1 00:00:05,519 --> 00:00:08,640 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Carol Masser, along 2 00:00:08,640 --> 00:00:11,559 Speaker 1: with Manis Crowning and Katie Greifeld. Join us each day 3 00:00:11,560 --> 00:00:15,680 Speaker 1: for insight from the best in economics, geopolitics, finance and investment. 4 00:00:16,040 --> 00:00:19,479 Speaker 1: Subscribe to Bloomberg Surveillance on demand at Apple, Spotify and 5 00:00:19,560 --> 00:00:23,200 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:23,320 --> 00:00:26,120 Speaker 1: the Bloomberg Terminal, and of course, on the Bloomberg Business App. 7 00:00:26,400 --> 00:00:28,720 Speaker 1: Let's See how Much Sleep byby Sam Stowell got He's 8 00:00:28,800 --> 00:00:32,519 Speaker 1: chief investment strategist at CFIA, joining us on this Friday. 9 00:00:33,040 --> 00:00:34,839 Speaker 1: There is so much to talk about, Sam, as we 10 00:00:34,880 --> 00:00:37,720 Speaker 1: get ready to wrap up a wild year one for 11 00:00:37,760 --> 00:00:40,760 Speaker 1: the textbooks. I feel like in so many ways, as 12 00:00:40,760 --> 00:00:44,000 Speaker 1: you sit here on this December, as we get ready 13 00:00:44,040 --> 00:00:45,919 Speaker 1: for the last trading day here in the United States, 14 00:00:46,080 --> 00:00:47,880 Speaker 1: how are you thinking about the year that was? In 15 00:00:47,920 --> 00:00:48,960 Speaker 1: the year that might. 16 00:00:48,840 --> 00:00:53,600 Speaker 2: Be, Well, good morning, Carol, and good morning everybody. I'm 17 00:00:53,600 --> 00:00:58,000 Speaker 2: basically thinking that looking forward to twenty twenty four also 18 00:00:58,120 --> 00:01:01,960 Speaker 2: being a good year. History tells us that great years 19 00:01:02,040 --> 00:01:06,319 Speaker 2: traditionally are followed by good years that gains in excess 20 00:01:06,319 --> 00:01:09,839 Speaker 2: of twenty percent in one calendar year. Lead to double 21 00:01:09,880 --> 00:01:13,279 Speaker 2: digit gains in the second year, basically a three hundred 22 00:01:13,319 --> 00:01:16,920 Speaker 2: basis point improvement over the long term average with a 23 00:01:17,000 --> 00:01:20,800 Speaker 2: ten percentage point increase in the frequency of advance. So 24 00:01:21,319 --> 00:01:24,480 Speaker 2: basically you letting your winners ride from one year to 25 00:01:24,520 --> 00:01:25,000 Speaker 2: the next. 26 00:01:25,600 --> 00:01:26,959 Speaker 3: So every day we've got to come up with a 27 00:01:27,000 --> 00:01:29,000 Speaker 3: new way to ask you whether you want to belong 28 00:01:29,160 --> 00:01:31,360 Speaker 3: the MAC seven relative to the breadth of the There 29 00:01:31,360 --> 00:01:34,000 Speaker 3: are four hundred and ninety three other stocks, so find. 30 00:01:33,840 --> 00:01:34,520 Speaker 4: Another version of it. 31 00:01:34,560 --> 00:01:37,120 Speaker 3: If you think you're going to get a double digit return, 32 00:01:37,200 --> 00:01:40,400 Speaker 3: The question is then within MAC seven they are expected 33 00:01:40,400 --> 00:01:42,920 Speaker 3: to see their earnings growth rise by twenty two percent 34 00:01:43,040 --> 00:01:45,679 Speaker 3: next year. That's twice the S and P five hundred advance. 35 00:01:45,840 --> 00:01:48,640 Speaker 3: I mean there's an airrevocability of having to have MAC 36 00:01:48,760 --> 00:01:51,880 Speaker 3: seven as a portion of your equity exposure. So is 37 00:01:51,880 --> 00:01:54,560 Speaker 3: it still over exposed to MAC seven or do you 38 00:01:54,560 --> 00:01:55,200 Speaker 3: go for breadth? 39 00:01:56,200 --> 00:01:57,440 Speaker 4: I think you go for breath. 40 00:01:57,560 --> 00:02:00,320 Speaker 2: But what you do is you broaden out and then 41 00:02:00,400 --> 00:02:03,920 Speaker 2: those sectors that have done so well. Again, going back 42 00:02:03,920 --> 00:02:06,920 Speaker 2: to nineteen ninety, if you were to be holding onto 43 00:02:07,000 --> 00:02:10,440 Speaker 2: the three best performing sectors from an up year into 44 00:02:10,480 --> 00:02:13,240 Speaker 2: the new year, you ended up beating the market seventy 45 00:02:13,280 --> 00:02:16,280 Speaker 2: percent of the time, and the focus being that now 46 00:02:16,360 --> 00:02:19,960 Speaker 2: you drift down into the second maybe third tier level. 47 00:02:20,080 --> 00:02:24,560 Speaker 2: So semiconductors having one hundred and five percent improvement on 48 00:02:24,680 --> 00:02:27,800 Speaker 2: a sub industry level within the S and P fifteen hundred, 49 00:02:28,120 --> 00:02:30,720 Speaker 2: you would stick with that group. But you might instead 50 00:02:30,760 --> 00:02:34,240 Speaker 2: of looking at Nvidia, you might be looking at Broadcom, 51 00:02:34,280 --> 00:02:37,400 Speaker 2: you might be looking at Marvel Technology, et cetera. So 52 00:02:37,880 --> 00:02:40,720 Speaker 2: you stick with the winning sectors, but you might broaden 53 00:02:40,760 --> 00:02:43,720 Speaker 2: out to the second and third tier companies. 54 00:02:43,800 --> 00:02:46,320 Speaker 1: Can I ask you, though, Sam, why not stay with Nvidia? 55 00:02:46,360 --> 00:02:47,760 Speaker 1: I feel like you know what manis if we talk 56 00:02:47,800 --> 00:02:50,760 Speaker 1: about AI chips, that is still the company that everybody 57 00:02:50,760 --> 00:02:52,320 Speaker 1: says has to beat. I was listening to something from 58 00:02:52,360 --> 00:02:55,280 Speaker 1: Ian King overnight. You know we're waiting for their you know, 59 00:02:55,360 --> 00:02:58,000 Speaker 1: accelerator chips that are about to come. I mean, why 60 00:02:58,040 --> 00:02:59,120 Speaker 1: not go with the leader? 61 00:03:00,120 --> 00:03:04,200 Speaker 2: Oh, we still recommend In video, Angelo Zeno, ar tech 62 00:03:04,480 --> 00:03:07,160 Speaker 2: specialist is saying that this is a company that is 63 00:03:07,280 --> 00:03:10,520 Speaker 2: likely to be a leader for quite some time. I 64 00:03:10,600 --> 00:03:13,359 Speaker 2: think that what I was saying is that we're also 65 00:03:13,440 --> 00:03:15,840 Speaker 2: going to see others. Maybe we turn it into the 66 00:03:15,840 --> 00:03:20,320 Speaker 2: Magnificent fourteen or so. But we basically broaden out those 67 00:03:20,360 --> 00:03:21,840 Speaker 2: groups that are likely to benefit. 68 00:03:23,040 --> 00:03:25,160 Speaker 3: And it's interesting that you say tier three, tier three 69 00:03:25,240 --> 00:03:27,080 Speaker 3: going from in Vidia two hundred and thirty eight percent 70 00:03:27,360 --> 00:03:29,720 Speaker 3: performance to broadcoalm at one hundred percent. But I get 71 00:03:29,760 --> 00:03:32,959 Speaker 3: your point. How much exceptional breath would you take? We 72 00:03:33,000 --> 00:03:36,480 Speaker 3: caught up with not Alliance Bernstein yesterday and they talked 73 00:03:36,480 --> 00:03:39,000 Speaker 3: about a sweet spot for junk at sweet spot for 74 00:03:39,120 --> 00:03:42,920 Speaker 3: many of these slightly riskier markets. How much risk do 75 00:03:42,960 --> 00:03:46,080 Speaker 3: you want to put into portfolios next year? How much breath? 76 00:03:46,080 --> 00:03:48,240 Speaker 3: I mean they talk about jump being in a sweet spot. 77 00:03:48,320 --> 00:03:50,760 Speaker 3: What's the equivalent for you in the equity world. 78 00:03:52,320 --> 00:03:55,400 Speaker 2: Well, when you deal with risk, I guess it depends 79 00:03:55,440 --> 00:03:58,080 Speaker 2: on the individual. I like to say I'm so conservative, 80 00:03:58,120 --> 00:04:01,320 Speaker 2: I wear a belt and suspenders, But I think when 81 00:04:01,360 --> 00:04:04,800 Speaker 2: you look to historical precedent and you see that we 82 00:04:04,880 --> 00:04:08,120 Speaker 2: are in an election year for a first term administration, 83 00:04:08,560 --> 00:04:10,800 Speaker 2: the market has gained one hundred percent of the time 84 00:04:10,840 --> 00:04:13,760 Speaker 2: since World War Two, with an average total return of 85 00:04:13,760 --> 00:04:16,400 Speaker 2: fifteen and a half percent. We're in the second year 86 00:04:16,440 --> 00:04:19,120 Speaker 2: of a bull market, typically up twelve and a half percent, 87 00:04:19,440 --> 00:04:22,599 Speaker 2: rising eighty five percent of the time. And as I 88 00:04:22,720 --> 00:04:26,240 Speaker 2: just mentioned whenever we're in a year following a twenty 89 00:04:26,279 --> 00:04:30,599 Speaker 2: plus percent advance, the market has done exceptionally well in 90 00:04:30,920 --> 00:04:33,839 Speaker 2: that second year. So I would tend to say that 91 00:04:34,680 --> 00:04:37,839 Speaker 2: if you have added to the risk in this fourth quarter, 92 00:04:38,960 --> 00:04:42,320 Speaker 2: stick with that higher risk, And if you do believe 93 00:04:42,360 --> 00:04:45,640 Speaker 2: that there is more risk potential for twenty twenty four, 94 00:04:46,480 --> 00:04:49,120 Speaker 2: I think we're a bit overbought right now, and once 95 00:04:49,160 --> 00:04:51,680 Speaker 2: we get into the new calendar year, when people can 96 00:04:51,760 --> 00:04:55,560 Speaker 2: take their profits and then defer taxes for another year, 97 00:04:56,240 --> 00:04:58,840 Speaker 2: then I would say look to buy on those dips. 98 00:04:59,200 --> 00:05:01,599 Speaker 5: Well, let's talk about this from a sector perspective, Because 99 00:05:01,600 --> 00:05:04,159 Speaker 5: you write in your notes that following up years, it's 100 00:05:04,200 --> 00:05:06,720 Speaker 5: best to let your winners ride. I want to talk 101 00:05:06,720 --> 00:05:09,120 Speaker 5: about the other side of that. Do you let your 102 00:05:09,200 --> 00:05:12,039 Speaker 5: losers continue to lose? You take a look at utilities, 103 00:05:12,200 --> 00:05:15,679 Speaker 5: energy staples leading losses this year. Do you just stay 104 00:05:15,680 --> 00:05:17,200 Speaker 5: away from them in twenty twenty four. 105 00:05:18,240 --> 00:05:21,200 Speaker 2: Well, obviously we do have recommendations in all three of 106 00:05:21,200 --> 00:05:25,920 Speaker 2: those sectors, but from a waiting perspective, we would continue 107 00:05:25,920 --> 00:05:29,640 Speaker 2: to recommend underweighting these groups, mainly because there's an awful 108 00:05:29,640 --> 00:05:34,080 Speaker 2: lot of overhead resistance and if there is the emphasis 109 00:05:34,120 --> 00:05:38,320 Speaker 2: toward growth, toward risk, etc. Investors are going to continue 110 00:05:38,360 --> 00:05:41,560 Speaker 2: to focus on those growth leaders. So I would tend 111 00:05:41,560 --> 00:05:44,880 Speaker 2: to say that while you could see a drifting hire 112 00:05:45,040 --> 00:05:48,400 Speaker 2: of some of these groups, from a relative strength perspective, 113 00:05:48,440 --> 00:05:50,440 Speaker 2: they're likely to be underperformers yet. 114 00:05:50,880 --> 00:05:53,360 Speaker 5: And I want to get specific here and run through 115 00:05:53,360 --> 00:05:55,480 Speaker 5: some names because I'm taking a look at the socks 116 00:05:55,520 --> 00:05:57,960 Speaker 5: that you've specified in financials. 