WEBVTT - Robinhood Credit Card, Boeing Shuffle 0:00:00.600 --> 0:00:07.280 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.600 --> 0:00:14.400 This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been in US corporate high yield. 0:00:17.880 --> 0:00:20.279 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:31.000 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.680 Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio. 0:00:42.440 --> 0:00:44.840 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.880 --> 0:00:47.200 business stories Impactnew Wall Street and the global markets. 0:00:47.280 --> 0:00:49.320 Each and every week we provide in depth research and 0:00:49.400 --> 0:00:51.199 data on some of the two thousand companies and one 0:00:51.280 --> 0:00:53.880 hundred and thirty industries our analysts cover worldwide. 0:00:53.960 --> 0:00:57.360 Today, we'll discuss why Apple's iPhone shipments are falling in China. 0:00:57.280 --> 0:00:59.880 Plaus we'll look at Boeing's leadership overhaul, with CEO Did 0:01:00.160 --> 0:01:02.440 Calhoun stepping down at the end of twenty twenty four. 0:01:02.640 --> 0:01:05.839 But first, Robinhood Market's best known for offering commission Free 0:01:05.880 --> 0:01:08.520 Trading is rolling out a credit card to US consumers 0:01:08.800 --> 0:01:11.480 as it looks to become a broader financial services company. 0:01:11.520 --> 0:01:14.520 The Robinhood Gold Card will be offered exclusively to members 0:01:14.520 --> 0:01:16.560 of the firm subscription based Gold program. 0:01:16.720 --> 0:01:19.000 For more, guest host Bailey Lipshaltz and I were joined 0:01:19.000 --> 0:01:22.000 by Robinhood, co founder and CEO of vladit Tenev. We 0:01:22.080 --> 0:01:25.119 first asked him for more context on the company's latest news. 0:01:25.360 --> 0:01:27.759 We were really excited to announce this. We've been working 0:01:27.840 --> 0:01:30.760 on it for quite a while and we didn't just 0:01:30.840 --> 0:01:34.080 want to launch another me too credit card. We really 0:01:34.120 --> 0:01:37.880 wanted to come in and do something special and really 0:01:38.360 --> 0:01:42.160 lead the industry. So it's really the best cash back 0:01:42.240 --> 0:01:45.280 rewards that we found in any credit card on the market, 0:01:45.520 --> 0:01:48.400 the best digital experience, and really the best design. We 0:01:48.520 --> 0:01:52.919 have a solid gold card that's basically a hunk of metal. 0:01:53.080 --> 0:01:58.840 It's extremely iconic, very simple, like, very well designed. We're 0:01:58.840 --> 0:01:59.920 really proud of the product. 0:02:00.280 --> 0:02:02.600 How does the credit card fit into the business, because 0:02:02.600 --> 0:02:05.200 I know early last year you guys announced a retirement products, 0:02:05.240 --> 0:02:08.400 so it feels like you're trying to expand away from 0:02:08.600 --> 0:02:10.480 the core trading platform. 0:02:10.720 --> 0:02:14.720 Yeah, so as a business Holistically, we're focused on three things. 0:02:14.880 --> 0:02:18.280 The first is being the number one platform for active traders. 0:02:18.560 --> 0:02:20.480 Right now, we're number two, but we have a path 0:02:20.560 --> 0:02:24.680 to being number one in some number of years, and 0:02:24.720 --> 0:02:28.600 that's really through user experience improvements, product innovations like twenty 0:02:28.639 --> 0:02:33.200 four hour market, adding new asset classes like futures, new 0:02:33.240 --> 0:02:36.720 platform launches like our web Pro platform, which we've announced. 0:02:37.040 --> 0:02:39.280 But we don't want to just be an active trader platform. 0:02:39.320 --> 0:02:41.840 We also want to grow wallet share with our customers 0:02:41.840 --> 0:02:45.000 and help them build wealth. That's where Robinhood Gold comes in. 0:02:45.320 --> 0:02:48.920 That's where our innovations and the retirement program with three 0:02:48.919 --> 0:02:51.600 percent match come in. And of course, now the credit 0:02:51.639 --> 0:02:55.680 card is sort of another pillar of us growing wallet 0:02:55.680 --> 0:02:58.720 share with customers and helping them do all of their 0:02:58.760 --> 0:03:01.640 financial activities one place via Robinhood. 