WEBVTT - Everybody's Business: Tariffs Interrupted--Bonds, iPhones and an Ancient Howl

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Hey everyone, Max Chaffkin here, just a heads up. You're

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<v Speaker 2>about to hear another episode of Everybody's Business, which is

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<v Speaker 2>the new show that I've been working on with the

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<v Speaker 2>wonderful financial journalist Stacy Vanicksmith. It's going to be here

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<v Speaker 2>in the Eloning feed for the next few weeks, and

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<v Speaker 2>then it's going to move over into its own feed

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<v Speaker 2>in May. We just thought you'd really like it, and

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<v Speaker 2>we really want to get some feedback, so please check

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<v Speaker 2>it out and.

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<v Speaker 3>Let us know what you think. He's Stacy.

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<v Speaker 2>Hello, I've lived like several lifetimes thousand years since we

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<v Speaker 2>last recorded. I've done a lot of reflecting on the

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<v Speaker 2>choices that we made in that episode as we were

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<v Speaker 2>living in a moment.

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<v Speaker 3>We are once.

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<v Speaker 2>Again in the moment, and this tariff madness continues.

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<v Speaker 4>This is Everybody's Business. I'm Stacy Bannicksmith Chafkin. It has

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<v Speaker 4>basically been NonStop drama and action ever since the Trump

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<v Speaker 4>administration unveiled that infamous list of taxes the US would

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<v Speaker 4>be putting on imports from countries all over the world.

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<v Speaker 3>Yeah, and then he unlifted many of them.

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<v Speaker 2>So we're going to talk to Tracy Alloway, co host

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<v Speaker 2>of Odd Lots, really one of the smartest people I

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<v Speaker 2>think either of us knows on the markets. And then

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<v Speaker 2>we're going to zoom in on one company, Apple, that

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<v Speaker 2>has been really affected by these tariffs and including by

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<v Speaker 2>the tariffs that remain by these these massive one hundred

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<v Speaker 2>and twenty five percent tariffs on China, the stakes are

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<v Speaker 2>super high for Apple, and I guess for anyone who's

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<v Speaker 2>buying an iPhone. And we've got a great segment with

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<v Speaker 2>Bloomberg's Mark German on that.

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<v Speaker 4>Yes, and Max, I don't know if you saw Jurassic Park,

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<v Speaker 4>if you remember that movie, Yes, it is happening.

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<v Speaker 5>It is happening. Maybe further proof of end of Days

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<v Speaker 5>is that.

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<v Speaker 3>The underrated story or the overrated story.

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<v Speaker 4>I don't think Jurassic Park coming to life could possibly

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<v Speaker 4>be overrated.

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<v Speaker 5>So Max, with all the.

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<v Speaker 4>Drama this week, the headlines changing every five minutes, like

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<v Speaker 4>market disaster, market triumph, there was this one thing that

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<v Speaker 4>I could not stop thinking about.

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<v Speaker 3>Was it the early season start of the New York Mets.

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<v Speaker 4>I don't even know what any of that means. I

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<v Speaker 4>do know about the Mets, but what I kept thinking

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<v Speaker 4>about was my iPhone?

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<v Speaker 3>Your iPhone?

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<v Speaker 5>My iPhone?

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<v Speaker 3>Because oh no, stare me.

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<v Speaker 2>Did you run to the Apple store to try to

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<v Speaker 2>buy another phone?

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<v Speaker 4>Reading all this tariff news, my phone has been like

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<v Speaker 4>semi dying. I probably could have gotten another four months

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<v Speaker 4>out of it, but I was like, what is going

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<v Speaker 4>to happen to the price of this phone in four months?

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<v Speaker 4>So I ran to the Apple store on a Monday

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<v Speaker 4>afternoon and it was a zoo and the salesperson told

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<v Speaker 4>me that, in fact, he had been hearing about the

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<v Speaker 4>terror issue from a lot of customers.

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<v Speaker 2>When you told me, I think we were slacking or

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<v Speaker 2>something over the weekend, and you said you were at

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<v Speaker 2>the Apple store. Yes, I don't think you said you

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<v Speaker 2>were doing it out of tariff reasons. But I believe

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<v Speaker 2>that Stacey vanock Smith, who has her stuff together, who's

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<v Speaker 2>very prepared, who's from Idaho, would do this. But I

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<v Speaker 2>couldn't believe that anyone else would run to the Apple

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<v Speaker 2>store to try to get ahead of tariffs.

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<v Speaker 4>You underestimate our fellow Americans. In fact, Max, you expressed

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<v Speaker 4>the skepticism, and so I wanted to see for myself.

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<v Speaker 4>So I went back to the Apple Store and talked

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<v Speaker 4>to some people who were coming out.

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<v Speaker 5>What's it like in there?

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<v Speaker 3>It seems busier than normal. I think a lot of

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<v Speaker 3>people don't know what's about to hit.

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<v Speaker 5>What did you purchase today?

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<v Speaker 2>And I bought them too? Pline sales for me and

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<v Speaker 2>my girlfriend?

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<v Speaker 4>Did you buy it today because of tariffs?

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<v Speaker 2>I wasn't gonna buy it anyway, but the taris my

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<v Speaker 2>decision easier.

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<v Speaker 6>What did you purchase today?

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<v Speaker 1>Computer?

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<v Speaker 5>Telephones?

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<v Speaker 3>Oh?

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<v Speaker 1>A lot?

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<v Speaker 7>Yes?

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<v Speaker 4>Are you worried about prices changing?

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<v Speaker 6>I'm sure everything will be in pacted by tariffs, but like,

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<v Speaker 6>what are we gonna do? I've had my laptop for

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<v Speaker 6>ten years.

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<v Speaker 3>I need a new laptop.

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<v Speaker 5>Was it pretty crowded in there?

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<v Speaker 6>I waited like twenty minutes, which is not bad. But

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<v Speaker 6>like New Yorkers are very busy.

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<v Speaker 2>Hearing Matt, I feel like people like you are maybe

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<v Speaker 2>already thinking about buying another device, aware that Apple and

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<v Speaker 2>these consumer electronics manufacturers are vulnerable to tariffs in a

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<v Speaker 2>way that more so probably than almost any other type

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<v Speaker 2>of company.

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<v Speaker 3>Cars.

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<v Speaker 4>Apparently, car dealerships have seen also a big rush of

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<v Speaker 4>people recently.

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<v Speaker 3>Do you feel safe now?

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<v Speaker 2>Do you feel like you're you're ready to ride this

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<v Speaker 2>thing out for the next three and a half years

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<v Speaker 2>amid all this uncertainty.

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<v Speaker 5>That's an interesting question. No, I don't know how.

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<v Speaker 2>I navigating Costco over the weekend, and I was surprised.

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<v Speaker 5>You do spend you do talk.

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<v Speaker 2>To I spend most of my time when I'm not

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<v Speaker 2>in this studio, and I was surprised that it was

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<v Speaker 2>like a lighter day than usual. I saw the same

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<v Speaker 2>number of Jumbo toilet paper packs that I would normally see.

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<v Speaker 4>You know where I bet this was not happening where

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<v Speaker 4>at the Costco and Idaho people know?

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<v Speaker 5>People are prepared in my home state.

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<v Speaker 3>I hy k, why K.

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<v Speaker 4>After basically a full week of markets plunging and surging

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<v Speaker 4>and plunging and surging, President Trump finally blinked. He announced

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<v Speaker 4>a ninety day pause on most of the tariffs he

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<v Speaker 4>put forward last week. That pause does not include China,

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<v Speaker 4>our largest trading partner. Here to talk about this with

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<v Speaker 4>us is the great Tracy Alloway, co host of the

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<v Speaker 4>podcast Odd Lots.

