WEBVTT - iPhone Shipments Fall in China , Baltimore Bridge Collapse 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple Car, playing Android Otto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch us live on YouTube. 0:00:24.720 --> 0:00:26.799 I think it's starting to get serious. Here here's the 0:00:26.800 --> 0:00:30.000 news today again on Apple. Apple iPhone shipments in China 0:00:30.520 --> 0:00:33.400 fell about thirty three percent in February from a year earlier, 0:00:33.400 --> 0:00:36.800 according to official data, extending a slump in demand from 0:00:36.800 --> 0:00:40.760 the flagship device in its most important overseas market. This 0:00:40.800 --> 0:00:43.559 is getting my attention now. I need to check in 0:00:43.600 --> 0:00:45.760 with men Deep Singh. He's our senior tech analyst for 0:00:45.840 --> 0:00:49.879 Bloomberg Intelligence. Man Deep, I mean one month, okay, two months? 0:00:50.000 --> 0:00:52.000 I mean it's starting to stack up here. 0:00:53.360 --> 0:00:57.840 What are we hearing from Coopertino about China risk and 0:00:57.880 --> 0:01:00.440 opportunities for them right now? 0:01:00.520 --> 0:01:03.040 I think the two data points that you got this year, 0:01:03.120 --> 0:01:06.040 one in February from this source called Counterpoint, where they 0:01:06.040 --> 0:01:09.520 said iPhone sales were down twenty four percent for six weeks. 0:01:10.000 --> 0:01:13.080 Now it's validated that they are actually down thirty three 0:01:13.120 --> 0:01:16.759 percent for the month of February, so clearly, you know 0:01:16.920 --> 0:01:20.440 they have a problem both with the demand for iPhone 0:01:20.480 --> 0:01:23.440 as well as competition. I think one of the things 0:01:23.520 --> 0:01:26.720 that doesn't get as much attention right now is the 0:01:26.760 --> 0:01:31.760 fact that Huawei has a comparable phone to iPhone. And 0:01:31.840 --> 0:01:34.280 the reason they've been able to do it very quickly 0:01:34.360 --> 0:01:37.160 is because of the supply chains that Apple created in 0:01:37.200 --> 0:01:41.400 the region. So a lot of those suppliers are actually 0:01:41.480 --> 0:01:44.160 making the phone for Huawei and they don't have to 0:01:44.200 --> 0:01:46.880 do much because Apple is at the cutting edge when 0:01:46.920 --> 0:01:49.960 it comes to the chip, the assembly, and so all 0:01:50.000 --> 0:01:55.240 the supply chains. Guys are actually diversifying themselves and making 0:01:55.400 --> 0:02:00.000 phones for Shami Huawei. Huawei is the notable share gainer here, 0:02:00.080 --> 0:02:02.120 but that just goes to show that, you know, they 0:02:02.120 --> 0:02:03.840 are also diversifying. 0:02:03.280 --> 0:02:05.240 Which also goes to show why Tim Cook is in 0:02:05.360 --> 0:02:07.840 China and saying that extra day to meet with quote 0:02:07.880 --> 0:02:10.240 unquote top leadership, which everyone seems to think is he's 0:02:10.280 --> 0:02:12.239 in paying what's going to be his pitch? 0:02:13.120 --> 0:02:17.520 I mean, look, I think my phones, yes, and they 0:02:17.600 --> 0:02:21.240 used to have twenty percent revenue exposure to China. It's 0:02:21.320 --> 0:02:24.600 gone down to about fifteen percent now. But when you 0:02:24.680 --> 0:02:28.000 think about the weight of China both as their biggest 0:02:28.000 --> 0:02:31.240 supply chain. You know, ninety five ninety eight percent supply 0:02:31.320 --> 0:02:35.120 chain still resides in China and fifteen percent revenue exposure. 0:02:35.120 --> 0:02:38.000 He doesn't have a choice, and that's where he has 0:02:38.080 --> 0:02:41.600 to make sure. You know, he's aligned with the party 0:02:41.639 --> 0:02:45.040 and you know, the locals, and they just want to 0:02:45.080 --> 0:02:47.360 make sure they don't end up losing share. Forget about 0:02:47.880 --> 0:02:51.280 growing in the region. It's all about keeping the share 0:02:51.360 --> 0:02:52.960 they have Right now, I. 0:02:52.919 --> 0:02:53.680 Don't know the answer. 