117 00:05:58,320 --> 00:05:59,239 Speaker 1: Charles Schwab. 118 00:05:59,320 --> 00:06:01,480 Speaker 5: Schwab is a really interesting name to me because obviously 119 00:06:01,560 --> 00:06:03,800 Speaker 5: it was one of the babies perhaps thrown out with 120 00:06:03,839 --> 00:06:06,320 Speaker 5: the bathwater, and what we saw with margin, it really 121 00:06:06,400 --> 00:06:09,279 Speaker 5: hasn't recovered. You take a look at shares down about 122 00:06:09,320 --> 00:06:12,880 Speaker 5: sixteen percent for twenty twenty three. What's the thinking around 123 00:06:12,960 --> 00:06:14,440 Speaker 5: Charles Schwab at this juncture. 124 00:06:15,480 --> 00:06:18,279 Speaker 2: Well, I like to say that fundamentals tell you what, 125 00:06:18,560 --> 00:06:22,279 Speaker 2: but technicals tell you when and how far. So I 126 00:06:22,440 --> 00:06:27,680 Speaker 2: like to combine CFIA equity analyst recommendations along with our 127 00:06:27,960 --> 00:06:32,920 Speaker 2: lowry research technical assistance area, so you know, seeing where 128 00:06:32,920 --> 00:06:36,400 Speaker 2: the momentum relative strength happens to be. So Charles Schwab, 129 00:06:36,520 --> 00:06:41,279 Speaker 2: basically it's an extreme undervaluation situation. It's almost trading at 130 00:06:41,320 --> 00:06:44,920 Speaker 2: about half of what it normally trades. Also, we're looking 131 00:06:45,000 --> 00:06:48,680 Speaker 2: at an environment in which the concern I think is 132 00:06:48,800 --> 00:06:52,279 Speaker 2: just totally overblown. So with the prospect of another good 133 00:06:52,320 --> 00:06:56,120 Speaker 2: year in the marketplace benefiting the investment banks and brokers, 134 00:06:56,760 --> 00:06:59,760 Speaker 2: one that is over sold and really has not reached 135 00:06:59,760 --> 00:07:00,960 Speaker 2: its potential is. 136 00:07:00,920 --> 00:07:03,920 Speaker 1: Schwab Hey sam our most read story in the Bloomberg. 137 00:07:04,080 --> 00:07:06,960 Speaker 1: It's a story put together by a bunch of our reporters, 138 00:07:06,960 --> 00:07:09,480 Speaker 1: and it says Wall Street's best and bright is flopped 139 00:07:09,480 --> 00:07:11,760 Speaker 1: once again in twenty twenty three, basically saying that at 140 00:07:11,760 --> 00:07:14,360 Speaker 1: the end of twenty twenty two, everyone, it seem was 141 00:07:14,400 --> 00:07:17,040 Speaker 1: game planning for the recession they were convinced was coming. 142 00:07:17,080 --> 00:07:20,000 Speaker 1: There's a lot of things that came out seemingly from nowhere. 143 00:07:20,200 --> 00:07:24,400 Speaker 1: Regional banking, the concerns there Russia Ukraine, that war continuing, 144 00:07:24,440 --> 00:07:27,720 Speaker 1: then of course the Middle East conflict. As you look 145 00:07:27,760 --> 00:07:31,360 Speaker 1: ahead and you obviously have laid out your scenario, you know, 146 00:07:31,440 --> 00:07:33,560 Speaker 1: what are the things though, that we must keep on 147 00:07:33,640 --> 00:07:35,720 Speaker 1: our radar that maybe could just kind of come out 148 00:07:35,720 --> 00:07:36,239 Speaker 1: of nowhere. 149 00:07:37,280 --> 00:07:39,880 Speaker 2: Well, as Mannis was saying early on in the program, 150 00:07:40,080 --> 00:07:42,760 Speaker 2: is when will the FED start to cut and by 151 00:07:42,800 --> 00:07:45,360 Speaker 2: how much our belief is that they're going to cut 152 00:07:45,400 --> 00:07:48,920 Speaker 2: three times in twenty twenty four, starting in the second quarter, 153 00:07:49,640 --> 00:07:52,200 Speaker 2: mainly because the FED doesn't want to make the mistakes 154 00:07:52,200 --> 00:07:54,600 Speaker 2: that they did in the late seventies. They want to 155 00:07:54,920 --> 00:07:59,520 Speaker 2: ensure that inflation, like a campfire, is fully doused before 156 00:07:59,520 --> 00:08:04,200 Speaker 2: they start to cut interest rates. So our belief is 157 00:08:04,240 --> 00:08:06,800 Speaker 2: that only if we end up with a hard landing 158 00:08:07,160 --> 00:08:09,520 Speaker 2: rather than a soft landing will the FED be more 159 00:08:09,520 --> 00:08:15,240 Speaker 2: aggressive from a rate cutting perspective. Also, adding geopolitical issues, 160 00:08:15,760 --> 00:08:19,119 Speaker 2: should we find that there's a broadening of the Middle 161 00:08:19,120 --> 00:08:23,200 Speaker 2: East tensions and conflict and the total shutdown of the 162 00:08:23,240 --> 00:08:26,480 Speaker 2: Red Sea, we still are having some shipping firms that 163 00:08:26,520 --> 00:08:29,840 Speaker 2: are willing to venture in there, but a total shutdown, 164 00:08:30,120 --> 00:08:34,880 Speaker 2: a jump in oil prices, those could obviously upend the 165 00:08:35,040 --> 00:08:36,000 Speaker 2: year ahead forecast. 166 00:08:36,080 --> 00:08:37,880 Speaker 1: Yeah, already a full play, it feels like for the 167 00:08:37,920 --> 00:08:40,320 Speaker 1: new year. Hey, Sam, thank you so much. Happy New Year. 168 00:08:40,520 --> 00:08:42,480 Speaker 1: I always appreciate all the time you give us here 169 00:08:42,480 --> 00:08:49,960 Speaker 1: at Bloomberg Sam Stovell over at CFRA a lot to 170 00:08:49,960 --> 00:08:51,839 Speaker 1: talk about. I mean, Apple's had a very good year. 171 00:08:51,880 --> 00:08:53,440 Speaker 1: The stock is up to I think just shy a 172 00:08:53,520 --> 00:08:57,199 Speaker 1: fifty percent here in twenty twenty three, so and a 173 00:08:57,280 --> 00:08:58,960 Speaker 1: lot of stories and a lot of concerns this week 174 00:08:59,000 --> 00:09:02,520 Speaker 1: in terms of litigations stopping sales of the Apple Wash 175 00:09:02,600 --> 00:09:05,040 Speaker 1: but coming back on board. So no offense. Guys, I'd 176 00:09:05,040 --> 00:09:06,319 Speaker 1: love to talk to you, but I really want to 177 00:09:06,320 --> 00:09:09,520 Speaker 1: talk to Mark German about it. Is Bloomberg Chief correspondent 178 00:09:09,600 --> 00:09:12,440 Speaker 1: Apple Expert has written a bunch about Apple always, but 179 00:09:12,480 --> 00:09:14,880 Speaker 1: also this week. Mark, good to have you here. We 180 00:09:14,920 --> 00:09:17,160 Speaker 1: know it's early. I think you're on the West coast, 181 00:09:17,559 --> 00:09:20,400 Speaker 1: so it is kind of early. Talk to us about 182 00:09:20,440 --> 00:09:24,000 Speaker 1: the watch, specifically in terms of the back and forth 183 00:09:24,120 --> 00:09:26,760 Speaker 1: pulling it off the market, putting it back on the market, 184 00:09:27,080 --> 00:09:30,079 Speaker 1: patent litigation. I feel like when it comes to technology companies, 185 00:09:30,800 --> 00:09:32,920 Speaker 1: it's kind of a given. But how should we be 186 00:09:33,000 --> 00:09:34,960 Speaker 1: thinking about it, at least for the investment side and 187 00:09:34,960 --> 00:09:36,000 Speaker 1: the investor audience. 188 00:09:37,360 --> 00:09:39,040 Speaker 4: Sure, thank you so much for having me. So I'll 189 00:09:39,080 --> 00:09:41,719 Speaker 4: start off by saying that the Apple Watch, one of 190 00:09:41,760 --> 00:09:45,679 Speaker 4: Apple's most premiere products being pulled from sale in the US. 191 00:09:46,720 --> 00:09:50,840 Speaker 4: That's unprecedented. That just doesn't happen. When the ITC said 192 00:09:50,840 --> 00:09:53,120 Speaker 4: in October that Apple would have to pull the watch 193 00:09:53,120 --> 00:09:56,600 Speaker 4: from store shelves after a sixty day review period, That's 194 00:09:56,600 --> 00:09:59,440 Speaker 4: how we ended up with this happening during the week 195 00:09:59,480 --> 00:10:02,120 Speaker 4: between Smiths and New Year's. I think a lot of 196 00:10:02,120 --> 00:10:05,360 Speaker 4: people believe that there would be no way Apple would 197 00:10:05,360 --> 00:10:07,800 Speaker 4: get to this point. Either Apple would figure out some 198 00:10:07,840 --> 00:10:11,240 Speaker 4: sort of settlement, either they would issue a software update, 199 00:10:11,280 --> 00:10:14,840 Speaker 4: they would convince the Biden administration to veto the order 200 00:10:14,880 --> 00:10:17,640 Speaker 4: from the Trade Commission. I think it was very surprising, 201 00:10:17,679 --> 00:10:20,199 Speaker 4: including to myself, when these things actually got pulled from 202 00:10:20,200 --> 00:10:23,880 Speaker 4: store shelves. Now the Van, for all intentsive purposes, really 203 00:10:23,880 --> 00:10:26,760 Speaker 4: only lasted a few days because Apple just a couple 204 