Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 2: It is our first week of twenty twenty four and
Speaker 2: got to say it was a busy start to the
Speaker 2: new year for markets, with Federal Reserve meeting minutes being released.
Speaker 2: We also got the December jobs report. We also saw
Speaker 2: a risk off trade for much of the week on
Speaker 2: expectations at the Fed. Now we'll keep interest rates elevated
Speaker 2: for longer. We've heard this before, Tim.
Speaker 3: Perhaps not surprising then, as dak as a result taking
Speaker 3: the worst of it and so a head on the program,
Speaker 3: we'll examine both the bull and the bear case for
Speaker 3: the index's largest holding, the Ultimate megacap Apple.
Speaker 4: Indeed.
Speaker 2: Also ahead a wide ranging interview with arkinvest Kathy Wood,
Speaker 2: and you'll hear from Carnival CEO Josh Weinstein on what
Speaker 2: the cruise line can do for an encore on the
Speaker 2: heels of eight strong quarterly earnings to cap off twenty
Speaker 2: twenty three.
Speaker 3: Plus, our Bloomberg Pursuits team lays out the ultimate travel
Speaker 3: guide for the next twelve months, which spans destinations on
Speaker 3: six of the seven continents. Sorry no trips to Anthwerp.
Speaker 2: This is a story there, everybody.
Speaker 3: And the Caribbean as well.
Speaker 2: I'm already putting a list together overhere. I want to
Speaker 2: go all of that to come. We begin with the
Speaker 2: very first Bloomberg Big Take of twenty twenty four, covers everything,
Speaker 2: well almost everything, that Wall Street expects in the year ahead.
Speaker 2: The range everything from the mother of all rallies to
Speaker 2: a sell off for the ages. Talk about a standard
Speaker 2: deviation tip.
Speaker 3: For a look at the key takeaways from more than
Speaker 3: six hundred and fifty calls from the financial world, we
Speaker 3: welcome Bloomberg News Senior editor Sam Potter. And as a reminder,
Speaker 3: on our last trading day of twenty twenty three, our
Speaker 3: most read story on the Bloomberg terminal was about how
Speaker 3: Wall Street's Best and Brightest flopped once again in twenty
Speaker 3: twenty three. So our first question for Sam, what's the
Speaker 3: use in surveying Wall Street for what to expect in
Speaker 3: the new new year?
Speaker 5: Yeah, they really put me in a buying with that
Speaker 5: story at the end of last year. First, I should
Speaker 5: just say these are the investment outlooks that the biggest banks,
Speaker 5: the biggest asset managers and advisors put out every year.
Speaker 5: They start publishing the mid November. Many of them run
Speaker 5: to one hundred pages or more, containing all the wisdom
Speaker 5: and the forecasts for the year ahead. I've been putting these,
Speaker 5: I've been sort of collating the main calls for these
Speaker 5: for the last five years or so, five.
Speaker 3: Or six years.
Speaker 5: I've got to say it's interesting this time round because
Speaker 5: the dispersion there is dispersion is ever, but actually there's
Speaker 5: a fair fairly common consensus among most of the reports,
Speaker 5: which is, and it's a pretty sort of benign, middle
Speaker 5: of the road kind of view that we're going to
Speaker 5: the rate hikes that we've seen this past year or two,
Speaker 5: they're finally going to buy it. Economy are going to slow,
Speaker 5: and that will prompt a central bank pivot somewhere in midyear,
Speaker 5: which could pave the way for a bit of a
Speaker 5: recovery and modest kind of games for stocks and bonds
Speaker 5: are seen. So actually, most of the forecasts are sort
Speaker 5: of leaving around this fairly benign outlet.
Speaker 2: Does that, and that doesn't typically happen in terms of
Speaker 2: kind of a middle of the road thinking. You know, Sam,
Speaker 2: since you've done this, you know, for us a few
Speaker 2: times here at Bloomberg, is it more typically some extremes
Speaker 2: kind of all over.
Speaker 6: Yeah.
Speaker 5: So the reason, yes, the reason that that twenty twenty
Speaker 5: three was stood out so much and that my colleagues
Speaker 5: did that story last week was this time last year,
Speaker 5: everyone was very gloomy. They expected recession, and not a
Speaker 5: mild recession. A lot of people were predicting that it
Speaker 5: was going to be a very tough year as those
Speaker 5: rate hikes really grounded to the economy, and as it happened,
Speaker 5: the economy held up pretty well. You guys were just
Speaker 5: talking about that, and then an AI frenzy from nowhere
Speaker 5: stoked the stock market, and so everyone's forecasts were sort
Speaker 5: of torn up this time around. As I say, it's
Speaker 5: a very kind of I mean the words they use
Speaker 5: are like mild recession, a healthy slowdown, benign. It's the
Speaker 5: soft landing, right, it's the successful soft landing, which most
Speaker 5: of the calls say, not all of them, As we say,
Speaker 5: is there are still some outliers, but it's unusually kind
Speaker 5: of conservative. I guess this year it is.
Speaker 3: But there's also this section on risks that I wanted
Speaker 3: to highlight. Sam what were some of the risks or
Speaker 3: I guess what is the general theme that runs through
Speaker 3: the different the different banks when they talk about risk
Speaker 3: for this year.
Speaker 5: Well, there's the big and very obvious one, which is
Speaker 5: the election year ahead, which has been talked about quite
Speaker 5: a lot. I think it works out that more than
Speaker 5: a country is equating to more than half of the
Speaker 5: global economy, will be electing their leaders in the year
Speaker 5: ahead or are expected to, led of course by the
Speaker 5: United States. And at this point that is just too
Speaker 5: too tough to call. All the reports can all these
Speaker 5: poor strategists can do is say, you know, prepare for volatility.
Speaker 5: It's too early to say, we don't know what's going
Speaker 5: to happen. So the US election is really a big one.
Speaker 5: Inflation has it been vanquished? If it proved stickier than
Speaker 5: everyone expects, then that could be a bit of a
Speaker 5: surprise for the market. And also geopolitics. I think in
Speaker 5: the past three or four years it's been the unexpected
Speaker 5: that has derailed all the Wall Street courts. So the
Speaker 5: war in Ukraine and now we have these rail gaza
Speaker 5: so there is well, there is consensus, there's a lot
Speaker 5: of nervousness, and we see generally risks back to the downside.
Speaker 2: Yeah, I feel like the geopolitics one of the things.
Speaker 2: Last week it was so quiet. I mean every morning
Speaker 2: we'd come in and futures were like point zero three,
Speaker 2: Like it was like barely moved. We actually got unchanged
Speaker 2: a couple of times. It was just so quiet. But
Speaker 2: we were concerned about geopolitics, certainly as we started to
Speaker 2: see problems in the Red Sea, and you know, some
Speaker 2: of the big container shippers or the big you know,
Speaker 2: trading companies that are so important to moving stuff around
Speaker 2: in terms of our global supply chain saying I'm not
Speaker 2: going to do it Marisk you know again, I think
Speaker 2: today or in the last twenty four hours saying we're
Speaker 2: not going to send our ships through there. There's just
Speaker 2: too much risks. At this point, I do feel like
Speaker 2: it's kind of wild here, Sam, wild in a scary way.
Speaker 2: That we now have the Russia Ukraine warheaded for its
Speaker 2: third year, right, and then we now have the Middle
Speaker 2: East where it does feel like things are escalating, and
Speaker 2: that there's a lot of kind of hot points. People.
Speaker 2: Last week we're talking about one hundred, more than one
Speaker 2: hundred attacks like in the region, So maybe we are
Speaker 2: already in a third world war. If you had to say,
Speaker 2: you know, the biggest risk that maybe faces investors this
Speaker 2: year is it geopolitics.
Speaker 5: Well, funnily enough, geopolitics. I mentioned it after the election
Speaker 5: because that seems to be where it comes on the radar. Obviously,
Speaker 5: the US election in particular has a huge bearing on
Speaker 5: the geopolitics because the foreign policy of the respective candidates
Speaker 5: is likely to be quite different. Yeah, I think geopolitics,
Speaker 5: A lot of the view is that the Russia and
Speaker 5: Ukraine war is kind of a known element. Now, those
Speaker 5: energy shocks that we experienced in the early days of
Speaker 5: the war and not happening so much anymore. There are
Speaker 5: some rumblings, you know, if the Middle East escalates, obviously
Speaker 5: that can impact the energy sector. But yeah, a lot
Speaker 5: of I guess I don't know whether the strategists are
Speaker 5: just getting weary or but a lot of people saying,
Speaker 5: you know, in the long run, the markets look through
Speaker 5: these things, they look past these things, so don't worry
Speaker 5: about it. Too much. Far more important is the election.
Speaker 5: And actually one thing that we haven't mentioned this fiscal
Speaker 5: picture which is looming in the background in particularly in
Speaker 5: the US, because a lot of people are wondering if
Speaker 5: the US could keep spending the way it is and
Speaker 5: how that is going to feed into the election.
Speaker 2: One thing I wanted to ask is AI was such
Speaker 2: a big momentum play, if you will, and actually turned
Speaker 2: out to be fundamentally because we did see some strong
Speaker 2: numbers from Nvidia. Is there something else that kind of
Speaker 2: juices the markets? AI did it last year, those new
Speaker 2: class of weight loss drugs. Is there something in terms
Speaker 2: of a sector or trend? And just got about forty
Speaker 2: seconds here.
Speaker 5: AI still is where I would say to that. I mean,
Speaker 5: for the longest time, they all will talk ESG and
Speaker 5: green energy and things, but it never sort of catches
Speaker 5: firing the way AI did this year. So a lot
Speaker 5: of the outlooks are talking about the potential for AI
Speaker 5: to keep supercharging returns and it's going to play out
Speaker 5: they see as a theme that's going to run and
Speaker 5: around over the next couple of years. So AI still,
Speaker 5: But yeah, that's these things by their nature come out
Speaker 5: of the blue, right So if we knew the if
Speaker 5: I'd seen the magic ticket in these outlooks, I would well,
Speaker 5: I wouldn't be telling you guys. But come on, Sam, yeah,
Speaker 5: I would tell you.
Speaker 3: If I knew you would.
Speaker 2: Quit, you would make it.
Speaker 3: If Sam is an, Sam's not doing the outlook for
Speaker 3: twenty twenty five. We know he found the golden ticket. Okay,
Speaker 3: that's what we know.
Speaker 7: That is so true. Didn't somebody win?
Speaker 2: Was it in Michigan?
Speaker 3: Yeah, but I'm talking like, you know, more important than
Speaker 3: the lottery is like knowing.
Speaker 2: What the markets are exactly. Sam Potter, thank you so much.
Speaker 2: We know it is later out there in London, so
Speaker 2: we were so glad we could bring this story to everybody.
Speaker 2: Sam Potter, Bloomberg News Senior editor on zoom from London.
Speaker 2: This is Bloomberg.
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Speaker 3: The twenty twenty four rating year began with volatility for
Speaker 3: bitcoin investors. Early this past week, we saw the cryptocurrency
Speaker 3: briefly touch forty five thousand dollars for the first time
Speaker 3: since April of twenty twenty two, before retreating this on
Speaker 3: bets that the SEC will soon approve in exchange traded
Speaker 3: fund investing directly in the biggest token.
