1
00:00:09,880 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.

2
00:00:13,960 --> 00:00:17,560
Speaker 1: We bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,520
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,600 --> 00:00:30,480
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Apple

5
00:00:30,600 --> 00:00:33,920
Speaker 1: delivering better than expected results and guidance and poised to

6
00:00:34,040 --> 00:00:37,639
Speaker 1: recapture a trillion dollar market. Camp here in New York

7
00:00:37,680 --> 00:00:40,720
Speaker 1: to discuss this. Lori Calvacina very pleased to say we've

8
00:00:40,720 --> 00:00:44,360
Speaker 1: got with us OURBC Capital Markets head of US Equity Strategy.

9
00:00:44,360 --> 00:00:46,760
Speaker 1: Good morning to Laurie, Good morning John, Thanks for having

10
00:00:46,760 --> 00:00:48,400
Speaker 1: me on. Great to have you with us. So your

11
00:00:48,440 --> 00:00:53,000
Speaker 1: line reporting season looking solid, though not spectacular. Is that enough?

12
00:00:53,680 --> 00:00:55,680
Speaker 1: I think it's enough for a little while. I don't

13
00:00:55,720 --> 00:00:58,279
Speaker 1: know that it's necessarily the catalyst that can come that

14
00:00:58,320 --> 00:01:01,040
Speaker 1: can you know, propel us to big highs later this year,

15
00:01:01,040 --> 00:01:02,480
Speaker 1: But I think it's enough. I think if you're a

16
00:01:02,480 --> 00:01:04,440
Speaker 1: short term trader, I think you can enjoy the ride

17
00:01:04,440 --> 00:01:06,840
Speaker 1: a little bit longer um, but but longer term, I

18
00:01:06,840 --> 00:01:09,200
Speaker 1: think we're gonna need more catalysts. Your year in forecast

19
00:01:09,240 --> 00:01:13,000
Speaker 1: still has some pretty decent upside from here, Well, we're um,

20
00:01:13,080 --> 00:01:15,320
Speaker 1: so we're we're basically, you know, right in line with

21
00:01:15,319 --> 00:01:17,480
Speaker 1: it right now. And what we've said is we could

22
00:01:17,480 --> 00:01:19,880
Speaker 1: see some overshoot in the short term. UM. We haven't

23
00:01:19,920 --> 00:01:21,720
Speaker 1: put a precise number on that, but I would say,

24
00:01:21,720 --> 00:01:24,200
Speaker 1: you know, maybe sort of north of three thousand or so. UM.

25
00:01:24,200 --> 00:01:25,959
Speaker 1: But I think if you're a longer term investor and

26
00:01:25,959 --> 00:01:27,320
Speaker 1: you're thinking about where we're going to be at the

27
00:01:27,400 --> 00:01:28,920
Speaker 1: end of the year, I would be locking in those

28
00:01:28,920 --> 00:01:30,760
Speaker 1: games and starting to take in some profits. There was

29
00:01:30,880 --> 00:01:34,000
Speaker 1: some worries as the year progressed about an owning recession.

30
00:01:34,000 --> 00:01:36,760
Speaker 1: As the year has grown older, those worries have diminished somewhat.

31
00:01:36,959 --> 00:01:39,240
Speaker 1: We're gonna avoid that this year. I think we're going

32
00:01:39,280 --> 00:01:41,520
Speaker 1: to avoid it. But I do think it's important to

33
00:01:41,560 --> 00:01:43,880
Speaker 1: note that that what we're seeing under the surface suggests

34
00:01:43,920 --> 00:01:46,680
Speaker 1: it might be a low quality a kind of avoidance.

35
00:01:46,720 --> 00:01:48,160
Speaker 1: And and the way I've put it is, you know,

36
00:01:48,160 --> 00:01:50,440
Speaker 1: we've kind of got this flat number now for one QUE,

37
00:01:50,760 --> 00:01:53,040
Speaker 1: flattish number for two Q at least in terms of

38
00:01:53,080 --> 00:01:54,840
Speaker 1: what happened in one QUE. I think companies were really

39
00:01:54,880 --> 00:01:57,440
Speaker 1: throwing everything but the kitchen sink at this reporting season.

40
00:01:57,760 --> 00:02:00,720
Speaker 1: So we've We've seen things like pricing. Buy back were enormous.

41
00:02:00,800 --> 00:02:03,120
Speaker 1: The share account reduction was two point two percent and

42
00:02:03,200 --> 00:02:05,960
Speaker 1: one queue, the greatest we've seen since the financial crisis.

43
00:02:06,160 --> 00:02:08,480
Speaker 1: We've even seen a lot of companies talking about their

44
00:02:08,480 --> 00:02:11,720
Speaker 1: cost initiatives, about a third companies overall. And we've actually

45
00:02:11,720 --> 00:02:13,880
Speaker 1: noticed a lot of companies that worked their tax rates

46
00:02:13,919 --> 00:02:16,760
Speaker 1: down in the first So you'll take Lori's take is

47
00:02:16,760 --> 00:02:19,240
Speaker 1: really important, hits on because you think these companies are

48
00:02:19,240 --> 00:02:22,400
Speaker 1: pulling a lot of levers to support margins. How sustainable

49
00:02:22,440 --> 00:02:24,160
Speaker 1: is it? Well, that that's our big question for the

50
00:02:24,200 --> 00:02:25,840
Speaker 1: second half of the year. And I do think, you know,

51
00:02:25,880 --> 00:02:27,960
Speaker 1: they can probably do a little bit of it, you know,

52
00:02:28,000 --> 00:02:29,919
Speaker 1: in the second quarter. But I think a lot of

53
00:02:29,960 --> 00:02:32,640
Speaker 1: people have been worried about this kind of ramp up

54
00:02:32,639 --> 00:02:34,440
Speaker 1: in earnings growth in the second half of the year

55
00:02:34,480 --> 00:02:37,000
Speaker 1: that's supporting you know, kind of this to three type

56
00:02:37,000 --> 00:02:39,560
Speaker 1: consensus number. You know, you'll probably be able to do

57
00:02:39,600 --> 00:02:41,960
Speaker 1: the buybacks, but some of these things like cost controls

58
00:02:41,960 --> 00:02:44,359
Speaker 1: and especially tax I think it feels more one time,

59
00:02:44,400 --> 00:02:46,640
Speaker 1: and I really give you a major credit for the

60
00:02:46,680 --> 00:02:49,000
Speaker 1: tax analysis. I've noticed that as well that some of

61
00:02:49,040 --> 00:02:52,919
Speaker 1: these taxes are coming in shockingly low as well. If

62
00:02:52,960 --> 00:02:56,480
Speaker 1: there's a caution out there, a lot of our listeners

63
00:02:56,480 --> 00:02:59,680
Speaker 1: are saying, Okay, that's great, but why mess around, Just

64
00:02:59,720 --> 00:03:03,079
Speaker 1: go to cash, go to short term, grab a coupon whatever.

65
00:03:03,200 --> 00:03:06,600
Speaker 1: So what is the nuance of this word caution? The

66
00:03:07,080 --> 00:03:10,000
Speaker 1: problem is, you know, go back to what happened on December.

67
00:03:10,639 --> 00:03:12,440
Speaker 1: So we had gone from having you know, sort of

68
00:03:12,440 --> 00:03:15,720
Speaker 1: big valuation problems, big crowding problems, to the exact opposite

69
00:03:15,720 --> 00:03:17,760
Speaker 1: of that, and then the market just turned on a dime.

70
00:03:18,280 --> 00:03:20,359
Speaker 1: So you know, I don't necessarily think you have to

71
00:03:20,400 --> 00:03:22,639
Speaker 1: take a long term bearish view at this point and

72
00:03:22,680 --> 00:03:25,120
Speaker 1: just bail. But I would start to lock in profits.

73
00:03:25,160 --> 00:03:26,840
Speaker 1: I would start to look at things like healthcare. I

74
00:03:26,840 --> 00:03:29,120
Speaker 1: would look at things like energy, look at things like financials,

75
00:03:29,120 --> 00:03:32,360
Speaker 1: which are finally starting to work. There's just more value

76
00:03:32,360 --> 00:03:34,120
Speaker 1: there than some of these big things that have run up.