00:10:26,800 --> 00:10:29,760 Speaker 4: of days ago got an emergency order through an appeals 205 00:10:29,800 --> 00:10:32,680 Speaker 4: court in DC that got them to put the Watch 206 00:10:32,800 --> 00:10:35,920 Speaker 4: back on the market. Now this is temporary, right. Apple 207 00:10:36,040 --> 00:10:39,400 Speaker 4: still has to put a software fix in place or 208 00:10:39,440 --> 00:10:42,040 Speaker 4: another type of fix, and that fix is being reviewed 209 00:10:42,080 --> 00:10:45,400 Speaker 4: by the US Customs Agency. There was actually a hearing 210 00:10:45,600 --> 00:10:48,640 Speaker 4: yesterday on Thursday. We don't know how the hearing went 211 00:10:48,679 --> 00:10:51,600 Speaker 4: at this point because it's all closed door stuff, but 212 00:10:51,640 --> 00:10:54,040 Speaker 4: by mid January we should have some sort of answer 213 00:10:54,040 --> 00:10:56,800 Speaker 4: from the Customs Agency whether or not the fix via 214 00:10:56,880 --> 00:10:59,800 Speaker 4: software that Apple has proposed for the Watch is sufficient 215 00:10:59,840 --> 00:11:03,160 Speaker 4: and to no longer in their view violate the patents 216 00:11:03,200 --> 00:11:06,679 Speaker 4: from a company called Massimo, a medical device company that 217 00:11:06,880 --> 00:11:09,560 Speaker 4: say Apple and fringed and got the ITC to pull 218 00:11:09,600 --> 00:11:11,240 Speaker 4: the watch from Apple stores in the US. 219 00:11:11,360 --> 00:11:13,680 Speaker 1: Hey, Mark, are we naive to just assume that Apple's 220 00:11:13,679 --> 00:11:15,319 Speaker 1: going to figure this one out and they'll be able 221 00:11:15,360 --> 00:11:17,880 Speaker 1: to keep their watches on shelves in the future. 222 00:11:20,040 --> 00:11:23,240 Speaker 4: I think we were naive to believe that this wouldn't happen. 223 00:11:23,600 --> 00:11:25,920 Speaker 4: I think we're less naive to believe that Apple is 224 00:11:25,920 --> 00:11:28,200 Speaker 4: on the verge of figuring this out. There's going to 225 00:11:28,200 --> 00:11:31,800 Speaker 4: be a resolution here sometime in January. I believe if 226 00:11:31,800 --> 00:11:35,920 Speaker 4: the US Customers Agency accepts Apple's software fix, it's game 227 00:11:35,960 --> 00:11:40,360 Speaker 4: over right. This watch is back on sale. Masno will 228 00:11:40,360 --> 00:11:43,959 Speaker 4: go after Apple again. The two companies have been in court. 229 00:11:44,200 --> 00:11:47,640 Speaker 4: They have a round two of their trial related to 230 00:11:47,679 --> 00:11:51,080 Speaker 4: patents and trade secret theft that's kicking off in late 231 00:11:51,120 --> 00:11:55,040 Speaker 4: October of twenty twenty four. For those unfamiliar, Massimo sued 232 00:11:55,080 --> 00:11:58,680 Speaker 4: Apple in twenty twenty over patent infringement. There was actually 233 00:11:58,679 --> 00:12:01,319 Speaker 4: a trial this year ended in a mistrial due to 234 00:12:01,360 --> 00:12:04,640 Speaker 4: a hung jury. For this type of trial, you needed 235 00:12:05,520 --> 00:12:08,200 Speaker 4: all the jurors to be in agreement. One way or another, 236 00:12:08,400 --> 00:12:10,360 Speaker 4: but it was actually six to one in Apple's favor. 237 00:12:10,920 --> 00:12:12,840 Speaker 4: So both Apple and Moss of a loss. 238 00:12:12,840 --> 00:12:15,719 Speaker 3: So they've got history and they've got form, they've got 239 00:12:15,800 --> 00:12:18,959 Speaker 3: form on that. Can we just sort of because those 240 00:12:19,040 --> 00:12:21,160 Speaker 3: legal rankers are going to continue If you look at 241 00:12:21,160 --> 00:12:22,560 Speaker 3: the wearable as part of the business, I know there's 242 00:12:22,559 --> 00:12:23,880 Speaker 3: a number of the kdes keeping an eye and the 243 00:12:23,880 --> 00:12:27,160 Speaker 3: wearables is ten percent of the revenue. We had Dan 244 00:12:27,280 --> 00:12:29,319 Speaker 3: ives with us a little bit earlier in the week. 245 00:12:29,360 --> 00:12:32,200 Speaker 3: Can he evangelize had a four trillion dollar valuation on 246 00:12:32,360 --> 00:12:34,840 Speaker 3: Apple A. How quickly do you think it could make 247 00:12:34,920 --> 00:12:38,120 Speaker 3: that valuation? But more importantly, how important is China too 248 00:12:38,160 --> 00:12:41,800 Speaker 3: that because again there's regulatory sniping from the Chinese on 249 00:12:41,840 --> 00:12:45,480 Speaker 3: the ownership of iPhones, and iPhones are seventy seven percent 250 00:12:45,800 --> 00:12:49,319 Speaker 3: of the of the revenue lineup for Apple. 251 00:12:51,960 --> 00:12:54,160 Speaker 4: Yeah, I'll tell you this. You can be quite successful 252 00:12:54,240 --> 00:12:57,559 Speaker 4: by constantly betting that Apple's going to be okay long 253 00:12:57,679 --> 00:12:59,920 Speaker 4: term and their market cap is going to keep growing. 254 00:13:00,840 --> 00:13:03,440 Speaker 4: So you know, I see every scenario in the book 255 00:13:03,480 --> 00:13:06,360 Speaker 4: that Apple gets the four trillion. I'm not sure it'll 256 00:13:06,400 --> 00:13:09,040 Speaker 4: be in twenty twenty four, but it will happen. Eventually, 257 00:13:09,480 --> 00:13:12,440 Speaker 4: and it's typically a bad bet to go against Apple. 258 00:13:12,760 --> 00:13:12,920 Speaker 1: Right. 259 00:13:13,520 --> 00:13:16,480 Speaker 4: In terms of China, there have been these reports from 260 00:13:16,600 --> 00:13:21,160 Speaker 4: US and others about the government banning the iPhone and 261 00:13:21,200 --> 00:13:25,600 Speaker 4: other non Chinese made devices in certain offices, in certain 262 00:13:25,679 --> 00:13:29,240 Speaker 4: organizations within the country. I think it's really going to 263 00:13:29,320 --> 00:13:32,840 Speaker 4: take until Apple reveals its first quarter results at the 264 00:13:32,880 --> 00:13:36,200 Speaker 4: tail end of January or early February to see what 265 00:13:36,280 --> 00:13:38,360 Speaker 4: revenue is like in China to get a full scope 266 00:13:38,360 --> 00:13:41,720 Speaker 4: of that impact. The last revenue results that we got 267 00:13:41,800 --> 00:13:44,720 Speaker 4: for Apple, that was the fourth quarter, they did okay 268 00:13:44,960 --> 00:13:48,840 Speaker 4: in China. They really didn't decline much. It was pretty 269 00:13:48,880 --> 00:13:52,280 Speaker 4: solid overall. That The issue for us in terms of 270 00:13:52,320 --> 00:13:54,680 Speaker 4: trying to determine what that means is that it only 271 00:13:54,720 --> 00:13:59,640 Speaker 4: incorporated very few days of iPhone fifteen sales in the 272 00:13:59,679 --> 00:14:02,200 Speaker 4: overall Q four earnings. So it's really difficult to know 273 00:14:02,320 --> 00:14:05,720 Speaker 4: until Apple actually puts those numbers out because otherwise we're 274 00:14:05,760 --> 00:14:06,280 Speaker 4: just guessing. 275 00:14:06,720 --> 00:14:09,079 Speaker 3: So a lot of the time, the detractors of Apple 276 00:14:09,120 --> 00:14:13,800 Speaker 3: would say the scale and the speed of radical innovation, 277 00:14:14,000 --> 00:14:18,040 Speaker 3: radical product product development has perhaps slowed down. Where do 278 00:14:18,080 --> 00:14:20,600 Speaker 3: they what does Apple need as where to get to 279 00:14:20,640 --> 00:14:23,880 Speaker 3: four trillion? Does it need multiple refreshes which we get 280 00:14:24,440 --> 00:14:27,720 Speaker 3: or does it need something perhaps more damascene esque. 281 00:14:29,320 --> 00:14:33,520 Speaker 4: That's undoubtedly true that the pace of device redesigns has 282 00:14:33,600 --> 00:14:36,960 Speaker 4: slowed down to an incredible degree. If you look at 283 00:14:36,960 --> 00:14:42,000 Speaker 4: the iPhone fifteen Pro, sure it has pretty great new materials, 284 00:14:42,040 --> 00:14:45,080 Speaker 4: It has a very advanced processor, the first three and 285 00:14:45,120 --> 00:14:49,240 Speaker 4: animeter chip to ship in volume in a smartphone. But 286 00:14:49,320 --> 00:14:51,520 Speaker 4: if you put that thing in a case, or even 287 00:14:51,560 --> 00:14:53,200 Speaker 4: if you don't put it in a case, it's going to, 288 00:14:53,360 --> 00:14:56,200 Speaker 4: for the most part, look and feel almost the same 289 00:14:56,200 --> 00:14:58,280 Speaker 4: as an iPhone you bought three or four years ago. 290 00:14:58,960 --> 00:15:02,240 Speaker 4: But that doesn't necessarily matter. It's the ecosystem, it's the 291 00:15:02,280 --> 00:15:05,680 Speaker 4: lock in, it's the services, it's the attached products like 292 00:15:05,760 --> 00:15:08,360 Speaker 4: the AirPods, the Apple Watch, the Apple TV and others, 293 00:15:08,560 --> 00:15:10,800 Speaker 4: which has really created this mode for the company that's 294 00:15:10,880 --> 00:15:13,880 Speaker 4: going to help it continue to grow. And I think 295 00:15:13,960 --> 00:15:16,640 Speaker 4: for twenty twenty four you have some pretty cool products 296 00:15:16,680 --> 00:15:19,400 Speaker 4: on the roadmap. The Apple Vision Pro, their first mixed 297 00:15:19,400 --> 00:15:21,960 Speaker 4: reality headset that's going to go on sale in about 298 00:15:21,960 --> 00:15:23,960 Speaker 4: one month from now. That's not going to drive a 299 00:15:23,960 --> 00:15:26,800 Speaker 4: lot of revenue for Apple, but it's probably going to 300 00:15:26,840 --> 00:15:29,760 Speaker 4: add for the next two years. Probably between two and 301 00:15:29,880 --> 00:15:33,600 Speaker 4: five billion an annual revenue, and on a quarterly basis, 302 00:15:33,600 --> 00:15:36,760 Speaker 4: that could be the difference between a couple percent growth 303 00:15:36,840 --> 00:15:40,400 Speaker 4: or a couple percent decline. So that could be important 304 00:15:40,440 --> 00:15:42,680 Speaker 4: in the short term, but critical in the long term. 305 00:15:42,960 --> 00:15:46,080 Speaker 4: You're going to see larger iPhones in the fall. They're 306 00:15:46,080 --> 00:15:48,160 Speaker 4: moving from a six point one inch to a six 307 00:15:48,160 --> 00:15:51,360 Speaker 4: point three inch on the smaller phone, and from six 308 00:15:51,360 --> 00:15:53,400 Speaker 4: point seven inches to six point nine inches on the 309 00:15:53,400 --> 00:15:56,520 Speaker 4: bigger phone. Now to your questions about China, that's very 310 00:15:56,560 --> 00:15:59,680 Speaker 4: important because in China, lots of consumers are shifting to 311 00:15:59,720 --> 00:16:03,800 Speaker 4: one instead of having an iPad, iPhone, mac, i'll watch, 312 00:16:03,840 --> 00:16:05,880 Speaker 4: et cetera. A lot of people are just buying phones 313 00:16:05,920 --> 00:16:07,560 Speaker 4: and they want the biggest ones that they can get 314 00:16:07,600 --> 00:16:09,880 Speaker 4: their hands on, and so that six point nine inch 315 00:16:09,960 --> 00:16:12,640 Speaker 4: iPhone sixteen Promax, that's going to be pretty important for 316 00:16:12,720 --> 00:16:13,240 Speaker 4: that market. 