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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets Podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 3: We want to.

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Speaker 1: Welcome Star Stage and Screen Creaty Groupda. She's a markets

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Speaker 1: reporter for Bloomberg and she's here doing some work on

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Speaker 1: an Amazon case Federal Trade Commission. It's tough to be

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Speaker 1: a big tech and trying to get bigger.

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Speaker 4: Is in it? It is?

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Speaker 5: Look, this is my kind of weekly obsession this week.

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Speaker 5: I'm traditionally Okay, it's reporter, as you know, But to me,

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Speaker 5: I think one of the big stories that perhaps isn't

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Speaker 5: getting enough attention is just how much momentum the FDC

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Speaker 5: is getting. Some of the biggest cases against these big

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Speaker 5: tech names are coming from the FTC, and a lot

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Speaker 5: of them filed just this week on Amazon, the third

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Speaker 5: one on Amazon. The big one I've been keeping my

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Speaker 5: eye on, though, is Microsoft and Activision. Yes, and bear

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Speaker 5: with me. Fun fact my very first speed at Bloomberg

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Speaker 5: was video game stocks and cannabis stocks.

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Speaker 6: Really, I know, I.

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Speaker 7: Didn't know that.

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Speaker 5: I know, it really tracks with my image, doesn't it

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Speaker 5: have a cool be It actually was, And this was

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Speaker 5: back in twenty eighteen, when you know, these weren't big

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Speaker 5: covered sectors just yet. So Activision kind of holds a

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Speaker 5: close spot in my heart. But I think what you

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Speaker 5: really have to keep in mind here is that this

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Speaker 5: is one of the biggest tech deals in history, sixty

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Speaker 5: nine billion dollar active acquisition of Activision getting a lot

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Speaker 5: of flak for basically potentially hurting consumers. That's kind of

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Speaker 5: the new definition of anti trust. Now, just how competitive

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Speaker 5: does it get? If I can put some numbers on it,

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Speaker 5: because you did start to hear testimony from Sati Nadella,

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Speaker 5: the Microsoft CEO, the Activision CEO Bobby Codec as well,

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Speaker 5: and one of the big takeaways was how much market

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Speaker 5: share does Microsoft take in the cloud gaming space, which

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Speaker 5: is very nascent by the way, if you take over

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Speaker 5: call of Duty vertical integration essentially, and one of the

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Speaker 5: chief kind of complaints came from the Sony PlayStation CEO.

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Speaker 5: They're saying, look, if you take call of duty off

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Speaker 5: our consoles. That's going to one erode our own kind

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Speaker 5: of market dominance in the console market. But two, it's

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Speaker 5: really going to hurt consumers because at the end of

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Speaker 5: the day, you don't just pay fifty to one hundred

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Speaker 5: bucks for the game, you have to then pay two

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Speaker 5: hundred and fifty to three hundred bucks for the console

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Speaker 5: as well. And you know you could have gamers up

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Speaker 5: in arms about that.

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Speaker 7: Yeah.

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Speaker 8: Yeah, So when does Microsoft say this has just gotten

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Speaker 8: too hard and too expensive, let's just call it.

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Speaker 9: A day on this deal.

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Speaker 5: Yeah, well, that's where I think this decision is so crucial. Look,

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Speaker 5: we've had about five days of testimony from both sides.

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Speaker 5: We've heard closing arguments yesterday. We are expecting now to

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Speaker 5: hear from the FTC Commissioner soon as well as well

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Speaker 5: as a judge who is ruling the case. Basically, the

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Speaker 5: deal here is the FDC has filed an injunction, which

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Speaker 5: basically means they need to if the FDC grants it,

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Speaker 5: or excuse me, if the federal court grants it, they

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Speaker 5: need to then be able to take this to a

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Speaker 5: proper trial, a proper hearing. That's not what's happened yet.

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Speaker 5: If it is taken to that proper trial hearing, that

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Speaker 5: is three years of extra administrative costs plus a three

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Speaker 5: billion dollar breakup fee. Now, in the context of Microsoft,

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Speaker 5: three billion dollars is not that much, but the added

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Speaker 5: kind of gains you've seen in Microsoft stock off of

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Speaker 5: the potential of this deal is enormous, and that's where

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Speaker 5: you see a bigger loss. Basically, the chief lawyer for

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Speaker 5: the Microsoft side said, if this injunction is granted, we're

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Speaker 5: going to drop the deal because the closing date is

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Speaker 5: July eighteenth, and there's no way you can get a

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Speaker 5: hearing done before that.

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Speaker 1: So so when do we hear about that injunction.

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Speaker 5: We're expecting starting as early as Monday, but given the holiday,

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Speaker 5: it might be later in the week.

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Speaker 1: And so is there a chance that this ing could

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Speaker 1: actually go to trial before you know the kind of

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Speaker 1: that closing date type of thing there, and we'll get

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Speaker 1: a resolution one way or the other.

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Speaker 5: There is it might not go to trial, because basically

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Speaker 5: Microsoft is saying is if they there is a push

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Speaker 5: to go to a trial, they're going to drop the

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Speaker 5: deal altogether. And if they don't grant the injunction. Traditionally,

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Speaker 5: the FTC says, if you don't get the adjunction, we're

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Speaker 5: going to hands off on the deal. That's been the

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Speaker 5: historic trend. But Lenacon is a different She comes that

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Speaker 5: tech really hard. She has been for a while. So

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Speaker 5: anything can happen.

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Speaker 8: Here, really, And how does this impact the AI sector

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Speaker 8: as well?

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Speaker 5: Chredy, what's the potential read through? Yeah, well, when we

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Speaker 5: talked about cloud gaming, look, cloud gaming is something that

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Speaker 5: is brand spanking new in the technology sphere, and it's

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Speaker 5: why Microsoft really wants to get their hands on it

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Speaker 5: as well. Here's what else is brand spanking new artificial

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Speaker 5: intelligence and a lot of that is happening through these

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Speaker 5: acquisitions of these smaller AI players because it hasn't grown

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Speaker 5: to that ability yet. And remember acquisitions have been kind

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Speaker 5: of frozen for a lot of these big tech names

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Speaker 5: for a while. It's why they're sitting on i think

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Speaker 5: one hundred and fifty billion dollars of cash combined with

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Speaker 5: all the kind of big tech players because they're trying

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Speaker 5: to avoid that scrutiny from the federal government. So the

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Speaker 5: concern here for the broader tech sphere and the broader

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Speaker 5: benchmark is that if you start to see some sort

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Speaker 5: of precedent that the FTC wins here, then it could

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Speaker 5: hit every deal that big tech has had and might

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Speaker 5: potentially have in their race to really expand on AI.

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Speaker 1: Yeah, I mean that is the big fallout. Yeah, And

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Speaker 1: I think we're kind of the market's kind of already

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Speaker 1: pricing that in. I don't think the market anticipates the market.

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Speaker 1: The government regular is allowing big tech to do anything

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Speaker 1: more of size, right.

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Speaker 5: Nothing more. But then they also don't think that they're

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Speaker 5: going to make progress on kurttailing what's already been done,

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Speaker 5: and that's really where the market.

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Speaker 1: Risk is, all Rightty, great reporting, Thank you so much

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Speaker 1: for coming in here. Kritti Gupta. She's host the Bloomberg

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Speaker 1: Surveillants Early Edition for Bloomberg News and just doing some

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Speaker 1: work here on what is a huge topic in Silicon Valley,

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Speaker 1: in technology, in M and A in general, which is

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Speaker 1: can big tech get anything done in terms of mergers

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Speaker 1: and acquisitions? And boy, the government's really clamping down hard

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Speaker 1: on that after you know, decades of a soft touch.

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Speaker 3: You're listening to the team Ken's are Live program Bloomberg

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Speaker 3: Markets weekdays at ten am Eastern.

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Speaker 4: On Bloomberg dot Com.

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Speaker 3: The iHeartRadio app and the Bloomberg Business app or listen

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Speaker 3: on demand wherever you get your podcasts.

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Speaker 1: First half of the year in the books, and you

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Speaker 1: know when this day closes here, So we're looking at it.

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Speaker 1: A nice big move up in this market. Fifteen percent

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Speaker 1: plus and y s and P five hundred. Matt Stucky

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Speaker 1: joins us. He's a senior portfolio manager at Northwestern Mutual. Matt,

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Speaker 1: what do you make of this market here? What do

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Speaker 1: you make of the first half here? With like no hindsight, Look,

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Speaker 1: no hindsight.

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Speaker 10: This is a surprising result for the front half of

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Speaker 10: this year, and so put me in that camp of

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Speaker 10: those that probably were caught a little bit off guard

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Speaker 10: with how strong this market has been. Look, I mean

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Speaker 10: the Nasdaq up until today is up forty percent year today.

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Speaker 10: That's the best since nineteen eighty three when what a

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Speaker 10: Feeling was leading the radio charts. And so this is

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Speaker 10: definitely unprecedented just in terms of what this market's done

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Speaker 10: in absolute terms, but also just in terms of the

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Speaker 10: context of you know, we're in the middle of a

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Speaker 10: fed rate hike cycle that they're moving pretty aggressively with.

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Speaker 10: With there's you know, a good amount of fear out

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Speaker 10: there in terms of the recession probability, and we think

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Speaker 10: that is still something that's all on the table, and

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Speaker 10: so pull that together, it definitely is a surprising result.

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Speaker 8: So to what extent, Matt, are you concerned about lack

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Speaker 8: of breadth in the rally in the first half of

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Speaker 8: twenty twenty three? Paul was citing earlier some research from

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Speaker 8: Bloomberg Intelligence showing that that breath may not actually be

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Speaker 8: as big of a problem as we tend to talk

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Speaker 8: about all day here at Bloomberg. Is that something that's

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Speaker 8: on top of mind for you?

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Speaker 10: It is, you know, just a I was actually looking

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Speaker 10: at this topic this morning, and you know, if last

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Speaker 10: October was indeed the low for this this cycle, and

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Speaker 10: you know, recession risks were probably priced at that point,

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Speaker 10: you would expect a pretty sizable rally off that low

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Speaker 10: level and broad based participation off that level. But if

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Speaker 10: you take a look at kind of what's happened since October,

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Speaker 10: the equal weighted S and P five hundred for one

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Speaker 10: hundred ninety days out since the low is up about

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Speaker 10: fourteen percent or so. The overall market, which is cap

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Speaker 10: weighted obviously, is up about twenty four percent. But if

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Speaker 10: you contrast that rally off the lows of fourteen percent

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Speaker 10: against prior recession trough levels, we're in weak territory on average.

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Speaker 10: If you kind of go back through each recession kind

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Speaker 10: of what was the low and what was the rally

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Speaker 10: from the low after one hundred and ninety days, that

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Speaker 10: average rally is about forty five to fifty percent or so.

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Speaker 7: So we're quite a bit underneath that.

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Speaker 10: So broad based participation is not quite there, and on

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Speaker 10: an equal weight to basis, it's it's telling you a

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Speaker 10: different story just how narrow this leadership has been, which

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Speaker 10: to me makes me question some of the sustainability.

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Speaker 1: All Right, so Matt, let's just assume I was overweight

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Speaker 1: the magnificent seven stocks here this year. Now I'm sitting

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Speaker 1: on this big game. I'm looking to reallocate here inequities.

