Rebecca Walser, President of Walser Wealth Management, discusses the growth of advertising and cloud businesses, in addition to highlighting the global economic factors impacting U.S. investors. 

Opening Bell

Microsoft Posts Q1 Earnings Beat With Revenue Topping $49.3 Billion

for more inside an early morning activity. I am joined by Rebecca Walser president of Walser wealth management Rebecca despite the earnings beats that we've seen from, you know ups Pepsico, I think coke yesterday g inflation and supply chain pressures, they are kind of the big headwinds that all of these players are signaling really being a concern for them for the rest of the year. One of the big takeaways that you have noticed from these reports. Well, I think that you know, we can't underestimate supply chain problems and we can't underestimate our reliance on china and that's the biggest takeaway because if we do not reroute supply chains when we have the opportunity and then we have these situations where we have china with a zero covid policy and we have so much like Foxconn with Apple shutting down again, you know, that is going to again make them re do their estimates and this is the thing that will continuously happen until we can figure out what kind of policy is going to work in china through this virus to keep international shipping and this just in time delivery system that we've all gotten you to, the all the corporations have now implemented that will work again because right now it's it's going to be a problem for the rest of the year. And it's fascinating because you look back at the beginning of last year, we thought this was a problem that would be easing really going into 2022 and it just continues to kind of linger Moving though from, from consumer staples, so to speak to to kind of tech, right? Because this week is going to be a major week of tech earnings. We've got Microsoft and Alphabet, they're gonna be reporting after the bell today. These are two major companies that make up 17% of the NASDAQ 100. What are you going to be watching? Especially when it comes to advertising and cloud growth? Well, that's exactly what we're looking for. We want to see the number of dollars on the advertising revenue threshold we want to see is consumer sentiment making these companies pull back. Um, and therefore not advertising the platforms and the advertising revenue is definitely going to take a hit. And is the leading indicator? So is that something that is going to continue to dampen future projections? Because if the advertising is not there, then obviously consumer sentiment is being followed by companies that they think maybe the rest of the year is going to be a tough one between the salaries of raising interest rates, making financials more expensive for the individual consumer at the credit card and mortgage level, car loan level versus what's happening on the tech front. Obviously they care because that's where all these advertisements for all of these consumer purchases come from. And so that's a big impact to both google and Microsoft. Is the street expecting that pulled back to happen in terms of advertising dollars kind of kind of being pulled back. I, I think that we are looking for a relatively soft landing if we could call it that as the to borrow a term from the Fed. Um, so I think that it's not gonna be so much this quarter as next quarter, that will really start to see a shift in the consumer spending for advertising. So that's gonna be a really key number to look at and see what the trend is and see what we can really expect coming next border continuing in the vein of tech here earnings obviously from names like Apple meta platforms and even amazon those are all gonna be reporting um, later on this week. What are you gonna be watching with those names specifically as well? The big thing with Apple is, I want to see their revisions for, you know, the supply chain and Foxconn once again, you know, they they're so dependent. It's almost like we look at Foxconn as a, as a subsidiary of Apple, even though it's technically not. And so that's the biggest thing. We want to see, what is the impact for future projections for the rest of the year. We've already expected this year to be impacted thus far with inflation with consumer sentiment. But we're really looking to see if, what are these supply chains now looking into for forecasted projections for next quarter because that's really where the year can go bad, We can really turn this around pretty quickly if we can get things back to moving, but if we're expecting That this is going to really impact us 2-6 months. You know the supply chain interruptions that we're seeing in the Chinese seas right now Could have an impact on this country for 2-6 months once it's ironed out. So that's that's getting things back moving and back shipping again. So we're really looking for the projections as opposed to this quarter. But I think this quarter will be happily surprised as we have been with all of the ones that reported yesterday and today. Yeah, I think for earnings were at like 75% kind of beats across the companies that have reported so far which is pretty healthy and pretty decent. But then I look at the markets right now, I'm looking at the big board here at the N. Y. S. C. And you've got the board solidly red, you got the vix up to almost 29 28.38 right now clearly signs of volatility. Yesterday was a clear kind of picture of that. When you look at kind of what's happening in the market as of late and then you look forward on the market itself. What's your view of the market this month and what investors really should be paying close attention to? Well I do like the audience season is looking really positive so far. But I think what's really happening is we're starting to see it just came out yesterday broke yesterday that Israel now is losing their U. S. Dollar reserves to china's Wuhan and you know, a basket of currencies. So what I start to what I'm really seeing is this monetary change of the U. S. Dollars, the sole reserve and that has