1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,199 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Government 7 00:00:33,240 --> 00:00:37,000 Speaker 1: debt government refunding? Is the level of government debt and 8 00:00:37,120 --> 00:00:40,600 Speaker 1: private debt? Is it endangering the growth of the US economy? 9 00:00:40,640 --> 00:00:42,960 Speaker 1: Here to tell us More's Joel Stern. He's the chairman 10 00:00:43,000 --> 00:00:47,240 Speaker 1: and the chief executive officer of Stern Value Management. Joel Stern, 11 00:00:47,280 --> 00:00:49,160 Speaker 1: thank you very much for being in our eleven three 12 00:00:49,159 --> 00:00:51,239 Speaker 1: oh studio. It's a pleasure to have you here. So 13 00:00:51,360 --> 00:00:53,800 Speaker 1: answer this question for us. The level of government debt 14 00:00:53,880 --> 00:00:57,680 Speaker 1: is causing a lot of people to opine about the 15 00:00:57,720 --> 00:01:00,760 Speaker 1: future prospects for growth. What's your thought, Well, they are wrong, 16 00:01:01,520 --> 00:01:03,160 Speaker 1: they are wrong. There are two ways you can tell. 17 00:01:03,760 --> 00:01:07,440 Speaker 1: Take a look at real interest rates if the level 18 00:01:07,480 --> 00:01:09,880 Speaker 1: of debt. Look if the bond rating of a company 19 00:01:09,880 --> 00:01:11,400 Speaker 1: goes down, what do you think happens to the rate 20 00:01:11,440 --> 00:01:15,200 Speaker 1: of interest they pay? It goes skyward. The thirty year 21 00:01:15,280 --> 00:01:20,880 Speaker 1: government bonds, they're yielding three point one or something. So 22 00:01:20,959 --> 00:01:22,920 Speaker 1: there's gotta be there's gotta be a retort to that, 23 00:01:22,959 --> 00:01:25,440 Speaker 1: and I'll tell you what it is. You don't look 24 00:01:25,480 --> 00:01:29,200 Speaker 1: at book value. You will look at market value. The 25 00:01:29,280 --> 00:01:32,240 Speaker 1: market value of assets in the United States, not just 26 00:01:32,360 --> 00:01:37,959 Speaker 1: the stock market, hey, real estate, gold, diamonds, all kinds 27 00:01:38,000 --> 00:01:40,880 Speaker 1: of assets. They are very very high. If you take 28 00:01:40,920 --> 00:01:43,440 Speaker 1: a look at the debt ratio, the amount of debt 29 00:01:43,440 --> 00:01:46,640 Speaker 1: in relation to the market value of the assets we have, 30 00:01:47,120 --> 00:01:51,480 Speaker 1: the debt ratio has actually gone down quite considerably. Okay, So, Joel, 31 00:01:51,560 --> 00:01:54,520 Speaker 1: you're making an argument saying that it is perfectly fine 32 00:01:54,760 --> 00:01:57,440 Speaker 1: for the U. S. Treasure Department to be selling a 33 00:01:57,520 --> 00:02:00,400 Speaker 1: record amount of debt each quarter going forward. For right, 34 00:02:00,400 --> 00:02:02,720 Speaker 1: so you've got new debt, right, new debt, Yes, new debt, 35 00:02:02,800 --> 00:02:06,080 Speaker 1: additional issue in uh So, given that argument, we got 36 00:02:06,160 --> 00:02:09,480 Speaker 1: the Treasury funding announcement earlier today, do you think they 37 00:02:09,480 --> 00:02:12,040 Speaker 1: ought to be selling longer dated debt and more of 38 00:02:12,080 --> 00:02:14,040 Speaker 1: that because they're focusing so much on the front end 39 00:02:14,080 --> 00:02:16,720 Speaker 1: with a new two months two months a note as well. Well. 40 00:02:16,800 --> 00:02:19,640 Speaker 1: Keep in mind that government debt, as I understand it, 41 00:02:19,680 --> 00:02:22,960 Speaker 1: has no call protection. Whatever rate of interest, for whatever 42 00:02:23,040 --> 00:02:25,560 Speaker 1: period of time, you're stuck with it in the government. 43 00:02:25,560 --> 00:02:28,480 Speaker 1: Well were we as citizens are stuck with it? Okay, 44 00:02:28,639 --> 00:02:31,480 Speaker 1: we can't call the debt and retire it early. Okay, 45 00:02:31,600 --> 00:02:33,360 Speaker 1: we can buy it up in the market place, but 46 00:02:33,400 --> 00:02:36,320 Speaker 1: there's no call protection. I remember back in the early 47 00:02:36,360 --> 00:02:39,280 Speaker 1: eighties when the Gut when the inflation rate was very, 48 00:02:39,360 --> 00:02:43,560 Speaker 1: very high Underaggan, he inherited that was something like twelve percent. Well, 49 00:02:43,600 --> 00:02:46,840 Speaker 1: would you believe thirty year government bonds was suddenly being 50 00:02:46,880 --> 00:02:51,200 Speaker 1: offered at fifteen point two percent? Okay, fifteen percent? Well, 51 00:02:51,200 --> 00:02:53,920 Speaker 1: what does that mean? It means that the government officials, 52 00:02:54,000 --> 00:02:57,480 Speaker 1: the economists, they believe that the high inflation was going 53 00:02:57,520 --> 00:03:01,520 Speaker 1: to continue for the next thirty years. Okay. A Beryl Sprinkle, 54 00:03:01,560 --> 00:03:03,399 Speaker 1: who was the under Secretary of the Treasury, I called 55 00:03:03,440 --> 00:03:05,160 Speaker 1: him at that time and I said, hey, Beryl, what 56 00:03:05,160 --> 00:03:07,280 Speaker 1: do you think? He said, I'm not I'm not a 57 00:03:07,360 --> 00:03:09,760 Speaker 1: risk taker on this. I'm just a government official. I 58 00:03:09,800 --> 00:03:12,240 Speaker 1: don't have any bonuses paid to me based on whether 59 00:03:12,320 --> 00:03:14,679 Speaker 1: or not my guesses are right. Whatever the market wants, 60 00:03:14,960 --> 00:03:16,720 Speaker 1: that's what I'm gonna do, all right. It's one thing. 61 00:03:16,720 --> 00:03:19,280 Speaker 1: If it's fifteen and a half percent. I'm looking at 62 00:03:19,360 --> 00:03:23,160 Speaker 1: three point one percent for thirty years in US yields. 63 00:03:23,240 --> 00:03:28,120 Speaker 1: Right now, you're suggesting that the US not necessarily issue 64 00:03:28,360 --> 00:03:31,720 Speaker 1: thirty year debt at these types of yields because they 65 00:03:31,760 --> 00:03:34,119 Speaker 1: could go lower. Is that correct? No, I would say 66 00:03:34,160 --> 00:03:36,440 Speaker 1: that I would not be a betting person that for 67 00:03:36,480 --> 00:03:38,760 Speaker 1: the next thirty years we're not going to have any 68 00:03:38,800 --> 00:03:42,360 Speaker 1: significant inflation and therefore I'll get paid back in cheaper dollars. 