0:03:01.800 --> 0:03:05.440 So are you competing with this card with the bank 0:03:05.520 --> 0:03:08.359 issued Visa master cards? Is that the market you're now 0:03:08.360 --> 0:03:08.919 going into. 0:03:09.400 --> 0:03:12.079 I think that we're trying to do something really interesting 0:03:12.120 --> 0:03:15.200 with this card. So if you think about premium credit cards, 0:03:15.520 --> 0:03:18.640 the best ones out there, accept less than half of 0:03:18.680 --> 0:03:19.560 the people that apply. 0:03:20.160 --> 0:03:22.960 Is that right? Is that half of that Chase Sephi 0:03:23.040 --> 0:03:24.880 or is that an platinum or whatever. 0:03:25.360 --> 0:03:29.160 Those classes of credit cards really like the typical sort 0:03:29.160 --> 0:03:32.920 of like super prime premium rewards cards, and they have 0:03:33.040 --> 0:03:36.400 high annual fees. So what we wanted to do is, 0:03:36.680 --> 0:03:40.560 in the same way that Robinhood democratized stock trading and 0:03:40.600 --> 0:03:43.880 made it accessible to a wider group of people, we 0:03:43.960 --> 0:03:47.480 want to open up the private client experience. I don't 0:03:47.480 --> 0:03:51.120 know if you've been to a Chase branch, but you 0:03:51.160 --> 0:03:54.520 can see there's two doors, one for the private clients 0:03:54.880 --> 0:03:57.640 and one for everyone else. And the whole idea behind 0:03:57.720 --> 0:04:01.840 Robinhood Gold is giving that private client experience for as 0:04:01.840 --> 0:04:04.360 little as five dollars a month, opening it to everyone. 0:04:04.400 --> 0:04:06.920 And it starts with the premium credit card. Of course, 0:04:06.960 --> 0:04:09.800 the retirement benefits where you get a three percent match, 0:04:10.160 --> 0:04:13.160 the first and biggest in the industry, the five percent 0:04:13.200 --> 0:04:17.400 apy on our cash, which is just an institutional grade, 0:04:17.480 --> 0:04:20.240 high yield offering that you have to have, you know, 0:04:20.320 --> 0:04:25.000 millions of dollars to match at other brokers. So yeah, 0:04:25.040 --> 0:04:27.520 we're putting all this together and we're seeing Robinhood Gold 0:04:27.560 --> 0:04:30.960 customers actually depositing the lion's share of their money into 0:04:31.080 --> 0:04:34.000 Robinhood and really growing with us. And I think we 0:04:34.080 --> 0:04:37.800 have an opportunity to offer them services for all their 0:04:37.839 --> 0:04:39.000 financial needs in BLAD. 0:04:39.000 --> 0:04:40.760 The perks are pretty sweet, as you mentioned, three percent 0:04:40.800 --> 0:04:43.520 cash back on all purchases. Do you make money off 0:04:43.560 --> 0:04:45.280 of this? How is this going to be kind of 0:04:45.320 --> 0:04:48.679 another peg for the profitability and the growth of the company. 0:04:49.000 --> 0:04:53.640 Yeah. Two things there. One is we do obviously any 0:04:53.839 --> 0:04:57.760 business line we enter, we intend to be profitable over 0:04:57.800 --> 0:05:00.760 the long run on a standalone basis, so not just 0:05:00.839 --> 0:05:04.279 a creative but we anticipate this being a profitable business 0:05:04.320 --> 0:05:09.360 line just within the card portfolio, and that's through not 0:05:09.480 --> 0:05:14.520 just the interchange transaction revenue, but also the lending business 0:05:14.640 --> 0:05:17.240 through the card. We anticipate this would actually be a 0:05:17.360 --> 0:05:21.520 very attractive card for people building credit over time, and 0:05:21.560 --> 0:05:23.880 not just folks that pay off their balance in full. 0:05:24.120 --> 0:05:26.560 The other side of it is we see that when 0:05:26.560 --> 0:05:31.039 customers adopt Robinhood Gold, their rate of deposit growth and 0:05:31.120 --> 0:05:34.919 account balance growth is much higher than non gold customers. 