a massive impact on the dollar's purchasing power. That's going to have an impact on all of commodities across the world. And so it is a really global monetary situation that is impacting us beyond just supply chains beyond geopolitical, you know, Russia Ukraine invasion beyond all of that. We have something happening on a monetary position globally. That is going to have an impact that no one's really addressing and talking about. And I think that's why the market, even though we have such great Ernest number, the market is overall saying, hey, what's going on here? Let's take a pause and we're not seeing a great projections for today. But you know, we could whip salt like we did yesterday, we could have red and then green. So we'll see, I mean we were solidly lower by the time I left the desk yesterday and we were told by 400 points and then you know, I blinked my eye and I look at my phone and I'm like how are we in the green? But that's been the market as of late and it doesn't surprise you when you look at the vix right now, you kind of mentioned the Fed there. So I want to get your take on Fed activity. Um is the Fed kind of proceeding in the way that it should be or or or is it not hawkish enough? Not dovish enough, not taking into consider the volatility, volatility in the market right now. What's your take? The Fed is between a rock and a hard place. There is no good turn for this Fed. I mean when they say that they are going to do 50 pips and then the market reacts crazily we didn't, we only get 25 tips and Russia invades Ukraine. We pull back, we're worried about, you know, to being too overbearing on these corrective actions then the market says, oh this isn't enough, inflation is 8.5%. Now we need 50 pips. I've even had some prognosticators say 75 tips. This is going to be hard for them. We got ourselves back into this corner and now we have to ease our way out of it and it's not gonna be a pretty sight, It's going to be difficult. But I mean we have to deal with this inflation, we cannot have people losing you know, 8 to 12% of their purchasing power on a yearly basis. That's just not workable. Yeah, I mean to your point that the Fed really being in between a rock and a hard place. The reality is the Fed isn't beholden to the market, but we know that the Fed looks at the market or it seems like the Fed looks at the market and sees when it freaks out and really doesn't want that to kind of, you know, lead into the recessionary concerns um but it does to your point have to get inflation under control and you've got, you know, to your point there also Bullard mentioning, you know, 75 basis points potentially. Although the likelihood is, is more like 50 basis points when you look at this greater macro picture, right? And you look at inflation kind of being the top of mind for so many of us, especially over the better part of the last two years and really a major concern for the Fed, you think about the potentials pull back, that's going to lead to with consumers pulling back. What do you see when it comes to consumer spending in terms of that potentially beginning to wane? Well, yeah, I mean that's the biggest concern, you know, our economy is 70% consumer spending driven, we are services based economy and if people aren't consuming services, we have big problems in our US country which is affects all the advertising dollars and all the tech platforms in our if it is all interconnected. So as consumer sentiment wanes and they think, gosh, not only am I not getting a raise, but I'm actually losing money because more of my dollars going to food and gas To get to work if they're even telecommuting anymore. And a lot of them work from home, you know, so this is a big problem. A lot of consumers are thinking where you need to pull back, credit card rates go up, mortgage rates go up. I mean you have people that were just a month ago qualified for maybe twice as much house because the rates went from 3% into the sixes. So this is a huge impact. It affects real estate, affects every piece of property in american affects all of our services. And so consumer sentiment is very important and they need to feel like they're not losing the value of their dollar just because you know, the year is passing Rebecca, I've got, I've got about a minute with you, so I want to kind of end on the big story of the day and get your thoughts obviously around twitter and Elon musk, the board approving musk's offered by the social media platform. What is your take on the buyout? Um and how do you see it impacting really, Even the other social media platforms. Well, that's a great question. I think for Twitter shareholders, it was a good decision. I mean, I was seriously concerned about the board's decision to go for a poison pill and not really consider his offer and once he put forth, the financing 25.5 billion in debt financing another 21 billion and equity financing. Once he put forth the financing, they took his offer seriously, and they were able to get to negotiating table. This is a good thing for the investors, you know, we'll see about what it does for the platform. I think free speech, I'm a libertarian, So free speech for me is always the best, but obviously there's a lot of people on the progressive side are really worried about hate speech, and so it's gonna be a neat, neat path to follow. Uh Elon musk, who is a Diehard, staunch free speech. Er we'll see what that means when it comes to twitter, because obviously, That platform has made a lot of changes in the last 24 months and it's gonna be changing back. So we'll see what those changes will look like. And I know that a lot of people have concerns, but I think more information is always better, you know, always more. And then you decide as an adult what information you do not think is accurate and what information you think is, you know, just fluff. And that's the kind of mindset that Elon musk seems to be betting on that more people feel like that. Rebecca really appreciate your insight. Rebecca walter. President of Walser wealth management