1 00:00:02,960 --> 00:00:10,840 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,880 --> 00:00:15,040 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:15,080 --> 00:00:18,079 Speaker 1: Eastern on Apple Car, playing Android Otto with the Bloomberg 4 00:00:18,120 --> 00:00:21,440 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:21,640 --> 00:00:24,040 Speaker 1: or watch us live on YouTube. 6 00:00:24,720 --> 00:00:26,799 Speaker 2: I think it's starting to get serious. Here here's the 7 00:00:26,800 --> 00:00:30,000 Speaker 2: news today again on Apple. Apple iPhone shipments in China 8 00:00:30,520 --> 00:00:33,400 Speaker 2: fell about thirty three percent in February from a year earlier, 9 00:00:33,400 --> 00:00:36,800 Speaker 2: according to official data, extending a slump in demand from 10 00:00:36,800 --> 00:00:40,760 Speaker 2: the flagship device in its most important overseas market. This 11 00:00:40,800 --> 00:00:43,559 Speaker 2: is getting my attention now. I need to check in 12 00:00:43,600 --> 00:00:45,760 Speaker 2: with men Deep Singh. He's our senior tech analyst for 13 00:00:45,840 --> 00:00:49,879 Speaker 2: Bloomberg Intelligence. Man Deep, I mean one month, okay, two months? 14 00:00:50,000 --> 00:00:52,000 Speaker 3: I mean it's starting to stack up here. 15 00:00:53,360 --> 00:00:57,840 Speaker 2: What are we hearing from Coopertino about China risk and 16 00:00:57,880 --> 00:01:00,440 Speaker 2: opportunities for them right now? 17 00:01:00,520 --> 00:01:03,040 Speaker 4: I think the two data points that you got this year, 18 00:01:03,120 --> 00:01:06,040 Speaker 4: one in February from this source called Counterpoint, where they 19 00:01:06,040 --> 00:01:09,520 Speaker 4: said iPhone sales were down twenty four percent for six weeks. 20 00:01:10,000 --> 00:01:13,080 Speaker 4: Now it's validated that they are actually down thirty three 21 00:01:13,120 --> 00:01:16,759 Speaker 4: percent for the month of February, so clearly, you know 22 00:01:16,920 --> 00:01:20,440 Speaker 4: they have a problem both with the demand for iPhone 23 00:01:20,480 --> 00:01:23,440 Speaker 4: as well as competition. I think one of the things 24 00:01:23,520 --> 00:01:26,720 Speaker 4: that doesn't get as much attention right now is the 25 00:01:26,760 --> 00:01:31,760 Speaker 4: fact that Huawei has a comparable phone to iPhone. And 26 00:01:31,840 --> 00:01:34,280 Speaker 4: the reason they've been able to do it very quickly 27 00:01:34,360 --> 00:01:37,160 Speaker 4: is because of the supply chains that Apple created in 28 00:01:37,200 --> 00:01:41,400 Speaker 4: the region. So a lot of those suppliers are actually 29 00:01:41,480 --> 00:01:44,160 Speaker 4: making the phone for Huawei and they don't have to 30 00:01:44,200 --> 00:01:46,880 Speaker 4: do much because Apple is at the cutting edge when 31 00:01:46,920 --> 00:01:49,960 Speaker 4: it comes to the chip, the assembly, and so all 32 00:01:50,000 --> 00:01:55,240 Speaker 4: the supply chains. Guys are actually diversifying themselves and making 33 00:01:55,400 --> 00:02:00,000 Speaker 4: phones for Shami Huawei. Huawei is the notable share gainer here, 34 00:02:00,080 --> 00:02:02,120 Speaker 4: but that just goes to show that, you know, they 35 00:02:02,120 --> 00:02:03,840 Speaker 4: are also diversifying. 36 00:02:03,280 --> 00:02:05,240 Speaker 5: Which also goes to show why Tim Cook is in 37 00:02:05,360 --> 00:02:07,840 Speaker 5: China and saying that extra day to meet with quote 38 00:02:07,880 --> 00:02:10,240 Speaker 5: unquote top leadership, which everyone seems to think is he's 39 00:02:10,280 --> 00:02:12,239 Speaker 5: in paying what's going to be his pitch? 40 00:02:13,120 --> 00:02:17,520 Speaker 4: I mean, look, I think my phones, yes, and they 41 00:02:17,600 --> 00:02:21,240 Speaker 4: used to have twenty percent revenue exposure to China. It's 42 00:02:21,320 --> 00:02:24,600 Speaker 4: gone down to about fifteen percent now. But when you 43 00:02:24,680 --> 00:02:28,000 Speaker 4: think about the weight of China both as their biggest 44 00:02:28,000 --> 00:02:31,240 Speaker 4: supply chain. You know, ninety five ninety eight percent supply 45 00:02:31,320 --> 00:02:35,120 Speaker 4: chain still resides in China and fifteen percent revenue exposure. 46 00:02:35,120 --> 00:02:38,000 Speaker 4: He doesn't have a choice, and that's where he has 47 00:02:38,080 --> 00:02:41,600 Speaker 4: to make sure. You know, he's aligned with the party 48 00:02:41,639 --> 00:02:45,040 Speaker 4: and you know, the locals, and they just want to 49 00:02:45,080 --> 00:02:47,360 Speaker 4: make sure they don't end up losing share. Forget about 50 00:02:47,880 --> 00:02:51,280 Speaker 4: growing in the region. It's all about keeping the share 51 00:02:51,360 --> 00:02:52,960 Speaker 4: they have Right now, I. 52 00:02:52,919 --> 00:02:53,680 Speaker 3: Don't know the answer. 53 00:02:53,760 --> 00:02:56,400 Speaker 2: I can't think of an answer for Apple, particularly on 54 00:02:56,440 --> 00:02:59,200 Speaker 2: the supply chain. I can pencil out China going to. 55 00:02:59,120 --> 00:03:00,720 Speaker 3: Close to zero terms of sales. 56 00:03:00,800 --> 00:03:02,920 Speaker 2: I could pencil that out, put a multiple on it, 57 00:03:03,000 --> 00:03:06,560 Speaker 2: and there we go. There is no Apple without China 58 00:03:06,600 --> 00:03:10,160 Speaker 2: in terms of supply chain. There is no Apple without 59 00:03:10,240 --> 00:03:11,120 Speaker 2: that supply chain. 60 00:03:12,000 --> 00:03:14,160 Speaker 4: And for the longest time we thought the risk for 61 00:03:14,280 --> 00:03:17,720 Speaker 4: the suppliers is if Apple is not giving business to them, 62 00:03:17,800 --> 00:03:20,880 Speaker 4: they don't have anything to manufacture. Well guess what they have, 63 00:03:21,560 --> 00:03:23,840 Speaker 4: you know, a Huawei and the local guys, and so 64 00:03:23,919 --> 00:03:26,240 Speaker 4: that's how they are going about the business right now. 65 00:03:26,360 --> 00:03:29,080 Speaker 5: So if I'm Tim Cook and I have seen this 66 00:03:29,160 --> 00:03:31,880 Speaker 5: for years and I want to diversify my supply chain. 67 00:03:32,160 --> 00:03:33,520 Speaker 5: What does that look like? 68 00:03:33,880 --> 00:03:34,440 Speaker 6: What is that? 69 00:03:34,760 --> 00:03:36,880 Speaker 4: I mean, it's we did a big report. It's a 70 00:03:37,000 --> 00:03:41,440 Speaker 4: multi year yes, and you know, the assembly part is 71 00:03:42,040 --> 00:03:45,840 Speaker 4: already moving to India. We've seen a big rampop in India. 72 00:03:45,880 --> 00:03:48,880 Speaker 4: Almost twenty two percent of the phones last year iPhones, 73 00:03:48,960 --> 00:03:51,360 Speaker 4: not the highest end, but a lot of the models 74 00:03:51,360 --> 00:03:55,840 Speaker 4: were assembled in India, and gradually they will have to diversify, 75 00:03:56,040 --> 00:03:58,640 Speaker 4: you know, the assembly side. The problem they are running 76 00:03:58,680 --> 00:04:01,360 Speaker 4: into is the com all the components that you need 77 00:04:01,440 --> 00:04:05,520 Speaker 4: to manufacture an iPhone and the complex device that it is. 78 00:04:06,320 --> 00:04:08,760 Speaker 4: It's not that easy to just you know, lift and 79 00:04:08,800 --> 00:04:11,680 Speaker 4: shift your supply chains into a different regions. You need 80 00:04:11,880 --> 00:04:15,520 Speaker 4: so many there's so many dependencies both with TSMC and 81 00:04:15,600 --> 00:04:20,200 Speaker 4: the other suppliers that feed into the Chinese assembly. So 82 00:04:20,279 --> 00:04:23,159 Speaker 4: all that needs to be relocated, and it will happen. 