WEBVTT - Big Bank's Earnings Breakdown Continues 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 purtnising the power of Business 0:00:13.680 --> 0:00:17.159 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analysts 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 --> 0:00:28.360 Eastern Time on Bloomberg Radio or watch us on YouTube 0:00:28.400 --> 0:00:32.159 search Bloomberg Clovel News. So we had another big batch 0:00:32.400 --> 0:00:35.760 of bank earnings, the Big Bank, City Group, equity sales, 0:00:35.760 --> 0:00:40.000 trading revenue topping estimates, Fick disappointing investment banking fees, a 0:00:40.040 --> 0:00:43.280 little bit of a surprise there, uh Bag of America 0:00:43.320 --> 0:00:45.960 struggling to build back its landing income wells Fargo, average 0:00:45.960 --> 0:00:49.360 loans tumbling in the second quarter. We know that consumers 0:00:49.360 --> 0:00:52.519 and businesses, because of some of those stimulus programs, refrain 0:00:52.560 --> 0:00:54.680 from more borrowing. Tim Well, let's get right into it 0:00:54.680 --> 0:00:57.200 with Anton Show, its president and chief investment officer at 0:00:57.240 --> 0:01:01.160 Menden Capital Advisors, joining us once again on the from Florida. Anton. 0:01:01.200 --> 0:01:02.720 It's always great to have you on the show, especially 0:01:02.720 --> 0:01:05.080 when we're talking banks, because I know you follow the 0:01:05.160 --> 0:01:08.920 regional banks very closely. But how are you thinking about 0:01:09.000 --> 0:01:10.920 or how would you characterize what we've heard from from 0:01:10.920 --> 0:01:13.080 the big banks this week as they've reported earnings for 0:01:13.120 --> 0:01:17.760 their second quarter. Yeah, for the most part, not a surprise. Um, 0:01:17.800 --> 0:01:19.920 you know loan growth if you if you, of course 0:01:19.959 --> 0:01:23.200 I watched the weekly loan growth numbers. No surprise, There 0:01:23.280 --> 0:01:26.160 isn't any long growth because there's so much liquidity out there, 0:01:26.600 --> 0:01:29.080 and part of that liquidity is finding its way into 0:01:29.080 --> 0:01:32.080 deposits of the banks, which is lovely. It would be 0:01:32.120 --> 0:01:34.080 really nice if they could offset it with some loans 0:01:34.120 --> 0:01:36.480 instead of the low yield on some of the securities 0:01:36.520 --> 0:01:41.640 they're buying out there. Well, okay, right, it makes sense. Um, 0:01:41.800 --> 0:01:44.000 you know we talked about during the pandemic that was 0:01:44.040 --> 0:01:46.840 a pretty good environment for these big banks. What's the 0:01:46.880 --> 0:01:50.160 outlook for them or what stands out among the big 0:01:50.200 --> 0:01:53.760 ones Anton, that you have um that have reported, whether 0:01:53.760 --> 0:01:55.840 it's City, whether it's Bank of America, whether it's Wells 0:01:55.920 --> 0:01:58.600 JP Morgan Goldman. Is there anybody in particular that you 0:01:58.640 --> 0:02:01.400 really kind of hone in on because as maybe an 0:02:01.440 --> 0:02:06.680 indicator where the financial world, the banking world is going well. 0:02:06.720 --> 0:02:09.160 You know, if you look at the big their national right, 0:02:09.240 --> 0:02:11.880 and you can't you can't pick on regions. You know, 0:02:11.960 --> 0:02:14.959 I love picking on regions of the world because some 0:02:14.960 --> 0:02:18.800 some regions have above trend growth, so on a national basis, 0:02:19.400 --> 0:02:23.040 you know, banking is tough because too much liquidity on 0:02:23.080 --> 0:02:25.760 the bigger banks. I like Wells Fargo. It's a self 0:02:25.800 --> 0:02:28.680 help story, right, I mean, they're getting out from underneath 0:02:28.680 --> 0:02:32.440 this regulatory stuff. They've got insane amounts of excess capital 0:02:32.440 --> 0:02:34.400 because it has not been allowed to grow their balance sheet. 