WEBVTT - Apple Tells Suppliers IPhone Demand Slowing 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.680 plus technology, politics, economics, all partnessing the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.479 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.480 --> 0:00:27.880 Eastern Time on the Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:32.080 YouTube search Bloomberg Global News. So we just heard from 0:00:32.120 --> 0:00:36.120 the President detailing the latest upbeat on what the US 0:00:36.280 --> 0:00:38.800 wants to do in terms of really combating this latest 0:00:38.880 --> 0:00:41.519 variant when it comes to COVID nineteen. In the meantime, 0:00:41.560 --> 0:00:43.479 we do have our second reporter case in the US 0:00:43.880 --> 0:00:46.199 fires are expecting its vaccine to hold up against the 0:00:46.320 --> 0:00:50.400 omicron variant uh and executive coming out with that. Germany 0:00:50.440 --> 0:00:53.800 imposing stringent nationwide restrictions on people who are not vaccinated. 0:00:53.880 --> 0:00:56.080 So that's a little bit of our world snapshot. We're 0:00:56.080 --> 0:00:58.280 also seeing that even though Amy Cron is stealing a 0:00:58.280 --> 0:01:00.360 lot of the attention. The delta variant is still pressuring 0:01:00.400 --> 0:01:01.920 the U S health care system. So it comes to 0:01:02.000 --> 0:01:05.319 the time where hospitalizations are rising in at thirty nine states. Carol, 0:01:05.319 --> 0:01:07.600 all right, so let's get to our guest, Dr Emily Gurley, 0:01:07.640 --> 0:01:11.440 Associate scientist at Johns Hopkins University, Bloomberg School of Public Health, 0:01:11.720 --> 0:01:14.000 which is of course supported by Michael R. Bloomberg, Founder, 0:01:14.040 --> 0:01:17.160 Bloomberg LP and Bloomberg Philanthropies. She joins us on the 0:01:17.200 --> 0:01:20.240 phone from Baltimore. Great to have you here with us, 0:01:20.319 --> 0:01:23.160 Dr Gurley. The latest amicron variant. What are some of 0:01:23.160 --> 0:01:29.360 the conversations you guys are having at John's Hopkins about this? Well, Um, 0:01:29.480 --> 0:01:35.880 there are conversations about the scientific UH questions around where 0:01:35.920 --> 0:01:41.320 the this variant came from, UM and what the mutations 0:01:41.319 --> 0:01:45.319 that that we observe in this variant might mean. And 0:01:45.319 --> 0:01:48.080 then there are conversations about the public health impact which 0:01:48.440 --> 0:01:50.920 are related to the scientific questions but but are a 0:01:50.920 --> 0:01:54.520 bit different. And and in in terms of public health impact, 0:01:54.520 --> 0:01:58.280 we're really in a way and see mode because um, 0:01:58.400 --> 0:02:02.880 we we don't know UH answers to key questions like 0:02:03.080 --> 0:02:06.880 is this virus more transmissible? Is it able to evade 0:02:07.000 --> 0:02:10.799 our our immune responses. Um, could it lead to more 0:02:10.919 --> 0:02:14.960 severe disease? And it may be weeks actually before we 0:02:15.040 --> 0:02:17.519 have good answers to this question. Let's ask the question 0:02:17.520 --> 0:02:23.400 a different way. What do we know? Well, we know that, uh, 0:02:23.840 --> 0:02:30.320 the omicron variant has many more mutations then we would 0:02:30.360 --> 0:02:35.240 expect to see from a virus that evolved from one 0:02:35.240 --> 0:02:41.560 of the existing more common variants. So, UM, we expect 0:02:41.680 --> 0:02:45.760 viruses to change over time. That's that's normal. UM. But 0:02:46.200 --> 0:02:51.840 this virus has many more mutations. So it's it looks 0:02:51.919 --> 0:02:58.639 a lot different than the other variants that are currently circulating. UM. 0:02:58.760 --> 0:03:01.800 And so we don't we don't know how it came 0:03:01.880 --> 0:03:04.400 to be, but we do know that it looks different. 