WEBVTT - DOJ Sues Apple, Reddit IPO 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple Car playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch us live on YouTube. 0:00:25.079 --> 0:00:27.880 The other big story here in the world of technology 0:00:27.960 --> 0:00:32.200 is Apple. The US Justice Department and sixteen Attorneys General 0:00:32.560 --> 0:00:37.519 sued Apple, accusing the iphonemaker violating antitrust laws by blocking 0:00:37.640 --> 0:00:41.760 rivals from accessing hardware and software features on its popular devices. 0:00:41.800 --> 0:00:43.600 The stocks trading off about three and a half percent 0:00:43.680 --> 0:00:47.000 here today. It's certainly been an underperformer versus some of 0:00:47.040 --> 0:00:48.800 the other big tech names that are really riding in 0:00:48.840 --> 0:00:51.479 the wave of AI. There's concern here about Apple, not 0:00:51.560 --> 0:00:54.959 just with these legal issues, but also with China as 0:00:54.960 --> 0:00:57.120 well in terms of demand and supply chain. So let's 0:00:57.160 --> 0:01:00.000 check it out with anarag Rana along with man Deepca. 0:01:00.160 --> 0:01:03.480 He's our leader of our technology coverage at Bloomberg Intelligence. 0:01:03.760 --> 0:01:06.800 An Rock, what do you make of this latest legal 0:01:06.880 --> 0:01:09.720 challenge from the US Justice Department against Apple. 0:01:10.360 --> 0:01:12.440 So it's been long time coming. There's been, you know, 0:01:12.520 --> 0:01:15.080 so much pressure, legal pressure on them from all over 0:01:15.120 --> 0:01:17.920 the world. Apple is a closed system. Everybody knew that, 0:01:18.000 --> 0:01:19.480 so but you know, it's going to be fun to 0:01:19.520 --> 0:01:22.679 see how these things get proof that they were anti competitive. 0:01:23.000 --> 0:01:27.039 But having said that, big overhang on the stock headline risk, 0:01:27.600 --> 0:01:30.000 nothing good going on for them right now, iPhone saying 0:01:30.040 --> 0:01:32.640 is blowing down, So there's this is going to be 0:01:32.720 --> 0:01:34.160 a tough year for Apple. 0:01:34.800 --> 0:01:37.119 What paulm I were talking about earlier is that what 0:01:37.319 --> 0:01:40.840 problem is this trying to solve for me as a consumer? 0:01:42.840 --> 0:01:45.399 Basically saying, you know, we have a closed system and 0:01:45.440 --> 0:01:48.680 you can't transact outside the system. But Apple would argue 0:01:48.680 --> 0:01:51.600 that that's what makes the iPhone and the Apple ecosystem 0:01:51.640 --> 0:01:55.200 far safer than the open source or the open ecosystems. 0:01:55.240 --> 0:01:57.320 And that's really what a lot of the fight is about. 0:01:57.080 --> 0:01:59.760 Frankly, And it's also like it's easier, Like it makes 0:01:59.760 --> 0:02:00.440 our life, it's easier. 0:02:00.520 --> 0:02:01.640 Don't we want that one click? 0:02:01.880 --> 0:02:03.680 Just just back on the redis story indication a little 0:02:03.720 --> 0:02:05.800 bit higher here. They raised the indication. 0:02:05.520 --> 0:02:07.440 Forty four to forty eight. It was forty two to 0:02:07.480 --> 0:02:07.920 forty six. 0:02:07.920 --> 0:02:09.760 So pushing that indication up a little bit will stay 0:02:09.760 --> 0:02:13.320 on top of that. So we've seen this play before, 0:02:13.440 --> 0:02:15.680 and I know you have ANURAG with your research coverage 0:02:15.720 --> 0:02:19.200 of Microsoft. Is this something where Apple, you know, over 0:02:19.200 --> 0:02:22.400 the next several five ten years, pay some fines, write 0:02:22.440 --> 0:02:27.120 some checks, maybe put some workarounds in their business. How 0:02:27.120 --> 0:02:29.520 do you think this plays out for the company? 