69 00:03:42,680 --> 00:03:44,640 Speaker 1: If I were the US government, I would never have 70 00:03:44,680 --> 00:03:47,160 Speaker 1: gone to the route of the ten year. I would 71 00:03:47,160 --> 00:03:49,840 Speaker 1: have stayed with the thirty year because the difference right now, 72 00:03:49,880 --> 00:03:52,200 Speaker 1: for example, between the ten year and the thirty year 73 00:03:52,680 --> 00:03:54,800 Speaker 1: is a drop in the bucket. It's about fifteen basis 74 00:03:54,800 --> 00:03:57,880 Speaker 1: points well at that rate. For goodness sake, they should 75 00:03:57,920 --> 00:03:59,800 Speaker 1: be borrowing as much thirty year money as they can, 76 00:04:00,320 --> 00:04:03,400 Speaker 1: and they should be refinancing short term money into that. 77 00:04:03,480 --> 00:04:06,280 Speaker 1: Because I believe that the economy, as you know, is 78 00:04:06,280 --> 00:04:08,560 Speaker 1: going to be stronger going forward. I think we could 79 00:04:08,560 --> 00:04:11,120 Speaker 1: have growth rates in between three and three quarters and 80 00:04:11,160 --> 00:04:13,600 Speaker 1: four and a quarter percent, and if we do, interest 81 00:04:13,680 --> 00:04:15,760 Speaker 1: rates are going to be higher. And if they are higher, 82 00:04:16,360 --> 00:04:18,600 Speaker 1: take a look at the budget. I mean, the interest 83 00:04:18,680 --> 00:04:22,120 Speaker 1: is something like seven percent of the entire federal budget, 84 00:04:22,200 --> 00:04:24,320 Speaker 1: so we don't want it to become twelve percent or 85 00:04:24,360 --> 00:04:27,120 Speaker 1: fift in percent simply because the rates go up. Let's 86 00:04:27,120 --> 00:04:29,880 Speaker 1: lock the rates and now, well the Federal Reserve phrase 87 00:04:29,960 --> 00:04:34,480 Speaker 1: interest rates consistent to what economists are predicting three maybe 88 00:04:34,480 --> 00:04:36,960 Speaker 1: four times. Yes, I think so. But the keep in 89 00:04:37,000 --> 00:04:40,800 Speaker 1: mind that right now, because short term rates have already 90 00:04:40,800 --> 00:04:44,480 Speaker 1: been increasing, the Fed has to raise the interest rate 91 00:04:44,560 --> 00:04:48,560 Speaker 1: they charge banks. Otherwise the banks are going to get 92 00:04:48,600 --> 00:04:51,719 Speaker 1: at another subsidy. They don't deserve it. In other words, 93 00:04:51,760 --> 00:04:54,120 Speaker 1: that they can borrow at the discount window. They have 94 00:04:54,200 --> 00:04:57,000 Speaker 1: to raise the discount rate just to keep it competitive 95 00:04:57,040 --> 00:05:00,000 Speaker 1: with treasury rates. Otherwise the banks have an unfair advantag 96 00:05:01,320 --> 00:05:05,000 Speaker 1: So I'm trying to understand if you're saying, and you've 97 00:05:05,000 --> 00:05:07,120 Speaker 1: been consisted in this, and frankly you've been right that 98 00:05:07,160 --> 00:05:10,520 Speaker 1: the U. S economy will continue to accelerate. Um, what 99 00:05:10,560 --> 00:05:12,920 Speaker 1: do you make of the earnings we've gotten so far, 100 00:05:13,000 --> 00:05:17,400 Speaker 1: particularly Caterpillar, which sort of was the key moment in 101 00:05:17,400 --> 00:05:19,600 Speaker 1: this earning season, coming out and saying this may be 102 00:05:19,720 --> 00:05:22,120 Speaker 1: as good as it gets. I am not one for 103 00:05:22,240 --> 00:05:24,880 Speaker 1: taking a look at one quarter. Okay, you've got to 104 00:05:24,880 --> 00:05:26,520 Speaker 1: take a look at this thing over a period of 105 00:05:26,600 --> 00:05:29,760 Speaker 1: quarters and see what's really happening. Keep in mind, too, 106 00:05:30,040 --> 00:05:32,520 Speaker 1: the slashing of the tax rate is one big effect. 107 00:05:32,880 --> 00:05:36,200 Speaker 1: There's a slight offset though. Remember what did what did 108 00:05:37,160 --> 00:05:40,480 Speaker 1: Trump do with regard to capital expenditures? You right off 109 00:05:40,480 --> 00:05:43,560 Speaker 1: the capital expenditures all in the current year. Remember we 110 00:05:43,680 --> 00:05:46,120 Speaker 1: would normally depreciate them over time. Well, one of the 111 00:05:46,160 --> 00:05:48,600 Speaker 1: ways they thought to stimulate the economy would be an 112 00:05:48,600 --> 00:05:51,440 Speaker 1: immediate right off, and it would be. But the question is, then, 113 00:05:52,000 --> 00:05:55,719 Speaker 1: what happens to comparability on accounting information if you're measuring 114 00:05:55,760 --> 00:05:58,760 Speaker 1: return on investment or whatever. Now the investment is lower 115 00:05:58,960 --> 00:06:01,440 Speaker 1: because it's been written off immediately, and the profits are 116 00:06:01,440 --> 00:06:04,000 Speaker 1: lower because it's been written off against the profits. So 117 00:06:04,120 --> 00:06:06,440 Speaker 1: it's gonna be we're gonna go through a period when 118 00:06:06,480 --> 00:06:10,320 Speaker 1: we're gonna have comparables against the prior year for cooperations 119 00:06:10,520 --> 00:06:12,520 Speaker 1: that are not going to be very meaningful. I would 120 00:06:12,520 --> 00:06:15,000 Speaker 1: like to ask the people at Caterpillar to what extent 121 00:06:15,440 --> 00:06:17,359 Speaker 1: was the new tax law, if it had any effect 122 00:06:17,400 --> 00:06:19,719 Speaker 1: at all, And to what extent the tax law is 123 00:06:19,720 --> 00:06:21,680 Speaker 1: going to have an effect in the future, and that's 124 00:06:21,720 --> 00:06:25,400 Speaker 1: true for all capital intensive companies. I want your thoughts 125 00:06:25,440 --> 00:06:28,719 Speaker 1: on inflation and why we seem to be at maybe 126 00:06:28,720 --> 00:06:32,600 Speaker 1: two percent inflation officially, and yet you talk to anybody, 127 00:06:33,040 --> 00:06:36,120 Speaker 1: their perception is inflation is much higher. Know that you 128 00:06:36,160 --> 00:06:38,600 Speaker 1: have to talk to me. Inflation is much lower. Can 129 00:06:38,640 --> 00:06:41,400 Speaker 1: I tell you why? Very interesting. Let's assume the price 130 00:06:41,400 --> 00:06:44,520 Speaker 1: of peace goes up and you switched to string beans, 131 00:06:44,960 --> 00:06:47,400 Speaker 1: and say string beans have not yet gone up, then 132 00:06:47,440 --> 00:06:49,159 Speaker 1: the average price you pay is not as high as 133 00:06:49,160 --> 00:06:52,920 Speaker 1: the index indicates. In other words, the the index assumes 134 00:06:53,240 --> 00:06:55,640 Speaker 1: that the market basket of goods and services that people 135 00:06:55,720 --> 00:06:59,960 Speaker 1: buy is unchanged. There's another reason. I remember I was 136 00:07:00,040 --> 00:07:02,800 Speaker 1: on the board of a company called Vivatar. We made lenses, 137 00:07:02,839 --> 00:07:06,080 Speaker 1: flash equipment, thirty five millimeter cameras, and one of our 138 00:07:06,120 --> 00:07:09,080 Speaker 1: board members walked in and said, look at this, and 139 00:07:09,120 --> 00:07:12,280 Speaker 1: he showed us the new Sony camera that had no 140 00:07:12,400 --> 00:07:15,200 Speaker 1: film in it. Okay, and he goes click, click, click, 141 00:07:15,440 --> 00:07:17,920 Speaker 1: He takes a few photographs, and I said, where is 142 00:07:17,960 --> 00:07:20,960 Speaker 1: the film in there? Oh, no, no film, just a microprocessor. 