0:03:04.919 --> 0:03:10.200 So many more mutations? Is that worries some like? Give 0:03:10.280 --> 0:03:11.840 us some idea for those of us who are not 0:03:11.880 --> 0:03:15.440 as smart as you. Oh, well, I mean but that 0:03:15.600 --> 0:03:17.919 but that's I mean, that's the question. What does it mean? 0:03:18.200 --> 0:03:21.520 I don't think we fully understand what it means from 0:03:21.520 --> 0:03:26.160 a public health perspective. We generally are not smart enough 0:03:26.240 --> 0:03:30.520 to be able to look at genetic mutations and say, uh, 0:03:30.760 --> 0:03:33.040 if a virus has this, this, and this, it is 0:03:33.120 --> 0:03:37.880 going to do this we know, UH, we can't say 0:03:37.920 --> 0:03:42.400 because of where the mutations are on the virus. There 0:03:42.400 --> 0:03:46.960 there are many around the spike protein, and the spike 0:03:47.160 --> 0:03:52.680 is what connects to our UH cells, so the virus 0:03:52.720 --> 0:03:56.600 can replicate, and the spike is what are antibodies target, right, 0:03:56.720 --> 0:04:01.280 So if we have antibodies two to a spike protein 0:04:01.320 --> 0:04:04.880 of previous variants, they may not bind as well to 0:04:05.000 --> 0:04:08.640 this virus because it has some mutations there. It looks 0:04:08.640 --> 0:04:13.480 a little bit different to our immune systems. Yeah, I 0:04:13.560 --> 0:04:17.080 think for our audience, a question that I've been talking 0:04:17.080 --> 0:04:19.760 about with friends is what should we be doing? How 0:04:19.800 --> 0:04:25.039 should we change your behavior? If at all? I think that. 0:04:25.600 --> 0:04:30.120 I mean, first of all the variants that the variant 0:04:30.160 --> 0:04:33.840 that's transmitted most commonly in the US right now and 0:04:33.880 --> 0:04:37.000 that's causing all these hospitalizations and deaths is the Delta variant. 0:04:37.720 --> 0:04:43.159 So don't forget about delta. UM. We expect that all 0:04:43.200 --> 0:04:48.279 of our interventions UH that we use now for UM 0:04:48.400 --> 0:04:51.640 for delta are the same. They're the still the best 0:04:51.680 --> 0:04:54.960 tools that will have for O macron as well. So 0:04:55.920 --> 0:05:00.040 get vaccinated, get a booster UH. If you're eligi a 0:05:00.120 --> 0:05:04.920 bowl UM, be aware of what's happening around you. So 0:05:05.120 --> 0:05:08.040 if there's a lot of transmission happening in your community, 0:05:08.600 --> 0:05:13.279 you know, get the mask out. Um Uh, you've got 0:05:13.279 --> 0:05:15.599 to be aware of what's happening around you. If you've 0:05:15.640 --> 0:05:20.280 been exposed, test yourself. Um, even if you've been vaccinated, 0:05:20.320 --> 0:05:24.120 because we know that if you are infected, even after vaccination, 0:05:24.160 --> 0:05:26.880 you can transmit to other people. Well, I have a 0:05:26.960 --> 0:05:29.880 question for you. So, um, sure Tim got his booster. 0:05:29.920 --> 0:05:32.080 I hope I can say that I'm a vast get 0:05:32.120 --> 0:05:34.120 my booster. I'm about to get my booster. So what 0:05:34.160 --> 0:05:35.719 if then all of a sudden they come out in 0:05:35.760 --> 0:05:37.960 a couple of weeks and they're like, Okay, that booster 0:05:38.000 --> 0:05:41.960 is gonna do nothing for you, And then I don't 0:05:42.000 --> 0:05:44.920 know what does that mean for our safety and our health. Again, 0:05:44.960 --> 0:05:47.520 I guess it depends on how lethal it is, right 0:05:47.560 --> 0:05:49.440 and how contagious is it it is. I guess we 0:05:49.480 --> 0:05:51.600 have to answer those questions. But then if they come 0:05:51.600 --> 0:05:55.240 out with another booster in three months that does deal 0:05:55.279 --> 0:05:58.080 with this new variant, we'll be safe to go ahead 0:05:58.120 --> 0:05:59.920 and get that again. Like we can just continue to 0:06:00.040 --> 0:06:02.440 keep getting boosters and the stuff being you know, basically 0:06:02.440 --> 0:06:08.560 being shot again. UM. So there are a lot there's 0:06:08.560 --> 0:06:12.760 a lot of speculation there, questions. But you know what 0:06:12.800 --> 0:06:15.479 I'm getting at, Like this idea of getting multiple vaccines 0:06:15.520 --> 0:06:18.280 over and over and maybe getting them closer and closer 0:06:18.320 --> 0:06:22.440 to one another. Um, do we need