0:02:53.760 --> 0:02:56.400 I can't think of an answer for Apple, particularly on 0:02:56.440 --> 0:02:59.200 the supply chain. I can pencil out China going to. 0:02:59.120 --> 0:03:00.720 Close to zero terms of sales. 0:03:00.800 --> 0:03:02.920 I could pencil that out, put a multiple on it, 0:03:03.000 --> 0:03:06.560 and there we go. There is no Apple without China 0:03:06.600 --> 0:03:10.160 in terms of supply chain. There is no Apple without 0:03:10.240 --> 0:03:11.120 that supply chain. 0:03:12.000 --> 0:03:14.160 And for the longest time we thought the risk for 0:03:14.280 --> 0:03:17.720 the suppliers is if Apple is not giving business to them, 0:03:17.800 --> 0:03:20.880 they don't have anything to manufacture. Well guess what they have, 0:03:21.560 --> 0:03:23.840 you know, a Huawei and the local guys, and so 0:03:23.919 --> 0:03:26.240 that's how they are going about the business right now. 0:03:26.360 --> 0:03:29.080 So if I'm Tim Cook and I have seen this 0:03:29.160 --> 0:03:31.880 for years and I want to diversify my supply chain. 0:03:32.160 --> 0:03:33.520 What does that look like? 0:03:33.880 --> 0:03:34.440 What is that? 0:03:34.760 --> 0:03:36.880 I mean, it's we did a big report. It's a 0:03:37.000 --> 0:03:41.440 multi year yes, and you know, the assembly part is 0:03:42.040 --> 0:03:45.840 already moving to India. We've seen a big rampop in India. 0:03:45.880 --> 0:03:48.880 Almost twenty two percent of the phones last year iPhones, 0:03:48.960 --> 0:03:51.360 not the highest end, but a lot of the models 0:03:51.360 --> 0:03:55.840 were assembled in India, and gradually they will have to diversify, 0:03:56.040 --> 0:03:58.640 you know, the assembly side. The problem they are running 0:03:58.680 --> 0:04:01.360 into is the com all the components that you need 0:04:01.440 --> 0:04:05.520 to manufacture an iPhone and the complex device that it is. 0:04:06.320 --> 0:04:08.760 It's not that easy to just you know, lift and 0:04:08.800 --> 0:04:11.680 shift your supply chains into a different regions. You need 0:04:11.880 --> 0:04:15.520 so many there's so many dependencies both with TSMC and 0:04:15.600 --> 0:04:20.200 the other suppliers that feed into the Chinese assembly. So 0:04:20.279 --> 0:04:23.159 all that needs to be relocated, and it will happen. 0:04:23.240 --> 0:04:26.200 It's just it's a multi year effort. And right now 0:04:26.240 --> 0:04:29.840 the focus is also shifting towards on device AI. I 0:04:29.880 --> 0:04:33.240 feel the reason why Chinese government is really cracking down 0:04:33.680 --> 0:04:36.280 is because the next wave of this is AI will 0:04:36.360 --> 0:04:39.200 run on device and they don't want a US based 0:04:39.279 --> 0:04:43.760 company probably to be running AI. You know, on device 0:04:43.839 --> 0:04:45.880 in the in the region. So that's the other aspect 0:04:45.880 --> 0:04:46.080 of it. 0:04:46.720 --> 0:04:49.599 Here to date stocks down eleven percent trailing twelve months, 0:04:49.640 --> 0:04:52.440 it's up seven percent. Well, that can make it from 0:04:52.560 --> 0:04:55.960 here a bear case could be made here big time. 0:04:56.680 --> 0:05:00.360 I mean, look, I mean a long term multi bear 0:05:00.440 --> 0:05:03.599 case here. I've got supply chain issues. I've already zeroed 0:05:03.640 --> 0:05:05.240 out my China revenue. 0:05:05.880 --> 0:05:08.440 And revenue is going to be changing because of all 0:05:08.440 --> 0:05:09.240 the new laws. 0:05:09.080 --> 0:05:11.599 Right in terms of core cases could be Yeah, the 0:05:11.680 --> 0:05:14.800 DJ lawsuit, it's coming at the worst time for Apple. 0:05:14.880 --> 0:05:18.039 I mean, they should be doubling down on other markets 0:05:18.040 --> 0:05:20.600 where they can acquire share that they may end up 0:05:20.640 --> 0:05:24.520 losing in China. Obviously, the DJ lawsuit is not helping. 