WEBVTT - Bloomberg Surveillance TV: June 11, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.360 Terminal and the Bloomberg Business App. Russ Coasterrick at Black 0:00:37.400 --> 0:00:40.200 Rog saying this, we think markets are vulnerable to modest 0:00:40.200 --> 0:00:43.199 pullbacks on both sticky inflation as well as the pre 0:00:43.280 --> 0:00:46.120 election trade as we get into late summer and fall 0:00:46.159 --> 0:00:49.159 election season. That said, we think the market can end 0:00:49.159 --> 0:00:51.760 this year higher. Russ joins us. Now for more so, 0:00:52.159 --> 0:00:54.480 let's start with the equery market picture. Sir, you've been. 0:00:54.360 --> 0:00:55.640 Trimming since spring. 0:00:55.880 --> 0:00:57.880 I know you're still constructive on the stock market. Can 0:00:57.920 --> 0:00:59.840 you just walk us through where you've been pulling back 0:00:59.880 --> 0:01:00.560 to a little bit? 0:01:01.600 --> 0:01:02.840 Absolutely good? More on, Jonathan. 0:01:02.920 --> 0:01:04.640 You look, we still think the market is going to 0:01:04.760 --> 0:01:06.760 end to year higher. We're still in a bold market. 0:01:07.120 --> 0:01:08.920 You know, that said we've taken a little bit off 0:01:08.920 --> 0:01:10.959 the table. We started doing that back in the spring, 0:01:11.440 --> 0:01:13.440 and I think it reflects a few things. One the 0:01:13.480 --> 0:01:16.200 magnitude of the gains, the fact that you still have 0:01:16.240 --> 0:01:19.640 a lot of uncertainty around the Fed, and the you know, 0:01:19.720 --> 0:01:21.440 the sentiment is going to get a little bit more 0:01:21.520 --> 0:01:24.280 challenging as we get towards the end of summer and 0:01:24.319 --> 0:01:26.840 the early fall and the market deals with the uncertainty 0:01:27.360 --> 0:01:28.800 of a very unusual election. 0:01:29.959 --> 0:01:32.600 What about the election, Russ are you concerned about because 0:01:32.600 --> 0:01:34.319 what we hear from a lot of people is that 0:01:34.360 --> 0:01:36.480 it's the bond market, not equities. And that's where the 0:01:36.560 --> 0:01:38.400 risk is, is that how do you and the team see things? 0:01:39.800 --> 0:01:43.480 You know, I think the biggest issue is really the 0:01:43.560 --> 0:01:47.200 simply the uncertainty that hopefully will resolved once the election 0:01:47.319 --> 0:01:49.680 is over. You know, in terms of whether or not 0:01:49.720 --> 0:01:51.840 you're going to get aggressively long or short the market, 0:01:52.080 --> 0:01:53.880 it's generally been the wrong call. 0:01:54.000 --> 0:01:56.960 I think what you go back to or the fundamentals. 0:01:56.640 --> 0:02:01.520 Strong growth, inflation has moderated, moderating, albeit not in a 0:02:01.640 --> 0:02:04.720 straight line. But the reality is investors are likely to 0:02:04.760 --> 0:02:06.560 deal with some of the uncertain team to run up, 0:02:06.760 --> 0:02:10.400 and that often causes a little volatility in September and October. 0:02:10.520 --> 0:02:12.440 Russ, it strikes me that we're talking about the equity 0:02:12.440 --> 0:02:16.120 market as a monolith and taking risk exposure as though 0:02:16.160 --> 0:02:19.480 all of it were exposed to macro risk or any 0:02:19.560 --> 0:02:22.519 risk whatsoever. How much you just basically hide out in 0:02:22.600 --> 0:02:26.280 certain cash rich companies, the magnificent two or three or 0:02:26.320 --> 0:02:30.359 whatever is left, and basically stay away from small caps, 0:02:30.360 --> 0:02:32.560 stay away from those that are interest rate sensitive, stay 0:02:32.560 --> 0:02:34.760 away from those that are vulnerable to all these risks. 