1 00:00:02,600 --> 00:00:13,800 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailey. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,479 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Big 5 00:00:32,520 --> 00:00:36,400 Speaker 1: Big move from Testa. Tom within the reg your reporting 6 00:00:36,440 --> 00:00:40,640 Speaker 1: it correctly. Others are saying it's it's surged. Come on, 7 00:00:40,720 --> 00:00:43,480 Speaker 1: it's it's back to the top of its range. Absolutely 8 00:00:43,520 --> 00:00:47,599 Speaker 1: crushed estimates though, yes, the third prophet in its history. UM, 9 00:00:47,600 --> 00:00:50,040 Speaker 1: I think on a quarterly basis. Gordon Johnson joining US 10 00:00:50,040 --> 00:00:54,240 Speaker 1: now Vertical Group Managing director an analyst. Gordon, your view 11 00:00:54,240 --> 00:00:59,320 Speaker 1: on this company on whether these numbers accurately reflect the 12 00:00:59,440 --> 00:01:02,800 Speaker 1: company and it positions this company is in right now, Yeah, 13 00:01:02,840 --> 00:01:05,080 Speaker 1: we don't think so. And what we want to highlight 14 00:01:05,200 --> 00:01:07,959 Speaker 1: is that, you know, they essentially started putting the Model 15 00:01:08,000 --> 00:01:10,839 Speaker 1: three out there. They opened reservations up in twenty sixteen. 16 00:01:10,880 --> 00:01:13,160 Speaker 1: The promise then was twenty seven and a half thousand 17 00:01:13,200 --> 00:01:16,959 Speaker 1: dollar car um fully autonomous. You mean you climbing the 18 00:01:16,959 --> 00:01:19,520 Speaker 1: back seat, drive coast to coast, sleeping, and you'd have 19 00:01:19,560 --> 00:01:21,760 Speaker 1: free supercharging. None of those things are true. But on 20 00:01:21,800 --> 00:01:24,360 Speaker 1: that promise in twenty sixteen, they got a bunch of reservations. 21 00:01:24,520 --> 00:01:26,720 Speaker 1: We believe they pulled those reservations into two Q and 22 00:01:26,760 --> 00:01:28,800 Speaker 1: three Q and that's the numbers look great. We don't 23 00:01:28,800 --> 00:01:31,200 Speaker 1: think they're repeatable. UM So we think four Q is 24 00:01:31,200 --> 00:01:34,000 Speaker 1: a big, big um question mark and we think it's 25 00:01:34,000 --> 00:01:36,360 Speaker 1: going to prove negative. We're we're we're more confident in 26 00:01:36,360 --> 00:01:38,560 Speaker 1: the short than we've ever been. So you've come on 27 00:01:38,560 --> 00:01:40,399 Speaker 1: my show, come on this show many many times. You've 28 00:01:40,400 --> 00:01:43,319 Speaker 1: been very outspoken about your coal, which is a cell 29 00:01:43,520 --> 00:01:46,000 Speaker 1: on this stalk. The cash flow position, though it looks 30 00:01:46,000 --> 00:01:48,080 Speaker 1: more positive now than it has done for quite a while, 31 00:01:48,480 --> 00:01:50,560 Speaker 1: um Gold, did you think they're gonna have to raise capital? 32 00:01:51,000 --> 00:01:52,720 Speaker 1: It doesn't look like they're gonna have to raise capital, 33 00:01:52,760 --> 00:01:54,240 Speaker 1: and that was one of the key positives. Clearly the 34 00:01:54,320 --> 00:01:56,160 Speaker 1: numbers were good. Uh, it doesn't look like they're gonna 35 00:01:56,160 --> 00:01:57,960 Speaker 1: have to raise capital. But I think a couple of 36 00:01:58,040 --> 00:01:59,640 Speaker 1: key questions were made. We need to see the tank 37 00:01:59,680 --> 00:02:02,440 Speaker 1: Q think about this. Their DNA depreciation amortization was up 38 00:02:02,440 --> 00:02:05,360 Speaker 1: only five percent, despite the fact that they advertized their 39 00:02:05,360 --> 00:02:07,840 Speaker 1: tooling costs on a per unit basis and their productions 40 00:02:07,920 --> 00:02:10,639 Speaker 1: up fifty so that doesn't pass the smell test. This 41 00:02:10,720 --> 00:02:13,320 Speaker 1: is really important and this goes to just breaking all 42 00:02:13,320 --> 00:02:16,440 Speaker 1: that Vertical does in terms of acute research. You're gonna 43 00:02:16,440 --> 00:02:19,480 Speaker 1: wait for the quarterly statement, which I'm gonna guess is 44 00:02:19,520 --> 00:02:23,120 Speaker 1: thirty to sixties single space boring pages, where I would 45 00:02:23,160 --> 00:02:25,880 Speaker 1: not often John Tuck, John Ferroll, John Tucker would not 46 00:02:25,919 --> 00:02:27,640 Speaker 1: off as well, what are you going to look for 47 00:02:27,800 --> 00:02:33,640 Speaker 1: in the ten Q about manufacturing processes? Yes, so I 48 00:02:33,680 --> 00:02:35,760 Speaker 1: think that's a very good question. One other thing, though, 49 00:02:35,760 --> 00:02:37,640 Speaker 1: I wanted to highlight their s g n A was 50 00:02:37,720 --> 00:02:40,360 Speaker 1: down despite the fact that the unit deliveries are up 51 00:02:40,360 --> 00:02:42,600 Speaker 1: a hundred and five percent. They opened four new stores 52 00:02:42,600 --> 00:02:45,680 Speaker 1: and forty four new superchargers. So we need to understand 53 00:02:46,120 --> 00:02:49,240 Speaker 1: how their SGNA is dropping, i e. How are they 54 00:02:49,280 --> 00:02:52,760 Speaker 1: basically paying less to their workers despite the fact that 55 00:02:52,760 --> 00:02:54,720 Speaker 1: they're ramping up all these new facilities. We don't know 56 00:02:54,760 --> 00:02:56,800 Speaker 1: the ansis critical because we don't want, we don't need. 57 00:02:56,919 --> 00:03:02,880 Speaker 1: Mr musk dalical. But are you suggesting malfeasance or is 58 00:03:02,880 --> 00:03:06,520 Speaker 1: this just the normal debate that any major accounting firm 59 00:03:06,520 --> 00:03:09,760 Speaker 1: would have about accounting. Well, we think that there's definitely 60 00:03:09,840 --> 00:03:12,799 Speaker 1: some accounting shenanigans going on. Um, if you go back 61 00:03:12,800 --> 00:03:15,440 Speaker 1: to the last quarter they had a profit Q three 62 00:03:15,520 --> 00:03:17,880 Speaker 1: of twenty I think it was sixteen, and you look 63 00:03:17,919 --> 00:03:20,360 Speaker 1: at that quarterly report, they were they were guiding to 64 00:03:20,440 --> 00:03:23,720 Speaker 1: a profit thereafter and if you go go to the 65 00:03:23,800 --> 00:03:26,280 Speaker 1: last time they reported a profit, their profits then after 66 00:03:26,320 --> 00:03:29,640 Speaker 1: that quarter went significantly negative. Listen, they did a bunch 67 00:03:29,639 --> 00:03:32,280 Speaker 1: of things to pull forward demand into Q three. They 68 00:03:32,360 --> 00:03:35,960 Speaker 1: offered free supercharging, They opened up their Freemont facility to 69 00:03:36,000 --> 00:03:39,040 Speaker 1: buy cars, They did discounting, etcetera. We gotta rip John. 70 00:03:39,040 --> 00:03:41,760 Speaker 1: This is really important because the word shenanigans goes back 71 00:03:41,760 --> 00:03:45,600 Speaker 1: to Howard Schille. It's like a famous word in American counting. 