317 00:16:13,400 --> 00:16:17,120 Speaker 5: I really don't understand the desire for a larger phone, 318 00:16:17,120 --> 00:16:19,000 Speaker 5: but I want to talk about the Vision Pro a 319 00:16:19,000 --> 00:16:21,800 Speaker 5: little bit. I'm sure you remember the video of when 320 00:16:21,800 --> 00:16:24,360 Speaker 5: they unveiled the Prison Pro and they read out the 321 00:16:24,360 --> 00:16:27,040 Speaker 5: price of it and the audience gasped. It was a 322 00:16:27,120 --> 00:16:27,680 Speaker 5: viral moment. 323 00:16:27,680 --> 00:16:28,480 Speaker 1: It was pretty funny. 324 00:16:28,680 --> 00:16:31,520 Speaker 5: Who's going to buy these? Is this just people who 325 00:16:31,960 --> 00:16:34,840 Speaker 5: love Apple? Apple enthusiasts, and are we going to see 326 00:16:34,880 --> 00:16:40,320 Speaker 5: the price tag come down from several thousands of dollars. 327 00:16:40,560 --> 00:16:43,040 Speaker 4: Yeah, you're going to see software developers who want to 328 00:16:43,080 --> 00:16:47,480 Speaker 4: develop for the platform. You're going to see mixed reality enthusiasts. 329 00:16:47,520 --> 00:16:50,400 Speaker 4: You're going to see not the early adopters. I think 330 00:16:50,400 --> 00:16:52,880 Speaker 4: the early adopters are the people who buy the new 331 00:16:52,920 --> 00:16:55,640 Speaker 4: iPhones the first day or week they come out. But 332 00:16:55,760 --> 00:16:59,480 Speaker 4: I think you're going to see the early, early early adopters. Right, 333 00:16:59,600 --> 00:17:03,000 Speaker 4: that is an even more niche audience. I'm not expecting 334 00:17:03,120 --> 00:17:07,000 Speaker 4: lines outside of Apple stores. You know, they believe over 335 00:17:07,040 --> 00:17:09,320 Speaker 4: the course of a year they're only going to sell 336 00:17:09,400 --> 00:17:11,840 Speaker 4: a couple of these at most a day in each 337 00:17:11,880 --> 00:17:15,120 Speaker 4: of its retail stores. Right, So this is a niche product, 338 00:17:15,200 --> 00:17:18,280 Speaker 4: probably in the same spectrum as people who would buy 339 00:17:18,280 --> 00:17:21,040 Speaker 4: a Mac prow or high end Mac Studio. Those are 340 00:17:21,080 --> 00:17:24,080 Speaker 4: the company's most expensive max right, you're talking thirty five 341 00:17:24,119 --> 00:17:27,639 Speaker 4: hundred dollars plus five hundred dollars in task in the US. 342 00:17:27,840 --> 00:17:32,560 Speaker 1: Yeah. Not for the lighthearted or the small pocketbooks. Mark 343 00:17:32,600 --> 00:17:34,520 Speaker 1: always appreciate it. Mark is always my go to. Is 344 00:17:34,520 --> 00:17:36,720 Speaker 1: it time for me to upgrade a watch a phone? 345 00:17:36,800 --> 00:17:38,920 Speaker 1: That's who I talk to, Mark German, Thank you so much, 346 00:17:38,920 --> 00:17:41,919 Speaker 1: Happy New Year, Bloomberg's own Markerman. When it comes to Apple, 347 00:17:42,000 --> 00:17:43,280 Speaker 1: I must read here at Bomber. 348 00:17:53,920 --> 00:17:57,439 Speaker 3: Let's take these discussions too. On next guests, Terry Haynes, 349 00:17:57,800 --> 00:18:00,680 Speaker 3: is they find at off Pangaea policy? Very good morning 350 00:18:00,680 --> 00:18:03,359 Speaker 3: to you. I mean you lay it out very punchally, 351 00:18:03,480 --> 00:18:05,360 Speaker 3: so well done to you. This is what you say 352 00:18:05,400 --> 00:18:10,040 Speaker 3: about Washington. Let's just start with the geopolitical situation there, 353 00:18:10,040 --> 00:18:14,320 Speaker 3: because they haven't funded Ukraine and they're reluctant to fund Israel. 354 00:18:14,320 --> 00:18:17,040 Speaker 3: They've got two hot wars. But you say this, Washington's 355 00:18:17,119 --> 00:18:21,359 Speaker 3: lazy burn minimum approach on everything, whether it's border security, 356 00:18:21,400 --> 00:18:25,720 Speaker 3: foreign aid, or building fiscal crisis of great concern to 357 00:18:25,800 --> 00:18:29,560 Speaker 3: markets won't cut it in twenty twenty four, Not for markets, 358 00:18:29,640 --> 00:18:34,480 Speaker 3: not for the US national and international interests. We've ignored 359 00:18:34,760 --> 00:18:39,639 Speaker 3: markets have essentially ignored these faux pas, these grand faux pas. 360 00:18:39,960 --> 00:18:42,600 Speaker 3: We've ignored them. Is that our folly to ignore these 361 00:18:42,640 --> 00:18:43,960 Speaker 3: and which is the biggest tail risk? 362 00:18:45,240 --> 00:18:47,320 Speaker 6: Well, I think what you've got, manis here is a 363 00:18:47,359 --> 00:18:50,640 Speaker 6: situation where you haven't seen in fifty years, where you've 364 00:18:50,640 --> 00:18:55,159 Speaker 6: got a combination of probably the highest geopolitical risk and 365 00:18:55,200 --> 00:18:59,879 Speaker 6: probably the highest domestistical risk as well, those things combine. 366 00:19:00,119 --> 00:19:03,720 Speaker 6: I think what markets ignore is that going into twenty 367 00:19:03,760 --> 00:19:07,760 Speaker 6: twenty four with that combination very simply is you know, 368 00:19:08,200 --> 00:19:12,000 Speaker 6: they tend to see political issues by and large as 369 00:19:12,680 --> 00:19:16,280 Speaker 6: spices one way or the other. You know, things that 370 00:19:16,320 --> 00:19:20,199 Speaker 6: the things that are fundamental to the markets but provide 371 00:19:20,240 --> 00:19:24,200 Speaker 6: some some minor upper down action, when what they should 372 00:19:24,240 --> 00:19:29,840 Speaker 6: consider is that lower geopolitical risk and lower domestic political 373 00:19:29,920 --> 00:19:33,080 Speaker 6: risk in the United States are both foundational to the markets. 374 00:19:33,600 --> 00:19:37,400 Speaker 6: And and you know, we haven't really had a main 375 00:19:37,480 --> 00:19:41,080 Speaker 6: conflict in the United States the shook markets since the 376 00:19:41,119 --> 00:19:44,399 Speaker 6: Second World War. But when it did, you know, the 377 00:19:44,440 --> 00:19:47,600 Speaker 6: markets went down by twenty percent in the first six 378 00:19:47,600 --> 00:19:51,720 Speaker 6: months after Pearl Harbor. And you know, I'm talking about 379 00:19:51,720 --> 00:19:54,240 Speaker 6: a conflict that happened almost eighty years ago, in a 380 00:19:54,280 --> 00:19:59,119 Speaker 6: conflict in which you know not as today more than 381 00:19:59,200 --> 00:20:02,520 Speaker 6: half of the United State citizens are invested in the markets. 382 00:20:02,880 --> 00:20:06,320 Speaker 6: So the foundational risks here, I think generally are in 383 00:20:06,359 --> 00:20:07,600 Speaker 6: the volatility. 384 00:20:07,720 --> 00:20:10,320 Speaker 1: Terry. Let's get more specific, though, play it out. If 385 00:20:10,359 --> 00:20:15,960 Speaker 1: markets are ignoring geopolitical risks, what what might likely happen 386 00:20:16,080 --> 00:20:18,600 Speaker 1: in twenty twenty four. When it comes to the geopolitical risks, 387 00:20:18,600 --> 00:20:21,800 Speaker 1: and we've kind of laid them out all throughout the week, 388 00:20:21,920 --> 00:20:24,200 Speaker 1: Obviously we continue to watch what's going on in the 389 00:20:24,200 --> 00:20:26,879 Speaker 1: Middle East and concerns about escalation. You still have Russia 390 00:20:26,880 --> 00:20:30,840 Speaker 1: and Ukraine, We're looking at China and Taiwan, and then 391 00:20:31,080 --> 00:20:33,600 Speaker 1: you know you've got an election coming up. I think 392 00:20:33,600 --> 00:20:36,040 Speaker 1: there's some concerns nervousness to here, so play it out 393 00:20:36,080 --> 00:20:39,280 Speaker 1: specifically what you think likely could happen that investors have 394 00:20:39,359 --> 00:20:40,439 Speaker 1: to be wary of. 395 00:20:42,000 --> 00:20:45,080 Speaker 6: I think fundamentally, there will be a temptation to think 396 00:20:45,119 --> 00:20:50,560 Speaker 6: that the three major conflict areas geopolitically that you just 397 00:20:50,640 --> 00:20:57,000 Speaker 6: pointed out Ukraine, Israel, Taiwan are going to be somehow handled, 398 00:20:57,440 --> 00:21:00,560 Speaker 6: when in fact they're going to continue on for months. 