WEBVTT - AI, Labor, Stocks, Ford, and Commodities (Podcast) 0:00:00.080 --> 0:00:02.880 Paul, we have Welcome to the Bloomberg Markets Podcast. I'm 0:00:02.920 --> 0:00:05.200 Paul Sweene. It alongside my co host Matt Miller. 0:00:05.680 --> 0:00:09.640 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.880 and Bloomberg experts, along with the essential market news right 0:00:14.040 --> 0:00:15.440 to talk about Bloomberg Markets. 0:00:15.200 --> 0:00:18.600 Podcast podcasts or wherever you listen to podcasts and at 0:00:18.640 --> 0:00:20.480 Bloomberg dot com slash podcast. 0:00:20.560 --> 0:00:24.640 And then Dan ives over at web Bush, who, as 0:00:24.680 --> 0:00:28.040 we know, is definitely someone who's a well known tech bull. 0:00:28.400 --> 0:00:30.360 And you actually released Wait. 0:00:30.280 --> 0:00:33.479 You have to do a fashion update before you do anything. 0:00:33.600 --> 0:00:36.559 We have to take a look at this disturb and 0:00:36.640 --> 0:00:39.920 Dan streaming on YouTube, so you can't hide the shirt. 0:00:39.920 --> 0:00:40.440 It's out there. 0:00:41.040 --> 0:00:43.960 Okay, I love it. 0:00:43.960 --> 0:00:46.160 It's great. So you were talking to your clients about 0:00:46.159 --> 0:00:48.760 how you still see tex stocks againing about twelve to 0:00:48.840 --> 0:00:51.360 fifteen percent in the second half of the year even 0:00:51.400 --> 0:00:54.760 after this gang buster riley that we've seen in gross stocks, 0:00:54.760 --> 0:00:57.520 obviously led by Ai. Tell us about your case when 0:00:57.560 --> 0:00:59.800 it comes to continued strength there in the second half. 0:00:59.840 --> 0:01:02.560 But look, we believe it's a new tech bowl market 0:01:02.760 --> 0:01:06.080 that's forming and ultimately something that's covered tech. Going back 0:01:06.120 --> 0:01:09.800 to nineties. This I view as a nineteen ninety five 0:01:09.880 --> 0:01:13.160 Internet movement, in other words, not nineteen ninety nine dot 0:01:13.200 --> 0:01:16.400 com bubble burst. You know, I believe based on everything 0:01:16.400 --> 0:01:20.720 we've done, this is the biggest transformational tech trend that 0:01:20.840 --> 0:01:23.040 we've seen. And we were talking about a trillion dollars 0:01:23.040 --> 0:01:26.000 of incremental spend that's now coming into the tech ecosystem, 0:01:26.280 --> 0:01:28.559 which is why, in my opinion, this is a green 0:01:28.640 --> 0:01:30.640 light to own tech. I think it's gonna get broad 0:01:30.680 --> 0:01:33.560 and broader in terms of the rally. And many of 0:01:33.600 --> 0:01:36.760 the bears that continue to say this is hype, they're 0:01:36.840 --> 0:01:40.959 not talking to the CIOs, the CTOs, the it spent 0:01:41.360 --> 0:01:43.640 where well, I think it's something unlike I've ever seen. 0:01:44.120 --> 0:01:45.400 And that's kind of where I wanted to go down 0:01:45.400 --> 0:01:48.360 because you've got this perspective, long time perspective in the 0:01:48.400 --> 0:01:51.480 tech space. In your words, when you're talking to your 0:01:51.480 --> 0:01:53.240 institutional investor clients, and I know you've been on the 0:01:53.320 --> 0:01:57.600 road a lot, what how do you define AI Artificial intelligence? 0:01:57.600 --> 0:02:00.960 Because I hear it thrown about by every company that 0:02:01.120 --> 0:02:03.320 walks through that door, whether they're selling pet food or 0:02:03.320 --> 0:02:05.200 whether they're a tech company. It's everywhere. 0:02:05.200 --> 0:02:07.760 It seems like, well, ultimately, it's really like when you 0:02:07.800 --> 0:02:10.040 think about the shift to cloud and what we've seen 0:02:10.080 --> 0:02:13.239 with data processing power, it was all about you have data, 0:02:13.760 --> 0:02:16.920 whether it's coming in consumer tech, but how do you 0:02:17.040 --> 0:02:20.480 ultimately monetize how do you ultimately mind that data? When 0:02:20.480 --> 0:02:23.280 you look at the models coming out, of course it's Nadella, 0:02:23.480 --> 0:02:26.880 Microsoft Chat, GPT really lead in Nvidia in terms of 0:02:26.919 --> 0:02:29.960 the foundation, this is the start of what I'll cause 0:02:29.960 --> 0:02:32.600 an AI revolution. The use cases now that we're seeing, 0:02:32.720 --> 0:02:36.640 Let's give example, developers, they potentially now could do things 0:02:36.680 --> 0:02:37.640 in an hour that. 0:02:37.600 --> 0:02:38.560 Took them three weeks. 0:02:39.639 --> 0:02:43.480 Advertising could Ultimately there's there's use cases things that could 0:02:43.480 --> 0:02:47.520 take a month now could take basically two hours. And 0:02:47.680 --> 0:02:51.080 the and who benefits it's the software, it's the chips, 0:02:51.120 --> 0:02:53.919 it's the echo sit That's why I believe this this 0:02:54.000 --> 0:02:56.680 is a gold rush that really is going to define, 0:02:56.680 --> 0:03:00.519 in my opinion, a new bowl market for tech that's 0:03:00.600 --> 0:03:01.160 just starting. 0:03:01.240 --> 0:03:03.960 When you were talking about how you're having these conversations 0:03:03.960 --> 0:03:07.320 with these industry players, what specifically are they telling you 0:03:07.360 --> 0:03:09.399 and where are those pockets of strength when it comes 0:03:09.440 --> 0:03:11.000 to say enterprise spending. 0:03:11.400 --> 0:03:13.359 Yeah, and I think part is we go back. 0:03:13.600 --> 0:03:17.280 We sat here in January right hard Landing, dark clouds, 0:03:17.440 --> 0:03:20.600 Armaguet and the whole. So obviously none of that's happened. 0:03:20.600 --> 0:03:24.440 But now the differences at enterprise from a CIO perspective, 0:03:24.880 --> 0:03:28.200 they've gone from yellow light to now potentially green light. 0:03:28.760 --> 0:03:32.480 And you're starting to see ultimately they're looking, they're looking 0:03:32.520 --> 0:03:35.040 over the road and they're not seeing cars company and 0:03:35.560 --> 0:03:39.480 it's ai that today is less than one percent it spend. 0:03:39.840 --> 0:03:42.840 We think next year that's potentially eight to ten percent. 0:03:43.120 --> 0:03:43.360 Wow. 0:03:43.600 --> 0:03:44.960 And that's that's. 0:03:44.840 --> 0:03:47.560 Ultimately look in my view, and it's totally in PA. 0:03:47.720 --> 0:03:51.560 I've talked about it for decades. Is that the transformational 0:03:51.680 --> 0:03:53.800 tech themes if you put them in and you talk 0:03:53.800 --> 0:03:56.520 about you know, evaluation, downgrade today and meta, you put 0:03:56.560 --> 0:04:00.320 them in a little pe box on some historical doing 0:04:00.320 --> 0:04:03.720 your spreadsheet valuations from your office building. I get it 0:04:04.560 --> 0:04:06.960 to me, you can't put them in that box. That's 0:04:07.000 --> 0:04:10.600 why ultimately you've missed the Apples, the Tesla's, the Netflix, 0:04:10.720 --> 0:04:14.440 the metas and everything else if you don't understand the 0:04:14.480 --> 0:04:16.560 transformational growth theme. And that's why right now I think 0:04:16.560 --> 0:04:19.200 it's the fourth Industrial Revolution that's planning out. 0:04:19.400 --> 0:04:22.080 Now what we've seen, and I guess it feels to me, 0:04:22.440 --> 0:04:24.839 Dan that we are in the very top of the 0:04:24.880 --> 0:04:29.040 first inning here, and what we're saying, what we're hearing 0:04:29.040 --> 0:04:31.279 from people like you and from others in the tech space, 0:04:31.360 --> 0:04:34.719 is just buy some of the really good tech names 0:04:34.760 --> 0:04:38.200 that receive the tech spend anyway. They're going to be 0:04:38.200 --> 0:04:41.360 on the forefront when and that's a Microsoft for example, 0:04:41.440 --> 0:04:44.039 and some others, and in the chip companies, when do 0:04:44.080 --> 0:04:47.200 you think there will be that Facebook moment, that Google 0:04:47.240 --> 0:04:52.799 moment where we're a company born of AI. Like Google 0:04:52.920 --> 0:04:55.560 was for search, Facebook was for social, When do you 0:04:55.560 --> 0:04:59.479 think we'll have that first big AI born company and 0:04:59.520 --> 0:05:00.760 where it come from? 0:05:00.800 --> 0:05:02.760 Well, I think also a lot of those AI born 0:05:02.880 --> 0:05:06.360 companies potentially might get acquired before they're actually born. 0:05:06.360 --> 0:05:07.160 And I think that's why. 0:05:07.080 --> 0:05:10.320 You can see massive consolidation across tech right. A lot 0:05:10.360 --> 0:05:12.520 of these tech companies have more cash in some countries. 0:05:13.120 --> 0:05:15.000 But then I think if you look at it by 0:05:15.000 --> 0:05:18.400 the d I think over the next few quarters, we're 0:05:18.400 --> 0:05:20.920 gonna have what I'll call that Apple two thousand and 0:05:21.000 --> 0:05:24.640 seven iPhone moment, that Internet nineteen ninety five moment. We 0:05:24.720 --> 0:05:26.800 saw it with the guidance heard around the world from 0:05:26.880 --> 0:05:29.839 Jensen and Video the four billion dollar guidance raise. But 0:05:29.920 --> 0:05:32.400 I think that's what we're starting to see right now. 0:05:32.520 --> 0:05:34.520 Even when we come to earnings over the next month. 0:05:34.800 --> 0:05:37.880 Of course, investors are going to focus on what numbers 0:05:37.920 --> 0:05:41.039 look like guidance next quarter or two, But there's a 0:05:41.160 --> 0:05:44.240 much bigger story playing out here, and that's why I 0:05:44.279 --> 0:05:46.160 think a lot of these technames continue to be Rock 0:05:46.240 --> 0:05:47.080 or Gibraltar Lake. 0:05:47.440 --> 0:05:49.279 I'm glad you brought up Apple because there's a lot 0:05:49.320 --> 0:05:51.880 of companies like that where during the Internet boom you 0:05:51.920 --> 0:05:54.359 might not have realized certain companies to that would have 0:05:54.440 --> 0:05:57.240 benefited years later. Where do you think are the winners 0:05:57.240 --> 0:06:00.000 that might be getting overlooked and where do you think potent? 