72 00:03:45,600 --> 00:03:48,320 Speaker 1: I don't know if that's when when we used that 73 00:03:48,360 --> 00:03:52,600 Speaker 1: word shenanigans. You're not saying anything untoward is going going. Yes, 74 00:03:53,040 --> 00:03:54,640 Speaker 1: we don't want to go as far as to say that, 75 00:03:54,840 --> 00:03:58,040 Speaker 1: but we do believe that, for instance, their services and 76 00:03:58,040 --> 00:04:01,600 Speaker 1: other division margins are negative thirty five percent. Why is that? 77 00:04:01,640 --> 00:04:03,520 Speaker 1: Elon must said a few quarters ago that that was 78 00:04:04,600 --> 00:04:07,040 Speaker 1: a major firms are in them writers. They got some 79 00:04:07,160 --> 00:04:09,680 Speaker 1: local shop out of Palm Dell. Which is it. It's 80 00:04:09,680 --> 00:04:12,200 Speaker 1: price price Waterhouse Coopers. But one thing go highlight. There 81 00:04:12,200 --> 00:04:14,800 Speaker 1: was an l A Times article last week that stated 82 00:04:15,000 --> 00:04:18,200 Speaker 1: that they were taking employee costs and taking those out 83 00:04:18,240 --> 00:04:20,960 Speaker 1: of cost a good soul and capitalizing them. So this 84 00:04:21,000 --> 00:04:23,640 Speaker 1: isn't just us saying this. That is a respectable newspaper 85 00:04:23,720 --> 00:04:28,600 Speaker 1: essentially alleging accounting impropriety. Fascinating stuff and golden. I'm sure 86 00:04:28,640 --> 00:04:30,200 Speaker 1: we'll have to get you back on and of course 87 00:04:30,200 --> 00:04:32,520 Speaker 1: we'll have to try and get a comment from the 88 00:04:32,560 --> 00:04:35,839 Speaker 1: company as well. Going to Johnson Vertical Group managing director 89 00:04:36,080 --> 00:04:39,080 Speaker 1: and analyst. But he just said, is so important John? 90 00:04:39,520 --> 00:04:41,560 Speaker 1: Can we keep john You're in charge of the show. 91 00:04:41,600 --> 00:04:44,120 Speaker 1: Can we keep Mr Johnson around? You can to do 92 00:04:44,279 --> 00:04:46,960 Speaker 1: five things we need to know about accounting because what 93 00:04:47,040 --> 00:04:50,400 Speaker 1: he just said is really really critical, really important. Is 94 00:04:50,440 --> 00:04:52,120 Speaker 1: just believed in the street or do you feel like 95 00:04:52,160 --> 00:04:55,359 Speaker 1: you're alone on the idea of shenanigans? I feel like 96 00:04:55,400 --> 00:04:58,040 Speaker 1: I'm alone. One other thing I'll highlight that it really 97 00:04:58,080 --> 00:05:00,279 Speaker 1: gets to the core and really upsets me as a person. 98 00:05:00,640 --> 00:05:03,960 Speaker 1: Tesla keeps talking about how safe their cars are. There's 99 00:05:04,160 --> 00:05:07,880 Speaker 1: a medium called Medium Transportation that did an analysis and 100 00:05:07,920 --> 00:05:11,599 Speaker 1: basically their analysis suggested you're four times more likely to 101 00:05:11,839 --> 00:05:15,599 Speaker 1: die if you're in a Tesla car versus other luxury markets. 102 00:05:15,960 --> 00:05:18,320 Speaker 1: Go on. Johnson joining us now from Vertical Group managing 103 00:05:18,400 --> 00:05:22,679 Speaker 1: director and analyst after Tesla reports a really good quarter, 104 00:05:22,839 --> 00:05:26,679 Speaker 1: the third positive course for the company. Um the question, 105 00:05:26,720 --> 00:05:29,120 Speaker 1: I guess, Gordon, and you use the word shenanigan. So 106 00:05:29,200 --> 00:05:32,440 Speaker 1: let's talk about that again. Whether that word implies as 107 00:05:32,440 --> 00:05:34,520 Speaker 1: something untoward is going on or whether they are just 108 00:05:34,560 --> 00:05:38,320 Speaker 1: sort of artificially making things look better by squeezing suppliers, 109 00:05:38,360 --> 00:05:41,680 Speaker 1: bringing orders forward, those kind of things. Which one is it? Well, 110 00:05:41,720 --> 00:05:44,800 Speaker 1: I think it may be that there the latter and 111 00:05:45,279 --> 00:05:46,719 Speaker 1: a couple of things we want to talk about with 112 00:05:46,760 --> 00:05:49,040 Speaker 1: respect to the queue. One thing we definitely want to 113 00:05:49,040 --> 00:05:50,919 Speaker 1: see is their warranty reserves. You want to see what 114 00:05:50,960 --> 00:05:53,600 Speaker 1: that number looks like, because we've definitely gotten comments from 115 00:05:53,600 --> 00:05:56,600 Speaker 1: the Tesla Motor Club that there's issues with respect to quality, 116 00:05:56,640 --> 00:05:58,720 Speaker 1: there's issues with respect the parts following off the car. 117 00:05:59,080 --> 00:06:01,560 Speaker 1: So if that number ops, that number takes away from 118 00:06:01,600 --> 00:06:05,000 Speaker 1: gross revenue and drops down to the gross profit line. 119 00:06:05,040 --> 00:06:07,440 Speaker 1: So if warranty reserves are dropping out of time when 120 00:06:07,440 --> 00:06:10,279 Speaker 1: complaints are increasing, that is a concern. We we know 121 00:06:10,360 --> 00:06:13,479 Speaker 1: that all of our audiences worldwide. Gordon Johnson have an 122 00:06:13,520 --> 00:06:17,200 Speaker 1: accounting acuity there in financer in business, they have an 123 00:06:17,279 --> 00:06:20,800 Speaker 1: interest in this. Does warranty reserves move the needle for 124 00:06:21,000 --> 00:06:25,080 Speaker 1: Mr Musk? Is he gonna say that's inconsequential or is 125 00:06:25,080 --> 00:06:28,480 Speaker 1: it a tangible reason to be cautious on the stock? 126 00:06:28,800 --> 00:06:31,320 Speaker 1: It's it's It's one of the key things that I think. 