Speaker 2: Yes, indeed, we're watching the calendar now. One person who
Speaker 2: has long been confident in this development as Kathy Wood,
Speaker 2: the founder, CEO and CIO of our Investment Management. She
Speaker 2: joined me in our Bloomberg TV colleagues Katie Greifeld and
Speaker 2: Manas Crani on December twenty eighth for a wide ranging
Speaker 2: conversation starting with arcs move to sell off its remaining
Speaker 2: position in the gray scale Bitcoin trust based on the
Speaker 2: shrinking discount to its net asset value.
Speaker 6: We're as optimistic about bitcoin as we ever have been,
Speaker 6: but there are a few regulatory and tax uncertainties, and
Speaker 6: we had been waiting for the discount between GBTC and and.
Speaker 8: NAVE to narrow.
Speaker 6: It was as high as fifty percent at one point
Speaker 6: last year when there was great uncertainty around all of
Speaker 6: the turmoil in crypto generally, and now it's a single
Speaker 6: digit and there are now other products out there that
Speaker 6: we can use to gain exposure to bitcoin in this moment,
Speaker 6: and it's just a moment of uncertainty between now we
Speaker 6: think and January January eighth to tenth, somewhere in that
Speaker 6: range perhaps, but we will, out of an abundance of caution,
Speaker 6: didn't want to take any risk.
Speaker 9: And I mean, let's get a little bit specific here,
Speaker 9: because we're talking about the ARC Next Generation Internet ETF.
Speaker 7: The ticker there is.
Speaker 9: ARC W and I think we caught a lot of
Speaker 9: people's attentions is that you completely sold down your remaining
Speaker 9: stake of the Grayscale Bitcoin Trust instead on the same
Speaker 9: day you bought into the pro Shares Bitcoin Strategy ETF.
Speaker 9: Of course, that tracks bitcoin futures, it doesn't actually hold
Speaker 9: the physical bitcoin.
Speaker 8: Can you explain that shuffle?
Speaker 2: What was the thinking there?
Speaker 8: Sure a couple of things.
Speaker 6: First of all, Biddo the pro Shares is already approved.
Speaker 6: There's no regulatory uncertainty having to do with it. So
Speaker 6: we chose to maintain our exposure through Biddo for the
Speaker 6: time being. And as I mentioned before, there are some
Speaker 6: tax and regulatory uncertainties still as part of this process.
Speaker 6: We don't know exactly who's going to be approved, and.
Speaker 8: Whether they've met.
Speaker 6: All the criteria that the SEC has put before us.
Speaker 6: We know we have, but we don't know if others,
Speaker 6: including GBTC.
Speaker 8: Have, We just don't know.
Speaker 6: So again, out of an abundance of caution and gbt's
Speaker 6: discount again it was as much as fifty percent relative
Speaker 6: to NAV. So not only have we enjoyed this year
Speaker 6: the run in bitcoin itself, but we've had the nice
Speaker 6: closing of that discount.
Speaker 8: So it's been you know, double good news for us.
Speaker 2: When you've talked about January tenth, Kathy, I think in
Speaker 2: another report, is that possible, whether it's you or somebody
Speaker 2: else in terms of the first spot bitcoin ETF actually
Speaker 2: getting approval.
Speaker 6: Well, we think the probabilities have gone up because the
Speaker 6: SEC has been highly engaged compared to what was happening before.
Speaker 8: Before it was just denying.
Speaker 6: Approval, denying approval, and we just kept putting our filing
Speaker 6: in again, you know, try, try, ugged and determined, and
Speaker 6: so here we are. We think we're first in line,
Speaker 6: and that's why there is this January tenth deadline. But
Speaker 6: we like the idea that the SEC has been so
Speaker 6: engaged and it's not just with us, it's others as well.
Speaker 6: We think a number of a number of funds could
Speaker 6: be approved.
Speaker 8: At the same time.
Speaker 6: And they've been asking not only one set of questions,
Speaker 6: but follow up questions, and again that's a very good sign.
Speaker 2: Well, speaking of engagement, Oh go ahead, please, no, no, no, no.
Speaker 6: The last few questions have been very technical and so
Speaker 6: more der riguer. And you know, you'd expect them to
Speaker 6: be asking these questions as we head toward an approval.
Speaker 6: Now it's not one hundred percent certain, and so we
Speaker 6: want to make that.
Speaker 8: Clear as well.
Speaker 6: This is the SEC and we never know, you know,
Speaker 6: what might happen along the way.
Speaker 2: Regulators can be tricky, that's for sure. Hey, listen, you
Speaker 2: mentioned engagement. Let's talk about engagement with your funds overall
Speaker 2: and especially the ARC Innovation Fund up seventy two percent
Speaker 2: year to date, easily apt performing some of the major
Speaker 2: market benchmarks, still down sixty five percent from the high
Speaker 2: back in February of twenty twenty one. For you, though,
Speaker 2: a lot of critics. We bring up your name, we
Speaker 2: bring up ARC, and you have a lot of fans,
Speaker 2: and you have a lot of critics. There's a lot
Speaker 2: of discussion. Does it although a little bit like a
Speaker 2: victory lap this year.
Speaker 6: Well, you know, we are very happy that a couple
Speaker 6: of things have happened that this idea that interest rates
Speaker 6: were going to continue moving higher has been proven incorrect.
Speaker 6: And I think even the Fed, while there is that
Speaker 6: small possibility, even the Fed is now starting to talk
Speaker 6: about the other side of the interest rate move And
Speaker 6: so I do believe all we've seen so far is
Speaker 6: a reaction to that macro phenomenon or judgment call. We
Speaker 6: went through our flagship strategy and all of our strategies
Speaker 6: went through a very difficult time from February twenty one
Speaker 6: through December of twenty two, as interest rates, first of all,
Speaker 6: were presumed to move up or forecasts move up, and
Speaker 6: then when they did move up, so it was almost
Speaker 6: like a double discounting.
Speaker 8: And so we've seen the.
Speaker 6: First installment of the UH the correction there to the
Speaker 6: upside for our funds with this notion, and it's again
Speaker 6: the forecast that interest rates will come down.
Speaker 8: And you know, we would presume that if they do come.
Speaker 6: Down for the reasons we think they're going to come down,
Speaker 6: the most important one being deflation, then our funds will
Speaker 6: be in good shape because we are very Our companies
Speaker 6: thrive on deflation. Technologically enabled innovation is deflationary.
Speaker 10: So Kathy, a very good morning too.
Speaker 11: It's Manus, the first time we've met on So we're
Speaker 11: going to move to a deflationary environment.
Speaker 10: We'll come back to the big macrocoll in a moment.
Speaker 11: Just let's square it away before I talk to you
Speaker 11: about the flows in the funds, which is how much
Speaker 11: interest rate cuts do you presume? Are you forecasting? Leave
Speaker 11: the forecast of everybody else's side? Well, what do you
Speaker 11: what do you presume will happen next year?
Speaker 6: Well, we put up a chart in one of our
Speaker 6: in the Nose, which is a YouTube video that I
Speaker 6: do every every month Employment Friday. And in that chart
Speaker 6: you will find a ratio. It's the metals to gold ratio,
Speaker 6: so metals price to goal price, and there has been
Speaker 6: an extremely tight correlation between that ratio and long term
Speaker 6: interest rates. In October we published it or early November,
Speaker 6: and what you will see is that there was a
Speaker 6: very wide gap that had developed. The metals to gold
Speaker 6: ratio was near its low for the past twelve to
Speaker 6: fifteen years, and interest rates were at their highs five percent.
Speaker 6: The correlation if you just eyeballed that chart. The correlation
Speaker 6: suggested that rate should go to two percent. Now, maybe
Speaker 6: they won't go all the way to two percent, but
Speaker 6: we think that long term interest rates are way above
Speaker 6: where they're going to end because of defaise.
Speaker 11: Okay, well, let's we'll come back to that and see
Speaker 11: why that we get to the two percent level. I'm
Speaker 11: going to ask you about the flows into the funds,
Speaker 11: which is obviously you know, as Krol just said, you've
Speaker 11: got a bit of a victory lap going on at
Speaker 11: the moment.
Speaker 10: But this is the first year of outflows. Have those
Speaker 10: outflows stopped?
Speaker 11: You've had a great performance in the back part of
Speaker 11: this year. Have the outflows stopped and has that bleed stopped?
Speaker 6: Yes, Well, we were very gratified at our asset retention
Speaker 6: in twenty one and twenty two. In fact, we had
Speaker 6: net inflows if you combine both years of more than
Speaker 6: eighteen billion dollars and this year one, what might expect
Speaker 6: that those who averaged down into the very steep declines
Speaker 6: that we were seeing in twenty two especially might take
Speaker 6: some profits. So we have had I know, for our
Speaker 6: flagship strategy, it's roughly five hundred million dollars and outflows
Speaker 6: maybe for all of our strategies one point eight million,
Speaker 6: so maybe ten percent of the inflows that we enjoyed
Speaker 6: during twenty one and twenty two. So again, we're very
Speaker 6: gratified and grateful to our clients for the support that
Speaker 6: we continue to receive.
Speaker 10: So has the outflow stopped?
Speaker 6: We have had days of on balance very recently, yes,
Speaker 6: And I think.
Speaker 8: Part of this is many people do.
Speaker 6: Tax management towards the end of the year, and so
Speaker 6: some of the outflows might have been associated with clients
Speaker 6: who got in at a high cost base and we're
Speaker 6: just harvesting some tax losses.
Speaker 8: But I think we're through that.
Speaker 2: Do you find a little surprising, though, Kathy, considering the
Speaker 2: run up or do you I'm curious about the conversations
Speaker 2: you do have with investors considering the year that you're
Speaker 2: having and then to see those flows, it's got to
Speaker 2: be a little disheartening.
Speaker 8: Yeah, oh no, no, no, no, not at all.
Speaker 6: Actually, we put out a piece for Resolute, our distributor who,
Speaker 6: and we basically showed them if you rebalance our strategy
Speaker 6: when there have been big moves one way or the other,
Speaker 6: if you rebalance regularly or based on a rule like
Speaker 6: when the funds up fifteen percent relative to everything else,
Speaker 6: takes some profits. And what it showed that study showed
Speaker 6: that if you are disciplined that way, that over any
Speaker 6: rolling five year period, it is highly likely almost one
Speaker 6: hundred percent, I'm not quite sure if it's quite that high,
Speaker 6: but that you will beat the market, meaning as measured
Speaker 6: by the Nasdaq or the SMP over a rolling five
Speaker 6: year period. And so a lot of our funds are
Speaker 6: with advisors who are very sophisticated and responded somewhat perhaps
Speaker 6: in this tax management part of the year to that message.
Speaker 2: I feel like we can't talk. We have to talk
Speaker 2: about Tesla and Elon Muskin. I know you just had
Speaker 2: a conversation on Twitter X. This has been I think
Speaker 2: from day one, right in terms of you starting out
Speaker 2: that you've had this investment in Tesla, and I remember
Speaker 2: when we first talked and you were getting started, you
Speaker 2: talked about him being the next Thomas Edison and how
Speaker 2: his vehicles would turn the US economy upside down. Having
Speaker 2: said that, there's an evolution and the ev world has changed,
Speaker 2: how are you thinking it's still a top holding? How
Speaker 2: are you thinking about the Tesla story right now.
Speaker 6: Well, first of all, Carol, thank you very much for
Speaker 6: letting me interview that time.
Speaker 8: That was nearly ten years ago. Arcus is about.