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<v Speaker 6>Welcome, Tracy, Thank you so much for having me in

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<v Speaker 6>for that very kind intro.

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<v Speaker 4>Well, I feel like your time is precious. You've been

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<v Speaker 4>very NonStop.

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<v Speaker 6>It has been busy this week. I'll say that.

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<v Speaker 4>One thing that I saw that you tweet that I

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<v Speaker 4>wanted to ask you about because I think it kind

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<v Speaker 4>of gets at the heart of maybe what's going on

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<v Speaker 4>underneath the blink is you wrote quote. Honestly, at this point,

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<v Speaker 4>it's kind of comforting to see that the bond market

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<v Speaker 4>can still intimidate everybody.

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<v Speaker 6>Yeah, I think this is really like one of the

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<v Speaker 6>big things that happened this week. And that's in reference

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<v Speaker 6>to the old famous Carville quote where he talked about

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<v Speaker 6>if he was going to be reincarnated, he would want

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<v Speaker 6>to come back as the bond market because then he

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<v Speaker 6>could intimidate everyone. And here we are, about three decades

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<v Speaker 6>after he uttered that quote, and it turns out that

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<v Speaker 6>the bond market can still intimidate everyone, including a president

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<v Speaker 6>who looked pretty set on trying to remake the global

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<v Speaker 6>economy and the global financial system. He might still end

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<v Speaker 6>up doing it, but for the moment, the bond market

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<v Speaker 6>really seems to be the big roadblock in some of

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<v Speaker 6>these plans. And in fact, when he did his press

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<v Speaker 6>conference on Wednesday where he announced the ninety day pause,

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<v Speaker 6>he talked about markets getting like yippie queasy but he

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<v Speaker 6>really highlighted the bond market.

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<v Speaker 3>The bond market is very tricky.

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<v Speaker 6>I was watching it, but if you look at it now, it's, uh,

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<v Speaker 6>it's beautiful.

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<v Speaker 3>The bond market right now is beautiful.

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<v Speaker 6>And we know from you know, some other sources of

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<v Speaker 6>reporting that it really looks like it was the move

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<v Speaker 6>in the bond market, bond prices plunging, yields going up,

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<v Speaker 6>that frightened him off.

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<v Speaker 2>Wait didn't he just get frightened because he saw Jamie

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<v Speaker 2>Diamond on Fox News?

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<v Speaker 3>Am? I that is that? Like? Two good question?

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<v Speaker 6>But Jamie Diamond cares about bond yields too.

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<v Speaker 2>Okay.

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<v Speaker 6>The bond market is the most important market in the world.

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<v Speaker 6>The US has like twenty nine trillion dollars outstanding. It's

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<v Speaker 6>much bigger than the stock market. But more importantly, it

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<v Speaker 6>is much more interwoven with the US economy, so it

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<v Speaker 6>informs things like mortgage rates, corporate financing rates. And if

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<v Speaker 6>you're Trump, someone who came in on the pro that

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<v Speaker 6>you were going to lower housing costs, the economy was

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<v Speaker 6>going to boom under your tenre, you really care about

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<v Speaker 6>what happens to those rates.

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<v Speaker 5>Well, I feel like.

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<v Speaker 4>The stock market is so much more visible, and it's

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<v Speaker 4>a simpler market to explain, I think in a lot

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<v Speaker 4>of ways. So what was it about the bond market

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<v Speaker 4>that like rattled people in a way that the stock

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<v Speaker 4>market which was going up and down, I mean nine

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<v Speaker 4>percent down. You know, we haven't seen this since COVID,

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<v Speaker 4>since the housing crisis, and this kind of up and

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<v Speaker 4>down I don't think I've ever seen.

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<v Speaker 6>Yeah, it was pretty intense. It is highly unusual to

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<v Speaker 6>see both bonds and stocks falling at the same time.

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<v Speaker 6>And to be honest, the financial system isn't really built

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<v Speaker 6>to handle that. It can't really handle those two things

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<v Speaker 6>happening simultaneously. When we see both of those asset classes falling.

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<v Speaker 6>What tends to happen is big investors as well as

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<v Speaker 6>banks and broker dealers which nerrisk them have to start

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<v Speaker 6>de risking their portfolios or their balance sheets. And once

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<v Speaker 6>they're de risking, you set in motion, basically a feedback

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<v Speaker 6>loop that really risks, making asset prices even lower, people

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<v Speaker 6>having to sell more.

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<v Speaker 2>De risking you mean selling assets, right, Okay, I just

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<v Speaker 2>want to say two things.

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<v Speaker 3>One is we're recording this Thursday morning. A lot could happen.

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<v Speaker 6>You need to say the exact time, Yes, exactly, it is.

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<v Speaker 5>Yeah, eastern time, Eastern time.

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<v Speaker 2>The other thing, I just think we should take a

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<v Speaker 2>step back and say that what we're talking about, we're

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<v Speaker 2>talking about the bond market. I think tracing is the

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<v Speaker 2>concern that these tariffs are destroying the US economy, right,

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<v Speaker 2>and that is going to lead to some kind of recession,

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<v Speaker 2>maybe even a deep recession.

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<v Speaker 3>Do you have any.

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<v Speaker 2>Sense of why people were so worried about these tariffs?

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<v Speaker 2>And we talked about a little bit last week, but

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<v Speaker 2>Trump telegraphed this and we knew it was coming, and

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<v Speaker 2>yet suddenly we're comparing what happened to you know, the

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<v Speaker 2>great financial crisis of two thousand and eight or COVID

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<v Speaker 2>or something, these incredibly traumatic moments.

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<v Speaker 6>Okay, there's a lot to say here, but I think

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<v Speaker 6>the simple answer is the scale of the tariffs.

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<v Speaker 3>Right.

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<v Speaker 6>You don't get many countries who try to tear iff

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<v Speaker 6>every single trading partner they have all at once. It's

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<v Speaker 6>usually relatively focused. And the fact that it's the US economy,

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<v Speaker 6>the world's biggest economy, actually doing that, it meant most

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<v Speaker 6>people were expecting, you know, a ratcheting down of global growth.

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<v Speaker 6>So if they were expecting global growth to slow, why

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<v Speaker 6>did they sell bonds? So normally, if you expect a recession,

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<v Speaker 6>you would buy bonds rather than stocks. And this gets

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<v Speaker 6>back to the de risking point. People were forced to sell,

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<v Speaker 6>They had to unwind positions because the moves were just

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<v Speaker 6>so extreme. And then the other thing that really spooked

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<v Speaker 6>people about all of this is you have to look

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<v Speaker 6>at what was going on in the financial plumbing, So

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<v Speaker 6>the really big wholesale financing market, the repo market from

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<v Speaker 6>which banks and investors source a lot of their overnight loans,

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<v Speaker 6>a lot of their overnight liquidity. They need to keep

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<v Speaker 6>doing that in order to roll over positions. If they

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<v Speaker 6>can't get that liquidity because their dealer is de risking

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<v Speaker 6>its balance sheet and selling assets and it doesn't want

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<v Speaker 6>to take on any more assets at that time, then

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<v Speaker 6>that becomes a problem and you get that additional selling pressure.

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<v Speaker 6>And the one other thing I would say on that

0:11:31.800 --> 0:11:35.840
<v Speaker 6>is on Wednesday, when things got pretty extreme in the

0:11:35.840 --> 0:11:39.120
<v Speaker 6>bond market, there was a lot of chatter about the

0:11:39.160 --> 0:11:43.360
<v Speaker 6>FED possibly having to come in and bail out that market.