127 00:06:31,320 --> 00:06:33,480 Speaker 1: It does move a needle. One other thing we definitely 128 00:06:33,480 --> 00:06:36,760 Speaker 1: want to look at as well is we've gotten indications 129 00:06:36,800 --> 00:06:40,000 Speaker 1: that they sold large amounts of cars being returned to 130 00:06:40,279 --> 00:06:42,800 Speaker 1: enterprise I either rental car company and you can see 131 00:06:42,800 --> 00:06:45,039 Speaker 1: that with respect to be almost the more than doubling 132 00:06:45,040 --> 00:06:47,479 Speaker 1: in their accounts receivable. John does this cf A level 133 00:06:47,520 --> 00:06:53,039 Speaker 1: five today. But this goes back to revenue recognition right, 134 00:06:53,320 --> 00:06:55,560 Speaker 1: which you know in England John has been a big 135 00:06:55,600 --> 00:06:58,520 Speaker 1: deal over the years in Germany particularly. I mean, are 136 00:06:58,560 --> 00:07:02,040 Speaker 1: you this is important? You're saying one of the things 137 00:07:02,080 --> 00:07:05,680 Speaker 1: we need to know is revenue recognition is an issue 138 00:07:06,400 --> 00:07:10,720 Speaker 1: Mr Musk company. In the auto industry. When accounts receivable 139 00:07:10,760 --> 00:07:13,560 Speaker 1: show a significant increase, that is indicative of cells to 140 00:07:13,600 --> 00:07:17,480 Speaker 1: the commercial space i e. Rental car companies and those 141 00:07:17,480 --> 00:07:19,760 Speaker 1: cells are done at huge discounts. But if Tesla does 142 00:07:19,800 --> 00:07:23,280 Speaker 1: not recognize the cost associated with those cells in this quarter, 143 00:07:23,520 --> 00:07:26,480 Speaker 1: that is a huge boost to gross margins. And and 144 00:07:26,560 --> 00:07:28,200 Speaker 1: one other thing I'll highlight we we want to look 145 00:07:28,200 --> 00:07:29,600 Speaker 1: at this and see if it's it's it's covered in 146 00:07:29,640 --> 00:07:32,920 Speaker 1: the queue. We've heard of multiple instances of people getting 147 00:07:32,920 --> 00:07:35,440 Speaker 1: a VIN number, paying for their Tesla car, going to 148 00:07:35,480 --> 00:07:37,600 Speaker 1: pick the car up, and then the then being reassigned 149 00:07:37,600 --> 00:07:41,160 Speaker 1: to someone else. That potentially enables Tesla to double book 150 00:07:41,360 --> 00:07:45,040 Speaker 1: car sells in the quarter. Um that effectively selling one 151 00:07:45,080 --> 00:07:47,640 Speaker 1: car to two people that boost their cash flows. So 152 00:07:47,640 --> 00:07:50,000 Speaker 1: these are all items that we think need to be 153 00:07:50,240 --> 00:07:52,680 Speaker 1: looked into specifically, and we think the tim Q will 154 00:07:52,680 --> 00:07:55,240 Speaker 1: provide some insights. We haven't seen that yet. So Golden 155 00:07:55,320 --> 00:07:58,360 Speaker 1: essentially is saying this quota company repeates it. We think 156 00:07:58,400 --> 00:08:00,920 Speaker 1: this quarter cannot be repeated one and we highlighted on 157 00:08:01,000 --> 00:08:04,000 Speaker 1: the that the prior appearance was if you look at Norway. 158 00:08:04,000 --> 00:08:05,840 Speaker 1: The reason why we highlight Norway is in Norway, if 159 00:08:05,840 --> 00:08:07,880 Speaker 1: you buy an i C E engine car and tunnel 160 00:08:07,920 --> 00:08:10,600 Speaker 1: combustion engine car, you pay double the price. There's an 161 00:08:10,600 --> 00:08:12,400 Speaker 1: excess tax that means you have to pay dull the price. 162 00:08:12,400 --> 00:08:15,800 Speaker 1: So the cars in Norway are ev right now. The 163 00:08:15,840 --> 00:08:18,920 Speaker 1: first month I eat October, that Jaguar I Pace is available, 164 00:08:18,920 --> 00:08:22,880 Speaker 1: They've all sold Tesla by six those cars. Those cars 165 00:08:22,880 --> 00:08:26,160 Speaker 1: are coming to America in the fourth quarter. I'm sorry 166 00:08:26,240 --> 00:08:28,840 Speaker 1: you're wearing Dodger blue today. That's what it looks like. Well, 167 00:08:28,880 --> 00:08:31,240 Speaker 1: the last thing we need to know, Gordon Johnson, and 168 00:08:31,320 --> 00:08:33,439 Speaker 1: what do the Dodgers do about their pitching? I mean, 169 00:08:33,440 --> 00:08:35,960 Speaker 1: forget about all the distractions. They got to get somebody 170 00:08:35,960 --> 00:08:37,880 Speaker 1: to put the ball over the plate. Where he is 171 00:08:37,960 --> 00:08:41,160 Speaker 1: the next Cofax? I don't know, and I'm a Dodger 172 00:08:41,200 --> 00:08:43,599 Speaker 1: fair it was. It was tough last night. Uh. You know, 173 00:08:43,640 --> 00:08:46,280 Speaker 1: I can't root for the Red Sox because I believe 174 00:08:46,520 --> 00:08:49,320 Speaker 1: New York Yankees blue. So Um. I don't know the 175 00:08:49,320 --> 00:08:55,640 Speaker 1: answer to the question, but they have my backing. What 176 00:08:55,760 --> 00:08:58,040 Speaker 1: he wanted to sign back to that you're supposed to say, 177 00:08:58,080 --> 00:09:01,640 Speaker 1: but you're sick, you say, if they don't have a 178 00:09:01,720 --> 00:09:05,439 Speaker 1: co Fax, where's their Drysdal? Do you think I have 179 00:09:05,480 --> 00:09:07,679 Speaker 1: a clue what you're talking about? God, I love it. 180 00:09:07,760 --> 00:09:10,640 Speaker 1: Gordon Johnson, Thank you so much. A special Five things 181 00:09:10,880 --> 00:09:14,080 Speaker 1: you need to know? Thank you. Interactive brokers. This is 182 00:09:14,120 --> 00:09:28,080 Speaker 1: Bloomberg surveillance. I think we should bring in a man 183 00:09:28,160 --> 00:09:31,280 Speaker 1: that really needs no introduction on Wall Street, Gary Shilling. 184 00:09:31,640 --> 00:09:33,560 Speaker 1: We now get to call him a Bloomberg opinion columnist. 