143 00:07:21,640 --> 00:07:24,120 Speaker 1: I said, how much does that camera cost? Two thousand 144 00:07:24,160 --> 00:07:26,760 Speaker 1: four D? I see, and when do you think it 145 00:07:26,760 --> 00:07:29,160 Speaker 1: will come down to a decent price. Oh, it'll get 146 00:07:29,160 --> 00:07:31,320 Speaker 1: down to eight hundred within a year, and maybe it'll 147 00:07:31,320 --> 00:07:33,480 Speaker 1: be down to three hundred in a few years. But 148 00:07:33,600 --> 00:07:37,040 Speaker 1: here's the problem. People start then buying it big time, 149 00:07:37,600 --> 00:07:40,600 Speaker 1: and guess what happens. It's not yet in the market basket. 150 00:07:41,120 --> 00:07:43,320 Speaker 1: And by the time they put it in the market basket, 151 00:07:43,400 --> 00:07:46,960 Speaker 1: all those price declines that take place from down to 152 00:07:46,960 --> 00:07:50,280 Speaker 1: the three hundred, they never show up anywhere. Keep in mind, too, 153 00:07:50,320 --> 00:07:54,240 Speaker 1: we're getting improvements in the iPhone or in the other phones, 154 00:07:54,600 --> 00:07:58,080 Speaker 1: and the result is we're not it's not being priced 155 00:07:58,120 --> 00:08:01,360 Speaker 1: in to the consumer price index I'm suggesting, and it's 156 00:08:01,400 --> 00:08:03,560 Speaker 1: difficult to do it. Don't get me wrong. I feel 157 00:08:03,600 --> 00:08:07,080 Speaker 1: badly for the Commerce Department and the Bureau Labor Statistics 158 00:08:07,120 --> 00:08:10,360 Speaker 1: because it's difficult to do these calculations. And at the 159 00:08:10,360 --> 00:08:13,600 Speaker 1: same time we have to realize that the inflation rate 160 00:08:13,640 --> 00:08:17,920 Speaker 1: is almost permanently overstated. Joel Stern, we love having you on. 161 00:08:17,960 --> 00:08:19,520 Speaker 1: Thank you so much for being with us and sharing 162 00:08:19,520 --> 00:08:23,080 Speaker 1: your thoughts. Joel Stern, Chairman and chief executive of Stern 163 00:08:23,360 --> 00:08:28,800 Speaker 1: Value Management, very respected person in the market, long term 164 00:08:28,960 --> 00:08:32,120 Speaker 1: voice who is uh sounding a note of optimism on 165 00:08:32,320 --> 00:08:35,400 Speaker 1: all this caution and concerns that the best is behind 166 00:08:35,559 --> 00:08:39,720 Speaker 1: us and woe upon this credit cycle. And Lisa Brom 167 00:08:39,760 --> 00:08:41,880 Speaker 1: what's along with my co host Pim Fox, And this 168 00:08:42,080 --> 00:09:00,640 Speaker 1: is Bloomberg Radio. Oh Apple, the gift that ends up 169 00:09:00,679 --> 00:09:05,280 Speaker 1: giving despite people's doubt about whether or not it could deliver. 170 00:09:05,400 --> 00:09:07,440 Speaker 1: Here to talk about the earnings and what's to come. 171 00:09:07,720 --> 00:09:12,120 Speaker 1: John Butler, senior Telecom Services and Equipment analyst with Bloomberg Intelligence, 172 00:09:12,360 --> 00:09:15,800 Speaker 1: joining us in our eleven three Oh studios. John, is 173 00:09:15,840 --> 00:09:18,240 Speaker 1: there anything negative here or was this just an all 174 00:09:18,360 --> 00:09:21,760 Speaker 1: out and out amazing, wonderful blockbuster that shows that even 175 00:09:21,800 --> 00:09:24,400 Speaker 1: though Apple is tied to the smartphone, it doesn't matter. 176 00:09:24,520 --> 00:09:26,360 Speaker 1: They can still blow it out of the water. There 177 00:09:26,480 --> 00:09:28,680 Speaker 1: was not a lot to worry about this. Come on, 178 00:09:29,600 --> 00:09:34,680 Speaker 1: they defied the skeptics, um, you know. Rolling into the quarter, 179 00:09:34,800 --> 00:09:37,520 Speaker 1: there were all these reports coming out of the supplier 180 00:09:37,600 --> 00:09:41,440 Speaker 1: community that Apple was cutting orders for the iPhone X 181 00:09:41,760 --> 00:09:45,000 Speaker 1: iPhone ten, I should say, and there was a lot 182 00:09:45,000 --> 00:09:48,720 Speaker 1: of the concern was at that iPhone ten is helping 183 00:09:48,760 --> 00:09:51,719 Speaker 1: Apple bring up the average selling price of the iPhone, 184 00:09:51,800 --> 00:09:55,760 Speaker 1: so as unit chip and slow. If your average prices 185 00:09:55,800 --> 00:09:59,760 Speaker 1: going up, you're gonna get nice revenue gains, and we 186 00:10:00,000 --> 00:10:03,400 Speaker 1: saw that this past quarter, right, iPhone shipments were up 187 00:10:03,440 --> 00:10:08,440 Speaker 1: around three percent, but the revenue group four. And I 188 00:10:08,480 --> 00:10:12,719 Speaker 1: think what really encouraged people was Cook's commentary that the 189 00:10:12,800 --> 00:10:15,959 Speaker 1: iPhone TM has been the best selling iPhone in every 190 00:10:16,000 --> 00:10:18,920 Speaker 1: week since its launch, and that has never been the 191 00:10:18,960 --> 00:10:21,200 Speaker 1: case in the past with a new phone. That that 192 00:10:21,360 --> 00:10:24,120 Speaker 1: really is a record for them. And I hate to 193 00:10:24,280 --> 00:10:28,000 Speaker 1: use the word record because every company has record quarters 194 00:10:28,000 --> 00:10:32,680 Speaker 1: and record this and record that. It gets overused and overblown, 195 00:10:32,760 --> 00:10:35,320 Speaker 1: but I think it's really fair to take note to that. 196 00:10:35,440 --> 00:10:38,280 Speaker 1: I think that's an important trend here because it lends 197 00:10:38,360 --> 00:10:42,120 Speaker 1: confidence in the fact that there is a market for 198 00:10:42,240 --> 00:10:45,680 Speaker 1: a thousand dollar plus phone. And I think the iPhone 199 00:10:45,720 --> 00:10:48,600 Speaker 1: ten is proving that it's pims, it's Pins family. Right. 