0:02:29.680 --> 0:02:31.520 I think you called it right. That's exactly what's going 0:02:31.600 --> 0:02:34.240 to happen. And it could even pressure their services revenue 0:02:34.280 --> 0:02:36.280 a little bit, their app store fee. They'll have to 0:02:36.280 --> 0:02:38.720 figure out to reduce that in certain areas. But I 0:02:38.760 --> 0:02:40.839 would argue that they have the capacity to do make 0:02:40.880 --> 0:02:44.320 it from you know, advertising revenue that they really don't 0:02:44.360 --> 0:02:47.040 generate that much at this point. So you know, the 0:02:47.080 --> 0:02:50.360 ecosystem is there. I don't think you can shake that. 0:02:50.760 --> 0:02:52.400 But it's going to be, as I said, a headline 0:02:52.480 --> 0:02:54.000 risk for the stock for for a long time. 0:02:54.040 --> 0:02:58.360 Now, what do you think resolves it? Like if they 0:02:58.400 --> 0:03:00.440 fix this issue is or something else? What else is 0:03:00.480 --> 0:03:03.840 going to happen? How when is the bottom for this? 0:03:04.880 --> 0:03:06.440 Yeah, I think it's going to be a mix of 0:03:06.800 --> 0:03:09.080 a little bit of fines plus some compression in the 0:03:09.120 --> 0:03:12.480 feast that they charge. But I don't think any structural 0:03:12.560 --> 0:03:14.640 change is going to come out of how Apple does it. 0:03:14.680 --> 0:03:17.120 I mean, that doesn't sound good though, does it? Like 0:03:17.160 --> 0:03:19.600 that's that feels like a big overhang to have to reevaluate. 0:03:19.639 --> 0:03:21.840 Now, this is something that and Honor I've remember is this. 0:03:21.919 --> 0:03:24.200 I mean, this is something that I think the market 0:03:24.240 --> 0:03:27.000 learned from the Microsoft See situation, which was a twenty 0:03:27.000 --> 0:03:29.799 twenty five year issue that at some point and even 0:03:29.840 --> 0:03:31.960 to the tobacco industry, you just kind of power through 0:03:33.000 --> 0:03:36.720 this this overhang. What's the company saying on I mean 0:03:36.800 --> 0:03:39.000 when when they talk about these issues. 0:03:39.320 --> 0:03:40.960 Yeah, they're going to find that. And you know, it 0:03:40.960 --> 0:03:43.200 would have been a different story if iPhone sales were 0:03:43.240 --> 0:03:45.920 really good. But the problem is iPhone sales are also 0:03:46.000 --> 0:03:48.080 not good. The product sales are not there, so there 0:03:48.120 --> 0:03:51.320 isn't much to hangle your hat on. If you're an investor, 0:03:51.600 --> 0:03:54.480 you're looking at, you know, two percent growth in terms 0:03:54.520 --> 0:03:58.320 of top line, maybe five percent bottom or EPs. So 0:03:58.520 --> 0:04:01.600 it's not that exciting right now. Now that may change 0:04:01.640 --> 0:04:03.600 if by summer roared by the end of this year, 0:04:03.640 --> 0:04:06.000 we find out they've done to deal with Google and 0:04:06.080 --> 0:04:08.640 they are able to use Google's large language model on 0:04:08.680 --> 0:04:11.640 their phones, and that leads to foster refresh cycle of 0:04:11.640 --> 0:04:13.920 the iPhone so there is some hope, but you know, 0:04:13.960 --> 0:04:15.800 there is a lot of different butts in between. 0:04:16.160 --> 0:04:18.680 So if I'm looking at this valuation real quick, is 0:04:18.720 --> 0:04:21.599 it worth twenty six times estimated price to earnings? 0:04:21.600 --> 0:04:25.680 There I try not to look at estimated earnings. I 0:04:25.720 --> 0:04:28.000 try to look at free cash flow one hundred plus 0:04:28.000 --> 0:04:30.280 billion growing at three to five percent for a long 0:04:30.279 --> 0:04:32.560 period of time. You know, there isn't a company that 0:04:32.640 --> 0:04:36.080 has better financials than this one. So I you know, 0:04:36.120 --> 0:04:38.520 if I was to look at from that point, you know, 0:04:38.600 --> 0:04:40.599 the yardstick is a bit different. 0:04:41.040 --> 0:04:41.719 Yeah, it's interesting. 0:04:41.800 --> 0:04:44.440 I think this June Developer conference is going to be 0:04:44.520 --> 0:04:47.039 key for Apple. They need to try to get an 0:04:47.080 --> 0:04:48.800 AI narrative. 