0:05:24.520 --> 0:05:27.760 And the EU regulation the digital markets acts, so from 0:05:27.839 --> 0:05:31.200 a regulatory perspective, you're right. I think the bear case 0:05:31.279 --> 0:05:35.120 is really around the revenue exposure and I'm sure the 0:05:35.160 --> 0:05:38.920 supply chains they'll moddel through in terms of making sure 0:05:38.960 --> 0:05:41.120 they can still make the phone. And you know, as 0:05:41.120 --> 0:05:44.799 long as the manufacturers or they are getting the business, 0:05:44.839 --> 0:05:48.520 they don't mind Apple continuing to you know, have the 0:05:48.560 --> 0:05:52.599 supply chains remain intact there. But I think the hard 0:05:52.600 --> 0:05:56.600 part would be the EPs drawdown as a result of 0:05:56.960 --> 0:05:58.840 the Chinese revenue going down. 0:05:59.440 --> 0:06:02.680 I mean, you know, thirty two buys eighteen holes out 0:06:02.680 --> 0:06:05.240 there in five cells. That's about as middle of the 0:06:05.320 --> 0:06:07.880 road as I've seen Apple in twenty years in terms 0:06:07.880 --> 0:06:09.000 of the street. 0:06:09.160 --> 0:06:12.159 And it's waiting in the s and p is also falling. Yeah, 0:06:12.800 --> 0:06:13.920 that too, So I mean. 0:06:14.320 --> 0:06:17.760 I equate it. It's similar to Tesla. Actually, in some ways, 0:06:17.800 --> 0:06:21.800 Tesla and Apple are very similar because Tesla also has 0:06:21.800 --> 0:06:25.800 a revenue exposure. It also manufactures it cars, But I 0:06:26.120 --> 0:06:29.360 think Tesla's supply chain is more diversified. That's the one 0:06:29.360 --> 0:06:32.080 big difference is they do manufacture elsewhere. 0:06:32.120 --> 0:06:34.799 Here's a dumb question, why can't they just build stuff 0:06:34.800 --> 0:06:36.800 in the US? Like, I know, it's not as easy 0:06:36.800 --> 0:06:38.280 as like here's a plant, let's PLoP it down in 0:06:38.279 --> 0:06:40.680 the US. But like why is India the next port 0:06:40.720 --> 0:06:42.360 of call? Like why not the US? 0:06:42.680 --> 0:06:45.800 Well, again, it's the components. So think of the bill 0:06:45.839 --> 0:06:49.599 of Yeah, there are certain components that can only be 0:06:49.800 --> 0:06:53.719 sourced over there, and over time they can move things around. 0:06:53.720 --> 0:06:56.719 But if you're talking about you know, a twelve hundred 0:06:56.720 --> 0:07:01.040 dollars phone, it has a certain bill of material things 0:07:01.040 --> 0:07:02.880 are done in a certain way. That's why it comes 0:07:02.960 --> 0:07:05.240 at that cost. We're not talking about a five thousand 0:07:05.320 --> 0:07:09.320 dollars phone. If they you know, relocate things overnight, that 0:07:09.760 --> 0:07:10.920 price could double triple. 0:07:11.040 --> 0:07:13.040 I mean, okay, that's crazy. But you remember when the 0:07:13.080 --> 0:07:15.040 iPhone was coming out of a thousand and it was like, 0:07:15.080 --> 0:07:17.160 no one's going to pay that. This is insane, this 0:07:17.240 --> 0:07:19.400 is ridiculous. Now it's like twelve hundred whatever. 0:07:19.560 --> 0:07:20.239 Yeah, exactly. 0:07:20.640 --> 0:07:23.440 The market adapts, as we've seen here. All right, So 0:07:24.600 --> 0:07:27.080 if you're a bull, are you simply saying there's two 0:07:27.080 --> 0:07:29.200 billion units out there, they'll forgret to way to make 0:07:29.240 --> 0:07:31.880 money off of those things, and that ecosystem, I. 0:07:31.800 --> 0:07:34.120 Mean, the bull case is still the ecosystem and the 0:07:34.160 --> 0:07:37.000 fact that they have an install base of one point 0:07:37.040 --> 0:07:40.400 three billion users you know who still have the iPhone 0:07:40.440 --> 0:07:42.760 and they will refresh the phone at some point, and 0:07:42.880 --> 0:07:47.560 everyone still likes the iOS ecosystem. I think what Huawei 0:07:47.880 --> 0:07:51.360 is doing is laying out a path where people can 0:07:51.480 --> 0:07:54.360 move out of the iOS ecosystem. And then the whole 0:07:54.400 --> 0:07:57.760 AI thing and the regulatory stuff I think is just 0:07:57.840 --> 0:07:59.920 making it worse. Word the timing of it is just 0:08:00.040 --> 0:08:01.720 words for Apple, right, now interesting. 