1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penil podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:24,799 Speaker 1: at Bloomberg dot com. Well, we are eagerly awaiting the 8 00:00:24,800 --> 00:00:28,360 Speaker 1: FED announcement of their policy tomorrow when we talk. When 9 00:00:28,400 --> 00:00:31,560 Speaker 1: we talk FED and all the intricacies of the FED 10 00:00:31,600 --> 00:00:33,479 Speaker 1: and what it means for the rates market, there is 11 00:00:33,479 --> 00:00:36,360 Speaker 1: absolutely no one better to speak to than Ira Jersey. 12 00:00:36,400 --> 00:00:39,800 Speaker 1: Ira is a b I rate strategist for Bloomberg Intelligence. 13 00:00:40,159 --> 00:00:41,959 Speaker 1: He joined us on the phone. Ira, thanks so much 14 00:00:42,000 --> 00:00:45,600 Speaker 1: for joining us. Okay, we're gonna get let's say we 15 00:00:45,680 --> 00:00:49,800 Speaker 1: get that twenty five basis point cut tomorrow. Then everybody's 16 00:00:49,840 --> 00:00:53,680 Speaker 1: gonna really focus on the language of chairman Pal. What 17 00:00:53,720 --> 00:00:56,160 Speaker 1: do you expect to hear from the chairman? Yeah, I 18 00:00:56,200 --> 00:01:00,200 Speaker 1: think the chairman is Yeah, it's gonna be tricky for him, 19 00:01:00,200 --> 00:01:02,680 Speaker 1: and you know, trying to discount what he's gonna say 20 00:01:02,760 --> 00:01:05,080 Speaker 1: is going to be difficult, primarily because a lot of 21 00:01:05,080 --> 00:01:07,560 Speaker 1: the data that we've had the last three weeks or 22 00:01:07,600 --> 00:01:10,280 Speaker 1: so has been relatively good, where some people are even 23 00:01:10,360 --> 00:01:12,280 Speaker 1: questioning whether or not they should be cutting rates at all, 24 00:01:12,319 --> 00:01:14,520 Speaker 1: and they and they will cut interest rates basis points 25 00:01:14,520 --> 00:01:16,399 Speaker 1: that would be that the real shock would be if 26 00:01:16,440 --> 00:01:18,680 Speaker 1: they didn't. So so the question is are they gonna 27 00:01:19,160 --> 00:01:21,760 Speaker 1: Are they going to hike more? And the answer is probably, 28 00:01:21,800 --> 00:01:24,320 Speaker 1: excuse me, cut more? Like more that would be that 29 00:01:24,360 --> 00:01:26,960 Speaker 1: would be amazing, But um that you know, are they 30 00:01:26,959 --> 00:01:30,240 Speaker 1: going to cut more? And uh, and what's the magnitude 31 00:01:30,240 --> 00:01:32,560 Speaker 1: and the pace of that? So you know, if it's 32 00:01:32,560 --> 00:01:34,680 Speaker 1: starting in June, we thought maybe they'd cut a couple 33 00:01:34,680 --> 00:01:36,560 Speaker 1: of times and then wait a little while and then 34 00:01:36,640 --> 00:01:39,600 Speaker 1: and then um, cut a bit more if they had to, say, 35 00:01:39,600 --> 00:01:42,600 Speaker 1: in early. But but at this point it's it's not 36 00:01:42,640 --> 00:01:44,640 Speaker 1: obvious that they're going to have to. So I think 37 00:01:44,680 --> 00:01:48,040 Speaker 1: that he's going to need to be pretty neutral in 38 00:01:48,040 --> 00:01:50,760 Speaker 1: his statement, saying basically like we're going to be very 39 00:01:50,840 --> 00:01:53,720 Speaker 1: data dependent, and that might not be enough for risk 40 00:01:53,760 --> 00:01:57,520 Speaker 1: assets to really um to really be upbeat after that, 41 00:01:57,600 --> 00:01:59,680 Speaker 1: because I think a lot of risk asset markets, whether 42 00:01:59,680 --> 00:02:02,320 Speaker 1: it's at his in equities have really been reliant on 43 00:02:02,360 --> 00:02:04,440 Speaker 1: the idea that the FED is going to cut you know, 44 00:02:04,640 --> 00:02:07,120 Speaker 1: three or four times, which is what the market has 45 00:02:07,440 --> 00:02:10,440 Speaker 1: has continued to price. Well, that's exactly my question, is 46 00:02:10,440 --> 00:02:13,240 Speaker 1: it it feels like the markets set up to take 47 00:02:13,400 --> 00:02:16,160 Speaker 1: anything that j. Powell does or says is hawkish because 48 00:02:16,160 --> 00:02:18,160 Speaker 1: it's not going to be a fifty or seventy five 49 00:02:18,200 --> 00:02:21,680 Speaker 1: basis point cut. Yeah, I think that's right, Alex. You 50 00:02:21,720 --> 00:02:23,880 Speaker 1: know that. So if they cut twenty five now and 51 00:02:23,919 --> 00:02:26,280 Speaker 1: then he hints it they're going to cut in again 52 00:02:26,440 --> 00:02:30,480 Speaker 1: in September October, but don't necessarily expect there to be 53 00:02:30,760 --> 00:02:35,160 Speaker 1: a prolonged easing cycle. So say, you know, as much 54 00:02:35,160 --> 00:02:37,359 Speaker 1: as the market is currently priced, which is basically for 55 00:02:37,560 --> 00:02:40,519 Speaker 1: four cuts by the middle of next year, Um, I 56 00:02:40,840 --> 00:02:43,240 Speaker 1: think that risk assets take that badly. Now do they 57 00:02:43,280 --> 00:02:45,560 Speaker 1: take it badly in that they reprice a couple of 58 00:02:45,600 --> 00:02:48,480 Speaker 1: percent and then you know, find a new equilibrium or 59 00:02:48,600 --> 00:02:51,160 Speaker 1: it doesn't wind up being a prolonged down trend because 60 00:02:51,160 --> 00:02:55,240 Speaker 1: I think, you know, ironically, if the FED hints like 61 00:02:55,360 --> 00:02:57,160 Speaker 1: I just mentioned that they're going to cut twice and 62 00:02:57,160 --> 00:03:00,000 Speaker 1: then and then stop for a while, if that means 63 00:03:00,000 --> 00:03:02,600 Speaker 1: a two percent or three percent repricing in the SMP five. 64 00:03:03,000 --> 00:03:05,120 Speaker 1: I don't think that the FED cares. I think that 65 00:03:05,120 --> 00:03:08,600 Speaker 1: that maybe is actually good right from from the FED standpoint, 66 00:03:08,639 --> 00:03:10,320 Speaker 1: and that's what kind of what they would hope for. 67 00:03:10,760 --> 00:03:14,440 Speaker 1: But if it winds up starting a downtrend in risk assets, 68 00:03:14,480 --> 00:03:19,080 Speaker 1: you know, wider credit, lower equities, that's the type of 69 00:03:19,080 --> 00:03:20,720 Speaker 1: thing that then you wind up pricing it back in. 70 00:03:20,800 --> 00:03:23,960 Speaker 1: So there's weird feedback loop that the markets might actually 71 00:03:24,040 --> 00:03:27,840 Speaker 1: generate for the FED, which, um, you know, in an 72 00:03:27,919 --> 00:03:31,040 Speaker 1: environment where the the economy is modeling along that the 73 00:03:31,080 --> 00:03:34,160 Speaker 1: Feds looking at the markets for some semblance of what 74 00:03:34,280 --> 00:03:36,760 Speaker 1: expectations are for the future, and right now, you know, 75 00:03:36,800 --> 00:03:39,520 Speaker 1: expectations for the future isn't okay, but not great economy. 