0:04:48.440 --> 0:04:49.440 Out there for the company. 0:04:49.480 --> 0:04:51.039 On rag Rana, thanks so much for joining us on 0:04:51.040 --> 0:04:55.039 a rag Ruana Senior Technology annels for Bloomberg Intelligence. Just 0:04:55.080 --> 0:04:58.640 talking about the Justice Department suing Apple. They got some 0:04:58.680 --> 0:05:00.840 issues that they're gonna have to work Workaround's going to 0:05:00.839 --> 0:05:04.000 be a long drawn out process, as they typically are. 0:05:04.480 --> 0:05:06.200 The question is, you know, how does the stock perform 0:05:06.320 --> 0:05:07.440 with that overhang. 0:05:10.080 --> 0:05:13.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:14.040 --> 0:05:17.560 weekdays at ten am Eastern on applecar Play and Android 0:05:17.600 --> 0:05:20.359 Auto with the Bloomberg Business app. You can also listen 0:05:20.480 --> 0:05:23.560 live on Amazon Alexa from our flagship New York station. 0:05:23.960 --> 0:05:27.680 Just say Alexa play Bloomberg eleven thirty. 0:05:28.520 --> 0:05:31.560 All right, now we all turn to Reddit. Here Man 0:05:31.600 --> 0:05:33.880 deep sing joints and sees a senior technology anels for 0:05:33.880 --> 0:05:35.440 Bloomberg Intelligence. 0:05:36.080 --> 0:05:36.440 Reddit. 0:05:36.680 --> 0:05:41.400 Is this just another social media company, like a Pinterest, 0:05:41.520 --> 0:05:44.520 like a I don't know what, like a smaller meta. 0:05:44.680 --> 0:05:45.760 What is Reddit? 0:05:46.640 --> 0:05:46.880 Yeah? 0:05:47.240 --> 0:05:49.960 I think the best way to think about Reddit is 0:05:50.880 --> 0:05:54.040 it's very similar to Twitter in the sense that it 0:05:54.120 --> 0:05:58.240 is a community interest based platform. But the difference is 0:05:59.360 --> 0:06:01.719 obviously if you've heard about Wall Street bets and you 0:06:01.760 --> 0:06:06.280 know how meme stocks really originated and the whole trend 0:06:06.360 --> 0:06:10.080 originated on Reddit. So it's got a different type of 0:06:10.120 --> 0:06:13.080 community aspect to it. And in terms of user base, 0:06:13.120 --> 0:06:17.360 it's very similar to Twitter or pinterest or Snapchat, so 0:06:17.400 --> 0:06:20.760 it's of the same size. The one big difference is 0:06:21.040 --> 0:06:25.320 reddits engagement when it comes to DAUS to MAUS, which. 0:06:25.160 --> 0:06:27.480 Is daily active users to monthly after users. 0:06:27.560 --> 0:06:30.680 You want them to be more active, right exactly, And 0:06:30.720 --> 0:06:33.760 so that's where they have struggled over the course of 0:06:33.800 --> 0:06:37.960 their fifteen to Eighteen years is years, folks, not months. 0:06:38.120 --> 0:06:40.360 Yeah, it's been like I mean, haven't they been around 0:06:40.360 --> 0:06:41.080 for like twenty years? 0:06:41.360 --> 0:06:43.160 They have been around for eighteen years. 0:06:43.000 --> 0:06:43.640 I mean something. 0:06:44.480 --> 0:06:47.400 I'm still still not making money, I know, that's the thing. 0:06:47.560 --> 0:06:49.320 So I'm just wondering, like what they want to get 0:06:49.320 --> 0:06:52.320 out of this. What would success look like for this 0:06:52.400 --> 0:06:54.719 IPO based in the fact that they're an unprofitable social 0:06:54.720 --> 0:06:58.440 media company. That's not like a popular sentence to say, yeah, and. 0:06:58.480 --> 0:07:01.680 Social media companies, I mean, the ones that have done 0:07:01.680 --> 0:07:04.920 well are the ones with scale and notably meta other 0:07:05.040 --> 0:07:08.760 ones snap Pinterest, Stock hasn't gone anywhere if you look 0:07:08.800 --> 0:07:11.360 at you know, long term eight to ten years, these 0:07:11.400 --> 0:07:15.560 stocks haven't. Yes, they had their way up during the pandemic, 0:07:15.600 --> 0:07:19.400 but then they came down sharply. So clearly profitability is 0:07:19.440 --> 0:07:22.240 a concern for a lot of the smaller social media names, 0:07:22.280 --> 0:07:25.240 and Reddit is no exception. The thing that excites me 0:07:25.280 --> 0:07:28.239 the most is their data licensing part. I think that's 0:07:28.280 --> 0:07:31.880 the part. The timing of it is quite good with 0:07:31.960 --> 0:07:35.760 the Genai wave and everyone focusing on these large language models. 