0:08:01.800 --> 0:08:06.960 Interesting, So the developer conference in June, right, that's gonna 0:08:06.960 --> 0:08:08.760 the pressure is gonna be big for them to reach. 0:08:08.960 --> 0:08:12.720 And remember they're looking at leveraging by DO. Now that 0:08:13.040 --> 0:08:17.040 the reason for leveraging by DO for AI in Chinese 0:08:17.120 --> 0:08:19.480 region is just to please you know that, the fact 0:08:19.480 --> 0:08:22.760 that they're using a local AI player as opposed to 0:08:22.880 --> 0:08:23.880 deploying their own AI. 0:08:24.000 --> 0:08:26.480 So that's the other aspect of it, all right, Man, 0:08:26.520 --> 0:08:29.200 Deep sing thank you so much. Is he's the best man, 0:08:29.240 --> 0:08:33.080 Deep Singh. He covers all the technology for Bloomberg Intelligence 0:08:33.080 --> 0:08:36.959 along a Runa and the whole team around the globe London, 0:08:37.440 --> 0:08:40.400 New York, at in Silicon Valley. We've got a big 0:08:40.400 --> 0:08:43.440 team in Asia as well, so we've got the global 0:08:43.480 --> 0:08:45.800 tech space covered head to toe. 0:08:45.840 --> 0:08:51.200 There you're listening to the Bloomberg Intelligence Podcast. Catch us 0:08:51.240 --> 0:08:54.439 live weekdays at ten am Eastern on Apple card Play 0:08:54.480 --> 0:08:57.280 and Android Auto with the Bloomberg Business app. You can 0:08:57.320 --> 0:09:00.840 also listen live on Amazon Alexa from our New York 0:09:00.880 --> 0:09:03.880 station just Say Alexa playing Bloomberg eleven. 0:09:05.800 --> 0:09:09.360 Michael McKee joins us, our global economics editor here and Michael, 0:09:09.400 --> 0:09:13.320 when we see a bridge in a major port city 0:09:13.720 --> 0:09:19.400 like Baltimore collapsed into the river. There are economic implications here, 0:09:19.640 --> 0:09:22.880 and we're just learning more and more about Baltimore as 0:09:23.000 --> 0:09:25.560 a port city, Baltimore as a city where a lot 0:09:25.559 --> 0:09:26.960 of cargo transit. 0:09:26.520 --> 0:09:28.800 Its over that bridge. 0:09:29.920 --> 0:09:31.360 How are you thinking about it from I guess a 0:09:31.400 --> 0:09:32.720 regional economic impact. 0:09:33.520 --> 0:09:36.559 Well, it's a regional impact and to a certain extent, 0:09:36.600 --> 0:09:39.080 a national impact because of the type of cargo that 0:09:39.120 --> 0:09:40.000 Baltimore handles. 0:09:40.040 --> 0:09:40.520 It is the. 0:09:40.600 --> 0:09:43.439 Largest port for automobile. 0:09:42.920 --> 0:09:44.680 Imports, and I didn't know that before. 0:09:44.800 --> 0:09:48.200 Most nine hundred thousand cars, cars and other trucks came 0:09:48.240 --> 0:09:51.760 through there. Plus they also handle what they call roll 0:09:51.800 --> 0:09:56.559 on rollofs for big companies like Caterpillar and John Deere, 0:09:56.679 --> 0:10:00.640 so a lot of equipment goes through that port. It 0:10:00.720 --> 0:10:03.720 is one of the bigger ports on the east coast 0:10:03.760 --> 0:10:07.559 of the US. So there's going to be an interruption there, 0:10:08.400 --> 0:10:10.720 first of all, because there's no way to get in 0:10:10.800 --> 0:10:12.800 or out of the port at the moment until they 0:10:12.800 --> 0:10:17.160 clear the wreckage of the bridge. Bloomberg's trade people have 0:10:17.480 --> 0:10:21.520 noted there's twenty one ships behind them ridge, so I can't. 0:10:21.280 --> 0:10:22.240 Get out again. 0:10:23.000 --> 0:10:25.320 And then there are more that would be coming in 0:10:25.400 --> 0:10:28.400 that in theory can be diverted, but it's going to 0:10:28.400 --> 0:10:32.840 be a question of capacity for getting the tonnage off 0:10:32.880 --> 0:10:34.320 those ships others. 