0:02:35.480 --> 0:02:37.680 So this is a great question, and I do think 0:02:37.760 --> 0:02:40.639 that the megacap trend again not necessarily just two or 0:02:40.680 --> 0:02:43.880 three companies, but those companies that are exposed to these 0:02:44.040 --> 0:02:48.720 longer term secular trends like AI, like internet commerce, like 0:02:48.720 --> 0:02:50.799 cloud computing, they have further togo. 0:02:51.200 --> 0:02:53.080 So that is definitely part of it. And I also 0:02:53.120 --> 0:02:54.959 agree you were talking to me for about real estate. 0:02:55.480 --> 0:02:58.360 One of the best ways to add value this year 0:02:58.720 --> 0:03:01.040 has been to avoid what I would call rate data. 0:03:01.360 --> 0:03:03.480 In other words, those segments in the market, whether we're 0:03:03.520 --> 0:03:06.720 talking about low income consumers and companies that are geared 0:03:06.720 --> 0:03:11.040 to their spending commercial real estate smaller regional banks. 0:03:11.360 --> 0:03:14.120 These are all parts of the market. They're generally going 0:03:14.160 --> 0:03:14.680 to be more. 0:03:14.560 --> 0:03:16.720 Sensitive to the fact that rates have actually grind it 0:03:16.800 --> 0:03:19.079 higher this year, and one of the things we've done 0:03:19.160 --> 0:03:22.040 is try to minimize exposure to those segments. 0:03:22.320 --> 0:03:23.240 Generally that's worked. 0:03:23.280 --> 0:03:26.120 I think you continue to do it given this higher 0:03:26.120 --> 0:03:27.120 for longer environment. 0:03:27.320 --> 0:03:29.920 There's an ax that's developing because people need something to 0:03:29.919 --> 0:03:32.840 worry about. People being myself as everyone basically says the 0:03:32.840 --> 0:03:35.960 same thing in terms of crowding into the names that 0:03:36.000 --> 0:03:38.560 have been just throwing off bucket loads of cash and 0:03:38.600 --> 0:03:40.600 staying away from some of the more rate sensitive sectors. 0:03:40.640 --> 0:03:43.800 It's the reason why we've seen the Russell two thousand underperform. 0:03:44.200 --> 0:03:46.800 At what point do you worry about crowding and the 0:03:46.880 --> 0:03:49.760 sense that you can't avoid going into these stocks if you. 0:03:49.720 --> 0:03:50.680 Want to outperform. 0:03:51.040 --> 0:03:53.840 But that leaves the market that much more vulnerable to 0:03:53.880 --> 0:03:57.119 an idiosyncratic shock hinge to one of these companies. 0:03:58.400 --> 0:03:59.440 I think it's a real risk. 0:04:00.160 --> 0:04:02.320 Hard to argue that there's not been crowning, but it's 0:04:02.320 --> 0:04:04.680 been interesting. You know, this is still a narrow market. 0:04:04.760 --> 0:04:07.360 It's still a market led by a handful of names 0:04:07.360 --> 0:04:10.360 that you have seen some broadening out good example, utilities. 0:04:11.080 --> 0:04:14.600 Utilities is generally considered a low beta sector. It can 0:04:14.640 --> 0:04:17.279 be a very rat sensitive sector having a good year. 0:04:17.320 --> 0:04:20.520 Why is that well, of course, because for many investors, 0:04:20.520 --> 0:04:23.640 they're realizing that one of the constraints on the AI 0:04:23.720 --> 0:04:27.320 revolution is going to be electricity generation, and companies that 0:04:27.360 --> 0:04:30.320 are geared to that, that are geared to utilities the grid, 0:04:30.360 --> 0:04:31.760 et cetera, many of them. 0:04:31.720 --> 0:04:32.720 Are having a great year. 0:04:32.760 --> 0:04:35.600 Now, this is something we didn't see twelve or fifteen 0:04:35.640 --> 0:04:37.640 or eighteen months ago, but I think it is an 0:04:37.680 --> 0:04:41.039 example of investors looking beyond two, three, four or five 0:04:41.120 --> 0:04:44.720 companies and thinking about one of the other beneficiaries of 0:04:44.760 --> 0:04:45.760 this AI revolution. 