399 00:21:00,640 --> 00:21:03,440 Speaker 6: I mean, there's no easy end to the Ukraine War. 400 00:21:04,119 --> 00:21:06,600 Speaker 6: The Israelis say that the Moss War will go on 401 00:21:06,760 --> 00:21:09,760 Speaker 6: for months, and I don't see anything there to stop it. 402 00:21:10,119 --> 00:21:12,760 Speaker 6: And there's a lot of volatility around Taiwan, which I think, 403 00:21:12,760 --> 00:21:20,160 Speaker 6: frankly is underappreciated by markets who think that Biden and 404 00:21:20,240 --> 00:21:25,040 Speaker 6: chi Jinping have some sort of an agreement after their 405 00:21:25,119 --> 00:21:28,960 Speaker 6: recent summit, when in fact, what China is doing is 406 00:21:29,880 --> 00:21:34,359 Speaker 6: pushing on kind of undeterred and and probably has more 407 00:21:34,520 --> 00:21:40,120 Speaker 6: rather than less incentives to act thanks to their more 408 00:21:40,119 --> 00:21:42,760 Speaker 6: powerless politicals or excuse me, economic situation. 409 00:21:43,359 --> 00:21:44,920 Speaker 4: So there's all that, and. 410 00:21:44,880 --> 00:21:46,440 Speaker 6: Then you and then you're going to have a lot 411 00:21:46,440 --> 00:21:53,520 Speaker 6: of points in the in domestic politics, with primaries coming 412 00:21:53,600 --> 00:21:56,040 Speaker 6: up over the next several months. Who are going to 413 00:21:56,080 --> 00:21:59,040 Speaker 6: be the non cominee? Will there continue to be rising 414 00:21:59,080 --> 00:22:02,200 Speaker 6: third party challenge? Jesus, I've thought and continue to think 415 00:22:02,240 --> 00:22:05,240 Speaker 6: there will be, you know, exactly what is the direction 416 00:22:05,440 --> 00:22:08,359 Speaker 6: of the United States, both domestically and in terms of 417 00:22:08,400 --> 00:22:11,520 Speaker 6: its own foreign policy. Those will play out in you know, 418 00:22:11,600 --> 00:22:15,680 Speaker 6: in specific points, you know, at least once or twice 419 00:22:15,720 --> 00:22:19,480 Speaker 6: a month through the year, and I think have the 420 00:22:19,480 --> 00:22:23,760 Speaker 6: opportunity to put additional volatility into the market. Says I'm 421 00:22:23,840 --> 00:22:26,160 Speaker 6: sure about the future direction of the Unity Terry. 422 00:22:26,160 --> 00:22:27,760 Speaker 1: I don't want to be inflammatory. I just want to 423 00:22:27,760 --> 00:22:30,600 Speaker 1: be smart here for our audience when we talk about 424 00:22:30,640 --> 00:22:33,800 Speaker 1: a third world war. When I look at our Bloomberg 425 00:22:33,840 --> 00:22:37,240 Speaker 1: intelligence team and when they're putting out research when it 426 00:22:37,280 --> 00:22:40,280 Speaker 1: comes to what we need to watch on the global economy, 427 00:22:40,720 --> 00:22:44,120 Speaker 1: and top of the line or top of the headline 428 00:22:44,160 --> 00:22:48,000 Speaker 1: is about war. So how do we need to think 429 00:22:48,000 --> 00:22:51,080 Speaker 1: about the possibility of a third World war? 430 00:22:52,960 --> 00:22:55,240 Speaker 6: You know? In some ways, and I'm not trying to 431 00:22:55,240 --> 00:22:57,320 Speaker 6: be inflammatory either, I'll give you a different way of 432 00:22:57,359 --> 00:22:59,480 Speaker 6: thinking about it. Though in a lot of ways we 433 00:22:59,520 --> 00:23:02,320 Speaker 6: already are are. You know, there are at least three 434 00:23:02,359 --> 00:23:07,160 Speaker 6: regional conflicts. Uh, there's there's cyber war. There's a concern 435 00:23:07,280 --> 00:23:13,560 Speaker 6: about how the the contending parties move into space. There 436 00:23:13,680 --> 00:23:17,879 Speaker 6: is there their concerns about how they they're moved around 437 00:23:18,000 --> 00:23:20,160 Speaker 6: in even in the Arctic for example. 438 00:23:21,080 --> 00:23:22,400 Speaker 2: So you know, you've got. 439 00:23:22,280 --> 00:23:26,240 Speaker 6: Kind of a slow moving conflict right now. And I'm 440 00:23:26,240 --> 00:23:29,359 Speaker 6: not trying to be inflammatory or push it push it 441 00:23:29,400 --> 00:23:32,239 Speaker 6: too far either, but what I will say is that 442 00:23:32,520 --> 00:23:39,359 Speaker 6: anybody that's looking at the current three spots as solely 443 00:23:39,400 --> 00:23:43,320 Speaker 6: regional conflicts and not representative of a larger conflict isn't 444 00:23:43,320 --> 00:23:48,160 Speaker 6: thinking about this enough. And the economic consequences alone, as 445 00:23:48,200 --> 00:23:50,960 Speaker 6: you all just noted, on supply chains and in the 446 00:23:51,000 --> 00:23:54,520 Speaker 6: Red Sea and many other things, could be very substantial. 447 00:23:54,640 --> 00:23:57,639 Speaker 6: So you know, we are in a very We're in 448 00:23:57,680 --> 00:24:00,960 Speaker 6: a very volatile situation already, even though markets don't fully 449 00:24:01,320 --> 00:24:03,479 Speaker 6: understand it, realize it, or appreciate it. 450 00:24:03,840 --> 00:24:05,800 Speaker 5: So there's a lot to worry about on the global front. 451 00:24:05,880 --> 00:24:08,639 Speaker 5: Let's go back to mestic though, because you write in 452 00:24:08,680 --> 00:24:11,560 Speaker 5: a recent note you talk about Washington's out of control 453 00:24:11,600 --> 00:24:15,199 Speaker 5: fiscal spending increasing debt service costs. Maybe we saw some 454 00:24:15,280 --> 00:24:17,639 Speaker 5: of those concerns play out in the treasury market in 455 00:24:17,680 --> 00:24:20,199 Speaker 5: the summer, but looking at the state of play right now, 456 00:24:20,200 --> 00:24:20,920 Speaker 5: it seems like that. 457 00:24:20,880 --> 00:24:21,320 Speaker 7: Was a blip. 458 00:24:21,320 --> 00:24:23,520 Speaker 5: But what's the trajectory there when you think about the 459 00:24:23,520 --> 00:24:25,120 Speaker 5: fiscal side of the equation. 460 00:24:26,640 --> 00:24:27,080 Speaker 8: Washington. 461 00:24:27,520 --> 00:24:30,399 Speaker 6: Washington always thinks that they understand the markets, and the 462 00:24:30,440 --> 00:24:33,679 Speaker 6: markets always think they understand Washington, and that Washington is 463 00:24:33,760 --> 00:24:37,840 Speaker 6: responsive to markets. I've never thought that was true, and 464 00:24:37,920 --> 00:24:41,119 Speaker 6: we've probably got the biggest gap between Washington and the 465 00:24:41,119 --> 00:24:45,760 Speaker 6: markets in some time. Increasingly markets are asking you when 466 00:24:45,800 --> 00:24:49,960 Speaker 6: and whether the United States government is going to be 467 00:24:49,960 --> 00:24:54,160 Speaker 6: able to get its fiscal spending under control, and there's 468 00:24:54,280 --> 00:24:57,200 Speaker 6: no movement at all towardwards. 469 00:24:57,200 --> 00:24:57,479 Speaker 1: Do that? 470 00:24:57,680 --> 00:24:58,360 Speaker 4: You know, you have a. 471 00:24:58,320 --> 00:25:05,760 Speaker 6: Situation in Washington right now where the most the people 472 00:25:05,800 --> 00:25:08,000 Speaker 6: are banging their fists on the table, the most to 473 00:25:08,080 --> 00:25:12,520 Speaker 6: control spending. Are people that are ironically to some extent 474 00:25:13,240 --> 00:25:17,240 Speaker 6: conservative Republicans, But really what they're doing is talking about 475 00:25:17,680 --> 00:25:20,639 Speaker 6: as much as one percent out of thirty percent the 476 00:25:20,680 --> 00:25:24,960 Speaker 6: discretionary part of the overall federal budget. And that's a blip, 477 00:25:25,000 --> 00:25:27,840 Speaker 6: and that's by no means what anybody expects. So the 478 00:25:28,280 --> 00:25:33,679 Speaker 6: discrepancy between what markets want in terms of more sustainable 479 00:25:33,680 --> 00:25:38,200 Speaker 6: fiscal policy and what Washington can deliver, there's a huge gap, 480 00:25:38,200 --> 00:25:41,440 Speaker 6: and there's no there's no indication that Washington even understands 481 00:25:41,440 --> 00:25:43,760 Speaker 6: what markets want or expect. 482 00:25:43,760 --> 00:25:46,760 Speaker 3: There, Terry, we'll have to see how these negotiations go 483 00:25:46,920 --> 00:25:50,199 Speaker 3: down to the war this month in regards to the 484 00:25:50,200 --> 00:25:52,600 Speaker 3: potential risks, and as you say, there is a great 485 00:25:52,640 --> 00:25:57,640 Speaker 3: disconnect between markets and Washington. Let them rule, we rule 486 00:25:57,680 --> 00:26:00,800 Speaker 3: our own way at say the bond equity commodity traders. 487 00:26:00,880 --> 00:26:05,800 Speaker 3: Terry Hans Pangaea Policy. 488 00:26:06,080 --> 00:26:08,480 Speaker 1: Angela Stent is here with us. She's a non resident 489 00:26:08,560 --> 00:26:11,400 Speaker 1: senior Fellow at the Brookings Institution. She's author of Putin's World. 490 00:26:11,440 --> 00:26:16,600 Speaker 1: She understands Vladimir Putin so well. She has worked done 491 00:26:16,720 --> 00:26:20,600 Speaker 1: national intelligence for Russia and Eurasia the National Intelligence Council. 492 00:26:20,680 --> 00:26:24,359 Speaker 1: So really understands a lot when it comes to geopolitics, Angela, 493 00:26:24,440 --> 00:26:26,040 Speaker 1: good to have you here as we get ready to 494 00:26:26,040 --> 00:26:31,080 Speaker 1: wrap up twenty twenty three. This latest barrage by Russia 495 00:26:31,640 --> 00:26:34,720 Speaker 1: shows that what to you, that this war is long 496 00:26:34,800 --> 00:26:35,359 Speaker 1: from over. 497 00:26:36,680 --> 00:26:40,040 Speaker 8: Oh yes, this war is going to continue well into 498 00:26:40,080 --> 00:26:43,800 Speaker 8: twenty twenty four. Despite stories that occasionally appear in our 499 00:26:43,840 --> 00:26:48,080 Speaker 8: media about being willing to negotiate, he's defined this as 500 00:26:48,119 --> 00:26:53,040 Speaker 8: an extential existential issue for him, the survival of his regime. 501 00:26:53,760 --> 00:26:55,679 Speaker 8: And as we saw today, this was I think the 502 00:26:55,720 --> 00:27:03,320 Speaker 8: deadliest attack again hitting civilian targetssly and you know, anger 503 00:27:03,440 --> 00:27:07,480 Speaker 8: that the Ukrainians were able to destroy this amphibious Russian 504 00:27:07,480 --> 00:27:11,639 Speaker 8: warship in Crimea this week. This was a major game 505 00:27:11,760 --> 00:27:15,480 Speaker 8: for the Ukrainians. But still there they are fighting very 506 00:27:15,520 --> 00:27:17,760 Speaker 8: hard to maintain their position. 