1 00:00:05,800 --> 00:00:08,360 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim 2 00:00:08,400 --> 00:00:11,440 Speaker 1: Fox along with my co host Lisa Bramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,560 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg P M 6 00:00:20,680 --> 00:00:31,520 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 7 00:00:31,720 --> 00:00:33,159 Speaker 1: I want to bring in Oliver Redneck. He has our 8 00:00:33,159 --> 00:00:36,800 Speaker 1: Bloomberg Stocks Reporter, and he joins us right now. I 9 00:00:36,840 --> 00:00:38,440 Speaker 1: want to just get a lay of the land. There 10 00:00:38,440 --> 00:00:40,320 Speaker 1: are a bunch of deals that came out. What's catching 11 00:00:40,320 --> 00:00:43,360 Speaker 1: your eye today. I think that today, at least from 12 00:00:43,360 --> 00:00:46,279 Speaker 1: the market's perspective, is just it's it's quiet still, it's 13 00:00:46,320 --> 00:00:49,479 Speaker 1: low volume, it is a sort of stand still that 14 00:00:49,560 --> 00:00:51,920 Speaker 1: it's kind of gripped equity markets at least when we 15 00:00:51,960 --> 00:00:54,280 Speaker 1: look at risk assets, I think it's probably a little 16 00:00:54,280 --> 00:00:56,000 Speaker 1: bit more interesting, sort of your neck in the woods. 17 00:00:56,040 --> 00:00:58,440 Speaker 1: It's just what's happening with bonds, what's happening with yields? 18 00:00:58,760 --> 00:01:01,400 Speaker 1: And I think that also spells a story for stocks 19 00:01:01,400 --> 00:01:03,560 Speaker 1: as well, because in the past week there's a little 20 00:01:03,560 --> 00:01:05,840 Speaker 1: bit of reversals. Our story that our team put out 21 00:01:05,840 --> 00:01:08,039 Speaker 1: on Friday that kind of took the week in recap 22 00:01:08,040 --> 00:01:09,800 Speaker 1: and that I think says the stage for this week 23 00:01:10,120 --> 00:01:12,360 Speaker 1: is large about some of the rotations that have occurred 24 00:01:12,400 --> 00:01:14,480 Speaker 1: within the market. This is largely been a story of 25 00:01:14,520 --> 00:01:17,399 Speaker 1: the past year, which is changing perspectives on what's going 26 00:01:17,440 --> 00:01:20,119 Speaker 1: to work, what's going to work based on Washington, what's 27 00:01:20,120 --> 00:01:22,959 Speaker 1: going to work based on economic growth? Um, right now, 28 00:01:23,000 --> 00:01:24,800 Speaker 1: I've got a few interesting notes in my inbox that 29 00:01:24,840 --> 00:01:27,920 Speaker 1: our story of homing in on the idea of a 30 00:01:27,920 --> 00:01:31,880 Speaker 1: potential value stock rebound based on higher rates and what 31 00:01:31,920 --> 00:01:33,959 Speaker 1: happens when the rest of the market starts to view 32 00:01:34,080 --> 00:01:36,720 Speaker 1: higher rates and the likelihood of that beginning to happen. 33 00:01:37,040 --> 00:01:38,440 Speaker 1: What kind of companies do go in? And there are 34 00:01:38,440 --> 00:01:40,319 Speaker 1: a little bit of different types of companies well, and 35 00:01:40,360 --> 00:01:43,480 Speaker 1: I think that a lot of the muted volatility that 36 00:01:43,480 --> 00:01:46,279 Speaker 1: we're seeing in markets is partly because we're just getting 37 00:01:46,319 --> 00:01:48,840 Speaker 1: so much noise from Washington, d c UH and the 38 00:01:48,920 --> 00:01:52,640 Speaker 1: latest I want to uh have some insight from Porter Bibb, 39 00:01:52,920 --> 00:01:56,160 Speaker 1: who's managing partner at Media Tech Capital Partners, which is 40 00:01:56,200 --> 00:01:58,760 Speaker 1: based in New York and and Porter bib is known 41 00:01:59,080 --> 00:02:02,640 Speaker 1: as being the first publisher of Rolling Stone Magazine reporter 42 00:02:03,080 --> 00:02:08,640 Speaker 1: Um we Over the weekend, President Trump diverted attention away 43 00:02:08,680 --> 00:02:11,760 Speaker 1: from his tax plan and put it toward whether or 44 00:02:11,800 --> 00:02:16,320 Speaker 1: not NFL players stand for the national anthem. He absolutely 45 00:02:16,400 --> 00:02:21,520 Speaker 1: limbasted some for kneeling in protest of the pervasive racial 46 00:02:21,520 --> 00:02:24,760 Speaker 1: discrimination in the country. He was saying that that's disgraceful. 47 00:02:25,280 --> 00:02:28,280 Speaker 1: As a result, the team's kneeled even more. What's your 48 00:02:28,280 --> 00:02:30,639 Speaker 1: take on this and at what point our advertisers going 49 00:02:30,720 --> 00:02:34,400 Speaker 1: to have to weigh in on this? Uh sort of 50 00:02:34,440 --> 00:02:40,119 Speaker 1: odd controversy on. On top of criticizing the activists who 51 00:02:40,120 --> 00:02:44,560 Speaker 1: were kneeling, he also criticized the referee referees for taming 52 00:02:44,600 --> 00:02:47,200 Speaker 1: down the game and taking away some of the violent 53 00:02:47,280 --> 00:02:51,280 Speaker 1: hits that he demonstrated by banging his fist together in 54 00:02:51,320 --> 00:02:56,240 Speaker 1: a typical Trumpian manner. But the reality is, after he said, 55 00:02:56,520 --> 00:03:00,320 Speaker 1: the ratings of the NFL are way way down. Last 56 00:03:00,400 --> 00:03:04,960 Speaker 1: year was the highest NFL rating in for the season 57 00:03:05,000 --> 00:03:08,520 Speaker 1: in history, and except for the two hurricane weekends of 58 00:03:08,639 --> 00:03:12,359 Speaker 1: Harvey and Irma, they're running ahead right now of last year. 59 00:03:12,400 --> 00:03:15,360 Speaker 1: So it looks like NFL ratings and viewership is going 60 00:03:15,360 --> 00:03:18,320 Speaker 1: to be very very strong and not way way down. 61 00:03:18,680 --> 00:03:22,400 Speaker 1: Advertisers are sitting tight because two thirds are more of 62 00:03:22,480 --> 00:03:29,760 Speaker 1: the NFL most advocate uh strongest fans are basically in 63 00:03:29,800 --> 00:03:34,359 Speaker 1: the Trump camp in terms of activism, mixing with with 64 00:03:34,440 --> 00:03:38,680 Speaker 1: their their sports, and advertisers are going to stay very silent, 65 00:03:38,760 --> 00:03:41,160 Speaker 1: but pay attention to the ratings, and the ratings, as 66 00:03:41,200 --> 00:03:45,480 Speaker 1: I suggested, are holding. So NFL advertising is going to 67 00:03:45,560 --> 00:03:49,360 Speaker 1: be very bulliant this year. Is your sense that viewership 68 00:03:49,440 --> 00:03:52,760 Speaker 1: will go down? I don't think so. I think it's likely. 