1 00:00:02,920 --> 00:00:10,799 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,840 --> 00:00:15,000 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:15,040 --> 00:00:18,720 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business app. 4 00:00:18,760 --> 00:00:22,000 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:22,040 --> 00:00:24,360 Speaker 1: us live on YouTube. 6 00:00:25,000 --> 00:00:28,160 Speaker 2: So here's a headline for you. Blacksuit cyber crime gang 7 00:00:28,280 --> 00:00:31,800 Speaker 2: is blamed for major CDK ransomware attacks. 8 00:00:31,800 --> 00:00:32,560 Speaker 3: So this is the deal. 9 00:00:33,040 --> 00:00:36,159 Speaker 2: Fifteen thousand car dealerships across the US in Canada have 10 00:00:36,200 --> 00:00:39,600 Speaker 2: gone days now without software systems that are crucial to 11 00:00:39,680 --> 00:00:43,199 Speaker 2: running their business, and this is after multiple cyber attacks 12 00:00:43,200 --> 00:00:46,519 Speaker 2: on CDK Global. Now that company's just a handful of 13 00:00:46,520 --> 00:00:51,400 Speaker 2: dealer management systems that provide auto retailer's ability to basically function, 14 00:00:51,560 --> 00:00:56,000 Speaker 2: schedule appointments, customer records, etc. And so apparently Blacksuit cyber 15 00:00:56,120 --> 00:00:59,120 Speaker 2: crime Gang is blamed in that attack. 16 00:00:59,200 --> 00:00:59,840 Speaker 4: It's a real deal. 17 00:01:00,000 --> 00:01:02,960 Speaker 5: Buddy Mine manages a dealership in Jersey and he said 18 00:01:02,960 --> 00:01:05,720 Speaker 5: it's definitely. It impacts everything they do. And the net 19 00:01:05,720 --> 00:01:09,280 Speaker 5: result is it just takes longer to serve your customer, 20 00:01:09,840 --> 00:01:10,280 Speaker 5: gives them. 21 00:01:10,240 --> 00:01:12,319 Speaker 4: More time to walk out the door, and. 22 00:01:12,319 --> 00:01:14,080 Speaker 5: So it's impacting, you know, a little bit of an 23 00:01:14,120 --> 00:01:16,920 Speaker 5: impact on units sold per day they're noticing, so they 24 00:01:16,959 --> 00:01:19,200 Speaker 5: need to get that fixed as quickly as possible. 25 00:01:19,200 --> 00:01:19,679 Speaker 3: That's interesting. 26 00:01:19,680 --> 00:01:21,160 Speaker 2: But also like when you go to a car dealership, 27 00:01:21,160 --> 00:01:23,440 Speaker 2: you already spend half your day there, so you extended 28 00:01:23,560 --> 00:01:26,240 Speaker 2: and like forget it. Steve Mann is Bloomberg Intelligence Global 29 00:01:26,240 --> 00:01:28,960 Speaker 2: Auto is an industrials research analyst, and he joins us. Now, Steve, 30 00:01:28,959 --> 00:01:31,039 Speaker 2: you've been following this and the hack. 31 00:01:31,319 --> 00:01:32,080 Speaker 3: What happened? 32 00:01:33,240 --> 00:01:37,040 Speaker 6: Oh, this is very significant. I mean, I mean, Paul 33 00:01:37,200 --> 00:01:39,760 Speaker 6: just said he spoke to some of the dealership in 34 00:01:39,760 --> 00:01:42,160 Speaker 6: New Jersey. If I've reached out to some of the 35 00:01:42,200 --> 00:01:46,080 Speaker 6: dealerships that I've that I've talked to, the impact is significant. 36 00:01:46,160 --> 00:01:49,800 Speaker 6: It's not just only sales, but it's also service and parts. 37 00:01:50,760 --> 00:01:53,800 Speaker 6: You know, the systems interrupted to a point where they 38 00:01:53,840 --> 00:01:58,920 Speaker 6: can't even get certain cars registered and delivered to their customers, 39 00:01:58,960 --> 00:02:02,080 Speaker 6: the ones that's already sold. So you know, Inventor is 40 00:02:02,120 --> 00:02:06,240 Speaker 6: gonna get a little pick up. It's gonna be you know, 41 00:02:06,280 --> 00:02:08,880 Speaker 6: I don't know when it's gonna get fixed. They probably 42 00:02:08,880 --> 00:02:10,960 Speaker 6: have to pay that fine, and I think they will 43 00:02:10,960 --> 00:02:13,280 Speaker 6: pay that fine. But at the end of the day, 44 00:02:13,639 --> 00:02:16,239 Speaker 6: I think if I look at from the automaker's perspective, 45 00:02:16,800 --> 00:02:20,799 Speaker 6: it's it's a temporary, temporary blip. Inventory is gonna rise, 46 00:02:20,880 --> 00:02:23,679 Speaker 6: but I think sales will be delayed, and hopefully when 47 00:02:23,680 --> 00:02:27,400 Speaker 6: this gets resolved, customers will come back. More customers will 48 00:02:27,440 --> 00:02:29,200 Speaker 6: come back to the to the showroom. 49 00:02:29,600 --> 00:02:33,880 Speaker 5: And it seems I mean Bloomberg News reporting CDK plans 50 00:02:33,960 --> 00:02:35,560 Speaker 5: to make the ransomware payment. 51 00:02:35,960 --> 00:02:39,720 Speaker 4: Oh yeah, frustrating. It's just but I guess they kind 52 00:02:39,720 --> 00:02:40,040 Speaker 4: of have to. 53 00:02:40,080 --> 00:02:42,200 Speaker 5: I don't know, all right, Steve talked to us about 54 00:02:42,639 --> 00:02:48,320 Speaker 5: China europe tariffs. We've got the European Union reporting you know, 55 00:02:48,440 --> 00:02:50,679 Speaker 5: we talked to you last week initiating some tariffs here. 56 00:02:51,080 --> 00:02:53,840 Speaker 5: Now Beijing's kind of responding here. What's the latest. 57 00:02:55,240 --> 00:02:59,160 Speaker 6: Yeah, it's uh, it's it's a big deal for the Germans, 58 00:02:59,240 --> 00:03:02,960 Speaker 6: especially the luck through automakers like BMW, Mercedes and Audi 59 00:03:03,400 --> 00:03:07,280 Speaker 6: which Volkswagen owns Audi. Uh. You know, they have about 60 00:03:07,320 --> 00:03:11,120 Speaker 6: eighty percent of the market, the luxury car market in China, 61 00:03:11,680 --> 00:03:15,640 Speaker 6: so they sell a huge amount of cars in China. 62 00:03:15,840 --> 00:03:20,480 Speaker 6: About a third to forty percent of these companies' revenues 63 00:03:20,520 --> 00:03:24,280 Speaker 6: actually generate in China, so they yeah, so they want 64 00:03:24,280 --> 00:03:27,639 Speaker 6: to make good with the Chinese. As you know, Germany 65 00:03:27,720 --> 00:03:32,000 Speaker 6: has been against the tariffs. So if the Germans are 66 00:03:32,080 --> 00:03:36,800 Speaker 6: able to get something from China and help ease some 67 00:03:36,880 --> 00:03:40,640 Speaker 6: of the tariffs or China. You know, if China can 68 00:03:41,240 --> 00:03:42,920 Speaker 6: get the Germans to help them ease some of the 69 00:03:43,000 --> 00:03:47,120 Speaker 6: tariffs in the EU, I think it will benefit you know, 70 00:03:47,160 --> 00:03:51,040 Speaker 6: potentially companies like Stilentis as well, which is which also 71 00:03:51,160 --> 00:03:52,880 Speaker 6: has a new joint venture. 72 00:03:53,160 --> 00:03:56,080 Speaker 2: But here's the thing that I get confused, is it 73 00:03:56,160 --> 00:04:00,160 Speaker 2: China's making a pitch to individual countries versus the European 74 00:04:00,280 --> 00:04:04,160 Speaker 2: Union trying to operate as one body in relation to tariffs, 75 00:04:04,200 --> 00:04:06,880 Speaker 2: and I wonder how that's gonna work itself out. 76 00:04:08,160 --> 00:04:12,200 Speaker 6: Yeah, I think it's it's that conquer, divine and conquer 77 00:04:12,520 --> 00:04:16,479 Speaker 6: strategy they're they're taking. So but you know, I think 78 00:04:16,520 --> 00:04:20,160 Speaker 6: the Germans probably has the most to lose out of 79 00:04:20,200 --> 00:04:24,599 Speaker 6: the global automakers here. You know, about sixteen percent of 80 00:04:24,640 --> 00:04:27,960 Speaker 6: their battery electric vehicles that are produced in China, it's 81 00:04:27,960 --> 00:04:31,560 Speaker 6: actually shipped out globally. So China plays an important part 82 00:04:31,920 --> 00:04:35,320 Speaker 6: for the BEEV market as a low cost producer. So 83 00:04:36,080 --> 00:04:37,680 Speaker 6: you know, I don't think there's a lot of other 84 00:04:38,600 --> 00:04:42,039 Speaker 6: automakers that are you know that have that many bev's 85 00:04:42,120 --> 00:04:45,040 Speaker 6: produced in China and sold elsewhere around the world. 86 00:04:45,839 --> 00:04:48,560 Speaker 5: And Steeve just a red headline crossing the Bloomberg terminal. 87 00:04:48,600 --> 00:04:52,160 Speaker 5: Now Canada now gets into the game. Canada announces planned 88 00:04:52,360 --> 00:04:56,080 Speaker 5: to curb imports of Chinese made evs. 89 00:04:56,480 --> 00:04:57,680 Speaker 4: I mean, what's going on here? 90 00:04:57,720 --> 00:05:00,839 Speaker 5: I mean, I mean, first of all, just give us 91 00:05:00,839 --> 00:05:04,599 Speaker 5: a sense of how good, how competitive are these Chinese evs, 92 00:05:04,600 --> 00:05:06,960 Speaker 5: because if you tell me they're good vehicles, let's bring 93 00:05:07,000 --> 00:05:07,599 Speaker 5: them into the market. 94 00:05:07,680 --> 00:05:10,600 Speaker 6: I don't know, Yeah, I think some if you talk 95 00:05:10,640 --> 00:05:13,320 Speaker 6: to some of the al makers, they actually have the 96 00:05:13,320 --> 00:05:16,680 Speaker 6: same thinking. Let's let's let's compete, right. I think competition 97 00:05:16,920 --> 00:05:20,080 Speaker 6: will make the whole industry better. You saw that with 98 00:05:20,200 --> 00:05:25,080 Speaker 6: Tesla being the you know, fourth or third automaker in 99 00:05:25,080 --> 00:05:27,720 Speaker 6: the US and actually helped drive a lot of the 100 00:05:27,800 --> 00:05:31,960 Speaker 6: b EV costs down. But you know, it's not surprising 101 00:05:32,000 --> 00:05:36,520 Speaker 6: that Canada is is implementing tariffs. Uh. They are part 102 00:05:36,560 --> 00:05:40,200 Speaker 6: of the US Mexico Canada Free Trade Agreement, and I 103 00:05:40,240 --> 00:05:43,240 Speaker 6: think you know they have to close that that door, 104 00:05:43,279 --> 00:05:45,880 Speaker 6: that back door where the Chinese evs can come in. 105 00:05:46,440 --> 00:05:49,800 Speaker 6: It is it is very competitive. I think you know, 106 00:05:49,960 --> 00:05:52,960 Speaker 6: Chinese evs are cheap enough that if you know, some 107 00:05:53,120 --> 00:05:56,159 Speaker 6: argue that even with the tariffs, even with some engineering 108 00:05:56,240 --> 00:06:00,800 Speaker 6: change to to so that they're they fit thet they 109 00:06:00,800 --> 00:06:05,719 Speaker 6: fit the regulatory safety and mission rules here, is still 110 00:06:05,760 --> 00:06:09,760 Speaker 6: be a very competitive price vehicle for North America. 