76 00:03:39,600 --> 00:03:42,760 Speaker 1: So you know, in that environment, UM, little changes can 77 00:03:42,800 --> 00:03:45,800 Speaker 1: mean a lot to monetary policy makers. So are we 78 00:03:45,960 --> 00:03:48,120 Speaker 1: We had a guest on earlier today who was suggesting 79 00:03:48,240 --> 00:03:53,960 Speaker 1: that the FED should bring quantitative easoning back onto the table. 80 00:03:54,080 --> 00:03:56,600 Speaker 1: Do you think that is an option that they would consider? 81 00:03:57,720 --> 00:04:00,680 Speaker 1: It is? I I think that they won't really consider 82 00:04:00,720 --> 00:04:03,480 Speaker 1: that until after they cut you know, four or five times, 83 00:04:03,480 --> 00:04:05,520 Speaker 1: so basically until the FED funds y it's closer to 84 00:04:05,560 --> 00:04:07,920 Speaker 1: one percent. I don't think QUI is an option now. 85 00:04:08,000 --> 00:04:09,800 Speaker 1: Something that they could do and something they will do 86 00:04:10,400 --> 00:04:12,600 Speaker 1: starting the middle of next year at the latest, if 87 00:04:12,600 --> 00:04:15,200 Speaker 1: not even a little bit earlier, is they'll start to 88 00:04:15,880 --> 00:04:19,000 Speaker 1: increase your balance sheet just to keep reserve levels constant. 89 00:04:19,040 --> 00:04:21,640 Speaker 1: So there's this very technical thing that goes on where 90 00:04:22,040 --> 00:04:26,000 Speaker 1: currency in circulation is usually rising, and as it's rising, 91 00:04:26,400 --> 00:04:29,560 Speaker 1: that means that some other liability that the FED has, 92 00:04:29,600 --> 00:04:33,720 Speaker 1: such as reserves, continually go down, and they the FED 93 00:04:33,800 --> 00:04:36,880 Speaker 1: has stated that they have a policy of keeping ample 94 00:04:36,960 --> 00:04:39,799 Speaker 1: reserves in the system, and in order to keep ample 95 00:04:39,800 --> 00:04:42,240 Speaker 1: bank reserves in the system, eventually they're going to have 96 00:04:42,320 --> 00:04:44,520 Speaker 1: to start increasing their balance sheet again to do that 97 00:04:44,920 --> 00:04:47,440 Speaker 1: um and I think that they have to do that 98 00:04:47,640 --> 00:04:49,159 Speaker 1: sometime in the third quarter of next year, and they 99 00:04:49,240 --> 00:04:50,600 Speaker 1: might even do it a little bit earlier. So that 100 00:04:50,760 --> 00:04:54,200 Speaker 1: is kind of a dovish ish thing, which I think 101 00:04:54,320 --> 00:04:57,640 Speaker 1: will you know, make the markets happy, particularly risk asset markets, 102 00:04:57,720 --> 00:05:00,640 Speaker 1: because I kind of don't understand the dynamics. It's it's 103 00:05:00,640 --> 00:05:03,239 Speaker 1: a it's an optics issue I think more than anything. 104 00:05:03,279 --> 00:05:06,200 Speaker 1: But that could be something that's helpful that's not really QUI. 105 00:05:06,279 --> 00:05:08,320 Speaker 1: Some people are gonna call it QUI. It's not que though, 106 00:05:08,360 --> 00:05:09,800 Speaker 1: And you know, we have a lot of work that 107 00:05:09,839 --> 00:05:12,320 Speaker 1: we've done, so terminal users can check out b I 108 00:05:12,440 --> 00:05:15,400 Speaker 1: rates and find some of our information on on the 109 00:05:15,400 --> 00:05:17,560 Speaker 1: FED balance sheet and how we think that will develop 110 00:05:17,600 --> 00:05:19,120 Speaker 1: over the next year and a half. We love the 111 00:05:19,120 --> 00:05:21,280 Speaker 1: shameless plugs era. We do it all the time. Um. 112 00:05:21,560 --> 00:05:24,280 Speaker 1: So when you say it's not que like than than than, 113 00:05:24,400 --> 00:05:27,040 Speaker 1: what is it? I mean, in essence is providing the 114 00:05:27,160 --> 00:05:30,599 Speaker 1: more immity in the market. It's standard monetary policy. I 115 00:05:30,600 --> 00:05:33,640 Speaker 1: mean people don't realize, but prior to the two thousand 116 00:05:33,640 --> 00:05:37,200 Speaker 1: seven financial crisis, the Fed's balance sheet increased by about 117 00:05:37,240 --> 00:05:40,440 Speaker 1: three to five percent every year. So going back to 118 00:05:40,520 --> 00:05:43,960 Speaker 1: that same type of environment where the Fed's increasing its 119 00:05:43,960 --> 00:05:47,200 Speaker 1: balance sheet incrementally every single month in order to keep 120 00:05:47,200 --> 00:05:51,200 Speaker 1: reserve balances constant, would not be that Dutch, just typical 121 00:05:51,240 --> 00:05:54,640 Speaker 1: monetary policy. It's not que right, the FEDS balance sheet. 122 00:05:54,760 --> 00:05:56,800 Speaker 1: You know, everyone says, oh, it's so big now, and 123 00:05:56,839 --> 00:06:00,320 Speaker 1: it was a trillion dollars before the before the crisis. Yes, 124 00:06:00,360 --> 00:06:02,920 Speaker 1: before the crisis it was a trillion, but it was 125 00:06:02,960 --> 00:06:05,960 Speaker 1: only four billion. So the thing is is like over that, 126 00:06:06,120 --> 00:06:09,000 Speaker 1: over that twelve year period more than doubled. Right, So 127 00:06:09,320 --> 00:06:13,719 Speaker 1: it's not a that's right, and that wasn't called quantitative easing, right. 