83 00:04:23,240 --> 00:04:26,200 Speaker 4: It's just it's a multi year effort. And right now 84 00:04:26,240 --> 00:04:29,840 Speaker 4: the focus is also shifting towards on device AI. I 85 00:04:29,880 --> 00:04:33,240 Speaker 4: feel the reason why Chinese government is really cracking down 86 00:04:33,680 --> 00:04:36,280 Speaker 4: is because the next wave of this is AI will 87 00:04:36,360 --> 00:04:39,200 Speaker 4: run on device and they don't want a US based 88 00:04:39,279 --> 00:04:43,760 Speaker 4: company probably to be running AI. You know, on device 89 00:04:43,839 --> 00:04:45,880 Speaker 4: in the in the region. So that's the other aspect 90 00:04:45,880 --> 00:04:46,080 Speaker 4: of it. 91 00:04:46,720 --> 00:04:49,599 Speaker 2: Here to date stocks down eleven percent trailing twelve months, 92 00:04:49,640 --> 00:04:52,440 Speaker 2: it's up seven percent. Well, that can make it from 93 00:04:52,560 --> 00:04:55,960 Speaker 2: here a bear case could be made here big time. 94 00:04:56,680 --> 00:05:00,360 Speaker 2: I mean, look, I mean a long term multi bear 95 00:05:00,440 --> 00:05:03,599 Speaker 2: case here. I've got supply chain issues. I've already zeroed 96 00:05:03,640 --> 00:05:05,240 Speaker 2: out my China revenue. 97 00:05:05,880 --> 00:05:08,440 Speaker 5: And revenue is going to be changing because of all 98 00:05:08,440 --> 00:05:09,240 Speaker 5: the new laws. 99 00:05:09,080 --> 00:05:11,599 Speaker 4: Right in terms of core cases could be Yeah, the 100 00:05:11,680 --> 00:05:14,800 Speaker 4: DJ lawsuit, it's coming at the worst time for Apple. 101 00:05:14,880 --> 00:05:18,039 Speaker 4: I mean, they should be doubling down on other markets 102 00:05:18,040 --> 00:05:20,600 Speaker 4: where they can acquire share that they may end up 103 00:05:20,640 --> 00:05:24,520 Speaker 4: losing in China. Obviously, the DJ lawsuit is not helping. 104 00:05:24,520 --> 00:05:27,760 Speaker 4: And the EU regulation the digital markets acts, so from 105 00:05:27,839 --> 00:05:31,200 Speaker 4: a regulatory perspective, you're right. I think the bear case 106 00:05:31,279 --> 00:05:35,120 Speaker 4: is really around the revenue exposure and I'm sure the 107 00:05:35,160 --> 00:05:38,920 Speaker 4: supply chains they'll moddel through in terms of making sure 108 00:05:38,960 --> 00:05:41,120 Speaker 4: they can still make the phone. And you know, as 109 00:05:41,120 --> 00:05:44,799 Speaker 4: long as the manufacturers or they are getting the business, 110 00:05:44,839 --> 00:05:48,520 Speaker 4: they don't mind Apple continuing to you know, have the 111 00:05:48,560 --> 00:05:52,599 Speaker 4: supply chains remain intact there. But I think the hard 112 00:05:52,600 --> 00:05:56,600 Speaker 4: part would be the EPs drawdown as a result of 113 00:05:56,960 --> 00:05:58,840 Speaker 4: the Chinese revenue going down. 114 00:05:59,440 --> 00:06:02,680 Speaker 2: I mean, you know, thirty two buys eighteen holes out 115 00:06:02,680 --> 00:06:05,240 Speaker 2: there in five cells. That's about as middle of the 116 00:06:05,320 --> 00:06:07,880 Speaker 2: road as I've seen Apple in twenty years in terms 117 00:06:07,880 --> 00:06:09,000 Speaker 2: of the street. 118 00:06:09,160 --> 00:06:12,159 Speaker 5: And it's waiting in the s and p is also falling. Yeah, 119 00:06:12,800 --> 00:06:13,920 Speaker 5: that too, So I mean. 120 00:06:14,320 --> 00:06:17,760 Speaker 4: I equate it. It's similar to Tesla. Actually, in some ways, 121 00:06:17,800 --> 00:06:21,800 Speaker 4: Tesla and Apple are very similar because Tesla also has 122 00:06:21,800 --> 00:06:25,800 Speaker 4: a revenue exposure. It also manufactures it cars, But I 123 00:06:26,120 --> 00:06:29,360 Speaker 4: think Tesla's supply chain is more diversified. That's the one 124 00:06:29,360 --> 00:06:32,080 Speaker 4: big difference is they do manufacture elsewhere. 125 00:06:32,120 --> 00:06:34,799 Speaker 5: Here's a dumb question, why can't they just build stuff 126 00:06:34,800 --> 00:06:36,800 Speaker 5: in the US? Like, I know, it's not as easy 127 00:06:36,800 --> 00:06:38,280 Speaker 5: as like here's a plant, let's PLoP it down in 128 00:06:38,279 --> 00:06:40,680 Speaker 5: the US. But like why is India the next port 129 00:06:40,720 --> 00:06:42,360 Speaker 5: of call? Like why not the US? 130 00:06:42,680 --> 00:06:45,800 Speaker 4: Well, again, it's the components. So think of the bill 131 00:06:45,839 --> 00:06:49,599 Speaker 4: of Yeah, there are certain components that can only be 132 00:06:49,800 --> 00:06:53,719 Speaker 4: sourced over there, and over time they can move things around. 133 00:06:53,720 --> 00:06:56,719 Speaker 4: But if you're talking about you know, a twelve hundred 134 00:06:56,720 --> 00:07:01,040 Speaker 4: dollars phone, it has a certain bill of material things 135 00:07:01,040 --> 00:07:02,880 Speaker 4: are done in a certain way. That's why it comes 136 00:07:02,960 --> 00:07:05,240 Speaker 4: at that cost. We're not talking about a five thousand 137 00:07:05,320 --> 00:07:09,320 Speaker 4: dollars phone. If they you know, relocate things overnight, that 138 00:07:09,760 --> 00:07:10,920 Speaker 4: price could double triple. 139 00:07:11,040 --> 00:07:13,040 Speaker 5: I mean, okay, that's crazy. But you remember when the 140 00:07:13,080 --> 00:07:15,040 Speaker 5: iPhone was coming out of a thousand and it was like, 141 00:07:15,080 --> 00:07:17,160 Speaker 5: no one's going to pay that. This is insane, this 142 00:07:17,240 --> 00:07:19,400 Speaker 5: is ridiculous. Now it's like twelve hundred whatever. 143 00:07:19,560 --> 00:07:20,239 Speaker 3: Yeah, exactly. 144 00:07:20,640 --> 00:07:23,440 Speaker 2: The market adapts, as we've seen here. All right, So 145 00:07:24,600 --> 00:07:27,080 Speaker 2: if you're a bull, are you simply saying there's two 146 00:07:27,080 --> 00:07:29,200 Speaker 2: billion units out there, they'll forgret to way to make 147 00:07:29,240 --> 00:07:31,880 Speaker 2: money off of those things, and that ecosystem, I. 148 00:07:31,800 --> 00:07:34,120 Speaker 4: Mean, the bull case is still the ecosystem and the 149 00:07:34,160 --> 00:07:37,000 Speaker 4: fact that they have an install base of one point 150 00:07:37,040 --> 00:07:40,400 Speaker 4: three billion users you know who still have the iPhone 151 00:07:40,440 --> 00:07:42,760 Speaker 4: and they will refresh the phone at some point, and 152 00:07:42,880 --> 00:07:47,560 Speaker 4: everyone still likes the iOS ecosystem. I think what Huawei 153 00:07:47,880 --> 00:07:51,360 Speaker 4: is doing is laying out a path where people can 154 00:07:51,480 --> 00:07:54,360 Speaker 4: move out of the iOS ecosystem. And then the whole 155 00:07:54,400 --> 00:07:57,760 Speaker 4: AI thing and the regulatory stuff I think is just 156 00:07:57,840 --> 00:07:59,920 Speaker 4: making it worse. Word the timing of it is just 157 00:08:00,040 --> 00:08:01,720 Speaker 4: words for Apple, right, now interesting. 158 00:08:01,800 --> 00:08:06,960 Speaker 2: Interesting, So the developer conference in June, right, that's gonna 159 00:08:06,960 --> 00:08:08,760 Speaker 2: the pressure is gonna be big for them to reach. 160 00:08:08,960 --> 00:08:12,720 Speaker 4: And remember they're looking at leveraging by DO. Now that 161 00:08:13,040 --> 00:08:17,040 Speaker 4: the reason for leveraging by DO for AI in Chinese 162 00:08:17,120 --> 00:08:19,480 Speaker 4: region is just to please you know that, the fact 163 00:08:19,480 --> 00:08:22,760 Speaker 4: that they're using a local AI player as opposed to 164 00:08:22,880 --> 00:08:23,880 Speaker 4: deploying their own AI. 165 00:08:24,000 --> 00:08:26,480 Speaker 2: So that's the other aspect of it, all right, Man, 166 00:08:26,520 --> 00:08:29,200 Speaker 2: Deep sing thank you so much. Is he's the best man, 167 00:08:29,240 --> 00:08:33,080 Speaker 2: Deep Singh. He covers all the technology for Bloomberg Intelligence 168 00:08:33,080 --> 00:08:36,959 Speaker 2: along a Runa and the whole team around the globe London, 169 00:08:37,440 --> 00:08:40,400 Speaker 2: New York, at in Silicon Valley. We've got a big 170 00:08:40,400 --> 00:08:43,440 Speaker 2: team in Asia as well, so we've got the global 171 00:08:43,480 --> 00:08:45,800 Speaker 2: tech space covered head to toe. 172 00:08:45,840 --> 00:08:51,200 Speaker 1: There you're listening to the Bloomberg Intelligence Podcast. Catch us 173 00:08:51,240 --> 00:08:54,439 Speaker 1: live weekdays at ten am Eastern on Apple card Play 174 00:08:54,480 --> 00:08:57,280 Speaker 1: and Android Auto with the Bloomberg Business app. You can 175 00:08:57,320 --> 00:09:00,840 Speaker 1: also listen live on Amazon Alexa from our New York 176 00:09:00,880 --> 00:09:03,880 Speaker 1: station just Say Alexa playing Bloomberg eleven. 