185 00:09:34,960 --> 00:09:37,080 Speaker 1: Dr Shilling. I'm very pleased about that. So, Gary, what 186 00:09:37,160 --> 00:09:38,760 Speaker 1: is going on in fixed income right now that you 187 00:09:38,760 --> 00:09:41,600 Speaker 1: think we need to be paying attention to? I'm sorry, 188 00:09:41,720 --> 00:09:43,880 Speaker 1: what is going on in fixed income now that you 189 00:09:43,920 --> 00:09:46,720 Speaker 1: think we need to pay attention to? I think it's 190 00:09:46,880 --> 00:09:52,440 Speaker 1: I think it's emerging markets because they face it on 191 00:09:52,440 --> 00:09:58,240 Speaker 1: on cheap borrowing UH, and after the financial crisis, UH, 192 00:09:58,440 --> 00:10:01,720 Speaker 1: investors were only happen to happen to end there. They're 193 00:10:01,840 --> 00:10:04,600 Speaker 1: zealous for yield. And of course a lot of this 194 00:10:04,679 --> 00:10:08,440 Speaker 1: was dollar denominated, but now the dollars rising, so it 195 00:10:08,480 --> 00:10:12,680 Speaker 1: makes it much more difficult for them to service those debts. Also, 196 00:10:12,800 --> 00:10:16,920 Speaker 1: as a dollar strengthens, UH, the commodity imports for most 197 00:10:16,960 --> 00:10:19,360 Speaker 1: of these countries are are through the roof. You look 198 00:10:19,400 --> 00:10:22,040 Speaker 1: at Turkey, for example, their price of price of oil 199 00:10:22,080 --> 00:10:24,640 Speaker 1: in Turkish leras basically dollar. But you and I have 200 00:10:24,760 --> 00:10:27,880 Speaker 1: seen this before in the basic difference. Now I'm told 201 00:10:27,880 --> 00:10:32,080 Speaker 1: as dollarization, whatever that means. Are you suggesting dr showing 202 00:10:32,160 --> 00:10:36,719 Speaker 1: that this is different, different than Ecuador, different than the 203 00:10:36,880 --> 00:10:40,320 Speaker 1: Three Mexicos. Well, that remains to be sane, Tom, because 204 00:10:40,360 --> 00:10:43,480 Speaker 1: so far you haven't really got contagion in a big way. 205 00:10:43,559 --> 00:10:48,199 Speaker 1: It's it's Argentina, Turkey, mainly UH and and of course 206 00:10:48,200 --> 00:10:51,439 Speaker 1: in the late nineties that started in Thailand spread throughout 207 00:10:51,880 --> 00:10:55,719 Speaker 1: Asia and then to UH, to Brazil and Argentina and 208 00:10:55,800 --> 00:11:00,119 Speaker 1: ultimately to UH Russia and long term capital management. But 209 00:11:00,120 --> 00:11:04,040 Speaker 1: but you very well could have a contagion uh. But 210 00:11:04,040 --> 00:11:06,280 Speaker 1: but you know, it's it's interesting so far you're getting 211 00:11:06,320 --> 00:11:09,360 Speaker 1: you're seeing signs of access. Is you're talking earlier about 212 00:11:09,400 --> 00:11:12,360 Speaker 1: this leverage loans, I mean they've they've basically doubled I 213 00:11:12,360 --> 00:11:15,880 Speaker 1: think one point three trillion dollars in the in the 214 00:11:16,080 --> 00:11:20,000 Speaker 1: sense of financial crisis. But you haven't seen junk bonds 215 00:11:20,160 --> 00:11:25,280 Speaker 1: disappear junk bonds. You've had a punishment in emerging market equity, 216 00:11:25,280 --> 00:11:28,120 Speaker 1: in debt, but you haven't seen it in in domestic 217 00:11:28,200 --> 00:11:30,680 Speaker 1: junk bonds. So you know, there's the real question. Is 218 00:11:30,720 --> 00:11:32,720 Speaker 1: this In other words, it's this simply the calm before 219 00:11:32,760 --> 00:11:35,320 Speaker 1: the storm, and we're gonna wake up one of these days. 220 00:11:35,360 --> 00:11:37,559 Speaker 1: It's a huge contagion. There are a lot of things 221 00:11:37,600 --> 00:11:39,719 Speaker 1: that are potentially in that category, but we haven't seen 222 00:11:39,800 --> 00:11:43,679 Speaker 1: them yet. So which one are you expecting, Gary, Well, 223 00:11:43,760 --> 00:11:47,600 Speaker 1: I I would I don't know, there's one country I would. 224 00:11:47,679 --> 00:11:51,760 Speaker 1: I would definitely point out uh. But uh, you know, 225 00:11:51,840 --> 00:11:55,240 Speaker 1: you gotta look at countries like South Africa, Brazil. I mean, 226 00:11:55,240 --> 00:11:57,480 Speaker 1: they've got election. You don't know how that's going to 227 00:11:57,559 --> 00:12:02,160 Speaker 1: come out. But uh, I think you can almost throw 228 00:12:02,200 --> 00:12:04,240 Speaker 1: a dart Bard and try to figure out which one. 229 00:12:04,400 --> 00:12:07,760 Speaker 1: Can you maintain your history call on lower interests? I 230 00:12:07,800 --> 00:12:10,120 Speaker 1: want you to justify that right now. You've got a 231 00:12:10,120 --> 00:12:12,600 Speaker 1: few people in Wall Street. Good morning Steve Major at 232 00:12:12,720 --> 00:12:16,280 Speaker 1: HSBC who are in the vicinity of shilling. But do 233 00:12:16,400 --> 00:12:19,400 Speaker 1: you maintain that we haven't seen a turn in the 234 00:12:19,480 --> 00:12:23,319 Speaker 1: Great Vulgar disinflation? Yeah? I think I think that's true, Tom, 235 00:12:23,360 --> 00:12:26,560 Speaker 1: because we're basically in a deflationary world. You look at 236 00:12:26,800 --> 00:12:28,640 Speaker 1: you look at all the forces out there, you look 237 00:12:28,679 --> 00:12:31,679 Speaker 1: at the UH, you look at globalization first and FOREMO 238 00:12:31,800 --> 00:12:34,559 Speaker 1: was probably the most important development on the world seen 239 00:12:34,640 --> 00:12:37,080 Speaker 1: in the last three decades. I mean that is massively 240 00:12:37,480 --> 00:12:41,120 Speaker 1: deflation areas. You simply take Western technology and put it 241 00:12:41,160 --> 00:12:45,400 Speaker 1: in areas of very cheap labor costs, principally in Asia, 242 00:12:45,960 --> 00:12:49,240 Speaker 1: other things that you know, the Amazon, the Almazon effect 243 00:12:49,280 --> 00:12:54,800 Speaker 1: just really knocks out retailers. And and you've seen another services. Well, 244 00:12:54,840 --> 00:12:58,520 Speaker 1: it's the highest thirty year bond you've ever remembered, the 245 00:12:58,559 --> 00:13:03,320 Speaker 1: highest third year twelve point six twelve point six point six. 246 00:13:04,440 --> 00:13:07,480 Speaker 1: So how do you respond to three point three six 247 00:13:07,559 --> 00:13:10,520 Speaker 1: percent in the world's gonna fall apart if we get 248 00:13:10,520 --> 00:13:14,079 Speaker 1: the four point zero percent thirty year. But well, I 249 00:13:14,520 --> 00:13:17,600 Speaker 1: think that's I think that's overdone. I mean, we've we've 250 00:13:17,640 --> 00:13:21,120 Speaker 1: done work on this and and uh, in terms of 251 00:13:21,280 --> 00:13:23,160 Speaker 1: you know, a debt bomb pre example, the point at 252 00:13:23,160 --> 00:13:26,320 Speaker 1: which interest on the federal debt gets such a big 253 00:13:26,600 --> 00:13:29,920 Speaker 1: element in the devilsit that it then it takes off geometrically. 