure, what your build or what your
spend should be in the exposure to that when there
(22:54):
is still the TBD is a big TVD.
Speaker 8 (22:58):
Yeah, I'm sure as the case with Generac and other companies.
You know, a lot of bordering conversations around this topic. Right,
is it a bubble? How long will it last?
Speaker 7 (23:06):
Is it? You know, is it a five year run?
A ten year run, a two year run.
Speaker 8 (23:10):
You know, I think what we know now and we
can look kind of look at our own business how
we're deploying it. Right, So we're using AI in our
operations in the manufacturing floor, We're using in our customer
support functions. We're using it across the business to drive optimizations,
and we're doing that as a trade off for adding heads.
Speaker 9 (23:26):
Right.
Speaker 8 (23:26):
So I think a lot of businesses are looking at
AI as a way to okay, can we gain enough
efficiencies where we don't have to add as many as
many new heads into the business.
Speaker 7 (23:35):
And so I think those trends are very well pronounced.
Speaker 8 (23:37):
In fact, you know, we have a bunch of conversations
and a lot of projects that are ongoing to utilize
AI in that fashion. So I look inward and we
see we're using it, and we see a lot of
opportunity in the future to use AI even more deeply
in our operations. And every company in America is going
through this same process, large and small. And you know,
I think, personally, I think this is a you know,
(23:59):
something that is a game changer obviously for businesses and
the way we are productive and how productive we can
be as a business and the impact it can have
on our customers and the impacts can have on our
products as well. So, you know, when I look at
that and you look at the kind of game changing
nature of it, I think even if let's let's say,
for the sake of argument, that maybe it's not going
to play out over the next two years the same
way we all know, different forecasts have said it's going
(24:21):
to be, you know, dramatically higher than than anything we've
ever seen.
Speaker 7 (24:25):
Let's say it doesn't turn out that way.
Speaker 8 (24:27):
I do think over time you're talking about this is
a game changer in terms of the technology and the
way it's being deployed. And I don't think there's any
you know, there's any reason to believe that this isn't
going to be something that's going to you know, obviously
have a tremendous amount of spending underpinning it for a
long time.
Speaker 3 (24:43):
But the connection to your business and what it does
for from people and companies that want to buy machines
from from Generac. Does it mean the grid becomes more
resilient and more reliable because it needs these upgrades and
upgrades in order to support the power demand. Is that
net not so great for your business because well, things
are more reliable.
Speaker 7 (25:04):
Yeah, that's very true.
Speaker 8 (25:05):
I think on the context of a broader grid kind
of network, right, the ability to kind of shift if
you've got a problem in one part of the network
to a part of the network that doesn't have a problem.
I think in our business though, frankly, what happens is
it's kind of the last mile, right, So you're that
that line that connects, you know, directly to your home.
Right if a tree falls on that line, there's not
(25:26):
a lot of that AI is going to be able
to do for you personally, for your home or your business,
And that really is at the heart of our you know,
kind of our resiliency part of our business. I would
say that, you know, the other side of this coin,
of course, is as we put more data centers on
the ground and you see that demand for power continue
to increase, if we don't have enough supply, you know,
I do think that we're going to have continued problems here.
(25:48):
The Texas example that I gave you is an example
from several years ago. But what we're seeing is localized pockets, Yeah,
where there's just not enough power.
Speaker 7 (25:56):
That's a problem Aaron.
Speaker 5 (25:57):
Someone listening watching right now.
Speaker 2 (26:00):
But hey, ask Aaron when the twenty eight kill a
watch generator that you were talking about when you were
on with us in August, when that's.
Speaker 5 (26:09):
Going to I guess be available. Just got about thirty seconds.
Speaker 8 (26:12):
Yeah, today, we just open shipping for the product today.
So it's a brand new product line for us, and
it's the largest air cooled homestand by generator in the market.
Speaker 7 (26:21):
So great product.
Speaker 5 (26:22):
All right, good stuff, good stuff. Hey listen, We always
appreciate time with you.
Speaker 1 (26:26):
Be well.
Speaker 2 (26:27):
Aaron Yackfelt join us, Chairman, president and CEO of Generak
joining us from Wisconsin on this Monday.
Speaker 3 (26:34):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:42):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (26:56):
Want to get to our conversations from the c suite?
Continuing on this Monday, and something that caught our attention
was from our Bloomberg Law team, and they wrote about
open ai and its most recent update to its usage policies.
For Chatchipt that provides kind of a window into the
company's efforts to insulate itself from potential liability for handing
out legal advice to its users. Tim the company's update,
(27:18):
they treat policies about how Chatchipt and other products can
be used to provide legal and medical device and although
some lawyers prematurely and inaccurately celebrate the changes as an
outright ban on giving legal advice.