177 00:09:05,800 --> 00:09:09,360 Speaker 2: Michael McKee joins us, our global economics editor here and Michael, 178 00:09:09,400 --> 00:09:13,320 Speaker 2: when we see a bridge in a major port city 179 00:09:13,720 --> 00:09:19,400 Speaker 2: like Baltimore collapsed into the river. There are economic implications here, 180 00:09:19,640 --> 00:09:22,880 Speaker 2: and we're just learning more and more about Baltimore as 181 00:09:23,000 --> 00:09:25,560 Speaker 2: a port city, Baltimore as a city where a lot 182 00:09:25,559 --> 00:09:26,960 Speaker 2: of cargo transit. 183 00:09:26,520 --> 00:09:28,800 Speaker 3: Its over that bridge. 184 00:09:29,920 --> 00:09:31,360 Speaker 2: How are you thinking about it from I guess a 185 00:09:31,400 --> 00:09:32,720 Speaker 2: regional economic impact. 186 00:09:33,520 --> 00:09:36,559 Speaker 7: Well, it's a regional impact and to a certain extent, 187 00:09:36,600 --> 00:09:39,080 Speaker 7: a national impact because of the type of cargo that 188 00:09:39,120 --> 00:09:40,000 Speaker 7: Baltimore handles. 189 00:09:40,040 --> 00:09:40,520 Speaker 1: It is the. 190 00:09:40,600 --> 00:09:43,439 Speaker 7: Largest port for automobile. 191 00:09:42,920 --> 00:09:44,680 Speaker 3: Imports, and I didn't know that before. 192 00:09:44,800 --> 00:09:48,200 Speaker 7: Most nine hundred thousand cars, cars and other trucks came 193 00:09:48,240 --> 00:09:51,760 Speaker 7: through there. Plus they also handle what they call roll 194 00:09:51,800 --> 00:09:56,559 Speaker 7: on rollofs for big companies like Caterpillar and John Deere, 195 00:09:56,679 --> 00:10:00,640 Speaker 7: so a lot of equipment goes through that port. It 196 00:10:00,720 --> 00:10:03,720 Speaker 7: is one of the bigger ports on the east coast 197 00:10:03,760 --> 00:10:07,559 Speaker 7: of the US. So there's going to be an interruption there, 198 00:10:08,400 --> 00:10:10,720 Speaker 7: first of all, because there's no way to get in 199 00:10:10,800 --> 00:10:12,800 Speaker 7: or out of the port at the moment until they 200 00:10:12,800 --> 00:10:17,160 Speaker 7: clear the wreckage of the bridge. Bloomberg's trade people have 201 00:10:17,480 --> 00:10:21,520 Speaker 7: noted there's twenty one ships behind them ridge, so I can't. 202 00:10:21,280 --> 00:10:22,240 Speaker 3: Get out again. 203 00:10:23,000 --> 00:10:25,320 Speaker 7: And then there are more that would be coming in 204 00:10:25,400 --> 00:10:28,400 Speaker 7: that in theory can be diverted, but it's going to 205 00:10:28,400 --> 00:10:32,840 Speaker 7: be a question of capacity for getting the tonnage off 206 00:10:32,880 --> 00:10:34,320 Speaker 7: those ships others. 207 00:10:34,400 --> 00:10:34,920 Speaker 3: It's interesting. 208 00:10:34,960 --> 00:10:36,560 Speaker 2: I have to admit I am a kind of a 209 00:10:36,600 --> 00:10:38,920 Speaker 2: trade shipping geek, and I have an app on my 210 00:10:38,960 --> 00:10:40,920 Speaker 2: phone that tracks this stuff. So I'm sitting on the 211 00:10:41,000 --> 00:10:43,400 Speaker 2: Jersey Shore beach and I say a big cargo ship, gup. 212 00:10:43,440 --> 00:10:45,240 Speaker 2: I want to know where it came from, where it's 213 00:10:45,280 --> 00:10:47,280 Speaker 2: going when it's carrying. And what I do notice is 214 00:10:47,320 --> 00:10:49,280 Speaker 2: the ones leaving the New York Harbor often the next 215 00:10:49,320 --> 00:10:52,720 Speaker 2: stop is actually Norfolk, Virginia, more so than you would 216 00:10:52,720 --> 00:10:57,080 Speaker 2: say Philadelphia, Baltimore. So perhaps, but I can't imagine putt 217 00:10:57,160 --> 00:11:03,119 Speaker 2: nine hundred thousand cars. Who's got room for that, right, Yeah, that's. 218 00:11:01,880 --> 00:11:03,840 Speaker 7: Going to be a bit of an issue. They also 219 00:11:04,080 --> 00:11:08,560 Speaker 7: it's a major distribution hup there on the north side 220 00:11:08,920 --> 00:11:14,360 Speaker 7: of the bridge. They have Amazon FedEx under Armor Home Depot. 221 00:11:15,040 --> 00:11:19,480 Speaker 7: They all have big warehouses there and the stuff that 222 00:11:19,520 --> 00:11:21,880 Speaker 7: comes in and out to those warehouses and this will 223 00:11:21,920 --> 00:11:24,480 Speaker 7: be more of a regional impact but won't be coming 224 00:11:24,480 --> 00:11:26,960 Speaker 7: in and out. So there's going to be have to 225 00:11:26,960 --> 00:11:30,000 Speaker 7: be a lot of logistical changes made. Now the good 226 00:11:30,000 --> 00:11:33,200 Speaker 7: news is to the extent that I don't know if 227 00:11:33,200 --> 00:11:35,320 Speaker 7: it's good news or not. But we have had some 228 00:11:35,400 --> 00:11:41,040 Speaker 7: bridge collapses in recent years, remember in Minnesota and in 229 00:11:41,720 --> 00:11:47,679 Speaker 7: the Bay Bridge in Oakland. Others like that have happened. 230 00:11:47,760 --> 00:11:52,160 Speaker 7: Philadelphia had the I ninety five bridge, and putting a 231 00:11:52,160 --> 00:11:55,160 Speaker 7: bridge back together is easier than building it from scratch. 232 00:11:55,200 --> 00:11:55,839 Speaker 3: Now, this is a. 233 00:11:55,960 --> 00:11:59,120 Speaker 7: Much worse This is a much worse situation than those. 234 00:12:00,400 --> 00:12:04,000 Speaker 7: They were able to get them rebuilt on a fairly 235 00:12:04,200 --> 00:12:07,480 Speaker 7: quick timetable. It took five years to build this bridge, 236 00:12:08,040 --> 00:12:10,720 Speaker 7: so the hope is it would not take that long 237 00:12:11,360 --> 00:12:12,520 Speaker 7: to rebuild this bridge. 238 00:12:12,559 --> 00:12:15,200 Speaker 5: So let me ask how long This is a completely 239 00:12:15,280 --> 00:12:17,679 Speaker 5: unfair question and give you in a minute, But how 240 00:12:17,720 --> 00:12:19,280 Speaker 5: long does it take for these kind of issues to 241 00:12:19,320 --> 00:12:22,719 Speaker 5: filter down into prices for example? And then how is 242 00:12:22,760 --> 00:12:24,960 Speaker 5: the feggan to look at it, because yes, it's transitory, 243 00:12:25,040 --> 00:12:26,920 Speaker 5: but two and a half years and then the confidence 244 00:12:26,920 --> 00:12:29,319 Speaker 5: and the expectation of inflation that isn't transitory. 245 00:12:30,000 --> 00:12:33,520 Speaker 7: Well, it's hard to say at this point because companies 246 00:12:33,720 --> 00:12:37,160 Speaker 7: are much better and the pandemic forced them to be 247 00:12:37,240 --> 00:12:40,160 Speaker 7: much better at being able to change their supply routes 248 00:12:40,200 --> 00:12:44,880 Speaker 7: and supply lines on short notice. If we don't get 249 00:12:45,360 --> 00:12:48,720 Speaker 7: stuff or we can't ship stuff, it will raise the 250 00:12:48,840 --> 00:12:52,080 Speaker 7: price probably, but it has to last for a while 251 00:12:52,440 --> 00:12:55,800 Speaker 7: if they can find alternate ways around it. Transportation is 252 00:12:55,800 --> 00:12:59,400 Speaker 7: a very very small part of overall goods prices, so 253 00:12:59,480 --> 00:13:02,920 Speaker 7: it's probably not going to have a major national impact. 