0:11:43.920 --> 0:11:47.120
<v Speaker 6>In a bailout the bond marketing, Yeah, I mean bail out.

0:11:47.160 --> 0:11:49.959
<v Speaker 6>It's it's not a credit risk, although I think there

0:11:49.960 --> 0:11:53.840
<v Speaker 6>are some investors who are potentially worried about the US's

0:11:53.920 --> 0:11:57.000
<v Speaker 6>credit worthiness under this new presidency. It was more of

0:11:57.080 --> 0:12:00.480
<v Speaker 6>a liquidity issue, and so the thinking was maybe they're

0:12:00.480 --> 0:12:03.120
<v Speaker 6>going to do what they did back in twenty twenty.

0:12:03.320 --> 0:12:06.280
<v Speaker 6>And then the last thing I will say on this

0:12:06.400 --> 0:12:11.199
<v Speaker 6>dynamic is you can just imagine if you're Trump, how

0:12:11.320 --> 0:12:15.360
<v Speaker 6>much would you hate that headline that the FED had

0:12:15.400 --> 0:12:19.720
<v Speaker 6>to come in and rescue the world's most important market

0:12:20.200 --> 0:12:23.079
<v Speaker 6>because of your trade policies.

0:12:23.559 --> 0:12:25.560
<v Speaker 4>Well, one thing I wanted to ask about was, like

0:12:25.600 --> 0:12:28.079
<v Speaker 4>you said, the bond market is typically where people go.

0:12:28.360 --> 0:12:32.560
<v Speaker 4>It's like their safe space, and bonds are essentially loans

0:12:32.800 --> 0:12:35.400
<v Speaker 4>that you give the government, and because the US government

0:12:35.440 --> 0:12:38.719
<v Speaker 4>is seen as so safe, interest rates the yield as

0:12:38.720 --> 0:12:40.520
<v Speaker 4>they call it, but the interest rate the government pays

0:12:40.640 --> 0:12:45.040
<v Speaker 4>is really low. This is a super oversimplification, but it

0:12:45.040 --> 0:12:47.800
<v Speaker 4>occurred to me that maybe the price of all this volatility.

0:12:48.400 --> 0:12:50.360
<v Speaker 4>If a stock drops ten percent and goes back up

0:12:50.400 --> 0:12:54.240
<v Speaker 4>ten percent, technically you're fine if you own the stock,

0:12:54.640 --> 0:12:57.120
<v Speaker 4>But maybe the long term price of all this volatility

0:12:57.360 --> 0:13:00.720
<v Speaker 4>is the bond market, because now the interest or the

0:13:00.880 --> 0:13:03.520
<v Speaker 4>yield that the government's having to pay on these bonds

0:13:04.000 --> 0:13:07.080
<v Speaker 4>is really high, which is weird because normally, when so

0:13:07.160 --> 0:13:10.400
<v Speaker 4>many people are looking for a safe space, bonds should

0:13:10.440 --> 0:13:13.160
<v Speaker 4>be where everybody goes. Yeah, but all of a sudden,

0:13:13.160 --> 0:13:15.839
<v Speaker 4>the US doesn't seem so trustworthy because of all the volatility.

0:13:15.920 --> 0:13:17.920
<v Speaker 4>So I was wondering if that might be like a

0:13:18.000 --> 0:13:21.080
<v Speaker 4>long term consequence, even if the market comes back to

0:13:21.080 --> 0:13:24.640
<v Speaker 4>where it was, that there's like long term damage from this.

0:13:24.920 --> 0:13:28.120
<v Speaker 6>Yeah, I think that's exactly right. So one of the

0:13:28.240 --> 0:13:32.199
<v Speaker 6>consequences of all of this volatility, all of this chaos

0:13:32.280 --> 0:13:35.240
<v Speaker 6>is people started talking about the possibility that we could

0:13:35.320 --> 0:13:40.600
<v Speaker 6>see alternative safe havens, so things like German government bonds

0:13:40.720 --> 0:13:45.160
<v Speaker 6>or Japanese government bonds. Europe, as one of our guests

0:13:45.200 --> 0:13:50.559
<v Speaker 6>recently said, is a region of norms and strong conventions

0:13:50.600 --> 0:13:53.040
<v Speaker 6>and rule of law, and maybe the US is a

0:13:53.040 --> 0:13:55.760
<v Speaker 6>little bit less so at the moment, so you could

0:13:55.760 --> 0:13:59.800
<v Speaker 6>see big investors flocking there. The irony in all of

0:13:59.800 --> 0:14:05.719
<v Speaker 6>this is there's already been reduced structural demand for US treasuries,

0:14:05.840 --> 0:14:09.160
<v Speaker 6>and that means you've had big buyers stepping away from

0:14:09.240 --> 0:14:13.079
<v Speaker 6>the market, and so when that happens, you know again

0:14:13.200 --> 0:14:16.480
<v Speaker 6>yields are going to have to go up if this

0:14:16.600 --> 0:14:21.880
<v Speaker 6>results in even less demand for US treasuries. The irony

0:14:22.080 --> 0:14:25.800
<v Speaker 6>is the US's own financing costs are going to go up,

0:14:25.960 --> 0:14:28.800
<v Speaker 6>and we know that Trump has talked about how important

0:14:28.920 --> 0:14:31.160
<v Speaker 6>it is to get those down, how important it is.

0:14:31.240 --> 0:14:32.520
<v Speaker 5>It's like US servicing our debt.

0:14:32.640 --> 0:14:36.000
<v Speaker 6>Yeah, how important it is to reduce America's debt. That

0:14:36.120 --> 0:14:39.440
<v Speaker 6>is much more difficult if you don't have buyers for it.

0:14:40.280 --> 0:14:43.480
<v Speaker 2>I want to say, sort of shift slightly to stocks,

0:14:43.960 --> 0:14:46.360
<v Speaker 2>if you permit. The thing I've been wondering as we've

0:14:46.400 --> 0:14:49.160
<v Speaker 2>watched the stock market sort of go up and down

0:14:49.240 --> 0:14:53.080
<v Speaker 2>in response to where that Trump says, is like is

0:14:53.120 --> 0:14:55.120
<v Speaker 2>this real? And I feel like you could tell two

0:14:55.200 --> 0:14:58.440
<v Speaker 2>different stories. And John Herman at New York Magazine wrote

0:14:58.440 --> 0:15:00.840
<v Speaker 2>a great article about this, basically saying Trump has turned

0:15:00.840 --> 0:15:03.080
<v Speaker 2>the US economy into a meme stock. He's like basically

0:15:03.120 --> 0:15:05.520
<v Speaker 2>managing the United States the way the CEO of Game

0:15:05.560 --> 0:15:08.760
<v Speaker 2>Stop does. So there's no reality, there's just vibes. You

0:15:08.840 --> 0:15:11.080
<v Speaker 2>have traders just like trying to get inside the head

0:15:11.640 --> 0:15:15.080
<v Speaker 2>of the guy running the thing, and you get chaos

0:15:15.080 --> 0:15:17.880
<v Speaker 2>in these wild moves. And then I think there's an

0:15:17.960 --> 0:15:22.600
<v Speaker 2>alternative story, which is like the stock market is asserting itself.

