Latest / Bloomberg Intelligence / FAANG Can Go Another 25-30% Higher by Mid-2021: Wedbush's Ives

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FAANG Can Go Another 25-30% Higher by Mid-2021: Wedbush's Ives · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. I love this quote I
• 0:22
  Speaker 1: read just recently. Quote right now it's big text world
• 0:25
  Speaker 1: and everyone else is paying rent. That was wed Best
• 0:28
  Speaker 1: Securities analyst Dan Ives and Dan joins us here. Dan,
• 0:32
  Speaker 1: thanks so much for joining us here. I love that
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  Speaker 1: quote you had, and the numbers we saw last night
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  Speaker 1: really bear that out. So let's step back, you know,
• 0:40
  Speaker 1: thirty feet, and we have those big four tech companies
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  Speaker 1: last night report strong to extraordinarily strong results. How should
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  Speaker 1: we put all this in context? Yeah, I mean these
• 0:54
  Speaker 1: stocks have had massive moves and really it's what's led
• 0:58
  Speaker 1: the market to touch the all time highs that we're seeing.
• 1:02
  Speaker 1: And but there was a lot of pressure, especially what
• 1:04
  Speaker 1: we saw last week with Microsoft and TESSAs, and the
• 1:07
  Speaker 1: momentum came off last night was a fork in the
• 1:11
  Speaker 1: road situation for tech and they needed to not just
• 1:15
  Speaker 1: talk to talk, but walk to walk. And this is
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  Speaker 1: a tech freight train right now that I is showing
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  Speaker 1: no sign to slowing down across the board as the
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  Speaker 1: COVID environment has really ACCELERI these growth stories by eighteen
• 1:27
  Speaker 1: to twenty four months with Apple front and center. So
• 1:31
  Speaker 1: what kind of stock gains are we looking at and
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  Speaker 1: what will these text dooks trade us in say a
• 1:36
  Speaker 1: year's time. Well, I also think there's a rerating going on,
• 1:40
  Speaker 1: and you know the haters will hate, but but I
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  Speaker 1: don't see that now. I think there's a middle innings
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  Speaker 1: of a re rating intact because there's a lack of
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  Speaker 1: security growth stories. And if you look more and more,
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  Speaker 1: you've seen that consolidation. I still think fang names going
• 1:56
  Speaker 1: to the higher over the next nine months. And I
• 2:01
  Speaker 1: think what you saw from these numbers, it reflects the
• 2:05
  Speaker 1: fundamental cases. And now you're going to continue to see
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  Speaker 1: investors with a green light to by tax this morning,
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  Speaker 1: and I think over the coming weeks and months. Let's
• 2:15
  Speaker 1: talk about alphabet the parent of Google. Uh, Tom Kin
• 2:20
  Speaker 1: doesn't even it's it's an alphabet free studio with Tom Keane,
• 2:22
  Speaker 1: but we'll go with it a little bit here stocks
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  Speaker 1: all four and a half percent here, just a sense
• 2:27
  Speaker 1: of kind of the advertising and the business model for
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  Speaker 1: Google here in a pandemic world. Yeah, definitely digital advertising
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  Speaker 1: and seeing headwinds and that's what alphabets being and I
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  Speaker 1: think you've seen the stock reflecting that. But but I
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  Speaker 1: do think that this is more of a call one
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  Speaker 1: to three quarter issue radding something that's going to be sustainable.
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  Speaker 1: But you're seeing a knee jerk negative reaction as this
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  Speaker 1: clearly is a headwind and they're seeing that front and center,
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  Speaker 1: and some of those other areas like Google Cloud still small,
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  Speaker 1: that continues to be the core business and unlike their
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  Speaker 1: fang brethren, definitely not the results investors wanted to see,
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  Speaker 1: even though anticipation it was going to be weak. Numbers
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  Speaker 1: even weaker than the whisper. Let me ask you, if
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  Speaker 1: we don't get some kind of new stimulus that gives
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  Speaker 1: people a few little extra dollars in their pocket, If this,
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  Speaker 1: you know, next round, is going to make people really
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  Speaker 1: cut back, do we see them coming back on things
• 3:27
  Speaker 1: like tech spending or you know, streaming services spending. I
• 3:31
  Speaker 1: think most consumers view all of these fang games is
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  Speaker 1: almost utilities. It's bread. You know, it's really food, water,
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  Speaker 1: and a lot of these fangs in terms of from
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  Speaker 1: Facebook to Apple and Amazon to others in terms of
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  Speaker 1: interaction and really consumer uteries. And I think that's what's
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  Speaker 1: really happened here, is is that these stocks really become
• 3:53
  Speaker 1: tech utilities, and of course the consumer environment, especially a
• 3:57
  Speaker 1: thousand hour Apples and some other purchases should definitely get hit.
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  Speaker 1: I think what you're seeing is for Apple to beat
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  Speaker 1: iPhones by four billions in the middle of a once
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  Speaker 1: in a hundred year pandemic. That's a jaw dropper. I
• 4:13
  Speaker 1: mean I almost fell off my chair when I saw
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  Speaker 1: those numbers. Head Dan on Wednesday, again, the CEOs of
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  Speaker 1: some of these companies are right in front of Congress
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  Speaker 1: talking about antitrust ostensibly. Um, any takeaways there, what's the
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  Speaker 1: risk factors it relates to? Just regulatory risk? Give us
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  Speaker 1: an update there? Well, the one takeaway it's better they
• 4:34
  Speaker 1: did it the day before earnings than the day after,
• 4:37
  Speaker 1: just given the the types of profits they showed in uh,
• 4:41
  Speaker 1: you know, Monster Quarters book. I think it's a it's
• 4:43
  Speaker 1: a risk. I think it's viewed at in terms of
• 4:47
  Speaker 1: it was still a little more grandstanding and more of
• 4:50
  Speaker 1: a circus atmosphere, and I think investors came away feeling
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  Speaker 1: like nothing's going to happen in near term in terms
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  Speaker 1: of breakup. But I do believe momentum building in the
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  Speaker 1: Beltway as well as in the EU against these tech giants.
