WEBVTT - Israel, the Fed, IPOs, and Fintech 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.920 --> 0:00:23.880 All right, let's get to the latest on Israel, because 0:00:23.920 --> 0:00:26.400 it just once again we're just waiting it seems like 0:00:26.440 --> 0:00:29.240 for Israel to make the next move here and how 0:00:29.440 --> 0:00:31.880 decisive it will be. Mick mulroy joints us. He's a 0:00:31.920 --> 0:00:34.800 former CIA Power military officer and he's a co founder 0:00:34.840 --> 0:00:37.760 of the Lobo Institute. Mick, thanks so much for joining 0:00:37.800 --> 0:00:41.600 us here. It just it seems like everything we see 0:00:41.600 --> 0:00:44.199 and read from all the reporting that Israel is going 0:00:44.240 --> 0:00:47.800 to go big into kaza I guess the question is 0:00:47.960 --> 0:00:50.559 when and then what do you think? I guess more importantly, 0:00:50.600 --> 0:00:52.879 what do you think a realistic objective for them is? 0:00:55.000 --> 0:00:56.400 Well, it's good to be with you guys. I do 0:00:56.480 --> 0:00:58.320 believe it's coming up. So I think we're in the 0:00:58.400 --> 0:01:02.640 last stages of preparations. We've seen the preparatory fires to 0:01:02.680 --> 0:01:05.520 soften up the targets, take out some leadership. We've seen 0:01:05.560 --> 0:01:09.520 some small incursions, probably by special operations forces to try 0:01:09.560 --> 0:01:12.280 to find the best route for the main body to 0:01:12.280 --> 0:01:14.800 get in and potentially to try to get information on 0:01:14.840 --> 0:01:17.160 where the hostages could be. And now we're going to 0:01:17.160 --> 0:01:20.240 see a giant movement of all these tanks and armored 0:01:20.240 --> 0:01:24.800 personnel carriers and combat engineer vehicles. They're going to leave 0:01:24.800 --> 0:01:26.679 the assembly area. They're going to get in their attack 0:01:26.760 --> 0:01:31.560 formations and then likely enter from ares up at the top, 0:01:31.640 --> 0:01:34.720 because that's the best when it comes to terrain for 0:01:35.040 --> 0:01:38.720 all these formations to get into and then funnel in 0:01:38.959 --> 0:01:42.240 to the top going straight toward Gaza City. And to 0:01:42.319 --> 0:01:45.240 your point, they're going big and it's going to be violent. 0:01:45.480 --> 0:01:48.480 They'll probably have some come in from the sea to 0:01:48.560 --> 0:01:51.440 create a dilemma from Hamas, maybe some coming from the 0:01:51.480 --> 0:01:55.240 air to try to drop behind them in central in 0:01:55.320 --> 0:01:58.320 central Gaza to also to try to create a dilemma 0:01:58.360 --> 0:02:01.760 and develop them. But once they into the actual fighting, 0:02:01.800 --> 0:02:05.520 it's going to be blocked by block I'm hearing the 0:02:05.560 --> 0:02:08.400 Israeli planners that talk to me talk about Upper and 0:02:08.520 --> 0:02:12.120 Lower Gaza. Upper being buildings and everything that you see 0:02:12.160 --> 0:02:15.480 normally in the city lower is all these tunnels is 0:02:15.520 --> 0:02:18.520 around three hundred miles of tunnels down there, and that's 0:02:18.560 --> 0:02:22.160 going to be a bear militarily to try to conquer. 0:02:22.600 --> 0:02:23.680 How deep are the tunnels? 0:02:23.680 --> 0:02:27.040 Why can't A couple of questions I've had, and maybe 0:02:27.040 --> 0:02:32.280 you can help, Mick, how do they block the sea border? 0:02:32.440 --> 0:02:36.000 I mean, why wouldn't people in Gaza be able to 0:02:36.040 --> 0:02:39.320 get out on boats or you know, even swimming as 0:02:39.440 --> 0:02:41.880 rudimentary as it sounds, right, they're on the sea. 0:02:41.960 --> 0:02:42.840 How do they block that? 0:02:44.800 --> 0:02:47.520 So there's been a blockade, enable blockade and placed by 0:02:47.520 --> 0:02:50.240 the Israelis for some time because that was one of 0:02:50.280 --> 0:02:54.120 the means of which are on quite frankly, smuggled weapons 0:02:54.160 --> 0:02:58.520 into Gaza. The other was through the tunnels leading into Egypt. 