254 00:13:03,040 --> 00:13:06,840 Speaker 7: It may have an impact, certainly on Baltimore, and obviously 255 00:13:06,920 --> 00:13:09,160 Speaker 7: it's going to be a major impact for a while 256 00:13:09,240 --> 00:13:12,520 Speaker 7: in terms of traffic going up and down Interstate ninety five. 257 00:13:13,559 --> 00:13:16,480 Speaker 7: The probably the biggest impact is going to be with 258 00:13:16,559 --> 00:13:20,720 Speaker 7: hazardous materials because they can't go through the two Baltimore tunnels. 259 00:13:20,720 --> 00:13:22,720 Speaker 7: They can only go over the bridge. So now they're 260 00:13:22,760 --> 00:13:25,480 Speaker 7: going to have to make a wide detour around Baltimore. 261 00:13:25,559 --> 00:13:26,840 Speaker 7: That'll slow things down. 262 00:13:26,640 --> 00:13:28,839 Speaker 2: All right, Michael McKeith, thank you so much. We appreciate that. 263 00:13:28,880 --> 00:13:30,400 Speaker 2: Michael mckea economics editor. 264 00:13:32,760 --> 00:13:36,640 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 265 00:13:36,720 --> 00:13:39,800 Speaker 1: weekdays at ten am Eastern on affle Card playing Endroud 266 00:13:39,840 --> 00:13:42,920 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 267 00:13:43,000 --> 00:13:46,840 Speaker 1: you get your podcasts, or watch us live on YouTube. 268 00:13:48,200 --> 00:13:50,280 Speaker 5: Okay, let's get to some breaking data we had at 269 00:13:50,320 --> 00:13:53,040 Speaker 5: the top of the hour. And that's a consumer confidence. 270 00:13:53,200 --> 00:13:56,920 Speaker 5: So the Conference Board consumer confidence for March coming in 271 00:13:56,960 --> 00:13:59,679 Speaker 5: a little light, coming in at one oh four point seven. Also, 272 00:14:00,200 --> 00:14:03,960 Speaker 5: or was revised lower the present situation a bit better 273 00:14:04,120 --> 00:14:07,200 Speaker 5: one point fifty one. But it was the expectation number 274 00:14:07,679 --> 00:14:10,800 Speaker 5: that disappointing, coming in at seventy three point eight. So 275 00:14:10,880 --> 00:14:13,840 Speaker 5: let's dig through the numbers here. Joining us is Dana Peterson, 276 00:14:14,080 --> 00:14:19,120 Speaker 5: chief economist at the Conference Board. Dana, what led to 277 00:14:19,200 --> 00:14:20,920 Speaker 5: the lower expectation number? 278 00:14:22,320 --> 00:14:25,480 Speaker 8: Sure, the expectations number is made up of three pieces, employment, 279 00:14:25,920 --> 00:14:28,480 Speaker 8: incomes and business conditions, and all three you were down 280 00:14:28,480 --> 00:14:28,960 Speaker 8: in the month. 281 00:14:29,840 --> 00:14:31,040 Speaker 5: Well what does that tell us? 282 00:14:32,360 --> 00:14:34,320 Speaker 8: Well, tells us that consumers are a little bit worried 283 00:14:34,360 --> 00:14:38,160 Speaker 8: about the future. Certainly, this expectations gauge has been dancing 284 00:14:38,400 --> 00:14:42,400 Speaker 8: in around eighty and eighty really is the threshold for 285 00:14:42,480 --> 00:14:46,000 Speaker 8: which below that consumers think there's a recession coming. But 286 00:14:46,080 --> 00:14:48,440 Speaker 8: we also do have a separate recession question where we 287 00:14:48,480 --> 00:14:49,920 Speaker 8: ask consumers do you think there's going to be a 288 00:14:50,000 --> 00:14:52,600 Speaker 8: recession of the next twelve months, And they've been continuing 289 00:14:52,600 --> 00:14:55,960 Speaker 8: to be less convinced of that. So there's some mixed 290 00:14:56,320 --> 00:14:59,000 Speaker 8: implications here. Certainly they are a little bit concerned, but 291 00:14:59,000 --> 00:15:01,080 Speaker 8: they don't think of recession on the way. 292 00:15:01,160 --> 00:15:04,040 Speaker 2: So, Dana, it seems like from all the polling you 293 00:15:04,040 --> 00:15:07,200 Speaker 2: see out there that inflation is probably issue number one 294 00:15:07,320 --> 00:15:10,480 Speaker 2: with consumers out there. Yes, the rate of inflation has declined, 295 00:15:10,520 --> 00:15:13,840 Speaker 2: but boyd, prices are still high, whether it's food in 296 00:15:13,920 --> 00:15:16,080 Speaker 2: the supermarket, gasoline for your car. 297 00:15:16,800 --> 00:15:18,080 Speaker 3: What's your data show you about that. 298 00:15:19,480 --> 00:15:21,840 Speaker 8: Sure, we have write ins where we ask consumers what's 299 00:15:21,880 --> 00:15:25,240 Speaker 8: your most important issue, and complaints about inflation and prices 300 00:15:25,240 --> 00:15:28,320 Speaker 8: are still number one. They're still complaining about food and 301 00:15:28,400 --> 00:15:31,720 Speaker 8: energy prices, but in terms of energy, the complaints are 302 00:15:31,760 --> 00:15:35,120 Speaker 8: a little less severe, a little less intense. So consumers 303 00:15:35,120 --> 00:15:36,600 Speaker 8: are seeing a little bit of a break there, but 304 00:15:36,640 --> 00:15:39,160 Speaker 8: for the most part, there's still very worried about prices 305 00:15:39,200 --> 00:15:42,400 Speaker 8: being elevated. Eggs and gasoline costing more than they'd like. 306 00:15:42,600 --> 00:15:44,720 Speaker 5: Yeah, dot dot dot, because you take a look, there's 307 00:15:44,720 --> 00:15:47,320 Speaker 5: a survey out that shows that gasoline in the summer 308 00:15:47,400 --> 00:15:50,840 Speaker 5: could top four dollars. Now, so there is that coming 309 00:15:50,840 --> 00:15:54,440 Speaker 5: out there. You look, cocoa prices top and ten thousand dollars. 310 00:15:54,440 --> 00:15:57,360 Speaker 5: And then you have this issue at the Port of Baltimore, right, 311 00:15:57,400 --> 00:15:59,920 Speaker 5: and then you have this bridge collapse and that could 312 00:16:00,080 --> 00:16:03,960 Speaker 5: wind up affecting supply chains, et cetera. How do consumers 313 00:16:04,560 --> 00:16:08,080 Speaker 5: react to these kind of headlines, right, four dollars gasoline 314 00:16:08,160 --> 00:16:10,760 Speaker 5: bridge collapse, Like, how does this affect their level of 315 00:16:10,800 --> 00:16:12,320 Speaker 5: confidence and their level of spending? 316 00:16:13,680 --> 00:16:16,240 Speaker 8: Sure, I mean, we can't tell from this report because 317 00:16:16,560 --> 00:16:19,000 Speaker 8: you know, the data was fielded. Sure start, we redialed 318 00:16:19,000 --> 00:16:22,240 Speaker 8: it before this happened this morning. But certainly if consumers 319 00:16:22,280 --> 00:16:24,520 Speaker 8: think that there's going to be higher gasoline prices or 320 00:16:24,600 --> 00:16:27,720 Speaker 8: that supply chain disruptions from the incident in Baltimore are 321 00:16:27,800 --> 00:16:31,000 Speaker 8: going to make clothing and cars more expensive, then certainly 322 00:16:31,040 --> 00:16:32,720 Speaker 8: their confidence is probably going to wane. 323 00:16:33,680 --> 00:16:35,600 Speaker 2: All Right, Dana, thank you so much for joining us. 324 00:16:35,640 --> 00:16:37,960 Speaker 2: Dana Peterson, she said, Chief economists at the Conference Board. 325 00:16:38,040 --> 00:16:40,000 Speaker 2: We had the Conference Board coming out with some consumer 326 00:16:40,040 --> 00:16:44,480 Speaker 2: confidence data today, a little bit weaker then expected, and 327 00:16:44,880 --> 00:16:47,520 Speaker 2: certainly and some downward revisions from the prior month. So again, 328 00:16:47,600 --> 00:16:50,840 Speaker 2: consumers a little bit wavering, some confidence out there. Inflation 329 00:16:51,320 --> 00:16:54,160 Speaker 2: remains stubborn for many folks out there. 330 00:16:55,800 --> 00:16:59,640 Speaker 1: You're listening to the Bloomberg Intelligence podcast catch us live 331 00:17:00,080 --> 00:17:03,280 Speaker 1: days and ten am Eastern on applecar Play and Android 332 00:17:03,320 --> 00:17:06,040 Speaker 1: Auto with the Bloomberg Business app. You can also listen 333 00:17:06,200 --> 00:17:09,280 Speaker 1: live on Amazon Alexa from our flagship New York station. 