200 00:10:51,920 --> 00:10:55,520 Speaker 1: Can you tell me about margins? So the margins were 201 00:10:55,880 --> 00:10:59,040 Speaker 1: flat if you look behind the curtain. What's going on 202 00:10:59,120 --> 00:11:01,560 Speaker 1: with Apple and a lot of other companies, as you've 203 00:11:01,559 --> 00:11:06,439 Speaker 1: had memory costs rising pretty considerably, and they were asked 204 00:11:06,440 --> 00:11:08,520 Speaker 1: about it on the call and the answer was, we 205 00:11:08,600 --> 00:11:11,880 Speaker 1: really believe we've sort of seen the peak in in 206 00:11:12,000 --> 00:11:15,720 Speaker 1: nand and de ram prices, which are the memory chips 207 00:11:15,800 --> 00:11:20,000 Speaker 1: and so margins should improve going forward. The one thing 208 00:11:20,240 --> 00:11:23,320 Speaker 1: I looked at in particular is I'm very focused on 209 00:11:23,360 --> 00:11:27,280 Speaker 1: that Apple margins where i'm services revenue, pardon me, and 210 00:11:27,320 --> 00:11:32,280 Speaker 1: there are potential to expand margins because they're very Those 211 00:11:32,280 --> 00:11:36,600 Speaker 1: sales are very acreative to Apple's margins. So as services 212 00:11:36,640 --> 00:11:39,079 Speaker 1: increases a percent of revenue, I think it's going to 213 00:11:39,160 --> 00:11:43,760 Speaker 1: bring the margin up. How about the inventory levels. The 214 00:11:43,840 --> 00:11:49,959 Speaker 1: inventory levels, according to the CFO were higher, by the way, uh, 215 00:11:50,160 --> 00:11:53,800 Speaker 1: five to seven weeks versus normal channel inventories of four 216 00:11:53,880 --> 00:11:58,520 Speaker 1: to six And the answer was, we did some buying 217 00:11:58,640 --> 00:12:04,600 Speaker 1: to take advantage of some component costs, so they were 218 00:12:04,640 --> 00:12:08,640 Speaker 1: stockpiling at moments during the quarter. I think when they 219 00:12:08,640 --> 00:12:14,000 Speaker 1: thought they had an advantage on chip prices, spot market 220 00:12:14,200 --> 00:12:16,880 Speaker 1: was as you know, PIM was spot market prices. They 221 00:12:16,920 --> 00:12:20,079 Speaker 1: move all over the place. They sort of chose their 222 00:12:20,120 --> 00:12:23,920 Speaker 1: points and bought components and and built to those um 223 00:12:24,480 --> 00:12:27,800 Speaker 1: those purchases. So I want to talk about share buybacks 224 00:12:27,880 --> 00:12:29,760 Speaker 1: because the numbers kind of blew me out of the water. 225 00:12:29,840 --> 00:12:33,480 Speaker 1: This morning. Uh, they announced one hundred billion dollars of 226 00:12:33,520 --> 00:12:39,120 Speaker 1: additional share repurchases, but they also showed that the amount 227 00:12:39,160 --> 00:12:41,840 Speaker 1: of money that they spent on their own shares in 228 00:12:41,880 --> 00:12:45,400 Speaker 1: the first quarter was equal to all of the shares 229 00:12:45,440 --> 00:12:48,760 Speaker 1: of any one of two hundred and seventy five members 230 00:12:48,760 --> 00:12:52,000 Speaker 1: of the SMP five hundred. At what point is this 231 00:12:52,400 --> 00:12:56,560 Speaker 1: counterproductive in the sense that, yes, the returning shareholder of money, 232 00:12:56,600 --> 00:12:59,840 Speaker 1: but they're not investing in anything new or acquiring any 233 00:12:59,880 --> 00:13:03,280 Speaker 1: of a companies that could potentially diversify their business away 234 00:13:03,280 --> 00:13:06,800 Speaker 1: from the smartphone. I share that concern. That's really my 235 00:13:06,960 --> 00:13:09,600 Speaker 1: only answer there is I saw the size of the 236 00:13:09,640 --> 00:13:14,400 Speaker 1: buy back and I thought, you know, I realized to them, 237 00:13:14,600 --> 00:13:18,840 Speaker 1: Apple shares are attractive, but there have to be higher 238 00:13:18,880 --> 00:13:25,360 Speaker 1: return projects out their higher return potential acquisitions, particularly Sinceri 239 00:13:25,679 --> 00:13:29,679 Speaker 1: in particular has sort of lagged its its rivals Google Assistant, 240 00:13:29,720 --> 00:13:33,360 Speaker 1: for example. Why aren't they out buying companies that are 241 00:13:33,480 --> 00:13:40,679 Speaker 1: doing natural language processing better than they are or A. I. Um, 242 00:13:40,720 --> 00:13:43,480 Speaker 1: you know, a lot of the companies in those areas 243 00:13:43,480 --> 00:13:45,920 Speaker 1: are very small, so it doesn't take a lot to 244 00:13:45,960 --> 00:13:48,800 Speaker 1: buy them. But I'm with you. I think they should 245 00:13:48,800 --> 00:13:53,040 Speaker 1: have kept some dry powder for M and A. Well. 246 00:13:53,080 --> 00:13:55,760 Speaker 1: I just I think it was up from seventon that 247 00:13:55,800 --> 00:13:57,600 Speaker 1: most people thought it was going to be the announced 248 00:13:57,760 --> 00:14:00,320 Speaker 1: share buy back, so they actually increase they would over 249 00:14:00,360 --> 00:14:02,679 Speaker 1: what people were expecting with capital returns. Just to put 250 00:14:02,720 --> 00:14:05,080 Speaker 1: it into perspective, it's not just that they were returning 251 00:14:05,120 --> 00:14:08,640 Speaker 1: capital to shareholders as people expected. They blew the estimates 252 00:14:08,679 --> 00:14:12,880 Speaker 1: out of the water, right, I don't right, So again 253 00:14:13,120 --> 00:14:16,439 Speaker 1: I was a little bit concerned about that in the 254 00:14:16,520 --> 00:14:19,800 Speaker 1: for the same reason you are, which is you know, 255 00:14:19,880 --> 00:14:23,280 Speaker 1: they could do a transformative acquisition here. Not that they 256 00:14:23,320 --> 00:14:28,320 Speaker 1: need to transform, but they could diversify more. In the 257 00:14:28,400 --> 00:14:32,520 Speaker 1: latest quarter, for example, iPhone sales were sixty of the 258 00:14:32,560 --> 00:14:36,840 Speaker 1: total and probably a much higher percent of profits. So 259 00:14:36,880 --> 00:14:42,480 Speaker 1: they're still highly dependent on a single consumer electronics product line. 260 00:14:43,040 --> 00:14:46,760 Speaker 1: So I'd love to see more diversification there, particularly in 261 00:14:46,880 --> 00:14:49,480 Speaker 1: services to I didn't mention that they could make some 262 00:14:49,680 --> 00:14:53,720 Speaker 1: key acquisitions there. Content. Perhaps I've got to have you back. 263 00:14:53,960 --> 00:14:56,840 Speaker 1: We've got much more to talk about. What Thanks very much, 