77
00:03:34,200 --> 00:03:36,640
Speaker 1: This sounds like that classic rotation away from growth and

78
00:03:36,720 --> 00:03:38,880
Speaker 1: to value. We've heard this so many times, Laurie, Why

79
00:03:38,920 --> 00:03:41,000
Speaker 1: is this the right time to do it? So, you know,

80
00:03:41,080 --> 00:03:43,800
Speaker 1: I think in terms of looking at the broader market dynamics,

81
00:03:43,840 --> 00:03:46,040
Speaker 1: what what we figured out basically is that the growth

82
00:03:46,040 --> 00:03:48,120
Speaker 1: trade is going to break down when the market breaks down.

83
00:03:48,520 --> 00:03:50,920
Speaker 1: And when we look through our work, specifically at the

84
00:03:50,960 --> 00:03:53,720
Speaker 1: valuation and positioning models, we find we're right back to

85
00:03:53,800 --> 00:03:56,040
Speaker 1: last year's highs on some of them and getting closer

86
00:03:56,080 --> 00:03:59,920
Speaker 1: on others. CFTC data on US equity futures positioning is

87
00:04:00,080 --> 00:04:03,520
Speaker 1: within spitting distance of last January and September's highs. It's

88
00:04:03,560 --> 00:04:06,040
Speaker 1: telling you the institutional community has gotten to you for it.

89
00:04:06,440 --> 00:04:08,240
Speaker 1: I miss a lot of stuff out there, John, as

90
00:04:08,280 --> 00:04:11,360
Speaker 1: you well know. But City Group I just happened to

91
00:04:11,360 --> 00:04:16,880
Speaker 1: pick see because it's a simple symbol up off the bottom.

92
00:04:17,040 --> 00:04:19,400
Speaker 1: Imagine I didn't have to know that. I missed that too.

93
00:04:19,760 --> 00:04:22,000
Speaker 1: I didn't know the move was that a Christians. But

94
00:04:22,040 --> 00:04:24,800
Speaker 1: to your point, Laurie, on the participation point, it's not

95
00:04:24,839 --> 00:04:27,080
Speaker 1: a story that gets told on this network, on this

96
00:04:27,160 --> 00:04:29,560
Speaker 1: program very often. In fact, most people say that we

97
00:04:29,560 --> 00:04:32,720
Speaker 1: haven't had the participation yet. Are you saying we have? Well,

98
00:04:32,760 --> 00:04:34,520
Speaker 1: you know we we don't think there was a ton

99
00:04:34,560 --> 00:04:37,039
Speaker 1: of cash on the sidelines to begin with this year,

100
00:04:37,080 --> 00:04:38,680
Speaker 1: and we went through and we looked at domestic and

101
00:04:38,680 --> 00:04:41,560
Speaker 1: global equity funds didn't really go up in fork you.

102
00:04:41,600 --> 00:04:43,960
Speaker 1: One client told me he said, any money I raised

103
00:04:43,960 --> 00:04:47,280
Speaker 1: had to go to redemptions. Um, I mean it's and

104
00:04:47,320 --> 00:04:51,040
Speaker 1: that that's just a very practical explanation of what happened households.

105
00:04:51,040 --> 00:04:52,680
Speaker 1: If you look at the Federal Reserve flow of funds

106
00:04:52,720 --> 00:04:55,240
Speaker 1: data picked up a teeny tiny bit, but nowhere near

107
00:04:55,279 --> 00:04:57,560
Speaker 1: the spikes we've seen in the past when retail investors

108
00:04:57,600 --> 00:04:59,479
Speaker 1: did have a lot of cash on the sidelines, we

109
00:04:59,520 --> 00:05:01,640
Speaker 1: looked at to allocation funds. So these are the guys

110
00:05:01,640 --> 00:05:04,800
Speaker 1: who do stock sponds cash globally. Now, they did raise

111
00:05:04,839 --> 00:05:06,599
Speaker 1: a bit of money in the fourth quarter, but we

112
00:05:06,680 --> 00:05:09,360
Speaker 1: have some preliminary data for one queue. They already worked

113
00:05:09,360 --> 00:05:10,920
Speaker 1: a lot of that down, and what they did work

114
00:05:10,960 --> 00:05:13,440
Speaker 1: down they actually were putting into non US equities, not

115
00:05:13,640 --> 00:05:16,920
Speaker 1: US equities. So so what you're saying is the street

116
00:05:17,000 --> 00:05:20,480
Speaker 1: is a general statement, missed this huge bowl market. People

117
00:05:20,560 --> 00:05:22,800
Speaker 1: missed it. And there's some surveyors. Why do I get off?

118
00:05:22,960 --> 00:05:25,200
Speaker 1: Why do I get off the seven favorite stocks that

119
00:05:25,240 --> 00:05:27,120
Speaker 1: are out there? Whatever they are? Well, you know, one

120
00:05:27,160 --> 00:05:29,440
Speaker 1: thing we track is actually the most crowded names and

121
00:05:29,520 --> 00:05:32,520
Speaker 1: mutual funds and hedge funds, and they actually haven't been

122
00:05:32,600 --> 00:05:34,719
Speaker 1: leading the market this year. They've been kind of moving

123
00:05:34,800 --> 00:05:38,000
Speaker 1: inline kind of aside what is leading the market this year.

124
00:05:38,320 --> 00:05:41,680
Speaker 1: UM Technology as a broader sector has been doing so well.

125
00:05:43,160 --> 00:05:44,880
Speaker 1: Stemmy's have been doing really well. And you know, they

126
00:05:44,920 --> 00:05:47,559
Speaker 1: looked super cheap a few months ago. They look fairly

127
00:05:47,600 --> 00:05:49,479
Speaker 1: valued on our models right now, and so it's not

128
00:05:49,560 --> 00:05:51,680
Speaker 1: surprising to me that you're actually starting to see some

129
00:05:51,680 --> 00:05:54,480
Speaker 1: profits taken. So this weekend, John Farrell is going to

130
00:05:54,520 --> 00:05:57,440
Speaker 1: be in line at Glossier waiting to get makeup, and

131
00:05:57,440 --> 00:06:04,400
Speaker 1: and somebody's gonna be Sair's gonna be o MG. They're

132
00:06:04,400 --> 00:06:09,080
Speaker 1: gonna go, oh mg, it's John Farrell. We're gonna fight

133
00:06:09,279 --> 00:06:12,960
Speaker 1: right right now. So anyways, John's gonna be in line.

134
00:06:12,960 --> 00:06:15,600
Speaker 1: They're gonna go oh mg. It's a star of Bloomberg surveillance.

135
00:06:15,640 --> 00:06:18,039
Speaker 1: And they're gonna ask John, how do they still like

136
00:06:18,120 --> 00:06:21,880
Speaker 1: a twenty four multiple on a consumer discretionary How do

137
00:06:21,920 --> 00:06:25,120
Speaker 1: you stomach a multiple when, as you say, there's other

138
00:06:25,160 --> 00:06:28,159
Speaker 1: things trading cheap. Yeah, And look, I can't comment on

139
00:06:28,200 --> 00:06:31,200
Speaker 1: them specifically, but I do think come on, Group, go

140
00:06:31,240 --> 00:06:33,880
Speaker 1: with the game. Here, it's radio. There's a ten multiple

141
00:06:34,000 --> 00:06:37,159
Speaker 1: on City Group. Now. I think investors have demonstrated to

142
00:06:37,200 --> 00:06:39,440
Speaker 1: me and my conversations just this year that they're much

143
00:06:39,480 --> 00:06:41,760
Speaker 1: more sensitive to what they're paying for different levels of

144
00:06:41,800 --> 00:06:44,160
Speaker 1: growth than they've been in the past. So I even hear,

145
00:06:44,279 --> 00:06:46,400
Speaker 1: you know, growth investors who generally don't even want to

146
00:06:46,440 --> 00:06:49,640
Speaker 1: mention evaluation multiple are talking about GARB type metrics are

147
00:06:49,640 --> 00:06:52,719
Speaker 1: talking about peg ratios. Um. So we do think that's

148
00:06:52,800 --> 00:06:55,600
Speaker 1: entering into the lexicon. And look, I know energy technically

149
00:06:55,600 --> 00:06:57,719
Speaker 1: it's kind of underperforming now year today, but about a

150
00:06:57,720 --> 00:07:01,520
Speaker 1: week ago it was actually still outperforming, and we were

151
00:07:01,560 --> 00:07:06,080
Speaker 1: seeing investors recognizing the valuation opportunity there, recognizing the buy backs,

152
00:07:06,120 --> 00:07:08,839
Speaker 1: recognizing the dividends, and saying, hey, this is great. We

153
00:07:08,880 --> 00:07:11,560
Speaker 1: just don't want them to do dumb m and a. Um.