0:10:34.400 --> 0:10:34.920 It's interesting. 0:10:34.960 --> 0:10:36.560 I have to admit I am a kind of a 0:10:36.600 --> 0:10:38.920 trade shipping geek, and I have an app on my 0:10:38.960 --> 0:10:40.920 phone that tracks this stuff. So I'm sitting on the 0:10:41.000 --> 0:10:43.400 Jersey Shore beach and I say a big cargo ship, gup. 0:10:43.440 --> 0:10:45.240 I want to know where it came from, where it's 0:10:45.280 --> 0:10:47.280 going when it's carrying. And what I do notice is 0:10:47.320 --> 0:10:49.280 the ones leaving the New York Harbor often the next 0:10:49.320 --> 0:10:52.720 stop is actually Norfolk, Virginia, more so than you would 0:10:52.720 --> 0:10:57.080 say Philadelphia, Baltimore. So perhaps, but I can't imagine putt 0:10:57.160 --> 0:11:03.119 nine hundred thousand cars. Who's got room for that, right, Yeah, that's. 0:11:01.880 --> 0:11:03.840 Going to be a bit of an issue. They also 0:11:04.080 --> 0:11:08.560 it's a major distribution hup there on the north side 0:11:08.920 --> 0:11:14.360 of the bridge. They have Amazon FedEx under Armor Home Depot. 0:11:15.040 --> 0:11:19.480 They all have big warehouses there and the stuff that 0:11:19.520 --> 0:11:21.880 comes in and out to those warehouses and this will 0:11:21.920 --> 0:11:24.480 be more of a regional impact but won't be coming 0:11:24.480 --> 0:11:26.960 in and out. So there's going to be have to 0:11:26.960 --> 0:11:30.000 be a lot of logistical changes made. Now the good 0:11:30.000 --> 0:11:33.200 news is to the extent that I don't know if 0:11:33.200 --> 0:11:35.320 it's good news or not. But we have had some 0:11:35.400 --> 0:11:41.040 bridge collapses in recent years, remember in Minnesota and in 0:11:41.720 --> 0:11:47.679 the Bay Bridge in Oakland. Others like that have happened. 0:11:47.760 --> 0:11:52.160 Philadelphia had the I ninety five bridge, and putting a 0:11:52.160 --> 0:11:55.160 bridge back together is easier than building it from scratch. 0:11:55.200 --> 0:11:55.839 Now, this is a. 0:11:55.960 --> 0:11:59.120 Much worse This is a much worse situation than those. 0:12:00.400 --> 0:12:04.000 They were able to get them rebuilt on a fairly 0:12:04.200 --> 0:12:07.480 quick timetable. It took five years to build this bridge, 0:12:08.040 --> 0:12:10.720 so the hope is it would not take that long 0:12:11.360 --> 0:12:12.520 to rebuild this bridge. 0:12:12.559 --> 0:12:15.200 So let me ask how long This is a completely 0:12:15.280 --> 0:12:17.679 unfair question and give you in a minute, But how 0:12:17.720 --> 0:12:19.280 long does it take for these kind of issues to 0:12:19.320 --> 0:12:22.719 filter down into prices for example? And then how is 0:12:22.760 --> 0:12:24.960 the feggan to look at it, because yes, it's transitory, 0:12:25.040 --> 0:12:26.920 but two and a half years and then the confidence 0:12:26.920 --> 0:12:29.319 and the expectation of inflation that isn't transitory. 0:12:30.000 --> 0:12:33.520 Well, it's hard to say at this point because companies 0:12:33.720 --> 0:12:37.160 are much better and the pandemic forced them to be 0:12:37.240 --> 0:12:40.160 much better at being able to change their supply routes 0:12:40.200 --> 0:12:44.880 and supply lines on short notice. If we don't get 0:12:45.360 --> 0:12:48.720 stuff or we can't ship stuff, it will raise the 0:12:48.840 --> 0:12:52.080 price probably, but it has to last for a while 0:12:52.440 --> 0:12:55.800 if they can find alternate ways around it. Transportation is 0:12:55.800 --> 0:12:59.400 a very very small part of overall goods prices, so 0:12:59.480 --> 0:13:02.920 it's probably not going to have a major national impact. 