to be concerned 0:06:22.440 --> 0:06:28.920 about that? I really doubt it. I UM and so 0:06:29.040 --> 0:06:32.240 and but let's be clear about what the vaccines really 0:06:32.360 --> 0:06:35.520 are meant to do. UM And I think because I 0:06:35.520 --> 0:06:38.880 think this message does get confused. What we're trying to 0:06:39.000 --> 0:06:44.840 do is prevent hospitalizations and death. That's the primary goal 0:06:45.680 --> 0:06:50.040 for COVID control, UM and to end the pandemic because 0:06:50.320 --> 0:06:53.080 you know, imagine, imagine we were having a pandemic that 0:06:53.200 --> 0:06:56.839 only caused mild disease. Right do you get an infection, 0:06:57.360 --> 0:06:58.920 you don't feel well for a few days, but then 0:06:58.960 --> 0:07:02.080 you recover and your fine. Uh, no rush to the hospital, 0:07:02.200 --> 0:07:05.360 no increase in risk of death. We would not offend 0:07:05.400 --> 0:07:09.720 our world for a pandemic like that, right. So what 0:07:09.840 --> 0:07:12.160 we have to try to do as much as we 0:07:12.240 --> 0:07:17.720 can is get COVID to look like that, right. So, 0:07:17.720 --> 0:07:21.000 so then we're reducing at every stage. Uh, you know, 0:07:21.480 --> 0:07:24.600 risk of hospitalization, risk of death. Vaccines are the very 0:07:24.680 --> 0:07:30.560 best way to do that. Even in studies that show, um, 0:07:30.600 --> 0:07:32.800 you know that vaccines can wane over time and their 0:07:32.840 --> 0:07:38.960 ability to prevent infection. Um, they still are retain their 0:07:39.000 --> 0:07:42.240 ability to prevent hospitalization and death. And that's really what 0:07:42.320 --> 0:07:46.600 we have to keep our eyes on here, I think. UM. So, 0:07:46.600 --> 0:07:49.000 so those vaccines are the are the best way to 0:07:49.080 --> 0:07:52.600 do that. Um. There's no reason to believe that, Oh, 0:07:52.640 --> 0:07:56.600 macron Is is going to change that calculation. Um. And 0:07:56.640 --> 0:08:02.680 we also have to you know, think about um, you know, treatment. 0:08:02.840 --> 0:08:06.040 If you're at high risk, you need to be you know, 0:08:06.120 --> 0:08:08.960 you need to be watching yourself. UM. Get some home 0:08:09.080 --> 0:08:11.400 rapid tests. Yes, Okay, that's what I want to talk 0:08:11.440 --> 0:08:13.120 about with you. I want to talk about the home 0:08:13.200 --> 0:08:15.480 rapid test because we just heard from President Biden that 0:08:15.520 --> 0:08:17.280 he wants private insurers to pay for these at home 0:08:17.360 --> 0:08:20.480 rapid tests. These are antigen tests. They're not PCR test. Correct, 0:08:21.760 --> 0:08:24.680 That's correct. Okay. What is the accuracy of an at 0:08:24.720 --> 0:08:30.960 home rapid test versus a PCR test? Um? So they 0:08:31.040 --> 0:08:36.240 can't be less accurate, But it depends on the situation, right. UM. 0:08:36.400 --> 0:08:39.760 So Let's imagine that you know you've been exposed, and 0:08:39.880 --> 0:08:44.720 you have symptoms and your rapid test is positive, you 0:08:44.840 --> 0:08:47.640 probably have COVID. The chances that you don't have COVID 0:08:47.679 --> 0:08:51.640 are very low. Okay, Um, Let's imagine that you haven't 0:08:51.679 --> 0:08:54.440 been exposed, you don't have symptoms, and you get a 0:08:54.440 --> 0:08:59.200 positive test. Well maybe yes, maybe no, right, maybe you 0:08:59.240 --> 0:09:02.199 take a second test to to to figure that out 0:09:02.880 --> 0:09:05.520 or to get in, you know, to get another data point. Right. 0:09:05.800 --> 0:09:08.439 Um So, I think when we say these tests aren't 0:09:08.520 --> 0:09:12.319 is accurate, we're selling them short because there are many 0:09:12.320 --> 0:09:17.079 situations where they are definitely accurate enough to take action. 