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Speaker 1: How are you kind of allocating between the various kind

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Speaker 1: of ways to play this market? Large cap, small cap, growth, value,

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Speaker 1: How are you guys kind of thinking about that?

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Speaker 10: Well, we're shifting a little bit towards value, a little bit,

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Speaker 10: a little bit towards small and madcap, which is a

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Speaker 10: little bit you know, I would say it's it's not

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Speaker 10: necessarily addressed for the economic environment. Yet, because we do

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Speaker 10: think of recession is in the cards for later on

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Speaker 10: this year and into twenty twenty four, those asset classes

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Speaker 10: are a little bit more economically sensitive, you know, to

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Speaker 10: the macro. But the reality that we think is priced

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Speaker 10: into those asset classes to us gives us some compensation

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Speaker 10: for the risks in front of us.

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Speaker 7: You know, look at small.

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Speaker 10: Cap as an example, it's just going to dig into

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Speaker 10: that for a little bit. Earnings estimates for the four

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Speaker 10: to twelve months or down about fourteen percent, and we're

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Speaker 10: paying just a thirteen x multiple for those reduced estimates.

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Speaker 10: Contrast that to the S and P five hundred, which

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Speaker 10: have actually seen earning's revisions start to rise and they're

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Speaker 10: only three percent off the all time highs, and you're

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Speaker 10: paying nineteen times earnings for that. You know, valuations aren't

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Speaker 10: a very good short term indicator for performance, but over

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Speaker 10: the long term, where we try to align our time

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Speaker 10: horizon with our investment and portfolio, they do start to matter.

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Speaker 10: And so we think we can probably weather the storm

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Speaker 10: pretty well in something that already is pricing in a

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Speaker 10: little bit of economic weakness, which is what we expect

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Speaker 10: as we kind of move throughout the rest of this year.

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Speaker 10: But you know, broad outside of equities, we do think

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Speaker 10: fixed income is attractive here, and we've allocated more of

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Speaker 10: our portfolio towards fixed income for those that have more

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Speaker 10: balanced portfolios. Part of that is just due to an

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Speaker 10: overall outlook of again recession, but also inflationary pressures are

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Speaker 10: coming down and religious rates are rising. These are some

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Speaker 10: of the highest real interest rates we've seen in over

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Speaker 10: a decade, and so for investors that are out there

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Speaker 10: that have balanced portfolios, we do think fixed income is attractive.

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Speaker 8: I want to talk to you about this breaking news

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Speaker 8: that we've got on student loan forgiveness from the Supreme

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Speaker 8: Court throwing out Biden's proposal on student loan forgiveness. There

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Speaker 8: Biden's saying that he's going to come back with a

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Speaker 8: different plan. But let's say that those student loan payments

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Speaker 8: are not forgiven. And of course the student loan payments

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Speaker 8: are resuming after a three year pause. JP Morgan says

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Speaker 8: that's going to cause a hit, particularly to core retail

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Speaker 8: sales growth. Are you concerned about the return of student

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Speaker 8: loan payments impacting earnings this season?

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Speaker 7: We are a little bit concerned about that.

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Speaker 10: I think if let's just use a hypothetical situation here

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Speaker 10: that you know, payments are turned back on, and what's

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Speaker 10: the cost of that to the economy. It's about you know,

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Speaker 10: one hundred and twenty five billion or so worth of

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Speaker 10: consumer payments that are going to be reallocated towards meeting

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Speaker 10: their student loan obligations. And of that subset of those

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Speaker 10: that are going to be required to start repaying, think

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Speaker 10: about the propensities to spend of that population. You know,

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Speaker 10: typically these are younger people, these are people with lower

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Speaker 10: incomes relative to the rest of the population, and the

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Speaker 10: propensity is spend is very high. So the direct impact

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Speaker 10: of the economy, we would think it probably punches above

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Speaker 10: the way a little versus that number, and so you

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Speaker 10: know the direct impact, Yeah, it's probably consumer related businesses,

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Speaker 10: Retail sales definitely collecting a lot of the impact.

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Speaker 1: Hey, on your fixed income comment, Matt, talk to us

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Speaker 1: about duration. Can I go out from the curve? I mean,

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Speaker 1: I'm I'm very comfortable sitting here in my two year

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Speaker 1: treasury four point eight seven percent. Some people are saying

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Speaker 1: I got to get out of my comfort zone a

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Speaker 1: little bit. And go out in duration. I don't know

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Speaker 1: about that. What do you think?

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Speaker 10: It's tricky right now? You know, right now, actually one

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Speaker 10: year treasury bills treasury bonds are at five point four

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Speaker 10: one percent. That's twenty bases higher than we were prior

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Speaker 10: to the regional bank crisis that flirted up during March.

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Speaker 10: And you kind of think, okay, back then, the mark

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Speaker 10: was expecting a rake cut in the next thirty days

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Speaker 10: when we started to see Sippy fail. Now there's no

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Speaker 10: cuts priced in for the next six months, and this

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Speaker 10: increase is probably we're going to get two more hikes

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Speaker 10: from the Federal Reserve, and so kind of think, okay,

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Speaker 10: interest rates are pressured upward from here, and maybe even

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Speaker 10: the two years pressured upward from here. But we kind

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Speaker 10: of go through history and hiking cycles and cutting cycles.

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Speaker 10: The Fed, you know, when they're forced to cut, doesn't

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Speaker 10: just cut by twenty five basis points. Typically that first

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Speaker 10: cut is one hundred and fifty to two hundred basis points.

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Speaker 10: If they have that in the bag, that's usually due

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Speaker 10: to some sort of economic event going on, you know,

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Speaker 10: some sort of form of a recession.

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Speaker 7: There's a crisis somewhere.

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Speaker 10: I'm just going through history, and we're not calling for

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Speaker 10: any kind of episodic situation that would force that, but

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Speaker 10: you know, we do need to probably think through the

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Speaker 10: likelihood that what we're seeing that's attractive on the front

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Speaker 10: end here, how long that's likely to persist. And so

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Speaker 10: we're more intermediate and that's what we're recommending to our clients,

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Speaker 10: where we get that nice balance between duration and reinvestment

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Speaker 10: right for our clients. And you know, it is tempting

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Speaker 10: there to take those attractive front end yields, though I

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Speaker 10: understand that exactly.

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Speaker 1: All right, Matt, thanks so much for joining us. Appreciate

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Speaker 1: getting your thoughts. Matt Stuckey, Senior portfolio manager for Northwestern Mutual.

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Speaker 3: You're listening to the tape Can's our live program Bloomberg

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Speaker 3: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 3: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: Madison Mills, Paul Sweeney. Here in our Bloomberg directive Broger Studio, Busy,

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Speaker 1: busy day here, we need to take some time out

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Speaker 1: here and get the latest on the geopolitical issues, particularly

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Speaker 1: as it relates to Ukraine. And nobody better to speak

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Speaker 1: to about this issue than Mike Rodgers. Mike is a

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Speaker 1: retired four star admiral with the United States NAVING. Of course,

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Speaker 1: we thank him for his service. Admiral, thanks so much

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Speaker 1: for taking the time to chat with us today. I

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Speaker 1: would love to get your view of the current situation

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Speaker 1: on the battlefield in Ukraine.

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Speaker 6: Sure, and thanks very much for the opportunity.

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Speaker 11: Paul. You know, as I look at it, I don't

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Speaker 11: think either side, even the aftermath of the Wagner Group

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Speaker 11: activities of the rebellion, neither side has yet shown the

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Speaker 11: ability to deliver a knockout bow. Even in the midst

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Speaker 11: of this disarray within the Russian and this side so

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Speaker 11: to speak. Is this mutiny was ongoing, Ukraine wasn't unable

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Speaker 11: to really take advantage of it.

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Speaker 6: They're still in the early stages I think of their offensive.

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Speaker 11: We'll see how that plays out, but right now my

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Speaker 11: assessment would be we're likely to see a kind of

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Speaker 11: continued stalemate for the near future at least.

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Speaker 1: What is your takeaway from this? Just stunning news of

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Speaker 1: what happened within Russia over the last week with the

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Speaker 1: Wagner Group, and most specifically, what do you think that

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Speaker 1: means for Putin standing within Russia.

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Speaker 11: Well, first of all, I think at highlights there's probably

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Speaker 11: more fragility in the Russian system than most of the

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Speaker 11: West has recognized. If I was Putin, I'd be very concerned,

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Speaker 11: and I'd be concerned about a couple of specific dimensions.

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Speaker 11: Number One, you saw almost no reaction from the Russian

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Speaker 11: military or the Russian security services to this meeting. They

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Speaker 11: literally seemed to sit on the sidelines and watch, and

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Speaker 11: the Wagner Group was able to relatively quickly move several

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Speaker 11: hundred miles, occupy Rostov and a few other locations with

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Speaker 11: in southwest Russia, and then move on to Moscow before

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Speaker 11: ultimately I think Putin cut a deal to get this

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Speaker 11: thing to stop, but the fact that they didn't respond

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Speaker 11: that would worry me if I were Secondly, if you

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Speaker 11: look at the videos of the Wagner Group as it

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Speaker 11: moved into Rostov, the largest urban area that we saw

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Speaker 11: them in, are you saw people on the streets literally cheering?

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Speaker 4: Yep?

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Speaker 6: Now, not because they.

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Speaker 11: Thought forgoes in The leader of the Wagner group was

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Speaker 11: trying to overthrow Putin because he wasn't. But the idea

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Speaker 11: that this strong individual who's been leading a group that's

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Speaker 11: been relatively successful by Russian standards of the battlefield of Ukraine.

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Speaker 11: This individual was saying, Look, the reason we're not winning

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Speaker 11: his war is because of incompetence within the defense ministry

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Speaker 11: and the Russian senior military leadership. And therefore, I Progozen

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Speaker 11: are going to put enough pressure on the Putin that

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Speaker 11: he's going to remove those people and will ultimately win

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Speaker 11: this war.

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Speaker 6: Because Progosen had been an advocate war, he had been

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Speaker 6: arguing that it was an appropriate action. The fact that

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Speaker 6: so many people were cheering this.

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Speaker 11: If I was Putin, I would be thinking to myself,

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Speaker 11: this is something I need to be thinking.

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Speaker 6: About in terms of what does that mean? Why is

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Speaker 6: the public responding so positively to this?

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Speaker 8: So to speaking, well, what about the global response. I'm

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Speaker 8: curious what you're thinking about to what extent this reaction

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Speaker 8: to Putin on the ground is going to impact the

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Speaker 8: ability for other world leaders to continue to rebuff him

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Speaker 8: and rebuff Russia when it comes to things like sanctions

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Speaker 8: and other measures that other global leaders have.

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Speaker 11: So I think it doesn't change the broad dynamic where

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Speaker 11: the West, US, EU, NATO, and a handful love on

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Speaker 11: the nations remain committed to helping Ukraine, both through the

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Speaker 11: provision of weapons, through assistance, and through these sanctions that

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Speaker 11: are being imposed on Russia. I think all of those

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Speaker 11: nations remain committed, and this activity of the last week

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Speaker 11: doesn't change that. Likewise, I don't think China, the biggest

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Speaker 11: champions so to speak, of the Russians, is likely to

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Speaker 11: change their position at least now. I think most of

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Speaker 11: the major outside parties are trying to get a sense

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Speaker 11: for was this event unique, was it a one off?

