Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each
Speaker 2: day for insight from the best in markets, economics, and
Speaker 2: geopolitics from our global headquarters in New York City. We
Speaker 2: are live on Bloomberg Television weekday mornings from six to
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen, and as always on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Joining us now
Speaker 2: to discuss is the former Kansas City Fed President Esther.
Speaker 2: George Esther, Welcome back to the program. I remember your
Speaker 2: descent in twenty nineteen. I remember your descent. I think
Speaker 2: it was in twenty twenty two. You've got some experience.
Speaker 2: Can you describe for us what it's like entering the room,
Speaker 2: the committee has a conversation and you say, you know what,
Speaker 2: I disagree, I think we should be going in a
Speaker 2: different direction.
Speaker 1: Well, it is and parcel of decision making in a
Speaker 1: large committee, in my view, and you approach those conversations,
Speaker 1: those decisions in a way that I think is respectful
Speaker 1: of what you're hearing around the table, that you've taken
Speaker 1: into account, agree with the chairman. You want to acknowledge
Speaker 1: that you are listening and understand what the arguments are.
Speaker 1: But at the end of the day, decision making is difficult,
Speaker 1: and I would argue it is particularly difficult in times
Speaker 1: when the read of the data is not so clear
Speaker 1: across the table, and I always felt it was as
Speaker 1: much an obligation to the public to express.
Speaker 3: Those views, to be.
Speaker 1: Respectful again of what you've heard, but at the end
Speaker 1: of the day, to really voice how you see the
Speaker 1: economy and the appropriate stance of policy.
Speaker 4: We saw a pretty big divide represented by the views
Speaker 4: of FED Governor Member Chris Waller as well as FED
Speaker 4: chair Jap Powell. Both have a very different view of
Speaker 4: the labor market, and John's been really good about accentuating
Speaker 4: the point that we only have two months of data.
Speaker 4: Do we have enough time to really bridge that gap
Speaker 4: between the two men to really understand whether this labor
Speaker 4: market truly is stable and solid or whether there are cracks.
Speaker 1: Well, I heard earlier a comment on your program that
Speaker 1: talked about each time you finish up one meeting and
Speaker 1: think you have plenty of time to see the data
Speaker 1: for the next that.
Speaker 5: Is never conclusive.
Speaker 1: You will always face uncertainty around what the data is
Speaker 1: telling you and whether the trends you're relying on are
Speaker 1: about to shift or whether they will continue. And so
Speaker 1: that of course is going to be the focus in
Speaker 1: bringing these two views to some kind of consensus. I'd
Speaker 1: be surprised if two months resolves that, but obviously both
Speaker 1: we'll be looking very carefully to try to reconcile how
Speaker 1: the economy's unfolding by that time.
Speaker 4: Is your sense there's quite a bit of disagreement on
Speaker 4: the ending point, because certainly on Wall Street there's a
Speaker 4: great deal of uncertainty about whether the neutral rate is
Speaker 4: something closer to four percent or whether it's closer to
Speaker 4: three percent. Do you get the sense that there's that
Speaker 4: type of disagreement just among FED members.
Speaker 1: Well, at some level, Lisa, It is absolutely the issue
Speaker 1: at hand, because when you are trying to specify your policy,
Speaker 1: when you're trying to describe it, particularly after a time
Speaker 1: when you brought down rates by one hundred basis points,
Speaker 1: trying to calibrate around what is an equilibrium, what we
Speaker 1: should we be expecting that the endgame is and so
Speaker 1: you see that in a long run sense in the
Speaker 1: dot plots. But of course, for any given stage in
Speaker 1: the economic cycle, you'd be very hard pressed to know
Speaker 1: exactly what you're looking for. So that I think, at
Speaker 1: the end of the day is really the question is
Speaker 1: this mildly restricted policy? Is it restrictive? Is it not
Speaker 1: restrictive at all relative to the outcomes we're getting? Is
Speaker 1: at the heart of what the committee is debating.