154
00:07:11,600 --> 00:07:14,440
Speaker 1: Now I think the tensions turned to financials. Healthcare is

155
00:07:14,480 --> 00:07:16,720
Speaker 1: starting to get a lot of interest. Um, and I

156
00:07:16,720 --> 00:07:18,440
Speaker 1: don't think anyone wants to step in front of the

157
00:07:18,440 --> 00:07:22,720
Speaker 1: politics for a while, right right, And you know, healthcare

158
00:07:22,760 --> 00:07:24,560
Speaker 1: has been interesting. I mean, it had a great run

159
00:07:24,560 --> 00:07:28,200
Speaker 1: into December, it lacked to start the year. It absolutely

160
00:07:28,240 --> 00:07:30,280
Speaker 1: fell apart in April, and then it bounced right back.

161
00:07:30,400 --> 00:07:32,360
Speaker 1: You know, it's still down for the year, but you

162
00:07:32,400 --> 00:07:34,360
Speaker 1: did see the sort of contingent of people who went

163
00:07:34,400 --> 00:07:37,680
Speaker 1: out and said the politics probably you know are worst.

164
00:07:37,720 --> 00:07:39,400
Speaker 1: Are are not as bad as Beard. We're gonna go

165
00:07:39,440 --> 00:07:40,720
Speaker 1: ahead and get in. I want to get a final

166
00:07:40,760 --> 00:07:43,360
Speaker 1: word for you on small but caps. It's an area

167
00:07:43,360 --> 00:07:45,640
Speaker 1: of the market that has lacked. Do you see the

168
00:07:45,640 --> 00:07:48,160
Speaker 1: catch up taking place? You know, we we've been hoping

169
00:07:48,160 --> 00:07:50,000
Speaker 1: that it would. I mean, we do see a tremendous

170
00:07:50,040 --> 00:07:53,280
Speaker 1: amount of value there. It's starting to bother me, frankly

171
00:07:53,280 --> 00:07:55,280
Speaker 1: that we're not getting it because the end of March

172
00:07:55,320 --> 00:07:57,560
Speaker 1: we did start to see a lot of cyclical areas

173
00:07:57,600 --> 00:08:00,200
Speaker 1: like financials, like the banks were gonna take off. Small

174
00:08:00,240 --> 00:08:02,440
Speaker 1: caps did it briefly and then they faded again. The

175
00:08:02,520 --> 00:08:05,720
Speaker 1: valuation stories there. The dollar catalyst isn't known there. But

176
00:08:05,800 --> 00:08:08,720
Speaker 1: the problem is that stronger dollar is not translating into

177
00:08:08,720 --> 00:08:11,440
Speaker 1: better earnings revisions. We talked about lovers, they just don't

178
00:08:11,440 --> 00:08:13,520
Speaker 1: have as many to pull. Laurie. Great to catch up

179
00:08:13,560 --> 00:08:17,239
Speaker 1: with you, Laurie. Nobody cares. Can you be a repeat?

180
00:08:18,160 --> 00:08:19,840
Speaker 1: I hope so. You know when when I was there,

181
00:08:19,880 --> 00:08:22,480
Speaker 1: we were terrible at sports. So I'm still in a

182
00:08:22,520 --> 00:08:26,280
Speaker 1: state of disbelief. You went to the UV a nerd campus,

183
00:08:26,960 --> 00:08:30,000
Speaker 1: actually going to get a barce alonea Liverpool predictions for

184
00:08:30,080 --> 00:08:34,560
Speaker 1: a minute. I'm pleased you went with you. I'm bullish

185
00:08:34,559 --> 00:08:37,080
Speaker 1: there the long term secular growers and okay, please come

186
00:08:37,080 --> 00:09:00,640
Speaker 1: back with us with now an adult conversation an Apple

187
00:09:00,800 --> 00:09:04,200
Speaker 1: John Dan Alice joining us won't push securities managing director.

188
00:09:04,240 --> 00:09:06,840
Speaker 1: Good morning to you, Dan. Great to be here, Great

189
00:09:06,880 --> 00:09:08,360
Speaker 1: to have you with us. You and I sat down

190
00:09:08,360 --> 00:09:10,360
Speaker 1: a number of months ago, and right before they gave

191
00:09:10,440 --> 00:09:13,240
Speaker 1: us the profit warning and cut their forecast, you said

192
00:09:13,800 --> 00:09:15,880
Speaker 1: they need to throw the kitchen sink at this. They

193
00:09:15,920 --> 00:09:18,240
Speaker 1: need to fess up because things aren't good in China.

194
00:09:18,280 --> 00:09:22,480
Speaker 1: They did. Now we sit here May they're turning around

195
00:09:22,480 --> 00:09:24,319
Speaker 1: and saying things are getting better, and things are getting

196
00:09:24,360 --> 00:09:27,120
Speaker 1: better because they cut prices. Is that the story here

197
00:09:27,200 --> 00:09:29,199
Speaker 1: Dan this morning? Yeah. I mean that's the best thing

198
00:09:29,240 --> 00:09:32,240
Speaker 1: they did, because they took their medicine fest up. China

199
00:09:32,280 --> 00:09:34,640
Speaker 1: fell off a cliff, but they have cut prices. I

200
00:09:34,720 --> 00:09:38,160
Speaker 1: remember the sixties. Seventy million iPhones are coming up for

201
00:09:38,200 --> 00:09:41,000
Speaker 1: an upgrade in China that continues to be the key

202
00:09:41,080 --> 00:09:45,120
Speaker 1: fuel for cook and Coopertina. Four million iPhones are coming

203
00:09:45,200 --> 00:09:48,360
Speaker 1: up for an upgrade at the Keen Household the low

204
00:09:48,440 --> 00:09:51,000
Speaker 1: break just before the model. That's that's what happens for

205
00:09:51,120 --> 00:09:53,600
Speaker 1: a million. Suddenly the kid drops the phone on the floor.

206
00:09:55,480 --> 00:09:58,439
Speaker 1: Oh down, it's broken A bar continued Dan, what do

207
00:09:58,520 --> 00:10:00,640
Speaker 1: you make of the upgrade cycle? Look, I mean this

208
00:10:00,720 --> 00:10:03,320
Speaker 1: upgrade cycle in my opinion, it's hit a speed bump,

209
00:10:03,360 --> 00:10:05,880
Speaker 1: but there's always been the last few quarters. But comes

210
00:10:05,880 --> 00:10:10,240
Speaker 1: down to pure numbers. Nine million active iPhones, three hundred

211
00:10:10,320 --> 00:10:12,679
Speaker 1: fifty million of those, based on our estimates over the

212
00:10:12,720 --> 00:10:16,200
Speaker 1: next twelve to eighteen months, are coming up for an upgrade.

213
00:10:16,600 --> 00:10:19,839
Speaker 1: Just given the pure install based for retention, we believe

214
00:10:19,920 --> 00:10:23,480
Speaker 1: apples of stock that's gonna make new highs here over

215
00:10:23,520 --> 00:10:26,640
Speaker 1: the coming months. Let's go partial differential. All this happy

216
00:10:26,679 --> 00:10:31,360
Speaker 1: talk on China and price cuts, what's its elasticity into

217
00:10:31,400 --> 00:10:34,920
Speaker 1: the thirty eight percent margin? Look, I think right now

218
00:10:35,080 --> 00:10:39,600
Speaker 1: for Apple it's actually less about what I would say

219
00:10:39,640 --> 00:10:42,839
Speaker 1: the price elasticity and more importantly making sure that they

220
00:10:42,960 --> 00:10:45,400
Speaker 1: keep those customers because when it comes down to the

221
00:10:45,559 --> 00:10:48,160
Speaker 1: services and the monetization, that's the key. You got to

222
00:10:48,240 --> 00:10:52,280
Speaker 1: keep those sixties seven seventy million iPhone customers coming out

223
00:10:52,640 --> 00:10:55,520
Speaker 1: Mantra's profit, I mean, Steve Jobs, Mantra was profit. Are

224
00:10:55,520 --> 00:10:58,480
Speaker 1: they giving up the profit mantra in China, They're gonna

225
00:10:58,520 --> 00:11:00,360
Speaker 1: have to give up some of the profit, and that's

226
00:11:00,360 --> 00:11:03,360
Speaker 1: why the price cuts were something that they needed to do.