0:09:17.200 --> 0:09:18.920 My question is because as we get closer and closer 0:09:18.920 --> 0:09:20.600 to the holidays, and I saw this certainly with friends 0:09:20.600 --> 0:09:23.480 and family before the Thanksgiving holiday, people go and they 0:09:23.480 --> 0:09:25.520 get a bunch of bay Nacks now tests from the 0:09:25.600 --> 0:09:28.400 drug store. They all take them, they are all negative, 0:09:28.800 --> 0:09:31.960 and they go and have Thanksgiving or Christmas or Hanukah 0:09:32.000 --> 0:09:35.120 with one another. Is that okay to do? Because these 0:09:35.160 --> 0:09:37.600 tests are are accurate enough to tell us if we 0:09:37.640 --> 0:09:40.640 don't have symptoms, and we we that we don't have COVID, 0:09:41.800 --> 0:09:46.080 they are great for that reason. Um so yeah, so 0:09:46.320 --> 0:09:48.400 we we we should be using them. We should be 0:09:48.440 --> 0:09:52.920 using them all the time. The test result, that's difficult 0:09:52.960 --> 0:09:56.199 to figure out. If you don't have symptoms and it's positive, 0:09:56.720 --> 0:10:01.400 it may be a false positive. That's possible. But you know, 0:10:01.480 --> 0:10:04.240 if you're gonna air on the conservative side, maybe you 0:10:04.280 --> 0:10:07.360 just set that, you know, don't go into that party 0:10:07.400 --> 0:10:10.239 until you can get a PCR test and get it confirmed. 0:10:10.880 --> 0:10:15.640 But if you're symptomatic and it's positive, you should stay away. Um. 0:10:15.679 --> 0:10:19.720 So so you know, I again, I think these these 0:10:19.760 --> 0:10:22.880 tests gets get a bad rap um for for no 0:10:22.920 --> 0:10:26.280 good reason. Remember what they're trying to do. So a 0:10:26.400 --> 0:10:29.640 PCR test is better in the sense that it can 0:10:29.720 --> 0:10:35.440 pick up the virus sooner in your system. So so 0:10:35.800 --> 0:10:39.280 that's an advantage. But the anagen tests are much better 0:10:39.520 --> 0:10:43.480 at telling us whether or not you're infectious, whether or 0:10:43.520 --> 0:10:46.480 not you have a lot of virus in your nose 0:10:46.640 --> 0:10:51.080 and are likely to infect someone else. So um, from 0:10:51.120 --> 0:10:54.640 a from a public health perspective, from a transmission perspective, 0:10:55.160 --> 0:10:58.480 those anagin tests are great because that's really what you 0:10:58.520 --> 0:11:00.839 want to know. If I go somewhere, is there a 0:11:00.920 --> 0:11:03.520 chance that I can inspect somebody else? Right? And the 0:11:03.559 --> 0:11:08.800 antigine tests are great for that. Um, they're in they're fast, right, 0:11:09.440 --> 0:11:14.480 that's we we speed means so much in terms of transmission. 0:11:14.840 --> 0:11:18.400 So just for an example, UM, if you've got a 0:11:18.480 --> 0:11:22.360 swap collected today and you've got your PCR results back tomorrow, 0:11:22.520 --> 0:11:26.480 that's very quick. But that PCR result tells you about 0:11:26.520 --> 0:11:31.800 your infection status yesterday, not today. And to be able 0:11:31.840 --> 0:11:33.960 to act on data you need you know you need 0:11:34.160 --> 0:11:37.680 rapid tests and the aningine tests are great for for 0:11:37.720 --> 0:11:41.360 helping you determine whether or not you're infectious. Covered a 0:11:41.360 --> 0:11:44.400 lot of ground, good stuff. Uh, Dr Emily Gurley, thank 0:11:44.440 --> 0:11:48.000 you so much. Epidemiologist over at Johns Hopkins University, Bloomberg 0:11:48.000 --> 0:11:50.840 School of Public House, supported by Michael R. Bloomberg, founder 0:11:50.840 --> 0:11:53.400 of Bloomberg ALP and Bloomberg Philanthropy. She's joining us on 0:11:53.480 --> 0:11:55.920 the phone from Baltimore. Really good questions. I know you've 0:11:55.920 --> 0:11:58.720 been thinking a lot about the testing. Really helpful clarification 0:11:58.760 --> 0:12:01.040 with these tests because there's so a lot of people 0:12:01.080 --> 0:12:03.120 have a lot of confusion around how accurate they are. 0:12:03.840 --> 0:12:07.880 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:12:07.960 --> 0:12:11.920 Quick Takes. Tim Stinovic on Bloomberg Radio. We have been 0:12:11.920 --> 0:12:16.320 watching shares of Apple, seeing some selling earlier on definitely 0:12:16.320 --> 0:12:18.880 bouncing off their lows, but still a bit lower. What 0:12:19.080 --> 0:12:21.200 the concern seems to be is we know that there's 0:12:21.200 --> 0:12:23.360 been supply chain issues, but now we're looking at maybe 0:12:23.440 --> 0:12:26.200 some demand issues. To him, yeah, well, fortunately Mark German 0:12:26.320 --> 0:12:28.160 is the guy to talk to when it comes to 0:12:28.280 --> 0:12:31.640 all things Apple. He's technology reporter for Bloomberg News. He 0:12:31.679 --> 0:12:33.679 joins us right now from the Los Angeles bureau, so 0:12:33.800 --> 0:12:36.120 you folks on YouTube who are watching and listening right 0:12:36.120 --> 0:12:38.160 now can see him as well. Mark, What is what 0:12:38.280 --> 0:12:40.320 is going on with the demand story here? Because this 0:12:40.400 --> 0:12:42.640 is part of a much larger narrative that um, we've 0:12:42.640 --> 0:12:44.559 heard about over the last few weeks thanks to your 0:12:44.559 --> 0:12:47.840 reporting in our colleagues as well as you know, the 0:12:47.840 --> 0:12:51.760 iPhone thirteen is really a modest upgrade over the iPhone twelve, 0:12:51.840 --> 0:12:54.280 and that was ignored for the first several weeks of 0:12:54.320 --> 0:12:57.800 this product's launch because there was such supply chain problems 0:12:57.800 --> 0:13:00.640 with this device alongside every thing else because of the 0:13:00.679 --> 0:13:03.000 chip shot, which we saw one month delays, right and 0:13:03.000 --> 0:13:06.360 those one month delays sort of indicated really strong demand. 0:13:06.760 --> 0:13:09.880 But we know that that is starting to sort of ease, 0:13:10.000 --> 0:13:12.440 and we know that people are not looking to buy 0:13:12.480 --> 0:13:15.760 the iPhone thirteen in quantities that they were wanting to 0:13:15.760 --> 0:13:18.400 buy the iPhone thirteen weeks ago, probably because it's a 0:13:18.440 --> 0:13:20.640 modest upgrade. The other thing I should know is that 0:13:20.720 --> 0:13:24.840 the carrier is an Apple head. Extraordinarily aggressive rebate offers 0:13:24.880 --> 0:13:27.959 for the iPhone teen out of the gate. The amount 0:13:27.960 --> 0:13:30.760 of how lucrative those deals are have now subsided now 0:13:30.760 --> 0:13:33.280 that the phone has been out for several months as well. 0:13:33.320 --> 0:13:35.840 Now right, so that all indicates why would be weakening? 0:13:35.840 --> 0:13:38.480 People are waiting for the iPhone fourteen. They're waiting for 0:13:38.520 --> 0:13:40.719 bigger changes next year, and I'd be waiting for a 0:13:40.760 --> 0:13:44.280 new iPhone I seen next year. Can I just tell you? Alright, alright, 0:13:44.320 --> 0:13:45.880 I'm not gonna say who it is, but there's been 0:13:45.880 --> 0:13:51.000 a carrier, my carrier sorry, has been bombarding me saying like, 0:13:51.040 --> 0:13:52.400 if you get a new phone. I just bought a 0:13:52.400 --> 0:13:53.679 new phone in the last year, Like, if you buy 0:13:53.679 --> 0:13:55.280 a new phone, we're gonna give you this an amount 0:13:55.280 --> 0:13:58.800 of money. I mean, it has been NonStop. Mark. Well, 0:13:58.840 --> 0:14:01.080 they're doing that because they need They know that they 0:14:01.120 --> 0:14:04.240 need rebates and discounts in these special deals in order 0:14:04.320 --> 0:14:07.400 to move these devices. Right, if you bought an iPhone 0:14:07.400 --> 0:14:10.800 twelve last year. There's basically no reason to upgrade to 0:14:10.840 --> 0:14:13.280 the iPhone thirteen, So why did I do it? Right? 0:14:13.320 --> 0:14:15.160 I have the iPhone third Team Promax here, I had 0:14:15.160 --> 0:14:17.880 the twelve Promacs lost year white. I got it for free. Really, 0:14:17.960 --> 0:14:20.160 I swear I got it for free. That's how aggressive 0:14:20.160 --> 0:14:22.080 the deals were at the early off thing of these 0:14:22.120 --> 0:14:25.920 new iPhones. They gave yous basically for a twelve Promax 0:14:26.000 --> 0:14:29.520 last year. Other devices got big discounts too, right, That's 0:14:29.520 --> 0:14:31.880 why these phones were flying off the shelves because of 0:14:31.880 --> 0:14:34.800 those carrier deals. There are some cool nifty features, the 0:14:34.840 --> 0:14:38.240 new camera