69 00:03:53,600 --> 00:03:58,720 Speaker 1: Yesterday they had an all time record rating viewership because 70 00:03:58,800 --> 00:04:00,840 Speaker 1: everybody wanted to see what was going to happen with 71 00:04:00,920 --> 00:04:03,560 Speaker 1: the with the kneelings. It started with the Jaguars and 72 00:04:03,640 --> 00:04:07,440 Speaker 1: Ravens in London and Saturday Sunday morning and continued um 73 00:04:08,080 --> 00:04:11,560 Speaker 1: right through the evening. Um ratings are are holding, and 74 00:04:11,680 --> 00:04:15,720 Speaker 1: advertisers respect the ratings more than they respect politics. You know. 75 00:04:15,840 --> 00:04:18,839 Speaker 1: One thing that has struck me is that a number 76 00:04:19,040 --> 00:04:23,160 Speaker 1: of billionaire donors to President Trump who are also owners 77 00:04:23,279 --> 00:04:27,000 Speaker 1: of these teams have come out against him, albeit not 78 00:04:27,160 --> 00:04:30,600 Speaker 1: necessarily in some cases as strongly as someone would hope. 79 00:04:30,839 --> 00:04:33,719 Speaker 1: I mean, at what point will they have to take 80 00:04:33,920 --> 00:04:37,680 Speaker 1: more aggressive stances? Will they will sort of widen the 81 00:04:37,760 --> 00:04:40,440 Speaker 1: divide between some of his base, at least the wealthier 82 00:04:40,480 --> 00:04:42,880 Speaker 1: part of his base. Well, the NFL is a business, 83 00:04:42,960 --> 00:04:45,960 Speaker 1: and and these owners, even the ones who are very 84 00:04:46,080 --> 00:04:48,000 Speaker 1: very close to Trump, and some of them who have 85 00:04:48,080 --> 00:04:52,280 Speaker 1: given millions of dollars to Trump, really are protecting their 86 00:04:52,320 --> 00:04:55,440 Speaker 1: business more than anything else. And they they have said 87 00:04:55,480 --> 00:05:00,359 Speaker 1: their pieces. Um. Only one, Mike Brown, the Cincinnati Bengal owner, 88 00:05:00,440 --> 00:05:03,440 Speaker 1: was the only one among all of the NFL owners 89 00:05:03,480 --> 00:05:05,839 Speaker 1: who came out in support of the comments that Trump 90 00:05:05,839 --> 00:05:08,880 Speaker 1: had made on Friday and then again on Saturday and Sunday. 91 00:05:08,920 --> 00:05:12,920 Speaker 1: So I think that they want to respect the value 92 00:05:13,160 --> 00:05:17,040 Speaker 1: of their team and the profitability that that the team 93 00:05:17,120 --> 00:05:19,919 Speaker 1: can engender. And it's a team sport. They have to 94 00:05:20,040 --> 00:05:24,240 Speaker 1: hold everybody together or else the whole business falls apart. 95 00:05:24,279 --> 00:05:26,800 Speaker 1: And it's not likely to happen anytime soon. What's the 96 00:05:26,880 --> 00:05:32,800 Speaker 1: history of advertisers actually getting political. They really have stayed away. 97 00:05:32,880 --> 00:05:35,120 Speaker 1: I mean, you had just a week ago to my 98 00:05:35,560 --> 00:05:41,160 Speaker 1: hill at ESPN, UM was sanctioned by by Trump's UH 99 00:05:41,680 --> 00:05:46,640 Speaker 1: communications director and said she should be fired. UH. Advertisers 100 00:05:46,640 --> 00:05:51,360 Speaker 1: did not flinch, They didn't budge from ESPN, and ESPN 101 00:05:51,440 --> 00:05:54,200 Speaker 1: just moved on. Well, the reason why I asked that 102 00:05:54,279 --> 00:05:56,480 Speaker 1: is because I remember during the Super Bowl there were 103 00:05:56,520 --> 00:06:00,320 Speaker 1: there were a couple of controversial advertisements that actually lead 104 00:06:00,320 --> 00:06:04,920 Speaker 1: did get political and make messages, uh that that you know, 105 00:06:05,360 --> 00:06:09,200 Speaker 1: took a stand. It's it's more difficult for the advertiser 106 00:06:09,320 --> 00:06:11,520 Speaker 1: to cross over the line than it is for team 107 00:06:11,560 --> 00:06:15,320 Speaker 1: owners or players or even the NFL. Roger Goodell came 108 00:06:15,320 --> 00:06:19,000 Speaker 1: out very strongly against the comments and the and the 109 00:06:19,800 --> 00:06:25,600 Speaker 1: substance of what the President said about the activists kneeling um. 110 00:06:25,640 --> 00:06:29,240 Speaker 1: But it's still a business, and both sides, the advertisers, 111 00:06:29,279 --> 00:06:31,719 Speaker 1: the NFL and the team owners have to make a 112 00:06:31,720 --> 00:06:35,480 Speaker 1: profit or else the whole system falls apart. It's just amazing. 113 00:06:35,560 --> 00:06:37,599 Speaker 1: As I was seeing on Twitter, it's sort of the 114 00:06:37,680 --> 00:06:41,400 Speaker 1: rival teams we're coming together, the fans were coming together 115 00:06:41,680 --> 00:06:46,440 Speaker 1: with this united cause. So it's sort of amazing what 116 00:06:46,440 --> 00:06:48,760 Speaker 1: what President Trump can do to bring unity up. Port 117 00:06:48,880 --> 00:06:50,560 Speaker 1: Bit thank you so much for joining us part of 118 00:06:50,560 --> 00:06:53,560 Speaker 1: BIT managing partner at Media Tech Capital Partners in New York. 119 00:06:53,600 --> 00:06:57,320 Speaker 1: And of course our thanks to Oliver Rennick Bloomberg Stocks reporter. 