0:05:35.080 --> 0:05:37.960 They also adopt our products at a much higher rate, 0:05:38.360 --> 0:05:41.840 and so even though they're getting so much more value 0:05:41.880 --> 0:05:45.760 with all these industry leading rates and value props, the 0:05:45.880 --> 0:05:49.680 revenue that accrues to the business from the gold relationship 0:05:49.920 --> 0:05:52.880 is also multiples higher than non gold customers. And we 0:05:52.920 --> 0:05:56.880 think the credit card since it's so core to people's 0:05:56.920 --> 0:05:59.920 financial needs. Typically all of their the line share of 0:06:00.160 --> 0:06:03.440 spending goes through credit and if you're using a credit card, 0:06:03.520 --> 0:06:06.680 much easier to grab the paycheck deposit. We need to 0:06:06.720 --> 0:06:07.599 carry his cash around. 0:06:07.600 --> 0:06:09.480 Now, this is the guy who walks around with hundreds 0:06:09.520 --> 0:06:10.440 of dollars in his pocket. 0:06:10.440 --> 0:06:13.360 I don't know why I asked myself to say, when 0:06:13.400 --> 0:06:15.839 you walk into a bar, the jersey short good cash 0:06:15.880 --> 0:06:16.520 on the bar there? 0:06:16.680 --> 0:06:16.960 All right? 0:06:17.000 --> 0:06:21.640 So who is the typical Robinhood customer these days? Client? 0:06:21.720 --> 0:06:22.200 These days? 0:06:22.800 --> 0:06:26.880 A typical Robinhood customer, I would say, is someone in 0:06:26.920 --> 0:06:30.640 their thirties. They tend to be an early adopter of technology. 0:06:31.360 --> 0:06:34.120 They have. You know, more, half of our customers make 0:06:34.160 --> 0:06:40.040 over one hundred thousand dollars in annual income. So it's 0:06:40.080 --> 0:06:43.760 not sort of like the paycheck to paycheck customer as 0:06:44.040 --> 0:06:47.200 maybe some people think. 0:06:47.320 --> 0:06:47.520 Yep. 0:06:48.040 --> 0:06:51.920 And we also have much larger customers with big accounts. 0:06:52.040 --> 0:06:56.920 We recently have been introducing matches. In fact, we rolled 0:06:56.920 --> 0:07:01.320 out another initiative one percent unlimited pose and Match into 0:07:01.400 --> 0:07:05.760 Robinhood for all dollars deposited for our Gold members. So basically, 0:07:06.520 --> 0:07:09.560 most financial firms charge you a percentage to keep your 0:07:09.600 --> 0:07:12.520 money there as a management fee. We're paying you a 0:07:12.520 --> 0:07:16.200 percentage to move your money with us. And these types 0:07:16.240 --> 0:07:19.240 of offers have really attracted people with much bigger accounts. 0:07:19.280 --> 0:07:21.720 We've had customers with tens of millions of dollars moving 0:07:21.760 --> 0:07:25.200 those accounts to Robinhood and they've been very happy with 0:07:25.240 --> 0:07:29.080 the experience. So we have been adding capabilities to serve 0:07:29.200 --> 0:07:33.120 customers across the entire market, not just sort of in 0:07:33.160 --> 0:07:36.840 that middle tier, but also people with more money and 0:07:36.920 --> 0:07:40.160 people with less who are just getting started. We also 0:07:40.240 --> 0:07:42.800 would like to serve them and have been focusing on 0:07:42.840 --> 0:07:44.920 that demographic since day one and vlat. 0:07:45.080 --> 0:07:47.320 When I talk to skeptics, they point out that you 0:07:47.320 --> 0:07:51.040 guys are heavily reliant on options, trading crypto volumes, and 0:07:51.120 --> 0:07:54.160 that driving the business. Paul mentioned their huge run up 0:07:54.160 --> 0:07:55.240 over the last twelve months. 0:07:55.120 --> 0:07:55.840 It's still down. 0:07:55.680 --> 0:07:58.760 Forty eight percent from the IPO price. What is the 0:07:59.000 --> 0:08:01.320 kind of mission in the next coming months and years 0:08:01.600 --> 0:08:03.520 for the company to get back to that IPO price 0:08:03.520 --> 0:08:04.119 and trade higher. 