0:07:36.200 --> 0:07:39.240 I mean, at the end of the day, these llms 0:07:39.280 --> 0:07:43.080 have to be trained and retrained every two three months. 0:07:43.280 --> 0:07:46.480 And the way you can retrain these algorithms is through 0:07:46.520 --> 0:07:51.080 the corpus of data like Reddit possesses or like Twitter possesses, 0:07:51.120 --> 0:07:54.360 And that to me is something that every company will 0:07:54.360 --> 0:07:56.960 license from them. We know Google already has a two 0:07:57.040 --> 0:08:00.440 hundred million dollar license. I wouldn't be surprised if Apple 0:08:00.640 --> 0:08:03.720 or Microsoft or others start doing the same, and there 0:08:03.760 --> 0:08:06.840 will be a gold rush for training data at some point, 0:08:07.040 --> 0:08:08.280 like there is for semis. 0:08:08.440 --> 0:08:09.400 So a couple of. 0:08:09.400 --> 0:08:11.680 Hours ago, right an hour ago, we had Men Deep 0:08:11.720 --> 0:08:13.640 in here talking about Reddit to Bailey and I and 0:08:13.680 --> 0:08:16.160 I Billy, and I asked them to pitch us, like 0:08:16.160 --> 0:08:17.560 we're a couple of head fund man and why we 0:08:17.560 --> 0:08:18.200 should buy this thing. 0:08:18.200 --> 0:08:19.840 And I did put in ten percent orders. So we'll 0:08:19.840 --> 0:08:21.520 see how I do today. 0:08:21.160 --> 0:08:24.640 Say, but it is all about that data aspect, is 0:08:24.680 --> 0:08:26.640 Men Deep was highlighting. And so if you're an investor, 0:08:26.680 --> 0:08:29.080 I think you if you're buying stock this morning, I 0:08:29.120 --> 0:08:30.880 think you have to buy off that this is a 0:08:31.000 --> 0:08:34.319 viable aspect to the investment story, that in fact they 0:08:34.360 --> 0:08:37.640 can monetize their data to people that need you know, 0:08:37.640 --> 0:08:39.199 that are running these larger language models. 0:08:39.240 --> 0:08:42.680 So this would be like a third derivative of AI. Yeah, 0:08:42.760 --> 0:08:43.880 is that a fair thing to say? 0:08:44.120 --> 0:08:47.400 And right now everyone is too fixated on semis and 0:08:47.440 --> 0:08:50.760 getting the chips. In the end, it comes down to 0:08:50.960 --> 0:08:53.880 how does AI solve your problem? Whether it's a chatbot 0:08:53.960 --> 0:08:57.319 or a copilot. What does a copilot need to be intelligent? 0:08:57.480 --> 0:08:58.440 It needs data? 0:08:58.520 --> 0:09:00.280 See this is so interesting because I feel like AI 0:09:00.360 --> 0:09:02.679 conversation is now broadening out to different sectors. Paul and 0:09:02.720 --> 0:09:04.800 I talked yesterday. I was just in Houston, and all 0:09:04.800 --> 0:09:07.680 the energy companies are talking about is power demand for 0:09:07.760 --> 0:09:10.480 the data centers for AI? And there just isn't enough 0:09:10.520 --> 0:09:12.080 and like how to solve for that? So now you 0:09:12.160 --> 0:09:14.720 have the AI craze going to social media, and you 0:09:14.720 --> 0:09:17.640 have it going to energy and then chips and then software. 