120 00:06:57,560 --> 00:06:59,960 Speaker 1: And as we were saying, a lot of this controversy 121 00:07:00,040 --> 00:07:03,320 Speaker 1: took attention away from the tax plan that Republicans are 122 00:07:03,400 --> 00:07:20,480 Speaker 1: pulling together. Over the weekend, GOP Congressman announced a draft 123 00:07:20,560 --> 00:07:23,720 Speaker 1: of a tax plan that has a pretty aggressive schedule 124 00:07:23,800 --> 00:07:27,920 Speaker 1: to get through Congress and get into practice. I want 125 00:07:27,920 --> 00:07:31,120 Speaker 1: to bring in Laura Davison, Capital Hill, reporter for Bloomberg 126 00:07:31,200 --> 00:07:33,040 Speaker 1: B and A. And Laura, can you just give us 127 00:07:33,360 --> 00:07:36,880 Speaker 1: an overview of what the main tenants are that are 128 00:07:36,920 --> 00:07:40,520 Speaker 1: being proposed. Yes, So this plan is expected to be 129 00:07:40,560 --> 00:07:43,040 Speaker 1: officially released later this week, and sort of the headline 130 00:07:43,120 --> 00:07:46,400 Speaker 1: numbers are that the corporate rate would drop to you know, 131 00:07:46,440 --> 00:07:49,520 Speaker 1: it's now, and there would be a special rate for 132 00:07:49,600 --> 00:07:52,480 Speaker 1: pass through entities. So that's everything from you know, doctor's practices, 133 00:07:52,560 --> 00:07:55,240 Speaker 1: law firms, private equity funds that would have a special rate. 134 00:07:55,240 --> 00:07:59,040 Speaker 1: Of those taxes are almost at now. So these are 135 00:07:59,080 --> 00:08:01,360 Speaker 1: the big numbers, and the whole point of this is 136 00:08:01,400 --> 00:08:04,480 Speaker 1: to get support from Republicans and Congress to buy onto 137 00:08:04,480 --> 00:08:07,600 Speaker 1: this plan. What it won't have, however, is sort of 138 00:08:08,120 --> 00:08:09,600 Speaker 1: what how it's going to be paid for. You know, 139 00:08:09,640 --> 00:08:12,400 Speaker 1: what are the deductions, the credits, the other tax breaks 140 00:08:12,400 --> 00:08:14,280 Speaker 1: that they're going to get rid of, uh, in order 141 00:08:14,320 --> 00:08:16,800 Speaker 1: to make those those deep rate cuts. So, in other words, 142 00:08:16,840 --> 00:08:20,200 Speaker 1: this is really a corporate tax cut rather than a 143 00:08:20,560 --> 00:08:24,680 Speaker 1: tax reform plan. Correct. You know, that's still to be 144 00:08:24,720 --> 00:08:26,680 Speaker 1: seen a little bit. And they're also playing around with 145 00:08:26,680 --> 00:08:30,160 Speaker 1: whether these changes will be temporary or be be permanent. Um. 146 00:08:30,240 --> 00:08:32,160 Speaker 1: You know, there's some rules in the Senate that they 147 00:08:32,160 --> 00:08:33,960 Speaker 1: have to to work with to make sure all the 148 00:08:34,000 --> 00:08:37,200 Speaker 1: numbers add up. Um. But right now, the emphasis is 149 00:08:37,240 --> 00:08:39,000 Speaker 1: on sort of what are the rate reduction is going 150 00:08:39,000 --> 00:08:40,880 Speaker 1: to be, and then on the tax cut side of it. 151 00:08:41,640 --> 00:08:43,080 Speaker 1: If they're able to get a lot of buy in 152 00:08:43,120 --> 00:08:45,280 Speaker 1: and they're able to kind of move the process quickly, 153 00:08:45,640 --> 00:08:47,880 Speaker 1: they may they may be able to do some simplification 154 00:08:47,960 --> 00:08:51,120 Speaker 1: type reforms and overall cleaning up the tax code, but 155 00:08:51,160 --> 00:08:53,120 Speaker 1: they're on a really time tight schedule to do that, 156 00:08:53,160 --> 00:08:55,400 Speaker 1: and if there's any hiccups in the process, more of 157 00:08:55,440 --> 00:08:57,959 Speaker 1: the emphasis will shift to the tax cut side versus 158 00:08:58,000 --> 00:09:01,320 Speaker 1: the reform side. So just how tight is the schedule 159 00:09:01,400 --> 00:09:05,719 Speaker 1: going forward? Um? Basically every single card needs to fall 160 00:09:05,800 --> 00:09:08,040 Speaker 1: exactly where it needs to for this to to move 161 00:09:08,080 --> 00:09:10,480 Speaker 1: by the end of the year. Uh. You know, they 162 00:09:10,480 --> 00:09:12,679 Speaker 1: they have to get this to the House, get it 163 00:09:12,679 --> 00:09:15,360 Speaker 1: through committee. The plan is to go through regular orders, 164 00:09:15,360 --> 00:09:18,680 Speaker 1: So unlike the health care bill, UM on both sides, 165 00:09:18,679 --> 00:09:20,520 Speaker 1: it will go through committee, get approved, go to the 166 00:09:20,559 --> 00:09:22,600 Speaker 1: House floor, get approved, and then the same side over 167 00:09:22,640 --> 00:09:25,360 Speaker 1: on the Senate. UM. And we're already seeing some divisions 168 00:09:25,400 --> 00:09:27,880 Speaker 1: between the House and the Senate. Or In Hatch, who's 169 00:09:27,920 --> 00:09:29,720 Speaker 1: the chairman of the Senate Finance Committee, had said, Look, 170 00:09:29,760 --> 00:09:31,520 Speaker 1: we're just not going to rubber stamp anything that the 171 00:09:31,559 --> 00:09:34,160 Speaker 1: House does. We want to have our own input shape 172 00:09:34,200 --> 00:09:37,120 Speaker 1: the plan ourselves, and that can really slow down the process. Laura, 173 00:09:37,200 --> 00:09:40,800 Speaker 1: how much will President Trump himself pose an obstacle simply 174 00:09:40,840 --> 00:09:43,679 Speaker 1: because he's come out, uh and sort of cast a 175 00:09:43,720 --> 00:09:46,040 Speaker 1: little bit of shade on the proposal for not getting 176 00:09:46,080 --> 00:09:49,560 Speaker 1: down to the rate that he was hoping for. That's 177 00:09:49,600 --> 00:09:51,880 Speaker 1: that's the big question, right because the President has been 178 00:09:51,880 --> 00:09:54,319 Speaker 1: a little bit unpredictable in some of these policy discussions. 179 00:09:54,360 --> 00:09:57,040 Speaker 1: You know, he's really pushed for a fifteen percent rate. UM. 180 00:09:57,080 --> 00:09:58,600 Speaker 1: That looks like that's not going to happen, and there's 181 00:09:58,600 --> 00:10:00,600 Speaker 1: been a lot of recognition among law makers that that 182 00:10:00,679 --> 00:10:03,560 Speaker 1: was probably unrealistic. Um. You know, but as the close 183 00:10:03,640 --> 00:10:06,000 Speaker 1: at the end of the year, especially if healthcare falls through, 184 00:10:06,120 --> 00:10:09,920 Speaker 1: especially if some of these other um priorities appear to 185 00:10:09,960 --> 00:10:12,720 Speaker 1: be allusive to Republicans, there will be a push to 186 00:10:12,880 --> 00:10:14,839 Speaker 1: get this done sort of no matter what that rate is. 187 00:10:15,280 --> 00:10:18,240 Speaker 1: What about the Democrats? Do you expect there to be 188 00:10:18,280 --> 00:10:22,240 Speaker 1: any support for the plan in its current incarnation at 189 00:10:22,320 --> 00:10:25,480 Speaker 1: least uh the rough sense that we've gotten, will ever 190 00:10:25,520 --> 00:10:28,720 