WEBVTT - The Return of T+1 Stock Trading, Pricing Offshore Wind 0:00:02.440 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.480 --> 0:00:12.360 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.440 --> 0:00:15.520 weekdays at ten am Eastern on Apple card playing Android 0:00:15.520 --> 0:00:18.560 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:18.680 --> 0:00:21.840 you get your podcasts, or watch us live on YouTube. 0:00:23.600 --> 0:00:25.200 All right, top of the top. 0:00:25.360 --> 0:00:25.400 Go. 0:00:25.760 --> 0:00:27.880 Kind of thing today is Wall Street returns to a 0:00:27.960 --> 0:00:31.880 T plus one stock trading after a century Only in Bloomberg. 0:00:31.920 --> 0:00:34.680 When people read that kind of story, and maybe I'll 0:00:34.720 --> 0:00:37.320 find one other person that cares about this, Larry Tapp, 0:00:37.440 --> 0:00:40.519 He's head of market Structure a Bloomberg Intelligence. Larry, can 0:00:40.560 --> 0:00:43.560 you explain to us what is going on here? To 0:00:43.600 --> 0:00:45.360 explain it? Like I'm five years old, because when I 0:00:45.400 --> 0:00:47.040 started the business, I think it was T plus seven. 0:00:47.120 --> 0:00:49.839 That was a gentlemanly timeframe. Now it's T plus one. 0:00:49.920 --> 0:00:50.360 What's going on? 0:00:51.720 --> 0:00:56.240 Not a problem, Paul? Yeah, you know, starting today, securities 0:00:56.280 --> 0:01:01.840 traded today will actually settle tomorrow instead of on on Thursday. 0:01:01.960 --> 0:01:05.880 So what that means is that we buy I buy 0:01:05.920 --> 0:01:09.920 Apple today, and on tomorrow tomorrow, I get the shares 0:01:10.000 --> 0:01:14.200 in my account and my broker takes the payment out 0:01:14.280 --> 0:01:17.280 of my out of my account. Now for most retail 0:01:17.680 --> 0:01:19.360 it's not going to be that big an issue. It's 0:01:19.800 --> 0:01:23.360 much more of an institutional issue where the securities in 0:01:23.480 --> 0:01:26.880 cash don't reside at the broker, where they reside at 0:01:26.880 --> 0:01:30.360 a third party custodian, and that becomes a little more complicated. 0:01:30.920 --> 0:01:33.400 So how does it become complicated? Like it seems like 0:01:33.440 --> 0:01:35.920 a pretty straightforward thing, right, So where do the problems lie? 0:01:37.640 --> 0:01:41.720 Well, there are there are problems will lie in four 0:01:41.840 --> 0:01:48.000 or five different areas. The biggest problem is with foreign exchange. 0:01:48.040 --> 0:01:52.240 So let's just say I am Aberdeen and I'm located 0:01:52.920 --> 0:01:58.160 in Scotland or wherever, or in London. If they buy Apple, 0:02:00.040 --> 0:02:06.240 they're going to have to actually send over currency pounds 0:02:06.600 --> 0:02:09.639 and convert that to dollars and pay for that. The 0:02:09.760 --> 0:02:12.639 problem is that currency takes two days to settle in 0:02:12.760 --> 0:02:16.960 standard currency settlement, whereas the securities will settle in one day. 0:02:17.040 --> 0:02:19.519 So if they buy Apple today, will have to pay 0:02:19.560 --> 0:02:22.160 for the securities tomorrow. But if they send over pounds 0:02:22.240 --> 0:02:24.680 to pay for that to cover that, the pounds won't 0:02:24.720 --> 0:02:29.280 actually get converted to dollars till Thursday, which means they 0:02:29.320 --> 0:02:32.720 won't have the cash there on time, which means they 0:02:32.720 --> 0:02:35.639 either have to finance that purchase, or they have to 0:02:35.720 --> 0:02:40.639 move the cash earlier, or they have to instead of 0:02:40.760 --> 0:02:44.959 using Swift or CLS, which is the currency settlement system, 0:02:45.360 --> 0:02:47.720 they actually have to call somebody and say, hey, let's 0:02:47.760 --> 0:02:51.080 do this on an emergency basis and get this taken 0:02:51.160 --> 0:02:54.480 care of. And so that's an issue. The second it 0:02:55.160 --> 0:02:59.600 has to do with securities lending. So if my security 0:02:59.639 --> 0:03:02.880 is of my apples out on loan, they have to 0:03:02.960 --> 0:03:05.320 get that back so that I can actually make sure 0:03:05.440 --> 0:03:08.280 that can get delivered. Now, Apple's probably not a big 0:03:08.360 --> 0:03:11.320 issue there, but if it's hard to borrow security, it 0:03:11.400 --> 0:03:14.760 might be much more difficult to find the securities, you know, 0:03:14.800 --> 0:03:17.040 if I've lent them out to try to collect a feed, 0:03:17.480 --> 0:03:21.560 getting them back maybe a little bit more problematic. Other 0:03:21.680 --> 0:03:25.200 issues which impact actually everybody in the US is the 0:03:25.280 --> 0:03:29.240 allocation confirmation process. So if I'm FIDELI or if I'm 0:03:29.240 --> 0:03:31.480 a big asset manager, I'm not buying one hundred or 0:03:31.520 --> 0:03:34.280 two hundred shares of Apple. I'm probably buying one hundred 0:03:34.360 --> 0:03:38.839 thousand or a million shares of Apple. Trays these days 0:03:38.920 --> 0:03:42.800 don't necessarily occur in these big blocks like they used to. 0:03:43.040 --> 0:03:45.840 They get broken up into algos and they get executed 0:03:45.920 --> 0:03:50.160 in hundred share increments. That said, the und share increments 0:03:50.200 --> 0:03:53.440 don't settle immediately. They have to be badged up. We 0:03:53.560 --> 0:03:56.320 have to create an average price. There's a lot of 0:03:56.520 --> 0:03:59.760 manual or at least what used to be manual effort 0:03:59.840 --> 0:04:03.880 involved in managing that, and the process just needs to 0:04:03.920 --> 0:04:08.160 be sped up. And the close out time is generally 0:04:08.320 --> 0:04:12.480 nine nine PM for that, and so they have between 0:04:12.800 --> 0:04:15.480 you know, four and nine to get all that operational 0:04:15.560 --> 0:04:18.800 stuff done and that just takes, you know, takes time 0:04:18.920 --> 0:04:22.320 sometimes when when it you know, becomes harder to add 0:04:22.440 --> 0:04:24.520 all this stuff up and average price it out and 0:04:24.640 --> 0:04:28.040 break them up into the transactions. Because it's probably not 0:04:28.400 --> 0:04:31.360 a million shares of Apple for one fidelity account. It 0:04:31.440 --> 0:04:35.080 could be you know, ten different portfolios that are buying 0:04:35.120 --> 0:04:37.360 Apple and it has to be broken up into you know, 0:04:37.600 --> 0:04:41.640 ten little clumps. And there are a couple of other issues, 0:04:41.720 --> 0:04:42.839 but those are the big ones. 0:04:43.440 --> 0:04:47.240 So given all that, why is a SEC doing this 0:04:47.440 --> 0:04:53.680 is simply because from a technological perspective, they can, well. 0:04:53.600 --> 0:04:56.200 The SEC can do a lot of things, but increasingly 0:04:57.520 --> 0:04:59.880 people are suing the SEC, so there they can't do 0:05:00.040 --> 0:05:04.120 anything they want. I think the issue here revolves around 0:05:04.680 --> 0:05:08.120 the Robinhood issue back in January of twenty twenty one, 0:05:08.200 --> 0:05:10.080 where they got a margin call to come up with 0:05:10.160 --> 0:05:14.680 three billion dollars to cover all the memestock buying. And 0:05:14.920 --> 0:05:17.560 so there's an old saying in the back office that 0:05:17.680 --> 0:05:20.600 nothing good ever happens between trading and settlement date. So 0:05:21.560 --> 0:05:26.359 the challenge there is that if for whatever reason, XYZ 0:05:26.560 --> 0:05:31.800 broker goes bankrupt, you know, you know on one day, 0:05:33.240 --> 0:05:36.320 the shorter the settlement period is, the more likely that 0:05:37.960 --> 0:05:41.040 those transactions get paid for and they don't have to 0:05:41.120 --> 0:05:44.680 be funded by you know, the industry, because right now 0:05:44.720 --> 0:05:47.800 what happens is all these transactions washed through the DTCC. 0:05:48.520 --> 0:05:54.120 The DTCC, the depository trust guarantees settlements. So if God forbid, 0:05:54.200 --> 0:05:59.720 a broker goes down, you know, the other side of 0:05:59.720 --> 0:06:03.440 the isn't broken. But to do that they have to 0:06:03.480 --> 0:06:07.160 take margin from virtually the whole industry. And so if 0:06:07.240 --> 0:06:11.279 you shorten the settlement cycle, the risk of failure goes down, 0:06:11.839 --> 0:06:13.760 and so the amount of margin that you have to 0:06:13.880 --> 0:06:18.000 put up to guarantee those trades goes down, and so 0:06:19.200 --> 0:06:23.240 it just takes less risk, It takes risk out of 0:06:23.279 --> 0:06:24.200 the settlement system. 