0:09:17.679 --> 0:09:18.400 It's it's kind of. 0:09:18.320 --> 0:09:20.280 Cool, it is, And that's why I. 0:09:21.800 --> 0:09:23.959 Kind of cool. AI is kind of cool. There we 0:09:24.040 --> 0:09:24.839 go drop the mind. 0:09:24.920 --> 0:09:26.679 I think this Internet thing is it's just it's just 0:09:26.679 --> 0:09:27.160 gonna pass. 0:09:27.400 --> 0:09:30.600 Actually, I actually gave that advice once to an analyst 0:09:30.679 --> 0:09:32.880 colleague mind who was following the newspaper industry and they 0:09:32.880 --> 0:09:35.120 asked him and he's a highly ranked analist, and there's 0:09:35.160 --> 0:09:37.319 this little thing called America Online out there and some 0:09:37.360 --> 0:09:40.200 stuff that was coming along Netscape and things like that, 0:09:40.360 --> 0:09:42.960 and they wanted him to drop his coverage where he 0:09:42.960 --> 0:09:45.599 had a franchise and go do this internet thing. You 0:09:45.679 --> 0:09:49.120 know what, I told him, stick with newspapers, baby, to be. 0:09:49.120 --> 0:09:53.280 Fair, to be fair. Where's Netscape? 0:09:53.520 --> 0:09:55.040 Yeah, but I mean aol. 0:09:55.640 --> 0:09:58.440 He Fortunately he ignored me and went on to great 0:09:58.440 --> 0:10:03.840 fame and fortune. So good for landing. Okay, So what's 0:10:03.880 --> 0:10:06.200 the feeling out there about digital advertising in general, because 0:10:06.240 --> 0:10:09.040 that still is, at least in the near term, the 0:10:09.040 --> 0:10:11.280 big driver for Reddit. 0:10:11.960 --> 0:10:15.120 It is, and I think when it comes to ads, clearly, 0:10:15.280 --> 0:10:20.000 Meta has a clear dominance when it comes to showing 0:10:20.320 --> 0:10:23.600 the users the most targeted ads. That's where Twitter struggle. 0:10:23.760 --> 0:10:26.559 That's where I think Reddit struggles to an extent as well, 0:10:26.920 --> 0:10:30.080 is that ad targeting and advertisers go to platforms with 0:10:30.240 --> 0:10:34.720 scale and the best at targeting. So overall environment seems 0:10:34.760 --> 0:10:37.240 to be getting better. But what Meta has going for 0:10:37.280 --> 0:10:41.400 them right now is they're actually applying large angrod models 0:10:41.760 --> 0:10:45.200 for improving their ad targeting. It's not possible for a 0:10:45.200 --> 0:10:48.360 company of Reddit scale or Twitter scale or Snap scale 0:10:48.360 --> 0:10:51.520 to do that because they just don't have that kapex 0:10:51.600 --> 0:10:54.800 investment going in terms of applying large angroid models. So 0:10:55.040 --> 0:10:58.040 that's what it comes down to, scale of investments. 0:10:58.120 --> 0:11:01.080 Okay, before we let you go, they also put like 0:11:01.120 --> 0:11:04.360 what eight percent aside to like regular Reddit users. Are 0:11:04.400 --> 0:11:05.800 they gonna buy it? Are they gonna short? What are 0:11:05.840 --> 0:11:06.280 they gonna do? 0:11:06.640 --> 0:11:09.960 I think, Given again, Wall Street Bets is such a big, 0:11:10.040 --> 0:11:12.959 powerful community on Reddit, I wouldn't be surprised if they 0:11:12.960 --> 0:11:15.400 are interested in buying their own stock. And that's where 0:11:15.480 --> 0:11:19.720 I feel the IPO was priced relatively attractively when it 0:11:19.760 --> 0:11:22.440 comes to, you know, a first dapop up, I wouldn't 0:11:22.440 --> 0:11:24.400 be surprised if if you do end up seeing that 0:11:24.480 --> 0:11:27.160 kind of pop and the eight percent allocation goes to 0:11:27.280 --> 0:11:28.960 moderators and the advanced using way. 0:11:28.800 --> 0:11:29.440 I'm glad I don't. 0:11:29.480 --> 0:11:31.240 I don't have to like moderate the trading this the 0:11:31.280 --> 0:11:33.360 first few days, like as the bookmaker, because I don't 0:11:33.360 --> 0:11:35.599 know what these redditors are gonna do. I don't know 0:11:35.640 --> 0:11:37.160 if they're gonna go crazy like they do for some 0:11:37.160 --> 0:11:38.360 of these other Why would they. 0:11:38.320 --> 0:11:40.520 Shot their own stocks? Give me one good reason. 0:11:40.600 --> 0:11:40.959 I agree. 