Speaker 1: This is Bloomberg Business. Wait inside from the reporters and
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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Well, today is the day the data world sees in
Speaker 2: your iPhone.
Speaker 3: I don't know.
Speaker 2: It's not like it used to be.
Speaker 4: Maybe it is, I don't know. We'll talk about that
Speaker 4: with our next guests.
Speaker 2: Apple adveiling its iPhone fifteen, along with a hefty year
Speaker 2: price for the top model. The Pro Version's going to
Speaker 2: remain at nine hundred and ninety nine bucks, but the
Speaker 2: Pro Max will now start at one and ninety nine dollars.
Speaker 2: That's up one hundred dollars from last year's version. We
Speaker 2: also saw some new Apple watches with eco friendly materials
Speaker 2: and more Apple shares by the way down two point
Speaker 2: three percent. Mark German is chief Technology correspondent at Bloomberg News.
Speaker 2: He joins us on Zoom from our Los Angeles bureau,
Speaker 2: and we got Ed Ludlow, the co host of Bloomberg
Speaker 2: Technology on Bloomberg Television. He joins us from Cooper Tino
Speaker 2: and I want to start with if you I've been
Speaker 2: to a few of these iPhone unveilings back in my day,
Speaker 2: place three or four of them, and you know they're always,
Speaker 2: you know, exciting events. There's a lot of pop and
Speaker 2: circumstance around them. What's the vibe there today?
Speaker 5: I don't know, Man, the vibe is strong.
Speaker 3: I don't know.
Speaker 5: I think this says all of the energy and allures
Speaker 5: every generation event has gone before it. It was packed
Speaker 5: down there, and I'm going to let Mark talk about
Speaker 5: how substantive or not these hardware upgrades are. But the
Speaker 5: intense interest in the Pro and Pro Max was phenomenal. German,
Speaker 5: if you're listening, I had just held both of them
Speaker 5: in my hand, and you were absolutely right on every
Speaker 5: single detail. The titanium sides really jump out at you.
Speaker 5: It's definitely a lighter weight product, right. You can feel
Speaker 5: its durability. And everyone down there in the Steve Jobs
Speaker 5: theater is talking about this a seventeen processor three nanometer tech.
Speaker 5: Everything that you reported basically you were spot on with.
Speaker 5: But I would say, Tim, you know the energy here.
Speaker 5: Tim was taking selfies with all of the attendees. It
Speaker 5: has matched prior events I've been.
Speaker 2: To Okay, that's good to know. Hey Mark Kerman, come
Speaker 2: on in here and just follow up on that. Ed says,
Speaker 2: everything you've reported about these phones was right. No surprises
Speaker 2: for us, any surprises for you.
Speaker 6: Thanks for having me. I mean, the important thing is
Speaker 6: now that the news is out and people get digested
Speaker 6: and people are excited about what these new phones mean,
Speaker 6: both consumers who just want to get the new iPhone
Speaker 6: in their pocket and shareholders who are trying to see
Speaker 6: how these new devices will have an impact on the
Speaker 6: company's stock. I think Apple did what they needed to
Speaker 6: do today. Certainly they drummed up a few things with
Speaker 6: their marketing. Might they put that new fancy A seventeen
Speaker 6: pro name on the A seventeen chip. They talked about
Speaker 6: some of the advancements there, but if you really take
Speaker 6: a step step back, ten percent CPU leap, twenty percent
Speaker 6: GPU leap not entirely significant compared to overhauls to the
Speaker 6: chip in prior years. The titanium is basically the biggest
Speaker 6: introduction they had today. One pretty nifty feature that I
Speaker 6: think wasn't expected ahead of the announcement today is certainly
Speaker 6: the use of a spatial video camera on the back
Speaker 6: of the iPhone fifteen, Pro and Pro Max. I mean
Speaker 6: you can take three D video watch it on the
Speaker 6: Apple Vision Pro next year. Now, this is not going
Speaker 6: to impact most consumers, but it's a niftyqual feature that
Speaker 6: shows the power of these new cameras. You know, if
Speaker 6: Ed is still there, I'm curious on the new colors
Speaker 6: for the Pro versions. What stood out to him?
Speaker 7: Yeah, Ed, let's bring you back in here.
Speaker 6: What's your take colors? Yeah, of the Pro models, there's colors.
Speaker 1: Colors.
Speaker 6: Yes, I am curious. Blue blue, You're exactly right.
Speaker 5: No, No, this was my other main takeaway because if
Speaker 5: you put side by side the fifteen, Pro and Pro
Speaker 5: Max with the base version fifteen and fifteen Plus, the
Speaker 5: fifteen and fifteen plus come in these beautiful, vibrant pastel colors, yellows, greens,
Speaker 5: nice if you're into that. I always get a blue
Speaker 5: iPhone for the Celse of Chelsea Football Club. That's just
Speaker 5: I've always been honest about that.
Speaker 4: On air.
Speaker 5: I also use a Samsung. By the way, I'm technology agnostic,
Speaker 5: but the Pro lines come in a much more limited
Speaker 5: color range, and that is very clear mark, especially when
Speaker 5: you're inside the Steve Jobs Theater display room and they're
Speaker 5: all on display side by side. You know, I don't
Speaker 5: know why they went that way.
Speaker 6: Yeah, certainly it's an interesting dynamic with that new titanium frame.
Speaker 6: But I think that happened here is the titanium allows
Speaker 6: them to try some new things. One of those things
Speaker 6: is not polishing with the color the material, which is
Speaker 6: something you need to do with stainless steel, so they're
Speaker 6: able to have that raw, natural color for one of
Speaker 6: the models. I think the blue personally looks interesting. I
Speaker 6: have the black fourteen Promax right now, so don't think
Speaker 6: I'm gonna get the black again. No gold, which could
Speaker 6: be interesting for some markets in China in particular, gold
Speaker 6: is a very powerful and popular color. Red would have
Speaker 6: been a very popular and powerful color in China, but
Speaker 6: those two colors are elusive for this generation. Maybe they'll
Speaker 6: figure out a way to get next year red and
Speaker 6: gold out there, but certainly color is a big part
Speaker 6: of this iPhone launched the overall appearance. I think the
Speaker 6: periscope camera, the new lens system on the fifteen Promax
Speaker 6: is going to be quite impressive and quite useful. But
Speaker 6: I certainly think that this is they've done enough to
Speaker 6: make this a hot cellar of this fall.