111 00:06:10,760 --> 00:06:13,400 Speaker 2: So then to that point, we're waiting for Mexico now, right, 112 00:06:13,480 --> 00:06:15,080 Speaker 2: because I think we talked about this before. So not 113 00:06:15,160 --> 00:06:17,719 Speaker 2: only is Canada gonna put tariffs on EV imports, they're 114 00:06:17,720 --> 00:06:19,680 Speaker 2: also going to curb imports. 115 00:06:19,400 --> 00:06:20,520 Speaker 3: Of Chinese made evs. 116 00:06:20,800 --> 00:06:22,440 Speaker 2: The idea is that if Mexico doesn't have any of 117 00:06:22,440 --> 00:06:25,000 Speaker 2: those restrictions, that they can just import EV's from China 118 00:06:25,080 --> 00:06:27,880 Speaker 2: and then through Mexico go into the US. And that's 119 00:06:27,880 --> 00:06:30,680 Speaker 2: a different way of operating. When do we get that 120 00:06:30,720 --> 00:06:31,440 Speaker 2: from Mexico. 121 00:06:32,240 --> 00:06:36,200 Speaker 6: I think there are some negotiation that's happening now with 122 00:06:36,440 --> 00:06:39,839 Speaker 6: Mexico to kind of implement similar tariff. I've heard that 123 00:06:40,400 --> 00:06:44,400 Speaker 6: VOVO is already kind of lobbying. VOVO is actually part 124 00:06:44,440 --> 00:06:49,560 Speaker 6: of Chile, is actually lobbying the Mexican government to not implement, 125 00:06:49,839 --> 00:06:54,320 Speaker 6: to not put tariffs in place. So then negotiations are ongoing. 126 00:06:55,200 --> 00:06:57,719 Speaker 6: I don't think we were gonna wait, have to wait 127 00:06:57,760 --> 00:06:59,480 Speaker 6: too long to hear any news from that. 128 00:07:00,080 --> 00:07:03,279 Speaker 5: All right, So stepping back a little bit, give us 129 00:07:03,320 --> 00:07:07,000 Speaker 5: the latest thinking out of Detroit and other auto capitals 130 00:07:07,040 --> 00:07:08,240 Speaker 5: around the world about. 131 00:07:09,000 --> 00:07:11,080 Speaker 4: EV's versus the hybrids. 132 00:07:12,280 --> 00:07:15,679 Speaker 5: Is the hybrid going to be I guess the stepping 133 00:07:15,720 --> 00:07:19,000 Speaker 5: stone to a pure EV environment? Do you think is 134 00:07:19,000 --> 00:07:19,800 Speaker 5: that still the thinking? 135 00:07:20,680 --> 00:07:22,720 Speaker 6: Yeah, I think that is still the thinking. I think 136 00:07:22,760 --> 00:07:28,840 Speaker 6: with BEEV sales slowing down or growth slowing down, the 137 00:07:28,880 --> 00:07:33,920 Speaker 6: automakers do need something else to meet the cafe, the 138 00:07:34,360 --> 00:07:39,040 Speaker 6: few economy regulations, the emissions regulations. So hybrid is a 139 00:07:39,080 --> 00:07:42,200 Speaker 6: stopgap measure. But if you talk to the all the 140 00:07:42,280 --> 00:07:45,280 Speaker 6: automakers just still spending a lot of money on BEV. 141 00:07:45,440 --> 00:07:48,000 Speaker 6: They think that is the future because at the end 142 00:07:48,040 --> 00:07:51,880 Speaker 6: of the day, hybrid vehicles do still spill spell out 143 00:07:52,800 --> 00:07:58,000 Speaker 6: pollution or greenhouse gases. So you know, as you know, 144 00:07:58,040 --> 00:08:02,000 Speaker 6: these emission standards, these few economy standards, they're only going 145 00:08:02,080 --> 00:08:03,400 Speaker 6: to get tighter and tighter. 146 00:08:04,360 --> 00:08:06,840 Speaker 3: All right, Steve, we appreciate it, Thank you very much. 147 00:08:06,920 --> 00:08:08,880 Speaker 2: I feel like your sector is moving so fast right 148 00:08:08,880 --> 00:08:11,000 Speaker 2: now in terms of all the rules and regulations. Steve 149 00:08:11,080 --> 00:08:15,200 Speaker 2: Man Bloomberg Intelligence, Global Autos and industrials research analyst. 150 00:08:16,800 --> 00:08:20,680 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 151 00:08:20,760 --> 00:08:23,280 Speaker 1: weekdays at ten am Eastern on Apple car. 152 00:08:23,320 --> 00:08:25,040 Speaker 7: Play and Android Auto. 153 00:08:24,720 --> 00:08:27,480 Speaker 1: With the Bloomberg Business app. You can also listen live 154 00:08:27,560 --> 00:08:30,760 Speaker 1: on Amazon Alexa from our flagship New York station Just 155 00:08:30,800 --> 00:08:33,439 Speaker 1: Say Alexa playing Bloomberg eleven thirty. 156 00:08:35,120 --> 00:08:37,120 Speaker 5: One of the pieces of news crossing the tape here, 157 00:08:37,520 --> 00:08:40,160 Speaker 5: Alex just reaching is you know Apple, there's some concerns 158 00:08:40,160 --> 00:08:44,280 Speaker 5: there at the European Union regulators once again looking at 159 00:08:44,280 --> 00:08:46,640 Speaker 5: a big US tech company, in this case Apple, looking 160 00:08:46,679 --> 00:08:51,439 Speaker 5: at their app store and maybe some abuses. Their Temlin 161 00:08:52,720 --> 00:08:56,760 Speaker 5: Basent Joints is here. Temlin is a technologyannelst for Bloomberg Intelligence. 162 00:08:57,160 --> 00:08:59,600 Speaker 5: He was in the US, but now he's in London. 163 00:09:00,080 --> 00:09:01,920 Speaker 4: Get to London. I have no idea how that happened. 164 00:09:02,040 --> 00:09:03,440 Speaker 4: I did not complane. 165 00:09:03,559 --> 00:09:04,880 Speaker 3: I mean a ship would take a way too long. 166 00:09:04,960 --> 00:09:05,920 Speaker 4: Yeah, I did not approve that. 167 00:09:06,360 --> 00:09:08,640 Speaker 5: But anyway, Tamlin, thanks so much for joining us here. 168 00:09:08,800 --> 00:09:09,040 Speaker 6: Talent. 169 00:09:09,160 --> 00:09:11,839 Speaker 5: Tell us what's happening with Apple today as it relates 170 00:09:11,880 --> 00:09:13,920 Speaker 5: to the European Union and some of the regulators there. 171 00:09:15,000 --> 00:09:18,160 Speaker 8: Yeah. Sure, So what happened today is the European Commission 172 00:09:18,760 --> 00:09:23,280 Speaker 8: announced preliminary findings in an investigation into Apple under the 173 00:09:23,400 --> 00:09:27,760 Speaker 8: Digital Markets Act. This is the sweeping new competition rules 174 00:09:27,760 --> 00:09:30,880 Speaker 8: that the European Union is sort of implemented in March 175 00:09:30,920 --> 00:09:35,120 Speaker 8: of this year. Now, the findings of this probe relate 176 00:09:35,400 --> 00:09:39,960 Speaker 8: to anti steering rules, so essentially to Apple's rules that 177 00:09:40,040 --> 00:09:43,080 Speaker 8: it has in place to sort of prevent app developers 178 00:09:43,480 --> 00:09:47,240 Speaker 8: from informing users of maybe cheaper subscription options outside of 179 00:09:47,280 --> 00:09:50,120 Speaker 8: the app store. Now this might sound familiar because just 180 00:09:50,200 --> 00:09:53,400 Speaker 8: in early March, before the DMA took effect, the Commission 181 00:09:53,440 --> 00:09:57,440 Speaker 8: did find Apple one point eight billion euros over sort 182 00:09:57,480 --> 00:10:02,000 Speaker 8: of the same anti steering. Now, what today their commission 183 00:10:02,040 --> 00:10:06,360 Speaker 8: said is that Apple is still not complying now with 184 00:10:06,520 --> 00:10:10,640 Speaker 8: the d m A in terms of really letting developers 185 00:10:10,760 --> 00:10:15,440 Speaker 8: freely engage with users and direct them to cheaper options. Specifically, 186 00:10:15,520 --> 00:10:18,360 Speaker 8: this kind of they want developers to be able to 187 00:10:19,240 --> 00:10:22,480 Speaker 8: market within the app and show cheaper subscriptions within that. 188 00:10:23,000 --> 00:10:26,240 Speaker 8: So it's really this is kind of more pressure on 189 00:10:26,320 --> 00:10:28,760 Speaker 8: those sort of app store revenues that Apple. 190 00:10:29,360 --> 00:10:31,320 Speaker 2: So what does Apple say to that, Like, well, what's 191 00:10:31,360 --> 00:10:33,400 Speaker 2: their defense to that, because presumably they had months to 192 00:10:33,480 --> 00:10:34,320 Speaker 2: kind of get it together. 193 00:10:35,559 --> 00:10:38,760 Speaker 8: They did, and they haven't responded. What do they said 194 00:10:38,840 --> 00:10:41,440 Speaker 8: is they think that they do comply with all of this. 195 00:10:41,720 --> 00:10:43,800 Speaker 8: What's interesting about the DMA, though, is that this is 196 00:10:43,840 --> 00:10:49,240 Speaker 8: the DMA that European Commission did play a strong role 197 00:10:49,320 --> 00:10:53,560 Speaker 8: in drafting these rules, and it's also responsible for enforcing them, 198 00:10:53,840 --> 00:10:57,959 Speaker 8: and there are a lot of sort of subjective interpretations 199 00:10:58,000 --> 00:11:01,199 Speaker 8: in terms of first complying with it. So I think 200 00:11:01,320 --> 00:11:03,680 Speaker 8: what we are going to see is probably the European 201 00:11:03,679 --> 00:11:07,320 Speaker 8: Commission taking a very strict view of what's reasonable in 202 00:11:07,360 --> 00:11:12,160 Speaker 8: these circumstances and probably really try to get strict adherance here. 203 00:11:12,200 --> 00:11:14,440 Speaker 8: So it's going to be going to be up to 204 00:11:14,480 --> 00:11:16,960 Speaker 8: them to decide whether Apple is complied or not, and 205 00:11:17,000 --> 00:11:19,079 Speaker 8: then Apple can then sort of appeal to the courts. 206 00:11:19,080 --> 00:11:20,960 Speaker 8: But I do think it's it's pretty likely we're going 207 00:11:21,000 --> 00:11:24,920 Speaker 8: to see another fine in this and some behavioral remedies 208 00:11:24,960 --> 00:11:25,800 Speaker 8: coming down the line. 209 00:11:26,040 --> 00:11:28,720 Speaker 5: You know, Alex, I love talking to Tamlin. Good guy, 210 00:11:28,840 --> 00:11:31,720 Speaker 5: smart guy, But you know what, it just doesn't matter. 