Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Big
Speaker 1: Big move from Testa. Tom within the reg your reporting
Speaker 1: it correctly. Others are saying it's it's surged. Come on,
Speaker 1: it's it's back to the top of its range. Absolutely
Speaker 1: crushed estimates though, yes, the third prophet in its history. UM,
Speaker 1: I think on a quarterly basis. Gordon Johnson joining US
Speaker 1: now Vertical Group Managing director an analyst. Gordon, your view
Speaker 1: on this company on whether these numbers accurately reflect the
Speaker 1: company and it positions this company is in right now, Yeah,
Speaker 1: we don't think so. And what we want to highlight
Speaker 1: is that, you know, they essentially started putting the Model
Speaker 1: three out there. They opened reservations up in twenty sixteen.
Speaker 1: The promise then was twenty seven and a half thousand
Speaker 1: dollar car um fully autonomous. You mean you climbing the
Speaker 1: back seat, drive coast to coast, sleeping, and you'd have
Speaker 1: free supercharging. None of those things are true. But on
Speaker 1: that promise in twenty sixteen, they got a bunch of reservations.
Speaker 1: We believe they pulled those reservations into two Q and
Speaker 1: three Q and that's the numbers look great. We don't
Speaker 1: think they're repeatable. UM So we think four Q is
Speaker 1: a big, big um question mark and we think it's
Speaker 1: going to prove negative. We're we're we're more confident in
Speaker 1: the short than we've ever been. So you've come on
Speaker 1: my show, come on this show many many times. You've
Speaker 1: been very outspoken about your coal, which is a cell
Speaker 1: on this stalk. The cash flow position, though it looks
Speaker 1: more positive now than it has done for quite a while,
Speaker 1: um Gold, did you think they're gonna have to raise capital?
Speaker 1: It doesn't look like they're gonna have to raise capital,
Speaker 1: and that was one of the key positives. Clearly the
Speaker 1: numbers were good. Uh, it doesn't look like they're gonna
Speaker 1: have to raise capital. But I think a couple of
Speaker 1: key questions were made. We need to see the tank
Speaker 1: Q think about this. Their DNA depreciation amortization was up
Speaker 1: only five percent, despite the fact that they advertized their
Speaker 1: tooling costs on a per unit basis and their productions
Speaker 1: up fifty so that doesn't pass the smell test. This
Speaker 1: is really important and this goes to just breaking all
Speaker 1: that Vertical does in terms of acute research. You're gonna
Speaker 1: wait for the quarterly statement, which I'm gonna guess is
Speaker 1: thirty to sixties single space boring pages, where I would
Speaker 1: not often John Tuck, John Ferroll, John Tucker would not
Speaker 1: off as well, what are you going to look for
Speaker 1: in the ten Q about manufacturing processes? Yes, so I
Speaker 1: think that's a very good question. One other thing, though,
Speaker 1: I wanted to highlight their s g n A was
Speaker 1: down despite the fact that the unit deliveries are up
Speaker 1: a hundred and five percent. They opened four new stores
Speaker 1: and forty four new superchargers. So we need to understand
Speaker 1: how their SGNA is dropping, i e. How are they
Speaker 1: basically paying less to their workers despite the fact that
Speaker 1: they're ramping up all these new facilities. We don't know
Speaker 1: the ansis critical because we don't want, we don't need.
Speaker 1: Mr musk dalical. But are you suggesting malfeasance or is
Speaker 1: this just the normal debate that any major accounting firm
Speaker 1: would have about accounting. Well, we think that there's definitely
Speaker 1: some accounting shenanigans going on. Um, if you go back
Speaker 1: to the last quarter they had a profit Q three
Speaker 1: of twenty I think it was sixteen, and you look
Speaker 1: at that quarterly report, they were they were guiding to
Speaker 1: a profit thereafter and if you go go to the
Speaker 1: last time they reported a profit, their profits then after
Speaker 1: that quarter went significantly negative. Listen, they did a bunch
Speaker 1: of things to pull forward demand into Q three. They
Speaker 1: offered free supercharging, They opened up their Freemont facility to
Speaker 1: buy cars, They did discounting, etcetera. We gotta rip John.