227
00:11:03,400 --> 00:11:06,960
Speaker 1: They had pricing hubris. They got hit over the head

228
00:11:07,000 --> 00:11:09,080
Speaker 1: with it in terms of Chinese consumers speak and not

229
00:11:09,120 --> 00:11:12,160
Speaker 1: going to spend one month paycheck for an iPhone. And

230
00:11:12,200 --> 00:11:14,120
Speaker 1: now they're doing the right things and you're seeing demand

231
00:11:14,120 --> 00:11:17,280
Speaker 1: come back. Check back to revenue growth in the next quarter.

232
00:11:17,880 --> 00:11:21,280
Speaker 1: I think, starting as we get into Q four in

233
00:11:21,360 --> 00:11:25,600
Speaker 1: September and especially in that's where really growth comes back.

234
00:11:25,640 --> 00:11:28,200
Speaker 1: And that's all right now the street this morning, even

235
00:11:28,200 --> 00:11:30,439
Speaker 1: though whither they say or is their starting now, look

236
00:11:30,480 --> 00:11:34,840
Speaker 1: at and especially with that services business worth four hundred

237
00:11:34,920 --> 00:11:38,520
Speaker 1: billion to billion are opinion and some of the parts

238
00:11:38,559 --> 00:11:40,760
Speaker 1: this is a stock right now that has his mojo back.

239
00:11:41,000 --> 00:11:43,520
Speaker 1: Is the revenue makes changing quickly enough for you awaite

240
00:11:43,520 --> 00:11:45,920
Speaker 1: from hard white world services. Well, I think it's a

241
00:11:45,960 --> 00:11:48,800
Speaker 1: balance because you don't want to see it changed too

242
00:11:48,880 --> 00:11:50,760
Speaker 1: quickly because the end of the day, the core mean

243
00:11:50,840 --> 00:11:56,240
Speaker 1: potatoes of Apple r iPhones that can use profits and revenue,

244
00:11:56,720 --> 00:11:59,120
Speaker 1: but it does come down to services is going to

245
00:11:59,200 --> 00:12:02,080
Speaker 1: be the next step there's a monetizing Well, let's talk

246
00:12:02,080 --> 00:12:04,760
Speaker 1: about how you monetize services. You think they're gonna make

247
00:12:04,760 --> 00:12:07,320
Speaker 1: an acquisition, let's get the Dana's crystal bowl out. What

248
00:12:07,440 --> 00:12:10,160
Speaker 1: kind of acquisition, how much money? Well, I think this

249
00:12:10,240 --> 00:12:12,360
Speaker 1: will be in the next six months. They will make

250
00:12:12,400 --> 00:12:16,280
Speaker 1: a large content acquisition. And we've talked about so many

251
00:12:16,280 --> 00:12:19,160
Speaker 1: pictures and darker petroleum. What do they come by? I

252
00:12:19,200 --> 00:12:21,640
Speaker 1: think that's a dark course. But but i'd view i'd

253
00:12:21,720 --> 00:12:27,760
Speaker 1: view MGM, and we've talked about CBS Viacom is a

254
00:12:27,880 --> 00:12:30,040
Speaker 1: very value. This is really cool because it goes to

255
00:12:30,120 --> 00:12:32,760
Speaker 1: Apple's ethos, which is a constant cash flow. They pick

256
00:12:32,840 --> 00:12:35,840
Speaker 1: up their libraries, they get all the publishing flow of

257
00:12:35,920 --> 00:12:37,960
Speaker 1: that cash flow. That's mean they're comfortable with that, right,

258
00:12:38,080 --> 00:12:40,320
Speaker 1: They're comfortable, and I think part why they're keeping everything

259
00:12:40,360 --> 00:12:43,079
Speaker 1: close to the vast in terms of the streaming services

260
00:12:43,080 --> 00:12:45,120
Speaker 1: in this ship, which will official get lunch and fall.

261
00:12:45,559 --> 00:12:49,040
Speaker 1: I think there is a significant acquisition that they're looking

262
00:12:49,120 --> 00:12:52,360
Speaker 1: to do on content. That's the key, and in our opinion,

263
00:12:52,400 --> 00:12:54,840
Speaker 1: from a larger deal, CBS viacoms the one that makes

264
00:12:54,920 --> 00:12:57,720
Speaker 1: most sense. I mean, they're trading now, it's seventeen it

265
00:12:57,800 --> 00:13:00,160
Speaker 1: used to be a twelve multiple, whatever the multiple was

266
00:13:00,200 --> 00:13:02,440
Speaker 1: coming up. What do you say to the Apple fan

267
00:13:02,520 --> 00:13:06,600
Speaker 1: boys that say this thing should trade multiple? Well, I

268
00:13:06,640 --> 00:13:08,880
Speaker 1: think this is a stock that's in the process again

269
00:13:08,920 --> 00:13:12,160
Speaker 1: re rated historically twelve to sixteen times. You know, when

270
00:13:12,160 --> 00:13:14,640
Speaker 1: it gets to twelve, you tell your your grandparents to

271
00:13:14,679 --> 00:13:18,199
Speaker 1: bide at sixteen times to sell it. Now fundamentally, right

272
00:13:18,200 --> 00:13:20,400
Speaker 1: now you're just starting to say and get rereaded on

273
00:13:20,480 --> 00:13:23,800
Speaker 1: the services business. That's gonna take time, not gonna happen overnight,

274
00:13:24,240 --> 00:13:27,360
Speaker 1: but in our opinion, that's what's happening here. What's coma

275
00:13:27,720 --> 00:13:33,199
Speaker 1: what's the line of iPhones, toys, stuff, max iPads versus

276
00:13:33,240 --> 00:13:37,640
Speaker 1: the EBA lines? Services? I mean, it's genormous. It's genorous

277
00:13:37,679 --> 00:13:40,400
Speaker 1: because if you look at services today, the amount services

278
00:13:40,440 --> 00:13:44,320
Speaker 1: being a fifty billion dollar revenue stream, but remember margin,

279
00:13:44,480 --> 00:13:46,120
Speaker 1: how much of that do they take down to some

280
00:13:46,240 --> 00:13:47,800
Speaker 1: form of line on the income. So do you think

281
00:13:47,800 --> 00:13:52,040
Speaker 1: about it's about thirty thirty five billion that that they

282
00:13:52,120 --> 00:13:55,160
Speaker 1: take down of services. And that's why that services right

283
00:13:55,160 --> 00:13:58,199
Speaker 1: now is basically a pure money maker, which is why

284
00:13:58,200 --> 00:14:00,800
Speaker 1: it's so cy tom onst you about Ample fan boys,

285
00:14:00,800 --> 00:14:02,880
Speaker 1: Can we talk about a Tesla fan boys just from

286
00:14:02,920 --> 00:14:06,360
Speaker 1: moments too. You'll pullish ample you are non bullish Tesla.

287
00:14:06,640 --> 00:14:08,760
Speaker 1: You've down graded that stock in the last couple of weeks.

288
00:14:08,800 --> 00:14:11,839
Speaker 1: I think you called the cold a debacle. What do

289
00:14:11,880 --> 00:14:14,079
Speaker 1: you make what's going on right now? Then? Well, I

290
00:14:14,160 --> 00:14:18,040
Speaker 1: think you compare and contrast the adults in the room

291
00:14:18,360 --> 00:14:21,360
Speaker 1: like a cook an apple versus what we saw with

292
00:14:21,480 --> 00:14:23,960
Speaker 1: Tesla and Musk, and I think that was the big issue.