211 00:11:32,040 --> 00:11:34,640 Speaker 5: Apple stock up a tenths of one percent today, It's 212 00:11:34,679 --> 00:11:37,800 Speaker 5: a nine percent year to date. We've seen this time 213 00:11:37,840 --> 00:11:41,160 Speaker 5: and time again where the Europeans just start nitpicking at 214 00:11:41,200 --> 00:11:45,400 Speaker 5: these US technology companies, Tamila, what's the feeling within the 215 00:11:45,440 --> 00:11:49,440 Speaker 5: regulatory environment of Europe as to really what they're trying 216 00:11:49,480 --> 00:11:51,800 Speaker 5: to do here, because it just doesn't seem like it's 217 00:11:51,960 --> 00:11:54,360 Speaker 5: even relevant. I mean, it just at the end of 218 00:11:54,400 --> 00:11:57,599 Speaker 5: the day, they just these whether it's Google or Facebook, 219 00:11:57,720 --> 00:12:00,320 Speaker 5: or they just write checks here to make could all 220 00:12:00,400 --> 00:12:04,120 Speaker 5: go away? I mean, is that kind of do European 221 00:12:04,160 --> 00:12:08,319 Speaker 5: regulators recognize that it just doesn't seem to be that 222 00:12:08,360 --> 00:12:09,600 Speaker 5: I material what they're doing. 223 00:12:09,520 --> 00:12:11,880 Speaker 8: Right, Yeah, So I think if you look at this 224 00:12:11,920 --> 00:12:14,880 Speaker 8: specific investigation, you know, this is one that sort of 225 00:12:14,920 --> 00:12:17,040 Speaker 8: came out of sort of Spotify, which of course is 226 00:12:17,200 --> 00:12:20,920 Speaker 8: headquartered in Europe, and the app developers are complaining that 227 00:12:20,920 --> 00:12:23,079 Speaker 8: the Apple is squeezing them too hard. So I think 228 00:12:23,559 --> 00:12:26,200 Speaker 8: in some of these instances, Europe is trying to protect 229 00:12:26,559 --> 00:12:30,760 Speaker 8: some local players by sort of ordering a sort of 230 00:12:30,800 --> 00:12:33,880 Speaker 8: loosening of these rules that sort of maybe benefit the 231 00:12:33,920 --> 00:12:38,160 Speaker 8: gatekeeper on the NBA, which DNA, which would be at Apple, Google, 232 00:12:38,160 --> 00:12:40,720 Speaker 8: Microsoft brothers, and they are sort of trying to show 233 00:12:41,679 --> 00:12:44,840 Speaker 8: domestic industry that they are trying to pry open the markets. 234 00:12:45,280 --> 00:12:47,160 Speaker 8: But I do think you're right that I think at 235 00:12:47,160 --> 00:12:50,360 Speaker 8: this point investors are sort of kind of just shrugging 236 00:12:50,360 --> 00:12:53,040 Speaker 8: this off. This is just one thing after another. I 237 00:12:53,080 --> 00:12:55,840 Speaker 8: will point that may point out that a difference under 238 00:12:55,840 --> 00:12:59,040 Speaker 8: the DMA is that the timeline is really much quicker 239 00:12:59,040 --> 00:13:02,079 Speaker 8: than under sort of former case law, where it may 240 00:13:02,160 --> 00:13:05,800 Speaker 8: take three four years until you got a result after 241 00:13:05,840 --> 00:13:09,400 Speaker 8: an industiation. Here that this finding came just three months 242 00:13:09,440 --> 00:13:12,560 Speaker 8: after the inquiry opened, and we're going to have sort 243 00:13:12,600 --> 00:13:16,040 Speaker 8: of a final remedial measure by early next year. So 244 00:13:16,280 --> 00:13:19,480 Speaker 8: I do think the timeline is faster. Whether or not 245 00:13:19,720 --> 00:13:22,319 Speaker 8: this results and sort of the impact that the regulators 246 00:13:22,360 --> 00:13:25,400 Speaker 8: might be looking for, I think definitely remains to be seen, 247 00:13:25,440 --> 00:13:28,040 Speaker 8: and I think investors are definitely looking a little bit 248 00:13:28,080 --> 00:13:30,160 Speaker 8: of skew at it and thinking maybe this is sort 249 00:13:30,200 --> 00:13:31,040 Speaker 8: of just more of the same. 250 00:13:31,120 --> 00:13:34,680 Speaker 5: And Alex, I mean, you know, it's really almost, maybe 251 00:13:34,720 --> 00:13:37,360 Speaker 5: even more than thirty years ago that Microsoft started going 252 00:13:37,400 --> 00:13:40,440 Speaker 5: through the same whole thing with the European Union, and 253 00:13:40,520 --> 00:13:43,839 Speaker 5: again it investors became conditioned to it's no big deal. 254 00:13:43,840 --> 00:13:45,360 Speaker 5: They just write it check and it kind of goes away. 255 00:13:45,480 --> 00:13:48,160 Speaker 5: The tobacco industry, you know, investors kind of said, put 256 00:13:48,200 --> 00:13:51,800 Speaker 5: it in context, it's not that big a deal, and 257 00:13:51,880 --> 00:13:54,480 Speaker 5: you kind of wonder, you know, given that the US 258 00:13:54,600 --> 00:13:57,760 Speaker 5: regulators have taken a very light touch to technology and 259 00:13:57,760 --> 00:14:00,360 Speaker 5: then allowing these companies to get so big, like the 260 00:14:00,360 --> 00:14:03,360 Speaker 5: Europeans are trying to do what they can to kind 261 00:14:03,400 --> 00:14:05,280 Speaker 5: of rein it in, but it seems almost too little, 262 00:14:05,280 --> 00:14:06,080 Speaker 5: too late, right. 263 00:14:06,120 --> 00:14:08,040 Speaker 2: And also you can make the argument too that you know, 264 00:14:08,080 --> 00:14:10,320 Speaker 2: Europe doesn't have a lot of technology companies. They have some, 265 00:14:10,400 --> 00:14:14,439 Speaker 2: of course, like ASML for example, Yes, but yeah, exactly SAP, 266 00:14:14,640 --> 00:14:17,760 Speaker 2: but I mean, can you name anymore? No, there's some, 267 00:14:18,000 --> 00:14:20,160 Speaker 2: But I think that that's kind of the point. Maybe 268 00:14:20,240 --> 00:14:22,640 Speaker 2: take a look at you know, European stocks versus the 269 00:14:22,720 --> 00:14:24,680 Speaker 2: S and P and market cap like twenty years ago 270 00:14:24,920 --> 00:14:28,360 Speaker 2: versus now, Oh my gosh, forget that different. Hey Tamlin, 271 00:14:28,480 --> 00:14:30,520 Speaker 2: what's going on with Apple in general? Like it's it's 272 00:14:30,640 --> 00:14:32,320 Speaker 2: it seems to be making a little bit of a 273 00:14:32,360 --> 00:14:35,000 Speaker 2: comeback here. It's actually ups extensive one percent, despite you know, 274 00:14:35,000 --> 00:14:36,840 Speaker 2: in video for example, down over two percent. 275 00:14:36,880 --> 00:14:37,560 Speaker 3: What do you make of that? 276 00:14:38,680 --> 00:14:40,600 Speaker 8: Yeah, I mean I think some of this comes some 277 00:14:40,720 --> 00:14:43,720 Speaker 8: sort of the recent announcement to sort of build AI 278 00:14:43,880 --> 00:14:47,160 Speaker 8: into the into the iPhone and maybe maybe sort of 279 00:14:47,200 --> 00:14:51,560 Speaker 8: accelerate the recycle in terms of getting people to buy 280 00:14:51,560 --> 00:14:56,200 Speaker 8: those phones. I do think it probably definitely. I don't 281 00:14:56,240 --> 00:15:01,600 Speaker 8: think the regulatory headwinds are really causing it much damage 282 00:15:01,680 --> 00:15:04,480 Speaker 8: right now. I will point out that although the US 283 00:15:04,560 --> 00:15:07,320 Speaker 8: is definitely like ASSAD taking a light touch approach, the 284 00:15:07,360 --> 00:15:09,480 Speaker 8: one area they are getting involved in is on sort 285 00:15:09,480 --> 00:15:12,120 Speaker 8: of these apps for rules, where where Apple's obviously been 286 00:15:12,120 --> 00:15:14,360 Speaker 8: in litigation with Epic for years and years and years. 287 00:15:14,400 --> 00:15:16,720 Speaker 8: So I think on both sides of the Atlantic, there 288 00:15:16,960 --> 00:15:20,080 Speaker 8: are some pressure on that on those services revenues that 289 00:15:20,160 --> 00:15:22,360 Speaker 8: we might see shaking out over the next you know, 290 00:15:22,520 --> 00:15:24,440 Speaker 8: nine to eighteen months to see how that plays out. 291 00:15:24,560 --> 00:15:27,720 Speaker 5: So Timmley, you've you've been based both in the US 292 00:15:28,040 --> 00:15:31,040 Speaker 5: and now in the UK. What's your view of kind 293 00:15:31,040 --> 00:15:35,400 Speaker 5: of the technology and landscape and the ability for new 294 00:15:35,440 --> 00:15:39,320 Speaker 5: technologies to kind of be developed and grow in in 295 00:15:39,360 --> 00:15:41,760 Speaker 5: the UK and Europe. What's what's your view given your 296 00:15:41,760 --> 00:15:43,040 Speaker 5: experience in the US. 297 00:15:43,760 --> 00:15:47,840 Speaker 8: Yeah, well, I think the US probably probably has more 298 00:15:47,840 --> 00:15:51,560 Speaker 8: of a fostering environment for that startups stage. I think 299 00:15:51,560 --> 00:15:55,880 Speaker 8: that's why you've seen some of your US companies really flourished. 300 00:15:56,080 --> 00:15:58,720 Speaker 8: I do think in Europe there's trying to create that 301 00:15:58,760 --> 00:16:03,040 Speaker 8: fostering environment, specifically for the artificial intelligence field. I think 302 00:16:03,080 --> 00:16:06,280 Speaker 8: you have seen some they are. There's an AI regulation 303 00:16:06,360 --> 00:16:08,880 Speaker 8: that's taken effect. I don't think it's nearly as strict 304 00:16:08,880 --> 00:16:10,680 Speaker 8: as it could have been. I think a large reason 305 00:16:10,720 --> 00:16:15,080 Speaker 8: for that are lawmakers, specifically in France and Germany, really 306 00:16:15,080 --> 00:16:18,760 Speaker 8: wanted to try to foster and incubate beat AI industries 307 00:16:18,800 --> 00:16:20,760 Speaker 8: that they had going on. So I think we'll have 308 00:16:20,840 --> 00:16:23,240 Speaker 8: to see whether that works out and whether we have 309 00:16:23,320 --> 00:16:28,400 Speaker 8: the European large scale AI players. I think historically definitely, 310 00:16:28,480 --> 00:16:30,920 Speaker 8: I think you've seen more of that sort of startup, 311 00:16:31,000 --> 00:16:33,520 Speaker 8: startup fostering taking place in the US than Europe. 