264 00:14:56,920 --> 00:14:59,960 Speaker 1: John Butler. We found something to worry about. There's always 265 00:15:00,000 --> 00:15:03,320 Speaker 1: something to worry about. John Butler, senior Telecom services analyst 266 00:15:03,400 --> 00:15:22,320 Speaker 1: for Bloomberg Intelligence, much appreciated the fund that our next 267 00:15:22,360 --> 00:15:25,360 Speaker 1: guest manages is up more than six percent so far 268 00:15:25,480 --> 00:15:27,440 Speaker 1: this year. I want to introduce will prove it. He 269 00:15:27,480 --> 00:15:31,000 Speaker 1: is portfolio manager of the Fidelity Latin America Fund. The 270 00:15:31,120 --> 00:15:34,080 Speaker 1: symbol there is flat X, that's f l A t 271 00:15:34,680 --> 00:15:37,600 Speaker 1: X and it has about six hundred and fifty million 272 00:15:37,640 --> 00:15:40,680 Speaker 1: dollars of assets. And he is based in Boston, but 273 00:15:40,800 --> 00:15:43,480 Speaker 1: joins us here in our eleven three oh studios. Will 274 00:15:43,560 --> 00:15:46,280 Speaker 1: thanks very much for coming in. Maybe just give people 275 00:15:46,280 --> 00:15:48,160 Speaker 1: a little bit of your background as to how you 276 00:15:48,240 --> 00:15:51,560 Speaker 1: came to manage this particular fund. Sure, thanks for having me, 277 00:15:51,720 --> 00:15:54,760 Speaker 1: guys really appreciate it. Um So, I joined Fidelity ten 278 00:15:54,840 --> 00:15:58,760 Speaker 1: years ago. UM, you know, spent the first eight years 279 00:15:58,840 --> 00:16:01,440 Speaker 1: looking at various sector so did a couple of years 280 00:16:01,440 --> 00:16:04,760 Speaker 1: in global consumer, looked at the beverage and tobacco stocks, 281 00:16:05,000 --> 00:16:08,560 Speaker 1: luxury goods companies, um CAN. Spent a few years looking 282 00:16:08,560 --> 00:16:11,560 Speaker 1: at the commodity space, so the medals and miners UM, 283 00:16:11,600 --> 00:16:14,520 Speaker 1: and then another couple of years looking at emerging market financials. 284 00:16:14,520 --> 00:16:16,920 Speaker 1: And then two years ago took over. Took over this fund. 285 00:16:17,640 --> 00:16:21,960 Speaker 1: All right, so let's dig into Latin American equities. Obviously, 286 00:16:21,960 --> 00:16:24,720 Speaker 1: emerging markets had been on a tear. I have seen 287 00:16:24,760 --> 00:16:27,080 Speaker 1: a little bit more of a soft patch of late. 288 00:16:27,640 --> 00:16:30,640 Speaker 1: I want to talk about a couple of countries in particular. 289 00:16:30,760 --> 00:16:33,640 Speaker 1: Let's start with Mexico. A lot of question marks. Right now, 290 00:16:33,640 --> 00:16:36,760 Speaker 1: we're heading into the election that is highly contentious. What's 291 00:16:36,760 --> 00:16:38,960 Speaker 1: your outlook? Yeah, I mean, if you look at the 292 00:16:39,040 --> 00:16:42,520 Speaker 1: recent polls, AM low so Locus obdor Um is in 293 00:16:42,600 --> 00:16:45,600 Speaker 1: the lead by a lot um and you know, the 294 00:16:45,640 --> 00:16:48,200 Speaker 1: elections in a couple of months. So you know, I 295 00:16:48,240 --> 00:16:50,960 Speaker 1: think that the odds are increasing that um that that 296 00:16:51,120 --> 00:16:54,080 Speaker 1: he's going to win that election. Um, you know, napt 297 00:16:54,120 --> 00:16:57,840 Speaker 1: uncertainties continue. Um. You know, I don't really have a 298 00:16:57,840 --> 00:17:00,440 Speaker 1: call on what's gonna happen with with NAFTA or with election. 299 00:17:00,560 --> 00:17:02,120 Speaker 1: So how do you how do you actually bet on 300 00:17:02,160 --> 00:17:05,240 Speaker 1: specific companies if you don't have a call on these 301 00:17:05,320 --> 00:17:08,040 Speaker 1: massive macro issues. Yeah, good questions. So I look at 302 00:17:08,080 --> 00:17:10,679 Speaker 1: good I'm looking for good quality businesses at cheap valuations. 303 00:17:11,000 --> 00:17:12,720 Speaker 1: There are a lot of great companies in Mexico, and 304 00:17:12,720 --> 00:17:14,480 Speaker 1: there are a lot of cheap companies in Mexico. But 305 00:17:14,520 --> 00:17:16,840 Speaker 1: there are not a lot of great cheap companies in Mexico. 306 00:17:16,960 --> 00:17:20,120 Speaker 1: So I'm underweight that market anyway, just given the lack 307 00:17:20,160 --> 00:17:22,240 Speaker 1: of value that I see there. So I don't really 308 00:17:22,280 --> 00:17:24,520 Speaker 1: need to make a call on these macro issues. UM. 309 00:17:24,680 --> 00:17:27,720 Speaker 1: What I'm really hoping is, you know, if UM, if 310 00:17:27,720 --> 00:17:31,119 Speaker 1: AMIL is elected, or if there's a negative resolution to NAFTA, 311 00:17:31,200 --> 00:17:33,440 Speaker 1: that the market comes down, I get the opportunity to 312 00:17:33,440 --> 00:17:35,440 Speaker 1: pick up some of these some of the local equities 313 00:17:35,600 --> 00:17:38,760 Speaker 1: at cheap values. Just give an example of a couple 314 00:17:38,760 --> 00:17:42,639 Speaker 1: of equities. You have a credit company, credit finance company 315 00:17:42,720 --> 00:17:46,119 Speaker 1: in the portfolio from Mexico. Plus I believe also you 316 00:17:46,200 --> 00:17:50,000 Speaker 1: have sort of a medical lab company as well. Yeah, 317 00:17:50,080 --> 00:17:53,080 Speaker 1: I mean so UM in Mexico. The sector that I 318 00:17:53,160 --> 00:17:56,159 Speaker 1: most overweight is financial services UM. So I'm not sure 319 00:17:56,200 --> 00:17:59,360 Speaker 1: you're talking about critical reality is one. Yeah, So financial 320 00:17:59,400 --> 00:18:02,399 Speaker 1: services in Mexico are very underpenetrated. It's one of the 321 00:18:02,440 --> 00:18:05,560 Speaker 1: most underpenetrated markets in the world for for credit products. 322 00:18:05,920 --> 00:18:08,800 Speaker 1: So that is a small cap company which does payroll 323 00:18:08,920 --> 00:18:13,359 Speaker 1: lending to government employees, so very secure UM kind of lending. 324 00:18:13,840 --> 00:18:16,760 Speaker 1: UM been able to grow quite quickly at very high 325 00:18:16,840 --> 00:18:21,320 Speaker 1: returns historically. And that stock UM I think is either 326 00:18:21,400 --> 00:18:24,960 Speaker 1: the most or or one of the least expensive maybe 327 00:18:25,320 --> 00:18:28,679 Speaker 1: bottom two or three stocks within the within that market. 