254 00:13:30,520 --> 00:13:32,880 Speaker 1: And and the worst you had was in the nineties 255 00:13:33,400 --> 00:13:36,440 Speaker 1: and and and and today. To get to the equivalent, 256 00:13:36,840 --> 00:13:39,600 Speaker 1: you'd have to go to eight percent yellow and Treasury. 257 00:13:39,600 --> 00:13:42,040 Speaker 1: The distinction here is a John Farren and I on 258 00:13:42,080 --> 00:13:47,400 Speaker 1: a Thursday. Today's Thursday. Right, Oh, I'm gonna blur. You know, 259 00:13:47,840 --> 00:13:49,719 Speaker 1: me and my good friend David Price can't fig out 260 00:13:49,720 --> 00:13:55,600 Speaker 1: which day we got from which we did, thank you. Okay, 261 00:13:55,880 --> 00:13:59,080 Speaker 1: So John Farren and I agree that every Friday the 262 00:13:59,160 --> 00:14:02,719 Speaker 1: dooming gloom are nticles come out. Your charm, Gary is 263 00:14:02,800 --> 00:14:07,640 Speaker 1: you've been cautious on yields, but you haven't been dooming gloom. 264 00:14:07,720 --> 00:14:11,400 Speaker 1: What do the doom and gloom people get wrong about 265 00:14:11,400 --> 00:14:14,640 Speaker 1: their worry about the economy, worry about the stock market 266 00:14:14,679 --> 00:14:17,640 Speaker 1: and the rest of it. I think that they have 267 00:14:17,960 --> 00:14:22,320 Speaker 1: really our feel that we've had low rick rates for 268 00:14:22,360 --> 00:14:26,520 Speaker 1: so long, that's how any any any break on that 269 00:14:26,680 --> 00:14:28,720 Speaker 1: is the end of the world. I don't think they're 270 00:14:28,760 --> 00:14:31,360 Speaker 1: looking at the greater scope of history, which is a 271 00:14:31,400 --> 00:14:35,440 Speaker 1: technological progress and the new technology overlay which keeps driving 272 00:14:35,480 --> 00:14:38,840 Speaker 1: this forward. Yeah, you've written about this for bloom Bird Opinion, 273 00:14:38,960 --> 00:14:41,600 Speaker 1: you know, like five six eight essays on China. Yeah, 274 00:14:42,000 --> 00:14:44,080 Speaker 1: what did I say? I think there's there's there's so 275 00:14:44,160 --> 00:14:45,880 Speaker 1: much of a tendency to look at the last couple 276 00:14:45,880 --> 00:14:48,120 Speaker 1: of years and project that into the next millennium. Then 277 00:14:48,160 --> 00:14:50,000 Speaker 1: how do you bring it over to the equity markets 278 00:14:50,000 --> 00:14:53,080 Speaker 1: in the primal urge to go to cash? Well, you 279 00:14:53,120 --> 00:14:57,040 Speaker 1: know equities, equities are are very expansive, and you have 280 00:14:57,160 --> 00:14:59,720 Speaker 1: the FED no longer as a wind that you're back 281 00:15:00,000 --> 00:15:02,120 Speaker 1: out the wind of your face. You know, they were 282 00:15:02,160 --> 00:15:03,800 Speaker 1: saying is don't fight the fat, And I'd say you 283 00:15:04,080 --> 00:15:06,440 Speaker 1: can you own white Well shares today? White Well john 284 00:15:06,560 --> 00:15:08,720 Speaker 1: was a firm a few years ago that Mr Shilling 285 00:15:08,920 --> 00:15:11,200 Speaker 1: had a business card at. But can you own the 286 00:15:11,240 --> 00:15:14,760 Speaker 1: banking shares right now who have not participated in the 287 00:15:14,800 --> 00:15:18,720 Speaker 1: recent foolishness. I don't think so, because maybe maybe that 288 00:15:18,920 --> 00:15:21,720 Speaker 1: has maybe well the banks in terms of spread lending, 289 00:15:21,760 --> 00:15:24,280 Speaker 1: that that action may be over because of course their 290 00:15:24,320 --> 00:15:28,240 Speaker 1: their rate increases led the increased costs they have for funds, 291 00:15:28,240 --> 00:15:29,840 Speaker 1: and now they got to pay more for their money. 292 00:15:30,160 --> 00:15:32,480 Speaker 1: But you know the problem with banks is actually ad banks. 293 00:15:32,760 --> 00:15:34,400 Speaker 1: They don't want to be in the banking business. They 294 00:15:34,440 --> 00:15:36,520 Speaker 1: want to be in the growth stock business. And that's 295 00:15:36,560 --> 00:15:38,600 Speaker 1: what's gotten them into all these things. We're hearing that 296 00:15:38,680 --> 00:15:43,920 Speaker 1: a lot of inter loans and and and derivati origination 297 00:15:43,960 --> 00:15:45,560 Speaker 1: and trading, all the kinds of things you got them 298 00:15:45,600 --> 00:15:49,000 Speaker 1: into trouble in two thousand and eight, and and they 299 00:15:49,080 --> 00:15:51,120 Speaker 1: you know that the traditional banker just wants to take 300 00:15:51,120 --> 00:15:52,600 Speaker 1: the positives and lend them out. They don't want to 301 00:15:52,640 --> 00:15:54,800 Speaker 1: do make jokes about you being the poet from Amates. 302 00:15:54,880 --> 00:15:58,600 Speaker 1: You are the physicists from AMATES steeped in Newtonian mechanics. 303 00:15:58,840 --> 00:16:01,480 Speaker 1: What do you think of our art? Think of what 304 00:16:01,720 --> 00:16:05,520 Speaker 1: our start, John Williams, And we're gonna, you know, we're 305 00:16:05,520 --> 00:16:08,960 Speaker 1: gonna do three plugins and run some differential equations and 306 00:16:09,200 --> 00:16:14,120 Speaker 1: figure out where I am. Um. I think that the 307 00:16:14,200 --> 00:16:18,720 Speaker 1: idea that you are going to use mechanical means I 308 00:16:18,880 --> 00:16:23,240 Speaker 1: A or whatever to beat the human brain is a 309 00:16:23,280 --> 00:16:25,520 Speaker 1: long way from fruition. And that's I think what all 310 00:16:25,560 --> 00:16:28,400 Speaker 1: that that amounts to. Innother ways, you're you're looking, you're 311 00:16:28,400 --> 00:16:31,840 Speaker 1: looking for patterns and you're assuming repetition. And you know, 312 00:16:32,000 --> 00:16:36,200 Speaker 1: Mark Twain said history, Uh doesn't repeat, but it does rhyme, 313 00:16:36,240 --> 00:16:38,720 Speaker 1: but it doesn't repeat enough. Very cool. He's with us 314 00:16:38,800 --> 00:16:41,560 Speaker 1: next week. Gary Shilling, thank you so much. Greatly appreciated 315 00:16:41,880 --> 00:16:54,760 Speaker 1: a Gary Shilling and is important newsletter worth pointing out 316 