312 00:16:33,680 --> 00:16:36,080 Speaker 3: All right, Tamlin, we really appreciate it. Thank you so much. 313 00:16:36,320 --> 00:16:37,920 Speaker 3: Do you like living in Europe? By the way, are 314 00:16:37,920 --> 00:16:38,720 Speaker 3: you enjoying the UK? 315 00:16:39,640 --> 00:16:39,840 Speaker 1: Yeah? 316 00:16:39,920 --> 00:16:40,520 Speaker 8: Quite nice? 317 00:16:40,680 --> 00:16:43,920 Speaker 2: Excellent, right, I get you. It's not ninety two degrees there. 318 00:16:43,960 --> 00:16:46,800 Speaker 3: Yeah, humidity. I'm just put that out there, all right, Tamlin. 319 00:16:46,920 --> 00:16:48,120 Speaker 3: We appreciate you. Thank you. 320 00:16:48,560 --> 00:16:52,760 Speaker 2: Tamlin based in joining US A Bloomberg Intelligence technology analyst 321 00:16:53,320 --> 00:16:56,200 Speaker 2: from the UK. Here's my question for you, Paul, what 322 00:16:56,240 --> 00:16:58,240 Speaker 2: do you think is going on with tech right now? Like? 323 00:16:58,360 --> 00:16:59,800 Speaker 3: Is this like a rebalancing to the end of the 324 00:16:59,840 --> 00:17:03,360 Speaker 3: cour order. Is this like a pause? Is there something 325 00:17:03,400 --> 00:17:05,400 Speaker 3: more disastrous going on here? What do you think? 326 00:17:05,520 --> 00:17:07,400 Speaker 5: I don't think so. I mean again, we just heard. 327 00:17:07,520 --> 00:17:11,399 Speaker 5: I just got a note from Vince from out in 328 00:17:11,440 --> 00:17:14,760 Speaker 5: the audience. Bid in stocks's quarter end window dressing. That's 329 00:17:14,800 --> 00:17:17,119 Speaker 5: all he's hearing so far, Vince Cignarella kind of rating 330 00:17:17,160 --> 00:17:19,560 Speaker 5: in here. So no, I think tech is you know, 331 00:17:19,600 --> 00:17:20,639 Speaker 5: I just think it's a pause here. 332 00:17:20,640 --> 00:17:22,600 Speaker 4: I mean, I think they're gonna be. 333 00:17:22,119 --> 00:17:24,280 Speaker 5: The question for a lot of folks, is you know 334 00:17:24,400 --> 00:17:27,960 Speaker 5: tech has been the leader in this stock market performance 335 00:17:28,040 --> 00:17:29,200 Speaker 5: for years now? 336 00:17:29,359 --> 00:17:30,480 Speaker 4: Can it continue to be? 337 00:17:30,960 --> 00:17:33,600 Speaker 5: And I just think you look at the tech spending 338 00:17:34,119 --> 00:17:37,080 Speaker 5: and you see where it continues to be a significant 339 00:17:37,080 --> 00:17:39,439 Speaker 5: growth story, and just in terms of old total tech 340 00:17:39,520 --> 00:17:41,720 Speaker 5: spending throughout the entire tech stack. 341 00:17:41,880 --> 00:17:42,720 Speaker 4: Led by AI. 342 00:17:43,160 --> 00:17:46,159 Speaker 5: So maybe the AI trade maybe got the sector a 343 00:17:46,160 --> 00:17:49,000 Speaker 5: littlehead of itself. Maybe time for a pause, but boy, 344 00:17:49,240 --> 00:17:51,359 Speaker 5: the longer term trend seems really solid. 345 00:17:53,760 --> 00:17:57,639 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 346 00:17:57,720 --> 00:18:01,080 Speaker 1: weekdays at ten am Eastern on Focar playing Endroyd Auto 347 00:18:01,119 --> 00:18:04,040 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 348 00:18:04,119 --> 00:18:08,960 Speaker 1: get your podcasts or watch us live on YouTube. 349 00:18:08,720 --> 00:18:10,560 Speaker 2: And the NASDA gets flat on the day. I mean, 350 00:18:10,600 --> 00:18:12,880 Speaker 2: go figure. I feel like we're definitely on our way back. 351 00:18:12,960 --> 00:18:16,720 Speaker 2: Alleren Gilbert's CEO of Wealthfuised Financial, is joining us right 352 00:18:16,720 --> 00:18:19,239 Speaker 2: now for her take. So, Alaren Paul and I were 353 00:18:19,280 --> 00:18:21,719 Speaker 2: talking just earlier about what is going on. Is it 354 00:18:21,800 --> 00:18:24,280 Speaker 2: a tech breather, is it rebalancing into the end of 355 00:18:24,320 --> 00:18:26,840 Speaker 2: the quarter. Is last week kind of the start of 356 00:18:26,880 --> 00:18:27,920 Speaker 2: something more severe? 357 00:18:28,160 --> 00:18:28,920 Speaker 3: How do you view it? 358 00:18:30,800 --> 00:18:34,000 Speaker 9: Yeah, I mean I think let's not forget it's starting 359 00:18:34,000 --> 00:18:37,120 Speaker 9: to be summer. People are off to the Hamptons, off 360 00:18:37,200 --> 00:18:41,040 Speaker 9: to international trips, et cetera. So part of this would 361 00:18:41,080 --> 00:18:44,760 Speaker 9: be just seasonality. But another part is I think we're 362 00:18:44,880 --> 00:18:48,560 Speaker 9: going through a shift when it comes to AI from 363 00:18:48,680 --> 00:18:52,200 Speaker 9: development to deployment, and so I think with that, we're 364 00:18:52,240 --> 00:18:55,119 Speaker 9: going to see a broadening out of the market, not 365 00:18:55,560 --> 00:18:59,040 Speaker 9: just the companies like Nvidia that are the start of AI, 366 00:18:59,600 --> 00:19:03,280 Speaker 9: but moving into how companies can monetize it. And so 367 00:19:03,359 --> 00:19:05,919 Speaker 9: I think we're going to continue to see this broadening 368 00:19:05,960 --> 00:19:09,159 Speaker 9: out with other companies that are able to actually profit 369 00:19:09,240 --> 00:19:09,560 Speaker 9: from it. 370 00:19:10,240 --> 00:19:12,320 Speaker 5: What are some of those companies on what are some 371 00:19:12,400 --> 00:19:16,120 Speaker 5: of those sectors that can benefit from the actual deployment 372 00:19:16,440 --> 00:19:17,359 Speaker 5: of this technology. 373 00:19:18,000 --> 00:19:21,080 Speaker 9: Well, it goes across all sectors really, but you know, 374 00:19:21,080 --> 00:19:27,120 Speaker 9: when we think about even even just industrials and how 375 00:19:27,520 --> 00:19:32,800 Speaker 9: the technology here is going to be able to broaden out. 376 00:19:33,480 --> 00:19:37,000 Speaker 9: You know, even companies like Caterpillar and John Deere are 377 00:19:37,000 --> 00:19:41,080 Speaker 9: going to be able to use AI to improve efficiencies. 378 00:19:41,080 --> 00:19:45,480 Speaker 9: So really it's across all sectors, whether it's healthcare or industrials, 379 00:19:45,680 --> 00:19:46,160 Speaker 9: et cetera. 380 00:19:46,520 --> 00:19:47,720 Speaker 3: So that's the AI play. 381 00:19:47,760 --> 00:19:50,040 Speaker 2: And then you do like, plus, let's look at valuation 382 00:19:50,200 --> 00:19:51,920 Speaker 2: and where we're at, what's a good bet? 383 00:19:52,000 --> 00:19:53,400 Speaker 3: Like do you like industrials right now? 384 00:19:55,080 --> 00:19:57,520 Speaker 9: I do like industrials. We think that that is going 385 00:19:57,560 --> 00:20:00,400 Speaker 9: to be a backbone and when we look to add 386 00:20:00,760 --> 00:20:05,560 Speaker 9: infrastructure spending, that is going to continue to be a theme. So, 387 00:20:06,080 --> 00:20:07,639 Speaker 9: you know, and I think we have to take in 388 00:20:07,720 --> 00:20:11,480 Speaker 9: mind where we are with the FED and that we're 389 00:20:11,480 --> 00:20:14,879 Speaker 9: definitely about to see ray cuts, you know, and the 390 00:20:14,960 --> 00:20:17,560 Speaker 9: question is just when do they start. But we know 391 00:20:17,680 --> 00:20:20,119 Speaker 9: that trend is going to be our friend, and so 392 00:20:20,200 --> 00:20:23,080 Speaker 9: I think you can't give up on technology. It's going 393 00:20:23,160 --> 00:20:27,119 Speaker 9: to continue to be the driver here moving forward, and 394 00:20:27,160 --> 00:20:30,840 Speaker 9: with interest rates that will go down. That's a risk 395 00:20:30,920 --> 00:20:33,240 Speaker 9: on move in the market, so we have to be mindful, 396 00:20:33,280 --> 00:20:35,639 Speaker 9: but it is all about what are you buying at 397 00:20:35,640 --> 00:20:36,240 Speaker 9: what price? 398 00:20:37,160 --> 00:20:40,280 Speaker 5: All right, Lauren, you're a graduate of the University of Texas, 399 00:20:40,280 --> 00:20:43,000 Speaker 5: so that means by default you must have an energy call. 400 00:20:43,600 --> 00:20:46,359 Speaker 5: What do you think what do you think energy stocks 401 00:20:46,359 --> 00:20:47,840 Speaker 5: are going to be doing here? How do you think about, 402 00:20:48,240 --> 00:20:49,720 Speaker 5: you know, investing in energy stocks. 403 00:20:50,480 --> 00:20:53,960 Speaker 9: Yeah, we like energy a lot, and we like utilities. 404 00:20:55,000 --> 00:21:00,440 Speaker 9: Looking at the play just continued expansion in the need 405 00:21:00,760 --> 00:21:04,560 Speaker 9: for energy with regards to AI. If you look at 406 00:21:04,560 --> 00:21:07,959 Speaker 9: those numbers, they're astronomical and so there has to be 407 00:21:08,000 --> 00:21:12,720 Speaker 9: this continued build out and making energy more efficient. So 408 00:21:12,800 --> 00:21:16,080 Speaker 9: we definitely like the energy play. 409 00:21:16,720 --> 00:21:18,480 Speaker 2: Where in the energy play because this is something that 410 00:21:18,520 --> 00:21:21,639 Speaker 2: I've been thinking about, Like oil companies aren't power companies, 411 00:21:21,680 --> 00:21:23,920 Speaker 2: and power companies are the ones that are going to benefit, 412 00:21:24,160 --> 00:21:26,960 Speaker 2: But utilities are regulated. So does that kind of change 413 00:21:26,960 --> 00:21:29,399 Speaker 2: how you want to be investing in utility companies versus 414 00:21:29,400 --> 00:21:30,200 Speaker 2: power companies. 415 00:21:30,240 --> 00:21:32,040 Speaker 3: We're on that spectrum. It makes the most sense. 416 00:21:33,119 --> 00:21:37,439 Speaker 9: Yeah, So it's true that utility companies are regulated, but 417 00:21:37,680 --> 00:21:40,200 Speaker 9: what we're seeing is that there's going to be there's 418 00:21:40,240 --> 00:21:44,760 Speaker 9: just so much demand that the demand versus supply is 419 00:21:44,840 --> 00:21:48,479 Speaker 9: going to be the story there. So definitely there I 420 00:21:48,520 --> 00:21:53,000 Speaker 9: agree with you, not so much just oil and gas companies, 421 00:21:53,359 --> 00:22:01,399 Speaker 9: but really everything that is behind the idea of what's 422 00:22:01,440 --> 00:22:02,879 Speaker 9: going to help with AI. 423 00:22:04,400 --> 00:22:07,080 Speaker 5: All right, so how do we think about that's at equities? 