Speaker 1: This is really important because the word shenanigans goes back
Speaker 1: to Howard Schille. It's like a famous word in American counting.
Speaker 1: I don't know if that's when when we used that
Speaker 1: word shenanigans. You're not saying anything untoward is going going. Yes,
Speaker 1: we don't want to go as far as to say that,
Speaker 1: but we do believe that, for instance, their services and
Speaker 1: other division margins are negative thirty five percent. Why is that?
Speaker 1: Elon must said a few quarters ago that that was
Speaker 1: a major firms are in them writers. They got some
Speaker 1: local shop out of Palm Dell. Which is it. It's
Speaker 1: price price Waterhouse Coopers. But one thing go highlight. There
Speaker 1: was an l A Times article last week that stated
Speaker 1: that they were taking employee costs and taking those out
Speaker 1: of cost a good soul and capitalizing them. So this
Speaker 1: isn't just us saying this. That is a respectable newspaper
Speaker 1: essentially alleging accounting impropriety. Fascinating stuff and golden. I'm sure
Speaker 1: we'll have to get you back on and of course
Speaker 1: we'll have to try and get a comment from the
Speaker 1: company as well. Going to Johnson Vertical Group managing director
Speaker 1: and analyst. But he just said, is so important John?
Speaker 1: Can we keep john You're in charge of the show.
Speaker 1: Can we keep Mr Johnson around? You can to do
Speaker 1: five things we need to know about accounting because what
Speaker 1: he just said is really really critical, really important. Is
Speaker 1: just believed in the street or do you feel like
Speaker 1: you're alone on the idea of shenanigans? I feel like
Speaker 1: I'm alone. One other thing I'll highlight that it really
Speaker 1: gets to the core and really upsets me as a person.
Speaker 1: Tesla keeps talking about how safe their cars are. There's
Speaker 1: a medium called Medium Transportation that did an analysis and
Speaker 1: basically their analysis suggested you're four times more likely to
Speaker 1: die if you're in a Tesla car versus other luxury markets.
Speaker 1: Go on. Johnson joining us now from Vertical Group managing
Speaker 1: director and analyst after Tesla reports a really good quarter,
Speaker 1: the third positive course for the company. Um the question,
Speaker 1: I guess, Gordon, and you use the word shenanigan. So
Speaker 1: let's talk about that again. Whether that word implies as
Speaker 1: something untoward is going on or whether they are just
Speaker 1: sort of artificially making things look better by squeezing suppliers,
Speaker 1: bringing orders forward, those kind of things. Which one is it? Well,
Speaker 1: I think it may be that there the latter and
Speaker 1: a couple of things we want to talk about with
Speaker 1: respect to the queue. One thing we definitely want to
Speaker 1: see is their warranty reserves. You want to see what
Speaker 1: that number looks like, because we've definitely gotten comments from
Speaker 1: the Tesla Motor Club that there's issues with respect to quality,
Speaker 1: there's issues with respect the parts following off the car.
Speaker 1: So if that number ops, that number takes away from
Speaker 1: gross revenue and drops down to the gross profit line.
Speaker 1: So if warranty reserves are dropping out of time when
Speaker 1: complaints are increasing, that is a concern. We we know
Speaker 1: that all of our audiences worldwide. Gordon Johnson have an
Speaker 1: accounting acuity there in financer in business, they have an
Speaker 1: interest in this. Does warranty reserves move the needle for
Speaker 1: Mr Musk? Is he gonna say that's inconsequential or is
Speaker 1: it a tangible reason to be cautious on the stock?
Speaker 1: It's it's It's one of the key things that I think.