00:16:54,760 --> 00:16:57,600 Speaker 1: that we actually um we crossed over to test and 317 00:16:57,640 --> 00:17:00,520 Speaker 1: asked for some comment on the comments from Johnson. I 318 00:17:00,520 --> 00:17:03,440 Speaker 1: have a medical group on the Shenanigans in the accounting 319 00:17:03,760 --> 00:17:08,120 Speaker 1: um Tesla saying nothing to add, so no comment from 320 00:17:08,119 --> 00:17:11,480 Speaker 1: Tesla on the record. We we will see and we 321 00:17:11,560 --> 00:17:15,760 Speaker 1: will feature Mr Johnson's comments on our podcast today. Thank 322 00:17:15,800 --> 00:17:20,600 Speaker 1: you Spotify, thank you Apple Podcast for their support. We've 323 00:17:20,640 --> 00:17:24,400 Speaker 1: been thunderstruck by the success of the podcast and part 324 00:17:24,440 --> 00:17:27,240 Speaker 1: of it is our team led by McKinnon d kiper 325 00:17:27,960 --> 00:17:32,199 Speaker 1: Uh featuring those interviews john We don't have any I 326 00:17:32,200 --> 00:17:34,040 Speaker 1: want to make clear I don't have an opinion by 327 00:17:34,080 --> 00:17:36,840 Speaker 1: old cell and Tesla. I would hope you don't. I don't. 328 00:17:37,000 --> 00:17:40,520 Speaker 1: I don't know, but I think within the intense questioning 329 00:17:40,520 --> 00:17:43,360 Speaker 1: of Mr Johnson it may have been allowed to believe that, 330 00:17:43,520 --> 00:17:48,679 Speaker 1: but his his statements were really something. There was something 331 00:17:48,720 --> 00:17:50,400 Speaker 1: and it's a judgment Cole, and I'm sure there will 332 00:17:50,400 --> 00:17:52,600 Speaker 1: be a big debate off the back of them. Interesting 333 00:17:52,600 --> 00:17:54,960 Speaker 1: that President drunks late to this one. Tom, He's late 334 00:17:55,040 --> 00:17:57,080 Speaker 1: to the news conference side from Franklin. What is it signal? 335 00:17:57,280 --> 00:17:59,879 Speaker 1: I have no idea, probably absolutely nothing. Wanting us on 336 00:17:59,920 --> 00:18:03,040 Speaker 1: the bone is Christian Shield City Economics team direct. He 337 00:18:03,080 --> 00:18:06,960 Speaker 1: knows what Christian was? He like, well, it's a it's 338 00:18:06,960 --> 00:18:10,920 Speaker 1: a sensitive press conference today given what's going on in 339 00:18:11,200 --> 00:18:15,080 Speaker 1: UM in the Eurozone politically. Of course UM and Joy 340 00:18:15,240 --> 00:18:17,960 Speaker 1: is right in the middle of things, so of course 341 00:18:18,200 --> 00:18:21,719 Speaker 1: he might be having some last instructions and briefings on 342 00:18:21,960 --> 00:18:24,080 Speaker 1: what to say and what not to say. But I mean, 343 00:18:24,640 --> 00:18:28,320 Speaker 1: I think seriously, Um, it's very much so far at 344 00:18:28,400 --> 00:18:32,280 Speaker 1: least a non event all changes at all in the decisions. Um. 345 00:18:32,320 --> 00:18:33,600 Speaker 1: And let's see what he makes of it in the 346 00:18:33,600 --> 00:18:35,600 Speaker 1: press conference. Well, he's walking into the room right now. 347 00:18:35,600 --> 00:18:38,080 Speaker 1: Have you had a question for him in the news conference? 348 00:18:38,080 --> 00:18:43,160 Speaker 1: What would it be, Christian? Um? The I mean, the 349 00:18:43,160 --> 00:18:47,159 Speaker 1: the key question is and what conditions the path that 350 00:18:47,200 --> 00:18:50,400 Speaker 1: they've laid out until September next year for both acid 351 00:18:50,440 --> 00:18:54,360 Speaker 1: purchases and for interest rates, and what conditions could they 352 00:18:54,359 --> 00:18:58,240 Speaker 1: shift from that in both directions? Christian Schild's City Economics 353 00:18:58,240 --> 00:19:01,720 Speaker 1: team director joining us says, President Mario Drunkie walks into 354 00:19:01,840 --> 00:19:04,960 Speaker 1: the headquarters of the European Central Bank kid Frankfurt, Germany, 355 00:19:05,080 --> 00:19:07,480 Speaker 1: about to take a seat and take questions of the 356 00:19:07,480 --> 00:19:22,359 Speaker 1: news conference. Gene Munster remains with us here he, of course, 357 00:19:22,680 --> 00:19:26,639 Speaker 1: of Loup Adventures, managing partner and analysts. Gene Munster, we 358 00:19:26,640 --> 00:19:28,880 Speaker 1: were talking about Tesla and I want to ask you 359 00:19:28,960 --> 00:19:33,080 Speaker 1: about Apple in relationship to automobiles, because during the break 360 00:19:33,119 --> 00:19:35,439 Speaker 1: we got a chance to chat about that. You have 361 00:19:35,640 --> 00:19:40,639 Speaker 1: the most expensive version of Apple Play. Correct. That's right, Pam, 362 00:19:40,640 --> 00:19:43,600 Speaker 1: I UH, in some ways paid forty two hours for 363 00:19:43,640 --> 00:19:47,159 Speaker 1: a version of Apple Play. Recent not so proud owner 364 00:19:47,280 --> 00:19:52,680 Speaker 1: of a Mazda nine. It is their larger suv, and 365 00:19:52,880 --> 00:19:54,960 Speaker 1: I had the privilege of getting it tricked out to 366 00:19:55,040 --> 00:19:57,600 Speaker 1: the kind of the full Touring edition, which is a 367 00:19:57,640 --> 00:20:02,520 Speaker 1: forty two edition. Uh. The reason we purchased these cars 368 00:20:02,520 --> 00:20:05,280 Speaker 1: we wanted something bigger, but ultimately wanted the biggest car 369 00:20:05,480 --> 00:20:08,480 Speaker 1: with Apple Play that in in a matrix I put together. 