Speaker 7: I've always been a fan of the gold or the
Speaker 7: rose gold.
Speaker 8: But ed Mark was just mentioning earlier to about Apple
Speaker 8: stock price down more than two percent as we had
Speaker 8: closer into the closing bell here. But historically the product
Speaker 8: releases initially just haven't always pushed shares higher. What's your
Speaker 8: sort of view on this for today?
Speaker 5: Yeah, let's regroup in twenty four hours and look at
Speaker 5: the cell side and invest in notes. But you know,
Speaker 5: go back to twenty eleven, there have been thirteen iPhone events,
Speaker 5: including today's. The stock has fallen on ten out of
Speaker 5: thirteen occasions. In the session on the day that Apple's
Speaker 5: had an iPhone event, the bar is kind of high.
Speaker 3: You know.
Speaker 5: The story with Apple and Apple has dominated newsflow recently.
Speaker 5: Is three quarters of overall sales declined guidance that indicated
Speaker 5: are heading towards a fourth consecutive quarter of overall sales decline.
Speaker 5: And in the June quarter, China was a bright spot.
Speaker 5: Greater China grew top line eight percent, with a heavy
Speaker 5: emphasis on switchers consumers switching to iPhone, either for the
Speaker 5: first time or from another brand. The news flow and
Speaker 5: the stories and reporting about China's central government clamping down
Speaker 5: on iPhone use in the public sector changes the narrative
Speaker 5: potentially for the rest of the year, but the market
Speaker 5: doesn't agree to what extent. What we wanted to know
Speaker 5: was the hardware upgrades and the tech upgrades here and
Speaker 5: Marx really walked us through them. Do they resonate with
Speaker 5: the Chinese consumer? That's a big question going forward.
Speaker 8: Mark Apple is also said to sell made in India
Speaker 8: iPhones on its launch day for the first time.
Speaker 7: What's behind this move?
Speaker 6: So, yeah, they've been producing iPhones in India for a
Speaker 6: couple of years now, they've really ramped it up in
Speaker 6: recent quarters, and so the goals to get in India
Speaker 6: the maide in India models on launch day for the
Speaker 6: first time. They've actually sold iPhones in their India stores
Speaker 6: and in the India online store from launch day in
Speaker 6: prior years. But according to my colleagues reporting usill with
Speaker 6: the first time that the first models will be the
Speaker 6: made in India models.
Speaker 2: Hey, ed, what should we make of the sustainability initiatives
Speaker 2: that we heard from from Apple today? They're making the
Speaker 2: new aluminum watches first carbon neutral devices. They're dropping leather
Speaker 2: from all iPhone and Apple Watch accessories.
Speaker 4: What do you make of it?
Speaker 5: Yes, yeah, I'm glad that you noticed it, because what
Speaker 5: was interesting in the lead up to this and indeed
Speaker 5: during the event is almost every analyst, market analyst, research analysts,
Speaker 5: and investor that I've spoken to was actually interested in that.
Speaker 5: You know, they buy into the idea of Apple's net
Speaker 5: zero goal for twenty thirty. But the reason that we
Speaker 5: focus on it from kind of markets perspective well is
Speaker 5: supply chain. You know, Apple seems to be able to
Speaker 5: move quite nimbly and swiftly on its supply chain, and
Speaker 5: they confirmed the number of products today are going to
Speaker 5: be either at zero from this point on or in
Speaker 5: the very near term. You know, one of the things
Speaker 5: I'm going to review on my social media piece that's
Speaker 5: coming shortly is you know, they scrap leaver from the
Speaker 5: accessories offering and using more sustainable materials on that side
Speaker 5: as well. It kind of fits with the brand of
Speaker 5: this company, and as we know for investors from an
Speaker 5: SG perspective, that can count. You know, you see many
Speaker 5: of the megatap cap tech names, you know, think about
Speaker 5: their impact on the world, and you know, Mark reported
Speaker 5: in the top Life blog on all of those that
Speaker 5: you can recap.
Speaker 7: Mark, we only have about fifteen seconds left.
Speaker 8: But our producer, one of our producers, wants to know
Speaker 8: are their plans for Apple to lower the cost of
Speaker 8: the iPhone fourteenth.
Speaker 6: Now, I believe the iPhone fourteen is sticking around on
Speaker 6: saying you'll be able to get them at a cheaper price.
Speaker 4: We don't know how much cheaper though, right.
Speaker 6: Not yet, probably one hundred dollars.
Speaker 4: Okay, but Mark, you're still upgrading.
Speaker 6: I'm still upgrading.
Speaker 4: You have do you do every year? You do every year?
Speaker 9: Yes?
Speaker 4: All right?
Speaker 2: Mark im in chief Technology correspondent at Bloomberg News. He
Speaker 2: joins us on zoom from our Los Angeles bureau. Also
Speaker 2: had Lovelow, the co host of Bloomberg Technology on Bloomberg TV,
Speaker 2: joining us live from Cooper Tino.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 2: It's Tim Centeveek and Jess Bennen relyve from the Bloomberg Interactive.
Speaker 2: A broker's studio here in New York. It is Bloomberg
Speaker 2: Business Week, having a fun chat with our friends over
Speaker 2: at Bloomberg TV, Romain Bostick and Scarlett feu. Our next guest, though,
Speaker 2: a veteran of Walmart and Levi Strauss. If you were
Speaker 2: listening to us just now, you heard me introduce him.
Speaker 2: Already he perhaps faces his toughest challenge yet reviving the
Speaker 2: storied brand of j C. Penny, the department store chain
Speaker 2: out for bankruptcy shortly after the start of the pandemic.
Speaker 2: That was back in twenty twenty. Then in November of
Speaker 2: twenty twenty one, Mark Rosen became the CEO. Just last month,
Speaker 2: the company announced a one billion dollar reinvestment plan that
Speaker 2: focuses on digital and in store experiences. Very pleased to
Speaker 2: have with us, Mark Rosen, CEO at jcpenny, joining us
Speaker 2: on Zoom from jcpenny headquarters in Plano, Texas.