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  Speaker 1: The stronger getting stronger in this environment. A lot of
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  Speaker 1: it really hinges on any type of legislative fix and
• 5:10
  Speaker 1: or what happens in terms of blue or red as
• 5:13
  Speaker 1: we go into the election, because I think if you
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  Speaker 1: get blue across the board, that's viewed is much more
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  Speaker 1: negative in terms of antitrust toward attack. Briefly done your
• 5:24
  Speaker 1: thoughts on fourth one stock split a smart move. I
• 5:28
  Speaker 1: think other tech giants are going to follow the same
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  Speaker 1: pattern because I think Cook and the board they want
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  Speaker 1: more broader ownership of Apple, and by having a quarnuicoard
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  Speaker 1: cheaper stock in a four for one, it's something that
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  Speaker 1: I think it was a smart move. I think others
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  Speaker 1: are gonna follow and it just shows right now they
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  Speaker 1: are in it just a massive position of strength and
• 5:53
  Speaker 1: to be in a position to do a fourth one
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  Speaker 1: stock split with a stock in all time high in
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  Speaker 1: the middle of a pandemic. Yeah, I mean, it's pretty
• 6:01
  Speaker 1: phenomenal listeners. Don Ives, Equity analyst at Wedbush Security, is
• 6:05
  Speaker 1: always such a pleasure to speak with you, and boy,
• 6:07
  Speaker 1: was there a lot to speak with Don about today, Paul.
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  Speaker 1: I mean, we were to a certain extent anticipating this,
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  Speaker 1: but I think in the era that's in it, I'm
• 6:15
  Speaker 1: not sure we were even expecting the amount of you know,
• 6:19
  Speaker 1: beats and good news and lack of uncertainty and so
• 6:22
  Speaker 1: on that we saw from the Big Four. Yeah, it's
• 6:24
  Speaker 1: just extraordinary in this environment. Is Dan was mentioning to
• 6:27
  Speaker 1: see how well these companies do and how it was
• 6:29
  Speaker 1: a big, big pivot for the technology Industrys relates to
• 6:32
  Speaker 1: Wall Street, it is time for Bloomberg Opinion. Welcome to
• 6:38
  Speaker 1: have a Gary Shilling, president of a Gary Shilling and Company,
• 6:42
  Speaker 1: in a Bloomberg Opinion columnists joining us, Gary, your most
• 6:44
  Speaker 1: recent comment or your column here. Bonds are sending the
• 6:48
  Speaker 1: right signals. Now what do you mean by that, Well,
• 6:51
  Speaker 1: bon bons typically leads stocks and that was certainly true
• 6:54
  Speaker 1: earlier this year. UH Treasury bond started a rally rache
• 6:59
  Speaker 1: decline literally the first trading day, the second of of January, UH,
• 7:05
  Speaker 1: anticipating that the Corona crisis, and of course it was
• 7:09
  Speaker 1: barely known, but it wasn't until seven weeks later, on
• 7:14
  Speaker 1: February nine, the stocks peaked out. I think we've got
• 7:17
  Speaker 1: the same pattern now. In the last month we've seen
• 7:21
  Speaker 1: a again a significant rally in treasuries, and I rather
• 7:25
  Speaker 1: suspect that it is leading a sell off in stocks
• 7:30
  Speaker 1: because we are getting the second wave of the virus um.
• 7:34
  Speaker 1: Maybe we'll get a vaccine, but that's hard to know.
• 7:37
  Speaker 1: When restarting the economy is difficult. Washington is struggling over
• 7:43
  Speaker 1: the next fiscal stimulus bill. So I think there are
• 7:46
  Speaker 1: a lot of reasons to suggest that the economy is
• 7:49
  Speaker 1: going into a second down leg and that stocks will
• 7:52
  Speaker 1: be in fact reflecting that. How will it manifest in
• 7:57
  Speaker 1: the data? I mean, we're already seeing GDP both you know, down,
• 8:01
  Speaker 1: no growth at all, down by contraction. I mean, are
• 8:06
  Speaker 1: we going to see more quarters like that? Gary, Yeah, Well,
• 8:09
  Speaker 1: we won't see more quarters like that. We'll be at
• 8:12
  Speaker 1: zero the economy. I mean, you know, this is a
• 8:15
  Speaker 1: if you annualize this, this is something like a annual
• 8:18
  Speaker 1: rate uh, that will work for very long. But I
• 8:23
  Speaker 1: do think that rather than the v recovery that many
• 8:26
  Speaker 1: people thought, and you don't hear much talk about the
• 8:28
  Speaker 1: V anymore. UM. I think it's more an l a
• 8:32
  Speaker 1: big decline initially and then a downwards sloping lower leg
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  Speaker 1: which will extend into next year. So when we start
• 8:39
  Speaker 1: to see a concrete evidence on the third quarter, UM,
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  Speaker 1: I think that's when people are gonna be forced to say, hey,
• 8:46
  Speaker 1: wait a minute, this is an extended recession. And that's
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  Speaker 1: what I think stocks would probably sell off and and
• 8:53
  Speaker 1: follow bonds which have already rallied prices up, rate interest
• 8:58
  Speaker 1: rates down. So Gary, we're a waiting word from White House, uh,
• 9:04
  Speaker 1: Chief of Staff Mark Meadows and just moments about potentially
• 9:08
  Speaker 1: some progress that may be mean on the um stimulus spill,
• 9:13
  Speaker 1: How important is that? Uh? I don't think it is
• 9:17
  Speaker 1: it it's it's it's best is stabilizing the situation. I
• 9:21
  Speaker 1: don't think it's really reviving. If you look at the
• 9:25
  Speaker 1: second quarter numbers, you had a huge jump in the
• 9:28
  Speaker 1: saving rate I have, the personal saving rate I think
• 9:31
  Speaker 1: was in other words, people have this money, but they're
• 9:35
  Speaker 1: not they're not spending it, and a lot of people
• 9:38
  Speaker 1: are scared to go out, so putting money in their
• 9:41
  Speaker 1: pockets and spending and stimulating the economy, creating jobs and
• 9:45
  Speaker 1: so on are really two different issues. Gary, what do
• 9:51
  Speaker 1: we need to hear from the administration and basically from Congress.