128 00:06:13,800 --> 00:06:16,520 Speaker 1: Quantitative easing is large scale ass of purchases that are 129 00:06:16,560 --> 00:06:19,080 Speaker 1: a large portion of both the market and also the 130 00:06:19,520 --> 00:06:22,200 Speaker 1: size of the fed's balance sheet, where you're actively increasing 131 00:06:22,480 --> 00:06:24,680 Speaker 1: the amount of reserves that are in the system, not 132 00:06:24,839 --> 00:06:28,160 Speaker 1: keeping them confident, which is what we're talking about. Our Jersey, 133 00:06:28,160 --> 00:06:30,520 Speaker 1: thank you so much. As always, when we talk Fed, 134 00:06:30,600 --> 00:06:32,520 Speaker 1: we need to talk to Ira Jersey. We will wait 135 00:06:32,720 --> 00:06:35,200 Speaker 1: to see what the FED does tomorrow. Clearly we will 136 00:06:35,240 --> 00:06:38,120 Speaker 1: be all over that that Bloomberg Radio. Ira Jersey, senior 137 00:06:38,160 --> 00:06:55,480 Speaker 1: rate strategist for Bloomberg Intelligence, joining us on the phone. 138 00:06:57,800 --> 00:07:00,160 Speaker 1: Time to check in with Bloomberg Opinion. We're join by 139 00:07:00,160 --> 00:07:03,280 Speaker 1: Bloomberg Opinion columnust Shira over Day, who's giving us a 140 00:07:03,279 --> 00:07:06,159 Speaker 1: little preview of what we might see from Apple. So 141 00:07:06,520 --> 00:07:09,040 Speaker 1: again kind of you know these quarters for Apple, they're 142 00:07:09,160 --> 00:07:12,600 Speaker 1: really interesting for investors trying to get a sense of 143 00:07:12,640 --> 00:07:15,920 Speaker 1: how well this company is making the transition from really 144 00:07:16,040 --> 00:07:18,960 Speaker 1: a a phone and iPad company to maybe something a 145 00:07:19,000 --> 00:07:21,520 Speaker 1: little bit more in terms of the services and so on. 146 00:07:21,560 --> 00:07:23,520 Speaker 1: What are you gonna be looking for Shure when the 147 00:07:23,520 --> 00:07:26,880 Speaker 1: company reports tonight. Yeah, I think that those are important 148 00:07:27,120 --> 00:07:31,080 Speaker 1: details about revenue has been declining and is expected to 149 00:07:31,080 --> 00:07:35,400 Speaker 1: continue to decline for Apple's iPhone business in this quarter. 150 00:07:36,000 --> 00:07:39,760 Speaker 1: And I think what investors are watching is both how 151 00:07:39,840 --> 00:07:42,200 Speaker 1: much can they fill in at least some of the 152 00:07:42,240 --> 00:07:45,320 Speaker 1: gap from other products things like you know, Apple watching 153 00:07:45,360 --> 00:07:48,880 Speaker 1: air pods and also that services business, as you said, 154 00:07:48,920 --> 00:07:53,720 Speaker 1: which includes things like App Store downloads and Apple Care warranties, uh, 155 00:07:53,760 --> 00:07:56,600 Speaker 1: and the revenue that the revenue sharing payments that they 156 00:07:56,640 --> 00:07:58,600 Speaker 1: get from Google and things like that. The other thing 157 00:07:58,640 --> 00:08:01,280 Speaker 1: that investors are looking for is anything about China. That 158 00:08:02,000 --> 00:08:05,920 Speaker 1: revenue from China has been declining significantly the first half 159 00:08:05,920 --> 00:08:08,760 Speaker 1: of Apple's fiscal year, and the question is will it 160 00:08:08,840 --> 00:08:12,760 Speaker 1: get slightly better going forward? And the commentary about China 161 00:08:12,840 --> 00:08:15,880 Speaker 1: is going to be very closely watched, as will anything 162 00:08:15,880 --> 00:08:19,840 Speaker 1: that Apple says about moving bits of their supply chain 163 00:08:19,920 --> 00:08:21,840 Speaker 1: out of China and what the impact of that is 164 00:08:21,840 --> 00:08:24,440 Speaker 1: going to be on the company's costs. So what are 165 00:08:24,480 --> 00:08:26,480 Speaker 1: the chances that Apple says any of those things, meaning 166 00:08:26,480 --> 00:08:28,120 Speaker 1: that they're gonna be like, look look at all the 167 00:08:28,120 --> 00:08:30,480 Speaker 1: pretty service revenue, Look at how much that jump by 168 00:08:30,520 --> 00:08:33,240 Speaker 1: double digits. Blah blah blah. Oh iPhone sales, Yeah, they're 169 00:08:33,240 --> 00:08:35,240 Speaker 1: gonna be really strong in the replacement cycle. Was Apple 170 00:08:35,240 --> 00:08:39,320 Speaker 1: actually gonna say? You basically just channeled Tim Cook that 171 00:08:39,480 --> 00:08:43,360 Speaker 1: is yeah, that is exactly what they say is yeah, yeah, 172 00:08:43,400 --> 00:08:47,640 Speaker 1: iPhones blah blah blah, the foundation of our billion dollars 173 00:08:47,640 --> 00:08:50,559 Speaker 1: in annual revenue. Look at this, look at this beautiful 174 00:08:50,600 --> 00:08:53,760 Speaker 1: services revenue. And that is the message that they're sending. 175 00:08:53,760 --> 00:08:55,480 Speaker 1: But look, I've said this before and I'll say it 176 00:08:55,520 --> 00:08:59,240 Speaker 1: again that there's no way for things like you know, 177 00:08:59,320 --> 00:09:02,439 Speaker 1: App Store downloads and Apple Music subscriptions and and the 178 00:09:02,520 --> 00:09:05,400 Speaker 1: upcoming television service. There's no way that can fill the 179 00:09:05,440 --> 00:09:10,120 Speaker 1: gap from declining iPhone revenue if that continues to decline. 180 00:09:10,120 --> 00:09:13,160 Speaker 1: And if you look at the smartphone market at large, 181 00:09:13,440 --> 00:09:16,320 Speaker 1: that is the trajectory of the smartphone market. It's unit 182 00:09:16,400 --> 00:09:19,360 Speaker 1: sales of smartphones are expected to decline globally for the 183 00:09:19,440 --> 00:09:22,480 Speaker 1: third straight year in two thousand nineteen. This is a 184 00:09:22,520 --> 00:09:25,720 Speaker 1: trend that it seems, at least in the near future, 185 00:09:25,760 --> 00:09:29,800 Speaker 1: to continue. Uh. And Apple has not really addressed those 186 00:09:29,880 --> 00:09:32,960 Speaker 1: broad trends in the smartphone industry and whether it can 187 00:09:33,000 --> 00:09:35,160 Speaker 1: kind of buck those. It's interesting the timing of this 188 00:09:35,200 --> 00:09:38,680 Speaker 1: earnings call is very coincidental, I guess, with the U 189 00:09:38,760 --> 00:09:42,280 Speaker 1: S trade to get delegation over in Shanghai negotiating potential 190 00:09:42,320 --> 00:09:45,800 Speaker 1: trade deal. And no company arguably is more exposed or 191 00:09:45,840 --> 00:09:49,679 Speaker 1: certainly a poster child for good or bed trade relationships 192 00:09:49,720 --> 00:09:51,840 Speaker 1: between the US and China than Apple. What do you 193 00:09:51,840 --> 00:09:56,160 Speaker 1: expect Apple to say about what they're doing to kind 194 00:09:56,200 --> 00:09:58,679 Speaker 1: of deal with the uncertainty with China? You know, at 195 00:09:58,720 --> 00:10:01,880 Speaker 1: least so far in the in the last few earnings calls, 196 00:10:01,880 --> 00:10:05,040 Speaker 1: Apple has been pretty optimistic about the US and China 197 00:10:05,160 --> 00:10:10,160 Speaker 1: resolving their trade disagreements in some sort of amicable way. Um, 198 00:10:10,240 --> 00:10:13,640 Speaker 1: we'll see if that happens. Right. Apple so far has 199 00:10:13,640 --> 00:10:16,960 Speaker 1: been relatively immune from some of the tariffs that the 200 00:10:17,040 --> 00:10:20,600 Speaker 1: US has imposed on goods coming from China. So there 201 00:10:20,600 --> 00:10:24,160 Speaker 1: are not yet tariffs on smartphones, for example, which is 202 00:10:24,400 --> 00:10:28,120 Speaker 1: at least by units, very important for Apple. We'll see 203 00:10:28,160 --> 00:10:31,160 Speaker 1: if that changes. Um, and yeah, I agree that it 204 00:10:31,160 --> 00:10:33,559 Speaker 1: will be interesting to see what Tim Cook in particular 205 00:10:33,679 --> 00:10:37,640 Speaker 1: says about those trade talks and whether he sees some 206 00:10:37,720 --> 00:10:42,160 Speaker 1: resolution and how what is in the stock and that, like, 207 00:10:42,240 --> 00:10:44,880 Speaker 1: who's the marginal buyer that's going to come into this 208 00:10:44,960 --> 00:10:49,840 Speaker 1: equity tomorrow. It's it's really hard to know that Apple 209 00:10:49,920 --> 00:10:53,000 Speaker 1: has been I think it is now at or near 210 00:10:53,720 --> 00:10:59,079 Speaker 1: it's all time high in terms of pevaluation. So this stock, 211 00:10:59,320 --> 00:11:03,120 Speaker 1: like many box in two thousand nineteen, is pretty expensive, 212 00:11:03,679 --> 00:11:07,160 Speaker 1: and I do wonder, right, people who aren't already in 213 00:11:07,160 --> 00:11:08,760 Speaker 1: the stock, what do they need to see from the 214 00:11:08,800 --> 00:11:12,280 Speaker 1: company that will change their mind. I mean, the story 215 00:11:12,360 --> 00:11:15,480 Speaker 1: is not changing. That iPhone revenue is probably going to 216 00:11:15,520 --> 00:11:19,560 Speaker 1: continue to decline or maybe increase marginally, and so I 217 00:11:19,559 --> 00:11:23,320 Speaker 1: think the question is if you get in, it's a belief, 218 00:11:23,400 --> 00:11:26,720 Speaker 1: a bet that they can find some new product or 219 00:11:26,760 --> 00:11:30,760 Speaker 1: service that's gonna fill in the gap more from that 220 00:11:30,880 --> 00:11:34,120 Speaker 1: declining iPhone revenue. How about use of cash? I know, uh, 221 00:11:34,160 --> 00:11:37,600 Speaker 1: they have dollars of cash and marketuple securities on the 222 00:11:37,600 --> 00:11:39,800 Speaker 1: balance sheet. What are they doing with the cash? They're 223 00:11:39,840 --> 00:11:43,360 Speaker 1: going to give it to a SoftBank? The vision seriously, 224 00:11:43,559 --> 00:11:45,440 Speaker 1: they have so much cash that they can give some 225 00:11:45,520 --> 00:11:48,120 Speaker 1: of it to SoftBank and have plenty leftover to do 226 00:11:48,240 --> 00:11:51,840 Speaker 1: lots of things. I think Apple's made clear they have 227 00:11:51,880 --> 00:11:56,000 Speaker 1: two hundred plus billion dollars in gross cash. They've made 228 00:11:56,040 --> 00:11:58,199 Speaker 1: clear for some time that eventually they want to get 229 00:11:58,200 --> 00:12:02,600 Speaker 1: to some sort of cash neutral position, and that means 230 00:12:02,600 --> 00:12:04,559 Speaker 1: they're probably gonna give a lot of it back to 231 00:12:04,640 --> 00:12:08,240 Speaker 1: shareholders in the forms of dividend and particularly share buy backs, 232 00:12:08,280 --> 00:12:11,640 Speaker 1: which they've already been pretty aggressive on. So I assume 233 00:12:11,720 --> 00:12:15,840 Speaker 1: that that will continue. Thanks very much, Bloomberg Opinion, Thomas 234 00:12:15,880 --> 00:12:17,920 Speaker 1: Shira over Day, Thank you so much again giving us 235 00:12:17,960 --> 00:12:19,720 Speaker 1: your thoughts on Apple. I'm sure we'll be talking to 236 00:12:19,800 --> 00:12:38,480 Speaker 1: you after they report this week. We have a whole 237 00:12:38,520 --> 00:12:41,480 Speaker 1: host of economics data, um you know, coming out, probably 238 00:12:41,720 --> 00:12:44,400 Speaker 1: highlighted by the jobs report we will get on Friday. 239 00:12:44,720 --> 00:12:47,440 Speaker 1: One question is how strong is the consumer? We know 240 00:12:47,520 --> 00:12:50,360 Speaker 1: the consumer has really been driving this economy. How much 241 00:12:50,480 --> 00:12:52,960 Speaker 1: is left for the U. S. Consumer? To get a 242 00:12:52,960 --> 00:12:54,959 Speaker 1: sense of that, we turned to Lynn Franco. Lynn is 243 00:12:55,000 --> 00:12:57,960 Speaker 1: a senior director of Economic Indicators and Surveys at the 244 00:12:58,040 --> 00:13:02,080 Speaker 1: Conference Board, and our own ulnas Ulieteva from Bloomberg Economics 245 00:13:02,160 --> 00:13:05,120 Speaker 1: joins us as well. Lynn, what did your data show 246 00:13:05,160 --> 00:13:08,280 Speaker 1: you today for the latest report. We had a nice 247 00:13:08,360 --> 00:13:11,920 Speaker 1: rebound in July following June's decline, so it seems that 248 00:13:12,160 --> 00:13:15,439 Speaker 1: consumers have put that escalation and trade and Tower of 249 00:13:15,520 --> 00:13:19,040 Speaker 1: tensions behind them, and they're focusing back on the fundamentals, 250 00:13:19,040 --> 00:13:21,560 Speaker 1: which is really employment. We had a pretty good report 251 00:13:21,600 --> 00:13:23,920 Speaker 1: and I think we're expecting another strong report this week. 252 00:13:24,240 --> 00:13:27,920 Speaker 1: How does a consumer factor in things like trade or 253 00:13:28,240 --> 00:13:30,560 Speaker 1: the debate over the dollar for example, or things like 254 00:13:30,600 --> 00:13:32,640 Speaker 1: that we talked about all the time in the financial markets. 255 00:13:33,240 --> 00:13:35,920 Speaker 1: It doesn't seem to impact the consumer that much. It's 256 00:13:35,960 --> 00:13:39,160 Speaker 1: really the fundamentals, you know, wage growth, employment growth, that's 257 00:13:39,160 --> 00:13:42,480 Speaker 1: really what's driving confidence. And what we're seeing here is there. 258 00:13:42,520 --> 00:13:45,600 Speaker 1: You know, they're assessing both current conditions very favorably, and 259 00:13:45,600 --> 00:13:48,679 Speaker 1: they're very optimistic that the economy is going to continue expanding, 260 00:13:48,720 --> 00:13:51,520 Speaker 1: So that should translate into strong spending in the next 261 00:13:51,520 --> 00:13:55,040 Speaker 1: two quarters. So, Julian, we know that how strong the 262 00:13:55,480 --> 00:13:58,560 Speaker 1: how important the consumer is to the economy. What is 263 00:13:58,559 --> 00:14:01,320 Speaker 1: your sense of bloomerk economy as it relates to can 264 00:14:01,360 --> 00:14:04,520 Speaker 1: the consumer continue to drive this economy given where we're 265 00:14:04,559 --> 00:14:08,079 Speaker 1: seeing maybe some weakness in manufacture, not just in US, 266 00:14:08,120 --> 00:14:10,400 Speaker 1: but more so outside of the US. Is a consumers 267 00:14:10,440 --> 00:14:13,960 Speaker 1: still strong enough to continue to drive this economy forward? Absolutely. 268 00:14:14,000 --> 00:14:19,120 Speaker 1: I think today's reports both on consumer confidence and earlier 269 00:14:19,200 --> 00:14:23,160 Speaker 1: on personal income and spending really support this notion that 270 00:14:23,280 --> 00:14:26,560 Speaker 1: consumers will continue to drive economic growth in the second 271 00:14:26,560 --> 00:14:28,480 Speaker 1: half of the year. So if you look at the 272 00:14:28,520 --> 00:14:33,160 Speaker 1: profile of personal income and particularly wage and salaries growth 273 00:14:33,480 --> 00:14:38,840 Speaker 1: in the second quarter, we saw continued acceleration in that profile. 274 00:14:39,240 --> 00:14:43,920 Speaker 1: And the July reading on consumer confidence that is, you know, 275 00:14:44,000 --> 00:14:48,240 Speaker 1: basically the best reading this year, UH, suggests that we 276 00:14:48,360 --> 00:14:52,760 Speaker 1: will continue to see personal income and consumer confidence driving 277 00:14:52,800 --> 00:14:55,760 Speaker 1: personal spending higher. Lynn, what are the elements that go 278 00:14:55,800 --> 00:14:59,040 Speaker 1: into the higher consumer confidence number? But you guys measure well, 279 00:14:59,040 --> 00:15:01,840 Speaker 1: take a look at current business conditions and employment conditions 280 00:15:01,840 --> 00:15:04,120 Speaker 1: and those are coming in very strong. And then we 281 00:15:04,160 --> 00:15:06,960 Speaker 1: took take a look at consumers expectations six months down 282 00:15:06,960 --> 00:15:10,600 Speaker 1: the road in terms of business conditions, employment and their 283 00:15:10,640 --> 00:15:15,600 Speaker 1: income prospects there and it's just very strong across the board. So, 284 00:15:16,080 --> 00:15:19,000 Speaker 1: as Elena said, it's the highest reading this year, and 285 00:15:19,040 --> 00:15:21,640 Speaker 1: we think that the in terms of growth and consumer 286 00:15:21,720 --> 00:15:23,720 Speaker 1: is going to continue to be a very strong pillar 287 00:15:23,960 --> 00:15:28,280 Speaker 1: despite other pockets of weakness. And looking at the details, Lynn, 288 00:15:28,400 --> 00:15:31,280 Speaker 1: if you look at the jobs plentiful and jobs hard 289 00:15:31,320 --> 00:15:34,760 Speaker 1: to get, UH, that actually suggests that we might see 290 00:15:34,760 --> 00:15:37,680 Speaker 1: a decline in the unemployment rate in the upcoming report 291 00:15:38,040 --> 00:15:41,440 Speaker 1: on Friday. So jobs hard to get increased a little 292 00:15:41,480 --> 00:15:45,480 Speaker 1: bit in June, but they fell again in July, and 293 00:15:45,520 --> 00:15:48,280 Speaker 1: that tells me that maybe there was something about like 294 00:15:48,400 --> 00:15:53,240 Speaker 1: some temporary hiring and just hard hard to get jobs 295 00:15:53,800 --> 00:15:56,920 Speaker 1: in such tight labor market. But it seems like it's 296 00:15:56,920 --> 00:15:59,840 Speaker 1: abating and we can see another decline in the end 297 00:15:59,840 --> 00:16:02,000 Speaker 1: of limit rate. Eleen, I can't let you come into 298 00:16:02,000 --> 00:16:04,320 Speaker 1: the studio without asking you about the FED tomorrow. How 299 00:16:04,360 --> 00:16:08,400 Speaker 1: important is lower interest rates or the prospect of lower 300 00:16:08,440 --> 00:16:11,680 Speaker 1: interest rates for the consumer and consumer confidence? Is that 301 00:16:11,720 --> 00:16:16,520 Speaker 1: a big factor? I think we already see a lot um. 302 00:16:17,040 --> 00:16:20,040 Speaker 1: You know, the interest rates have been very low, and 303 00:16:20,080 --> 00:16:22,920 Speaker 1: you already see that in mortgage rates for example. So 304 00:16:23,040 --> 00:16:27,400 Speaker 1: mortgage rates already declined quite a bit, but unfortunately didn't 305 00:16:27,400 --> 00:16:31,440 Speaker 1: really left home sales that much. But you know, it's 306 00:16:31,800 --> 00:16:35,760 Speaker 1: supporting consumer spending like auto sales and things like that. 307 00:16:35,840 --> 00:16:39,000 Speaker 1: I think that's where you see the impact of lower 308 00:16:39,040 --> 00:16:42,360 Speaker 1: interest rates. So Lynn, going forward, you said that you 309 00:16:42,360 --> 00:16:44,600 Speaker 1: know you feel like the consumer can continue on this path. 310 00:16:44,920 --> 00:16:47,360 Speaker 1: Does it get better though, because I'm wondering, like what 311 00:16:47,440 --> 00:16:49,920 Speaker 1: the incremental gain can really be from this point, and 312 00:16:49,960 --> 00:16:52,520 Speaker 1: if we be tied into GDP growth that's going to 313 00:16:52,600 --> 00:16:55,480 Speaker 1: be steady as she goes versus better well, in terms 314 00:16:55,480 --> 00:16:58,280 Speaker 1: of GDP, we're probably expecting the economy to grow somewhere 315 00:16:58,280 --> 00:17:01,560 Speaker 1: around two or a little above two cent um. You know, 316 00:17:01,680 --> 00:17:04,520 Speaker 1: we just had spending coming at four point three. I 317 00:17:04,520 --> 00:17:07,920 Speaker 1: don't think we're going to get much stronger than that um, 318 00:17:07,920 --> 00:17:10,480 Speaker 1: but I think we can stay around those strong levels 319 00:17:10,520 --> 00:17:12,440 Speaker 1: maybe you know, two and a half three and a 320 00:17:12,480 --> 00:17:16,320 Speaker 1: half percent in terms of spending UM. And and also 321 00:17:16,400 --> 00:17:18,160 Speaker 1: in terms of you know, getting back to the Fed 322 00:17:18,200 --> 00:17:20,920 Speaker 1: and interest rates, the percent of consumers who expect interest 323 00:17:21,000 --> 00:17:23,720 Speaker 1: rates to get higher was the lowest reading we've seen 324 00:17:23,760 --> 00:17:26,320 Speaker 1: since uh, you know, two thousand and twelve. So it's 325 00:17:26,320 --> 00:17:29,520 Speaker 1: already baked in that the Fed is likely to cut rates. 326 00:17:30,400 --> 00:17:32,280 Speaker 1: Lin Franco, thank you so much. Lynn Franco is a 327 00:17:32,359 --> 00:17:36,439 Speaker 1: senior director of Economic Indicators and Surveys at the Conference Board, 328 00:17:36,720 --> 00:17:39,159 Speaker 1: joining us as she does regularly with that data from 329 00:17:39,200 --> 00:17:43,280 Speaker 1: the Conference Board and Elena Estulia Tieva Bloomberg Economics always 330 00:17:43,400 --> 00:17:45,639 Speaker 1: uh welcome in this studio to get the sense that 331 00:17:45,720 --> 00:17:48,240 Speaker 1: get the latest on kind of you know, what's going 332 00:17:48,280 --> 00:17:50,239 Speaker 1: on in the economy. How strong is the economy. How 333 00:17:50,280 --> 00:18:06,600 Speaker 1: long can the economy continue to go? We have the 334 00:18:06,720 --> 00:18:10,639 Speaker 1: SMP up about this year. The question is where do 335 00:18:10,720 --> 00:18:13,640 Speaker 1: we go from here to get some clarification, get some guidance. 336 00:18:13,680 --> 00:18:18,119 Speaker 1: We turned to Matt Malee, equity strategist at Miller Tabak. Uh, Matt, 337 00:18:18,160 --> 00:18:20,600 Speaker 1: thanks so much for joining us. Start off real quick, 338 00:18:20,600 --> 00:18:24,560 Speaker 1: what do you think we're gonna get from the Fed tomorrow? Uh? Yeah, 339 00:18:25,280 --> 00:18:27,919 Speaker 1: I'm kind of with the consensus twenty five basis points. 340 00:18:28,520 --> 00:18:31,199 Speaker 1: I don't think we'll get the big fifty uh anything. 341 00:18:31,320 --> 00:18:33,439 Speaker 1: It's not out of the question, of course. Um. But 342 00:18:33,520 --> 00:18:36,159 Speaker 1: the big question is going to be the big thing 343 00:18:36,200 --> 00:18:38,000 Speaker 1: we're gonna look for, of course, is in the uh 344 00:18:38,480 --> 00:18:42,439 Speaker 1: uh in the press conference, when Charon Powell will get 345 00:18:42,440 --> 00:18:44,080 Speaker 1: a little more in accordant with guidance. And we've been 346 00:18:44,240 --> 00:18:47,919 Speaker 1: talking about earnings reports recently, and the more important thing 347 00:18:47,920 --> 00:18:49,679 Speaker 1: has been the guidance. I think that's gonna be the 348 00:18:49,720 --> 00:18:51,520 Speaker 1: same for the Fed. If they signal, you know, if 349 00:18:51,520 --> 00:18:53,080 Speaker 1: they signal is kind of a one and done thing, 350 00:18:53,160 --> 00:18:55,640 Speaker 1: especially if it's only twenty five basis points, that's gonna 351 00:18:55,680 --> 00:18:58,919 Speaker 1: be I think kind of get some investors off guard. However, 352 00:18:58,920 --> 00:19:01,399 Speaker 1: if they do indicate that they're gonna uh do it 353 00:19:01,440 --> 00:19:03,720 Speaker 1: another time and maybe even a third time this year 354 00:19:04,400 --> 00:19:08,080 Speaker 1: that would be viewed as positive. So how you position then? Well, 355 00:19:08,160 --> 00:19:09,679 Speaker 1: right now, it's it's so weird because we're at this 356 00:19:09,800 --> 00:19:12,399 Speaker 1: key uh level in the in the stock market. I mean, 357 00:19:12,440 --> 00:19:14,720 Speaker 1: we we're talking about, hey, we make a new records 358 00:19:14,720 --> 00:19:16,480 Speaker 1: and it seems like, oh my gosh, the stock market 359 00:19:16,480 --> 00:19:20,280 Speaker 1: has been unbelievable. Well, I mean it is or has been, 360 00:19:20,840 --> 00:19:23,280 Speaker 1: but for the last eighteen nineteen months, we keep getting 361 00:19:23,320 --> 00:19:26,040 Speaker 1: up near this three thousand level and then we break 362 00:19:26,040 --> 00:19:27,800 Speaker 1: to a new high, but only a slight new high, 363 00:19:27,840 --> 00:19:30,680 Speaker 1: and then roll back over. This is basically the fourth 364 00:19:30,760 --> 00:19:32,960 Speaker 1: time we've done it, uh, and it's still only a 365 00:19:33,040 --> 00:19:35,359 Speaker 1: slight new high. So uh, if we can get further 366 00:19:35,440 --> 00:19:38,320 Speaker 1: mind kind of magic numbers thirteen sorry, three thousand thirty 367 00:19:38,320 --> 00:19:40,200 Speaker 1: on the SMP because I would give it a three 368 00:19:40,240 --> 00:19:44,840 Speaker 1: percent uh move above it's so high. But you know, 369 00:19:45,080 --> 00:19:47,119 Speaker 1: it's it's if we fail again, it's going to be 370 00:19:47,480 --> 00:19:50,040 Speaker 1: a big concern. So I guess my way I plan 371 00:19:50,160 --> 00:19:52,120 Speaker 1: it right now. It's kind of weight on the sidelines 372 00:19:52,160 --> 00:19:54,520 Speaker 1: to see what happens. I'm you know, uh, the one thing, 373 00:19:54,680 --> 00:19:57,280 Speaker 1: it's two things the number one. Still looking at some 374 00:19:57,320 --> 00:19:59,600 Speaker 1: of the defensive names in case it doesn't, in case 375 00:19:59,640 --> 00:20:02,560 Speaker 1: some market rolls over. But also look at gold because 376 00:20:02,600 --> 00:20:06,159 Speaker 1: it's already broken out key a resistance level. And uh, 377 00:20:06,160 --> 00:20:08,040 Speaker 1: if we can move above fourteen fifty, it's going to 378 00:20:08,119 --> 00:20:10,080 Speaker 1: be a real breakout for the for the for the 379 00:20:10,119 --> 00:20:12,680 Speaker 1: yellow metal sometat. I was reading some of your recent 380 00:20:12,720 --> 00:20:15,400 Speaker 1: research and uh, I see your noting that, in your opinion, 381 00:20:15,680 --> 00:20:18,399 Speaker 1: you think there's a meaningful decline in the stock market 382 00:20:18,400 --> 00:20:20,520 Speaker 1: over the next over the near future. It's much more 383 00:20:20,560 --> 00:20:22,840 Speaker 1: possible than most people are thinking right now. What kind 384 00:20:22,880 --> 00:20:25,640 Speaker 1: of gives you that thought, Well, there's a couple of things. Well, 385 00:20:25,720 --> 00:20:28,760 Speaker 1: two things that stand out to me is I worry 386 00:20:28,760 --> 00:20:31,080 Speaker 1: about why why the FED is really getting involved in 387 00:20:31,080 --> 00:20:34,520 Speaker 1: this an insurance rate cut, what you know, interest rate cut. 388 00:20:34,720 --> 00:20:36,399 Speaker 1: Why would they need to feel the need to do that. 389 00:20:36,640 --> 00:20:38,520 Speaker 1: Is there's something that they're seeing. And the thing that 390 00:20:38,560 --> 00:20:41,720 Speaker 1: really concerns me most of all is the action in 391 00:20:41,760 --> 00:20:45,000 Speaker 1: the European banks. There's been a huge divergence in the 392 00:20:45,040 --> 00:20:47,800 Speaker 1: European banks, especially over the last few months. I mean, 393 00:20:48,240 --> 00:20:49,840 Speaker 1: we have the you know, this big sell off in 394 00:20:49,880 --> 00:20:53,040 Speaker 1: the fourth quarter of last year, throughout the throughout the world, 395 00:20:53,400 --> 00:20:56,080 Speaker 1: and of course we've all rallied uh strongly off those 396 00:20:56,160 --> 00:21:02,879 Speaker 1: levels of the US market stuff. Uh uh, I'm sorry, uh, 397 00:21:03,920 --> 00:21:07,080 Speaker 1: from those lows. The European market is up seventent from 398 00:21:07,080 --> 00:21:10,439 Speaker 1: those lows. And yet the European banks are unchanged, and 399 00:21:10,480 --> 00:21:12,439 Speaker 1: over the last few months they've sold off in a 400 00:21:12,480 --> 00:21:15,680 Speaker 1: severe way and they're testing those lows from back in December. 401 00:21:15,880 --> 00:21:17,919 Speaker 1: What's going on there? We know about the situation with 402 00:21:17,960 --> 00:21:20,359 Speaker 1: Deutsche Banker, but we don't know all the details there. 403 00:21:20,640 --> 00:21:22,359 Speaker 1: And I just when you get that kind of major 404 00:21:22,359 --> 00:21:26,119 Speaker 1: divergence between the bank stocks in Europe and not just 405 00:21:26,240 --> 00:21:31,600 Speaker 1: the the US stock market, but the European stock market overall, 406 00:21:31,880 --> 00:21:34,640 Speaker 1: it tells me something's wrong out there. And uh, I'm 407 00:21:34,680 --> 00:21:37,800 Speaker 1: worried that that kind of surprise could cause the market 408 00:21:37,840 --> 00:21:40,040 Speaker 1: to pull back in a in a in a meaningful way. 409 00:21:40,080 --> 00:21:42,959 Speaker 1: I'm not calling for a major bear market, but uh, 410 00:21:43,080 --> 00:21:46,320 Speaker 1: it's just something out there that concerns me. So the 411 00:21:46,400 --> 00:21:50,320 Speaker 1: trade has been like by utilities, by those dividend proxy 412 00:21:50,359 --> 00:21:53,199 Speaker 1: stocks like reads et cetera. Um, have you seen the 413 00:21:53,280 --> 00:21:58,280 Speaker 1: earnings that back up paying up for those defensive sectors. Now, 414 00:21:58,480 --> 00:22:01,679 Speaker 1: that's that's the one one concern that I have, especially 415 00:22:01,800 --> 00:22:03,639 Speaker 1: for like the utility stocks, which are you know, a 416 00:22:03,800 --> 00:22:06,359 Speaker 1: very very expensive on historic basis. The one thing with 417 00:22:06,480 --> 00:22:08,840 Speaker 1: some of the on the dividend paying stocks, it depends 418 00:22:08,960 --> 00:22:11,520 Speaker 1: on of course what you see, but you get a 419 00:22:11,520 --> 00:22:13,879 Speaker 1: Procter and Gamble that comes out with some pretty good earnings. 420 00:22:14,000 --> 00:22:16,359 Speaker 1: And the thing on the dividend paying stocks, I believe 421 00:22:16,680 --> 00:22:18,720 Speaker 1: with the market. So you know, whether you think the 422 00:22:18,720 --> 00:22:20,959 Speaker 1: market's going higher or not, it is still we'd all 423 00:22:20,960 --> 00:22:23,359 Speaker 1: agree as the least extended to a degree on a 424 00:22:23,440 --> 00:22:25,919 Speaker 1: valuation basis. And if you get some of these stocks 425 00:22:25,920 --> 00:22:27,879 Speaker 1: not just to pay a good dividend, but have a 426 00:22:27,920 --> 00:22:30,720 Speaker 1: record of increase in their dividend on a consistent basis 427 00:22:30,760 --> 00:22:33,159 Speaker 1: for many years, uh, you're in pretty good shapes be 428 00:22:33,160 --> 00:22:34,960 Speaker 1: In other words, they should be able to participate on 429 00:22:35,000 --> 00:22:37,320 Speaker 1: the way up if I'm wrong. Uh, and yet but 430 00:22:37,520 --> 00:22:40,360 Speaker 1: protecting nicely and pay you to wait, uh if if 431 00:22:40,359 --> 00:22:42,960 Speaker 1: the market comes back in. However, having said that, the 432 00:22:43,119 --> 00:22:45,359 Speaker 1: key area to watch right now and in terms of 433 00:22:45,359 --> 00:22:48,080 Speaker 1: groups of the technology stocks, we've seen this great rally 434 00:22:48,080 --> 00:22:50,560 Speaker 1: in the semi conductor stocks. Uh, they're bumping up, are 435 00:22:50,560 --> 00:22:52,720 Speaker 1: actually broke to a slight new high. If they can 436 00:22:52,720 --> 00:22:55,000 Speaker 1: follow through more, that's going to be very, very bullish, 437 00:22:55,040 --> 00:22:59,520 Speaker 1: and it'll mean my concerns about a short term pullback 438 00:22:59,680 --> 00:23:01,720 Speaker 1: are long. Uh, really keep an eye on the semi 439 00:23:01,720 --> 00:23:04,399 Speaker 1: because there's been a great leadership group for for decades, 440 00:23:04,440 --> 00:23:06,879 Speaker 1: but particularly in the last year or two. So that 441 00:23:06,920 --> 00:23:10,399 Speaker 1: we're about halfway through this earning season. Here would have 442 00:23:10,440 --> 00:23:12,679 Speaker 1: been your takeaways both from the earnings, maybe some of 443 00:23:12,720 --> 00:23:16,400 Speaker 1: the outlook that we've had from some of these reporting companies. Well, 444 00:23:16,440 --> 00:23:18,919 Speaker 1: the one thing is that I've really found is that 445 00:23:19,040 --> 00:23:20,600 Speaker 1: as much as it some of the you know, the 446 00:23:20,680 --> 00:23:23,960 Speaker 1: high profile names have done have some great earnings reports 447 00:23:24,000 --> 00:23:27,520 Speaker 1: and some and some good guidance. Overall, however, it's been 448 00:23:27,600 --> 00:23:30,879 Speaker 1: a you know, an okay earning season. I mean, the 449 00:23:31,320 --> 00:23:34,320 Speaker 1: thing is, as it always happens, in the estimates were 450 00:23:34,359 --> 00:23:37,040 Speaker 1: lowered so much that of course we're they're being beaten 451 00:23:37,400 --> 00:23:39,639 Speaker 1: and that's great, but it happens every quarter. I mean, 452 00:23:39,640 --> 00:23:42,040 Speaker 1: I don't care how good the earnings are. They they 453 00:23:42,040 --> 00:23:45,040 Speaker 1: always beat expectations. The question is what are we going 454 00:23:45,080 --> 00:23:47,360 Speaker 1: to get for the full year? And the full year 455 00:23:47,760 --> 00:23:50,359 Speaker 1: guidance has been coming down all year long. Fourth quarter 456 00:23:50,400 --> 00:23:52,320 Speaker 1: people were looking for a big pick up on the 457 00:23:52,320 --> 00:23:54,640 Speaker 1: fourth quarter of ten or eleven percent. That's now down 458 00:23:54,720 --> 00:23:58,480 Speaker 1: to about five percent five point three. Uh So, the 459 00:23:58,960 --> 00:24:01,960 Speaker 1: and as we've halfway through this uh earning season, those 460 00:24:02,040 --> 00:24:04,800 Speaker 1: that for I'm sorrying future guidance hasn't come up at 461 00:24:04,800 --> 00:24:07,480 Speaker 1: off anything has actually come down slightly. So as good 462 00:24:07,520 --> 00:24:09,680 Speaker 1: as the headline numbers are, I'm sorry for the big 463 00:24:09,720 --> 00:24:13,520 Speaker 1: profile names, the overall earning things has been only okay. 464 00:24:13,840 --> 00:24:17,040 Speaker 1: And it concerns me that, you know, the valuation levels 465 00:24:17,040 --> 00:24:19,120 Speaker 1: are tough. I mean, everybody talks about what don't fight 466 00:24:19,160 --> 00:24:24,080 Speaker 1: the FED because they can create a good multiple expansion. 467 00:24:24,320 --> 00:24:27,120 Speaker 1: The problems you still need good earnings. Uh multiple expansion 468 00:24:27,119 --> 00:24:29,520 Speaker 1: can't do it by itself so quickly. Just just to 469 00:24:29,640 --> 00:24:34,480 Speaker 1: round it out here, Um, what sector is most vulnerable? Well, 470 00:24:34,560 --> 00:24:37,359 Speaker 1: it's funny I mentioned that one of the things that 471 00:24:37,359 --> 00:24:41,120 Speaker 1: could be the most beneficial here would be the technology stocks. 472 00:24:41,320 --> 00:24:43,320 Speaker 1: The problem is it could also be the most vulnerable 473 00:24:43,359 --> 00:24:46,480 Speaker 1: if they don't fall through. And uh so, it's it's 474 00:24:46,520 --> 00:24:48,879 Speaker 1: kind of a That's why I say you gotta step 475 00:24:49,040 --> 00:24:51,080 Speaker 1: Sometimes it's good to just sit there and wait to 476 00:24:51,119 --> 00:24:53,159 Speaker 1: see what happens. You need, you don't need to you know, 477 00:24:53,200 --> 00:24:55,320 Speaker 1: you can miss the first couple of percentage point moves 478 00:24:55,880 --> 00:24:58,320 Speaker 1: because if the technology stocks roll over in a meaningful 479 00:24:58,359 --> 00:25:01,320 Speaker 1: way anytime in the near future, they're most vulnerable because, 480 00:25:01,400 --> 00:25:03,600 Speaker 1: especially in the semi conductor area, they don't have the 481 00:25:03,600 --> 00:25:07,480 Speaker 1: big underlying fundamental growth that some of the other groups have. 482 00:25:07,640 --> 00:25:10,840 Speaker 1: So uh and I said talking about kind of both 483 00:25:10,840 --> 00:25:13,359 Speaker 1: sides of my mouth. But that's why it's such a 484 00:25:13,480 --> 00:25:16,520 Speaker 1: vital point or critical point, uh in the star market 485 00:25:16,600 --> 00:25:18,760 Speaker 1: right now. And that's why it's also critical for this 486 00:25:19,160 --> 00:25:22,639 Speaker 1: the technology stocks. Matt Millie, thanks so much for joining us. 487 00:25:22,680 --> 00:25:25,199 Speaker 1: Matt as an equity strategist at Miller Tabac, joining us 488 00:25:25,240 --> 00:25:27,359 Speaker 1: on the phone. Thanks for listening to the Bloomberg P 489 00:25:27,440 --> 00:25:30,000 Speaker 1: and L podcast. You can subscribe and listen to interviews 490 00:25:30,000 --> 00:25:33,880 Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, 491 00:25:33,880 --> 00:25:36,639 Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa bram Woyit's 492 00:25:36,640 --> 00:25:39,680 Speaker 1: I'm on Twitter at Lisa bram Woyds one before the podcast. 493 00:25:39,720 --> 00:25:42,320 Speaker 1: You can always catch us worldwide on Bloomberg Radio.