0:06:00.279 --> 0:06:02.240 Are the losers right now that are just behind the game? 0:06:02.560 --> 0:06:04.640 Sure, and I think when you look at Apple, cook 0:06:04.720 --> 0:06:07.800 continues to play chess where others play checkers, and I 0:06:07.800 --> 0:06:10.880 think it's an installed based play, best install based in 0:06:10.960 --> 0:06:13.720 the world. From a consumer perspective, iPhone fifteen, I believe 0:06:13.720 --> 0:06:17.120 it's going to be a mini super cycle AI. This 0:06:17.320 --> 0:06:19.039 is just the start of what's going to be that 0:06:19.160 --> 0:06:20.719 drum roll in terms of what I've us as an 0:06:20.760 --> 0:06:23.760 AI App Store over the next twelve to eighteen months. 0:06:23.960 --> 0:06:27.279 I think that's being overlooked as an AI play. I 0:06:27.320 --> 0:06:31.720 think salesforce being overlooked from an AI perspective. I do 0:06:31.800 --> 0:06:34.520 think you have some pure play AI names, even like 0:06:34.839 --> 0:06:36.839 you look at names like palan Tier and others that 0:06:36.880 --> 0:06:39.680 are really from a use case perspective, and I think 0:06:39.720 --> 0:06:42.920 it's really the software echoesis. I think it's the software 0:06:43.080 --> 0:06:46.200 names right now that I really put an asterisk around, 0:06:46.240 --> 0:06:49.279 because that's going to get the predominant amount of Aspen. 0:06:49.880 --> 0:06:52.080 What about Adobe, because I feel like that was a 0:06:52.120 --> 0:06:54.720 player maybe people weren't focusing enough on and then all 0:06:54.720 --> 0:06:56.719 of a sudden we had that strong report when it 0:06:56.760 --> 0:06:58.880 comes to that AI potential there well. 0:06:58.800 --> 0:07:00.680 No, I think you saw from Adobe, you song from 0:07:00.680 --> 0:07:04.000 Mango dB, and I think those are the barometers that 0:07:04.040 --> 0:07:07.840 were now starting to see Adobe that's been just a 0:07:07.880 --> 0:07:10.480 phenomenal job that they've been able to mine into the 0:07:10.520 --> 0:07:14.200 install base. And I think that's just the tip of 0:07:14.280 --> 0:07:17.040 the iceberg of what I believe we're going to see 0:07:17.080 --> 0:07:19.800 over the next month. Look, we can maybe start to 0:07:19.840 --> 0:07:22.600 do some sort of you know, clock to see who 0:07:22.600 --> 0:07:25.320 could actually say AI the most in their conference rights, 0:07:25.560 --> 0:07:29.440 and that's why Krueger and to that maybe because some 0:07:29.560 --> 0:07:30.440 get above one hundred. 0:07:30.440 --> 0:07:32.200 But that's why the big question is going to. 0:07:32.240 --> 0:07:36.760 Be who are the fakes versus the real ones? 0:07:36.840 --> 0:07:39.040 So what do you think are the risks to your 0:07:39.040 --> 0:07:39.600 bowl case? 0:07:40.360 --> 0:07:45.600 So the risks clearly macro things take longer. You've had 0:07:45.760 --> 0:07:49.280 multiple expansion for six months. Investors are patient, but then 0:07:49.320 --> 0:07:52.040 all of a sudden if it doesn't come to fruition, 0:07:52.600 --> 0:07:56.920 you know, and then I think the geopolitical situation US 0:07:57.200 --> 0:07:59.920 China continues to sort of be that you know, when 0:08:00.480 --> 0:08:03.920 dark cloud. But this is going to be patience. And 0:08:03.920 --> 0:08:07.040 that's why I view it as these are moments that 0:08:07.120 --> 0:08:10.440 happen every twenty thirty years, and right now we just 0:08:10.520 --> 0:08:12.640 happen to be living through what I view as a 0:08:12.680 --> 0:08:14.160 nineteen ninety five Internet movement. 0:08:14.400 --> 0:08:18.239 All right. We mentioned Google earlier and to Just's point Losers. 0:08:18.760 --> 0:08:21.520 Initially when this kind of hit my consciousness six months ago, 0:08:21.680 --> 0:08:25.440 AI I said, oh, that's gonna be a real competitor, 0:08:25.440 --> 0:08:27.800 maybe the first real competitor to Google. And you think 0:08:27.800 --> 0:08:30.280 about just search in general, how do you think about 0:08:30.280 --> 0:08:31.679 Google and its position visa. 0:08:31.640 --> 0:08:34.199 Clearly at first black Eye in terms of coming out. 0:08:34.360 --> 0:08:36.840 They missed in Microsoft, you know, beat them to the game. 0:08:37.400 --> 0:08:40.480 I think for Google the golden goose, it's actually not Search. 0:08:41.200 --> 0:08:43.440 I think it's really the cloud. I mean that is 0:08:43.520 --> 0:08:48.000 what from an enterprise perspective, they could potentially redefine themselves 0:08:48.040 --> 0:08:50.800 on AI. And this is also it's not a zero 0:08:50.880 --> 0:08:53.560 some game. It's not just one player. We're talking about 0:08:53.720 --> 0:08:57.040 We view conservatively eight hundred billion potentially in the trillions 0:08:57.120 --> 0:08:58.880 of now incremental it spent. 0:08:59.200 --> 0:09:01.840 We're six months was not here yep. 0:09:02.000 --> 0:09:04.280 Just it's extraordinary and you've got to think, you know, 0:09:04.760 --> 0:09:08.840 a winner like Google with the engineering chops, not to 0:09:08.840 --> 0:09:11.280 mention the balance sheet, we'll be a player there. Hey, Dan, 0:09:11.320 --> 0:09:13.320 thanks so much for joining us. I appreciate you coming 0:09:13.360 --> 0:09:18.000 in studio. Despite the shirt, despite the shirt, it's good stuff. 0:09:18.360 --> 0:09:21.040 Dan ives. He's a senior analyst at wood Bush Securities, 0:09:21.040 --> 0:09:22.880 And what we love about Dan is a he's very 0:09:22.880 --> 0:09:25.760 clear and his his points and his convictions. Definitely, we've 0:09:25.760 --> 0:09:27.800 got the perspective to say, hey, let's put this into 0:09:27.800 --> 0:09:29.520 context of what we've seen in past cycles. 0:09:29.600 --> 0:09:30.760 Hey, he's been doing this a long time. 0:09:30.760 --> 0:09:32.880 He's been doing it a long time, and it's certainly 0:09:32.920 --> 0:09:35.600 helpful to us newbies trying to get our heads around 0:09:36.200 --> 0:09:39.079 what is a I looking at this market here, you know, 0:09:39.160 --> 0:09:41.080 kind of hanging in here. We're about one thirty one 0:09:41.080 --> 0:09:43.319 percent on the S and P five hundred getting in 0:09:43.720 --> 0:09:46.839 a nastac up about a half a percent. So tech is, 0:09:46.880 --> 0:09:48.920 as Dan has been saying for a long time, continues 0:09:49.480 --> 0:09:50.760 to perform. 0:09:51.520 --> 0:09:54.920 You're listening to the team Ken's are Live program Bloomberg 0:09:54.960 --> 0:09:58.320 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:58.400 --> 0:10:01.560 the iHeartRadio app and the Lower Business at or listen 0:10:01.640 --> 0:10:03.720 on demand wherever you get your podcasts. 0:10:06.040 --> 0:10:08.840 You know, one of the numbers that always sticks out 0:10:08.880 --> 0:10:10.440 of me is when we look at the Jolts number, 0:10:10.440 --> 0:10:12.160 you know, the job opening Yes, that's the number that 0:10:12.320 --> 0:10:15.400 historically ran five six million job openings, but it's been. 0:10:15.640 --> 0:10:17.800 Close to ten right consistently. 0:10:18.160 --> 0:10:20.160 You know, I'm like, where did all these people go 0:10:20.360 --> 0:10:23.640 during the pandemic. And one issue that comes up is 0:10:23.679 --> 0:10:25.559 there's some ages, maybe some people are kind of aging 0:10:25.559 --> 0:10:27.680 out of the workforce. But I want to get a 0:10:27.720 --> 0:10:30.360 sense of kind of you know, what ageism means in 0:10:30.400 --> 0:10:33.440 the labor market and for the economy. And our next 0:10:33.440 --> 0:10:36.079 guest did a lot of work on that. Mikhaela Grimm, 0:10:36.160 --> 0:10:40.880 senior economists for Alliance, joins us via Zoom. So, MICHAELA, 0:10:40.960 --> 0:10:43.400 talk to us about kind of what your work showed 0:10:43.840 --> 0:10:47.720 as it relates to agism in the workforce. Are people 0:10:47.760 --> 0:10:49.680 just simply aging out of the workforce. 0:10:51.640 --> 0:10:56.040 What we saw, especially when we looked at the pension systems, 0:10:57.400 --> 0:11:00.240 where we see the need that people should work longer 0:11:00.440 --> 0:11:02.960 or should stay longer in the work in the working 0:11:03.080 --> 0:11:09.800 age population. To cussion the demographic effect on the pension 0:11:09.800 --> 0:11:12.640 systems but on the labor markets as well, is that 0:11:12.800 --> 0:11:17.600 when politicians propose the increase of retirement age, it's often 0:11:17.640 --> 0:11:21.160 answered with protests like we saw in France, because people 0:11:21.160 --> 0:11:24.600 are afraid that they don't find the job in higher 0:11:24.640 --> 0:11:29.560 ages and that any increase in retirement age just means 0:11:29.960 --> 0:11:34.360 longer unemployment before retirement and in the end a kind 0:11:34.480 --> 0:11:36.200 of a hidden pension cut. 0:11:36.840 --> 0:11:40.319 And these fears. 0:11:41.120 --> 0:11:43.880 Are not out of the blue, because we see that 0:11:43.920 --> 0:11:47.600 in higher ages the chances to be unemployed for longer 0:11:47.640 --> 0:11:48.160 are higher. 0:11:48.679 --> 0:11:50.640 The long term unemployment. 0:11:50.160 --> 0:11:53.319 Rates of the age group fifty five plus are much 0:11:53.360 --> 0:11:57.720 higher than in the average workforce population between twenty five 0:11:57.920 --> 0:12:03.640 and fifty four. For example, and if older workers apply 0:12:03.760 --> 0:12:09.720 for a new job, they are often facing stereotypes about 0:12:10.080 --> 0:12:16.880 older workers. And given these environment, many people who get 0:12:16.960 --> 0:12:20.839 unemployed after the age of fifty five either drop out 0:12:20.880 --> 0:12:26.160 of the labor force or decide to go into a retirement. 0:12:27.360 --> 0:12:31.520 How does this differentiate when you're looking on particular regions 0:12:31.559 --> 0:12:33.959 in countries, say the US versus Europe. 