0:11:41.360 --> 0:11:43.600 They've been talking about like not buying, they've been talking 0:11:43.600 --> 0:11:45.520 about it though, haven't they. 0:11:45.960 --> 0:11:48.160 I don't know this scene could it could be one 0:11:48.160 --> 0:11:50.120 of those things where the you know, the marketmakers like, 0:11:50.120 --> 0:11:51.599 I don't know where these buyers are coming from, but 0:11:51.640 --> 0:11:53.720 they're flooding me in with these one hundred chair orders 0:11:53.800 --> 0:11:55.480 left and right. All right, men Deep saying thank you 0:11:55.480 --> 0:11:56.959 so much for joining us. Man Deep saying he's a 0:11:57.040 --> 0:12:01.280 senior tech industry analyst for Bloomberg Intelligence. He doesn't melod in, folks. 0:12:01.320 --> 0:12:04.400 He comes into the studio just like John Tucker, coming 0:12:04.400 --> 0:12:05.480 and showing up every day. 0:12:05.520 --> 0:12:06.440 A big part of life. 0:12:06.360 --> 0:12:08.480 Is just showing up every day. 0:12:08.520 --> 0:12:10.600 Ain't that the truth? A big part of life is 0:12:10.640 --> 0:12:14.319 showing It's just showing up every day. 0:12:14.760 --> 0:12:18.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:18.720 --> 0:12:21.400 weekdays at ten am Eastern on AFO, car Playing and 0:12:21.520 --> 0:12:24.440 broyd Otto with the Bloomberg Business app. Listen on demand 0:12:24.480 --> 0:12:28.800 wherever you get your podcasts, or watch us live on YouTube. 0:12:29.600 --> 0:12:31.560 Well, we get that economic data that came out about 0:12:31.559 --> 0:12:35.400 fifteen minutes ago, that was the pmis over at SMP Global. 0:12:35.679 --> 0:12:37.720 That they came in a little light. So what we 0:12:37.880 --> 0:12:39.640 like to do with you here is get the guy 0:12:39.679 --> 0:12:42.360 who did the data right after they dropped Chris Williamson, 0:12:42.400 --> 0:12:45.439 his chief business economist over at SMP Global Market Intelligence, 0:12:45.840 --> 0:12:49.079 and he joins us Now, what is my read from 0:12:49.120 --> 0:12:50.480 the uspmis right now? 0:12:52.120 --> 0:12:54.559 The April read is one of further solid growth in 0:12:54.679 --> 0:12:58.080 March ends quite a good first quarter. So we're running 0:12:58.080 --> 0:13:01.400 at levels that are realy indicted of GDP rising and 0:13:01.400 --> 0:13:04.800 annualized rate around two percent, which I think matches a 0:13:04.800 --> 0:13:09.680 lot of other sort of NowCast models. So quite a 0:13:09.679 --> 0:13:13.160 good quarter. What's interesting is I think the split of data, 0:13:14.720 --> 0:13:19.400 because we've got signs of demand shifting back towards manufacturing now, 0:13:19.840 --> 0:13:23.840 which is really doing quite well again. Services growth slipping slightly. 0:13:24.280 --> 0:13:26.440 It looks like we're seeing some demand shift come back 0:13:26.480 --> 0:13:29.080 from services towards goods. 0:13:29.640 --> 0:13:32.520 So on the manufacturing side again, it came into fifty 0:13:32.520 --> 0:13:35.400 two point five. The consensus was fifty two I'm sorry, 0:13:35.400 --> 0:13:38.000 fifty one point eight, so well above consensus for this 0:13:38.080 --> 0:13:40.360 month and a little bit higher than last month as well. 0:13:40.679 --> 0:13:44.040 So is that simply manufacturer saying, hey, we've taken our 0:13:44.120 --> 0:13:46.880 inventories down, it's time to start refilling and start making 0:13:46.920 --> 0:13:47.440 stuff again. 0:13:48.720 --> 0:13:51.199 No, it's not just that, it's it's overall demand levels 0:13:51.240 --> 0:13:53.520 as well starting to rise, So the inventory cycle is 0:13:53.520 --> 0:13:57.200 playing a part in that, but it's also final demand 0:13:57.400 --> 0:14:00.960 sharing signs of picking up nice So it's a more 0:14:01.000 --> 0:14:04.640 broad based picture than just turn in the stocking cycle. 