0:15:22.640 --> 0:15:25.400
<v Speaker 2>It's actually serving as a check on Trump. And what

0:15:25.440 --> 0:15:27.440
<v Speaker 2>we are learning now and maybe what we learned even

0:15:27.520 --> 0:15:31.640
<v Speaker 2>yesterday was that you know that Trump can't do this,

0:15:31.720 --> 0:15:34.680
<v Speaker 2>that there are going to be repercussions. Tracy, I'm sure

0:15:34.680 --> 0:15:38.080
<v Speaker 2>you saw this. Like in March, this guy, Michael Symbolist

0:15:38.120 --> 0:15:41.200
<v Speaker 2>of JP morgan to put out this research note saying

0:15:41.880 --> 0:15:44.160
<v Speaker 2>here's the interesting thing about the stock market. It could

0:15:44.240 --> 0:15:46.360
<v Speaker 2>probably apply this to the bond market as well. It

0:15:46.360 --> 0:15:49.400
<v Speaker 2>cannot be indicted, arrested or deported. It cannot be intimidated

0:15:49.440 --> 0:15:52.240
<v Speaker 2>or threatened or billy. It has no gender, ethnicity, or religion.

0:15:52.720 --> 0:15:55.120
<v Speaker 2>When this came out, I was like talking to a

0:15:55.160 --> 0:15:58.360
<v Speaker 2>group of i'd say MAGA aligned finance guys and they

0:15:58.400 --> 0:16:01.040
<v Speaker 2>were laughing about this. They were like, this is like

0:16:01.120 --> 0:16:04.000
<v Speaker 2>some you know, woke nods, you know what I mean.

0:16:04.040 --> 0:16:05.880
<v Speaker 2>And I feel like we are maybe learning in real

0:16:05.920 --> 0:16:08.440
<v Speaker 2>time and will continue to learn whether or not this

0:16:08.560 --> 0:16:13.400
<v Speaker 2>thing that Michael Symbolist wrote that that feels like obviously true.

0:16:13.680 --> 0:16:14.840
<v Speaker 3>It is in fact true.

0:16:15.120 --> 0:16:17.960
<v Speaker 6>I mean, I think we've seen evidence of that this week,

0:16:18.080 --> 0:16:20.840
<v Speaker 6>especially in the bond market. The thing I would say

0:16:20.960 --> 0:16:24.040
<v Speaker 6>that investors are really struggling with at the moment. Kind

0:16:24.040 --> 0:16:27.880
<v Speaker 6>of goes back to your reality point. I think investors

0:16:27.920 --> 0:16:31.760
<v Speaker 6>are pretty good at pricing and weighing some of the

0:16:31.800 --> 0:16:35.600
<v Speaker 6>consequences of these policies. The effects of all of this

0:16:36.200 --> 0:16:39.680
<v Speaker 6>are very real. You know, investors have a pretty decent

0:16:40.520 --> 0:16:43.080
<v Speaker 6>idea of what's going to happen to the global economy

0:16:43.120 --> 0:16:46.760
<v Speaker 6>and markets if all of this were to happen, even

0:16:46.800 --> 0:16:50.240
<v Speaker 6>though you know it's unprecedented in many ways. As we discussed,

0:16:50.800 --> 0:16:54.840
<v Speaker 6>I think the difficulty for them is the unpredictability of

0:16:55.000 --> 0:16:58.040
<v Speaker 6>what Trump actually says, Like that is the sticking point.

0:16:58.680 --> 0:17:02.320
<v Speaker 6>And because the the entire market is so focused on

0:17:02.560 --> 0:17:05.920
<v Speaker 6>this one guy, you don't know what he's going to

0:17:06.000 --> 0:17:10.080
<v Speaker 6>say between one day and the next. And it's funny.

0:17:10.119 --> 0:17:12.680
<v Speaker 6>We wrote a newsletter, i think on Tuesday where we

0:17:12.760 --> 0:17:15.439
<v Speaker 6>basically pointed out, you know, it's all about Trump. He

0:17:15.440 --> 0:17:18.920
<v Speaker 6>could come out and say everything's fine. And that's one

0:17:18.960 --> 0:17:22.680
<v Speaker 6>reason why when we had an erroneous headline on Monday

0:17:22.840 --> 0:17:25.920
<v Speaker 6>saying there was a ninety day pause, stock shot up

0:17:26.400 --> 0:17:29.840
<v Speaker 6>so so much, and then you know, when it happened

0:17:29.840 --> 0:17:33.199
<v Speaker 6>again on Wednesday, like people really rush to move up

0:17:33.280 --> 0:17:35.520
<v Speaker 6>even though they might have been burned on Mondays. So

0:17:35.640 --> 0:17:39.919
<v Speaker 6>that just underscores how important Trump is to the markets

0:17:39.960 --> 0:17:40.320
<v Speaker 6>right now.

0:17:41.200 --> 0:17:43.520
<v Speaker 4>Well, Tracy, thank you so much for joining us. I

0:17:43.520 --> 0:17:47.159
<v Speaker 4>think you have to go tape your own podcasts right now.

0:17:47.520 --> 0:17:49.480
<v Speaker 6>I do, I do, but it's been fun.

0:17:49.720 --> 0:17:50.639
<v Speaker 5>Thank you for joining us.

0:17:50.720 --> 0:17:52.000
<v Speaker 3>Thanks Tracy, thank you.

0:17:55.320 --> 0:17:55.560
<v Speaker 6>Wow.

0:18:03.720 --> 0:18:07.840
<v Speaker 2>Okay, Stacey, we're talking all about, you know, the chaos

0:18:07.840 --> 0:18:11.040
<v Speaker 2>of the markets, these questions of like, okay, what should

0:18:11.040 --> 0:18:15.040
<v Speaker 2>investors do with Trump making all these policy shifts and

0:18:15.760 --> 0:18:17.960
<v Speaker 2>making these erratic statements, and they're sort of like the

0:18:18.000 --> 0:18:19.879
<v Speaker 2>other side of this, which is what do you buy?

0:18:20.080 --> 0:18:21.439
<v Speaker 3>And how do companies price?

0:18:21.640 --> 0:18:25.119
<v Speaker 2>And we have a great guest to talk about this,

0:18:25.600 --> 0:18:31.399
<v Speaker 2>Mark German, Bloomberg's chief correspondent covering consumer technology, author of

0:18:31.440 --> 0:18:34.040
<v Speaker 2>the power On newsletter, which you should all subscribe to.

0:18:34.440 --> 0:18:36.560
<v Speaker 2>I want to talk to Mark because in his newsletter

0:18:36.600 --> 0:18:39.919
<v Speaker 2>the other day he wrote this really great sort of

0:18:40.359 --> 0:18:44.240
<v Speaker 2>primer basically on how Apple prices, and we want to

0:18:44.240 --> 0:18:47.240
<v Speaker 2>talk to him about that because Apple has so affected

0:18:47.320 --> 0:18:48.280
<v Speaker 2>by these tariffs.

0:18:48.440 --> 0:18:49.560
<v Speaker 3>Mark, thanks for being.

0:18:49.440 --> 0:18:51.200
<v Speaker 7>Here, Thanks for having me. Great to be on.

0:18:51.480 --> 0:18:54.080
<v Speaker 2>Okay, Mark, I just said that Apple is really exposed

0:18:54.119 --> 0:18:56.320
<v Speaker 2>to the trade war. Before you joined US, I might

0:18:56.320 --> 0:18:58.120
<v Speaker 2>have even said that they are one of the most

0:18:58.119 --> 0:19:01.560
<v Speaker 2>exposed companies to terrorst First of all, do you do

0:19:01.680 --> 0:19:03.040
<v Speaker 2>buy that number one?

0:19:03.280 --> 0:19:06.639
<v Speaker 3>Number two? Why is Apple so exposed?