0:06:25.120 --> 0:06:27.560 So Larry, with that in mind, how long are we 0:06:27.680 --> 0:06:30.560 going to know? At what point when we know if 0:06:30.680 --> 0:06:34.560 T plus one is working or the difficulties are cropping up, 0:06:35.240 --> 0:06:36.120 when are we going to know that? 0:06:37.880 --> 0:06:41.440 Well, it depends on who we is, the brokers and 0:06:41.720 --> 0:06:44.960 the custodians and the folks involved that the transactions will 0:06:45.040 --> 0:06:51.520 know pretty quickly, you know. The problem is that data 0:06:51.600 --> 0:06:55.080 to the rest of the public probably won't be known 0:06:55.240 --> 0:06:58.080 for a while. And where we expect to see problems 0:06:58.120 --> 0:07:01.960 occur would be in the fail numbers. So if if, if, 0:07:02.240 --> 0:07:04.440 if I have to, if I'm a European, if I 0:07:04.760 --> 0:07:06.600 go back up, I'm Aberdeen, and I have to pay 0:07:06.720 --> 0:07:09.720 for Apple and the US and my payment doesn't come 0:07:09.760 --> 0:07:13.800 in two things Leiter happen. One is that I'll have 0:07:13.920 --> 0:07:17.920 to borrow cash from my bank, in which case we 0:07:18.080 --> 0:07:20.800 may never know about it because it's it'll just be 0:07:20.920 --> 0:07:24.040 wind up being a loan from X y Z bank 0:07:24.120 --> 0:07:30.360 to Aberdeen. Or two, the securities will fail and then 0:07:30.480 --> 0:07:32.960 the fail numbers come out on a delayed basis, so 0:07:33.080 --> 0:07:35.120 we won't know what the fails wind up going up 0:07:35.160 --> 0:07:38.920 for a couple of weeks. And so that's where and 0:07:39.040 --> 0:07:41.720 so and the third issue is that if all hell 0:07:41.840 --> 0:07:46.160 breaks loose and we have a real problem, that'll be 0:07:46.280 --> 0:07:49.960 known in the back offices before anything. And the question is, 0:07:50.280 --> 0:07:52.640 you know what kind of transparency will we get out 0:07:52.640 --> 0:07:55.120 of it. Maybe we'll know some stuff from the Federal 0:07:55.160 --> 0:07:59.680 Reserve if things go drastically awry, or the d DCC, 0:08:00.040 --> 0:08:03.040 your CEFMA. But they're going to have to They're gonna 0:08:03.040 --> 0:08:05.320 have to publish that information. It's not like something that 0:08:05.360 --> 0:08:09.560 we could see on a screen on the Bloomberg screen, right, 0:08:09.760 --> 0:08:12.280 A lot of that stuff is fairly private data. 0:08:12.440 --> 0:08:14.400 All right, Larry, We're gonna to leave it there. Great stuff. 0:08:14.480 --> 0:08:17.840 Larry tab head of market Structure Bloomberg Intelligence. He is 0:08:18.000 --> 0:08:20.440 on top of He is the leading voice in the 0:08:20.480 --> 0:08:24.000 marketplace a back all these markets actually work. This is Bloomberg. 0:08:29.200 --> 0:08:33.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:33.160 --> 0:08:36.680 weekdays at ten am Eastern on applecard Play and Android 0:08:36.720 --> 0:08:39.440 Outo with the Bloomberg Business app. You can also listen 0:08:39.600 --> 0:08:42.680 live on Amazon Alexa from our flagship New York station. 