technology, the portrait mode, cinema mode for video, 0:14:38.400 --> 0:14:40.440 the new Cerra blue color, which I think is kind 0:14:40.440 --> 0:14:44.080 of cool. But other than that, yeah, that's the one. 0:14:44.720 --> 0:14:47.440 But other than that, these are not significant upgrades. But 0:14:47.920 --> 0:14:50.600 there's also people with older phones. Markets is already because 0:14:50.640 --> 0:14:52.320 one great thing about working with Markerrman is you can 0:14:52.360 --> 0:14:54.720 email him and say, hey, Mark, what phone should I get? 0:14:54.960 --> 0:14:57.160 And he'll email you back. And I'm so grateful he 0:14:57.600 --> 0:14:59.880 because there's nobody else who knows more about phones than Mark. 0:15:00.080 --> 0:15:02.760 Day Uh Mark. So here's the thing. I upgraded from 0:15:02.760 --> 0:15:05.600 an iPhone tad. So there was a huge reason for 0:15:05.600 --> 0:15:07.840 me to buy this, this thirteen pro that I just got. 0:15:07.840 --> 0:15:10.560 And it's so it's a it's night and day, especially 0:15:10.600 --> 0:15:13.640 with with the apps that I use. Um, isn't that 0:15:13.720 --> 0:15:15.840 who this phone is geared toward, not necessarily to people 0:15:15.880 --> 0:15:19.400 who have the twelve like Carol? That's right. Apple doesn't 0:15:19.440 --> 0:15:22.160 design and develop new products to be released on an 0:15:22.160 --> 0:15:25.280 annual basis to get the people from last year to upgrade. Right. 0:15:25.480 --> 0:15:28.280 It's about people new to the ecosystem. It's about people new, 0:15:28.760 --> 0:15:31.320 uh to the iPhone. It's about people who are all 0:15:31.480 --> 0:15:34.320 upgrading from older phones like yourself. Right. But at the 0:15:34.360 --> 0:15:39.240 same time, we've seen consumer spending, right, decreases. Consumer prices 0:15:39.280 --> 0:15:41.560 have gone up, gas prices are going up. People are 0:15:41.560 --> 0:15:44.520 concerned about you know, food prices and potential food shortages. 0:15:44.760 --> 0:15:48.240 There are some concerns obviously on the Crowning and COVID 0:15:48.240 --> 0:15:50.880 as well, right, And those are reasons why demand could 0:15:50.920 --> 0:15:53.200 could be weakening. The one thing I'll note is I 0:15:53.240 --> 0:15:55.520 think this is, you know, a blit, not a trend 0:15:55.560 --> 0:15:58.840 for Apple. I think you'll see stronger sales next year. 0:15:58.880 --> 0:16:01.160 I think the iPhone fourteen is going to be obviously 0:16:01.160 --> 0:16:03.520 a smash hit. And the one thing I will say 0:16:03.760 --> 0:16:06.800 is that Apple has said that it's quarter revenue for 0:16:06.920 --> 0:16:10.160 Q one is going to be a grand slam. Basically, 0:16:10.160 --> 0:16:12.960 they're going to top a hundred and twelve billion, which 0:16:13.000 --> 0:16:14.800 was with a you know, reported last year in the 0:16:14.840 --> 0:16:17.760 first quarter. So regardless of this demand weekending, it's going 0:16:17.800 --> 0:16:20.680 to be an extraordinarily strong quarter, perhaps just not as 0:16:20.720 --> 0:16:24.040 strong as some had been anticipating or Apple would have liked, 0:16:24.400 --> 0:16:27.280 because not only because of supplied but a combination of 0:16:27.280 --> 0:16:29.760 supplying demand. I mean, I always feel like when we're 0:16:29.760 --> 0:16:32.920 talking Apple, it's like the law of large numbers. I mean, 0:16:32.960 --> 0:16:35.640 it's just it blows my mind. Hey, Mark German, thank 0:16:35.680 --> 0:16:39.040 you so much. Mark is technology reporter join in us 0:16:39.120 --> 0:16:40.840 and you can have seen him on YouTube from our 0:16:40.960 --> 0:16:43.200 l A bureau. I love talking with Mike. You to 0:16:43.200 --> 0:16:45.600 get him back again. What color is your phone? I 0:16:45.640 --> 0:16:47.960 got the C blue one that market. That's cool, I'll 0:16:47.960 --> 0:16:51.480 show it's here. You're listening to Bloomberg Business Week with 0:16:51.600 --> 0:16:56.400 Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:16:56.760 --> 0:16:59.600 All Right. At one time, Enron was a prominent energy supplier, 0:16:59.720 --> 0:17:03.200 a rating powerhouse named financial vehicles after Star Wars characters 0:17:03.200 --> 0:17:05.320 and themes. We all followed it. We wanted to talk 0:17:05.359 --> 0:17:07.600 to its top executives, and it had a stock that 0:17:07.640 --> 0:17:09.360 went from a high of ninety in August of two 0:17:09.400 --> 0:17:11.800 thousands to below a buck in November of two thousand 0:17:11.800 --> 0:17:14.800 one as it all unraveled in a massive fraud. Today, 0:17:14.800 --> 0:17:17.480 Tim is the twenty year anniversary of the end Ron bankruptcy. 