1 00:00:05,800 --> 00:00:08,719 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,880 --> 00:00:32,680 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The 7 00:00:32,760 --> 00:00:35,400 Speaker 1: shares of Ford Motor Company. They are hired by nearly 8 00:00:35,520 --> 00:00:38,400 Speaker 1: three percent after the company says it's going to get 9 00:00:38,520 --> 00:00:41,360 Speaker 1: rid of its sedan production in the United States except 10 00:00:41,360 --> 00:00:44,199 Speaker 1: for the Mustang. Here to tell us about the company 11 00:00:44,240 --> 00:00:47,760 Speaker 1: and its investment prowess is David Coudla. He is founder, 12 00:00:47,840 --> 00:00:52,520 Speaker 1: chief executive in chief investment strategist for Mainstay Capital. David, 13 00:00:52,520 --> 00:00:54,640 Speaker 1: thanks very much for being with us. All Right, so 14 00:00:54,840 --> 00:00:59,400 Speaker 1: you've got, uh, you know what, two billion under management. 15 00:00:59,480 --> 00:01:01,560 Speaker 1: You get a all from a customer and they say, 16 00:01:01,840 --> 00:01:05,319 Speaker 1: all right, they heard that Ford is cutting costs, they're 17 00:01:05,319 --> 00:01:09,960 Speaker 1: getting out of making a loss making sedans, and they 18 00:01:10,040 --> 00:01:13,360 Speaker 1: tweet to you at David Underscore Coodla, and they say, 19 00:01:13,400 --> 00:01:15,760 Speaker 1: what should we do? Should we buy Ford stock? What 20 00:01:15,800 --> 00:01:22,600 Speaker 1: do you say? Well, we have been neutral on the 21 00:01:22,600 --> 00:01:27,640 Speaker 1: auto since domesticatos since Pecato in sten. What's interesting is 22 00:01:28,080 --> 00:01:32,640 Speaker 1: we've remained on a plateau essentially between seventeen and seventeen 23 00:01:32,720 --> 00:01:36,560 Speaker 1: a half million vehicles. So I think, with you know, 24 00:01:36,600 --> 00:01:41,319 Speaker 1: the news that we have on the cost reductions coming 25 00:01:41,720 --> 00:01:47,680 Speaker 1: and the the transition a very big transition from cars 26 00:01:47,720 --> 00:01:51,280 Speaker 1: to SUVs and trucks, Ford is an attractive stock right now. 27 00:01:51,880 --> 00:01:54,920 Speaker 1: So you'd recommend to buy I'd recommend to buy Ford 28 00:01:55,000 --> 00:01:57,800 Speaker 1: if you remember Ford earlier this year. You know, during 29 00:01:57,840 --> 00:02:02,040 Speaker 1: the correction the overall market um sold off pretty steeply 30 00:02:02,480 --> 00:02:05,240 Speaker 1: and along with a lot of the socks, but even 31 00:02:05,800 --> 00:02:07,480 Speaker 1: how to bigger sell off. But we think, yeah, we 32 00:02:07,520 --> 00:02:10,840 Speaker 1: think right now, uh, the autos are looking very attractive, 33 00:02:11,560 --> 00:02:12,960 Speaker 1: all of them. You know, this is what I want 34 00:02:13,000 --> 00:02:15,960 Speaker 1: to get to. So how much are we seeing some 35 00:02:16,040 --> 00:02:19,239 Speaker 1: sort of rebound from a lot of bad news baked 36 00:02:19,320 --> 00:02:23,840 Speaker 1: into forward shares? How much has the overall backdrop of 37 00:02:23,919 --> 00:02:28,320 Speaker 1: slowing sales, higher costs of metals that go into the 38 00:02:28,320 --> 00:02:32,640 Speaker 1: production of these vehicles, and basically challenges across the globe 39 00:02:32,840 --> 00:02:39,040 Speaker 1: from competing automakers. How much has that backdrop changed? Well, 40 00:02:39,080 --> 00:02:43,560 Speaker 1: what's interesting, say with let's take forward in GM, the 41 00:02:43,600 --> 00:02:49,280 Speaker 1: commodity prices are definitely affecting UH the input costs. When 42 00:02:49,280 --> 00:02:51,799 Speaker 1: you look at the first quarter, Ford had almost five 43 00:02:52,240 --> 00:02:57,960 Speaker 1: million in an increase in commodities cost GM UM. We 44 00:02:58,040 --> 00:03:00,800 Speaker 1: also see the tax reform will be good for those 45 00:03:00,800 --> 00:03:05,160 Speaker 1: companies UH as we look forward, though, again, what's interesting 46 00:03:05,240 --> 00:03:09,120 Speaker 1: is is where we've traditionally had this this economic cycle 47 00:03:09,160 --> 00:03:13,119 Speaker 1: with autos, the ramp up we reach Piccato come back 48 00:03:13,160 --> 00:03:15,600 Speaker 1: down the other side. We've called for this plateau, and 49 00:03:15,600 --> 00:03:19,600 Speaker 1: that's what we've seen. So they're continuing to make cars, 50 00:03:19,680 --> 00:03:24,360 Speaker 1: make cars with a ratio that's biased more and more 51 00:03:24,960 --> 00:03:30,440 Speaker 1: towards trucks and suv is the most profitable. David, if 52 00:03:30,440 --> 00:03:34,720 Speaker 1: you had to choose between GM, Ford and f A 53 00:03:34,800 --> 00:03:37,560 Speaker 1: Fiat Chrysler, do you choose one or do you buy all? 54 00:03:39,040 --> 00:03:42,040 Speaker 1: I actually would choose Fiat Chrysler right now. And the 55 00:03:42,120 --> 00:03:45,520 Speaker 1: reason is the transition that GM and Ford are making 56 00:03:45,600 --> 00:03:48,080 Speaker 1: right now. And Ford made a very bold statement about 57 00:03:48,120 --> 00:03:52,200 Speaker 1: this that they will be by only making the Mustang 58 00:03:52,400 --> 00:03:56,800 Speaker 1: in the focused crossover vehicle. But UH, Fiat Chrysler has 59 00:03:56,800 --> 00:03:59,360 Speaker 1: already done this. They've done this over the last two years. 