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Speaker 11: Does it suggest that there's something more foundational or problematic,

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Speaker 11: that there's greater weakness than the Russian system that we've

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Speaker 11: fully realized. So I think right now you're watching people

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Speaker 11: observe this and trying to see does this activity that

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Speaker 11: we watch.

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Speaker 6: With the Wagoner group, does it start to spur others.

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Speaker 11: In Russia to startlingly start talking about, Hey, we need

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Speaker 11: to stand up, we need to stop this war.

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Speaker 6: We'll see. I think we're going to see anything immediately,

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Speaker 6: but everybody's clearly paying great.

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Speaker 1: Attention Admiral, is there any I guess, weaponry, armaments, or

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Speaker 1: even sanctions that could be provided by the West that

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Speaker 1: could tip the scales materially in the favor of Ukraine.

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Speaker 1: I'm thinking F sixteen fighter jets. Is there anything out

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Speaker 1: there that could be provided that would make a big difference?

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Speaker 11: Well, I think, though I don't want to speak for Ukraine,

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Speaker 11: but my sense is if you ask them, what's the

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Speaker 11: greatest capability that we wish we had that we don't

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Speaker 11: have right now, I suspect their argument would be, give

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Speaker 11: us long range weapons that would enable us to strike

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Speaker 11: targets deeper within Russia. That would increase the pressure on

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Speaker 11: Russia both domestically, it's populous, would see the war start

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Speaker 11: to feel the war. Putin would be more pressured, and

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Speaker 11: it would also enable us to try to stop the

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Speaker 11: flow of reinforcements, munitions, support into these Russian troops in Ukraine.

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Speaker 11: We could hit the targets deeper behind them, enable us

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Speaker 11: to isolate that much more effectively. My guess would be

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Speaker 11: that would probably be the number one thing they would

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Speaker 11: be looking for it at the moment that you asked.

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Speaker 6: The West has broadly said that would be really escalatory.

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Speaker 6: We're not committed, We're not prepared to do that.

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Speaker 11: But if you watch how this is unfolded over the

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Speaker 11: last since February of last year, we're coming up now

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Speaker 11: in fifteen sixteen months. Yeah, we're now providing weapons the

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Speaker 11: West is in the US that when this started we

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Speaker 11: initially said.

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Speaker 6: Who this would be escalatory. We're not going to do that.

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Speaker 11: Like as you highlighted, you know, at sixteen or fighter aircraft.

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Speaker 11: So the war is definitely in a different place than

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Speaker 11: it was when it started, not unexpected as.

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Speaker 8: We kind of near this war lasting for a year

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Speaker 8: and a half, which I feel like so many of

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Speaker 8: us never anticipated. If you had to put a timeline

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Speaker 8: on it, when would you say that this war is

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Speaker 8: likely to wrap up? And how much acceleration do you

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Speaker 8: think we'll see in that given the events that we

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Speaker 8: saw in Russia for the weekend.

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Speaker 11: So first of all, I wish I could tell you

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Speaker 11: I knew an exact day, but clearly I don't. My

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Speaker 11: gut tells me it will be longer than shorter. So

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Speaker 11: for example, I would not expect.

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Speaker 6: Anything before the end of the year at the earliest.

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Speaker 11: Personally, Now, what are the things that might change that dynamic,

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Speaker 11: We'll see how this Ukrainian offensive unfold. If it in

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Speaker 11: fact leads to great success on the battlefield and they

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Speaker 11: are able to push the Russians either out of or

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Speaker 11: back closer out of Ukraine or closer back into Russia itself,

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Speaker 11: we'll see if that plays out. We'll see if Putin

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Speaker 11: makes an assessment given what we've just watched with the

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Speaker 11: Wagner group. Hey, perhaps the conditions for me domestically within

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Speaker 11: my own system in Russia are not quite as strong

438
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Speaker 11: as I thought that where maybe it's in my best

439
00:21:48,160 --> 00:21:52,600
Speaker 11: interest to try to declare victory, so to speak. But

440
00:21:52,640 --> 00:21:56,840
Speaker 11: traditionally conflicts then for one of three reasons history. Either

441
00:21:56,880 --> 00:21:59,840
Speaker 11: what happens on the battles, one side gains great advantage

442
00:22:00,119 --> 00:22:01,960
Speaker 11: or another side is really weak.

443
00:22:02,040 --> 00:22:03,800
Speaker 6: It feels but we've just got to stop this.

444
00:22:04,440 --> 00:22:10,600
Speaker 11: The second scenario, generally historically is political pressure. Again, one

445
00:22:10,640 --> 00:22:13,640
Speaker 11: site either feels I can't take this pressure, We're losing

446
00:22:14,000 --> 00:22:16,399
Speaker 11: the my populaces against the war. We've got to stop

447
00:22:16,440 --> 00:22:19,439
Speaker 11: at the prices too high. And then the third is

448
00:22:19,520 --> 00:22:23,119
Speaker 11: some external party generally intervened. Historically, it might have been

449
00:22:23,160 --> 00:22:26,119
Speaker 11: the United Nations, it could be China, the US or

450
00:22:26,119 --> 00:22:29,840
Speaker 11: others who basically put pressure on the primary combatants in

451
00:22:29,880 --> 00:22:33,359
Speaker 11: the conflict. At the moment, none of those three scenarios

452
00:22:33,760 --> 00:22:39,240
Speaker 11: battlefield dominance or failure, political pressure or or the major

453
00:22:39,320 --> 00:22:43,000
Speaker 11: external parties supporting the primary combatants, none of those three

454
00:22:43,040 --> 00:22:46,840
Speaker 11: things right now looks like there is any indication that

455
00:22:46,880 --> 00:22:47,920
Speaker 11: they're going to bring.

456
00:22:48,240 --> 00:22:51,760
Speaker 6: An end to the battlefield conflict anytime soon.

457
00:22:52,040 --> 00:22:55,240
Speaker 1: Said ambassador. Is there any reason to believe that Putin

458
00:22:55,320 --> 00:22:58,800
Speaker 1: still does not enjoy the support of a senior military leadership.

459
00:23:00,280 --> 00:23:03,399
Speaker 11: I would not draw the conclusion from this activity that

460
00:23:04,359 --> 00:23:09,239
Speaker 11: Putin is imminent danger of being replaced removed, whether it

461
00:23:09,280 --> 00:23:11,840
Speaker 11: be a coup for the military, of the security services,

462
00:23:11,880 --> 00:23:16,320
Speaker 11: the only arts, et cetera. However, what we have seen

463
00:23:16,400 --> 00:23:19,960
Speaker 11: should clearly show both ourselves as well as Putin. Perhaps

464
00:23:19,960 --> 00:23:22,959
Speaker 11: you're not as strong as you think you are, and

465
00:23:23,320 --> 00:23:26,080
Speaker 11: given that, maybe you ought to step back and rethink

466
00:23:26,240 --> 00:23:29,920
Speaker 11: that the value of continuing this conflict, which you started

467
00:23:29,920 --> 00:23:33,240
Speaker 11: in the first place in a directed violation of sovereigny

468
00:23:33,320 --> 00:23:34,800
Speaker 11: international law, and it's.

469
00:23:34,640 --> 00:23:38,600
Speaker 6: Time to end this. We'll see what if this changes.

470
00:23:38,280 --> 00:23:41,800
Speaker 11: Putin's calculus in the lot to watch in coming weeks

471
00:23:41,840 --> 00:23:42,480
Speaker 11: and months.

472
00:23:42,840 --> 00:23:44,879
Speaker 1: All Right, Adamiral, thank you so much for joining us.

473
00:23:45,200 --> 00:23:48,160
Speaker 1: Mike Rogers retired four star admiral for the US Navy

474
00:23:48,600 --> 00:23:52,920
Speaker 1: and a proud graduate of Auburn University, so we appreciate

475
00:23:52,920 --> 00:23:54,119
Speaker 1: getting some of his time there.

476
00:23:55,520 --> 00:23:56,680
Speaker 4: You're listening to the team.

477
00:23:57,040 --> 00:24:00,400
Speaker 3: Can's a live program Bloomberg Markets weekdays at ten am

478
00:24:00,480 --> 00:24:03,879
Speaker 3: Eastern on Bloomberg dot Com, the iHeartRadio app, and the

479
00:24:03,880 --> 00:24:06,920
Speaker 3: Bloomberg Business App, or listen on demand wherever you get

480
00:24:06,960 --> 00:24:07,760
Speaker 3: your podcasts.

481
00:24:10,040 --> 00:24:13,280
Speaker 1: Madison Mills, Paul Sweeney. Here in the Bloomberg Interactive Brokers Studio,

482
00:24:13,320 --> 00:24:15,920
Speaker 1: we've been breaking down a lot of the rulings we've

483
00:24:15,920 --> 00:24:18,480
Speaker 1: received from the Central from the Supreme Court over the

484
00:24:18,560 --> 00:24:20,200
Speaker 1: last several days week and a lot of smart people

485
00:24:20,200 --> 00:24:23,000
Speaker 1: in there helping us understand what's going on. Today. The

486
00:24:23,000 --> 00:24:28,120
Speaker 1: Supreme Court throws out President Biden's student loan relief bill,

487
00:24:28,560 --> 00:24:30,280
Speaker 1: and we want to break that down a little bit more,

488
00:24:30,320 --> 00:24:32,440
Speaker 1: and we've been talking about it all morning. We're joined

489
00:24:32,520 --> 00:24:35,159
Speaker 1: right now by Bloomberg at Legal analyst June Garosso and

490
00:24:35,160 --> 00:24:37,639
Speaker 1: Bloomberg Hire Ed Financial Report at Janet Lord. They join

491
00:24:37,720 --> 00:24:40,960
Speaker 1: us here in our Bloomberg Interactive Broker Studio and on

492
00:24:41,080 --> 00:24:44,679
Speaker 1: zoom from Washington D C Ryan Tige Beckworth joining us

493
00:24:44,720 --> 00:24:47,320
Speaker 1: that covers the White House and politics. June, let's start

494
00:24:47,320 --> 00:24:49,560
Speaker 1: with you. You've had a few minutes now to take a

495
00:24:49,600 --> 00:24:54,600
Speaker 1: look at this ruling here. How profound is this ruling

496
00:24:54,760 --> 00:24:56,920
Speaker 1: by the Supreme Court, How wide ranging may be.

497
00:24:57,080 --> 00:24:58,560
Speaker 9: So we're talking about the student.

498
00:24:58,280 --> 00:25:00,000
Speaker 12: Loan Yes, we are here, so many things.

499
00:25:00,080 --> 00:25:03,520
Speaker 9: It happened today and notice all by six to three

500
00:25:03,720 --> 00:25:08,520
Speaker 9: votes the conservative majority of flexing their town. It's it's

501
00:25:08,640 --> 00:25:12,600
Speaker 9: very profound and the I think the Supreme Court really

502
00:25:13,040 --> 00:25:16,879
Speaker 9: the Conservatives went out of their way to find standing,

503
00:25:17,040 --> 00:25:19,560
Speaker 9: sort of bent the rules a little bit to find

504
00:25:19,600 --> 00:25:22,879
Speaker 9: standing in this case because they said the states didn't

505
00:25:22,920 --> 00:25:28,760
Speaker 9: have standing, but they used a Missouri loan servicer, by law,

506
00:25:28,840 --> 00:25:31,760
Speaker 9: has to give some money kick somebody back to the state.