0:02:34.919 --> 0:02:37.560 You know, buybacks are a really big part of all 0:02:37.600 --> 0:02:41.000 of the big banks. And you know JP Morgan bought 0:02:41.000 --> 0:02:43.480 what five billion dollars of its own stock Glass Quarter 0:02:43.600 --> 0:02:46.600 Goldmen bought a billion, you know, Bank America. I didn't 0:02:46.639 --> 0:02:48.560 didn't see the numbers this morning, but they're way up 0:02:48.600 --> 0:02:51.440 there as well. At Wells As, I think something like 0:02:51.520 --> 0:02:53.680 eighteen billion dollars worth of stock to buy over the 0:02:53.720 --> 0:02:56.280 next you know, year, year, a year and a half, 0:02:56.360 --> 0:02:59.919 so that's a lot of its market cap. And that's 0:02:59.919 --> 0:03:02.240 a lot of good support will lead to earnings growth. 0:03:02.360 --> 0:03:05.520 But the real, the real grail for these banks is 0:03:05.720 --> 0:03:09.160 you know, a faster g DT, a lot of long 0:03:09.240 --> 0:03:13.240 growth materializing. It'll do wonders for their earnings. And you know, 0:03:13.280 --> 0:03:15.399 the interesting thing is they were all punished last year 0:03:15.440 --> 0:03:18.440 because they built all these giant loll loss reserves. Now 0:03:18.520 --> 0:03:21.680 they're releasing them, and you you see these giant earnings 0:03:21.720 --> 0:03:24.480 numbers on the surface, you all just releasing the loss reserves. 0:03:24.480 --> 0:03:26.880 That doesn't count well if you punish them on one 0:03:26.960 --> 0:03:30.480 side when you're punishing them again when they're releasing them. 0:03:30.480 --> 0:03:33.640 But the point is they have really great credit. They 0:03:33.680 --> 0:03:36.720 have lots of capital um and they'll be buying back 0:03:36.720 --> 0:03:38.560 a lot of stock. And the dividends are being raised 0:03:38.560 --> 0:03:40.680 with a lot of these banks, so on the big 0:03:40.760 --> 0:03:45.400 I look at them as capital return stories, buy backs, uh, dividends. 0:03:45.680 --> 0:03:48.440 Those are very important for those and and wells I 0:03:48.480 --> 0:03:51.000 think is going to be able to eventually have higher 0:03:51.040 --> 0:03:53.480 earnings and estimates are gonna have to get raised if 0:03:53.520 --> 0:03:57.520 long growth materializes. This entire group estimates have to get raised. 0:03:57.600 --> 0:03:59.680 How how are the results from the big banks? How 0:03:59.680 --> 0:04:03.240 are they informing you about the regional banks, the smaller 0:04:03.280 --> 0:04:07.360 banks that you follow so closely their results. Sure, So 0:04:07.480 --> 0:04:10.680 first of all, you know, JP Morgan really did actually 0:04:10.720 --> 0:04:13.200 talk about some long growth. Where it's not having long 0:04:13.280 --> 0:04:16.359 growth which doesn't impact the regionals is it's the credit 0:04:16.360 --> 0:04:19.480 card balances. The consumer is flush with cash, they've got 0:04:19.520 --> 0:04:22.119 lots of stimulus. So no, none of the big banks 0:04:22.120 --> 0:04:24.799 are having growth there. So if you're a consumer lender 0:04:24.839 --> 0:04:27.680 other than on auto, which a lot of smaller banks are, 0:04:28.320 --> 0:04:30.840 you're really not getting a lot of long growth. You know, mortgage, 0:04:30.880 --> 0:04:33.839 the re five booms sort of ended. Um, you know, 0:04:33.839 --> 0:04:35.880 so that's tapid. But I think you're going to see 0:04:36.000 --> 0:04:39.640 good commercial long growth out of the southeast, out of Texas, 0:04:40.000 --> 0:04:43.120 out of Florida, um. And I think you're going to 0:04:43.240 --> 0:04:45.480 see more tapid growth in other parts of the country. 0:04:46.360 --> 0:04:48.120 So among I'm looking at your R and B A 0:04:48.160 --> 0:04:51.680 mend in financial services fund um ANTI and it's up. 0:04:51.839 --> 0:04:55.840 It's up about three according to Bloomberg data year to date, 0:04:55.960 --> 0:04:59.920 so ninety one percent of I look at twelve months now, 0:05:00.040 --> 0:05:04.320 the fourth percent up almost a D three. What kind 0:05:04.320 --> 0:05:07.520 of allocations are you looking to do? Is there anything 0:05:07.960 --> 0:05:10.360 in your portfolio that you think is getting ahead of itself. 