0:04:46.040 --> 0:04:48.000 Russ I've got to ask, though, if that means the 0:04:48.000 --> 0:04:51.520 correlation between utilities and the biggest market way on a 0:04:51.640 --> 0:04:54.279 SMP five hundred goes up, what am I actually owning 0:04:54.279 --> 0:04:55.120 in the portfolio? 0:04:56.560 --> 0:04:59.160 Well, you're still going to have a very big exposure 0:04:59.360 --> 0:05:01.400 to that mega trend, and that's going to be something 0:05:01.839 --> 0:05:04.000 along with economic growth and rate data that you're really 0:05:04.000 --> 0:05:05.880 just going to have to decide how much of that 0:05:05.960 --> 0:05:08.520 exposure do you want? That said, you know, again, I 0:05:08.520 --> 0:05:11.440 think the reason that these trains have become crowded. Is 0:05:11.480 --> 0:05:14.080 that there are multi year trends and the companies that 0:05:14.120 --> 0:05:16.440 are give to them when we know their names, are 0:05:16.680 --> 0:05:20.159 doing an amazing job of generating cash flow, and that's 0:05:20.200 --> 0:05:22.719 still a very desired commodity. And you think about what's 0:05:22.760 --> 0:05:25.920 work in this market, things like consistency companies that can 0:05:26.000 --> 0:05:30.520 generate consistent revenue, consistent margins, and you know, again, if 0:05:30.560 --> 0:05:33.640 you can you can stay long those themes I think 0:05:33.640 --> 0:05:34.440 you're going to do all right. 0:05:34.720 --> 0:05:36.559 Saw this line from Mike Wilson and more can standing 0:05:36.640 --> 0:05:39.400 yesterday said bottom line, the data remains mixed, leaving all 0:05:39.440 --> 0:05:43.400 the major macro outcomes on the table. RUSS is never easy. 0:05:44.000 --> 0:05:46.000 I always sit here and say that what you guys 0:05:46.040 --> 0:05:48.680 do is never easy. It's always easy looking back. But 0:05:48.839 --> 0:05:51.760 what about this moment is more difficult than maybe other 0:05:51.839 --> 0:05:52.760 moments in the past. 0:05:53.839 --> 0:05:57.000 Well, I think I actually would agree with some of 0:05:57.000 --> 0:06:00.640 the promise would microsine, which is that it's complicated up. Generally, 0:06:00.680 --> 0:06:04.000 the economy is strong or it's certainly in decent shape. 0:06:04.000 --> 0:06:06.560 We had more evidence of that last Friday with the 0:06:06.560 --> 0:06:09.320 main non farm pay report. But there are segments in 0:06:09.320 --> 0:06:12.000 the market that are under pressure. We've spoken about the 0:06:12.080 --> 0:06:15.159 lower end consumer. They are feeling the pain of higher rates, 0:06:15.480 --> 0:06:18.920 commercial real estate, the smaller banks. So I do think 0:06:19.240 --> 0:06:21.640 that generally, if you look at the economy, you've got 0:06:21.760 --> 0:06:22.520 strong growth. 0:06:22.560 --> 0:06:24.680 It's likely to moderate in the back half of the year. 0:06:25.240 --> 0:06:27.200 But you have to keep thinking about what are the 0:06:27.240 --> 0:06:30.520 segments of the market that are going to feel pressure 0:06:30.920 --> 0:06:33.560 because we are in a higher for longer environment where 0:06:33.600 --> 0:06:35.719 the FED clearly does not have the latitude of the 0:06:35.800 --> 0:06:38.080 desire to Russian cut rates. 0:06:38.279 --> 0:06:40.320 Hi rush Graz to get your thoughts. As always, Buddy 0:06:40.400 --> 0:06:52.960 Ross costrict there of black Drob. It's on thoughte have 0:06:53.040 --> 0:06:56.360 maximum group rights in this Consumers feel like they have 0:06:56.440 --> 0:06:59.560 new phones. When Apple updates it's mobile operating system to 0:06:59.600 --> 0:07:02.159 the extent it rolls out its AI related efforts in 0:07:02.160 --> 0:07:04.800 a way that breaks that bond with consumers, that could 0:07:04.839 --> 0:07:08.200 result in backlash for the company. Tom joined us now 0:07:08.240 --> 0:07:10.080 for more Tom, I just want to start with that point, 0:07:10.080 --> 0:07:12.960 in what way would that break its bond with consumers? 