0:08:04.840 --> 0:08:07.480 Well, I think we've been doing really well focusing on 0:08:07.520 --> 0:08:11.720 the inputs of the business. I can't really control the 0:08:11.800 --> 0:08:15.360 stock price directly, but if we're growing revenues, if we're 0:08:15.360 --> 0:08:20.080 diversifying revenues, if we're launching innovative new products for our customers, 0:08:20.560 --> 0:08:23.680 I think we can kind of grow through market headwinds 0:08:23.720 --> 0:08:26.800 and high interest rate environment and be sort of like 0:08:27.360 --> 0:08:31.320 a company that thrives in all conditions. And you mentioned 0:08:31.320 --> 0:08:34.960 the revenues and options trading and all these things. But 0:08:35.720 --> 0:08:38.200 what's happened in the past couple of years is the 0:08:38.240 --> 0:08:41.480 revenue profile of the business has diversified as we've rolled 0:08:41.480 --> 0:08:44.200 out all these products. As of the last earnings report 0:08:44.640 --> 0:08:47.560 several earnings calls, more than half of the revenues actually 0:08:47.640 --> 0:08:51.000 net interest margin, not even transaction base. So as we 0:08:51.040 --> 0:08:53.840 add more of these products, like the five percent yield 0:08:54.040 --> 0:08:57.880 on your cash, the profile of the business has also changed. 0:08:58.160 --> 0:09:01.160 Our thanks to Robinhood, co founder and Ceenev, we. 0:09:01.160 --> 0:09:03.600 Moved out of politics. President Joe Biden has gained ground 0:09:03.640 --> 0:09:05.960 against Republican Donald Trump and six of the seven key 0:09:06.040 --> 0:09:08.680 swinging states, and significantly so and at least two of them. 0:09:08.880 --> 0:09:11.400 The results make for the Democrats the strongest position yet. 0:09:11.400 --> 0:09:13.839 In a monthly Bloomberg News Morning Console Poll. 0:09:14.040 --> 0:09:16.280 For more on this poll, we were joined by Mark Niquett, 0:09:16.320 --> 0:09:19.680 Bloomberg Real Economy Team reporter. We first asked Mark to 0:09:19.720 --> 0:09:21.360 break down some of the poll's findings. 0:09:21.559 --> 0:09:23.959 The poll shows it's a monthly tracking poll that we've 0:09:23.960 --> 0:09:25.960 been doing since October, and it shows that Trump's still 0:09:26.000 --> 0:09:28.880 doing pretty well in Georgia, Arizona, Nevada are the most 0:09:28.880 --> 0:09:35.199 significant findings is that Biden has improved his standing in Michigan, Wisconsin, 0:09:35.240 --> 0:09:38.040 and Pennsylvania, sort of the blue Wall. I think these 0:09:38.080 --> 0:09:40.800 states are going to decide the election, and he needs 0:09:40.800 --> 0:09:42.520 to to win these states if he's going to get 0:09:42.520 --> 0:09:46.360 a second term. In Wisconsin, Biden now holds one point 0:09:46.440 --> 0:09:49.599 lead over Trump after trailing and by four points in February. 0:09:49.880 --> 0:09:52.760 In Pennsylvania, the candidates are tied after Trump had a 0:09:52.800 --> 0:09:55.840 six point lead in February, and they're also tied in Michigan. 0:09:56.120 --> 0:09:59.840 Any common denominator here, Marcus to what might be driving 0:10:00.080 --> 0:10:00.920 of these poll numbers. 0:10:01.120 --> 0:10:03.440 The timing of the poll was interesting. It was conducted 0:10:04.120 --> 0:10:08.240 March eighth through the fifteenth in the swing states, and 0:10:08.559 --> 0:10:11.760 March eighth is a day after Biden's State of the 0:10:11.840 --> 0:10:15.000 Union address, which was pretty fiery, and I think, you know, 0:10:15.480 --> 0:10:19.720 alleviated some Democratic concerns about the president's age and his 0:10:19.840 --> 0:10:23.000 fitness to take on Trump a second time in a rematch. 0:10:23.320 --> 0:10:27.600 And it's also midway about March twelfth is Super Tuesday, 0:10:27.640 --> 0:10:33.000 when both Biden and Trump sort of clinch the respective nominations. 