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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: can also watch the show live on YouTube. Visit the

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Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 2: mornings from seven to ten am Eastern from our global

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Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app r in

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Speaker 2: Timor is definitive at Fidelity with our question look on LinkedIn.

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Speaker 2: It's the best place to see this. The absolute smartest

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Speaker 2: combination of economics and finance in the charts, technical analysis,

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Speaker 2: and it's so good. I'm going to put this up

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Speaker 2: for YouTube. I took a screen grab of my most

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Speaker 2: important chart of the second quarter. It's of course from

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Speaker 2: mister timmor of Fidelity. E'ine. It's real simple use of

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Speaker 2: cash earnings to twenty five. I got a linear growth

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Speaker 2: and dividends seventy five dollars and I got ninety dollars

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Speaker 2: in share buyback corporations are generating seventy three percent payout

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Speaker 2: on those earnings of two hundred and twenty five dollars.

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Speaker 2: Does that continue? Yeah?

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Speaker 3: And you know, and this is the reason why the

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Speaker 3: US trades at a premium to most of the rest

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Speaker 3: of the world, because the share buyback culture is somewhat unique.

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Speaker 3: I mean, it happens in other places. But the payout

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Speaker 3: of seventy three percent, which is actually below where it

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Speaker 3: has been over the past decade or so, was closer

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Speaker 3: to ninety percent. But if you think about it from

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Speaker 3: a DCF you know, discount of cashlow model perspective. If

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Speaker 3: you're a shareholder and you're getting more of the company's

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Speaker 3: earnings return to you in one way or the other,

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Speaker 3: that commands a higher premium, right, And so that's why

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Speaker 3: the US has traded, you know, more more expensive, I guess,

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Speaker 3: but it's well earned. And if the big free cash

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Speaker 3: flow generators continue to generate that cash flow, then I

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Speaker 3: suspect it will continue.

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Speaker 2: So there's this dovetail with Michael Mobison's work, which what's

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Speaker 2: more important now is the annual payout along the continuum

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Speaker 2: rather than the terminal rate. Insanity we were lectured on

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Speaker 2: in school. Is the actual yearly payout that you describe

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Speaker 2: more important than some phony calculation of terminal value?

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Speaker 3: Well, you know, you're getting into the ways of the

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Speaker 3: DCF model, which is both so elegant and frustrating at

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Speaker 3: the same time, because there are there are so many variables, right,

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Speaker 3: you have earnings growth, you have to payout, you have

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Speaker 3: the risk free rate, and you have the equity risk premium.

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Speaker 3: And it's elegant because you can explain the market through

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Speaker 3: every variable, including sentiment, which I think the risk premium

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Speaker 3: is a reflection of. But you also can never solve

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Speaker 3: for four variables at once. That makes it frustrating. So

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Speaker 3: you have to isolate. So the terminal rate versus the

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Speaker 3: next five years growth, I just assume that it's going

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Speaker 3: to be six percent. The terminal rate is the ten

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Speaker 3: year treasury yield, and then I saw for the risk

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Speaker 3: premium because you have to isolate something.

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Speaker 2: Paul I was in Boston near the state House, a

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Speaker 2: lovely or in seventeenth century state house whatever, the red

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Speaker 2: brick building there, and some guy next to me is

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Speaker 2: going on on DCF. Peter Lynch through a snowball.

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Speaker 4: At him, So you're in I mean, I know a

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Speaker 4: lot of companies when they come through Boston, they come

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Speaker 4: into the Fidelity offices to meet with you guys. When

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Speaker 4: you're talking about use of cash, how do you and

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Speaker 4: I'm sure a lot of these companies say, hey, what

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Speaker 4: would you like to see dividends or buybacks or what

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Speaker 4: kind of mix? How do you answer that question for

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Speaker 4: these companies?

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Speaker 2: Well, that's a good question.

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Speaker 3: I guess it depends. I mean, dividends are sort of,

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Speaker 3: you know, like a sacred commitment, right, so if you're

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Speaker 3: going to pay a dividend, you better not take it away.

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Speaker 3: And buybacks are more variable. Right, If you have the

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Speaker 3: cash flow buy back the share, then the question is

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Speaker 3: do you buy back shares or do you spend it

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Speaker 3: on capex? And actually, it's interesting that the capex as

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Speaker 3: a percent of revenues has been increasing and maybe that's

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Speaker 3: part of the whole AI boom. But that's obviously good

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Speaker 3: to see. But it comes down to, you know, the

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Speaker 3: productive views of your cash. And if you're generating so

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Speaker 3: much cash that even after satisfying capex, it's just sitting

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Speaker 3: on your barance sheet, well then you might as well

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Speaker 3: return it to shareholders, because that is part of the

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Speaker 3: of math.

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Speaker 4: How about for our good friends in Cooper Tino, Tim Cook, Apple,

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Speaker 4: you know, they pay just a token dividend. We've seen

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Speaker 4: Meta initiate a token dividend. What do you say to

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Speaker 4: the technology companies when they come through your offices about, okay,

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Speaker 4: thank you for the jillion dollar buy back, But would

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Speaker 4: a three percent dividend yield kill you? I mean, do

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Speaker 4: you have those conversations with the big tech companies.

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Speaker 3: I think for the growthier companies, I think generally they

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Speaker 3: have paid less individends than for instance, you know a

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Speaker 3: bank or you know a consumer stable. And I think

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Speaker 3: that's just part of the of the structure of different sectors.