424 00:22:07,480 --> 00:22:08,520 Speaker 5: How about fixed income? 425 00:22:08,560 --> 00:22:08,720 Speaker 8: Here? 426 00:22:08,840 --> 00:22:11,439 Speaker 5: What are you telling your clients these days about bond market? 427 00:22:12,960 --> 00:22:15,800 Speaker 9: Well, we love the bond market. It couldn't be you know, 428 00:22:16,040 --> 00:22:18,919 Speaker 9: more excited about bonds, and who gets excited about bonds? 429 00:22:18,960 --> 00:22:22,040 Speaker 9: So right now is a very good time because when 430 00:22:22,080 --> 00:22:25,919 Speaker 9: you look at where we are once again with rates 431 00:22:25,960 --> 00:22:29,040 Speaker 9: going to be going down, the story is that all 432 00:22:29,080 --> 00:22:31,719 Speaker 9: that money that's sitting in money markets is going to 433 00:22:31,760 --> 00:22:34,400 Speaker 9: be moving. It's already started to move a little bit, 434 00:22:35,160 --> 00:22:38,639 Speaker 9: and while some of it may land in the equity markets, 435 00:22:38,880 --> 00:22:40,399 Speaker 9: a lot of it's going to end up in the 436 00:22:40,440 --> 00:22:43,919 Speaker 9: bond markets. And so with that, you know, now is 437 00:22:43,960 --> 00:22:46,840 Speaker 9: the time to be moving money because for people that 438 00:22:46,880 --> 00:22:48,720 Speaker 9: are going to be in money markets a year later, 439 00:22:48,760 --> 00:22:52,199 Speaker 9: they're going to be very disappointed and moving into the 440 00:22:52,240 --> 00:22:55,280 Speaker 9: bond markets. Now you have the yield, but you also 441 00:22:55,280 --> 00:22:59,560 Speaker 9: have capital appreciation opportunities. We like preferred stock as well, 442 00:23:00,080 --> 00:23:05,919 Speaker 9: other good play that's fixed income to equity. So keeping 443 00:23:05,960 --> 00:23:10,240 Speaker 9: it though, I would say all high quality, not venturing 444 00:23:10,480 --> 00:23:15,679 Speaker 9: into as our economy has been softening, keeping it on 445 00:23:15,720 --> 00:23:17,000 Speaker 9: the high quality side. 446 00:23:17,560 --> 00:23:19,119 Speaker 2: This brings up my question that I have is that 447 00:23:19,600 --> 00:23:21,880 Speaker 2: why are we convinced that money market funds are going 448 00:23:21,920 --> 00:23:23,840 Speaker 2: to go somewhere else? Because if we're in a rate 449 00:23:23,920 --> 00:23:26,760 Speaker 2: normalization cycle, doesn't mean we're going to go back to 450 00:23:27,119 --> 00:23:28,919 Speaker 2: one percent of the Fed funds rate, Like if we 451 00:23:28,920 --> 00:23:31,840 Speaker 2: stay at four, I don't know, three and a half, Like, 452 00:23:32,040 --> 00:23:34,119 Speaker 2: why would I maybe take on more resk when it 453 00:23:34,160 --> 00:23:35,399 Speaker 2: can sit there and still make money. 454 00:23:36,800 --> 00:23:40,639 Speaker 9: Well, because what you're doing is locking in to a 455 00:23:40,760 --> 00:23:44,600 Speaker 9: higher rate for longer by moving into the fixed income 456 00:23:44,680 --> 00:23:49,359 Speaker 9: markets versus seeing the rates continue to go down in 457 00:23:49,440 --> 00:23:53,760 Speaker 9: money markets. So right now, if you move into just say, 458 00:23:54,200 --> 00:23:58,280 Speaker 9: you know, a six year duration on your fixed income, 459 00:23:58,760 --> 00:24:02,400 Speaker 9: you're looking at between you know, four to five percent 460 00:24:02,920 --> 00:24:06,080 Speaker 9: on the yield with some capital appreciation opportunity that you 461 00:24:06,119 --> 00:24:09,040 Speaker 9: can lock in for the next six years. That's what 462 00:24:09,560 --> 00:24:12,760 Speaker 9: history tells us, So I'd liken it too. You know, 463 00:24:12,840 --> 00:24:15,639 Speaker 9: if you could go back in time a couple of 464 00:24:15,680 --> 00:24:19,840 Speaker 9: years ago and lock into a home mortgage rate at 465 00:24:19,840 --> 00:24:20,920 Speaker 9: three percent, So if. 466 00:24:20,800 --> 00:24:23,280 Speaker 3: You could be alan statically, yes, so Paul's we can 467 00:24:23,320 --> 00:24:25,359 Speaker 3: go back in time and be me that's what you. 468 00:24:25,359 --> 00:24:29,080 Speaker 9: Would do, be a static about that. And so similarly, 469 00:24:29,200 --> 00:24:32,040 Speaker 9: right now we have the opportunity in fixed income to 470 00:24:32,160 --> 00:24:34,919 Speaker 9: lock in at the higher rate for a period of 471 00:24:34,960 --> 00:24:38,000 Speaker 9: time and instead of watching the rates go down. 472 00:24:38,840 --> 00:24:41,480 Speaker 5: Uh, Lauren, you mentioned preferred stock, and we don't talk 473 00:24:41,480 --> 00:24:42,720 Speaker 5: about prefers stock a lot. 474 00:24:43,480 --> 00:24:46,960 Speaker 4: How do you use perfertock in your port portfolio? Why 475 00:24:47,000 --> 00:24:48,040 Speaker 4: is it attractive right now? 476 00:24:49,119 --> 00:24:51,040 Speaker 9: Yeah, so we use it as part of our fixed 477 00:24:51,080 --> 00:24:54,040 Speaker 9: income allocation because you're getting a yield from it, but 478 00:24:54,160 --> 00:24:59,359 Speaker 9: you also have equity like exposure with you know, some 479 00:24:59,560 --> 00:25:03,760 Speaker 9: upside there. So it's this hybrid as it were, and 480 00:25:03,800 --> 00:25:06,600 Speaker 9: it gives off a very nice yield while you're waiting. 481 00:25:07,000 --> 00:25:11,000 Speaker 9: So it is kind of this more conservative way, more 482 00:25:11,000 --> 00:25:14,640 Speaker 9: conservative approach and looks very attractive right now. 483 00:25:15,160 --> 00:25:20,440 Speaker 3: What do you think of corporate credit, Well, you. 484 00:25:20,400 --> 00:25:27,199 Speaker 9: Know, I think that we would prefer agency mortgage backed 485 00:25:27,440 --> 00:25:34,560 Speaker 9: securities corporate credit. You know, in a diversified fixed income portfolio, 486 00:25:34,600 --> 00:25:37,600 Speaker 9: you're going to have some corporate credit, but more so 487 00:25:37,680 --> 00:25:44,600 Speaker 9: than that agency even treasury, but a smaller allocation I 488 00:25:44,600 --> 00:25:47,560 Speaker 9: would say to corporate just with the softening of the economy. 489 00:25:48,359 --> 00:25:51,119 Speaker 5: I mean I was speaking with a large group of 490 00:25:51,240 --> 00:25:55,399 Speaker 5: registered investment advisers recently now surprised by how aggressive they 491 00:25:55,440 --> 00:25:59,640 Speaker 5: were in terms of allocating their client's portfolio to alternative investments. 492 00:25:59,640 --> 00:26:03,359 Speaker 5: While it's hedge funds, private equity, private credit, How do 493 00:26:03,400 --> 00:26:05,960 Speaker 5: you view alternatives in a client's portfolio. 494 00:26:07,280 --> 00:26:11,520 Speaker 9: Well, I think alternatives have their space, and we allocate 495 00:26:11,600 --> 00:26:15,399 Speaker 9: to alternatives as well, but it is a smaller piece 496 00:26:15,480 --> 00:26:19,919 Speaker 9: of the puzzle. So you know, we look at, you 497 00:26:19,960 --> 00:26:23,960 Speaker 9: know how much between equity and fixed income and in 498 00:26:24,040 --> 00:26:28,159 Speaker 9: all alternatives in general, we consider that part of the 499 00:26:28,280 --> 00:26:33,840 Speaker 9: equity exposure that gives us more diversification than just going 500 00:26:33,880 --> 00:26:36,480 Speaker 9: along on equity. But I think you have to be 501 00:26:36,560 --> 00:26:40,480 Speaker 9: careful because some alternatives can lock you in for a 502 00:26:40,560 --> 00:26:44,320 Speaker 9: very long time, so liquidity needs have to be considered. 503 00:26:44,880 --> 00:26:49,160 Speaker 9: And the other thing is as they can be a diversifier, 504 00:26:49,280 --> 00:26:53,880 Speaker 9: but that doesn't always mean that they're going to outperform 505 00:26:54,240 --> 00:26:57,359 Speaker 9: other areas of the market. So yes, we use it, 506 00:26:58,000 --> 00:27:00,760 Speaker 9: and we're always looking for what the opport tunities are. 507 00:27:01,400 --> 00:27:03,760 Speaker 9: I think there's been there's been quite a bit of 508 00:27:03,880 --> 00:27:08,320 Speaker 9: investment in private credit as an alternative investment. And I 509 00:27:08,359 --> 00:27:10,840 Speaker 9: don't know how much more legs that really have. 510 00:27:11,920 --> 00:27:15,040 Speaker 2: Great stuff really appreciated some counterintuitive views. 511 00:27:15,040 --> 00:27:16,160 Speaker 3: They're so fun to get. 512 00:27:16,359 --> 00:27:20,040 Speaker 2: Hullarene Gilbert, CEO of wealth Wise Financial, kind of you know, 513 00:27:20,280 --> 00:27:21,760 Speaker 2: sort of tempering. 514 00:27:21,400 --> 00:27:24,080 Speaker 3: Expectations when it comes to private credit. Maybe it's not 515 00:27:24,160 --> 00:27:26,080 Speaker 3: the bazillion dollar industry that we all think in. 516 00:27:26,320 --> 00:27:28,960 Speaker 5: Yeah, we'll see how the asset class performs here with 517 00:27:29,040 --> 00:27:33,239 Speaker 5: these higher for longer interest rates, because you've got to, 518 00:27:33,280 --> 00:27:34,639 Speaker 5: you know, now, some of the banks are kind of 519 00:27:34,640 --> 00:27:36,800 Speaker 5: getting you know, maybe getting a little bit more aggressive 520 00:27:36,840 --> 00:27:40,439 Speaker 5: in their leverage lending businesses here, trying to you know, 521 00:27:40,600 --> 00:27:41,399 Speaker 5: kind of compete a. 522 00:27:41,400 --> 00:27:44,040 Speaker 4: Little bit better with this private credit. 523 00:27:44,080 --> 00:27:45,800 Speaker 5: But the private credit's done really well, particularly in the 524 00:27:45,840 --> 00:27:48,119 Speaker 5: mid middle markets where maybe some of the regional banks 525 00:27:48,160 --> 00:27:51,240 Speaker 5: have dialed back since a great financial crisis their risk 526 00:27:51,280 --> 00:27:52,480 Speaker 5: taking environment. 