Speaker 2: There seems to be disagreements on both sides of the
Speaker 2: mandate as the not just on the inflation story, but
Speaker 2: also on the labor market. We have payrolls tomorrow. We've
Speaker 2: heard from Governor Waller. He was pretty explicit. He came
Speaker 2: on this program and said the same thing. He thinks
Speaker 2: the labor market is on the edge. That was like
Speaker 2: day and night compared to what we heard from Chairman
Speaker 2: Pow yesterday when he talked about the labor market and
Speaker 2: the Committee continues to call it solid. Can we get
Speaker 2: your opinion how you view the labor market at the
Speaker 2: moment and whether you'd characterize it as solid.
Speaker 1: Well, I think this is a labor market that's shifting
Speaker 1: and obviously in a macro sense. This is a committee
Speaker 1: that is making macro policy has to rely on a
Speaker 1: macro number, which the chairman said is going to be
Speaker 1: the unemployment rate. So in that sense, they have explained
Speaker 1: clearly in a broad sense, what they're looking at as
Speaker 1: things move around. Though underneath the of that unemployment rate,
Speaker 1: I think you have to be mindful that the Fed's
Speaker 1: reaction to that cannot be a direct response. In other words,
Speaker 1: if you're going to lower rates thinking you will arrest,
Speaker 1: the changes that are going on under the covers not
Speaker 1: likely to happen. And so in a time when your
Speaker 1: backdrop is coming off of high inflation trying to get
Speaker 1: back to that two percent target, it creates this weight
Speaker 1: and see it creates a real sense of having to
Speaker 1: have conviction around the next move in your policy rate
Speaker 1: to know what you are responding to.
Speaker 2: Esther, thanks for sharing some of your experience with us
Speaker 2: this morning. We appreciate it as the judge that the
Speaker 2: former Kansas City FED president to extend the conversation. Jason Furman,
Speaker 2: the former economic advisor to President Obama, joins us now
Speaker 2: for more. Jason, welcome back to the program. The data
Speaker 2: seems to be okay. The Utning's from Corporate America better
Speaker 2: than good. We're a few months into this process, and
Speaker 2: I just wonder, from your point of view, Jason, whether
Speaker 2: you believe it's premature to sound the or clear.
Speaker 5: I don't think the data is that terrific.
Speaker 6: In the first half of this year, the economy grew
Speaker 6: at a one point two percent annual rate, that is
Speaker 6: way below where we should be. Core inflation was a
Speaker 6: three point zero percent annual rate. That's way above where
Speaker 6: we should be. So no, it's not a catastrophe by
Speaker 6: any stretch of the imagination. But you know, there's more
Speaker 6: than a hint of stagflation in the numbers we saw
Speaker 6: in the first half of this year.
Speaker 5: Looking at it together, it.
Speaker 4: Was something Jason that Bob Michael was talking about. The
Speaker 4: key question for a lot of people is how big
Speaker 4: is the stag and how big is the flation? What
Speaker 4: are you looking for to determine the answer to that question.
Speaker 6: Look, one of the confusing signals here is the disconnect
Speaker 6: between GDP growth, which has been weak. It was even
Speaker 6: negative in the first corridor, although some of that I
Speaker 6: think was furious measurement issue, and the job market, which
Speaker 6: if you look at the unemployment rate, which Jay Powell
Speaker 6: rightly emphasized yesterday, has held up quite well. And you know,
Speaker 6: you see consumers cutting their spending back but continuing to
Speaker 6: get jobs, continuing to get raises, and that on the
Speaker 6: stag side of the ledger is making things even more unclear.
Speaker 4: Well on the flation side of things right now, there's
Speaker 4: a question about the trickle out effects of the tariffs,
Speaker 4: whether we've seen the ramifications yet. A lot of economists
Speaker 4: have been saying, wait until the third quarter, wait into
Speaker 4: the fourth quarter, and see exactly how companies really managed
Speaker 4: through this. Who do you think is a good example,
Speaker 4: or is there an industry that you think is a
Speaker 4: good example that might have given us an early look
Speaker 4: at how this trickles out and what consumer receptivity is
Speaker 4: to absorbing those price increases.
Speaker 6: Look, some of the lowest margin businesses like toys, you
Speaker 6: see that passed on very quickly. At the other end
Speaker 6: of the spectrum, cars where you have the President telling
Speaker 6: them not to raise prices, their prices are very visible.