0:07:13.320 --> 0:07:14.440 If you want, there's two. 0:07:14.320 --> 0:07:19.360 Real risks to Apple's brand on Apple Intelligence. One is 0:07:19.360 --> 0:07:23.320 what I wrote there, which is when you buy an iPhone, 0:07:23.840 --> 0:07:27.320 you get that new iPhone feeling every fall when they 0:07:27.400 --> 0:07:29.520 roll out the new mobile operating system. 0:07:29.880 --> 0:07:32.680 So if Apple's saying, you know, this, Apple. 0:07:32.400 --> 0:07:36.040 Intelligence is really cool, which remains to be seen. If 0:07:36.040 --> 0:07:39.280 it is, but you need to have an iPhone fifteen 0:07:39.400 --> 0:07:42.320 pro because the chip on your iPhone fifteen is not 0:07:42.440 --> 0:07:45.200 adequate to do it, then you do not get that 0:07:45.320 --> 0:07:48.560 new iPhone feeling every time they upgrade the software, and 0:07:48.600 --> 0:07:50.920 I think they're breaking a bond with the consumer. The 0:07:51.000 --> 0:07:54.080 other risk to brand is that they've named it Apple Intelligence. 0:07:54.760 --> 0:07:57.400 So if for you, Siri as a guide serious kind 0:07:57.400 --> 0:08:00.720 of been a failure to the extent that my own 0:08:00.760 --> 0:08:04.400 anecdotal use of Syria is a glorified egg timer. So 0:08:04.480 --> 0:08:06.400 to the extent that now I'm going to rely on 0:08:06.560 --> 0:08:12.600 Apple Intelligence and Siri for all this supposedly wonderful artificial intelligence, I. 0:08:12.600 --> 0:08:14.760 Think there's a lot of brain risks for Apple in 0:08:14.840 --> 0:08:15.440 the move here. 0:08:16.280 --> 0:08:16.480 Tom. 0:08:16.480 --> 0:08:18.360 This is interesting because we caught it with Dan Ives, 0:08:18.360 --> 0:08:20.160 and I wish we'd formed a panel with you both 0:08:20.240 --> 0:08:22.480 a little bit earlier this morning. Dan Ives of wet 0:08:22.520 --> 0:08:25.240 Bush earlier today was saying, this is it. This is 0:08:25.240 --> 0:08:29.160 going to be the thing that unlocks that elusive upgrading cycle, 0:08:29.560 --> 0:08:33.480 that mega upgrading cycle we've been looking for for years now. 0:08:33.600 --> 0:08:35.320 Dan says it's just around the corner based on what 0:08:35.360 --> 0:08:36.240 they released yesterday. 0:08:36.240 --> 0:08:36.920 Why is he wrong? 0:08:38.240 --> 0:08:41.160 He's wrong because I think that artificial intelligence is not 0:08:41.320 --> 0:08:44.440 ready for prime time. When you think about hallucinations, you 0:08:44.480 --> 0:08:47.679 think about the many issues that Google's had with barn 0:08:48.400 --> 0:08:52.120 and then now integrating with Chat GPT, consumers are going 0:08:52.160 --> 0:08:53.520 to get a lot of bad information. 0:08:53.880 --> 0:08:55.280 It may not be have a rock. 0:08:55.200 --> 0:08:58.120 Every day, or you know, include the glue when you 0:08:58.160 --> 0:09:00.400 make the pizza to keep the cheese, the stick. Things 0:09:00.440 --> 0:09:03.040 that nature and it may be. So I think that 0:09:03.920 --> 0:09:07.240 I understand why Dan thinks this could be the elusive 0:09:07.360 --> 0:09:10.840 upgrade cycle, the first major upgrade cycle since five G. 0:09:11.559 --> 0:09:13.480 But I'm not convinced that we're there yet. 0:09:13.679 --> 0:09:16.720 Tom, just to put a bow on this, basically, we 0:09:16.760 --> 0:09:19.480 heard from Dan Ives that he will wear a black suit. 0:09:19.679 --> 0:09:22.680 If they don't get the kind of increase in sales, well, 0:09:22.720 --> 0:09:25.520 you wear dan ives wardrobe. But if they do see 