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Speaker 3: And so as long as it comes back, you know, again,

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Speaker 3: if the cash is used for productive purpose CAPEX, whatever

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Speaker 3: your R and D, then that's fine. If it's not used,

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Speaker 3: whether it comes back as a dividend or as a buyback,

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Speaker 3: you know, I guess ultimately it doesn't matter too much.

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Speaker 3: Probably a dividend would command a higher pre because it's

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Speaker 3: less likely to go away, But for growth companies it's

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Speaker 3: I don't think it's generally expected.

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Speaker 2: You're in a technical question, folks, inside baseball. Here, come

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Speaker 2: with us. It's a global Wall Street question. You're in timmer.

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Speaker 2: The return on invested capital of Nvidia is fifty four percent.

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Speaker 2: The EVA spread, we're not going to go on the

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Speaker 2: details now, is a mind blowing forty two percent. If

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Speaker 2: they migrate to trend, can their stock hold up that?

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Speaker 3: That is a good question. You know, you get into

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Speaker 3: that super growthy space and you start looking at not

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Speaker 3: just the second derivatives, but the third derivatives, you know,

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Speaker 3: and so that's always a tough question. It depends on,

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Speaker 3: you know, how crowded the space is, what the valuations are.

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Speaker 3: One thing I'll tell you is that, you know, I've

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Speaker 3: looked at this concept of the nifty to fifty, and

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Speaker 3: of course we're down to the MAC seven, but generally

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Speaker 3: speaking the nifty fifty I study that very carefully, going

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Speaker 3: back to the early seventies, which was the original nifty

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Speaker 3: to fifty, and when you see periods of these big

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Speaker 3: growth companies really dominating, as we did in the early

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Speaker 3: seventies and the late nineties, at the end of the day,

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Speaker 3: those companies traded at a x multiple to the rest

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Speaker 3: of the market, and today the top fifty are trading

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Speaker 3: only at about a thirty percent multiple, So maybe there's

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Speaker 3: still some room to go because most of their performance

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Speaker 3: has been justified by earnings.

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Speaker 2: Just just great, you're in Timmor, Thank you so much

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Speaker 2: to Fidelity. We're going to take a measured conversation right

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Speaker 2: now with mister Ives. Dan Ives is Opiniata. He's senior

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Speaker 2: equity pinata at Wedbush Securities. Everybody loves to hate him.

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Speaker 2: And my problem is if I have a look at

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Speaker 2: you know, if I don't look at a daily charter

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Speaker 2: in every fifteen minutes chart like Scott looks at over

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Speaker 2: at the dusk Star, Dan Eyes, I'm looking at a

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Speaker 2: monthly chart of Apple and it is beyond elegant, bouncing

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Speaker 2: off my long term moving average at one sixty six.

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Speaker 2: It's up sixteen percent in the last x number of

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Speaker 2: days and weeks. First of all, Dan Eyes, why is

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Speaker 2: Apple up sixteen percent?

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Speaker 5: Because investors are anticipating not just what's gonna happen in

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Speaker 5: WWDC where they're gonna release cook and cup Patina, the

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Speaker 5: AI strategy. But if you look at numbers coming out

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Speaker 5: of you know, our Asia checks and others, you're seeing

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Speaker 5: a stabilization of iPhone demand and I think a renaissance

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Speaker 5: of growth right now on the horizon for Apple.

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Speaker 2: Okay, I don't want to do a fanboy thing here

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Speaker 2: at Dan Eyes, but I'm absolutely blown away by the

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Speaker 2: resolution from the M four chip over to the fancy iPad.

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Speaker 2: Are they going to cannibalize other Apple products or are

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Speaker 2: they going to stand on their own?

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Speaker 5: I think it stands on its own. Look, I mean,

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Speaker 5: you've come about us a lot, the chips that they

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Speaker 5: beat in till it's their own game, and I think

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Speaker 5: now you'll have a legit refresh on iPads. But it

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Speaker 5: shows the power of those chips. And the important thing

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Speaker 5: is that those chips too, they're going to be able

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Speaker 5: to ultimately navigate and deploy AI features within the broader

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Speaker 5: Coupertino ecosystem, and that's why most are going to access

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Speaker 5: AI in the future through an Apple device. Hey, Dan, you.

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Speaker 4: Know, as Tom mentioned this, Apple's up sixteen percent over

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Speaker 4: the last period of time here several days and weeks.

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Speaker 4: What's the call on China these days? How's the market

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Speaker 4: viewing the China? I'm going to call it a risk

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Speaker 4: for Apple. How's the market digesting and discounting it?

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Speaker 5: Yeah, Paul I think it went from a huge risk

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Speaker 5: to what we've seen, especially at our checks in Taiwan

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Speaker 5: this week, steaveisition to an uptick. So I think we're

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Speaker 5: starting that market's starting to sniff out not just a steaveisition,

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Speaker 5: but an uptick in China. And at that point, I mean,

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Speaker 5: that's that's cook drinking a mimosa, because then you now

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Speaker 5: start to see an upgrade cycle take place with the

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Speaker 5: biggest event we've seen in a decade with AI Common Apple.

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Speaker 4: All right, so June this developer conference. What should the

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Speaker 4: market expect here? What do you think is going to

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Speaker 4: happen there?