0:14:05.280 --> 0:14:07.839 And if you look beyond that headline PMI, if you 0:14:07.880 --> 0:14:09.560 look at something like the output index, I mean that 0:14:09.600 --> 0:14:11.120 was up fifty four point nine. 0:14:11.160 --> 0:14:13.480 That's really quite a respectable reading. That's the highest since 0:14:13.520 --> 0:14:15.040 May twenty twenty two. 0:14:15.440 --> 0:14:17.840 So it really does thing look like production is starting 0:14:17.840 --> 0:14:19.360 to turn around quite quite nicely. 0:14:19.400 --> 0:14:22.720 Now, so here's my question then, I mean, let's get 0:14:22.720 --> 0:14:25.600 to the raid cut situation in the second, but what 0:14:25.640 --> 0:14:29.000 are prices when it comes to manufacturing and also services? 0:14:29.040 --> 0:14:30.680 And that really does lead to the FED, right, because 0:14:30.720 --> 0:14:33.120 if we get cuts, is it just sort of jumpstart 0:14:33.120 --> 0:14:35.120 demand even more and then jumpstart infletion. 0:14:36.400 --> 0:14:40.040 Well that's the kicker, yeah, because the price gauges are 0:14:40.040 --> 0:14:43.040 on the rise again the manufacturing. So we've got two 0:14:43.080 --> 0:14:45.280 lots of price gauges. They one is input costs and 0:14:45.320 --> 0:14:48.080 one is their prices that they charge to customers for 0:14:48.200 --> 0:14:52.640 manufacturing series. All those gauges rose in March coming and 0:14:52.680 --> 0:14:55.320 say they're costs a rising because of increasing wages as 0:14:55.360 --> 0:14:58.320 well as the oil and gas prices starting to come 0:14:58.360 --> 0:15:02.720 through hitting costs is well, so they're passed these on 0:15:02.760 --> 0:15:05.560 to their customers. So rates the selling price inflation they 0:15:05.600 --> 0:15:08.800 accelerated really quite sharply, in manufacturing at a thirteen month 0:15:08.920 --> 0:15:12.360 high now and services at an eight month high now. 0:15:12.520 --> 0:15:16.320 The peer this overall gauge of selling price inflation is 0:15:16.360 --> 0:15:18.120 around the highest for a year now. It's done a 0:15:18.200 --> 0:15:21.920 good job of anticipating where CPI is going to go, 0:15:22.440 --> 0:15:25.080 and it tracked the upturning the downturn through the pandemic 0:15:25.160 --> 0:15:28.720 really quite nicely. And this latest reading means that having 0:15:28.800 --> 0:15:31.600 come down to sort of closed store maybe even passing 0:15:31.680 --> 0:15:34.800 two percent target, you're climbing back up to a sort 0:15:34.800 --> 0:15:37.000 of four percent rate again with these numbers. 0:15:37.360 --> 0:15:39.320 Hey, Chris, based upon the data that you guys see, 0:15:39.360 --> 0:15:42.720 do you feel like this recent I guess pick up 0:15:42.760 --> 0:15:43.320 an inflation? 0:15:43.560 --> 0:15:46.240 Is it short term? Is it just a blip? 0:15:46.360 --> 0:15:49.240 Or is it maybe something a little bit more longer term? 0:15:49.720 --> 0:15:51.720 But there's a lot of speculation, isn't there that there 0:15:51.800 --> 0:15:55.440 might be some seasonality creeping into inflation numbers. At the moment, 0:15:56.120 --> 0:16:00.960 it's too early to say, is the honest answer. We've 0:16:01.000 --> 0:16:04.840 seen gas prices come up and the oil price come up. 0:16:04.920 --> 0:16:08.200 That's feeding through. So it's fairly obvious where that's coming from. 0:16:08.720 --> 0:16:12.600 The wage growth. I mean that that's still being passed 0:16:12.640 --> 0:16:14.520 through now that The hope is, of course, and this 0:16:14.560 --> 0:16:17.280 applies to the other central backs as well as the FED, 0:16:17.840 --> 0:16:21.360 is that as you get your headline inflation numbers come down, 0:16:21.600 --> 0:16:25.120 then that feed through to wake away weaker wage negotiations. 0:16:25.280 --> 0:16:26.440 So there's always going to be a bit of a 0:16:26.480 --> 0:16:29.040 lag there. So what's hoped is that this little up 0:16:29.080 --> 0:16:30.560 to him we've got is still a bit of that 0:16:30.680 --> 0:16:34.800 lag feeding through and as the year goes on, this, 0:16:34.960 --> 0:16:38.360 as we move into the summer, hopefully you'll see those 0:16:38.400 --> 0:16:39.440 wage day to come down. 0:16:39.560 --> 0:16:39.720 Yep. 0:16:39.800 --> 0:16:41.520 Excellent, Chris, thanks so much for jumping on with us. 0:16:41.520 --> 0:16:42.120 Really appreciated. 