328 00:18:28,720 --> 00:18:31,000 Speaker 1: And so I think it's good quality company, very very 329 00:18:31,080 --> 00:18:34,320 Speaker 1: cheap UM with good growth prospects. Let's head south. Let's 330 00:18:34,320 --> 00:18:37,720 Speaker 1: go to Brazil, because this is an economy that has 331 00:18:37,760 --> 00:18:41,960 Speaker 1: been in turmoil and been into the deepest recession, uh forever. 332 00:18:42,800 --> 00:18:47,760 Speaker 1: So what's your what's your approach to Brazil? Are you overweight? Underweight? 333 00:18:47,920 --> 00:18:51,119 Speaker 1: And uh what can you illuminate? Yeah, so I'm overweight 334 00:18:51,119 --> 00:18:55,800 Speaker 1: Brazil since end of so after Timor came in and 335 00:18:55,840 --> 00:18:58,480 Speaker 1: they were able to pass the first fiscal reform um. 336 00:18:58,520 --> 00:19:00,960 Speaker 1: So I've been overweight that market. So you look at Brazil. 337 00:19:01,040 --> 00:19:03,840 Speaker 1: What's really interesting about Brazil is it's the only major 338 00:19:04,240 --> 00:19:07,920 Speaker 1: economy in the world which is early cycle. So every 339 00:19:07,920 --> 00:19:10,560 Speaker 1: other market in the world, at least significant one is 340 00:19:10,640 --> 00:19:13,840 Speaker 1: mid or late cycle. Brazil, all the economic indicators are 341 00:19:13,840 --> 00:19:16,400 Speaker 1: showing now is recovering from this recession. So you look 342 00:19:16,440 --> 00:19:20,520 Speaker 1: at unemployment, inflation, interest rates. Him he's basically saying it 343 00:19:20,560 --> 00:19:25,879 Speaker 1: can't get any worse. And I think that that's a 344 00:19:25,960 --> 00:19:30,359 Speaker 1: relevant point because it is difficult for many people to 345 00:19:30,440 --> 00:19:33,880 Speaker 1: recognize that you want to be purchasing quality assets when 346 00:19:33,920 --> 00:19:36,760 Speaker 1: no one else believes they are quality assets. You don't 347 00:19:36,760 --> 00:19:40,120 Speaker 1: want to buy them when everybody is already aboard. Absolutely, 348 00:19:40,200 --> 00:19:42,240 Speaker 1: I mean paying top dollar. And this is why I 349 00:19:42,240 --> 00:19:44,080 Speaker 1: think just being aware of where you are in the 350 00:19:44,119 --> 00:19:46,600 Speaker 1: cycle matters. Like I'm not trying to call cycles, but 351 00:19:46,760 --> 00:19:49,760 Speaker 1: if you are at an early cycle stage and you 352 00:19:49,760 --> 00:19:52,560 Speaker 1: can find cheap assets or even mid cycle multiples on 353 00:19:52,560 --> 00:19:55,240 Speaker 1: on assets at early cycle, that's a great place to fish. 354 00:19:55,400 --> 00:19:57,359 Speaker 1: If you are a late cycle and you're playing top dollar, 355 00:19:57,720 --> 00:20:01,760 Speaker 1: that's bad. Alright. So is Brazil where your most overweight 356 00:20:01,840 --> 00:20:04,480 Speaker 1: right now? It is? It is so within Brazil, I 357 00:20:04,480 --> 00:20:06,960 Speaker 1: mean the financial space I think is very interesting. The 358 00:20:06,960 --> 00:20:10,480 Speaker 1: banks there are exceptional. Um, it's interesting, like you compare 359 00:20:10,480 --> 00:20:14,000 Speaker 1: emerging markets versus developed markets. In developed markets, banks are 360 00:20:14,480 --> 00:20:18,119 Speaker 1: now at least social businesses sometimes cover the cost of capital, 361 00:20:18,160 --> 00:20:22,120 Speaker 1: sometimes they don't. Brazil consolidated market, high margins, great businesses. 362 00:20:22,480 --> 00:20:25,439 Speaker 1: So I'm trying to get a sense, given the trade 363 00:20:25,440 --> 00:20:29,639 Speaker 1: war concerns, where is Latin America as a bet And 364 00:20:29,680 --> 00:20:32,200 Speaker 1: I know you're completely biased because you focus entirely on 365 00:20:32,359 --> 00:20:34,919 Speaker 1: this region, but you know where in the cycle if 366 00:20:34,920 --> 00:20:37,080 Speaker 1: you could say it is the region, I mean it's 367 00:20:37,160 --> 00:20:40,040 Speaker 1: it's a more important issue from Mexico obviously compared with Brazil. 368 00:20:40,200 --> 00:20:44,280 Speaker 1: So Brazil exports commodities for the most part, They're not 369 00:20:44,320 --> 00:20:48,040 Speaker 1: a big finish good exporter and the commodities are metals, 370 00:20:48,359 --> 00:20:53,480 Speaker 1: UM commodity, UM, soft bodies, so pulp and paper, soy corn, 371 00:20:53,600 --> 00:20:56,359 Speaker 1: that kind of thing. The export everywhere. China is a 372 00:20:56,359 --> 00:20:58,240 Speaker 1: big customer, but they also export to Europe in the 373 00:20:58,320 --> 00:21:01,119 Speaker 1: US UM. So you don't think it's going to be 374 00:21:01,160 --> 00:21:02,800 Speaker 1: that big of adition. I don't think so. I don't think. 375 00:21:02,840 --> 00:21:04,880 Speaker 1: I mean you could argue that they would. They would 376 00:21:04,920 --> 00:21:07,400 Speaker 1: benefit from the trades spat between the US and China, 377 00:21:07,520 --> 00:21:10,440 Speaker 1: right because if China is putting tariffs on imported soy 378 00:21:10,480 --> 00:21:13,200 Speaker 1: from the US, Brazil is actually the largest soy export 379 00:21:13,240 --> 00:21:15,040 Speaker 1: in the world, is going to help them all right, 380 00:21:15,200 --> 00:21:17,280 Speaker 1: Will Pruett, thank you so much for being with us 381 00:21:17,280 --> 00:21:20,639 Speaker 1: and coming in from Boston. Portfolio manager for the Fidelity 382 00:21:20,760 --> 00:21:25,320 Speaker 1: Latin American Fund uh managing about six hundred and fifty 383 00:21:25,440 --> 00:21:28,960 Speaker 1: million dollars of assets, and he has headed to Chile 384 00:21:29,560 --> 00:21:47,360 Speaker 1: in less than a week. Have a great flight. Welcome 385 00:21:47,400 --> 00:21:51,159 Speaker 1: to the Megan economy. I'm talking about the marriage between 386 00:21:51,200 --> 00:21:55,359 Speaker 1: Prince Harry and Megan Marco, which has the potential to 387 00:21:55,560 --> 00:22:00,159 Speaker 1: transform the fashion industry, if not forever, perhaps for a 388 00:22:00,160 --> 00:22:03,480 Speaker 1: few years. Joining us now, James Fallon editorial director for 389 00:22:03,680 --> 00:22:06,160 Speaker 1: Women's Where Daily, joining us here in our eleven three 390 00:22:06,160 --> 00:22:08,640 Speaker 1: our studios, James, thank you so much for being here. 391 00:22:08,760 --> 00:22:12,280 Speaker 1: So tell us about the Megan economy and just how 392 00:22:12,320 --> 00:22:16,680 Speaker 1: significant this marriage will be two retailers another in the 393 00:22:16,680 --> 00:22:19,120 Speaker 1: fashion world. I think it will be very significant. The 394 00:22:19,160 --> 00:22:23,840 Speaker 1: initial projections by UK Consultancy where that the marriage would 395 00:22:23,840 --> 00:22:27,440 Speaker 1: inject five hundred million pounds so six hundred plus million 396 00:22:27,480 --> 00:22:30,879 Speaker 1: dollars into the British economy. They immediately raise that and 397 00:22:30,920 --> 00:22:34,800 Speaker 1: they're now expecting it to be almost a billion pounds um. 398 00:22:34,840 --> 00:22:39,080 Speaker 1: And anything that Megan Marco wears more or less flies 399 00:22:39,160 --> 00:22:43,679 Speaker 1: off the shelves or gets back ordered on online, etcetera. 