0:05:11.040 --> 0:05:14.200 How do you see some of those names. Yeah, that's 0:05:14.279 --> 0:05:17.080 that's really you know. You sit there and you say, wow, 0:05:17.080 --> 0:05:20.200 you're up a hundred percent over twelve months, and there 0:05:20.200 --> 0:05:22.160 are things ahead of themselves. And I've had some people 0:05:22.200 --> 0:05:24.920 say that to me and things were so overdone. We 0:05:24.920 --> 0:05:28.440 were talking twelve months ago and how crazy the valuations were. 0:05:28.480 --> 0:05:31.200 On the downside. The interesting thing is is if I 0:05:31.240 --> 0:05:33.880 look at my average holding and I did this exercise 0:05:33.920 --> 0:05:36.800 about a week ago, so the numbers even better. They're 0:05:36.839 --> 0:05:42.560 down about fifteen from their highs. So you know that 0:05:42.720 --> 0:05:44.520 a lot of things have not gotten ahead of themselves. 0:05:44.839 --> 0:05:47.599 Obviously rotated into some things that are cheaper. But I 0:05:47.600 --> 0:05:49.680 look at a number of my my positions that are 0:05:49.720 --> 0:05:52.720 trading it less than ten times next year's earnings, and 0:05:53.120 --> 0:05:55.679 you know, I want to own those. They have excess capital, 0:05:55.800 --> 0:05:58.680 they have good loan growth. I think they'll eventually get 0:05:58.720 --> 0:06:02.440 revalued higher. UM one of them and I'll first, Horizon 0:06:02.839 --> 0:06:05.479 closed a merger with Iberia last year, so that's got 0:06:05.520 --> 0:06:09.120 some some really good evaluation here. I look at a 0:06:09.200 --> 0:06:13.920 pending merger between Bankcorps South and Cadence, and again Great 0:06:13.920 --> 0:06:17.640 Geographies four billion dollar Bank. Post the merger, you get 0:06:17.640 --> 0:06:20.920 a special divnated O owning Caden and I'm going under 0:06:20.920 --> 0:06:23.000 ten times next year's earnings. Yeah, I want to own 0:06:23.040 --> 0:06:26.920 as much as I can. And uh yeah, I mean 0:06:26.960 --> 0:06:29.440 so yeah, I see lots off side in those names. 0:06:29.440 --> 0:06:32.120 They're well off there fifty two weeks. Well, always good 0:06:32.120 --> 0:06:33.760 to get a check with you and a lot of 0:06:33.760 --> 0:06:36.080 those regional banks, of course, their earnings to come, so 0:06:36.120 --> 0:06:38.240 we'll be tracking them here at Bloomberg. Anton take care. 0:06:38.560 --> 0:06:42.520 Anton shuts He's president, chief investment officer at Minden Capital Advisors, 0:06:42.560 --> 0:06:45.880 on the phone from Florida, wondering about all the M 0:06:45.920 --> 0:06:48.960 and A in if it's going to consolidation, right, consolidation. 0:06:48.960 --> 0:06:50.599 It's interesting as he went through some of those names 0:06:50.600 --> 0:06:55.840 and talked about, uh, the activity that's still so highly regulated. Yeah, exactly. 0:06:56.080 --> 0:06:59.360 All right, you're listening to Bloomberg Radio. Today's Bloomberg Big Take. 0:06:59.480 --> 0:07:03.719 It's all so this week's cover story of Business Week magazine. 0:07:03.839 --> 0:07:06.320 It's about the future for the drug company that's become 0:07:06.360 --> 0:07:09.360 a household word during the pandemic. We're talking about Maderna 0:07:09.640 --> 0:07:12.680 and really what is its second act? Joining us now? 0:07:12.720 --> 0:07:15.080 Is Joel Weber, Editor at Bloomberg Business Week. He's with 0:07:15.160 --> 0:07:18.360 us in the Bloomberg Interactive at Broker Studio. Also Bob Langrath, 0:07:18.520 --> 0:07:22.160 the healthcare reporter for Bloomberg News, joining us on the phone, 0:07:22.640 --> 0:07:26.000 the healthcare Star, the healthcare Star. He's also the author 0:07:26.040 --> 0:07:29.520 of this other story and lost track, like so long ago, 0:07:30.320 --> 0:07:32.680 and it was at the beginning of the pandemic. Who 0:07:32.720 --> 0:07:35.600 I was like, right, who can write about pandemics? Well 0:07:35.600 --> 0:07:37.560 a year ago, I think it's fair to say maybe 0:07:37.560 --> 0:07:39.560 Bob was thinking about m R and A, but most 0:07:39.640 --> 0:07:41.840 of us in this room I don't think weren't. And 0:07:42.120 --> 0:07:45.880 I wonder what Moderna's second act is here right after 0:07:45.920 --> 0:07:49.640 