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Speaker 5: So I think look summer, fearing it will be a

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Speaker 5: hype event, I strongly disagree. I think this is the

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Speaker 5: start of essential Whi's going to be AI To developers,

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Speaker 5: you're gonna it's really the start of a new AI

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Speaker 5: app store from a services perspective. And I think the

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Speaker 5: features that they're gonna build in right, not just the

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Speaker 5: room but open AI that they're ultimately introduced, I think

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Speaker 5: that's a partnership, right, that's gonna be exclusive and important.

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Speaker 2: One more Apple question. I really want to go financial,

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Speaker 2: but I'm going to stay on the fanboy stuff. Dan

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Speaker 2: I what am I actually gonna do with AI with Apple?

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Speaker 2: If I've got the iPad and the pencil pro and

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Speaker 2: I miss her artsy FARTSI what's AI going to do

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Speaker 2: for me? Where I look like I'm not making Popeye

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Speaker 2: as a comic strip.

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Speaker 5: Well, first off, I think the big thing, especially with

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Speaker 5: open AI and some of these LM features, Apple is

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Speaker 5: really trying to get you to almost bypass things like

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Speaker 5: Google and some of the traditional search. But I think

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Speaker 5: the biggest thing is just the features that you're gonna

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Speaker 5: see come out on healthcare, on consumer apps, on generative AI.

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Speaker 5: It's all gonna be apps. Developers are going to be

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Speaker 5: building AI, generative AI driven apps on the iOS foundation,

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Speaker 5: and that's and that's the key in the future. It's

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Speaker 5: all gonna be mostly through Apple device. But that's what

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Speaker 5: Microsoft is fighting this week. They want to be He

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Speaker 5: said that from a consumer perspective.

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Speaker 2: And now the obligatory in video questions.

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Speaker 4: Paul Sweeney, So, Dan, I mean Tom Kean's all about

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Speaker 4: AI here? What's he gonna what should he be looking

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Speaker 4: for tomorrow afternoon? When when in video reports.

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Speaker 5: I think, get get the popcorn ready and get all set.

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Speaker 5: You know your favorite you know, beverage when they were

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Speaker 5: port Because when the Godfather of Ai Jensen and a

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Speaker 5: video report, I think it's gonna be another jaw dropper

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Speaker 5: in terms of the demand that we're seeing. It's not

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Speaker 5: slowing down, and I think we're just starting to see

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Speaker 5: this acceleration. And that's important for the second, third, fourth

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Speaker 5: derivatives within tech, which is why we believe this tech

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Speaker 5: bull market has significant legs from here. But it all

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Speaker 5: starts with odd Father of Ai Jensen. Tomorrow, I'm expecting

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Speaker 5: another just drop the micro yeah.

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Speaker 2: I mean he's going on existential on it. So the

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Speaker 2: third and fourth derivative as well, Where does Apple fit

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Speaker 2: into the derivatives? I mean they're not first or second derivative,

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Speaker 2: are they? They're a follow on from all these other people, right.

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Speaker 5: I think they're second, third driven because when we go

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Speaker 5: my nvideo Microsoft Google service, now that's enterprise, but on

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Speaker 5: the consumer side, the chips and the actual use cases,

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Speaker 5: how are they coming to the consumer? It's meta Google,

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Speaker 5: but most importantly it's Apple. And that's why now this

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Speaker 5: is ready for prime time starting next month at WWC.

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Speaker 5: That's where the unveil starts and eventually the iPhone sixteen,

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Speaker 5: I will have their own AI features built in.

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Speaker 6: Hey, Dan, who goes to this?

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Speaker 4: I mean is can top king get a ticket to this?

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Speaker 5: The King could get a t it anywhere. So he's

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Speaker 5: like Gilms have to exclude him. I mean, he's he's

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Speaker 5: one of those exclusive you know, Monaco. But for the

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Speaker 5: average this is really for developers. Yep, it's for industry folks.

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Speaker 5: That's really the focus of WWBC what we'll be at.

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Speaker 2: What are you doing with your two hundred and fifty

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Speaker 2: dollars price target? You're an outlier? But seriously, Dan ives

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Speaker 2: some of the parts are earnings momentum as they come

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Speaker 2: off the mat of sixteen percent? Are you ready to

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Speaker 2: adjust that up so we can make some news this morning.

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Speaker 5: Look to fifty's base case. We I believe AI will

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Speaker 5: add thirty to forty dollars per share to this Apple

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Speaker 5: story over the coming years. And that's why I think

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Speaker 5: four trillion will be what we'll be talking about a year.

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Speaker 2: Go go first, de rivet And what's it do to Microsoft? Oh?

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Speaker 5: I mean, Mike, I think Microsoft that they're in there

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Speaker 5: right now in the in the leader seat. From an

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Speaker 5: enterprise perspective, I mean, if the mount Rush of Ai.

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Speaker 5: It's Gentsen there carving that out. Who's next to It's Nadella.

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Speaker 2: Can you see Mount Rushmore? Jensen Dyan Ives. I mean,

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Speaker 2: it's just it would be too much, Dan Ives, I

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Speaker 2: could just see you on Mount Rushbort, thank you so much.

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Speaker 2: With Webb Bush, you can send your hate mail to

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Speaker 2: mister Is directly, or I get the hate mail too.