400 00:22:43,920 --> 00:22:46,400 Speaker 1: So okay, so let's put this into context. Prince Harry 401 00:22:46,520 --> 00:22:49,080 Speaker 1: is not going to be king unless his brother dies, right, 402 00:22:49,160 --> 00:22:51,719 Speaker 1: So he's six in line. He's sixth in line, right, 403 00:22:51,760 --> 00:22:54,879 Speaker 1: so he's there's and five other people have to go 404 00:22:54,960 --> 00:22:58,000 Speaker 1: before he becomes king. Megan Marco is a an American 405 00:22:58,080 --> 00:23:01,960 Speaker 1: divorcee who is older than him, and they're getting married 406 00:23:01,960 --> 00:23:05,399 Speaker 1: in a relatively private affair. Uh. Not a lot of 407 00:23:05,520 --> 00:23:09,640 Speaker 1: media is going to be allowed. Does this affect the 408 00:23:09,720 --> 00:23:13,720 Speaker 1: economic impact or is the fascination with soon to be 409 00:23:13,840 --> 00:23:18,960 Speaker 1: Princess Markle too significant. It's that's the fascination is too significant. 410 00:23:18,960 --> 00:23:20,560 Speaker 1: I mean they're going to be tracking it one way 411 00:23:20,640 --> 00:23:23,800 Speaker 1: or the other. And I'm sure the British coverage is 412 00:23:23,840 --> 00:23:26,919 Speaker 1: already breathless and it will become even more breathless as 413 00:23:26,960 --> 00:23:30,640 Speaker 1: they build up to the May ninete date. Um as 414 00:23:30,920 --> 00:23:33,840 Speaker 1: the American coverage will become more breathless too, so it'll 415 00:23:33,880 --> 00:23:38,399 Speaker 1: be significant. And then you're also seeing Prince Harry in 416 00:23:38,440 --> 00:23:40,840 Speaker 1: a way is more popular than Prince William, even though 417 00:23:40,880 --> 00:23:43,760 Speaker 1: Prince William is heir to the throne. I think everybody 418 00:23:43,840 --> 00:23:47,080 Speaker 1: kind of identifies with the bad boy image a little 419 00:23:47,080 --> 00:23:51,800 Speaker 1: bit of Prince Harry. He's very personable. Um. And you're 420 00:23:51,800 --> 00:23:54,679 Speaker 1: also seeing a difference where, you know, as much of 421 00:23:54,720 --> 00:23:57,520 Speaker 1: an impact as Katherine Middleton has had, she now has 422 00:23:57,520 --> 00:24:01,240 Speaker 1: three children. She's not an actress can Marco as an actress. 423 00:24:01,320 --> 00:24:05,000 Speaker 1: So the public, being fickle, will immediately switch their attitude 424 00:24:05,000 --> 00:24:08,240 Speaker 1: and focus on Megan, and poor Kate will be like, oh, 425 00:24:08,280 --> 00:24:13,400 Speaker 1: she's a mother who cares baically. Wow, way harsh. They're 426 00:24:13,440 --> 00:24:18,280 Speaker 1: tough over there, clearly, Okay, I've got the Bride the 427 00:24:18,280 --> 00:24:23,600 Speaker 1: bridebook dot co dot uk. Countdown clock here sixteen days, 428 00:24:23,720 --> 00:24:29,240 Speaker 1: twenty hours, fifteen minutes to the Royal wedding. Estimated cost 429 00:24:29,520 --> 00:24:33,840 Speaker 1: about forty three million dollars. One of those costs is 430 00:24:33,880 --> 00:24:38,320 Speaker 1: supposed to be uh two dresses the wedding dress that 431 00:24:38,880 --> 00:24:40,720 Speaker 1: the bride will wear a plus the dress that she 432 00:24:40,760 --> 00:24:44,360 Speaker 1: will then wear in the evening celebration. Estimated costs there 433 00:24:44,400 --> 00:24:48,119 Speaker 1: about four hundred thou dollars. Yes, who will make the dress? 434 00:24:48,520 --> 00:24:54,879 Speaker 1: That's the questions, um, I mean that's the question. I 435 00:24:54,880 --> 00:24:57,879 Speaker 1: mean that the odds makers at the moment have this 436 00:24:58,119 --> 00:25:01,000 Speaker 1: British designer Ralph and Russo is this is one of 437 00:25:01,040 --> 00:25:04,120 Speaker 1: the shortlists. Um. It was a designer named Air Deem 438 00:25:04,200 --> 00:25:06,800 Speaker 1: for a while, but he seems to have faded. No 439 00:25:06,840 --> 00:25:09,800 Speaker 1: one will know until she steps out of the carriage 440 00:25:09,880 --> 00:25:12,800 Speaker 1: and they get that brief photo of her. Um. And 441 00:25:12,880 --> 00:25:15,600 Speaker 1: it can have a significant impact. It will have a 442 00:25:15,640 --> 00:25:19,640 Speaker 1: significant impact on whatever that person's businesses. Whether that impact 443 00:25:19,720 --> 00:25:24,080 Speaker 1: lasts remains to be seen. I mean, the Emmanuel's who 444 00:25:24,119 --> 00:25:28,080 Speaker 1: designed Princess Diana's wedding dress, built a career that lasted 445 00:25:28,359 --> 00:25:32,800 Speaker 1: maybe fifteen years, and Elizabeth Emmanuel still designs. But it 446 00:25:32,880 --> 00:25:37,560 Speaker 1: then kind of disappeared. Um, if I give you a 447 00:25:37,600 --> 00:25:40,760 Speaker 1: quiz to name the designer of Sarah Ferguson's wedding dress, 448 00:25:40,800 --> 00:25:43,160 Speaker 1: I dare to say neither of. You could probably say 449 00:25:43,200 --> 00:25:46,680 Speaker 1: that you're talking to such the wrong person because he 450 00:25:47,560 --> 00:25:50,200 Speaker 1: is her name, um, and she had a career. So 451 00:25:50,480 --> 00:25:53,520 Speaker 1: but who do you think will I think probably it 452 00:25:53,600 --> 00:25:55,720 Speaker 1: might be rough and Rousso I think that that's the 453 00:25:55,760 --> 00:26:00,080 Speaker 1: sort of focus that everybody's on. But again people are saying, 454 00:26:00,119 --> 00:26:03,000 Speaker 1: maybe it won't be a British designer, maybe it has 455 00:26:03,040 --> 00:26:05,040 Speaker 1: to almost be a British designer. What she may do 456 00:26:05,160 --> 00:26:07,960 Speaker 1: is she may go transatlantic, So the designer