Speaker 6: To celebrate this tenth year anniversary and you gave us
Speaker 6: that opportunity, so thank you. The world is evolving, actually,
Speaker 6: I think even more closely to what we expected, because
Speaker 6: we expected a lot of traditional auto manufacturers to see
Speaker 6: the riding on the wall and rush as quickly as
Speaker 6: they could into scaling big time into electric vehicles. And
Speaker 6: what has happened recently, both GM and Ford have said
Speaker 6: we're stepping back. We're not going to do this until
Speaker 6: it's profitable. The problem with that is, in order to
Speaker 6: be profitable, they need to scale.
Speaker 8: That's how this works. These are learning curves.
Speaker 6: That they are riding down, and those are expressed in costaclines.
Speaker 6: So the fact that they're pulling back means there's more
Speaker 6: share for Tesla and others who choose to go for it.
Speaker 9: And Kavi, I want to keep the conversation going on
Speaker 9: elon Musk, but I want to bring it to the
Speaker 9: arc Venture Fund. Of course, it's not an ETF. You
Speaker 9: invest in private companies etc. In there and you take
Speaker 9: a look at the portfolio. You have SpaceX in there,
Speaker 9: and you also have X formerly known as Twitter, And
Speaker 9: in July you had told the Wall Street Journal that
Speaker 9: you had written down your Twitter steak by forty seven percent.
Speaker 9: Fill us in on the past couple of months. Have
Speaker 9: you written it down further or how has that changed?
Speaker 6: No, I think it's still there. You know, we have
Speaker 6: to be very careful. This is an interval fund, it
Speaker 6: is a forty act fund, and we have to mark
Speaker 6: to market every day. The good news is our clients
Speaker 6: can get in and have access to these amazing companies
Speaker 6: for just five hundred dollars and they get quarterly liquidity.
Speaker 8: So that's the good news.
Speaker 6: The markdowns are simply you know, if we see in
Speaker 6: the secondary market employee stock trading at a steep discount,
Speaker 6: we have to take that into account.
Speaker 8: If we see others in the.
Speaker 6: More traditional asset management work worldlike Fidelity and others marking
Speaker 6: their holdings down, we need to take that into consideration
Speaker 6: during our daily mark to market. So it's an abundance
Speaker 6: of caution. We have a five year investment time horizon.
Speaker 6: Do we think that's where X belongs in terms of valuations?
Speaker 8: Absolutely not.
Speaker 6: Absolutely not a roughly twenty ish billion dollar valuation for
Speaker 6: what we believe truly will become the everything app think
Speaker 6: we chat. Pay Elon started his entrepreneurial career in the
Speaker 6: payments industry, and he's been thinking about this for a
Speaker 6: long time. He now has money transmitter licenses in more
Speaker 6: than half of all of the states, which we learned
Speaker 6: on Twitter spaces or on x spaces, i should say,
Speaker 6: the other.
Speaker 8: Day when we had our interview with him. So that's exciting.
Speaker 8: He's going for it.
Speaker 7: He's going for it. We'll see if that one lands.
Speaker 9: But let's talk a little bit more about the private markets,
Speaker 9: because obviously the private credit market has gotten a lot
Speaker 9: of attention right now. You're looking at the private markets
Speaker 9: through this interval fund that you have when you think
Speaker 9: about the opportunities there on that five year horizon that
Speaker 9: you have, do you see more so in the public
Speaker 9: markets or.
Speaker 2: In the private markets right now?
Speaker 6: Well, now that we've had this very nice run this year,
Speaker 6: we think the answer to that question is in the
Speaker 6: private markets. They're close. They're close. What's fascinating to us
Speaker 6: is that the public markets have been leading the private
Speaker 6: markets for the past three years. As our funds were
Speaker 6: were falling. In twenty one, private evaluations were going to
Speaker 6: all time highs along with the Nasdaq. They were taking
Speaker 6: their ques, I suppose from the Nasdaq. But real innovation,
Speaker 6: if you looked at our portfolios, was starting to revalue
Speaker 6: to the downside, and even more so in twenty twenty two.
Speaker 6: We are still seeing major down rounds taking place in
Speaker 6: the private markets. And I'm always surprised at this sort
Speaker 6: of thing because you would think that the private markets
Speaker 6: lead the public markets. That has not been the case
Speaker 6: in the last few years.
Speaker 2: Hey, Kathy, I got to be honest with you. I
Speaker 2: think whenever we think about Elon Musk brilliant but also erratic.
Speaker 2: And I'm curious how you think about Elon the individuals
Speaker 2: versus Elon the companies he's creating the things he's doing,
Speaker 2: because I think if there is time, any other CEO
Speaker 2: of a major publicly held company would I think it's
Speaker 2: safe to say not be able to get away with
Speaker 2: a lot of what he has done. So help us
Speaker 2: educate us how you make sense of it of someone
Speaker 2: you have followed, talked with for many years.
Speaker 6: Well, first of all, very often we just look at
Speaker 6: what he does, not exactly what he's saying, which can
Speaker 6: often be a distraction, or it can be an advertisement
Speaker 6: for his cars or for X or for SpaceX and
Speaker 6: so forth. But we have a scoring system as we
Speaker 6: are evaluating companies and their founders and their management teams,
Speaker 6: and there are six metrics, and one of them is
Speaker 6: MOTE and barriers to entry.
Speaker 8: And I think Elon is a.
Speaker 6: Maestro of raising barriers to entry with innovation, which that
Speaker 6: is so much faster than anyone else. Why because he's
Speaker 6: so first principles physics driven in his analysis of how
Speaker 6: to approach a new idea, a big idea.
Speaker 10: So tell me this then, Kathy.
Speaker 11: I mean, if you look at the cohort of the
Speaker 11: CEOs that you back, Brian Armstrong, does he hit that bar?
Speaker 10: Is he above Elon? Or is he at the money?
Speaker 11: You've got Elon, You've got Brian, You've got Tony Wood
Speaker 11: at Rocco.
Speaker 10: Does anybody come close to Elon?
Speaker 11: Or is Brian Armstrong maybe even at the money with
Speaker 11: Elon or above.
Speaker 6: We don't actually look at the world that way, one
Speaker 6: relative to the other in terms of management teams. We
Speaker 6: do look from our scoring system at the scores, which
Speaker 6: include MOTE, management, people and culture, execution of valuation that
Speaker 6: might surprise people, and product and service leadership.
Speaker 8: And thesis risk.
Speaker 6: Those are the six scores, and both well, all three
Speaker 6: of them score very highly. Which one scores the highest?
Speaker 6: They are actually very close to one another, to be honest, they're.
Speaker 10: Very close to one another.
Speaker 11: So I mean, obviously Coinbase is one of your key holdings.
Speaker 11: We've talked a little bit about that. The other feature
Speaker 11: that we want to talk about is AI. I'm curious
Speaker 11: to know in open ai the valuations have ranged between
Speaker 11: eighty billion to one hundred billion. Will you take a
Speaker 11: position in open ai? Is that going to be part
Speaker 11: of your holdings as you explore the next development of
Speaker 11: AI and your holdings.
Speaker 6: Well, in our private portfolios, we are already exposed to andthropic,
Speaker 6: which has been a major beneficiary of the drama around
Speaker 6: open ai that we all witnessed a few months ago.
Speaker 8: But if you look at GPT.
Speaker 6: Four, which is the latest large language model that open
Speaker 6: ai has published, it is way above others in terms
Speaker 6: of performance. So there you have it, the pros and
Speaker 6: the cons. So we can't tell you what we're going
Speaker 6: to do in that portfolio, but we are so impressed
Speaker 6: at how open ai has led the industry. We're also impressed, however,
Speaker 6: at the open source models, and we'd like to encourage
Speaker 6: more of that movement. We know that Meta Platforms has
Speaker 6: with Lamaitu and it's working on others. Is moving very
Speaker 6: quickly and making great strides. So for much lower cost
Speaker 6: open sources, free companies can get close.
Speaker 8: At GPT four book close.
Speaker 6: So we want to see the open source movement in
Speaker 6: the venture fund we also own.
Speaker 2: Kathy, We've got a oh sorry, no, no, no, we
Speaker 2: never have enough time with you. Can I ask you
Speaker 2: a really quick question five seconds? Any ETFs coming our
Speaker 2: way from you guys next year?
Speaker 8: Well, real quickly.
Speaker 6: As you may know, we bought a company in London. Yeah,
Speaker 6: they have some very interesting funds.
Speaker 2: Our thanks to Kathy Wood, the founder, CEO and CIO
Speaker 2: of our investment management joining me Katie Greifeld to Maniscrani
Speaker 2: on December twenty eighth.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 12: Old bonds.
Speaker 2: All right, everybody, Apple something the most. That's September shares
Speaker 2: down three point six percent after Barclay's cutting their ratings
Speaker 2: and price target on the stock. Alic's there bearish of
Speaker 2: an expectation of soft demand for the latest iPhone and
Speaker 2: a lack of new features in the next iteration of
Speaker 2: the iPhone, arguing that's just not going to prompt customers
Speaker 2: to go out and upgrade. I don't know I need
Speaker 2: a new phone. I need a new watch.
Speaker 13: This just watch the.
Speaker 3: Apple that definitely need a new watch. You have, like
Speaker 3: the first.
Speaker 2: Appatch that takes a road show is calling?
Speaker 3: Which phone do you have?
Speaker 2: Twelve?
Speaker 8: Twelve?
Speaker 3: Okay, yeah, you should probably get a new phone.
Speaker 2: Well, Dan Ives has the opposite take. He is not
Speaker 2: a bear, just a couple of weeks ago, coming out
Speaker 2: with a note that argued that Apple is going to
Speaker 2: be the first four trillion dollar market cap company and
Speaker 2: that will happen by the end of this year.
Speaker 3: It's two point eight trillion dollars right now.
Speaker 2: Yeah, so a little ways to go. He's got an
Speaker 2: app or form and a two hundred and fifty dollars
Speaker 2: a share twelve month price target on Apple. Dan by
Speaker 2: the Way, Managing director, senior equity research analyst atweb Bush Securities.
Speaker 2: He's joining us from New York City on the phone.
Speaker 2: Hey Dan, so good to have you here. My new
Speaker 2: year already feels better. What do you make of this call?
Speaker 2: At Barkley's I'm going to assume if you were in
Speaker 2: a debate, you'd be like, Nope, you got it wrong.
Speaker 4: I mean, it's like groundhog Day the movie.
Speaker 14: Look, we've seen this before, right, I mean every year,
Speaker 14: the fire and a crowded theater, you know, first few
Speaker 14: days of the year scars everyone. The reality is I mean,
Speaker 14: is someone that spends so much time in Asia? This
Speaker 14: iPhone fifteen upgrade cycle has actually been strong. I mean
Speaker 14: China has come through I think, actually much better than feared.
Speaker 14: It's about the install based that many just continue to underestimate.
Speaker 14: Youre talking about the best install based in the world. Services,
Speaker 14: double digital growth. I think a year from now, we look,
Speaker 14: this is going to be a four trillion dollar market.
Speaker 3: What do you make of the channel check weekly step
Speaker 3: Barkley's analysts are talking about. Are you not seeing channel
Speaker 3: check weakness.
Speaker 14: I mean, look, I mean everyone has their opinion, but
Speaker 14: for the last year, people have talked about challenge check weakness,
Speaker 14: and it's essentially been a fictional Netflix story, you know,
Speaker 14: in terms of what's actually come through. I'm not saying
Speaker 14: it's Roses and Champagne. But when I look relative to
Speaker 14: street expectations and relative to the upgrades, I mean, tim,
Speaker 14: we have not seen any cuts at this point in
Speaker 14: the cycle out of our Asian supply chain checks and you.