the pandemic. Actually, I remember that exact conversation with Bob 0:07:49.920 --> 0:07:52.640 about a year and a half ago, and he was like, so, 0:07:52.680 --> 0:07:56.400 there's this company called Maderna that has this technology. It's 0:07:56.400 --> 0:07:58.200 gonna be really interesting to see if it works. So 0:07:58.560 --> 0:08:02.000 here we are, um uh, and Bob, let's just bring 0:08:02.000 --> 0:08:04.840 you in, you know, Like the what we set out 0:08:04.880 --> 0:08:08.480 here to do was to say, look, like Maderna has 0:08:08.520 --> 0:08:11.720 been one of the big heroes of the pandemic, and 0:08:11.760 --> 0:08:14.960 if you can solve COVID nineteen, what else do they 0:08:15.000 --> 0:08:18.880 have and what else does? What else is mRNA capable of? 0:08:18.960 --> 0:08:23.320 So what are they working on? Yeah? So yeah, it's 0:08:23.840 --> 0:08:27.760 efficacy has definitely been demonstrated very powerfully for vaccines, and 0:08:27.840 --> 0:08:31.000 so now they're working on a whole host of other vaccines. 0:08:31.280 --> 0:08:34.319 There's like about fifty or more viruses discovered the last 0:08:34.400 --> 0:08:37.040 forty years, only tiny handful of vaccines. You know. Maderna 0:08:37.120 --> 0:08:40.400 thinks that the technology, which is kind of modular and 0:08:40.400 --> 0:08:42.760 fast moving, can be you know, make vaccines to a 0:08:42.800 --> 0:08:45.360 lot of them. They're working on a food vaccine, They're 0:08:45.360 --> 0:08:47.800 working on several of the respiratory viruses. They ultimately want 0:08:47.800 --> 0:08:49.960 to combine it to one kind of super booster that 0:08:50.000 --> 0:08:52.199 you might get like once a year, and they deal 0:08:52.240 --> 0:08:54.559 with the whole host of like you know, fall winter 0:08:54.600 --> 0:08:57.920 type respiratory viruses. They're working on long term kind of 0:08:58.040 --> 0:09:01.160 HIV and even starting I think, uh and have some 0:09:01.200 --> 0:09:04.360 early trials in cancer vaccines, which has been a long 0:09:04.440 --> 0:09:06.840 promising but very difficult area. Well, we've got a hundred 0:09:06.880 --> 0:09:09.480 billion questions for you about that. I mean, this company 0:09:09.559 --> 0:09:13.680 hit a hundred billion dollar market cap today. The expectations 0:09:13.760 --> 0:09:16.760 on it are incredibly high in terms of what Maderna 0:09:16.840 --> 0:09:22.000 can do. Can this messenger RNA technology science really be 0:09:22.080 --> 0:09:25.920 trans translate to a lot of different vaccines ultimately or 0:09:25.960 --> 0:09:29.960 do we still not quite know. Well, we're gonna have 0:09:30.000 --> 0:09:31.800 to wait and see there's something gonna be testing a 0:09:31.840 --> 0:09:36.040 lot of things. Uh and uh. And you know, one 0:09:36.040 --> 0:09:37.800 of the things we talked about and the story is 0:09:37.880 --> 0:09:42.079 that they're certainly pursuing booster shots uh. And we may 0:09:42.120 --> 0:09:43.920 need them or at least a third booster shot at 0:09:43.920 --> 0:09:46.400 some point. It's it's you know, not you know, not 0:09:46.440 --> 0:09:48.079 at all clear how big the you know, the market 0:09:48.120 --> 0:09:49.679 for COVID nineteen is going to be sort of in 0:09:49.679 --> 0:09:51.280 a long term, so there is going to be pressure 0:09:51.320 --> 0:09:52.880 for them to come up with other things and new 0:09:52.920 --> 0:09:55.520 things and not be dependent on, you know, an endless 0:09:55.559 --> 0:09:58.000 market for COVID nineteen boosters. And the other thing going 0:09:58.040 --> 0:10:00.360 on is that now everyone else knows we other do 0:10:00.440 --> 0:10:02.800 a company in the world knows that this this technology 0:10:02.880 --> 0:10:05.160 can really work, you know, at least in the infections 0:10:05.240 --> 0:10:08.040 vaccinary and they're all pursuing an all kind of all 0:10:08.080 --> 0:10:09.800 trying to come up, like you know, new or better 0:10:09.920 --> 0:10:12.400 versions of m RNA. So it's you know, they're in 0:10:12.400 --> 0:10:14.360 a great position. But there's also a lot