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Speaker 2: If you have love notes for Dan and Ives, they

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Speaker 2: go through a Lisa and Tao. Mister Is with Wedbush,

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Speaker 2: he is enthusiastic on America's technology darkening the door of commerce.

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Speaker 2: A number of years ago, an academic from the Upper

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Speaker 2: East Side of the Council on Foreign Relations, Elizabeth Economy,

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Speaker 2: went down to assist the Governor of Rhode Island with

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Speaker 2: Commerce Ford. Elizabeth Economy joins us, right now, she's free

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Speaker 2: from the clutches of our public service. What was the

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Speaker 2: first day like it it Commerce? Did they put a

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Speaker 2: cork in your mouth and just say be nice? What

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Speaker 2: was the first day like?

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Speaker 1: I don't think they knew what to expect.

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Speaker 2: Yeah, exactly.

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Speaker 1: Honestly, there were only about fifty people working there at

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Speaker 1: the time because it was right in the middle of

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Speaker 1: the pandemic, and the only people that were showing up

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Speaker 1: for work were the secretary is kind of immediate, twenty

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Speaker 1: to thirty people on the fifth floor, So it was

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Speaker 1: like a ghost town. But it was a great, great opportunity,

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Speaker 1: and she's just fantastic.

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Speaker 2: And just to remind people Elizabeth Economy years ago out

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Speaker 2: of Michigan where the river runs black. It was just

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Speaker 2: in a profoundly changing book on China's pollution right now,

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Speaker 2: an all series of books along the way. I want

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Speaker 2: to go to your foreign affairs blistering essay and without

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Speaker 2: going into the details within the confines of the length

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Speaker 2: of this interview, what should the US do? Are you

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Speaker 2: allowed to say this now? Are you like in a

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Speaker 2: timeout chare for six months.

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Speaker 1: After leaving no notice? What should we read the restrictions on?

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Speaker 2: How do we respond to your blistering essay of China's plan?

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Speaker 1: I think the point that I was really trying to

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Speaker 1: make in the piece was that the United States has

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Speaker 1: done a really good job of responding in the first

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Speaker 1: couple of years of the administration to the immediate challenge

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Speaker 1: that China poses, But now we really need to expand

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Speaker 1: to the global stage and pay attention to how China,

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Speaker 1: through its Belton Road Initiative, through its Global Civilization Initiative,

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Speaker 1: It's security initiative, It's development initiative, all of these things

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Speaker 1: are designed to transform the international system in ways that

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Speaker 1: are anathetical to the US, and so that necessitates a

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Speaker 1: new strategy, a kind of second tier strategy from the

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Speaker 1: United States, which is much more than simply focusing on

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Speaker 1: our European and our Asian allies, but really expanding our

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Speaker 1: tent to include emerging economies in Latin America and Africa

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Speaker 1: and Southeast Asia and bringing them into an American vision

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Speaker 1: of the world for the twenty first century.

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Speaker 4: I guess I grew up on Global Wall Street, where

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Speaker 4: globalization was the thing that was my career with China,

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Speaker 4: should we try to engage with China? Should that be

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Speaker 4: our first order business to try to engage with China?

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Speaker 4: Or where should we step back and say, this is

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Speaker 4: almost like I don't know the Soviet Union from back

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Speaker 4: in the day. I mean, how should we engage with Chinese?

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Speaker 1: So I think, for you know, thirty thirty five years

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Speaker 1: we had ninety percent engagement, ten percent competition. Right now

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Speaker 1: we're basically at ninety percent competition. And ten percent engagement.

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Speaker 1: I think actually, unfortunately, we've got it about right at

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Speaker 1: this point. I think we need to understand that China

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Speaker 1: is not interested in the kind of engagement that we've

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Speaker 1: you know, pursued for thirty some years. They have their

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Speaker 1: own vision, They want their own norms, their own values,

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Speaker 1: their own interests reflected on the global stage.

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Speaker 2: Your your book The Third Revolution was in my book

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Speaker 2: of the Summer. You know, it seems ages ago pandemic

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Speaker 2: ago as well. In it, you were really controversial about

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Speaker 2: the power that presidency has in China. Has he solidified

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Speaker 2: his power? Is he impregnable now?

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Speaker 1: I don't know whether anyone is impregnable. Certainly he's done

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Speaker 1: an amazing job of bringing institutional power into his own hands.

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Speaker 1: What we don't know is, you know, how much his

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Speaker 1: personal power actually radiates through society. What is the real

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Speaker 1: legitimacy of chi jinping among the Chinese people. We have

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Speaker 1: some polls, for example, that show that urban Chinese would

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Speaker 1: really like to have greater freedom of speech, they'd really like,

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Speaker 1: you know, greater property rights, the right to assemble. I

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Speaker 1: think you can look and see a lot of dissatisfaction

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Speaker 1: in the country if you look beneath the surface. You know,

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Speaker 1: we don't have one hundred and eighty thousand protests on

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Speaker 1: the streets the way we used to because Sheijinping is

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Speaker 1: put in place is incredible repressive apparatus. But that's not

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Speaker 1: to say discontent is not still there the.