507
00:25:31,920 --> 00:25:35,080
Speaker 9: And they said that because of this, you know, Joe Biden,

508
00:25:35,160 --> 00:25:38,800
Speaker 9: for giving student loans, that loan services would lose money

509
00:25:38,840 --> 00:25:41,600
Speaker 9: and so Missouri would lose money. So it was really

510
00:25:41,640 --> 00:25:45,520
Speaker 9: a tenuated argument. But I mean, this is going to

511
00:25:45,600 --> 00:25:50,640
Speaker 9: have profound effects on all the student loan borrowers. And

512
00:25:50,840 --> 00:25:54,600
Speaker 9: I know that President Biden is supposed to announce new action,

513
00:25:54,760 --> 00:25:57,280
Speaker 9: but I'm trying to figure out what action he could

514
00:25:57,840 --> 00:26:02,600
Speaker 9: he could actually you know, put forward that would surpass.

515
00:26:03,200 --> 00:26:05,520
Speaker 1: Well, let's go to you, Ryan, you're done in DC.

516
00:26:05,920 --> 00:26:08,040
Speaker 1: You're talking to the folks down there in the White

517
00:26:08,040 --> 00:26:10,880
Speaker 1: House in the administration. What do you think the president

518
00:26:11,119 --> 00:26:11,560
Speaker 1: can do?

519
00:26:13,080 --> 00:26:13,280
Speaker 3: Yeah?

520
00:26:13,320 --> 00:26:16,360
Speaker 13: I mean he's always had the power to do smaller

521
00:26:16,359 --> 00:26:18,560
Speaker 13: and more targeted things, and I think if you read

522
00:26:18,600 --> 00:26:23,960
Speaker 13: the decision here, the majority opinion says that its main

523
00:26:24,080 --> 00:26:28,800
Speaker 13: beef with this is the unprecedented scale, so he can

524
00:26:28,840 --> 00:26:33,440
Speaker 13: continue to do these sort of smaller targeted efforts that

525
00:26:33,640 --> 00:26:37,199
Speaker 13: specific groups of people who have student loans. I don't know.

526
00:26:37,680 --> 00:26:41,080
Speaker 13: Advocates want him to just you know, redo the same thing,

527
00:26:41,119 --> 00:26:44,080
Speaker 13: but with a different rationale, not relying on the pandemic

528
00:26:44,680 --> 00:26:47,240
Speaker 13: as his excuse. And I don't think he's going to

529
00:26:47,280 --> 00:26:50,399
Speaker 13: do that, but I do think he'll offer up a

530
00:26:50,440 --> 00:26:53,840
Speaker 13: bunch of other ideas and then I think we'll see

531
00:26:53,880 --> 00:26:58,840
Speaker 13: this become a push for Congress to get involved after

532
00:26:58,920 --> 00:27:00,000
Speaker 13: the twenty twenty four elections.

533
00:27:00,200 --> 00:27:00,360
Speaker 14: Yeah.

534
00:27:00,400 --> 00:27:03,080
Speaker 8: Well, Ryan, to your point, this has been done previously

535
00:27:03,320 --> 00:27:07,840
Speaker 8: by politicians across the aisle for a variety of different

536
00:27:08,359 --> 00:27:12,280
Speaker 8: individuals and communities. The Doe forgave six billion dollars for

537
00:27:12,320 --> 00:27:16,119
Speaker 8: defrauded students. Trump wiped out debt for disabled veterans. So

538
00:27:16,320 --> 00:27:19,879
Speaker 8: going to you on this janet, are there some smaller

539
00:27:19,920 --> 00:27:24,880
Speaker 8: moves that the Biden administration could make to get around

540
00:27:25,040 --> 00:27:29,439
Speaker 8: some of the Supreme Court challenges here when it comes

541
00:27:29,480 --> 00:27:33,200
Speaker 8: to specific groups of students that could get their debt forgiven.

542
00:27:33,359 --> 00:27:36,600
Speaker 15: Yes, you mentioned the forgiveness for for profit schools the

543
00:27:36,640 --> 00:27:40,480
Speaker 15: Corinthian that was I believe it was six billion dollars.

544
00:27:40,760 --> 00:27:44,359
Speaker 15: They've made the public service loan forgiveness program much easier.

545
00:27:44,359 --> 00:27:47,280
Speaker 15: That was a very difficult way to get your loans

546
00:27:47,320 --> 00:27:49,760
Speaker 15: repaid after ten years for working in the public sector.

547
00:27:50,600 --> 00:27:54,160
Speaker 15: They've already been trying to make things easier. So there

548
00:27:54,160 --> 00:27:56,320
Speaker 15: are ways, but it's not going to be the blanket

549
00:27:56,440 --> 00:27:59,760
Speaker 15: ten thousand for everybody. And Elizabeth Warren has already come

550
00:27:59,800 --> 00:28:03,159
Speaker 15: out to say the fight is not over, that the

551
00:28:03,200 --> 00:28:06,080
Speaker 15: president has more tools and he must use them, because

552
00:28:06,080 --> 00:28:08,720
Speaker 15: the advocates have been pretty you know, strong in their

553
00:28:08,960 --> 00:28:13,199
Speaker 15: in their language that they want something. However, you know,

554
00:28:13,240 --> 00:28:16,720
Speaker 15: probably the bigger impact is the twenty thousand dollars on

555
00:28:16,800 --> 00:28:19,879
Speaker 15: Pelgram recipients that would have had a bigger impact on

556
00:28:19,920 --> 00:28:23,560
Speaker 15: their lives. Certainly, Elizabeth Warren had been pushing for fifty thousand,

557
00:28:23,600 --> 00:28:26,520
Speaker 15: which was not politically tenable. But the question is, if

558
00:28:26,640 --> 00:28:28,920
Speaker 15: we talked about earlier, this does not solve the root

559
00:28:29,040 --> 00:28:31,600
Speaker 15: problem of the increasing cost of college. This is a

560
00:28:31,640 --> 00:28:35,560
Speaker 15: one time fix for ten thousand dollars for most borrowers.

561
00:28:36,359 --> 00:28:39,280
Speaker 15: Doesn't aggress the cost of graduate school, which is, you know,

562
00:28:39,480 --> 00:28:41,760
Speaker 15: the people with the largest balances are people who went

563
00:28:41,800 --> 00:28:45,720
Speaker 15: to law school or other graduate schools and borrowed over

564
00:28:45,760 --> 00:28:48,560
Speaker 15: one hundred thousand dollars, and that doesn't do anything to

565
00:28:48,640 --> 00:28:51,960
Speaker 15: change that. Calculus and frankly colleges were never on the

566
00:28:52,000 --> 00:28:52,880
Speaker 15: hook for this money.

567
00:28:53,080 --> 00:28:56,440
Speaker 1: Yep, exactly. The last of the sweny offspring, the fourth

568
00:28:56,840 --> 00:28:59,320
Speaker 1: is going to start as freshman year. It is all

569
00:28:59,360 --> 00:29:03,800
Speaker 1: in numbers to them eight. It is uneven relative to

570
00:29:03,840 --> 00:29:07,360
Speaker 1: my oldest that's been inflations crazy. June, let's step back

571
00:29:07,400 --> 00:29:09,440
Speaker 1: from the court. You mentioned a six to three aspect

572
00:29:09,520 --> 00:29:12,360
Speaker 1: of it. As we step back from and just look

573
00:29:12,360 --> 00:29:15,120
Speaker 1: at it in too totality, what's your take on this

574
00:29:15,600 --> 00:29:16,080
Speaker 1: court here?

575
00:29:16,480 --> 00:29:19,400
Speaker 9: Well, I think that this week really says it all

576
00:29:19,440 --> 00:29:22,120
Speaker 9: because during the term there was an opinion here or

577
00:29:22,120 --> 00:29:23,840
Speaker 9: opinion there where you think, oh, well, they're coming.

578
00:29:24,040 --> 00:29:25,000
Speaker 7: That's what I was thinking.

579
00:29:25,200 --> 00:29:27,920
Speaker 9: And in the last week, which is when they usually

580
00:29:28,000 --> 00:29:32,120
Speaker 9: hand down the most controversial issues, you had six to

581
00:29:32,160 --> 00:29:37,520
Speaker 9: three decisions which struck down affirmative action, which got rid

582
00:29:37,640 --> 00:29:42,880
Speaker 9: of President Joe Biden's loan forgiveness, and which restricted rights

583
00:29:42,920 --> 00:29:47,360
Speaker 9: of LGBTQ people. So I think that you're seeing the

584
00:29:47,440 --> 00:29:52,120
Speaker 9: conservative majority really flexing their muscle. They're not afraid even

585
00:29:52,200 --> 00:29:55,040
Speaker 9: though we're at a point where there's so much questioning

586
00:29:55,160 --> 00:29:58,800
Speaker 9: about the court and we've seen these ethics issues where

587
00:29:58,960 --> 00:30:02,680
Speaker 9: were the public there's no accountability from these nine people.

588
00:30:02,680 --> 00:30:04,440
Speaker 9: They can do whatever they want. Do we look what

589
00:30:04,480 --> 00:30:04,920
Speaker 9: they're doing?

590
00:30:05,080 --> 00:30:05,400
Speaker 7: Did we?

591
00:30:05,560 --> 00:30:07,920
Speaker 1: Or do we see it on the mirror image? When

592
00:30:08,280 --> 00:30:11,160
Speaker 1: the Democrats have and I can't recall when that was

593
00:30:11,280 --> 00:30:13,479
Speaker 1: or whatever, But I mean, I'm not a scholar. What

594
00:30:13,560 --> 00:30:15,800
Speaker 1: if the Republicans had or if the Democrats or when

595
00:30:15,840 --> 00:30:18,000
Speaker 1: the Democrats had a six to three or five four,

596
00:30:18,160 --> 00:30:19,440
Speaker 1: then they do kind of the same thing.

597
00:30:19,720 --> 00:30:22,000
Speaker 9: I don't remember things like this that. I mean, there

598
00:30:22,000 --> 00:30:24,920
Speaker 9: were some things, you know, there was affirmative action there,

599
00:30:26,040 --> 00:30:29,840
Speaker 9: but there's things they're taking away rights here. That's the difference.

600
00:30:29,880 --> 00:30:33,360
Speaker 9: The Conservative majority is taking away rights, limiting them. When

601
00:30:33,400 --> 00:30:36,360
Speaker 9: Democrats were in the majority, they were giving rights, and

602
00:30:36,400 --> 00:30:39,280
Speaker 9: of course the conservatives objected to that. But abortion is

603
00:30:39,320 --> 00:30:41,520
Speaker 9: a key example, and that also happened the last day

604
00:30:41,560 --> 00:30:43,760
Speaker 9: of the term. Just think about it. They wait for

605
00:30:43,800 --> 00:30:46,000
Speaker 9: these decisions the last day of the term, then they

606
00:30:46,040 --> 00:30:48,480
Speaker 9: all go off on vacation. There was a story about

607
00:30:48,480 --> 00:30:51,360
Speaker 9: one justice that used to have the limousine waiting outside

608
00:30:51,400 --> 00:30:53,840
Speaker 9: the court and once the opinions were ready'd get and

609
00:30:53,920 --> 00:30:56,520
Speaker 9: go off on vacation. And they try to sort of

610
00:30:56,560 --> 00:30:59,000
Speaker 9: insulate themselves from the backlash.