Speaker 3: Mark, how are you. I'm good.
Speaker 10: Thank you very much for having me today.
Speaker 4: Yeah, it's good to have you with us. Hey, give
Speaker 4: us an update.
Speaker 2: It's a privately held company, so we don't get any
Speaker 2: insight into the finances. We know that the company's planning
Speaker 2: to hire twenty thousand employees ahead of the holiday season.
Speaker 2: But give us some more numbers we can work with.
Speaker 10: Yeah, so Lake, you said, we are a private company,
Speaker 10: but what I can share is we now have sales
Speaker 10: that are over eight billion dollars. We have just over
Speaker 10: six hundred and fifty stores across the country, and we
Speaker 10: also operate JCP dot com, So we're serving customers everywhere
Speaker 10: right now. And the business is really You mentioned that
Speaker 10: we emerge from bankruptcy, and we emerged with a very
Speaker 10: very clean balance sheet, in a strong, strong financial position
Speaker 10: with less than half a billion dollars with less than
Speaker 10: five hundred million dollars of debt on the balance sheet,
Speaker 10: so really financially positioned to drive forward and really reinvigorate
Speaker 10: this brand and re establish our relationship and our relevance
Speaker 10: with our consumers, which is really the core of America.
Speaker 2: You might have heard Romayne just a little earlier talking
Speaker 2: about over the weekend visiting a mall, seeing a JC
Speaker 2: Penny that was no longer operating, and even having the
Speaker 2: conversation with his family about whether or not the store
Speaker 2: still exists. How do you change that narrative and let
Speaker 2: people know that yes, JC Penny is here, and we've
Speaker 2: got six hundred and fifty stores across the country.
Speaker 4: How do you do it?
Speaker 10: Well, that's actually part of so you mentioned that we
Speaker 10: just announced an over a billion dollar investment back into
Speaker 10: the business, and that that investment is focused on remodeling
Speaker 10: our stores and reinvesting in the store platform, putting new technology,
Speaker 10: a new point of sale, in in revitalizing our online
Speaker 10: shopping experience and really improving THEJCP dot com shopping experience,
Speaker 10: and then also our supply chain. But I would say
Speaker 10: we're a retailer, and so it all really starts out
Speaker 10: with product. And over the last couple of years, what
Speaker 10: we've done is reintroduce over twenty five of our brands,
Speaker 10: brands like Stafford that every customer knows and loves and
Speaker 10: a lot of customers grew up with brands like Liz
Speaker 10: Claiborne and brands like Cooks in our homes, in our
Speaker 10: home area, and so we've reintroduced that product. And now
Speaker 10: what we're investing in also along with that a billion
Speaker 10: dollars is a what we're calling a brand reinvigoration that
Speaker 10: is centered around really helping our customers make it count.
Speaker 10: And when we look at our customer. I set our
Speaker 10: customers the core of America. It's the school teachers that
Speaker 10: teach our children. It's the construction workers that build our
Speaker 10: homes in the buildings we work in. It's medical workers
Speaker 10: who take care of our families. And that customer is
Speaker 10: looking for a sense of belonging there, looking for a
Speaker 10: place where they can find accessible fashion that they can
Speaker 10: still get at a great value, because that customer is
Speaker 10: making trade offs every day in their life. And so
Speaker 10: what we're introducing also is a campaign to reinvigorate the brand,
Speaker 10: centering around how we help our customers make every moment
Speaker 10: in their lives, whether it's a big moment like their
Speaker 10: daughter's wedding, or whether it's a smaller moment like getting
Speaker 10: their kids ready for school in the morning. But how
Speaker 10: do they use the products that we have at jcpenny
Speaker 10: to make that count but be able to make a count,
Speaker 10: but still have money left to put breakfast on the
Speaker 10: table for the kids.
Speaker 9: Hey, Mark, whenever you're talking about middle income shoppers, and
Speaker 9: especially with this inflation dynamic, how do you sort of
Speaker 9: view that as far as how to get shoppers back
Speaker 9: in when they are trying to figure out where to
Speaker 9: sort of shift their spending at this point.
Speaker 10: Right inflation is an issue for our customer. We look
Speaker 10: right now, we see that our customer is spending over
Speaker 10: seven hundred dollars a month more us for rent or mortgage,
Speaker 10: for groceries, for gas, and that means that every dollar
Speaker 10: is even more important to them, and it's more important
Speaker 10: that they make every dollar count. And that's really what
Speaker 10: we're here for is to help them do that. And
Speaker 10: I think the unique thing that we can bring to
Speaker 10: the table is we can bring great fashion and great
Speaker 10: product at a really accessible price to our customers. And
Speaker 10: that's what that's what they need, that's what they're looking
Speaker 10: for right now in their lives.
Speaker 8: When you talk about technology upgrades to some of these stores,
Speaker 8: kind of build on that. What more specifically are you doing.
Speaker 10: Within the stores. It's a lot of it's mobile and
Speaker 10: it's point of sale or checkout technology. So we'll be
Speaker 10: within the stores centralizing the checkout, but we'll also be
Speaker 10: putting in the hand of hands of all of our
Speaker 10: associates in the stores mobile devices that will help them
Speaker 10: manage inventory better. It'll help them ship and fulfill online orders,
Speaker 10: it'll help them check inventory and order online for a
Speaker 10: customer or I've talked about centralized checkout. What it really
Speaker 10: will do is move check out anywhere so that they
Speaker 10: can mobile check out a customer anywhere in the store.
Speaker 2: Hey, Mark, God, I got so many questions for you.
Speaker 2: We got three minutes left, So we're going to do
Speaker 2: sort of a you know, try to do some rapid
Speaker 2: fire questions. Sales of over eight billion dollars, Where do
Speaker 2: more sales happen right now at the six hundred and
Speaker 2: fifty stores across the country or jcpenny dot com.
Speaker 10: So it's about a seventy thirty split with stores the
Speaker 10: seventy percent and with the online business about thirty And
Speaker 10: where are you more bullish? So both are actually growing,
Speaker 10: and we're focused on growing both. But I do believe
Speaker 10: that right now, we've done a significant amount of reimagining
Speaker 10: our online experience and investing in JCP dot com, and
Speaker 10: we think there's significant growth there.