Speaker 4: Would have already seen that now. And I think.
Speaker 14: That's Look, Apple's like Rocky Balboa every time it's over
Speaker 14: the growth at a trillion, trillion and a half two trillion,
Speaker 14: three trips, and I think that cycle it speaks to
Speaker 14: our view of we're in the beginning, in our opinion,
Speaker 14: of a new tech bowl market, and to be bearish
Speaker 14: on Apple going into the it's the exact opposite of
Speaker 14: what we would be doing.
Speaker 2: Having said that, Dan, you know, up almost fifty percent
Speaker 2: last year, is there some expectation that some investors are
Speaker 2: going to be taking profits, that there could be a
Speaker 2: little bit of a pullback after such a run like that,
Speaker 2: I mean, do the fundamentals justify that almost fifty percent
Speaker 2: run up in twenty twenty three.
Speaker 4: Yeah, and you look, and we've talked about it.
Speaker 14: You're going to have pullbacks like we always do, and
Speaker 14: pullbacks are healthy. But if from a valuation, I mean
Speaker 14: our view, it's just some of the parts. And that's
Speaker 14: really what started to happen with tech, with the godfather
Speaker 14: of AI and video. We've seen it with Google, We've
Speaker 14: seen it with Microsoft. That's what's happened with Apple. I mean,
Speaker 14: when you look at the valuation today, this is Apple
Speaker 14: with zero valuation for AI, which is going to be
Speaker 14: the next phase of the story. So our view is
Speaker 14: we'll have some ebbs and flows here, but this is
Speaker 14: one where fundamentally we continue to think it's one where
Speaker 14: it goes higher on multiple it goes higher in.
Speaker 2: Numbers, does Apple Like I'm looking at revenues for twenty
Speaker 2: twenty three, Greater China was about almost seventy three billion,
Speaker 2: America's as a group one hundred and sixty two billion,
Speaker 2: So certainly the biggest market. Will there always be a
Speaker 2: Chinese market for Apple products? In your view?
Speaker 14: I mean, and look, and I think in kind it's
Speaker 14: important because if you go back over the last seventy years.
Speaker 14: The bear story in Apple, if you go back you
Speaker 14: trillion ago, it's China, right, Eventually that's the big bad way.
Speaker 14: Eventually that's going to that market. Domestically, geopolitical, the reality
Speaker 14: right now twenty percent iPhones coming out of China and
Speaker 14: you have one hundred million iPhones and trying just end.
Speaker 4: Up great opportunity to lose.
Speaker 14: So that's something where the growth continues to actually expand
Speaker 14: in China for Apple, and I think you'll you'll continue
Speaker 14: to have this as kind of a debatable point, but
Speaker 14: this is something that's just going to continue to expand,
Speaker 14: not contract, relative to what the average Chinese consumer wants.
Speaker 2: Well, it's interesting because we just talked about ASML and
Speaker 2: the Biden administration putting pressure on it to not sell
Speaker 2: some of its really key China semi manufacturing equipment to
Speaker 2: that country.
Speaker 5: I do you think.
Speaker 2: Politics geopolitics between the US and China ultimately find a
Speaker 2: way to get along or does that continue to though,
Speaker 2: like I just wonder, doesn't it eventually make it more
Speaker 2: complicated for a company like Apple. Although Apple very important
Speaker 2: to China in terms of the amount of workers it's
Speaker 2: got putting to work.
Speaker 14: Yeah, I mean, I peak its second biggest employer in China,
Speaker 14: right and I think even look at Tesla today, China
Speaker 14: numbers strong. So I think when you look at the
Speaker 14: political you know, sort of tightrope that's happened right now
Speaker 14: because it's an AI arms race. So let's just call
Speaker 14: it a between US and China. And right now because
Speaker 14: in video because of Microsoft in the US is actually ahead,
Speaker 14: it's going to be a balancing act.
Speaker 4: But our view is geopolitical is a background noise.
Speaker 14: I mean, this is the biggest tech transformation we've seen
Speaker 14: in thirty years, and it's one you're always going to
Speaker 14: have these worries. The reality is it's a dysfunctional relationship
Speaker 14: that continues. They both need each other in terms of
Speaker 14: US and China, and that's and that will continue to
Speaker 14: go down this path. And actually the tensions, I'd say,
Speaker 14: if anything, has maybe been toned down a bit relative
Speaker 14: to what we've seen over the last three four months.
Speaker 3: Hey, Dan, Ives want to get your take on another
Speaker 3: part of the Barclay's downgrade, which has to do with
Speaker 3: the iPhone sixteen. It's a little early for us to
Speaker 3: be talking about the iPhone sixteen. After all, these things
Speaker 3: are unveiled usually in September, but analyst at Barclay's argue
Speaker 3: that there are no features or upgrades that are likely
Speaker 3: to make the iPhone sixteen more compelling. What do you
Speaker 3: make of that?
Speaker 14: Look, they're probably the same ones that said you wouldn't
Speaker 14: have a big ten team in the national Championship and
Speaker 14: now you have two.
Speaker 4: So look, it's just look.
Speaker 14: It's always going to be it's easy to take shots, right,
Speaker 14: But the reality you're talking about two billion iOS devices
Speaker 14: and you have one point three billion iPhones.
Speaker 4: That upgrade opportunity alone.
Speaker 14: Is going to be two hundred forty two and fifty
Speaker 14: million units. And you look at iPhone sixteen, it goes
Speaker 14: back to Apple. They played chess, others played checkers. That's
Speaker 14: my most valuable company in the world. But you will look,
Speaker 14: the heaters are going to heat, and you're going to
Speaker 14: come out, especially coming out in the new year, the
Speaker 14: fire and a crowd theater.
Speaker 4: Call, I get it.
Speaker 14: You know, we've seen it many times in our almost
Speaker 14: twenty five years cover in tech. But we view as
Speaker 14: a golden buying opportunity and not time to you know,
Speaker 14: to hit the you know, the elevator for the cell button.
Speaker 3: So what brings what brings Apple to four trillion dollars?
Speaker 3: What is the next big thing from Apple? What's the
Speaker 3: one more thing? Is Steve Jobs used to say.
Speaker 14: It's good and look and obviously you know one of
Speaker 14: the best thought leaders out there, German.
Speaker 4: You know it talks about a bit, but it's AI.
Speaker 4: I mean you have the biggest install based in the world.
Speaker 14: So that monetize we viewed it's going to be an
Speaker 14: AI app store, It's going to be ultimately something that
Speaker 14: gets rolled out over the next year, and this is
Speaker 14: going to be AI apps within the services flywheel.
Speaker 3: But is that vision pro is that the conduit is
Speaker 3: that the device is that the platform?
Speaker 14: Vision pro from a form factor is the early stages
Speaker 14: of where this is all had see see the quick
Speaker 14: take would be like vision Pro thirty five hundred, it's
Speaker 14: not going to change the mat that that's not really
Speaker 14: a focused vision pro because two years from now that
Speaker 14: it's gonna be a twelve.
Speaker 4: Hundred dollar basically look like sunglasses. It's all about developers.
Speaker 14: Now, developers are gonna build more and more apps. They're
Speaker 14: gonna be AI generate, ar VR, and that's going to
Speaker 14: further mind to the insalt based, but tim it just
Speaker 14: goes back to when AirPods, when they release AirPods, and
Speaker 14: everyone's like, if they sell more than five million in
Speaker 14: a year, that would be the most unbelievable, eighth wonder
Speaker 14: of the world.
Speaker 3: I think I bought five million, less.
Speaker 14: Sure they sold ninety eight million in a year. So
Speaker 14: I'm just saying, like Apple's want it goes back to
Speaker 14: the Rocky Boutboa just continues to think it's over.
Speaker 5: Next thing.
Speaker 4: You know, you're watching Rocky eight.
Speaker 2: If though some of what Barklay's comes true and there
Speaker 2: are some issues, would you start to rethink a little
Speaker 2: bit differently or would you just say, maybe this is
Speaker 2: a little bit of a slower year than we thought.
Speaker 14: I just view it as here and there even some conservatism.
Speaker 14: I view it as overall slight turbulence chop that's ultimately
Speaker 14: going to forty thousand feet with smooth out in terms
Speaker 14: of where this.
Speaker 5: Is all headed.
Speaker 14: So that that's sort of my view in terms of
Speaker 14: how this is going to go. I'm not saying it's
Speaker 14: not gonna be can hit some chop getting there, But
Speaker 14: that's the nature of Apple's That's how it always is,
Speaker 14: and that's why you're always going to have one where
Speaker 14: the skeptics try to say this is the year it's over,
Speaker 14: innovations done, and yet at the top of that mountain
Speaker 14: is cooking Cooper Tina.
Speaker 2: So what about Musk and Tesla? A little bit of
Speaker 2: a transition, not a good one, sorry, another but you've
Speaker 2: got an outpor form. You've got a three hundred and
Speaker 2: fifty dollars I think a share price target on this one.
Speaker 2: Some news about them falling behind byd and coarly ev
Speaker 2: sales slowing. What's your thoughts on Tesla here?
Speaker 14: I mean deliveries today was the flecks, the muscles, I
Speaker 14: mean beef, the street China. A lot of the price cut,
Speaker 14: that price wars actually subsided strong China numbers, cyber truck.
Speaker 14: You know, we look demand to supplies ten to one,
Speaker 14: you know, in terms of what we see out there.
Speaker 14: And I think this is actually the next phase of
Speaker 14: the Tesla growth story that's come in the next one
Speaker 14: two three years in terms of full self driving supercharger
Speaker 14: as well as they you know, ultimately they're diving into
Speaker 14: deep end of the pool. Others are peeling back in Detroit.
Speaker 14: So for Tesla, it's another one where many continue to
Speaker 14: bet against Musk and Tesla.
Speaker 4: That's been the wrong bet.
Speaker 3: How do you feel, Dan about byd it's now ahead
Speaker 3: of Tesla when it comes to quarterly EV sales.
Speaker 14: I mean, I'm a big fan of BID. What they've
Speaker 14: done I've seen a firsthand is amazing. It's a two
Speaker 14: horse race in terms of essent to what's happening here.
Speaker 4: But this is not a zeros get and there's there's
Speaker 4: not just one play.
Speaker 14: We're talking about the biggest tech trans the biggest transformation
Speaker 14: to the auto industry since nineteen fifties, the green tidal
Speaker 14: wave that's come. And others will say, okay, is the
Speaker 14: demand is.
Speaker 3: Yeah, That's what I was gonna say, is the demand there.
Speaker 3: I was having a conversation with my dad about this.
Speaker 3: Who loves his EV, and you know he has a
Speaker 3: Ford and I've talked about this a lot, Carol, but
Speaker 3: you know he took him so long to get it
Speaker 3: after he ordered it, Dan, and now they can't get
Speaker 3: these things off of lots because people aren't buying them.
Speaker 3: And he had a good point. He said, you know,
Speaker 3: everyone who has an EV actually wants them, and you
Speaker 3: can get an internal combustion engine car for a lot
Speaker 3: less money. What about the demand question, Dan just.
Speaker 2: Got about thirty forty seconds.
Speaker 14: I mean for demand, I think it's it was maybe
Speaker 14: overestimated a bit, but we're still going at twenty five
Speaker 14: thirty percent of automo bis are going to be EV
Speaker 14: from three to four percent today. And that's why eventually
Speaker 14: likely your dad might be driving in EV in your future.