0:16:42.200 --> 0:16:46.200 Chris Williamson, chief business economist at SMP Global Market Intelligence, 0:16:46.280 --> 0:16:47.600 joining us from London via zoom. 0:16:48.920 --> 0:16:52.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:52.880 --> 0:16:55.960 weekdays at ten am Eastern on Affle Card, playing Enroud 0:16:56.000 --> 0:16:59.080 Otto with the Bloomberg Business app. Listen on demand wherever 0:16:59.120 --> 0:17:02.880 you get your podcast, or watch just Live on you too. 0:17:04.320 --> 0:17:05.840 I want to get more insight here and sort of 0:17:05.880 --> 0:17:08.080 how you manage the momentum, how you manage the market. 0:17:08.160 --> 0:17:11.000 Nicole Web the senior vice president financial advisor at Wealth 0:17:11.080 --> 0:17:14.760 Enhancement Group, and she joins us, now, okay, you can't 0:17:14.760 --> 0:17:17.280 get in the way of this momentum, right, No, can't 0:17:17.359 --> 0:17:20.640 do You buy into it? You do even at these levels. 0:17:20.760 --> 0:17:23.800 I'm sorry, but you do. And I think this is 0:17:23.840 --> 0:17:27.280 where it's really It's an interesting moment and it's supported 0:17:27.359 --> 0:17:29.440 by the breath we're seeing in the rustle, It's supported 0:17:29.440 --> 0:17:32.760 by credit spreads, it is supported by earnings. You take 0:17:32.800 --> 0:17:35.199 fed off the table, you still can look at earnings 0:17:35.200 --> 0:17:39.360 and profitability. And then you look at the forefront of digitization, 0:17:39.520 --> 0:17:43.719 and you mentioned Micron, and here we see just so 0:17:43.960 --> 0:17:47.040 clearly the thirst, the hunger for the next leg of AI. 0:17:47.720 --> 0:17:52.840 And it's interesting so storage speed all of these things. 0:17:53.160 --> 0:17:54.879 And then we and then we had, you know, for 0:17:54.920 --> 0:17:57.119 a lot of people. Was another confirming piece of data. 0:17:57.960 --> 0:18:01.359 Astera Labs comes out public yesterday. The stock just Rips 0:18:01.480 --> 0:18:04.160 was up seventy percent yesterday on's first day of trading. 0:18:04.160 --> 0:18:06.880 It's some of the nineteen percent today. Again, I guess 0:18:06.880 --> 0:18:10.080 you could say, well, it's a cour like one of 0:18:10.160 --> 0:18:13.560 our reporters sources said, well, of course this sing ripped. 0:18:13.640 --> 0:18:15.960 My mother could have taken this public, that's how good 0:18:16.000 --> 0:18:17.000 a story it was. 0:18:17.119 --> 0:18:19.400 But still it's a great performance. We're going to see 0:18:19.440 --> 0:18:22.600 with Reddit see how that trades today. But the IPO 0:18:22.640 --> 0:18:25.160 market is maybe a little bit of a confirming factor here. 0:18:25.280 --> 0:18:27.399 Yeah, I think the IPO market is really interesting, and 0:18:27.400 --> 0:18:31.000 I think there's going to be differences in the names 0:18:31.000 --> 0:18:33.359 that are brought forward. You know, the one thing I 0:18:33.400 --> 0:18:35.480 want to go back to when we think about going 0:18:35.520 --> 0:18:38.399 down the cap spectrum, when we think about investors taking 0:18:38.440 --> 0:18:41.280 bets maybe on names that they don't know at the 0:18:41.320 --> 0:18:44.679 headline level. In the same way, what we also know 0:18:44.920 --> 0:18:47.760 intrinsically is that there's been trimming of positions. If you 0:18:47.840 --> 0:18:50.760 had a META in your portfolio and it was three percent, 0:18:50.840 --> 0:18:53.000 it's now nine percent, you trimmed that back to five. 0:18:53.040 --> 0:18:55.520 And so you're hearing some of these mega tech names 0:18:55.960 --> 0:18:59.320