Speaker 1: It does move a needle. One other thing we definitely
Speaker 1: want to look at as well is we've gotten indications
Speaker 1: that they sold large amounts of cars being returned to
Speaker 1: enterprise I either rental car company and you can see
Speaker 1: that with respect to be almost the more than doubling
Speaker 1: in their accounts receivable. John does this cf A level
Speaker 1: five today. But this goes back to revenue recognition right,
Speaker 1: which you know in England John has been a big
Speaker 1: deal over the years in Germany particularly. I mean, are
Speaker 1: you this is important? You're saying one of the things
Speaker 1: we need to know is revenue recognition is an issue
Speaker 1: Mr Musk company. In the auto industry. When accounts receivable
Speaker 1: show a significant increase, that is indicative of cells to
Speaker 1: the commercial space i e. Rental car companies and those
Speaker 1: cells are done at huge discounts. But if Tesla does
Speaker 1: not recognize the cost associated with those cells in this quarter,
Speaker 1: that is a huge boost to gross margins. And and
Speaker 1: one other thing I'll highlight we we want to look
Speaker 1: at this and see if it's it's it's covered in
Speaker 1: the queue. We've heard of multiple instances of people getting
Speaker 1: a VIN number, paying for their Tesla car, going to
Speaker 1: pick the car up, and then the then being reassigned
Speaker 1: to someone else. That potentially enables Tesla to double book
Speaker 1: car sells in the quarter. Um that effectively selling one
Speaker 1: car to two people that boost their cash flows. So
Speaker 1: these are all items that we think need to be
Speaker 1: looked into specifically, and we think the tim Q will
Speaker 1: provide some insights. We haven't seen that yet. So Golden
Speaker 1: essentially is saying this quota company repeates it. We think
Speaker 1: this quarter cannot be repeated one and we highlighted on
Speaker 1: the that the prior appearance was if you look at Norway.
Speaker 1: The reason why we highlight Norway is in Norway, if
Speaker 1: you buy an i C E engine car and tunnel
Speaker 1: combustion engine car, you pay double the price. There's an
Speaker 1: excess tax that means you have to pay dull the price.
Speaker 1: So the cars in Norway are ev right now. The
Speaker 1: first month I eat October, that Jaguar I Pace is available,
Speaker 1: They've all sold Tesla by six those cars. Those cars
Speaker 1: are coming to America in the fourth quarter. I'm sorry
Speaker 1: you're wearing Dodger blue today. That's what it looks like. Well,
Speaker 1: the last thing we need to know, Gordon Johnson, and
Speaker 1: what do the Dodgers do about their pitching? I mean,
Speaker 1: forget about all the distractions. They got to get somebody
Speaker 1: to put the ball over the plate. Where he is
Speaker 1: the next Cofax? I don't know, and I'm a Dodger
Speaker 1: fair it was. It was tough last night. Uh. You know,
Speaker 1: I can't root for the Red Sox because I believe
Speaker 1: New York Yankees blue. So Um. I don't know the
Speaker 1: answer to the question, but they have my backing. What
Speaker 1: he wanted to sign back to that you're supposed to say,
Speaker 1: but you're sick, you say, if they don't have a
Speaker 1: co Fax, where's their Drysdal? Do you think I have
Speaker 1: a clue what you're talking about? God, I love it.
Speaker 1: Gordon Johnson, Thank you so much. A special Five things
Speaker 1: you need to know? Thank you. Interactive brokers. This is
Speaker 1: Bloomberg surveillance. I think we should bring in a man
Speaker 1: that really needs no introduction on Wall Street, Gary Shilling.
Speaker 1: We now get to call him a Bloomberg opinion columnist.