60 00:03:59,720 --> 00:04:02,760 Speaker 1: They're in the process around a cadence converting four plants 61 00:04:03,280 --> 00:04:07,720 Speaker 1: from car production to truck and suv production. So we've 62 00:04:07,760 --> 00:04:11,440 Speaker 1: seen that stock you know, do very well and they're 63 00:04:11,480 --> 00:04:16,719 Speaker 1: really very well positioned right now already with uh that 64 00:04:16,720 --> 00:04:21,280 Speaker 1: that bias towards truck and suv production over cars. All right, 65 00:04:21,320 --> 00:04:24,960 Speaker 1: cbre recommending f c A instead of putting money into 66 00:04:25,000 --> 00:04:28,080 Speaker 1: Ford or putting money into my topic right now would 67 00:04:28,080 --> 00:04:31,200 Speaker 1: be okay. Um, what effect do you think that NAFTA 68 00:04:31,240 --> 00:04:33,120 Speaker 1: trade talks are going to have on investments in the 69 00:04:33,120 --> 00:04:37,440 Speaker 1: auto sector. Uh, It's it's still hard to tell because 70 00:04:37,760 --> 00:04:42,520 Speaker 1: it's it's such a complex equation about how the uh 71 00:04:42,560 --> 00:04:46,760 Speaker 1: you know, parts moved from between the three countries when 72 00:04:46,800 --> 00:04:49,360 Speaker 1: they get integrated into the car where the cars eventually 73 00:04:49,400 --> 00:04:54,839 Speaker 1: made and shipped. But uh, you know, overall, net net, 74 00:04:55,080 --> 00:04:57,320 Speaker 1: it will be bad for the autos because it will 75 00:04:57,520 --> 00:05:00,680 Speaker 1: it will disrupt the supply chain and potentially at costs. 76 00:05:01,040 --> 00:05:03,720 Speaker 1: And that is just just parts moving within the same 77 00:05:03,760 --> 00:05:09,760 Speaker 1: company or uh you know, or those parts from suppliers. David, 78 00:05:10,120 --> 00:05:12,039 Speaker 1: I want to turn our attention a little bit to 79 00:05:12,040 --> 00:05:15,840 Speaker 1: the credit side of things. Auto loans. The total outstanding 80 00:05:15,960 --> 00:05:19,080 Speaker 1: has surged over the past eight years. Now it's starting 81 00:05:19,080 --> 00:05:22,120 Speaker 1: to get more expensive to borrow given the increase in 82 00:05:22,240 --> 00:05:25,440 Speaker 1: short term rates. I'm just wondering did any of the 83 00:05:25,480 --> 00:05:29,800 Speaker 1: companies have they addressed their concern about sort of rising 84 00:05:29,839 --> 00:05:35,279 Speaker 1: credit costs crimping demand. Well, there's only there's only so 85 00:05:35,360 --> 00:05:39,080 Speaker 1: much they can do. We buy cars in America, we 86 00:05:39,240 --> 00:05:42,559 Speaker 1: buy cars on credit. That's how cars are bought. So, 87 00:05:43,160 --> 00:05:45,440 Speaker 1: you know, your your question is a very good one. 88 00:05:45,760 --> 00:05:48,919 Speaker 1: Is of concern to the autos because we see the 89 00:05:48,960 --> 00:05:52,360 Speaker 1: cost of credit, the cost of of cost of money 90 00:05:52,480 --> 00:05:56,200 Speaker 1: is rising, is certainly rising, and uh, you know, we've 91 00:05:56,200 --> 00:06:00,120 Speaker 1: seen what's happened to the amount of credit that we 92 00:06:00,200 --> 00:06:02,800 Speaker 1: have in in the car industry. So that is one 93 00:06:02,839 --> 00:06:05,400 Speaker 1: concern we have as we see the ten year bond 94 00:06:06,120 --> 00:06:09,280 Speaker 1: UH now is not only touched, but moved a little 95 00:06:09,279 --> 00:06:12,240 Speaker 1: bit behind, a little bit above yesterday. And we think 96 00:06:12,320 --> 00:06:14,680 Speaker 1: rates continue to go up, cost of credit goes up, 97 00:06:15,160 --> 00:06:19,520 Speaker 1: that will eventually start to take have an impact on 98 00:06:19,520 --> 00:06:21,640 Speaker 1: on the way that we buy autos in the US, 99 00:06:21,960 --> 00:06:25,200 Speaker 1: and it will have an adverse impact. Thank you so 100 00:06:25,279 --> 00:06:28,719 Speaker 1: much for joining us. David Coudla, founder, chief executive officer 101 00:06:28,760 --> 00:06:33,200 Speaker 1: in chief investment strategist at Mainstay Capital, coming to us 102 00:06:33,240 --> 00:06:51,600 Speaker 1: from the auto capital of the nation in Michigan. Deutsche 103 00:06:51,600 --> 00:06:56,000 Speaker 1: Bank another year another pledge to cut a vast amount 104 00:06:56,120 --> 00:06:59,960 Speaker 1: of their staff joining us Now y'allman owner and senior financer, 105 00:07:00,040 --> 00:07:03,640 Speaker 1: a writer for Bloomberg News. Yeahman, we've heard this before, 106 00:07:03,839 --> 00:07:07,359 Speaker 1: Deutsche Bank reporting results and saying that they're going to 107 00:07:07,520 --> 00:07:12,200 Speaker 1: significantly curb their presence in the US and Asia. Do 108 00:07:12,240 --> 00:07:15,280 Speaker 1: you think that this time will really be the time 109 00:07:15,320 --> 00:07:17,840 Speaker 1: when they do make the thousands of cuts that they're 110 00:07:17,880 --> 00:07:21,400 Speaker 1: basically implying with this statement. You know, one of my 111 00:07:21,440 --> 00:07:25,440 Speaker 1: favorite books is called this Time is Different But Um 112 00:07:25,520 --> 00:07:28,880 Speaker 1: a couple of professors who tried to explain why we 113 00:07:28,960 --> 00:07:32,080 Speaker 1: keep ending in financial crisis and looked at about two 114 00:07:32,200 --> 00:07:35,520 Speaker 1: hundred crisis in the last five hundred years, and every 115 00:07:35,560 --> 00:07:38,160 Speaker 1: time everybody says this time is different, We're gonna we're 116 00:07:38,200 --> 00:07:40,360 Speaker 1: not gonna end up in crisis and things aren't gonna 117 00:07:40,360 --> 00:07:43,160 Speaker 1: fall apart. We did it better, we have a new paradigm, 118 00:07:43,200 --> 00:07:46,440 Speaker 1: and we end up in crisis. Um, So I don't 119 00:07:46,800 --> 00:07:48,800 Speaker 1: it's hard to believe this time is going to be 120 00:07:48,800 --> 00:07:51,960 Speaker 1: different because Deutche Bank has been saying these things over 121 00:07:52,040 --> 00:07:56,080 Speaker 1: and over over the last many years. Um, and they 122 00:07:56,080 --> 00:07:58,880 Speaker 1: don't and they don't deliver. I mean, this is the 123 00:07:58,960 --> 00:08:03,160 Speaker 1: third CEO UM and you know, the previous CEOs have 124 00:08:03,280 --> 00:08:06,960 Speaker 1: come up with similar plans, as I keep bringing up 125 00:08:07,000 --> 00:08:10,040 Speaker 1: over and over every time we talked to Bank. You know, 126 00:08:10,280 --> 00:08:12,640 Speaker 1: two three years ago, they said they're gonna cut cut 127 00:08:12,720 --> 00:08:16,480 Speaker 1: ten thousand jobs in addition to getting rid of post Bank. 128 00:08:16,760 --> 00:08:18,840 Speaker 1: They did not get rid of post Bank. They did 129 00:08:18,840 --> 00:08:21,640 Speaker 1: not cut ten thousand jobs. And now they're saying they're 130 00:08:21,680 --> 00:08:25,120 Speaker 1: gonna cut jobs. So they it's easy to say this, 131 00:08:25,240 --> 00:08:28,800 Speaker 1: but it doesn't seem to be that easy to implement. 