Speaker 5 (27:31):
The update was more a change in wording.
Speaker 2 (27:34):
Chatchipt still produces legal advice, including drafting contracts if asked
to do so.
Speaker 3 (27:39):
Okay, so a brave new world. Don't take legal advice
from us. Now choose whether or not you want to
take it from a large language model. Curious what Laura
Chambers has to say about this and sort of everything
that is this layer of technology that's kind of underlying
everything in our ecosystem right now. She's CEO of Mozilla Corporation.
She joins us from a sam. Mozilla's the global nonprofit
(28:02):
dedicated to ensuring the Internet remains open, inclusive and equitable.
And you might know the company from its Firefox web browser.
And that's really where I want to start and sort
of understanding this layer of technology that we're talking about
so much that so many of us are using, And
I wonder how you look at it as a way
that it's part of the ecosystem Now, Laura, is this
(28:24):
like is it a web browser? Is it like internet
access was in the nineteen nineties. Are there going to
be no such thing as like, you know, AI companies
because everything is going to be an AI company? How
should we be thinking about it?
Speaker 9 (28:35):
Yeah, it's a moment of tremendous change. One of the
big shifts we're seeing is a really renewed interest in
browsers as a category. Perplexity just launched their Comet browser.
Open Ai just launched their Atlas browser, and it makes sense.
The browser has been around for decades and it's a
product we use all the time, but we don't think
(28:56):
about it very often, and it's not surprising that AI
companies are getting into this space. The browser has incredible
access into credentials, your tabs, where you're browsing, how you're
spending your time, and as you know, AI companies are
very hungry for that information. So it is it is
sort of a moment of resurgence for the browser right now.
Speaker 3 (29:15):
Is the browser the gateway to all of this or
is it not? Because we're using apps like Claude or
chat GPT.
Speaker 9 (29:24):
What we're finding is that the folks that created those
apps are feeling that the interface is a little clunky
right now.
Speaker 10 (29:30):
That you might be in a.
Speaker 9 (29:31):
Browser and then you have to go to another tab
and back and forth a little bit. And so I
think that there will be a role to play for apps.
But what we're certainly seeing from open ai and others
is that they're really interested in getting into the browser space.
But I think the browser is changing. The browser has
traditionally been a container. You know, you have a URL
(29:51):
and a search bar, you have some tabs, and the
browser renders content on the web for you. The shift
that we're expecting to see is that the browser will
be become more of an agent to actually do work
on your behalf in that browser interface. But with that
shift becomes a big shift in power of data as well.
You know, the ais now have more information about your credentials,
(30:13):
where you're spending your time, while you're spending your money,
and we know that people are worried about that. Sixty
percent of people in the US are really worried about
privacy with AI, and the other forty percent probably should
be as well. And so I think to be successful
in this space, people are going to have to go
back to those values that Mozilla and Firefox are really
built on, which is around privacy and choice and control
(30:33):
over your experience and your data.
Speaker 2 (30:35):
Do you feel like it's it's difficult to compete against
the behemoths that are out there.
Speaker 9 (30:41):
It's always challenging to be a smaller company. The big
tech companies consolidate a lot of power, They lock you in,
they have vertical integration. But it's something that is incredibly
important to do. The Internet, if left to its own devices,
would always trend to being closed, to being expensive, and
to just have.
Speaker 10 (30:59):
A few players.
Speaker 9 (31:00):
And that's why it's important to have open source solutions.
It's important for alternatives for Firefox, like Firefox to be there.
You know, we have our own browser engine called Gecko.
There are only three browser engines left microsoften Opera. Everyone
else moved over to Chromium. It's expensive to run a
browser engine. I know why they did it, but we
(31:22):
think it's incredibly important to invest in options like that
because very quickly, otherwise you end up in a very
very sort of monopolistic world, which is bad for the
health of the Internet and it's bad for the users
of the Internet.
Speaker 3 (31:35):
So is are you creating a web browser? Are you
changing Firefox in order to be an AI first browser
so it can compete with whatever browser OpenAI ultimately has
whatever browser Perplexity ultimately offers in the way Chrome change
is from Alphabet's Google.
Speaker 9 (31:51):
Yeah, Firefox, we always adapt to where users are going
and what they need. And not all of our users
want AI. About twelve percent of of users in the
US actually don't want AI, so they'll always be an
experience for them. But we are actually we just launched
smart Windows. We have sign ups for those available right now,
which will be our version of AI. But it's going
to be centered on privacy, on trust, and on transparency.
(32:14):
So it will be you'll be able to have a
great eye experience in the five Fox browser, but it's
going to be one that is really oriented around what
users really need and how we can do a great
job of protecting the data.