• 9:55
  Speaker 1: We're awaiting Mark Meadows come out and make some kind
• 9:57
  Speaker 1: of commentary. We don't know what it will be. Maybe
• 10:00
  Speaker 1: it will be some progress on on what they're trying
• 10:02
  Speaker 1: to talk about. But apparently the Senate went home and
• 10:04
  Speaker 1: we didn't get an agreement on the next round of stimulus.
• 10:07
  Speaker 1: What do we need, Well, you probably need at least
• 10:12
  Speaker 1: enough to continue in some some of what was going
• 10:15
  Speaker 1: on now. There's a big hang up of course in
• 10:18
  Speaker 1: the unemployment insurance because the federal program on top of
• 10:22
  Speaker 1: the state programs, of the six dollars federal program with
• 10:26
  Speaker 1: the state programs, you know, there are many many people.
• 10:29
  Speaker 1: I think roughly half of the half of the workforce
• 10:32
  Speaker 1: was making more staying home than working, and that the
• 10:36
  Speaker 1: Republicans are saying no way to that. So whatever whatever
• 10:40
  Speaker 1: comes out of this, I think it's gonna be less
• 10:43
  Speaker 1: generous turn it was before. So Gary, I mean, give
• 10:48
  Speaker 1: it a sense that this may be longer for lower Um,
• 10:54
  Speaker 1: what do you think the Fed is doing a We
• 10:56
  Speaker 1: heard from the FED Chairman pal Or earlier this week,
• 11:00
  Speaker 1: seems like the FETE is there to support and to
• 11:03
  Speaker 1: do quote whatever is needed. Is that enough? Well, they've
• 11:07
  Speaker 1: done pretty much everything you can do. They brought everything
• 11:09
  Speaker 1: in sight. They've even brought fallen angels, h bonds that
• 11:14
  Speaker 1: are now rado junk that previously we're we're investment grade
• 11:18
  Speaker 1: before the before the crisis, and you know, buying corporates
• 11:22
  Speaker 1: are supporting statan local governments. They've got two hundred billion
• 11:25
  Speaker 1: dollar line of the treasury to cover their losses. The
• 11:28
  Speaker 1: FETE is already deep into fisical policy and polin effect
• 11:33
  Speaker 1: of saying that, he's really saying, uh, the next step
• 11:37
  Speaker 1: has to be in terms of fiscal policy. Now, whether
• 11:40
  Speaker 1: fiscal policy is going to work as they say is
• 11:42
  Speaker 1: another issue. But you know, it's it's started as saying, hey,
• 11:46
  Speaker 1: we've done everything we can. Somebody else has got to
• 11:48
  Speaker 1: carry the ball from here on. Gary, when you talk
• 11:50
  Speaker 1: to all the people that you talk to, your clients
• 11:52
  Speaker 1: and everybody who calls you, well, what are they saying
• 11:55
  Speaker 1: about the election? Are they sort of anticipating at this
• 11:59
  Speaker 1: point that there won't to be a second term from
• 12:02
  Speaker 1: the president's or is that not at all a done
• 12:05
  Speaker 1: deal yet. And for those that are talking about a
• 12:08
  Speaker 1: Biden presidency, you know, what do they think that will bring? Well? Uh,
• 12:13
  Speaker 1: I think people are very much up in the air
• 12:15
  Speaker 1: on this. That nobody wants to underestimate Trump because you know,
• 12:19
  Speaker 1: it looked like Hillary was going to win hands down
• 12:22
  Speaker 1: in twenty sixteen and Loan the whole It was quite
• 12:25
  Speaker 1: the other way. Uh. The reality is that it's very
• 12:28
  Speaker 1: difficult for any income at president to get re elected
• 12:32
  Speaker 1: in a economic recession. And of course, uh, Trump has
• 12:37
  Speaker 1: been trying to get the economy restarted. Now he's realized
• 12:42
  Speaker 1: that isn't going to happen by the election day. So
• 12:45
  Speaker 1: now he's saying he's delay the election. I mean, he
• 12:49
  Speaker 1: realizes he's in a hotspot as far as Biden is concerned. Um,
• 12:53
  Speaker 1: you know, I don't I don't think there's I don't
• 12:55
  Speaker 1: think there's a lawful lot that people are looking for
• 12:59
  Speaker 1: in Biden. He so he's tough on China, or he
• 13:02
  Speaker 1: says he is like like crump Um, he's for more
• 13:06
  Speaker 1: um more income retribution. Uh, short of the classic Democratic program.