0:08:43.080 --> 0:08:47.520 Just say Alexa, play Bloomberg eleven thirty Alex. 0:08:47.720 --> 0:08:50.439 This is how it was described to buy. Our next 0:08:50.480 --> 0:08:51.880 guest to me the first time I met him. The 0:08:51.960 --> 0:08:53.400 biggest company you never heard of? 0:08:53.760 --> 0:08:54.000 For me? 0:08:54.240 --> 0:08:56.360 Love that My man was I this is a fifty 0:08:56.440 --> 0:08:59.040 billion this is Arthur J. Gallagher and Company. It's an 0:08:59.040 --> 0:09:01.640 insurance company. I don't anything about insurance, and maybe that 0:09:01.679 --> 0:09:03.520 has some something to do with it. But it's fifty 0:09:03.559 --> 0:09:05.400 four billion dollars in market cap. I mean, it's up 0:09:05.440 --> 0:09:07.760 ten percent this year of the stock, up twenty three 0:09:07.840 --> 0:09:10.199 percent over the trailing twelve months. It just up into 0:09:10.280 --> 0:09:13.040 the right every year. Why haven't I paid it more 0:09:13.040 --> 0:09:14.120 attention to this one? But thank you. 0:09:14.120 --> 0:09:15.200 It's like a family business. 0:09:15.240 --> 0:09:15.439 I know. 0:09:15.640 --> 0:09:18.520 Great grandfather Pac Allagher joins this year, great grandson of 0:09:18.559 --> 0:09:21.760 the founder. He's the chief executive officer of Gallagher Insurance. 0:09:22.200 --> 0:09:25.240 Pat talk to us about your company. You're based on Chicago. 0:09:25.320 --> 0:09:28.079 Talk to us about a typical customer of yours and 0:09:28.120 --> 0:09:30.319 a typical piece of business you do for your customers. 0:09:30.600 --> 0:09:32.320 What are you guys really focusing on these days? 0:09:32.440 --> 0:09:34.319 Well, first of all, pall we're not an insurance company, 0:09:34.400 --> 0:09:37.079 so we don't take risks. We're insurance programs. 0:09:37.040 --> 0:09:38.920 So much rights. 0:09:39.240 --> 0:09:41.280 And it was my grandfather start of the company, not 0:09:41.400 --> 0:09:44.640 my great grandfather. But anyway, every single day we get 0:09:44.679 --> 0:09:46.680 up and we talk to customers about what the things 0:09:46.720 --> 0:09:49.920 are that they are facing them that could cause real 0:09:50.000 --> 0:09:52.360 disaster in their business. So this can be a business 0:09:52.400 --> 0:09:55.120 as large as any of the largest companies in America 0:09:55.280 --> 0:09:58.240 with professional risk management staff, all the way down to 0:09:58.320 --> 0:10:01.000 the smallest of companies that you know in neighborhood, and 0:10:01.160 --> 0:10:04.480 each of these businesses faces all kinds of complex risk 0:10:04.559 --> 0:10:07.520 that's becoming more complex as we sit here. We never 0:10:07.640 --> 0:10:10.040 ever thought of cyber ten years ago. Cyber is a 0:10:10.400 --> 0:10:14.160 huge risk. Everybody's concerned about it. I tell our production 0:10:14.320 --> 0:10:17.160 for us, if you're talking to the largest company in America, 0:10:17.280 --> 0:10:19.680 or you're talking to someone who owns nothing more than 0:10:19.760 --> 0:10:22.599 a sundry shop, they've got to be concerned about this. 0:10:22.800 --> 0:10:24.839 And now you add AI to that, and so you 0:10:24.960 --> 0:10:28.160 see the world everywhere. On top of that, of course, 0:10:28.240 --> 0:10:30.840 you've got climate change and weather related issues that are 0:10:30.880 --> 0:10:33.080 happening across the world, which is one of the reasons 0:10:33.120 --> 0:10:35.880 why you see such a difficult time, for instance, getting 0:10:36.160 --> 0:10:40.839 homeowners insurance in places like southern southern Florida. The point 0:10:40.960 --> 0:10:44.640 is that every single company, every single organization out there, 0:10:44.760 --> 0:10:48.000 faces these risks. What do they do with them. Insurance 0:10:48.040 --> 0:10:50.800 plays one role. The other part of a broker's role 0:10:50.880 --> 0:10:53.080 is to say, there's some things that aren't ensurable, Now, 0:10:53.120 --> 0:10:54.600 how do we deal with that? What are the things 0:10:54.679 --> 0:10:56.679 we do to help you control that. So we look 0:10:56.720 --> 0:10:59.760 at a full spectrum of risk for a client and say, 0:10:59.800 --> 0:11:01.280 these are the things that we can do to help 0:11:01.360 --> 0:11:04.319 you deal with that as you go forward, and that 0:11:04.640 --> 