0:09:25.640 --> 0:09:28.120 that increase in sales come September, I. 0:09:28.080 --> 0:09:32.240 Will wear his most obnoxious, boldest color outfit. We could 0:09:32.240 --> 0:09:34.720 go Nick's blue and orange, even though I'm a Bulls fan. 0:09:35.440 --> 0:09:36.839 Absolutely all right, we. 0:09:36.800 --> 0:09:37.600 Will be there for that. 0:09:37.840 --> 0:09:40.280 I will wonder just going forward. You said something that 0:09:40.360 --> 0:09:43.000 I found really compelling, that this is breaking a bond 0:09:43.160 --> 0:09:45.800 with the consumer. There has been a feeling that if 0:09:45.840 --> 0:09:48.199 you had an Apple phone, if you had an iPhone, 0:09:48.679 --> 0:09:51.880 you would be a subject of whatever kind of new 0:09:51.880 --> 0:09:55.560 advancements were coming out for the phone. Specifically, you think 0:09:55.559 --> 0:09:57.480 that this is actually going to cause people to turn 0:09:57.800 --> 0:09:59.360 away from the iPhone? 0:09:59.400 --> 0:10:00.000 Is that correct? 0:10:00.200 --> 0:10:01.840 Or else just keep their old ones. 0:10:02.559 --> 0:10:05.760 I think there's real risk here that the consumer will 0:10:05.760 --> 0:10:10.560 be less enthralled to continue to buy smartphones from Apple 0:10:11.360 --> 0:10:13.560 if they don't get that new phone feeling every fall 0:10:13.559 --> 0:10:15.480 when they upgrade the software. So yeah, I think that's 0:10:15.559 --> 0:10:16.280 real issue. 0:10:16.440 --> 0:10:17.160 Where do they go? 0:10:17.559 --> 0:10:20.360 And I guess this is why we saw Samsung kind 0:10:20.400 --> 0:10:24.160 of trolling Apple yesterday, putting this out adding Apple doesn't 0:10:24.160 --> 0:10:27.360 make it newer, groundbreaking, welcome to AI, followed by an 0:10:27.360 --> 0:10:30.640 Apple emoji. This was Samsung's official account putting that out 0:10:30.640 --> 0:10:34.120 there on social media. Do you think that Samsung wins 0:10:34.200 --> 0:10:37.760 out here if they introduce something that's more polished, more advanced, 0:10:37.800 --> 0:10:41.280 and frankly diverges more significantly from what's currently available. 0:10:42.040 --> 0:10:44.200 Well, I think Samsung con went out to the extent 0:10:44.280 --> 0:10:48.640 that a consumer dissatisfied with the Apple experience, either because 0:10:48.640 --> 0:10:51.080 of Siri or Apple Intelligence or things of that nature, 0:10:51.280 --> 0:10:54.360 may gravitate to Samsung. So yes, But at the same time, 0:10:54.440 --> 0:10:57.360 I think that AI issues are kind of industry wide. 0:10:57.559 --> 0:11:02.000 They're solucinating on sam phones as well. But yeah, I 0:11:02.000 --> 0:11:05.359 think you might see some switching here if this bond 0:11:05.480 --> 0:11:06.280 is in fact broken. 0:11:06.679 --> 0:11:06.960 It's on. 0:11:07.160 --> 0:11:10.200 This relationship with Google is interesting. You're one of the 0:11:10.200 --> 0:11:12.520 few that's really really digging deep and talking about it. 0:11:13.000 --> 0:11:16.000 I assume we'll be spending lots of time doing other 0:11:16.080 --> 0:11:18.920 things and less time on Google Search, and I'm trying 0:11:18.920 --> 0:11:21.520 to work out if that's sort of good for Apple 0:11:21.559 --> 0:11:23.199 and bad for Google, or bad for both. 0:11:24.360 --> 0:11:26.320 I do think that bad for Google is a fair 0:11:26.320 --> 0:11:29.680 interpretation of yesterday's news to the extent that they're integrating 0:11:29.720 --> 0:11:32.720 chat GBT, although they did open it to other large 0:11:32.760 --> 0:11:34.880 language models, including. 0:11:34.480 --> 0:11:35.640 Gemini from Google. 