Paul Sweeney, Katie Gupta, Scott Kessler discussed on Bloomberg Markets


Jarrett thank you so much It was just flagged to me that a listener has said they like our program To that listener we thank you so much We are very happy to be here Paul Sweeney mat Miller off today Katie Gupta here from the interactive broker studio boomer headquarters New York City shinola what's so striking to me is you have these massive earnings you have this massive movement the S&P 500 up only 0.6% Yeah it's fascinating And in the commercial break we were just talking about some of these big big businesses You see a huge move in Microsoft pricing power thumb tech businesses still doing really well but growth is slowing Across the board So what does that look like in the next wave of investing Yeah and honora grana from blurring a telescope just recently joining us literally minutes ago and just said I don't know why people think tech is immune from this growth slowdown It's not It's just better prepared And that's a very good point It kind of seems like the stock is perhaps being punished for that or at least it was the case yesterday today The S&P 500 tech broadly in the green Let's pose that question to Scott Kessler global sector lead of TMT at the third bridge group Scott always a pleasure Thank you for joining us You're actually also my former employer or not used was a little bit third bridge was my former employer so I have a special place in my heart for third bridge commentary Talk to us a little bit about this question Scott is tech better positioned for this growth slowdown And if so why hasn't seen so much pain year to date Yeah well thanks for the warm comments about third bridge So I get look a couple of things First I think a lot of folks paint TMT sector with one brush It is not a monolith Within the sector you have cloud software and you have wireless telecom You have in some cases some payment providers and you have let's call it legacy security software You have PC hardware and you have semiconductors It is a very big and broad and diverse sector That being said look there's no question that those areas that historically have been thought of as more cyclical and I would put probably semiconductors and hardware in that category they are more than likely going to be more impacted by growth slowdown then other areas that are maybe later cycle such as software and services The other thing you need to look at are what are the secular growth trends right So on one hand you're looking at cloud software I think there's a very strong set of tailwinds for that particular area However these are some companies that have been doing fantastically well largely as a result of the pandemic and now coming out of that Suddenly those tailwinds have turned into headwinds There's a lot of headwinds right There are a lot of headwinds and I think people don't ask this enough People go when they talk about the stock market they ask what to buy But what about what to sell When you look at the parts of technology and media and telecom that are going to hit the most troubles in the next 12 months where are they I mean look over the next 12 months I mean there are a lot of different areas to focus on From a fundamental perspective I think one of the areas that people have been focusing on more recently is hardware for example hardware saw a very substantial bump as a result of suddenly everyone having to work at home to essentially attend school at home So you saw the deployment of a massive amount of Chromebooks laptops et cetera but now we're coming out of COVID times hopefully and the comparisons are very very challenging So that would be an area where I think people need to look at what I was talking about in terms of balancing kind of secular growth considerations versus the cyclicality of the economy where we're likely to see some slowing for a variety of reasons Scott how much should we be worried or should tech investors be worried about the China of it all Whether it comes to supply chain issues whether it comes to COVID lockdowns or simply Chinese demand for some of these tech companies and tech services Yeah I mean it's a good question right I think over the last couple of years even predating COVID the importance of China from a supply chain perspective has become problematic for a lot of companies And I think given the continuing COVID lockdowns there there is no indication that we're going to see a normalization anytime soon Look we speak to experts day in and day out There's a big focus not surprisingly on kind of the technology supply chain Semiconductors and production And we have experts that have told us that normalization won't come until 2023 People frankly have been caught flat footed in terms of the magnitude and the duration of the supply chain issues That is not going to abate within kind of the short term And I think that's something people need to recognize Now you also pointed out something that people wonder about which is kind of demand considerations I would say for a lot of technology vendors TMT providers China is not as big a consumer of those products and services as you might think If you consider the fact that a lot of Internet media isn't even accessible within Mainland China I think that explains a lot of why there isn't that much of a potential kind of demand and revenue impact there And then the last thing I'd say is China has been building out its own TMT sector They've been investing very aggressively in semiconductors for example And so that's something that people need to be aware of as well Scott Kessler global sector lead of TMT over a third bridge We thank you so much as always for joining us We're going to jump right into our next guest here We want to talk about the markets we want to talk about the impact But let's stick with that China theme and for that Steve Kane co CIO and general portfolio manager with TC W invest management investment management talks to us and joins us here on.

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