Speaker 3: Oh he's got the Machi, loves it, but he had
Speaker 3: to wait forever, right, Yeah, he had to wait forever
Speaker 3: to get it. My mom loves it too, she drives
Speaker 3: it more than my dad.
Speaker 2: Dan, do you drive an EV just quickly?
Speaker 4: Yeah?
Speaker 15: So?
Speaker 14: And I'm also on the cyber truck list, So when
Speaker 14: I'm in the cyber truck, I'll pick you guys up.
Speaker 4: Yeah, on the waxing and then we can drive it.
Speaker 2: Deal deal, deal, Dan ives such a treat. Great to
Speaker 2: have you here on this first trading day of twenty
Speaker 2: twenty four. Only thing as I wish we could see
Speaker 2: you because you are a killer dresser. It's a weasy
Speaker 2: next time, Yeah, next time, get home safely. Dan, i'ves
Speaker 2: managing director senior equity research channel set would Bush Securities
Speaker 2: talking to us about Apple and Tesla, two of some
Speaker 2: big app performers last year.
Speaker 3: He's bullish on twenty four.
Speaker 2: He is indeed all right, you're listening and watching Bloomberg BusinessWeek.
Speaker 2: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Podcast. Catch us live
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Speaker 2: Plenty ahead in our second hour of the weekend edition
Speaker 2: of Bloomberg Business Week, including a trip around the world
Speaker 2: literally courtesy of Bloomberg Pursuits, find out which destinations from
Speaker 2: nearly every corner of the globe need to be on
Speaker 2: your itinerary in the new year. And we're going to
Speaker 2: also tell you when to go, which is really kind
Speaker 2: of cool.
Speaker 3: About this care We go now somewhere, yes please. And
Speaker 3: speaking of travel, Carol and our friends from Bloomberg Television
Speaker 3: sit down with the head of the world's largest cruise
Speaker 3: company and operator, Carnival CEO Josh Weinstein offers his view
Speaker 3: on the health of the consumer and explains why few
Speaker 3: can compete with the level of hospitality that his firm
Speaker 3: has to offer.
Speaker 2: First, up this hour, we continue our look at Apple
Speaker 2: and its potential hurdles in the coming months. No American
Speaker 2: tech company has bet as heavily as it has on
Speaker 2: the economic interdependence of China and the US. Quite simply,
Speaker 2: Apple needs Chinese worker to make its iPhones and Chinese
Speaker 2: consumers to buy them, So this.
Speaker 3: Would seem to make the deteriorating relationship between the two
Speaker 3: global superpowers, the US and China uniquely dangerous for Apple.
Speaker 3: Remember Biden launch an aggressive campaign to keep China from
Speaker 3: developing advanced semis and called Chinese President Chijin Ping a
Speaker 3: quote dictator, and then she pursued a strategy to limit
Speaker 3: China's reliance Carol and Western made technology.
Speaker 2: But back and forth, back and forth. Apple.
Speaker 3: Here's an Apple. We're up fifty percent last year.
Speaker 2: Yeah, they did really well. So let's get into it.
Speaker 2: Because while the company is floated above the geopolitical tumult
Speaker 2: so far, Apple does enter this year twenty twenty four
Speaker 2: in danger of getting dragged into it. So writes our
Speaker 2: next guest. Not a guest, he's a friend of the show,
Speaker 2: friend of the family. Bloomberg BusinessWeek columnist Max Chafkin, who
Speaker 2: joins us here in our Bloomberg Interactive Story Interactive Broker's studio.
Speaker 2: His story, by the way, in the new issue of
Speaker 2: Bloomberg Business Week, which is already by the way, the
Speaker 2: story available a Bloomberg dot com slash Business weekend on
Speaker 2: the Bloomberg terminal.
Speaker 7: Year.
Speaker 3: Happy New Year.
Speaker 2: It's going to be happy new year for Apple.
Speaker 12: Well, you know, I mean, look, Apple is a big
Speaker 12: and powerful company, and what we're talking about are certainly
Speaker 12: challenges but but but probably not existential challenges.
Speaker 3: I mean, when you we.
Speaker 12: Take a few steps back, there are a few companies
Speaker 12: that are as sort of bought into the idea of
Speaker 12: US China relations being fairly warm.
Speaker 3: And that goes back decades.
Speaker 12: When you talk about Tim Cook, where did he come from?
Speaker 12: Before he was CEO of Apple, he was essentially the
Speaker 12: architect of this supply chain, the supply chain that relies
Speaker 12: on these big outsourcers, most of them operating factories in
Speaker 12: China to a stat to manufacture phones and relies on
Speaker 12: a market of a market that has grown, you know,
Speaker 12: tremendously and has done really well by Apple over the
Speaker 12: past few years. You might have thought during the Trump presidency,
Speaker 12: you know, Trump a lot of anti China rhetoric, a
Speaker 12: lot of rhetoric about globalization. Apple did great. And one
Speaker 12: of the reasons Apple did great is because although the
Speaker 12: trade war did not affect Apple, did affect Apple's competitors,
Speaker 12: primarily Huawei. So for several years, Huawei was essentially frozen
Speaker 12: out of the market for high end chips it had.
Speaker 12: In twenty nineteen, Huawei actually surpassed Apple in terms of
Speaker 12: handset sales globally the terms of units sold, and then
Speaker 12: it basically fell off a cliff because it lost access
Speaker 12: to Semis, to the high end semis. And what happened
Speaker 12: last year is that Huawei, basically out of nowhere, and
Speaker 12: we've talked about this before, you know, launched this new phone,
Speaker 12: the Mate sixty Pro, that has a chip that is,
Speaker 12: although it's not quite a state of the art chip,
Speaker 12: it's a lot closer than it was. That phone has
Speaker 12: sold very well. Huawei is bouncing back, and that is
Speaker 12: creating problems for Apple in China. At the same time
Speaker 12: that the Chinese government is introducing new restrictions that you know,
Speaker 12: the US has characterized as you know, retribution for our
Speaker 12: own restrictions. China has been sort of opaque about what
Speaker 12: they're doing. But it seems like, according to bloomber reporting
Speaker 12: that many Chinese workers, Chinese workers at state back companies
Speaker 12: are being encouraged or told or required not to bring
Speaker 12: iPhones to work. So you have these two sources of pressure.
Speaker 12: One is competition, the other is government regulation, and they're
Speaker 12: biting Apple, you know, in a very important market.
Speaker 3: Max. I think a big part of this story also
Speaker 3: is the fact that the ecosystem, the mobile ecosystem in
Speaker 3: China is not as sticky as the mobile ecosystem in
Speaker 3: other parts of the world. So here in the US,
Speaker 3: if you're an iOS or you know an iPhone user,
Speaker 3: your next phone is going to be an iPhone because
Speaker 3: you're like in that ecosystem you have all the apps.
Speaker 3: But then in China you have these over the top
Speaker 3: payments apps that work equally well whether you use an
Speaker 3: Android or whether you use an iOS device. We don't
Speaker 3: have that. They don't have that stickiness that we have
Speaker 3: here with like I Message and other parts of the
Speaker 3: Apple ecosystem.
Speaker 12: Well, and I mean a big point you think about
Speaker 12: what is appealing about an iPhone. Obviously, part of is
Speaker 12: the hardware. It's very beautiful, works fast, good chip so on.
Speaker 12: But the software part is important also, and of course
Speaker 12: software in China and these cloud services are regulated differently.
Speaker 12: You know, Chinese users may not have access to all
Speaker 12: of the cloud services that that are that that US
Speaker 12: users have access to, So so that's another factor. And
Speaker 12: of course there's been a lot of you know, sort
Speaker 12: of media coverage around this issue. You know, in China.
Speaker 12: You know, there's there's talking sort of patriotic duty to
Speaker 12: buy you know, uh compones made by domestic companies, just
Speaker 12: as there is, I guess to some extent you know,
Speaker 12: in the US. But until recently that hasn't had much
Speaker 12: of an impact. And one reason it hasn't had much
Speaker 12: of an impact is because you haven't had really strong competitors.
Speaker 12: But now, you know, talking to analysts and so on,
Speaker 12: the the competitors are getting better. They're getting they're closing
Speaker 12: that gap with Apple, you know, at a time when
Speaker 12: the government may be more interested. The government has long
Speaker 12: been interested in sort of reducing the you know, influence
Speaker 12: of foreign made technology equipment. But where the government now
Speaker 12: seems to be sort of doing something acting on that interest.
Speaker 2: So does that have to be worried about China especially
Speaker 2: you know, consumers wanting their devices or being able to
Speaker 2: do it. I feel like we have had bulbear scenarios
Speaker 2: as of late in the last week or so, where
Speaker 2: there's some concerns about the uptick in China, specifically of
Speaker 2: the iPhone. So does Apple need to be worried? I mean,
Speaker 2: it also employs a lot of workers, which is a
Speaker 2: good thing for China.
Speaker 12: So when you look at when you talk, when you
Speaker 12: hear what Apple's saying publicly, what they're saying is, you know,
Speaker 12: they're not seeing this. They're not worried. They've sort of
Speaker 12: signaled that the softness in China was not in the
Speaker 12: most recent quarter, was not related to this iPhone issue.
Speaker 12: And they still sell a lot and they're selling a lot,
Speaker 12: and we write in the story you know there are
Speaker 12: big lines, you know at Apple stores. The fact is
Speaker 12: that this is a device that whatever the government says
Speaker 12: or does and whatever's happening politically, is popular with consumers.
Speaker 12: People like it and the same way they like it here.
Speaker 12: So that is all stuff that is going for Apple.
Speaker 12: And again, when you look back historically, we've sort of
Speaker 12: talked about this and these warnings have been swirling around
Speaker 12: for like a decade, and Apple has basically done well,
Speaker 12: has continue to grow at sales in China. No, sales
Speaker 12: may bee plateauing to some extent. But but but now
Speaker 12: you know, people are raising concerns that we may be
Speaker 12: turning some kind of corner.
Speaker 3: Can you talk a little bit Max about how this
Speaker 3: is a function of Tim Cook before he was CEO.
Speaker 3: I mean, this is a guy who was a supply
Speaker 3: chain expert before he was tapped to become interim CEO.
Speaker 3: And then you know CEO when Steve Jobs died, how
Speaker 3: did he set up Apple in China?
Speaker 12: Well, and this is like such a fascinating thing because
Speaker 12: people think of Apple as this design first company and
Speaker 12: and you might think that the successor to Steve Jobs
Speaker 12: would be another head of the clouds to creative type
Speaker 12: and of course that's not what Tim Cook is. Tim
Speaker 12: Cook is a practical minded supply chain whiz. And you
Speaker 12: know it's worked incredibly well when you look at the
Speaker 12: amount of the number of devices, the way they've been
Speaker 12: able to squeeze costs to make this thing cheaper, to
Speaker 12: maintain their profits. I mean, you know, a huge percentage
Speaker 12: of profits and the smartphone industry general, Apple, it's all
Speaker 12: kind of worked. Well, then again, it's maybe it's built
Speaker 12: on a vision of the world that is changing that
Speaker 12: and that will continue to change, assuming that you know,
Speaker 12: the US and China tensions between those two countries continues on.
Speaker 2: Those supply chains. You write the supply chain diversification, right,
Speaker 2: because Apple is looking at other places. But it might
Speaker 2: be well, it looks like it's a way to reduce
Speaker 2: apples exposure to geopolitical blowback. It may be having the
Speaker 2: opposite effect. And you write Apple's a major employer in
Speaker 2: China and the government crackdown on iPhones could be seen
Speaker 2: as a warning about moving jobs out of the country.
