WEBVTT - Apparel Stocks, Market Trends, and Apple (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.919 at Bloomberg dot com slash podcast. We've got the threat 0:00:24.000 --> 0:00:27.200 of recession either here or looming. But on the other hand, 0:00:27.200 --> 0:00:30.440 we have pretty much a fully employed economy. The consumer 0:00:30.480 --> 0:00:33.960 seems pretty decent. I like to look to the retailers 0:00:33.960 --> 0:00:35.640 to get a sense of how the consumers doing, and 0:00:35.640 --> 0:00:38.519 we've got a great round table now. Pudum Goyle analysts 0:00:38.520 --> 0:00:41.839 for e commerce at leisure whatever that is an off 0:00:41.920 --> 0:00:44.920 price retail for Bloomberg Intelligence here in the U S. 0:00:44.960 --> 0:00:48.120 And Deb Bacon. She's a senior analyst of luxury goods 0:00:48.120 --> 0:00:52.080 and beauty home care with Bloomberg Intelligence. She's based in London. Deb. 0:00:52.120 --> 0:00:55.600 I want to talk start with you Audie Das as 0:00:55.600 --> 0:00:58.760 we say it in Europe, okay, named for Addie Dosler. 0:00:58.800 --> 0:01:00.920 Thank you very much for pronouncing correctly. You're very You're 0:01:01.000 --> 0:01:04.760 very welcome. Starts are today They had their earnings were 0:01:04.760 --> 0:01:11.560 a little disappointing. Give us the latest on Adidas debin 0:01:11.959 --> 0:01:16.840 you there, deb dear deb Hello, Hello, Hello, I am 0:01:16.959 --> 0:01:21.440 I am. But actually that punum stock and she's online, 0:01:21.640 --> 0:01:25.200 so excellent. Yeah, yeah, we'll just start. Let's start with 0:01:25.200 --> 0:01:27.920 you in Europe. How are things going through the consumer? 0:01:28.440 --> 0:01:30.640 Tell Gucci we can go to Gucci. Then Gucci had 0:01:30.640 --> 0:01:34.760 something because yeah we can't. Sorry, I right, okay, so 0:01:34.920 --> 0:01:38.520 UM if I if I focused on Karen, Um, so 0:01:39.040 --> 0:01:41.200 scaring is the order of Gucci for those listeners who 0:01:41.200 --> 0:01:44.200 don't know. I didn't know that. Yeah, yes, so Karen 0:01:44.640 --> 0:01:47.559 makes well over Sorry, so Gucci makes well over fifty 0:01:48.280 --> 0:01:51.880 of UM sales at the Kuren group. And then you 0:01:52.000 --> 0:01:57.360 have the brands in there like San Lauran, Balence, t Jaga, Botego, Vanetta. 0:01:57.760 --> 0:02:00.600 But Gucci is by far the biggest brand and also 0:02:01.320 --> 0:02:05.960 very much so the biggest mix in terms of profitability. 0:02:06.080 --> 0:02:09.560 So um, what we saw last night from Paris was 0:02:10.600 --> 0:02:15.320 fourteen percent organic sales growth and even twenty three percent 0:02:15.440 --> 0:02:18.680 when we add in Forex game, which looked great on 0:02:18.720 --> 0:02:22.280 the top line and was beat stock down today, UM 0:02:22.480 --> 0:02:26.240 stocked down and soft overall, bringing the sector down and 0:02:26.360 --> 0:02:30.000 very much it's overshadowed by Gucci brand softness. The idea 0:02:30.040 --> 0:02:32.360 here is that there was a question in the market 0:02:32.400 --> 0:02:35.680 place on where the Gucci became too much fashion orientated. 0:02:35.960 --> 0:02:38.920 So the idea is really to elevate the brand to 0:02:39.040 --> 0:02:42.640 the levels that we see within some of the LVMH 0:02:42.880 --> 0:02:46.760 with a ton another portfolio as Christian Your and also MS. 0:02:46.880 --> 0:02:50.119 Both of those had knockout results in the last week 0:02:50.240 --> 0:02:53.800 or so. Has been a problem, not just this quarter right, 0:02:53.960 --> 0:02:56.120 It's been a problem for a number of reporting periods. 