370 00:20:08,760 --> 00:20:11,439 Speaker 1: Even thoughts is a lot of money, it was the 371 00:20:11,520 --> 00:20:15,040 Speaker 1: cheapest largest car that had Apple Play. Okay. The reason 372 00:20:15,080 --> 00:20:18,360 Speaker 1: I mentioned this is not to uh comment on your 373 00:20:18,359 --> 00:20:22,520 Speaker 1: purchase of a Mazda, but to demonstrate how technology and 374 00:20:22,560 --> 00:20:28,080 Speaker 1: the desire for technology drives purchases in ways that may 375 00:20:28,119 --> 00:20:32,280 Speaker 1: not have been the normal consumer pattern in the past. 376 00:20:32,880 --> 00:20:37,240 Speaker 1: And you mentioned Tesla not just as an automobile company, 377 00:20:37,280 --> 00:20:39,520 Speaker 1: but as a company that is going to challenge the 378 00:20:39,560 --> 00:20:45,040 Speaker 1: business model of companies such as Uber and Lift as well. Tesla's, 379 00:20:45,240 --> 00:20:48,000 Speaker 1: as we talked about earlier, is this concept of accelerating 380 00:20:48,040 --> 00:20:50,800 Speaker 1: the globe's adoption renewable energy. It's not just a car company, 381 00:20:50,880 --> 00:20:53,840 Speaker 1: but car is an important segment and when they think 382 00:20:53,880 --> 00:20:57,320 Speaker 1: about that, they have a really a radical view about 383 00:20:57,320 --> 00:21:01,399 Speaker 1: how transportation can be changed and really de segmented. And 384 00:21:01,440 --> 00:21:04,679 Speaker 1: so ultimately, and Elon Musk is very clear on the 385 00:21:04,680 --> 00:21:07,360 Speaker 1: call last night, as the company has ambitions to compete 386 00:21:07,400 --> 00:21:11,639 Speaker 1: directly with Uber and left that means a Tesla owned fleet, 387 00:21:12,040 --> 00:21:13,920 Speaker 1: so they own the cars and they put it out 388 00:21:13,960 --> 00:21:18,239 Speaker 1: there and they would presumably offer transportation, offer rides at 389 00:21:18,480 --> 00:21:21,600 Speaker 1: less and then separately an Airbnb option where they allow 390 00:21:22,040 --> 00:21:24,600 Speaker 1: Tesla owners when they're at work to turn their car 391 00:21:24,720 --> 00:21:27,320 Speaker 1: over to the fleet. That's just one example of how 392 00:21:27,359 --> 00:21:29,760 Speaker 1: they're really taking the blinders off and thinking different about 393 00:21:29,760 --> 00:21:33,400 Speaker 1: the future transportation, like the jets. Does the public want 394 00:21:33,440 --> 00:21:35,920 Speaker 1: this stuff? Not very many people I think are gonna 395 00:21:35,960 --> 00:21:39,879 Speaker 1: want to within the monster thing you did with Apple Play, 396 00:21:39,960 --> 00:21:45,600 Speaker 1: does the public want that stuff? Yeah? I think if 397 00:21:45,640 --> 00:21:47,639 Speaker 1: you have a let's say you have a children and 398 00:21:47,680 --> 00:21:50,320 Speaker 1: they love Apple and Apple Play and everyone's got an 399 00:21:50,320 --> 00:21:53,600 Speaker 1: Apple device, what are you gonna buy? You're gonna buy 400 00:21:53,640 --> 00:21:57,159 Speaker 1: cars that are Apple enable, which opens up the conversation 401 00:21:57,160 --> 00:21:58,680 Speaker 1: about what Apple is going to do in the car 402 00:21:58,760 --> 00:22:01,719 Speaker 1: longer term. Um, and you have to as part of 403 00:22:01,720 --> 00:22:04,320 Speaker 1: my therapy around being a big belief that Apple was 404 00:22:04,359 --> 00:22:06,919 Speaker 1: eventually going to do a TV. I need to mention 405 00:22:07,280 --> 00:22:10,520 Speaker 1: projects that Apple works on don't necessarily see the light 406 00:22:10,560 --> 00:22:13,800 Speaker 1: of day. But in fact, Apple is working on a car. 407 00:22:13,960 --> 00:22:16,239 Speaker 1: They have a partnership with Volkswagen right now, they're doing 408 00:22:16,240 --> 00:22:19,280 Speaker 1: a lot of testing around AI. They just hired the 409 00:22:19,280 --> 00:22:23,479 Speaker 1: head of manufacturing from Tesla or rehired him back to Apple. 410 00:22:23,920 --> 00:22:26,280 Speaker 1: So I think that it won't just be car play 411 00:22:26,320 --> 00:22:30,600 Speaker 1: in the future. I U am. I'm optimistic that eventually 412 00:22:30,600 --> 00:22:32,800 Speaker 1: they're going to play a bigger role in transportation. You're 413 00:22:32,800 --> 00:22:35,760 Speaker 1: not doing by hold Sells so much lou Ventures versus 414 00:22:35,760 --> 00:22:38,159 Speaker 1: what you did at Piper Jeffrey. But where are you 415 00:22:38,200 --> 00:22:40,119 Speaker 1: on Apple right now? When you look at some of 416 00:22:40,119 --> 00:22:42,480 Speaker 1: the parts to be they're just ever dominant. But I'm 417 00:22:42,520 --> 00:22:45,800 Speaker 1: just speaking because they see all my kids. Their phones 418 00:22:45,800 --> 00:22:49,920 Speaker 1: have all broken in the last twelve weeks. It's gonna 419 00:22:49,920 --> 00:22:54,240 Speaker 1: be an expensive Last night was the laptop pitch at 420 00:22:54,280 --> 00:22:58,600 Speaker 1: dinner and and you're resisting this because what you're going 421 00:22:58,680 --> 00:23:01,439 Speaker 1: to give in later or when I mean, what's the 422 00:23:01,440 --> 00:23:03,840 Speaker 1: point I need? I need a new laptop instead. I'm 423 00:23:03,880 --> 00:23:06,720 Speaker 1: talking to Mr Munster tomorrow on radio, will ask him 424 00:23:07,240 --> 00:23:09,400 Speaker 1: I mean that's what it's about. This about. Yeah, wait, 425 00:23:09,400 --> 00:23:13,440 Speaker 1: wait till next Monday. They'll have new ones to announce there. 426 00:23:13,880 --> 00:23:16,560 Speaker 1: But you know, as far as Apple is concerned, I 427 00:23:16,640 --> 00:23:19,399 Speaker 1: we're still very optimistic that this stock is I got 428 00:23:19,440 --> 00:23:20,720 Speaker 1: a lot of room to go higher. It could be 429 00:23:20,800 --> 00:23:23,080 Speaker 1: multiple times bigger. As hard as that is to believe, 430 00:23:23,560 --> 00:23:25,640 Speaker 1: there's a shift in terms of how investors are thinking 431 00:23:25,680 --> 00:23:28,879 Speaker 1: about this. Instead of the anxiety around what the iPhone 432 00:23:28,920 --> 00:23:30,800 Speaker 1: numbers in a given quarter, they're starting to get more 433 00:23:30,840 --> 00:23:33,520 Speaker 1: comfortable that it's going to be a stable business and 434 00:23:33,600 --> 00:23:36,760 Speaker 1: the overall hardware and software is operating more like a 435 00:23:36,840 --> 00:23:39,320 Speaker 1: services business, So we refer to that as Apple as 436 00:23:39,320 --> 00:23:41,719 Speaker 1: a service. If that does in fact take hold, that's 437 00:23:41,720 --> 00:23:45,679 Speaker 1: a higher multiple and chairs should move higher based on that. 438 00:23:46,119 --> 00:23:50,320 Speaker 1: Can you share with Mr Keane the concept of the 439 00:23:50,359 --> 00:23:56,120 Speaker 1: wireless earbuds, the ear pods, and also the notion that 440 00:23:56,359 --> 00:24:01,520 Speaker 1: Apple is going to infiltrate other areas of daily life, 441 00:24:01,600 --> 00:24:05,280 Speaker 1: not just your computing, but with the