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Speaker 2: Heart of the matter. And folks, I attended to the

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Speaker 2: Consulum for Relations where I'm a member of very important

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Speaker 2: conference by Jina Romando. I've got a Paul as you mentioned,

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Speaker 2: a business globalization structure debating China, and I've got a

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Speaker 2: president of the United States word about four swing states,

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Speaker 2: so he's anti China, and the candidate for the Republican Party,

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Speaker 2: I believe is anti China as well. Are we able

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Speaker 2: to have a kojin discussion on China now? Are we

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Speaker 2: literally back to Shang Kai shek in the ballet post

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Speaker 2: World War Two?

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Speaker 1: I think that we're able to have a cojin discussion,

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Speaker 1: But the parameters have shifted so that it's there's a

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Speaker 1: new realization about the real challenge that China presents. I

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Speaker 1: think we don't want to sort of go down the

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Speaker 1: rabbit hole where everything is about competition. We need to

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Speaker 1: do what the Biden administration started out to do, which

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Speaker 1: is to look for areas of common ground and common purpose,

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Speaker 1: to try to find communication channels on the mil to

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Speaker 1: military to military cooperation. We don't want this relationship to

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Speaker 1: devolve into kinetic conflict. But it's also true that we

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Speaker 1: recognize we can't continue that globalization without any protection for

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Speaker 1: the American economy. You can argue whether we're too far

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Speaker 1: swinging too far in one way. You can argue whether

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Speaker 1: or not we actually have been very clear about what

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Speaker 1: we're doing in terms of our economic strategy on the

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Speaker 1: grounds of national security or economic security or economic competitiveness.

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Speaker 6: I think we can do a better job there.

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Speaker 2: I'm running on a time. Can you make this a

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Speaker 2: weekly appointment? You know, Elizabeth, Economy. We've deployed four military

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Speaker 2: bases in a new military effort from the northern Philippines

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Speaker 2: down to somewhere in the vicinity of Indonesia. We've got

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Speaker 2: to build out in Australia, et cetera, et cetera, et cetera.

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Speaker 2: Is the Pentagon going to be our state department to

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Speaker 2: China in the next five years. No.

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Speaker 1: I think the Commerce Department has been our state department

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Speaker 1: and good thing too, because its secretary is really the star. No,

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Speaker 1: I mean, I think our economic strategy has.

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Speaker 2: Rich she's still working for the government or not. Did

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Speaker 2: I look at the memo? No?

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Speaker 1: I think again, we've you know, enacted so many different

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Speaker 1: kinds of new economic policies that have a pretty significant

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Speaker 1: impact on China. I think that has been our first

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Speaker 1: foot forward. But it's also true that if looking at

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Speaker 1: issues like Taiwan or as you're suggesting, the Philippines in

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Speaker 1: the South China, see the military has to.

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Speaker 2: Be How long is Ted Burns over there, a good

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Speaker 2: friend of the show, Nicholas Burns out of Wellesley and

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Speaker 2: all of his public service as well. Is our State

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Speaker 2: department alone in Beijing?

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Speaker 1: No, No, I think he's done an amazing job of engaging,

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Speaker 1: frankly with our other ambassadors from our allies and partners,

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Speaker 1: you know. So he's he's got a lot of support,

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Speaker 1: a lot of friends. I think in the earlier days

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Speaker 1: of the pandemic it was extremely difficult, but he's been

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Speaker 1: an amazing ambassador.

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Speaker 2: At least it wants to know. I mean, do you

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Speaker 2: really think that high school kids now should pick up

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Speaker 2: Mandarin is a third language?

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Speaker 6: Absolutely?

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Speaker 1: Absolutely, absolutely, we need the next generation of China scholars

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Speaker 1: and China policymakers. We need people to be informed about

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Speaker 1: this country. You know, it's one point three some billion

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Speaker 1: people of second you know, largest economy, largest military. Why

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Speaker 1: do we not want to be expert.

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Speaker 2: In everybody on's a new book? What are you doing here?

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Speaker 2: You are you slacking off? Six hours today? Right?

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Speaker 1: Polarized polity, looking at polarization in China, arguing that it's

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Speaker 1: easily as China, easily as polarized as the United States,

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Speaker 1: and implications for China's future can Alho.

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Speaker 2: What's your name is? Scarlett Johansson? Is that? How do

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Speaker 2: you pronounce her name?

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Speaker 5: Joe Hanson?

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Speaker 2: Joe Hansson?

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Speaker 1: Did you starring as?

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Speaker 2: She?

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Speaker 6: Didn't p anytime soon?

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Speaker 2: When does this? When does his tone come out?

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Speaker 1: Let's let's call it two and a half years, two and.

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Speaker 2: A half years great Elizabeth Economy, do not be a

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Speaker 2: stranger her public service to the nation at commerce now

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Speaker 2: ascons to the consul and foreign relations definitive China. Look

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Speaker 2: for writings. I can't say enough about her first effort

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Speaker 2: for Foreign Affairs magazine. Look for that. It's a blistering essay,

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Speaker 2: a to do list for America with China. You did

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Speaker 2: to look at the front pages around the world a

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Speaker 2: foundation to what we do. You're including our newspaper cent

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Speaker 2: I glanced at at least this is a great lineup

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Speaker 2: you got today. Where do you start?

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Speaker 7: Yeah, we're starting. This is an interesting article in the terminal.

