00:00Well, if you look at where we were, you know, a year ago, everybody was raising CapEx and they
00:04were getting rewarded for raising CapEx almost across the board. And I think that that's obviously
00:08changed dramatically. I think you saw in the results this week that where you start to see
00:12that acceleration and growth, which you saw for Microsoft and Amazon versus where you have issues
00:17like you saw with Meta. Apple's got different issues because I think that's much more about
00:21the supply chain and the fact that memory prices are so high, but I don't think it's a demand
00:25problem. So for something like Apple, I would be less concerned about that in the near term, but
00:30longer term or medium term. But I think that it really shows you you're starting to get bifurcation
00:34on how people are accepting the kind of spending that's happening and what people hope for on the
00:39return side. So this is definitely the earning season where AI spending stopped being enough
00:44on its own. But we're seeing companies spend billions and billions on AI infrastructure.
00:47Are there key signs that you're looking at to see whether those investments will actually
00:51pay off? That might be a tricky question, but I know you look at these closely.
00:55Well, I think I mean, I think that this is where the earnings were very important,
00:58because had you not seen the acceleration in demand that Microsoft was talking about
01:02and that AWS was talking about on that side, I think that that question would be even more
01:06in focus. But I think the fact that also you've seen a little bit of moderation on that raise
01:11of CapEx. Yes, the CapEx is still strong, but we're not talking about doubling it again
01:15and again and again. And I think that that's important. And I also think that, you know,
01:19the issue with what's going on in China and some of those models that are cheaper,
01:22that also brings into question, OK, maybe the CapEx moderates a little bit. And I think the
01:26market starts to reward that moderation to some degree, because it's not just you have
01:30to get there first. It's how do we integrate this? What's actually going to happen and what
01:33are you going to get paid for? Overall, what's your take so far of earnings? Because we had a
01:38really high bar to clear when we had fantastic earnings in the first quarter, pretty big expectations
01:43for Q2 as well. I think that the earnings, you know, you're still seeing earnings growth in the
01:47places where you expect to see it in the information technology side. You're also seeing it in
01:51industrials. What you're starting to see, like Tyson and like Procter & Gamble, is some real
01:54issues on the consumer side, because consumer staples are having trouble with that pricing.
01:59You're starting to hit a wall with pricing. You don't see that yet in the technology space,
02:02but you I mean, this is the whole this is why you saw such volatility is that that adding China
02:07with
02:08a cheaper potential mix into there makes it question how much you can continue to raise price on the
02:13technology side. I think that's going to be the tension going into 2027. I can't believe I'm saying
02:17that that we're going into 2027. But there you are. And I think that that's how people are going
02:21to be looking at things as are my am I seeing that acceleration in demand? And can I count on
02:25some returns from all that spending that I'm doing right now? We are heading into 2027. And it's
02:29August, which is for me hard to believe. What about the Fed? They're balancing stubborn inflation
02:34against concerns about consumer pressure. Do you think there's a risk that maybe keeping rates
02:39higher for longer may create more economic damage than maybe some brief relief?
02:43I think the problem is that where we're seeing the inflation coming from, it's hard to see how
02:48higher rates are going to solve that problem. If you have a supply shock on oil, it's hard to see
02:51how higher rates help you unless you just kill demand. And that has ancillary effects that they
02:56don't necessarily want. So I think it's more about keeping things elevated as opposed to elevating them
03:01further, although that argument is going to continue into the summer. And we'll see what happens both
03:05with the employment report and what happens with inflation, because that oil shock that was getting
03:10better is now it's now gotten worse. I mean, today, you're down a little you're down four bucks.
03:13There's a lot more volatility there. And I think people were expecting a one way trip down. And I
03:17think that's going to complicate things for the Fed. Once again, 2026 is shaping up to be a year
03:22driven by information technology, consumer communication services. Are there areas outside
03:29of there that maybe investors should be looking for, whether it's financials, health care? I'm not sure.
03:33Absolutely. I think that there are places in health care. I think that there are places in industrials.
03:37This is really a good time. I mean, you saw what happened with the memory stocks and you see what
03:40happens with the hardware stocks occasionally on this AI trade. You want to be looking at the
03:45companies that are outside that to some degree and have a good cash flow, a good balance sheet.
03:49You know, we're big believers in capital return. We want to see those dividends being paid. We want
03:53to see that cash flow coming through and that cash flow growing. And I think that this is a good
03:57time
03:57to be looking in those areas because some of the valuations are not as punchy as you see on the
04:01AR hardware trade. Well, some of those tech names that we've, since the beginning of time,
04:06whether it's Google or somebody else, gobs of free cash flow. Gobs is a CFA term. Gobs of free cash
04:11flow. Now they were cash flow negative in some of these. I mean, that's a real issue for investors
04:15to deal with. And I think that that's exactly why that CapEx question is becoming a bigger and louder
04:21one, which is, okay, if you're funding it out of cash flow, at least you're funding yourself. If
04:25you're now going to the debt markets or going to the...
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