0:10:33.000 --> 0:10:35.520 They got enough delegates to clinch, so it kind of 0:10:35.559 --> 0:10:38.560 really made it a binary choice. You know, we knew 0:10:38.559 --> 0:10:41.160 this was going to be the outcome, but I think 0:10:41.360 --> 0:10:44.199 the Democrats in particular, we're thinking that until it was 0:10:44.280 --> 0:10:47.000 really clear in voters' minds that this was going to 0:10:47.040 --> 0:10:50.439 be a rematch and it was Trump or Biden, that's 0:10:50.480 --> 0:10:53.080 their choices, that you know, Biden was not going to 0:10:53.120 --> 0:10:55.679 do as well in the polls. So this is sort 0:10:55.679 --> 0:10:57.880 of the first poll that you know, we have clearly 0:10:58.000 --> 0:11:00.320 established that it's going to be a Trump Biden real match. 0:11:00.920 --> 0:11:04.200 Are voters voting because they like the candidates or because 0:11:04.200 --> 0:11:05.400 they don't like the other one? 0:11:05.520 --> 0:11:09.000 Well, Interestingly, our polls showed that in the case of Trump, 0:11:09.360 --> 0:11:12.200 most of the support is coming from people who like Trump. 0:11:12.520 --> 0:11:15.840 Only three and ten Trump supporters said they were voting 0:11:15.880 --> 0:11:18.720 for Trump because they didn't like Biden. They're essentially voting 0:11:18.720 --> 0:11:22.520 against Biden. But the case was different for Biden. About 0:11:22.520 --> 0:11:25.120 half the supporters of Biden so and they were voting 0:11:25.160 --> 0:11:27.480 for the president essentially as a vote against Trump. They 0:11:27.480 --> 0:11:29.600 didn't want to see Trump get back into the White House. 0:11:29.720 --> 0:11:31.920 There was even more pronounced in Wisconsin, were like six 0:11:32.000 --> 0:11:34.760 and ten of the supporters of Biden were voting for 0:11:34.840 --> 0:11:37.080 him because they were voting against Trump. 0:11:37.360 --> 0:11:40.600 To that point, are those voters more sticky or not? Like, 0:11:40.679 --> 0:11:43.559 is the anti vote stickier than the pro vote? 0:11:43.840 --> 0:11:43.960 Well? 0:11:44.040 --> 0:11:46.560 Is what we're going to find out is what's more motivating, right, 0:11:47.040 --> 0:11:50.120 support for your candidate or desire not to see the 0:11:50.160 --> 0:11:53.359 other candidate win. You know, I think Trump has benefited 0:11:53.360 --> 0:11:58.880 over time from enthusiastic support from his base and base 0:11:58.960 --> 0:12:02.200 turning out board for him, but the negative feeling can 0:12:02.240 --> 0:12:05.480 also be a very strong motivating factor, could drive folks 0:12:05.480 --> 0:12:08.240 to the polls specifically to vote against Donald Trump because 0:12:08.240 --> 0:12:09.760 they don't want to see him back in the lighthouse. 0:12:09.880 --> 0:12:12.040 But we're going to find out what's more motivating, you know, 0:12:12.120 --> 0:12:14.720 voting for your guy or voting against the other guy. 0:12:14.800 --> 0:12:17.400 All right, great stuff, really appreciate it, Thank you very much. 0:12:17.400 --> 0:12:20.280 We look forward to the next poll as well Mark Nkatt, 0:12:20.280 --> 0:12:23.280 He's Bloomberg Real Economy reporter, joining us in the latest 0:12:23.320 --> 0:12:24.840 Morning Console poll. 0:12:25.040 --> 0:12:27.600 Coming up on the program, we'll discuss why Apple's iPhone 0:12:27.600 --> 0:12:30.600 shipments are falling in China. You're listening to Bloomberg Intelligence 0:12:30.640 --> 0:12:33.160 on Bloomberg Radio, providing in that research and data on 0:12:33.200 --> 0:12:35.920 two thousand companies in one hundred and thirty industries. You 0:12:35.960 --> 0:12:38.560 can access Bloomberg Intelligence via b I go in the terminal. 0:12:38.640 --> 0:12:41.560 Oh, Paul Sweeney and I'm Alex Steel and this is Bloomberg. 0:12:49.960 --> 0:12:53.840 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:53.920 --> 0:12:57.000 weekdays at ten am Eastern on Affo card playing Android 0:12:57.040 --> 0:12:59.839 Auto with the Bloomberg Business App. Listen on demand where 0:13:00.000 --> 0:13:04.040 wherever you get your podcasts, or watch us live on YouTube. 