Speaker 5: They've been reluctant to do it.
Speaker 6: But it's not like General Motors is going to continue
Speaker 6: to sell cars at a loss indefinitely. They're eventually going
Speaker 6: to have to raise those prices.
Speaker 2: Jason, do you see this being offset by what's developing
Speaker 2: in services inflation at the moment? How are you reading
Speaker 2: what's happening in one side versus the other?
Speaker 6: I mean, services is continuing to come down, but we
Speaker 6: sort of always thought that was going to happen. That
Speaker 6: was our path to two percent. That was the part
Speaker 6: we were counting on. The problem is that the goods
Speaker 6: deflation has reversed, and now we have goods inflation again.
Speaker 6: And so one of those I take for granted doesn't
Speaker 6: seem to me like the news. The other one the
Speaker 6: good side. That's the unpleasant surprise here. Now, the idea
Speaker 6: that it's transitory is not at all crazy. I think
Speaker 6: there's even a very good chance it's true. But if
Speaker 6: you're the Fed, do you want to bet everything on
Speaker 6: a very good chance when you're definitely not sure?
Speaker 2: With that in mind, do you think two months of
Speaker 2: dankster is enough danta to draw any conclusions before you
Speaker 2: make a decision.
Speaker 5: I mean, you.
Speaker 6: Always think the two months from now everything's going to
Speaker 6: be clear, and then two months from now everything is
Speaker 6: still muddy, so it's going to be money two months
Speaker 6: from now, they're going to be getting conflicting data, but yeah,
Speaker 6: maybe it'll be a tiny bit clearer than it is now.
Speaker 4: I keep going back to the way that John opened
Speaker 4: the show, which was Jay Who, and it raises the
Speaker 4: question implicitly about how relevant the FED is at a
Speaker 4: time of massive technological explosion, and we're seeing that in
Speaker 4: the tech earnings. I mean, how much does the advancement,
Speaker 4: the investment coming from some of the tech giants in
Speaker 4: the United States overwhelm some of this discussion has certainly
Speaker 4: overwhelmed the negative consequences from the tariffs, so a lot
Speaker 4: of people had expected.
Speaker 5: It depends what you're talking about.
Speaker 6: If you're talking about the stock market, Yeah, a lot
Speaker 6: of what's going on in the numerator, which is earnings,
Speaker 6: rather than the denominator.
Speaker 5: The discount rate is what matters right now.
Speaker 6: If you're talking about GDP, we're not seeing a lot
Speaker 6: of tech at least in the supply side. Frankly, we're
Speaker 6: actually seeing it more on the demand side right now,
Speaker 6: and so if anything, it might be inflationary. Upfront productivity
Speaker 6: growth is basically right on the track we thought it
Speaker 6: would be prior to the pandemic. So tech is helping
Speaker 6: the stock market quite a lot. I'm optimistic and hopeful
Speaker 6: it will help GDP, but right now it is not
Speaker 6: having any real material impact.
Speaker 2: There, Jason, that's a strong fund of point. We'll leave
Speaker 2: it there, Thank you, sir, Jason Furman. That at the
Speaker 2: Harvard Kennedy School, Gagi Chantry with blankcropt writing, AI and
Speaker 2: Tech continues to lead here pushing back on the broadening
Speaker 2: out narrative yet again, as underpinned by strong beats from METSA, Microsoft,
Speaker 2: and Google. Gagie joint is now for more Gaki, good.
Speaker 7: Monic, Hi, good morning.
Speaker 2: Just phenomenal beats from these companies. How difficult is it
Speaker 2: to leave the US behind and just pile into this
Speaker 2: europe trade, pile into this everything else tride you now.
Speaker 7: One of the things that we've been talking to clients
Speaker 7: about is the need for diversification, but at the same
Speaker 7: time not giving up on the US dec AI theme.
Speaker 7: And I think to the extent that investors have not
Speaker 7: had any international exposure or massively underweight. For those investors,
Speaker 7: having some exposure to quality international names does make sense.
Speaker 7: But so important, as was made evident by yesterday's earnings.