0:11:36.120 --> 0:11:38.960 But yeah, I think that the challenge for Google in 0:11:39.080 --> 0:11:43.559 search is to the extent that Microsoft integrates open AIS 0:11:43.600 --> 0:11:48.359 technology and to the extent that consumers lean into artificial 0:11:48.400 --> 0:11:51.880 intelligence to advanced search. Despite the challenges, that could be 0:11:51.880 --> 0:11:52.720 a real issue. 0:11:52.520 --> 0:11:55.320 For Google, not just Google, there is an issue for 0:11:55.559 --> 0:11:57.880 a lot of apps and app creators that came out. 0:11:58.040 --> 0:12:00.880 I'm thinking of Grammarly, I'm thinking of some others. There 0:12:00.920 --> 0:12:02.959 was sort of a list of rip all of these 0:12:02.960 --> 0:12:05.960 different apps yesterday trending as people took a look at 0:12:06.040 --> 0:12:08.640 what would be rendered obsolete by some of this technology. 0:12:09.040 --> 0:12:10.760 Do you think there's going to be a real tension, 0:12:11.040 --> 0:12:14.640 particularly with Apple's dominance in the app Store, between some 0:12:14.720 --> 0:12:16.920 of these app providers and frankly the fact that they've 0:12:16.960 --> 0:12:18.320 been rendered obsolete overnight. 0:12:19.600 --> 0:12:20.280 Absolutely. 0:12:20.840 --> 0:12:22.800 The number that that set out to me yesterday is 0:12:22.840 --> 0:12:26.480 that there's only two thousand native apps for the Vision 0:12:26.559 --> 0:12:29.680 pro So that feels like a low number one year 0:12:29.760 --> 0:12:33.400 into the product, and I do it reminded. 0:12:32.920 --> 0:12:36.000 Me on larger scale of the flashlight app. 0:12:36.440 --> 0:12:37.920 So there was a point in time where if you 0:12:37.960 --> 0:12:40.240 wanted to use your iPhone as a flashlight, you had 0:12:40.240 --> 0:12:44.120 to get a dedicated app. Now it's a future within iPhone. 0:12:44.320 --> 0:12:47.960 So yeah, I think there's a lot of risk of 0:12:48.200 --> 0:12:50.040 irritating the developers here as well. 0:12:50.440 --> 0:12:52.120 Tom. Just finally, we'd love your view. 0:12:52.280 --> 0:12:53.920 Just to finish up, I want to hear a little 0:12:53.960 --> 0:12:56.200 bit more from you on Elon Musk and that complain 0:12:56.320 --> 0:12:58.520 for Melon, what did you actually make of that? 0:12:58.800 --> 0:13:00.520 Do you actually think you'll follow through with that? 0:13:01.960 --> 0:13:05.360 I do, and so I admit, though I'm only halfway 0:13:05.400 --> 0:13:09.560 through Isaacson's book on Elon, which I'm enjoying immensely, but 0:13:09.679 --> 0:13:10.480 I do think. 0:13:10.280 --> 0:13:14.120 That Elon, while he may prave drama. 0:13:14.640 --> 0:13:17.679 I think there's a lot of validity into his comments. 0:13:18.000 --> 0:13:21.319 And I worry about the consumer who flip flops between 0:13:21.360 --> 0:13:25.679 Apple Intelligence and Chat GPT, one that's supposedly privacy protected 0:13:25.960 --> 0:13:27.800 and then one that's open and. 0:13:27.800 --> 0:13:28.600 Doesn't know better. 0:13:29.080 --> 0:13:31.240 So I think, you know, there's gonna be a lot 0:13:31.240 --> 0:13:33.840 of fun stories. The good news is now we have 0:13:33.880 --> 0:13:35.199 Apple strategy. Now we get to. 0:13:35.120 --> 0:13:35.920 See how it works out. 0:13:36.080 --> 0:13:39.160 Interesting Tom looking forward to the results. Tom fordy of 0:13:39.280 --> 0:13:51.439 Maximum Group and I was of Wetburst joined us now 0:13:51.440 --> 0:13:53.600 for more so, Dan, let's separrite the two stories. The 0:13:53.679 --> 0:13:56.240 complaint coming from Elon Musk and what was unveiled yesterday. 0:13:56.280 --> 0:13:58.880 And you were in Coopatino, California. So Dan, tell me 0:13:58.880 --> 0:14:01.240 how impressed you were by yesterday's release. 