507 00:27:18,200 --> 00:27:20,880 Speaker 1: Angela, I do wonder that geopolitically, there's a lot going 508 00:27:20,920 --> 00:27:22,600 Speaker 1: on around the world, to say the least, it's an 509 00:27:22,640 --> 00:27:24,560 Speaker 1: understatement with what's going on in the Middle East, and 510 00:27:24,600 --> 00:27:29,080 Speaker 1: I do wonder how global allies are preoccupied with so 511 00:27:29,280 --> 00:27:32,600 Speaker 1: much and how that might impact their support of something 512 00:27:33,160 --> 00:27:35,080 Speaker 1: like the Russian war in Ukraine. 513 00:27:35,800 --> 00:27:36,400 Speaker 4: Right, So for. 514 00:27:36,440 --> 00:27:39,320 Speaker 8: Putin, you know, the Israel Hamask war has been a godsend. 515 00:27:39,880 --> 00:27:43,520 Speaker 8: Attention is being diverted to what's happening in the Middle East, 516 00:27:43,600 --> 00:27:46,320 Speaker 8: away from Rsian Ukraine. And then of course you have 517 00:27:47,200 --> 00:27:50,960 Speaker 8: the debates within the United States. Our Congress couldn't agree 518 00:27:51,119 --> 00:27:55,000 Speaker 8: on a major sixty billion dollar aid package for Ukraine. 519 00:27:55,080 --> 00:27:57,639 Speaker 8: They went away. They may be able to agree on 520 00:27:57,680 --> 00:28:00,120 Speaker 8: it in January, but it's of course tied to all 521 00:28:00,160 --> 00:28:04,320 Speaker 8: these issues of border security. The European Council was unable 522 00:28:04,680 --> 00:28:08,760 Speaker 8: to vote on a fifty billion euro tranch of financial 523 00:28:08,760 --> 00:28:13,359 Speaker 8: support for Ukraine because Victor Orbam Hungarian Prime Minister venoed it. 524 00:28:13,600 --> 00:28:16,400 Speaker 8: They're also trying to get round this, but the Ukrainians 525 00:28:16,400 --> 00:28:19,480 Speaker 8: are our saying that they cannot pay pensions going forward 526 00:28:19,680 --> 00:28:21,960 Speaker 8: if they don't get this money from the European Union. 527 00:28:22,400 --> 00:28:26,800 Speaker 8: So allies are distracted, They're dealing with their own domestic issues, 528 00:28:27,560 --> 00:28:30,880 Speaker 8: and so the outlook for Ukraine for the next year 529 00:28:31,000 --> 00:28:32,160 Speaker 8: is really very sober. 530 00:28:33,080 --> 00:28:37,080 Speaker 3: Angew good morning. When you talk about the lack of 531 00:28:37,280 --> 00:28:40,680 Speaker 3: robust support from the US and from Europe, is Victor 532 00:28:40,760 --> 00:28:44,440 Speaker 3: orban of course, who is the spoiler in that narrative? 533 00:28:44,760 --> 00:28:50,840 Speaker 3: Does this embolden putin to deliver killing blow as he 534 00:28:50,920 --> 00:28:53,800 Speaker 3: has today. I mean it is one of the missile record, 535 00:28:53,880 --> 00:28:57,360 Speaker 3: missile barrage killing eighteen people. This is breaking news this morning. 536 00:28:57,400 --> 00:29:01,560 Speaker 3: He's attacked Kiev live, Odessa are under attack. Do you 537 00:29:01,600 --> 00:29:06,000 Speaker 3: think that this prevarication by the United States and by 538 00:29:06,040 --> 00:29:09,120 Speaker 3: the part in part Europe emboldens Putin? 539 00:29:10,040 --> 00:29:13,520 Speaker 8: Oh, it certainly does. If you watch the nightly Russian 540 00:29:13,600 --> 00:29:17,880 Speaker 8: TV shows, they are gloating both about the debates within 541 00:29:18,000 --> 00:29:20,560 Speaker 8: Congress and the Republicans who don't want to give any 542 00:29:20,560 --> 00:29:23,880 Speaker 8: more money to Ukraine, and they're gloating about a disunited 543 00:29:24,200 --> 00:29:28,640 Speaker 8: European Union. Of course it emboldens them because Hutin's calculation 544 00:29:28,840 --> 00:29:33,120 Speaker 8: is a defeat. Waits this out Western support will further erode. 545 00:29:33,480 --> 00:29:36,040 Speaker 8: He is waiting for Donald Trump to be re elected 546 00:29:36,560 --> 00:29:40,880 Speaker 8: next November and hoping that then US support for Ukraine will. 547 00:29:40,480 --> 00:29:42,640 Speaker 3: Can I ask you if Trump, I mean this is 548 00:29:42,760 --> 00:29:45,640 Speaker 3: this is projection. This is projection. But I want you 549 00:29:45,680 --> 00:29:48,480 Speaker 3: to reflect on certain moments in the previous administration when 550 00:29:48,480 --> 00:29:51,560 Speaker 3: Trump was in power. He went to meet Kim Jong ung, 551 00:29:51,720 --> 00:29:55,000 Speaker 3: He he got on planes, he sort of you know, 552 00:29:55,120 --> 00:29:57,440 Speaker 3: grand standard, and it did a great deal of theater. 553 00:29:57,640 --> 00:29:59,840 Speaker 3: Is that our risk here that if there's a shift 554 00:29:59,840 --> 00:30:03,280 Speaker 3: in politics in the United States of America, is this campaign, 555 00:30:04,000 --> 00:30:08,400 Speaker 3: Is this Russia war going to play in the polls 556 00:30:08,920 --> 00:30:12,640 Speaker 3: for Trump towards the campaign later this year. 557 00:30:13,480 --> 00:30:15,200 Speaker 8: Well, I think it will. I mean Trump has said 558 00:30:15,240 --> 00:30:17,560 Speaker 8: that he could end this one in twenty four hours. 559 00:30:17,600 --> 00:30:20,200 Speaker 8: I would be interested to understand how he's going to 560 00:30:20,240 --> 00:30:23,120 Speaker 8: do that. But it's clearly going to play in the 561 00:30:23,160 --> 00:30:26,520 Speaker 8: election campaign in the United States. The whole question of 562 00:30:26,560 --> 00:30:30,080 Speaker 8: why we're supporting Ukraine and how important it is, as 563 00:30:30,080 --> 00:30:33,880 Speaker 8: he said before during his presidency, to have a good 564 00:30:33,920 --> 00:30:35,120 Speaker 8: relationship with Russia. 565 00:30:35,800 --> 00:30:37,800 Speaker 5: And before we get, of course to the twenty twenty 566 00:30:37,800 --> 00:30:40,320 Speaker 5: four US presidential election, we have to get through the winter. 567 00:30:40,440 --> 00:30:42,640 Speaker 5: And you write in your notes that the winter will 568 00:30:42,640 --> 00:30:46,120 Speaker 5: be very challenging for the Ukrainians walk us through that. 569 00:30:46,160 --> 00:30:48,720 Speaker 5: The reality on the ground is, of course, the calendar 570 00:30:48,960 --> 00:30:51,720 Speaker 5: year flips here, right. 571 00:30:51,600 --> 00:30:55,480 Speaker 8: So the Ukrainian counter offenship that began in June did 572 00:30:55,520 --> 00:30:57,680 Speaker 8: not achieve one of the Ukrainians and I think what 573 00:30:57,800 --> 00:31:00,400 Speaker 8: we and the Europeans hoped that what they want able 574 00:31:00,400 --> 00:31:05,520 Speaker 8: to take back a significant amount of territory, they need 575 00:31:05,560 --> 00:31:09,760 Speaker 8: to mobilize more soldiers, their generals have said that now 576 00:31:10,520 --> 00:31:13,280 Speaker 8: they need more US weapons, and if they don't get 577 00:31:13,320 --> 00:31:16,080 Speaker 8: the weapons from the US, which is quite possible given 578 00:31:16,120 --> 00:31:18,760 Speaker 8: the debates in Congress, it will be much more difficult 579 00:31:18,800 --> 00:31:20,720 Speaker 8: for them to push back if they don't get the 580 00:31:20,760 --> 00:31:24,960 Speaker 8: financial assistance both from the US and for the European Union. Again, 581 00:31:25,520 --> 00:31:30,000 Speaker 8: they're the mystic situation. Their economic situation will deteriorate, and 582 00:31:30,120 --> 00:31:33,800 Speaker 8: Russia still has millions of people that it could mobilize. 583 00:31:34,200 --> 00:31:37,280 Speaker 8: So far, Putin, who's running for re election in March, 584 00:31:37,600 --> 00:31:40,240 Speaker 8: has said that there won't be another mobilization and maybe 585 00:31:40,280 --> 00:31:43,080 Speaker 8: there won't be at least until after the election. And 586 00:31:43,120 --> 00:31:46,600 Speaker 8: the Russians, you know, they've survived the sanctions. The sanctions 587 00:31:46,640 --> 00:31:49,440 Speaker 8: have not had the impact that the West hoped that 588 00:31:49,520 --> 00:31:53,080 Speaker 8: they would, so Russia appears to be in a stronger 589 00:31:53,120 --> 00:31:57,400 Speaker 8: position now and Ukraine really is very challenged to keep 590 00:31:57,400 --> 00:31:59,240 Speaker 8: pushing back against the Russian. 591 00:31:58,920 --> 00:32:02,040 Speaker 5: Forces well on the AID conversation. Of course, on the 592 00:32:02,120 --> 00:32:04,160 Speaker 5: US side, we've been talking about it on the program 593 00:32:04,200 --> 00:32:07,239 Speaker 5: this week, about a compromise needed when it comes to 594 00:32:07,280 --> 00:32:10,600 Speaker 5: the southern border, and the expectation seems to be there 595 00:32:10,640 --> 00:32:12,800 Speaker 5: that that will be achieved in January, but when it 596 00:32:12,800 --> 00:32:16,680 Speaker 5: comes to the EU. You mentioned, of course Victor Orbn's opposition. 597 00:32:17,040 --> 00:32:20,200 Speaker 5: Is there a path for the EU around Hungary's veto? 598 00:32:21,560 --> 00:32:24,440 Speaker 8: I think there is, and the EU, the European Council, 599 00:32:24,480 --> 00:32:27,040 Speaker 8: they're discussing this, and they've said that they hope in 600 00:32:27,120 --> 00:32:32,280 Speaker 8: January that they can somehow avoid having to have, you know, 601 00:32:32,640 --> 00:32:34,920 Speaker 8: organ vote on this and find another way of getting 602 00:32:34,920 --> 00:32:37,840 Speaker 8: the money to Ukraine. But it still has been I 603 00:32:37,840 --> 00:32:40,200 Speaker 8: think much more challenging for them. I think the other 604 00:32:40,240 --> 00:32:43,280 Speaker 8: thing we should realize is that right now the G 605 00:32:43,400 --> 00:32:47,120 Speaker 8: seven countries are seriously thinking about how they can deploy 606 00:32:47,400 --> 00:32:51,320 Speaker 8: the frozen, frozen Russian assets three hundred billion dollars of them, 607 00:32:51,640 --> 00:32:54,920 Speaker 8: maybe not the principle, but the interest to help Ukraine. 