0:13:05.120 --> 0:13:07.959 We look next at the aerospace industry in Boeing. Earlier 0:13:08.000 --> 0:13:10.360 this week, we got news that Boeing CEO Dave Calhoun 0:13:10.400 --> 0:13:12.079 is stepping down at the end of this year. It's 0:13:12.120 --> 0:13:13.680 all part of a leadership overhaul. 0:13:14.040 --> 0:13:15.920 This comes as a planemaker has been dealing with the 0:13:15.960 --> 0:13:19.280 aftermath of a near catastrophic fuselage failure on a seven 0:13:19.400 --> 0:13:21.600 thirty seven Max nine aircraft early this year. 0:13:21.760 --> 0:13:24.360 Boeing also said the chairman, Larry Kellner, will not stand 0:13:24.400 --> 0:13:27.720 for reelection and stand deal. Chief of Boeing's commercial airplane 0:13:27.720 --> 0:13:30.920 division is departing. He'll be replaced by Chief operating Officer 0:13:31.000 --> 0:13:31.880 Stephanie Pope. 0:13:31.920 --> 0:13:34.800 For more, we're joined by George ferguson Bloomberg Intelligence, senior 0:13:34.840 --> 0:13:38.280 aerospace analysts. We first asked George for his reaction to 0:13:38.320 --> 0:13:38.760 the news. 0:13:39.120 --> 0:13:42.280 My reaction was, you know, we thought Dave Calhoun probably 0:13:42.320 --> 0:13:44.320 would be going. I hate to sort of wish that 0:13:44.400 --> 0:13:47.840 in anybody, but it seemed that, you know, the problems 0:13:47.840 --> 0:13:50.640 in the manufacturing business just there were just too many 0:13:50.679 --> 0:13:53.120 of them over too long a period of time to 0:13:53.200 --> 0:13:56.400 say that he was as effectual, if that's a right words, 0:13:56.720 --> 0:13:59.720 as he should have been at bringing everything, you know, 0:14:00.080 --> 0:14:02.760 back into order. It does seem weird that it's going 0:14:02.800 --> 0:14:05.240 to take them till the end of twenty twenty four 0:14:05.720 --> 0:14:07.680 to find his replacement. There's a lot of things that 0:14:07.760 --> 0:14:10.720 have to happen between now and then that the company 0:14:10.800 --> 0:14:13.480 just can't wait for. They've got to serve to the 0:14:13.559 --> 0:14:16.440 FAA their view and how they're going to stabilize their 0:14:16.480 --> 0:14:19.680 production process, and at the same time, right they've got 0:14:19.720 --> 0:14:22.800 to start to increase build rates so they can improve 0:14:22.880 --> 0:14:25.040 profits and cash flow. They can't wait a year on 0:14:25.080 --> 0:14:27.600 that either. So there's a lot of super important things 0:14:27.600 --> 0:14:30.120 that are happening this year to wait till the end 0:14:30.160 --> 0:14:32.480 of the year to replace the CEO that doesn't seem 0:14:32.520 --> 0:14:35.120 to have been able to get that job done well. 0:14:35.440 --> 0:14:37.520 It seems like a lengthy timeline to me, But it 0:14:37.560 --> 0:14:40.320 may just be that the board was flat footed and 0:14:40.400 --> 0:14:43.880 realizing that the CEO had to go and as nowhere 0:14:43.880 --> 0:14:45.480 in a search and so they've got to start from 0:14:45.480 --> 0:14:47.280 scratch here and figure out who the next person is. 0:14:47.440 --> 0:14:49.200 What can you tell us about Stephanie Pope. She's going 0:14:49.280 --> 0:14:50.920 to be stepping up and taking a big role with 0:14:51.120 --> 0:14:52.320 the aircraft business. 0:14:52.680 --> 0:14:54.560 Yeah, so she's been around for a while and she's 0:14:54.560 --> 0:14:59.080 been CFO of that aircraft business. So it seems like 0:14:59.160 --> 0:15:02.080 a logical in side choice. But I think when you 0:15:02.120 --> 0:15:05.040 have a you know, ahead of that department stand deal 0:15:05.440 --> 0:15:08.400 who's leaving after thirty plus years of the company, they're 0:15:08.800 --> 0:15:11.920 hard shoes to fill. You look around internally for who could. 0:15:11.800 --> 0:15:12.400 Be the next person. 0:15:12.400 --> 0:15:15.240 The CFO is always in particularly decent shape because they 0:15:15.320 --> 0:15:19.680 understand at least all the financials about the business. She's 0:15:19.680 --> 0:15:22.840 also had, you know, had positions at Boeing Global Services, 0:15:23.080 --> 0:15:27.120 which is a super successful business inside Boeing, high teens margins. 