0:14:02.320 --> 0:14:04.920 I thought it was a historical moment for Apple, because 0:14:04.960 --> 0:14:07.600 this is really now as much as we can talk 0:14:07.600 --> 0:14:12.240 about the generative AI. From an enterprise perspective, the consumer 0:14:12.360 --> 0:14:14.920 AI story is going to go through Apple. 0:14:15.160 --> 0:14:16.240 This is significant. 0:14:16.400 --> 0:14:20.360 I believe this will be a catalyst to an AI 0:14:20.480 --> 0:14:22.920 driven super cycle over the next two years. 0:14:23.160 --> 0:14:25.760 Dam we started the program by talking about Apple always 0:14:25.840 --> 0:14:28.280 being late, but better. Can you tell me if this 0:14:28.360 --> 0:14:31.080 is late and better? It feels late. I just need 0:14:31.120 --> 0:14:32.200 to understand if it's better. 0:14:33.440 --> 0:14:35.520 Yeah, I think we said was exactly great. 0:14:35.600 --> 0:14:39.960 It's late, but you have two point two billion iOS devices, 0:14:40.240 --> 0:14:40.640 so they. 0:14:40.600 --> 0:14:42.960 Can be late. But they have an install base. 0:14:42.840 --> 0:14:46.720 That's unrival and that's really what they're going after right now. 0:14:46.720 --> 0:14:49.520 It's going to be on the services side, the modization. 0:14:50.480 --> 0:14:53.560 I think eventu will be a subscription service. And then 0:14:53.560 --> 0:14:55.720 this is something if you don't have an iPhone fifteen 0:14:55.840 --> 0:14:58.320 or later, you're not going to be able to access 0:14:58.360 --> 0:14:59.360 Apple intelligence. 0:14:59.400 --> 0:15:01.000 And I think that that is the key. 0:15:01.040 --> 0:15:05.040 The headline here is the long away at operat cycle 0:15:05.080 --> 0:15:07.600 that we've talked about while on the show is now 0:15:07.640 --> 0:15:08.320 in front of us. 0:15:08.640 --> 0:15:10.680 So let's take it to that little bit. Dan. If 0:15:10.680 --> 0:15:16.160 we don't see a material uptick in sales, say in September, November, December, 0:15:16.560 --> 0:15:19.440 and October, are you going to basically retrench some of 0:15:19.480 --> 0:15:21.480 your bullishness or do you think it could come as 0:15:21.840 --> 0:15:23.840 as late as next year and it still would be valid. 0:15:24.760 --> 0:15:24.960 Yeah. 0:15:24.960 --> 0:15:27.760 If that doesn't happen, I'll come into the studio wearing 0:15:27.760 --> 0:15:32.440 a black sports jacket because I because I believe this 0:15:32.640 --> 0:15:36.000 is the start of a renaissance of growth. And I 0:15:36.000 --> 0:15:39.320 think what's important now is that Apple, you know, really 0:15:39.440 --> 0:15:42.720 unveiling their AI strategy. Of course, Altman there the open 0:15:42.760 --> 0:15:47.080 AI being significant. I mean this is ultimately most consumers 0:15:47.120 --> 0:15:50.240 twenty twenty five percent in the world, they will access 0:15:50.320 --> 0:15:52.320 AI through an Apple device. 0:15:52.760 --> 0:15:55.160 Well, if we end up with sales as soon as 0:15:55.160 --> 0:15:57.240 next week, you'll be wearing the dray of stead. I'm 0:15:57.280 --> 0:15:59.040 curious about the idea of. 0:15:59.000 --> 0:15:59.920 A subscription, sir. 0:16:00.480 --> 0:16:01.640 What are people going to be. 0:16:01.600 --> 0:16:04.560 Subscribing to Given the fact that right now you've got 0:16:04.600 --> 0:16:07.240 Apple Music, you have a number of other services, are 0:16:07.240 --> 0:16:09.760 these going to subscribe to Apple Intelligence? 