0:12:35.320 --> 0:12:38.760 In the US, we see a lower rate of longer 0:12:39.080 --> 0:12:42.000 unemployment in higher ages, and it's already a little bit 0:12:42.040 --> 0:12:43.840 higher the activity. 0:12:43.480 --> 0:12:45.480 Ratio than in the U, for example. 0:12:45.840 --> 0:12:48.640 And we see also that in countries where the retirement 0:12:48.640 --> 0:12:52.559 ages are already higher, like in speed for example, on Singapore, 0:12:52.760 --> 0:12:55.840 you see much higher activity ratio is among the older 0:12:55.920 --> 0:12:56.920 workforce population. 0:12:58.160 --> 0:13:01.400 So, MICHAELA, you know, I guess I was surprised when 0:13:01.400 --> 0:13:05.600 I saw the you know, the incredible uprising public uprising 0:13:05.640 --> 0:13:08.360 in France when they were talking about raising the retirement age. 0:13:08.360 --> 0:13:10.040 I think it was from sixty two to sixty four. 0:13:10.040 --> 0:13:11.840 It didn't seem like that big a deal to me. 0:13:11.920 --> 0:13:15.760 Maybe that's just the US bias. Did that surprise you 0:13:15.880 --> 0:13:17.559 or is that consistent with some of the some of 0:13:17.600 --> 0:13:18.360 the data you've seen. 0:13:19.559 --> 0:13:22.079 Well, from the open point of view, we were surprised 0:13:22.080 --> 0:13:26.720 as well because our government agreed to increase the retirement 0:13:26.760 --> 0:13:31.000 age to sixty seven already. But we see also that 0:13:31.040 --> 0:13:34.520 in France the unemployment ratio of all the workers is 0:13:34.640 --> 0:13:38.679 higher than in Germany, for example, and therefore that was 0:13:38.720 --> 0:13:43.840 the concern, for example, that if the government pushes the 0:13:43.920 --> 0:13:47.600 retirement age sixty four, it just would mean a higher 0:13:47.679 --> 0:13:50.320 rate of our longer term of unemployment before retiring. In 0:13:50.360 --> 0:13:55.160 the end, we saw that in surveys that this was 0:13:55.280 --> 0:13:58.280 one big concern of the working edge population. 0:13:59.080 --> 0:14:01.600 When we're looking at the US specifically, what's been the 0:14:01.640 --> 0:14:05.400 main catalyst that's keeping older workers out of the workforce 0:14:05.480 --> 0:14:08.480 longer and how much did the pandemic end up exacerbating this. 0:14:11.000 --> 0:14:14.360 We we saw in service as well that many older 0:14:14.400 --> 0:14:19.760 workers decided to retire early. But we also seen in 0:14:19.760 --> 0:14:24.040 in in service of from r P that they face 0:14:24.120 --> 0:14:28.360 age discrimination. That there's example, for example, a wish to 0:14:28.520 --> 0:14:33.800 participate more in training measures, that there is a wish 0:14:34.120 --> 0:14:36.800 to have more flexible working hours, to be able to 0:14:36.960 --> 0:14:38.400 choose word to work. 0:14:39.000 --> 0:14:42.320 To have more chance to work from home, to work remotely. 0:14:42.880 --> 0:14:48.040 And still I think companies or many companies that are 0:14:48.080 --> 0:14:50.640 only not only in the US as we did not 0:14:50.840 --> 0:14:56.160 face the impact of demographic change until recently and uh 0:14:56.560 --> 0:15:00.400 it paused for example in many countries, uh at now baby, 0:15:00.440 --> 0:15:04.600 we must start to retire. Now companies feel more the 0:15:04.640 --> 0:15:08.560 pressure to adapt to the needs of an aging workforce population. 0:15:08.560 --> 0:15:11.400 That was not the case in recent years. 0:15:11.880 --> 0:15:17.360 Therefore, I think, since many workers since still face age discrimination, 0:15:18.640 --> 0:15:21.280 the step to say okay, I drop out or take 0:15:21.320 --> 0:15:23.480 a lower page job, or even have to they take 0:15:23.520 --> 0:15:26.560 a lower page job that does not fit to my 0:15:26.840 --> 0:15:28.960 qualifications than earlier time. 0:15:28.960 --> 0:15:33.120 It is an opten What subsidies are, what support? I 0:15:33.120 --> 0:15:37.960 guess can governments provide companies to maybe you know, hire 0:15:38.040 --> 0:15:41.760 more older workers. Is there anything that is there a 0:15:41.840 --> 0:15:43.440 role that governments can play in this. 0:15:45.160 --> 0:15:47.560 Well, we've seen in some countries they are already kind 0:15:47.600 --> 0:15:51.800 of advertise think campaigns in place like in Singapore. 0:15:51.200 --> 0:15:55.880 Where the there is a company, the government. 0:15:55.480 --> 0:16:01.360 Tries to to push for a cultural change, for change 0:16:01.480 --> 0:16:04.040 of the perception of all the workers. But what governments 0:16:04.040 --> 0:16:07.240 can also do as we see a need for reskilling, 0:16:07.280 --> 0:16:10.040 for upskilling, for lifelong learning. 0:16:10.360 --> 0:16:11.960 It's especially. 0:16:13.120 --> 0:16:16.200 Smaller companies who often cannot afford, for example, these kind 0:16:16.240 --> 0:16:20.000 of measures. So it would be one measure to UH 0:16:20.400 --> 0:16:27.120 support companies when offering training trainings for their workers. It 0:16:27.360 --> 0:16:32.400 could be also possible to support subsidy or grant subsidies 0:16:32.520 --> 0:16:38.240 of when employing all the workers coming from long term unemployment. 0:16:39.240 --> 0:16:42.880 It would also be a measure to support part time employment. 0:16:43.200 --> 0:16:47.960 UH. It could be a measure to say, okay. 0:16:46.840 --> 0:16:54.160 We reduce contribution rates or taxes for workers after after 0:16:54.640 --> 0:16:58.600 specific age. Then other measures could be when we look 0:16:58.640 --> 0:17:02.280 at the pension systems to make it possible to combine 0:17:02.680 --> 0:17:08.040 work and retirement, part time retirement, or as I said, 0:17:08.160 --> 0:17:12.320 to come get away from the mental retirement age, make 0:17:12.560 --> 0:17:16.640 retirement ages more flexible and for example grand and right 0:17:17.200 --> 0:17:17.679 to work. 0:17:17.880 --> 0:17:22.879 Yep, all right, all interesting stuff there. Companies, countries, politicians 0:17:22.920 --> 0:17:26.200 have to think about this as the global population continues 0:17:26.240 --> 0:17:26.760 to age. 0:17:27.119 --> 0:17:30.240 You're listening to the tape cats are live program Bloomberg 0:17:30.280 --> 0:17:33.879 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:33.960 --> 0:17:37.120 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:37.240 --> 0:17:40.040 You can also listen live on Amazon Alexa from our 0:17:40.040 --> 0:17:45.120 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:17:45.520 --> 0:17:48.080 Yeah, we'll get straight to our next guest who's a 0:17:48.200 --> 0:17:53.240 veteran investor, George Bass, chairman at Sanders Bors Harris joints 0:17:53.320 --> 0:17:55.639 us on Zoom to discuss all things markets and his 0:17:55.760 --> 0:17:56.280 stock pick. 0:17:56.400 --> 0:17:58.000 You know, just when I came on Wall Street in 0:17:58.000 --> 0:18:01.480 the mid sixties, George was, I believe, the chairman of 0:18:01.560 --> 0:18:05.640 Prudential Base, which Bach company proceeded, and then Prudential bought Base, 0:18:06.359 --> 0:18:09.439 one of the top from One Street, and I'll tell 0:18:09.440 --> 0:18:11.439 you what, one of the best research departments on the. 0:18:11.400 --> 0:18:13.359 Street at the time, and we're excited for him to 0:18:13.400 --> 0:18:15.720 be here. George, I wanted to pick your brain because 0:18:15.760 --> 0:18:17.879 in the last couple of months you had been making 0:18:17.920 --> 0:18:20.399 some comments about how you thought the big tech riley 0:18:20.440 --> 0:18:22.320 had run its course, but you still were thinking the 0:18:22.320 --> 0:18:26.320 broader equity market would approach new record highs this year. 0:18:26.520 --> 0:18:28.280 Are you still thinking that'll be the case for the 0:18:28.359 --> 0:18:29.280 second half of the year. 0:18:31.680 --> 0:18:35.840 The majority of the experts, the pundits seemed to be 0:18:35.880 --> 0:18:40.399 on the side of the market weekening. As we get 0:18:40.480 --> 0:18:43.920 further into the year, there's a bit of a war 0:18:44.040 --> 0:18:46.560 between what I'd call Morgan Stanley on the one hand, 0:18:47.119 --> 0:18:52.000 which is predicating a one hundred and eighty some dollar 0:18:52.359 --> 0:18:54.960 earnings on the S and P five hundred and then 0:18:55.040 --> 0:18:59.640 the more optimistic to twenty plus s and P earnings 0:19:00.080 --> 0:19:04.320 estimates of Golden and Sacks, with again the majority of 0:19:04.359 --> 0:19:08.119 the experts, and they are smart people, falling on the 0:19:08.160 --> 0:19:14.240 more negative camp. I do think that they're wrong. And 0:19:15.640 --> 0:19:20.200 by the way, I'll say that they interest to Wall 0:19:20.240 --> 0:19:23.280 Street was more in the nineteen seventies and the sixties. 0:19:23.440 --> 0:19:28.719 But back then, way back then, five percent interest rates 0:19:29.200 --> 0:19:33.919 were common. They were accepted by business, and businesses operated 0:19:34.040 --> 0:19:38.600 very profitably with comfortable profit margins with interest rates at 0:19:38.640 --> 0:19:43.679 five percent. That's happening again today. Over the last decade, 0:19:43.720 --> 0:19:49.320 we sort of forgot that managements and consumers and the 0:19:49.400 --> 0:19:53.000 economy can live all right with interest rates at a 0:19:53.320 --> 0:19:57.119 five percent or so level, And that I think is 0:19:57.160 --> 0:19:59.800 an optimistic note for the market and earnings and the 0:20:00.000 --> 0:20:01.359 economy going forward. 