0:13:03.040 --> 0:13:06.840 It may have an impact, certainly on Baltimore, and obviously 0:13:06.920 --> 0:13:09.160 it's going to be a major impact for a while 0:13:09.240 --> 0:13:12.520 in terms of traffic going up and down Interstate ninety five. 0:13:13.559 --> 0:13:16.480 The probably the biggest impact is going to be with 0:13:16.559 --> 0:13:20.720 hazardous materials because they can't go through the two Baltimore tunnels. 0:13:20.720 --> 0:13:22.720 They can only go over the bridge. So now they're 0:13:22.760 --> 0:13:25.480 going to have to make a wide detour around Baltimore. 0:13:25.559 --> 0:13:26.840 That'll slow things down. 0:13:26.640 --> 0:13:28.839 All right, Michael McKeith, thank you so much. We appreciate that. 0:13:28.880 --> 0:13:30.400 Michael mckea economics editor. 0:13:32.760 --> 0:13:36.640 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:36.720 --> 0:13:39.800 weekdays at ten am Eastern on affle Card playing Endroud 0:13:39.840 --> 0:13:42.920 Auto with the Bloomberg Business app. Listen on demand wherever 0:13:43.000 --> 0:13:46.840 you get your podcasts, or watch us live on YouTube. 0:13:48.200 --> 0:13:50.280 Okay, let's get to some breaking data we had at 0:13:50.320 --> 0:13:53.040 the top of the hour. And that's a consumer confidence. 0:13:53.200 --> 0:13:56.920 So the Conference Board consumer confidence for March coming in 0:13:56.960 --> 0:13:59.679 a little light, coming in at one oh four point seven. Also, 0:14:00.200 --> 0:14:03.960 or was revised lower the present situation a bit better 0:14:04.120 --> 0:14:07.200 one point fifty one. But it was the expectation number 0:14:07.679 --> 0:14:10.800 that disappointing, coming in at seventy three point eight. So 0:14:10.880 --> 0:14:13.840 let's dig through the numbers here. Joining us is Dana Peterson, 0:14:14.080 --> 0:14:19.120 chief economist at the Conference Board. Dana, what led to 0:14:19.200 --> 0:14:20.920 the lower expectation number? 0:14:22.320 --> 0:14:25.480 Sure, the expectations number is made up of three pieces, employment, 0:14:25.920 --> 0:14:28.480 incomes and business conditions, and all three you were down 0:14:28.480 --> 0:14:28.960 in the month. 0:14:29.840 --> 0:14:31.040 Well what does that tell us? 0:14:32.360 --> 0:14:34.320 Well, tells us that consumers are a little bit worried 0:14:34.360 --> 0:14:38.160 about the future. Certainly, this expectations gauge has been dancing 0:14:38.400 --> 0:14:42.400 in around eighty and eighty really is the threshold for 0:14:42.480 --> 0:14:46.000 which below that consumers think there's a recession coming. But 0:14:46.080 --> 0:14:48.440 we also do have a separate recession question where we 0:14:48.480 --> 0:14:49.920 ask consumers do you think there's going to be a 0:14:50.000 --> 0:14:52.600 recession of the next twelve months, And they've been continuing 0:14:52.600 --> 0:14:55.960 to be less convinced of that. So there's some mixed 0:14:56.320 --> 0:14:59.000 implications here. Certainly they are a little bit concerned, but 0:14:59.000 --> 0:15:01.080 they don't think of recession on the way. 0:15:01.160 --> 0:15:04.040 So, Dana, it seems like from all the polling you 0:15:04.040 --> 0:15:07.200 see out there that inflation is probably issue number one 0:15:07.320 --> 0:15:10.480 with consumers out there. Yes, the rate of inflation has declined, 0:15:10.520 --> 0:15:13.840 but boyd, prices are still high, whether it's food in 0:15:13.920 --> 0:15:16.080 the supermarket, gasoline for your car. 0:15:16.800 --> 0:15:18.080 What's your data show you about that. 0:15:19.480 --> 0:15:21.840 Sure, we have write ins where we ask consumers what's 0:15:21.880 --> 0:15:25.240 your most important issue, and complaints about inflation and prices 0:15:25.240 --> 0:15:28.320 are still number one. They're still complaining about food and 0:15:28.400 --> 0:15:31.720 energy prices, but in terms of energy, the complaints are 0:15:31.760 --> 0:15:35.120 a little less severe, a little less intense. So consumers 0:15:35.120 --> 0:15:36.600 are seeing a little bit of a break there, but 0:15:36.640 --> 0:15:39.160 for the most part, there's still very worried about prices 0:15:39.200 --> 0:15:42.400 being elevated. Eggs and gasoline costing more than they'd like. 0:15:42.600 --> 0:15:44.720 Yeah, dot dot dot, because you take a look, there's 0:15:44.720 --> 0:15:47.320 a survey out that shows that gasoline in the summer 0:15:47.400 --> 0:15:50.840 could top four dollars. Now, so there is that coming 0:15:50.840 --> 0:15:54.440 out there. You look, cocoa prices top and ten thousand dollars. 