Speaker 2: So do you think that it'll is it growing at
Speaker 2: a faster rate? In like yelly clips store sales with
Speaker 2: JCP dot com in a number.
Speaker 10: Of years, the JCP dot com business is growing faster
Speaker 10: than the store business. I don't believe that it's ever
Speaker 10: going to eat clips. I think you could reach, like,
Speaker 10: you know, a forty sixty or something like that. But
Speaker 10: the reality is what we're seeing is that customers still
Speaker 10: want to shop in stores. They still want to come in,
Speaker 10: they want to have that try and experience, They want
Speaker 10: to get help from an associate to put together an outfit,
Speaker 10: and in important areas like we reintroduce beauty, a customer
Speaker 10: is looking to come in and get help and try product.
Speaker 8: When you look at this portfolio, whether it's fashion, apparel, home,
Speaker 8: beauty as well as jewelry, where are you seeing spending
Speaker 8: the strongest and where do you see people pulling.
Speaker 7: Back the most.
Speaker 10: It's interesting because if we look across the business, we're
Speaker 10: really pleased with the growth that we've seen in our
Speaker 10: home business and in our men's and women's apparel business,
Speaker 10: and we believe we've gained share in all of those
Speaker 10: areas because customers are spending there. Our jewelry business is
Speaker 10: another one that continues to be really strong right now.
Speaker 10: I think rather than seeing people reduce spending in particular areas,
Speaker 10: we're actually seeing that within an area, they're being a
Speaker 10: little bit more selective about what they're choosing, and we
Speaker 10: are seeing some more growth come from some of our
Speaker 10: private label brands. For example, in home, we're seeing products
Speaker 10: like Cooks, which is a private label opening price point,
Speaker 10: small small appliance think like blenders and toasters and things
Speaker 10: like that, and cookwear. We're seeing customers choose that product
Speaker 10: in some cases because they realize it's great value and
Speaker 10: they can save money by going for that product.
Speaker 2: So are you going to stay a private company forever?
Speaker 2: Is there an IPO on the horizon?
Speaker 10: So right now, we're really actually focused on just driving sustainable,
Speaker 10: profitable customer growth within the business, and we're very fortunate
Speaker 10: that we have an ownership group that is aligned with
Speaker 10: doing that and focused on the long term.
Speaker 3: And right now the.
Speaker 10: Focus is building that relationship with customers, driving customers back
Speaker 10: to the brand, and then we'll see where it goes
Speaker 10: from there.
Speaker 2: Mark Rosen, CEO at jcpenny, joining us on Zoom from
Speaker 2: jcpenny headquarters in Plano, Texas. Hey, Mark, really appreciate you
Speaker 2: taking the time. Come visit us next time you're in
Speaker 2: New York.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live week day afternoons from three to six Easter on
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Speaker 1: York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 3: Oh you need to store on a new Steve Beava.
Speaker 2: Bevag Well. For the last several years, people visiting Las
Speaker 2: Vegas might have been as puzzled as they gaze westward
Speaker 2: from the strip. Looming in the distance was a three
Speaker 2: hundred and sixty six foot tall sphere. The dark orb
Speaker 2: bore a familial resemblance to the Death Star, but lacked
Speaker 2: any signage offering a clue to its purpose. It was
Speaker 2: obviously an attraction, but what kind. Well to understand what
Speaker 2: it is and how it got there, you have to
Speaker 2: go all the way back to twenty sixteen and to
Speaker 2: a sketch on a notepad. Devin Leonard is out with
Speaker 2: a new feature that delves into the convoluted history and
Speaker 2: promise of what's known as the Sphere. Devin's story is
Speaker 2: going to be featured in the forthcoming issue of BusinessWeek magazine.
Speaker 2: You can read it now though on the Bloomberg and
Speaker 2: at Bloomberg dot com slash BusinessWeek. Also here is the
Speaker 2: editor of Bloomberg BusinessWeek, Joel Webber, he's with us along
Speaker 2: with Devin in our Bloomberg Interactive Broker's studio.
Speaker 4: So, Joel, are you a fan.
Speaker 3: Of the Knicks?
Speaker 11: Uh?
Speaker 3: I kind of this is hard to say.
Speaker 4: You did not know that was?
Speaker 3: You know? I I love basketball. I grew up playing basketball.
Speaker 12: The for the Mets, the Nets and the Jets last
Speaker 12: night was heartbreaking.
Speaker 4: Sorry about that.
Speaker 12: I mean got the wind, but you know, that's just nuts.
Speaker 12: It kind of locks you into the rhyme like the
Speaker 12: Nick doesn't. But look, the Knicks h have a very
Speaker 12: interesting owner in James Dolan, who owns his own MSG
Speaker 12: and that we have written James Dolan stories because he
Speaker 12: is not thought highly of by NBA fans, specifically Nick fans.
Speaker 12: But what this story was really about wasn't that. And
Speaker 12: you know, I wanted to approach this story, and I
Speaker 12: think Devin did a great job of this. He's actually
Speaker 12: kind of fascinating in that he has other interests and
Speaker 12: music's a big one, and he saw this opportunity to
Speaker 12: basically build something in Vegas that had never been built before,
Speaker 12: and he had a vision that I think originated more
Speaker 12: or less with him and he went and like did
Speaker 12: it and now it's like gonna open and there has
Speaker 12: never been a music venue like this, So yeah, it's
Speaker 12: really easy to hate on James Dolan and the guy
Speaker 12: may have pulled off like what's basically the perhaps we'll
Speaker 12: find out a world class music venue unlike any other.
Speaker 12: And it's shaped like a sphere.
Speaker 13: And that's what it's called, right Devin, The sphere. Yeah,
Speaker 13: I mean, I mean, look, you know this, this is
Speaker 13: this guy. He embarks on this thing. You know, he's
Speaker 13: he's past sixty, He's got, you know, all the money
Speaker 13: he needs. He's the son of you, the son of
Speaker 13: a billionaire Charles dall On, the cable you know, Cable
Speaker 13: TV pioneer, and you know, his family controls already controls,
Speaker 13: you know, some of the world's most you know, famous venues.