0:02:56.560 --> 0:03:00.760 It has And if we look pre COVID, they went 0:03:00.840 --> 0:03:04.239 through a two year program where they really reorganized Gucci, 0:03:04.360 --> 0:03:07.680 had big collaborations, lots and lots the new design very 0:03:07.720 --> 0:03:10.000 good and ready to wear and footbear and others, and 0:03:10.600 --> 0:03:13.120 they were seeing four percent plus growth. So when you 0:03:13.160 --> 0:03:15.280 look at it on a three year stack base, it's 0:03:15.280 --> 0:03:18.200 still very very solid growth. But what we saw in 0:03:18.360 --> 0:03:22.239 the Q three overall is that actually Gucci came in 0:03:22.320 --> 0:03:24.799 at nine percent growth and if I give you two 0:03:24.880 --> 0:03:29.079 comps on that, that compares against your major nine and 0:03:29.160 --> 0:03:32.000 them as a percent. And the view is that it's 0:03:32.000 --> 0:03:34.639 going to be costly for them to really bring this 0:03:34.760 --> 0:03:37.000 brand back up to day. It's not passing on the 0:03:37.080 --> 0:03:40.320 price in the US though Europe was huge for them 0:03:40.400 --> 0:03:43.480 because the US are traveling there and using dollar benefit. 0:03:44.280 --> 0:03:46.800 And then in China, it's got a new team coming 0:03:46.840 --> 0:03:49.400 in and the branch just seems to have lost its fears. 0:03:50.400 --> 0:03:52.360 So I put them want to bring you in here 0:03:52.680 --> 0:03:55.920 on Adidas, I see the start trading afterday some problems 0:03:56.000 --> 0:04:00.120 with China. Yeah, absolutely no. China continues to be an 0:04:00.160 --> 0:04:03.880 important area for the ath leisure companies Adidas as well, 0:04:04.040 --> 0:04:06.840 and um, it's continued to be weak. Um, there's no 0:04:07.080 --> 0:04:10.280 sign of recovery there, which is a big risk for 0:04:10.400 --> 0:04:13.240 not only Adidas but also Nike and the other brands 0:04:13.320 --> 0:04:16.880 that have a larger presence there for growth. Um, we 0:04:17.040 --> 0:04:19.880 don't know when China will recover, but we do know 0:04:20.480 --> 0:04:23.080 that comparisons get easier as we move into the next 0:04:23.200 --> 0:04:27.000 fiscal year and hopefully that should help at least show 0:04:27.160 --> 0:04:31.080 better numbers. But that said, with the COVID lockdowns, China 0:04:31.200 --> 0:04:35.000 still remains a big wild card for these retailers. But 0:04:35.120 --> 0:04:38.040 it's not just China that's a concern for Adidas here. 0:04:38.040 --> 0:04:40.720 I think the bigger concern really for US is the 0:04:40.800 --> 0:04:43.120 weakness that we're seeing in the Western markets with the 0:04:43.200 --> 0:04:46.880 inventory build up and and that's causing some major concern 0:04:47.640 --> 0:04:50.040 um for the brand and also for rivals. By the way, 0:04:50.040 --> 0:04:54.440 are they still working together with ya formerly known as 0:04:54.520 --> 0:05:02.000 Kanye West tweets At the moment, the collaboration is still 0:05:02.279 --> 0:05:05.520 intact and under review, so we know that. You know, 0:05:05.760 --> 0:05:08.400 he has seen a lot of collaborations kind of go 0:05:08.760 --> 0:05:13.840 off recently and Adidas was reviewing that. So but so 0:05:13.960 --> 0:05:16.120 far as the Germans are willing to work with him 0:05:17.560 --> 0:05:21.400 at the moment, it's under review. Yes, Hey, talk to 0:05:21.480 --> 0:05:24.600 us about just luxury in general by thirty seconds, so 0:05:24.720 --> 0:05:27.200 dependent upon China. But if China is not going to 0:05:27.279 --> 0:05:31.000 be China for a while during this covered lockdowns, how 0:05:31.040 --> 0:05:32.919 big of a head winners after just luxury in general? 0:05:33.920 --> 0:05:36.080 I think, Um, you know, if you've got the brands 0:05:36.080 --> 0:05:38.320 out in China, then there are ways for the consumer. 0:05:38.400 --> 0:05:40.640 If the brand is hot, the consumer is picking up. 0:05:40.760 --> 0:05:44.240 So for UM, if we think about for Louisa, Tom 0:05:44.360 --> 0:05:47.680 for the Yore, for UM, for MS brand overalls, they 0:05:47.720 --> 0:05:50.200 were really positive on China. What they're saying though is 0:05:50.240 --> 0:05:53.120 that there are some lockdown still, but where stores are 0:05:53.160 --> 0:05:56.000 open it's back to double digit growth and that started 0:05:56.080 --> 0:05:58.239 up from June through July. But if I think about 0:05:58.279 --> 0:06:02.480 other areas, um, we also had last night. Loreal, for example, 0:06:02.640 --> 0:06:05.640 have big skincare market in China and it's still not 0:06:05.800 --> 0:06:08.360 back the market. They said it's down three for beauty. 0:06:09.160 --> 0:06:12.680 Um there are there are positive eight there are still 0:06:12.760 --> 0:06:15.560 issues in this brand by brand right good stuff? All right? 0:06:15.839 --> 0:06:18.200 Love getting that retail round up if you will put 0:06:18.279 --> 0:06:21.680 them goil She's retail analyst for Bloomberg Intelligence based in Princeton, 0:06:21.720 --> 0:06:24.840 New Jersey, and deb Ache and retail analysts for Bloomberg 0:06:24.839 --> 0:06:28.040 Intelligence based in London, covering all things retail over there, 0:06:28.120 --> 0:06:32.520 plus the luxury sector, which it just continues to chug on. 0:06:36.160 --> 0:06:39.080 Think about this group, your principal investment banking and Morgan 0:06:39.120 --> 0:06:41.480 Stanley are a pretty standard job head of investment banking 0:06:41.520 --> 0:06:43.720 a's c IBC. It's a good standard job. That's a 0:06:43.800 --> 0:06:46.480 good gig. But then you go your portfolio manager at 0:06:46.560 --> 0:06:48.880 s A C Capital. I mean it's like you're a banker, 0:06:48.960 --> 0:06:51.640 but then you're a trader with Stevie Cohen Master. Who 0:06:51.680 --> 0:06:53.920 does that? I mean, who does that? Our next guest 0:06:53.920 --> 0:06:57.640 did that, Jay Hatfield CEO, founder and portfolio manager Infrastructure 0:06:57.640 --> 0:06:59.600 Capital Management. I have no idea what this guy does 0:06:59.640 --> 0:07:00.960 for a living, but I want to. I know they've 0:07:00.960 --> 0:07:03.360 got a lot of eats. They make e t f s, 0:07:03.880 --> 0:07:05.560 and one of the e t f s is the 0:07:06.400 --> 0:07:09.760 I don't know, they do energy stuff like that. The 0:07:09.960 --> 0:07:12.960 energy space has been so out of favor J for 0:07:13.280 --> 0:07:16.600 so long and it's like a minuscule four percent of 0:07:16.640 --> 0:07:19.400 the SMP five fund. When I started the business, it 0:07:19.560 --> 0:07:22.960 was rocking energy. Now it's nothing, but it's had a 0:07:23.040 --> 0:07:25.520 couple of good years here. How do you think about 0:07:25.560 --> 0:07:29.720 the energy space, Well, there's two major developments that UM 0:07:30.440 --> 0:07:33.800 have benefited the sector. The first is they started to 0:07:33.880 --> 0:07:38.280 manage their capital structures appropriately so and also their investment 0:07:38.440 --> 0:07:41.080 so instead of just trying to grow, they tried to 0:07:41.160 --> 0:07:45.200 generate earnings, which I learned as an undergrad is really critical. 0:07:45.360 --> 0:07:48.800 Actual book earnings do matter. And if somebody says they do, 0:07:49.120 --> 0:07:52.640 count Davis by the way you count Davis, so that 0:07:52.760 --> 0:07:54.480 I think is a pretty good law of investing. So 0:07:54.560 --> 0:07:58.200 they's finally started to try to generate actual profits and 0:07:58.520 --> 0:08:00.840 also dividends, which is our core of what we do. 0:08:01.440 --> 0:08:06.840 And then, unfortunately for Europe. They have a failed energy 0:08:06.920 --> 0:08:10.440 policy of not securing enough natural gas even before the 0:08:10.520 --> 0:08:14.400 Ukraine War and then finally after the Ukraine War having 0:08:14.440 --> 0:08:18.760 that cut off. So that's why US energy prices are 0:08:18.800 --> 0:08:22.160 relatively resilient even though we're in the shoulder months and 0:08:23.040 --> 0:08:26.800 global growth is obviously challenged. And that's because natural gas 0:08:26.920 --> 0:08:29.600 is treating at the oil equivalent of a eighty dollars 0:08:29.640 --> 0:08:33.560 a barrel, which draws in all other hydrocarbons into Europe. 0:08:33.800 --> 0:08:37.199 So we have the all time record refining margins for 0:08:37.320 --> 0:08:40.160 distill it because you can ship distill it easily. So 0:08:40.280 --> 0:08:43.480 those two factors are really supporting, of course, the recovery 0:08:43.520 --> 0:08:45.959 from the pandemic, supporting the energy sector and making it 0:08:47.000 --> 0:08:49.439 outperform in these tough markets. But by the way, with 0:08:49.520 --> 0:08:54.280 your experience in the energy industry, UM, which is significant, 0:08:54.440 --> 0:08:58.280 and obviously you're still you know, working with it at infrastructure, UM, 0:08:59.720 --> 0:09:04.000 how likely is it that President Biden is able to 0:09:04.280 --> 0:09:07.960 actually get prices down at the pump by releasing barrels 0:09:08.000 --> 0:09:11.360 from the spr It helps a little bit the margin, 0:09:11.480 --> 0:09:13.200 but you just have to think of the oil market 0:09:13.520 --> 0:09:18.360 as being global, So it's a hundred million barrels per 0:09:18.480 --> 0:09:21.959 day consumed, and so anything that comes out of the 0:09:22.160 --> 0:09:24.599 spr is just going to operate at the margin. So 0:09:24.679 --> 0:09:28.040 it's a gigantic market and it's fungible. So all the 0:09:28.240 --> 0:09:32.760 discussions of limiting Russian oil prices and these other constraints 0:09:32.800 --> 0:09:35.280 really don't work because it's a true commodity market. And 0:09:35.360 --> 0:09:38.280 I was hearing it as too far upstream because we've 0:09:38.320 --> 0:09:42.079 heard um that the problem really is the refining capacity 0:09:42.320 --> 0:09:44.839 and that even if you were to give them fifty 0:09:44.880 --> 0:09:47.680 million barrels of oil a day for free, it's still 0:09:47.760 --> 0:09:51.080 difficult to get that turned into gasoline and diesel absolutely well, 0:09:51.080 --> 0:09:54.280 and particularly diesel because diesel hit eighty dollars of barrel, 0:09:54.360 --> 0:09:57.400 which is almost unfathomable. So it's actually you get more 0:09:57.520 --> 0:10:00.200 margin than the cost of the oil, So that's eating 0:10:00.240 --> 0:10:03.439 at one eight. So that really demonstrates that that's the 0:10:03.520 --> 0:10:06.679 issue is a shortage of distillate to replace the natural 0:10:06.760 --> 0:10:09.679 gas in Europe. So you know when we had the 0:10:10.480 --> 0:10:14.160 syenergy crisis development with the Russian invasion of Ukraine and 0:10:14.200 --> 0:10:16.240 then the reopening of the global economy, and that kind 0:10:16.240 --> 0:10:19.440 of created this energy shortage. If you will, my question 0:10:19.520 --> 0:10:21.800 to all my buddies done in Texas and Oklahoma is like, 0:10:21.880 --> 0:10:25.439 we just start start up the refineries, start pumping. You know, 0:10:25.520 --> 0:10:28.079 we we've got lots of oil, we've got shale. Just 0:10:28.160 --> 0:10:30.880 start finding this stuff and if we have to liquify 0:10:30.960 --> 0:10:32.880 and send it to Europe, we can do that. But 0:10:32.960 --> 0:10:35.640 apparently it's we don't have a lot of refining capacity 0:10:35.679 --> 0:10:38.400 out there, do we know? We definitely don't. It hadn't 0:10:38.440 --> 0:10:41.480 been a great business for years, so there was less 0:10:41.520 --> 0:10:44.600 investment and it doesn't really pay. Most of the new 0:10:44.640 --> 0:10:47.160 refineries are coming in the Middle East. There's really been 0:10:47.240 --> 0:10:50.160 no new refineries. In fact, there is one ship down 0:10:50.240 --> 0:10:54.360 that that blew up in Philadelphia, so you can't really 0:10:54.440 --> 0:10:57.079 just poof of a refinery out there. And it's highly 0:10:57.120 --> 0:11:00.559 imprudent because over time the returns won't be great, so 0:11:00.640 --> 0:11:02.319 you just have to kind of mint money while the 0:11:02.400 --> 0:11:05.640 markets are good and then wait. So it's an Unfortunately, 0:11:05.640 --> 0:11:07.640 I don't like the discipline. I mean, the energy guys 0:11:07.679 --> 0:11:10.520 are now preaching discipline to their equity shareholders and to 0:11:10.600 --> 0:11:13.640 their bondholders and things like that, when in reality I 0:11:13.720 --> 0:11:16.400 need them to build more capacity, but they're not doing it. 0:11:16.480 --> 0:11:18.560 They are, in fact disciplined with their capital you need 0:11:18.640 --> 0:11:23.280 them to as a consumer, yes, as an okay, as 0:11:23.320 --> 0:11:26.880 an investor, j um. Where would you go right now? 0:11:27.240 --> 0:11:29.360 There are a lot of ets out there to play, 0:11:29.840 --> 0:11:34.640 you know, exploration, production, infrastructure, refining. Where do you think 0:11:34.760 --> 0:11:36.959 is the right place to be? Well, we always like 0:11:37.080 --> 0:11:41.199 to have, particularly in these sort of horrific markets, with 0:11:41.360 --> 0:11:44.800 the bond market crashing every day, UM in more conservative, 0:11:44.800 --> 0:11:46.920 Like if you're gonna do energy, do the most conservative, 0:11:47.000 --> 0:11:51.000 so that would be pipelines. Um. Definitely, the yield six 0:11:51.120 --> 0:11:55.120 to eight percent, the super majors have substantial yields, and 0:11:55.240 --> 0:11:57.280 of course we just discussed that the refiners are just 0:11:57.400 --> 0:12:02.560 printing money and trade it ridiculously multiples and have good dividends, 0:12:02.640 --> 0:12:04.839 So that's the better way. We wouldn't And there's a 0:12:04.960 --> 0:12:07.960 few of the e MP companies that have like eight 0:12:08.120 --> 0:12:10.400 nine percent dividends, but they don't need to go after 0:12:10.480 --> 0:12:14.199 the most risky small cop gambling type. You get plenty 0:12:14.240 --> 0:12:16.360 of risk already if you're an energy, so you don't 0:12:16.400 --> 0:12:18.600 need to go small caps. We go ultra large cap 0:12:18.880 --> 0:12:22.839 and dividends. Sorry, well, I'm just um. You mentioned the 0:12:22.880 --> 0:12:26.000 bond market crashing every day, right, which is not great 0:12:26.000 --> 0:12:28.720 if you're a holder. But if you want return, it's 0:12:28.760 --> 0:12:32.559 not bad. Um, where's the tenure right now? Four point 0:12:32.760 --> 0:12:36.160 three four point four on the tenure, but you're getting 0:12:36.200 --> 0:12:38.599 more on the two year and you know everywhere you 0:12:38.679 --> 0:12:42.400 look yields are high. Is that bad for MLP demand? 0:12:42.559 --> 0:12:47.720 I mean, um, do those rates become competitive? Well? Definitely. 0:12:47.800 --> 0:12:53.400 In the last month, all really large cap um value 0:12:53.480 --> 0:12:56.719 dividend stocks got smashed because rates were crashed, and we 0:12:56.800 --> 0:13:01.079 went from two e d to four and two and 0:13:01.120 --> 0:13:06.839 a half once the biggest sell off in you know, 0:13:07.360 --> 0:13:11.199 recent memory at least, and so that really caused most 0:13:11.240 --> 0:13:13.559 of those stocks to sell off. But we don't mind 0:13:13.640 --> 0:13:16.360 that so much because when you're getting paid substantial dividends, 0:13:16.400 --> 0:13:20.040 not like two percent at eight that's still a good spread. 0:13:20.120 --> 0:13:22.840 And those dividends are growing now with the pipeline companies, 0:13:22.920 --> 0:13:26.160 so they're not that raid sensitive. They're just mostly oil sensitive. 0:13:26.920 --> 0:13:28.920 J stick around just when we have some breaking news 0:13:29.000 --> 0:13:30.880 we want to get to. But Jay Haltfield, CEO, Founder 0:13:30.880 --> 0:13:33.800 Portfolio Management Infrastructure Capital Advisors, you're gonna stick with us. 0:13:34.000 --> 0:13:37.000 I got some interesting news coming over the Bloomberg terminal. 0:13:37.400 --> 0:13:40.960 Apple in the news again, the design chief is going 0:13:41.000 --> 0:13:45.160 to leave the company three years after replacing Umster Ivy. 0:13:45.200 --> 0:13:48.240 Evans Hanky, vice President Industrial Design, used it depart. This 0:13:48.360 --> 0:13:50.800 is a big news, Ed Ludlow from Bloomberg News. He's 0:13:51.040 --> 0:13:53.400 usually based on the West Coast and has his tentacles 0:13:53.440 --> 0:13:55.680 and all things Silicon Valley, but he's here in New 0:13:55.720 --> 0:13:59.360 York on a Bloomberg Interactive broker studio. Some pretty big news. Head. Yeah, 0:13:59.400 --> 0:14:01.439 it's big. Is you go back to the history of 0:14:01.520 --> 0:14:04.000 this company in the nineties when Steve Jobs kind of 0:14:04.040 --> 0:14:06.280 came back in and made Apple what it is today. 0:14:06.600 --> 0:14:08.920 This is the first time that they won't have a 0:14:09.040 --> 0:14:11.800 kind of de facto design chief. I think what's also 0:14:11.880 --> 0:14:14.079 interesting is she's only been in the role since two 0:14:14.120 --> 0:14:17.040 thousand nineteen, and you know, to all our global audience 0:14:17.120 --> 0:14:19.840 that have an iPhone, the reason that it's sleek and 0:14:19.960 --> 0:14:23.400 get sleeker and thinner and more beautiful each year. Well, 0:14:23.640 --> 0:14:25.840 this person has a role in evans Hanky leads the 0:14:25.880 --> 0:14:28.200 team of designers that do that. And we talk a 0:14:28.240 --> 0:14:31.080 lot about the macro how Apple performs the high end 0:14:31.120 --> 0:14:34.240 of the market, particularly in markets like China, for the 0:14:34.320 --> 0:14:39.120 middle and upper upper class income bracket. UM but they're 0:14:39.160 --> 0:14:41.720 also working on these new products for its future right 0:14:41.800 --> 0:14:44.520 a r VR, headsets and EV potentially, and she would 0:14:44.560 --> 0:14:46.200 have had a role in that. What we know, according 0:14:46.240 --> 0:14:48.400 to sources is she told everyone she's leaving this week, 0:14:48.440 --> 0:14:51.480 but we'll stay for six months and crucially, the software 0:14:51.560 --> 0:14:55.000 chief is staying. Okay, but I mean turnover an Apple 0:14:55.200 --> 0:14:59.320 doesn't seem like a typical right, They just fired their 0:14:59.320 --> 0:15:01.760 production she you for like well, quoting a line from 0:15:01.760 --> 0:15:04.400 the movie Arthur. Okay, I know you haven't seen, but 0:15:04.520 --> 0:15:07.160 you know we grew up with that movie. Okay, two things. 0:15:07.240 --> 0:15:10.160 First of all, their supply chain chief did depart the 0:15:10.240 --> 0:15:14.000 company for some colorful comments that he made in a 0:15:14.080 --> 0:15:16.200 viral social media It's pretty direct quote. I'm surprised you 0:15:16.240 --> 0:15:17.760 remember the movie. So I'm just not going to say 0:15:17.840 --> 0:15:21.040 on this program. One high area of turnover has been 0:15:21.120 --> 0:15:24.920 the very secretive EV program. Apple's attempt to make a 0:15:24.960 --> 0:15:27.960 self driving electric vehicle has had names from all across 0:15:27.960 --> 0:15:31.280 the industry, from legacy auto too failed names where they 0:15:31.280 --> 0:15:34.480 went startups and work out turnover, turnover. But yes, Paul, 0:15:34.800 --> 0:15:38.480 this is a company where continuity is king. Is this 0:15:38.680 --> 0:15:44.200 design chief specifically focused on, um, you know, the iPhone 0:15:44.680 --> 0:15:48.760 or would a design chief be looking at also the Mac, 0:15:48.920 --> 0:15:52.000 the watch, even the e V Yes. So I guess 0:15:52.040 --> 0:15:53.520 the way that I put it is that she focused 0:15:53.560 --> 0:15:56.200 on the hardware, what it looked like, how it felt 0:15:56.240 --> 0:15:58.360 to the consumer, how how it is, and that not 0:15:58.520 --> 0:16:01.440 just the phone, I pad, everything exactly. You know, That's 0:16:01.440 --> 0:16:04.080 why I flag how crucial it is that Allan Dy, 0:16:04.280 --> 0:16:07.200 who's the head of design for software in ux or 0:16:07.680 --> 0:16:10.880 user interface, is staying because the other big part of 0:16:10.920 --> 0:16:14.280 the tech I've got an iPhone in my hand is iOS, right, 0:16:14.320 --> 0:16:17.400 the operating platform, how how that works across its different things, 0:16:17.480 --> 0:16:21.080 So continuity in that sense. But again she led what 0:16:21.280 --> 0:16:24.040 was a relatively big team, a few dozen very senior 0:16:24.400 --> 0:16:27.400 industrial engineers who we assume we'll stay in place. It's 0:16:27.440 --> 0:16:29.320 just that their chief is leaving after three years and 0:16:29.400 --> 0:16:32.440 that doesn't happen. Just looking at the start greater Apple 0:16:32.480 --> 0:16:34.440 Star kind of unchanged on the day, up about six 0:16:34.480 --> 0:16:36.960 tenths of one percent of the news, so upmarket in 0:16:37.000 --> 0:16:40.880 an upmarket absolutely is any reason is there is this 0:16:40.960 --> 0:16:44.880 signal greater I don't know, uncertainty, turmoil, distraction at the 0:16:45.240 --> 0:16:47.840 at what is a crucial part of the company. You 0:16:47.920 --> 0:16:50.040 know that there's always a question every now and then 0:16:50.080 --> 0:16:52.240 to Tim Cook about succession, just as there is for 0:16:52.360 --> 0:16:57.320 any long tenured executive of a company of that size. Um, 0:16:57.760 --> 0:16:59.680 it's been a rough year for Apple, right, you know, 0:16:59.760 --> 0:17:02.080 they did show nimbleness with the supply chain for a 0:17:02.120 --> 0:17:04.880 big portion of the last eighteen months, but they still 0:17:04.960 --> 0:17:08.760 face headwinds. They faced the the head wind of a 0:17:08.800 --> 0:17:11.800 stronger dollar. They face issues of demand in China, just 0:17:11.880 --> 0:17:14.920 like everyone else. And if your topic, secutives and talent 0:17:15.000 --> 0:17:17.720 are leaving the company for whatever reason, we actually, you know, 0:17:17.880 --> 0:17:19.880 we don't have a good reason why. In this case, 0:17:20.200 --> 0:17:25.560 it's not good. I mean, the the one caveat really 0:17:25.720 --> 0:17:28.399 is that she's only been there for three years and 0:17:28.800 --> 0:17:31.320 we don't know exactly why she left. But she replaced 0:17:31.600 --> 0:17:36.240 a giant in the world of design. She replaced Johnny I, 0:17:36.400 --> 0:17:39.000 who was there for two decades, who was arguably as 0:17:39.119 --> 0:17:41.719 important to Apple success as Steve Jopps. And that's why 0:17:41.800 --> 0:17:43.399 context is king. So first of all, I think I 0:17:43.440 --> 0:17:45.080 said this, but evans Hanki is going to stay for 0:17:45.160 --> 0:17:47.879 six months, so there's a kind of handover period. She 0:17:48.119 --> 0:17:50.840 was appointed to this role in two thousand nineteen, but 0:17:51.000 --> 0:17:53.520 she had worked for Johnny I. For years and years 0:17:53.560 --> 0:17:55.640 and years, you know, a designer in her own right. 0:17:56.080 --> 0:17:59.679 But again it's just a changing of history for Apple. 0:18:00.080 --> 0:18:03.440 The first megastar design chief, Johnny I is twenty years 0:18:03.480 --> 0:18:05.960 of the company. His success is there for three years 0:18:06.000 --> 0:18:08.960 tool intensive purposes. What happens next, you know, that's always 0:18:08.960 --> 0:18:11.560 the question. Alright, good stuff. Ed Ludlow joining us here 0:18:11.560 --> 0:18:13.960 in our Bloomberg interactior broker studio at Ludlow for Bloomberg 0:18:14.000 --> 0:18:16.920 News breaking down some news here. Apple design chief to 0:18:17.000 --> 0:18:21.199 leave three years after replacing the icon Johnny, I've all right, 0:18:21.240 --> 0:18:22.679 this is what we're gonna do, folks. We're gonna get 0:18:22.680 --> 0:18:25.040 a Bloomber business class, reset everything. They're gonna come back 0:18:25.080 --> 0:18:28.200 with a j Hatfield and we're going to get another 0:18:28.400 --> 0:18:31.840 person coming darkening the door as we speak, Dryden Pennce 0:18:31.840 --> 0:18:34.000 ce I, O of Pence Wealth Management. We're around table. 0:18:34.600 --> 0:18:37.280 Even before today we were up to in a third percent. Yes, 0:18:37.600 --> 0:18:39.840 so that was just Monday and Tuesday. We were down 0:18:39.920 --> 0:18:42.040 Wednesday and Thursday, and now when we're up today, that 0:18:42.119 --> 0:18:43.399 just adds to it. I don't know what's going on 0:18:43.560 --> 0:18:46.240 until the options expiration, Yeah, exactly. All right, let's bring 0:18:46.320 --> 0:18:49.440 it back talk some stocks in this segment. J Halfield 0:18:49.440 --> 0:18:52.399 he's still with a CEO at Infrastructure Capital Management, and 0:18:52.440 --> 0:18:55.879 we're joined by Dryden Pence ce I oh for Pence 0:18:55.960 --> 0:18:59.840 Capital Management. Both in our Bloomberg Interactive Broker studio. We 0:19:00.000 --> 0:19:03.480 can't get a Bloomberg employee to come into our studio 0:19:03.600 --> 0:19:06.000 time on a Friday. You know, that's the new world 0:19:06.080 --> 0:19:08.280 we live in. Dried In, what do you make of 0:19:08.320 --> 0:19:11.720 this market? It's been brutal this year. My sixty portfolios 0:19:11.720 --> 0:19:13.399 in the toilet, what do you make of it? I 0:19:13.480 --> 0:19:15.200 think the market right now is is what I call 0:19:15.240 --> 0:19:19.359 the frazzled cat. Everybody's overreacting to whatever piece of information 0:19:19.520 --> 0:19:21.840 comes out, and I think that we're it's a very 0:19:21.920 --> 0:19:24.959 emotional market and it's trading and moving on the multiple. 0:19:25.040 --> 0:19:26.879 So we think it's a tail of two years. This 0:19:27.000 --> 0:19:28.679 year is going to be about the multiple, next year 0:19:28.680 --> 0:19:31.560 will be about fundamentals. But I think that that really 0:19:31.680 --> 0:19:35.400 everybody is overreacting to every piece of news that comes out, 0:19:35.640 --> 0:19:37.080 and folks need to kind of step back and have 0:19:37.119 --> 0:19:39.560 a little better perspective. Well, I mean, look, the problem 0:19:39.680 --> 0:19:41.920 is it's not just what's happening here in the US 0:19:42.080 --> 0:19:45.720 right we have more than ten percent inflation in the UK. UM. 0:19:45.880 --> 0:19:47.760 Germany is looking at a situation where they may have 0:19:47.880 --> 0:19:53.560 to start rationing goods. Um uh. Are we in a 0:19:53.720 --> 0:19:56.879 different situation? Ja, Do you think the US is the 0:19:56.960 --> 0:20:01.720 cleanest dirty shirt? Will we avoid a major recession? Absolutely? 0:20:01.840 --> 0:20:04.439 And it's really related to the conversation we're having before 0:20:04.480 --> 0:20:09.119 about energy, is that Europe's problem is our opportunity. So 0:20:09.240 --> 0:20:14.159 we have manufacturing cost advantage, not just with l G 0:20:15.200 --> 0:20:21.200 and UM refined products, but chemicals steal even there's a 0:20:21.240 --> 0:20:25.160 story about textiles where energy is critical, so we think 0:20:25.240 --> 0:20:28.040 that's a tail wind. And also we the housing sector, 0:20:28.080 --> 0:20:31.480 even though it's going to decline, has limited inventory, and 0:20:31.600 --> 0:20:34.280 that's usually where you get the layoffs in the deepercession, 0:20:34.720 --> 0:20:38.399 it's fed raises rates, layoff all the construction workers, layoff 0:20:38.400 --> 0:20:41.399 auto workers. But because of the pandemic, we don't have that. 0:20:41.480 --> 0:20:44.480 So we're forecasting a mild recession here, but a deepercession 0:20:44.520 --> 0:20:49.440 in Europe. Alright, So driving given that background, I mean, 0:20:50.600 --> 0:20:53.240 when I think about the you know, do you agree, Yeah, 0:20:54.920 --> 0:20:57.200 tend to agree with the idea of a mild recession. 0:20:57.280 --> 0:21:00.440 We're probably on our way, probably on our out of it. 0:21:00.520 --> 0:21:01.959 Before we know what we're in it, So it's more 0:21:01.960 --> 0:21:06.480 of a shallow mild recession because you can lose five 0:21:06.560 --> 0:21:09.560 million jobs and you still have full employment because we've 0:21:09.600 --> 0:21:11.760 got more demand for jobs and we than we actually 0:21:11.800 --> 0:21:13.920 have people. So do I buy kind of the sickles 0:21:14.040 --> 0:21:18.000 that do well if we're you know, mild recession thinking 0:21:18.000 --> 0:21:19.639 about the other side, or do I just stick with 0:21:19.720 --> 0:21:21.560 the big growth stocks that have been so good for 0:21:21.640 --> 0:21:23.520 me since I don't know two thousand eight or something 0:21:23.600 --> 0:21:25.960 like that. Well, I think that that going into the 0:21:26.040 --> 0:21:27.560 end of the year, we're probably gonna have a little 0:21:27.560 --> 0:21:28.920 bit of a rally, and that's good to kind of 0:21:28.960 --> 0:21:33.760 reposition portfolios to stronger more earnings and fundamentals getting into 0:21:33.920 --> 0:21:36.560 next year. We do see that this inflation is going 0:21:36.640 --> 0:21:41.200 to bifurcate certain sectors. Uh. It's kind of like it's 0:21:41.240 --> 0:21:46.120