0:11:08.360 is incredibly valuable. We have a survey that we're just 0:11:08.480 --> 0:11:11.040 finalizing the details on now. We talked to about one 0:11:11.080 --> 0:11:15.520 thousand business owners across America and it's interesting to me 0:11:15.640 --> 0:11:18.920 because it really is a finger on the pulse. They're 0:11:19.120 --> 0:11:22.240 very concerned about weather related issues. Oh yeah, weather has 0:11:22.280 --> 0:11:24.800 all of a sudden gone from something that's important on 0:11:24.880 --> 0:11:27.880 the coasts to something that's important everywhere. I mean, I 0:11:27.960 --> 0:11:30.400 grew up in the Midwest. We never had tornadoes in 0:11:30.440 --> 0:11:34.240 the fall. Now that's normal. So just unfortunately a week 0:11:34.280 --> 0:11:36.840 ago in Iowa there was a terrible school So people 0:11:36.880 --> 0:11:39.000 are worried about that. They're worried about tech. 0:11:39.480 --> 0:11:42.720 So how many how many? So what kind of customers 0:11:42.800 --> 0:11:45.240 come to you and you say and they're like I 0:11:45.280 --> 0:11:47.320 can't get coverage on this, or like I need coverage 0:11:47.360 --> 0:11:50.480 on this, but I can't get it, or how has 0:11:50.559 --> 0:11:53.640 that conversation evolved just in the last five years. 0:11:53.880 --> 0:11:56.199 Oh, it's huge, So let's let's first of all, a 0:11:56.240 --> 0:11:58.360 big part of what we do is help people take 0:11:58.400 --> 0:12:00.679 their own risk. So that can take the form of 0:12:00.760 --> 0:12:03.760 a large client creating a self insured platform where we 0:12:03.960 --> 0:12:07.120 ensure excess of large deductibles. It can also go on 0:12:07.520 --> 0:12:09.600 all the way to the middle market where groups band 0:12:09.679 --> 0:12:13.360 together to form captive insurance companies. So the first the 0:12:13.440 --> 0:12:15.360 first line of defense, of course, is to look at 0:12:15.400 --> 0:12:18.760 all this and say what's insurable. Okay, you've got plants 0:12:18.800 --> 0:12:21.920 in Iowa, You've got plants in Naples, Florida. How's that 0:12:22.040 --> 0:12:24.400 going to shake out? What's that going to look like. Secondly, 0:12:24.520 --> 0:12:27.439 you've got workers. You have to ensure the worker's compensation. 0:12:28.000 --> 0:12:30.120 Those types of things you check off the list first. 0:12:30.480 --> 0:12:33.160 Then you come back and say, these things either shouldn't 0:12:33.280 --> 0:12:37.000 be or can't be insured. And there, Alexis really is 0:12:37.080 --> 0:12:40.760 really the point of differentiation, because that's where we bring 0:12:40.800 --> 0:12:43.679 an expert in to your point. If you ask anybody 0:12:43.760 --> 0:12:46.959 out in the marketplace, not everything's insurable. Who's going to 0:12:47.000 --> 0:12:49.960 help me? If you happen to be a builder. That's 0:12:50.000 --> 0:12:52.040 a different answer than if you happen to be a school, 0:12:52.520 --> 0:12:55.200 school district or university. So you have to have people 0:12:55.280 --> 0:12:59.160 that talk that language, and that is really what differentiates us. 0:12:59.760 --> 0:13:01.600 It's not just about quoting insurance. 0:13:01.920 --> 0:13:05.640 And you're a global business. Talk to us about the 0:13:05.720 --> 0:13:07.800 business here in the US versus maybe some of the 0:13:07.880 --> 0:13:09.560 other bigger markets outside the US. 0:13:10.080 --> 0:13:12.000 So we are global business. We like to say that 0:13:12.120 --> 0:13:15.600 any account of any size, located anywhere in the world, 0:13:15.720 --> 0:13:17.839 we can do and we can be helpful too. If 0:13:17.880 --> 0:13:19.599 you look at the United States, though, we have a 0:13:19.760 --> 0:13:24.480 very interesting business here in that it's incredibly fragmented right now. 0:13:24.559 --> 0:13:29.040 We have thirty thousand competitors. Those aren't people, those are firms. 