Speaker 7: What you need in your portfolio is parts of the
Speaker 7: equity market that are continuing to have revenue growth, continuing
Speaker 7: to throw out amazing amounts of free cash flow. And Chathan,
Speaker 7: I think you made that point earlier that we're finally
Speaker 7: getting an ROI on all of the capex that has
Speaker 7: gone in over the last year, and we're seeing the
Speaker 7: world's largest companies grow growing revenue at the high double digits,
Speaker 7: which is amazing.
Speaker 2: In some ways. The least interesting thing about this week
Speaker 2: is Tariff's at the trade deadline. Now, if you'd ask
Speaker 2: me that on hyproback in July, whether that would be
Speaker 2: the case July ninth, going into that deadline, I would
Speaker 2: have said, well, you're talking about tariff is like the story.
Speaker 2: Do you think that's going to reassert itself in a
Speaker 2: month's account.
Speaker 7: I think we're all and I know I follow your show.
Speaker 7: You're focusing in it as well. Obviously, some of the
Speaker 7: headlines yesterday around copper, around India tariffs, those idiosyncratic stories
Speaker 7: are going to drive certain markets and eventually in time,
Speaker 7: when we realize what the landing zone of tariffs will be,
Speaker 7: whether that's closer to a fifteen percent or a twenty percent,
Speaker 7: Eventually we will see that feed through, and we're already
Speaker 7: kind of seeing that in goods inflation, certain components of
Speaker 7: goods inflation. So it will appear, it won't disappear. It
Speaker 7: will appear in data, and it will appear in margins,
Speaker 7: or it will appear in certain foreign companies reducing their prices.
Speaker 7: But of right now, I think the bigger theme is
Speaker 7: the two things. Number one, the ROI on Capex coming
Speaker 7: through and large cap deck really a large cap deck
Speaker 7: and AI really being the story that's going to propel
Speaker 7: us exceptionalism forward. And I think the second one, which
Speaker 7: is also less exciting this morning, which is that the Fed,
Speaker 7: while I think they're both quite hawkish, they're still telling
Speaker 7: us in their own way that if things wobble, especially
Speaker 7: in the unemployment rate front, they are here to start
Speaker 7: cutting rates. And I think that's something else that the
Speaker 7: market will eventually care about as well.
Speaker 4: When you put these stories together, there's sort of this
Speaker 4: big question underputting the market. What are we going to
Speaker 4: get the trickling out of some of the benefits that
Speaker 4: the hyperscalers are experiencing to the rest of the market.
Speaker 4: When are you going to see a broadening out where
Speaker 4: their leadership isn't just a ballast amid a storm, but
Speaker 4: really something that is driving gains an efficiency and profitability
Speaker 4: across corporate America. How far away from that away?
Speaker 7: So, I think depending on what people mean when they
Speaker 7: mean broadening out, I would argue you're seeing some and
Speaker 7: then at the same time you're obviously continuing to see
Speaker 7: the largest companies throughout the largest revenue growth. So when
Speaker 7: I say there is some amount of broadening out, I
Speaker 7: would say when you look at something like financials, when
Speaker 7: you look at different sectors or sub sectors within the
Speaker 7: equity market, this year, you are seeing more of those
Speaker 7: sectors being in positive territory. That could be called one
Speaker 7: that could be one way of thinking about broadening. But
Speaker 7: at the same time, obviously you have the largest hyperscalers
Speaker 7: being the largest revenue growers, and I think that that
Speaker 7: probably pushes back against the broadening out narrative. I think
Speaker 7: the theme is clear. It is one of moving away
Speaker 7: from small cap, unprofitable companies to large cap quality companies.
Speaker 7: And that's what we've been talking about and many you know,
Speaker 7: you guys have been having a lot of people on
Speaker 7: your show. They've talked about that theme of large cap.
Speaker 7: Perhaps it doesn't feel as comfortable to talk about it
Speaker 7: it being also talked about it last year, but it's
Speaker 7: still working and it will continue to work. I think
Speaker 7: the theme going forward for the next six month is
Speaker 7: finding pockets of diversification in your portfolio. In addition to
Speaker 7: this AI and tech trade, international plays a role there.