0:19:06.960 --> 0:19:11.640
<v Speaker 2>Talk a little bit about this incredibly global company.

0:19:12.320 --> 0:19:14.600
<v Speaker 1>Yeah, So, just to take a step back here for

0:19:14.640 --> 0:19:17.199
<v Speaker 1>a while now, we knew that something was going to

0:19:17.280 --> 0:19:22.359
<v Speaker 1>happen in relation to Apple and tariff specifically related to China, right.

0:19:22.480 --> 0:19:25.680
<v Speaker 1>I think people understood that Apple is in a very

0:19:25.720 --> 0:19:30.439
<v Speaker 1>bad position because they make about eighty five to ninety

0:19:30.480 --> 0:19:34.359
<v Speaker 1>percent of their iPhones in China, right, and they sell

0:19:34.440 --> 0:19:38.160
<v Speaker 1>the majority of them in the United States. So needing

0:19:38.200 --> 0:19:41.320
<v Speaker 1>to build the product there and then needing to ship

0:19:41.320 --> 0:19:43.119
<v Speaker 1>them to the United States, obviously you're going to get

0:19:43.119 --> 0:19:47.120
<v Speaker 1>tariff pretty high. Why the market went crazy is because

0:19:47.160 --> 0:19:52.199
<v Speaker 1>the tariff percentage on China specifically was way higher than

0:19:52.240 --> 0:19:55.720
<v Speaker 1>people had anticipated, not leaving much room for Apple to

0:19:55.760 --> 0:19:59.399
<v Speaker 1>deal with getting better pricing, not leaving much room for

0:19:59.440 --> 0:20:02.080
<v Speaker 1>Apple to eat some of the costs, and not leaving

0:20:02.160 --> 0:20:04.720
<v Speaker 1>much room for minor price increases.

0:20:04.880 --> 0:20:05.760
<v Speaker 7>So that was one thing.

0:20:06.240 --> 0:20:09.239
<v Speaker 1>But what really sent everyone wild was the fact that

0:20:09.280 --> 0:20:14.520
<v Speaker 1>the tariffs were planted across every country there were countries

0:20:14.840 --> 0:20:19.200
<v Speaker 1>that Apple had moved to in order to reduce the

0:20:19.240 --> 0:20:23.160
<v Speaker 1>threat from the China tariffs that they had long anticipated.

0:20:23.680 --> 0:20:26.320
<v Speaker 1>So for the last several years, Apple had been building

0:20:26.400 --> 0:20:33.960
<v Speaker 1>up in places like Malaysia, Thailand, Vietnam, and those places

0:20:34.000 --> 0:20:37.960
<v Speaker 1>too were hit with tariffs. Right, So China you knew

0:20:38.000 --> 0:20:41.000
<v Speaker 1>would be bad, but it was worse. And then everywhere

0:20:41.040 --> 0:20:43.320
<v Speaker 1>else was way worse than anticipated too.

0:20:43.840 --> 0:20:46.280
<v Speaker 2>All that diversification too that you're talking about, a lot

0:20:46.320 --> 0:20:49.920
<v Speaker 2>of it started, unless I'm mistaken, like under the last

0:20:50.440 --> 0:20:55.480
<v Speaker 2>Trump presidency. They've been aware for years that their reliance

0:20:55.480 --> 0:21:00.360
<v Speaker 2>on China creates vulnerabilities, geopolitical vulnerabilities, and they have been

0:21:00.440 --> 0:21:02.120
<v Speaker 2>trying mark to diversify.

0:21:03.320 --> 0:21:06.000
<v Speaker 1>They knew for some time, you know, dating back to

0:21:06.040 --> 0:21:09.440
<v Speaker 1>the first Trump administration, that there would be political and

0:21:09.520 --> 0:21:14.840
<v Speaker 1>geopolitical economic vulnerabilities at some point with their huge reliance

0:21:14.880 --> 0:21:18.560
<v Speaker 1>on China, and that really kicked off the diversification efforts,

0:21:18.600 --> 0:21:21.680
<v Speaker 1>you know, closer to a decade ago. But COVID made

0:21:21.760 --> 0:21:26.200
<v Speaker 1>us all realize that it's not only geopolitical, right, there

0:21:26.240 --> 0:21:29.520
<v Speaker 1>are world related disasters that have little to do with

0:21:29.600 --> 0:21:33.120
<v Speaker 1>the economy. And I think a prime example was actually

0:21:33.240 --> 0:21:38.400
<v Speaker 1>the iPhone fourteen Pro and Promax. Back in twenty twenty two, right,

0:21:38.480 --> 0:21:41.679
<v Speaker 1>things seemed to have been calming down. COVID had been

0:21:41.680 --> 0:21:43.480
<v Speaker 1>going on for a year and a half, things began

0:21:43.560 --> 0:21:45.520
<v Speaker 1>to dissipate, and all of a sudden, there was a

0:21:45.600 --> 0:21:48.680
<v Speaker 1>huge COVID wave in China and they had a lot

0:21:48.680 --> 0:21:51.879
<v Speaker 1>of their fourteen pro production in one facility, right in

0:21:51.920 --> 0:21:55.440
<v Speaker 1>one gigantic facility at Fox Gone in China, And because

0:21:55.480 --> 0:21:58.119
<v Speaker 1>of that new COVID wave, the Chinese government shut everything

0:21:58.160 --> 0:22:02.240
<v Speaker 1>down and that blew up Apples sales projections for that

0:22:02.320 --> 0:22:05.280
<v Speaker 1>device and their overall revenue in that holiday quarter. And

0:22:05.320 --> 0:22:08.040
<v Speaker 1>that was another realization we can't just do everything in

0:22:08.080 --> 0:22:10.520
<v Speaker 1>one place. At some point, if your Apple, you have

0:22:10.560 --> 0:22:12.760
<v Speaker 1>to ask yourself, what can we do with all our

0:22:12.800 --> 0:22:16.280
<v Speaker 1>money to really be able to withstand more issues in

0:22:16.320 --> 0:22:19.800
<v Speaker 1>the future. Because Trump is only going to be here

0:22:19.880 --> 0:22:22.920
<v Speaker 1>another three and a half years in this term, we'll

0:22:22.960 --> 0:22:25.600
<v Speaker 1>see if his policies continue for another four or eight

0:22:25.680 --> 0:22:26.520
<v Speaker 1>years after that.

0:22:27.359 --> 0:22:28.680
<v Speaker 7>But looking down the line.

0:22:28.480 --> 0:22:31.720
<v Speaker 1>Ten fifteen years, twenty years, fifty years, there are going

0:22:31.760 --> 0:22:34.439
<v Speaker 1>to be more politicians, There are going to be more wars,

0:22:34.680 --> 0:22:37.840
<v Speaker 1>There are going to be more natural disasters. There are

0:22:37.920 --> 0:22:40.800
<v Speaker 1>going to be more pandemics right over the arc of time.

0:22:40.880 --> 0:22:42.199
<v Speaker 1>That's just how the world works.

0:22:42.600 --> 0:22:46.600
<v Speaker 2>Mark, Let's talk about the actual pricing of the iPhone.