293
00:14:24,000 --> 00:14:26,400
Speaker 1: What we saw in the earnings is that it comes

294
00:14:26,480 --> 00:14:29,400
Speaker 1: down to they continue to live in a sci fi

295
00:14:29,680 --> 00:14:32,920
Speaker 1: fictional novel in terms of what's happening in terms of

296
00:14:33,080 --> 00:14:36,520
Speaker 1: cord demand and their need to raise capital, which is

297
00:14:36,680 --> 00:14:39,560
Speaker 1: was our fundamental issue. We we have three billion of

298
00:14:39,640 --> 00:14:42,200
Speaker 1: capital is gonna need to be raised. This continues to

299
00:14:42,240 --> 00:14:44,680
Speaker 1: be a strong company in terms of how their position,

300
00:14:44,800 --> 00:14:47,760
Speaker 1: but fundamental and you're seeing the stock now. It comes

301
00:14:47,760 --> 00:14:50,960
Speaker 1: out to what the profitability path is and when they're

302
00:14:50,960 --> 00:14:55,680
Speaker 1: gonna have to bid price target. Come on, let's talking

303
00:14:55,720 --> 00:14:59,360
Speaker 1: about fan boys. Three fifty to arrange of three hundred

304
00:14:59,400 --> 00:15:02,920
Speaker 1: and we're enjoying this morning. Yeah. Ultimately, we think this

305
00:15:03,080 --> 00:15:06,280
Speaker 1: is a range bound stockward to seventy and you're still

306
00:15:06,320 --> 00:15:10,000
Speaker 1: at two seven to even look. In my opinion, right now,

307
00:15:10,160 --> 00:15:13,480
Speaker 1: the path here is more dark days ahead before we

308
00:15:13,680 --> 00:15:16,720
Speaker 1: see brighter days in terms of just given demand and

309
00:15:16,800 --> 00:15:19,240
Speaker 1: given the pure financial just came up earlier this week.

310
00:15:19,440 --> 00:15:20,960
Speaker 1: If you're just joining us day in ice with us,

311
00:15:20,960 --> 00:15:24,000
Speaker 1: the decades of experience and the fever of the hoopla

312
00:15:24,120 --> 00:15:27,200
Speaker 1: and the reality of tech. Does Google need to be

313
00:15:27,400 --> 00:15:30,720
Speaker 1: more Apple Like? They don't have a dividend, They're not deploying,

314
00:15:31,160 --> 00:15:34,760
Speaker 1: you know, in any great enthusiasm cash back to shareholders.

315
00:15:35,520 --> 00:15:37,720
Speaker 1: I know they're still young and eager and there's no

316
00:15:37,840 --> 00:15:40,200
Speaker 1: gray hairs, and I get all that, but that they

317
00:15:40,280 --> 00:15:43,640
Speaker 1: need to be more like the blue chippyness of Apple. Well,

318
00:15:43,680 --> 00:15:46,480
Speaker 1: I think before that they have to make a significant acquisition,

319
00:15:46,920 --> 00:15:50,240
Speaker 1: specifically in cloud. I think that's something that and I

320
00:15:50,320 --> 00:15:52,520
Speaker 1: think you said they're riding on the wall in terms

321
00:15:52,520 --> 00:15:55,920
Speaker 1: of alphabets, numbers. You look what happened to Microsoft a WS.

322
00:15:56,200 --> 00:15:59,120
Speaker 1: Google has to make an acquisition, a larger deal in

323
00:15:59,240 --> 00:16:03,360
Speaker 1: cloud we move. That's something that once has. I mean

324
00:16:03,440 --> 00:16:04,880
Speaker 1: when you look at the names that they could go

325
00:16:04,960 --> 00:16:07,960
Speaker 1: after that, those are names like a service now a

326
00:16:08,080 --> 00:16:11,480
Speaker 1: work day of salesforce. In terms of large deals, potentially

327
00:16:12,080 --> 00:16:15,680
Speaker 1: um hubs because you look at where Google is in cloud,

328
00:16:15,880 --> 00:16:19,400
Speaker 1: they're rounding error and where's the strength going in enterprise

329
00:16:19,480 --> 00:16:23,200
Speaker 1: it's AWS and Amazon. Look at Microsoft Nidela. That's how

330
00:16:23,280 --> 00:16:28,480
Speaker 1: the stocks recent billion dollar business. You actually think they

331
00:16:28,520 --> 00:16:31,000
Speaker 1: could do a deal that big and we've talked about

332
00:16:31,360 --> 00:16:35,320
Speaker 1: likely Google is going to have to make a significant deal.

333
00:16:35,520 --> 00:16:38,280
Speaker 1: That's obviously more on the larger side. But part of

334
00:16:38,320 --> 00:16:40,960
Speaker 1: why they brought Tom Curry and in from Oracle was

335
00:16:41,040 --> 00:16:43,680
Speaker 1: to do significant M and A. They're no longer going

336
00:16:43,720 --> 00:16:45,280
Speaker 1: to be on the treadmill, and I think that would

337
00:16:45,280 --> 00:16:48,400
Speaker 1: be the next step with Google, to make a significant

338
00:16:48,640 --> 00:16:51,520
Speaker 1: M and A deal on cloud. Doug emails in from Florida.

339
00:16:51,560 --> 00:16:54,880
Speaker 1: He says, who's gonna buy Twitter? Um? I think Twitter

340
00:16:55,000 --> 00:16:58,440
Speaker 1: continues to be a standalone company. And I think, well,

341
00:16:59,080 --> 00:17:01,640
Speaker 1: I think when you good social media, I think there

342
00:17:01,800 --> 00:17:04,840
Speaker 1: was you went through a period here where there was

343
00:17:04,920 --> 00:17:07,880
Speaker 1: potential eminids for some of those names. I think now

344
00:17:08,040 --> 00:17:10,240
Speaker 1: Dorsey and those guys have moojo and feel like they're

345
00:17:10,240 --> 00:17:12,239
Speaker 1: going to do it themselves. Okay, I want to reframe us.

346
00:17:12,359 --> 00:17:14,480
Speaker 1: Eric Ross just out with a readjust up to two

347
00:17:14,560 --> 00:17:18,760
Speaker 1: thirty on Apple? What Dan? What your target on Apple again. Yes,

348
00:17:18,840 --> 00:17:22,119
Speaker 1: we raised the two thirty five, but I believe if

349
00:17:22,160 --> 00:17:24,880
Speaker 1: they continue to execute, this is the doctor that could

350
00:17:24,920 --> 00:17:27,200
Speaker 1: go meaningfully higher. And I think, come on, come on,

351
00:17:27,320 --> 00:17:30,280
Speaker 1: you were among friends here three hundred look, I think

352
00:17:30,320 --> 00:17:33,920
Speaker 1: three again agreed just if they if they execute, and

353
00:17:34,080 --> 00:17:37,040
Speaker 1: on the services, that could be worth another twenty or

354
00:17:37,080 --> 00:17:39,719
Speaker 1: thirty hours per share, which could push you to sixty

355
00:17:41,119 --> 00:17:43,359
Speaker 1: host on the street at the mind thank you that.

356
00:17:43,760 --> 00:17:47,320
Speaker 1: I just love a lot of upgrades this morning. If

357
00:17:47,320 --> 00:17:49,880
Speaker 1: you got to the the Blimberg taminal and just looking

358
00:17:49,960 --> 00:17:53,040
Speaker 1: andless cold. And remember three months ago, a lot of

359
00:17:53,119 --> 00:17:55,800
Speaker 1: the a lot of my competitors, you know, we're viewing

360
00:17:55,840 --> 00:17:57,960
Speaker 1: this like a toxic stock. In the New York City

361
00:17:58,320 --> 00:18:00,960
Speaker 1: Driver wars negative on it. Dan emailed me the fifth

362
00:18:01,000 --> 00:18:03,320
Speaker 1: week of February in two thousand one, is said Tom

363
00:18:03,440 --> 00:18:06,920
Speaker 1: sell everything except I didn't open a email until April.

364
00:18:07,000 --> 00:18:09,080
Speaker 1: So if he opened the email, what would have happened?

365
00:18:12,200 --> 00:18:30,320
Speaker 1: Securitaging Director, This is the definitive interview of the day

366
00:18:30,480 --> 00:18:33,240
Speaker 1: on Venezuela. We are thrilled to have with a Shannon O'Neil.