0:02:58.680 --> 0:03:01.960 So that's been blocked. If boats were allowed in, there 0:03:01.960 --> 0:03:05.200 could be some X bills, uh, you know, civilians leaving 0:03:05.280 --> 0:03:07.400 that way. But I don't think the Israelis are letting 0:03:07.400 --> 0:03:10.720 any any any vessels in any of the c space 0:03:11.080 --> 0:03:13.160 right off the coast of Gaza. I do think they'll 0:03:13.480 --> 0:03:16.519 try some kind of amphibious landing, maybe just a small 0:03:16.600 --> 0:03:19.960 special operations type force or more like a giant or 0:03:20.240 --> 0:03:22.720 you know, a large marine formation like the like the 0:03:22.760 --> 0:03:26.760 Marine Corps type formation hitting hitting the beach. Almost everybody 0:03:26.840 --> 0:03:29.160 is going south via vehicle or put I. 0:03:29.520 --> 0:03:33.160 Also wonder, you know, we wondered, uh, we talked about 0:03:33.160 --> 0:03:37.320 the objective for Israel, but going back to the terrorist 0:03:37.480 --> 0:03:42.040 attacks that we saw last week, why did Hamas do that? 0:03:42.560 --> 0:03:47.280 Other than you know, uh, spreading terror and I guess, 0:03:47.320 --> 0:03:51.119 you know, retaliation against what they feel has been done 0:03:51.160 --> 0:03:54.040 to them. Do you think they're trying to bait the 0:03:54.120 --> 0:03:56.560 Israelis into Gaza. 0:03:57.520 --> 0:04:00.120 Yes, and that's a good that's a good point of 0:04:00.200 --> 0:04:02.920 your question. So when they attacked Israel like this, they 0:04:02.960 --> 0:04:04.800 had to know that this was going to happen, and 0:04:04.800 --> 0:04:07.560 I think they did. Why did they do it? Obviously 0:04:07.680 --> 0:04:11.160 to your point terror, they're a terrorist organization, been designated 0:04:11.200 --> 0:04:15.560 as such as nineteen ninety seven. But also they want 0:04:15.680 --> 0:04:19.680 to disrupt all of the diplomatic efforts in the region. 0:04:19.920 --> 0:04:23.159 We've already had the Abraham Accords Saudi Arabia and Israel. 0:04:23.200 --> 0:04:26.560 We're getting close to normalizing relations. This is not good 0:04:26.560 --> 0:04:29.360 for Hamas, it's not good for Iran. And if it's 0:04:29.400 --> 0:04:31.479 not good for on it's not good for Hamas or Hesbela, 0:04:31.760 --> 0:04:34.760 and that's potentially part of what you're trying to do. 0:04:35.080 --> 0:04:37.840 And then the last part militarily is to get them 0:04:37.839 --> 0:04:40.440 into a fight like this, because the IDEF is one 0:04:40.440 --> 0:04:43.520 of the most advanced militaries in the world. But urban fighting, 0:04:43.680 --> 0:04:47.599 tunneled fighting, is subterranean fighting is it takes away a 0:04:47.640 --> 0:04:51.160 lot of those advantages. And they have this place wired 0:04:51.320 --> 0:04:55.960 literally to fight the benefit on their side. So that 0:04:56.080 --> 0:04:58.719 is why they want the IDEF to get into this 0:04:58.920 --> 0:05:01.279 battle inside Gaza City for example. 0:05:01.760 --> 0:05:04.520 And Mick, I mean, have do you think the IDF 0:05:04.560 --> 0:05:08.080 has been able to identify over the years who actually 0:05:08.160 --> 0:05:10.719 is in Hamas? I mean, the leadership is one thing, 0:05:11.200 --> 0:05:14.040 but of the fifteen hundred or so Hamas terrorists that 0:05:14.080 --> 0:05:16.360 came across the boarded, does Israel know who they are? 0:05:16.560 --> 0:05:16.600 It? 0:05:16.680 --> 0:05:19.600 Did they know? Really? Can they really neutralize Hamas as 0:05:19.600 --> 0:05:20.719 a terrorist organization? 0:05:22.800 --> 0:05:24.919 So there's gonna be a lot of the Hamas fryers 0:05:24.960 --> 0:05:26.560 are going to fight, so they're they're going to die, 0:05:26.960 --> 0:05:29.440 and that's gonna be Then they're going to gather all 0:05:29.480 --> 0:05:31.880 those and then the ones that they capture, they're going 0:05:31.960 --> 0:05:35.599 to go through every camera that and of course Israel, 0:05:35.680 --> 0:05:38.680 like most modern countries, has cameras everywhere and try to 0:05:38.720 --> 0:05:42.400 make sure that they've identified everybody either dead or alive. 