0:15:27.480 --> 0:15:29.000 To me, the only thing I don't see in her 0:15:29.000 --> 0:15:32.600 background is that manufacturing skill set. I think the next 0:15:32.640 --> 0:15:38.800 CEO has to really have a manufacturing engineering mindset background, 0:15:38.800 --> 0:15:41.000 and I think that's that's what I don't quite see there. 0:15:41.320 --> 0:15:45.080 Sort Of like Larry culp No. 0:15:45.480 --> 0:15:48.480 I mean Lowry obviously, he's pretty busy, and honestly, the 0:15:48.600 --> 0:15:52.400 job he has now a GE could be better profits, 0:15:52.440 --> 0:15:55.480 more fun than Boeing because there's a lot of great 0:15:55.520 --> 0:15:58.760 technology inside GE and there's a huge bow wave of 0:15:58.800 --> 0:16:01.640 a lot of maintenance coming that really high margin. I 0:16:01.640 --> 0:16:03.360 think you'd really have to work hard to get like. 0:16:03.400 --> 0:16:05.440 But George, I mean, does he like fun or does 0:16:05.480 --> 0:16:06.680 he like a challenge? I mean he was the one 0:16:06.720 --> 0:16:07.760 that went did GE to begin with. 0:16:08.720 --> 0:16:10.520 I do think he likes a challenge, and I think 0:16:10.520 --> 0:16:13.640 he showed his ability to navigate it really well at GE. 0:16:13.880 --> 0:16:15.960 But again, you know, they're just kind of getting to 0:16:16.040 --> 0:16:20.520 the super fun part. I think there's still challenge inside GE, 0:16:20.680 --> 0:16:22.680 but he's just getting to the point where he's got 0:16:22.720 --> 0:16:24.920 aerospace broken out and he can really make a lot 0:16:24.960 --> 0:16:28.520 of hay here. So someone like him is absolutely what 0:16:28.560 --> 0:16:31.440 I think Boeing needs. I don't know, maybe he's got 0:16:31.440 --> 0:16:33.640 a you know, maybe there's a protege somewhere inside there 0:16:33.680 --> 0:16:35.200 that they could tap or something. 0:16:35.320 --> 0:16:38.160 Thinking about who could be the next CEO. Here is 0:16:38.200 --> 0:16:41.080 the expectation, George, that it'll come from an external candidate 0:16:41.240 --> 0:16:44.320 or internally And are there any early front runners? Do 0:16:44.320 --> 0:16:44.560 you think? 0:16:45.160 --> 0:16:45.360 Yeah? 0:16:45.400 --> 0:16:47.840 So, I definitely think it's going to come external, right. 0:16:47.880 --> 0:16:50.160 I just think the fact that you've seen this purge 0:16:50.160 --> 0:16:53.520 of the CEO, you see the purge of commercial airplane president, 0:16:54.040 --> 0:16:58.240 means that we've depleted some talent there. There was you know, 0:16:58.440 --> 0:17:03.040 former heads of boeing'smmercial airplanes that had left when Muhlenberg 0:17:03.160 --> 0:17:06.159 came on. They could potentially be, you know, in the 0:17:06.240 --> 0:17:08.600 running for something like this. I know a couple of 0:17:08.640 --> 0:17:11.439 them wanted the CEO job and didn't get it, But 0:17:11.480 --> 0:17:13.760 I'm almost positive you're talking about something that's going to 0:17:13.760 --> 0:17:16.160 be outside. Ray Connor is the name that comes to mind. 0:17:16.200 --> 0:17:19.240 Used to be the head of Boeing Commercial. Not sure 0:17:19.280 --> 0:17:21.360 what he's doing now, but he might be on the list. 0:17:21.400 --> 0:17:24.760 Similar what's the culture like at a Boeing in terms 0:17:24.800 --> 0:17:25.879 of getting an outsider? 0:17:26.560 --> 0:17:28.359 You know, I think Boeing is one of those companies. 