Speaker 7: Fixed income plays a role there, assets like inflation link bonds, gold,
Speaker 7: and certainly market neutral strategies that aren't giving you too
Speaker 7: much beta but at the same time giving you alpha
Speaker 7: makes sense.
Speaker 4: International plays role and John was alluding to this earlier.
Speaker 4: There was this belief that international was going to outperform
Speaker 4: the US earlier this year, and it did, and a
Speaker 4: lot of it was pegged the dollar, and when we
Speaker 4: saw the weakening, there's been a huge and violent about face.
Speaker 4: Do you think that there is staying power where the
Speaker 4: first half was the rest of the world and the
Speaker 4: second half is back to US exceptionalism.
Speaker 7: I think that a lot of that violent move that
Speaker 7: you mentioned was very much around the underperformance, and obviously
Speaker 7: with July, with the dollar coming back, rallying back has
Speaker 7: led to a little bit of that reversal. I think
Speaker 7: the path forward a big part of that story will
Speaker 7: be what happens with the dollar. Frankly, what we're seeing
Speaker 7: in flows and what we're seeing when we pull our
Speaker 7: investors and our clients is a recognition of the need
Speaker 7: to diversify away from a large gap because that's all
Speaker 7: they have, not because it's not going to generate returns,
Speaker 7: but because there is a need for getting that value
Speaker 7: component into portfolios and getting that from international to the extent,
Speaker 7: not just US investors, but global investors continue to move
Speaker 7: away from US into going back to their home countries.
Speaker 7: So we look at European investors and APAC investors, and
Speaker 7: many of those investors are just being a little bit
Speaker 7: more diversified away from the US. To the extent that happens,
Speaker 7: I think that the international story can certainly have some legs,
Speaker 7: but not at the expense of US large cap quality
Speaker 7: and growth.
Speaker 2: Let's just say, on the US, when you set diversify,
Speaker 2: you set diversify the equity. So if I'm in the
Speaker 2: US right now, I diversify my equity exposure to the
Speaker 2: international story. Given where we are right now with the dollar,
Speaker 2: is that something I need to currency hedge?
Speaker 7: You know, that's an interesting question, like a lot of
Speaker 7: right now. The view for our firm is still that
Speaker 7: the dollar can continue to depreciate. Usually, what we've seen
Speaker 7: is that the dollar depreciations happen in these long cycles.
Speaker 7: It's not just for one month or a week. It
Speaker 7: happens over many months, eighteen to twenty four months, and
Speaker 7: we're just in the beginning of that. In that case,
Speaker 7: obviously you want some of those foreign exposures. You want
Speaker 7: that exposure to some of the you know em as
Speaker 7: well as DM currencies. Fixed income, though, is another story,
Speaker 7: right So, usually what we've seen our clients do is
Speaker 7: in fixed income allegations not necessarily taking the FCS risk,
Speaker 7: actually hedging it back into US for that enhanced yield.
Speaker 7: And that's something that you know, some of our portfolio managers,
Speaker 7: especially in fixed income with products like bink, are doing
Speaker 7: taking advantage of the hedged costs for European and other
Speaker 7: areas credit markets.
Speaker 2: Gaky appreciate it. It's got to see you. Thanks for
Speaker 2: breaking it down, Gagy Chuntry there of Black Crook, what
Speaker 2: pic of life Shed Partners has a neutral racing on Apple.
Speaker 2: He came out in front in the last few months
Speaker 2: or so, and so the tech gig I should also
Speaker 2: consider a new CEO. What joins us now for more Well,
Speaker 2: welcome back to the program. Let's talk about what you're
Speaker 2: expecting from Apple later on this afternoon.
Speaker 8: Well, first, Jonathan, I just want to comment on your
Speaker 8: last segment. The two things about those high moving stocks
Speaker 8: is that they're investing in AI and that's really the
Speaker 8: issue that we have with Apple in terms of the quarter.