0:22:46.600 --> 0:22:48.800
<v Speaker 2>You mentioned more than eighty five percent of iPhones are

0:22:48.800 --> 0:22:51.359
<v Speaker 2>made in China. The iPhone, for people who don't know

0:22:51.480 --> 0:22:53.240
<v Speaker 2>or have been living under a rock, is like the

0:22:53.240 --> 0:22:56.359
<v Speaker 2>most successful consumer product of all time. It is also

0:22:56.480 --> 0:23:01.600
<v Speaker 2>still very much the cornerstone of Apple's business. You kind

0:23:01.600 --> 0:23:04.000
<v Speaker 2>of went through in this newsletter that I mentioned at

0:23:04.000 --> 0:23:08.440
<v Speaker 2>the top, basically three options for dealing with a tariff,

0:23:08.480 --> 0:23:10.239
<v Speaker 2>and I think we should just take them one at

0:23:10.280 --> 0:23:12.480
<v Speaker 2>a time. The top of the line iPhone in the

0:23:12.560 --> 0:23:17.200
<v Speaker 2>United States costs basically one thousand dollars. What are their

0:23:17.240 --> 0:23:19.360
<v Speaker 2>options they're hit with this tariff and right now it's

0:23:19.400 --> 0:23:22.280
<v Speaker 2>over one hundred percent. If history is any guide, They're

0:23:22.280 --> 0:23:25.840
<v Speaker 2>going to release another iPhone in the fall, and they're

0:23:25.840 --> 0:23:27.159
<v Speaker 2>gonna have to come up with a price for that.

0:23:27.720 --> 0:23:30.080
<v Speaker 2>Talk through how they're going to deal with these tariffs

0:23:30.160 --> 0:23:30.919
<v Speaker 2>step by step.

0:23:31.240 --> 0:23:33.600
<v Speaker 1>Well, the first thing for the short term, it's getting

0:23:33.680 --> 0:23:37.480
<v Speaker 1>as many phones into the US channel before the tariffs

0:23:37.480 --> 0:23:39.640
<v Speaker 1>from China came into place. So that's something they've done

0:23:39.680 --> 0:23:43.320
<v Speaker 1>over the past several months in the even more recent

0:23:43.520 --> 0:23:45.760
<v Speaker 1>right as the tariffs are coming into place. Obviously they

0:23:45.760 --> 0:23:47.600
<v Speaker 1>sell a lot of phones. You have to replenish that supply.

0:23:48.040 --> 0:23:50.159
<v Speaker 1>It's bringing them in from India where you have a

0:23:50.200 --> 0:23:53.760
<v Speaker 1>tariff hit that's now I don't know, fifteen percent of

0:23:53.800 --> 0:23:57.320
<v Speaker 1>the tariff hit they're talking about from China. So looking forward,

0:23:57.640 --> 0:24:00.840
<v Speaker 1>it's now pushing suppliers to give them better pricing so

0:24:00.840 --> 0:24:04.280
<v Speaker 1>they have fatter margins, so they have more cost opportunity

0:24:04.280 --> 0:24:07.720
<v Speaker 1>to own and less cost to pass on to the customer.

0:24:08.160 --> 0:24:10.840
<v Speaker 1>And the reality is is that the iPhone price hikes

0:24:11.240 --> 0:24:13.560
<v Speaker 1>are probably not going to be more than a few

0:24:13.640 --> 0:24:15.760
<v Speaker 1>hundred dollars per model, because they are going to make

0:24:15.800 --> 0:24:20.160
<v Speaker 1>supply chain changes, and Apple knows that customers are simply

0:24:20.200 --> 0:24:23.240
<v Speaker 1>not going to pay certain dollar amounts when they can

0:24:23.320 --> 0:24:26.919
<v Speaker 1>get refurbished phones for cheaper, they can buy used phones

0:24:26.960 --> 0:24:30.200
<v Speaker 1>for cheaper, they can go elsewhere cheaper. And the other

0:24:30.240 --> 0:24:34.000
<v Speaker 1>thing is installment plans and trading programs to offset the

0:24:34.080 --> 0:24:36.760
<v Speaker 1>higher costs. If new phone prices are going to go up,

0:24:37.119 --> 0:24:39.240
<v Speaker 1>the value of the old phones are going to go

0:24:39.320 --> 0:24:41.440
<v Speaker 1>up as well, and so you're going to be able

0:24:41.440 --> 0:24:43.119
<v Speaker 1>to get more bang for your buck when trading in

0:24:43.160 --> 0:24:44.320
<v Speaker 1>your older products too.

0:24:44.480 --> 0:24:46.880
<v Speaker 2>But mark their costs are going to go up by

0:24:46.960 --> 0:24:49.000
<v Speaker 2>more than a couple hundred bucks.

0:24:49.080 --> 0:24:49.280
<v Speaker 3>Right.

0:24:49.680 --> 0:24:54.400
<v Speaker 1>The idea is by moving to lower tariff places, by

0:24:54.800 --> 0:24:58.359
<v Speaker 1>pushing suppliers to give them better pricing, by eating a

0:24:58.400 --> 0:25:01.720
<v Speaker 1>little bit of their costs, and then having the consumer

0:25:01.800 --> 0:25:04.359
<v Speaker 1>eat a bit of the costs. You're splitting four ways,

0:25:04.720 --> 0:25:07.359
<v Speaker 1>so maybe the price increase would have been one thousand dollars,

0:25:07.359 --> 0:25:09.520
<v Speaker 1>but when you're splitting in four ways, you know you're

0:25:09.520 --> 0:25:11.560
<v Speaker 1>in the two to three hundred dollars range for the customer.

0:25:11.960 --> 0:25:12.160
<v Speaker 3>Right.

0:25:12.359 --> 0:25:15.360
<v Speaker 2>So, like some of these components are also subject to tariffs,

0:25:15.400 --> 0:25:18.280
<v Speaker 2>you sort of force some of your suppliers to take

0:25:18.400 --> 0:25:20.600
<v Speaker 2>take some of that cost. You force, as you said,

0:25:20.600 --> 0:25:22.280
<v Speaker 2>the customers to take some of that cost. And then

0:25:22.359 --> 0:25:24.560
<v Speaker 2>Apple's a very profitable company. I'm not sure what the

0:25:24.560 --> 0:25:27.240
<v Speaker 2>gross margins on these It's like forty five percent or something, but.

0:25:27.320 --> 0:25:29.400
<v Speaker 1>Yeah, forty five percent is their corporate average. I would

0:25:29.480 --> 0:25:32.560
<v Speaker 1>say the phone is above fifty percent in most cases.

0:25:32.840 --> 0:25:35.600
<v Speaker 4>Right, So a lot of room there perhaps, But investors

0:25:35.640 --> 0:25:38.040
<v Speaker 4>might disagree with that. They would be upset if they

0:25:38.080 --> 0:25:40.520
<v Speaker 4>were taking smaller profit margins still, right, I mean that

0:25:40.760 --> 0:25:42.359
<v Speaker 4>would be bad for the company.

0:25:42.359 --> 0:25:44.240
<v Speaker 3>Right Mark, Can I ask you something.

0:25:44.680 --> 0:25:47.600
<v Speaker 2>They basically have not changed the price of an iPhone

0:25:47.640 --> 0:25:50.000
<v Speaker 2>in a very long time, and you brought this up,

0:25:50.000 --> 0:25:52.679
<v Speaker 2>but like there have been these subtle price increases, so

0:25:52.800 --> 0:25:54.960
<v Speaker 2>like a top of the line phone is cost about

0:25:54.960 --> 0:25:56.720
<v Speaker 2>one thousand dollars for a very long time. They've they've

0:25:56.760 --> 0:25:58.760
<v Speaker 2>done things where like you have to pay a little

0:25:58.760 --> 0:26:00.159
<v Speaker 2>more for memory.

0:25:59.880 --> 0:26:01.640
<v Speaker 1>Or like larger screen.