• 13:11
  Speaker 1: But there isn't an awful lot of new initiative. And
• 13:14
  Speaker 1: I think the election is more, um, it's more a
• 13:16
  Speaker 1: referendum on Trump than it is a vote for Biden. Garret.
• 13:21
  Speaker 1: What happens if the you know, again, in the election.
• 13:23
  Speaker 1: We're focusing obviously, as we should, on the presidential election,
• 13:26
  Speaker 1: but also the a lot of big issues as it
• 13:28
  Speaker 1: relates to the Senate and potential for the Senate to
• 13:31
  Speaker 1: go from Republican control to Democratic control. So you might
• 13:35
  Speaker 1: have a scenario with uh, you know, a democratic sweep
• 13:39
  Speaker 1: of both Houses of Congress and the White House. Yeah,
• 13:42
  Speaker 1: is that a concern? Is that possibility? And of course
• 13:45
  Speaker 1: the Democrats already control the House and and the Republican
• 13:50
  Speaker 1: majority in the Senate is pretty thin. Um. If you
• 13:53
  Speaker 1: had that, UM, I think the initial reaction of of
• 13:57
  Speaker 1: the shock market would be a big shell off, because
• 14:01
  Speaker 1: it would be assumed that the Democrats would make good
• 14:04
  Speaker 1: on their pledge to redistribute income. They would increase taxes
• 14:09
  Speaker 1: on higher income people, they would resame the corporate tax cuts, UM.
• 14:13
  Speaker 1: They would an attempt to redistribute income to basically their
• 14:18
  Speaker 1: constituents lower income people, UM, minority groups and so on
• 14:23
  Speaker 1: and so forth. And I don't think that that would
• 14:25
  Speaker 1: be at all well received on Wall streets. So, um,
• 14:29
  Speaker 1: if you have that, I'd say, you know, look out below.
• 14:33
  Speaker 1: I have to ask about bees in a moment. Gary
• 14:35
  Speaker 1: always have to ask you about what kind of season
• 14:37
  Speaker 1: it is for those creatures. But I do also want
• 14:40
  Speaker 1: to ask you, do we need to be hard on China?
• 14:44
  Speaker 1: I mean there's so much talk it's become sort of
• 14:47
  Speaker 1: almost during gery now talk about a new Cold War,
• 14:50
  Speaker 1: But is that really what we're about to be in
• 14:52
  Speaker 1: the middle of. Well, we're in a it isn't a
• 14:57
  Speaker 1: Cold war in essentially is military, but as certainly as
• 15:01
  Speaker 1: the Cold War in terms of the economy. The Chinese
• 15:04
  Speaker 1: want to be the top dogs in the world. Um.
• 15:07
  Speaker 1: And they really feel that that's their destiny. Um that
• 15:11
  Speaker 1: they they had that traditionally nineteenth century, Uh, the the
• 15:17
  Speaker 1: Europeans basically took over China partitioned it. Uh. They call
• 15:21
  Speaker 1: that the century of Shame. They think they want they
• 15:23
  Speaker 1: want to get back on top. This is the way
• 15:26
  Speaker 1: they see it. And what's interesting the way they the
• 15:29
  Speaker 1: way they need to do that. Yeah, They've got all
• 15:31
  Speaker 1: the military exploit and that's how China. See. They've got
• 15:35
  Speaker 1: the Belton Road Program, which is spreading a lot of
• 15:37
  Speaker 1: money around although a lot of it is is at losses.
• 15:41
  Speaker 1: But I think the primary battle is going to be
• 15:43
  Speaker 1: over technology because China, as a result of the one
• 15:47
  Speaker 1: one child per couple UH birth policy, is going to
• 15:52
  Speaker 1: have a declining labor force for the next thirty years,
• 15:55
  Speaker 1: regardless of what happens now. Those people that aren't going
• 15:58
  Speaker 1: to go into labor force already not born. So they
• 16:02
  Speaker 1: need productivity to have economic growth. And how do you
• 16:07
  Speaker 1: get that. You get that true technology. Now. They've already,
• 16:10
  Speaker 1: of course been invading the West, stealing technology, demanding tech
• 16:14
  Speaker 1: transfer and so on, and now they're trying to develop technology.
• 16:18
  Speaker 1: They're way behind the West, but they're doing their best
• 16:20
  Speaker 1: to catch up. And I think that's where the battleground
• 16:23
  Speaker 1: it's going to be. It isn't going to be a
• 16:25
  Speaker 1: military It isn't gonna be rattling arms and and you know,
• 16:29
  Speaker 1: praise of tanks and guns and red square the technology. Yeah, Gary,
• 16:35
  Speaker 1: I do have to ask you about the bees because obviously,
• 16:37
  Speaker 1: you know, humans are facing coronavirus, and you are a
• 16:41
  Speaker 1: beekeeper and you make honey every single year from from
• 16:45
  Speaker 1: your bees. How are you managing in this time of
• 16:47
  Speaker 1: coronavirus to take care of the bees and what kind
• 16:49
  Speaker 1: of a season is it for bees? Well, a good question, monny. Um.