Internet of things 442 00:24:05,320 --> 00:24:08,639 Speaker 1: in five G coming, there's gonna be a lot of 443 00:24:08,680 --> 00:24:11,760 Speaker 1: stuff we don't even imagine right now. Yeah, a lot 444 00:24:11,840 --> 00:24:13,840 Speaker 1: of the stuff that we're not imagining right now is 445 00:24:13,840 --> 00:24:18,800 Speaker 1: around uh, transportations one. Also wearables. As you said, AirPods 446 00:24:18,800 --> 00:24:23,040 Speaker 1: have been just an absolute grand slam for the company. Um, 447 00:24:23,119 --> 00:24:26,000 Speaker 1: and they're gonna continue to evolve on that. But the 448 00:24:26,040 --> 00:24:29,520 Speaker 1: watch is surprisingly accelerating and growth. I was recently at 449 00:24:29,520 --> 00:24:31,840 Speaker 1: an Apple store. There was a gentleman there in his 450 00:24:31,960 --> 00:24:34,760 Speaker 1: nineties and he's looking at a watch and the salesperson 451 00:24:34,840 --> 00:24:37,960 Speaker 1: was having a hard time explaining how to actually charge 452 00:24:38,040 --> 00:24:40,480 Speaker 1: the watch, and I asked him why he's buying it, 453 00:24:40,560 --> 00:24:43,000 Speaker 1: and he said, it's for fall detection, this new feature 454 00:24:43,000 --> 00:24:45,600 Speaker 1: that they added. So they are coming up with products 455 00:24:45,600 --> 00:24:48,159 Speaker 1: that fit a lot of areas of our lives that 456 00:24:48,200 --> 00:24:50,080 Speaker 1: you would never have thought of a decade. Is it 457 00:24:50,200 --> 00:24:52,320 Speaker 1: bad that the eleven year old ist pitching me on, 458 00:24:53,040 --> 00:24:54,680 Speaker 1: come on, we need to get the new one because 459 00:24:54,680 --> 00:24:58,760 Speaker 1: it's got six core and quad core processors. I mean, 460 00:24:59,200 --> 00:25:00,840 Speaker 1: these kids are all well. The fact that they were 461 00:25:00,880 --> 00:25:03,240 Speaker 1: able to put those words together in a sentence, yeah, 462 00:25:03,240 --> 00:25:06,800 Speaker 1: I would touch if I can just do a quick sidebar. 463 00:25:06,880 --> 00:25:10,280 Speaker 1: So you can't talk to somebody who is more optimistic 464 00:25:10,280 --> 00:25:13,520 Speaker 1: about the future positive impact of technology in our lives. 465 00:25:13,680 --> 00:25:18,040 Speaker 1: I think that I'm betting my career at Ventures on that. 466 00:25:18,040 --> 00:25:21,080 Speaker 1: That said, is we are doing more work on this 467 00:25:21,200 --> 00:25:25,120 Speaker 1: tech addiction problem. This is very real. You've seen some 468 00:25:25,400 --> 00:25:28,919 Speaker 1: smile adjustments to the products that Apple's had on the 469 00:25:28,920 --> 00:25:33,119 Speaker 1: software level to try to help manage addiction, but ultimately 470 00:25:33,160 --> 00:25:36,639 Speaker 1: I think it's a hardware problem. And so what I 471 00:25:36,680 --> 00:25:39,399 Speaker 1: think we're getting into as a period hopefully where people 472 00:25:39,440 --> 00:25:43,280 Speaker 1: recognize some of the the damage that we're doing with 473 00:25:43,560 --> 00:25:48,399 Speaker 1: our constant uh usage of these devices is where's the 474 00:25:48,480 --> 00:25:52,240 Speaker 1: technology loop on this? I mean everything they do a 475 00:25:52,240 --> 00:25:56,520 Speaker 1: new core processors, they do this from an engineering standpoint, 476 00:25:57,280 --> 00:26:01,359 Speaker 1: There's gotta be a shelving. There's gotta be where we 477 00:26:01,440 --> 00:26:04,280 Speaker 1: go far enough or is it not? There? Just forever 478 00:26:04,400 --> 00:26:08,000 Speaker 1: better and better. I'm in the camp it's forever better 479 00:26:08,040 --> 00:26:10,200 Speaker 1: and better. I mean uh and so yeah, I think 480 00:26:10,240 --> 00:26:13,120 Speaker 1: that the last hundred years would suggest that it's forever. 481 00:26:13,200 --> 00:26:17,480 Speaker 1: But so the Apple x V I I I will 482 00:26:17,520 --> 00:26:21,440 Speaker 1: be just that much better. It will be uh five 483 00:26:21,480 --> 00:26:25,240 Speaker 1: percent better, but that five percent will be indispensing the 484 00:26:25,280 --> 00:26:27,919 Speaker 1: new one. Here. You can see this on radio and 485 00:26:28,640 --> 00:26:32,080 Speaker 1: instantly the camera was just stunning. Little things like that, 486 00:26:32,480 --> 00:26:34,840 Speaker 1: the five percent every year make a big difference from 487 00:26:34,880 --> 00:26:40,560 Speaker 1: people the quality that Apple projects, not only in terms 488 00:26:40,600 --> 00:26:43,600 Speaker 1: of the products they produced, but the comments and the 489 00:26:43,720 --> 00:26:48,240 Speaker 1: thoughtfulness of their presentation, and I'm thinking of the alerts 490 00:26:48,280 --> 00:26:50,879 Speaker 1: that they send to tell you how long you have 491 00:26:51,040 --> 00:26:54,879 Speaker 1: been using your device? Are they the only ones who 492 00:26:54,920 --> 00:26:56,760 Speaker 1: are doing that? As far as you know, Google is 493 00:26:56,800 --> 00:26:59,320 Speaker 1: doing it too. They just rolled out some tools around 494 00:26:59,359 --> 00:27:02,880 Speaker 1: that this ring, so there. They call it digital well being, 495 00:27:03,000 --> 00:27:06,080 Speaker 1: So um yeah, Android fallen start to have that as well. 496 00:27:06,080 --> 00:27:08,680 Speaker 1: I thought you meant the alert dat I needn't do MyPad. 497 00:27:10,040 --> 00:27:15,200 Speaker 1: Dore's that alert. It's not an alert, that's supporter, that's alert. 498 00:27:16,119 --> 00:27:17,760 Speaker 1: Gene Monster, thank us. So what's great to have your 499 00:27:17,760 --> 00:27:20,560 Speaker 1: in our studios. Gene Munster, thank you. Blue Ventures of course, 500 00:27:20,560 --> 00:27:25,800 Speaker 1: talking on Tesla and and really talking on technology as well. 501 00:27:31,440 --> 00:27:35,680 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 502 00:27:35,720 --> 00:27:41,040 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 503 00:27:41,080 --> 00:27:45,320 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 504 00:27:45,359 --> 00:27:49,200 Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg 505 00:27:49,280 --> 00:28:01,240 Speaker 1: Radio