132 00:08:29,200 --> 00:08:31,720 Speaker 1: And you know they want to excuse is Germany. They 133 00:08:31,720 --> 00:08:34,000 Speaker 1: it's very hard to get rid of people. Okay, but 134 00:08:34,120 --> 00:08:37,240 Speaker 1: they even bargain with the labor unions there and actually 135 00:08:37,240 --> 00:08:41,480 Speaker 1: reached conclusions and actually were supposed to start cutting in 136 00:08:41,520 --> 00:08:45,000 Speaker 1: Germany and that hasn't happened. And and the non German stuff, 137 00:08:45,040 --> 00:08:47,160 Speaker 1: I mean, they could have done the non Germans, you know, 138 00:08:47,320 --> 00:08:52,280 Speaker 1: the employee cuts before. They haven't. So they just say 139 00:08:52,360 --> 00:08:54,720 Speaker 1: and this time they don't even have details. They don't 140 00:08:54,720 --> 00:08:56,520 Speaker 1: even come up with a number, like we're gonna cut 141 00:08:56,880 --> 00:08:59,439 Speaker 1: X number of jobs. They're like, this is gonna be significant. 142 00:08:59,480 --> 00:09:02,040 Speaker 1: It's gonna be great. It sounds a little bit like 143 00:09:02,120 --> 00:09:05,640 Speaker 1: our president. You know. Well, I don't want to go there. 144 00:09:05,800 --> 00:09:08,480 Speaker 1: I want to go more into the details of Deutsche Bank. 145 00:09:08,760 --> 00:09:12,280 Speaker 1: Why do you think they can't do this? They can, 146 00:09:12,520 --> 00:09:14,880 Speaker 1: I'm not sure they will. I mean, that's the problem. 147 00:09:14,920 --> 00:09:17,800 Speaker 1: But why, I mean, is it because they don't want to? Ultimately? Mean, 148 00:09:17,800 --> 00:09:20,080 Speaker 1: they got what a little bit more than thousand on 149 00:09:20,160 --> 00:09:27,400 Speaker 1: record employees. What is preventing the new chief executive, Christian 150 00:09:27,679 --> 00:09:32,520 Speaker 1: saving from actually making the cuts? Uh? I don't know 151 00:09:32,559 --> 00:09:35,280 Speaker 1: if anything is preventing them from doing it. So so 152 00:09:35,440 --> 00:09:39,320 Speaker 1: why why it hasn't it happened under several previous CEOs? 153 00:09:39,840 --> 00:09:43,840 Speaker 1: They've I've never heard a proper explanation. As I said, 154 00:09:43,920 --> 00:09:46,960 Speaker 1: you know that the typical excuse was, you know, in 155 00:09:47,040 --> 00:09:50,440 Speaker 1: Germany it's very hard to fire people, but even it's 156 00:09:50,480 --> 00:09:53,559 Speaker 1: it's hard, but it's not impossible, and they're all the time, 157 00:09:53,640 --> 00:09:56,079 Speaker 1: you know, every every meeting that the CEO or CFO 158 00:09:56,160 --> 00:09:58,920 Speaker 1: or others other executives would say, you know, this is 159 00:09:58,960 --> 00:10:02,040 Speaker 1: what we're doing with the the unions. And eventually they 160 00:10:02,080 --> 00:10:04,760 Speaker 1: actually reached the agreements with the unions. We reported that 161 00:10:04,800 --> 00:10:07,600 Speaker 1: are people in Germany reported all that and still they 162 00:10:07,640 --> 00:10:10,360 Speaker 1: couldn't really get rid of people. So so I'm not 163 00:10:10,440 --> 00:10:14,960 Speaker 1: sure what's keeping dots Bank from from implementing these plans 164 00:10:15,000 --> 00:10:17,920 Speaker 1: that they announced over and over and over and and 165 00:10:17,920 --> 00:10:21,040 Speaker 1: and this one doesn't even sound that significant. If if 166 00:10:21,080 --> 00:10:24,080 Speaker 1: the number, the only number they've given is that they're 167 00:10:24,080 --> 00:10:28,840 Speaker 1: going to bring down their share of Corporate and Investment Bank, 168 00:10:28,880 --> 00:10:31,600 Speaker 1: which is their big investment bank unit, UH down to 169 00:10:32,800 --> 00:10:36,080 Speaker 1: from fifty three, that doesn't sound amazing. You know, I 170 00:10:36,120 --> 00:10:38,319 Speaker 1: wanna I want to broaden our our our sort of 171 00:10:38,400 --> 00:10:41,040 Speaker 1: view a little bit, because barclay Is also reported earnings 172 00:10:41,120 --> 00:10:44,160 Speaker 1: seem to demonstrate a shift towards taking on more risk 173 00:10:44,360 --> 00:10:49,040 Speaker 1: and toward expanding its horizons. With Deutsche Bank, even let's 174 00:10:49,080 --> 00:10:50,880 Speaker 1: say that they do go through their plan to reduce 175 00:10:50,920 --> 00:10:55,120 Speaker 1: their footprint in the US and Asia, with this crimp 176 00:10:55,240 --> 00:10:59,920 Speaker 1: their ability to get clients in Europe and more look 177 00:11:00,200 --> 00:11:02,640 Speaker 1: in Germany because they don't have as proud of a 178 00:11:02,679 --> 00:11:07,320 Speaker 1: reach possibly as I and again you know we have 179 00:11:07,920 --> 00:11:10,040 Speaker 1: all three of us have talked about tot Bank before 180 00:11:10,080 --> 00:11:13,160 Speaker 1: and then as I bring it up before, um, they 181 00:11:13,240 --> 00:11:16,400 Speaker 1: it's dotcha bank is an investment bank. Um. If they're 182 00:11:16,440 --> 00:11:20,720 Speaker 1: now deciding to become a retail bank. That's not their DNA, 183 00:11:20,880 --> 00:11:24,800 Speaker 1: it's never been their DNA. Plus Germany, where their home 184 00:11:24,840 --> 00:11:28,040 Speaker 1: base for retail banking is where post Bank is based 185 00:11:28,080 --> 00:11:31,080 Speaker 1: and and there are other retail branches, is completely over 186 00:11:31,200 --> 00:11:34,200 Speaker 1: banked and there's no money to be made in Germany 187 00:11:34,200 --> 00:11:38,040 Speaker 1: in retail banking. Um so where so I hope they're 188 00:11:38,080 --> 00:11:41,000 Speaker 1: still staying in investment banking. I don't think they're getting 189 00:11:41,000 --> 00:11:43,920 Speaker 1: out of it. As I said, fifty three to fifty 190 00:11:44,200 --> 00:11:46,599 Speaker 1: as share of revenue is really for me nothing, and 191 00:11:46,880 --> 00:11:50,920 Speaker 1: some analysts during the call earlier today in Europe we're 192 00:11:51,000 --> 00:11:53,800 Speaker 1: complaining that it's it's too little. They're not really doing anything. 