more very 0:10:14.360 --> 0:10:17.120 serious competition now. So you spent some time at one 0:10:17.160 --> 0:10:20.719 of the production facilities for Moderna outside of Boston. It's 0:10:20.720 --> 0:10:24.280 a former Polaroid factory. What is the competitive advantage that 0:10:24.320 --> 0:10:27.559 the company has now that every other biotech company knows 0:10:28.040 --> 0:10:30.040 that m RNA has been so successful, at least when 0:10:30.040 --> 0:10:34.679 it comes to coronavirus. Oh. Yeah, the basic competitive advantage 0:10:34.720 --> 0:10:36.400 they have is they've done it. They've done a success 0:10:36.440 --> 0:10:38.959 and the only other companies that achieved that level of 0:10:39.000 --> 0:10:43.400 success is obviously fiser BioNTech. But not every mRNA vaccine 0:10:43.400 --> 0:10:44.960 has worked as well. There's a third one that has 0:10:44.960 --> 0:10:48.200 tried cure Vac and it's trials came out a few 0:10:48.240 --> 0:10:50.400 weeks ago and it was only forty eight percent effectives. 0:10:50.400 --> 0:10:52.880 So not every iteration of things you put in. You 0:10:52.880 --> 0:10:54.839 can't just put in our mr andy vaccine and have 0:10:54.880 --> 0:10:56.760 it automatically work. You've got to make the right choices 0:10:57.080 --> 0:10:58.720 and then it can work, you know, do a powerful, 0:10:58.800 --> 0:11:00.719 mean response. So they have you know, they are one 0:11:00.720 --> 0:11:03.280 of the two companies with real experience that doing this 0:11:03.360 --> 0:11:05.840 in a large scale now, and you know their production 0:11:05.880 --> 0:11:07.600 that you know they haven't matched Fizer, which has just 0:11:07.640 --> 0:11:11.200 been listening incredible. You know, vaccine producing juggernauts. They haven't 0:11:11.200 --> 0:11:14.600 matched Fiser BioNTech, but you know their their productions still. 0:11:14.640 --> 0:11:16.800 You know, they haven't had big problems and kind of 0:11:17.160 --> 0:11:20.640 more or less made their numbers, uh so, which is 0:11:20.679 --> 0:11:22.520 you know, which is impressive for a company that hadn't 0:11:22.520 --> 0:11:24.719 really made until last Yearly they had a plan as 0:11:24.720 --> 0:11:26.280 a small plant, but it was basically kind of like 0:11:26.280 --> 0:11:28.719 a pilot plant, never made a hundred thousand doses of 0:11:28.760 --> 0:11:31.240 anything in a year, and now they're talking about as 0:11:31.280 --> 0:11:34.840 a billion doses uh this year. So so that's quite 0:11:34.840 --> 0:11:39.520 a scale. Bob, you've followed obviously, you know that little 0:11:39.520 --> 0:11:41.280 story I said at the beginning where we sat next 0:11:41.280 --> 0:11:43.160 to each other in that conference from all those months ago, 0:11:43.160 --> 0:11:47.160 and you were like, so maderna uh in person that 0:11:47.280 --> 0:11:49.520 was it was in the before times, just just before 0:11:49.559 --> 0:11:53.520 everything changed. Um. But but Bob, you know, I'm curious 0:11:53.520 --> 0:11:56.720 because you've written about maderna weekend week out over the 0:11:56.720 --> 0:11:58.839 past year, and then you got to do a story 0:11:58.920 --> 0:12:02.400 like this and to the CEO and everything else, I'm wondering, 0:12:02.440 --> 0:12:04.839 what did you learn while you were working on this story? 0:12:07.280 --> 0:12:09.160 You know, how they did this, and you know, it's 0:12:09.160 --> 0:12:11.960 still a very small company relatively what they've done. They 0:12:12.080 --> 0:12:14.800 like they're up to people nowaday. You know, they were 0:12:14.840 --> 0:12:16.600 like eight hundred of the Star last year, so they 0:12:16.679 --> 0:12:20.680 get all this relatively small number of people, which is, 0:12:20.760 --> 0:12:24.240 you know, it's impressive they're able to to make this 0:12:24.400 --> 0:12:27.199 many doses, you know, with a few contractors and obviously 0:12:27.240 --> 0:12:29.960 some government funding and that was significant, but you know, 0:12:30.240 --> 0:12:33.679 it wasn't you know, it was until last year, until 0:12:33.679 --> 0:12:36.240 