334 00:17:09,680 --> 00:17:12,399 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 335 00:17:13,920 --> 00:17:15,480 Speaker 3: All right, let's see what's happening with these markets? 336 00:17:15,680 --> 00:17:18,600 Speaker 2: Checking with he does his stuff. We're a living Carolshlife, 337 00:17:18,920 --> 00:17:23,560 Speaker 2: chief investment officer of BEMO Family office located there in Minneapolis, 338 00:17:23,560 --> 00:17:25,840 Speaker 2: and she's joining us via zoom. So, Carol, what do 339 00:17:25,920 --> 00:17:29,800 Speaker 2: you make of this market here? What's driving stock price 340 00:17:29,880 --> 00:17:30,200 Speaker 2: is higher? 341 00:17:30,200 --> 00:17:34,359 Speaker 9: In your opinion, I think there's a growing belief that 342 00:17:35,240 --> 00:17:38,160 Speaker 9: whether it's not even a soft landing, it's no landing 343 00:17:38,200 --> 00:17:40,920 Speaker 9: at all. There's a growing belief in the sturdiness of 344 00:17:41,000 --> 00:17:44,200 Speaker 9: the economy and what's going on in the US. There's 345 00:17:44,200 --> 00:17:47,159 Speaker 9: also a lot of physcal stimulus that's finally freed up. 346 00:17:47,640 --> 00:17:50,160 Speaker 9: It's been teed up for the last couple of years, 347 00:17:50,240 --> 00:17:53,880 Speaker 9: and now it's actually moving into markets and supporting things. 348 00:17:54,000 --> 00:17:58,880 Speaker 9: We're doing exciting things like reshoring, we're building artificial intelligence 349 00:17:59,119 --> 00:18:01,800 Speaker 9: data center hub. There's a lot of activity going on, 350 00:18:02,480 --> 00:18:04,480 Speaker 9: and if you look under the hood at what the 351 00:18:04,600 --> 00:18:07,840 Speaker 9: markets are showing, they're showing it's not just those Magnificent 352 00:18:07,920 --> 00:18:09,000 Speaker 9: seven leading the pack. 353 00:18:09,080 --> 00:18:09,480 Speaker 6: Anymore. 354 00:18:09,680 --> 00:18:13,480 Speaker 9: It's a much broader basis, and you've seen a broadening 355 00:18:13,520 --> 00:18:16,960 Speaker 9: out of the leadership, which is very reassuring and supportive 356 00:18:17,119 --> 00:18:18,480 Speaker 9: for constructive markets. 357 00:18:18,960 --> 00:18:21,280 Speaker 2: So again, a lot of folks, I guess we did 358 00:18:21,400 --> 00:18:24,440 Speaker 2: see that that November December moving the market, a broadening 359 00:18:24,520 --> 00:18:25,920 Speaker 2: out of performance. 360 00:18:27,320 --> 00:18:29,240 Speaker 3: How important is that for the market. 361 00:18:29,080 --> 00:18:32,119 Speaker 2: Because it just seems like technology has got to lead 362 00:18:32,160 --> 00:18:34,119 Speaker 2: this market, but you need to see us some other 363 00:18:34,160 --> 00:18:35,560 Speaker 2: sectors participate as well. 364 00:18:36,720 --> 00:18:37,760 Speaker 6: Yeah, it's definitely. 365 00:18:38,000 --> 00:18:42,000 Speaker 9: It's definitely important for the sustainability and durability of a 366 00:18:42,119 --> 00:18:47,840 Speaker 9: market advance to have most of the participants or most 367 00:18:47,880 --> 00:18:49,760 Speaker 9: of the constituents participating. 368 00:18:50,320 --> 00:18:51,600 Speaker 6: And you're definitely seeing that. 369 00:18:51,720 --> 00:18:54,960 Speaker 9: You're seeing a turnover where you've got stabilization, some interesting 370 00:18:55,080 --> 00:18:58,639 Speaker 9: things going on with financial services, you've got consumer goods 371 00:18:59,200 --> 00:19:05,840 Speaker 9: companies moving both staples and but more particularly the discretionary. 372 00:19:05,160 --> 00:19:05,760 Speaker 6: Side of things. 373 00:19:06,200 --> 00:19:08,280 Speaker 9: We'll have earnings coming up in a couple of weeks, 374 00:19:08,320 --> 00:19:10,440 Speaker 9: so we'll be able to start parsing through some of that. 375 00:19:10,840 --> 00:19:13,840 Speaker 9: But it really is vital for the for this for 376 00:19:13,960 --> 00:19:16,680 Speaker 9: the ability of the markets to carry on that more 377 00:19:16,720 --> 00:19:19,760 Speaker 9: and more are participating in it, and it's interesting on 378 00:19:19,840 --> 00:19:22,600 Speaker 9: a day like today, even a lot of those magnificence 379 00:19:22,680 --> 00:19:26,120 Speaker 9: haven't aren't in the top tier. They're they're holding their own, 380 00:19:26,240 --> 00:19:28,600 Speaker 9: but they're way down the list of contributors. And so 381 00:19:28,720 --> 00:19:32,879 Speaker 9: it's really important for this market to continue to see 382 00:19:33,160 --> 00:19:36,040 Speaker 9: more and more stocks participating. 383 00:19:36,640 --> 00:19:39,840 Speaker 5: How do you judge that, Carol, I mean, because there 384 00:19:39,880 --> 00:19:41,359 Speaker 5: are because they're they're not going to be able to 385 00:19:41,440 --> 00:19:43,600 Speaker 5: catch up to like pre pandemic levels. You can make 386 00:19:43,600 --> 00:19:46,639 Speaker 5: an argument like maybe energy and industrials we've seen, but 387 00:19:47,359 --> 00:19:49,480 Speaker 5: how do you know which sectors are going to be 388 00:19:49,520 --> 00:19:52,119 Speaker 5: able to have that real balance and which ones are 389 00:19:52,200 --> 00:19:54,720 Speaker 5: just going to be too exposed to rates, say and 390 00:19:54,800 --> 00:19:55,480 Speaker 5: the consumer. 391 00:19:56,720 --> 00:20:01,280 Speaker 6: I think it's really important to not necessarily just invest sectors. 392 00:20:01,359 --> 00:20:04,720 Speaker 6: But what you saw, especially in the last quarterly earnings. 393 00:20:04,520 --> 00:20:08,560 Speaker 9: As you saw a big dispersion even within sectors in 394 00:20:08,680 --> 00:20:11,560 Speaker 9: terms of who was adapting the higher rates, who was 395 00:20:11,640 --> 00:20:14,560 Speaker 9: adapting the higher costs, who wasn't. You saw a lot 396 00:20:14,600 --> 00:20:19,159 Speaker 9: of credit attributed to individual companies that talked about right 397 00:20:19,280 --> 00:20:21,960 Speaker 9: sizing businesses where they were laying off in one part 398 00:20:22,040 --> 00:20:24,000 Speaker 9: in investing strategically in another. 399 00:20:24,560 --> 00:20:26,720 Speaker 6: So it really is a stock pickers market. 400 00:20:26,840 --> 00:20:29,480 Speaker 9: So maybe the bigger question is do we go back 401 00:20:29,560 --> 00:20:33,240 Speaker 9: to a predominance of active management and those active managers 402 00:20:33,600 --> 00:20:36,159 Speaker 9: who are able to parse through the companies that are 403 00:20:36,280 --> 00:20:41,000 Speaker 9: really able to accommodate. But one of the things that's 404 00:20:41,119 --> 00:20:44,119 Speaker 9: helpful as companies try to figure out can they adjust 405 00:20:44,160 --> 00:20:48,080 Speaker 9: to higher in overall higher terminal rate is if the 406 00:20:48,480 --> 00:20:51,200 Speaker 9: FED is done raising rates, which they seem for all 407 00:20:51,240 --> 00:20:54,040 Speaker 9: intents and purposes to have indicated in a variety of 408 00:20:54,119 --> 00:20:58,040 Speaker 9: ways that they're done raising regardless of when they start 409 00:20:58,119 --> 00:21:03,359 Speaker 9: to lower, it's easy to model out what impacts rates 410 00:21:03,440 --> 00:21:06,840 Speaker 9: have if they're not continuing to rise. At least you 411 00:21:06,920 --> 00:21:09,680 Speaker 9: can figure out what your cost of capital is and 412 00:21:09,840 --> 00:21:14,400 Speaker 9: play that through. So you know, it's a real arduous task, 413 00:21:14,520 --> 00:21:16,800 Speaker 9: if you will, because it's a company by company, not 414 00:21:17,000 --> 00:21:19,600 Speaker 9: necessarily industry by industry exercise. 