Speaker 13: You know, some people call him Madison Square Garden, you know,
Speaker 13: you know, the most famous venue in the world. And
Speaker 13: yet he has this idea he wants to he wants
Speaker 13: to disrupt live entertainment by building you know what's basically
Speaker 13: what is it's you know, it's around it's an orb
Speaker 13: like you know, sphere, and it's it's sort of three
Speaker 13: different things. You know, at night, it's going to be
Speaker 13: a concert hall with this with this sort of state
Speaker 13: of the art sounds. So someone also this huge LED
Speaker 13: screen that's his biggest, bigger than I should say, three
Speaker 13: football fields, and you know the high they're calling it
Speaker 13: the highest resolution LED screen.
Speaker 2: If you're watching us on YouTube right now, you can
Speaker 2: actually see the video and images on the screen.
Speaker 3: In the world.
Speaker 11: In the daytime, it's going to be sort of more
Speaker 11: of a tourist attraction, immersive entertainment. Uh you know, seats
Speaker 11: will shake, the wind will blow, you know they have.
Speaker 11: Then they're gonna be debuting a movie in October, directed
Speaker 11: by Darren Aronofski that uh you know, the director of
Speaker 11: uh uh you know, a Black Swan and record for
Speaker 11: Dream and just just to wrap it up, and what
Speaker 11: you're looking at now, if you are looking at TV,
Speaker 11: that's the exosphere. The outside that's gonna be a giant
Speaker 11: billboard and uh you know, they're they're gonna run ads
Speaker 11: on that among many other things.
Speaker 2: You've got to see pictures and videos of this thing
Speaker 2: to actually do a justice. I mean, you you know,
Speaker 2: hearing about it is one thing totally, but this thing
Speaker 2: is actually really, really cool.
Speaker 11: No that, I mean that That's something that really kind
Speaker 11: of blew my mind was that when I went out
Speaker 11: to Vegas to go take a tour, I actually actually
Speaker 11: I stayed in the West and you know, we just
Speaker 11: sort of overlooking it, and I asked them, you know, hey,
Speaker 11: can I can I I want to look out at
Speaker 11: the sphere because it was because it was one hundred
Speaker 11: and fourteen degrees, I got to do it. I'm not
Speaker 11: gonna go outside. But but no, but but I got
Speaker 11: in there and just looked at it out the window.
Speaker 11: I know, I couldn't believe it. I mean that that's when,
Speaker 11: you know, again, as I say in the store, a
Speaker 11: lot of people, you know, we're doubting. A lot of
Speaker 11: people are saying this is you know, this is never
Speaker 11: going to work, this is the death Star. And then
Speaker 11: they turned it on and you know, everybody had, you know,
Speaker 11: people just kind of went nuts.
Speaker 7: So why is spear? What was the inspiration behind it?
Speaker 11: You know, that's a really good question. You know, in
Speaker 11: twenty sixteen, you know, his family just sold Cable Vision.
Speaker 11: They just they just sold it for eighteen billion dollars,
Speaker 11: you know, And I make a joke in the story
Speaker 11: the guy plays in the band. I mean he could
Speaker 11: have gone off and played and played in the band.
Speaker 11: And he's like he drew a picture, you know, on
Speaker 11: on a notepad and you know, and told this guy
Speaker 11: been the chief technology officer of a cable vision, this
Speaker 11: is the venue of the future. Let's go out and
Speaker 11: disrupt the live entertainment is. I don't actually know where,
Speaker 11: No worry, he got that idea.
Speaker 12: But but it turns out that from an engineering standpoint,
Speaker 12: it is incredibly difficult.
Speaker 3: No, it's insane to playing music in. So how did
Speaker 3: they go about solving that. Well, it's about.
Speaker 11: It's an acoustical nightmare because everything just echoes inside of sperciality.
Speaker 11: They they found a company in called hola Plot in Germany.
Speaker 11: That's that basically beams audio to using algorithms to different
Speaker 11: places and you know, to where wherever you're sitting that
Speaker 11: the algorithm set up so they're basically measured. They're creating
Speaker 11: these beams you know, sound and and and they're measured.
Speaker 11: So everybody sort of here's the same thing. But that way,
Speaker 11: since you're sending the audio right to the people, you're
Speaker 11: everything isn't just bouncing all around and echoing and that's
Speaker 11: just one of the sort of crazy crazy and and
Speaker 11: and I think ultimately expensive things they did, and and
Speaker 11: helps explain why this thing went from one point two
Speaker 11: billion dollars you know price tag to uh two point
Speaker 11: three billion inflation.
Speaker 3: That's the thing.
Speaker 12: Who's so so wait, there's gonna be a big act
Speaker 12: that's gonna open this up.
Speaker 3: And because this is gonna happen, and I mean it's.
Speaker 12: Already in Vegas, it's built, they're already doing weird stuff
Speaker 12: on the strip.
Speaker 3: Right who's opening a little bit? And from Ireland called
Speaker 3: you two of them?
Speaker 12: Yeah, I think if you're gonna be there, yeah, if
Speaker 12: you're gonna make if you're gonna make a splash like
Speaker 12: launch with with with YouTube.
Speaker 3: How long are they going to be opening there?
Speaker 4: They're good.
Speaker 11: They're the're gonna be playing for twenty five twenty five nights,
Speaker 11: and tickets are how much?
Speaker 8: You know?
Speaker 11: I think they started around one hundred and fifty dollars.
Speaker 3: Yeah, but I mean I'm going well, I mean.
Speaker 11: They're almost all sold out, so I think if you
Speaker 11: want to go, Joel, you're gonna have to look them
Speaker 11: stuff hop and those prices are.
Speaker 2: Right, yeah, I mean it's a good point though, Joel,
Speaker 2: that you bring up if it's good enough for Bono,
Speaker 2: all right, then you know it's good enough for other musicians, right.
Speaker 12: I also just think this is this is the future,
Speaker 12: right like live event We know that live events are
Speaker 12: where artists make their money. If you can make an
Speaker 12: artist a venue, unlike any.
Speaker 3: Other what happens, you can get anybody you want.