0:20:02.600 --> 0:20:06.399 George, you know, technology has been such a leader of 0:20:06.400 --> 0:20:08.680 this market really since the Great Financial Crisis. I mean 0:20:08.680 --> 0:20:12.119 it just felt like, you know, really leadership position in 0:20:12.160 --> 0:20:15.000 the marketplace. Do you still think that's the case here 0:20:15.000 --> 0:20:17.600 in a world where again you've got rising interest rates 0:20:17.600 --> 0:20:20.000 into your treasuries at four point seventy five percent, Can 0:20:20.080 --> 0:20:21.000 tech still be the leader. 0:20:23.400 --> 0:20:27.359 Technology stocks have been balancing with interest rates on the 0:20:27.400 --> 0:20:33.800 assumption that the futurejourneys of technology companies will be a 0:20:33.920 --> 0:20:37.320 function of dividends paid well well out many years from now. 0:20:38.400 --> 0:20:41.800 But get back to the base case. Technology and the 0:20:41.880 --> 0:20:49.240 changes in technology are what's driving growth, productivity, constructive change 0:20:49.600 --> 0:20:56.840 in economies worldwide. That's not going to fold. My supposition 0:20:57.480 --> 0:21:03.600 is that the big, big technology companies, the fang pluses, 0:21:03.680 --> 0:21:07.280 the seven stocks that have driven almost all the games 0:21:07.320 --> 0:21:12.639 in the SMP this year, are so darn big that 0:21:12.680 --> 0:21:17.560 they can't grow very rapidly anymore. They're great companies, they're 0:21:17.600 --> 0:21:23.960 doing extremely well, they're financial fortresses, but simply as a 0:21:23.960 --> 0:21:28.840 matter of scale, they've reached the point of diminishing returns. 0:21:29.359 --> 0:21:33.680 And so I'm looking at what I term mid tech 0:21:33.760 --> 0:21:40.560 companies as the next wave of fundamentally justified, high growth, 0:21:41.480 --> 0:21:45.720 high contributor companies, where the stocks are way down from 0:21:45.760 --> 0:21:50.400 the perhaps unjustified levels of last year, but have an 0:21:50.560 --> 0:21:53.960 enormous amount of upside potential, and that's going to start 0:21:54.000 --> 0:21:57.600 to be recognized as we get into the second half 0:21:57.600 --> 0:22:01.720 of this year. So I'm saying by mid sell the 0:22:02.080 --> 0:22:05.480 big fangy type stocks as we get into the second 0:22:05.560 --> 0:22:07.480 half of twenty twenty three. 0:22:08.040 --> 0:22:12.160 George, you've held leadership positions on Wall Street for decades, 0:22:12.480 --> 0:22:15.280 again going all the way back to E. F. Hutton 0:22:15.440 --> 0:22:18.240 and Base, some of the all time iconic brands on 0:22:18.320 --> 0:22:21.840 Wall Street. What's your view of the business of Wall 0:22:21.920 --> 0:22:22.920 Street these days? 0:22:24.359 --> 0:22:27.280 The business of Wall Street is much more commoditized these 0:22:27.359 --> 0:22:31.439 days than it was back then, but it is still 0:22:31.560 --> 0:22:39.120 the found from which money for companies to grow and 0:22:39.160 --> 0:22:44.600 to expand and to diversify comes. And it's also probably 0:22:44.680 --> 0:22:49.720 the best place for individuals to put their savings, their 0:22:49.720 --> 0:22:53.399 excess cash to work. So Wall Street continues to be 0:22:53.560 --> 0:22:58.000 a marvelous place, much less humanistic than it used to be, 0:22:58.760 --> 0:23:02.040 but vital to the economy and by the way, one 0:23:02.080 --> 0:23:09.000 of our big national advantages. We have the ability to 0:23:09.160 --> 0:23:14.080 create money for growth much more efficiently than other economies, 0:23:14.200 --> 0:23:17.520 and it's apt to give us a competitive edge that 0:23:18.000 --> 0:23:20.240 extends into the next twenty or thirty years. 0:23:20.600 --> 0:23:22.399 With that said, George, we got to know what are 0:23:22.400 --> 0:23:25.000 your top stock picks. 0:23:25.640 --> 0:23:32.560 Well, again, consistent with my mid tech theory, I would 0:23:32.680 --> 0:23:39.280 use as example specifics but also as examples Teledoc. Teledoc 0:23:39.480 --> 0:23:44.840 reaches over fifty million Americans. It's a company that is 0:23:44.880 --> 0:23:48.480 not yet profitable all those cash flow positive. If they 0:23:48.480 --> 0:23:53.080 can take just a fair slice of their client or 0:23:53.119 --> 0:23:56.720 patient base and convert it to a subscription model at 0:23:57.200 --> 0:24:01.280 fair economic prices, they have enormous ability to earn a 0:24:01.320 --> 0:24:06.640 great deal of money. Trade desk is what the ad 0:24:06.640 --> 0:24:10.680 agencies were back in the nineteen sixties and seventies when 0:24:10.720 --> 0:24:14.960 I started. Trade desk is a way of placing advertising 0:24:15.119 --> 0:24:20.840 or seeking advertisers on an efficient basis, and its ability 0:24:20.920 --> 0:24:25.679 to grow exponentially over the next ten years is I 0:24:25.720 --> 0:24:34.640 think almost unrivaled. Mercarlil Libra, the Amazon of South America 0:24:34.640 --> 0:24:39.359 and Central America is very profitable, but it's just scratching 0:24:39.720 --> 0:24:43.680 the surface. So that's a trio of mid tech companies. 0:24:43.720 --> 0:24:50.800 They're sizable, but they're converting from a revenue growth model 0:24:51.080 --> 0:24:52.919 to a profit growth model. 0:24:54.000 --> 0:24:56.639 George, one of the themes that's really come into this 0:24:56.720 --> 0:25:00.639 market over the last year or so is artificial intelligence AI. 0:25:00.720 --> 0:25:03.359 And we had a well regarded Wall Street analyst earlier 0:25:03.400 --> 0:25:08.720 says this is like the nineteen eighty five Internet Aha moment, 0:25:08.920 --> 0:25:11.680 or you know, kind of like when a Google came 0:25:11.680 --> 0:25:13.440 on and we said Oh boy, this is a big 0:25:14.080 --> 0:25:17.480 moment for the internet. He said, it's something akin to that. 0:25:18.200 --> 0:25:21.080 How do you view this thing called artificial intelligence AI? 0:25:21.520 --> 0:25:24.600 It really seems to be the theme of the tech 0:25:24.640 --> 0:25:26.960 world these days. 0:25:27.680 --> 0:25:29.639 I'm going to sound like an old fogy and that 0:25:30.600 --> 0:25:32.320 really bothers me. They don't want to do it. I'd 0:25:32.359 --> 0:25:37.159 rather take a different view. Yeah, AAI is a marvelous 0:25:37.200 --> 0:25:41.199 step forward because it's going to give people access in 0:25:41.640 --> 0:25:45.200 multi dimensions to all of the wealth of knowledge of 0:25:47.320 --> 0:25:51.639 the world, and it will write things that will seek 0:25:51.720 --> 0:25:56.240 things that will display things brilliantly and very helpfully. But 0:25:57.680 --> 0:26:03.560 it is not predictive. It is a look into the 0:26:03.680 --> 0:26:07.119 database of what's known up to now, and so I 0:26:07.160 --> 0:26:10.040 don't think it's going to be transformative in the sense 0:26:10.080 --> 0:26:13.760 of being the fuel cell of growth the way many 0:26:13.800 --> 0:26:17.600 people are predicting. I don't think it's a fat or 0:26:17.600 --> 0:26:22.280 a bubble. But I think it's importance in the economic 0:26:22.280 --> 0:26:25.720 future of our country and of the world is overstated. 0:26:26.720 --> 0:26:31.280 You know, the past is destructive, but it's not predictive, 0:26:32.000 --> 0:26:35.600 and so AI is important but not transformative in my 0:26:36.040 --> 0:26:37.400 perhaps geriatric view. 0:26:37.640 --> 0:26:40.679 No, it's a perfectly relevant view. And but lastly, George, 0:26:40.720 --> 0:26:42.920 I have to ask, are you an Aspen Colorado right now? 0:26:45.000 --> 0:26:47.720 No, I'm in the Salt Colorado. If you can't quite 0:26:47.760 --> 0:26:50.480 afford to be an Aspen, you've got ten miles down there. 0:26:50.880 --> 0:26:53.000 All right, wherever you are in Colorado, I'm just where 0:26:53.000 --> 0:26:53.239 I am. 0:26:53.280 --> 0:26:53.640 All right. 0:26:53.680 --> 0:26:55.480 Wherever you are in Colorado, I'm just going to suggest 0:26:55.480 --> 0:26:57.639 you might be a little overdressed. You look very solid 0:26:57.680 --> 0:27:00.679 for Wall Street, but I think the Colorado and for 0:27:00.760 --> 0:27:03.960 Bloomberg Markets next time you can certainly go a little 0:27:04.000 --> 0:27:06.679 bit more casual if you're in Colorado. George Ball everyone 0:27:07.160 --> 0:27:12.280 just literally an iconic person on Wall Street. He's the 0:27:12.320 --> 0:27:15.080 chairman of Sanders Mars Harris, but has really been a 0:27:15.200 --> 0:27:19.560 leader on Wall Street for decades, I mean CEO level leader, 0:27:20.000 --> 0:27:22.840 and it's just amazing the career he's had. Again, it 0:27:22.880 --> 0:27:24.399 goes all the way back to E. F. Hutton and 0:27:24.440 --> 0:27:28.200 you kids can look that up. Base Company another fantastic firm, 0:27:28.240 --> 0:27:31.159 bought by Prudential Securities when it became Prudential Base and 0:27:31.160 --> 0:27:33.919 then Potential Securities and again one of the leading firms 0:27:34.000 --> 0:27:35.879 on the street. So George has seen it all. We 0:27:35.920 --> 0:27:38.960 appreciate getting a few minutes of his time. 0:27:40.119 --> 0:27:43.520 You're listening to the team Ken's are live program Bloomberg 0:27:43.560 --> 0:27:46.959 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:27:47.000 --> 0:27:50.160 the iHeartRadio app, and the Bloomberg Business App, or listen 0:27:50.240 --> 0:27:52.360 on demand wherever you get your podcasts. 0:27:54.280 --> 0:27:58.080 All right, let's talk about our good friends at Amazon. 0:27:58.119 --> 0:28:00.000 We've all got boxes probably sitting in front of our 0:28:00.080 --> 0:28:03.199 doors as we speak, are good friends at Amazon. And 0:28:03.240 --> 0:28:05.840 then there's a little thing called Prime. I'm a huge 0:28:05.840 --> 0:28:09.720 fan of Prime. Free delivery, gets created, the audio video service, 0:28:09.760 --> 0:28:11.240 all kinds of stuff kind of wrapped up in there. 0:28:11.720 --> 0:28:13.920 But apparently the FTC has taken a look at this thing. 