of the 457 00:26:08,000 --> 00:26:10,720 Speaker 1: wedding dress might be British and the designer of the 458 00:26:10,760 --> 00:26:15,560 Speaker 1: evening dress might be American. Let's talk besides the wedding dresses, 459 00:26:16,000 --> 00:26:20,200 Speaker 1: just sort of the fury over anything that she wears. Uh, 460 00:26:20,600 --> 00:26:24,080 Speaker 1: just out and about have we already seen the Megan effect, 461 00:26:25,520 --> 00:26:28,240 Speaker 1: particularly with a lot of the younger Canadian labels she wore, 462 00:26:28,280 --> 00:26:32,600 Speaker 1: because remember Suits was filmed in Toronto, so she sort 463 00:26:32,640 --> 00:26:36,440 Speaker 1: of took up a lot of young Canadian brands. Um, 464 00:26:36,560 --> 00:26:39,720 Speaker 1: and I mean one of them was jotted down a note. 465 00:26:39,760 --> 00:26:42,200 Speaker 1: One of them was this brand called mackage, and so 466 00:26:42,280 --> 00:26:45,640 Speaker 1: she wore a suit from them and they saw one 467 00:26:45,680 --> 00:26:50,639 Speaker 1: point six billion impressions after that, like boom. And I 468 00:26:50,680 --> 00:26:53,520 Speaker 1: mean it's just phenomenal the impact that she has. And 469 00:26:53,560 --> 00:26:56,160 Speaker 1: she knows how to wear I mean it sounds kind 470 00:26:56,160 --> 00:26:58,040 Speaker 1: of wrong, but she knows how to wear clothes. I 471 00:26:58,040 --> 00:27:01,200 Speaker 1: mean she looks very stylish, makes fabulous, she's a beautiful woman, 472 00:27:01,320 --> 00:27:04,000 Speaker 1: and she wears them well and carries herself well. And 473 00:27:04,040 --> 00:27:05,880 Speaker 1: so she's a good mom. Yeah no, And I think 474 00:27:05,920 --> 00:27:11,800 Speaker 1: I think that she's bringing up again not being critical, 475 00:27:12,160 --> 00:27:18,520 Speaker 1: Kate Middleton, but you know, Kate Middleton was not an actress. 476 00:27:18,880 --> 00:27:21,600 Speaker 1: You know, she was just a quote normal person. So 477 00:27:21,920 --> 00:27:24,560 Speaker 1: you know, she looks very stylished and closed. But you're 478 00:27:24,640 --> 00:27:27,159 Speaker 1: you're dealing with someone now and Megan Markle who is 479 00:27:27,280 --> 00:27:29,280 Speaker 1: used to being in the public eye. And I think 480 00:27:29,280 --> 00:27:35,480 Speaker 1: that's the difference. Estimate of four thousand guests, seventeen thousand 481 00:27:35,520 --> 00:27:40,920 Speaker 1: glasses of champagne and wine, thousand canapas, and an eight 482 00:27:41,119 --> 00:27:46,440 Speaker 1: tier banana cake. I'm intrigued by the banana case. It's 483 00:27:46,560 --> 00:27:50,680 Speaker 1: very odd. I think them I'd be surprised IF's only 484 00:27:50,960 --> 00:27:54,760 Speaker 1: um so little champagne, because they didn't. Well, the drinks 485 00:27:54,760 --> 00:27:58,720 Speaker 1: are estimated to cost about two hundred and sixty thou dollars. Yes, 486 00:27:59,640 --> 00:28:04,280 Speaker 1: will will there be souvenirs, of course, that will And 487 00:28:04,320 --> 00:28:06,920 Speaker 1: I think that's part of the billion pounds. Yeah, that's 488 00:28:06,920 --> 00:28:08,840 Speaker 1: part of the billion pounds. You'll have the plates, you'll 489 00:28:08,840 --> 00:28:11,240 Speaker 1: have the cops, you'll have the hats, you'll have whatever. 490 00:28:11,359 --> 00:28:15,960 Speaker 1: The bespokes silver plated fanfare trumpets, as well as a 491 00:28:16,080 --> 00:28:18,960 Speaker 1: drone destroyer for security. Well, I want to I want 492 00:28:18,960 --> 00:28:22,359 Speaker 1: to talk about the Royal wedding and whether there's anything 493 00:28:22,359 --> 00:28:25,280 Speaker 1: comparable in the US or whether this is its own base. 494 00:28:25,280 --> 00:28:27,240 Speaker 1: When it comes to its effect on the fashion world, 495 00:28:29,240 --> 00:28:34,880 Speaker 1: there really isn't anything comparable. I don't think that um 496 00:28:34,920 --> 00:28:39,080 Speaker 1: where you have one person trickling down and having that impact. 497 00:28:39,120 --> 00:28:41,560 Speaker 1: I mean you have celebrities of course who you know, 498 00:28:42,200 --> 00:28:44,720 Speaker 1: Beyonce or whomever, who have their own clothing lines and 499 00:28:44,800 --> 00:28:47,720 Speaker 1: can influence it. But there really isn't anything where there's 500 00:28:47,800 --> 00:28:49,960 Speaker 1: one event that everybody looks at and it's like, oh 501 00:28:49,960 --> 00:28:53,000 Speaker 1: my god, do we care what dress she's wearing? You 502 00:28:53,040 --> 00:28:55,760 Speaker 1: know the Oscars, yes, but those are every year other 503 00:28:55,800 --> 00:28:58,040 Speaker 1: than the Canadian brands. Just real quick, are there any 504 00:28:58,040 --> 00:29:00,640 Speaker 1: other brands that have benefited from me. Mark, I mean, 505 00:29:00,680 --> 00:29:04,520 Speaker 1: she's worn J crew and and that's buckled up. She's 506 00:29:04,560 --> 00:29:08,120 Speaker 1: she's warn Jason wu Um. And it will be interesting 507 00:29:08,160 --> 00:29:12,200 Speaker 1: to see how she mixes the balance, because you know 508 00:29:12,320 --> 00:29:14,840 Speaker 1: she will be a British princess, So how does she 509 00:29:14,960 --> 00:29:20,400 Speaker 1: mix the balance of promoting Britain but also remaining America. Well, 510 00:29:20,440 --> 00:29:23,640 Speaker 1: we've got sixteen days and twenty hours and fifteen minutes 511 00:29:23,680 --> 00:29:28,080 Speaker 1: to find out. Our thanks to James. Okay, don't rush it. 512 00:29:28,840 --> 00:29:32,960 Speaker 1: They're still sewing. James Fallon, editorial director, Women's Wear Daily, 513 00:29:33,160 --> 00:29:35,160 Speaker 1: thank you very much for being with us and and 514 00:29:35,280 --> 00:29:41,760 Speaker 1: lightening us about this upcoming a royal wedding. Thanks for 515 00:29:41,800 --> 00:29:44,440 Speaker 1: listening to the Bloomberg P and L podcast. You can 516 00:29:44,480 --> 00:29:48,320 Speaker 1: subscribe and listen to interviews at Apple Podcasts, SoundCloud, or 517 00:29:48,360 --> 00:29:51,840 Speaker 1: whatever podcast platform you prefer. I'm Pim Fox. I'm on 518 00:29:51,880 --> 00:29:55,720 Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 519 00:29:55,840 --> 00:29:58,440 Speaker 1: It's one before the podcast. You can always catch us 520 00:29:58,480 --> 00:30:02,280 Speaker 1: worldwide on Bloomberg Radio. To be Atta