Speaker 1: Dr Shilling. I'm very pleased about that. So, Gary, what
Speaker 1: is going on in fixed income right now that you
Speaker 1: think we need to be paying attention to? I'm sorry,
Speaker 1: what is going on in fixed income now that you
Speaker 1: think we need to pay attention to? I think it's
Speaker 1: I think it's emerging markets because they face it on
Speaker 1: on cheap borrowing UH, and after the financial crisis, UH,
Speaker 1: investors were only happen to happen to end there. They're
Speaker 1: zealous for yield. And of course a lot of this
Speaker 1: was dollar denominated, but now the dollars rising, so it
Speaker 1: makes it much more difficult for them to service those debts. Also,
Speaker 1: as a dollar strengthens, UH, the commodity imports for most
Speaker 1: of these countries are are through the roof. You look
Speaker 1: at Turkey, for example, their price of price of oil
Speaker 1: in Turkish leras basically dollar. But you and I have
Speaker 1: seen this before in the basic difference. Now I'm told
Speaker 1: as dollarization, whatever that means. Are you suggesting dr showing
Speaker 1: that this is different, different than Ecuador, different than the
Speaker 1: Three Mexicos. Well, that remains to be sane, Tom, because
Speaker 1: so far you haven't really got contagion in a big way.
Speaker 1: It's it's Argentina, Turkey, mainly UH and and of course
Speaker 1: in the late nineties that started in Thailand spread throughout
Speaker 1: Asia and then to UH, to Brazil and Argentina and
Speaker 1: ultimately to UH Russia and long term capital management. But
Speaker 1: but you very well could have a contagion uh. But
Speaker 1: but you know, it's it's interesting so far you're getting
Speaker 1: you're seeing signs of access. Is you're talking earlier about
Speaker 1: this leverage loans, I mean they've they've basically doubled I
Speaker 1: think one point three trillion dollars in the in the
Speaker 1: sense of financial crisis. But you haven't seen junk bonds
Speaker 1: disappear junk bonds. You've had a punishment in emerging market equity,
Speaker 1: in debt, but you haven't seen it in in domestic
Speaker 1: junk bonds. So you know, there's the real question. Is
Speaker 1: this In other words, it's this simply the calm before
Speaker 1: the storm, and we're gonna wake up one of these days.
Speaker 1: It's a huge contagion. There are a lot of things
Speaker 1: that are potentially in that category, but we haven't seen
Speaker 1: them yet. So which one are you expecting, Gary, Well,
Speaker 1: I I would I don't know, there's one country I would.
Speaker 1: I would definitely point out uh. But uh, you know,
Speaker 1: you gotta look at countries like South Africa, Brazil. I mean,
Speaker 1: they've got election. You don't know how that's going to
Speaker 1: come out. But uh, I think you can almost throw
Speaker 1: a dart Bard and try to figure out which one.
Speaker 1: Can you maintain your history call on lower interests? I
Speaker 1: want you to justify that right now. You've got a
Speaker 1: few people in Wall Street. Good morning Steve Major at
Speaker 1: HSBC who are in the vicinity of shilling. But do
Speaker 1: you maintain that we haven't seen a turn in the
Speaker 1: Great Vulgar disinflation? Yeah? I think I think that's true, Tom,
Speaker 1: because we're basically in a deflationary world. You look at
Speaker 1: you look at all the forces out there, you look
Speaker 1: at the UH, you look at globalization first and FOREMO
Speaker 1: was probably the most important development on the world seen
Speaker 1: in the last three decades. I mean that is massively
Speaker 1: deflation areas. You simply take Western technology and put it
Speaker 1: in areas of very cheap labor costs, principally in Asia,
Speaker 1: other things that you know, the Amazon, the Almazon effect
Speaker 1: just really knocks out retailers. And and you've seen another services. Well,
Speaker 1: it's the highest thirty year bond you've ever remembered, the
Speaker 1: highest third year twelve point six twelve point six point six.
Speaker 1: So how do you respond to three point three six
Speaker 1: percent in the world's gonna fall apart if we get
Speaker 1: the four point zero percent thirty year. But well, I
Speaker 1: think that's I think that's overdone. I mean, we've we've
Speaker 1: done work on this and and uh, in terms of
Speaker 1: you know, a debt bomb pre example, the point at
Speaker 1: which interest on the federal debt gets such a big
Speaker 1: element in the devilsit that it then it takes off geometrically.
