Summary of a television interview · Based on the recording of the conversation
In brief
On Bloomberg TV Bulgaria, Kliment Robev discusses the results of Microsoft and Alphabet, the proposed merger of Tesla and SpaceX, the forthcoming Anthropic IPO and the signals from the Fed. In his view, the earnings season sends a clear message: the market no longer pays for promises and future profits, but for positive cash flow and profits delivered today.
Key points
- In Kliment Robev’s view, what the market liked most about Microsoft was that it combines heavy capital spending with positive free cash flow and no new capital raising that would dilute shareholders, although he also points to risks – investment in shorter-lived chips that will weigh on depreciation, and rising memory prices that make devices more expensive, an issue that also affects Apple.
- At Alphabet the cloud business almost doubled year on year, but investors were disappointed by record capital spending, negative free cash flow, plans for further investment and a slowdown at Google Search and YouTube, while he attributes much of the weaker profit to accounting write-downs on investments, including in SpaceX.
- Although around 80% of companies are beating expectations and earnings are growing strongly, the indices are not making new highs, which he reads as a sign that the market pays for cash and real profits rather than promises – especially when 10-year US Treasuries yield around 5% and equities have to beat that return with real results.
- He sees Elon Musk’s proposal to merge Tesla and SpaceX as a way to “rescue” Tesla, whose valuation depends on future projects such as autonomous driving and humanoid robots, since SpaceX – with Starlink as its profit engine, AI as its growth engine and rockets as the source of public interest – could provide capital and computing power, though the terms of any deal remain unclear.
- He describes the Anthropic IPO as a major test for a market that, within a few months, must also find liquidity for the SpaceX IPO and a new share offering from Meta, noting that this money comes from selling other assets, mainly equities, and declines to make a forecast for a possible OpenAI IPO.
- After the Fed meeting, markets are pricing in a rate rise in December, and in his view the fall in two-year yields and slight rise in 10-year yields point to a longer period of high rates, which would make AI spending harder to finance and weigh on tech valuations – part of a chain that runs from US–Iran tensions and oil above $100 through inflation and higher rates to a search for defensive companies with positive cash flow.
Context
The conversation was prompted by the results of Microsoft and Alphabet, the Fed’s decision to hold rates and the upcoming ECB meeting; it also covers Elon Musk’s proposal to merge Tesla and SpaceX, the forthcoming Anthropic IPO and the US midterm elections.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