611
00:30:59,040 --> 00:31:02,000
Speaker 8: Well, and on the last night, five month two right,

612
00:31:02,080 --> 00:31:04,680
Speaker 8: I've forgotten, Yeah, June, I also really quickly want to

613
00:31:04,680 --> 00:31:09,280
Speaker 8: get your take on the sort of conflict that we're

614
00:31:09,280 --> 00:31:12,160
Speaker 8: hearing amongst the justices. In the descent. It feels to

615
00:31:12,280 --> 00:31:16,080
Speaker 8: me like we're hearing more infighting now than we've ever

616
00:31:16,640 --> 00:31:18,320
Speaker 8: heard before. Does that feel right to you?

617
00:31:18,520 --> 00:31:18,800
Speaker 10: Yes?

618
00:31:18,880 --> 00:31:21,400
Speaker 9: I mean it's not right, but it is true.

619
00:31:21,480 --> 00:31:23,840
Speaker 8: That's a correct description rather, yeah.

620
00:31:23,520 --> 00:31:26,800
Speaker 9: Because and you know, when the justices read a descent

621
00:31:26,920 --> 00:31:29,840
Speaker 9: from the bench, that's sort of a move showing that

622
00:31:29,880 --> 00:31:33,239
Speaker 9: they are really really upset about what's happening. And for

623
00:31:33,280 --> 00:31:36,080
Speaker 9: the last two days, Justice Sonya Sotomayor, who leads the

624
00:31:36,120 --> 00:31:38,920
Speaker 9: liberal wing of the Court, has read descents from the bench,

625
00:31:39,160 --> 00:31:42,600
Speaker 9: and an interesting thing is in her descents usually they

626
00:31:42,640 --> 00:31:47,040
Speaker 9: say I dissent respectfully something like that. She's just saying

627
00:31:47,160 --> 00:31:50,120
Speaker 9: I dissent in her descence, and I think that and

628
00:31:50,160 --> 00:31:54,080
Speaker 9: there the descents are really biting, and you see that

629
00:31:54,160 --> 00:31:57,560
Speaker 9: in some of them. For example, in the affirmative action,

630
00:31:58,600 --> 00:32:01,160
Speaker 9: Justice Katanji Brown Jackson, in the first black woman on

631
00:32:01,200 --> 00:32:04,520
Speaker 9: the Court was sort of having a debate, nasty debate

632
00:32:04,640 --> 00:32:08,240
Speaker 9: with Justice Clarence Thomas, who's made it his life's mission

633
00:32:08,360 --> 00:32:11,520
Speaker 9: to get rid of affirmative action. So yeah, you're seeing

634
00:32:11,560 --> 00:32:13,000
Speaker 9: a lot of fissures.

635
00:32:12,560 --> 00:32:16,160
Speaker 1: All right, Amazing stuff, amazing reporting. Thanks guys for joining

636
00:32:16,240 --> 00:32:20,680
Speaker 1: us here, June Grasso, legal analyst and Janet Lauren higher

637
00:32:20,760 --> 00:32:23,560
Speaker 1: education finance reporter, as well as Ryan Teagbeck with down

638
00:32:23,600 --> 00:32:24,920
Speaker 1: in DC with the political Angle.

639
00:32:25,200 --> 00:32:28,800
Speaker 3: You're listening to the Tape cat'sur live program Bloomberg Markets

640
00:32:28,880 --> 00:32:32,280
Speaker 3: weekdays at ten am Eastern on Bloomberg Radio, the tune

641
00:32:32,280 --> 00:32:33,960
Speaker 3: in app, Bloomberg dot Com, and.

642
00:32:33,960 --> 00:32:35,240
Speaker 4: The Bloomberg Business App.

643
00:32:35,280 --> 00:32:38,120
Speaker 3: You can also listen live on Amazon Alexa from our

644
00:32:38,120 --> 00:32:42,520
Speaker 3: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

645
00:32:44,960 --> 00:32:47,239
Speaker 1: Anna wom talk about a smart voice helping us out.

646
00:32:47,800 --> 00:32:51,920
Speaker 1: Chief US economists with Bloomberg Economics Joints is here. So

647
00:32:52,280 --> 00:32:55,040
Speaker 1: let's step back and what's your takeaway from the eco

648
00:32:55,120 --> 00:32:57,440
Speaker 1: data we saw this week and last week what we

649
00:32:57,480 --> 00:33:00,120
Speaker 1: heard from the central bankers here? You plug that all

650
00:33:00,000 --> 00:33:02,160
Speaker 1: go into your model, which I know you've got a model.

651
00:33:02,280 --> 00:33:02,840
Speaker 1: What does that do?

652
00:33:03,840 --> 00:33:04,040
Speaker 16: Well?

653
00:33:04,080 --> 00:33:06,920
Speaker 17: You know, I think the tension between what markets belief

654
00:33:07,040 --> 00:33:10,840
Speaker 17: and the FED chair power wants the market to believe

655
00:33:10,920 --> 00:33:14,200
Speaker 17: there's still just this DUDEO Powell wants us to believe

656
00:33:14,280 --> 00:33:17,360
Speaker 17: that there's two more twenty five bits hike coming. Market

657
00:33:17,520 --> 00:33:21,600
Speaker 17: is pricing in only one more hike. And you know, Paul,

658
00:33:21,760 --> 00:33:26,080
Speaker 17: the student debt forgiveness today is interesting because it does

659
00:33:26,240 --> 00:33:29,920
Speaker 17: shape off some a couple of tenths of percentage point

660
00:33:30,000 --> 00:33:33,760
Speaker 17: off inflation and the student debt. Yes, and it so

661
00:33:33,800 --> 00:33:37,840
Speaker 17: we estimated last year that the student debt forgiveness would

662
00:33:37,840 --> 00:33:42,240
Speaker 17: have added point two percentage point to CPI for each year.

663
00:33:42,640 --> 00:33:45,120
Speaker 17: So you know, looking at an inflation for the rest

664
00:33:45,160 --> 00:33:47,560
Speaker 17: of the year, because that really is what will what

665
00:33:47,640 --> 00:33:51,560
Speaker 17: will determine where Fed funds rate would go. We think

666
00:33:51,680 --> 00:33:56,440
Speaker 17: that the resumption of student loan the payment this August,

667
00:33:56,720 --> 00:33:59,960
Speaker 17: and on top of that, this student debt forgiveness program

668
00:34:00,200 --> 00:34:06,200
Speaker 17: being invallot now that it would subtract about twenty BIPs

669
00:34:06,200 --> 00:34:10,719
Speaker 17: from core inflation. And also the student debt forgiveness primarily

670
00:34:10,760 --> 00:34:16,040
Speaker 17: affect people on the forty to eighty income percentile. And

671
00:34:16,120 --> 00:34:19,280
Speaker 17: you know, we wrote earlier this week that the bottom

672
00:34:19,320 --> 00:34:23,280
Speaker 17: forty percent of households have already exhausted their excess savings,

673
00:34:23,400 --> 00:34:26,640
Speaker 17: so those folks are seeing their credit card debts run up.

674
00:34:27,000 --> 00:34:30,560
Speaker 17: And now the forty to eighty percent, tell by income,

675
00:34:30,640 --> 00:34:34,120
Speaker 17: those folks are also having to see their finances further

676
00:34:34,239 --> 00:34:37,920
Speaker 17: stretched with student loan you know, resumption payments. So I

677
00:34:38,000 --> 00:34:42,560
Speaker 17: think that a broader stretch of this economy are experiencing

678
00:34:42,800 --> 00:34:45,120
Speaker 17: headwinds in the rest of the year. This is why

679
00:34:45,320 --> 00:34:47,759
Speaker 17: we still think a recession is going to happen in

680
00:34:47,800 --> 00:34:50,160
Speaker 17: the second half of this year. And I think that

681
00:34:50,280 --> 00:34:52,680
Speaker 17: Powell will have a hard time con visiting market that

682
00:34:52,719 --> 00:34:54,040
Speaker 17: there's two more hikes coming.

683
00:34:54,520 --> 00:34:59,200
Speaker 8: Okay, but doesn't the resumption of student loan repayments and

684
00:34:59,280 --> 00:35:02,560
Speaker 8: a isn't that going to be a bit deflationary because

685
00:35:02,560 --> 00:35:04,560
Speaker 8: the consumer is going to be struggling a bit more

686
00:35:04,760 --> 00:35:07,560
Speaker 8: and therefore perhaps that does the job of the FED

687
00:35:07,600 --> 00:35:08,480
Speaker 8: a little bit more for them.

688
00:35:08,680 --> 00:35:11,520
Speaker 17: Yes, that's exactly what I meant. So yeah, with the

689
00:35:11,600 --> 00:35:17,160
Speaker 17: forgiveness program invalidated that it shoots subtract about twenty fips

690
00:35:17,480 --> 00:35:19,560
Speaker 17: per year from inflation.

691
00:35:19,680 --> 00:35:24,319
Speaker 8: But we're still seeing that may not be enough to

692
00:35:24,680 --> 00:35:27,400
Speaker 8: do the job for the FED enough for us to

693
00:35:27,480 --> 00:35:29,320
Speaker 8: have this perfect soft landing scenario.

694
00:35:29,360 --> 00:35:32,239
Speaker 17: Is that what you're saying, Well, I think a recession

695
00:35:32,360 --> 00:35:35,279
Speaker 17: is going to happen because there's there would be five

696
00:35:35,360 --> 00:35:37,640
Speaker 17: hundred there's five hundred BIPs of rate hike in the

697
00:35:37,640 --> 00:35:41,440
Speaker 17: pipeline and there's another twenty five bps likely coming in July.

698
00:35:41,640 --> 00:35:43,799
Speaker 17: So in the second half of this year, you're going

699
00:35:43,880 --> 00:35:46,319
Speaker 17: to have five hundred and twenty five BIPs of rate

700
00:35:46,400 --> 00:35:49,200
Speaker 17: hike in the pipeline. So that should be sufficient to

701
00:35:49,239 --> 00:35:50,440
Speaker 17: push the economy into your.

702
00:35:50,480 --> 00:35:54,759
Speaker 1: Session, Anna, with all your education, all your experience, can

703
00:35:54,760 --> 00:35:57,120
Speaker 1: you explain what biden Omics is to me?

704
00:35:58,600 --> 00:36:03,439
Speaker 17: Biden Omics is about overheating the economy. And while there

705
00:36:03,440 --> 00:36:06,000
Speaker 17: are short term gains, and there are a lot, and

706
00:36:06,440 --> 00:36:09,800
Speaker 17: you know, it's really up to Congress to debate whether

707
00:36:09,920 --> 00:36:13,120
Speaker 17: it's worth it, because you know, for many households, it's

708
00:36:13,160 --> 00:36:17,720
Speaker 17: totally worth it. On employment rate for minority are at

709
00:36:18,239 --> 00:36:22,600
Speaker 17: historical lows and many people. You know, it affects many people.

710
00:36:22,640 --> 00:36:24,440
Speaker 17: But at the same time, there are long term costs

711
00:36:24,440 --> 00:36:27,920
Speaker 17: of higher inflation, is said, having to do more, potentially

712
00:36:28,000 --> 00:36:31,359
Speaker 17: putting pushing the economy into recession, which could have long

713
00:36:31,440 --> 00:36:34,920
Speaker 17: term term effects as well on many households. So ultimately

714
00:36:34,960 --> 00:36:37,760
Speaker 17: it depends on the It's up to the politicians engaging

715
00:36:37,800 --> 00:36:39,480
Speaker 17: whether this is the right thing to do.