• 16:54
  Speaker 1: It started off very very mixed because it was a
• 16:57
  Speaker 1: very warm back in March, and the bees got going
• 17:00
  Speaker 1: and they muliplied and then they swarmed. And that's what
• 17:03
  Speaker 1: happens when there are too many bees, and the old
• 17:06
  Speaker 1: queen the old queen, and half the bees take off
• 17:09
  Speaker 1: and they make a new queen. But even if he
• 17:11
  Speaker 1: catched the swarm, and I caught six swarms this year,
• 17:14
  Speaker 1: I've got about a hundred colonies and at all time
• 17:17
  Speaker 1: high record, and you don't get any honey out of
• 17:19
  Speaker 1: either the old colony or the the new one. Now,
• 17:22
  Speaker 1: the one thing about this is that there's always a
• 17:25
  Speaker 1: snap back, and that's what it is. And as a
• 17:27
  Speaker 1: matter of fact, in two weeks we're going to be
• 17:30
  Speaker 1: taking the honey off. And it looks like we're gonna
• 17:33
  Speaker 1: have a we're gonna have a great harvest. I was,
• 17:35
  Speaker 1: I was amazed, but you know, this is agriculture, and
• 17:39
  Speaker 1: and you never know what's going to happen, the vicissitudes
• 17:41
  Speaker 1: of nature, and sometimes you're lucky and sometimes you aren't.
• 17:44
  Speaker 1: But it looks like we're looks like we're lucky this year.
• 17:47
  Speaker 1: That's phenomenal. And I have to tell all of our listeners. Gary,
• 17:51
  Speaker 1: you know, makes these wonderful jars of honey, but he
• 17:53
  Speaker 1: also comes up with the fantastic names for them every year. Gary,
• 17:56
  Speaker 1: I just can't remember what the one last year was,
• 17:58
  Speaker 1: but I'm sure this year will have to be something
• 18:00
  Speaker 1: the pandemic related. Yeah, I think it was. I think
• 18:04
  Speaker 1: it was regardless of the party. Our honey is de electable, yes,
• 18:09
  Speaker 1: because it was a lot to talk about impeachment last year. Anywhere.
• 18:13
  Speaker 1: Any of our listeners haven't got any great slogans. We
• 18:16
  Speaker 1: always like to have a topical, usually usually with a
• 18:19
  Speaker 1: political economic twist. But the issue is that we you know,
• 18:24
  Speaker 1: we send out the honey to you and all our
• 18:26
  Speaker 1: friends and clients right before Christmas, and we need a
• 18:32
  Speaker 1: we need a label that's going to be current into
• 18:35
  Speaker 1: the next year, and those it can't be ephemeral with
• 18:38
  Speaker 1: appoint at by the time January one, rules were all, well,
• 18:41
  Speaker 1: I think you're fairly secure with things. I think you're
• 18:45
  Speaker 1: fairly secure with things like pandemic, vaccine, faucci. All of
• 18:50
  Speaker 1: these things might provide some fodder for the title, what
• 18:53
  Speaker 1: do you think, Paul, Yes, just the suggestion of it,
• 18:57
  Speaker 1: because because I don't think that issue is going to
• 18:59
  Speaker 1: go away, and maybe we can get some variation that
• 19:02
  Speaker 1: our you know, our our bees, our corona, our corviate
• 19:07
  Speaker 1: nineteen free. You may not want to go that direct,
• 19:10
  Speaker 1: but they get plenty of diseases and validies, but they
• 19:13
  Speaker 1: don't get the carved nineteen. That's great. Gary Shilling, thanks
• 19:19
  Speaker 1: so much for joining us. Gary Shilling, president of a
• 19:22
  Speaker 1: Gary Shilling in Company and a Bloomberg opinion columnists. You know,
• 19:28
  Speaker 1: as we take a look at the economy, we really
• 19:29
  Speaker 1: start to really have to focus on the consumer with
• 19:32
  Speaker 1: all those terrible unemployment numbers and the impact on some
• 19:35
  Speaker 1: personal spending. Personal income. We had some numbers out today.
• 19:38
  Speaker 1: Let's dig into those. We can do that with Read Pickart,
• 19:41
  Speaker 1: she covers US economy for Bloomberg News. Read thanks so
• 19:45
  Speaker 1: much for joining us here. Personal income. What's the data
• 19:48
  Speaker 1: showing us? Yeah, thanks for having me so today we
• 19:52
  Speaker 1: got the income and spending data for June, and it
• 19:55
  Speaker 1: showed us two mean things. It showed us that, you know,
• 19:58
  Speaker 1: spending continued its rebound in June um but remains below
• 20:03
  Speaker 1: it's pre pandemic level. UM, and two, it showed us
• 20:05
  Speaker 1: that incomes declined for another month as the initial boost
• 20:10
  Speaker 1: from the one time stimulus checks those checks UM that
• 20:14
  Speaker 1: were largely distributed in April have continued to wind down UM.
• 20:19
  Speaker 1: But a very interesting part of it, at least that
• 20:21
  Speaker 1: I thought, was, at the same time, we saw that
• 20:23
  Speaker 1: payments for unemployment insurance from the previous month, especially pay
• 20:28
  Speaker 1: out for that weekly six and unemployment benefits that expire
• 20:33
  Speaker 1: today UM, you know, increase. So you know, we're seeing
• 20:38
  Speaker 1: that households are more reliant on those unemployment benefits as
• 20:42
  Speaker 1: a portion of their income than they have ever before.