Speaker 11: Well, they don't have to travel. So so I mean,
Speaker 11: these these bands have like these caravans of trucks that
Speaker 11: you know they carry there, they're they're they're you know,
Speaker 11: all the equipment around all that they take their led
Speaker 11: lighting around, they take their sounds just to surround all
Speaker 11: these contras halls, and and and and in this case
Speaker 11: is from what I'm told with you too and other bands,
Speaker 11: they actually have two sets, you know, two caravans that
Speaker 11: you know that you know that that move in between
Speaker 11: in between venues. So when they're so the one to
Speaker 11: the next one, you know they're setting up the next
Speaker 11: venue walk while they're breaking down the first. Anyway, I mean,
Speaker 11: it's it sounds, it's enormously expensive, and it's a huge headache,
Speaker 11: and and and I guess if they can spend you know,
Speaker 11: a couple of months in Vegas. You know, some people
Speaker 11: are definitely gonna want to do that. And some of
Speaker 11: the bands, by the way that they're talking about a
Speaker 11: cold Play and Fish, Harry Styles isish.
Speaker 4: A relationship with Yeah, yeah, you packed that house.
Speaker 12: Yeah okay, So there's also a possibility that Vegas won't
Speaker 12: be the only place that has a sphere.
Speaker 11: Not if Jim Dog can help. But yeah, no, they're they're,
Speaker 11: they're they're they're trying to get permission to build one
Speaker 11: in London, and there's they're scouting other locations. But after
Speaker 11: spending two point three billion dollars, they want to change
Speaker 11: their plans to get partners because he's not going to
Speaker 11: want to do that again. Well he's already said he
Speaker 11: says he's not going to do that again.
Speaker 4: Okay.
Speaker 2: So Joel, you mentioned that, you know, with live music
Speaker 2: in this day and age, the world of Beyonce, the
Speaker 2: world of Taylor Swift, people will pay for certain acts
Speaker 2: and certain experiences more than.
Speaker 3: One hundred and fifty dollars. Oh for sure.
Speaker 2: Yeah, you didn't see me going to beyoncere Taylor Swift
Speaker 2: as concerts, even though I wanted to, devin it was
Speaker 2: hard to see this coming, like the post pandemic surge
Speaker 2: and especially the high prices that people would pay. Talk
Speaker 2: about the construction of this and the way that the
Speaker 2: pandemic derailed it, because this thing was in the works
Speaker 2: before the summer of twenty twenty three.
Speaker 11: No, because that's I mean, that's the whole thing. They
Speaker 11: basically they least eighteen acres of land from from Las
Speaker 11: Vegas sands and they started to build this thing and
Speaker 11: then in twenty twenty pandemic hits and it just drives
Speaker 11: up the cost of you know, steel, computer chips, you know, basically,
Speaker 11: you know, just saying the story just about anything you need,
Speaker 11: you know, for a multi billion dollar development led yeah,
Speaker 11: yea yeah, yeah, no, yes, especially for the inside and
Speaker 11: the outside of the excessphere. But so so that effect
Speaker 11: and also it halted construction. They were initially going to
Speaker 11: open in twenty twenty one, so that set them back
Speaker 11: three years. But but but it was also just all
Speaker 11: this advanced technology, all these things they're experimenting with. They
Speaker 11: had to create an entirely new camera just to be
Speaker 11: able to capture images large enough to fit you know,
Speaker 11: that screen. They were stitching images together for multiple cameras.
Speaker 12: Camera and they had to patent this thing because it's
Speaker 12: like the equality and size of this image is so big.
Speaker 12: And then like I think this is like there's like
Speaker 12: some feats of engineering that they passed.
Speaker 11: A lot of stuff, and I came, there's I think
Speaker 11: the numbers on like sixty patents overall and not just
Speaker 11: that the camera is just you know, like eight or something.
Speaker 12: So yeah, so what's it look like, you know in Vegas?
Speaker 12: I mean we saw those images, but like, give me
Speaker 12: a sense of the scale of this thing. I mean,
Speaker 12: the strip is the strip, and like, is this just
Speaker 12: you suddenly not realize that the strip's there anymore? And
Speaker 12: there's an eyeball or whatever else they want to make.
Speaker 11: Well, it does take take your attention away from anything else.
Speaker 11: But I mean you fly into Vegas, I mean you
Speaker 11: can see it from the airport, you know what I mean,
Speaker 11: it's just you know, it's I think that may be
Speaker 11: a building or two that are bigger than it, but
Speaker 11: I mean, you know, it's it's it's there. It dominates,
Speaker 11: you know, from depending on where you're standing, you know,
Speaker 11: and if that is, assuming it's lit up, you know,
Speaker 11: you know, it's you know, I guess in certain sense
Speaker 11: of dominates the strip.
Speaker 12: Wait a sign that says your ad here.
Speaker 8: So just how complicated was it to get approval to
Speaker 8: build that?
Speaker 11: Well, that's the funny thing is is that the approval
Speaker 11: it flew through the approval places in Vegas in Vegas,
Speaker 11: but in London they they I guess they submitted to
Speaker 11: the planning application in in twenty nineteen and they haven't
Speaker 11: built anything yet. You know, there's a local development corporation
Speaker 11: that overseas the site and they finally signed off last year,
Speaker 11: but they're still finalizing the deal with Dolan's company and
Speaker 11: then it goes to the Mayor of London and he
Speaker 11: has to consider it. And there's also there's also a
Speaker 11: Secretary of State you know in the Sunac administration that
Speaker 11: might be weighing in a too. So that's taken forever
Speaker 11: and you know, and nothing's been built. So you have
Speaker 11: two very very different situations. And also you know, if
Speaker 11: they went to la if they went to New York,
Speaker 11: much more similar to.
Speaker 3: London than you know in Vegas. In Vegas, they.
Speaker 2: Where would I where would you find the space for
Speaker 2: this in other cities? Like where are they doing this
Speaker 2: in London. You need seventeen eighteen acres, you know that.