0:16:10.840 --> 0:16:13.080 I think in first it's free and that's the key 0:16:13.200 --> 0:16:14.400 for any Apple user. 0:16:14.480 --> 0:16:18.840 But this is essentially an AI brand in the iPhone 0:16:19.320 --> 0:16:22.360 and where eventually there's going to go developers that were 0:16:22.400 --> 0:16:24.800 all there yesterday that I saw they're going to be 0:16:24.800 --> 0:16:29.160 building hundreds of apps based on this technology stack within 0:16:29.200 --> 0:16:31.400 the Apple ecosystem, and that's. 0:16:31.200 --> 0:16:33.720 Where more and more consumers are going to interact with it. 0:16:33.800 --> 0:16:37.720 This is just the start of now this AI party 0:16:37.760 --> 0:16:40.480 coming to Cupertino. But as much as it's lead to 0:16:40.520 --> 0:16:44.400 the party, it's still nine pm in this party that 0:16:44.480 --> 0:16:45.320 I believe goes. 0:16:45.160 --> 0:16:46.160 To four or five am. 0:16:46.440 --> 0:16:47.960 Side, Dan, can you tell us why you la must 0:16:47.960 --> 0:16:49.120 doesn't want to attend. 0:16:50.520 --> 0:16:54.000 Because Musk had soured greats because ultimately this is what 0:16:54.040 --> 0:16:58.000 he wanted to do from a tested perspective. Obviously there's 0:16:58.000 --> 0:17:01.600 a beef with the open Ai going back years, but 0:17:01.760 --> 0:17:05.440 this is essentially Apple in their castle saying it's our data, 0:17:05.440 --> 0:17:08.159 it's our customers, you're not gonna have access. But I 0:17:08.240 --> 0:17:10.800 believe Musk this could be just some stress going to 0:17:10.840 --> 0:17:13.639 shaold of me this week. He's not gonna ban iPhones 0:17:13.680 --> 0:17:14.680 in my opinion. 0:17:14.560 --> 0:17:16.960 In super super simple terms, can you explain what his 0:17:17.080 --> 0:17:18.560 complaint actually is? 0:17:18.760 --> 0:17:19.879 What's he concerned about. 0:17:21.080 --> 0:17:24.960 He's basically concerned about Apple and open ai having access 0:17:25.000 --> 0:17:27.199 to the data and no one else has access to it, 0:17:27.880 --> 0:17:32.160 and that what he speaks to would be a broader 0:17:32.240 --> 0:17:36.360 concern among other tech players because Apple has a castle 0:17:36.440 --> 0:17:37.480 that no one else has. 0:17:37.560 --> 0:17:38.639 They have the devices. 0:17:38.680 --> 0:17:43.399 It's one point five billion iPhones worldwide, and they're saying 0:17:43.800 --> 0:17:45.840 it's me casser not to casta. 0:17:46.119 --> 0:17:48.000 So, Danie, you mentioned Musk contesta and some of the 0:17:48.080 --> 0:17:51.400 issues he's having. Let's stock that nine folds under your comforage, 0:17:51.480 --> 0:17:54.919 Joe clearly, very very constructive on Apple. Where are you 0:17:55.000 --> 0:17:57.280 now on Tesla? 0:17:57.400 --> 0:17:58.280 Look, I think. 0:17:58.160 --> 0:18:00.800 They've gone through a Category five storm, but they're starting 0:18:00.840 --> 0:18:01.680 to turn the corner. 0:18:02.320 --> 0:18:03.440 And in terms. 0:18:03.280 --> 0:18:05.720 Of what we see later this week, I think that 0:18:05.920 --> 0:18:10.520 compact does pass, that does remove and overhang, and then 0:18:10.560 --> 0:18:15.280 it's all about stabilization in China, FSD and autonomous going forward. 0:18:15.400 --> 0:18:18.200 I think right now the rich reward is there positive. 0:18:18.480 --> 0:18:21.119 That's why the stock, I believe, is hanging in even 0:18:21.200 --> 0:18:25.159 though they're going through some tough times from a demand perspective, 0:18:25.240 --> 0:18:29.040 better days ahead despite what's definitely a white knuckle period 0:18:29.200 --> 0:18:30.359 for Tesla shareholders. 0:18:30.560 --> 0:18:32.960 That's it, dan We talk about the AI super cycle, 0:18:33.000 --> 0:18:34.719 and that's the reason why Apple is sitting in its 0:18:34.800 --> 0:18:37.280 castle and creating a party that's going to go to 0:18:37.320 --> 0:18:40.560 four or five am. But there's a question for Tesla here. 0:18:40.680 --> 0:18:41.840 You have Elon Musk. 0:18:42.160 --> 0:18:44.800 You said sour grapes about not having this first. 0:18:44.800 --> 0:18:45.680 This is what he wanted. 0:18:45.720 --> 0:18:50.320