the pandemic came along. It was a startup company. There 0:12:36.280 --> 0:12:38.120 was a well funded startup but you know, most of 0:12:38.160 --> 0:12:40.400 its most of its products were early trials. It wasn't 0:12:40.440 --> 0:12:42.000 planning to have anything in the market, you know, even 0:12:42.000 --> 0:12:43.679 if things went well for a few years. So this 0:12:43.840 --> 0:12:46.880 is like, you know, a rather you know, impressive scale 0:12:47.080 --> 0:12:51.160 and they certainly have big ambitions. But what I love 0:12:51.200 --> 0:12:53.720 about your reporting is you really explain the science right 0:12:53.800 --> 0:12:55.360 for those who are like, what is a message or 0:12:55.440 --> 0:12:57.280 it's still even today I get questions, you know, and 0:12:57.320 --> 0:13:00.600 I'm sharing articles and links with people. You know, what 0:13:00.800 --> 0:13:03.920 is it about the science of a messenger RNA or 0:13:04.000 --> 0:13:07.640 of messenger RNA that makes it so adaptable to create 0:13:07.760 --> 0:13:09.959 maybe so many more uses and just got about a 0:13:10.000 --> 0:13:13.200 minute or so. Yeah, So it doesn't like solve every 0:13:13.240 --> 0:13:16.720 miracle known to medicine, but it is relatively straightforward to 0:13:16.760 --> 0:13:19.360 produce because you're not you don't have to produce a 0:13:19.360 --> 0:13:21.840 whole new protein, which because a lot of biotech products 0:13:21.880 --> 0:13:25.920 are produced produced inside live cells chicken chicken eggs for X, 0:13:26.040 --> 0:13:30.200 some flu vaccines and even for monocolon antipole's producing vats 0:13:30.240 --> 0:13:32.599 of live cells, and that's very complicated. And this is 0:13:32.640 --> 0:13:36.760 actually just kind of a prototypes instructions and for the 0:13:36.840 --> 0:13:39.079 body's own cells to produce a protein. And that makes 0:13:39.120 --> 0:13:42.360 it very module and very easily adaptable to new users. 0:13:43.160 --> 0:13:49.000 Very briefly, what the rails moderna with these ambitions? You know, uh, 0:13:49.280 --> 0:13:51.719 you know it doesn't work in other applications. You know, 0:13:51.800 --> 0:13:55.400 other competitors get their first or you know they don't 0:13:55.440 --> 0:13:58.200 you know, they don't have they don't have an intellectual 0:13:58.320 --> 0:14:00.560 property stranglehold over the whole field. They can't like if 0:14:00.600 --> 0:14:02.079 they can't say, you know, we're the only ones with 0:14:02.200 --> 0:14:05.840 m R and so I think that's a really interesting point, 0:14:05.920 --> 0:14:08.920 you know, because you're gonna have all these other competitors 0:14:09.080 --> 0:14:11.839 and Bob goes into others now like a Chinese m 0:14:11.960 --> 0:14:15.120 R and a dark horse out there. But you know 0:14:15.559 --> 0:14:19.440 it may work for coronavirus as a vaccine, but whether 0:14:19.520 --> 0:14:21.720 or not that can translate into something that is a 0:14:21.840 --> 0:14:25.880 therapeutic that works with cancer, big big question mark. Still right, Well, 0:14:26.160 --> 0:14:28.680 and as Bob Wright goes, you know, we rush this 0:14:28.880 --> 0:14:31.680 through right the f D. A approval process for anything 0:14:31.720 --> 0:14:33.480 else that they do is going to take years. So 0:14:33.600 --> 0:14:35.960 remember that when you look at the market cap and 0:14:36.000 --> 0:14:38.360 the valuation, it will take some time to play out. Um, 0:14:38.440 --> 0:14:41.120 great stuff. You make a smarter Bob Landreth, healthcare reporter 0:14:41.160 --> 0:14:44.120 oft Bloomberg News along with your Weber, editor of Bloomberg 0:14:44.160 --> 0:14:46.000 Business Week. I'm so glad you have those conversations with 0:14:46.080 --> 0:14:51.560 your reporters. They never stopped. That's a good thing. All right. 0:14:51.560 --> 0:14:54.360 You're listening to Bloomberg Business Week, and this is Bloomberg Radio. 