Speaker 2: That part of the story just kind of blew my
Speaker 2: mind because I don't know that we've really thought about
Speaker 2: it that way.
Speaker 12: Yeah, so that's the thing. I mean, Apple sort of
Speaker 12: seems to have dispatched executive Tim Cook flew out there.
Speaker 12: At the beginning of twenty twenty three, senior Apple executive
Speaker 12: made public comments kind of a rare interview with state
Speaker 12: media talking about the kind of joint relationship between the
Speaker 12: two countries. Apple's really interested in sort of promoting the
Speaker 12: idea that, hey, it's been a really good employer in China.
Speaker 10: Yes, it is.
Speaker 12: It is interested in diversifying its supply chain, as are
Speaker 12: many companies, of course, because as we've seen with Covid
Speaker 12: and so on, there are reasons for that. But it's
Speaker 12: it's hard to escape the sense that they're that they're
Speaker 12: in a bit of a box they have to or
Speaker 12: that they at least have to walk a line where
Speaker 12: they want to diversify their supply chain. They're they're trying
Speaker 12: to make more iPhones in India, both for reasons of diversification,
Speaker 12: because they want to reach that market, while at the
Speaker 12: same time trying to make sure that they keep those
Speaker 12: relationships in China that Tim Cook and this company have
Speaker 12: spent decades building intact. You know, they definitely can't just
Speaker 12: turn off the iPhone factories in China. China is going
Speaker 12: to be important Apple, you know, for many years going forward.
Speaker 2: God, it's fascinating, right, It's like, we'll see what happens
Speaker 2: in the new year. It's hard to it would hard
Speaker 2: to be Tim Cook and kind of juggling it all.
Speaker 2: Max great great piece of like carry out into the
Speaker 2: new year. Max Chack in Commnis at Bloomberg Business Week.
Speaker 2: Coming up in the new issue of Business Week, it'll
Speaker 2: be out next week, but it's already on the Bloomberg
Speaker 2: terminal at Bloomberg dot com. Max. Thank you so much.
Speaker 2: Happy New Year. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business app and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa Play Bloomberg. Eleven thirty.
Speaker 3: Kruse stocks led the travel and leisure industry as one
Speaker 3: of the market's best surprises in the past twelve months,
Speaker 3: and yet they slumped in the first trading days of
Speaker 3: twenty twenty four.
Speaker 2: Well Our Bloomberg News team says the early losses are
Speaker 2: evidence of just how demanding investors have become for the
Speaker 2: top cruise lines to offer fresh catalysts After banner twenty
Speaker 2: twenty three, Resilient consumer spending habits led all three major
Speaker 2: cruise stocks to post their best annual gain since going public.
Speaker 3: The biggest of the three, Carnival, came out with fourth
Speaker 3: quarter results that beat estimates late last month, and SMP
Speaker 3: Global ratings upgraded Carnival's credit rating two notches on its
Speaker 3: strong booking figures and higher prices. CEO Josh Weinstein sat
Speaker 3: down with Carolannis, Granny and Katie Greifeld on December twenty
Speaker 3: ninth for a closer look at the numbers and at
Speaker 3: the consumer twenty twenty three.
Speaker 16: You know, we wrapped in November now, November thirtieth, and
Speaker 16: you know, the one word that we like to use
Speaker 16: as a as a summary is record. We had record demand,
Speaker 16: record yields, record pricing, record bookings, forward bookings, record on
Speaker 16: board spending level. So really across the board, our business
Speaker 16: has really thrived in twenty twenty three, and we expect
Speaker 16: much more in twenty twenty four.
Speaker 2: It could continue because you're such a great gauge of
Speaker 2: how customers are feeling. You know, you have several brands,
Speaker 2: but you really kind of speak to you know, the
Speaker 2: everyday US consumer, if you will, and you just have
Speaker 2: a great read on it. Are they continuing to spend?
Speaker 2: Are they continue to do advanced book things and then
Speaker 2: once they're on their ships, Josh, continuing to spend as well.
Speaker 16: Yeah, that is exactly what we see, you know, as
Speaker 16: a matter of fact, our Q four was from a
Speaker 16: pricing standpoint, the highest all year. So it's accelerating, it's
Speaker 16: not decelerating. And when we look when we look forward,
Speaker 16: we're actually two thirds booked for all of twenty twenty
Speaker 16: four already.
Speaker 2: It's a nice visibility.
Speaker 16: It's not too bad. We were about ten points higher
Speaker 16: than we were last year. And on top of the
Speaker 16: ticket bookings, we've actually started pulling forward on board spend,
Speaker 16: so we have about a more or less about a
Speaker 16: third of our onboard spend being prepaid in advance. So
Speaker 16: we have a really good amount of visibility. And those
Speaker 16: booking trends, they just haven't slowed down. You know, every
Speaker 16: quarter this year, you know, people expected it's got to
Speaker 16: slow down, it's got to go. We're going to see something.
Speaker 16: The consumer is going to get impacted, and the fact is,
Speaker 16: with our business, we haven't seen it.
Speaker 8: It's record after record.
Speaker 16: As a matter of fact, we just ended the two
Speaker 16: weeks of you know, Cyber Monday and Black Friday at
Speaker 16: more records. And it's not just coming from one brand,
Speaker 16: it's not coming from the United States. It's global. It's
Speaker 16: with our global portfolio of brands, which is really really encouraging.
Speaker 11: Do you think we're moving from many CEOs similar to yourself.
Speaker 11: I sat with that run global airlines and global businesses,
Speaker 11: have said, we've lived through a period of revenge tourism.
Speaker 10: We were all locked up for a period of time.
Speaker 11: This is something we had this parabolic reopening and you
Speaker 11: had a para rebooking. Are we evolving into some kind
Speaker 11: of new cycle? You said, there's no end insight in
Speaker 11: this demand. So if we've ended revenge tourism, how do
Speaker 11: you describe the next evolution?
Speaker 16: Yeah, that's a great question. So we don't think this
Speaker 16: is revenge anymore. This is not pent up demand. It's
Speaker 16: two years on from when we really got back in
Speaker 16: full as a as a corporation. This is people who
Speaker 16: have decided what's meaningful for them. How do I want
Speaker 16: to spend my life? And experiences are what they're looking for,
Speaker 16: you know, unforgettable memories and creation with friends and family.
Speaker 16: And that's exactly what cruising has to offer.
Speaker 11: And that's what I sat down with the at course
Speaker 11: CEO and he said, look, I haven't got enough hotel
Speaker 11: rooms and I haven't got enough high end staff to
Speaker 11: help me run this business, which then takes me to
Speaker 11: the cruise is the high end hotel. But to what
Speaker 11: extent are those packages off ship and on shore those
Speaker 11: additional spans, Are they critically important to the expansion and
Speaker 11: the turnaround from the loss that you've had. Do they
Speaker 11: add incrementally or significantly?
Speaker 16: So, I mean, when we think about our business, we're
Speaker 16: a little bit different from when you're looking at hotel companies.
Speaker 16: You know, I'm staying in a hotel in New York,
Speaker 16: and I won't tell you which one it is, but
Speaker 16: I'll tell you the service is not very good. And
Speaker 16: we've learned how to live with that as a society.
Speaker 16: It's almost a tacit acceptance. No, we should not. And
Speaker 16: cruise industry, our brands did not deviate from service level.
Speaker 16: Our guests have high expectations and we aim to exceed them.
Speaker 16: We do not close off floors, we do not shut
Speaker 16: areas down, We do not skimp on the services that
Speaker 16: we used to offer. It is full steam ahead, and
Speaker 16: that's what people expect and that's what they're willing to
Speaker 16: pay for, and that's what we're seeing.
Speaker 9: And let's talk a little bit about the fact that
Speaker 9: you are a global brand. Of course, a global company
Speaker 9: that goes many places in the world. I don't need
Speaker 9: to tell you that the geopolitical landscape very fraud right now,
Speaker 9: too hot wars of course, conflict in the Red Sea?
Speaker 9: Has that impacted at all where you can go? And
Speaker 9: are you seeing any inflationary pressures from some of the
Speaker 9: things that we're talking.
Speaker 16: About here, So the second question is no, we haven't
Speaker 16: seen anything of note. Obviously, we pay attention to crude prices,
Speaker 16: which is a good barometer of a lot of things.
Speaker 16: With respect to the impact on our business, we had
Speaker 16: about less than one percent of our business touching Israel
Speaker 16: in one way or another, not necessarily homeporting, but it
Speaker 16: might be one transit stop on a world cruise or
Speaker 16: something of that nature. We may changes some time ago.
Speaker 16: We actually don't have any ships transiting the Red Sea
Speaker 16: area for several months, and so obviously safety first, and
Speaker 16: will we have mitigation plans should we need to adjust
Speaker 16: where those ships would be transiting, But as of now
Speaker 16: we're a watch and learn mode.
Speaker 9: Also talk about your bond book, because it was interesting
Speaker 9: seeing just last week actually SMP coming out and upgrading Carnival.
Speaker 9: Not quite back to investment grade territory, but you're getting closer,
Speaker 9: not just higher not just higher on earnings day. Actually,
Speaker 9: you think back and the chief financial officer of Carnival
Speaker 9: said that there's a real possibility that Carnival will come
Speaker 9: back to the debt markets in twenty twenty four. Where
Speaker 9: is your current thinking on that and what would actually
Speaker 9: bring you back to the debt market.
Speaker 16: Well, really, the only thing that would bring us back
Speaker 16: to the debt market as far as we can see,
Speaker 16: is if there's opportunity to refinance on more favorable terms.
Speaker 2: So lower rates, Yeah, lower rates.
Speaker 16: We're not or managing our maturities, but we're not looking
Speaker 16: to lever up. As a matter of fact, as you
Speaker 16: said in the intro, we've managed to cut down our
Speaker 16: debt load by about five billion dollars so far, and
Speaker 16: we expect much more of that as we go forward.
Speaker 16: You know, that's priority one, two and three when it
Speaker 16: comes to our capital structure de lever So.
Speaker 2: Hey, you know one of the things that it kind
Speaker 2: of ties together geopolitic but also kind of you know,
Speaker 2: we're thinking about growth. So a story that the first
Speaker 2: domestically built ship in China getting ready to hit the
Speaker 2: high seas. But it's a joint ventures you guys are
Speaker 2: involved in this and I think about how important China
Speaker 2: is for you guys, but also geopolitically concerns about China
Speaker 2: It's ambitions with Taiwan and whether or not there's going
Speaker 2: to be some problems there down the road.
Speaker 16: Sure, well, we're very happy for the folks at the
Speaker 16: China JV. We actually unwound the JV earlier this year.
Speaker 4: We did.
Speaker 16: We did so we've been providing ship building expertise support
Speaker 16: for them and we were very happy to do that
Speaker 16: work a story.
Speaker 2: So it says you guys are involved, but go ahead, Well,
Speaker 2: that could be.
Speaker 16: How we're involved at this point. But from our perspective,
Speaker 16: we got a portfolio of world class brands all over
Speaker 16: the world and that's where our focus is. You know,
Speaker 16: it's great for the cruise industry that China has opened
Speaker 16: up and it will be opening up for international cruise companies.
Speaker 16: We're not going to be one of them that's going
Speaker 16: back in. We've got our assets where we want them.