0:26:02.160 --> 0:26:04.879
<v Speaker 2>Right yeah, Apple critics will point out, oh, they're charging

0:26:04.880 --> 0:26:07.920
<v Speaker 2>money on services, you know whatever, but it does seem

0:26:08.000 --> 0:26:12.080
<v Speaker 2>to be some kind of psychological threshold in terms of

0:26:12.160 --> 0:26:14.840
<v Speaker 2>like what a consumer will pay for one of these things.

0:26:15.080 --> 0:26:17.480
<v Speaker 2>Do we have any sense do your sources have any

0:26:17.520 --> 0:26:22.320
<v Speaker 2>sense of how high they could push the prices without

0:26:22.440 --> 0:26:25.159
<v Speaker 2>seeing you know, like consumer pushback.

0:26:25.520 --> 0:26:28.360
<v Speaker 1>A lot happened over the last ten years or so,

0:26:29.000 --> 0:26:33.640
<v Speaker 1>and the iPhone price didn't change inflation. You had COVID,

0:26:33.800 --> 0:26:37.840
<v Speaker 1>which obviously made things more expensive to make. The technology

0:26:37.880 --> 0:26:40.200
<v Speaker 1>got more expensive and more advanced, and they still never

0:26:40.280 --> 0:26:43.600
<v Speaker 1>raise the price. And that just tells you how price

0:26:43.720 --> 0:26:46.800
<v Speaker 1>sensitive it believes consumers are. But they have a unique

0:26:46.800 --> 0:26:51.440
<v Speaker 1>opportunity now for this price increase, because if Apple raises prices.

0:26:52.359 --> 0:26:54.480
<v Speaker 1>Everyone is going to point to one man and it's

0:26:54.480 --> 0:26:55.160
<v Speaker 1>not Tim Cook.

0:26:55.880 --> 0:26:57.119
<v Speaker 5>Oh oh, they have a scapegoat.

0:26:57.640 --> 0:26:58.600
<v Speaker 7>They have a scapegoat.

0:26:58.640 --> 0:27:00.920
<v Speaker 1>Now, I think everyone would know that this has become

0:27:02.000 --> 0:27:04.639
<v Speaker 1>a untenable situation to keep prices the same because of

0:27:04.640 --> 0:27:07.480
<v Speaker 1>the tariffs, and people would blame Trump here. I think

0:27:07.520 --> 0:27:09.679
<v Speaker 1>if they did it because of inflation, I think if

0:27:09.680 --> 0:27:11.840
<v Speaker 1>they did it because of COVID. I think if they

0:27:11.840 --> 0:27:15.120
<v Speaker 1>did it because the technology became more advanced, people would

0:27:15.160 --> 0:27:17.679
<v Speaker 1>be a lot less understanding and say, hey, Apple's just

0:27:17.680 --> 0:27:18.720
<v Speaker 1>trying to make another.

0:27:18.440 --> 0:27:19.080
<v Speaker 7>Buck on us.

0:27:19.560 --> 0:27:22.679
<v Speaker 1>But now this is mainstream. This is not because of Apple.

0:27:23.040 --> 0:27:25.439
<v Speaker 1>Apple would not be raising prices if it weren't for

0:27:25.480 --> 0:27:25.960
<v Speaker 1>these tariffs.

0:27:26.040 --> 0:27:26.879
<v Speaker 7>I can assure you of that.

0:27:27.400 --> 0:27:30.679
<v Speaker 4>So when I ran to the store this week to

0:27:31.040 --> 0:27:34.160
<v Speaker 4>upgrade my iPhone.

0:27:33.440 --> 0:27:35.640
<v Speaker 3>Uh, vindication is this?

0:27:36.000 --> 0:27:39.480
<v Speaker 5>Was that a good move? Did I save myself some money?

0:27:39.800 --> 0:27:41.480
<v Speaker 7>What did you come from and what did you get?

0:27:41.680 --> 0:27:43.880
<v Speaker 5>I came from a twelve, I got a sixteen.

0:27:44.080 --> 0:27:46.360
<v Speaker 3>Oh, Man Mark is like twelve.

0:27:46.320 --> 0:27:50.080
<v Speaker 1>Well, sure, but that's a good upgrade, right Like if

0:27:50.119 --> 0:27:52.320
<v Speaker 1>you were coming from a fourteen or fifteen, I'd be

0:27:52.359 --> 0:27:54.040
<v Speaker 1>more concerned about your decision making.

0:27:54.560 --> 0:27:56.119
<v Speaker 3>Whoo the fact.

0:27:56.320 --> 0:27:59.680
<v Speaker 1>The fact is is that you got a really good

0:27:59.720 --> 0:28:03.040
<v Speaker 1>phone from a really old phone and it was time

0:28:03.080 --> 0:28:07.000
<v Speaker 1>for you to upgrade anyways. So you saved money potentially

0:28:07.440 --> 0:28:10.560
<v Speaker 1>but got something that you needed. And so this is like,

0:28:10.800 --> 0:28:12.040
<v Speaker 1>for you, is the perfect storm.

0:28:12.080 --> 0:28:15.119
<v Speaker 3>And I think that was a complete vindication for Stacey feeling.

0:28:15.800 --> 0:28:18.840
<v Speaker 4>I know that the whole economy is in total turmoil,

0:28:18.920 --> 0:28:22.560
<v Speaker 4>but personally I'm feeling good because of Markney.

0:28:23.680 --> 0:28:28.359
<v Speaker 1>The dye Gleses do while the bossing realm of the

0:28:28.840 --> 0:28:30.200
<v Speaker 1>don't murder me.

0:28:31.880 --> 0:28:34.200
<v Speaker 3>I beg of you don't good?

0:28:38.000 --> 0:28:41.040
<v Speaker 2>All right, it's our underrated segment of the week and Mark,

0:28:41.160 --> 0:28:43.960
<v Speaker 2>you're gonna stick around Stacy Vanick Smith, what do you

0:28:44.000 --> 0:28:44.480
<v Speaker 2>have for us?

0:28:45.000 --> 0:28:47.440
<v Speaker 4>Yes, this is where we take what we feel was

0:28:47.480 --> 0:28:50.600
<v Speaker 4>an underrated piece of news this week and we shine

0:28:50.720 --> 0:28:51.480
<v Speaker 4>a light on it.

0:28:52.320 --> 0:28:54.160
<v Speaker 5>And in this case, it's a pretty exciting story.

0:28:54.560 --> 0:28:58.720
<v Speaker 4>Have you guys seen Jurassic Park, Yes, you know where

0:28:58.760 --> 0:29:00.320
<v Speaker 4>they take the DNA out of the.

0:29:00.160 --> 0:29:04.520
<v Speaker 2>Mecedo amber in that guy's cane. They do them animation

0:29:05.000 --> 0:29:07.600
<v Speaker 2>and they make dinosaurs, they make dynasty, they bring extinct

0:29:07.760 --> 0:29:09.040
<v Speaker 2>species back to life.

0:29:09.080 --> 0:29:10.880
<v Speaker 5>This literally happened.

0:29:11.720 --> 0:29:17.400
<v Speaker 4>So there is this company called Colossal biosciences and they

0:29:17.440 --> 0:29:21.480
<v Speaker 4>have brought back to life something called the dire wolf.

0:29:21.520 --> 0:29:26.360
<v Speaker 4>This is a species of wolf that went extinct twelve

0:29:26.720 --> 0:29:27.840
<v Speaker 4>thousand years ago.

0:29:28.040 --> 0:29:29.320
<v Speaker 3>These are the Game of Thrones wolves.