Speaker 11: That's the funny thing, tim, is that they're building on
Speaker 11: a much smaller, smaller piece of land in London. I
Speaker 11: went over there used to be a parking lot. You know,
Speaker 11: it's kind of been between some train tracks, but uh,
Speaker 11: it's it's it's on a site that that was originally
Speaker 11: sort of set aside for the I guess the Olympics
Speaker 11: in London. But so I guess there's there is and
Speaker 11: it's over in East London. I guess sort of a
Speaker 11: more working class, working class kind of area. But uh,
Speaker 11: you know that that's a good question. Like where would
Speaker 11: you build it in New York and Manhattan? I have
Speaker 11: no idea.
Speaker 2: Jersey probably American dream All.
Speaker 12: Yeah, yeah, I would go check this out, like I
Speaker 12: was gonna. It does seem like like one of those things.
Speaker 12: If you're if you're a fan of YouTube, you will
Speaker 12: go to Vegas and.
Speaker 3: You will watch that.
Speaker 2: It sounds like Devin, and you will need to actually
Speaker 2: do that because you did.
Speaker 11: You go ahead, Well we'll see no, sorry, well that's
Speaker 11: what cut out. What's a good cut out of the story.
Speaker 11: I interviewed all these YouTube fans including this one guy
Speaker 11: who'd been who've seen them already more than one hundred
Speaker 11: and fifty times.
Speaker 3: He was going something like ten shows.
Speaker 11: Ten shows in Vegas are a couple of guys.
Speaker 3: Guys like that.
Speaker 11: They were great, but there was just so much build
Speaker 11: a room for so much stuff.
Speaker 4: Why are the tickets so cheap?
Speaker 3: Well? Will they remain? That will be the question, right,
Speaker 3: we'll see.
Speaker 12: I mean like, look like this is I think like
Speaker 12: it's a new thing, and you know, we'll see.
Speaker 3: What the think pricing, dynamic dynamic pricing does.
Speaker 2: Yet I think it costs like one hundred twenty five
Speaker 2: bucks to go to the Imax SA movie these days.
Speaker 12: Well, you know, Imax briefly comes up in the story
Speaker 12: because you know this is such a unique venue that
Speaker 12: you can't even put Imax films there. Well maybe they can,
Speaker 12: but not to start with.
Speaker 11: Well no, but the idea is, you know, to blow
Speaker 11: I'm blow you know, Imax theaters away.
Speaker 12: Yeah, yeah, And I love that they're playing this right now.
Speaker 2: There we go give it to us very good stuff,
Speaker 2: of course, As always from our team here at Bloomberg
Speaker 2: Business Week, a big thank you to Devin Leonard. He
Speaker 2: is with us from Bloomberg BusinessWeek magazine. It's featured in
Speaker 2: the upcoming issue of Bloomberg BusinessWeek, available Bloomberg dot com
Speaker 2: slash BusinessWeek and thanks as always to Joe Webbermarck.
Speaker 3: A journal.
Speaker 6: How about you let me drive?
Speaker 3: No no, no, no please going to drive home?
Speaker 1: Honey please, I'll do the driving gravels Let's mate, I
Speaker 1: want to try it.
Speaker 2: It's good question time.
Speaker 3: This is the drive to the Globe dot Com trim thing.
Speaker 3: We'll dry around.
Speaker 11: Should it on?
Speaker 8: On Bloomberg Radio, Jasmin and Tim Stenovik here at the
Speaker 8: Bloomberg Interactive Broker's studio now, with just twenty minutes under
Speaker 8: that to go before the closing bell. US socks did
Speaker 8: lose ground a day after oil prices climbed to their
Speaker 8: highest level of the year. We did talk about Apple
Speaker 8: earlier tim Those shares down more than two percent after
Speaker 8: its iPhone fifteen event, while Oracles headed for its worst
Speaker 8: day over two decades after posting revenue and sales guidance
Speaker 8: that was weaker than analysts had expected.
Speaker 7: So big move there.
Speaker 8: So that's why you're seeing energy higher and then more
Speaker 8: of these growth rounded companies and.
Speaker 7: Corners and sectors of the market.
Speaker 8: Lower. Joining us now to weigh in on all things
Speaker 8: markets is Katherine Krantz, chief executive officer at the Center
Speaker 8: for the Macro Specialist Designation. I wanted to start off, Catherine,
Speaker 8: to tell us about your firm and what it is
Speaker 8: that you do, because it's really interesting too. This is
Speaker 8: supposed to be basically a designation that is more complimentary
Speaker 8: to a CFA.
Speaker 7: Correct.
Speaker 14: Thanks, Jess.
Speaker 7: Absolutely, so.
Speaker 14: Our firm is focused on all things macro. So we
Speaker 14: have basically three ways that we interact with our clients.
Speaker 14: We have a traditional sell side research product with our
Speaker 14: founder Franz jatra Han. He has been a macro leader
Speaker 14: for decades, and so we sell that product to our
Speaker 14: institutional clients. Last year we started the Macro Specialist designation
Speaker 14: because we became aware that it's not something Macro is
Speaker 14: not something that's really taught anywhere.
Speaker 7: It's not the same.
Speaker 14: Macro investing, is not the same as what you learn
Speaker 14: in a macro economics curriculum in college, and it's really
Speaker 14: not something that's part of other designations. It's something that
Speaker 14: you tend to learn getting beaten up by the cycle
Speaker 14: year after year.
Speaker 7: So say tomorrow eight.
Speaker 8: Thirty am, Tim and I were talking about this earlier
Speaker 8: CPI report comes out. This is different than if you're
Speaker 8: just reading some of these macro data points that are
Speaker 8: coming out each morning.
Speaker 14: Oh yes, it's different. So basically we teach our framework,
Speaker 14: which is rooted in monetary policy. Obviously the FEDS moves
Speaker 14: and how that impacts interest rates, and we look at
Speaker 14: how interst rates basically lead leading indicators like the stock
Speaker 14: market with about an eighteen month lag time, and then
Speaker 14: that helps us by looking at where interest rates have gone.
Speaker 14: That helps us anticipate the direction of the market and
Speaker 14: then obviously internally which segments of the market will outperform.
Speaker 2: Okay, so given that your CEO at the Center for
Speaker 2: Macro Specialist designation, where are we right now and where
Speaker 2: are we going?
Speaker 1: What do you like?