Speaker 1: be any support from the Democrats? Um, that is on 191 00:10:28,760 --> 00:10:30,840 Speaker 1: the House side. There will probably be very limited House 192 00:10:31,080 --> 00:10:33,840 Speaker 1: support from for Democrats. On the Senate side though, you know, 193 00:10:33,840 --> 00:10:38,240 Speaker 1: Trump is courting UM some some Democrats who are from 194 00:10:38,320 --> 00:10:40,840 Speaker 1: states where he wants the Heidi Height camp in North Dakota, 195 00:10:41,120 --> 00:10:45,360 Speaker 1: Joe Donnally and Indiana, UM, Joe Manson uh from from 196 00:10:45,400 --> 00:10:47,240 Speaker 1: West Virginia. You know, he's been taking them out with 197 00:10:47,400 --> 00:10:49,719 Speaker 1: as he's going to give speeches in their states, and 198 00:10:49,760 --> 00:10:52,080 Speaker 1: you know, we'll we'll see. But they've sort of left 199 00:10:52,080 --> 00:10:55,280 Speaker 1: the door open to UM to be available uh potentially 200 00:10:55,280 --> 00:10:57,240 Speaker 1: to vote for this, especially if the bill gets moderated 201 00:10:57,240 --> 00:10:59,200 Speaker 1: in the Senate, which it which it typically does. That's 202 00:10:59,200 --> 00:11:01,640 Speaker 1: the kids for pretty mu any sort of legislation. UM. 203 00:11:01,720 --> 00:11:03,320 Speaker 1: You know, you could see some pressure on them to 204 00:11:03,480 --> 00:11:06,440 Speaker 1: vote yes, and Republicans maybe really heavily relying on their 205 00:11:06,480 --> 00:11:08,480 Speaker 1: vote especially if you know, they only have two members 206 00:11:08,520 --> 00:11:10,079 Speaker 1: on their side that they can lose in the Senate 207 00:11:10,080 --> 00:11:13,000 Speaker 1: for this bill the past. So what's the likelihood that 208 00:11:13,559 --> 00:11:18,720 Speaker 1: this proposal will end up bleeding into household tax rates 209 00:11:18,840 --> 00:11:22,160 Speaker 1: as well? So there there is much talk about also 210 00:11:22,200 --> 00:11:24,920 Speaker 1: reducing rates on me on the individual side as well. 211 00:11:24,960 --> 00:11:26,880 Speaker 1: You know, the top rate for individuals may be going 212 00:11:26,920 --> 00:11:28,880 Speaker 1: down to about thirty percent. You know, that's from about 213 00:11:28,880 --> 00:11:31,959 Speaker 1: thirty nine percent where it is now. Um, though, what 214 00:11:32,000 --> 00:11:34,959 Speaker 1: they're looking at is really doing big reductions on the 215 00:11:35,240 --> 00:11:37,960 Speaker 1: mid to lower income side of the scale, because there's 216 00:11:37,960 --> 00:11:39,720 Speaker 1: been some criticisms that, look, this is just a tax 217 00:11:39,720 --> 00:11:41,600 Speaker 1: cut for the wealthy. So they're looking at, you know, 218 00:11:41,679 --> 00:11:44,000 Speaker 1: doubling the standard deduction so fewer people would have to 219 00:11:44,000 --> 00:11:46,280 Speaker 1: itemize would be simpler for them. Um. You know, they 220 00:11:46,280 --> 00:11:48,400 Speaker 1: could also you know, lower that bottom rate to about 221 00:11:48,440 --> 00:11:51,160 Speaker 1: ten percent and have that include more people, and that 222 00:11:51,200 --> 00:11:54,160 Speaker 1: would be very helpful for um, especially sort of this 223 00:11:54,200 --> 00:11:57,760 Speaker 1: populous message of uh, you know how actually for for 224 00:11:57,800 --> 00:12:01,320 Speaker 1: middle and lower income people, although it could potentially affect 225 00:12:01,600 --> 00:12:05,400 Speaker 1: the wealthier people in New York and New Jersey particularly hard, 226 00:12:05,480 --> 00:12:08,600 Speaker 1: right exactly, Well, so the one pay for that they 227 00:12:08,600 --> 00:12:10,120 Speaker 1: seem to have sort of agreed on is that they're 228 00:12:10,120 --> 00:12:12,559 Speaker 1: going to get rid of that state and local tax deduction. 229 00:12:12,679 --> 00:12:14,959 Speaker 1: So in states where there are low taxes, you like 230 00:12:15,000 --> 00:12:17,160 Speaker 1: think Tennessee, that's not as big of a deal. But 231 00:12:17,240 --> 00:12:18,920 Speaker 1: in New York, New Jersey, where you have state and 232 00:12:18,920 --> 00:12:21,080 Speaker 1: local tax rates that exceed you know, ten percent in 233 00:12:21,120 --> 00:12:23,840 Speaker 1: some cases, that would be a huge tax increase. And 234 00:12:23,840 --> 00:12:25,240 Speaker 1: you know that's not only people in New York City, 235 00:12:25,240 --> 00:12:27,040 Speaker 1: that's people in upstate New York to that also says 236 00:12:27,080 --> 00:12:29,920 Speaker 1: high taxes. So uh and what about business leaders? Are 237 00:12:29,920 --> 00:12:32,360 Speaker 1: they excited about this so far? They're could of holding 238 00:12:32,400 --> 00:12:35,560 Speaker 1: their judgment until more details roll out. There's a lot 239 00:12:35,600 --> 00:12:38,600 Speaker 1: of sort of um, you know, sort of hoping for 240 00:12:38,600 --> 00:12:40,720 Speaker 1: the best, but anticipating that it might not be as 241 00:12:40,800 --> 00:12:42,920 Speaker 1: much as they've wanted. You know, I think after seeing 242 00:12:43,000 --> 00:12:45,880 Speaker 1: lu Way Healthcare went, and you know, they're they're really 243 00:12:45,880 --> 00:12:48,120 Speaker 1: pushing for for rates to go as low as possible, 244 00:12:48,600 --> 00:12:51,679 Speaker 1: But no one's really making any strategic decisions based on 245 00:12:51,720 --> 00:12:53,319 Speaker 1: what this plan could. Everyone's sort of in a wait 246 00:12:53,320 --> 00:12:55,440 Speaker 1: and see mode at the moment. Laura Davison, thank you 247 00:12:55,480 --> 00:12:58,360 Speaker 1: so much for this great insight. Laura Davison, as Capital 248 00:12:58,360 --> 00:13:01,920 Speaker 1: Hell reporter for bloom b n A talking about the 249 00:13:02,120 --> 00:13:18,360 Speaker 1: tax plan that is expected to be unveiled later this week. Well, 250 00:13:18,400 --> 00:13:21,280 Speaker 1: we are starting to talk a little bit more concretely 251 00:13:21,320 --> 00:13:25,280 Speaker 1: about a possible tax plan coming out of Congress. Here 252 00:13:25,320 --> 00:13:27,640 Speaker 1: to give us a sense of just too much optimism 253 00:13:27,720 --> 00:13:29,720 Speaker 1: there is that there will be something passed and it 254 00:13:29,760 --> 00:13:32,679 Speaker 1: will give a boost to stock markets beyond where they 255 00:13:32,679 --> 00:13:35,439 Speaker 1: are now. Is John Augustine He chief investment officer of 256 00:13:35,480 --> 00:13:38,160 Speaker 1: Huntington National Bank, which overseas about seventeen and a half 257 00:13:38,200 --> 00:13:41,120 Speaker 1: billion dollars in Columbus, Ohio. John, always a pleasure to 258 00:13:41,160 --> 00:13:44,199 Speaker 1: speak with you. Um, thanks for coming in. What's your impression. 