0:17:28.400 --> 0:17:30.399 I think you get a job and you stick around 0:17:30.400 --> 0:17:33.080 for lots and lots of years, and so, you know, 0:17:33.280 --> 0:17:37.600 I think that bringing people in from outside is something 0:17:37.640 --> 0:17:40.480 you do only when you have a breakdown like you've 0:17:40.520 --> 0:17:44.280 had now. Right under normal circumstances, there would be very 0:17:44.760 --> 0:17:48.400 clean lines of succession inside Boeing. You know, you would 0:17:48.440 --> 0:17:51.280 move up through the ranks and expect opportunities as you rose. 0:17:51.520 --> 0:17:53.840 But there's been so much tumult in this business over 0:17:53.880 --> 0:17:56.600 the last I don't know, you know, four years or 0:17:56.680 --> 0:17:59.400 so that I think that it's a time in their 0:17:59.440 --> 0:18:01.959 history where they're they're going to be going outside a 0:18:01.960 --> 0:18:04.800 lot more to replenish some of these senior management ranks. 0:18:04.800 --> 0:18:06.679 So they've just they've turned over a bunch of it. 0:18:07.119 --> 0:18:10.400 And George, it seems like this is no quick fix here. 0:18:10.440 --> 0:18:13.359 It seems like it was years, maybe even decades in 0:18:13.400 --> 0:18:16.879 the making in terms of maybe the deterioration of some 0:18:16.960 --> 0:18:18.120 of their quality controls. 0:18:18.119 --> 0:18:18.399 Here. 0:18:19.240 --> 0:18:22.040 When you talk to an industry folks, people at Boeing, 0:18:23.240 --> 0:18:25.040 is there a pathway to kind of get back to 0:18:25.040 --> 0:18:26.320 where they were in terms of quality. 0:18:26.720 --> 0:18:28.600 I think there is, but it's a lot of attention 0:18:28.640 --> 0:18:30.800 to detail. And like you said, it's it's slow work, 0:18:30.920 --> 0:18:33.080 so you can't sort of wave a wand I think 0:18:33.119 --> 0:18:37.399 and make it, you know, happen overnight. Really, you know, 0:18:37.560 --> 0:18:41.119 I think has a lot to do with people and processes, right, 0:18:41.119 --> 0:18:43.359 And that's why I think you want someone like a 0:18:43.440 --> 0:18:47.199 Larry Koppe who loves people in processes. You need and 0:18:47.440 --> 0:18:49.320 I mean that just takes time. You need a lot more, 0:18:49.760 --> 0:18:52.679 you need training, you need, you need, you know, in 0:18:52.720 --> 0:18:54.760 the interim, you probably need to beef up some of 0:18:54.800 --> 0:18:58.000 the oversight. You need to get into your supply chain. 0:18:58.080 --> 0:18:59.399 You need to give them a hug, you need to 0:18:59.400 --> 0:19:02.680 help them out, you know, help them bring you quality products. 0:19:02.720 --> 0:19:04.239 It's not a hey, how are you going to make 0:19:04.280 --> 0:19:08.000 my margins work better in the next couple of years discussion, right, 0:19:08.040 --> 0:19:11.240 It's really, like I said, it's people and processes. It's 0:19:11.240 --> 0:19:14.639 the softer side of management. I think Boeing over the 0:19:14.680 --> 0:19:18.440 last decade or two really was more into the how 0:19:18.480 --> 0:19:20.720 do I squeeze you to get you know, you to 0:19:20.760 --> 0:19:22.880 give me products at a cheaper price. So I could 0:19:22.920 --> 0:19:26.960 build my margins recipe for success. It wasn't that wasn't 0:19:27.000 --> 0:19:29.199 quite the term, but there was a term like that 0:19:29.200 --> 0:19:31.879 that Boeing was using with their suppliers. It was all 0:19:31.880 --> 0:19:34.520 about squeezing them. So the supply chain is all. You know, 0:19:34.560 --> 0:19:37.879 they've been scarred. They're worried about when Boeing comes to 0:19:37.920 --> 0:19:39.159 talk to them, and I think they need to get 0:19:39.160 --> 0:19:41.680 to a world where when Boeing shows up, that they 0:19:41.680 --> 0:19:43.439 think someone's there to help them and is looking out 0:19:43.480 --> 0:19:44.200 for their best. 0:19:44.000 --> 0:19:48.399 Interests our Thanks to George Ferguson, Bloomberg Intelligence, Senior Aerospace Analyst. 0:19:48.240 --> 0:19:50.399 We moved next to big tech and Apple. Earlier in 0:19:50.440 --> 0:19:52.720 the week, we reported that Apple iPhone shipments in China 0:19:52.720 --> 0:19:55.560 fell about thirty three percent in February from a year earlier, 0:19:55.600 --> 0:19:58.200 and that's citing data from the China Academy of Information 0:19:58.280 --> 0:19:59.680