367
00:18:33,880 --> 00:18:36,159
Speaker 1: If you do not know her, she's Vice president the

368
00:18:36,800 --> 00:18:40,399
Speaker 1: Council on Foreign relations. She is the Rockefeller Fellow on

369
00:18:40,600 --> 00:18:46,000
Speaker 1: Latin America, which barely describes her holistic understanding of Latin

370
00:18:46,280 --> 00:18:49,960
Speaker 1: and South America. We spoke to her earlier this morning, Shannon,

371
00:18:50,040 --> 00:18:51,879
Speaker 1: I need to go to the immediate news, and the

372
00:18:51,960 --> 00:18:56,359
Speaker 1: headline is there isn't any I'm stunned at the silence

373
00:18:56,800 --> 00:18:59,720
Speaker 1: out of Caracas here at ten minutes to nine in

374
00:18:59,760 --> 00:19:02,400
Speaker 1: the morning. Are you surprised at the lack of news

375
00:19:02,480 --> 00:19:06,320
Speaker 1: flow from Caracas this morning? We'll give in Yesterday morning

376
00:19:06,400 --> 00:19:09,520
Speaker 1: was very tumultuous with videos coming out from the opposition

377
00:19:09,840 --> 00:19:13,320
Speaker 1: with military behind the word Guido and the other leaders.

378
00:19:13,600 --> 00:19:16,640
Speaker 1: Today is very quiet, right, we hear nothing coming out.

379
00:19:17,160 --> 00:19:20,880
Speaker 1: Last night Medoro had a video he had the military

380
00:19:20,920 --> 00:19:23,400
Speaker 1: brass behind him, so showing his or trying to show

381
00:19:23,520 --> 00:19:26,480
Speaker 1: his control of the situation. In this morning, as you say,

382
00:19:26,600 --> 00:19:28,960
Speaker 1: is quiet. So it doesn't look like much has changed overnight.

383
00:19:29,200 --> 00:19:31,520
Speaker 1: And the question is what happens today. It's Mayday. There's

384
00:19:31,560 --> 00:19:34,399
Speaker 1: been a call for big opposition protests. We'll see if

385
00:19:34,440 --> 00:19:37,080
Speaker 1: people turn out on the streets. Washington is not quite

386
00:19:37,080 --> 00:19:39,560
Speaker 1: at the Secretary of State with Fox John Bolton and

387
00:19:39,720 --> 00:19:43,160
Speaker 1: CNN within the last hour, both of the making headlines

388
00:19:43,280 --> 00:19:47,440
Speaker 1: talking the company line. Identify where the company line goes

389
00:19:47,560 --> 00:19:51,000
Speaker 1: for the Trump administration. Is this a company line that's

390
00:19:51,040 --> 00:19:56,000
Speaker 1: political or does it include discussions with a Pentagon. Well,

391
00:19:56,080 --> 00:19:58,520
Speaker 1: what we saw so far yesterday and then this morning

392
00:19:58,760 --> 00:20:01,520
Speaker 1: is a company line that can DEM's Venezuela, that supports

393
00:20:01,520 --> 00:20:04,399
Speaker 1: the Venezuela opposition and then quickly turns to Cuba and

394
00:20:04,440 --> 00:20:08,320
Speaker 1: brings Cuba into this Cuba as an instigator of the

395
00:20:08,400 --> 00:20:11,280
Speaker 1: problems there, as a supporter of the Maduro regime and

396
00:20:11,440 --> 00:20:14,440
Speaker 1: demanding that Cuba stepped down. And so that company line

397
00:20:14,480 --> 00:20:17,119
Speaker 1: has really continued, but it is also more for the

398
00:20:17,200 --> 00:20:19,920
Speaker 1: two countries together as than just focusing on Venezuela, and

399
00:20:20,000 --> 00:20:22,879
Speaker 1: Senator Rubio tweeting out two hours ago with an update

400
00:20:22,960 --> 00:20:27,159
Speaker 1: on his thoughts on Florida and Cuba as well. Shannon O'Neil,

401
00:20:27,240 --> 00:20:29,280
Speaker 1: let's go to this. We have Fidel Casto, we have

402
00:20:29,400 --> 00:20:32,000
Speaker 1: roadcaster who I believe is eighties six or eighties seven.

403
00:20:32,480 --> 00:20:36,159
Speaker 1: There's a new guy in Cuba, a younger guy. He

404
00:20:36,320 --> 00:20:41,160
Speaker 1: has clearly supported Mr Maduro. How should anyone in American

405
00:20:41,280 --> 00:20:47,240
Speaker 1: particularly Trump administration, respond to this triangle of Washington. Let's

406
00:20:47,280 --> 00:20:52,160
Speaker 1: call it a trapezoid, Washington, Miami, Havana, and Caracas. How

407
00:20:52,240 --> 00:20:56,600
Speaker 1: does the Trump administration adapt to that? Well, the Trump

408
00:20:56,600 --> 00:20:59,440
Speaker 1: administration is putting those two in the same basket. But

409
00:20:59,600 --> 00:21:02,280
Speaker 1: as we look at Venezuela and some sort of solution there,

410
00:21:02,640 --> 00:21:04,919
Speaker 1: we can't forget the other big players that are right

411
00:21:05,000 --> 00:21:08,639
Speaker 1: now backing the Maduro government. Yes, there's fifty plus nations

412
00:21:08,680 --> 00:21:11,880
Speaker 1: including the United States that represent her recognize Jangwai though,

413
00:21:12,200 --> 00:21:15,760
Speaker 1: but China and Russia are backing the Maduro government so far,

414
00:21:15,800 --> 00:21:19,159
Speaker 1: and particularly Russia has in backing them with military support

415
00:21:19,200 --> 00:21:22,159
Speaker 1: at least advisors, if not more, on the ground in Venezuela.

416
00:21:22,240 --> 00:21:24,479
Speaker 1: So those are two players that as we look at

417
00:21:24,560 --> 00:21:26,960
Speaker 1: a triangle or travels and we should forget that those

418
00:21:27,000 --> 00:21:28,720
Speaker 1: two are is important as well. I mean, I guess

419
00:21:28,800 --> 00:21:32,159
Speaker 1: John Hay in the time of Ted Roosevelt, John Hay

420
00:21:32,240 --> 00:21:34,879
Speaker 1: did not have to worry about China and Russia in

421
00:21:35,040 --> 00:21:38,840
Speaker 1: his interpretation of a nineteen o four Monroe doctrine. Give

422
00:21:38,920 --> 00:21:41,040
Speaker 1: us an update on the Monroe doctor and John Bolton

423
00:21:41,119 --> 00:21:43,440
Speaker 1: was just talking about it on CNN. Do we have

424
00:21:43,600 --> 00:21:48,200
Speaker 1: a Monroe doctrine that excludes them? Well, right, Bolton is

425
00:21:48,240 --> 00:21:50,680
Speaker 1: bringing the Monroe Doctrine back again, and this idea that

426
00:21:50,760 --> 00:21:53,520
Speaker 1: the Western hemisphere should be the preserve of the United

427
00:21:53,600 --> 00:21:56,959
Speaker 1: States as as the great players or or the big actors.

428
00:21:57,000 --> 00:21:59,199
Speaker 1: And at the time it was against the European nations,

429
00:21:59,320 --> 00:22:01,680
Speaker 1: Britain and others who might be messing around. You know,

430
00:22:01,800 --> 00:22:04,560
Speaker 1: today it is really about China and Russia and their

431
00:22:04,640 --> 00:22:08,560
Speaker 1: influence there um, and that is that standoff is something

432
00:22:08,680 --> 00:22:11,080
Speaker 1: to be washing. Obviously, United States and Russia have had

433
00:22:11,400 --> 00:22:14,920
Speaker 1: disagreements in places like Syria and other around the world.

434
00:22:15,280 --> 00:22:17,680
Speaker 1: The question is what happens here in Venezuela, because so

435
00:22:17,840 --> 00:22:22,159
Speaker 1: far it looked that Russia is strongly backing this Maduro

436
00:22:22,240 --> 00:22:24,760
Speaker 1: government that the US is condemning. So that is but

437
00:22:24,800 --> 00:22:28,080
Speaker 1: another potential flashpoint around the world between those two nations.