259 00:13:44,240 --> 00:13:46,199 Speaker 1: Does the plan that was unveiled over the weekend by 260 00:13:46,360 --> 00:13:50,319 Speaker 1: GOP Congressman give you hope that there will be some 261 00:13:50,360 --> 00:13:53,439 Speaker 1: sort of plan past in the near term that will 262 00:13:53,480 --> 00:13:57,080 Speaker 1: be a boon to stocks. Yeah, good morning, Lisa. And 263 00:13:57,679 --> 00:14:02,800 Speaker 1: the tax package is represented, we would say fifty fifty 264 00:14:02,840 --> 00:14:07,040 Speaker 1: odds of some implementation. It will likely be in our view, 265 00:14:07,160 --> 00:14:12,839 Speaker 1: targeted implementation around corporate tax rates. We would say, if 266 00:14:12,880 --> 00:14:15,200 Speaker 1: we're looking at the end of this year into the 267 00:14:15,240 --> 00:14:18,839 Speaker 1: fourth quarter. It seems like that was the emphasis of 268 00:14:18,880 --> 00:14:23,240 Speaker 1: the administration. It seems like whatever comes out will likely 269 00:14:23,280 --> 00:14:26,160 Speaker 1: be targeted versus broad based reform. Well, how much of 270 00:14:26,200 --> 00:14:29,080 Speaker 1: that is already baked into valuations? Right? I mean some 271 00:14:29,160 --> 00:14:31,480 Speaker 1: people will would say, well, if we do get tax 272 00:14:31,520 --> 00:14:34,600 Speaker 1: reform or tax changes, uh, then you will expect bond 273 00:14:34,680 --> 00:14:37,520 Speaker 1: yields to go up just because growth expectations would go 274 00:14:37,640 --> 00:14:40,560 Speaker 1: up and stock prices would also go up. But what 275 00:14:40,720 --> 00:14:43,320 Speaker 1: they or is it all baked in? The interesting thing 276 00:14:43,360 --> 00:14:45,000 Speaker 1: to us is we thought this would play out the 277 00:14:45,120 --> 00:14:47,760 Speaker 1: entire second half of this year and the FED would 278 00:14:47,760 --> 00:14:50,800 Speaker 1: actually be more aggressive in the face of economic agenda 279 00:14:50,840 --> 00:14:53,680 Speaker 1: coming at it. Now the Fed seems to have kind 280 00:14:53,680 --> 00:14:58,400 Speaker 1: of played its hand. We do wonder about pemotibles around that. However, 281 00:14:59,120 --> 00:15:02,000 Speaker 1: what we would say is maybe it's worth five dollars 282 00:15:02,000 --> 00:15:05,000 Speaker 1: to share to the SMP next year, which could have 283 00:15:05,040 --> 00:15:09,600 Speaker 1: an appreciable impact on stocks next year as this earnings 284 00:15:09,640 --> 00:15:14,000 Speaker 1: recovery continues. You know, we were talking before the segment 285 00:15:14,080 --> 00:15:16,760 Speaker 1: and you were saying that you still do like stocks 286 00:15:16,760 --> 00:15:19,280 Speaker 1: of re bonds, but you really did not sound particularly bullish. 287 00:15:19,280 --> 00:15:21,920 Speaker 1: You were saying that our earnings expectations for next year 288 00:15:21,960 --> 00:15:26,000 Speaker 1: seemed like they're probably too high. Um, what are your 289 00:15:26,000 --> 00:15:28,600 Speaker 1: what are your highest convictions right now amid such a 290 00:15:28,640 --> 00:15:32,480 Speaker 1: dearth of information and ongoing uncertainty out of Washington. Yeah, 291 00:15:32,560 --> 00:15:34,600 Speaker 1: so October is going to be a very interesting month. 292 00:15:35,160 --> 00:15:36,880 Speaker 1: You know, our equity teams are going to be looking 293 00:15:36,880 --> 00:15:40,280 Speaker 1: at looking at those earnings because they're low expectations now 294 00:15:40,320 --> 00:15:44,560 Speaker 1: and getting lower expectations because their earnings in the third quarter. Yeah, 295 00:15:44,680 --> 00:15:47,520 Speaker 1: in general, and who all is that going to affect? 296 00:15:47,880 --> 00:15:50,200 Speaker 1: And who all might not in effect, but says it 297 00:15:50,280 --> 00:15:52,920 Speaker 1: affected them. That's something our equity teams are going to 298 00:15:52,960 --> 00:15:57,480 Speaker 1: be looking at now. Evaluation perspective. You know, the pe 299 00:15:57,520 --> 00:16:04,040 Speaker 1: of the SMPS about times trailing. We had thought that 300 00:16:04,080 --> 00:16:07,680 Speaker 1: would come down to the eighteen or nineteen range by 301 00:16:07,760 --> 00:16:11,360 Speaker 1: year end with a more aggressive FED. Now we're starting 302 00:16:11,360 --> 00:16:15,520 Speaker 1: to question that. So our point here is maybe there's 303 00:16:15,520 --> 00:16:20,120 Speaker 1: a little bit more support for stocks going into the 304 00:16:20,240 --> 00:16:26,280 Speaker 1: end of this year that we stay at the undred level. However, 305 00:16:26,480 --> 00:16:29,480 Speaker 1: we don't see what our equity team and Randy Hair 306 00:16:29,560 --> 00:16:33,560 Speaker 1: do not see is multiple expansion. So now it's more 307 00:16:33,560 --> 00:16:37,320 Speaker 1: about earnings. So that's where when when we discussed it, 308 00:16:37,360 --> 00:16:41,280 Speaker 1: that's where some hesitancy came. We're probably done with multiple expansion. 