415 00:21:20,160 --> 00:21:23,239 Speaker 2: Are there some sectors, given given that the bottoms up 416 00:21:23,359 --> 00:21:26,280 Speaker 2: pickers market in some people's perspective, are there some sectors 417 00:21:26,320 --> 00:21:28,320 Speaker 2: that generally you guys are favoring at this point? 418 00:21:29,600 --> 00:21:31,679 Speaker 6: Yeah, I think. I mean there's a variety of sectors. 419 00:21:31,760 --> 00:21:34,440 Speaker 9: We've liked industrials for a very long period of time, 420 00:21:34,560 --> 00:21:37,840 Speaker 9: not the least of which is because the fiscal stimulus 421 00:21:38,160 --> 00:21:42,200 Speaker 9: tied up are or teed up if you will, for 422 00:21:42,520 --> 00:21:46,120 Speaker 9: those sectors we've liked industrials. We do think financials will 423 00:21:46,160 --> 00:21:49,119 Speaker 9: need to play. Healthcare is very important as well, and 424 00:21:49,200 --> 00:21:52,639 Speaker 9: there's a lot of innovation going on in medical devices, 425 00:21:52,920 --> 00:21:57,600 Speaker 9: biotechnology services, lots of different things that are benefiting. 426 00:21:57,960 --> 00:22:00,280 Speaker 6: And technology and communication service. 427 00:22:00,320 --> 00:22:03,320 Speaker 9: Are important as well because they, as you mentioned, there's 428 00:22:03,400 --> 00:22:07,240 Speaker 9: such a significant component and they builter over into virtually 429 00:22:07,359 --> 00:22:08,720 Speaker 9: every other industry as well. 430 00:22:09,840 --> 00:22:10,280 Speaker 10: What do you do? 431 00:22:10,520 --> 00:22:12,440 Speaker 5: This is totally talking my own book, but some of 432 00:22:12,480 --> 00:22:15,040 Speaker 5: the stocks that have done really well this quarter is 433 00:22:15,119 --> 00:22:19,879 Speaker 5: Constellation Energy. It's a straight up nuclear power company, and 434 00:22:20,080 --> 00:22:22,040 Speaker 5: that has done really well as a derivative play of 435 00:22:22,119 --> 00:22:24,359 Speaker 5: data centers and AI because you need so much power. 436 00:22:24,440 --> 00:22:27,399 Speaker 5: And I'm wondering if this is like the octopus legs 437 00:22:27,440 --> 00:22:29,800 Speaker 5: for AI, like you have to go into those sectors 438 00:22:30,160 --> 00:22:32,680 Speaker 5: that will also really benefit. How do you think about that? 439 00:22:33,680 --> 00:22:36,080 Speaker 6: Yeah, I think it's really important because it's not just 440 00:22:36,880 --> 00:22:37,119 Speaker 6: to me. 441 00:22:37,440 --> 00:22:40,360 Speaker 9: It parallels very much what happened in the first dot 442 00:22:40,480 --> 00:22:42,840 Speaker 9: com first internet build out in the ninety five to 443 00:22:42,920 --> 00:22:46,280 Speaker 9: two thousand. You had a lot of short term exuberance 444 00:22:46,320 --> 00:22:48,920 Speaker 9: around anybody who could put dot com in their name, 445 00:22:49,440 --> 00:22:49,720 Speaker 9: but the. 446 00:22:50,240 --> 00:22:52,080 Speaker 6: More important longer term play. 447 00:22:52,160 --> 00:22:56,760 Speaker 9: There were the people building out the actual infrastructures, the routers, 448 00:22:56,960 --> 00:23:00,920 Speaker 9: the data centers at the time, and similarly here it 449 00:23:01,040 --> 00:23:03,600 Speaker 9: really is the play on It's great to say you're 450 00:23:03,600 --> 00:23:05,159 Speaker 9: going to put up a data center, but you have 451 00:23:05,280 --> 00:23:07,440 Speaker 9: to hook it to the energy grid. You also have 452 00:23:07,560 --> 00:23:10,359 Speaker 9: to make sure you have water rights for the cooling 453 00:23:10,480 --> 00:23:14,200 Speaker 9: technology there. So there's a lot of secondary in tertiary 454 00:23:14,720 --> 00:23:17,080 Speaker 9: knock on effects that go there. And so I think 455 00:23:17,280 --> 00:23:23,440 Speaker 9: investing more broadly that way, because artificial intelligence, data centers, 456 00:23:23,520 --> 00:23:26,919 Speaker 9: reshoring all of that stuff is not just a short. 457 00:23:26,720 --> 00:23:30,119 Speaker 6: Term cyclical play. It's a secular play, and. 458 00:23:30,160 --> 00:23:33,320 Speaker 9: So figuring out who's going to benefit and where the 459 00:23:33,440 --> 00:23:36,320 Speaker 9: stocks may not have moved, not Constellation may have moved, 460 00:23:36,400 --> 00:23:40,480 Speaker 9: but there are other broader implications for those industries that 461 00:23:40,680 --> 00:23:43,840 Speaker 9: you're spot on in terms of highlighting those. 462 00:23:44,920 --> 00:23:48,720 Speaker 3: So you know, outside of let's work it up earnings. 463 00:23:48,800 --> 00:23:51,359 Speaker 2: You mentioned in a couple of weeks, what are you 464 00:23:51,400 --> 00:23:53,320 Speaker 2: going to be looking for here? I mean, I'm thinking 465 00:23:53,359 --> 00:23:56,720 Speaker 2: about valuation in this market, Carol. I mean, we've seen big, 466 00:23:56,760 --> 00:23:58,840 Speaker 2: big moves off the October lows. I'm not sure I've 467 00:23:58,840 --> 00:24:02,680 Speaker 2: seen a commensurate move higher and analyst estimates here, what's 468 00:24:02,760 --> 00:24:04,879 Speaker 2: your valuation call, and how important earnings coming up? 469 00:24:05,800 --> 00:24:09,840 Speaker 9: Well, earnings will be really important to watch and listen for, 470 00:24:10,040 --> 00:24:11,959 Speaker 9: and there will be a lot, as there have been 471 00:24:12,040 --> 00:24:15,160 Speaker 9: in the last few quarters, there will be a lot 472 00:24:15,240 --> 00:24:17,920 Speaker 9: of analysis not just of worthy earnings come in, but 473 00:24:18,000 --> 00:24:20,920 Speaker 9: what the companies say in those transcripts and in those 474 00:24:20,960 --> 00:24:25,840 Speaker 9: earnings calls. And people will be watching pricing power, what 475 00:24:25,920 --> 00:24:29,240 Speaker 9: they're doing with employment, what they're doing with capex and 476 00:24:31,720 --> 00:24:34,960 Speaker 9: expansion plans, what they might be doing with mergers and acquisitions, 477 00:24:35,040 --> 00:24:36,760 Speaker 9: how much cash is on the balance sheet. 478 00:24:36,960 --> 00:24:38,960 Speaker 6: There'll be a lot of details that people will be 479 00:24:39,160 --> 00:24:42,480 Speaker 6: looking for in those earnings. And you're right, valuations are 480 00:24:42,560 --> 00:24:43,320 Speaker 6: not cheap. 481 00:24:44,000 --> 00:24:48,960 Speaker 9: They're not hyper expensive necessarily, and particularly when you look 482 00:24:49,000 --> 00:24:52,119 Speaker 9: at technology and the way that those growth trends have 483 00:24:52,280 --> 00:24:57,320 Speaker 9: come in. Those growth trends have supported where the stock 484 00:24:57,400 --> 00:25:00,320 Speaker 9: price movements may have gone, even though evaluation and are 485 00:25:00,359 --> 00:25:03,400 Speaker 9: somewhat high. But you know, critical sectors to watch will 486 00:25:03,440 --> 00:25:06,840 Speaker 9: be those consumer names. How much pricing power do they have, 487 00:25:07,080 --> 00:25:09,680 Speaker 9: because it does feel like in the last couple of 488 00:25:09,800 --> 00:25:13,280 Speaker 9: quarters there's a lot of consumer pushback in terms of 489 00:25:14,000 --> 00:25:16,040 Speaker 9: you know, what the grocery bill is going to cost 490 00:25:16,119 --> 00:25:18,320 Speaker 9: her what they're willing to spend on and what they're 491 00:25:18,400 --> 00:25:19,520 Speaker 9: not willing to spend on. 492 00:25:19,800 --> 00:25:23,720 Speaker 6: But consumers are still spending, companies are still spending. 