0:13:29.520 --> 0:13:31.800 So in your local community, you know, you drive by 0:13:31.920 --> 0:13:35.200 main Street and you'll see Jones Insurance that's a competitor 0:13:35.200 --> 0:13:39.079 of ours. So it goes from those thirty thousand in 0:13:39.240 --> 0:13:41.520 business insurance, the top one hundred went all the way 0:13:41.559 --> 0:13:44.400 down to thirty five million, thirty six million in revenue. 0:13:44.440 --> 0:13:47.319 We did about ten billion last year and the other 0:13:47.480 --> 0:13:50.440 twenty nine nine hundred are smaller than that. So it's 0:13:50.480 --> 0:13:54.280 just incredibly fragmented business with professionals of all sizes and 0:13:54.400 --> 0:13:57.439 sorts around the country. That we have a very strong 0:13:57.520 --> 0:14:00.800 platform of acquisitions and we bring those people in, we 0:14:00.960 --> 0:14:03.679 don't want them to leave us. We feel that one 0:14:03.760 --> 0:14:08.080 plus one can equal five. Paul, you're in your community, 0:14:08.280 --> 0:14:11.559 you know your people. You're very good at insurance. But 0:14:11.679 --> 0:14:14.040 when we bring our capabilities in, when we bring our 0:14:14.160 --> 0:14:17.079 data and analytics. Now that big account in town, that 0:14:17.280 --> 0:14:20.880 large contractor the large university that you knew you had 0:14:20.920 --> 0:14:23.320 to stay away from, let's go get it together. And 0:14:23.400 --> 0:14:25.800 if that energizes you, you'll be a great fit for 0:14:25.880 --> 0:14:26.800 our acquisition team. 0:14:27.480 --> 0:14:29.920 You're going to sell insurance, No, but it's people I 0:14:30.000 --> 0:14:32.400 know that so insurance do fair very well. And you 0:14:32.400 --> 0:14:33.800 spend a lot of time on the golf course too, 0:14:33.840 --> 0:14:35.160 which I don't figure out that business. 0:14:35.200 --> 0:14:39.280 Oh ok, yeah, we are recruiting Paul. 0:14:39.320 --> 0:14:42.960 By the way, I think exactly what is a typical 0:14:43.320 --> 0:14:45.240 acquisition for you guys. Is there a typical size you 0:14:45.440 --> 0:14:46.960 like or is there a typical revenue. 0:14:46.720 --> 0:14:49.280 Number you like? Well, we're not afraid to do large deals, 0:14:49.360 --> 0:14:51.280 and in the last ten years we've done a number 0:14:51.320 --> 0:14:53.440 that have reached that billion mark and we're very proud 0:14:53.480 --> 0:14:55.080 of that. But really if you go back to my 0:14:55.240 --> 0:14:59.520 comment about size of the availability in the United States, 0:14:59.560 --> 0:15:02.960 and this is mirrored globally. Most of the people who 0:15:03.000 --> 0:15:05.920 are out there that are private are smaller. And by 0:15:06.000 --> 0:15:09.040 that I mean our average acquisition size is probably somewhere 0:15:09.040 --> 0:15:11.920 around ten million in revenue. Okay, it's probably owned by 0:15:11.960 --> 0:15:14.880 two or three entrepreneurs, may have started at their dining 0:15:14.960 --> 0:15:17.560 room table, or their parents may have started it. They've 0:15:17.600 --> 0:15:20.120 grown the business to a great size for them in 0:15:20.200 --> 0:15:22.640 their local community. To your point, Paul, they make a 0:15:22.880 --> 0:15:26.560 very good living, and yet at the same time, if 0:15:26.600 --> 0:15:29.080 they want to stay in touch with what's happening in 0:15:29.160 --> 0:15:32.920 the future, AI, cyber data analytics, et cetera, they need 0:15:33.000 --> 0:15:36.440 a partner. And that's what we bring. And again back 0:15:36.480 --> 0:15:39.600 to the point that we don't synergize out costs and 0:15:39.680 --> 0:15:41.640 say come in here, get rid of everybody. We just 0:15:41.680 --> 0:15:43.880 want your book of business. We want to take that 0:15:44.040 --> 0:15:45.560 platform and really expand it. 0:15:46.040 --> 0:15:48.480 That thirty seconds left, Pat, just how's your year been 0:15:48.600 --> 0:15:48.920 so far? 0:15:49.400 --> 0:15:49.720 Years? 