0:17:17.560 --> 0:17:20.480 Greg Farrell is an investigative reporter for a legal enforcement 0:17:20.520 --> 0:17:22.399 team here at Bloomberg News. He's with us in the 0:17:22.440 --> 0:17:25.359 Bloomberg Interactive Broker's Studio. Greg story is featured in the 0:17:25.400 --> 0:17:27.920 new issue of Bloomberg Business Week Magazines. It's available on 0:17:27.960 --> 0:17:31.120 newsstands and at Bloomberg dot com slash of Business Week. 0:17:31.200 --> 0:17:33.520 So take us back twenty years ago where you were, 0:17:33.560 --> 0:17:36.960 Greg Um, you were a reporter at USA today, just 0:17:37.000 --> 0:17:39.280 following it right. Yes, I was at USA today, and 0:17:39.280 --> 0:17:42.560 in fact, because of nine eleven, I had been over 0:17:42.680 --> 0:17:45.600 in Europe for a while spelling some of our foreign correspondence, 0:17:45.680 --> 0:17:48.440 just in Germany and in England. So I remember the 0:17:48.520 --> 0:17:50.680 day to the bankruptcy, having a drink in a bar 0:17:50.760 --> 0:17:53.480 in Frankfort with an ex Golden Sax guy who was 0:17:53.520 --> 0:17:56.240 just starting his own fund and like, I wasn't following 0:17:56.240 --> 0:17:58.119 anyone because I was over there for something else, the 0:17:58.160 --> 0:18:01.119 Afghan pea stocks or something. But this guy was like, 0:18:01.359 --> 0:18:03.399 you know, I can't believe this happened. This was just 0:18:03.400 --> 0:18:06.119 such a stunning event that Enron, which was such a 0:18:06.200 --> 0:18:09.239 high flyer for so many years and like crashed and 0:18:09.240 --> 0:18:12.240 burned and like record time. So as soon as I 0:18:12.280 --> 0:18:15.520 got back, you know, I was put on this and uh, 0:18:15.600 --> 0:18:17.679 you know, it started with congressional hearings and then of 0:18:17.720 --> 0:18:21.119 course the almost you know, the very quick charge criminal 0:18:21.200 --> 0:18:24.919 charge that the Justice Department leveled against Arthur Anderson. Um. Well, 0:18:24.960 --> 0:18:28.159 speaking of crashing and burning, right, these were the the 0:18:28.280 --> 0:18:32.399 accounting firms and Arthur Anderson in particular. What came what 0:18:32.640 --> 0:18:36.040 came to be known as a result of the investigations, Well, 0:18:36.160 --> 0:18:39.000 first of all, it came out very quickly that Anderson 0:18:39.080 --> 0:18:43.080 had engaged in like a frenzy of paper shredding. You know, 0:18:43.520 --> 0:18:46.320 when at the time in October of two thousand one, 0:18:46.640 --> 0:18:49.000 that it was clear that a massive loss was going 0:18:49.040 --> 0:18:50.960 to be reported, and it was clear that there was 0:18:50.960 --> 0:18:55.120 going to be at least an sec investigation, if not worse. Um. So, 0:18:55.480 --> 0:18:58.159 you know that was a very bad fact than Joe Berardino, 0:18:58.520 --> 0:19:01.760 the current the CEO at the time and the last 0:19:01.760 --> 0:19:06.640 CEO of Arthur Anderson Um, he testified Congress in December 0:19:06.680 --> 0:19:09.480 that he thought that they've been you know, our Arthur 0:19:10.080 --> 0:19:11.919 had been lied to. At least that was the defense 0:19:11.960 --> 0:19:16.280 he put forward, right and ron Um that Enron had 0:19:16.280 --> 0:19:18.400 lied to Arthur and he was trying to protect the 0:19:18.440 --> 0:19:21.639 auditing firm. Um. Well, that's what's interesting about the stories. 