Speaker 16: We've changed our assets strategy, we've moved ships to different
Speaker 16: brands to accommodate the change in China, and they're doing
Speaker 16: very very well. So we'll take a wait and see
Speaker 16: approach on that as well.
Speaker 2: But not a market you need to be in right now.
Speaker 10: Just no, it's definitely not.
Speaker 3: That was Josh Weinstein, the CEO of Carnival, with Carol
Speaker 3: and Bloomberg Televisions, Katie Greifeld and manas Granny back on
Speaker 3: December twenty ninth.
Speaker 2: Still to come on Bloomberg Business Week the best new resorts,
Speaker 2: restaurants and museums to plan a trip in the year ahead.
Speaker 17: Malta. It's a place that I have always kind of
Speaker 17: been interested in. It has so much on just a
Speaker 17: couple of islands, and you think of Malta as like
Speaker 17: old cities, kind of like Game of Thrones type stuff.
Speaker 17: But it's also got beautiful small towns, wonderful countrysides. Feels
Speaker 17: like Sicily.
Speaker 3: Bloomberg Pursuits unveils it's data packed guide to your twenty
Speaker 3: twenty four in travel. That's on the other side. This
Speaker 3: is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business This Week podcast. Catch
Speaker 1: us live weekday afternoons from three to six Eastern Listen
Speaker 1: on Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 1: Business App, or watch us live on YouTube.
Speaker 2: The International Air Transport Association predicts that four points seven
Speaker 2: billion people will jump on planes in the coming year,
Speaker 2: generating some nine hundred and sixty four billion dollars in
Speaker 2: airfare alone. Wellness tourism also poised him to reach the
Speaker 2: one trillion dollar mark this year. I just want to
Speaker 2: go places.
Speaker 3: People want to get pampered too when they go places
Speaker 3: with travelers looking for new hotels that dazzle and impress
Speaker 3: and experiences to match. It's creating opportunities for less heralded
Speaker 3: destinations to emerge. Our friends with Bloomberg Pursuits have sorted
Speaker 3: through all of the contenders to determine the twenty four
Speaker 3: most exciting places to travel in twenty twenty four, and
Speaker 3: of course the ideal times to pack up and go.
Speaker 2: What a tough job, sorry list, indeed, my heart bleeds
Speaker 2: all right. This story will appear in the year ahead
Speaker 2: shore a Bloomberg Busess Week. It's available now at Bloomberg
Speaker 2: dot com, slash Business Week, and of course on the
Speaker 2: Bloomberg terminal.
Speaker 3: Here with a.
Speaker 2: Breakdown, our Bloomberg Pursuits editor Chris Rouser and deputy editor
Speaker 2: Jim Gaddy and Chris, I want to start with you
Speaker 2: because there are lots of places or both of you,
Speaker 2: you know, guys, where we can go? So how do
Speaker 2: you guys put this together? What's kind of the jam
Speaker 2: session that you have to kind of figure it out?
Speaker 3: So we start working.
Speaker 17: We keep track of places throughout the whole year, and
Speaker 17: we start working in like August on this particular project,
Speaker 17: so it could.
Speaker 2: We march and you're like, oh, guys, that's that's gonna
Speaker 2: be one for the end of the yeah.
Speaker 3: Yeah.
Speaker 17: And what we do particularly is we focus on destinations
Speaker 17: that have that have news in them. So like a
Speaker 17: lot of some of these other lists that's like have
Speaker 17: you never heard of this place? Go off the beaten track.
Speaker 17: For us, it's is there more air access? Is it
Speaker 17: easier to reach than it has been in the past?
Speaker 17: Are there more luxury hotels or more Safari trip opportunities?
Speaker 17: There is just more stuff to do. Is a city
Speaker 17: having a major development boom?
Speaker 3: Are there lots of new.
Speaker 17: Reasons to visit a place? That's how our list is determined,
Speaker 17: all right.
Speaker 2: So it's not alphabetical already the names out of a hat.
Speaker 3: I Jim wanted to start sort of the on the
Speaker 3: ground research that goes into not just determining the places
Speaker 3: but also making sure that you have a good idea,
Speaker 3: that you and the team have a good idea of
Speaker 3: what can be found at these places.
Speaker 13: Well, I have to give a shout out to our
Speaker 13: travels are Nikki Exstein, who it really works with people
Speaker 13: on the ground. As you know, we have many bureaus
Speaker 13: around the world. We work with those bureaus to identify
Speaker 13: places that have this business opportunity, and Nikki is in
Speaker 13: touch with them all year. We have freelancers that also
Speaker 13: are on the ground that sometimes go to these places
Speaker 13: specifically to write up you know, sometimes we think of
Speaker 13: these as like maybe we'll do something bigger on these
Speaker 13: places later in the year in twenty twenty four. So
Speaker 13: we have people it's called this is kind of like
Speaker 13: our scouting trip.
Speaker 3: I say it every year, but like I never get
Speaker 3: the call from you, Chris. It's like, hey, you need
Speaker 3: to go to Aspen in February to just check it
Speaker 3: out and sure, I have a surprisory.
Speaker 17: Do you want to go to Aspen?
Speaker 3: I do want to go skiing?
Speaker 17: All right, let's leave our children with our spouse.
Speaker 2: Sorry, guys, So Aspen's on the.
Speaker 17: List, Yes, Aspen is on the list. So and I am.
Speaker 17: I've never been to Aspen and because of all this,
Speaker 17: I'm going to.
Speaker 1: Try to go.
Speaker 3: Yeah, in March, we should go, Chris.
Speaker 17: Yes, Tim, come with me.
Speaker 3: It's a good time to go.
Speaker 17: So Aspen, you know, is so well known for all
Speaker 17: the restaurants in the fabulous hotels and the sort of
Speaker 17: luxury that's there, but what hasn't sort of grown a
Speaker 17: lot in decades is the actual ski terrain, and they've
Speaker 17: added They've added a huge, whole one hundred and fifty
Speaker 17: three acre part of the mountain which mostly shoots and
Speaker 17: glades and stuff. So that's like an exciting reason to
Speaker 17: go this year. And there's half a dozen new restaurants.
Speaker 17: Well there's more than there's in the Northeast. Not as
Speaker 17: much snow as in Switzerland.
Speaker 2: But you were saying lots of restaurants, Okay, So there's.
Speaker 17: Half a dozen new restaurants, and then a bunch of hopes.
Speaker 17: There's a new hotel called the Molly Aspen. It's the
Speaker 17: first new hotel in five years, and a lot of
Speaker 17: the hotels that are already there have undergone renovations. So
Speaker 17: the Saint Regis is like totally redone. They have this
Speaker 17: fabulous Newspa. So there's a lot of reasons to go,
Speaker 17: both on the slopes and off.
Speaker 2: I wonder too, like, as you guys go through the list, Jim, like,
Speaker 2: was there a favorite place that you're like, oh my god,
Speaker 2: I didn't know, or as you guys were reporting and
Speaker 2: writing about it and you're like, I'm going to go there.
Speaker 13: You know. I was talking about this with Chris before
Speaker 13: Vick came over here. One of my favorite categories that
Speaker 13: we do is the place that you thought you knew,
Speaker 13: but it is totally different now. Las Vegas was an
Speaker 13: obvious candidate for that. They're on the list. Came in Islands, Carol,
Speaker 13: did you know that they have a thriving art scene.
Speaker 2: I had no idea. I've been, I've gone there diving,
Speaker 2: but no, I did not know. I thought it's a
Speaker 2: place to park your money.
Speaker 13: Yeah, but in February and in May they have these
Speaker 13: huge arts weeks, and so that was something that kind
Speaker 13: of appealed to me. Someone who loves going to the
Speaker 13: beach and also likes going to museums. You kind of
Speaker 13: get the best of both worlds there.
Speaker 3: Let's go back to Vegas for a second, because for me, Tim, what, oh,
Speaker 3: I mean to be honest, For me, Vegas has been
Speaker 3: every time I've gone to Vegas, it's just been a drag.
Speaker 3: I mean it's like you're here for some conference that
Speaker 3: you don't want to be at. Uh, and you're stuck
Speaker 3: in a casino. Now there's the Sphere, which people everybody's
Speaker 3: talking about. I would love to go to the Sphere.
Speaker 3: What else is? What else is Vegas bring to the list?
Speaker 13: Well, you know, they've kind of reinvented themselves as a
Speaker 13: sports destination. The super Bowl is there in February. Formula
Speaker 13: One has a presence there now, and there's a big
Speaker 13: fine dining restaurant seeing there, you know, and I don't
Speaker 13: know if this council is fine dining. But Hollywood star
Speaker 13: John Favro is opening up a food truck with Roy Troy.
Speaker 3: Wingersingers. It was in years ago he like drove from
Speaker 3: LS directors.
Speaker 17: Would you say he's a major Hollywood I know, I know.
Speaker 9: So much.
Speaker 2: I eat well, I've seen shows. It's kind of fun
Speaker 2: to Vegas.
Speaker 17: Have you gone lately, Tim?
Speaker 1: Have not?
Speaker 3: Yeah? I went a couple of years. We went, but
Speaker 3: we went for like sixteen hours.
Speaker 17: If you've talked to anyone who's gone this year. They
Speaker 17: will rave about it, you know, seeing Adele, seeing you
Speaker 17: two at the sphere. People are thrilled with Vegas.
Speaker 13: Kate's Beyonce twice.
Speaker 17: Hannah went to formula one.
Speaker 3: You know, all right, there's a lot in education.
Speaker 2: Okay, guess I had no idea. Sometimes maybe I'm just
Speaker 2: an idiot. But Transylvania's actually a real play.
Speaker 3: Thank you for well.
Speaker 11: Here.
Speaker 2: Oh no, no, we actually have somebody in our makeup room.
Speaker 2: He's from Transylvania.
Speaker 17: Well, and did you ask him if it was a
Speaker 17: real place?
Speaker 2: He kind of left, so doesn't work on me anymore.
Speaker 2: Just kidding, I'm just kidding, Okay, So tell us about that.
Speaker 17: It's real, So Transla reaching in Romania, and it's incredibly beautiful.
Speaker 17: If you've ever seen pictures. It's these craggy mountains and
Speaker 17: these old, uh you know, monasteries and churches that are
Speaker 17: literally a thousand years old. And you can stay in
Speaker 17: a hotel that's from the thirteenth century called bethlen Estates.
Speaker 17: It's an old ancestral manner. Now there's a bunch more
Speaker 17: sort of luxury destinations hotels kind of like rural farmhouses
Speaker 17: turned into sort of camp luxury camps.
Speaker 3: What's also really cool about this is it's affordable. I
Speaker 3: mean luxury hotel prices. According to the chart that you
Speaker 3: guys have in the story, they don't even top two
Speaker 3: hundred dollars. Yeah, like that's that's pretty great.
Speaker 17: And it feels like you're in a you know, you know,
Speaker 17: you love how you love a place that feels like
Speaker 17: you're in a totally different world. It's it's exactly that.
Speaker 17: You can go hiking, it's quiet, it's incredibly beautiful. You
Speaker 17: can see brand Castle, which is theoretically where Dracula lived
Speaker 17: and is in the movie Dracula, and I should say
Speaker 17: in the it wasn't Dracula.
Speaker 3: We know it wasn't he real. It was real.