309 00:16:41,320 --> 00:16:44,280 Speaker 1: In this cycle, but maybe we get to keep the 310 00:16:44,400 --> 00:16:47,440 Speaker 1: multiple we thought they would pull back. It's something on 311 00:16:47,480 --> 00:16:49,480 Speaker 1: our mind. So that sort of speaks to some of 312 00:16:49,520 --> 00:16:52,640 Speaker 1: the stocks that you're looking at in particular as high conviction, Microsoft, 313 00:16:52,720 --> 00:16:56,520 Speaker 1: Crowncastle International, x On Mobile. These aren't exactly undervalued, but 314 00:16:56,560 --> 00:17:00,320 Speaker 1: they're sort of mainstays that will keep their value. Yeah, 315 00:17:00,360 --> 00:17:03,760 Speaker 1: they're consistence, you know, they're kind of ruler stocks, and 316 00:17:03,760 --> 00:17:07,240 Speaker 1: and those stocks represent their represented and all three of 317 00:17:07,280 --> 00:17:09,720 Speaker 1: our internal portfolios that we do for clients. That's what 318 00:17:09,800 --> 00:17:13,439 Speaker 1: caught our attention. Um, there's conviction around those from a 319 00:17:13,480 --> 00:17:17,080 Speaker 1: growth team, a core team, and in a dividend income team. 320 00:17:17,400 --> 00:17:19,800 Speaker 1: And so when we see that consistency, we like it, 321 00:17:20,119 --> 00:17:22,879 Speaker 1: and we obviously like that for our customers. So one 322 00:17:22,880 --> 00:17:25,240 Speaker 1: other thing that you were talking about is that you 323 00:17:25,320 --> 00:17:29,440 Speaker 1: cannot recommend your clients to invest in treasuries right now 324 00:17:29,440 --> 00:17:31,520 Speaker 1: with a ten year yield at about two and a quarter, 325 00:17:32,520 --> 00:17:34,840 Speaker 1: given the fact that inflation rates and growth rates are 326 00:17:34,840 --> 00:17:38,879 Speaker 1: about one point nine? What how I would yield have 327 00:17:38,960 --> 00:17:42,440 Speaker 1: to go for you to say, you know what, take 328 00:17:42,520 --> 00:17:46,200 Speaker 1: some profits off the table going back into bonds. Our 329 00:17:46,240 --> 00:17:49,399 Speaker 1: fixed income team at Huntington the numbers about two six 330 00:17:49,520 --> 00:17:52,879 Speaker 1: right now, So that much the ten years been in 331 00:17:52,960 --> 00:17:57,040 Speaker 1: a to one percent to to six percent range really 332 00:17:57,040 --> 00:18:00,880 Speaker 1: since the election, and it's had trouble obviously holding over 333 00:18:00,960 --> 00:18:05,280 Speaker 1: to two point six percent. So without some big adjustments 334 00:18:05,359 --> 00:18:10,479 Speaker 1: to inflation or economic expectations, to six, you know, as 335 00:18:10,520 --> 00:18:13,280 Speaker 1: unbelievable as that may be, to six seems to be 336 00:18:13,320 --> 00:18:16,480 Speaker 1: a place of demarcation for the bond market right now. 337 00:18:16,680 --> 00:18:18,560 Speaker 1: So this is interesting because there was actually a jp 338 00:18:18,680 --> 00:18:22,199 Speaker 1: More Morgan UH analyst note out this morning saying that 339 00:18:22,240 --> 00:18:25,879 Speaker 1: they didn't expect that there was room for benchmark yields 340 00:18:25,880 --> 00:18:28,240 Speaker 1: to rise before it really affected equities. They said there 341 00:18:28,240 --> 00:18:30,680 Speaker 1: was room about UH for for yields to rise about 342 00:18:30,680 --> 00:18:33,359 Speaker 1: a hundred hundred and fifty basis points one percent to 343 00:18:33,400 --> 00:18:37,439 Speaker 1: one percentage points. This seems like it's much less than 344 00:18:37,480 --> 00:18:40,120 Speaker 1: that before it starts affecting equities. Well, you asked about 345 00:18:40,160 --> 00:18:43,000 Speaker 1: valuations so to speak, or wanting to go into bonds. 346 00:18:43,040 --> 00:18:44,679 Speaker 1: It's when they get out of the range that's when 347 00:18:44,720 --> 00:18:48,359 Speaker 1: we start to look at them now, equity valuations. Yeah, 348 00:18:48,400 --> 00:18:51,040 Speaker 1: maybe maybe it's the next round number at three percent. 349 00:18:51,160 --> 00:18:53,040 Speaker 1: That's what we all thought would be this year, and 350 00:18:53,080 --> 00:18:55,560 Speaker 1: we were trying to base the future on three percent. 351 00:18:56,119 --> 00:18:58,080 Speaker 1: It looks like the bondmark is going to be foiled 352 00:18:58,119 --> 00:19:01,720 Speaker 1: once again this year to get to three. So two 353 00:19:01,720 --> 00:19:04,639 Speaker 1: six is an area we're watching to see if he 354 00:19:04,680 --> 00:19:07,879 Speaker 1: can get above. The expectations are it only goes to 355 00:19:07,960 --> 00:19:13,560 Speaker 1: two four this year. Three. Maybe that affects stock market valuations. 356 00:19:13,600 --> 00:19:15,920 Speaker 1: So we're operating in these ranges because we're on such 357 00:19:16,040 --> 00:19:19,320 Speaker 1: low numbers in the bond market. Is now the FEDS 358 00:19:19,359 --> 00:19:24,800 Speaker 1: trying to normalize, and inflation is trying to come back up. 359 00:19:25,359 --> 00:19:27,800 Speaker 1: You know, I have to wonder on the macroeconomic sphere. 360 00:19:27,840 --> 00:19:30,919 Speaker 1: I mean, we just see so many alarming headlines about 361 00:19:31,359 --> 00:19:34,359 Speaker 1: nuking each other and whatever else. I mean, at what 362 00:19:34,400 --> 00:19:38,080 Speaker 1: point do you care about this stuff? If we would 363 00:19:38,080 --> 00:19:40,440 Speaker 1: have invested on those over the past, let's stay starting 364 00:19:40,480 --> 00:19:42,840 Speaker 1: with Brexit, we'd be about oh for four for our 365 00:19:42,880 --> 00:19:46,920 Speaker 1: customers trying to handicap political events and other headline events. 