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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Single best idea and

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Speaker 1: off of yesterday's program, which was just wonderful of people working,

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Speaker 1: Eric and the team working on the geopolitics of the

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Speaker 1: Eastern Mediterranean and all of that. We tried to shift

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Speaker 1: back to the markets into the economy much more today.

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Speaker 1: Just a stellar set of guests program. Note. I really

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Speaker 1: want to shout out David Gurris the Big Take yesterday.

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Speaker 1: Look for that at Bloomberg Podcasts. It is a show

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Speaker 1: that's gotten rave reviews on Israel, on Iran. It was

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Speaker 1: with our Nick Wattams and Company and Ethan Brown are

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Speaker 1: our Tel Aviv bureau chief. I really can't say enough

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Speaker 1: about the response mister Gurrs had off of The Big

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Speaker 1: Take yesterday. Our response today was to speak about the

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Speaker 1: Shreek Kamar is legendary. He's out of Los Angeles, iconic

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Speaker 1: with TCW and others before that, closely associated with Mike

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Speaker 1: Milkin's say the Milkan Institute. Shriek Kamar is adamant that

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Speaker 1: we've got to get back to foundational theories of another

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Speaker 1: time and place and even suggests with this persistent inflation,

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Speaker 1: not we will, but we could see a rate increase

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Speaker 1: he wants to go back to his mentor and PhD

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Speaker 1: advisor at Columbia years ago, John Taylor, now at Stanford University.

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Speaker 1: Shrek Kamar on the Taylor rule, You have.

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Speaker 2: To go back to the pre pandemic long ago nineteen

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Speaker 2: ninety's approach to Taylor rule, and it was first proposed

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Speaker 2: Tom in nineteen ninety three. Janet Yellen, who was then

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Speaker 2: in San Francisco, said she hopes that it can be

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Speaker 2: adopted soon and thirty years later, there is no problem

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Speaker 2: Chris toward it. It you need the tailored rule back. It

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Speaker 2: is a very flexible formula taking into account whether your

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Speaker 2: growth is above or below target, your inflation is above

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Speaker 2: or below target, and based on that, should you be

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Speaker 2: increasing a lowering interest rate. You put the formula out,

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Speaker 2: you publish it in newspapers, speak about it on Bloomberg,

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Speaker 2: and I will know what's going to happen to interest rate.

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Speaker 1: Shi Kamara with one thought there and of course closely

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Speaker 1: associated now with Stanford University in the Hoover Institution, one

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Speaker 1: of the things we really tried to do today was

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Speaker 1: stay on the markets. In the markets be course had

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Speaker 1: a deep draw down. I'm kidding. Vis got out to

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Speaker 1: a nineteen not twenty level. I guess that's some recent

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Speaker 1: angst in the market, as you'd expect with all this

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Speaker 1: going on in politics, and yes, some real earnings angst

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Speaker 1: as well off of JP Morgan, Coben, Sachs, old Morgan Stanley,

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Speaker 1: Bank of America less so thanks to Kennlean, CFRA was

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Speaker 1: brilliant on Bank of America. He made real clear he

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Speaker 1: thought this whole thing with subpar but Bank of America

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Speaker 1: clearly having the ability to bounce back in future quarters.

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Speaker 1: But so there we are into earning season, and of

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Speaker 1: course what everybody's waiting for is tech, and tech to

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Speaker 1: me is Apple. I know Microsoft comes out as well.

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Speaker 1: May second will be Apple earnings. And it's good to

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Speaker 1: catch up Gene Monster deep Water, and I went to

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Speaker 1: you know something conventional, not China, not product, not iPhone,

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Speaker 1: not goggles like Andrew Murphy, War's working with gene Mounster.

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Speaker 1: I went back to use of cash. Munster went through

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Speaker 1: the math of their free cash flow.

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Speaker 3: They generate about one hundred billion in operating income, and

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Speaker 3: so this is about a three hundred and fifty four

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Speaker 3: hundred billion dollar revenue company. They'll probably do about ninety

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Speaker 3: five billion. This year free cash flow will be around

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Speaker 3: fifty five billion, So this is still a machine. When

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Speaker 3: it comes to and I want to I think I

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Speaker 3: bury the lead relative to that data point about their

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Speaker 3: free cash flow is revenue growth. If you take what

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Speaker 3: it will be in the March quarter, what they're going

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Speaker 3: to report in a few weeks here, revenue growth over

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Speaker 3: the past eight quarters has been down, will be down

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Speaker 3: zero point four percent on average. So they continue to

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Speaker 3: drive that kind of fifty billion plus free cash flow

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Speaker 3: despite revenue being flat. I think it speaks to the

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Speaker 3: strength of the business model that they have.

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Speaker 1: I've been harping on this. It's maybe my theme for

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Speaker 1: the year, which is there's a complete growth fixation within

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Speaker 1: the financial media. It's about growing earnings, growing revenues, growing this,

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Speaker 1: growing units, how many clicks do they have, how many

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Speaker 1: iPods are they sold? Etc. And the iPhones, I should say.

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Speaker 1: And the reality is a lot of companies and CFOs

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Speaker 1: are less focused on growth at any cost and are

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Speaker 1: looking at profit. In the profit model of something like Apple,

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Speaker 1: just as one example, is just absolutely stunning. There's no

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Speaker 1: other way to put it. It's one of the focuses

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Speaker 1: that we have at Bloomberg surveillance is that we're always

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Speaker 1: looking at the Bloomberg FA screen, the financial analysis screen,

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Speaker 1: and we're saying, okay, growthy, growthy, growthy and all that,

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Speaker 1: but what does the profit look like? How do they

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Speaker 1: come down the income statement? What is free cash flow

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Speaker 1: look horizontally? Pro tip. One of the great things I'm

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Speaker 1: doing now this is not original, is I look at

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Speaker 1: where they were in twenty nineteen and now where they

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Speaker 1: are four years out, in five years out, in two

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Speaker 1: thousand and twenty four, five years out will be you know,

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Speaker 1: in two quarters, three quarters or so, and you'd be

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Speaker 1: amazed how you can glean out industries such as banking

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Speaker 1: or Yeah, there's been a free cashal lift, but not

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Speaker 1: as much as you think. In these juggernauts with these

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Speaker 1: high multiples, these big tech companies that are putting it

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Speaker 1: on every quarter. We're having a lot of fun with this.

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Speaker 1: It's single best idea, It's just two ideas. We have

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Speaker 1: a committee, you know, we argue. I mean we at

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Speaker 1: one meeting went forty five minutes to try to decide

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Speaker 1: which two we would pick to put in the single

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Speaker 1: best idea. But today it's Shree Komar and it's Gina Munster.

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Speaker 1: Just as simple as that. It's a single best idea.

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Speaker 1: Of course, listen to us out on Apple car Play,

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Speaker 1: download the Bloomberg Business app, It's free on YouTube. All

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Speaker 1: I can say is you search Bloomberg podcasts and you

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Speaker 1: get on the live chat, and we never know what

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Speaker 1: people are going to talk about. Jess Menton's like play satisfaction.

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Speaker 1: So we played the Rolling Stones, Otis Redding and other

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Speaker 1: worthies today. Okay, fine, and then everybody's all of a

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Speaker 1: sudden about the NBA. Think I'd Damien Sassauer bailed me

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Speaker 1: out with chick chat on the NBA. So this is

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Speaker 1: single best idea from Bloomberg. Surveillance would remain with the

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Speaker 1: Mason