0:28:13.960 --> 0:28:17.200 Matt Sheltenham, he's a senior litigation analyst. That means he's 0:28:17.240 --> 0:28:20.200 an attorney, but he's come over from the dark side 0:28:20.240 --> 0:28:22.159 and he's working on Wall Street and giving us some 0:28:22.200 --> 0:28:26.040 good research for Bloomberg Intelligence. Here, Matt talked to just 0:28:26.119 --> 0:28:29.960 describe what the issue f the FTC has with Amazon 0:28:30.320 --> 0:28:31.640 and its Prime business. 0:28:32.400 --> 0:28:35.760 Yeah, Paul, we saw this this emerge somewhat surprisingly last 0:28:35.800 --> 0:28:39.400 week when when the FDC filed this lawsuit on Wednesday 0:28:39.600 --> 0:28:44.840 alleging that Amazon has tricks or duped millions of consumers 0:28:44.880 --> 0:28:50.040 into signing up for Prime and and and in particular 0:28:50.120 --> 0:28:55.600 for the automatic renewal of those Prime membership and and 0:28:55.600 --> 0:28:59.520 and the allegation is that that violates a federal law 0:29:00.240 --> 0:29:05.000 and that Amazon's potentially on the hook for, you know, 0:29:05.200 --> 0:29:08.800 hundreds of millions of dollars or more in damages for 0:29:09.320 --> 0:29:12.280 or tricking consumers into staying with the program that they 0:29:12.280 --> 0:29:13.600 don't really want to be a part of. 0:29:14.200 --> 0:29:16.320 And it's interesting because going through this, it says the 0:29:16.360 --> 0:29:19.280 FTC was talking about how consumers must click through five 0:29:19.440 --> 0:29:22.120 pages on the desktop web store or six on the 0:29:22.160 --> 0:29:25.600 mobile app to cancel Prime, so clearly making it pretty 0:29:25.600 --> 0:29:29.360 difficult right for consumers to try to cancel this. I mean, 0:29:29.360 --> 0:29:32.000 how much and how far do you think this potential 0:29:32.320 --> 0:29:33.560 case could potentially go? 0:29:34.360 --> 0:29:38.240 Yeah, so, I mean that's exactly the allegation. What's really 0:29:38.280 --> 0:29:43.240 the big unknown here, though, is what is simple? The 0:29:43.360 --> 0:29:49.960 law requires a simple mechanism for subscribers to cancel automatic 0:29:50.000 --> 0:29:51.080 renewal plans like this. 0:29:51.200 --> 0:29:53.600 How about the time to the cable telephone company, cable 0:29:53.600 --> 0:29:56.160 television companies? How hard is that to cancel? 0:29:56.640 --> 0:29:59.120 Exactly? And that's exactly what you're going to hear from 0:29:59.120 --> 0:30:02.520 Amazon in the case is look at all these other 0:30:02.640 --> 0:30:05.200 businesses that make it so difficult. You got you want 0:30:05.200 --> 0:30:07.360 to cancel your gym membership, You got to go into 0:30:07.400 --> 0:30:10.040 the gym to to you know, find somebody to talk to. 0:30:10.640 --> 0:30:13.600 Other companies require you to call somebody on the line. 0:30:13.680 --> 0:30:16.520 Here we're talking about six clicks and and yeah, there 0:30:16.520 --> 0:30:19.480 are some extra hoops along the way, but there's very 0:30:19.520 --> 0:30:22.080 little guidance in the law on what is simple and 0:30:22.120 --> 0:30:24.520 what isn't. And so you know, I think there's a 0:30:24.680 --> 0:30:27.400 there's a real argument for Amazon to make here that 0:30:27.440 --> 0:30:31.960 the FDC is really straining to argue that that that 0:30:32.280 --> 0:30:35.000 the six clicks process violates the law. 0:30:36.040 --> 0:30:38.640 I mean, to me, first of all, I don't feel 0:30:38.720 --> 0:30:39.680 like like I was duped. 0:30:40.280 --> 0:30:42.480 I actually had an issue when it came to Audible 0:30:42.720 --> 0:30:45.800 when it comes to their podcast. I actually went through 0:30:45.800 --> 0:30:47.520 this a couple of months ago where I canceled and 0:30:47.560 --> 0:30:49.800 then kept getting charged and had it called up and 0:30:49.840 --> 0:30:52.880 go through this. So it's interesting now that but I 0:30:52.960 --> 0:30:55.280 kind of felt a little miffed there when that had 0:30:55.320 --> 0:30:56.000 happened to me. 0:30:56.760 --> 0:31:01.200 So, Matt, what is what's Amazon's mo when dealing with regulars? 0:31:01.240 --> 0:31:03.200 Do they just like settle these things out of court 0:31:03.320 --> 0:31:05.000 or do they fight them to toth and nail. 0:31:05.560 --> 0:31:08.920 Yeah. So, I mean for a company like Amazon, it's 0:31:08.920 --> 0:31:11.480 really hard for a suit like this to to be 0:31:11.840 --> 0:31:15.520 too threatening. But one reason it does matter is that 0:31:15.560 --> 0:31:20.240 the FTC's power to impose penalties is very broad. In theory, 0:31:20.320 --> 0:31:24.959 the FTC can impose fifty thousand dollars per violation, and 0:31:25.000 --> 0:31:28.520 that can be counted by user, So you start to 0:31:28.520 --> 0:31:30.920 go one hundred million times fifty thousand and you get 0:31:30.920 --> 0:31:33.720 to some gigantic number with lots of zeros at the end. 0:31:33.800 --> 0:31:38.400 So Amazon has to pay attention to this, especially when 0:31:38.480 --> 0:31:41.640 when the leader of the FTC, Lena Khan, is looking 0:31:41.680 --> 0:31:46.880 to be very aggressive in grow going after companies like Amazon. So, 0:31:47.480 --> 0:31:49.600 you know, I think Amazon would be happy to settle 0:31:49.640 --> 0:31:52.360 it for a small you know, a small figure, you know, 0:31:52.840 --> 0:31:56.880 relatively quickly. It's it's it's unclear whether the FTC would 0:31:56.920 --> 0:31:59.240 go on you know, be on board with that right away. 0:31:59.280 --> 0:32:02.560 But you know, I really do think Amazon has a 0:32:02.560 --> 0:32:06.120 good chance to prevail in this litigation, but it's going 0:32:06.160 --> 0:32:08.720 to take time, and so I do expect it to 0:32:08.720 --> 0:32:11.720 play out for a couple of years before we see 0:32:11.760 --> 0:32:14.280 a resolution. But it's really hard to see the FTC 0:32:14.480 --> 0:32:18.840 winning a material damage amount against Amazon here. 0:32:18.920 --> 0:32:23.000 Ultimately, so the timetable, like you said, being potentially a 0:32:23.040 --> 0:32:24.520 couple of years when it comes to this. 0:32:25.280 --> 0:32:27.239 Yeah, that's what I think. So I you know, this 0:32:27.400 --> 0:32:30.960 was just filed last Wednesday. I think you're likely to 0:32:30.960 --> 0:32:33.880 see a couple rounds of this litigation. And you know, 0:32:33.920 --> 0:32:36.160 the big risk for Amazon is this gets to a 0:32:36.240 --> 0:32:40.400 jury that that could could potentially offer you know, a 0:32:40.480 --> 0:32:44.640 damages award in the millions or even billions of dollars. 0:32:44.680 --> 0:32:46.720 That's what you can't let happen. But there are two 0:32:46.800 --> 0:32:50.120 steps in the litigation and process before we get there. One, 0:32:50.200 --> 0:32:52.640 Amazon can file a most into the myth, the whole 0:32:52.640 --> 0:32:55.320 thing and say, look, this doesn't even state a valid claim. 0:32:55.680 --> 0:32:58.040 I don't think that will work. It has a chance. 0:32:58.400 --> 0:33:01.680 But then even after a year or two of discovery, 0:33:01.760 --> 0:33:04.240 when they dive into the evidence, Amazon can say, look, 0:33:04.840 --> 0:33:07.680 the FTC collected all this evidence and there's still not 0:33:08.120 --> 0:33:10.640 a case that should go to a jury. That's point 0:33:10.680 --> 0:33:13.120 I think Amazon has a really good, good argument to 0:33:13.160 --> 0:33:16.400 the judge to say, look, Amazon's process may not have 0:33:16.440 --> 0:33:19.640 been perfect, but you know it's probably enough to qualify 0:33:19.680 --> 0:33:23.440 as a simple mechanism under this unclear standard under the law. 0:33:23.880 --> 0:33:25.520 So yeah, I think that's going to take a couple 0:33:25.560 --> 0:33:28.680 of years before we see any action, and certainly before 0:33:28.720 --> 0:33:31.360 it goes to a jury in a trial like setting. 0:33:31.760 --> 0:33:34.600 Hey, Matt, We've been talking to jenre who covers antitrust 0:33:34.600 --> 0:33:36.920 for Bloomberg Intelligence, and just talking about kind of the 0:33:37.440 --> 0:33:40.880 regulatory environment out there for businesses, particularly big tech, and 0:33:40.920 --> 0:33:42.880 it's really tough for big tech companies to really do 0:33:42.920 --> 0:33:46.760 anything here from your perspective, from the litigation side, what's 0:33:46.800 --> 0:33:50.160 the environment like out there for business? Is it tougher 0:33:50.200 --> 0:33:53.720 to do business as a government really taking a harder line. 0:33:54.600 --> 0:33:58.400 It's certainly there's been a change, certainly in you know, 0:33:58.480 --> 0:34:01.240 the past five to ten years in Washington, d C. 0:34:01.400 --> 0:34:04.040 On the regulation side, you know, we had this idea 0:34:04.080 --> 0:34:06.800 that for for a couple of decades, look, it's best 0:34:06.800 --> 0:34:08.759 to get out of the way of the Internet, let 0:34:08.840 --> 0:34:12.480 the Internet thrive. Everything is sort of changed in terms 0:34:12.520 --> 0:34:15.600 of policy in terms of okay, maybe we went too 0:34:15.640 --> 0:34:18.000 far in that direction, And you're seeing the same thing 0:34:18.080 --> 0:34:21.560 on the litigation side, where class act and lawyers the 0:34:21.840 --> 0:34:27.000 opportunities to go after companies like like Meta and Google 0:34:27.239 --> 0:34:31.200 for you know, potentially addictive social media you're seeing second 0:34:31.239 --> 0:34:34.520 in two thirty, the liability field that has long protected 0:34:34.560 --> 0:34:38.839 these companies suddenly people suggesting, maybe we've we've read that 0:34:38.880 --> 0:34:41.560 liability field too broadly, maybe we should be able to 0:34:41.560 --> 0:34:45.759 do these companies about harms and so it's it's it's 0:34:45.760 --> 0:34:50.080 an on thlought of different attacks that they didn't face 0:34:50.239 --> 0:34:52.520 five or ten years ago. That doesn't mean they're going 0:34:52.600 --> 0:34:56.360 to lose these cases. The companies have strong defenses to 0:34:56.440 --> 0:34:59.319 a lot of the claims, but it's definitely a more 0:34:59.360 --> 0:35:01.799 difficult and vironment than it was a couple of years back. 0:35:02.200 --> 0:35:05.239 And that's why Bloomberg Intelligence has a bunch of analysts 0:35:05.239 --> 0:35:08.480 and lawyers and smart people down in Washington with their 0:35:08.480 --> 0:35:10.560 fingers on the pulse of what's happening down there, so 0:35:10.840 --> 0:35:14.000 they can provide some very valuable research to Bloomberg customers. 