Speaker 1: And and the worst you had was in the nineties
Speaker 1: and and and and today. To get to the equivalent,
Speaker 1: you'd have to go to eight percent yellow and Treasury.
Speaker 1: The distinction here is a John Farren and I on
Speaker 1: a Thursday. Today's Thursday. Right, Oh, I'm gonna blur. You know,
Speaker 1: me and my good friend David Price can't fig out
Speaker 1: which day we got from which we did, thank you. Okay,
Speaker 1: So John Farren and I agree that every Friday the
Speaker 1: dooming gloom are nticles come out. Your charm, Gary is
Speaker 1: you've been cautious on yields, but you haven't been dooming gloom.
Speaker 1: What do the doom and gloom people get wrong about
Speaker 1: their worry about the economy, worry about the stock market
Speaker 1: and the rest of it. I think that they have
Speaker 1: really our feel that we've had low rick rates for
Speaker 1: so long, that's how any any any break on that
Speaker 1: is the end of the world. I don't think they're
Speaker 1: looking at the greater scope of history, which is a
Speaker 1: technological progress and the new technology overlay which keeps driving
Speaker 1: this forward. Yeah, you've written about this for bloom Bird Opinion,
Speaker 1: you know, like five six eight essays on China. Yeah,
Speaker 1: what did I say? I think there's there's there's so
Speaker 1: much of a tendency to look at the last couple
Speaker 1: of years and project that into the next millennium. Then
Speaker 1: how do you bring it over to the equity markets
Speaker 1: in the primal urge to go to cash? Well, you
Speaker 1: know equities, equities are are very expansive, and you have
Speaker 1: the FED no longer as a wind that you're back
Speaker 1: out the wind of your face. You know, they were
Speaker 1: saying is don't fight the fat, And I'd say you
Speaker 1: can you own white Well shares today? White Well john
Speaker 1: was a firm a few years ago that Mr Shilling
Speaker 1: had a business card at. But can you own the
Speaker 1: banking shares right now who have not participated in the
Speaker 1: recent foolishness. I don't think so, because maybe maybe that
Speaker 1: has maybe well the banks in terms of spread lending,
Speaker 1: that that action may be over because of course their
Speaker 1: their rate increases led the increased costs they have for funds,
Speaker 1: and now they got to pay more for their money.
Speaker 1: But you know the problem with banks is actually ad banks.
Speaker 1: They don't want to be in the banking business. They
Speaker 1: want to be in the growth stock business. And that's
Speaker 1: what's gotten them into all these things. We're hearing that
Speaker 1: a lot of inter loans and and and derivati origination
Speaker 1: and trading, all the kinds of things you got them
Speaker 1: into trouble in two thousand and eight, and and they
Speaker 1: you know that the traditional banker just wants to take
Speaker 1: the positives and lend them out. They don't want to
Speaker 1: do make jokes about you being the poet from Amates.
Speaker 1: You are the physicists from AMATES steeped in Newtonian mechanics.