608 00:32:55,000 --> 00:32:58,880 Speaker 8: And this is a conversation that has now gained momentum, 609 00:32:59,240 --> 00:33:01,440 Speaker 8: So that might be a way around some of this 610 00:33:01,560 --> 00:33:02,320 Speaker 8: in the next year. 611 00:33:02,560 --> 00:33:05,000 Speaker 1: Hey, Angela just got about thirty seconds left here. There 612 00:33:05,080 --> 00:33:07,480 Speaker 1: is a way though to peace, but maybe it's after 613 00:33:07,520 --> 00:33:08,680 Speaker 1: the presidential elections. 614 00:33:10,680 --> 00:33:12,800 Speaker 8: I mean, there's always a way to peace. But the 615 00:33:12,920 --> 00:33:17,160 Speaker 8: question is are the Russians interested in negotiating and how 616 00:33:17,240 --> 00:33:20,600 Speaker 8: much would the Ukrainians have to agree to give up 617 00:33:20,960 --> 00:33:23,480 Speaker 8: if there were to be peace negotiations, and I think 618 00:33:23,640 --> 00:33:26,480 Speaker 8: we have to be quite clear idea that as long 619 00:33:26,480 --> 00:33:30,040 Speaker 8: as Putin is in power, even if there were peace negotiations, 620 00:33:30,200 --> 00:33:33,320 Speaker 8: they would probably only be temporary because he has not 621 00:33:33,440 --> 00:33:36,440 Speaker 8: given up his goal of trying to conquer all of Ukrain. 622 00:33:37,400 --> 00:33:39,320 Speaker 1: All right, going to leave it on that note, Angela, 623 00:33:39,360 --> 00:33:42,480 Speaker 1: thank you so much, Really appreciate your insight. Angela's stent 624 00:33:42,840 --> 00:33:56,040 Speaker 1: of the Brookings Institution shares a Carnival corporation. They are 625 00:33:56,040 --> 00:33:58,080 Speaker 1: the seventh best performer in the S and P five hundred, 626 00:33:58,080 --> 00:33:59,880 Speaker 1: one hundred and thirty two percent year in to day 627 00:34:00,200 --> 00:34:03,040 Speaker 1: and we were delighted to have with us on this Friday. Carnivals. 628 00:34:03,360 --> 00:34:06,440 Speaker 1: Josh Weinstein, he's president, CEO and chief Climate Officer, joining 629 00:34:06,520 --> 00:34:10,040 Speaker 1: us here on set in New York in town. Welcome, Welcome, Welcome, 630 00:34:10,080 --> 00:34:10,960 Speaker 1: almost Happy. 631 00:34:10,719 --> 00:34:13,440 Speaker 7: New year, Happy new day, everybody, Thanks for having me. 632 00:34:13,480 --> 00:34:15,040 Speaker 1: How are you thinking about the year. I mean, you 633 00:34:15,040 --> 00:34:16,320 Speaker 1: guys have had a great one in terms of a 634 00:34:16,360 --> 00:34:18,360 Speaker 1: stock run. You're working on a lot of things in 635 00:34:18,440 --> 00:34:21,000 Speaker 1: terms of pairing down debt. Talked to us you just 636 00:34:21,040 --> 00:34:24,480 Speaker 1: reported earnings last week. Some pricing power talked to us 637 00:34:24,520 --> 00:34:26,600 Speaker 1: about the kind of the business environment. 638 00:34:26,800 --> 00:34:29,360 Speaker 7: Yeah, so the twenty twenty three you know, we wrapped 639 00:34:29,360 --> 00:34:32,879 Speaker 7: in November on November thirtieth, and you know, the one 640 00:34:32,920 --> 00:34:34,880 Speaker 7: word that we like to use as a as a 641 00:34:34,880 --> 00:34:39,560 Speaker 7: summary is record. We had record demand, record yields, record pricing, 642 00:34:39,880 --> 00:34:43,759 Speaker 7: record bookings, forward bookings, record on board spending level. So 643 00:34:43,920 --> 00:34:47,560 Speaker 7: really across the board, our business has really thrived in 644 00:34:47,600 --> 00:34:50,040 Speaker 7: twenty twenty three, and we expect much more in twenty 645 00:34:50,080 --> 00:34:50,520 Speaker 7: twenty four. 646 00:34:50,640 --> 00:34:52,600 Speaker 1: It could continue because you're such a great gauge of 647 00:34:52,640 --> 00:34:55,480 Speaker 1: how customers are feeling. You know, you have several brands, 648 00:34:55,719 --> 00:34:58,960 Speaker 1: but you really kind of speak to, you know, the 649 00:34:59,040 --> 00:35:02,120 Speaker 1: everyday US can consumer if you will, and you just 650 00:35:02,160 --> 00:35:04,760 Speaker 1: have a great read on it. Are they continuing to spend? 651 00:35:04,840 --> 00:35:06,960 Speaker 1: Are they continue to do advanced bookings and then once 652 00:35:06,960 --> 00:35:09,399 Speaker 1: they're on their ships, Josh, continuing to spend as well. 653 00:35:09,640 --> 00:35:11,680 Speaker 7: Yeah, that is exactly what we see. You know. As 654 00:35:11,719 --> 00:35:15,600 Speaker 7: a matter of fact, our Q four was from a 655 00:35:15,640 --> 00:35:19,319 Speaker 7: pricing standpoint, the highest all year. So it's accelerating, it's 656 00:35:19,320 --> 00:35:22,479 Speaker 7: not decelerating. And when we look when we look forward, 657 00:35:22,520 --> 00:35:25,480 Speaker 7: we're actually two thirds booked for all of twenty twenty 658 00:35:25,480 --> 00:35:29,320 Speaker 7: four already. It's nice visibility, it's not too bad. We 659 00:35:29,320 --> 00:35:32,240 Speaker 7: were about ten points higher than we were last year. 660 00:35:32,480 --> 00:35:35,960 Speaker 7: And on top of the ticket bookings, we've actually started 661 00:35:35,960 --> 00:35:38,440 Speaker 7: pulling forward on board spend, so we have about a 662 00:35:38,680 --> 00:35:40,920 Speaker 7: more or less about a third of our onboard spend 663 00:35:41,000 --> 00:35:43,879 Speaker 7: being prepaid in advance. So we have a really good 664 00:35:43,880 --> 00:35:47,800 Speaker 7: amount of visibility. And those booking trends, they just haven't 665 00:35:47,800 --> 00:35:50,880 Speaker 7: slowed down. You know, every quarter this year, you know, 666 00:35:51,920 --> 00:35:55,319 Speaker 7: people expected it's got to slow down, it's gotta we're 667 00:35:55,320 --> 00:35:57,799 Speaker 7: gon we're going to see something. The consumer is going 668 00:35:57,880 --> 00:36:00,319 Speaker 7: to get impacted, and the fact is, with our business, 669 00:36:00,640 --> 00:36:03,279 Speaker 7: we haven't seen it. It's record after record. As a 670 00:36:03,320 --> 00:36:06,040 Speaker 7: matter of fact, we just ended the two weeks of 671 00:36:06,480 --> 00:36:10,240 Speaker 7: you know, Cyber Monday and Black Friday at more records. 672 00:36:10,239 --> 00:36:13,600 Speaker 7: And it's not just coming from one brand. It's not 673 00:36:13,640 --> 00:36:16,440 Speaker 7: coming from the United States. It's global. It's with our 674 00:36:16,440 --> 00:36:19,360 Speaker 7: global portfolio of brands, which is really really encouraging. 675 00:36:19,400 --> 00:36:20,920 Speaker 3: Do you think we're moving Good morning, good to me. 676 00:36:21,000 --> 00:36:23,840 Speaker 3: Do you think we're moving from many CEOs similar to 677 00:36:23,880 --> 00:36:27,160 Speaker 3: yourself that I've sat with that run global airlines and 678 00:36:27,160 --> 00:36:30,279 Speaker 3: global businesses have said we've lived through a period of 679 00:36:30,280 --> 00:36:32,240 Speaker 3: revenge tourism. We were all locked up for a period 680 00:36:32,280 --> 00:36:35,440 Speaker 3: of time. This is something we had this parabolic reopening 681 00:36:35,600 --> 00:36:38,560 Speaker 3: and you had a parabolic rebooking. Are we evolving into 682 00:36:38,640 --> 00:36:40,640 Speaker 3: some kind of new cycle? You said, there's no end 683 00:36:40,640 --> 00:36:44,480 Speaker 3: insight in this demand. So if we've ended revenge tourism, 684 00:36:44,520 --> 00:36:46,920 Speaker 3: how do you describe the next evolution? 685 00:36:47,280 --> 00:36:49,279 Speaker 7: Yeah, that's a great question. So we don't think this 686 00:36:49,360 --> 00:36:51,839 Speaker 7: is revenge anymore. This is not pent up demand. It's 687 00:36:51,840 --> 00:36:54,400 Speaker 7: two years on from when we really got back in 688 00:36:54,520 --> 00:36:58,680 Speaker 7: full as a corporation. This is people who have decided 689 00:36:59,000 --> 00:37:01,880 Speaker 7: what's meaningful for them. How do I want to spend 690 00:37:01,920 --> 00:37:05,279 Speaker 7: my life? And experiences are what they're looking for, you know, 691 00:37:05,480 --> 00:37:08,719 Speaker 7: unforgettable memories and creation with friends and family. And that's 692 00:37:08,760 --> 00:37:11,280 Speaker 7: exactly what cruising has to offer. 693 00:37:11,520 --> 00:37:13,040 Speaker 3: And that's why I sat down at the a course 694 00:37:13,280 --> 00:37:15,240 Speaker 3: and he said, look, I haven't got enough hotel rooms 695 00:37:15,280 --> 00:37:18,040 Speaker 3: and I haven't got enough high end staff to help 696 00:37:18,080 --> 00:37:20,880 Speaker 3: me run this business, which then takes me to the 697 00:37:21,560 --> 00:37:24,600 Speaker 3: cruise is the high end hotel. But to what extent 698 00:37:24,640 --> 00:37:29,200 Speaker 3: are those packages off ship and on shore those additional 699 00:37:29,280 --> 00:37:32,120 Speaker 3: spans are they critically important to the expansion and the 700 00:37:32,200 --> 00:37:34,439 Speaker 3: turnaround from the loss that you've had, do they add 701 00:37:34,480 --> 00:37:36,399 Speaker 3: incrementally or significantly? 702 00:37:36,960 --> 00:37:40,520 Speaker 7: So, I mean, when we think about our business, we're 703 00:37:40,560 --> 00:37:42,880 Speaker 7: a little bit different from from when you're looking at 704 00:37:42,960 --> 00:37:44,840 Speaker 7: hotel companies. You know, I'm staying in a hotel in 705 00:37:44,880 --> 00:37:46,480 Speaker 7: New York and I won't tell you which one it is, 706 00:37:46,520 --> 00:37:48,759 Speaker 7: but I'll tell you the service is not very good. 707 00:37:49,640 --> 00:37:52,440 Speaker 7: And we've learned how to live with that. As a society. 