493 00:25:23,920 --> 00:25:29,160 Speaker 5: So before we let you go, what do you think 494 00:25:29,240 --> 00:25:31,320 Speaker 5: the lever will be? Because I feel like in the 495 00:25:31,359 --> 00:25:33,520 Speaker 5: last running season we did learn that the pricing power 496 00:25:33,600 --> 00:25:36,280 Speaker 5: of companies had kind of hit its max. Then the 497 00:25:36,400 --> 00:25:38,560 Speaker 5: levers to keep the margins going, what is it going 498 00:25:38,600 --> 00:25:38,720 Speaker 5: to be? 499 00:25:40,200 --> 00:25:40,320 Speaker 4: Well? 500 00:25:40,359 --> 00:25:44,480 Speaker 9: I think on the intermediate longer term, investors have to 501 00:25:44,560 --> 00:25:48,520 Speaker 9: realize that margins are at or close to all time highs, 502 00:25:49,480 --> 00:25:52,240 Speaker 9: and in terms of growing that and sustaining that gets 503 00:25:52,320 --> 00:25:56,200 Speaker 9: to be pretty tough. But companies will be looking at 504 00:25:56,760 --> 00:25:59,080 Speaker 9: you know, is there is somewhat of an easing end 505 00:25:59,119 --> 00:26:00,040 Speaker 9: because there was a lot. 506 00:25:59,880 --> 00:26:00,840 Speaker 6: Of pressure on. 507 00:26:02,480 --> 00:26:09,920 Speaker 9: Employee employee salaries and overall income and the hiring. You've 508 00:26:10,000 --> 00:26:13,720 Speaker 9: seen employment come into better balance, So hopefully people won't 509 00:26:13,760 --> 00:26:17,560 Speaker 9: be as pressure to offer substantial signing bonuses and. 510 00:26:19,119 --> 00:26:20,840 Speaker 6: Increases, although it would be. 511 00:26:20,880 --> 00:26:23,720 Speaker 9: Nice from a consumer standpoint to keep at least keep 512 00:26:23,760 --> 00:26:27,080 Speaker 9: pace with where the inflation rate is. So companies will 513 00:26:27,119 --> 00:26:31,119 Speaker 9: be parsing every item they have in terms of looking 514 00:26:31,200 --> 00:26:32,000 Speaker 9: at cost. 515 00:26:31,800 --> 00:26:35,320 Speaker 6: Efficiencies and where they can save a buck there. 516 00:26:35,400 --> 00:26:38,320 Speaker 9: But it'll be tough and as investors, we're going to 517 00:26:38,359 --> 00:26:41,280 Speaker 9: have to adjust to the fact that margins can't grow 518 00:26:41,320 --> 00:26:44,480 Speaker 9: to the moon anymore than stock price isn't necessarily. 519 00:26:44,000 --> 00:26:46,119 Speaker 2: Can Okay, Cal, thank you so much for joining us. 520 00:26:46,160 --> 00:26:48,800 Speaker 2: Really appreciate a Cowurchlafe. She's a chief investment officer PIMO 521 00:26:49,080 --> 00:26:51,359 Speaker 2: Family Office, and we appreciate getting some of our thoughts. 522 00:26:53,920 --> 00:26:57,760 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 523 00:26:57,880 --> 00:27:00,800 Speaker 1: weekdays at ten am Eastern on app car Play and 524 00:27:01,160 --> 00:27:04,160 Speaker 1: royd Otto with the Bloomberg Business. You can also listen 525 00:27:04,320 --> 00:27:07,359 Speaker 1: live on Amazon Alexa from our flagship New York station, 526 00:27:07,800 --> 00:27:10,520 Speaker 1: Just say Alexa Play. Bloomberg eleven thirty. 527 00:27:12,240 --> 00:27:15,160 Speaker 5: President Joe Biden has gained some ground against Republican Donald 528 00:27:15,160 --> 00:27:18,560 Speaker 5: Trump in six and seven key swing states. So we 529 00:27:18,640 --> 00:27:21,560 Speaker 5: want to get more on this with Real Economy reporter 530 00:27:21,680 --> 00:27:24,960 Speaker 5: for Bloomberg, Mark Niquette. He's joining us on this poll. 531 00:27:25,359 --> 00:27:26,760 Speaker 5: What are the findings that you have? 532 00:27:28,880 --> 00:27:31,560 Speaker 11: Well, the poll shows it's a monthly tracking poll that 533 00:27:31,600 --> 00:27:33,560 Speaker 11: we've been doing since October, and it shows that Trump's 534 00:27:33,560 --> 00:27:36,120 Speaker 11: still doing pretty well in Georgia, Arizona, Nevada. 535 00:27:36,800 --> 00:27:38,960 Speaker 10: But the most significant findings is that. 536 00:27:41,200 --> 00:27:46,720 Speaker 11: Biden has improved his standing in Michigan, Wisconsin, and Pennsylvania, 537 00:27:46,840 --> 00:27:49,159 Speaker 11: sort of the blue Wall. I think these states are 538 00:27:49,200 --> 00:27:52,879 Speaker 11: going to decide the election, and he needs to win 539 00:27:53,000 --> 00:27:54,760 Speaker 11: these states if he's going to get a second term. 540 00:27:55,720 --> 00:27:59,360 Speaker 11: In Wisconsin, Biden now holds a one point lead over 541 00:27:59,440 --> 00:28:03,920 Speaker 11: Trump after trailing him by four points in February. In Pennsylvania, 542 00:28:04,080 --> 00:28:06,280 Speaker 11: the candidates are tied after Trump had a six point 543 00:28:06,359 --> 00:28:08,880 Speaker 11: lead in February, and they're also tied in Michigan. 544 00:28:09,600 --> 00:28:13,359 Speaker 2: Any common denominator here, Marcus to what might be driving 545 00:28:13,440 --> 00:28:14,520 Speaker 2: some of these poll numbers. 546 00:28:15,720 --> 00:28:17,760 Speaker 10: Well, the timing of the poll was interesting. 547 00:28:17,840 --> 00:28:22,920 Speaker 11: It was conducted March eighth through the fifteenth in the 548 00:28:22,960 --> 00:28:26,040 Speaker 11: swing states, and that March eighth is. 549 00:28:26,040 --> 00:28:29,960 Speaker 10: A day after Biden's State of the Union address, which was. 550 00:28:29,960 --> 00:28:33,600 Speaker 11: Pretty fiery and I think, you know, alleviated some Democratic 551 00:28:33,680 --> 00:28:37,359 Speaker 11: concerns about the president's age and his fitness. 552 00:28:37,080 --> 00:28:39,720 Speaker 10: To take on Trump a second time in a rematch. 553 00:28:40,840 --> 00:28:41,720 Speaker 10: And it's also. 554 00:28:43,040 --> 00:28:47,520 Speaker 11: Midway about March twelfth is Super Tuesday, when both Biden 555 00:28:47,680 --> 00:28:52,840 Speaker 11: and Trump sort of si clinch the respective nominations. They 556 00:28:52,880 --> 00:28:56,200 Speaker 11: got enough delegates to clinch, So it kind of really 557 00:28:56,320 --> 00:28:59,040 Speaker 11: made it a binary choice. You know, we knew this 558 00:28:59,160 --> 00:29:01,840 Speaker 11: was going to be the out, but I think the 559 00:29:01,960 --> 00:29:04,920 Speaker 11: Democrats in particular, we're thinking that until it was really 560 00:29:05,000 --> 00:29:07,520 Speaker 11: clear in voters minds that this was going to be 561 00:29:07,600 --> 00:29:11,560 Speaker 11: a rematch and it was Trump or Biden, that's their choices, 562 00:29:12,760 --> 00:29:14,800 Speaker 11: that Biden was not going to do as well in 563 00:29:14,880 --> 00:29:17,520 Speaker 11: the polls. So this is sort of the first poll 564 00:29:17,600 --> 00:29:20,360 Speaker 11: that we have clearly established that it's going to be 565 00:29:20,400 --> 00:29:21,480 Speaker 11: a Trump Biden rematch. 566 00:29:22,120 --> 00:29:25,360 Speaker 5: Are voters voting because they like the candidates or because 567 00:29:25,400 --> 00:29:26,400 Speaker 5: they don't like the other one? 568 00:29:28,560 --> 00:29:28,680 Speaker 10: Well? 569 00:29:28,800 --> 00:29:31,920 Speaker 11: Interestingly, our polls showed that in the case of Trump, 570 00:29:33,200 --> 00:29:35,000 Speaker 11: most of the support is coming from. 571 00:29:34,920 --> 00:29:40,440 Speaker 10: People who like Trump. Only three and ten Trump supporters 572 00:29:40,440 --> 00:29:43,400 Speaker 10: said they were voting for Trump because they didn't like Biden. 573 00:29:43,440 --> 00:29:47,920 Speaker 10: There essentially voting against Biden. But the case was different 574 00:29:48,040 --> 00:29:48,840 Speaker 10: for Biden. 575 00:29:49,400 --> 00:29:52,360 Speaker 11: About half the supporters of Biden's and they were voting 576 00:29:52,400 --> 00:29:54,840 Speaker 11: for the president essentially as a vote against Trump. 577 00:29:54,880 --> 00:29:56,560 Speaker 10: They didn't want to see Trump get back into the 578 00:29:56,600 --> 00:29:57,080 Speaker 10: White House. 579 00:29:57,400 --> 00:29:59,560 Speaker 11: There was even more pronounced in Wisconsin, were like six 580 00:29:59,640 --> 00:30:03,160 Speaker 11: and ten of the supporters of Biden, we're voting for him. 581 00:30:03,320 --> 00:30:05,160 Speaker 10: Because they were voting against. 