07:04
PDT
AI is becoming a central theme in macroeconomic discussions.
– Companies adapting to AI are experiencing growth opportunities.
– Diversification across portfolios is crucial to mitigate risks.
– Many firms are trading at historically low multiples despite strong fundamentals.
– Investors should monitor the impact of AI on various sectors.
AI integrationdiversification strategy
▸ Full transcript
Do you hedge somehow? I think the key is always it's the free lunch, it's diversification, it's making sure not only of U.S. equities but non-U.S. equities. For example, in the SaaS apocalypse, another victim is SAP. In its amazing enterprise software that's deeply embedded in their larger companies globally, it has a fantastic moat. It's moving rapidly into AI with its own agentic layer. Like, why not? I think, Sarah, for trying to diversify, a narrative seems to be emerging that AI is the new macro, that it's kind of everything. The huge infrastructure build-out that's currently underway in the U.S. is because of AI. Some of these smaller companies and their ability to adapt is how can they add on AI? I mean, boiler makers are all of a sudden doing really well when they're left for bankruptcy because they're being put in AI data centers. Can you escape this trade? Because it feels like everything right now. Yes, Danny, I see your point, but AI could be incredibly productive and an opportunity for so many different companies. It can also be very, very disruptive. So we have to think about it, or it caused me thinking about across our entire, both international and global portfolios, but there's so many other companies that are trading at multiples they haven't seen in their history, just so much lower than they should be. So the AI theme can continue. We can all.
Analysis
AI is emerging as a dominant macro theme, influencing various sectors and driving infrastructure investments in the U.S. Companies that adapt to AI are finding new opportunities, while others face disruption, highlighting the need for diversification across portfolios.
The current landscape suggests that many companies are undervalued despite the AI trend, indicating potential for significant returns. Smart investors should consider the implications of AI on both established firms and emerging players, as this technology reshapes industries and market dynamics.
07:02
PDT
Micron's valuation remains low at eight times earnings despite tripling in value.
– Diversification is crucial to protect against downward pressure on high-multiple stocks.
– Airlines and tourism sectors are showing resilience despite past struggles.
– Consumer spending in tourism remains strong, indicating potential growth.
– Market volatility may increase due to rising bond yields.
earnings growthdiversification strategybond yields impactconsumer spending
▸ Full transcript
Tremendous earnings growth has been massive. As we've noted, a lot of these companies are still trading at what look like fairly cheap valuations. We've been talking a lot about Micron, even though it's tripled in the last year, it's still only trading eight times earnings. At what point do bond yields start to hurt the math of a 7,500 on the S&P? Hmm. Well, that's tough to answer, but it can't help. Let's know that. Therefore, being diversified is so important. This idea that just being in a concentrated few stocks, particularly, as you noted, your Micron, semiconductor, cyclical, that's why the multiples are low, because the earnings are extraordinarily high. That's why we advise our clients to think about our portfolios from a diversified perspective. Where can we perhaps take some shelter if there is this downward pressure on the highest of multiples? So Sarah, where are those areas where you can take shelter? Well, a lot of them are sort of war-torn. They did not do well in the beginning of the Iran conflict and are still struggling. I'd say some of the U.S.'s best-run airlines like Alaska or in tourism, an incredible business like Carnival, where people are just determined to cruise even if it's their last dollar, or in the industrial space, pumps and...
Analysis
Earnings growth remains robust, with companies like Micron trading at low valuations despite significant gains. Diversification is emphasized as a strategy to mitigate potential downward pressure on high-multiple stocks due to rising bond yields.
Investors should note that sectors like airlines and tourism, which struggled during geopolitical tensions, may present opportunities as consumer demand remains resilient. The focus on diversified portfolios suggests a cautious approach amidst potential market volatility.
06:58
PDT
Company reducing reliance on China for manufacturing.
– Current volume from China down to 50%, targeting 30% by 2027.
– Diversification strategy aims to mitigate tariff risks.
– Quality control remains a critical concern during the transition.
– Timeline for diversification may affect future earnings.
supply chain risktariff impact
▸ Full transcript
Is it that easy? It's not that easy, but we do have flexibility. We had been, prior to Teres and prior to any of this, on a journey to diversify our footprint out of China. So probably two-ish years ago, roughly 60-65% of our toy and game volume was coming from China. Today, as we enter into 2025, that was around 50%. All we've done is really accelerate the path to get down to roughly call it 30% by the time we enter into 2027. For us, I mean, if tariffs stay or if tariffs go, it's never good to have so much of your manufacturing base centered on one geography. We think the diversification is good, but it does take a bit of time to get vendors and suppliers up to speed. Quality is a big deal, especially when you're dealing with toys and kids. It's not an instantaneous thing, but it's also not a five-year build to create a new plan from scratch.
Analysis
A toy and game company is accelerating its diversification away from China, reducing its manufacturing volume from 60-65% to around 30% by 2027. This shift is driven by the need to mitigate risks associated with tariffs and over-reliance on a single geography.