0:15:49.760 --> 0:15:52.040 Looking great? Thank you very much. The last five years 0:15:52.080 --> 0:15:53.920 have been terrific, and we look at the future and 0:15:54.000 --> 0:15:54.960 we're just getting started. 0:15:55.200 --> 0:15:57.160 All right, sounds good to me. The insurance business is 0:15:57.200 --> 0:15:58.760 a good business. They all tell me that, but I 0:15:58.880 --> 0:15:59.760 just don't understand it. 0:16:00.120 --> 0:16:01.880 To be honest, I buy a lot of it. Yeah, 0:16:01.880 --> 0:16:03.160 I was gonna say, we buy a lot of it. 0:16:03.280 --> 0:16:04.160 This is very true. 0:16:04.680 --> 0:16:06.760 Yeah, I thought a lot of Pat Gallagher. He's the 0:16:06.840 --> 0:16:10.320 chief executive officer of Gallagher Insurance. Joining Slive here on 0:16:10.360 --> 0:16:13.840 a Bloomberg Interactive Brokers studio. Again, this is a large 0:16:14.160 --> 0:16:16.720 insurance brokerage firm, so I have to make sure I 0:16:17.000 --> 0:16:19.520 get that correct. Matt Palosol always on top of me 0:16:19.560 --> 0:16:21.720 about that. But I'm just looking at the revenue. Ten 0:16:21.760 --> 0:16:24.239 billion dollars of revenue, so it's just really extraordinary. 0:16:25.800 --> 0:16:29.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:29.760 --> 0:16:32.840 weekdays at ten am Eastern on fo card playing Android 0:16:32.880 --> 0:16:35.920 outo with the Bloomberg Business app. Listen on demand wherever 0:16:36.040 --> 0:16:39.160 you get your podcasts, or watch us live on YouTube. 0:16:40.520 --> 0:16:43.640 All right, let's check in with guy. He's pretty good 0:16:43.680 --> 0:16:46.280 on tech Space, He's okay, he's not bad. On Rock 0:16:46.320 --> 0:16:49.560 run our senior technology anelsts for Bloomberg Intelligence. On Rock, 0:16:49.600 --> 0:16:51.840 I was kind of paraphrasing what I think you're gonna 0:16:51.880 --> 0:16:55.760 say about this report that you know their iPhone shipments 0:16:55.760 --> 0:16:57.920 are up at gajillion percent here in the latest period. 0:16:58.640 --> 0:17:00.640 But talk to us about this data coming out of China. 0:17:00.680 --> 0:17:04.240 How reliable is it and how predictive is it? And 0:17:05.200 --> 0:17:07.239 if it's up fifty percent in the latest period, why 0:17:07.359 --> 0:17:08.960 isn't Apple stock up a lot more today? 0:17:10.040 --> 0:17:12.440 Yes, that's a very good question, Paul, And again I 0:17:12.560 --> 0:17:14.920 have nothing against the people who collect this data and 0:17:15.280 --> 0:17:17.840 figure it out, but this is the way I looked 0:17:17.880 --> 0:17:20.320 at it. In jan and Feb this data was down 0:17:20.400 --> 0:17:23.520 I think minus thirty five minus forty percent or so, 0:17:24.119 --> 0:17:26.520 and then when Apple reported their quarter, they said, you 0:17:26.600 --> 0:17:30.600 know what, mainland China, our iPhone revenue grew. So there 0:17:30.680 --> 0:17:34.399 is not that direct correlation between the two numbers. And 0:17:34.520 --> 0:17:37.600 it could be because there are times when Apple you know, 0:17:37.840 --> 0:17:41.359 sells phone, but it's stuck in the inventory channel in between. 0:17:41.680 --> 0:17:44.000 Then they put out a sale and then gets cleared up. 0:17:44.160 --> 0:17:46.359 So it's a question of timing not so much. But 0:17:46.480 --> 0:17:49.040 the big thing for us is that there is there 0:17:49.280 --> 0:17:52.240 was a downdraft of negative news coming out of China. 0:17:52.640 --> 0:17:55.120 It's turned positive two months in a row, so that's 0:17:55.160 --> 0:17:58.240 a good news. Seems more like a cyclical issue to me. 0:17:58.400 --> 0:18:02.119 Than a structural problem people giving away Apple phones not 0:18:02.200 --> 0:18:03.920 buying it, So that's not the case. So that's a 0:18:03.960 --> 0:18:06.640 good news. So I think, you know, from an overall 0:18:06.680 --> 0:18:08.480 point of sentiment point of view, I think this is 0:18:08.520 --> 0:18:11.560 good news for Apple that China, which in our view 0:18:11.680 --> 0:18:14.280 is the most important market