Speaker 1: What do you think of our art? Think of what
Speaker 1: our start, John Williams, And we're gonna, you know, we're
Speaker 1: gonna do three plugins and run some differential equations and
Speaker 1: figure out where I am. Um. I think that the
Speaker 1: idea that you are going to use mechanical means I
Speaker 1: A or whatever to beat the human brain is a
Speaker 1: long way from fruition. And that's I think what all
Speaker 1: that that amounts to. Innother ways, you're you're looking, you're
Speaker 1: looking for patterns and you're assuming repetition. And you know,
Speaker 1: Mark Twain said history, Uh doesn't repeat, but it does rhyme,
Speaker 1: but it doesn't repeat enough. Very cool. He's with us
Speaker 1: next week. Gary Shilling, thank you so much. Greatly appreciated
Speaker 1: a Gary Shilling and is important newsletter worth pointing out
Speaker 1: that we actually um we crossed over to test and
Speaker 1: asked for some comment on the comments from Johnson. I
Speaker 1: have a medical group on the Shenanigans in the accounting
Speaker 1: um Tesla saying nothing to add, so no comment from
Speaker 1: Tesla on the record. We we will see and we
Speaker 1: will feature Mr Johnson's comments on our podcast today. Thank
Speaker 1: you Spotify, thank you Apple Podcast for their support. We've
Speaker 1: been thunderstruck by the success of the podcast and part
Speaker 1: of it is our team led by McKinnon d kiper
Speaker 1: Uh featuring those interviews john We don't have any I
Speaker 1: want to make clear I don't have an opinion by
Speaker 1: old cell and Tesla. I would hope you don't. I don't.
Speaker 1: I don't know, but I think within the intense questioning
Speaker 1: of Mr Johnson it may have been allowed to believe that,
Speaker 1: but his his statements were really something. There was something
Speaker 1: and it's a judgment Cole, and I'm sure there will
Speaker 1: be a big debate off the back of them. Interesting
Speaker 1: that President drunks late to this one. Tom, He's late
Speaker 1: to the news conference side from Franklin. What is it signal?
Speaker 1: I have no idea, probably absolutely nothing. Wanting us on
Speaker 1: the bone is Christian Shield City Economics team direct. He
Speaker 1: knows what Christian was? He like, well, it's a it's
Speaker 1: a sensitive press conference today given what's going on in
Speaker 1: UM in the Eurozone politically. Of course UM and Joy
Speaker 1: is right in the middle of things, so of course
Speaker 1: he might be having some last instructions and briefings on
Speaker 1: what to say and what not to say. But I mean,
Speaker 1: I think seriously, Um, it's very much so far at
Speaker 1: least a non event all changes at all in the decisions. Um.
Speaker 1: And let's see what he makes of it in the
Speaker 1: press conference. Well, he's walking into the room right now.
Speaker 1: Have you had a question for him in the news conference?
Speaker 1: What would it be, Christian? Um? The I mean, the
Speaker 1: the key question is and what conditions the path that
Speaker 1: they've laid out until September next year for both acid
Speaker 1: purchases and for interest rates, and what conditions could they
Speaker 1: shift from that in both directions? Christian Schild's City Economics
Speaker 1: team director joining us says, President Mario Drunkie walks into
Speaker 1: the headquarters of the European Central Bank kid Frankfurt, Germany,
Speaker 1: about to take a seat and take questions of the
Speaker 1: news conference. Gene Munster remains with us here he, of course,
Speaker 1: of Loup Adventures, managing partner and analysts. Gene Munster, we
Speaker 1: were talking about Tesla and I want to ask you
Speaker 1: about Apple in relationship to automobiles, because during the break
Speaker 1: we got a chance to chat about that. You have
Speaker 1: the most expensive version of Apple Play. Correct. That's right, Pam,
Speaker 1: I UH, in some ways paid forty two hours for
Speaker 1: a version of Apple Play. Recent not so proud owner
Speaker 1: of a Mazda nine. It is their larger suv, and
Speaker 1: I had the privilege of getting it tricked out to
Speaker 1: the kind of the full Touring edition, which is a
Speaker 1: forty two edition. Uh. The reason we purchased these cars
Speaker 1: we wanted something bigger, but ultimately wanted the biggest car
Speaker 1: with Apple Play that in in a matrix I put together.
Speaker 1: Even thoughts is a lot of money, it was the
Speaker 1: cheapest largest car that had Apple Play. Okay. The reason
Speaker 1: I mentioned this is not to uh comment on your
Speaker 1: purchase of a Mazda, but to demonstrate how technology and
Speaker 1: the desire for technology drives purchases in ways that may
Speaker 1: not have been the normal consumer pattern in the past.