716
00:36:40,200 --> 00:36:42,960
Speaker 8: Anna, you have an amazing story on Bidenomics on the

717
00:36:43,000 --> 00:36:45,319
Speaker 8: Terminal that I read earlier this week and could not

718
00:36:45,760 --> 00:36:48,719
Speaker 8: stop thinking about all week, about the three major tenth

719
00:36:48,800 --> 00:36:51,480
Speaker 8: pole pieces of legislation he's been able to get through

720
00:36:51,840 --> 00:36:55,000
Speaker 8: so far as president. Can you talk to me about

721
00:36:55,080 --> 00:36:58,799
Speaker 8: remind our audience those three big pieces of legislation and

722
00:36:58,960 --> 00:37:02,840
Speaker 8: just how much money those pieces of legislation are throwing

723
00:37:02,960 --> 00:37:03,920
Speaker 8: into our economy.

724
00:37:04,760 --> 00:37:08,920
Speaker 17: Right, So aside from the American Rescue Act, right, there's

725
00:37:09,480 --> 00:37:13,759
Speaker 17: on top of that the infrastruct bipartisan Infrastructure Bill, which

726
00:37:13,800 --> 00:37:18,759
Speaker 17: is bipartisan, and that bill is about to generate five

727
00:37:18,840 --> 00:37:23,600
Speaker 17: hundred and fifty billion additional spending on highway and American

728
00:37:23,640 --> 00:37:26,640
Speaker 17: infrastructure in the next five to ten years. And the

729
00:37:26,719 --> 00:37:29,680
Speaker 17: second one is the Chips and Science Act, which is

730
00:37:29,719 --> 00:37:33,920
Speaker 17: also going to add additional about two hundred billion or

731
00:37:33,960 --> 00:37:40,719
Speaker 17: so in spending and text subsidies in rejuvenating American manufacturers

732
00:37:41,120 --> 00:37:45,160
Speaker 17: in chips. And then finally there's the Inflation Reduction Act,

733
00:37:45,520 --> 00:37:50,120
Speaker 17: which really adds about four hundred to five hundred billion

734
00:37:50,280 --> 00:37:54,120
Speaker 17: of spending over the next couple of five to ten years,

735
00:37:54,160 --> 00:37:58,000
Speaker 17: but also finance it with higher taxes on corporate and

736
00:37:58,080 --> 00:38:03,759
Speaker 17: high income individuals. Altogether, whether the effects of these numbers

737
00:38:04,040 --> 00:38:06,760
Speaker 17: look very large, they are going to be spread. Spending

738
00:38:06,880 --> 00:38:09,440
Speaker 17: is going to be spread across a long period, so

739
00:38:11,200 --> 00:38:14,239
Speaker 17: you know, the economic impact of it on a per

740
00:38:14,320 --> 00:38:19,359
Speaker 17: year basis, the gain is small, but over time it's

741
00:38:19,560 --> 00:38:23,680
Speaker 17: the you know, especially with Infrastructure Act, productivity is going

742
00:38:23,719 --> 00:38:26,200
Speaker 17: to rise. You know, when people have better highways that

743
00:38:26,320 --> 00:38:29,520
Speaker 17: get to work faster, it only get stuck in traffic.

744
00:38:29,560 --> 00:38:32,960
Speaker 17: It's better for a productivity. But I think the ultimate

745
00:38:33,040 --> 00:38:36,640
Speaker 17: cost is how much does it further overheat the economy

746
00:38:36,640 --> 00:38:39,719
Speaker 17: at a time where where capacity of the economy is

747
00:38:39,840 --> 00:38:43,000
Speaker 17: running up to the limit already and you're adding extra

748
00:38:43,560 --> 00:38:46,240
Speaker 17: pressure on it, like for example, the Chips and Science

749
00:38:46,280 --> 00:38:51,080
Speaker 17: Act has stimulated a lot of construction spending. The money

750
00:38:51,200 --> 00:38:54,800
Speaker 17: hard on this is that you know, constructure manufacturing spending

751
00:38:55,239 --> 00:38:59,359
Speaker 17: that skyrocketed this year from ninety billion last year to

752
00:38:59,600 --> 00:39:04,040
Speaker 17: one hundred ninety billion this year, and that will generate,

753
00:39:04,360 --> 00:39:09,239
Speaker 17: by our estimation, about four hundred k additional jobs in construction.

754
00:39:09,880 --> 00:39:13,440
Speaker 17: And it's adding to the pressure in labor market at

755
00:39:13,440 --> 00:39:16,040
Speaker 17: a time where the labor market needs to cool off.

756
00:39:16,080 --> 00:39:19,680
Speaker 17: So I think I think the overall the impact of

757
00:39:20,239 --> 00:39:24,160
Speaker 17: the well, it has noble intentions. Whether they're unintended short

758
00:39:24,239 --> 00:39:26,239
Speaker 17: term consequences is another matter.

759
00:39:26,560 --> 00:39:28,560
Speaker 1: So, and it's just about thirty seconds or so, what's

760
00:39:28,600 --> 00:39:32,360
Speaker 1: the greatest risk in your mind, persistent inflation or recession?

761
00:39:33,719 --> 00:39:37,960
Speaker 17: Persistent inflation because that and worst of actually both persistent

762
00:39:37,960 --> 00:39:40,040
Speaker 17: inflation and recession than y staflation.

763
00:39:40,280 --> 00:39:42,719
Speaker 1: There you go, all right, I mean that would be bad.

764
00:39:42,760 --> 00:39:44,920
Speaker 1: That would call I don't think you guys call that stagflation.

765
00:39:44,960 --> 00:39:45,359
Speaker 3: I don't know.

766
00:39:45,560 --> 00:39:49,000
Speaker 1: Anna Wong, she's the chief US economist for Bloomberg Economics.

767
00:39:49,200 --> 00:39:51,799
Speaker 1: She's been great for us. She was really the first

768
00:39:51,840 --> 00:39:55,440
Speaker 1: one on the street to really talk about higher rates

769
00:39:55,480 --> 00:39:58,759
Speaker 1: for longer, and boy was she right on that. So

770
00:39:58,800 --> 00:40:01,759
Speaker 1: here we've got the FED still thinking about you know,

771
00:40:02,080 --> 00:40:07,319
Speaker 1: one maybe two more you know, FED rate increases. That

772
00:40:07,440 --> 00:40:09,120
Speaker 1: was not what the market was thinking about, you know,

773
00:40:09,200 --> 00:40:11,239
Speaker 1: six nine months ago, and and and her team were

774
00:40:11,400 --> 00:40:13,880
Speaker 1: way out front and saying, hey, kids, you got to

775
00:40:13,880 --> 00:40:16,279
Speaker 1: really think about that. This FED is going to keep

776
00:40:16,360 --> 00:40:17,840
Speaker 1: rates higher for longer.

777
00:40:18,080 --> 00:40:20,720
Speaker 3: If you're listening to the tape, Cat's are live program

778
00:40:20,760 --> 00:40:24,720
Speaker 3: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

779
00:40:24,880 --> 00:40:26,960
Speaker 3: the tune in app, Bloomberg dot Com, and.

780
00:40:26,920 --> 00:40:28,239
Speaker 4: The Bloomberg Business App.

781
00:40:28,280 --> 00:40:31,120
Speaker 3: You can also listen live on Amazon Alexa from our

782
00:40:31,120 --> 00:40:38,120
Speaker 3: flagship New York station, Just say Alexa, play Bloomberg eleven thirty, Madison.

783
00:40:37,760 --> 00:40:40,440
Speaker 1: Wilson, Paul Sweet here in our Bloomberg Interactive Broker Studio.

784
00:40:40,480 --> 00:40:43,920
Speaker 1: One of the stock stories of the day clearly is

785
00:40:43,960 --> 00:40:47,080
Speaker 1: our good friends in Coopertino, California. Apple stocks up one

786
00:40:47,120 --> 00:40:50,440
Speaker 1: point five six percent today. That gives it a market

787
00:40:50,480 --> 00:40:55,319
Speaker 1: capitalization of just over three trillion dollars, all time high

788
00:40:55,360 --> 00:40:57,759
Speaker 1: for the stock of forty eight percent year to date.

789
00:40:58,280 --> 00:41:00,879
Speaker 1: All is good in the world of Apple. Let's break

790
00:41:00,880 --> 00:41:03,319
Speaker 1: it down a little bit and see what this means

791
00:41:03,360 --> 00:41:05,560
Speaker 1: across the board. And we're going to do that with

792
00:41:05,719 --> 00:41:08,600
Speaker 1: Anna rag Rana, he's a senior tech and also Bloomberg Intelligence.

793
00:41:08,800 --> 00:41:12,640
Speaker 1: And Mark German, a chief correspondent on Apple and tech

794
00:41:12,680 --> 00:41:15,919
Speaker 1: with Bloomberg News. They both join us via zoom.

795
00:41:15,960 --> 00:41:16,200
Speaker 7: Mark.

796
00:41:16,239 --> 00:41:18,280
Speaker 1: Let's start with you. We've been talking about the stock.

797
00:41:18,400 --> 00:41:20,200
Speaker 1: I'm a stock analyst. That's kind of how I think

798
00:41:20,200 --> 00:41:22,799
Speaker 1: about it. Investors and stuff like that. Talk to us

799
00:41:22,800 --> 00:41:26,960
Speaker 1: about the people in Kuopertino, the employees at Apple. What

800
00:41:27,000 --> 00:41:30,160
Speaker 1: does the stock mean to them? I would think, like

801
00:41:30,239 --> 00:41:32,799
Speaker 1: most other big tech companies, they get a lot of

802
00:41:32,800 --> 00:41:36,000
Speaker 1: stock in their compensation. What's the feeling when you go

803
00:41:36,040 --> 00:41:38,560
Speaker 1: into their new futuristic headquarters in Kupertino.

804
00:41:39,719 --> 00:41:41,560
Speaker 16: Yeah, thank you so much for having me. Good to

805
00:41:41,600 --> 00:41:44,520
Speaker 16: be here to talk about this milestone for Apple. You know,

806
00:41:44,600 --> 00:41:46,560
Speaker 16: there's been a wave of departures from Apple over the

807
00:41:46,640 --> 00:41:49,760
Speaker 16: last year or two. There is the post COVID quitting

808
00:41:50,120 --> 00:41:52,800
Speaker 16: that you saw happen. People trying to reevaluate their careers,

809
00:41:52,840 --> 00:41:55,400
Speaker 16: people wanting to go elsewhere to potentially make more money.

810
00:41:55,760 --> 00:41:58,200
Speaker 16: And as you said, a big portion of Apple stock

811
00:41:58,280 --> 00:42:01,120
Speaker 16: packages or pay packages or stock right you can have

812
00:42:01,120 --> 00:42:04,359
Speaker 16: stock anywhere between twenty and sixty percent, even up to

813
00:42:04,440 --> 00:42:07,960
Speaker 16: seventy five percent in some cases. Right, and so stock

814
00:42:08,040 --> 00:42:09,040
Speaker 16: is a key reason some.

815
00:42:08,920 --> 00:42:09,560
Speaker 4: People have left.

816
00:42:09,600 --> 00:42:13,000
Speaker 16: They felt that the stock growth has stopped or slowed.