527 00:27:52,560 --> 00:27:53,879 Speaker 4: So keep an eye on that. 528 00:27:55,400 --> 00:27:59,280 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 529 00:27:59,359 --> 00:28:03,200 Speaker 1: weekdays ten am Eastern on applecar Play and Android Auto 530 00:28:03,320 --> 00:28:06,080 Speaker 1: with the Bloomberg Business Act. You can also listen live 531 00:28:06,200 --> 00:28:09,359 Speaker 1: on Amazon Alexa from our flagship New York station. Just 532 00:28:09,440 --> 00:28:12,320 Speaker 1: say Alexa playing Bloomberg eleven thirty. 533 00:28:14,080 --> 00:28:17,080 Speaker 2: Malex Steel alongside pauls. We need this Bloomberg Intelligence Radio. 534 00:28:17,119 --> 00:28:20,280 Speaker 2: We bring you all the top news and analysis with 535 00:28:20,400 --> 00:28:23,119 Speaker 2: our analysts from Bloomberg Intelligence. They cover two thousand companies 536 00:28:23,160 --> 00:28:27,159 Speaker 2: and one hundred and thirty industries worldwide. And Friday means 537 00:28:27,200 --> 00:28:29,520 Speaker 2: the end of the second quarter, we will be halfway 538 00:28:29,560 --> 00:28:31,520 Speaker 2: through the year. So it's that time where we're getting 539 00:28:31,520 --> 00:28:34,680 Speaker 2: all the mid year outlooks, which are super helpful, particularly 540 00:28:34,720 --> 00:28:38,080 Speaker 2: from Bloomberg Intelligence and joining us in studio as Michael Halen, 541 00:28:38,240 --> 00:28:42,479 Speaker 2: He's consumer Products senior Bloomberg Intelligence industry analyst. 542 00:28:42,560 --> 00:28:44,440 Speaker 3: Michael in studio, We're very excited about this. 543 00:28:44,840 --> 00:28:45,560 Speaker 4: I'm excited too. 544 00:28:45,560 --> 00:28:47,640 Speaker 3: Thanks for joining. He finally came in. 545 00:28:48,200 --> 00:28:48,400 Speaker 2: Yeah. 546 00:28:48,600 --> 00:28:51,560 Speaker 10: Yeah, I was digging through my junk drawer, but I 547 00:28:51,600 --> 00:28:51,959 Speaker 10: found it. 548 00:28:52,080 --> 00:28:53,200 Speaker 3: We found it. It was just important. 549 00:28:53,240 --> 00:28:55,960 Speaker 2: Well, I mean, is New Jersey Transit even running? I 550 00:28:55,960 --> 00:28:56,920 Speaker 2: think is more of the question. 551 00:28:57,120 --> 00:28:57,640 Speaker 4: It's tough. 552 00:28:57,840 --> 00:28:58,200 Speaker 3: Nice. 553 00:28:58,480 --> 00:29:01,160 Speaker 2: Okay, So midyear outlook give us the broad sweeps, like 554 00:29:01,160 --> 00:29:02,640 Speaker 2: what are you expecting for the back half, and then 555 00:29:02,640 --> 00:29:04,000 Speaker 2: we can get to specific stocks. 556 00:29:04,200 --> 00:29:09,320 Speaker 10: Yeah, sure, you know, broad sweeps. I'd say sales are 557 00:29:09,360 --> 00:29:12,800 Speaker 10: probably looking a little bit better just because than they 558 00:29:12,800 --> 00:29:14,680 Speaker 10: were in the first half. Because the year over year 559 00:29:14,680 --> 00:29:20,600 Speaker 10: comparisons are getting easier. Higher income consumers should have money 560 00:29:20,600 --> 00:29:24,760 Speaker 10: to spend, right, we see we see stock markets at 561 00:29:24,800 --> 00:29:27,480 Speaker 10: all time highs, bitcoins having a rough day, but not 562 00:29:27,640 --> 00:29:30,640 Speaker 10: far off the highs, and home prices have held in 563 00:29:30,640 --> 00:29:34,320 Speaker 10: despite the higher rates, so that those should kind of 564 00:29:34,360 --> 00:29:38,360 Speaker 10: buoy restaurants sales. But on the other end, the other 565 00:29:38,440 --> 00:29:41,720 Speaker 10: end of the k, the low income consumers continue to struggle. 566 00:29:42,040 --> 00:29:45,120 Speaker 10: You know, consumers under seventy five thousand were cited by 567 00:29:45,240 --> 00:29:48,520 Speaker 10: Darden the other day on their earnings call is struggling, 568 00:29:48,600 --> 00:29:51,840 Speaker 10: especially consumers you know that are earning less than fifty thousand. 569 00:29:51,960 --> 00:29:55,160 Speaker 10: So we have kind of a push and a pull there. 570 00:29:57,160 --> 00:30:00,320 Speaker 10: You know, Margins are okay, you know. 571 00:30:00,280 --> 00:30:02,680 Speaker 4: We would like to see better sales because that's really. 572 00:30:02,440 --> 00:30:05,400 Speaker 10: What drives most of the margin expansion in that business. 573 00:30:05,480 --> 00:30:07,440 Speaker 10: Right There's a lot of operating leverage in the model, 574 00:30:07,520 --> 00:30:13,640 Speaker 10: so so maybe some modest margin expansion. And the stocks 575 00:30:13,640 --> 00:30:17,040 Speaker 10: generally haven't done so well this year, you know. You 576 00:30:17,040 --> 00:30:18,800 Speaker 10: know what we wrote is that we we think we're 577 00:30:18,800 --> 00:30:22,440 Speaker 10: going to see a larger spread between the stock market, 578 00:30:22,560 --> 00:30:26,080 Speaker 10: you know, the market share winners and losers this year, 579 00:30:26,400 --> 00:30:28,440 Speaker 10: you know, which we've largely seen in the first half. 580 00:30:28,480 --> 00:30:30,880 Speaker 4: You've seen stocks like Chipotle, you. 581 00:30:30,840 --> 00:30:33,560 Speaker 10: Know, actually absolutely knocked the cover off the ball again 582 00:30:33,680 --> 00:30:37,200 Speaker 10: and and really appreciate where where other chains like Darden 583 00:30:39,160 --> 00:30:41,120 Speaker 10: you know, actually, I'm sorry, Darden's done pretty well, like 584 00:30:41,160 --> 00:30:43,720 Speaker 10: blooming I should say, is kind of struggled in the 585 00:30:43,720 --> 00:30:46,080 Speaker 10: first half, and you've seen that stock, you know, sell 586 00:30:46,120 --> 00:30:47,320 Speaker 10: off pretty precipitously. 587 00:30:47,560 --> 00:30:51,440 Speaker 5: Talk to us about California and their new minimum wage law. 588 00:30:52,000 --> 00:30:54,640 Speaker 5: What's the impact been on the fast food business? 589 00:30:55,040 --> 00:30:58,280 Speaker 2: We have like a famous Hollywood restaurant closed because of that, 590 00:30:58,800 --> 00:31:00,840 Speaker 2: like the famous like Hollywood Donalds or something. 591 00:31:01,040 --> 00:31:07,560 Speaker 10: Oh, San Fran, Yeah, San Fran closed, Yeah, yeah, So 592 00:31:07,800 --> 00:31:08,760 Speaker 10: it's not been. 593 00:31:08,600 --> 00:31:12,000 Speaker 4: Good so far. April results were. 594 00:31:11,920 --> 00:31:14,400 Speaker 10: Kind of in line with the US in terms of 595 00:31:14,440 --> 00:31:19,240 Speaker 10: same star sales at quick service restaurants. But I think 596 00:31:19,280 --> 00:31:21,880 Speaker 10: everybody went in April and then they had got sticker 597 00:31:21,960 --> 00:31:24,680 Speaker 10: shock and they did not return in May. 598 00:31:24,320 --> 00:31:28,120 Speaker 5: So the McDonald's are the world the restaurants in general California. 599 00:31:28,160 --> 00:31:30,400 Speaker 5: Are they raising prices to cover their. 600 00:31:30,760 --> 00:31:34,720 Speaker 10: Higher labor Yeah, high single digits is typical, which is 601 00:31:34,800 --> 00:31:37,400 Speaker 10: a lot, and and that's not even covering it because 602 00:31:37,840 --> 00:31:40,880 Speaker 10: the traffic loss that that that we've seen here in May, 603 00:31:41,160 --> 00:31:42,920 Speaker 10: it's it's not even gonna cover it. So they may 604 00:31:42,920 --> 00:31:46,360 Speaker 10: even have to raise prices again if they can. 605 00:31:47,320 --> 00:31:48,000 Speaker 4: Quick Service. 606 00:31:49,000 --> 00:31:52,600 Speaker 10: Uh, California Same Star sales underperformed by almost four hundred 607 00:31:52,680 --> 00:31:56,200 Speaker 10: basis points in May versus the US. Yeah, so you know, 608 00:31:56,240 --> 00:31:59,000 Speaker 10: what we wrote is that we expect quick service to 609 00:31:59,080 --> 00:32:03,720 Speaker 10: continue to outperform casual dining just because it's a cheaper check. 610 00:32:04,240 --> 00:32:06,240 Speaker 10: Even though it's gotten all the bad press about the 611 00:32:06,240 --> 00:32:09,960 Speaker 10: eighteen dollars big Mac meal twenty two dollars smash Burger meal, 612 00:32:10,040 --> 00:32:12,040 Speaker 10: it's still you can eat there a lot cheaper on 613 00:32:12,080 --> 00:32:15,760 Speaker 10: the value menu and stuff like that. Also, you know, 614 00:32:15,840 --> 00:32:18,800 Speaker 10: chains are starting to discount more Burger King and McDonald's 615 00:32:18,800 --> 00:32:23,640 Speaker 10: five dollars meals, things of that nature. But California is 616 00:32:23,680 --> 00:32:26,600 Speaker 10: definitely gonna weigh on quick service growth throughout your end 617 00:32:26,760 --> 00:32:27,160 Speaker 10: for sure. 618 00:32:28,040 --> 00:32:31,640 Speaker 2: So as the k shape recovery grows even wider, it 619 00:32:31,680 --> 00:32:34,200 Speaker 2: feels like, so do the valuations of those companies that 620 00:32:34,320 --> 00:32:35,800 Speaker 2: service those two lines. 621 00:32:35,840 --> 00:32:37,000 Speaker 3: Is that a fair statement? 622 00:32:37,400 --> 00:32:37,600 Speaker 1: Yeah? 623 00:32:37,720 --> 00:32:39,959 Speaker 10: If you if you're a chain that can attract high end, 624 00:32:40,040 --> 00:32:43,760 Speaker 10: can high income consumers like Chipotle's done such a good 625 00:32:43,880 --> 00:32:46,720 Speaker 10: job of doing and McDonald's has done a good job 626 00:32:46,760 --> 00:32:49,480 Speaker 10: of it as well since since the start of the pandemic. 627 00:32:49,560 --> 00:32:52,560 Speaker 2: Chipotle is their Wednesday day, Paul, It varies, but it's 628 00:32:52,560 --> 00:32:54,400 Speaker 2: seven one day week they get Chipotle. 629 00:32:54,560 --> 00:32:56,440 Speaker 4: But here's a funny Chipotle story. 630 00:32:56,480 --> 00:32:59,760 Speaker 5: They got slammed in social media for like underfilling their 631 00:32:59,800 --> 00:33:03,160 Speaker 5: time and things like that. Now they've gone overboard and 632 00:33:03,240 --> 00:33:06,280 Speaker 5: they overfilled them. So the net result for me, instead 633 00:33:06,280 --> 00:33:08,719 Speaker 5: of getting three hard tacos with chicken and I'll give 634 00:33:08,760 --> 00:33:10,400 Speaker 5: you the whole order later, I only get two. 635 00:33:10,960 --> 00:33:11,760 Speaker 1: Oh, there you go. 636 00:33:12,000 --> 00:33:14,000 Speaker 5: So it's got to be hurting their sales. So that 637 00:33:14,120 --> 00:33:15,520 Speaker 5: is an interesting tidbit. 