• 20:47
  Speaker 1: Read what does it mean for you know, consumer companies
• 20:49
  Speaker 1: going forwards had this amazing quarter a couple quarters for
• 20:53
  Speaker 1: profiting gamble for example. I mean, will that be in
• 20:56
  Speaker 1: jeopardy of people literally can't buy what they need to
• 21:00
  Speaker 1: eat and clean themselves and and do all of the
• 21:03
  Speaker 1: you know, human functions necessary. So the six hundred dollar,
• 21:08
  Speaker 1: the extra six hundred dollars in weekly unemployment benefits UM
• 21:12
  Speaker 1: has really been a crucial lifeline for the economy in
• 21:15
  Speaker 1: this pandemic because it is broadly buoyed incomes UM and spending.
• 21:20
  Speaker 1: In recent months, even as the economy um, you know,
• 21:23
  Speaker 1: has has has spaced this pandemic um and and it's
• 21:27
  Speaker 1: it's hard to you know, see exactly what the impact
• 21:31
  Speaker 1: will be. But when you have these six hundred dollar payments,
• 21:34
  Speaker 1: you know, keeping these incomes up and allowing people to
• 21:38
  Speaker 1: pay their bills, allowing them to you know, keep spending
• 21:42
  Speaker 1: at those businesses. UM, it is concerning in terms of
• 21:46
  Speaker 1: what this means for the economic recovery and the coming months. Um.
• 21:51
  Speaker 1: You know, especially at a time like now when UM,
• 21:54
  Speaker 1: some of the data that we're seeing is showing that
• 21:56
  Speaker 1: that economic recovery is is stalling and and has been
• 22:00
  Speaker 1: you know for the for the month of July. So
• 22:02
  Speaker 1: read us a sense of kind of spending versus saving
• 22:06
  Speaker 1: over the last four or five months. Again, there's been
• 22:08
  Speaker 1: a crazy time here. The government's responded with that six
• 22:11
  Speaker 1: hundred dollars per month. What's the data showing us about
• 22:15
  Speaker 1: what people are spending versus what they're saving? M hm.
• 22:19
  Speaker 1: So the satings rate searched to a record in in April,
• 22:23
  Speaker 1: and that was mainly because of those stimulus checks, UM.
• 22:27
  Speaker 1: And we've seen the statings rate come down each month since,
• 22:30
  Speaker 1: but still remains quite high. So so the hope is
• 22:33
  Speaker 1: that you know, the stimulus checks plus those six hundred
• 22:37
  Speaker 1: dollars an extra weekly benefits that people are patting their
• 22:40
  Speaker 1: bank accounts UM. You know, as as we're moving into
• 22:43
  Speaker 1: this period of uncertainty in terms of you know, when
• 22:46
  Speaker 1: people will you know when and if people will get
• 22:49
  Speaker 1: an extra federal supplement to their unemployment insurance UM. But
• 22:53
  Speaker 1: as far as spending, I mean, we've seen spending you know,
• 22:56
  Speaker 1: rebound in a lot of ways. You know, retail sales,
• 22:59
  Speaker 1: for instance, UM are almost almost in line with their
• 23:03
  Speaker 1: pre pandemic levels. UM. But as far as the actual
• 23:07
  Speaker 1: amount of consumer spending, we're still below what we were
• 23:10
  Speaker 1: at before the pandemic. And it will be interesting to
• 23:14
  Speaker 1: see on in terms of whether we're put whether it's
• 23:17
  Speaker 1: possible to get you know, back to that pre pandemic
• 23:20
  Speaker 1: level of spending. You know, a while we have this
• 23:23
  Speaker 1: level the amount of joblessness that we have b if
• 23:26
  Speaker 1: you have these you know, extra benefits expire UM and
• 23:30
  Speaker 1: see just while the pandemic is you know, impacting the economy,
• 23:33
  Speaker 1: I mean, if if people are if people don't want
• 23:36
  Speaker 1: to eat out in a restaurant when they normally eat
• 23:38
  Speaker 1: out in a restaurant on the Friday on a Friday
• 23:40
  Speaker 1: and Saturday night. You you fundamentally have those people spending
• 23:43
  Speaker 1: last in the economy. Then then they were, you know,
• 23:45
  Speaker 1: back in February. Read thank you for joining. Always a
• 23:50
  Speaker 1: pleasure to speak with you. Read Pickerts. It covers the U. S.
• 23:53
  Speaker 1: Economy from Washington, d C. For Bloomberg News. And of
• 23:56
  Speaker 1: course she's on today because personal income was down one
• 23:59
  Speaker 1: point one percent for June, which missed the economist estimate
• 24:01
  Speaker 1: for it being down point six percent, and then the
• 24:04
  Speaker 1: previous month was revised lower two down four point four percent.
• 24:07
  Speaker 1: So obviously we might have anticipated personal income really suffering,
• 24:11
  Speaker 1: but personal spending was higher than forecast five point six percent.
• 24:15
  Speaker 1: This is Bloomberg Markets with Paul Sweeney and Vanny Quinn
• 24:19
  Speaker 1: on Bloomberg Radio. All right, it is time now to
• 24:23
  Speaker 1: talk to somebody who knows a lot about Facebook, but
• 24:26
  Speaker 1: also about all of the other advertising companies and the
• 24:29
  Speaker 1: tech companies in general. Mark Douglas is CEO of steel House.
• 24:33
  Speaker 1: Now that's a company that specializes in targeted ads. They're
• 24:36
  Speaker 1: the leader in highly targeted ads on connected TV as well.
