Old Economy Stocks Surge Again | Open Interest 2/12/20212

Speakers

Matt Miller — Anchor, Bloomberg

Dani Burger — Anchor, Bloomberg

Caroline Hyde — Anchor, Bloomberg Technology

Aaron Kirchfeld — Executive Editor, Bloomberg Deals

Red-Brown — Reporter, Bloomberg (Restaurants)

Cayla Seder — Macro Strategist, State Street

Woo Jin Ho — Analyst, Bloomberg Intelligence (Hardware)

Brooke Sutherland — Columnist, Bloomberg Opinion (Industrials)

Nancy Tengler — CEO & CIO, Laffer Tengler Investments

Robert Schiffman — Credit Analyst, Bloomberg Intelligence

Dave Magers — CEO, Mecum Auctions

Summary

Memory Chip Supercycle: A massive divergence is occurring in hardware. Memory chip prices are surging, boosting margins for manufacturers (Micron, Western Digital) but crushing margins for downstream networking hardware companies like Cisco.
The "SaaS Apocalypse": Investors are actively rotating out of legacy software (Salesforce, Adobe) due to fears that AI agents will disrupt "per-seat" pricing models. Capital is flowing into AI infrastructure (Power, Cooling, Cabling) instead.
Industrial Bifurcation: The industrial sector is split. Companies exposed to Data Center buildouts (cooling, power) and Aerospace are booming. However, consumer-facing industrials (tools, HVAC for residential) remain in a slump due to weak consumer spending.
Active Management Consolidation: Nuveen’s acquisition of Schroders signals that active asset managers must scale to >$2.5 Trillion AUM to survive the shift to passive investing.
Consumer Value Shift: McDonald's posted its best sales growth in two years by pivoting to value meals, proving that the lower-income consumer is active but highly price-sensitive.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
MU /WDC	LONG	Matt Miller Anchor, Bloomberg	Memory chip prices are hiking aggressively. Cisco explicitly cited "mounting memory chip costs" as the reason for their margin squeeze and weak profit forecast. One company's expense is another's revenue. The pricing power has shifted entirely to the component suppliers. While Cisco suffers margin compression, the memory producers are seeing direct margin expansion. LONG Memory Manufacturers. Sudden drop in hyperscaler demand or oversupply later in the cycle.	—
GEV /ANET /GLW /PLTR	LONG	Nancy Tengler CEO & CIO, Laffer Tengler Investments	Hyperscaler Capex is projected at $650 Billion. Tengler is buying Palantir and GE Vernova; Ho highlights Arista and Corning. This is the "Pick and Shovel" trade. Regardless of which AI model wins, they all need power (GEV), cabling (GLW), networking (ANET), and data infrastructure (PLTR). LONG AI Infrastructure. Regulatory caps on energy usage or a pullback in Big Tech Capex.	35:15
KRE /GS /JPM	LONG	Nancy Tengler CEO & CIO, Laffer Tengler Investments	The new administration is pushing for deregulation. Regional banks (KRE) benefit disproportionately from regulatory relief (lower compliance costs, easier M&A). Large banks (GS/JPM) benefit from increased deal flow and capital markets activity. LONG Financials. Resurgence of inflation forces Fed to keep rates high, pressuring bank balance sheets.	—
HIGH QUALITY CREDIT	LONG	Robert Schiffman Credit Analyst, Bloomberg Intelligence	Big Tech is issuing record amounts of debt (e.g., Alphabet) despite having cash. Tech companies are using debt for Capex (growth) rather than buybacks. This is credit-positive because it builds future cash flow assets. Spreads are tight, but demand is overwhelming. LONG High-Grade Tech Bonds. Over-leverage if AI returns do not materialize.	—
MCD	LONG	Red Browne Bloomberg Reporter	McDonald's sales grew at the fastest pace in two years following the introduction of value meals and promotions (e.g., Grinch meal). The consumer is not dead, but they are "trading down." McDonald's has successfully repositioned itself as the value leader, winning traffic from higher-priced competitors. LONG Value-Based Fast Food. Rising food costs forcing price hikes that alienate the value consumer.	6:45
ADBE /CRM	AVOID	Nancy Tengler CEO & CIO, Laffer Tengler Investments	Tengler explicitly stated she "exited Adobe and Salesforce." The "SaaS Apocalypse" thesis suggests AI is moving from a "Copilot" (user-based) model to an "Agent" (autonomous) model. This disrupts the seat-based pricing power of legacy software firms. AVOID Legacy SaaS. These companies successfully pivot to consumption-based pricing models faster than expected.	47:19
CSCO	AVOID	Woo Jin Ho Analyst, Bloomberg Intelligence (Hardware)	Cisco shares dropped ~7-9% on a profit forecast miss caused by high component costs (memory). While Cisco is trying to pass costs to customers, there is a lag. They are squeezed between rising input costs and the need to compete for AI networking share against agile competitors like Arista. AVOID until margins stabilize. Nancy Tengler (also in transcript) is buying the dip for the long term, citing strong earnings outside the margin issue.	0:53
CARR /PNR /SWK	AVOID	Brooke Sutherland Columnist, Bloomberg Opinion (Industrials)	Industrial earnings for consumer-facing products (power tools, residential pools, HVAC) are weak. Companies are citing consumers "trading down" or delaying renovations. High interest rates and economic uncertainty are freezing the "housing turnover" economy. Without existing home sales, demand for renovations (tools, new AC units) collapses. AVOID Residential Industrials. Fed cuts rates aggressively, sparking a housing turnover boom.	43:07
SDR	LONG	Aaron Kirchfeld Executive Editor, Bloomberg Deals	Nuveen is buying Schroders to create a $2.5T asset manager. Mid-sized active managers are "broken" due to the flight to passive. The only survival strategy is massive scale to lower costs and offer private market capabilities. This puts other mid-sized managers in play as acquisition targets. LONG Consolidation Targets in Asset Management. Regulatory blocking of mega-mergers.	0:32