0:19:21.640 --> 0:19:24.320 It really gets to the relationship between a firm and 0:19:24.359 --> 0:19:27.080 it's accounting firm, and you you really get into, you know, 0:19:27.160 --> 0:19:32.399 what are the responsibilities or the relationships because those accounting firms, 0:19:32.400 --> 0:19:36.280 which seems so dry and boring, they'd also become consultants, right, 0:19:36.320 --> 0:19:41.280 so they're really woven in with these companies. Yes, would 0:19:41.400 --> 0:19:43.600 potential that was a big problem at that time. Was 0:19:43.640 --> 0:19:45.800 such a big deal that the then chairman of the 0:19:45.880 --> 0:19:50.760 sec Arthur Levitt Um had proposed rule in the believe 0:19:50.880 --> 0:19:54.240 yes absolutely, and he had proposed rule in the year 0:19:54.280 --> 0:19:58.080 two thousand that auditing firms should keep there, you know, 0:19:58.160 --> 0:20:01.440 should should not serve also as business consultants to their 0:20:01.480 --> 0:20:05.160 clients because that could you know, basically expose them to leverage. 0:20:05.359 --> 0:20:07.480 And this is what we saw, you know, classically with 0:20:07.640 --> 0:20:10.960 Enron and Arthur Anderson. Uh, Anderson, like it was, it 0:20:11.040 --> 0:20:13.239 was the most profitable client. They got fifty more than 0:20:13.280 --> 0:20:15.639 fifty million dollars a year in two thousands, and they 0:20:15.680 --> 0:20:18.159 passed the fifty million mark just to October of two 0:20:18.200 --> 0:20:21.080 thousand one, before you know, Enron went down and it 0:20:21.160 --> 0:20:24.600 was clear that that amount of money had clouded, you know, 0:20:24.680 --> 0:20:26.840 and basically they had co opted the Houston office of 0:20:26.920 --> 0:20:30.399 Arthur Anderson. Okay, but you and you do. Right in 0:20:30.400 --> 0:20:33.520 the wake of this, three of the big four accounting 0:20:33.520 --> 0:20:36.600 from sold off their consulting units. But that was then. 0:20:36.680 --> 0:20:39.080 This is now in over the last decade, firms have 0:20:39.160 --> 0:20:42.719 reverse course acquiring consulting firms to expand their revenue sources, 0:20:42.760 --> 0:20:46.159 once again building conflicts of interest into the system a 0:20:46.240 --> 0:20:48.720 short term, right, yes, exactly. And that's that's one of 0:20:48.760 --> 0:20:50.720 the problems is that, you know, the passage of time 0:20:50.760 --> 0:20:53.800 went by. I think there was a real feeling after 0:20:53.880 --> 0:20:56.800 the conviction of Arthur Anderson was overturned by the Supreme 0:20:56.840 --> 0:21:00.760 Court unanimously that uh, you know, and we went from 0:21:01.040 --> 0:21:03.920 the you know, the Fabulous five or whatever you call them, 0:21:03.920 --> 0:21:06.760 to the Big four, the final four that you know, 0:21:07.520 --> 0:21:11.280 you can't put another accounting fir amount of business. Um. So, 0:21:11.400 --> 0:21:13.560 once the rest of the four sort of understood that 0:21:13.600 --> 0:21:15.720 it's not that they felt they had a license to 0:21:15.880 --> 0:21:18.679 do wrong as much as they didn't have that you know, 0:21:19.040 --> 0:21:21.480 fear of God that they had for a year or 0:21:21.480 --> 0:21:23.480 two after Anderson was put out of business, that we've 0:21:23.480 --> 0:21:25.159 got to watch our step. It kind of reminds me 0:21:25.240 --> 0:21:27.960 like coming off of the financial crisis or not the 0:21:27.960 --> 0:21:31.080 financial crisis, excuse me, the tech boom, right, and and 0:21:31.160 --> 0:21:34.320 you're having the analysts and the underwriters and it's just 0:21:34.400 --> 0:21:36.840 like it feels like things got obviously very messy. We 0:21:36.880 --> 0:21:38.840 know it did right in terms of conflicts of interest. 0:21:39.119 --> 0:21:41.439 I guess the question is, at this point, so memories 0:21:41.440 --> 0:21:45.000 are short, could we are investors better protected? Because I mean, 0:21:45.119 --> 0:21:47.000 investors lost the money a lot of money on and 0:21:47.119 --> 0:21:49.320 Ron and even more I think I'm world calm. A 0:21:49.359 --> 0:21:51.879 few months later, good point Sarbanes Oxley would not have 0:21:51.920 --> 0:21:54.359