193 00:11:54,120 --> 00:11:57,800 Speaker 1: Um they need to they need to recover their DNA 194 00:11:58,000 --> 00:12:02,960 Speaker 1: in investment banking, which has been their core strength for decades. Uh, 195 00:12:03,040 --> 00:12:06,000 Speaker 1: they were the biggest European investment bank, and they've lost 196 00:12:06,040 --> 00:12:08,680 Speaker 1: that title. They've lost everybody. They've lost the US banks 197 00:12:08,800 --> 00:12:12,360 Speaker 1: ship market share, they've lost the other European rivals market share. 198 00:12:12,600 --> 00:12:15,640 Speaker 1: So why and it's not about cost cutting. This is 199 00:12:15,679 --> 00:12:19,520 Speaker 1: something else, and and that why they're unable to recover 200 00:12:19,600 --> 00:12:22,200 Speaker 1: when even Barclays is recovering, not even I mean, but 201 00:12:22,320 --> 00:12:24,840 Speaker 1: every bank. You know, they went through all the European 202 00:12:24,840 --> 00:12:27,840 Speaker 1: banks went through a couple of years of bad you know, 203 00:12:28,400 --> 00:12:33,480 Speaker 1: investment banking trading results. They regrouped, they fixed, figured out 204 00:12:33,520 --> 00:12:36,240 Speaker 1: where they're strong, and they managed to get back on 205 00:12:36,280 --> 00:12:38,760 Speaker 1: the business. Thank you very much, y'all. I'm an owner 206 00:12:38,800 --> 00:12:41,359 Speaker 1: on a senior writer for banking and finance for Bloomberg 207 00:12:45,840 --> 00:12:49,360 Speaker 1: how to invest in the healthcare sector by lending money 208 00:12:49,400 --> 00:12:53,319 Speaker 1: to healthcare companies, companies that are looking to create innovations 209 00:12:53,360 --> 00:12:56,000 Speaker 1: in healthcare. Here to help us understand this market is 210 00:12:56,040 --> 00:12:58,839 Speaker 1: Scott Lee. He is a principle with c r P 211 00:12:59,360 --> 00:13:02,160 Speaker 1: helping demandag Jazz had some more than three billion dollars. 212 00:13:02,160 --> 00:13:04,640 Speaker 1: He joins us here in our eleven three oh studio. Scott, 213 00:13:04,640 --> 00:13:07,200 Speaker 1: thanks very much for coming in. Maybe just give people 214 00:13:07,240 --> 00:13:11,080 Speaker 1: a brief history of snopsis of a c RP because 215 00:13:11,120 --> 00:13:13,440 Speaker 1: I know that one of your founders, Charles Tate, he 216 00:13:13,520 --> 00:13:15,720 Speaker 1: stepped down from the firm. I guess it was last 217 00:13:15,880 --> 00:13:21,360 Speaker 1: April two thousand seventeen. And uh, Mr Tate is one 218 00:13:21,440 --> 00:13:23,760 Speaker 1: of the names that people may know because of the 219 00:13:23,840 --> 00:13:29,080 Speaker 1: famous private equity firm Hicks muse Tate and first tell 220 00:13:29,160 --> 00:13:32,560 Speaker 1: us about the company. Sure it's it's c RG and 221 00:13:32,960 --> 00:13:36,960 Speaker 1: Charles was was our founder and still UH our chairman emeritus, 222 00:13:36,960 --> 00:13:40,880 Speaker 1: and we're glad he's he's UH still part of the family. UH. 223 00:13:41,000 --> 00:13:44,000 Speaker 1: The c RG is a healthcare focused investment firm. UM. 224 00:13:44,000 --> 00:13:47,960 Speaker 1: We invest across suspective healthcare companies, from UM the most 225 00:13:48,000 --> 00:13:52,920 Speaker 1: innovative technology companies in in healthcare to more traditional services companies, 226 00:13:53,559 --> 00:13:55,840 Speaker 1: and we use credit as our tool to invest in 227 00:13:55,880 --> 00:13:59,560 Speaker 1: those companies. UM. We we have an unofficial motto that 228 00:13:59,640 --> 00:14:03,559 Speaker 1: everything healthcare takes more time and takes more money, and 229 00:14:03,880 --> 00:14:07,200 Speaker 1: using credit as a tool does help us provide more 230 00:14:07,240 --> 00:14:10,040 Speaker 1: capital and more time to companies. All right, Well, given 231 00:14:10,280 --> 00:14:12,040 Speaker 1: the fact that you do a deep dive and you 232 00:14:12,040 --> 00:14:14,720 Speaker 1: really do specialize in the health care industry, I'd love 233 00:14:14,760 --> 00:14:19,200 Speaker 1: to hear your perspective on Walmart's potential acquisition of Humanity 234 00:14:19,320 --> 00:14:21,640 Speaker 1: and just how some of the biggest companies are thinking 235 00:14:21,680 --> 00:14:25,680 Speaker 1: about managing healthcare costs. What's your take on this? Well, 236 00:14:25,720 --> 00:14:28,720 Speaker 1: I think if if Walmart does ultimately acquire Humanity or 237 00:14:29,120 --> 00:14:32,400 Speaker 1: UH form a tighter partnership with Humanity, it would be 238 00:14:32,400 --> 00:14:35,400 Speaker 1: a brilliant move for for Walmart. UM when they when 239 00:14:35,400 --> 00:14:40,400 Speaker 1: you think through Humanity members, Walmart employees, Walmart shoppers, um 240 00:14:40,440 --> 00:14:44,200 Speaker 1: everyone in their ecosystem. UM, they can have an influential 241 00:14:44,280 --> 00:14:47,360 Speaker 1: role in directing where and how they get care and 242 00:14:47,400 --> 00:14:51,320 Speaker 1: then ultimately where they buy their UH medications, which should 243 00:14:51,320 --> 00:14:54,120 Speaker 1: be at all the Walmart locations around the country. UM. 244 00:14:54,240 --> 00:14:57,400 Speaker 1: So in terms of managing healthcare costs, it's it's browing 245 00:14:57,440 --> 00:15:00,760 Speaker 1: in terms of driving more volume in to the higher 246 00:15:00,800 --> 00:15:05,240 Speaker 1: margin pharmacy segment for for Walmart. And we shouldn't forget 247 00:15:05,280 --> 00:15:06,880 Speaker 1: that Walmart is one of the big s pharmacies in 248 00:15:06,880 --> 00:15:10,480 Speaker 1: the country. UH, It's brilliant on multiple levels. I wonder 249 00:15:10,480 --> 00:15:13,520 Speaker 1: if you could use an example of one of your deals, 250 00:15:13,560 --> 00:15:16,440 Speaker 1: one of your investments. This is Dynavax and you or 251 00:15:16,480 --> 00:15:18,000 Speaker 1: you can pick another one. But I just chose this 252 00:15:18,040 --> 00:15:20,480 Speaker 1: because it's a big deal and it's about vaccines for 253 00:15:21,160 --> 00:15:24,000 Speaker 1: hepatitis B, and I think it was a hundred and 254 00:15:24,000 --> 00:15:27,400 Speaker 1: seventy five million dollar financing, And I wonder if you 255 00:15:27,400 --> 00:15:30,000 Speaker 1: could just use as an example to kind of demonstrate 256 00:15:30,040 --> 00:15:32,720 Speaker 1: what it is you look for and how do you 257 00:15:32,760 --> 00:15:35,400 Speaker 1: go into determine whether it's an investment that you believe 258 00:15:35,480 --> 00:15:38,600 Speaker 1: is worthwhile. Well, when we look at investments from a 259 00:15:38,760 --> 00:15:40,920 Speaker 1: you know, from a high level we try to find 260 00:15:40,920 --> 00:15:44,440 Speaker 1: companies that are addressing truly on met medical needs or 261 00:15:44,520 --> 00:15:47,520 Speaker 1: are our bringing costs out of the system UM. And 262 00:15:47,600 --> 00:15:49,600 Speaker 1: so if you look at Dynavax, and it's a company 263 00:15:49,600 --> 00:15:52,400 Speaker 1: we're very excited about. They have a very UH novel 264 00:15:52,840 --> 00:15:57,400 Speaker 1: be vaccine UM that is pretty differentiated relative to the 265 00:15:57,440 --> 00:16:01,400 Speaker 1: existing heavy vaccines. They've got a very promising imun oncology 266 00:16:01,440 --> 00:16:03,800 Speaker 1: pipeline as well, and so this is one where we 267 00:16:04,240 --> 00:16:06,880 Speaker 1: truly believe they're addressing this on that need. If you 268 00:16:06,920 --> 00:16:10,840 Speaker 1: look at another another investment of ours in a company 269 00:16:10,840 --> 00:16:14,560 Speaker 1: called m d Live, which is a tele medicine company, 270 00:16:14,600 --> 00:16:17,800 Speaker 1: a tell mess and platform that enables patients or customers 271 00:16:17,840 --> 00:16:23,120 Speaker 1: to access a position a counselor a therapist, a dermatologist 272 00:16:23,480 --> 00:16:27,360 Speaker 1: online and uh and and and big part of that 273 00:16:27,440 --> 00:16:30,560 Speaker 1: value proposition is they're they're reducing costs in the system 274 00:16:30,640 --> 00:16:33,600 Speaker 1: by allowing people to access care when they need it, UM, 275 00:16:33,640 --> 00:16:36,360 Speaker 1: not to let things fester and then access care too late, 276 00:16:37,200 --> 00:16:39,960 Speaker 1: UM and UM. And so that's that's one where we 277 00:16:40,000 --> 00:16:42,560 Speaker 1: really believe it's bringing costs in the system down. So 278 00:16:42,600 --> 00:16:45,520 Speaker 1: since you focus on credit, I want to focus on 279 00:16:45,680 --> 00:16:49,240 Speaker 1: the pessimism UH that that credit investors are known for. 280 00:16:49,360 --> 00:16:51,640 Speaker 1: And I'm wondering whether there are any investments that you've 281 00:16:51,720 --> 00:16:57,040 Speaker 1: passed over or that you view as being perhaps overvalued 282 00:16:57,160 --> 00:17:00,800 Speaker 1: right now as the entire healthcare industry shifts to a 283 00:17:00,920 --> 00:17:05,000 Speaker 1: very different model. Well, I think, UM, healthcare is no 284 00:17:05,040 --> 00:17:07,359 Speaker 1: different than other industries where people feel it's a little 285 00:17:07,440 --> 00:17:10,359 Speaker 1: you know, the evaluations are frothy, UM. But I think 286 00:17:11,240 --> 00:17:14,639 Speaker 1: the evaluations in healthcare don't quite move along with you know, 287 00:17:14,680 --> 00:17:17,800 Speaker 1: the broader economy or the broader market. UM. I wouldn't 288 00:17:17,800 --> 00:17:20,840 Speaker 1: say there are particular investments that we've passed over that 289 00:17:20,840 --> 00:17:22,320 Speaker 1: that we would look at and say, wow, look at 290 00:17:22,359 --> 00:17:26,080 Speaker 1: that valuation. Now, UM, there are always some that that 291 00:17:26,119 --> 00:17:29,480 Speaker 1: we wish we investments we could have made. I mean, 292 00:17:29,520 --> 00:17:32,159 Speaker 1: I mean things that you're cautious about right now, areas 293 00:17:32,160 --> 00:17:34,200 Speaker 1: of the market that you think that you think could 294 00:17:34,560 --> 00:17:37,360 Speaker 1: see a real synkol in the near future. Well within 295 00:17:37,400 --> 00:17:40,600 Speaker 1: the healthcare ecosystem, absolutely. You know, one thing we are 296 00:17:40,600 --> 00:17:45,840 Speaker 1: concerned about, um a qute care facilities for instance. UM, 297 00:17:45,920 --> 00:17:49,280 Speaker 1: there is quite a bit of consolidation happening in that 298 00:17:49,359 --> 00:17:54,040 Speaker 1: in that field, some of it for survival reasons as 299 00:17:54,040 --> 00:17:57,840 Speaker 1: opposed for as opposed to have being for growth motivations 300 00:17:58,000 --> 00:18:03,479 Speaker 1: and UM, it's it's in that industry. We we as 301 00:18:03,480 --> 00:18:05,920 Speaker 1: a country were probably overbetted in terms of a Q 302 00:18:06,080 --> 00:18:09,280 Speaker 1: care facility. So there's there's consolidation that needs to happen, 303 00:18:09,280 --> 00:18:11,879 Speaker 1: there's rationalization that needs to happen. UM. And these are 304 00:18:11,920 --> 00:18:14,920 Speaker 1: companies that tend to be pretty over levered. And so 305 00:18:14,960 --> 00:18:17,679 Speaker 1: that's for so many different reasons in this scenario that 306 00:18:17,680 --> 00:18:20,720 Speaker 1: we're staying away from right now. As a company that's 307 00:18:20,720 --> 00:18:24,560 Speaker 1: focused on investing through credit, does it matter to you 308 00:18:24,640 --> 00:18:28,320 Speaker 1: whether there is a big acquisition pipeline that perhaps you 309 00:18:28,320 --> 00:18:32,360 Speaker 1: know big farmer companies or other medical or healthcare companies 310 00:18:32,359 --> 00:18:36,560 Speaker 1: are looking to acquire some of your your credits. It's 311 00:18:36,640 --> 00:18:39,440 Speaker 1: it's helpful from a few different perspectives. One we we 312 00:18:39,440 --> 00:18:42,679 Speaker 1: we love it when companies have both organic and inorganic 313 00:18:42,720 --> 00:18:45,800 Speaker 