The transition to a more diversified supply chain is complex and time-consuming, particularly in maintaining quality standards for children's products. Smart investors should note that while the company is making progress, the timeline for achieving these goals may impact future earnings and operational stability.
06:56
PDT
Government grift ETF faces listing challenges from major exchanges.
– Political ETFs may reflect investor sentiment towards governance.
– Emergence of niche ETFs indicates a trend in thematic investments.
– Smart investors should monitor political influences on market performance.
– Potential for new exchanges to list politically themed ETFs.
political ETFsthematic investments
▸ Full transcript
Something that they could talk about this for. I mean look at it. We're talking on TV right now. It's a great advertisement. Yeah. James. Always great to have you on TV. James Safer there, Bloomberg Intelligence. Tune in, by the way, to ETF IQ. It's every Monday at 12 p.m. New York time, runs for a whole hour in the next hour of this program. Sarah Ketterer joins us from Causeway Capital. Plus, we'll talk about Elliott's new stake in Dexcom with the CEO Jake Leach and Sumer Sports with the CEO Larissa Horton.
Analysis
The discussion highlighted the challenges facing the proposed government grift ETF, which aims to track the stock performance of politicians. With major exchanges declining to list it, the ETF's future remains uncertain, raising questions about the implications of political influence on market movements.
Smart money should note the potential for political ETFs to gain traction despite regulatory hurdles, as they reflect broader trends in investor sentiment towards governance and accountability. The emergence of niche ETFs like the God Bless America ETF indicates a growing appetite for thematic investments tied to political narratives.
06:52
PDT
Political grift ETF faces listing challenges.
– Exchanges are hesitant to promote politically themed ETFs.
– Texas exchange may be the last hope for the ETF's launch.
– Niche political ETFs are gaining traction in the market.
– Investors are increasingly interested in politically motivated investments.
political investment strategiesETF market dynamics
▸ Full transcript
Into the market, including a so-called government grift ETF. Joining us now is James Safer, ETF analyst for Bloomberg Intelligence. James, so you have the, what are the Nancy Pelosi's? What are the Ted Cruz's of the world's trading on? What's up with this political grift ETF? Yeah, so the two ones that you mentioned, it's Nancy. It used to be Cruz now with the ticker GOP, which I guess is better, but in my head I still think of just Cruz. And they tend to track, like, either what are Democratic politicians doing and what are GOP politicians doing. The Grift ETF, it's still in limbo. That one is basically going to look at who's closest to the president, what politicians have actually had their stock portfolios perform best. So who has been the best stock picker? Their picks will actually get a higher weight in the index. But what's happened is, NYC, NASDAQ, and CBOE have all declined to list the ETF, which is the first time it's happened in history. We've talked about it on TV before. So basically, their last hope is that the new Texas exchange might list it. But yeah, that is the one that everyone's looking for. Why aren't they allowing it to list? It might be too on the nose. The ticker is what's going to be GRFT. Government grift isn't exactly something I guess these exchanges want to be promoting. So I was typing in the old ticker for the GOP ETF cruise, as you notice what you think about. And this one popped up for me. And I just kind of didn't realize how many categories of like strange political ETFs. This one with the ticker Y'all and it's called the God Bless America ETF.
Analysis
The political grift ETF, which aims to track the stock performance of politicians, is facing listing challenges from major exchanges like NYC, NASDAQ, and CBOE. The ETF's controversial nature, highlighted by its ticker 'GRFT', raises concerns about promoting political agendas in the investment space.
Smart money should note that the ETF's potential listing on the new Texas exchange could signal a shift in how politically themed investments are perceived. The emergence of niche ETFs like the God Bless America ETF indicates a growing trend towards politically motivated investment strategies, which may attract a specific investor demographic despite regulatory hurdles.
06:50
PDT
Innovative retail experiences are gaining traction.
– Technology integration in stores can enhance customer loyalty.
– Consumer interest in tech-driven environments is rising.
– Times Square remains a key location for experiential retail.
– Investors should monitor companies innovating in retail tech.
experiential retailtechnology integration
▸ Full transcript
Get ahead of tomorrow's trading with the close weekdays on Bloomberg. Context changes everything. In case you missed it, on the close. I'm 54 years old. I've always been into technology. I always invest in things that I first believe in, and things that are going to change people's lives. I know once people come inside the store, they will love what they see and they will fall in love with what they see. I was in the store for four hours, and there were just, you know, robots, dog robots, holograms. It's a beautiful place to be, and I think if you're ever in Times Square, you should definitely check it out. Don't miss the close live every weekday.
Analysis
A technology enthusiast highlights an innovative store experience featuring robots and holograms, suggesting a strong consumer appeal. This could indicate a shift in retail dynamics, where immersive technology enhances customer engagement and drives foot traffic.