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Speaker 7: You can check it out for yourself. Florida being hit

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Speaker 7: by this surge in commercial property insurance bills and because

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Speaker 7: of that it's causing a major issue there. I'll get

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Speaker 7: to that in a second. I want to break down

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Speaker 7: the numbers though. In the five year period ending twenty

433
00:24:22,840 --> 00:24:26,120
Speaker 7: twenty three, costs surged one hundred and twenty five percent.

434
00:24:26,440 --> 00:24:30,240
Speaker 7: Last year, premiums so twenty seven percent for the second

435
00:24:30,320 --> 00:24:32,560
Speaker 7: year in a row. So because of that, more nursing

436
00:24:32,600 --> 00:24:35,080
Speaker 7: homes they're starting to close down each year. The cost

437
00:24:35,119 --> 00:24:38,359
Speaker 7: of senior care is starting to rise. Two things are happening.

438
00:24:38,400 --> 00:24:41,640
Speaker 7: So you have climate change, you have more you know, hurricanes,

439
00:24:41,680 --> 00:24:44,160
Speaker 7: stronger hurricanes, and then you have the challenge of caring

440
00:24:44,240 --> 00:24:47,720
Speaker 7: for an elderly growing population. So you have those things

441
00:24:47,720 --> 00:24:50,160
Speaker 7: starting to collide together. And now because of that, there's

442
00:24:50,200 --> 00:24:53,639
Speaker 7: this issue where are the elderly going to live? Because

443
00:24:53,640 --> 00:24:55,640
Speaker 7: they all like you know, to go down to Florida

444
00:24:55,680 --> 00:24:57,879
Speaker 7: for the warmer weather, lower tax Yep, that.

445
00:24:57,880 --> 00:25:00,320
Speaker 2: Was years ago. Do they want to go down there now?

446
00:25:00,400 --> 00:25:02,800
Speaker 2: I don't know, because you know, what I've seen is

447
00:25:02,800 --> 00:25:04,520
Speaker 2: a couple of good articles. I'll give the Wall Street

448
00:25:04,600 --> 00:25:08,199
Speaker 2: Journal a shout out on this and the exodus of

449
00:25:08,359 --> 00:25:12,040
Speaker 2: middle class people from Florida. They're going up to Georgia,

450
00:25:12,080 --> 00:25:14,520
Speaker 2: North Carolina, you know the low country that is.

451
00:25:15,160 --> 00:25:18,680
Speaker 4: Yeah, with Florida being threatened by more powerful hurricanes, commercial

452
00:25:18,680 --> 00:25:22,280
Speaker 4: property insurance costs last year surged at nearly five times

453
00:25:22,280 --> 00:25:24,560
Speaker 4: at the national pace. That's that's a problem.

454
00:25:24,680 --> 00:25:28,040
Speaker 7: It's it's a and if these more theies retirements and

455
00:25:28,160 --> 00:25:29,400
Speaker 7: also closing down, I mean.

456
00:25:29,359 --> 00:25:32,119
Speaker 4: Florida, they can't take all these people that have been

457
00:25:32,119 --> 00:25:34,399
Speaker 4: coming down. I would think they'd have an issues with

458
00:25:34,520 --> 00:25:38,880
Speaker 4: schools or housing or water.

459
00:25:39,280 --> 00:25:41,720
Speaker 2: I mean, somebody in the last twenty four hoursand I

460
00:25:41,800 --> 00:25:44,600
Speaker 2: guys had a whole thing on Coral Gables. Yeah, I

461
00:25:44,600 --> 00:25:48,560
Speaker 2: mean I look seriously at Coral Gables. About seven years ago.

462
00:25:49,000 --> 00:25:51,000
Speaker 2: It was really I just didn't want to get out

463
00:25:51,040 --> 00:25:54,080
Speaker 2: of the triple averaged all cash fire. But the answer

464
00:25:54,200 --> 00:25:58,400
Speaker 2: is Florida isn't Miami, Florida isn't just Coral Gables and

465
00:25:58,920 --> 00:26:01,080
Speaker 2: hedge funds and you know all the other fans, you

466
00:26:01,080 --> 00:26:04,960
Speaker 2: know the life of my it's just you know, there's

467
00:26:05,000 --> 00:26:05,879
Speaker 2: a whole other floor.

468
00:26:05,920 --> 00:26:08,560
Speaker 7: Well, the thing is it's hard to find a play.

469
00:26:08,640 --> 00:26:11,040
Speaker 7: My mom's in Naples, and when she had to move

470
00:26:11,160 --> 00:26:13,880
Speaker 7: places from one retirement community to another, it was.

471
00:26:13,840 --> 00:26:15,560
Speaker 6: Hard to Like, you're on waiting list. I mean it's

472
00:26:15,640 --> 00:26:16,720
Speaker 6: it's hard to funking place.

473
00:26:17,240 --> 00:26:20,680
Speaker 7: So and with more closing down, I'm just okay, you're

474
00:26:20,720 --> 00:26:22,600
Speaker 7: sitting in Jersey, you're sitting the show.

475
00:26:22,880 --> 00:26:23,160
Speaker 5: Okay.

476
00:26:23,560 --> 00:26:28,800
Speaker 7: Next, the highest paid CEOs of twenty twenty three. Okay,

477
00:26:28,800 --> 00:26:30,879
Speaker 7: this is from the Wall Street Journal. They did an

478
00:26:30,880 --> 00:26:35,440
Speaker 7: analysis more than four hundred companies from my log iq. Okay,

479
00:26:35,520 --> 00:26:37,840
Speaker 7: so they found that half of the executives made at

480
00:26:37,920 --> 00:26:40,919
Speaker 7: least fifteen point seven million. That's a record for this survey.