817
00:42:13,000 --> 00:42:15,600
Speaker 16: They feel like there's more upset in other companies. But

818
00:42:15,960 --> 00:42:18,560
Speaker 16: since twenty twenty two, at the beginning of twenty twenty two,

819
00:42:18,560 --> 00:42:20,880
Speaker 16: the last time we were in three trillion dollar market

820
00:42:20,880 --> 00:42:24,920
Speaker 16: cap territory, it has climbed pretty steadily back up to

821
00:42:24,920 --> 00:42:27,239
Speaker 16: where we are today, just over three trillion dollars as

822
00:42:27,280 --> 00:42:30,920
Speaker 16: of now. And I think that's going to show employees

823
00:42:30,960 --> 00:42:32,520
Speaker 16: that maybe it is best to stick around.

824
00:42:32,520 --> 00:42:34,480
Speaker 6: Maybe if you were thinking about quitting.

825
00:42:34,160 --> 00:42:38,160
Speaker 16: In October when stock's best on the RSUs, the best,

826
00:42:38,200 --> 00:42:40,919
Speaker 16: the restricted units best, maybe you don't do that. Maybe

827
00:42:40,960 --> 00:42:42,520
Speaker 16: you hold off for a few more years. Maybe you

828
00:42:42,560 --> 00:42:44,640
Speaker 16: stick it out, maybe you ask for more shares. Right

829
00:42:44,840 --> 00:42:48,399
Speaker 16: Because clearly this Apple stock is a worthwhile investment, one

830
00:42:48,400 --> 00:42:52,280
Speaker 16: that has become rock solid and even more solified over time.

831
00:42:52,960 --> 00:42:54,920
Speaker 16: So I think this is a positive thing for Apple

832
00:42:54,960 --> 00:42:58,000
Speaker 16: and it's employees. But also, you know, employee retention is

833
00:42:58,000 --> 00:43:00,040
Speaker 16: one of the key issues right now at Apple and

834
00:43:00,040 --> 00:43:02,759
Speaker 16: and other technology companies, and this helps solve that at

835
00:43:02,840 --> 00:43:03,680
Speaker 16: least for the time being.

836
00:43:04,160 --> 00:43:06,920
Speaker 14: Well, honoron, come on in here, because City is saying

837
00:43:06,960 --> 00:43:11,840
Speaker 14: that Apple has another thirty percent upside with already forty

838
00:43:11,840 --> 00:43:15,359
Speaker 14: eight percent gains in the first half of twenty twenty three.

839
00:43:15,480 --> 00:43:18,760
Speaker 8: Here, do you think that the sky is the limit

840
00:43:18,840 --> 00:43:21,280
Speaker 8: for Apple? When are we going to see the peak?

841
00:43:21,320 --> 00:43:21,640
Speaker 7: Here?

842
00:43:22,840 --> 00:43:24,600
Speaker 12: You know, I haven't seen the City report, but are

843
00:43:24,600 --> 00:43:26,560
Speaker 12: they saying over the next twelve months or the next

844
00:43:26,640 --> 00:43:30,120
Speaker 12: ten years? Because you know, one could make the argument that, yeah,

845
00:43:30,120 --> 00:43:32,319
Speaker 12: the stock should go up over a long period of time,

846
00:43:32,360 --> 00:43:34,719
Speaker 12: but you know I can't make that judgment call over

847
00:43:34,760 --> 00:43:37,080
Speaker 12: a twelve month period trankly all.

848
00:43:37,040 --> 00:43:38,960
Speaker 1: Right, So Anrarak, just give us a sense of what

849
00:43:39,120 --> 00:43:41,879
Speaker 1: is even after a forty eight percent increase this year,

850
00:43:42,440 --> 00:43:44,040
Speaker 1: what's the bullcase from here?

851
00:43:45,200 --> 00:43:47,440
Speaker 12: So you can look at two ways. One is, are

852
00:43:47,480 --> 00:43:50,160
Speaker 12: people you know, looking at Apple as a proxy towards

853
00:43:50,239 --> 00:43:52,640
Speaker 12: the US market and that's one of the reasons why

854
00:43:52,640 --> 00:43:55,600
Speaker 12: people are getting into it with you know, inflation coming down,

855
00:43:55,680 --> 00:43:59,640
Speaker 12: employment rates are very good, interest rates are relatively low,

856
00:44:00,160 --> 00:44:02,200
Speaker 12: or you're looking at the potential for some of the

857
00:44:02,239 --> 00:44:05,120
Speaker 12: new products. But you know, in our view, as I've

858
00:44:05,120 --> 00:44:07,120
Speaker 12: said in the past, I think iPhone really is the

859
00:44:07,120 --> 00:44:10,160
Speaker 12: big story for Apple. I think it's going to remain

860
00:44:10,239 --> 00:44:12,240
Speaker 12: that at least for the next five to seven years

861
00:44:12,719 --> 00:44:17,239
Speaker 12: because globally, you know, countries like India, China, Brazil that

862
00:44:17,320 --> 00:44:21,280
Speaker 12: has a large, large population and the population is getting richer.

863
00:44:21,600 --> 00:44:24,160
Speaker 12: You know, they once they hit a certain point, they

864
00:44:24,200 --> 00:44:27,640
Speaker 12: are more you know, possible they're going to go for

865
00:44:27,680 --> 00:44:30,319
Speaker 12: an Apple device rather than an Android And that's really

866
00:44:30,320 --> 00:44:31,479
Speaker 12: the growth story in our view.

867
00:44:32,000 --> 00:44:34,840
Speaker 1: Hey, Mark, you know you think about India that Anorak

868
00:44:34,920 --> 00:44:37,359
Speaker 1: just mentioned and I hear India, you know, mentioned from

869
00:44:37,360 --> 00:44:39,719
Speaker 1: a lot of companies as an area of growth. You know,

870
00:44:39,760 --> 00:44:42,560
Speaker 1: maybe China's kind of closed itself off or closing itself off,

871
00:44:42,560 --> 00:44:45,160
Speaker 1: and so we're looking to India. But I think for India,

872
00:44:45,239 --> 00:44:48,239
Speaker 1: don't you have to have a lower priced product to

873
00:44:48,280 --> 00:44:50,279
Speaker 1: get into that market? And that doesn't just seem to

874
00:44:50,280 --> 00:44:53,440
Speaker 1: be Apple's kind of strength here. What do you hear

875
00:44:53,480 --> 00:44:56,239
Speaker 1: with Nkoupertino about how they might want to you know,

876
00:44:56,360 --> 00:44:58,240
Speaker 1: really grow in India.

877
00:45:00,000 --> 00:45:02,320
Speaker 16: I mean, the iPhone has been a failure in India,

878
00:45:02,400 --> 00:45:05,280
Speaker 16: right if you're looking at it in terms of numbers

879
00:45:05,320 --> 00:45:06,880
Speaker 16: at this point, right, it's been a failure. It has

880
00:45:06,920 --> 00:45:09,560
Speaker 16: extremely low market share compared to many of the other

881
00:45:09,640 --> 00:45:12,320
Speaker 16: handsets there. And the signals that Apple has been giving

882
00:45:12,360 --> 00:45:14,880
Speaker 16: over the past several months is that we want the

883
00:45:14,920 --> 00:45:17,360
Speaker 16: consumer to come to us, we don't necessarily want to

884
00:45:17,360 --> 00:45:19,640
Speaker 16: come to the consumer. And what that means is they're

885
00:45:19,719 --> 00:45:23,040
Speaker 16: talking about holding pricing firm right and having consumers come

886
00:45:23,080 --> 00:45:25,520
Speaker 16: to those prices rather than lowering prices and coming to

887
00:45:25,600 --> 00:45:28,240
Speaker 16: more consumers. And as on a Rug said, Apple believes

888
00:45:28,239 --> 00:45:30,319
Speaker 16: in this growing middle class in India. They believe people

889
00:45:30,320 --> 00:45:34,000
Speaker 16: are generating more revenue and money in India and they

890
00:45:34,000 --> 00:45:36,120
Speaker 16: want them to be able to spend more money on

891
00:45:36,160 --> 00:45:39,040
Speaker 16: their devices. Apple believes their phones are indispensable. They believe

892
00:45:39,080 --> 00:45:41,319
Speaker 16: the brand is a premium brand and they don't want

893
00:45:41,320 --> 00:45:45,240
Speaker 16: to impact that brand by lowering pricing or releasing cheaper models.

894
00:45:45,520 --> 00:45:48,799
Speaker 16: I personally think they should. I think they could and

895
00:45:48,920 --> 00:45:51,480
Speaker 16: should have already released an iPhone between two hundred and

896
00:45:51,480 --> 00:45:53,919
Speaker 16: three hundred dollars. Right now, the cheapest iPhone is about

897
00:45:53,960 --> 00:45:56,319
Speaker 16: four hundred and fifty dollars with five gene subs. That's

898
00:45:56,320 --> 00:45:59,040
Speaker 16: the latest iPhone onc When the next generation comes out,

899
00:45:59,080 --> 00:46:01,759
Speaker 16: they can easily tag or drop one hundred dollars off

900
00:46:01,800 --> 00:46:03,920
Speaker 16: that and make it an iPhone here towards India, I'm

901
00:46:03,960 --> 00:46:06,600
Speaker 16: not sure they're going to do that. Instead, they're creating

902
00:46:06,600 --> 00:46:10,200
Speaker 16: more installment plans, more financing plans, different promotions, try to

903
00:46:10,280 --> 00:46:12,760
Speaker 16: keep that high end brand, those high end price points

904
00:46:12,760 --> 00:46:15,279
Speaker 16: compared to the Huawei and show me devices you see

905
00:46:15,280 --> 00:46:17,480
Speaker 16: in India and have consumers come to them. So I

906
00:46:17,520 --> 00:46:20,600
Speaker 16: don't see that's the endpoint changing anytime soon, though it should.

907
00:46:21,120 --> 00:46:25,440
Speaker 8: Well, Apple has an update on its ten pole product

908
00:46:25,560 --> 00:46:28,400
Speaker 8: coming in the next few months. Mark with a new

909
00:46:28,520 --> 00:46:31,040
Speaker 8: iPhone update. Talk to me about what we can expect

910
00:46:31,040 --> 00:46:35,080
Speaker 8: from the iPhone fifteen and fifteen pro lines heading into

911
00:46:35,120 --> 00:46:38,960
Speaker 8: this fall, and to what extent does Apple have pricing

912
00:46:39,040 --> 00:46:41,120
Speaker 8: power for those upcoming releases.