Speaker 2: You know, it's funny that you talk about affordable though,
Speaker 2: And before we move on to something else Argentina, you
Speaker 2: guys point out because the storing inflation, like you're you know,
Speaker 2: a dollar's going to go really far. No easy segue,
Speaker 2: but Chris, do you have a favorite place in here
Speaker 2: that you were like, you know what, I got to
Speaker 2: put this on my list of places to go.
Speaker 17: Yes, there's actually a few, and Transylvania was one of them.
Speaker 3: Malta.
Speaker 17: It's a place that I have always kind of been
Speaker 17: interested in, and it has so much on just a
Speaker 17: couple of islands.
Speaker 3: It has.
Speaker 17: The opening picture on our story is these crazy caves
Speaker 17: on one of the islands in Malta, which just looks
Speaker 17: like somewhere that doesn't shouldn't exist in the world.
Speaker 2: I have to say, I'm obsessed with some YouTubers that
Speaker 2: sail around the world and they go to the Mediterranean
Speaker 2: and they have been here, and they just you see
Speaker 2: them kind of like, you know, just mooring there, and
Speaker 2: these places are stunning.
Speaker 17: Yeah, and you think of Malta as like old cities,
Speaker 17: kind of like Game of Thrones type stuff, but it's
Speaker 17: also got beautiful small towns, wonderful countrysides.
Speaker 3: Feels like Sicily.
Speaker 17: And you know, as you mentioned Tim, if you go
Speaker 17: to the world the web version of this story, you'll
Speaker 17: see that we have luxury hotel prices from Kayaks, so
Speaker 17: you can see when prices are high and prices are low.
Speaker 17: And we talked to local travel agents to say, like, okay,
Speaker 17: maybe the prices are low because you shouldn't go at
Speaker 17: this time of year. So we match up the good
Speaker 17: hotel prices with the right.
Speaker 3: Times to go.
Speaker 2: All right, guys, thank you so much. Happy New Year
Speaker 2: to both of you. Our thanks as always to bloombergm
Speaker 2: Pursuits editor Chris Rouser and deputy editor Jim Gaddy.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 2: Carol Master along with Tim Stanvik. When you look up
Speaker 2: the most enviable job in the encyclopedia, you see a picture,
Speaker 2: no doubt about it, of our next guest. We're talking
Speaker 2: about Hannah Elliott. She's autocolumnist for Bloomberg Pursuits. She's also
Speaker 2: the co host of the new podcast Hot Pursuit. New
Speaker 2: episodes are dropping.
Speaker 3: Weekly, so here's what that means. She flies around the world,
Speaker 3: drives new cars and gets to write about them for
Speaker 3: Bloomberg News. She got to drive about thirty different vehicles
Speaker 3: last year, from Porsches to Rolls Royce to Lamborghini's and
Speaker 3: Kia's and everything in between. Hannah joins us on Zoom
Speaker 3: from Los Angeles this afternoon. Hannah Before we get to
Speaker 3: your favorite cars that you got to drive last year,
Speaker 3: talk to us a little bit about where we are
Speaker 3: when it comes to the auto industry. Why was twenty
Speaker 3: twenty three such a big year for the auto industry?
Speaker 15: Well, great to talk to you guys, And in short,
Speaker 15: where we are is the most exciting time we've ever
Speaker 15: seen in the history of cars, if you ask me,
Speaker 15: we're seeing, of course, the most safe, the most efficient
Speaker 15: cars that we've ever had available at pretty fair pricing
Speaker 15: for consumers, a lot of choices, a lot of opportunities
Speaker 15: to bespoke if you want to spend a lot of money,
Speaker 15: there's a lot of variety. Twenty twenty three was finally
Speaker 15: a year where we have a lot of ev and
Speaker 15: plug in options, So I mean, gosh, there's so much
Speaker 15: to choose for. It's a really exciting time, and we've
Speaker 15: really hit an inflection point when it comes to electric
Speaker 15: vehicles where we're headed.
Speaker 7: So I'm having a lot of fun. I know you
Speaker 7: guys are too.
Speaker 2: You do have the best job in the business. I
Speaker 2: just want to do a little pushback because we often
Speaker 2: come on and we're like electric vehicles there's still really
Speaker 2: expensive and I know Elon has cut his vehicles. There's
Speaker 2: the tax credit that's still out there, but it does
Speaker 2: feel like on the high end there's still a little pricey.
Speaker 15: They are pricey, there's no denying that. I will point
Speaker 15: out that last year we had fourteen million electric vehicles
Speaker 15: sold globally, which is up over thirty percent from the
Speaker 15: previous year. So you are right, We're still a long
Speaker 15: way from total proliferation or from you know, electric vehicles
Speaker 15: not having a premium of pricing over non electric vehicles,
Speaker 15: but compared to where we were, we certainly are making
Speaker 15: great strides. We're still seeing a lot of vehicles getting
Speaker 15: federal tax rebates, even though we are seeing fewer this
Speaker 15: year than last year. So that's a little bit of
Speaker 15: a tricky thing too. And I will say to you point,
Speaker 15: you know, Ford and General Motors have walked back their
Speaker 15: targets for some.
Speaker 7: Of their electric trucks.
Speaker 15: So again to your point, yeah, we are seeing a
Speaker 15: lot of options. We're seeing electric vehicles from Audi, Mercedes, Porsche,
Speaker 15: all of these great luxury brands. But with the non
Speaker 15: luxury we are seeing some hesitancy a little bit. So
Speaker 15: again it's exciting.
Speaker 7: We don't know what's going to happen next.
Speaker 3: Carol, I have a bone to pick. You said to
Speaker 3: Hannah that we're talking about, you know, EV's being pricey. Yeah,
Speaker 3: Hannah d drove a thirty million dollar Rolls Rice, so
Speaker 3: you know, seventy thousand a seventy thousand dollars. EV is like,
Speaker 3: you know, that's not pricey.
Speaker 2: Okay, a little bit of a SmackDown.
Speaker 10: I feel you, I feel you, I feel you.
Speaker 2: All right, So Hannah, let's get to it. You did
Speaker 2: drive about you know you've got thirty I think that
Speaker 2: that you really really liked to talk to us about.
Speaker 2: Maybe is there one that's the top of the list
Speaker 2: for you?
Speaker 15: Well, since you brought up Rolls Royce, I will go
Speaker 15: toward the easy target, which is the Rolls Royce Specter.
Speaker 15: This is the first electric vehicle from Rolls Royce. It's
Speaker 15: a really big deal. It doesn't cost thirty million dollars.
Speaker 15: It costs closer to five hundred thousand. So if you're
Speaker 15: gonna like you, I'll tell you it's all comforative. This
Speaker 15: is a relative rare era that we're talking about. But
Speaker 15: the Specter is, for Rolls Royce a really important vehicle
Speaker 15: because it allows U their buyers, and Rolls Royce says
Speaker 15: their buyers. We're asking for it to really get in
Speaker 15: on the electric vehicle trend. I did drive this car
Speaker 15: in Cape Town. It is actually more Rolls Royce than
Speaker 15: any of the Rolls Royce I've driven, and I mean that.
Speaker 15: It's totally silent, totally smooth, very powerful, almost six hundred
Speaker 15: horsepower equivalent. In a way, it's like if there were
Speaker 15: any vehicle meant to be an electric vehicle, it would
Speaker 15: be a Rolls Royce. So I really loved it, and
Speaker 15: I also like how it looked too, A big two
Speaker 15: door car.
Speaker 3: That thing is cool. Check out Henna's video by the
Speaker 3: way of her Yeah, Cape Town, in Cape Town, that
Speaker 3: was cool.
Speaker 15: You got some wine, right, I did have a little bit.
Speaker 15: I'm not a big wine drinker. Actually, I can't claim
Speaker 15: to know what I'm talking about when I talk wine,
Speaker 15: but I did have a little bit.
Speaker 3: Yeah, yeah, driving of course, of course.
Speaker 7: Oh no, okay, after only I want to go to.
Speaker 3: The Porsche next the nine to eleven st it's the
Speaker 3: most expensive nine to eleven currently available. What is this
Speaker 3: beautiful car?
Speaker 15: This is I don't want to say a tribute car
Speaker 15: because that makes it sound not new. This is a
Speaker 15: completely new car that is inspired by some racing Porsches
Speaker 15: from the late nineteen sixties and early nineteen seventies. So
Speaker 15: it's for the road. It's not a track car. It
Speaker 15: is for the road. It's made in limited production, just
Speaker 15: over nineteen hundred of them will be made, and it's
Speaker 15: inspired by these old, very sporty, fun light racing porschees.
Speaker 15: It also comes with a watch if you want to
Speaker 15: if you want to get in on the Porscha design
Speaker 15: side of things too.
Speaker 7: But it really is it's a man you, which I love.
Speaker 7: It's not electric.
Speaker 15: This is a fully naturally aspirated, old school analogue Porsche.
Speaker 15: So for the non EVU people who really want a tangible,
Speaker 15: thrilling drive that feels like you're really driving, like you're
Speaker 15: shifting and you're hearing things.
Speaker 7: I really loved it. The st might be the car
Speaker 7: for you.
Speaker 2: Was it Barbie Pink or was it red?
Speaker 7: Okay? This is a polarizing color.
Speaker 15: The one I drove is called ruby Stone Neo and
Speaker 15: ruby Stone also known as ruby Starr, is a really
Speaker 15: historic color on a Porsche. Some people love it, some
Speaker 15: people hate it. It is like that Raspberry Hue. It's
Speaker 15: very memorable, you know. I it actually looks great in person.
Speaker 7: I would say, I just get a.
Speaker 2: New piece of luggage, and I think it's the same color.
Speaker 7: We care cool.
Speaker 3: Can I go to the G Wagon?
Speaker 2: No, we're gonna go to the Key EV nine. There
Speaker 2: is the g Wagon, which we would all love to
Speaker 2: talk about, but we'll get about a middleton. Kia is
Speaker 2: on this list. Some would say, sorry, Kia, what kind
Speaker 2: of Elliott?
Speaker 15: But as this list, I know this was really the surprise.
Speaker 15: And maybe this gets around to your first question, Carol,
Speaker 15: about the affordability of EV's. I was really impressed with
Speaker 15: the Kia EV nine Because it is priced from around
Speaker 15: fifty thousand dollars. It's not considered traditionally a luxury luxury brand,
Speaker 15: but this big seven passenger sc SUV was really well appointed.
Speaker 15: The range and performance figures are very comparable with something
Speaker 15: you might see at Volvo or land Rover. Even so,
Speaker 15: this is Keia kind of moving, punching up in a way.
Speaker 7: I thought they did a great job. I also just
Speaker 7: liked how it looked. I thought it was.
Speaker 15: Very cool looking, maybe even cooler than the Cadillac Escalade,
Speaker 15: which is going to go electric in twenty twenty four,
Speaker 15: so there might be a little bit of a competition there. Yeah,
Speaker 15: check it out if you haven't seen it in person.
Speaker 7: It's very cool.
Speaker 2: And you can read about the g Wagon and you
Speaker 2: can read about the Lamborkhini.
Speaker 3: Yes, this is an off R Lamborghini. It's the last
Speaker 3: internal combustion engine, the one they're gonna make Lamborghini.
Speaker 2: I don't get it.
Speaker 3: It raises so the clean you know, can you can
Speaker 3: grow over boulders?
Speaker 2: I do get Hannah Elliott, she's amazing AutoCOM as a
Speaker 2: Bloomberg pursuits. Check out our story on the Bloomberg and
Speaker 2: at Bloomberg dot com. This is Bloomberg Radio. Thank you, Hannah.
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