481
00:26:41,359 --> 00:26:44,639
Speaker 7: Several making abouts more than fifty million. The highest paid

482
00:26:44,760 --> 00:26:46,800
Speaker 7: S and P five hundred CEO and twenty twenty three

483
00:26:46,880 --> 00:26:50,480
Speaker 7: goes to broadcoms Hoc Tan, who made one hundred and

484
00:26:50,560 --> 00:26:53,840
Speaker 7: sixty two million dollars. There are certain stipulations, though, we

485
00:26:53,880 --> 00:26:56,000
Speaker 7: had to stand the job for five years, and broadcomes

486
00:26:56,000 --> 00:26:58,440
Speaker 7: share price has to reach certain targets after twenty twenty

487
00:26:58,520 --> 00:27:01,560
Speaker 7: five of October to get that full value. Then he

488
00:27:01,720 --> 00:27:05,520
Speaker 7: was followed down by Polo Alto Networks, Nikesh Aurora and

489
00:27:05,640 --> 00:27:07,480
Speaker 7: third Blackstones Stevens.

490
00:27:07,600 --> 00:27:11,840
Speaker 4: Every single year he's there, Stevens, is it is it?

491
00:27:11,880 --> 00:27:17,600
Speaker 2: Is it appropriate to put equitized risk into compensation studies?

492
00:27:17,760 --> 00:27:21,679
Speaker 4: Tom, the scam, the however you want to phrase it.

493
00:27:21,720 --> 00:27:25,879
Speaker 4: The the structures are basically stock based compensation. It sounds

494
00:27:25,920 --> 00:27:30,800
Speaker 4: good to shareholders. It's based upon metrics that can be

495
00:27:31,720 --> 00:27:37,520
Speaker 4: you know, managed, whether it's cash flow free, cash flow earnings, whatever.

496
00:27:37,760 --> 00:27:41,879
Speaker 4: You can run your business to reach those metrics to

497
00:27:42,080 --> 00:27:47,000
Speaker 4: achieve hurdles. So those hurdles to achieve your stock based

498
00:27:47,040 --> 00:27:50,879
Speaker 4: at risk compensation. And that's what Corporate America and the

499
00:27:50,920 --> 00:27:54,520
Speaker 4: boards and we and shareholders quite frankly and basically signed onto.

500
00:27:54,600 --> 00:27:55,439
Speaker 4: And that's kind of where we are.

501
00:27:55,520 --> 00:27:58,800
Speaker 6: Stock awards that grow in their compensation packages. I'll tell

502
00:27:58,840 --> 00:28:02,320
Speaker 6: you this one. You heard it come out. Scarlet scarlet Johannes,

503
00:28:02,920 --> 00:28:07,960
Speaker 6: huge scarlet Johan. Yes, I think maybe Okay got you

504
00:28:08,040 --> 00:28:10,359
Speaker 6: on that one. She has lawyered up.

505
00:28:10,440 --> 00:28:13,520
Speaker 7: She's fighting backs against open AI for a voice that

506
00:28:13,600 --> 00:28:14,840
Speaker 7: she says sounds like hers.

507
00:28:14,960 --> 00:28:18,680
Speaker 6: So the backstory is voice. In September, she.

508
00:28:18,800 --> 00:28:21,280
Speaker 7: Got an offer from open Ai Sam Altman to be

509
00:28:21,320 --> 00:28:24,880
Speaker 7: the voice of this audio feature for the chat Chept, but.

510
00:28:24,840 --> 00:28:26,120
Speaker 6: She decided to pass on it.

511
00:28:26,359 --> 00:28:29,280
Speaker 7: But then last week open Ai released these new tools

512
00:28:29,320 --> 00:28:32,359
Speaker 7: that included this voice called Sky, and she says it

513
00:28:32,480 --> 00:28:36,320
Speaker 7: sounded just like hers. Altman saying the voice is not hers.

514
00:28:36,400 --> 00:28:38,840
Speaker 7: It was not intended to sound like her. They had

515
00:28:38,840 --> 00:28:42,600
Speaker 7: a you know, a voice actor before even approaching her.

516
00:28:43,560 --> 00:28:45,960
Speaker 7: Open Aye did take down that voice it's called Sky,

517
00:28:46,080 --> 00:28:48,200
Speaker 7: replace it with another voice called Juniper.

518
00:28:48,560 --> 00:28:49,600
Speaker 6: But you see this.

519
00:28:51,400 --> 00:28:53,560
Speaker 2: What she believes is her voice.

520
00:28:54,200 --> 00:28:57,360
Speaker 7: Yes, but it's the point is the battle that you know,

521
00:28:57,400 --> 00:28:58,680
Speaker 7: the strikes were behind it too.

522
00:28:58,800 --> 00:29:00,720
Speaker 6: You know, AI fighting these deep face a.

523
00:29:00,720 --> 00:29:04,040
Speaker 3: Lot Hollywood for the next five years.

524
00:29:04,120 --> 00:29:05,080
Speaker 2: Oh my goodness.

