00:00 Speaker A
So these are some causes we transfer larger. It is at all times good time to take a a deep breath and take into consideration, okay, as buyers, what are the dangers I want to consider? In your wall of dangers, what would these be, Scott? What can be the the considerations you’d flag?
00:14 Scott
Effectively, look, I imply the they’re the one you at all times must flag, uh, with with with the present administration is rather like some giant scale coverage change that we simply did not see coming. Um, you understand, like you understand, Trump has clearly been kind of doing a little meddling forms of issues on a micro stage, I imply, you understand, when it comes to just like the AMD and and the 15% tax the, you understand, like, you understand, telling telling the hearth their CEO, you understand, making making enjoyable of, you understand, Solomon at Goldman, like, all you understand, these items are kind of like nuisances, like they’re they’re however they’re on the micro stage they usually do not type of rise to the size of being like essential for the complete economic system or essential kind of on on the macro stage. That is at all times on the that that playing cards within the deck although, like like we all know that. And so it is that that will be my chief threat and it is sadly not one you could kind of forecast, you simply kind of received to learn and react. However that is that is that is at all times like the large kind of boogie man on the market.
00:56 Speaker A
What about stagflation?
01:00 Scott
You may get some prints that that that look a bit bit scary, however it’s however the finish of the day, prefer it’s nonetheless like a reasonably robust economic system inside with a shopper, particularly within the center and the highest finish which can be that is actually robust and it will proceed to drive stuff and you do not, you understand, get stagflation with EPS rising 12% 12 months yearly. Um, and and and I imply with inflation like once more, kind of annoyingly sticky round 3%, however not accelerating larger.
01:20 Speaker A
What about I am going to herald Al. If I used to be to ask you, I imply hear, I’ve inexperienced in all places once more, proper? We proceed this soften up, uh, on Al’s Roots wall of fear, you understand, your considerations, what would they be?
01:37 Al
Uh, tariffs, proper, and tariffs feeding into that stagflation. You realize, the tariffs can, you understand, we hold speaking about it, it will impression. We simply hold kicking the can down the highway and China is the 800 pound gorilla when it comes to commerce and tariffs. We received one other 90 day extension, so you understand, it’s an irritation for industries. We have talked about vehicles lots, irritation for them. irritation for producers shopping for metal and aluminum, however for the economic system on the entire, it hasn’t actually confirmed up but. In order that goes within the unexpected coverage change class. I might fully agree with that. Um, after which you understand, we focus a lot on tariffs. I might simply fear extra, I might focus virtually solely on AI and productiveness good points and you know the way Nvidia’s doing. It sounds virtually trite, however simply simply see how Jensen’s feeling. If he is nonetheless wanting good, we’re good. And if not, we received to rethink.
02:42 Speaker A
I’ll I’ll say, Scott, it is attention-grabbing. Al brings up this level. I’ve heard individuals make this argument alongside the traces of what Al’s saying right here, which is you understand what? Observe massive tech. And if they appear strong and wholesome and resilient, you keep lengthy the market. I imply, is that too simplistic?
03:06 Scott
Probably not. I imply it isn’t too I believe that is about proper as a result of you understand, I imply take into consideration what these guys are doing proper now. They’re they’re doing like stimulus stage, like economic system stimulus stage capex. Proper. And never getting punished for it. You realize, often if you happen to do a type of like stimulus stage capex, the market goes to utterly punish you due to all of the issues that you just you understand, that often come about of that. They’re being rewarded for that proper now. That is that is extra like once you’re constructing the web and and such as you had an organization in 1997, if you happen to weren’t investing within the web, you have been going to get you are going to get creamed if you happen to you understand, that is that that is that is the kind of cycle we’re going by means of proper now the place like capex associated to AI spending is seen as vital and essential. And that may be a huge increase to productiveness. It is a huge increase to the economic system. So that they so you understand, if these guys if the if the large massive massive tech guys are proceed to do capex spending at this type of scale, it’s a enormous stimulus increase and it’s telling you that like this cycle can proceed on. Like these items do not go ceaselessly, however for proper now, in all probability all proper.
04:12 Speaker A
What do you make of that, Al? It was attention-grabbing. I imply you will have Zuckerberg come out and and the numbers he throws out are eye popping, however then you definately’ll have meta bulls come on this present they usually’ll say, hear, I see the ROI, they’re going to argue on customers and advertisers.
04:31 Al
Yeah, we have uh, I imply, we have seen this film earlier than. It is it is a cycle of spending, which is okay. And I am really comparatively I I really are usually a bullish, you understand, market goes up seven or 10 years. Why are all of us frightened a lot? Uh, I imply we’re speaking $300, $400 billion {dollars} of capex up 30% year-over-year for kind of the large 4 5 AI gamers. In the future we’ll must monetize that, proper? You are going to must earn an ROI on that. We’ll fear about that in 27. So I do not imply to be trite, however uh, it’s wild. Just like the market, you understand, Microsoft, Amazon’s earnings, after they noticed the capex numbers massive and going up, they’re, we will bid these shares up once more. It is kind of loopy. Oh, take my free money move. I am not frightened about return but, simply spend it. And that is the a part of the cycle we’re in. That is okay, however that is the a part of the cycle.
05:32 Scott
Yeah, you understand, like, you understand, know the sport you are taking part in. Like like this that is the sport we’re taking part in proper now. It does not go, you understand, does not go on ceaselessly, however it’s it is essential to know the sport, like kind of the foundations of the sport proper now. And it’s like ever extra capex is an efficient factor.
05:46 Speaker A
Let’s speak, Scott. I need to finish right here. I need to give some viewers some concepts. There are few other ways they might play the market. Let’s speak about them. One is equal weight tech.
05:56 Scott
Yeah, I imply, look, we’re speaking lots about concerning the massive boys and also you actually want must have that in within the portfolio. The the however what I believe goes to be a extra attention-grabbing play and doubtless like as we get into fourth quarter and and early subsequent 12 months is we’re going to see some kind of broadening out. I imply it is like persons are going to have to begin proving it. Like we’ll have to begin utilizing AI to truly drive productiveness good points and you may see that in margins. Proper? They and you understand, you see that margin enlargement. So if if we really see a few of these corporations begin to really make use of AI or type of type of use use these things in an effort to really, you understand, generate productiveness good points, then I believe you are going to see the AI commerce kind of broaden out in a far more significant than we have seen up to now. And I do not I simply do not know proper now the way to decide a few of these early winners and so you understand, extra of an equal weight tech kind of publicity will simply get it in all probability get it that that kind of broadening out theme a bit, you understand, a bit extra effectively with out having to do a number of the guesswork concerned with like selecting particular person names for for that kind of broadening out of AI.
06:44 Speaker A
Scott, nice to see you. Particular on set. Thanks, sir.
06:48 Scott
My pleasure.