366 00:19:46,960 --> 00:19:50,920 Speaker 1: So what we mean by that is the global economy 367 00:19:50,960 --> 00:19:53,240 Speaker 1: has picked up some speed in the summer. The U 368 00:19:53,359 --> 00:19:57,400 Speaker 1: S seems to be staying around two. Profit growth is recovered, 369 00:19:57,400 --> 00:20:01,879 Speaker 1: inflation stay and calm, and each changes to that environment 370 00:20:01,960 --> 00:20:06,200 Speaker 1: would make us reconsider allocations. We're just not seeing any 371 00:20:06,240 --> 00:20:08,560 Speaker 1: changes to that environment right now, right so you have 372 00:20:08,600 --> 00:20:10,080 Speaker 1: to look at the actual data. You have to look 373 00:20:10,080 --> 00:20:13,159 Speaker 1: at the actual numbers. But as far as Twitter wars 374 00:20:13,440 --> 00:20:18,600 Speaker 1: or even ongoing you know, military threats, no headlines haven't 375 00:20:18,600 --> 00:20:22,600 Speaker 1: affected any of those as as much as they catch 376 00:20:22,640 --> 00:20:25,560 Speaker 1: our attention, as bad as they could be, they just 377 00:20:25,600 --> 00:20:28,119 Speaker 1: haven't caught the market's attention because they don't seem to 378 00:20:28,160 --> 00:20:31,440 Speaker 1: affect the global economy. Thank you so much for joining us, 379 00:20:31,480 --> 00:20:34,200 Speaker 1: Thanks for having me. John Augustine is chief investment officer 380 00:20:34,200 --> 00:20:37,240 Speaker 1: of Huntington National Bank, which oversees about seventeen and a 381 00:20:37,240 --> 00:20:40,600 Speaker 1: half billion dollars and it's based in Columbus, Ohio, and 382 00:20:40,600 --> 00:20:42,879 Speaker 1: he was talking about how a lot of his clients 383 00:20:42,920 --> 00:20:45,240 Speaker 1: still have a lot of cash and that you just 384 00:20:45,320 --> 00:20:47,760 Speaker 1: can't justify pouring that cash into something that has a 385 00:20:47,800 --> 00:20:51,840 Speaker 1: real yield of nearly nothing at a time of relatively 386 00:20:52,000 --> 00:21:07,280 Speaker 1: good economic expansion. Definitely an interesting conversation. I want to 387 00:21:07,320 --> 00:21:09,400 Speaker 1: pick up and what John was talking about with respect 388 00:21:09,560 --> 00:21:12,399 Speaker 1: to Apples shares being among the most actively traded today 389 00:21:12,440 --> 00:21:15,600 Speaker 1: and being down for a fourth day. This comes as 390 00:21:16,080 --> 00:21:20,640 Speaker 1: reports are coming in pretty much everywhere from everywhere that 391 00:21:20,960 --> 00:21:24,840 Speaker 1: new orders and new purchases of the latest iPhone addition 392 00:21:25,000 --> 00:21:28,600 Speaker 1: are below expectations. Alex web joins us now. He's a 393 00:21:28,640 --> 00:21:30,760 Speaker 1: tech reporter for Bloomberg News and joins us from our 394 00:21:30,760 --> 00:21:34,760 Speaker 1: Bloomberg nine sixties studio in San Francisco. So Alex, can 395 00:21:34,800 --> 00:21:37,199 Speaker 1: we talk a little bit about just the color that 396 00:21:37,240 --> 00:21:41,320 Speaker 1: we've been hearing about the disappointing orders. How significant is 397 00:21:41,359 --> 00:21:45,560 Speaker 1: this and why is there some kind of uh decline 398 00:21:45,720 --> 00:21:48,360 Speaker 1: in the desire for this phone? So you gotta taken 399 00:21:48,359 --> 00:21:50,000 Speaker 1: into account here that there are two phones coming out. 400 00:21:50,000 --> 00:21:51,840 Speaker 1: We've got the iPhone eight, which is already on sale, 401 00:21:52,000 --> 00:21:53,840 Speaker 1: and then the iPhone tan is coming in about six 402 00:21:53,880 --> 00:21:57,280 Speaker 1: weeks time, and that suggests that a lot of people 403 00:21:57,440 --> 00:21:59,720 Speaker 1: might be waiting for the second phone. The wrinkle that 404 00:21:59,720 --> 00:22:02,679 Speaker 1: we've heard this morning is that Apple has told suppliers, 405 00:22:02,840 --> 00:22:05,359 Speaker 1: um this is a report from Digit Times in Asia, 406 00:22:05,680 --> 00:22:09,480 Speaker 1: that it's told suppliers to reduce their the components they're 407 00:22:09,480 --> 00:22:12,000 Speaker 1: going to deliver for the iPhone ten. That could just 408 00:22:12,080 --> 00:22:14,639 Speaker 1: be inventory management. Apple doesn't want to have millions of 409 00:22:14,680 --> 00:22:16,920 Speaker 1: phones sitting around and not be able to get them 410 00:22:16,960 --> 00:22:19,720 Speaker 1: to market quickly enough. But it could also suggest they're 411 00:22:19,760 --> 00:22:23,919 Speaker 1: wary about the levels of demand for the iPhone ten um. 412 00:22:23,960 --> 00:22:25,920 Speaker 1: But I don't think we want to read too much 413 00:22:25,960 --> 00:22:28,040 Speaker 1: into the iPhone eight because it could just be it 414 00:22:28,040 --> 00:22:29,720 Speaker 1: could actually in some way to be good news for Apple. 415 00:22:29,720 --> 00:22:31,680 Speaker 1: People are going to go for the later, more expensive 416 00:22:31,720 --> 00:22:34,200 Speaker 1: phone instead. Well, Alex, can you give a little bit 417 00:22:34,200 --> 00:22:36,920 Speaker 1: more color about the suppliers that you were talking about 418 00:22:37,040 --> 00:22:39,560 Speaker 1: that have been asked to dial back the production of 419 00:22:39,600 --> 00:22:42,359 Speaker 1: the components. Who are they and how much do they 420 00:22:42,359 --> 00:22:45,440 Speaker 1: rely on Apple for their business? So the support didn't 421 00:22:45,520 --> 00:22:47,600 Speaker 1: name suppliers. I think it's probably on their on their part, 422 00:22:47,600 --> 00:22:50,959 Speaker 1: it's an effort to protect their sources, I would imagine. 423 00:22:51,000 --> 00:22:53,879 Speaker 1: But you see the big names and like hon High, 424 00:22:54,160 --> 00:22:57,560 Speaker 1: peg Atron, these guys are the contract manufacturers who actually 425 00:22:57,640 --> 00:22:59,960 Speaker 1: make the iPhone. Then going deeper into the supply chain, 426 00:23:00,320 --> 00:23:03,240 Speaker 1: there are hundreds of companies who have little widgets in 427 00:23:03,280 --> 00:23:06,600 Speaker 1: the iPhone. Everything from companies in Germany like like Osraum 428 00:23:06,640 --> 00:23:09,879 Speaker 1: actually Osram does like LEDs for the Apple Watch, and 429 00:23:09,920 --> 00:23:13,480 Speaker 1: then um in you have Phillips doing perhaps the light 430 00:23:13,560 --> 00:23:15,320 Speaker 1: on the back of your phone. Then you have Bosch 431 00:23:15,440 --> 00:23:19,199 Speaker 1: doing your sensors which detect whether phone's moving. It's vastly 432 00:23:19,280 --> 00:23:23,160 Speaker 1: varsity complex supply chain. There are some smaller companies who 433 00:23:23,359 --> 00:23:26,359 Speaker 1: get you know, about half their revenue from Apple. They 434 00:23:26,440 --> 00:23:31,520 Speaker 1: are trying very hard to diversify. Companies UM like Dialogue Semiconductor, 435 00:23:31,560 --> 00:23:34,520 Speaker 1: for instance, they have a huge exposure to Apple and 436 00:23:35,280 --> 00:23:38,399 Speaker 1: the the extent to which they're able to stay in 437 00:23:38,440 --> 00:23:41,120 Speaker 1: each subsequent generation the phone is therefore very important for them. 438 00:23:41,320 --> 00:23:44,080 Speaker 1: You know, there was a good story written by Alex Webb. 439 00:23:44,160 --> 00:23:47,560 Speaker 1: I think you've heard of him about this one company 440 00:23:47,560 --> 00:23:53,280 Speaker 1: in particular, Universal Display Corps, that really focuses on this 441 00:23:53,840 --> 00:23:57,960 Speaker 1: high definition screen that will be used to the new iPhone. 