0:14:59.480 --> 0:15:03.000 Your list du Bloomberg Business Week with Carol Masser and 0:15:03.120 --> 0:15:08.000 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Yeah, you're 0:15:08.000 --> 0:15:11.040 listening to Bloomberg Business Week Wednesday, July fourteenth. As we mentioned, 0:15:11.080 --> 0:15:14.800 but steal day Apple shares check it out. Another record 0:15:14.880 --> 0:15:17.440 high today there's a couple of Apple stores you want 0:15:17.440 --> 0:15:19.880 to get to. We mentioned one yesterday about Apple teaming 0:15:19.920 --> 0:15:22.400 up with Goldman for a buy now, pay later services 0:15:22.400 --> 0:15:24.720 is a big deal. We saw a firm trade lower 0:15:24.840 --> 0:15:27.560 on that news Bloomberg exclusive. In fact buyer Mark German 0:15:27.600 --> 0:15:31.200 and Tree Ndarajan, who was also Mark, is reporting along 0:15:31.200 --> 0:15:33.960 with Bloomberg's DEBUTU today on how Apple is looking for 0:15:34.040 --> 0:15:39.080 an up to increase in new iPhone output for Apple. 0:15:39.120 --> 0:15:40.600 By the way, one of my gainers today for the 0:15:40.840 --> 0:15:43.320 for the close as two point five trillion dollar market 0:15:43.360 --> 0:15:45.800 cap getting very close to it. Mark German, technology reporter 0:15:45.960 --> 0:15:49.480 for Bloomberg News, joins us on the phone from l A. Mark. 0:15:49.600 --> 0:15:53.960 Let's start with Apple looking to boost iPhone output by 0:15:55.400 --> 0:15:58.680 why is Apple so confident that it can sell more 0:15:58.760 --> 0:16:02.520 iPhones or needs to make iPhones to satisfy demand for 0:16:02.560 --> 0:16:05.000 this next phone. Yeah, I think there's a lot of 0:16:05.080 --> 0:16:08.800 people who despite the millions and millions of upgraders to 0:16:08.840 --> 0:16:11.040 the iPhone twelve line last year, there's still a lot 0:16:11.080 --> 0:16:14.040 of people on the iPhone ten and earlier. And I 0:16:14.120 --> 0:16:16.040 think now this is the second version with five G, 0:16:16.360 --> 0:16:18.920 you have stronger five G penetration in the US, China 0:16:18.960 --> 0:16:21.880 and elsewhere. Now, after a year of new towers being 0:16:21.960 --> 0:16:24.680 placed up that you're going to see, you know, additional 0:16:24.800 --> 0:16:28.840 upgraders were also entering sort of the beginnings of the 0:16:28.960 --> 0:16:31.120 end of the pandemic. So, you know, in two months 0:16:31.160 --> 0:16:33.160 from now, when these new phones will roll out, Apple 0:16:33.280 --> 0:16:35.960 likely feels that there will be you know, additional people 0:16:36.000 --> 0:16:39.280 who were looking to buy uh these devices. Well, it's 0:16:39.280 --> 0:16:41.600 interesting what along their channel checks tells in this mark. 0:16:42.680 --> 0:16:45.040 You know, the channel checks you know are basically you know, 0:16:45.120 --> 0:16:49.000 economic based, Right, they put traffic to Apple stores increase, 0:16:49.080 --> 0:16:51.840 and you see more Apple stores opening. Right a year ago, 0:16:52.400 --> 0:16:55.200 right when they launched the phone, the majority of Apple 0:16:55.240 --> 0:16:58.680 stores were still closed. Now you have their entire retail footprint, 0:16:58.760 --> 0:17:02.200 plus that third party reach l footprint reopening for you know, 0:17:02.360 --> 0:17:05.040 in time for this new you know, iPhone launched not 0:17:05.119 --> 0:17:07.720 only the US but in many places around the world. 0:17:08.200 --> 0:17:09.399 What do we know? What do we know about this 0:17:09.480 --> 0:17:13.280 new iPhone? This is gonna be a fairly iterative update. 0:17:13.520 --> 0:17:15.639 The design is going to be the same. The notch 0:17:15.760 --> 0:17:17.680 sort of that cut out on the top of the 0:17:17.760 --> 0:17:19.879 display is going to be smaller, So it's gonna look 0:17:19.880 --> 0:17:21.320 a little bit better, you'll have a little bit more 0:17:21.440 --> 0:17:24.440 screen real estate for all intents of purpose. Wait wait, wait, 0:17:24.560 --> 0:17:27.200 I just bought a new phone. That's why you gotta 0:17:27.200 --> 0:17:31.800 be like me, carolinshone every five years ahead, Carol, Well, 0:17:31.880 --> 0:17:33.679 where are they come out the new phone every year? Right? 