1: growth opportunities in front of them. UM. It's certainly from 314 00:18:45,840 --> 00:18:49,320 Speaker 1: a credit underrating standpoint, makes things easier UM. But then 315 00:18:49,359 --> 00:18:52,800 Speaker 1: also it's great when there are larger companies who could 316 00:18:52,800 --> 00:18:56,560 Speaker 1: potentially acquire companies we invest in. Healthcare is always an 317 00:18:56,560 --> 00:18:59,640 Speaker 1: active m and a market UM. Even during the recession 318 00:18:59,640 --> 00:19:02,440 Speaker 1: tenure years ago, the most active sector tended to be 319 00:19:02,480 --> 00:19:04,879 Speaker 1: you know, aside from financial services, the most active sector 320 00:19:04,960 --> 00:19:09,280 Speaker 1: tended to be healthcare. I'm curious about Amazon. They seem 321 00:19:09,320 --> 00:19:12,160 Speaker 1: to have dampened some of the potential threat of them 322 00:19:12,200 --> 00:19:15,119 Speaker 1: moving into the healthcare industry from your discussions with some 323 00:19:15,200 --> 00:19:18,239 Speaker 1: of these suppliers and smaller companies that you invest in. 324 00:19:18,760 --> 00:19:21,000 Speaker 1: How real do they think the Amazon threat really is? 325 00:19:21,840 --> 00:19:24,679 Speaker 1: I think I think the threat is real. The timing 326 00:19:24,720 --> 00:19:27,560 Speaker 1: is uncertain. UM. You know, we talked about Walmart and 327 00:19:27,600 --> 00:19:31,560 Speaker 1: I mentioned uh driving volume to their pharmacies for low cost, 328 00:19:31,640 --> 00:19:36,800 Speaker 1: high bargin prescriptions. I think with fairly reasonable effort, Amazon 329 00:19:36,880 --> 00:19:38,959 Speaker 1: could be a big player in that mark UM and 330 00:19:39,000 --> 00:19:42,639 Speaker 1: create just another battleground with with Walmart and and so 331 00:19:42,720 --> 00:19:47,119 Speaker 1: I think Amazon's ability to be a major player and 332 00:19:47,119 --> 00:19:51,760 Speaker 1: and and and really drive volume to them is real 333 00:19:51,840 --> 00:19:54,720 Speaker 1: in many different segments of healthcare. UM, it's really a 334 00:19:54,720 --> 00:19:57,280 Speaker 1: matter of when they think it's important to them. And 335 00:19:57,359 --> 00:20:00,640 Speaker 1: just in one word or one phrase, which companies stand 336 00:20:00,640 --> 00:20:02,639 Speaker 1: to lose the most of Amazon if Amazon gains a 337 00:20:02,640 --> 00:20:07,399 Speaker 1: foothold here, I would say, every PBM pharmacy benefit manager, 338 00:20:07,520 --> 00:20:09,159 Speaker 1: all right, there you go, Scott Lee, thank you so 339 00:20:09,240 --> 00:20:11,560 Speaker 1: much for being with us. Really appreciate your time. Scott 340 00:20:11,640 --> 00:20:15,240 Speaker 1: Lee is principle of c r G, which oversees about 341 00:20:15,240 --> 00:20:33,040 Speaker 1: three billion dollars in New York City. Remember was it 342 00:20:33,240 --> 00:20:36,840 Speaker 1: yesterday when people were worried about the Fang stocks? I 343 00:20:36,840 --> 00:20:39,560 Speaker 1: think it lasted for about two hours. Evidently they're not 344 00:20:39,600 --> 00:20:43,000 Speaker 1: anymore because Facebook did fine and their shares are up 345 00:20:43,119 --> 00:20:46,320 Speaker 1: up more than nine percent. And here to explain why 346 00:20:46,400 --> 00:20:48,639 Speaker 1: everything is rosy and wonderful again, as Shura O v 347 00:20:48,720 --> 00:20:51,800 Speaker 1: D bloombergad Flight technology columnist who's joining us here in 348 00:20:51,920 --> 00:20:54,800 Speaker 1: our eleven three oh studios. So we are going to 349 00:20:54,840 --> 00:20:58,239 Speaker 1: be getting Amazon earnings after the bell, so we can 350 00:20:58,280 --> 00:21:01,399 Speaker 1: hold our breath a little bit. But is is this it? 351 00:21:01,480 --> 00:21:03,679 Speaker 1: I mean, did Facebook basically sound the all clear and 352 00:21:03,720 --> 00:21:06,159 Speaker 1: everyone's like that we were freaking out about regulation and 353 00:21:06,160 --> 00:21:09,440 Speaker 1: it's fine. I think it was a little bit of 354 00:21:09,480 --> 00:21:11,280 Speaker 1: a sigh of relief. I don't think we can say 355 00:21:11,320 --> 00:21:14,160 Speaker 1: that Facebook is sort of in the clear and everything 356 00:21:14,200 --> 00:21:17,359 Speaker 1: will be golden for the rest of Facebook's history. Look, 357 00:21:17,680 --> 00:21:20,920 Speaker 1: the fact remains that Facebook continues to be a revenue 358 00:21:21,000 --> 00:21:25,720 Speaker 1: generating machine. I was certainly surprised and impressed that revenue 359 00:21:25,920 --> 00:21:29,520 Speaker 1: the revenue growth rate accelerated in the first quarter, which 360 00:21:29,560 --> 00:21:32,760 Speaker 1: is pretty impressive for a company that already has forty 361 00:21:32,800 --> 00:21:36,840 Speaker 1: billion plus an annual sales. So that is certainly something 362 00:21:36,920 --> 00:21:39,679 Speaker 1: to be impressed by if you're a Facebook stockholder. On 363 00:21:39,720 --> 00:21:42,199 Speaker 1: the other hand, you know, there are some niggling points 364 00:21:42,200 --> 00:21:45,800 Speaker 1: of worry that all of these data privacy scandals and 365 00:21:45,840 --> 00:21:48,240 Speaker 1: misinformation scandals and Facebook they're not going to have an 366 00:21:48,280 --> 00:21:51,119 Speaker 1: impact on a business like Facebook right away, but they 367 00:21:51,200 --> 00:21:54,720 Speaker 1: might slowly over time. So the two things that kind 368 00:21:54,720 --> 00:21:58,880 Speaker 1: of bothered me was, first, Facebook posted its slowest ever 369 00:21:59,280 --> 00:22:02,080 Speaker 1: rate of increase and daily users in the first quarter 370 00:22:02,760 --> 00:22:06,000 Speaker 1: UM and that's something that's slowed down really noticeably over 371 00:22:06,040 --> 00:22:08,520 Speaker 1: the last six months to a year, so that's worth 372 00:22:08,680 --> 00:22:11,280 Speaker 1: worth watching. And the other thing was Facebook used to 373 00:22:11,320 --> 00:22:15,359 Speaker 1: give UM an average number of minutes that its users 374 00:22:15,400 --> 