Speaker 14: Unfortunately, we do not have a very rosy outlook. Something
Speaker 14: that we hear continually these days is that the lead
Speaker 14: and lag times of policy's impact on markets has changed
Speaker 14: just different.
Speaker 4: This time, so it's longer and more variable.
Speaker 7: Well, people are saying it shorter and we're over any pain.
Speaker 14: We disagree. We don't see any evidence that it's different.
Speaker 14: We are just now coming up to the eighteen month
Speaker 14: anniversary of the first FED rate hike of this cycle,
Speaker 14: and it has been the steepest, quickest tightening cycle since
Speaker 14: basically Paul Voker's day is at the FED. So add
Speaker 14: into that the already tightening of lending standards you've had
Speaker 14: due to the banking crisis, and there's a whole lot
Speaker 14: of tightening in the pipeline that we don't think has
Speaker 14: been priced in yet.
Speaker 8: What pockets within the economy raise some red flags to
Speaker 8: you at this point when you do have data, say,
Speaker 8: obviously GDP is backward looking, but when you're looking at that,
Speaker 8: I know, we'll have another reading of retail sales later
Speaker 8: this week, but some of this consumer spending data has
Speaker 8: still held up.
Speaker 7: So where's the weakness coming from.
Speaker 14: Yeah, we're not surprised by that. Like I said, we're
Speaker 14: really just getting to the point where the impact of
Speaker 14: tightening is going to start flowing through to the economy eventually.
Speaker 14: In stocks in general, you know, we keep a close
Speaker 14: eye on on earnings. It's basically when earnings growth goes
Speaker 14: negative that things start to get really bad. So we
Speaker 14: monitor earnings across all segments of the market. You know,
Speaker 14: we've seen the ism manufacturing survey is already in contraction territory. Uh,
Speaker 14: So you know, we think that things are going to
Speaker 14: deteriorate from here. As I mentioned earlier, obviously the tighter
Speaker 14: UH credit standards, which is not something that usually happens
Speaker 14: until you're much further along into a slowdown. And so
Speaker 14: the fact that that's already tightened so much is it's
Speaker 14: very concerning to us. So you know, we're really looking
Speaker 14: towards everything defensive. You know, what outperforms is UH boring
Speaker 14: things like staples and and and you know, the things
Speaker 14: that have more stable earnings profiles.
Speaker 2: So staples, you know, other defenses. Defensives what changes your
Speaker 2: mind and makes you more optimistic, Like what would you
Speaker 2: have to see over the next few months to say,
Speaker 2: wait a second, we actually have the worst of this
Speaker 2: behind us.
Speaker 14: You know, I mean, based on our framework, there's really
Speaker 14: almost nothing that could change. I mean, we feel like
Speaker 14: all the tightening is already baked in the cake.
Speaker 4: It's there so baked in the cake. But you said
Speaker 4: that then the it hasn't been.
Speaker 14: Priced in, right, But I'm saying that you can't undo it.
Speaker 14: So even if even if the FED were to suddenly
Speaker 14: pivot in lower rates. It then will take another eighteen
Speaker 14: months for that to feed through, So we don't see
Speaker 14: a way out of this. We think it's going to
Speaker 14: be a tough year.
Speaker 8: How much longer do you think it'll really be able
Speaker 8: to tell in the economy from the full effects from
Speaker 8: the last eighteen months and the eleven rate hikes that
Speaker 8: we have seen since March twenty twenty two. Yeah, Well,
Speaker 8: we think this is going to be a story that
Speaker 8: covers really most of twenty twenty four because, as we said,
Speaker 8: it's been the steepest, most intense tightening cycle, and so
Speaker 8: given that we're only coming up on the eighteen months
Speaker 8: anniversary of the first hike, we still have to we
Speaker 8: have a long tail to price s and so we
Speaker 8: think that's going to take some time to play out.
Speaker 8: What do you think are some of the risks to
Speaker 8: your case for the economy to the flip side of
Speaker 8: that argument.
Speaker 14: Yeah, I mean, look, we don't really like to ever
Speaker 14: say it's different this time. You know, we do stick
Speaker 14: to the framework, but you know, there's always a chance
Speaker 14: that things could could evolve and change. We don't think
Speaker 14: it's likely. We you know, we've had a recession every
Speaker 14: time CPI has been above five percent. We've had a
Speaker 14: recession in ten of thirteen of the past FED tightening cycles,
Speaker 14: and Sharon Powell pointed to some of those instances where
Speaker 14: there was not a recession, but in none of those
Speaker 14: instances did we have an inflation problem.
Speaker 2: Did you know you're focused on the macro, you're focused
Speaker 2: on inflation, but you've talked about the tightening cycle and
Speaker 2: where we are with the Federal Reserve. Do you think
Speaker 2: the S and P five hundred has hit its low
Speaker 2: for this cycle that was about a year ago, back
Speaker 2: in October, or do you think there's more to come?
Speaker 14: No, No, we think there's more to come. And it's funny,
Speaker 14: you know you mentioned last fall and at that point
Speaker 14: our framework was telling us that basically because of Chairman
Speaker 14: Paul's comments about inflation being transitory, we saw about a
Speaker 14: four or five month dip in interest rates which ended
Speaker 14: up feeding through. So we said, if our framework holds,
Speaker 14: which it usually does, we should see a bear market
Speaker 14: rally happen. And so I was just looking back at
Speaker 14: some of our research from that time last year, and
Speaker 14: we were writing about how we couldn't convince anybody to
Speaker 14: be bullish, and now it's completely flipped on its head.
Speaker 14: So we have had that rally. It's been a little
Speaker 14: bit longer than we anticipated, but we think that's kind
Speaker 14: of running out.
Speaker 8: I really have about twenty seconds left. But is there
Speaker 8: a danger though, of missing out on it? Since almost
Speaker 8: been a year there if you missed that rally.
Speaker 14: Yeah, I mean we're advising people to get more defensive
Speaker 14: and little you know, protect their portfolios and take this
Speaker 14: chance to really realign for what we think could be
Speaker 14: a tough recession.
Speaker 8: All right, Kathin Krantz, chief executive officer at the Center
Speaker 8: for the Macro Specialist Designation.
Speaker 7: Really interesting thoughts here for you to give to us today.
Speaker 14: This is the.
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