• 24:39
  Speaker 1: So Mark knows pretty much everything about you already. You
• 24:42
  Speaker 1: really don't need to and do him at all. Market
• 24:45
  Speaker 1: just kidding. What did you make of the testimony this
• 24:49
  Speaker 1: week from the Big four? Was there any danger for
• 24:53
  Speaker 1: any of them that they might stray into territory that
• 24:55
  Speaker 1: was you know a little gray? Yeah, well, I thought
• 24:59
  Speaker 1: Apple out off the hoof, they have an absolute monopoly
• 25:02
  Speaker 1: on the app Store, and it was mentioned, and but
• 25:05
  Speaker 1: they kept talking about how you know, it's only thirty
• 25:09
  Speaker 1: percent and we've never raised it up. I think they
• 25:12
  Speaker 1: they were given kind of a free path in the hearing,
• 25:14
  Speaker 1: and I felt like Google kind of um, their CEO
• 25:17
  Speaker 1: did a pretty bad job in the testimony. He sound,
• 25:21
  Speaker 1: I mean, it was just kind of shocking how bad
• 25:23
  Speaker 1: things went. But Amazon steared really well. I think Jeff Bezos,
• 25:27
  Speaker 1: you know, said I'm running a company here, I want
• 25:29
  Speaker 1: to win and I try my best to do things fairly, so,
• 25:32
  Speaker 1: you know, overall, and Mark Nutderberg literally has done it before,
• 25:35
  Speaker 1: and he he looked so much better in this hearing
• 25:39
  Speaker 1: than he had had like two or three years ago
• 25:42
  Speaker 1: when he did his first hearing before Congress. So I
• 25:44
  Speaker 1: think overall, Facebook, Mark Nunderberg was probably a big winner.
• 25:48
  Speaker 1: And Google, um, you know, I just didn't do well,
• 25:51
  Speaker 1: in terms of that testimony, let's let's focus on Google
• 25:55
  Speaker 1: a little bit. Marked the big tech companies. They had
• 25:57
  Speaker 1: their earnings last night, generally very very strong numbers, particularly
• 26:01
  Speaker 1: Apple and Amazon. Google disappointing. The revenue, you know, came
• 26:06
  Speaker 1: in below expectations, down ten per What's going on to Google, Yeah,
• 26:11
  Speaker 1: I mean, I think that indicates a pretty big problem.
• 26:14
  Speaker 1: So when you have as much revenue, just as someone
• 26:16
  Speaker 1: who runs the company and has been involved in a
• 26:19
  Speaker 1: lot of tech companies, when you have as much revenue
• 26:22
  Speaker 1: as Google has, and you have as much data as
• 26:25
  Speaker 1: they have, you have a lot of levers to pull
• 26:28
  Speaker 1: to kind of hit your targets. And if they missed,
• 26:31
  Speaker 1: you know, kind of underperformed against last year by ten percent,
• 26:36
  Speaker 1: that means they were on track to do a lot
• 26:38
  Speaker 1: worse than that. So they pulled out all stops inside
• 26:41
  Speaker 1: the company, you would assume, and still missed by ten percent.
• 26:45
  Speaker 1: So that's a pretty big indicator that there's something more
• 26:49
  Speaker 1: seriously wrong at the core. UM. In terms of the
• 26:53
  Speaker 1: advertising business, the YouTube business I think is under a
• 26:56
  Speaker 1: lot of pressure from connected tv. UM. All of the
• 27:00
  Speaker 1: growth of that supported connected TV which is happening now,
• 27:04
  Speaker 1: is going to take money away from YouTube. So that's
• 27:07
  Speaker 1: a big threat that's already kind of impacting them, and
• 27:11
  Speaker 1: it's going to kind of continue to have an impact
• 27:13
  Speaker 1: in future quarters. And there their um cloud hosting business
• 27:17
  Speaker 1: to really well, but it just is nowhere near where
• 27:20
  Speaker 1: Amazon Aws is basically inbedded the market. So I think
• 27:24
  Speaker 1: there's a lot wrong with Google right now when you
• 27:27
  Speaker 1: see that big a mysth um and and with that
• 27:32
  Speaker 1: much revenue and leverage to pull to make sure they
• 27:35
  Speaker 1: don't miss Yeah, I mean it would benefit you, right
• 27:38
  Speaker 1: if if if YouTube did sort of lose out a
• 27:41
  Speaker 1: connected TV. On which note, can I ask you about
• 27:44
  Speaker 1: your partnership with with Facebook? Obviously is is well known
• 27:49
  Speaker 1: and I'm sure your partner with most of the companies.
• 27:52
  Speaker 1: What are they anticipating? What are you anticipating for election season? Um?
• 27:56
  Speaker 1: In terms of well, you know, it's I honestly can't
• 28:01
  Speaker 1: can't recall whether they're gonna election ads or not, because
• 28:04
  Speaker 1: I think they kind of keep going back and forth
• 28:07
  Speaker 1: on that, I mean without even without kind of paid ads. Obviously,
• 28:12
  Speaker 1: Facebook is going to be used as a platform to
• 28:14
  Speaker 1: promote each candidates you know, perspective and each party's perspective.