00:22:19,439 Speaker 1: spend on Facebook and Facebook owned properties every day, and 375 00:22:19,480 --> 00:22:22,240 Speaker 1: the company doesn't give that number anymore, which I think 376 00:22:22,359 --> 00:22:25,360 Speaker 1: is telling it's obviously not going up or not going 377 00:22:25,400 --> 00:22:28,680 Speaker 1: up very much. Should we shift to Amazon dot Com 378 00:22:28,720 --> 00:22:33,040 Speaker 1: because releasing their results after the close of trading today, 379 00:22:33,240 --> 00:22:36,040 Speaker 1: a hundred million prime customers. That's a new piece of 380 00:22:36,080 --> 00:22:39,800 Speaker 1: information for the quarter, right, Yeah, that's right. And what 381 00:22:39,960 --> 00:22:41,720 Speaker 1: is going to be the thing people look at Amazon 382 00:22:41,800 --> 00:22:43,960 Speaker 1: Web services. Are they going to announce where they're going 383 00:22:44,000 --> 00:22:45,600 Speaker 1: to be spending more money? Are we going to have 384 00:22:45,640 --> 00:22:50,400 Speaker 1: a new mobile Alexa in the home? Maybe? Um? Look, 385 00:22:50,640 --> 00:22:54,760 Speaker 1: the story for Amazon is always the same, which is 386 00:22:55,560 --> 00:22:59,639 Speaker 1: the company sells a lot of stuff every quarter, and 387 00:22:59,680 --> 00:23:02,240 Speaker 1: they will, I suspect, continue to sell a lot of 388 00:23:02,280 --> 00:23:05,040 Speaker 1: stuff in the first quarter that ended in March. And 389 00:23:05,359 --> 00:23:08,119 Speaker 1: the question mark is always about how much is Amazon 390 00:23:08,240 --> 00:23:12,320 Speaker 1: spending on new and existing business initiatives and how much 391 00:23:12,320 --> 00:23:16,200 Speaker 1: do investors care or not care about that spending. So 392 00:23:16,359 --> 00:23:19,800 Speaker 1: you know, Amazon keeps plowing ahead that they keep telling people, 393 00:23:20,119 --> 00:23:21,880 Speaker 1: you know, we're spending a lot of money on things 394 00:23:21,920 --> 00:23:26,119 Speaker 1: like package warehouses and on Alexa technology and on prime 395 00:23:26,240 --> 00:23:29,959 Speaker 1: video programming and things like that. And sometimes investors notice, 396 00:23:30,600 --> 00:23:33,520 Speaker 1: um and care about that level of spending, and sometimes 397 00:23:33,520 --> 00:23:36,400 Speaker 1: they don't. And it's a little bit hard to predict, um, 398 00:23:36,480 --> 00:23:38,760 Speaker 1: which one it will be this time around? What's the 399 00:23:38,760 --> 00:23:41,680 Speaker 1: track record with the Amazon sort of laying out their 400 00:23:41,840 --> 00:23:44,439 Speaker 1: future plans, because I know there's so many questions about 401 00:23:44,680 --> 00:23:47,800 Speaker 1: here shrugging and rolling your eyes and they um at Amazon, 402 00:23:48,440 --> 00:23:51,080 Speaker 1: whether they're gonna get to healthcare or what they're going 403 00:23:51,119 --> 00:23:53,920 Speaker 1: to do with the Whole Foods kind of uh empire 404 00:23:54,000 --> 00:23:56,399 Speaker 1: that they've acquired. What are you expecting this time? So 405 00:23:56,480 --> 00:23:59,359 Speaker 1: Amazon says almost nothing about its future plans. I mean, 406 00:23:59,359 --> 00:24:04,600 Speaker 1: it's really know common well, people care, but there's nothing. 407 00:24:04,680 --> 00:24:06,480 Speaker 1: I don't think there's anything anyone can do about it. 408 00:24:06,520 --> 00:24:11,359 Speaker 1: That they're comically secretive about future projects, which is not 409 00:24:11,359 --> 00:24:15,240 Speaker 1: not unusual. I would think, Um, they have been talking 410 00:24:15,280 --> 00:24:19,119 Speaker 1: a little bit more about Whole Foods recently, and you 411 00:24:19,119 --> 00:24:22,280 Speaker 1: know there's clearly this this vision that they hint at 412 00:24:22,480 --> 00:24:26,479 Speaker 1: about trying to stitch together Amazon's various kind of fresh 413 00:24:26,520 --> 00:24:30,480 Speaker 1: food and and packaged food businesses. So right now Amazon 414 00:24:30,520 --> 00:24:34,000 Speaker 1: has this kind of jumble of food projects. So they 415 00:24:34,000 --> 00:24:36,840 Speaker 1: own Whole Foods. They have Amazon Fresh, which is a 416 00:24:36,880 --> 00:24:40,720 Speaker 1: ten year old plus gross online grocery delivery service. They 417 00:24:40,720 --> 00:24:43,320 Speaker 1: have Pantry, which is you know, you buy a bunch 418 00:24:43,320 --> 00:24:46,840 Speaker 1: of nonperishable goods on Amazon and get chipped in a 419 00:24:46,880 --> 00:24:50,439 Speaker 1: box for subscription fee. Um. They have Prime now you 420 00:24:50,480 --> 00:24:54,160 Speaker 1: get deliveries in a couple of hours or an hour 421 00:24:54,240 --> 00:24:56,760 Speaker 1: or less. Again that's often food stuff. They have a 422 00:24:56,760 --> 00:25:00,520 Speaker 1: restaurant delivery service, and they've hinted at least a little bit, 423 00:25:00,560 --> 00:25:03,360 Speaker 1: and ways to kind of stitch that together and rationalize 424 00:25:03,600 --> 00:25:07,200 Speaker 1: this jumble of food related projects. Um, but I don't 425 00:25:07,200 --> 00:25:09,280 Speaker 1: know that we've sort of seen all of that laid 426 00:25:09,280 --> 00:25:14,680 Speaker 1: out directly. Let's do some Apple, right. You're concerned that 427 00:25:14,720 --> 00:25:18,159 Speaker 1: the trends for Apple are not as favorable as they 428 00:25:18,240 --> 00:25:20,280 Speaker 1: used to be. Yeah, well, we're now in this So 429 00:25:20,320 --> 00:25:24,960 Speaker 1: Apple reports earnings on Tuesday, that's right next week, and 430 00:25:25,320 --> 00:25:27,800 Speaker 1: we're now in this period that seems to happen in 431 00:25:28,320 --> 00:25:31,359 Speaker 1: the week or two ahead of every Apple earnings report 432 00:25:31,400 --> 00:25:35,040 Speaker 1: in the last year, which is investors have gotten panicky 433 00:25:35,280 --> 00:25:38,800 Speaker 1: about the trajectory, the potential trajectory of iPhone sales. So 434 00:25:38,840 --> 00:25:42,720 Speaker 1: we've seen the last few days companies that either manufacture 435 00:25:42,760 --> 