913
00:46:42,200 --> 00:46:44,720
Speaker 16: Well, I would say that this iPhone fifteen launch happening

914
00:46:45,040 --> 00:46:47,239
Speaker 16: in the first half of September is one of the

915
00:46:47,280 --> 00:46:51,800
Speaker 16: key drivers to Anorog's point about why the stock is

916
00:46:51,840 --> 00:46:54,239
Speaker 16: going up. Right, You typically see this end of June

917
00:46:54,320 --> 00:46:58,600
Speaker 16: early July period. Analysts and shareholders and investors are anticipating

918
00:46:58,640 --> 00:47:01,600
Speaker 16: the new iPhone launch that's happened same month for the

919
00:47:01,680 --> 00:47:05,319
Speaker 16: last twelve years or so, right, and so they're really

920
00:47:05,360 --> 00:47:07,240
Speaker 16: excited about that. This is going to be a larger

921
00:47:07,280 --> 00:47:10,600
Speaker 16: iPhone upgrade cycle because you're going to see bigger enhancements

922
00:47:10,600 --> 00:47:12,720
Speaker 16: to both the low end models and the high end models,

923
00:47:12,719 --> 00:47:16,160
Speaker 16: which something which is something Apple hasn't done since twenty

924
00:47:16,160 --> 00:47:18,279
Speaker 16: twenty with the iPhone twelve and at five G. You're

925
00:47:18,280 --> 00:47:20,880
Speaker 16: going to see big camera improvements as well as screen

926
00:47:20,920 --> 00:47:23,680
Speaker 16: improvements the lower end phones, and on the higher end phones,

927
00:47:23,680 --> 00:47:25,760
Speaker 16: you're going to see a new titanium frame. So anytime

928
00:47:25,760 --> 00:47:29,200
Speaker 16: Apple makes a material change in terms of the material

929
00:47:29,200 --> 00:47:30,440
Speaker 16: that the phone is made out of, then you a

930
00:47:30,480 --> 00:47:33,040
Speaker 16: pretty big deal about that. Consumers are going to say, Wow,

931
00:47:33,080 --> 00:47:34,480
Speaker 16: that's really cool to get to be able to get

932
00:47:34,480 --> 00:47:38,120
Speaker 16: a phone in titanium. Right on the highest n iPhone,

933
00:47:38,160 --> 00:47:41,920
Speaker 16: the largest model. Apple's looking to raise ASPS by pushing

934
00:47:41,920 --> 00:47:44,160
Speaker 16: people to the higher model by introducing what is known

935
00:47:44,200 --> 00:47:47,080
Speaker 16: as a periscope camera. Now, the technology of periscope cameras

936
00:47:47,160 --> 00:47:49,840
Speaker 16: is still nascent. What this allows you to do is

937
00:47:49,880 --> 00:47:54,000
Speaker 16: have exceptional hardware based zoom, so you can zoom in

938
00:47:54,120 --> 00:47:56,760
Speaker 16: far more into something you want to take a picture

939
00:47:56,800 --> 00:47:59,440
Speaker 16: of without degrading the quality, which is something that happens

940
00:47:59,440 --> 00:48:01,560
Speaker 16: on iPhones on their phones today. This is going to

941
00:48:01,600 --> 00:48:03,960
Speaker 16: be a big improvement only available on the biggest and

942
00:48:03,960 --> 00:48:06,520
Speaker 16: most expensive phones. That's something that I think is going

943
00:48:06,520 --> 00:48:10,080
Speaker 16: to drive sales as well. I think shareholders anticipate higher

944
00:48:10,160 --> 00:48:12,640
Speaker 16: end phones to raise asps and that's what's generating a

945
00:48:12,640 --> 00:48:14,680
Speaker 16: lot of the excitement on the stock lately too.

946
00:48:15,360 --> 00:48:17,719
Speaker 1: Hey, Anura, can you give us a kind of an

947
00:48:17,800 --> 00:48:20,320
Speaker 1: update on Apple and China. So when I think that

948
00:48:20,480 --> 00:48:23,040
Speaker 1: Apple and China, I think about app you know, China

949
00:48:23,040 --> 00:48:25,600
Speaker 1: as obviously a big, big market for them, but I

950
00:48:25,640 --> 00:48:28,200
Speaker 1: also see that as a big supply chain risk. What's

951
00:48:28,200 --> 00:48:31,440
Speaker 1: the latest thinking on Apple and China?

952
00:48:31,640 --> 00:48:33,600
Speaker 12: So from a supply chain point of view, they're doing

953
00:48:33,680 --> 00:48:37,480
Speaker 12: a lot of work to assemble the phone outside China,

954
00:48:37,520 --> 00:48:39,799
Speaker 12: and we've seen you know, a new factory you know,

955
00:48:39,840 --> 00:48:42,600
Speaker 12: cropping up in India. I think that is going to

956
00:48:42,600 --> 00:48:45,240
Speaker 12: be a big feature going forward. I think they will

957
00:48:45,680 --> 00:48:49,319
Speaker 12: establish assembly factories outside in other regions. Also, you know,

958
00:48:49,560 --> 00:48:53,360
Speaker 12: around a last Thanksgiving then they had issues with the

959
00:48:53,640 --> 00:48:56,319
Speaker 12: pro model in China because of COVID, and I think

960
00:48:56,360 --> 00:48:58,920
Speaker 12: that probably taught them lesson that they need to diversify

961
00:48:59,000 --> 00:49:01,880
Speaker 12: that pretty strongly. And I think this year, you know,

962
00:49:01,920 --> 00:49:03,600
Speaker 12: as Mark said, it's going to be a lot of

963
00:49:03,640 --> 00:49:07,560
Speaker 12: excitement in the fourth quarter or the calendar fourth quarter,

964
00:49:07,680 --> 00:49:10,840
Speaker 12: because last year we had know COVID related stuff, so

965
00:49:10,960 --> 00:49:14,200
Speaker 12: very easy comparison for them, And from a supply chain

966
00:49:14,239 --> 00:49:15,880
Speaker 12: point of view, you know more and more stuff being

967
00:49:15,920 --> 00:49:18,960
Speaker 12: assembled in India and then perhaps in Brazil later on.

968
00:49:19,800 --> 00:49:21,600
Speaker 8: And Mark, I want to talk to you about the

969
00:49:21,600 --> 00:49:25,160
Speaker 8: headset because the day it was released, the stock price

970
00:49:25,800 --> 00:49:29,960
Speaker 8: was not as in the green as we're seeing today. Obviously,

971
00:49:30,960 --> 00:49:33,760
Speaker 8: is the headset going to be a headwind for Apple

972
00:49:33,800 --> 00:49:36,920
Speaker 8: moving forward or is it just something that is going

973
00:49:36,960 --> 00:49:39,120
Speaker 8: to be in the background but investors are happy to

974
00:49:39,200 --> 00:49:42,080
Speaker 8: kind of overlook the potential success of the headset.

975
00:49:44,200 --> 00:49:46,560
Speaker 16: The stock growth drivers from the headset have nothing to

976
00:49:46,560 --> 00:49:48,799
Speaker 16: do with the headset themselves. That has to do with

977
00:49:48,840 --> 00:49:52,239
Speaker 16: this idea of ecosystem locking, the idea of consumers wanting

978
00:49:52,280 --> 00:49:55,719
Speaker 16: to buy and use multiple products. The headset itself is

979
00:49:55,760 --> 00:49:58,200
Speaker 16: not going to add more than three billion dollars to

980
00:49:58,280 --> 00:50:01,399
Speaker 16: Apple's bottom line in the first year. And it's also

981
00:50:01,440 --> 00:50:03,960
Speaker 16: possible it could be a huge flop and after for

982
00:50:04,160 --> 00:50:07,799
Speaker 16: giving Apple return on its seven year development investment, it

983
00:50:07,800 --> 00:50:09,320
Speaker 16: could completely go out of style.

984
00:50:09,440 --> 00:50:09,600
Speaker 4: Right.

985
00:50:09,640 --> 00:50:12,279
Speaker 16: I don't anticipate that happening. But that's to say I

986
00:50:12,360 --> 00:50:15,840
Speaker 16: don't think anyone's buying Apple stock in any significant amount

987
00:50:16,320 --> 00:50:18,680
Speaker 16: of money or number of cares because of this headset.

988
00:50:18,760 --> 00:50:22,720
Speaker 16: The first model way overpriced out of normal consumer budgets

989
00:50:22,760 --> 00:50:25,040
Speaker 16: at thirty five hundred dollars starting, It's going to go

990
00:50:25,120 --> 00:50:28,160
Speaker 16: upwards at four thousand, depending on the bells and whistles

991
00:50:28,160 --> 00:50:30,600
Speaker 16: you get. The people who are buying this thing are

992
00:50:30,600 --> 00:50:33,680
Speaker 16: going to be the most avid Apple fans, mixed reality

993
00:50:33,719 --> 00:50:38,000
Speaker 16: efficient audos, and software developers, right the mass consumer, basically

994
00:50:38,080 --> 00:50:40,680
Speaker 16: anyone other than me. It's probably gonna hold off until

995
00:50:40,680 --> 00:50:44,719
Speaker 16: the third or fourth generation. Right over time, Apple anticipates this,

996
00:50:44,760 --> 00:50:48,200
Speaker 16: I'm told, becoming a twenty five billion or so annual business.

997
00:50:48,280 --> 00:50:51,440
Speaker 16: Right that's about an eighth of what the iPhone brings

998
00:50:51,480 --> 00:50:55,160
Speaker 16: in anyways, So I think at this point not a

999
00:50:55,200 --> 00:50:58,080
Speaker 16: lot on the stock because of the headset. But it's

1000
00:50:58,080 --> 00:51:00,839
Speaker 16: really the ecosystem locking the idea where you know, I'm

1001
00:51:00,880 --> 00:51:02,680
Speaker 16: sitting in front of me with an iPad pro, a

1002
00:51:02,760 --> 00:51:06,640
Speaker 16: MacBook Pro, an iPhone pro, at AirPods Pro, and you know,

1003
00:51:06,680 --> 00:51:08,400
Speaker 16: in six months from now, I could be wearing an

1004
00:51:08,400 --> 00:51:11,080
Speaker 16: Apple Vision Pro to be talking to you. I'm wearing

1005
00:51:11,120 --> 00:51:14,400
Speaker 16: an Apple Watch ultra right, that's the magic subscribe to

1006
00:51:14,440 --> 00:51:15,280
Speaker 16: all their services.

1007
00:51:15,360 --> 00:51:16,040
Speaker 6: Yeah, exactly.

1008
00:51:16,400 --> 00:51:19,759
Speaker 16: And so I'm the shareholder's dream consumer and I helped

1009
00:51:19,840 --> 00:51:22,160
Speaker 16: him cook sleep at night. Consumers like me, and I

1010
00:51:22,200 --> 00:51:25,080
Speaker 16: think that's why that's why people want to buy Apple stock.

1011
00:51:25,120 --> 00:51:27,560
Speaker 16: It's just like investing in Coca Cola.

1012
00:51:27,800 --> 00:51:30,040
Speaker 1: Yep, all right, it's got a lot of higher evaluation.

1013
00:51:30,200 --> 00:51:32,120
Speaker 1: But Mark German, thank you so much for We appreciate

1014
00:51:32,120 --> 00:51:35,799
Speaker 1: a chief correspondent on Apple and technology with Bloomberg News

1015
00:51:35,840 --> 00:51:38,320
Speaker 1: and of course Ana rag Ran, a senior technology analyst

1016
00:51:38,920 --> 00:51:40,279
Speaker 1: with Bloomberg Intelligence.

1017
00:51:44,040 --> 00:51:47,120
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1018
00:51:47,160 --> 00:51:50,960
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1019
00:51:51,040 --> 00:51:54,760
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1020
00:51:54,960 --> 00:51:58,160
Speaker 2: at Matt Miller nineteen seventy three, and I Fall Sweeney.

1021
00:51:58,239 --> 00:52:00,720
Speaker 1: I'm on Twitter at pt Sweeney. Before or the podcast,

1022
00:52:00,760 --> 00:52:03,239
Speaker 1: you can always catch us worldwide at Bloomberg Radio.