Speaker 8: You know, look there's a pull forward right and had
Speaker 8: to announced tariffs. I think people went out and bought
Speaker 8: iPhones ahead of the time. We've already seen this commentary
Speaker 8: out of the major distribution channel for Apple, which is
Speaker 8: the wireless operators for Verizon AT and T T Mobile
Speaker 8: and others. So you are going to see a pull
Speaker 8: forward of iPhone revenue this quarter. So then the question,
Speaker 8: as it always is for Apple, is you know, what
Speaker 8: is the guidance for next quarter? But again that's that
Speaker 8: focuses on I think, you know the near term where
Speaker 8: what investors are really wanting a note to know about
Speaker 8: is what is the AI strategy for this company for
Speaker 8: the long term because clearly the companies that are succeeding
Speaker 8: in the markets today and seeing investor dollars flow into them.
Speaker 8: Are those that have a clear AI strategy.
Speaker 4: Well, this just points to the idea that we might
Speaker 4: see their expense costs go down because they've lost a
Speaker 4: couple of pretty high profile AI technicians and strategists to
Speaker 4: the likes of Meta, which is offering one hundred million
Speaker 4: dollar payouts. I just wonder how important it's going to
Speaker 4: be for investors to see spending by Apple, to see
Speaker 4: that they are working on getting back some of that
Speaker 4: promise from this latest technology.
Speaker 3: I mean, there's two lines of spending.
Speaker 8: You have capital investment, where they're investing in the stuff
Speaker 8: that supports in LLM. It's probably too late for Apple
Speaker 8: to do that now. But there's another line of spending,
Speaker 8: and that's R and D which is over thirty billion
Speaker 8: dollars a year that the company invests. In the old days,
Speaker 8: when they would have analysts on that would ask tough questions,
Speaker 8: you would have people ask and say like, hey, where
Speaker 8: are you spending the thirty billion? There'd be some response
Speaker 8: in terms of the mix of R and D investment
Speaker 8: in new products versus old products, and there'd be some
Speaker 8: indication to give investors some hope that there would be
Speaker 8: new products or services incoming. Then we know what happened, right,
Speaker 8: Things like Project Titan that would have gotten them into
Speaker 8: autonomy were killed, and we saw other products products that
Speaker 8: came to market like the Vision pro that really didn't
Speaker 8: find a market opportunity. So I think hopefully we have
Speaker 8: some analysts on the call tonight during that Q and
Speaker 8: A session that will ask about where are you investing
Speaker 8: that thirty billion in R and D, what are some
Speaker 8: of the new products we can invest in? What is
Speaker 8: the AI strategy for the company going forward?
Speaker 4: Well, you've mentioned this a couple of times, so we
Speaker 4: have to go there. You think that the analyst community
Speaker 4: hasn't done a good enough job holding the feet to
Speaker 4: the fire of Apple at a time when it seems
Speaker 4: like maybe some of their strategies were overly complacent.
Speaker 3: I think it's a problem with earnings calls in general.
Speaker 3: These days. We do, at lea Shay, we do a
Speaker 3: quarterly review of this.
Speaker 8: We count the number of times analysts get on call
Speaker 8: and say great quarter, guys. I saw I heard it
Speaker 8: last night on another call again for a company that
Speaker 8: had a one million dollars in revenue, and an analyst
Speaker 8: was congratulating them on a great quarter. And they do
Speaker 8: that because they get on the calls right, and then
Speaker 8: when they get on the calls, they don't ask the
Speaker 8: tough questions that management need to be asked that investors
Speaker 8: want to here to figure out what that long term
Speaker 8: strategy is.
Speaker 3: It's very frustrating.
Speaker 2: Well, I see this with journalists too. How do we
Speaker 2: fix it?
Speaker 8: I mean, investors themselves have to put pressure on there.
Speaker 8: I certainly never want for incremental regulation, but I think
Speaker 8: the investors, the people that actually own the stock, need
Speaker 8: to start pressuring the companies or you know, look to
Speaker 8: us or others to provide. Maybe Bloomberg should start doing
Speaker 8: their own quarterly review like we do, evaluating which analysts
Speaker 8: are getting on the call, which have buy ratings versus
Speaker 8: holds or sells.
Speaker 3: For asking questions on these calls, Well.
Speaker 2: Apple was an odd one. It's probably the most well
Speaker 2: researched company on the planet. There's only three cells on it.
Speaker 2: And to your point, it's a company in a difficult
Speaker 2: spot that should face some difficult questions later on this afternoon,
Speaker 2: and well maybe won't. The issue that I have with
Speaker 2: some of the balls is they often come on the
Speaker 2: program and talk about the same thing over and over again.