Speaker 1: And you mentioned Tesla not just as an automobile company,
Speaker 1: but as a company that is going to challenge the
Speaker 1: business model of companies such as Uber and Lift as well. Tesla's,
Speaker 1: as we talked about earlier, is this concept of accelerating
Speaker 1: the globe's adoption renewable energy. It's not just a car company,
Speaker 1: but car is an important segment and when they think
Speaker 1: about that, they have a really a radical view about
Speaker 1: how transportation can be changed and really de segmented. And
Speaker 1: so ultimately, and Elon Musk is very clear on the
Speaker 1: call last night, as the company has ambitions to compete
Speaker 1: directly with Uber and left that means a Tesla owned fleet,
Speaker 1: so they own the cars and they put it out
Speaker 1: there and they would presumably offer transportation, offer rides at
Speaker 1: less and then separately an Airbnb option where they allow
Speaker 1: Tesla owners when they're at work to turn their car
Speaker 1: over to the fleet. That's just one example of how
Speaker 1: they're really taking the blinders off and thinking different about
Speaker 1: the future transportation, like the jets. Does the public want
Speaker 1: this stuff? Not very many people I think are gonna
Speaker 1: want to within the monster thing you did with Apple Play,
Speaker 1: does the public want that stuff? Yeah? I think if
Speaker 1: you have a let's say you have a children and
Speaker 1: they love Apple and Apple Play and everyone's got an
Speaker 1: Apple device, what are you gonna buy? You're gonna buy
Speaker 1: cars that are Apple enable, which opens up the conversation
Speaker 1: about what Apple is going to do in the car
Speaker 1: longer term. Um, and you have to as part of
Speaker 1: my therapy around being a big belief that Apple was
Speaker 1: eventually going to do a TV. I need to mention
Speaker 1: projects that Apple works on don't necessarily see the light
Speaker 1: of day. But in fact, Apple is working on a car.
Speaker 1: They have a partnership with Volkswagen right now, they're doing
Speaker 1: a lot of testing around AI. They just hired the
Speaker 1: head of manufacturing from Tesla or rehired him back to Apple.
Speaker 1: So I think that it won't just be car play
Speaker 1: in the future. I U am. I'm optimistic that eventually
Speaker 1: they're going to play a bigger role in transportation. You're
Speaker 1: not doing by hold Sells so much lou Ventures versus
Speaker 1: what you did at Piper Jeffrey. But where are you
Speaker 1: on Apple right now? When you look at some of
Speaker 1: the parts to be they're just ever dominant. But I'm
Speaker 1: just speaking because they see all my kids. Their phones
Speaker 1: have all broken in the last twelve weeks. It's gonna
Speaker 1: be an expensive Last night was the laptop pitch at
Speaker 1: dinner and and you're resisting this because what you're going
Speaker 1: to give in later or when I mean, what's the
Speaker 1: point I need? I need a new laptop instead. I'm
Speaker 1: talking to Mr Munster tomorrow on radio, will ask him
Speaker 1: I mean that's what it's about. This about. Yeah, wait,
Speaker 1: wait till next Monday. They'll have new ones to announce there.
Speaker 1: But you know, as far as Apple is concerned, I
Speaker 1: we're still very optimistic that this stock is I got
Speaker 1: a lot of room to go higher. It could be
Speaker 1: multiple times bigger. As hard as that is to believe,
Speaker 1: there's a shift in terms of how investors are thinking
Speaker 1: about this. Instead of the anxiety around what the iPhone
Speaker 1: numbers in a given quarter, they're starting to get more
Speaker 1: comfortable that it's going to be a stable business and
Speaker 1: the overall hardware and software is operating more like a
Speaker 1: services business, So we refer to that as Apple as
Speaker 1: a service. If that does in fact take hold, that's
Speaker 1: a higher multiple and chairs should move higher based on that.