438
00:22:28,160 --> 00:22:32,879
Speaker 1: Then what is your prescription in Caracas for these people

439
00:22:33,600 --> 00:22:36,440
Speaker 1: that want to push up against Maduro? I mean, we

440
00:22:36,520 --> 00:22:39,639
Speaker 1: saw what we saw yesterday, But what is the next

441
00:22:39,800 --> 00:22:43,159
Speaker 1: for Mr Guido and his people? You know, I do

442
00:22:43,320 --> 00:22:46,320
Speaker 1: think you will see Guido in the opposition today, call

443
00:22:46,480 --> 00:22:48,640
Speaker 1: for a big rally, see if they can bring people

444
00:22:48,720 --> 00:22:52,560
Speaker 1: out into the streets to pressure the regime. And while

445
00:22:52,680 --> 00:22:55,560
Speaker 1: Maduro did remain in the presidential palace last night and

446
00:22:55,760 --> 00:22:59,159
Speaker 1: woke up there this morning. His his control is not

447
00:22:59,480 --> 00:23:02,760
Speaker 1: air fight. And the fact that you saw some breaks yesterday,

448
00:23:02,760 --> 00:23:05,399
Speaker 1: you saw at least some lower level military come out.

449
00:23:05,440 --> 00:23:07,959
Speaker 1: The fact that you saw this question of was their

450
00:23:08,000 --> 00:23:10,480
Speaker 1: back room dealing with their negotiations going on behind his back,

451
00:23:10,520 --> 00:23:15,240
Speaker 1: It shows that the military is not fully compact and

452
00:23:15,560 --> 00:23:18,520
Speaker 1: in control there. So I do think what the opposition

453
00:23:18,600 --> 00:23:20,760
Speaker 1: can do, given that they don't control guns, given that

454
00:23:20,840 --> 00:23:23,639
Speaker 1: they don't control the different parts of the government, is

455
00:23:23,680 --> 00:23:25,480
Speaker 1: that they can bring out the people and show that

456
00:23:25,640 --> 00:23:27,960
Speaker 1: the government that the people of Venezuela are no longer

457
00:23:28,000 --> 00:23:30,240
Speaker 1: with this chame and see if you can get some

458
00:23:30,359 --> 00:23:33,080
Speaker 1: of the military and others to decide with what is

459
00:23:33,119 --> 00:23:35,440
Speaker 1: going on outside Caracas. I mean, my reading of the

460
00:23:35,520 --> 00:23:39,359
Speaker 1: Cuban Revolution nine was so much of it actually occurred

461
00:23:39,359 --> 00:23:42,760
Speaker 1: in eastern Cuba away from Havana. Is there an Eastern

462
00:23:42,880 --> 00:23:46,320
Speaker 1: Cuba for Venezuela right now that can provide a swelling

463
00:23:46,359 --> 00:23:50,960
Speaker 1: of support against Mr Maduro? So yesterday you saw people

464
00:23:51,000 --> 00:23:53,320
Speaker 1: come out in the street, obviously in Caracas, but also

465
00:23:53,400 --> 00:23:55,719
Speaker 1: in the other cities around Venezuela and then as well

466
00:23:55,760 --> 00:23:58,480
Speaker 1: as a very urban country some eight percent of the

467
00:23:58,520 --> 00:24:01,440
Speaker 1: population lives in urban areas, but it's not just the capital.

468
00:24:01,760 --> 00:24:05,160
Speaker 1: And so you have seen people across the nation come

469
00:24:05,200 --> 00:24:07,320
Speaker 1: out and want change, and a big part of that

470
00:24:07,520 --> 00:24:10,480
Speaker 1: is what has happened economically. This is a country that

471
00:24:10,720 --> 00:24:14,200
Speaker 1: is destitute. Its GDP is more than halved in just

472
00:24:14,359 --> 00:24:17,280
Speaker 1: a few years, inflation is it over ten million percent

473
00:24:17,359 --> 00:24:21,600
Speaker 1: and climbing. This is a place of desperation along with

474
00:24:21,720 --> 00:24:24,959
Speaker 1: political repression. So you do see people coming out across

475
00:24:24,960 --> 00:24:29,600
Speaker 1: the nation. What's the humanitarian prescription right now from Mr Maduro?

476
00:24:29,640 --> 00:24:32,200
Speaker 1: I mean, a lot of the Western press and particularly

477
00:24:32,200 --> 00:24:35,440
Speaker 1: the United States is poor Guido. I understand that, but

478
00:24:35,880 --> 00:24:38,879
Speaker 1: is this where Mr Maduro with Cuba, with China and

479
00:24:39,000 --> 00:24:43,359
Speaker 1: Russia gets humanitarian in the next two or three weeks.

480
00:24:44,720 --> 00:24:47,600
Speaker 1: You know, we have not seen the Maduro government care

481
00:24:47,640 --> 00:24:50,879
Speaker 1: about the humanitarian side. Why not? Why not? Why not?

482
00:24:51,320 --> 00:24:56,200
Speaker 1: Because this is a klectocratic criminal government at this point.

483
00:24:56,480 --> 00:24:59,920
Speaker 1: They're more interested in protecting their money, protecting their power.

484
00:25:00,000 --> 00:25:03,080
Speaker 1: Are um, they are running drugs, they are doing all

485
00:25:03,200 --> 00:25:05,600
Speaker 1: kinds of bad behaviors coming up to the government and

486
00:25:05,720 --> 00:25:07,600
Speaker 1: what they have been doing, which is actually the cube

487
00:25:07,680 --> 00:25:10,280
Speaker 1: example is if you don't agree with the government, they'd

488
00:25:10,359 --> 00:25:12,440
Speaker 1: prefer you to leave. And so we have seen over

489
00:25:12,600 --> 00:25:16,040
Speaker 1: three million refugees leave Venezuela. And I have to say,

490
00:25:16,080 --> 00:25:18,960
Speaker 1: if we don't see a political resolution coming up in

491
00:25:19,080 --> 00:25:21,560
Speaker 1: some way anytime soon, we're gonna see millions of more

492
00:25:21,680 --> 00:25:24,320
Speaker 1: Venezuelan's leaving. Dr O'Neill, I've got so much more to

493
00:25:24,400 --> 00:25:26,920
Speaker 1: talk about. We are out of time. We will do this,

494
00:25:27,080 --> 00:25:30,879
Speaker 1: unfortunately sooner than not with the news flow out of Venezuela.

495
00:25:30,960 --> 00:25:51,240
Speaker 1: Shannon O'Neill with a Council on Foreign Relations, you're gonna

496
00:25:51,280 --> 00:25:53,240
Speaker 1: get right to it. I was walking Vett Built down

497
00:25:53,280 --> 00:25:56,120
Speaker 1: Fifth Avenue last night. Somebody came up and they said,

498
00:25:56,200 --> 00:25:57,520
Speaker 1: how do you do it? How do you get up

499
00:25:57,560 --> 00:25:59,920
Speaker 1: there early in the morning? And as Paul Sweeney knows,

500
00:26:00,000 --> 00:26:02,600
Speaker 1: we're just honored with the quality of the guest f

501
00:26:02,720 --> 00:26:05,600
Speaker 1: Shannon O'Neil with us with a Council on Foreign Relations

502
00:26:05,640 --> 00:26:09,280
Speaker 1: in Venezuela. And now Randall Krossner of the University of

503
00:26:09,359 --> 00:26:12,520
Speaker 1: Chicago Boost School, the former governor of the FED, on

504
00:26:12,680 --> 00:26:17,440
Speaker 1: this tumultuous FED. Professor Crossner, how do you respond when

505
00:26:17,600 --> 00:26:20,600
Speaker 1: any president of the United States says keep the fund

506
00:26:20,680 --> 00:26:25,160
Speaker 1: punch bowl to the brim. How do you respond? Well,

507
00:26:25,800 --> 00:26:29,600
Speaker 1: I think presidents almost always say something like that, either

508
00:26:29,680 --> 00:26:34,000
Speaker 1: implicitly or explicitly. This president is much more explicit. Um,

509
00:26:34,400 --> 00:26:39,239
Speaker 1: but the fit is always in a political grip. Uh.

510
00:26:39,440 --> 00:26:42,639
Speaker 1: It is part of the it is part of the government.

511
00:26:43,000 --> 00:26:47,200
Speaker 1: It is created by Congress and it's mandate, and the

512
00:26:47,440 --> 00:26:51,360
Speaker 1: structure can always be changed by Congress and so um,

513
00:26:51,720 --> 00:26:54,600
Speaker 1: I don't. I think this is much more explicit. But

514
00:26:55,240 --> 00:26:57,760
Speaker 1: that the the ft is under political pressure is nothing new.