Speaker 2: They'll talk about growth that's coming further down the line.
Speaker 2: They'll talk about an upgrade cycle that doesn't seem to
Speaker 2: be happening. Well, when do they capitulate on that? At
Speaker 2: what point do you think they have to?
Speaker 8: I mean, to me, that's just laughable, right, I mean,
Speaker 8: you're exactly right, John. I mean, it's the five percent
Speaker 8: growth that it doesn't happen next quarter in the guidance,
Speaker 8: So they just say, oh, it's going to come the
Speaker 8: quarter after that or the quarter after that. But I
Speaker 8: think again, look at look at Apple's performance relative to
Speaker 8: the mag seven. You know, it's it still has a
Speaker 8: multiple that's a premium, right, It's still a good brand
Speaker 8: in the market. There's still an opportunity I think for
Speaker 8: them to get out of this if they get more
Speaker 8: focused on products and developing, you know, some type of
Speaker 8: AI strategy. I've suggested that may require a change in
Speaker 8: the management, a change in the CEO specifically. There's others
Speaker 8: that think that they can be they can do it
Speaker 8: with the existing CEO and just give them another year.
Speaker 8: But the problem with that is a year from now,
Speaker 8: what is the market going to look like? You know,
Speaker 8: what products are going to be in the market that
Speaker 8: are already disrupting Apple. The pace of innovation because of
Speaker 8: AI is faster than anything we've ever seen. Everyone agrees
Speaker 8: right more or less, that AI is going to be
Speaker 8: something that's have a bigger impact on our economy than
Speaker 8: even the Internet did. And yet you know, we're still
Speaker 8: not getting the questions asked of them and terms of
Speaker 8: you know, what's.
Speaker 3: Going on with AI?
Speaker 8: Why do I when I still use Siri today, why
Speaker 8: does it still work the same it did?
Speaker 3: You know three years ago?
Speaker 8: It's seemingly to me when I can pick up chat
Speaker 8: ept press their audio button and it works great.
Speaker 2: Well.
Speaker 4: Before I let you go, I'd love to hear your
Speaker 4: take on China and India and the manufacturing pathway for Apple.
Speaker 4: How much visibility do you think they're going to give?
Speaker 4: Will people be making iPhones in New Jersey?
Speaker 8: I mean, there was some excitement about some shift of
Speaker 8: manufacturing to India, but there's there's been a great book
Speaker 8: I forget the name of the author, but that came
Speaker 8: out recently talking about how Apple has moved manufacturing to
Speaker 8: China has enabled that country to be a manufacturing powerhouse
Speaker 8: and the difficulty that exist in trying to move that,
Speaker 8: you know, to other countries, whether it's India, the United.
Speaker 3: States or elsewhere.
Speaker 8: So obviously that remains there's always these like existential or
Speaker 8: you know, existing risks, whether it's manufacturer in China. The
Speaker 8: twenty billion dollar plus that Google pays them for search,
Speaker 8: which is obviously under scrutiny of the government because it
Speaker 8: was it was used as a way to keep Apple
Speaker 8: out of search. There are these big ticket items in
Speaker 8: terms of events that can certainly you know, still happen.
Speaker 8: That's not a way to invest on these break ticket
Speaker 8: items that you know that may or may not happen.
Speaker 8: We should be focused on at least where the AI
Speaker 8: strategy is. And look, you're right, like, you know, I
Speaker 8: don't know what they can update us on in China.
Speaker 8: How quickly they could get out of China. It's doubtful
Speaker 8: they would have anything that would make the market, you know,
Speaker 8: the concerns go away that all of a sudden, you're
Speaker 8: going to move this amount of volume out of China
Speaker 8: back to a different market.
Speaker 2: Well, I appreciate your time.
Speaker 3: Well PI sec of Lifshed.
Speaker 2: This is the Bloomberg Seventans podcast bringing you the best
Speaker 2: in markets, economics, and Giet politics. You can watch the
Speaker 2: show live on Bloomberg TV weekday mornings from six am
Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen, and as always, on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business own