Speaker 2 (32:26):
Yeah, I am curious too about you know, you're thinking
about who actually owns the data. We know the data
is what's going to make AI and LM's really powerful.
So I'm just thinking about you know, is some of
your concerns too about certain companies again going back to
the big guys, the big players, that they will have
(32:47):
the access to most data out there as more and
more folks use their search within their their AI chat engines,
if you.
Speaker 9 (32:55):
Will, Yeah, I think the users should be really thoughtful
about the data.
Speaker 7 (32:59):
Now.
Speaker 9 (32:59):
The good about data as it can create great experiences, right,
You've seamless, faster experiences. There's a lot of good things
that data can can do. But as you give away
more and more data, you're actually giving away control. And
so the big tech companies control what you see, you know,
where you spend your time, how you spend your money,
by sort of the algorithms of what they decide.
Speaker 7 (33:19):
To show you.
Speaker 9 (33:21):
And so even though on the internet it feels like
you have a lot of choice, actually that choice has
already been pre narrowed, and it's pre narrowed by the
data that's been collected for you. So I think it's
incredibly important for users to think about who's got my data,
how is it shaping what I'm seeing, what I'm buying,
how I'm spending my time, how I'm spending my money
and to not sort of give that data away without
(33:41):
really thinking it through, and to make choices that help
to preserve privacy.
Speaker 2 (33:46):
Yeah, certainly, lots of issues. We're kind of finding our
way through all of this. Really good to get your perspective.
Laura Chambers, she's chief executive officer of Mozilla, joining us
from San Francisco.
Speaker 3 (33:56):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (34:04):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 2 (34:17):
Yes, indeed, everybody, we're driving to the clothes on this Monday.
Just I know, time flies seventeen minutes until we wrap
up the trade and what's going to be a super
busy week. As we've mentioned in Nvidia, on Wednesday, we
get their results, we get fed minutes. Also on Wednesday,
we've got retail earnings coming our way, and then we.
Speaker 5 (34:34):
Get delayed, much delayed September.
Speaker 2 (34:38):
Jobs report now that the government is back open and running,
so we'll get that on Thursday.
Speaker 5 (34:42):
In the meantime, we've got some selling here on Monday.
Speaker 3 (34:44):
Yeah, we do taking a look as we just heard
from Charlie at the S and P five hundred seeing
it down one point three percent, just off our worst
levels of the session, the S and P five or
excuse me, one point two five percent and has Deck
and Posit down one point three percent, the Dow down
one point four percent.
Speaker 2 (34:57):
Yeah, most names in the S and P are lower. Hey,
let's get two with us. Back with us is seventy Balafast.
She's founder and CEO at gul Veast Advisory. The firm
has about seven hundred and twenty million in assets under management,
and great to have her back here in our Bloomberg
Interactive Broker's studio.
Speaker 5 (35:11):
It's been a little while. Good to have you.
Speaker 10 (35:13):
Thank you.
Speaker 5 (35:14):
How are you and.
Speaker 2 (35:14):
How are you thinking about? I mean, I can't believe
we're almost ready to wrap up twenty twenty five. But
the market environment we talked about bitcoin that's pulling back.
We've seen stocks pullback, questioning of the AI trade. There's
concerns about we don't get at another FED rate cut
come December.
Speaker 5 (35:31):
How do you sum up the market environment right now?
Speaker 11 (35:34):
Look, this is a healthy breather. I think it's been
a great market. We have to remember that we're still
up double digits on the S and P over you know,
thirteen or fourteen percent, and tech is up even more so.
A lot of clients that had a greater percentage of
tech in their portfolios.
Speaker 10 (35:49):
They're doing great.
Speaker 11 (35:50):
Even bonds are up if you look at the aggregate
bond innext up over six or seven percent for the year.
So yes, we've had a little bit of a pullback.
I think it's a healthy breather, but a good good
results so far for the year.
Speaker 3 (36:02):
You said healthy breather a couple of times there. Yeah,
where are we in the breath? Like the beginning of
the deep breath or like is this the end of
the deep breath we're breathing out now?
Speaker 11 (36:10):
We'll find out more from Navidia on Wednesday we mentioned that.
But I think we're still early on in the AI trade.
Speaker 5 (36:17):
Your believer.
Speaker 11 (36:17):
I am a believer. This is just early innings. We're
still early innings. And there was some recent commentary of
you know, some prominent people shorting some stocks and taking
a look and like really questioning do we have the
energy capacity that we will need do we have all
of this? So I think it's healthy. But at the
same time, and we'll hear this on Wednesday. I mean,
(36:39):
it was just last month that the CEO of the
video was talking about over five hundred billion dollars of
commitments that he's already seeing for next year. So I
think we're still early innings in this AI trade.