442 00:23:58,040 --> 00:23:59,800 Speaker 1: How much it's benefiting. Can you tell us a little 443 00:23:59,800 --> 00:24:02,280 Speaker 1: bit of at the yes. So, Universal Display is actually 444 00:24:02,280 --> 00:24:04,840 Speaker 1: a company which owns almost all of the intellectual property 445 00:24:04,880 --> 00:24:07,480 Speaker 1: or a lot of the significant intellectual property related to 446 00:24:07,680 --> 00:24:10,560 Speaker 1: organic light emitting diodes. This is the new display which 447 00:24:10,600 --> 00:24:12,800 Speaker 1: is going to be in the iPhone ten UM. They've 448 00:24:12,800 --> 00:24:16,080 Speaker 1: been toiling away on this stuff for almost twenty about 449 00:24:16,119 --> 00:24:18,760 Speaker 1: twenty years, and finally, um it's set for a big 450 00:24:18,760 --> 00:24:21,320 Speaker 1: pay day. They've really seen a spike in the stock 451 00:24:21,359 --> 00:24:24,240 Speaker 1: over the past year as the reporting gradually seats out 452 00:24:24,240 --> 00:24:26,480 Speaker 1: that Apple's likely to have or was like to have 453 00:24:26,960 --> 00:24:29,520 Speaker 1: led in the news in the new phone. Um and 454 00:24:29,720 --> 00:24:31,680 Speaker 1: there are a number of other companies as well who 455 00:24:31,720 --> 00:24:34,199 Speaker 1: have been betting on technology for years. Think about the 456 00:24:34,200 --> 00:24:36,679 Speaker 1: three D censor in the next iPhone. There are companies 457 00:24:36,720 --> 00:24:38,960 Speaker 1: who they used to make three D sensors for bombs, 458 00:24:39,000 --> 00:24:43,200 Speaker 1: for tracking, um, you know, bombs for Iraqa or Afghanistan, 459 00:24:43,200 --> 00:24:46,280 Speaker 1: wherever it might be. And now that technology, the three 460 00:24:46,320 --> 00:24:49,360 Speaker 1: D sensing technology is going into into phones. So that's 461 00:24:49,359 --> 00:24:53,000 Speaker 1: a huge potentially growth driver for them, Alex I wonder 462 00:24:53,119 --> 00:24:56,560 Speaker 1: how much the innovation in an iPhone comes from the 463 00:24:56,680 --> 00:25:00,720 Speaker 1: company dreaming up what it potentially could look like, versus 464 00:25:00,880 --> 00:25:03,159 Speaker 1: suppliers coming up to them and saying, look at this 465 00:25:03,240 --> 00:25:06,200 Speaker 1: incredible feature of this new technology that we have. Maybe 466 00:25:06,200 --> 00:25:08,000 Speaker 1: if you incorporate it into your phone, it will be 467 00:25:08,040 --> 00:25:11,639 Speaker 1: more appealing and we could provide we could provide it all. Two. 468 00:25:11,720 --> 00:25:14,600 Speaker 1: Of course, I think it is very much. It is 469 00:25:14,600 --> 00:25:17,200 Speaker 1: that way around. Yes, the Apple is very very good 470 00:25:17,240 --> 00:25:20,000 Speaker 1: at taking technologies and fine tuning them and making them 471 00:25:20,080 --> 00:25:22,040 Speaker 1: perhaps work better than some of the other competitors. But 472 00:25:22,200 --> 00:25:24,879 Speaker 1: my predecessor on the Apple beat, Adam Satriano, wrote a 473 00:25:24,920 --> 00:25:27,800 Speaker 1: really great story perhaps eighteen months ago where he looked 474 00:25:27,840 --> 00:25:31,160 Speaker 1: at the relative R and D spend of Apple versus 475 00:25:31,160 --> 00:25:33,720 Speaker 1: IT suppliers. Now, while Apple's R and D spend has 476 00:25:33,760 --> 00:25:36,520 Speaker 1: increased significantly, it's more than doubled over the past five years. 477 00:25:36,840 --> 00:25:39,919 Speaker 1: They're proportionately they spend a lot less than than their 478 00:25:39,960 --> 00:25:42,800 Speaker 1: biggest suppliers, and that's because the spend is done by 479 00:25:42,800 --> 00:25:44,960 Speaker 1: the suspires to fight to get into the phone, and 480 00:25:45,359 --> 00:25:48,119 Speaker 1: that then delivers them a big payday. That's not to 481 00:25:48,160 --> 00:25:52,119 Speaker 1: say that Apple doesn't suggest tweaks and particular direction and 482 00:25:52,160 --> 00:25:54,280 Speaker 1: work with suppliers. We we've heard that they may be 483 00:25:54,359 --> 00:25:56,679 Speaker 1: working with a company that works on some three D 484 00:25:56,840 --> 00:26:01,160 Speaker 1: and sorry, some inductive charging and wireless charging, but um, 485 00:26:01,200 --> 00:26:04,040 Speaker 1: that's coming out of that company and Apple substance. We 486 00:26:04,080 --> 00:26:06,240 Speaker 1: approaches them, not the other way around. It's like winning 487 00:26:06,240 --> 00:26:08,320 Speaker 1: the jackpot when Apple says, you know what, we're going 488 00:26:08,359 --> 00:26:10,879 Speaker 1: to use your next next technology on our phone, and 489 00:26:10,880 --> 00:26:13,640 Speaker 1: all of a sudden someone's been made a billionaire. Alex Web, 490 00:26:13,640 --> 00:26:15,240 Speaker 1: thank you so much for joining us alex Web as 491 00:26:15,240 --> 00:26:17,800 Speaker 1: a tech reporter for Bloomberg News, coming to us from 492 00:26:17,800 --> 00:26:23,639 Speaker 1: our Bloomberg nine sixties studio. Thanks for listening to the 493 00:26:23,640 --> 00:26:26,760 Speaker 1: Bloomberg p and l podcast. You can subscribe and listen 494 00:26:26,800 --> 00:26:30,960 Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform 495 00:26:31,000 --> 00:26:34,919 Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox. 496 00:26:35,240 --> 00:26:38,760 Speaker 1: I'm on Twitter at Lisa Abramoids One Before the podcast, 497 00:26:38,800 --> 00:26:41,399 Speaker 1: you can always catch us worldwide on Bloomberg Radio