0:35:14.000 --> 0:35:15.920 So Matt Shunholm is certainly one of them. He's a 0:35:15.960 --> 0:35:20.279 senior litigation analyst for Bloomberg Intelligence space down in Washington, DC. 0:35:20.480 --> 0:35:22.520 So we'll have to follow that. For Amazon, the numbers, 0:35:22.760 --> 0:35:24.840 you know, relative to its market cap arn't material, but 0:35:24.880 --> 0:35:27.160 it goes to one of the one of their core 0:35:27.200 --> 0:35:30.400 business practices here. So we'll see how they continue to 0:35:30.400 --> 0:35:32.320 fight this. But again, it's tough to fight the government 0:35:32.360 --> 0:35:34.680 and the Federal Trade Commission. But I guess if anybody 0:35:34.680 --> 0:35:36.240 can do it, it's Amazon. 0:35:36.640 --> 0:35:39.759 You're listening to the tape Cat's are live program Bloomberg 0:35:39.840 --> 0:35:43.719 Markets weekdays at ten am Eastern on Bloomberg Radio, tune 0:35:43.760 --> 0:35:46.719 in app, Bloomberg dot Com, and the Bloomberg Business app. 0:35:46.760 --> 0:35:49.560 You can also listen live on Amazon Alexa from our 0:35:49.600 --> 0:35:54.719 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:35:55.320 --> 0:35:56.920 Let's get right to our next guest because we get 0:35:56.960 --> 0:35:57.800 to live to the instrument. 0:35:57.880 --> 0:35:58.720 Yes in studio. 0:35:58.800 --> 0:35:59.239 I love this. 0:35:59.280 --> 0:36:02.600 I know Kevin Time and senior automotive analyst for Bloomberg Intelligence. 0:36:02.600 --> 0:36:05.160 He's based down on our Printson campus. But in case 0:36:05.239 --> 0:36:07.200 he gets up to the big town, Kevin, thanks so 0:36:07.239 --> 0:36:10.040 much for joining us. Lots of ways to go here, 0:36:10.040 --> 0:36:12.680 but first I gotta start your Mercedes that you drive 0:36:12.719 --> 0:36:14.400 as a V twelve it is does that means it 0:36:14.400 --> 0:36:17.080 has twelve cylinders twelve Cylin, and I have six in 0:36:17.160 --> 0:36:19.360 my car. That's right, So you have twice as many, 0:36:19.480 --> 0:36:20.120 that's correct. 0:36:20.400 --> 0:36:23.239 Why it's and it's Here's the beautiful thing is it's 0:36:23.280 --> 0:36:29.000 a two thousand and one Roadster V twelve with I 0:36:29.000 --> 0:36:31.719 don't know, ninety six thousand miles on it. So my 0:36:32.040 --> 0:36:35.680 carbon footprint is actually smaller than anybody who. 0:36:35.840 --> 0:36:37.680 Made them build a new EV. 0:36:39.000 --> 0:36:40.480 All right, that's all I say. I had to clear 0:36:40.520 --> 0:36:42.480 that up there. I thought I was a tough guy 0:36:42.520 --> 0:36:44.640 with six cylinders, but you got your driving around twelve. Great, 0:36:44.719 --> 0:36:47.200 all right, let's start with Ford. Ford cutting some jobs here. 0:36:48.400 --> 0:36:49.839 Why yeah. 0:36:49.920 --> 0:36:52.840 You know, what I thought was interesting about this was 0:36:52.920 --> 0:36:57.560 that you don't have this condition in the industry, or 0:36:57.560 --> 0:37:01.359 at least in North America, of oversupply, right like too big, 0:37:01.480 --> 0:37:05.040 too much product, too much production capacity, and we need 0:37:05.080 --> 0:37:05.720 to cut back. 0:37:06.000 --> 0:37:06.160 You know. 0:37:06.280 --> 0:37:09.239 Inventory on the ground industry wide now in the US 0:37:09.320 --> 0:37:12.479 is about half what it was at the peak, which 0:37:12.480 --> 0:37:16.480 would be peak volumeer was twenty sixteen, seventeen and a 0:37:16.480 --> 0:37:19.440 half million. Yep, we'll do fifteen this year, fifteen and 0:37:19.480 --> 0:37:23.440 a half at the outside, you know. So inventory is 0:37:23.520 --> 0:37:28.440 really in line with demand for the most part, and 0:37:28.480 --> 0:37:35.120 you're seeing rationalization of costs still, which my conclusion is 0:37:35.120 --> 0:37:37.560 is that this industry is very different than what it 0:37:37.640 --> 0:37:40.240 used to be, which was a lot of fixed costs, 0:37:40.360 --> 0:37:43.759 a lot of overhead produce produced, produce, figure out how 0:37:43.760 --> 0:37:48.239 to sell it tomorrow by giving it away incentives, discounting, 0:37:48.680 --> 0:37:51.560 lease deals, whatever it is. And to me, these job 0:37:51.600 --> 0:37:54.840 cuts really show that the mindset of the manufacturers auto 0:37:54.880 --> 0:37:58.200 manufacturers is we're not going back to that world. 0:37:59.320 --> 0:38:02.560 I wanted to toward Tesla because we are seeing at 0:38:02.600 --> 0:38:05.080 stock higher more than one percent today, so that is 0:38:05.120 --> 0:38:08.440 pushing discretionary shares higher, and obviously it's waiting in the 0:38:08.520 --> 0:38:10.360 S and P five hundred close to about two percent. 0:38:10.400 --> 0:38:13.640 We did see that downgrade from Goldman Sachs on Tesla 0:38:13.760 --> 0:38:16.800 earlier this week, just because of the difficult pricing environment. 0:38:16.840 --> 0:38:19.520 But we saw that huge run Tesla had been on 0:38:19.920 --> 0:38:21.960 that was snapped earlier this month. Obviously it was a 0:38:22.000 --> 0:38:26.239 thirteen session span. Stock gained over forty percent. I know 0:38:26.320 --> 0:38:29.640 that Paul's been watching RSI levels very closely, so it 0:38:29.680 --> 0:38:33.439 actually got to around eighty eight eighty eight earlier this month, 0:38:33.560 --> 0:38:36.279 obviously above seventies that overbought level. But what are you 0:38:36.360 --> 0:38:38.840 seeing when it comes to Tesla's stock there and doesn't 0:38:38.840 --> 0:38:40.400 make sense that we've seen a little bit of a 0:38:40.400 --> 0:38:42.319 pullback after such a strong run like that. 0:38:42.640 --> 0:38:42.879 Yeah. 0:38:42.880 --> 0:38:47.520 Well, the difficult part, you know, as an analyst is 0:38:47.520 --> 0:38:50.319 is to make sense of what the Tesla stock does 0:38:50.360 --> 0:38:55.040 it's its own product, right, compared to what the fundamentals 0:38:55.120 --> 0:38:59.560 of that company or of the industry are. So, you know, 0:38:59.600 --> 0:39:02.560 I think the longer we go, we see that this 0:39:02.760 --> 0:39:08.759 is an automaker, right, there's obviously big technology competitive advantages, 0:39:08.800 --> 0:39:12.400 at least perceived, and we saw the idea of the 0:39:12.560 --> 0:39:16.719 charging with GM and Ford signing on with that. 0:39:16.719 --> 0:39:17.920 That pushes the. 0:39:17.880 --> 0:39:22.359 Stock price higher, But ultimately this is an automaker with 0:39:22.840 --> 0:39:25.680 automaker demand issues. I was actually driving around with my 0:39:25.719 --> 0:39:28.960 wife this weekend and we drove by one of the malls, 0:39:29.040 --> 0:39:32.200 the Quaker Bridge Mall, and there's there in the parking 0:39:32.239 --> 0:39:36.120 lot there's overflow Tesla inventory as far as the eye 0:39:36.120 --> 0:39:38.840 can see. Actually made her pull over and I got out. 0:39:38.719 --> 0:39:40.080 And took pictures for myself. 0:39:40.080 --> 0:39:42.920 But you know, so when you look at it in 0:39:43.000 --> 0:39:47.600 the from the perspective of a metal bender that needs 0:39:47.640 --> 0:39:51.560 to produce and sell, and you take some of that 0:39:51.920 --> 0:39:55.440 technology angle away from it, you're going to have those 0:39:55.560 --> 0:39:59.839 periods where the stock just just adjusts yep, and then 0:39:59.840 --> 0:40:02.319 you you're gonna have periods where there's an announcement and 0:40:02.400 --> 0:40:04.880 it makes a big difference to the upside. 0:40:04.960 --> 0:40:06.719 And one of the things I don't I'm still trying 0:40:06.760 --> 0:40:08.320 to get a sense of is if I were Tesla 0:40:08.360 --> 0:40:10.640 investor or an analyst, is kind of where it fits 0:40:10.680 --> 0:40:14.239 into a world that's going completely electric. They get all 0:40:14.280 --> 0:40:16.720 the credit in the world for being first and being really, 0:40:16.760 --> 0:40:20.040 really really good, But in a day, as you suggest, 0:40:20.080 --> 0:40:24.920 it's a metal bending business and Ford gm VW. So 0:40:24.960 --> 0:40:28.160 when I think about Tesla, Rivian, Lucid all these other ones, 0:40:28.560 --> 0:40:30.879 how do you think this industry is gonna shake out? 0:40:31.000 --> 0:40:31.200 Yeah? 0:40:31.239 --> 0:40:37.080 I think we're through a period where where markets investors 0:40:37.120 --> 0:40:39.719 talked about the auto industry like it was the tech 0:40:39.760 --> 0:40:42.520 industry or these were tech companies, and they always have 0:40:42.719 --> 0:40:45.480 been right. Automakers have always been ahead of the curve 0:40:45.480 --> 0:40:48.800 of technology wise developed some great things over the years, 0:40:49.120 --> 0:40:52.200 and I think there was this belief that because of Tesla, 0:40:52.280 --> 0:40:55.680 that this entire industry was now, all of a sudden, 0:40:55.880 --> 0:40:59.080 a technology industry. So what you get is you're either 0:40:59.120 --> 0:41:03.760 going to get every other automaker that is essentially doing 0:41:03.840 --> 0:41:07.040 and can do the same things as Tesla, Beee considered 0:41:07.040 --> 0:41:10.440 tech companies and deserve those valuations, or you're going to 0:41:10.520 --> 0:41:14.239 get the ones that had the wild technology valuations, you know, 0:41:14.920 --> 0:41:19.640 recalibrated down to automakers. And I think that's the that's 0:41:19.719 --> 0:41:22.719 the greater likelihood. Ford and GM are never going to 0:41:22.760 --> 0:41:25.680 be and have never been valued like that. And I 0:41:25.719 --> 0:41:28.960 think the reality would be more that the EV and 0:41:29.040 --> 0:41:33.120 technology companies would be valued more as automakers than the reverse. 