0:15:54.440 --> 0:15:57.360 And then you have this issue at the Port of Baltimore, right, 0:15:57.400 --> 0:15:59.920 and then you have this bridge collapse and that could 0:16:00.080 --> 0:16:03.960 wind up affecting supply chains, et cetera. How do consumers 0:16:04.560 --> 0:16:08.080 react to these kind of headlines, right, four dollars gasoline 0:16:08.160 --> 0:16:10.760 bridge collapse, Like, how does this affect their level of 0:16:10.800 --> 0:16:12.320 confidence and their level of spending? 0:16:13.680 --> 0:16:16.240 Sure, I mean, we can't tell from this report because 0:16:16.560 --> 0:16:19.000 you know, the data was fielded. Sure start, we redialed 0:16:19.000 --> 0:16:22.240 it before this happened this morning. But certainly if consumers 0:16:22.280 --> 0:16:24.520 think that there's going to be higher gasoline prices or 0:16:24.600 --> 0:16:27.720 that supply chain disruptions from the incident in Baltimore are 0:16:27.800 --> 0:16:31.000 going to make clothing and cars more expensive, then certainly 0:16:31.040 --> 0:16:32.720 their confidence is probably going to wane. 0:16:33.680 --> 0:16:35.600 All Right, Dana, thank you so much for joining us. 0:16:35.640 --> 0:16:37.960 Dana Peterson, she said, Chief economists at the Conference Board. 0:16:38.040 --> 0:16:40.000 We had the Conference Board coming out with some consumer 0:16:40.040 --> 0:16:44.480 confidence data today, a little bit weaker then expected, and 0:16:44.880 --> 0:16:47.520 certainly and some downward revisions from the prior month. So again, 0:16:47.600 --> 0:16:50.840 consumers a little bit wavering, some confidence out there. Inflation 0:16:51.320 --> 0:16:54.160 remains stubborn for many folks out there. 0:16:55.800 --> 0:16:59.640 You're listening to the Bloomberg Intelligence podcast catch us live 0:17:00.080 --> 0:17:03.280 days and ten am Eastern on applecar Play and Android 0:17:03.320 --> 0:17:06.040 Auto with the Bloomberg Business app. You can also listen 0:17:06.200 --> 0:17:09.280 live on Amazon Alexa from our flagship New York station. 0:17:09.680 --> 0:17:12.399 Just say Alexa playing Bloomberg eleven thirty. 0:17:13.920 --> 0:17:15.480 All right, let's see what's happening with these markets? 0:17:15.680 --> 0:17:18.600 Checking with he does his stuff. We're a living Carolshlife, 0:17:18.920 --> 0:17:23.560 chief investment officer of BEMO Family office located there in Minneapolis, 0:17:23.560 --> 0:17:25.840 and she's joining us via zoom. So, Carol, what do 0:17:25.920 --> 0:17:29.800 you make of this market here? What's driving stock price 0:17:29.880 --> 0:17:30.200 is higher? 0:17:30.200 --> 0:17:34.359 In your opinion, I think there's a growing belief that 0:17:35.240 --> 0:17:38.160 whether it's not even a soft landing, it's no landing 0:17:38.200 --> 0:17:40.920 at all. There's a growing belief in the sturdiness of 0:17:41.000 --> 0:17:44.200 the economy and what's going on in the US. There's 0:17:44.200 --> 0:17:47.159 also a lot of physcal stimulus that's finally freed up. 0:17:47.640 --> 0:17:50.160 It's been teed up for the last couple of years, 0:17:50.240 --> 0:17:53.880 and now it's actually moving into markets and supporting things. 0:17:54.000 --> 0:17:58.880 We're doing exciting things like reshoring, we're building artificial intelligence 0:17:59.119 --> 0:18:01.800 data center hub. There's a lot of activity going on, 0:18:02.480 --> 0:18:04.480 and if you look under the hood at what the 0:18:04.600 --> 0:18:07.840 markets are showing, they're showing it's not just those Magnificent 0:18:07.920 --> 0:18:09.000 seven leading the pack. 0:18:09.080 --> 0:18:09.480 Anymore. 0:18:09.680 --> 0:18:13.480 It's a much broader basis, and you've seen a broadening 0:18:13.520 --> 0:18:16.960 out of the leadership, which is very reassuring and supportive 0:18:17.119 --> 0:18:18.480 for constructive markets. 0:18:18.960 --> 0:18:21.280 So again, a lot of folks, I guess we did 0:18:21.400 --> 0:18:24.440 see that that November December moving the market, a broadening 0:18:24.520 --> 0:18:25.920 out of performance. 0:18:27.320 --> 0:18:29.240 How important is that for the market. 0:18:29.080 --> 0:18:32.119 Because it just seems like technology has got to lead 0:18:32.160 --> 0:18:34.119 this market, but you need to see us some other 0:18:34.160 --> 0:18:35.560 sectors participate as well. 0:18:36.720 --> 0:18:37.760 Yeah, it's definitely. 0:18:38.000 --> 0:18:42.000 It's definitely important for the sustainability and durability of a 0:18:42.119 --> 0:18:47.840 market advance to have most of the participants or most 0:18:47.880 --> 0:18:49.760 of the constituents participating. 0:18:50.320 --> 0:18:51.600 And you're definitely seeing that. 0:18:51.720 --> 0:18:54.960 You're seeing a turnover where you've got stabilization, some interesting 0:18:55.080 --> 0:18:58.639 things going on with financial services, you've got consumer goods 0:18:59.200 --> 0:19:05.840 companies moving both staples and but more particularly the discretionary. 0:19:05.160 --> 0:19:05.760 Side of things. 0:19:06.200 --> 0:19:08.280 We'll have earnings coming up in a couple of weeks, 0:19:08.320 --> 0:19:10.440 so we'll be able to start parsing through some of that. 0:19:10.840 --> 0:19:13.840 But it really is vital for the for this for 0:19:13.960 --> 0:19:16.680 the ability of the markets to carry on that more 0:19:16.720 --> 0:19:19.760 and more are participating in it, and it's interesting on 0:19:19.840 --> 0:19:22.600 a day like today, even a lot of those magnificence 0:19:22.680 --> 0:19:26.120 haven't aren't in the top tier. They're they're holding their own, 0:19:26.240 --> 0:19:28.600 but they're way down the list of contributors. And so 0:19:28.720 --> 0:19:32.879 it's really important for this market to continue to see 0:19:33.160 --> 0:19:36.040 more and more stocks participating. 0:19:36.640 --> 0:19:39.840 How do you judge that, Carol, I mean, because there 0:19:39.880 --> 0:19:41.359 are because they're they're not going to be able to 0:19:41.440 --> 0:19:43.600 catch up to like pre pandemic levels. You can make 0:19:43.600 --> 0:19:46.639 an argument like maybe energy and industrials we've seen, but 0:19:47.359 --> 0:19:49.480 how do you know which sectors are going to be 0:19:49.520 --> 0:19:52.119 able to have that real balance and which ones are 0:19:52.200 --> 0:19:54.720 just going to be too exposed to rates, say and 0:19:54.800 --> 0:19:55.480 the consumer. 0:19:56.720 --> 0:20:01.280 I think it's really important to not necessarily just invest sectors. 0:20:01.359 --> 0:20:04.720 But what you saw, especially in the last quarterly earnings. 0:20:04.520 --> 0:20:08.560 As you saw a big dispersion even within sectors in 0:20:08.680 --> 0:20:11.560 terms of who was adapting the higher rates, who was 0:20:11.640 --> 0:20:14.560 adapting the higher costs, who wasn't. You saw a lot 0:20:14.600 --> 0:20:19.159 of credit attributed to individual companies that talked about right 0:20:19.280 --> 0:20:21.960 sizing businesses where they were laying off in one part 0:20:22.040 --> 0:20:24.000 in investing strategically in another. 0:20:24.560 --> 0:20:26.720 So it really is a stock pickers market. 0:20:26.840 --> 0:20:29.480 So maybe the bigger question is do we go back 0:20:29.560 --> 0:20:33.240