0:29:29.360 --> 0:29:31.640
<v Speaker 4>They are the Yeah, the Game of Thrones wolves were

0:29:31.640 --> 0:29:35.680
<v Speaker 4>based on the dire wolves. They basically crossed their DNA

0:29:35.840 --> 0:29:39.640
<v Speaker 4>or they used crisper or did the science where they

0:29:39.760 --> 0:29:43.680
<v Speaker 4>put the dire wolf DNA in a gray wolf DNA thing,

0:29:44.480 --> 0:29:46.600
<v Speaker 4>which is I guess, the closest living relative. And we

0:29:46.720 --> 0:29:50.400
<v Speaker 4>have dire wolf pups and right now we can hear

0:29:51.000 --> 0:29:54.960
<v Speaker 4>a wolf howl that has been extinct from this earth

0:29:55.160 --> 0:29:58.320
<v Speaker 4>for twelve thousand years. They have three little pups that

0:29:58.400 --> 0:30:00.480
<v Speaker 4>are so cute the house.

0:30:00.480 --> 0:30:01.280
<v Speaker 5>Okay, let's hear the.

0:30:01.200 --> 0:30:07.480
<v Speaker 1>How it's kind of adorable.

0:30:07.480 --> 0:30:08.840
<v Speaker 7>I'm not gonna lie.

0:30:09.560 --> 0:30:13.640
<v Speaker 5>It's so cute. Isn't that amazing? Like a sound not

0:30:13.760 --> 0:30:16.080
<v Speaker 5>heard for thousands of years?

0:30:16.520 --> 0:30:19.080
<v Speaker 1>I think this is brilliant. And by the way, I

0:30:19.120 --> 0:30:21.960
<v Speaker 1>love the name of that company, Colossal. That's yeah, that's

0:30:21.960 --> 0:30:22.440
<v Speaker 1>a good one.

0:30:22.560 --> 0:30:23.160
<v Speaker 3>Hear me out.

0:30:23.320 --> 0:30:26.920
<v Speaker 2>I think that this is the biggest croc ever, how

0:30:27.000 --> 0:30:27.560
<v Speaker 2>is it a croc?

0:30:27.640 --> 0:30:28.440
<v Speaker 5>You heard the howls?

0:30:28.480 --> 0:30:29.640
<v Speaker 3>The cute This is.

0:30:29.640 --> 0:30:32.840
<v Speaker 2>A wolf doodle. This is not a diar hole. This

0:30:33.040 --> 0:30:36.200
<v Speaker 2>is a pr stunt. Look, I'm not saying it's not cool.

0:30:36.480 --> 0:30:40.360
<v Speaker 2>I'm not saying those subtle hybrid wolves are not adorable.

0:30:41.120 --> 0:30:43.320
<v Speaker 2>I'm not saying like I don't want to go to

0:30:43.320 --> 0:30:46.320
<v Speaker 2>a zoo and see a white gray wolf. But if

0:30:46.360 --> 0:30:48.680
<v Speaker 2>you look at the actual science here, they did not

0:30:48.760 --> 0:30:51.800
<v Speaker 2>bring the dire wolf back. They took like something like

0:30:51.840 --> 0:30:56.560
<v Speaker 2>twenty genetic traits and changed them in a gray wolf

0:30:57.000 --> 0:31:00.000
<v Speaker 2>out of I think millions of traits they would have

0:31:00.280 --> 0:31:03.800
<v Speaker 2>to change to change a actual gray wolf into a

0:31:03.840 --> 0:31:06.520
<v Speaker 2>dire wolf. This is like a wolf doodle. This is

0:31:06.680 --> 0:31:10.080
<v Speaker 2>just like a This is like a total like. I'm

0:31:10.120 --> 0:31:12.560
<v Speaker 2>not saying I'm not saying the science isn't cool, but

0:31:12.640 --> 0:31:15.080
<v Speaker 2>like anyone who thinks we like brought back an extinct

0:31:15.080 --> 0:31:16.320
<v Speaker 2>species is like.

0:31:16.360 --> 0:31:18.480
<v Speaker 4>I'm going to give you a couple of counterpoints which

0:31:18.480 --> 0:31:21.320
<v Speaker 4>are not direct counterpoints, but counterpoint adjacent.

0:31:21.680 --> 0:31:23.640
<v Speaker 5>They got the DNA out of a tooth.

0:31:23.440 --> 0:31:26.720
<v Speaker 4>And a skull, so cool, and they're now working on

0:31:26.760 --> 0:31:30.200
<v Speaker 4>resurrecting the mammoth, the dodo, and the Tasmanian tiger.

0:31:30.400 --> 0:31:32.640
<v Speaker 5>I mean, be skeptical.

0:31:33.200 --> 0:31:36.000
<v Speaker 7>I like Max's point. I think it's a fair point, but.

0:31:36.160 --> 0:31:37.640
<v Speaker 3>I am sticking to my guns.

0:31:38.080 --> 0:31:40.560
<v Speaker 1>I am sticking to my guns. This is underrated and

0:31:40.600 --> 0:31:41.600
<v Speaker 1>this is really cool.

0:31:42.360 --> 0:31:45.320
<v Speaker 7>But I think Max's point is fair.

0:31:45.680 --> 0:31:45.920
<v Speaker 3>I do.

0:31:46.040 --> 0:31:48.400
<v Speaker 2>I was braced for a genuine intervention. I thought Mark

0:31:48.560 --> 0:31:51.920
<v Speaker 2>was gonna be like, Max, you need you need to

0:31:51.960 --> 0:31:53.600
<v Speaker 2>evaluate your life choices.

0:31:53.880 --> 0:31:55.720
<v Speaker 4>I feel like we could we could play the howls

0:31:55.760 --> 0:31:57.440
<v Speaker 4>again and see if you still feel that way.

0:31:57.520 --> 0:31:59.080
<v Speaker 3>They're so cute, they they are cute.

0:32:01.200 --> 0:32:03.800
<v Speaker 7>Oh it sounds great.

0:32:04.480 --> 0:32:06.000
<v Speaker 3>Wolfdoodles, so cute.

0:32:07.160 --> 0:32:11.440
<v Speaker 4>Twelve thousand years of silence, and now this is epic.

0:32:11.600 --> 0:32:12.360
<v Speaker 5>It's epic.

0:32:12.960 --> 0:32:15.280
<v Speaker 3>Mark German, thanks for being here. We really appreciate it.

0:32:15.320 --> 0:32:25.960
<v Speaker 7>Thanks guys.

0:32:28.040 --> 0:32:29.600
<v Speaker 3>This show is produced by Stacey Wong.

0:32:29.920 --> 0:32:33.959
<v Speaker 2>Magnus Hendrickson is our supervising producer, Amy keenar editor, and

0:32:34.000 --> 0:32:37.800
<v Speaker 2>Brendan Francis Newnham is our executive producer. Sage Bauman heads

0:32:37.800 --> 0:32:41.400
<v Speaker 2>Bloomberg Podcasts. If you have a minute, please let us

0:32:41.440 --> 0:32:44.120
<v Speaker 2>know what you think. This show is in development. We're

0:32:44.120 --> 0:32:46.640
<v Speaker 2>still working on it and we really want to hear

0:32:46.680 --> 0:32:49.719
<v Speaker 2>your thoughts. Email us at Everybody's with an S at

0:32:49.720 --> 0:32:54.120
<v Speaker 2>the end at Bloomberg dot net. That's Everybody's at Bloomberg

0:32:54.240 --> 0:32:56.520
<v Speaker 2>dot net. Thank you for listening and we'll see you

0:32:56.600 --> 0:32:57.040
<v Speaker 2>next week.

0:33:01.720 --> 0:33:04.680
<v Speaker 6>He ed to factor and to factor