0:41:33.400 --> 0:41:37.960 And our friend Matt Miller actually interviewed Ford's CEO Jim Farley, 0:41:38.640 --> 0:41:41.600 about a month ago, it's actually toward late May, about 0:41:41.960 --> 0:41:45.680 cost cuts, auto prices, evs when it comes to Ford 0:41:45.800 --> 0:41:48.399 in position to some of these other competitors that we're 0:41:48.440 --> 0:41:52.040 talking about, and obviously it's outlook for the next few years, 0:41:52.120 --> 0:41:53.880 do you think that's sustainable and do you think it 0:41:53.920 --> 0:41:54.440 could happen? 0:41:55.560 --> 0:41:59.799 Well, yeah, I mean I think profitability is going to 0:41:59.840 --> 0:42:05.240 drive I've adoption, right. These these are automakers, the legacy 0:42:05.280 --> 0:42:08.000 automakers are making a lot of money doing what they're 0:42:08.040 --> 0:42:12.920 good at, which is trucks and SUVs, and then being 0:42:13.040 --> 0:42:16.879 asked or forced into this transition to EV when it's 0:42:16.920 --> 0:42:20.240 not really ready. And I understand the concept of disruption, 0:42:20.400 --> 0:42:23.600 and that's what happens, and some things are messy during 0:42:23.640 --> 0:42:27.080 the transition. But you know, during the period where we 0:42:27.200 --> 0:42:30.680 transition to truck from car, that was profitable on the 0:42:30.680 --> 0:42:35.000 first day. Right So now you have you know, Tesla 0:42:35.239 --> 0:42:38.120 leading the way, but the governments starting to get involved 0:42:38.239 --> 0:42:43.720 with credits and infrastructure spending, motivating the consumer to demand 0:42:43.719 --> 0:42:46.920 these things that the manufacturer can't necessarily make money. 0:42:46.640 --> 0:42:47.520 On just yet. 0:42:47.880 --> 0:42:50.640 And it's and it's a it's a messy transition period 0:42:50.719 --> 0:42:54.040 right now because you don't want to give up profitable 0:42:54.080 --> 0:42:56.919 things to do unprofitable things in this market right now. 0:42:57.239 --> 0:42:59.800 You know, I drove the Ford F one fifty of 0:43:00.000 --> 0:43:02.600 electric one and as first time I drove a pickup 0:43:02.600 --> 0:43:05.600 truck probably the last. I'm a Wall Street guy, I'm 0:43:05.600 --> 0:43:08.840 not dry. My son's got one and it was my 0:43:08.880 --> 0:43:11.680 first electric vehicle, and boy, it blew me away in 0:43:11.719 --> 0:43:13.399 terms of the power and it's work and things like that. 0:43:13.640 --> 0:43:17.520 Is the belief in Detroit that the average pickup truck 0:43:17.600 --> 0:43:21.160 driver will demand an electric version. 0:43:21.200 --> 0:43:23.879 Well, I guess it's going to depend. I mean the 0:43:23.920 --> 0:43:28.680 towing capacity of the range. You know, there's and look 0:43:28.960 --> 0:43:30.960 and what I would say is this is that it's 0:43:31.040 --> 0:43:34.200 why we have segments. It's why we have vehicles with 0:43:34.280 --> 0:43:38.760 different capabilities, you know, so different drive trains. I got 0:43:39.160 --> 0:43:42.200 twelve cylinders, you got six, you know, like that, and 0:43:42.360 --> 0:43:45.680 to make the world go round. So the idea that 0:43:45.800 --> 0:43:50.719 maybe the technological singularity of internal combustion being traded for 0:43:51.200 --> 0:43:54.840 the singularity of electrification, for me is a difficult concept 0:43:54.880 --> 0:43:58.360 because I feel like there is a place, there's people 0:43:58.840 --> 0:44:01.719 that need, but I'm not sure we're ready to say 0:44:01.760 --> 0:44:04.400 one hundred this is your only option in terms of 0:44:04.719 --> 0:44:06.000 drive train technology. 0:44:06.280 --> 0:44:09.600 I hear you're speaking at a Bloomberg Intelligent event to 0:44:09.760 --> 0:44:11.080 date right upstairs. 0:44:11.160 --> 0:44:13.320 Uh right, and what are we doing there? 0:44:13.520 --> 0:44:17.879 That's uh the bi Lithium conference. So I'm the I'm 0:44:17.920 --> 0:44:20.680 the square you're the that's right here, the auto guy. 0:44:20.680 --> 0:44:23.319 I'm the square peg And just what what is the 0:44:23.560 --> 0:44:26.239 we got thirty seconds? Okay, what's the consensus out there 0:44:26.239 --> 0:44:28.719 on the street about lithium batteries? Are Is there going 0:44:28.760 --> 0:44:29.960 to be enough stuff? Are we going to be able 0:44:30.000 --> 0:44:30.560 to get them all? 0:44:30.719 --> 0:44:31.399 And no? 0:44:31.520 --> 0:44:33.160 That's and that's one of the things that I was 0:44:33.280 --> 0:44:37.480 out last week speaking at a couple of dealer conventions 0:44:37.760 --> 0:44:42.960 Louisiana Dealers, Virginia dealers. And that's the big question is 0:44:43.000 --> 0:44:46.360 you know, we hear this one hundred percent by whatever 0:44:46.520 --> 0:44:50.920 date you know, and and it's when you when you 0:44:50.960 --> 0:44:54.040 total up the market share and the volume, it just 0:44:54.120 --> 0:44:58.120 doesn't compute with the materials that we have access to, 0:44:58.400 --> 0:45:02.640 you know. And and the most cynical of them would say, look, 0:45:02.680 --> 0:45:06.560 we're essentially trading our dependence on foreign oil for our 0:45:06.600 --> 0:45:08.560 dependence on China materials. 0:45:08.640 --> 0:45:09.840 Yep at this point. 0:45:10.520 --> 0:45:12.319 But a lot of people don't want to talk about that. 0:45:12.840 --> 0:45:15.719 But you will. Yeah, that's why we've read Kevin Log, 0:45:15.960 --> 0:45:19.240 Kevin Tyne, and Old School Auto Kevin Tiny, senior automotive 0:45:19.239 --> 0:45:21.920 analyst for Bloomberg Intelligence, joining us here live and our 0:45:22.160 --> 0:45:25.200 Bloomberg Interactive Broker Studio. We appreciate that. 0:45:25.560 --> 0:45:28.680 You're listening to the tape. Cats are live program Bloomberg 0:45:28.719 --> 0:45:32.319 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:45:32.400 --> 0:45:35.640 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:45:35.640 --> 0:45:38.480 You can also listen live on Amazon Alexa from our 0:45:38.480 --> 0:45:42.480 flagship New York station, Just say Alexa play Bloomberg eleven 0:45:42.600 --> 0:45:44.759 thirty one. 0:45:44.800 --> 0:45:47.160 Thing we don't talk about we've already should is signific 0:45:47.239 --> 0:45:50.239 it at you know asset class. If you all alternative 0:45:50.280 --> 0:45:52.920 asset class, which is jewelry. Our next guest can help 0:45:53.000 --> 0:45:55.280 us do that oncoor Dagga joints us he's the CEO 0:45:55.320 --> 0:45:58.080 of Angara and he joins us here in O bloombergetting 0:45:58.120 --> 0:46:00.799 Arrective Broker Studio. Thanks once for joining us. 0:46:00.880 --> 0:46:02.080 Absolutely great to be here. 0:46:02.120 --> 0:46:04.239 Tell us about your company. What do you guys do it? 0:46:04.280 --> 0:46:08.120 And Kara, So we specialize in colored gemstones, so ruby, emerald, sapphire. 0:46:08.239 --> 0:46:10.560 We are vertically integrated, so we do everything from buy 0:46:10.600 --> 0:46:14.320 from the mines, cut in polish gemstones, design jewelry, manufactured jewelry, 0:46:14.400 --> 0:46:16.680 and retail over the web in over thirty countries. 0:46:16.840 --> 0:46:19.880 And you grew up in the jewelry industry. Talk to 0:46:19.960 --> 0:46:21.280 us about how you got started. 0:46:21.680 --> 0:46:23.080 Yeah, absolutely so I did. 0:46:23.160 --> 0:46:24.640 From the age of five. I was going to my 0:46:24.760 --> 0:46:28.399 dad's wholesale business and I inutially vowed that I would 0:46:28.440 --> 0:46:31.759 never come back into the industry. It was quite antiquated, 0:46:32.640 --> 0:46:35.080 and like Paula worked at Credits weeks before and then McKenzie. 0:46:35.200 --> 0:46:38.160 My largest project at McKinzie was turning around a jewelry 0:46:38.239 --> 0:46:40.000 retailer and I was like, wow, there's a lot of 0:46:40.000 --> 0:46:42.640 opportunity here and then there we are, all. 0:46:42.560 --> 0:46:45.040 Right, explain to me this thing. I know nothing about it. 0:46:45.560 --> 0:46:50.640 You know, I'm gonna say natural mind diamonds versus lab 0:46:50.640 --> 0:46:52.799 grown diamonds. I didn't even know there was really a 0:46:52.840 --> 0:46:55.520 thing for lab grown diamonds. Talk to us about lab 0:46:55.680 --> 0:46:56.680 grown diamonds. 0:46:56.840 --> 0:46:59.759 Yeah, So they've been gaining popularity over the last three years. 0:47:00.040 --> 0:47:03.799 Twenty eighteen, the FTC said a lab grown diamond is 0:47:03.880 --> 0:47:06.480 a diamond, just like a natural diamond. Is the only 0:47:06.560 --> 0:47:08.719 caveat is you have to disclose that as lab grown. 0:47:09.200 --> 0:47:11.960 Since then, the industry has really taken off. So in 0:47:12.000 --> 0:47:14.960 twenty twenty they were roughly two point three percent of 0:47:15.040 --> 0:47:18.799 all diamonds sold. Now they're over ten percent, and the 0:47:18.800 --> 0:47:21.680 growth rate obviously is fantastic, but in terms of unit 0:47:21.719 --> 0:47:23.000 volumes even more so. 0:47:23.200 --> 0:47:23.480 Now. 0:47:24.360 --> 0:47:27.799 I think part of why they are so attractive is 0:47:27.840 --> 0:47:30.120 now they are trading at seventy five percent to ninety 0:47:30.160 --> 0:47:32.000 percent cheaper than their natural mind equipment. 0:47:32.040 --> 0:47:34.319 Really, and what do they look like? 0:47:34.400 --> 0:47:39.239 How did they So they are optically, physically, chemically identical 0:47:39.520 --> 0:47:42.960 to natural so they really are a perfect substitute. 