0:17:33.840 --> 0:17:36.640 And I know now at the same time every year, 0:17:36.800 --> 0:17:39.080 I want to know the market German thinking of okay, 0:17:39.200 --> 0:17:41.040 this is when I do actually step up and buy 0:17:41.080 --> 0:17:43.200 the phone, Like, how do you do it? Okay? Well, 0:17:43.320 --> 0:17:46.240 I mean it's different for me, right because what I 0:17:46.320 --> 0:17:49.040 live and breathe and it's my passion. So you know, 0:17:49.440 --> 0:17:51.119 I hate to tell you that I've had every I 0:17:51.240 --> 0:17:54.960 home since the original. But am I a consumer? A 0:17:55.040 --> 0:17:58.159 normal consumer? Absolutely not. And I recognized that what I 0:17:58.200 --> 0:18:01.760 would recommend to you know, the average consumer is probably 0:18:01.920 --> 0:18:04.200 every three to four years in order to keep getting 0:18:04.240 --> 0:18:06.920 those soft roup grades or until the phone stops working. 0:18:07.359 --> 0:18:09.720 On the other hand, there are programs now where you 0:18:09.800 --> 0:18:12.680 can get a new iPhone without paying additional money out 0:18:12.720 --> 0:18:14.680 of pocket. So if you are a tech fan, you 0:18:14.800 --> 0:18:17.479 are looking at this pretty economically. There is a way 0:18:17.560 --> 0:18:19.720 to get the phone every year without showing out a 0:18:19.800 --> 0:18:22.480 thousand dollars. I dropped mine and it kind of shattered 0:18:22.520 --> 0:18:24.480 the screen on a New York City streets. Try to 0:18:24.560 --> 0:18:26.720 drop it in a body of water because it'll fare better. 0:18:26.960 --> 0:18:28.560 Just put it in a bag of rice, all right, 0:18:28.680 --> 0:18:32.800 so the waterproof. I know, I know this Goldman story. 0:18:33.359 --> 0:18:37.880 Huoa so impressive Mark Exclusive. Yeah, and you a firm 0:18:37.960 --> 0:18:41.120 stock was moving down on the news by now pay 0:18:41.600 --> 0:18:43.720 later service. I am all in on Apple and Apple 0:18:43.760 --> 0:18:47.520 Pay now using it because of the pandemic. What could 0:18:47.560 --> 0:18:51.480 this potentially mean for Apple's business? For Apple's business, They're 0:18:51.560 --> 0:18:54.840 just going to make more percentage of a pr interest 0:18:54.920 --> 0:18:56.920 through the loans that Goldman is doing. You're going to 0:18:57.040 --> 0:19:00.880 see penetration and usage of Apple Pay probably likely increase. 0:19:01.400 --> 0:19:05.600 They take a load double double digits sense amount on 0:19:05.680 --> 0:19:08.520 every transaction. So this is just going to push people 0:19:08.560 --> 0:19:10.560 to use Apple Pay, because we have to understand this 0:19:10.640 --> 0:19:13.560 is a layer on top of any Apple Pay transaction. 0:19:13.680 --> 0:19:16.480 With any credit card you use, you can buy whether 0:19:16.560 --> 0:19:18.440 it's a cup of coffee, a bagel, or a purse, 0:19:18.600 --> 0:19:21.920 and you can split that over for interest free payments 0:19:22.000 --> 0:19:25.320 every two weeks over eight weeks, so not paying additional money. 0:19:25.400 --> 0:19:27.560 So if it's a thousand dollars, you're paying to fifty 0:19:27.640 --> 0:19:31.000 four times plus, you're gonna have easier access to loans 0:19:31.119 --> 0:19:34.719 for multi thousand dollar purchases with you know, lower Goldmen 0:19:34.760 --> 0:19:40.239 interest rates too, are getting kind of expensive. What does 0:19:40.280 --> 0:19:42.960 this say to you Mark about how Apple is thinking 0:19:42.960 --> 0:19:46.880 about its expansion in further into financial services. I think 0:19:46.920 --> 0:19:50.000 they're doing basically, you know, everything they can to move 0:19:50.040 --> 0:19:54.160 into fintech. Apple has a long payment spintech roadmap. Another 0:19:54.280 --> 0:19:57.879 thing they're working on UH is for small businesses to 0:19:57.960 --> 0:20:00.399 be able to accept payments through an eye phone or 0:20:00.440 --> 0:20:02.520 an iPad. So for example, I can have my little 0:20:02.560 --> 0:20:04.960 lemonade stand and if I wants to buy some of 0:20:05.080 --> 0:20:08.240 my you know, not so tasty lemonade, they can tap 0:20:08.280 --> 0:20:09.960