Speaker 2 (36:50):
But how do we know it's just not an overspend?
And we talk about the circular financing that we seem
to be seeing of companies linking up and they do
a deal, I'll open AI or and video and then
they're I don't know, spending on in Vidia like chips
like it's just it seems a little close.
Speaker 10 (37:07):
That's some part of the market.
Speaker 11 (37:08):
And I'll say some companies like Oracle, for example, are
getting uh their stock prices are down more than others
like Microsoft that are seeing real earnings and real return
on their investment already. So I think it's not going
to be the same for anyone. They're going to be
winners and losers, and that's not clear already today. But
there are some that you can see, so Oracle taking
(37:31):
on some debt that maybe they don't you know, that's
raising some alarms, but there are companies that are making
real return on their investments.
Speaker 2 (37:37):
I mean, how do we know that companies aren't signing
up to make sure they have access to data centers
and are playing around or having access to lms, and
that they're playing around with it now, but that they're
gonna say, eh, that's pretty expensive, I don't really need
to be doing this, and so we start to see
(37:58):
some fallout at some point.
Speaker 11 (38:00):
We might see that followed at some point, but for
what we're seeing even into next year, the capital expenditures
that companies had talked about aren't there, and so companies
have been.
Speaker 10 (38:09):
Talking about that CEOs.
Speaker 11 (38:11):
So you know, it's kind of hard to tell what's
going to happen three years out, five years out. But
I think if we take a shorter term view, even
in the next twelve months, that's real money that's there.
So at some point it will be an over investment.
But I don't think we're there yet, and we just
don't have clarity. As a result, what do you do?
You can't be invested in only tech, right, That's where
(38:32):
that's where the diversification needs to come in.
Speaker 3 (38:34):
We just spoke with Zach Pandele, head of research over
at the crypto asset manager Grayscale Investments. I know you
caught part of the conversation. He was talking about the
crypto being treated like an alternative inside a portfolio. Are
you doing that?
Speaker 10 (38:47):
No, we're no, we're not there yet.
Speaker 11 (38:50):
No, we're not using bitcoin similar to maybe what we
were talking about earlier. You were mentioning earlier, Like I
also either your believer or you're not quite there yet.
And the people that are believers, they're they're backing bitcoin
and see it as an alternative investment. I think there
are other better ways to capture alternative INPCTY.
Speaker 2 (39:12):
Is it a way that we ultimately are all transacting
and so that we all will have access to it?
Speaker 10 (39:17):
Like I don't see the need yet. Yeah, I don't
see the need yet.
Speaker 11 (39:20):
I can't explain it to my clients why you're going
to hold this asset that's based on price, you know,
the supply and demand. Maybe the price goes up, maybe
the price comes down as it is now. I have
a hard time explaining to my clients what the fundamental
value is. Where's the cash flow? Where is it going
to get to?
Speaker 5 (39:36):
Which is what you were kind of asking.
Speaker 3 (39:38):
Yeah, I mean it was what I was asking, but
maybe a better question for him. And I'll ask you
this question now because I thought of it just now.
Is do you have gold in their portfolios?
Speaker 10 (39:45):
Okay, we do have gold in our portfolio.
Speaker 3 (39:47):
So how do you explain the use of gold?
Speaker 11 (39:49):
Okay, So more recently and since the Ukraine invasion that
happened a few years ago, now, you have been seeing
large funds, large central bank buying of gold and portfolios,
and I think that continues. I don't think we're done
with that. So you're seeing more adoption and you're seeing
more of that buying. And that was a big driver
of gold along with inflation. And gold has been around
(40:12):
a lot longer than bitcoin, and so we've seen the correlation. Also,
if we're worried about inflation, and yes, that is something
that we worry about in behalf of our clients, then
gold is another better way to put it in your
portfolio as an alternative.
Speaker 2 (40:26):
But could society at some point like rethink of what
crypto is and think of it as really like gold,
and so we shift it could be about perception perception
or is it real value?
Speaker 11 (40:39):
Well, I think it's about perception and the adoption. How
much will people start using bitcoin? I think that's a
big part of it, and that's why some people are
taking the approach. Again, we haven't done this for our
clients at this point, but some people are taking the
approach of saying, why wouldn't you take depending on your
total acid allocation, take a percent, take two percent. It's
like a lottery ticket if it does get to that.
(41:01):
You know, some smart people Kathy Wood are talking about
bitcoin at you know, over a million dollars, So yeah,
why not take a small percentage and put it in there?
Speaker 7 (41:09):
All right?
Speaker 5 (41:09):
Seven? Steve Blafast, thank you so much. I've gol best advisory.
She's the CEO.
Speaker 1 (41:14):
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