525
00:29:05,160 --> 00:29:07,920
Speaker 4: True and looking at the Bloomberg Bloomberg reporting here that

526
00:29:08,000 --> 00:29:10,520
Speaker 4: Johnson has waited into legal issues in Hollywood before. In

527
00:29:10,560 --> 00:29:13,800
Speaker 4: twenty twenty one, the actress sued Walt Disney, claiming the

528
00:29:13,880 --> 00:29:16,480
Speaker 4: entertainment company broke its promises to release her latest film,

529
00:29:16,520 --> 00:29:19,480
Speaker 4: Black Widow only movie theaters when it made available for streaming.

530
00:29:19,520 --> 00:29:24,240
Speaker 2: So I haven't said this publicly, but Opening I got

531
00:29:24,240 --> 00:29:28,120
Speaker 2: in touch with me about eight months ago, and they said,

532
00:29:28,160 --> 00:29:30,120
Speaker 2: we'll pay you not to use your thoughts.

533
00:29:30,400 --> 00:29:31,960
Speaker 6: I was like, theyre going to use your foot I

534
00:29:31,960 --> 00:29:32,280
Speaker 6: don't care.

535
00:29:32,680 --> 00:29:34,320
Speaker 2: No, they said, it's so bad.

536
00:29:34,840 --> 00:29:37,080
Speaker 6: Ah, we'll pay you to go away.

537
00:29:37,360 --> 00:29:39,000
Speaker 2: Thank you.

538
00:29:39,600 --> 00:29:41,200
Speaker 6: Last one Red Lobster.

539
00:29:41,360 --> 00:29:43,479
Speaker 7: We told you it was filing for bankruptcy, right, But

540
00:29:43,520 --> 00:29:45,480
Speaker 7: now everyone is flushing in.

541
00:29:45,560 --> 00:29:47,440
Speaker 6: They want to get their last meals.

542
00:29:47,080 --> 00:29:49,680
Speaker 7: There, even take home a piece of nostalgia, some of

543
00:29:49,680 --> 00:29:52,520
Speaker 7: the history from there. That twenty dollars oh you can

544
00:29:52,560 --> 00:29:53,760
Speaker 7: eat shrimp deal in June.

545
00:29:53,840 --> 00:29:56,400
Speaker 6: It really killed him.

546
00:29:56,480 --> 00:30:00,240
Speaker 7: But people love the affordable price for seafood that they

547
00:30:00,320 --> 00:30:02,400
Speaker 7: can get there, and that's why people keep going back.

548
00:30:02,560 --> 00:30:05,320
Speaker 7: They say they like the nostalgia they had, you know,

549
00:30:05,480 --> 00:30:10,240
Speaker 7: family parties, birthday parties. And actually Elon Musk did tweet

550
00:30:10,280 --> 00:30:12,120
Speaker 7: that he was unhappy when he.

551
00:30:12,080 --> 00:30:14,160
Speaker 6: Found out that they were filing for bankruptcy. He said,

552
00:30:14,160 --> 00:30:14,640
Speaker 6: too bad.

553
00:30:14,760 --> 00:30:17,200
Speaker 7: I have some fond memories from a long time ago

554
00:30:17,680 --> 00:30:21,160
Speaker 7: eating at Red Lobster. So people have been trying to

555
00:30:21,200 --> 00:30:23,479
Speaker 7: buy certain things when those stores close out, like some

556
00:30:23,520 --> 00:30:26,320
Speaker 7: of the kitchen stuff. They want to buy the Lobster tanks.

557
00:30:26,320 --> 00:30:28,720
Speaker 7: So they want like a piece of the history because

558
00:30:28,760 --> 00:30:29,920
Speaker 7: they say it's been there.

559
00:30:30,080 --> 00:30:32,200
Speaker 2: They go under because they were given away shrimp.

560
00:30:32,400 --> 00:30:35,040
Speaker 6: That's no, no, no, no.

561
00:30:35,720 --> 00:30:37,320
Speaker 4: It had a lot more to do with it, think

562
00:30:37,960 --> 00:30:41,320
Speaker 4: real estate costs and labor costs and so on and

563
00:30:41,320 --> 00:30:43,400
Speaker 4: so forth. But I mean, and then just people. I

564
00:30:43,400 --> 00:30:46,360
Speaker 4: think their demographic has been kind of pencil a little

565
00:30:46,360 --> 00:30:47,000
Speaker 4: bit of the margin.

566
00:30:47,080 --> 00:30:49,400
Speaker 6: So it did, but that was an eleven million dollar

567
00:30:49,520 --> 00:30:50,080
Speaker 6: loss for them.

568
00:30:50,080 --> 00:30:55,720
Speaker 2: That's Lisa Mateo, Thank you so much. With our newspapers.

569
00:30:56,160 --> 00:30:59,400
Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best

570
00:30:59,400 --> 00:31:04,200
Speaker 2: and economic finance, investment, and international relations. You can also

571
00:31:04,240 --> 00:31:08,280
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast

572
00:31:08,400 --> 00:31:12,440
Speaker 2: channel on YouTube to see the show weekday mornings from

573
00:31:12,480 --> 00:31:15,760
Speaker 2: seven to ten am Eastern from our global headquarters in

574
00:31:15,840 --> 00:31:19,520
Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify,

575
00:31:19,880 --> 00:31:23,440
Speaker 2: or anywhere else you listen, and always on Bloomberg Radio,

576
00:31:23,640 --> 00:31:26,800
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.