708 00:37:52,480 --> 00:37:55,800 Speaker 7: It's almost a tacit acceptance. No, we should not. And 709 00:37:55,040 --> 00:38:00,800 Speaker 7: a cruise industry, our brands did not deviate from service level. 710 00:38:01,200 --> 00:38:04,480 Speaker 7: Our guests have high expectations and we aim to exceed them. 711 00:38:04,520 --> 00:38:06,800 Speaker 7: We do not close off floors, we do not shut 712 00:38:06,880 --> 00:38:10,360 Speaker 7: areas down, We do not skimp on the services that 713 00:38:10,400 --> 00:38:13,080 Speaker 7: we used to offer. It is full steam ahead and 714 00:38:13,080 --> 00:38:15,239 Speaker 7: that's what people expect and that's what they're willing to 715 00:38:15,320 --> 00:38:16,680 Speaker 7: pay for, and that's what we're seeing. 716 00:38:17,400 --> 00:38:19,040 Speaker 5: And let's talk a little bit about the fact that 717 00:38:19,080 --> 00:38:21,840 Speaker 5: you are a global brand. Of course, a global company 718 00:38:22,520 --> 00:38:25,200 Speaker 5: that goes many places in the world. I don't need 719 00:38:25,200 --> 00:38:29,120 Speaker 5: to tell you that the geopolitical landscape very fraud right now. 720 00:38:29,160 --> 00:38:31,839 Speaker 5: Two hot wars and of course conflict in the Red 721 00:38:31,920 --> 00:38:34,879 Speaker 5: Sea has that impacted at all where you can go 722 00:38:35,000 --> 00:38:38,120 Speaker 5: and are you seeing any inflationary pressures from some of 723 00:38:38,120 --> 00:38:39,160 Speaker 5: the things that we're talking. 724 00:38:38,960 --> 00:38:43,479 Speaker 7: About here, So the second question is, no, we haven't 725 00:38:43,480 --> 00:38:46,960 Speaker 7: seen anything of note. Obviously, we pay attention to crude prices, 726 00:38:46,960 --> 00:38:48,959 Speaker 7: which is a good barometer of a lot of things. 727 00:38:49,719 --> 00:38:53,000 Speaker 7: With respect to the impact on our business, we had 728 00:38:53,040 --> 00:38:59,000 Speaker 7: about less than one percent of our business touching Israel 729 00:38:59,280 --> 00:39:01,920 Speaker 7: in one way or another, not necessarily homeporting, but it 730 00:39:02,000 --> 00:39:04,680 Speaker 7: might be one transit stop on a world cruise or 731 00:39:04,719 --> 00:39:07,960 Speaker 7: something of that nature. We may changes some time ago. 732 00:39:08,080 --> 00:39:10,680 Speaker 7: We actually don't have any ships transiting the Red Sea 733 00:39:10,719 --> 00:39:14,120 Speaker 7: area for several months, and so obviously safety first, and 734 00:39:14,160 --> 00:39:16,560 Speaker 7: we will we have mitigation plans should we need to 735 00:39:16,760 --> 00:39:20,320 Speaker 7: adjust where those ships would be transiting, but as of now, 736 00:39:20,680 --> 00:39:23,359 Speaker 7: we're to watch and learn mode. 737 00:39:23,600 --> 00:39:26,640 Speaker 5: Let's also talk about your bond book, because it was 738 00:39:26,719 --> 00:39:30,040 Speaker 5: interesting seeing just last week actually SMP coming out and 739 00:39:30,200 --> 00:39:33,920 Speaker 5: upgrading Carnival not quite back to investment grade territory, but 740 00:39:34,200 --> 00:39:37,520 Speaker 5: you're getting closer to not just higher, to not just higher. 741 00:39:38,080 --> 00:39:40,680 Speaker 5: On Earning's day, actually you think back and the chief 742 00:39:40,680 --> 00:39:44,359 Speaker 5: financial officer of Carnival said that there's a real possibility 743 00:39:44,360 --> 00:39:47,080 Speaker 5: that Carnival will come back to the debt markets in 744 00:39:47,160 --> 00:39:49,560 Speaker 5: twenty twenty four. Where is your current thinking on that 745 00:39:49,600 --> 00:39:52,040 Speaker 5: and what would actually bring you back to the debt market. 746 00:39:52,280 --> 00:39:53,879 Speaker 7: Well, really, the only thing that would bring us back 747 00:39:53,920 --> 00:39:55,799 Speaker 7: to the debt market as far as we can see, 748 00:39:55,840 --> 00:40:00,719 Speaker 7: is if there's opportunity to refinance on more favorable terms rates. Yeah, 749 00:40:00,760 --> 00:40:03,600 Speaker 7: lower rates. We're not or managing our maturities, but we're 750 00:40:03,680 --> 00:40:05,560 Speaker 7: not looking to lever up. As a matter of fact, 751 00:40:05,760 --> 00:40:08,160 Speaker 7: as you said in the intro, we've managed to cut 752 00:40:08,160 --> 00:40:10,759 Speaker 7: down our debt load by about five billion dollars so far, 753 00:40:11,840 --> 00:40:15,240 Speaker 7: and we expect much more of that as we go forward. 754 00:40:15,360 --> 00:40:17,440 Speaker 7: You know, that's priority one, two and three when it 755 00:40:17,440 --> 00:40:18,960 Speaker 7: comes to our capital structure. 756 00:40:19,280 --> 00:40:22,000 Speaker 1: De lever So, hey, you know one of the things 757 00:40:22,000 --> 00:40:24,719 Speaker 1: and it kind of ties together geopolitical but also kind 758 00:40:24,719 --> 00:40:27,800 Speaker 1: of you know, we're thinking about growth. Soa story. I 759 00:40:27,840 --> 00:40:29,279 Speaker 1: think it was today or in the last twenty four 760 00:40:29,280 --> 00:40:33,200 Speaker 1: hours that the first domestically built ship in China getting 761 00:40:33,239 --> 00:40:36,040 Speaker 1: ready to hit the high seas. But it's a joint venture. 762 00:40:36,040 --> 00:40:38,319 Speaker 1: It's you guys are involved in this, and I think 763 00:40:38,360 --> 00:40:41,879 Speaker 1: about how important China is for you guys, but also 764 00:40:42,120 --> 00:40:46,719 Speaker 1: geopolitically concerns about China It's ambitions with Taiwan and whether 765 00:40:46,800 --> 00:40:48,279 Speaker 1: or not there's going to be some problems there down 766 00:40:48,320 --> 00:40:48,640 Speaker 1: the road. 767 00:40:48,760 --> 00:40:52,960 Speaker 7: Sure, well, we're very happy for the folks at the 768 00:40:53,040 --> 00:40:56,359 Speaker 7: China JV. We actually unwound the JV earlier this year. 769 00:40:56,440 --> 00:40:56,839 Speaker 1: We did. 770 00:40:56,920 --> 00:41:01,000 Speaker 7: We did so we've been providing shipbuilding expertise support for 771 00:41:01,040 --> 00:41:02,680 Speaker 7: them and we were very happy to do that work. 772 00:41:02,719 --> 00:41:05,160 Speaker 1: O story still says you guys are involved, but go ahead, Well, 773 00:41:05,160 --> 00:41:05,840 Speaker 1: that could be. 774 00:41:05,840 --> 00:41:09,080 Speaker 7: How we're involved at this point. But from our perspective, 775 00:41:09,120 --> 00:41:12,480 Speaker 7: we got a portfolio of world class brands all over 776 00:41:12,520 --> 00:41:15,600 Speaker 7: the world and that's where our focus is. You know, 777 00:41:15,760 --> 00:41:19,080 Speaker 7: it's great for the cruise industry that China has opened 778 00:41:19,120 --> 00:41:21,920 Speaker 7: up and it will be opening up for international cruise companies. 779 00:41:21,960 --> 00:41:24,200 Speaker 7: We're not going to be one of them that's going 780 00:41:24,239 --> 00:41:27,520 Speaker 7: back in. We've got our assets where we want them. 781 00:41:27,600 --> 00:41:30,960 Speaker 7: We've we've changed our assets strategy, we've moved ships to 782 00:41:31,120 --> 00:41:34,439 Speaker 7: different brands to accommodate the change in China and they're 783 00:41:34,440 --> 00:41:37,279 Speaker 7: doing very very well. So we'll uh, we'll take a 784 00:41:37,280 --> 00:41:38,799 Speaker 7: wait and see approach on that as well. 785 00:41:38,840 --> 00:41:40,160 Speaker 1: But not a market you need to be in, right 786 00:41:40,160 --> 00:41:40,440 Speaker 1: now just. 787 00:41:40,520 --> 00:41:41,759 Speaker 7: No, it's definitely not all right. 788 00:41:41,920 --> 00:41:44,120 Speaker 1: Gonna leave it there. Listen, so appreciate it. You know 789 00:41:44,120 --> 00:41:46,200 Speaker 1: you're spending some time with family, but great to get you. 790 00:41:46,120 --> 00:41:47,960 Speaker 7: While you're my pleasure. Thanks and happening to her. 791 00:41:48,080 --> 00:41:51,960 Speaker 3: Yes, the New York Hotel, you should be get an upgrade. 792 00:41:52,360 --> 00:41:55,080 Speaker 1: The same experience in some hotels. I don't think they 793 00:41:55,120 --> 00:41:55,720 Speaker 1: have the workers. 794 00:41:55,840 --> 00:41:56,319 Speaker 7: They do not. 795 00:41:58,160 --> 00:41:58,440 Speaker 8: You need. 796 00:41:58,600 --> 00:42:00,279 Speaker 7: We do have all the workers that we need, and 797 00:42:00,480 --> 00:42:02,960 Speaker 7: I'd encourage everybody come come book a cruise before we 798 00:42:03,040 --> 00:42:05,279 Speaker 7: run out of inventory for twenty twenty four because it's 799 00:42:05,360 --> 00:42:06,280 Speaker 7: going pretty fast. 800 00:42:06,560 --> 00:42:09,120 Speaker 1: Josh Weinstein, the Presidency of Carnival. Thank you so much, 801 00:42:09,120 --> 00:42:13,239 Speaker 1: So appreciate it. Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, 802 00:42:13,280 --> 00:42:16,440 Speaker 1: and anywhere else you get your podcasts. Listen live every 803 00:42:16,480 --> 00:42:19,600 Speaker 1: weekday starting at seven am Eastern on Bloomberg dot Com, 804 00:42:19,680 --> 00:42:23,120 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 805 00:42:23,320 --> 00:42:26,360 Speaker 1: You can watch us live on Bloomberg Television and always. 806 00:42:25,960 --> 00:42:27,080 Speaker 4: On the Bloomberg Terminal. 807 00:42:27,200 --> 00:42:29,680 Speaker 1: Thanks so much for listening. I'm Carol Master and this 808 00:42:29,800 --> 00:42:30,440 Speaker 1: is Bloomberg