for them over the next 0:18:14.320 --> 0:18:16.440 three to five years, and we are not going to 0:18:16.480 --> 0:18:20.639 see you know, let's say eurobar declining share. I think 0:18:20.720 --> 0:18:23.000 it's it's going to be okay over the next few years, 0:18:23.119 --> 0:18:25.240 even if it goes ups and down. So that's really 0:18:25.280 --> 0:18:27.000 the big takeaway for us. DAR. 0:18:27.320 --> 0:18:31.520 So can I call this a nothing burger? No, that's 0:18:31.640 --> 0:18:34.760 not true because I say that because you didn't hear it. 0:18:34.800 --> 0:18:37.000 But Paul was guessing you would call this data a 0:18:37.080 --> 0:18:39.040 nothing burger. But you're being too polite about it. 0:18:39.119 --> 0:18:42.080 I think done a wrong So sentiment vice think about it. 0:18:42.440 --> 0:18:44.720 The only thing that we've been hearing for almost a 0:18:44.800 --> 0:18:47.480 year now that people don't want to buy iPhones in China, 0:18:47.640 --> 0:18:50.600 it's because of the government and nationalism and so many 0:18:50.680 --> 0:18:52.840 all things. And I think this one tells us that's 0:18:52.880 --> 0:18:56.040 not the case. People are strapped for cash and if 0:18:56.080 --> 0:18:58.000 they get a good deal on a phone, they'll buy it. 0:18:58.160 --> 0:19:00.520 So what do I expect. I expect Apple to go 0:19:00.640 --> 0:19:03.880 out and do more promotional activities over the next few 0:19:03.960 --> 0:19:07.240 months to try and sell more products into the market. Now, 0:19:07.320 --> 0:19:10.280 not every market is different. Apple's not known to give 0:19:10.520 --> 0:19:12.959 a lot of discounts globally, but if that's what they 0:19:13.000 --> 0:19:14.119 have to do in China, that's what. 0:19:14.160 --> 0:19:16.280 They have to do, all right, fair enough. 0:19:16.880 --> 0:19:18.440 But let's go to the discounts though for a second. 0:19:18.640 --> 0:19:21.240 So even if we don't say, take this data as gold, 0:19:21.280 --> 0:19:25.399 but just directionally, Apple and discounts tend not to go together, 0:19:25.440 --> 0:19:27.680 at least in my mind. What do you make of that? 0:19:28.920 --> 0:19:30.720 Yeah, I think this is a new thing for Apple, 0:19:30.760 --> 0:19:33.399 and again they're probably grinding their teeth and not liking it. 0:19:33.560 --> 0:19:35.080 But you know what, they have the rest of the 0:19:35.119 --> 0:19:37.520 world to make up for it. In the US, for example, 0:19:37.640 --> 0:19:40.200 people are liking to buy the higher end model, the 0:19:40.280 --> 0:19:43.760 pro model. That helps margins, that helps the adage selling price. 0:19:44.040 --> 0:19:45.720 So if they have to give a little bit up 0:19:45.800 --> 0:19:48.160 to gain market share in China, I think they should 0:19:48.200 --> 0:19:50.120 do it because you don't want to be branded as 0:19:50.520 --> 0:19:53.639 somebody a second player in China out there, which is 0:19:54.040 --> 0:19:56.359 you know, in our view, the most important market for 0:19:56.520 --> 0:19:59.640 growth for Apple. Otherwise what's going to happen is you're 0:19:59.640 --> 0:20:02.320 not going to see any growth in China. For that matter, 0:20:02.520 --> 0:20:04.440 their top line growth is not going to grow, and 0:20:04.600 --> 0:20:07.639 that's not good for the stock. Also, and ra' talk to. 0:20:07.680 --> 0:20:10.600 Us about India. What is it as a percentage of 0:20:10.640 --> 0:20:12.840 Apple's business today and what do you think it can 0:20:12.880 --> 0:20:14.879 be five, six, seven years from now. 0:20:15.680 --> 0:20:17.919 Yeah, so in our view, apples very small, less than 0:20:17.960 --> 0:20:20.800 five percent. In fact, when you we have done a 0:20:20.920 --> 0:20:23.399 lot of work on the number of shipments in India, 0:20:24.119 --> 0:20:27.080 Apple's market share is you know, less than five percent. 0:20:27.320 --> 0:20:30.639 But here's the kicker. Ninety five percent of the phones 0:20:30.680 --> 0:20:33.960