638 00:33:16,560 --> 00:33:19,320 Speaker 10: Yeah, so we were thinking about doing some work into it, 639 00:33:21,160 --> 00:33:25,760 Speaker 10: but we haven't done anything yet all right here, but 640 00:33:26,000 --> 00:33:29,000 Speaker 10: there was definitely some heat and some shade thrown at 641 00:33:29,080 --> 00:33:30,400 Speaker 10: Chipotle for a little while there. 642 00:33:30,680 --> 00:33:32,800 Speaker 5: I'm gonna say a year and a half ago, somebody 643 00:33:32,800 --> 00:33:34,320 Speaker 5: came in here. This is kind of the beginning of 644 00:33:34,360 --> 00:33:37,080 Speaker 5: this whole AI thing, And somebody came in to this 645 00:33:37,160 --> 00:33:39,760 Speaker 5: studio and said, one of the biggest areas is going 646 00:33:39,840 --> 00:33:42,320 Speaker 5: to be like, for example, drive through going through a 647 00:33:42,400 --> 00:33:45,280 Speaker 5: drive through McDonald's, it's gonna be all AI blah blah 648 00:33:45,320 --> 00:33:47,600 Speaker 5: blah blah blah. So my question to you is, are 649 00:33:47,800 --> 00:33:50,840 Speaker 5: local I don't know McDonald's or Burger Kings, did they 650 00:33:50,840 --> 00:33:53,840 Speaker 5: have fewer employees because they're using technology or at all 651 00:33:53,960 --> 00:33:54,280 Speaker 5: like that? 652 00:33:54,880 --> 00:33:59,000 Speaker 10: Well, they have tried to cut labor hours in other ways, 653 00:33:59,240 --> 00:34:01,800 Speaker 10: that's a goal using AI, for sure. 654 00:34:02,360 --> 00:34:02,560 Speaker 7: Uh. 655 00:34:02,640 --> 00:34:06,560 Speaker 10: It's been harder though at the drive through then anticipated 656 00:34:06,600 --> 00:34:10,279 Speaker 10: a lot of things just like accents, you know, you know, 657 00:34:10,360 --> 00:34:12,960 Speaker 10: something like that. You know, actually is is has caused 658 00:34:13,000 --> 00:34:16,360 Speaker 10: some issues something else there. Uh, they're also using AI 659 00:34:18,000 --> 00:34:20,080 Speaker 10: with these cameras that are using AI to see if 660 00:34:20,520 --> 00:34:24,680 Speaker 10: orders are being played packaged correctly, you know, since takeout 661 00:34:24,800 --> 00:34:26,160 Speaker 10: and delivery has become such. 662 00:34:26,000 --> 00:34:27,360 Speaker 4: A big part of these businesses. 663 00:34:27,360 --> 00:34:29,440 Speaker 10: But uh, you know, one of the companies that was 664 00:34:29,440 --> 00:34:35,640 Speaker 10: doing that got caught using people in India watching like screens. 665 00:34:35,400 --> 00:34:37,720 Speaker 4: Videos supposedly quote unquote AI. 666 00:34:37,960 --> 00:34:43,040 Speaker 10: So we're not quite there yet with the AI in that. 667 00:34:43,040 --> 00:34:43,720 Speaker 3: That's interesting. 668 00:34:44,320 --> 00:34:46,960 Speaker 2: It's like the practical application, like how it really makes 669 00:34:47,000 --> 00:34:49,960 Speaker 2: the difference. We may not quite be there yet. Here's 670 00:34:49,960 --> 00:34:52,759 Speaker 2: my question if you and Ken Shae Fromloomberg Intelligence, who 671 00:34:52,760 --> 00:34:55,640 Speaker 2: covers many things but in particular he covers all the 672 00:34:56,200 --> 00:35:00,520 Speaker 2: cannabis companies got together, like what is your interplay between 673 00:35:00,880 --> 00:35:01,279 Speaker 2: you guys? 674 00:35:01,320 --> 00:35:03,040 Speaker 3: And I'm not actually trying to be that funny, but 675 00:35:03,160 --> 00:35:05,640 Speaker 3: like you know, with all the. 676 00:35:05,600 --> 00:35:07,600 Speaker 2: Weed stores coming up and you can get kind of 677 00:35:07,600 --> 00:35:09,799 Speaker 2: cannabis anywhere in many places, Like, does that have a 678 00:35:09,840 --> 00:35:12,200 Speaker 2: direct impact on the companies that you cover? Like have 679 00:35:12,320 --> 00:35:14,040 Speaker 2: you noticed something along those lines? 680 00:35:15,200 --> 00:35:21,240 Speaker 10: They haven't necessarily necessarily attributed any you know, lower alcohol 681 00:35:21,360 --> 00:35:22,960 Speaker 10: sales to that, you. 682 00:35:22,920 --> 00:35:25,640 Speaker 3: Know, or like more food sales or like runchy sales. 683 00:35:26,320 --> 00:35:26,560 Speaker 1: Yeah. 684 00:35:26,600 --> 00:35:28,760 Speaker 10: I mean, you know, we've had some of our companies 685 00:35:28,760 --> 00:35:30,600 Speaker 10: like Jack in the Box and other companies that do 686 00:35:30,640 --> 00:35:33,520 Speaker 10: a big late night business kind of lean into that 687 00:35:33,600 --> 00:35:38,160 Speaker 10: stuff on their advertising. You know, they've used snoop you know, 688 00:35:38,239 --> 00:35:40,400 Speaker 10: and some of their stuff. I think ice Cube now is. 689 00:35:40,600 --> 00:35:43,240 Speaker 5: But on the flip side of that, is the GLP 690 00:35:43,440 --> 00:35:45,000 Speaker 5: one situation true? 691 00:35:46,200 --> 00:35:48,560 Speaker 4: Because is that real? Because your company has called it out. 692 00:35:49,800 --> 00:35:52,680 Speaker 10: Yeah, but like the panic over it seems to have 693 00:35:53,080 --> 00:35:53,880 Speaker 10: uh subsided. 694 00:35:54,600 --> 00:35:56,920 Speaker 4: Is it real? Yeah? But there's still a lot of 695 00:35:57,000 --> 00:35:57,640 Speaker 4: question marks. 696 00:35:59,440 --> 00:35:59,600 Speaker 1: You know. 697 00:36:00,160 --> 00:36:03,640 Speaker 10: Uh, there is definitely concern because like people are less 698 00:36:03,719 --> 00:36:07,120 Speaker 10: likely to go to fast food restaurants like there's a 699 00:36:07,120 --> 00:36:09,760 Speaker 10: lot of people saying they feel sick eating fast food 700 00:36:09,800 --> 00:36:10,840 Speaker 10: on GLP ones. 701 00:36:11,640 --> 00:36:14,160 Speaker 4: There's a lot lower alcohol. 702 00:36:13,800 --> 00:36:17,640 Speaker 10: Consumption on GLP one. So it's definitely something that's being monitored. 703 00:36:17,880 --> 00:36:22,279 Speaker 10: But right now it's still like such a small it's 704 00:36:22,280 --> 00:36:24,959 Speaker 10: just had such small distributions so far. I think what's 705 00:36:24,960 --> 00:36:26,960 Speaker 10: going to be more of a concern is once it's 706 00:36:27,080 --> 00:36:29,359 Speaker 10: in a in a pill or something that's easier than 707 00:36:29,400 --> 00:36:29,840 Speaker 10: a shot. 708 00:36:30,280 --> 00:36:31,360 Speaker 4: Yeah, right, it's interesting. 709 00:36:31,400 --> 00:36:33,319 Speaker 5: So I'm looking at the S and P Restaurant Index 710 00:36:33,400 --> 00:36:39,000 Speaker 5: VAT member returns. The second worst performing stock for restaurants 711 00:36:39,040 --> 00:36:42,600 Speaker 5: is cracker Barrel Old Country. That kills me because I'm 712 00:36:42,640 --> 00:36:44,719 Speaker 5: a huge advocate for Cracker brow So I don't know 713 00:36:44,760 --> 00:36:46,520 Speaker 5: why this stock's not working. 714 00:36:47,280 --> 00:36:49,720 Speaker 4: All right, all right, I'm going to improve by breakfast. 715 00:36:49,840 --> 00:36:52,640 Speaker 5: All right, Michael Halen, Bloomberg Intelligence, Thank you very much. 716 00:36:52,680 --> 00:36:53,839 Speaker 4: This is Bloombergen. 717 00:36:56,400 --> 00:37:00,279 Speaker 1: You're listening to the Bloomberg Intelligence podcast cat I have 718 00:37:00,400 --> 00:37:03,399 Speaker 1: week days at ten am Eastern on applecar Play and 719 00:37:03,400 --> 00:37:06,319 Speaker 1: Android Auto with the Bloomberg Business Act. You can also 720 00:37:06,400 --> 00:37:09,600 Speaker 1: listen live on Amazon Alexa from our flagship New York 721 00:37:09,640 --> 00:37:13,000 Speaker 1: station just Say Alexa playing Bloomberg eleven thirty. 722 00:37:14,760 --> 00:37:17,160 Speaker 5: Well for the month of June, Bloomberg Radio is committed 723 00:37:17,160 --> 00:37:19,480 Speaker 5: to bringing new segments and guests focus on the topic 724 00:37:19,520 --> 00:37:22,719 Speaker 5: of equality. Today, we're speaking with Mike Heider, President and 725 00:37:22,800 --> 00:37:26,600 Speaker 5: CEO of Executive Leadership Council. Mike, thanks so much for 726 00:37:26,719 --> 00:37:30,440 Speaker 5: joining us here. Tell us what the Executive Leadership Council is. 727 00:37:30,440 --> 00:37:32,360 Speaker 4: What are you guys doing over there? 728 00:37:33,360 --> 00:37:36,160 Speaker 11: Well, it's good. Thank you for having me. It's nice 729 00:37:36,200 --> 00:37:40,520 Speaker 11: to be here. I appreciate it. The Executive leaders of Council, 730 00:37:40,640 --> 00:37:45,200 Speaker 11: otherwise known as the ELC, we're an organization of the 731 00:37:45,280 --> 00:37:50,719 Speaker 11: highest ranking black executives in global organizations worldwide with a 732 00:37:50,760 --> 00:37:56,359 Speaker 11: commitment to the leadership and development of talent in corporations. 733 00:37:56,360 --> 00:37:58,120 Speaker 7: Been around thirty eight years. 734 00:37:58,000 --> 00:37:58,960 Speaker 4: Right, good stuff. 735 00:37:59,000 --> 00:38:02,000 Speaker 5: What are you finding these days? Just in terms of 736 00:38:02,080 --> 00:38:07,399 Speaker 5: overall that DEI concept which had been ascending for many 737 00:38:07,520 --> 00:38:09,640 Speaker 5: years and for some people feels. 738 00:38:09,440 --> 00:38:11,960 Speaker 4: Like it may have peaked. How how do you view 739 00:38:12,000 --> 00:38:12,920 Speaker 4: that commitment? 