582 00:30:04,880 --> 00:30:09,400 Speaker 5: Trumpet to that point, are those voters more sticky or not? Like, 583 00:30:09,560 --> 00:30:12,280 Speaker 5: is the anti vote stickier than the pro vote? 584 00:30:13,680 --> 00:30:13,920 Speaker 10: What is? 585 00:30:13,960 --> 00:30:16,360 Speaker 11: What we're going to find out is what's more motivating, right, 586 00:30:16,880 --> 00:30:20,480 Speaker 11: support for your candidate or desire not to see the 587 00:30:20,560 --> 00:30:24,560 Speaker 11: other candidate win. You know, I think Trump has benefited 588 00:30:24,640 --> 00:30:30,120 Speaker 11: over time from enthusiastic support from his base and base 589 00:30:30,200 --> 00:30:33,440 Speaker 11: turning out to support for him. But you know, the 590 00:30:33,560 --> 00:30:36,560 Speaker 11: negative feeling can also be a very strong motivating factor 591 00:30:37,160 --> 00:30:40,280 Speaker 11: and could drive folks to the polls, specifically to vote 592 00:30:40,280 --> 00:30:42,000 Speaker 11: against Donald Trump because they don't want to see him 593 00:30:42,000 --> 00:30:42,720 Speaker 11: back in the lighthouse. 594 00:30:43,000 --> 00:30:45,000 Speaker 10: We're going to find out what's more motivating, you know, 595 00:30:45,080 --> 00:30:47,680 Speaker 10: voting for your guy or voting against the other guy? 596 00:30:48,280 --> 00:30:51,320 Speaker 2: What is a polling show about some of these swing voters, 597 00:30:51,360 --> 00:30:54,240 Speaker 2: the more independent folks. What I've been told, or we've 598 00:30:54,240 --> 00:30:56,800 Speaker 2: been told by a lot of pollsters is that the 599 00:30:56,880 --> 00:30:58,840 Speaker 2: core Trump folks are going to stay with Trump no 600 00:30:59,000 --> 00:31:02,280 Speaker 2: matter what, and probably something similar on the Democratic side. 601 00:31:02,320 --> 00:31:05,120 Speaker 3: It's the folks in the middle. What do we know now? 602 00:31:06,880 --> 00:31:08,920 Speaker 11: I think we still don't know exactly how those folks 603 00:31:08,960 --> 00:31:11,520 Speaker 11: are going to play out, because we're We're particularly interested 604 00:31:11,640 --> 00:31:14,800 Speaker 11: in how suburban voters, particularly suburban women, are going to 605 00:31:14,880 --> 00:31:18,640 Speaker 11: vote in this election, and we've seen even in our 606 00:31:18,800 --> 00:31:22,960 Speaker 11: tracking poll, you know, changes in that subgroup, you know, 607 00:31:23,000 --> 00:31:27,480 Speaker 11: particularly in views about the economy. So I think we 608 00:31:27,600 --> 00:31:29,720 Speaker 11: have to get closer to the election to really see 609 00:31:29,840 --> 00:31:31,560 Speaker 11: how these folks are going to play out, and it's 610 00:31:31,600 --> 00:31:34,440 Speaker 11: going to be you know, maybe the deciding factor. You know, 611 00:31:34,520 --> 00:31:38,960 Speaker 11: how these independence and in particular suburban voters, you know, 612 00:31:39,160 --> 00:31:40,960 Speaker 11: decide between Trump and Biden. 613 00:31:40,960 --> 00:31:43,160 Speaker 10: And frankly, you know how motivated they are to turn 614 00:31:43,240 --> 00:31:45,080 Speaker 10: out because you know, particularly but. 615 00:31:45,280 --> 00:31:48,920 Speaker 11: Biden's going to win these these swing states, you know, 616 00:31:49,000 --> 00:31:54,480 Speaker 11: particularly Wisconsin, Pennsylvania, and Michigan, He's going to need a 617 00:31:54,680 --> 00:31:56,920 Speaker 11: very strong turnout in democratic cities. 618 00:31:57,080 --> 00:31:57,320 Speaker 9: MH. 619 00:31:58,080 --> 00:32:00,600 Speaker 5: Do what voters care about? Did that change Jital month 620 00:32:00,680 --> 00:32:01,000 Speaker 5: to month? 621 00:32:02,920 --> 00:32:05,840 Speaker 11: Interestingly, we saw a little bit of a decline in 622 00:32:06,000 --> 00:32:09,840 Speaker 11: the importance of the economy as a top issue for 623 00:32:10,000 --> 00:32:14,400 Speaker 11: voters and an increase in immigration as a top issue, 624 00:32:15,160 --> 00:32:18,000 Speaker 11: So sort of a listening of the economy and the 625 00:32:18,080 --> 00:32:22,480 Speaker 11: more heightened epsis on immigration, which presumably would be bad 626 00:32:22,560 --> 00:32:24,400 Speaker 11: news for President Biden. 627 00:32:26,160 --> 00:32:27,160 Speaker 10: But we also saw. 628 00:32:28,480 --> 00:32:32,400 Speaker 11: Folks who trust Trump more than Biden on the economy, 629 00:32:32,480 --> 00:32:34,840 Speaker 11: that that number go down a little bit. And also 630 00:32:35,200 --> 00:32:38,880 Speaker 11: the folks who feel they were better off financially under 631 00:32:39,000 --> 00:32:42,400 Speaker 11: Trump than Biden also that also go down a little bit. 632 00:32:42,760 --> 00:32:44,880 Speaker 11: So we're seeing a little bit of softening of the 633 00:32:45,000 --> 00:32:48,320 Speaker 11: advantage that Trump had on the economy and in particular 634 00:32:48,360 --> 00:32:50,000 Speaker 11: how voters feel about the economy. 635 00:32:50,480 --> 00:32:53,280 Speaker 2: Mark thirty seconds, how about the age issue. Both sides 636 00:32:53,280 --> 00:32:54,840 Speaker 2: are playing that up at the expense of the other. 637 00:32:56,720 --> 00:32:57,400 Speaker 10: Yeah, exactly. 638 00:32:57,640 --> 00:32:59,640 Speaker 11: And I think, you know, the one takeaway from this 639 00:32:59,760 --> 00:33:02,200 Speaker 11: pole is, you know, Biden has sort of helped in 640 00:33:02,280 --> 00:33:05,200 Speaker 11: that regard, I think primarily because of the State of 641 00:33:05,240 --> 00:33:06,040 Speaker 11: the Union address. 642 00:33:06,800 --> 00:33:09,080 Speaker 10: You know, age is still going to give a concern. 643 00:33:09,160 --> 00:33:11,240 Speaker 10: It will be a concern I think, you know, up 644 00:33:11,280 --> 00:33:11,960 Speaker 10: into the election. 645 00:33:13,000 --> 00:33:15,440 Speaker 11: But if nothing else, Democrats, i think, feel a little 646 00:33:15,520 --> 00:33:19,480 Speaker 11: more comfortable that it's not going to be a decisive 647 00:33:19,560 --> 00:33:21,320 Speaker 11: issue that's going to sing Biden's campaign. 648 00:33:22,080 --> 00:33:24,720 Speaker 5: All right, great stuff, Really appreciate it. Thank you very much. 649 00:33:24,720 --> 00:33:28,000 Speaker 5: We look forward to the next poll as well. Mark nqutte, 650 00:33:28,000 --> 00:33:30,920 Speaker 5: he's Bloomberg Real Economy reporter joining us in the latest 651 00:33:31,000 --> 00:33:34,000 Speaker 5: Morning Console poll. I want to see what apparently in 652 00:33:34,040 --> 00:33:36,920 Speaker 5: the poll too, Nikki Haley. Voters seemed to be moving 653 00:33:37,000 --> 00:33:41,000 Speaker 5: towards Trump, which I found to be quite interesting because like, 654 00:33:41,200 --> 00:33:44,000 Speaker 5: why I don't But then is that like an anti 655 00:33:44,040 --> 00:33:46,560 Speaker 5: Biden thing versus a true Trump, a pro Trump thing. 656 00:33:47,200 --> 00:33:47,920 Speaker 3: You know, it's interesting. 657 00:33:47,960 --> 00:33:49,360 Speaker 2: We'll have to see, we'll we get closer to the 658 00:33:49,440 --> 00:33:52,200 Speaker 2: election to see how some of these things start breaking. 659 00:33:52,320 --> 00:33:57,600 Speaker 1: Here this is the Bloomberg Intelligence podcast, available on Apple, Spotify, 660 00:33:57,800 --> 00:34:00,680 Speaker 1: and anywhere else you will get your podcast. Listen live 661 00:34:00,800 --> 00:34:04,200 Speaker 1: each weekday ten am tonoon Eastern on Bloomberg dot com, 662 00:34:04,520 --> 00:34:07,880 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 663 00:34:08,040 --> 00:34:11,000 Speaker 1: You can also watch us live every weekday on YouTube 664 00:34:11,280 --> 00:34:13,040 Speaker 1: and always on the Bloomberg terminal