515
00:26:58,160 --> 00:26:59,959
Speaker 1: The briefing of g d P and he can I'm

516
00:27:00,119 --> 00:27:03,880
Speaker 1: growth from the top line three point two to domestic

517
00:27:03,960 --> 00:27:06,880
Speaker 1: final sales, which are pretty saggy, you know the story, professor,

518
00:27:07,320 --> 00:27:11,639
Speaker 1: external exports, inventory dynamics, And that is fine. I'm going

519
00:27:11,680 --> 00:27:14,879
Speaker 1: to assume the PhDs that the FED don't work on

520
00:27:15,119 --> 00:27:20,760
Speaker 1: actual granual data. They smoothed things out into a moving average.

521
00:27:21,160 --> 00:27:23,959
Speaker 1: How is the moving average of the American economy right now?

522
00:27:25,359 --> 00:27:29,680
Speaker 1: I think it's looking pretty good. We certainly had a

523
00:27:29,880 --> 00:27:34,000
Speaker 1: strong growth last year of almost almost three percent, and

524
00:27:34,400 --> 00:27:37,879
Speaker 1: we're getting a good reasonly the first quarter, and I

525
00:27:37,960 --> 00:27:41,680
Speaker 1: think much stronger than people had expected a few months ago. Um,

526
00:27:41,920 --> 00:27:44,679
Speaker 1: are we expecting three percent again for the full year

527
00:27:44,760 --> 00:27:49,720
Speaker 1: this year. No, but um it suggests that the recovery

528
00:27:49,800 --> 00:27:54,720
Speaker 1: has has legs. So Professor, I think most participants in

529
00:27:54,760 --> 00:27:57,440
Speaker 1: the market would believe that this FEED has done a

530
00:27:57,680 --> 00:28:01,760
Speaker 1: credible job managing the economic slowdown to us, perhaps a

531
00:28:01,840 --> 00:28:04,159
Speaker 1: soft landing, if you will. How do you grade this

532
00:28:04,320 --> 00:28:08,880
Speaker 1: FED over the last year or so? Uh so? Uh

533
00:28:09,320 --> 00:28:12,280
Speaker 1: it's always difficult to to give out these uh these grades,

534
00:28:12,320 --> 00:28:15,959
Speaker 1: I do I do that another another four you can

535
00:28:16,000 --> 00:28:22,520
Speaker 1: go pass fail. Well, they certainly passed. I think, um, yeah,

536
00:28:22,560 --> 00:28:27,840
Speaker 1: we've had good growth with very little inflation, and we're

537
00:28:27,880 --> 00:28:31,040
Speaker 1: continuing to have growth. There's a lot of concern that

538
00:28:31,640 --> 00:28:34,959
Speaker 1: that one quarter percentage point rise in December was going

539
00:28:35,040 --> 00:28:38,320
Speaker 1: to lead to economic arment. Gedding don't really see that

540
00:28:38,480 --> 00:28:42,640
Speaker 1: given the the GDP report. UM, I think sometimes people

541
00:28:42,680 --> 00:28:45,560
Speaker 1: put a little bit too much emphasis on one quarter

542
00:28:45,600 --> 00:28:47,800
Speaker 1: of a percentage point plus a minus. What the said,

543
00:28:47,880 --> 00:28:50,200
Speaker 1: does you know if the if the world economy and

544
00:28:50,240 --> 00:28:53,480
Speaker 1: the youth economy is really depended on just one quarter

545
00:28:53,560 --> 00:28:57,000
Speaker 1: percentage point, then it's probably a much more fundamental issue

546
00:28:57,080 --> 00:29:00,080
Speaker 1: rather than a FED issue. What is your experience of

547
00:29:00,200 --> 00:29:02,680
Speaker 1: when there's a bet by the market as seen in

548
00:29:02,840 --> 00:29:07,800
Speaker 1: FED futures or other fancy derivative instruments about what the FED,

549
00:29:08,120 --> 00:29:11,760
Speaker 1: like Krosner on the FED will game out three months,

550
00:29:11,840 --> 00:29:14,680
Speaker 1: six months, nine months, twelve months. Right now, off the

551
00:29:14,760 --> 00:29:19,320
Speaker 1: fancy paraphernalia, the Bloomberg and Frankly folks. Professor Krasner teaches

552
00:29:19,400 --> 00:29:22,920
Speaker 1: the dynamics of that, the math of that wisdom at booth.

553
00:29:23,560 --> 00:29:26,640
Speaker 1: But right now there's a likelihood of a rate cut

554
00:29:26,840 --> 00:29:30,200
Speaker 1: Randy at the October FED meeting. How do we get there?

555
00:29:30,280 --> 00:29:35,920
Speaker 1: What does that mean to a governor like you? So? Uh,

556
00:29:36,360 --> 00:29:41,240
Speaker 1: certainly the markets um, they have a belief and and

557
00:29:41,520 --> 00:29:45,640
Speaker 1: hopefully build that based at least in part on uh,

558
00:29:45,800 --> 00:29:49,400
Speaker 1: the guidance that that officials are giving. I think the

559
00:29:49,840 --> 00:29:52,640
Speaker 1: pivot of patients that they have have said that they

560
00:29:53,680 --> 00:29:57,320
Speaker 1: have suggests that they're going to wait and see. Um.

561
00:29:57,920 --> 00:30:00,960
Speaker 1: Right now, that's it's a bet on um whether they

562
00:30:01,000 --> 00:30:04,720
Speaker 1: think the US economy will can continue to grow and

563
00:30:04,920 --> 00:30:08,280
Speaker 1: whether inflation will stay not too far from the two

564
00:30:08,360 --> 00:30:12,360
Speaker 1: percent goal. We're seeing signs that the economy is going

565
00:30:12,440 --> 00:30:16,000
Speaker 1: to continue on in a recent pace, maybe not quite

566
00:30:16,000 --> 00:30:18,640
Speaker 1: at this this pace, but there's a lot of concerns

567
00:30:18,640 --> 00:30:23,040
Speaker 1: that inflation may be flagging but I'm going to run

568
00:30:23,040 --> 00:30:24,600
Speaker 1: out of time, Professor, so I've got to get this

569
00:30:24,720 --> 00:30:28,520
Speaker 1: important question in two guys like you and you said it.

570
00:30:29,160 --> 00:30:32,760
Speaker 1: Do you look at market belief on what guys like

571
00:30:32,920 --> 00:30:37,720
Speaker 1: you will do as a bet or a speculation or

572
00:30:37,840 --> 00:30:40,200
Speaker 1: is there a more gospel sense of it as it's

573
00:30:40,280 --> 00:30:44,640
Speaker 1: portrayed in the media. I think it's a little less

574
00:30:44,880 --> 00:30:50,120
Speaker 1: close to gospel. I think it's an interpretation and a

575
00:30:50,240 --> 00:30:53,400
Speaker 1: combination of people's expectations about what the said will do,

576
00:30:54,000 --> 00:30:57,480
Speaker 1: plus expectations about where the economy is going. But trying

577
00:30:57,520 --> 00:31:01,720
Speaker 1: to predict the economy these months out not always the

578
00:31:01,800 --> 00:31:05,000
Speaker 1: crystal ball is sometimes cloudy. Very hels like the Cubs

579
00:31:05,040 --> 00:31:07,280
Speaker 1: and the White Sox. Randall Crossing, thank you so much,

580
00:31:07,360 --> 00:31:10,480
Speaker 1: greatly appreciated. He is a former governor of the fellerw

581
00:31:10,520 --> 00:31:14,440
Speaker 1: Reserve System. Of course, first rate in mathematics and financial

582
00:31:14,520 --> 00:31:29,320
Speaker 1: dynamics at Boost School Chicago. Thanks for listening to the

583
00:31:29,360 --> 00:31:35,800
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

584
00:31:36,200 --> 00:31:40,400
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

585
00:31:40,480 --> 00:31:44,680
Speaker 1: Tom Keane Before the podcast, you can always catch us worldwide.

586
00:31:45,200 --> 00:31:46,240
Speaker 1: I'm Bloomberg Radio