00:25:46,200 Speaker 1: iPhones or supply components for iPhones, a lot of them 436 00:25:46,200 --> 00:25:49,600 Speaker 1: have reported a little bit of weakness in sales or 437 00:25:49,760 --> 00:25:55,000 Speaker 1: forecasted sales. So Samsung, for example, said yesterday that the 438 00:25:55,080 --> 00:25:58,960 Speaker 1: particular kind of screens that it makes that are used 439 00:25:59,080 --> 00:26:03,399 Speaker 1: in the i Phone ten models, that it's it's seeing 440 00:26:03,440 --> 00:26:06,960 Speaker 1: some softness in demand. That's an organic light emitting diabyst 441 00:26:07,200 --> 00:26:10,800 Speaker 1: O lead for the screen and nerds out there. And 442 00:26:10,880 --> 00:26:13,480 Speaker 1: so there was another data point for people who are 443 00:26:13,520 --> 00:26:17,119 Speaker 1: a little bit anxious about what iPhone sales are going 444 00:26:17,160 --> 00:26:19,359 Speaker 1: to be, maybe not for the March quarter that Apple's 445 00:26:19,400 --> 00:26:22,239 Speaker 1: reporting on Tuesday, but maybe for the June quarter. So 446 00:26:22,280 --> 00:26:24,920 Speaker 1: you're starting to see Apple share price wobbled a little 447 00:26:24,920 --> 00:26:28,280 Speaker 1: bit the last few days. And then also the estimates 448 00:26:28,320 --> 00:26:31,640 Speaker 1: from analysts have been paired back, and it's just more 449 00:26:31,680 --> 00:26:35,400 Speaker 1: of this kind of anxiety about you know, look what's 450 00:26:35,400 --> 00:26:38,280 Speaker 1: happening to smartphone sales across the industry. They have slowed 451 00:26:38,320 --> 00:26:40,960 Speaker 1: to a crawl. So I have any analysts who cover 452 00:26:41,080 --> 00:26:45,280 Speaker 1: Apple actually recommended to sell That's interesting. I haven't looked 453 00:26:45,320 --> 00:26:48,439 Speaker 1: in a little while. There. It's not. They're built up 454 00:26:48,480 --> 00:26:52,120 Speaker 1: and happy to go. Yeah, although they're getting less bullish 455 00:26:52,160 --> 00:26:54,320 Speaker 1: over time. But I don't know that too many people 456 00:26:54,359 --> 00:26:56,040 Speaker 1: are out on a limb saying So I guess that 457 00:26:56,119 --> 00:27:00,680 Speaker 1: my question, no cells. You've got sixteen holes into eight byes, 458 00:27:00,760 --> 00:27:02,560 Speaker 1: all right, So I mean a hole is sort of 459 00:27:02,600 --> 00:27:05,679 Speaker 1: a cell by Wall Street great inflation. Well, I mean 460 00:27:05,720 --> 00:27:07,639 Speaker 1: I guess the reason why I ask is that you know, 461 00:27:07,720 --> 00:27:12,000 Speaker 1: at what point does a slowdown and smartphone sales translate 462 00:27:12,119 --> 00:27:15,320 Speaker 1: into a cell signal? And at what point is that 463 00:27:15,480 --> 00:27:17,680 Speaker 1: just this might not be as much of a behemoth 464 00:27:17,680 --> 00:27:19,760 Speaker 1: as we once thought. I think that's a fair question. 465 00:27:19,760 --> 00:27:22,960 Speaker 1: I mean, look, the smart thing that Apple has done 466 00:27:23,080 --> 00:27:25,080 Speaker 1: is they've done a lot of things to offset this 467 00:27:25,160 --> 00:27:28,000 Speaker 1: trend of slowing smartphone sales. They're charging higher prices for 468 00:27:28,040 --> 00:27:32,159 Speaker 1: a lot of their phones. They're focusing on new kinds 469 00:27:32,240 --> 00:27:35,320 Speaker 1: of either add on hardware like air pods, like the 470 00:27:35,359 --> 00:27:40,760 Speaker 1: HomePod speakers, or their internet services business, whether it's Apple 471 00:27:40,840 --> 00:27:43,960 Speaker 1: Music or other things, and those things can help offset 472 00:27:44,160 --> 00:27:49,120 Speaker 1: revenue if unit sales of iPhones are kind of flatlining. 473 00:27:49,200 --> 00:27:52,600 Speaker 1: So you know, good for Apple for sustaining growth that way. 474 00:27:52,880 --> 00:27:58,119 Speaker 1: Apple Watch, Um, Apple Watch. It's weird that a business 475 00:27:58,119 --> 00:28:01,520 Speaker 1: like Apple watches almost a footnote, right, It's looking definitely 476 00:28:01,520 --> 00:28:04,720 Speaker 1: an important business. We don't know exactly how many Apple 477 00:28:04,760 --> 00:28:08,440 Speaker 1: watches are sold. Apple doesn't disclose it, but it's probably 478 00:28:08,560 --> 00:28:12,920 Speaker 1: a five or six billion a year annual business, which 479 00:28:13,000 --> 00:28:16,960 Speaker 1: is nice chunk of change for most companies, but again, 480 00:28:17,000 --> 00:28:18,679 Speaker 1: kind of a drop in the bucket for a company 481 00:28:18,680 --> 00:28:22,000 Speaker 1: of Apple size. Thank you very much. Shara Overday technology 482 00:28:22,000 --> 00:28:26,160 Speaker 1: columnist Bloomberg a gadfly. Follow all her comments and her 483 00:28:26,800 --> 00:28:30,200 Speaker 1: thoughts on Twitter at Shira over Day. Coming up, We've 484 00:28:30,200 --> 00:28:33,479 Speaker 1: got a Bloomberg Politics, Policy, Power and Law with Amy Morris. 485 00:28:33,520 --> 00:28:35,320 Speaker 1: Amy Morris, tell us what have we got to look 486 00:28:35,359 --> 00:28:38,120 Speaker 1: forward to? The former Labor Secretary nominee has written a 487 00:28:38,160 --> 00:28:41,080 Speaker 1: new book. We'll be talking with Andy put. We're gonna 488 00:28:41,080 --> 00:28:45,040 Speaker 1: be listening. That's coming up right here on Bloomberg Politics, Policy, 489 00:28:45,080 --> 00:28:48,000 Speaker 1: Power and Law. Thanks for listening. I'm Pim Fox, my 490 00:28:48,160 --> 00:28:54,440 Speaker 1: colleague and co host Lisa Abramowitz. Thanks for listening to 491 00:28:54,480 --> 00:28:57,360 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 492 00:28:57,400 --> 00:29:00,880 Speaker 1: listen to interviews at Apple Podcasts, sound Cloud, or whatever 493 00:29:00,920 --> 00:29:04,440 Speaker 1: podcast platform you prefer. I'm Pim Fox. I'm on Twitter 494 00:29:04,720 --> 00:29:08,240 Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits 495 00:29:08,280 --> 00:29:11,320 Speaker 1: one Before the podcast. You can always catch us worldwide 496 00:29:11,320 --> 00:29:12,280 Speaker 1: on Bluebirg Radio