0:05:42.760 --> 0:05:45.839 It took part of that operation, and they also keep 0:05:45.880 --> 0:05:49.359 detailed records on who they believe is in Hamas and 0:05:49.480 --> 0:05:53.919 their leader Sinwar is in Gaza City. He is he 0:05:54.040 --> 0:05:56.360 is one of the most significant leaders in Hamas. He's 0:05:56.360 --> 0:05:58.920 going to be target number one. And they've already taken 0:05:58.960 --> 0:06:01.120 about twelve of the sea and your leaders around him 0:06:01.440 --> 0:06:05.239 out so far, just since the preparatory fires started. 0:06:05.480 --> 0:06:07.520 And Nick, one of the question I asked kind of 0:06:07.520 --> 0:06:11.200 consistently to guests on this topic is how much collateral 0:06:11.279 --> 0:06:14.600 damage do you think Israel is willing to inflict in 0:06:15.080 --> 0:06:17.839 order to achieve their military objectives. 0:06:19.600 --> 0:06:21.720 Well, I would hope and I do believe they will 0:06:21.839 --> 0:06:24.040 adhere to the law of armed conflict, which is to 0:06:24.040 --> 0:06:27.320 do everything you can to limit civilian casualties. And the 0:06:27.400 --> 0:06:33.560 first step is getting this humanitarian corridor that allows civilians 0:06:33.600 --> 0:06:36.760 to leave northern Gaza and move to southern Gaza, hopefully 0:06:37.000 --> 0:06:41.320 in a UN sponsored safe haven that's monitored. There's plenty 0:06:41.320 --> 0:06:45.360 of effort underway to set that up, but I do 0:06:45.440 --> 0:06:48.080 think Israel the IDF will do everything they can to 0:06:48.120 --> 0:06:53.040 limit sivilian casually. That said, this is urban fighting with armored, 0:06:53.160 --> 0:06:57.960 armored personnel carrier, multi dimension. There's no doubt that Hamas 0:06:58.040 --> 0:07:00.120 is going to hide behind civilians. There's no doubt have 0:07:00.200 --> 0:07:03.200 buildings wired, in tunnels wired. So there's going to be 0:07:03.200 --> 0:07:05.320 a lot of civilian casualties, which is why I think 0:07:05.320 --> 0:07:08.280 there's been so much effort recently to get as many 0:07:08.320 --> 0:07:10.920 civilians as possible, and I think last I heard was 0:07:10.920 --> 0:07:14.280 five hundred thousand have left northern Gaza. Everybody that can 0:07:14.400 --> 0:07:15.080 leave should lead. 0:07:15.920 --> 0:07:19.840 You know, last week was much harder for me than 0:07:19.840 --> 0:07:23.120 I expected mentally, and I don't even have a dog 0:07:23.160 --> 0:07:26.000 in this fight. It just hurt to see all of 0:07:26.000 --> 0:07:30.120 the damage inflicted by the terrorist attack first and then 0:07:31.120 --> 0:07:33.440 looking at the pictures of women and children in Gaza 0:07:33.640 --> 0:07:36.760 in the hospitals was also I mean, the little. 0:07:36.480 --> 0:07:37.800 Girls look like my little girl. 0:07:38.240 --> 0:07:41.000 How do you deal with this as a soldier, as 0:07:41.000 --> 0:07:43.440 a leader, how do you deal with that part of it? 0:07:45.720 --> 0:07:47.720 So that's the part I think that's the most lingering 0:07:47.800 --> 0:07:50.720 and the stuff that causes quite frankly, veterans the most 0:07:50.760 --> 0:07:53.760 grief along with losing their friends for the longest period 0:07:53.760 --> 0:07:57.000 of time. You know, you'd hope that if, quite frankly, 0:07:57.040 --> 0:07:59.720 if adult men would star wars, they should be the 0:07:59.760 --> 0:08:02.520 ones fighting it, right, not little kids as we see 0:08:02.520 --> 0:08:05.360 around the world in so many places, and certainly not 0:08:05.760 --> 0:08:08.440 all these innocent civilians who just happen to be caught 0:08:08.440 --> 0:08:11.040 in the crossfire. As you said, whether it's in Israel, 0:08:11.080 --> 0:08:15.120 whether it's in Gaza, or whether it's in Ukraine. It's 0:08:15.280 --> 0:08:18.520 just unacceptable. It's why most of the UN protocols came 0:08:18.880 --> 0:08:22.360 after World War Two is to try to prevent civilian 0:08:22.400 --> 0:08:24.800 casualties like this. They just should not be part of 0:08:24.840 --> 0:08:31.440 anybody's combat operations and their plans. They should be completely excluded. Unfortunately, 0:08:31.560 --> 0:08:35.040 look like Hamas's sole purpose, quite frankly, was to kill 0:08:35.080 --> 0:08:38.199 civilians when they went into Israel. They actually bypassed many 0:08:38.240 --> 0:08:40.640 of the ideas there is. Now we need to try 0:08:40.679 --> 0:08:43.080 to do everything we can to save civilians in Gaza. 0:08:42.720 --> 0:08:44.480 All right, Mack, thanks so much for joining us. As always, 0:08:44.559 --> 0:08:47.280 Mick mulroy of the lovelod Stude. 0:08:48.120 --> 0:08:51.520 You're listening to the team. Ken's a live program Bloomberg 0:08:51.559 --> 0:08:54.920 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:55.040 --> 0:08:58.199 the iHeartRadio app and the Bloomberg Business app or listening 0:08:58.240 --> 0:09:00.400 on demand wherever you get your podcast. 0:09:00.080 --> 0:09:06.240 Apps Bloomberg News. How was some reporting thing one of 0:09:06.280 --> 0:09:11.520 our mostly most read stories of the day. Apple's iPhones. 0:09:11.640 --> 0:09:13.840 They're off to a sluggish start in China, that's according 0:09:13.880 --> 0:09:15.680 to a study. So we want to bring in Ed Ludlow. 0:09:16.080 --> 0:09:17.960 He knows all about this stuff. He does a lot 0:09:18.000 --> 0:09:20.520 of work with the folks in Kupertino. Ed Lolo joins 0:09:20.520 --> 0:09:23.439 as he's a host of Bloomberg Technology. So, Ed, what's 0:09:23.520 --> 0:09:26.960 kind of the background here for iPhone sales in China? 0:09:28.040 --> 0:09:29.480 I guess it's whether you look at it through the 0:09:29.520 --> 0:09:31.319 lens of an economist or you look at it through 0:09:31.320 --> 0:09:34.720 the lens of a smartphone market analyst. But this is 0:09:34.840 --> 0:09:39.600 counterpoint research data that shows for the first seventeen days 0:09:40.040 --> 0:09:43.680 after the iPhone fifteen went on sale in China, sales 0:09:43.679 --> 0:09:47.000 are down four point five percent versus the same comparable 0:09:47.040 --> 0:09:50.600 period a year ago when the iPhone fourteen went on sale. 0:09:50.640 --> 0:09:53.160 And there are some caveats in that data, right, because 0:09:53.200 --> 0:09:55.960 when Apple releases a new generation of iPhone, there is 0:09:56.040 --> 0:09:57.079 multiple variants. 0:09:57.360 --> 0:10:00.000 So in this case, the iPhone fifteen and fifteen. 0:09:59.640 --> 0:10:02.400 Plus the base models and then the pro and Promacs, 0:10:02.440 --> 0:10:06.240 the more premium models, but overall it's down. And you know, 0:10:06.520 --> 0:10:09.880 China's economy is super interesting right now. It's an aging economy, 0:10:10.320 --> 0:10:12.760 but youth unemployment's really high. And I think we get 0:10:12.760 --> 0:10:15.719 a GDP print for China on Wednesday that's likely to 0:10:15.840 --> 0:10:20.320 show modest uptick on growth quarter on quarter, but below 0:10:20.360 --> 0:10:23.720 it's five percent target that Beijing has on an analyzed basis, 0:10:23.800 --> 0:10:26.640 So it could be a softness thing, but it's also 0:10:26.720 --> 0:10:29.520 a more competitive smartphone market domestically as well. 0:10:29.800 --> 0:10:31.920 Well, and they've made rules that you're not allowed to 0:10:31.920 --> 0:10:34.440 bring an iPhone in to certain places. 0:10:34.520 --> 0:10:37.160 Right it was already uncool, I guess or. 0:10:38.640 --> 0:10:38.760 Not? 0:10:39.000 --> 0:10:43.680 I like that, Yeah, jibe with the Communist Party vibe. 0:10:43.800 --> 0:10:47.839 But is this a China specific problem or do we 0:10:48.080 --> 0:10:51.000 expect to see reports like this for iPhone sales across 0:10:51.040 --> 0:10:52.000 other regions as well? 0:10:52.559 --> 0:10:56.040 So what's fascinating about it is, according to the Counterpoint data, 0:10:56.120 --> 0:10:59.800 it is a Chinese China specific problem because the Counterpoint 0:10:59.840 --> 0:11:02.160 d it has showed that on the first nine days 0:11:02.160 --> 0:11:06.199 of sales in the US, iPhone fifteen was up significantly 0:11:06.720 --> 0:11:09.439 compared to the iPhone fourteen sales for that first nine 0:11:09.480 --> 0:11:11.520 day period a year ago. 0:11:12.360 --> 0:11:13.360 So that's interesting. 0:11:13.360 --> 0:11:15.840 It also is completely counter to what we learned so 0:11:16.000 --> 0:11:18.640 far this year that in the June course or the 0:11:18.679 --> 0:11:21.559 quarter ending in June, what Apple told us was that 0:11:21.679 --> 0:11:24.880 China was the point of strength in that domestic Chinese 0:11:24.960 --> 0:11:28.440 or Greater China market. Apple had actually swung to top 0:11:28.480 --> 0:11:31.000 line growth of eight percent from a three percent decline 0:11:31.080 --> 0:11:34.319 the quarter before, and it was principally driven by iPhone 0:11:34.360 --> 0:11:37.280 at a time where US or North American smartphone sales 0:11:37.520 --> 0:11:40.640 were really weak. So the story we're playing seeing play 0:11:40.679 --> 0:11:43.400 out reading the tea leaves is that there's a really 0:11:43.400 --> 0:11:46.360 big tech upgride cycle going on in the US, not 0:11:46.520 --> 0:11:49.880 so in China. But remember in the background there are 0:11:50.640 --> 0:11:54.000 domestic smartphone market pressures because some of the Chinese players 0:11:54.000 --> 0:11:57.720 have surprised us with competitive handsets in that period as well. 0:11:58.520 --> 0:12:00.600 So, I mean, I guess if I were an Apple 0:12:00.679 --> 0:12:03.679 executive or fire an investor, my biggest fear would be 0:12:04.360 --> 0:12:07.760 just as nationalism on the part of the Chinese care 0:12:07.960 --> 0:12:10.280 are they just not buying American or are they just 0:12:10.280 --> 0:12:12.199 not buying Apple in this particular case. 0:12:12.040 --> 0:12:14.040 And they're like twenty percent of your customer base, right A, 0:12:14.160 --> 0:12:16.000 they make a huge chunk of Apples. 0:12:16.200 --> 0:12:19.760 Well, from a revenue perspective, I mean, you make both 0:12:19.880 --> 0:12:22.480 excellent questions, just really quick that even if your unit 0:12:22.600 --> 0:12:26.640 sales are down overall, remember that the Chinese consumer skews 0:12:26.679 --> 0:12:30.120 towards the higher end product, the pro and promax, So 0:12:30.200 --> 0:12:33.280 you can still grow revenue because of higher average selling prices, 0:12:33.600 --> 0:12:36.120 which is something that Apple's relied on. But I guess 0:12:36.120 --> 0:12:37.520 it doesn't matter if you look at it as an 0:12:37.520 --> 0:12:40.880 economist or as a market analyst. How do we price 0:12:40.960 --> 0:12:44.280 in or understand the effects of that communist policy that 0:12:44.360 --> 0:12:47.679 Matt was talking about. What Bloomberg's reported is that China 0:12:47.720 --> 0:12:51.600 central government basically said to all government agencies and state 0:12:51.640 --> 0:12:55.920 back corporations, tell your staff no iPhones. You cannot bring 0:12:55.960 --> 0:12:58.520 an iPhone to work. You have to use a domestic model. 0:12:59.679 --> 0:13:02.080 And everyone was pretty chill and sanguine about that at 0:13:02.080 --> 0:13:04.680 the time the news came out. We don't know for certain, 0:13:04.679 --> 0:13:07.319 but the question we're posing is does this data show 0:13:07.600 --> 0:13:10.400 that this put off consumers in China from going out 0:13:10.440 --> 0:13:13.120 and buying because their government said you can't use iPhones 0:13:13.120 --> 0:13:15.720 in the workplace, all right. 0:13:15.600 --> 0:13:17.240 So I mean, I guess is there do we have 0:13:17.440 --> 0:13:19.959 any response out of Cooper Tino where they, to their 0:13:20.120 --> 0:13:21.400 extent of their concern. 0:13:21.120 --> 0:13:25.640 Here no Apple define to comment on the story. 0:13:25.960 --> 0:13:28.559 But remember the guidance, right, The guidance was that iPhone 0:13:28.559 --> 0:13:31.040 sales would accelerate into the last three months of this year. 0:13:31.520 --> 0:13:34.040 This data conflicts with that guidance. 0:13:34.480 --> 0:13:39.679 I also feel like it's we do get stories worried 0:13:39.679 --> 0:13:43.960 about iPhone sales every cycle, right is that? Yes, just 0:13:44.080 --> 0:13:48.000 we're always wrong my old exactly it is true, and 0:13:48.040 --> 0:13:51.080 this is a company that loves to under promise and 0:13:51.160 --> 0:13:52.319 over deliver as well. 0:13:52.720 --> 0:13:54.000 So I don't know. 0:13:54.120 --> 0:13:56.960 I mean, it's interesting stuff, yeah, and we'll put it 0:13:57.000 --> 0:13:59.000 into our into our models, ed. 0:13:59.760 --> 0:14:02.160 But so I don't know. 0:14:02.200 --> 0:14:05.160 I do think what's changed this time around is that 0:14:05.200 --> 0:14:08.560 the big tech surprise was that Huawei brought out the 0:14:08.600 --> 0:14:12.640 Mate sixty Pro as a competitive five G enabled handset 0:14:12.679 --> 0:14:17.160 in China with a semiconductor or a processor, which was 0:14:17.200 --> 0:14:19.200 a generation ahead of what we thought China could do. 0:14:19.240 --> 0:14:20.720 And if you look at the body of the story 0:14:20.800 --> 0:14:24.360 that Bloomberg wrote, many analysts on Wall Street now believe 0:14:24.440 --> 0:14:28.920 that Huawei will overtake Apple in China, and that there 0:14:28.960 --> 0:14:32.200 will be, whether it's nationalism or it's just simply a 0:14:32.240 --> 0:14:36.000 price point issue. There is now a smartphone available in 0:14:36.040 --> 0:14:39.040 the market made in China by a Chinese company that 0:14:39.880 --> 0:14:43.240 from a tech perspective at least gets closer to Apple's iPhone. 0:14:43.360 --> 0:14:46.920 But the ux there, I mean, ed, I imagine you're 0:14:47.760 --> 0:14:52.920 playing around with a lot of new phones other than Apple, right, 0:14:53.040 --> 0:14:55.600 does is the operating system on anything else? 0:14:55.760 --> 0:15:00.320 Approach at all? The elegance of Apple's. 0:15:00.480 --> 0:15:04.440 Not really I mean, and bear in mind that the 0:15:04.520 --> 0:15:08.000 Chinese consumer buys motivated by technology. 0:15:08.160 --> 0:15:10.240 They want the latest technology. You know. 0:15:10.320 --> 0:15:12.400 I was being asked on TV show earlier about the 0:15:12.400 --> 0:15:15.800 comparison between LVMH and Apple, and yes, true, there is 0:15:15.880 --> 0:15:19.360 kind of a Chinese middle class consumer that buys Apple 0:15:19.360 --> 0:15:22.440 because of the Western brand recognition, But they're really highly 0:15:22.480 --> 0:15:27.560 motivated about technology advancement and the A seventeen processor in 0:15:27.600 --> 0:15:30.880 this iPhone fifteen pro and Promax, Apple's latest silicon was 0:15:30.920 --> 0:15:33.600 widely to be believed to be a driver of sales 0:15:33.640 --> 0:15:34.720 because of its performance. 0:15:35.240 --> 0:15:37.680 All right, great stuff, as always appreciate it. We like 0:15:37.800 --> 0:15:40.680 the microphone in the shot there. That is very cool. 0:15:40.760 --> 0:15:43.040 That's a Tom Keen effect. I think for those that 0:15:43.080 --> 0:15:43.960 watching as. 0:15:43.680 --> 0:15:45.440 You can see the Golden gate Bridge behind him, what 0:15:45.520 --> 0:15:46.280 an amazing view. 0:15:46.440 --> 0:15:49.880 Our offices in San Francisco are outstanding, which is no 0:15:49.920 --> 0:15:52.000 surprise to guess. They're outstanding in every city where we 0:15:52.000 --> 0:15:53.280 have an office. I don't know how they do it. 0:15:53.480 --> 0:15:56.600 You're listening to the tape can's our live program Bloomberg 0:15:56.640 --> 0:16:00.240 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:16:00.280 --> 0:16:03.520 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:16:03.560 --> 0:16:06.400 You can also listen live on Amazon Alexa from our 0:16:06.400 --> 0:16:12.360 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:16:12.480 --> 0:16:14.800 Matt Miller, Paul Sweeney live here in our Bloomberg Interactive 0:16:14.800 --> 0:16:17.680 Brooker Studio. Also streaming live on that YouTube thing, so 0:16:17.680 --> 0:16:19.840 to head over to YouTube dot com and search Bloomberg Radio. 0:16:20.200 --> 0:16:22.360 You know, Matt and I were just talking we may 0:16:22.400 --> 0:16:24.400 not be long here for this radio business John, because 0:16:24.400 --> 0:16:25.760 we're talking about Matt and I are going to go 0:16:26.000 --> 0:16:28.000 maybe start a private credit fund. I think that's where 0:16:28.000 --> 0:16:30.240 we are, and an ATF and an ETF. Okay, we'll 0:16:30.240 --> 0:16:33.680 do an ETF on that as well. So so alternative capital, 0:16:34.000 --> 0:16:37.600 alternative markets a growing source of opportunities for retail investors, 0:16:37.680 --> 0:16:40.400 not just big institutional investors. Michael Whites joins us. He's 0:16:40.400 --> 0:16:43.280 a founder and president of yield Street. Joins us live 0:16:43.280 --> 0:16:45.600 here in our Bloomberg Interactive Brooker studio. Michael talk to 0:16:45.640 --> 0:16:47.560 us about yield Street, what do you guys do there, 0:16:47.600 --> 0:16:49.440 and then we'll dig into the kind of the market option. 0:16:49.600 --> 0:16:51.240 Well, thanks for having me. It's always great to be 0:16:51.240 --> 0:16:53.760 back here at Bloomberg. So at yield Street, we are 0:16:53.800 --> 0:16:57.560 focused on making alternative investments more available. So we want 0:16:57.600 --> 0:17:01.040 to help people rebalance their portfolios, not to just include 0:17:01.080 --> 0:17:04.360 stocks and bonds, but to have private market investments alongside 0:17:04.359 --> 0:17:06.920 them in their portfolio. So at yild Street, what we 0:17:07.119 --> 0:17:10.919 do is invest in institutional quality opportunities, think things like 0:17:11.000 --> 0:17:14.040 private credit as you just mentioned, private equity, real estate, 0:17:14.119 --> 0:17:18.200 fine art, legal finance, structured notes. Basically trying to help 0:17:18.240 --> 0:17:22.440 people access a diversified portfolio of private investments. We put 0:17:22.480 --> 0:17:24.920 those online or on our app, and we have over 0:17:24.960 --> 0:17:27.840 four hundred thousand in our community who are investing in 0:17:27.920 --> 0:17:29.720 these products all across America. 0:17:29.840 --> 0:17:32.800 So how do you get these products? Which are I 0:17:32.800 --> 0:17:35.399 think some of them intended for sophisticated investors, right. I 0:17:35.440 --> 0:17:39.760 can't get into a lot of private investments without meeting 0:17:39.760 --> 0:17:42.680 certain criteria out to a retail investor like me. 0:17:43.320 --> 0:17:46.760 So there's different buckets in the US. From a regulatory 0:17:46.800 --> 0:17:49.200 perspective about what you're able to invest in. I would 0:17:49.200 --> 0:17:52.320 say our primary investor is going to be an accredited investor. 0:17:52.320 --> 0:17:54.560 There's fourteen million of those that live here in America. 0:17:54.960 --> 0:17:57.760 The definition of an accredited investor for those that don't know, 0:17:58.200 --> 0:18:00.560 is if you're single, your two hundred thousand dollars. If 0:18:00.560 --> 0:18:02.880 you're married or filing jointly, it's three hundred thousand dollars 0:18:02.920 --> 0:18:05.040 of income or a million dollars in networth. There are 0:18:05.080 --> 0:18:08.360 fourteen million people like that. The next level are people 0:18:08.400 --> 0:18:10.439 who are yet to be a credit investor. Hopefully one 0:18:10.520 --> 0:18:12.960 day they might be, and those are going to be 0:18:13.080 --> 0:18:17.000 roughly thirty five million Americans who are looking to invest 0:18:17.119 --> 0:18:20.320 in private markets or alternatives but don't meet that threshold. 0:18:20.400 --> 0:18:22.600 For that audience of people, there are things like a 0:18:22.720 --> 0:18:25.760 rate of forty act fund or other types of products 0:18:26.000 --> 0:18:28.800 that are designed for that audience, and so at Yield Street, 0:18:28.960 --> 0:18:31.760 we're able to create and package products in a way 0:18:31.760 --> 0:18:33.760 that's accessible to these various audiences. 0:18:34.080 --> 0:18:36.359 Interesting. So what are the we were just talking a 0:18:36.359 --> 0:18:38.720 little bit about private credit. Talk to us about kind 0:18:38.760 --> 0:18:41.480 of your experience with private credit kind of and and 0:18:41.560 --> 0:18:44.320 for your clients as well, are they asking about private 0:18:44.359 --> 0:18:45.680 credit that they want exposure there? 0:18:46.200 --> 0:18:48.119 I think you just hit on on a hot button. 0:18:48.200 --> 0:18:51.199 So you know, what I've seen is a major shift 0:18:51.359 --> 0:18:54.320 in investor demand over the last year and a half. 0:18:54.520 --> 0:18:57.000 If you think back to let's say January twenty two, 0:18:57.520 --> 0:19:00.520 we were in an incredibly sort of bull cycle at 0:19:00.520 --> 0:19:02.720 the time, if you will, and investors at large were 0:19:02.760 --> 0:19:05.320 looking for a great story. They wanted that next real 0:19:05.400 --> 0:19:07.600 estate opportunity they could own. They wanted that big private 0:19:07.600 --> 0:19:10.480 equity idea. They wanted that next big venture back company. 0:19:10.880 --> 0:19:13.760 What folks have shifted their appetite amidst all the volatility 0:19:13.760 --> 0:19:17.159 and increase in rates is a little bit less volatility, 0:19:17.200 --> 0:19:20.199 more consistency. They've asked for debt or debt like products 0:19:20.240 --> 0:19:23.520 that have consistent coupons and shorter duration. So the most 0:19:23.560 --> 0:19:26.080 popular things for us now are three to five years 0:19:26.440 --> 0:19:28.639 paying some type of a coupon, have a debt like 0:19:28.680 --> 0:19:31.920 product in so much as they have collateral that's really 0:19:31.920 --> 0:19:35.000 where people have shifted their appetite to. So practically what 0:19:35.040 --> 0:19:39.199 we've seen is real estate debt, art debt, private credit. 0:19:39.320 --> 0:19:42.480 So think of like supply chain finance, receivable funding, purchase 0:19:42.600 --> 0:19:45.639 order funding, so real credit like instruments. 0:19:45.680 --> 0:19:47.639 So how do you so, what would be a product 0:19:47.640 --> 0:19:50.199 if I want to in that supply chain thing, or 0:19:50.200 --> 0:19:51.919 if I want to art debt? What do you do 0:19:51.960 --> 0:19:53.399 for me? What's your platform do for me? 0:19:53.960 --> 0:19:57.320 So I think I think right now it might be available. 0:19:57.359 --> 0:19:59.600 I'm not sure, but you'd have to look. You'd have 0:19:59.600 --> 0:20:02.240 to look at the website. So for example, an art debt, right, So, 0:20:02.320 --> 0:20:06.119 we bought a business called Athena Fine Art from Carlisle 0:20:06.240 --> 0:20:08.520 in twenty nineteen. I think we paid roughly one hundred 0:20:08.560 --> 0:20:10.480 and seventy million dollars for it, and that is the 0:20:10.520 --> 0:20:12.720 sort of the pre eminent blue chip fine art lender 0:20:12.720 --> 0:20:15.399 in America. What the product will offer you is a 0:20:15.400 --> 0:20:19.159 diversified portfolio of loans that we've made to collectors or 0:20:19.200 --> 0:20:23.240 galleries or dealers who put up collateral of fine art. 0:20:23.280 --> 0:20:26.080 So call it five or ten million dollar pieces of art, 0:20:26.119 --> 0:20:28.600 We'll lend them forty or fifty percent loan to value 0:20:28.680 --> 0:20:31.200 we put it in one portfolio, so you get diversification, 0:20:31.600 --> 0:20:34.520