• 28:19
  Speaker 1: Facebook is generally taking the approach that they're going to
• 28:22
  Speaker 1: allow content and not gonna censor content unless it's like
• 28:26
  Speaker 1: harmful to the user. Um. I think they're in a
• 28:28
  Speaker 1: kind of no win situation on that topic. If they try,
• 28:32
  Speaker 1: if they censor its censorship. If they don't censor, people
• 28:35
  Speaker 1: have pissed off. And so you know, that's another thing
• 28:39
  Speaker 1: related to the testimony. I think that that thing come
• 28:42
  Speaker 1: up in the congressional testimony as much as you would expect,
• 28:46
  Speaker 1: and I think wide didn't come up is because Facebook
• 28:48
  Speaker 1: has taken a position Mark Zuckerberg in particular, that they're
• 28:51
  Speaker 1: not going to, um, they're gonna avoid as much as possible,
• 28:55
  Speaker 1: engaging in censorship and kind of just allowing their community
• 29:00
  Speaker 1: be more informed except where it's harmful. Um, specifically harmful
• 29:04
  Speaker 1: to the people. And let's just say that censorship is
• 29:07
  Speaker 1: a particular word in itself. That's that that that has
• 29:10
  Speaker 1: a particular bias built in, So you can call a
• 29:12
  Speaker 1: censorship or you could just call it you know, not
• 29:14
  Speaker 1: allowing you know, things that aren't fact checked online to
• 29:19
  Speaker 1: be published. Yeah. I mean the thing about Facebook, a
• 29:22
  Speaker 1: topic that also didn't come up that much in a
• 29:25
  Speaker 1: testimony is if I want to come in advertise, let's
• 29:28
  Speaker 1: stay on Bloomberg. There's standards in place, this checking of
• 29:32
  Speaker 1: the credibility advertising, all these things that happen, and Facebook
• 29:36
  Speaker 1: doesn't do those things. And I think that's really, for
• 29:40
  Speaker 1: years now been the big crust to the issue. Where
• 29:42
  Speaker 1: can you go You'll put in a credit card and say, hey,
• 29:46
  Speaker 1: can I deliver this message to two million people? And
• 29:48
  Speaker 1: you have no idea who I am or what I'm
• 29:51
  Speaker 1: gonna say, or care what I'm gonna say. And I
• 29:53
  Speaker 1: think that at the core is the real issue there
• 29:57
  Speaker 1: with Facebook. Are they going to actually operate like a
• 30:00
  Speaker 1: media company or and or they're going to continue to
• 30:03
  Speaker 1: pretend that they're not a media company even though they
• 30:05
  Speaker 1: take media dollars. And I think that's, you know, really
• 30:09
  Speaker 1: the issue that everyone That is kind of the core
• 30:12
  Speaker 1: of what you can almost call the Facebook question or
• 30:15
  Speaker 1: the Facebook issue. So, Mark, we you mentioned some of
• 30:18
  Speaker 1: those challenges facing Google's advertising business, but it doesn't appear
• 30:22
  Speaker 1: to be impacting Facebook as much. The stock is up
• 30:24
  Speaker 1: eight percent today, it's at an all time high. How
• 30:28
  Speaker 1: does Facebook and their advertising business, how do they avoid
• 30:31
  Speaker 1: some of the issues that are plaguing maybe some of
• 30:33
  Speaker 1: the other digital advertising companies during this pandemic. Yeah, so
• 30:36
  Speaker 1: Facebook does predominantly what's called direct response to advertising. The
• 30:41
  Speaker 1: easiest way to think about it is they sell revenue.
• 30:44
  Speaker 1: So you want to basically reach a consumer, Facebook has
• 30:47
  Speaker 1: access that access to that consumer, and they have a
• 30:50
  Speaker 1: lot of information about that consumer. And so they're essentially
• 30:54
  Speaker 1: selling your revenue in the sense that we can reach
• 30:56
  Speaker 1: the people you are looking for, and we can deliver
• 30:59
  Speaker 1: them to your website or to your or to your
• 31:02
  Speaker 1: mobile app. And that is just that value proposition. Um.
• 31:06
  Speaker 1: They have some competition from Google when the person knows
• 31:10
  Speaker 1: what they're looking for, but most of the things you
• 31:12
  Speaker 1: see advertising on Facebook or things you're discovering, and so
• 31:15
  Speaker 1: for discovering new products, there's really Facebook has no competition.
• 31:20
  Speaker 1: And when you're selling revenue, that's not going to go
• 31:22
  Speaker 1: out of style. That's gonna survive, you know, pandemics, that's
• 31:25
  Speaker 1: gonna survive boycotts and and the the and the even
• 31:30
  Speaker 1: advertisers that have boycotted some of them has come back
• 31:33
  Speaker 1: because you just literally can't afford to not use Facebook
• 31:37
  Speaker 1: if you need to buy revenue to fuel your own business.
• 31:40
  Speaker 1: And so I think Facebook's advertising business is not under
• 31:45
  Speaker 1: any immediate threat right now. The long term threat is
• 31:48
  Speaker 1: if their data declined, if there were a massive data boycotts,
• 31:53
  Speaker 1: then Facebook would have some missus Mark, but then they're not. Yeah, Mark,
• 31:58
  Speaker 1: thanks so much for joining us. We really appreciate that
• 32:00
  Speaker 1: getting your thoughts, and I like that buying revenue. That's
• 32:02
  Speaker 1: a great term. I'm going to use that. Mark Douglas,
• 32:03
  Speaker 1: CEO of Steelhouse, giving us his thoughts of some of
• 32:06
  Speaker 1: his big tech media companies. Funny great numbers last night
• 32:08
  Speaker 1: out of most of those tech companies, and really kind
• 32:11
  Speaker 1: of giving a lift to the NASDAC for Ronnie Quinn.
• 32:13
  Speaker 1: I'm Paul Sweeney. You're listening to Bloomberg Radio. Thanks for
• 32:18
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 32:21
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 32:25
  Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn,
• 32:29
  Speaker 1: and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
• 32:31
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 32:34
  Speaker 1: Bloomberg Radio