Speaker 1: Can you share with Mr Keane the concept of the
Speaker 1: wireless earbuds, the ear pods, and also the notion that
Speaker 1: Apple is going to infiltrate other areas of daily life,
Speaker 1: not just your computing, but with the Internet of things
Speaker 1: in five G coming, there's gonna be a lot of
Speaker 1: stuff we don't even imagine right now. Yeah, a lot
Speaker 1: of the stuff that we're not imagining right now is
Speaker 1: around uh, transportations one. Also wearables. As you said, AirPods
Speaker 1: have been just an absolute grand slam for the company. Um,
Speaker 1: and they're gonna continue to evolve on that. But the
Speaker 1: watch is surprisingly accelerating and growth. I was recently at
Speaker 1: an Apple store. There was a gentleman there in his
Speaker 1: nineties and he's looking at a watch and the salesperson
Speaker 1: was having a hard time explaining how to actually charge
Speaker 1: the watch, and I asked him why he's buying it,
Speaker 1: and he said, it's for fall detection, this new feature
Speaker 1: that they added. So they are coming up with products
Speaker 1: that fit a lot of areas of our lives that
Speaker 1: you would never have thought of a decade. Is it
Speaker 1: bad that the eleven year old ist pitching me on,
Speaker 1: come on, we need to get the new one because
Speaker 1: it's got six core and quad core processors. I mean,
Speaker 1: these kids are all well. The fact that they were
Speaker 1: able to put those words together in a sentence, yeah,
Speaker 1: I would touch if I can just do a quick sidebar.
Speaker 1: So you can't talk to somebody who is more optimistic
Speaker 1: about the future positive impact of technology in our lives.
Speaker 1: I think that I'm betting my career at Ventures on that.
Speaker 1: That said, is we are doing more work on this
Speaker 1: tech addiction problem. This is very real. You've seen some
Speaker 1: smile adjustments to the products that Apple's had on the
Speaker 1: software level to try to help manage addiction, but ultimately
Speaker 1: I think it's a hardware problem. And so what I
Speaker 1: think we're getting into as a period hopefully where people
Speaker 1: recognize some of the the damage that we're doing with
Speaker 1: our constant uh usage of these devices is where's the
Speaker 1: technology loop on this? I mean everything they do a
Speaker 1: new core processors, they do this from an engineering standpoint,
Speaker 1: There's gotta be a shelving. There's gotta be where we
Speaker 1: go far enough or is it not? There? Just forever
Speaker 1: better and better. I'm in the camp it's forever better
Speaker 1: and better. I mean uh and so yeah, I think
Speaker 1: that the last hundred years would suggest that it's forever.
Speaker 1: But so the Apple x V I I I will
Speaker 1: be just that much better. It will be uh five
Speaker 1: percent better, but that five percent will be indispensing the
Speaker 1: new one. Here. You can see this on radio and
Speaker 1: instantly the camera was just stunning. Little things like that,
Speaker 1: the five percent every year make a big difference from
Speaker 1: people the quality that Apple projects, not only in terms
Speaker 1: of the products they produced, but the comments and the
Speaker 1: thoughtfulness of their presentation, and I'm thinking of the alerts
Speaker 1: that they send to tell you how long you have
Speaker 1: been using your device? Are they the only ones who
Speaker 1: are doing that? As far as you know, Google is
Speaker 1: doing it too. They just rolled out some tools around
Speaker 1: that this ring, so there. They call it digital well being,
Speaker 1: So um yeah, Android fallen start to have that as well.
Speaker 1: I thought you meant the alert dat I needn't do MyPad.
Speaker 1: Dore's that alert. It's not an alert, that's supporter, that's alert.
Speaker 1: Gene Monster, thank us. So what's great to have your
Speaker 1: in our studios. Gene Munster, thank you. Blue Ventures of course,
Speaker 1: talking on Tesla and and really talking on technology as well.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio