Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 3: Joining us now Gene Monster in Minneapolis, obviously iconic with
Speaker 3: Piper Jeff.
Speaker 4: For years ago. Surety could join us from deep Water
Speaker 4: Asset Management.
Speaker 3: Dressed appropriately, Dan ives here a calar milage with aviator.
Speaker 3: Very nice. I'm awake, Gene Monster. I'm gonna start with you.
Speaker 3: Here's ives. He talks to Barons yesterday, Adam Clark, and
Speaker 3: he says, Apple, Microsoft and in video will be worth
Speaker 3: four trillion. We're not that far away, are we, gene Monster.
Speaker 3: How do they get the four million? Is it cash flow?
Speaker 4: Is it earnings or is it hype?
Speaker 5: I think it's probably two thirds expanding multiple and quickly
Speaker 5: I'll touch that in a second. I think it's probably
Speaker 5: one third expanding earnings when you look at like's just
Speaker 5: focusing on Apple. The expectations for this year, surprisingly are
Speaker 5: the iPhone growth is three percent. It's come down for
Speaker 5: five percent. This is for fiscal twenty five, so that
Speaker 5: number has been declining. It's eight percent for fiscal twenty six.
Speaker 5: So the I think that there's upside of those numbers.
Speaker 5: Dan and I can talk about how we get there,
Speaker 5: but I think that's one piece of it. But the
Speaker 5: second piece is what I continua believe. We've talked about
Speaker 5: this for the past year. This this three to five
Speaker 5: year bowl market. So we're probably in the early part
Speaker 5: of the second year that's going to continue to go
Speaker 5: up and then a spectacular bursting of the bubble. And
Speaker 5: just put some quick numbers around this time is that
Speaker 5: if you look at the Nasdaq, it's kind of trading
Speaker 5: mid to highest twenty percent on next year earnings. At
Speaker 5: the peak of the dot com bubble, it traded at
Speaker 5: one hundred times. We're not going to get back to
Speaker 5: thee hundred by any measure, but I think you could
Speaker 5: see a four multiple of fifty as just the hype
Speaker 5: around AI is just going to become intoxicating.
Speaker 3: Jennives I got on the Bloomberg Apple free cash flow
Speaker 3: pre pandemic sixty billion and they go out now to
Speaker 3: one hundred and ten billion. My thesis here is everybody's
Speaker 3: looking at the hype and the Dan Ives romance and
Speaker 3: Gene monster flying around, Jim Cook meeting with King Charles
Speaker 3: forget about it.
Speaker 4: Is it just financial oomph that is making mag seven go.
Speaker 6: Yeah, and look, I mean me and Jim talked about
Speaker 6: this before. The biggest thing is, even when you'll get Apple,
Speaker 6: you're not factoring in into numbers the AIS services piece
Speaker 6: as is essentially a new app store gets built on
Speaker 6: Apple intelligence. What that means from a services perspective, we
Speaker 6: think that could ultimately add ten to fifteen percent more
Speaker 6: to services and Tom that's why I think a year
Speaker 6: from now you're looking at four and a half trillion.
Speaker 6: What I believe over the coming years we're going to
Speaker 6: do five trillion dollar mark caps as we think about Godfather, Bi, Genen, Nvidia, Apple,
Speaker 6: and ultimately Microsoft.
Speaker 7: So Gene, I'd love to get your thoughts just kind
Speaker 7: of because I know you've covered Apple for a long time.
Speaker 7: You've seen the product cycle for this company over decades. Here,
Speaker 7: how do you frame out for your clients the AI
Speaker 7: play for Apple.
Speaker 8: It's twofold.
Speaker 5: I think the first is just this kind of the
Speaker 5: tailwind with Dan's talking about, I think that injecting AI
Speaker 5: into twenty percent of.
Speaker 8: The world's population.
Speaker 5: A couple of days ago was a big deal about
Speaker 5: what they've what they added to the eighteen point two upgrade.
Speaker 8: So I think that that.
Speaker 5: First part, Paul, is just this hardware growth and as
Speaker 5: I mentioned, the streets at three percent, what does it
Speaker 5: mean for the business injecting AI into this This is
Speaker 5: the first time software service.
Speaker 8: You know, this AI features is really the selling point.
Speaker 5: I think it can be eight percent growth and we
Speaker 5: can have meaningful upside to iPhone over the next year.
Speaker 5: And then the second phase, Dan touchdown it around.
Speaker 8: Kind of what.
Speaker 5: Happens with the app store is that you can see
Speaker 5: it in the dropdown menu. If you start digging around
Speaker 5: a eteam point two, you can see within the Apple
Speaker 5: Intelligence menu there's a point where you can pick which
Speaker 5: LLM you're using.
Speaker 8: So they're gonna add other ms. They will add other.
Speaker 5: Ones that are pay for so you upgrade, then they'll
Speaker 5: make more on their app store. So I think that's
Speaker 5: the second chapter hardware. First second is the app store.
Speaker 4: Gene Monster.
Speaker 3: Dan ives with us for this entire half hour, and
Speaker 3: I've already had three emails.
Speaker 4: Yes, folks. In our next.
Speaker 3: Block, we'll cover Tesla Paul continue here on mag seven
Speaker 3: X Tesla.
Speaker 7: Hey Dan, we've actually heard over the last I guess
Speaker 7: A couple of Quarters investors asked the question of Okay,
Speaker 7: I get the AI spend. I see the numbers. I
Speaker 7: got a sense of it's big and it's incremental. How
Speaker 7: about the returnal in that investment? That's now a question
Speaker 7: that people are hearing.
Speaker 4: How do you talk to your.
Speaker 7: Clients about what are we getting all this is spending
Speaker 7: on AI?
Speaker 6: Look, I think, hey, if you look at Salesforce dot
Speaker 6: com and you what was happening in software? They were
Speaker 6: waiting in line to get into an AI party while
Speaker 6: Jensen's on the dance floor, Elison of course cook and
Speaker 6: now behind those velvet ropes they're like Benioff, come on
Speaker 6: in now. So now software is part of the AI
Speaker 6: part because of the use cases, and that's why it
Speaker 6: continues to be ten pm in the AI party that
Speaker 6: goes to four am.
Speaker 4: Okay, I got to switch to Microsoft because you know
Speaker 4: we have this apple.
Speaker 3: The world's gonna end. Shyness terrible. I's just saying shut
Speaker 3: up and buy it. Muster's saying shut up and buy it.
Speaker 3: Moonshot Q three Q four, and it's like Sachia nan
Speaker 3: Della's falling off the face of the earth. Dana, I's
Speaker 3: an update on Microsoft into the quarterly report.
Speaker 6: Get the popcorn out, because this is just the start
Speaker 6: of more and more enterprises side.
Speaker 4: What are they doing right?
Speaker 6: I thought she had GPT was troubled because in the
Speaker 6: backyard of Microsoft are more and more enterprises. They're moving
Speaker 6: on copil, moving to AI from the cloud perspective. This
Speaker 6: is really what I've used the more and more the
Speaker 6: catalyst going into next year, the hyperscalees not just Microsoft.
Speaker 6: Gen's talked about again, Google, Amazon, this is now the
Speaker 6: second third derivative of the AI revolution.
Speaker 3: Gene monster on Google sort of off my radar here,
Speaker 3: I mean Search, the government's going to.
Speaker 4: Go after them.
Speaker 3: Do you have a confidence in an entire and total
Speaker 3: Google versus the split up that we hear from both
Speaker 3: Republicans and Democrats.
Speaker 5: I just got to say one thing about Dan for
Speaker 5: a second before I answer that Tom. No one illustrates
Speaker 5: as a better language of kind of illustrating what goes
Speaker 5: on than Dan. So I just appreciate that at the party,
Speaker 5: because that's exactly what's going on. Google has a seat
Speaker 5: at that party. They're also behind that red velvet road.
Speaker 5: You mention that party two wearing his purples.
Speaker 4: But Paul, you got to take the next question.
Speaker 5: So Google, in of Google, basically the pressure point on
Speaker 5: this is, I don't think it's around regulation.
Speaker 8: I don't think anything's gonna happen there. I think it's
Speaker 8: really what happens with search.
Speaker 5: And coming back to what happened in the September quarter,
Speaker 5: I think it was the most important number, that search
Speaker 5: number that Google has had in the last decade. Specifically
Speaker 5: is that they saw on acceleration in the US after
Speaker 5: one full quarter of these AI overviews. And so what
Speaker 5: that meant is by them injecting a at the top
Speaker 5: of the search results, that they were still getting more
Speaker 5: search revenue. And that's kind of the keeps what has
Speaker 5: been keeping investors up at night. The other beautiful part
Speaker 5: about the Google story is, you know they have these
Speaker 5: other bets. I think what happened related to, you know,
Speaker 5: their quantum computing that a two hundred and fifty billion
Speaker 5: in market cap this week.
Speaker 8: That was probably a little bit of a stretch.
Speaker 5: But what they have around Weymoa we can talk about
Speaker 5: in the next segment.
Speaker 8: What's going on there and relevant to to Tesla.
Speaker 5: But I just think Google is in a great position
Speaker 5: for this AI party.
Speaker 3: Paul YouTube is on fire, on fire and the live
Speaker 3: chat thank you HL can't wait for Dan ives.
Speaker 4: I know what is that about.
Speaker 6: But also look at Paul's sports shock. I think no
Speaker 6: one's talking about that from.
Speaker 7: County Donegal, Ireland.
Speaker 3: This sports shock more amazing as Sweeney's work three fridays
Speaker 3: in a row. He's trying to be like the Japanese
Speaker 3: to get to the four day work we get built
Speaker 3: out of the family.
Speaker 7: Paul continues, Hey, Gene, I'm gonna ask you to rehash
Speaker 7: once again. I kind of do it every time you
Speaker 7: come on because it's so important for our listeners and viewers.
Speaker 7: Put it into context like you can do AI versus say,
Speaker 7: I don't know the internet electricity, how big is AI
Speaker 7: in your mind?
Speaker 5: So the framework we use is that you know, at
Speaker 5: the highest level, what's been the most impactful has been electricity,
Speaker 5: and we put that at a scale of zero to
Speaker 5: one hundred. At one hundred, I mean, it's just hard
Speaker 5: to argue that piece. But I would put mobile around
Speaker 5: twenty five. I think the PC probably around thirty five
Speaker 5: In terms of the importance, I understand these technologies stack
Speaker 5: on top of each other, but I just think about
Speaker 5: in terms of value creation what they can do for investors.
Speaker 5: Put the Internet at fifty and I've put AI at
Speaker 5: ninety ninety five. If not for so, I think we're
Speaker 5: I just want to frame in one other piece just
Speaker 5: around this, like you know, you hear Dan and I
Speaker 5: talk about this enthusiasm, this party that's going on, and
Speaker 5: parties have a tendency to end, and when they end,
Speaker 5: there's a hangover after it, and we're going to have
Speaker 5: that in terms of a spectacular burst in the bubble.
Speaker 5: But I think this party is still appreciate that analogy, Dan,
Speaker 5: I think the party is still raging. And I just
Speaker 5: want to give an example. Broadcom this morning up seventeen
Speaker 5: percent in the pre market. They talked about their twenty
Speaker 5: twenty seven numbers effectively being like forty to fifty billion.
Speaker 5: For their AI revenue was twelve billion. And so this
Speaker 5: concept that like the hardware companies, the NVIDIAs, the broad cooms,
Speaker 5: that they're going to somehow hit a wall here in
Speaker 5: late twenty four or early twenty five, it's not happening.
Speaker 4: I want to get this thing because we really want
Speaker 4: to focus on Tesla.
Speaker 7: Here.
Speaker 3: This incredible call to these two players here. But let
Speaker 3: me start with you, Dan Eyves and Gene. I want
Speaker 3: you to pick up on the same thing. I want
Speaker 3: you to forget about the media. I want to forget
Speaker 3: about you. And down in Florida, Belski's dressed in white.
Speaker 3: He looks like neyrou at a convention in the sixties.
Speaker 3: Ives is dressed up looking like a fruit loop. And
Speaker 3: you know, Munster, it's all those romance of media and
Speaker 3: that you go into a top five long only buy
Speaker 3: side equity shop and you're talking to heavyweights about their
Speaker 3: over commitment to mag seven.
Speaker 4: How do they respond, Dan Ives to your enthusiasts.
Speaker 6: The first thing I say is stop trying to find
Speaker 6: AI in your spreadsheet, because that's how many have missed
Speaker 6: every transmissional tech name the last twenty years. And two,
Speaker 6: when you look at what's happening here, it's about some
Speaker 6: of the parts, Like I would argue, like the autonomous
Speaker 6: piece for Tesla, that's not and I'd say that's still
Speaker 6: the most under value I play in the market day
Speaker 6: not being fully valued. You look at what the ultimate
Speaker 6: valuation and what this is going to do from financially
Speaker 6: right from mag seven is still massively unappreciated, and it
Speaker 6: speaks to why I believe next year tech stocks are
Speaker 6: up into the twenty.
Speaker 4: Five or Gene Monster.
Speaker 3: When you go into the CFA crew at a long
Speaker 3: only buyside shop, pick your victim, Federated Fidelity, whatever, Genemunster,
Speaker 3: what's your terminal value? Can you go out five year vision,
Speaker 3: seven year vision?
Speaker 4: Yeah?
Speaker 5: I think that those are hard to you know, midling
Speaker 5: out five years is difficult, but that's ultimately where money
Speaker 5: is made. And to answer your question on the five
Speaker 5: year vision on this, as I would simplify just kind
Speaker 5: of across megacap is that there is going They're going
Speaker 5: to grow faster for longer, as simple as that sounds.
Speaker 5: But again I think the broadcom is representative of that.
Speaker 5: And so when I think about what that value creation is,
Speaker 5: I'm generally looking like a.
Speaker 8: Year two years out.
Speaker 5: My opinion is, for example, a year from now apples
Speaker 5: three fifteen. I think that, uh so, I think that
Speaker 5: there continues to move higher.
Speaker 3: Gene Monster with us and Dan, I thanks for the
Speaker 3: huge response, particularly out on YouTube. Greatly appreciate that. Dan,
Speaker 3: I'm going to talk to short on Tesla, You're completely opposed.
Speaker 3: I got one hundred and forty one thousand employees, I
Speaker 3: got single digit revenue growth.
Speaker 4: I got a pe of maybe one hundred and seventy.
Speaker 3: How do you equate that to MAGA mag seven success?
Speaker 3: How do you get those ratios which tell you south
Speaker 3: into your call north?
Speaker 6: Sure? So I think on Tesla it continues to really
Speaker 6: be about autonomous and AI. And when you think about
Speaker 6: this story going forward, it's going to be a full
Speaker 6: self driving penetration autonomous and what I've ultimately, Oh, I
Speaker 6: have it.
Speaker 4: I think you wouldn't talk to Gene Monster then.
Speaker 6: So look, I think over the next four to five
Speaker 6: years there will be a point where Sweeney is getting
Speaker 6: into a cybercab, no driver taken him to play golf.
Speaker 6: That that will happen next four to five years.
Speaker 7: All right? That that I mean, if that happens, that
Speaker 7: is a whole new game.
Speaker 6: But that's our And again, the whole issue is that
Speaker 6: between the Musk Trump romance. The reason it's so important
Speaker 6: for the stock is because now regulation in this country
Speaker 6: is going to rapidly change in terms of autonomous, and
Speaker 6: that we believe a trillion dollars alone for Tessa's valuation
Speaker 6: just based on autonomous.
Speaker 3: Jane, get us up to speed on this, and you
Speaker 3: come at this from loop Venture's a deep water asset
Speaker 3: where you've really dived into the entrepreneurial part of technology.
Speaker 4: Do you buy the ives story.
Speaker 8: One hundred percent?
Speaker 5: I think that the reality is is that if you're
Speaker 5: born today, there's no chance, and you're gonna born in
Speaker 5: the US today, there's no chance, and you're gonna ever
Speaker 5: need a driver's license.
Speaker 8: If you're eight years old today, there's no chance.
Speaker 6: And Jeane talk about what you talk about with your kid,
Speaker 6: like how you always say like your kid, like with
Speaker 6: your kid?
Speaker 5: Yeah, since she I have a daughter, she's eight years old,
Speaker 5: and I had a bet when just after she was
Speaker 5: born that she would never have a driver's license, and
Speaker 5: a couple of weeks ago.
Speaker 8: I'd had.
Speaker 5: I tried the latest version of Tesla FSD for twenty
Speaker 5: minutes and had a couple interventions. It's not there yet,
Speaker 5: but it is remarkable the progress that's making. I think
Speaker 5: that the whole conversation around Tesla, very few people are
Speaker 5: actually experiencing how far along they are, and then you
Speaker 5: layer on top of that the fact that humans are
Speaker 5: becoming worst drivers forty thousand plus people lose their lives
Speaker 5: a year and auto accents in the US alone, And
Speaker 5: then you layer on top of that what GM Cruise
Speaker 5: announced this week basically backing off from autonomy. It just
Speaker 5: leaves this wide open opportunity for Tesla to really be
Speaker 5: I think one of the two key players within autonomy,
Speaker 5: and so I think that that's not fully appreciated and
Speaker 5: shares the Tesla So Dan, when.
Speaker 7: We think about the Tesla story, I mean I part
Speaker 7: of me, the cynic of me, thinks Elon Musk is
Speaker 7: trying to get me to take my focus away from
Speaker 7: bending metal, which is a low margin business, competitive business,
Speaker 7: to other bets to use a tern but you think
Speaker 7: those other bets like autonomous driving, robotaxis are real.
Speaker 6: But I view its similar to like as Keen has
Speaker 6: talked about for a decade. It's like with Apple, but
Speaker 6: originally and Jeans talking about it as well, you just
Speaker 6: looked at Apple as a hardware player smartphone. Yeah, but
Speaker 6: what's been the key to the evaluation why it's gonna
Speaker 6: be the first one the four trillion dollar mark Club.
Speaker 6: It's because of services. It's because so when you think
Speaker 6: about Tesla, I would compare Autonomous the software FS to
Speaker 6: Apple services relative to that creuper Tino story.
Speaker 4: That's why it's so important.
Speaker 6: Seven million vehicles out there, you have ten million vehicles
Speaker 6: over the next year or two.
Speaker 4: And even when you look at.
Speaker 6: Waimo, which is a Google Play, those are two hundred
Speaker 6: thousand hours.
Speaker 4: I got to get this in yesterday. We had great coverage.
Speaker 3: Thank you to our team for linking it up with
Speaker 3: the President elect at the New York Stock Exchange.
Speaker 4: The billionaire of the United States was not there.
Speaker 3: I answer the critics of r and Musta and ives.
Speaker 3: Is he getting taxpayer support for all of his ventures?
Speaker 3: Is he getting a free ride off the back of
Speaker 3: the American textpayer?
Speaker 4: I disagree.
Speaker 6: I would argue you're talking about he made a bet
Speaker 6: for the ages with Trump and essentially iced out if
Speaker 6: you look at last administrations when it comes to by
Speaker 6: an administration, especially around EV's and now you're gonna really
Speaker 6: see him doubling down and within the Beltway, there's gonna
Speaker 6: be major changes. And when that knock of the door happens.
Speaker 3: It's must Geene monster, give me an EV update we
Speaker 3: got we won't want the Chinese in Europe's I read
Speaker 3: about BMW and Mercedes.
Speaker 4: It's a train wreck basically and no pun intended.
Speaker 3: Gee monster, What is the optimal EVS strategy for our
Speaker 3: listeners across America?
Speaker 5: If you're thinking about buying ev buy in the next
Speaker 5: two weeks in the US, because what could happen with
Speaker 5: those tax credits as far as like what's happening with
Speaker 5: the broader market. Just looking at Tesla, for example, units
Speaker 5: are basically going to be flatish for calendar twenty four.
Speaker 5: Must talk about twenty to thirty percent growth for next year,
Speaker 5: so a huge rebound that's surprised analysts, investors. The street
Speaker 5: right now is looking for fourteen percent, so kind of
Speaker 5: saying that Elon's being too optimistic on that.
Speaker 8: But I think the big picture, Tom, is.
Speaker 5: That we're coming through the EV winter here into starting
Speaker 5: to be a spring, and ultimately I think that evs
Speaker 5: just are naturally a better way to move around. It's
Speaker 5: not a political statement, it's a it's basically a physics statement,
Speaker 5: and I think that the free hand of the market
Speaker 5: will prove out that it's a more efficient way to
Speaker 5: move which will ultimately have evs. I considered an undeniable
Speaker 5: truth that eventually all vehicles will be electric.
Speaker 7: Gene I'm cruising around the Jersey Shore with my vestments scooter.
Speaker 7: I'm getting like eighty miles to the gollon you and
Speaker 7: Dan ives. But Dan, tell me about where you think
Speaker 7: ultimate demand is for electric vehicles, because I feel like
Speaker 7: we're in a bump in the road kind of moment here.
Speaker 6: It's a bump in the road, but our view is
Speaker 6: that if you get to twenty percent ed penetration, you know,
Speaker 6: call it over the next four or five years, that
Speaker 6: changes the game for Tesla and changes the game really
Speaker 6: for the industry. But you look what's happening in Detroit
Speaker 6: with the Big three. They're definitely starting to hedge that
Speaker 6: strategy in terms of especially when it comes to hybrid,
Speaker 6: and I think this continues to be a bump in
Speaker 6: the road. It's not the end. It's a transitional state
Speaker 6: in terms of where our view of the industry.
Speaker 3: Thank you guys for lighting this up. This has been great,
Speaker 3: Gene Monster. I didn't know you guys are in speaking terms.
Speaker 4: It's great. Yeah. I think he is greatly appreciate.
Speaker 3: Gene Monster. From Minneapolis. Well, Dan Ives, thanks for coming.
Speaker 3: I'm looking at Aviator Nation and they don't make my size.
Speaker 6: Oh no, they can make a spec and a special
Speaker 6: bow tie for you, I mean a Nation bow time.
Speaker 6: Look that could change and next thing, you know that
Speaker 6: those sales would just go off the ravee keen star
Speaker 6: wearing av.
Speaker 4: Do Nation bowt tag. What do you think I finish?
Speaker 7: But Tim, you're what we call back the day.
Speaker 4: You're a big fella. You're not.
Speaker 7: I don't know if they they got that for you.
Speaker 7: I mean, Tim's like a hockey player from Rochester.
Speaker 4: You know, it's like they make them big up there
Speaker 4: day nights. What are you doing for the holidays? I
Speaker 4: mean we're in Singapore.
Speaker 6: Look, the holidays is all about college football playoffs. It's
Speaker 6: about again, it's what we got punched in the mouth
Speaker 6: versus Oregon, came back, got checked now SMU. Next week
Speaker 6: when that going to uh, you know, to Phoenix and
Speaker 6: then we'll see what happens there.
Speaker 4: Thank you so much, greatly, greatly, I appreciate it.
Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 3: I'm watching the litmus paper of the system with Ibraham mcbari,
Speaker 3: and that is the foreign exchange market. There's so much
Speaker 3: signal there that pros are looking at.
Speaker 4: So we're going to get away from Dan.
Speaker 3: E's and Gene Monster in the next hour and right
Speaker 3: now with us some Fordham Global Insight, Ibrah and mcbari
Speaker 3: a knic with Villain Bauder at City Group a number.
Speaker 4: Of years ago. Ibrahim, thank you so much for joining.
Speaker 3: Is mister Trump's worst post inauguration nightmare, A new stronger
Speaker 3: dollar with d x y breaking ever higher.
Speaker 9: It's great to be with you once more, and on
Speaker 9: my take would be more than a strong dollar, more
Speaker 9: than anything else, reflects the strength and maybe even the
Speaker 9: exceptionalism of the US economy and actually has the side
Speaker 9: effect of maybe helping him over the inflation concerns. So
Speaker 9: if you look back at the election, nobody really voted
Speaker 9: against a strong dollar, voted against time inflation.
Speaker 10: So as much as president like Trump likes.
Speaker 9: To occasionally mention the dollar, I really think it's central
Speaker 9: in his site.
Speaker 4: Okay, so it's not central then what is within the
Speaker 4: foreign exchange in the geopolitical space? Is it?
Speaker 3: What we see in France this morning is a Germany
Speaker 3: flat on their back. What's the top item for Ibrahim
Speaker 3: Robari into twenty twenty five.
Speaker 10: Well, in fact, you put the nail on the head there.
Speaker 9: I do think for the foreign exchange market at large,
Speaker 9: Trump is still number one, and he's been obviously very
Speaker 9: highly publicized in the preponderance of the.
Speaker 10: US driving foreign exchange.
Speaker 9: But even in Trump's first term and in twenty twenty two,
Speaker 9: when the dollar did out the form, it did so
Speaker 9: against the backdrop of weaker rest of the world grows.
Speaker 10: And the way that I look.
Speaker 9: At the foreign exchange market right now is I think
Speaker 9: the market is right in.
Speaker 10: Seeing that exceptionalism go a little bit further.
Speaker 9: And sitting here in Germany today, looking at at an
Speaker 9: election at the end of February, and I think it's
Speaker 9: almost certainly going to get worse before it can get better,
Speaker 9: and that means we will see yet further declines in.
Speaker 10: The euro dollar.
Speaker 9: More broadly, a further weakening in the euro against the
Speaker 9: other major currency.
Speaker 7: Is parody in play here for the euro. I'm asking
Speaker 7: for a friend of mine who's making reservations to Paris
Speaker 7: as we speak.
Speaker 9: Yes, I think for investors there's always it's always very
Speaker 9: uncomfortable to be chasing a pre existing and pretty long
Speaker 9: running trend, and every evaluation Mottel will tell you the euro.
Speaker 10: Is pretty cheap.
Speaker 9: But in fact, parody would be my expectation in the
Speaker 9: first half of twenty twenty five.
Speaker 10: Maybe in the first quarter.
Speaker 4: Oh come on, can we get Europe parody? I'm thinking.
Speaker 8: At three PM.
Speaker 10: I mean, I certainly wouldn't rule it out historically.
Speaker 9: Historically, but you're actually strengthened into the end of the
Speaker 9: in December, and that there's a basic logic to it,
Speaker 9: which is into the end of the year and at
Speaker 9: the very beginning of the year people like to buy
Speaker 9: cheap things, right, and so the cheaper currency than there's.
Speaker 10: A corporate element.
Speaker 9: So I wouldn't necessarily get hung up on further weakness
Speaker 9: between now and the end of the year.
Speaker 10: But I think there is still more weakness for Europe.
Speaker 7: Ibrim, what do you expect. We've seen, you know, the
Speaker 7: ECB cut rates yesterday. Pretty much central banks across the globe,
Speaker 7: maybe the exception of the Bank of Japan or cutting rates,
Speaker 7: what do you expect that US Federal reserved to do
Speaker 7: next week?
Speaker 9: So I think the FED is actually in a very
Speaker 9: unusual spot competitor a lot of the other central because
Speaker 9: if you look at the Eurozone, Canada, Sweden, and in
Speaker 9: particular the economies that are really weakening fast, whereas for
Speaker 9: the FED, if you took a survey and maybe accepting
Speaker 9: your your brilliant polygona won't But most analysts at this
Speaker 9: point expect the FED to cut next week.
Speaker 10: But don't you think that they should be cutting? So
Speaker 10: what that implies at the end is you're almost certainly
Speaker 10: going to get a hawkish cut. So if that will cut,
Speaker 10: and then it will say, well, you know, we have some.
Speaker 9: Projections that will tell you we continue to cut at
Speaker 9: a different pace than we have done so far, but
Speaker 9: in practice we're probably going to adopt much.
Speaker 10: More of a wait and see approach.
Speaker 9: And again, I think that reflects a very different economic
Speaker 9: trajectory between the US and many of the other T
Speaker 9: ten economies, and even for Japan it's actually somewhere in
Speaker 9: the middle.
Speaker 10: Clearly the interistrate trajectory upwards, but the.
Speaker 9: Economy has much more of a mix of developments where
Speaker 9: the US has been pretty consistently strong and we and
Speaker 9: I continue to see that happening into the beginning of
Speaker 9: next year.
Speaker 10: At least a Hawkish Cup next week to be on
Speaker 10: the carg.
Speaker 3: Yeah, Ebram, I've got to do an audible here. Damien
Speaker 3: Sasaur is out in Scottsdale. I think he's in the
Speaker 3: bad little nine today the Scottsdale National Golf Club.
Speaker 4: It's really really highly ranked. It's nine holes, it's not
Speaker 4: eighteen holes.
Speaker 3: But that's plenty for It's plenty for dam So I
Speaker 3: gotta go Latin America and Ibram casas hours down around.
Speaker 4: I'm looking at Brazilian real out to six.
Speaker 3: Is it because mister Lula is so ill or is
Speaker 3: that something that can be opportunistic for our listeners in
Speaker 3: global Wall Street?
Speaker 9: So, I do think Brazil is a very interesting case
Speaker 9: where in a global perspective and even maybe relative to
Speaker 9: its prominent neighbor Argentina's and the opposites of investor sentiment.
Speaker 9: So Argentina recently have been a dialing in Brazil suffering
Speaker 9: from a combination of factors, but they definitely include that
Speaker 9: there was a sense that the central Bank was a
Speaker 9: little too casual about inflation risks, so I personally do
Speaker 9: think that we will end up seeing the Brazilian reel
Speaker 9: on a total return basis outperform in twenty twenty five.
Speaker 9: But picking the bottom, of course, in these very volatile
Speaker 9: currencies can be very treacherous. But nevertheless I would be
Speaker 9: on the positive side of Brazilian rail returns in twenty
Speaker 9: twenty five, and again it's an interesting contrast to the
Speaker 9: prevailing sentiment.
Speaker 4: Abram, thank you so much.
Speaker 3: If you and Tina Fordham are in New York together,
Speaker 3: we would be honored to have both you Tina Fordham
Speaker 3: into the studio with his sister Robari with Tina Fordham
Speaker 3: at Fordham Global Insights.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 2: starting at seven am Eastern on applecar Play and Android
Speaker 2: Auto with the Bloomberg Business app. You can also listen
Speaker 2: live on Amazon Alexa from our flagship New York station,
Speaker 2: Just Say Alexa. Playing Bloomberg eleven.
Speaker 4: Thirty Coffee is a moonshot.
Speaker 3: The summer is Brazil and Vietnam challenges, but it's always
Speaker 3: more nuanced than that. She's truly experted this out of
Speaker 3: reading and lc ConA Haik is absolutely iconic on what
Speaker 3: are called the softs away from oil. Maybe a little
Speaker 3: bit of metal is thrown in there, but it's mostly
Speaker 3: about the agricultural research she did at Reading University and
Speaker 3: bringing that over worldwide at Ed and f Man Conna,
Speaker 3: thank you so much for joining. I mean, I got
Speaker 3: Ed and f Man doing the touchy feely coffee of
Speaker 3: vulcaf making coffee business better. Together, We're going to be green.
Speaker 3: We're going to go out and help the farmers. Is
Speaker 3: that all pushed aside by the crisis of coffee?
Speaker 4: Is the pricing so.
Speaker 3: Egregious that the normal business of coffee is shifted?
Speaker 9: Oh?
Speaker 11: I think we're in an extreme part of the cycle.
Speaker 11: At the end of the day, all commodities are very
Speaker 11: cyclical agricultural markets obviously because of the weather cycles. But
Speaker 11: within the agricultural space, I would argue that the soft commodities,
Speaker 11: which are basically just grown in the tropical countries, have
Speaker 11: more heightens and more extreme cycles. And arguably, as we
Speaker 11: moved towards more climate change impacted scenarios, those cycles are
Speaker 11: going to be more extreme. So what we're seeing is you,
Speaker 11: as you mentioned, unprecedented droughts in Brazil, severe droughts in Vietnam.
Speaker 11: These two countries are the biggest producers and exporters off coffee,
Speaker 11: you know one number one Arabic exporter, Number two Robust exporter,
Speaker 11: you know, So they are massive. And when you have
Speaker 11: two producers seeing droughts leading to drops in yields, inevitably
Speaker 11: you see a supply contraction. The supply the one fundamentals
Speaker 11: to go out of whack. Prices, SPI cup stock start falling,
Speaker 11: and you get the situation we're in today. So yes,
Speaker 11: it's extreme, but not on and we've reached record highs
Speaker 11: in terms of the Arabic advice, but it's not unprecedented.
Speaker 11: These are the cycles we.
Speaker 6: Have to live with.
Speaker 7: I don't know. I don't like living with this. I
Speaker 7: got coffee on my screen here up seventy one percent
Speaker 7: year to date, my double short mocha at Strawbucks Route
Speaker 7: thirty five in Wall Township, New Jersey, five dollars and
Speaker 7: eighty three cents. It was like three dollars and fifty
Speaker 7: cents a year ago. I don't know what's going on,
Speaker 7: so connor is there any Is there any solution if
Speaker 7: I'm a coffee farmer. You know, is there any solution
Speaker 7: there technologically that can even out some of these swings
Speaker 7: here in the climate.
Speaker 11: No, it's not that easy. And maybe what today's high
Speaker 11: prices are doing is exactly telling you that that, you know,
Speaker 11: we're going to have to invent invest in more science
Speaker 11: to adapt to extreme weather scenarios and so the yields
Speaker 11: can still continue to be future proof. Maybe that's what
Speaker 11: the price are telling us. But in the short term,
Speaker 11: it's tricky because because they're tree crops, they don't not
Speaker 11: row crops like corn or wheat, which grow every year.
Speaker 11: You know, as soon as the price goes up, farmers
Speaker 11: good and plant a lot. In the case of coffee,
Speaker 11: it takes three to four years to grow from a
Speaker 11: tree from from seeding level to become full fruiting and
Speaker 11: so and then you know, as long as weather is good,
Speaker 11: it'll take some time to improve. And on the on
Speaker 11: the demand side, demand is pretty sticky. It's inelastic. You know,
Speaker 11: people find a small luxury that they don't need to sacrifice,
Speaker 11: they don't need to forego. What we have started to
Speaker 11: see is consumption from outdoors, like you know, in the
Speaker 11: outdoor coffee shops are slowly transferring into at home consumption
Speaker 11: because it's cheaper at home, and within the at home consumption,
Speaker 11: we're seeing downgrades to low quality maybe own brands, private labels.
Speaker 11: People are doing what you can.
Speaker 3: Yeah, ConA USDA was out with the summary in Vietnam
Speaker 3: and they say just in the last three days that
Speaker 3: they're seeing more planting. Farmers are motivated because of high
Speaker 3: coffee prices to plant more trees. Is the coffee equivalent
Speaker 3: what I use in my speeches from a knopsony, which
Speaker 3: is a rubber plantation in Singapore, is in Brazil and
Speaker 3: in Vietnam. Coffee where all the powers in the hands
Speaker 3: of the big companies, the shippers, the regional business people,
Speaker 3: and not in the power of the farmer farmers.
Speaker 11: Will sell to the traders, the middlemen. The traders then
Speaker 11: sell to the roasters, and some of them are small roases.
Speaker 11: Some of the big roasts of the big rotors are
Speaker 11: the likes of Nesle, Starbucks, JD Pete. So no would
Speaker 11: in depending where you are, Yes, maybe in the USA,
Speaker 11: a lot of the final coffee that we consume is
Speaker 11: in the hands of some big multi multi organizations and
Speaker 11: international corporations. But in different countries. You have small roasters
Speaker 11: as well, so different medium sizes as well, and now
Speaker 11: increasingly where you're seeing more and more independent roasters popping up.
Speaker 11: There's there's a real trend for that.
Speaker 7: Connor, what's the outlook for coffee here? I mean, I
Speaker 7: guess it's an agricultural question, but what are the what
Speaker 7: are the growers telling you about the next year, two
Speaker 7: years and what their expectations are.
Speaker 11: So prices are definitely high, so the incentive, as you mentioned,
Speaker 11: are very strong. If weather complies, then you know they
Speaker 11: will look after their crop next year. But when we
Speaker 11: did our crop toos, because even f Man we do
Speaker 11: our crop tos, and what we saw was that the rains,
Speaker 11: the lack of rains in Brazil this in during our summer,
Speaker 11: had a very bad impact on the blossom set. So
Speaker 11: the blossoms look good, but those blossoms and flowers didn't
Speaker 11: convert into actual buds and cherrits. So that's why we
Speaker 11: didn't see a crop. And that's where that's the plomer
Speaker 11: we're facing and a lot of farmerstis thought, this is
Speaker 11: not great. We're going to have to complaise stump our trees.
Speaker 11: So it's it's we'll see recovery for sure in twenty
Speaker 11: twenty six, but not in the short term.
Speaker 4: Conor.
Speaker 3: One final question Lisa emails in It says as ConA,
Speaker 3: if a peppermint mocha preppuccino blended beverage, it's Starbucks.
Speaker 4: Is it gonna top? Take ten dollars? Here? Conor, we
Speaker 4: hadn't for a ten dollars Starbucks?
Speaker 11: But how much does it cost today?
Speaker 4: Eight dollars? So says Lisa Daily with profanity wrapped around.
Speaker 11: Me, because one of you asked what are the solutions
Speaker 11: to this supply demand tightness? One of the solutions is
Speaker 11: that consumption has to fall, and for consumption to fall,
Speaker 11: these roses are going to have to pass on the
Speaker 11: higher cost to the retailers. And ultimately, yes, if higher
Speaker 11: costs leads to people thinking ten dollars is too much,
Speaker 11: let's give it up, then that's what we need to happen.
Speaker 4: Conorhick, thank you so much. Honored with ed n f Man.
Speaker 3: I can't say enough about their volt Cafe project, research
Speaker 3: project and support of farmers amid this crisis.
Speaker 4: As well as crop tours like.
Speaker 3: She's trying to make the flowers and the buds and
Speaker 3: like you know, Darshaling tea and you know can or
Speaker 3: Tall or.
Speaker 2: Whatever these Here's the Bloomberg Surveillance Pine. Listen live each
Speaker 2: weekday starting at seven am Eastern on Applecarplay and Android
Speaker 2: Auto with the Bloomberg Business app. You can also watch
Speaker 2: us live every weekday on YouTube and always on the
Speaker 2: Bloomberg terminal.
Speaker 4: The day you look at the front pages. Lisa Matteo hour,
Speaker 4: what's it like to be mentioned on the Costco conference call?
Speaker 4: That was pretty cool? Passion that.
Speaker 1: Ah, yes, those Costco earnings this morning. All right, We've
Speaker 1: got so much to get through for today, and I'm
Speaker 1: glad it's back up to an hour from a minute
Speaker 1: and a moment. So here we go. We're starting off
Speaker 1: with the battle between human and robot ride hailing drivers
Speaker 1: at airports. We're talking about Waimo one. Okay, they're owned
Speaker 1: by Alphabet. They already offer airport trips in Phoenix, they're
Speaker 1: waiting approval, yeah, and other markets. I don't know if
Speaker 1: I would take one. I'm still on the fence about it.
Speaker 1: But if it's robotaxis, continue expanding experts and telling business
Speaker 1: inside or here's the thing. Human ride hailing drivers they
Speaker 1: could see their incomes take a big hit as these
Speaker 1: robots start to come in. They're some of the most
Speaker 1: profitable trips for them, right, they often have higher, fair
Speaker 1: strong customer demand. That's the reason why. And the Uber
Speaker 1: and Lyft drivers are telling them that their gigs all
Speaker 1: already less.
Speaker 3: If the robot thing gets through the traffic, it's got
Speaker 3: to make that turn off the bridge onto the FDR.
Speaker 4: It's got to make the turn.
Speaker 3: It's like it's like Junior Helix over on the Upper
Speaker 3: east Side.
Speaker 7: I mean, I got I just I got in the
Speaker 7: car this morning with some dude I've never seen before
Speaker 7: in my life at four thirty in the warning. What's
Speaker 7: the difference in getting in with a robot car. I
Speaker 7: don't know.
Speaker 5: It's a human.