0:47:43.040 --> 0:47:45.560 So what's that done for the price of natural. 0:47:45.200 --> 0:47:48.359 Diamonds, that is, that is a significant issue. So our 0:47:48.560 --> 0:47:53.799 industry generally has not been prone to technological disruption. This 0:47:53.880 --> 0:47:56.760 is the first time. So over the last twelve months, 0:47:56.800 --> 0:47:59.479 diamond prices have gone down anywhere between eighteen and twenty 0:47:59.480 --> 0:48:02.480 four percent, and I think they're going to go down 0:48:02.560 --> 0:48:04.800 by another twenty to twenty five percent over the next. 0:48:04.600 --> 0:48:07.400 Twelve mile And how did COVID play into that in 0:48:07.440 --> 0:48:09.200 the direction of diamond prices. 0:48:09.560 --> 0:48:13.040 So COVID was another anominally for US, as many other industries. 0:48:13.640 --> 0:48:16.359 Acid prices for diamonds specifically went up by twenty five 0:48:16.400 --> 0:48:19.960 percent between let's say June twenty twenty and June twenty 0:48:20.000 --> 0:48:23.800 twenty two. But that demand has now moderated. During COVID, 0:48:23.840 --> 0:48:26.760 people couldn't go out, they couldn't eat out, they couldn't travel. 0:48:26.840 --> 0:48:32.000 A lot of that stimulus money went into luxury, especially jewelry, 0:48:32.280 --> 0:48:34.480 and now we're seeing a moderation of that. But what's 0:48:34.560 --> 0:48:37.759 now causing the further dip is really technology and lab 0:48:37.760 --> 0:48:38.960 grown diamonds. 0:48:38.520 --> 0:48:42.400 And what exactly was the catalyst for those prices moderating. 0:48:43.680 --> 0:48:47.880 So demand has receded a little bit after the pandemic 0:48:48.040 --> 0:48:50.359 has come off because now people are traveling a lot more, 0:48:50.360 --> 0:48:53.200 they're eating out a lot more, so they're balancing where 0:48:53.200 --> 0:48:54.160 they're spending their money. 0:48:54.160 --> 0:48:58.640 Again, So your company over four hundred employees, where are 0:48:58.680 --> 0:49:00.600 they and what do they do? Sure? 0:49:00.680 --> 0:49:04.520 So we have now ten offices across the world. LA 0:49:05.320 --> 0:49:09.080 is our headquarters. India's our largest operation, followed by Thailand 0:49:09.520 --> 0:49:13.640 and then Ireland, UK, Australia, Canada to add interesting. 0:49:13.719 --> 0:49:16.239 Okay, so talk to us about kind of some other 0:49:17.120 --> 0:49:20.640 gemstones and how do they compare us investments? Because I 0:49:20.640 --> 0:49:22.120 know a lot of people think about them. It's not 0:49:22.200 --> 0:49:24.480 just what I wear around on my finger or around 0:49:24.480 --> 0:49:27.160 my neck. It's an investment for me. How does how 0:49:27.160 --> 0:49:29.839 does those gemstones perform? That's right. 0:49:29.880 --> 0:49:32.799 So colored gemstones as opposed to diamonds, are seeing a 0:49:32.840 --> 0:49:35.360 great boom over the last three years. So the S 0:49:35.400 --> 0:49:37.560 and P three year kieger is around eleven and a 0:49:37.600 --> 0:49:41.399 half percent. Rubies have gone up by seventeen percent per year, 0:49:41.800 --> 0:49:44.920 sapphires by twelve percent a year, emeralds by thirteen percent. 0:49:45.239 --> 0:49:47.960 Some of the more niche gemstones like opals and turmalines 0:49:48.000 --> 0:49:50.040 are up anywhere from twenty percent a year to thirty 0:49:50.080 --> 0:49:54.240 six percent a year, so they are crushing the S andp. 0:49:53.760 --> 0:49:56.680 So there's this growing appreciation for more colored stones as 0:49:56.719 --> 0:49:57.680 an asset class. 0:49:57.840 --> 0:49:58.239 That's right. 0:49:58.320 --> 0:50:01.640 Yeah, So there's a few tailwinds that colorstones are experiencing. 0:50:02.120 --> 0:50:04.680 I think one is we're kind of going from this 0:50:04.840 --> 0:50:07.399 unipolar world where the US dominated. So ten years ago, 0:50:07.440 --> 0:50:10.840 the US was by far the largest consumer of color gemstones. 0:50:10.920 --> 0:50:13.880 Now we have India, which has historically been what I 0:50:13.920 --> 0:50:18.160 would describe as a as a gold jewelry market. Now 0:50:18.320 --> 0:50:21.440 as they get more sophisticated, diamonds and gemstones are catching up, 0:50:21.800 --> 0:50:25.120 and China gemstone consumption is even more so than in 0:50:25.200 --> 0:50:28.400 the US. So we have other tent poles across the 0:50:28.440 --> 0:50:32.000 world that are consuming more. So there's a supply demand imbalance. 0:50:32.040 --> 0:50:35.080 At the same time. On the supply side, mines are 0:50:35.120 --> 0:50:38.840 genuinely running out of material that they're mining. So for example, 0:50:38.880 --> 0:50:42.080 the Burmese mine for rubies has shut down effectively, the 0:50:42.160 --> 0:50:46.440 cash mind for sapphires has shut down. Columbia major emerald producer, 0:50:46.560 --> 0:50:49.319 is really reducing output. So at the same time the 0:50:49.360 --> 0:50:52.520 demand is rising, supply is reducing and we think that's 0:50:52.520 --> 0:50:55.759 going to continue over the next few years. I think 0:50:55.800 --> 0:50:57.799 the other thing for gemstones is when people are now 0:50:57.880 --> 0:51:01.759 realizing that diamonds are depreciating it as an asset class. Traditionally, 0:51:01.760 --> 0:51:05.640 both diamonds and gemstones have really been inflation hedges. But 0:51:05.880 --> 0:51:09.240 because colorstones are appreciating, more and more money is going 0:51:09.360 --> 0:51:10.919 there that we see. 0:51:11.000 --> 0:51:13.000 You think about some of those spy movies where right, 0:51:13.160 --> 0:51:16.080 you get payment in diamonds, you know, because you can 0:51:16.560 --> 0:51:18.879 take all that can, right, But now that's not such 0:51:18.920 --> 0:51:19.600 a good thing, right. 0:51:20.040 --> 0:51:22.120 Something I was curious about is what happens if you 0:51:22.200 --> 0:51:25.879 have it juxtapost where diamond prices are falling, but then 0:51:25.920 --> 0:51:28.960 you have these gemstone prices that are rising. Is there 0:51:28.960 --> 0:51:31.360 a triptical something that can happen there with the swings 0:51:31.360 --> 0:51:33.680 and prices when you have them diverging like that. 0:51:34.239 --> 0:51:37.000 Yeah, I think what we are seeing is much more 0:51:37.040 --> 0:51:39.120 of a transition to color because it is a better 0:51:39.160 --> 0:51:42.120 investment over time. The other thing is I think just 0:51:42.160 --> 0:51:46.640 in terms of culturally, color is becoming much more commonplace. 0:51:46.680 --> 0:51:50.640 So for example, Rolex Automarpiget Petek Philippe, they're higher end watches, 0:51:50.680 --> 0:51:55.360 their most coveted watches now have gemstone bezels around the dial. 0:51:56.239 --> 0:51:58.160 We think we also have. A part of it is 0:51:58.480 --> 0:52:01.000 we're typically now known within the industry as the Debiers 0:52:01.000 --> 0:52:04.600 for colorstone, and the idea is, you know, starting nineteen 0:52:04.680 --> 0:52:07.040 forty eight, Debiers came out with the Diamond Is Forever 0:52:07.760 --> 0:52:09.640 and the Four Seas, and there was this idea that 0:52:09.680 --> 0:52:13.359 there is a singular perfect diamond, which is a de flawless. Now, 0:52:13.480 --> 0:52:17.320 US as a society we've changed considerably. Where we're celebrating uniqueness, 0:52:17.360 --> 0:52:21.919 we're celebrating diversity. We're also celebrating what we like rather 0:52:21.960 --> 0:52:24.640 than what we're told we should like, and that transition, 0:52:24.840 --> 0:52:27.800 we're moving the market towards color with really a focus 0:52:27.840 --> 0:52:30.080 on education and customization of jewelry. 0:52:30.360 --> 0:52:32.359 All right, thirty seconds left. What's the future of your 0:52:32.360 --> 0:52:34.040 company over the next few years. You've got what one 0:52:34.120 --> 0:52:35.879 hundred million revenue roughly, that's right. 0:52:35.920 --> 0:52:38.280 So we've grown four x in the last three years. 0:52:38.880 --> 0:52:40.600 Our next target is a billion dollars. I think we 0:52:40.600 --> 0:52:42.839 can achieve in five years, so that's the goal. 0:52:43.120 --> 0:52:46.080 Really awesome, that is good. We're going to keep in 0:52:46.080 --> 0:52:46.720 touch with this guy. 0:52:47.000 --> 0:52:47.960 I'd forget back. 0:52:48.239 --> 0:52:48.439 Yeah. 0:52:48.520 --> 0:52:52.000 Awesome, that well, congratulations, fascinating discussion. I learned a ton there, 0:52:52.360 --> 0:52:55.520 particularly about the lab grown diamond prices. So do you 0:52:55.920 --> 0:52:57.279 I mean, do you go to your fiancee and kind 0:52:57.280 --> 0:52:58.759 of slip in a like real diamond but it's a 0:52:58.840 --> 0:53:00.680 lab grown one. I don't know what do you do there? 0:53:00.719 --> 0:53:02.760 I mean, look at these emeralds. This is my Bruce Snows. 0:53:02.800 --> 0:53:05.840 I keep looking at that. Up about thirteen percent? 0:53:06.200 --> 0:53:08.840 Yeah, good stuff? All right Oncrutondagah. Thanks so much. CEO 0:53:08.880 --> 0:53:11.560 of Angara joining us here live in our Bloomberg Interactive 0:53:11.600 --> 0:53:14.960 Brokers studio talking about the jewelry business. Fascinating discussion. We 0:53:15.080 --> 0:53:17.560 will follow an Encore's company going forward. 0:53:20.040 --> 0:53:23.120 Thanks for listening to the Bloomberg Markets podcast. You can 0:53:23.160 --> 0:53:27.279 subscribe and listen to interviews at Apple Podcasts or whatever. 0:53:27.040 --> 0:53:29.720 Podcast platform you prefer. I'm Matt Miller. 0:53:29.960 --> 0:53:32.879 I'm on Twitter at Matt Miller nineteen seventy three. 0:53:33.320 --> 0:53:34.160 And I'm Paul Sweeney. 0:53:34.239 --> 0:53:36.840 I'm on Twitter at pt Sweeney. Before the podcast, you 0:53:36.880 --> 0:53:40.280 can always catch us worldwide at Bloomberg Radio