740 00:38:14,360 --> 00:38:20,359 Speaker 11: Well, the diversity, equity and inclusion is and continues to 741 00:38:20,360 --> 00:38:27,520 Speaker 11: be a very strong element and element for organizations that 742 00:38:27,560 --> 00:38:31,640 Speaker 11: are beneficial for them. Unfortunately, there's a lot of heated 743 00:38:31,719 --> 00:38:37,400 Speaker 11: rhetoric about the diversity, equity, inclusion I guess being perceived 744 00:38:37,480 --> 00:38:43,840 Speaker 11: as reverse discrimination, which we don't. We fundamentally disagree with 745 00:38:43,880 --> 00:38:49,000 Speaker 11: that assertion. It is failing to sort of readdress the 746 00:38:49,040 --> 00:38:54,200 Speaker 11: facts that diversity equity inclusion has actually been benefited the 747 00:38:54,320 --> 00:38:59,040 Speaker 11: United States economy over the years with its But it 748 00:38:59,120 --> 00:39:01,480 Speaker 11: just has to be folks as properly if in order 749 00:39:01,520 --> 00:39:02,520 Speaker 11: for that to happen. 750 00:39:02,640 --> 00:39:05,120 Speaker 2: How do we do that, How does that? How is 751 00:39:05,160 --> 00:39:07,080 Speaker 2: it focused properly? And one of the steps that need 752 00:39:07,160 --> 00:39:07,680 Speaker 2: to be taken. 753 00:39:07,719 --> 00:39:11,919 Speaker 11: Now the steps should be the diversity equity inclusion should 754 00:39:12,000 --> 00:39:20,520 Speaker 11: be considered the impetus behind superior business performance, increase access 755 00:39:21,360 --> 00:39:26,600 Speaker 11: and opportunity for development for all people, and that the 756 00:39:26,680 --> 00:39:32,160 Speaker 11: focusing on increasing building corporate culture to increase and enhance 757 00:39:32,840 --> 00:39:37,439 Speaker 11: the engagement of as many employees as possible is what 758 00:39:37,680 --> 00:39:39,640 Speaker 11: diversity equity inclusion means. 759 00:39:40,600 --> 00:39:42,680 Speaker 7: It doesn't mean lowering standards. 760 00:39:43,239 --> 00:39:49,640 Speaker 11: So if it's applied as the significant contributed to the 761 00:39:49,680 --> 00:39:54,080 Speaker 11: business driver that it is, then it's it will be 762 00:39:55,760 --> 00:40:02,200 Speaker 11: strategically relevant in the organizations and less concerned as something 763 00:40:02,239 --> 00:40:04,160 Speaker 11: that is being merely tolerated. 764 00:40:05,440 --> 00:40:09,600 Speaker 5: So I mean, give us a sense how you think 765 00:40:09,640 --> 00:40:12,319 Speaker 5: that about this, Miket and how your counsel thinks about 766 00:40:12,360 --> 00:40:16,840 Speaker 5: this because again it seems like DEI is sharing a 767 00:40:16,880 --> 00:40:20,520 Speaker 5: similar type of situation or environment as e SG is 768 00:40:20,640 --> 00:40:23,880 Speaker 5: Environmental Social governance investing. As people are just kind of 769 00:40:23,880 --> 00:40:27,200 Speaker 5: pushing back on both of those types of initiatives, whether 770 00:40:27,200 --> 00:40:29,319 Speaker 5: it's from a political perspective. 771 00:40:28,920 --> 00:40:30,160 Speaker 4: Or a business perspective. 772 00:40:31,400 --> 00:40:36,080 Speaker 11: How do you think about that, Well, it's unfortunate that that's. 773 00:40:37,320 --> 00:40:38,040 Speaker 7: Been the case. 774 00:40:39,320 --> 00:40:46,000 Speaker 11: We're focusing on we want organizations need to be and 775 00:40:46,200 --> 00:40:51,440 Speaker 11: shareholders and customers are expecting and employees are expecting companies 776 00:40:51,480 --> 00:40:56,480 Speaker 11: to be peak performers. And specifically the ELC, we are 777 00:40:57,800 --> 00:41:02,720 Speaker 11: corporate officers that are our executives and major corporations around 778 00:41:02,760 --> 00:41:03,160 Speaker 11: the world. 779 00:41:03,280 --> 00:41:04,440 Speaker 7: So where we. 780 00:41:04,320 --> 00:41:08,399 Speaker 11: Look at the diversity equity inclusion as a piece of 781 00:41:09,480 --> 00:41:13,200 Speaker 11: increasing the effectiveness of an organization's ability to be more 782 00:41:13,239 --> 00:41:17,680 Speaker 11: profitable and be more successful as how we would suggest 783 00:41:17,960 --> 00:41:21,640 Speaker 11: organizations focus on it as opposed to it being something 784 00:41:21,640 --> 00:41:24,520 Speaker 11: that's perceived as a political issue. 785 00:41:24,680 --> 00:41:28,640 Speaker 2: What do you think would be helpful, Mike, because to 786 00:41:28,760 --> 00:41:32,560 Speaker 2: not politicize it just a few months before an election 787 00:41:32,680 --> 00:41:35,880 Speaker 2: that will definitely politicize this. How do you sort of 788 00:41:35,920 --> 00:41:36,440 Speaker 2: manage that? 789 00:41:38,760 --> 00:41:44,720 Speaker 11: Yeah, that's an excellent question, and I guess the challenge 790 00:41:44,719 --> 00:41:50,400 Speaker 11: of the day. Our assessment on managing it is staying 791 00:41:50,440 --> 00:41:55,520 Speaker 11: focused on what is required to be functional on the 792 00:41:55,560 --> 00:42:01,440 Speaker 11: ground in organizations and to be less I guess, less 793 00:42:01,440 --> 00:42:05,640 Speaker 11: defined by other people's assessment about what it is or 794 00:42:05,640 --> 00:42:11,040 Speaker 11: it isn't. That's the only way we think is the best. 795 00:42:11,520 --> 00:42:16,080 Speaker 11: I guess the best avenue is to be consistent for 796 00:42:16,239 --> 00:42:22,760 Speaker 11: addressing what I called this disparities in terms of numbers 797 00:42:23,160 --> 00:42:27,719 Speaker 11: based on representation of talent within organizations, and to have 798 00:42:27,800 --> 00:42:32,799 Speaker 11: talent strategies and development strategies that ensure that everybody is 799 00:42:32,840 --> 00:42:37,200 Speaker 11: reaching their full potential in organizations as our suggestions for 800 00:42:37,280 --> 00:42:40,319 Speaker 11: what organizations are to do, and to stay focused on 801 00:42:40,400 --> 00:42:43,239 Speaker 11: that independent of what it's called or indefinitive of what 802 00:42:43,320 --> 00:42:45,960 Speaker 11: the acronyms are that people are defining it. 803 00:42:46,040 --> 00:42:49,680 Speaker 5: By Mike, you mentioned that the EOC is a global 804 00:42:50,080 --> 00:42:54,000 Speaker 5: Council global entity. Giving your global view here, how does 805 00:42:54,280 --> 00:42:58,719 Speaker 5: the US doing on DEI initiatives maybe versus some other 806 00:42:58,719 --> 00:43:00,600 Speaker 5: parts of the world. 807 00:43:01,520 --> 00:43:07,080 Speaker 7: I think it is mixed relative to other parts of 808 00:43:07,120 --> 00:43:12,720 Speaker 7: the world, but I do believe that the. 809 00:43:11,840 --> 00:43:19,920 Speaker 11: Focus on productivity and team benefits globally is much more 810 00:43:20,200 --> 00:43:25,600 Speaker 11: pronounced and less it's less it's less defined by race 811 00:43:25,840 --> 00:43:33,200 Speaker 11: and culture, and so it has less less baggage, I guess, 812 00:43:33,680 --> 00:43:39,359 Speaker 11: if you will, relative to how it's perceived globally than 813 00:43:39,440 --> 00:43:44,400 Speaker 11: it does here in the United States. I think team productivity, 814 00:43:44,440 --> 00:43:49,759 Speaker 11: maximizing the contributions of all types of folks independent of 815 00:43:49,800 --> 00:43:54,840 Speaker 11: their background or gender, sexual orientation, continues to be something 816 00:43:54,920 --> 00:44:00,279 Speaker 11: that all organizations are striving towards. You know, they're some 817 00:44:00,320 --> 00:44:03,080 Speaker 11: companies who are more effective at it globally than others. 818 00:44:03,160 --> 00:44:06,040 Speaker 11: But you know, I just think the whole issue around 819 00:44:06,760 --> 00:44:11,399 Speaker 11: the discussion that you all are referencing is primarily much 820 00:44:11,440 --> 00:44:15,360 Speaker 11: more I guess, aggressive in the United States, because I 821 00:44:15,400 --> 00:44:19,840 Speaker 11: think there is an over interpretation of this as a 822 00:44:19,880 --> 00:44:23,000 Speaker 11: byproduct of a racial issue as opposed to something that 823 00:44:23,160 --> 00:44:26,840 Speaker 11: is looked at as a full production of all types 824 00:44:26,880 --> 00:44:28,520 Speaker 11: of people independent of race. 825 00:44:28,880 --> 00:44:29,800 Speaker 7: In the United States. 826 00:44:30,400 --> 00:44:32,520 Speaker 2: I think that's such a great point that it gets 827 00:44:32,560 --> 00:44:35,680 Speaker 2: stuck on race versus all diversity, like you need full 828 00:44:35,680 --> 00:44:38,520 Speaker 2: diversity in order to sort of deliver that profitability, to 829 00:44:38,560 --> 00:44:42,960 Speaker 2: deliver synergies, et cetera. So, yeah, it's true, all right, Mike, 830 00:44:43,000 --> 00:44:43,560 Speaker 2: we appreciate it. 831 00:44:43,600 --> 00:44:44,279 Speaker 3: Thanks very much. 832 00:44:44,480 --> 00:44:49,280 Speaker 2: Mike Hicher, President and CEO of Executive Leadership Committee ELC 833 00:44:49,920 --> 00:44:53,359 Speaker 2: joining us excuse me, Leadership Council joining us on all 834 00:44:53,360 --> 00:44:57,080 Speaker 2: the efforts through DEI. And you know, I wonder what 835 00:44:57,120 --> 00:44:59,880 Speaker 2: this happens once we get past November, Paul, Like, what 836 00:45:00,160 --> 00:45:01,399 Speaker 2: the result will wind up being? 837 00:45:02,160 --> 00:45:04,680 Speaker 3: Does this conversation get easier, get harder? 838 00:45:04,719 --> 00:45:07,920 Speaker 2: Can we refocus it into diversity is good for many reasons? 839 00:45:07,920 --> 00:45:10,440 Speaker 2: Here are the numbers that show it versus making it 840 00:45:10,480 --> 00:45:11,000 Speaker 2: a race issue. 841 00:45:11,000 --> 00:45:12,440 Speaker 4: At the end of the day, yep, exactly. 842 00:45:12,440 --> 00:45:14,840 Speaker 5: If you can put in the context of profitability and returns, 843 00:45:14,920 --> 00:45:16,360 Speaker 5: let's probably get the board's attention. 844 00:45:16,760 --> 00:45:21,279 Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify, 845 00:45:21,480 --> 00:45:24,680 Speaker 1: and anywhere else you'll get your podcasts. 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