Speaker 7: I don't know.
Speaker 10: I don't know.
Speaker 7: I don't know the human. Oh God.
Speaker 1: Okay, So Tokyo planning a four day work or city employees, Okay,
Speaker 1: they want to reverse their low birth rate. That's the
Speaker 1: whole reason.
Speaker 7: So if I'm working less, I'm pro creating more.
Speaker 1: No, that's good. That's a good way to think about it.
Speaker 1: But they're saying it'll make the work life balance better
Speaker 1: so that they'll have you know, more time to take
Speaker 1: care of the children. So that's the whole reason behind you.
Speaker 1: Because they're on track sixteenth consecutive year of decline for
Speaker 1: their population. So again, this is city employees. This is
Speaker 1: for April of twenty twenty five. But the way it
Speaker 1: works it lets them adjust. They're working hours to free
Speaker 1: up one day, so they need to choose what day that.
Speaker 3: After thoughts trying to get me to go to a
Speaker 3: six day work week, sixth times, where we are? You
Speaker 3: know I tried to get it empty the dishwasher last night,
Speaker 3: done in flames.
Speaker 1: Pluck with that, I have the same fight.
Speaker 4: All right.
Speaker 7: This story I am very concerned about.
Speaker 1: Did you notice when you went to Okay, well this
Speaker 1: is British pubs. Okay, British pubs running out of Guinness. Okay,
Speaker 1: huge story. This is the New York Times. Apparently the
Speaker 1: parent company Diagio. They've limited the amount of beer that
Speaker 1: the UK wholesalers distributors can buy each week because of
Speaker 1: the surging demand, because they're fearing this shortage coming up.
Speaker 1: The reason they're fearing a shortage is because Guinness was
Speaker 1: once this old timer's beer, right, but it's become popular
Speaker 1: with gen Z. Those are those drinkers up to twenty seven,
Speaker 1: you know, from drinking age to twenty seven. It's been
Speaker 1: this marketing push they've been pushing there. They've had celebrity endorsements.
Speaker 1: But there's also this viral drinking challenge. Okay, it's called
Speaker 1: split the G. I don't really understand it, but it
Speaker 1: means that you drink enough in one chug to leave
Speaker 1: the foam with the first letter of the branding pine Glass.
Speaker 1: Apparently this is this challenge going.
Speaker 8: On all right.
Speaker 7: I was just at the Dublin brewery for Guinness back
Speaker 7: in September. There's like three dudes. They're making the whole stuff.
Speaker 7: It's it's not that big, and they it's amazing with
Speaker 7: the stuff they put out there. I mean it's it's
Speaker 7: just an incredible trip. If you're ever in Dublin, check
Speaker 7: out the Guinness Brewery. But I guess the kids are
Speaker 7: drinking it.
Speaker 4: Now. What's it called? The split split.
Speaker 1: The G split the G, Yes, the Guinness the.
Speaker 4: Gee something every day.
Speaker 1: Yeah, I'm telling you wealth of knowledge here. Okay, the
Speaker 1: last one. Oh, this is the bane of my existence. Okay,
Speaker 1: this is the cookie chain that teen girls are helping
Speaker 1: power to one billion dollars in we're talking, Oh, Paul Sweeney, Crumble,
Speaker 1: it's those five dollars seven hundred calorie cookies that are huge.
Speaker 7: Where do you get them?
Speaker 1: You can get them in the store, but my door
Speaker 1: dash bill has just been getting from these things. So
Speaker 1: similar to Guinness, they're using the power of like social
Speaker 1: media and bi these TikTok challenges and things. So TikTok YouTube, Instagram.
Speaker 1: It has a thirty plus person social media team. Okay,
Speaker 1: nine point six million TikTok followers. If you compare that,
Speaker 1: you say, how much is that Starbucks only has two
Speaker 1: point two billion million? Okay? So they do this thing
Speaker 1: weekly menu changes, so instead of having the same cookies
Speaker 1: each week, they highlight a new cookie, so it keeps
Speaker 1: the interest going.
Speaker 4: The social people. They misspelled it.
Speaker 1: But other than yeah, exactly see rw nbl.
Speaker 4: Asperry buttercake cookie. It's a mouth watering buttercake cookie.
Speaker 3: Oh gets this down at the bottom and says, except
Speaker 3: all cookies, I love that cute Okay.
Speaker 1: Crumble, like have you Beenley's I've I've, I have been,
Speaker 1: and I have seen it arrive at my doorstep. Plenty
Speaker 1: of tially, Yes, it's the teen girls. They're all about this.
Speaker 1: They're posting reviews and then Crumble repost the views those reviews,
Speaker 1: so then they think they're like, hey, I'm famous now.
Speaker 1: So it's fueling this whole thing with the girls. I'm
Speaker 1: telling you. But the way this company started, I mean
Speaker 1: twenty seventeen, it was a single store in Logan, Utah,
Speaker 1: and it just kind of blew up.
Speaker 4: It's out of Logan, Utah. Wow. How social media team?
Speaker 1: Thirty plus person social media? So you got to work
Speaker 1: on ours.
Speaker 4: I hope Sparta's listening. Say it one more time for Sparta.
Speaker 4: How big is there social media?
Speaker 3: To me?
Speaker 4: Plus?
Speaker 1: How many is ours?
Speaker 3: We got two and one of them is in here
Speaker 3: because they went to a party last night, so.
Speaker 1: We're crumble all right, crumble, way to check it out.
Speaker 4: Like you know, we can go today and I can
Speaker 4: have a story.
Speaker 1: We can door dash it right here.
Speaker 4: I got the.
Speaker 3: Yeah, yeah, the semi sweet chocolate chunk.
Speaker 8: How much is that?
Speaker 7: I don't tell you the next to it?
Speaker 4: I mean Lisa Mateo.
Speaker 3: Thank you for Lisa Mateo, our and our newspapers.
Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live each weekday,
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