WEBVTT - Surveillance: Pricing In Recession Fears with Peter Tchir 0:00:00.240 --> 0:00:02.440 Get the latest news at the click of a button 0:00:02.560 --> 0:00:06.240 inside your car. The new Bloomberg Business App now featuring 0:00:06.320 --> 0:00:10.000 Applecarplay Android Auto. Listen to all your favorite Bloomberg radio 0:00:10.000 --> 0:00:13.800 stations and podcasts, plus the latest news, all on your dashboard. 0:00:13.880 --> 0:00:16.880 It's pre and easy to use. Just download the Bloomberg 0:00:16.920 --> 0:00:18.880 Business App on your smartphone. 0:00:18.320 --> 0:00:19.600 And connect the phone your car. 0:00:19.760 --> 0:00:23.840 The Bloomberg Business App now with Applecarplay Android Auto features 0:00:23.880 --> 0:00:26.920 downloaded pre in the Flip Store or on Google Play. 0:00:27.120 --> 0:00:29.840 Presented by our sponsor, Interactive Brokers. 0:00:35.240 --> 0:00:37.240 This is the Bloomberg Surveillance Podcast. 0:00:37.280 --> 0:00:41.199 I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz. 0:00:41.400 --> 0:00:45.880 Join us each day for insight from the best an economics, geopolitics, 0:00:45.880 --> 0:00:50.839 finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 0:00:51.080 --> 0:00:55.520 Spotify and anywhere you get your podcasts, and always on 0:00:55.640 --> 0:00:59.960 Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 0:01:00.440 --> 0:01:02.560 Our guest in the morning to synthesize all this with 0:01:02.680 --> 0:01:04.720 our question. Peter Cheers joins us now. Ahead of a 0:01:04.720 --> 0:01:07.560 macro strategy at Academy Securities. 0:01:07.680 --> 0:01:11.120 You look for price up, yield down. What will that do? 0:01:11.240 --> 0:01:12.280 To the equity market. 0:01:12.600 --> 0:01:13.840 I think for now it's going to be good. I 0:01:13.880 --> 0:01:16.880 think we see four thirty on tens before four, before 0:01:16.920 --> 0:01:18.520 we see four to seventy five. I think the pain 0:01:18.600 --> 0:01:21.080 trade is actually to lower yields. A lot of people 0:01:21.120 --> 0:01:23.320 who are bullish at five kind of got short again. 0:01:23.880 --> 0:01:25.800 I think that works until we get down about four 0:01:25.959 --> 0:01:28.520 thirty five. Equities rally on the back of that. Then 0:01:28.560 --> 0:01:31.119 we realize we're getting there because things like oil, copper 0:01:31.280 --> 0:01:34.760 receding because the economy is actually slowing fast. So I 0:01:34.800 --> 0:01:37.280 think at that point that's when the recession fear start 0:01:37.280 --> 0:01:38.759 getting priced back into stock taking. 0:01:38.840 --> 0:01:43.120 Academy Securities three year view, you've got that slowing global demand. 0:01:43.200 --> 0:01:46.119 Nick bennenbrook On from Wells Fargo stunning with a two 0:01:46.160 --> 0:01:48.080 point four percent global GDP call. 0:01:48.480 --> 0:01:50.880 Can you own equities out with a three year vision? 0:01:51.640 --> 0:01:53.320 I think you could if you had a three year vision. 0:01:53.600 --> 0:01:55.160 I think right now it's more like a two to 0:01:55.200 --> 0:01:57.840 three week vision. Everything's so volatile. We don't know where 0:01:57.840 --> 0:01:59.960 this economy is turning. We don't know what's going on there. 0:02:00.080 --> 0:02:01.800 And one thing that's starting to scare me is we're 0:02:01.800 --> 0:02:03.720 having a lot of discussions about the middle East, we're 0:02:03.720 --> 0:02:06.160 starting to hear a little bit more concerns about supply chains. 0:02:06.160 --> 0:02:08.880 I don't think it's an issue today, but if as 0:02:08.919 --> 0:02:12.520 this drags on, if there's any degree of escalation, supply 0:02:12.680 --> 0:02:14.639 chains become an issue again. So I think that will 0:02:14.639 --> 0:02:15.840 be a big drag on the economy. 0:02:15.919 --> 0:02:18.840 The Middle East crude last month is just unreal to 0:02:18.840 --> 0:02:22.040 see a move of almost eleven percent lower on WTI, 0:02:22.160 --> 0:02:23.840 even with the heightened tension of them. Add least a 0:02:23.840 --> 0:02:26.760 lot of people Pete appointing to maybe demand starting to 0:02:26.800 --> 0:02:29.200 crack in a certain places around the world, Europe one, 0:02:29.240 --> 0:02:31.119 maybe even the United State's gone into next year. 0:02:31.200 --> 0:02:31.920 What's your view on that? 0:02:32.360 --> 0:02:34.120 Yeah, I think last time I was here, I said 0:02:34.520 --> 0:02:36.160 buying oil was not going to be a good hedge 0:02:36.160 --> 0:02:38.440 for escalation there because oil had been under so much 0:02:38.480 --> 0:02:40.679 pressure before, and I think that's what we're seeing again. 0:02:40.720 --> 0:02:43.160 There's just that lack of demand and the Saudis definitely 0:02:43.200 --> 0:02:45.560 have the ability to turn on the tap if they want. 0:02:45.720 --> 0:02:48.080 We're clearly trying to figure out how to work with Venezuela, 0:02:48.320 --> 0:02:50.240 and so far it looks like Aram's going to continue 0:02:50.240 --> 0:02:53.919 to pump oil despite the sanctions, despite the heighted tensions there, 0:02:54.040 --> 0:02:55.920 So there's not much in favor of oil right now, 0:02:55.919 --> 0:02:58.080 and I think that's a very crowded long position, so 0:02:58.120 --> 0:03:00.600 I could see that breaking lower next year. 0:03:00.639 --> 0:03:03.200 You mentioned a two to three week view. I'm with you. 0:03:03.200 --> 0:03:04.520 You know what's about to happen though, In the next 0:03:04.520 --> 0:03:06.919 two to three weeks, we're going to get a load 0:03:06.960 --> 0:03:10.119 of people publishing their outlooks for twenty twenty four. Can 0:03:10.160 --> 0:03:12.720 you help us understand how you get any visibility whatsoever? 0:03:13.040 --> 0:03:16.320 It's next year? What's the strategic view going into next year? 0:03:16.400 --> 0:03:17.880 You know, I think there's still some big themes. I 0:03:17.880 --> 0:03:20.600 think AI, how people are using AI, the efficiency that 0:03:20.600 --> 0:03:22.480 that could cause for companies. I think that's going to 0:03:22.520 --> 0:03:24.520 be a big theme still. So you can look over that. 0:03:25.120 --> 0:03:26.800 Where are we going to be on the defense spending? 0:03:26.840 --> 0:03:29.680 Where are we going to be in terms of geopolitical spending. 0:03:29.800 --> 0:03:32.160 I think the reshoring is still real. I think a 0:03:32.520 --> 0:03:35.640 reasonably healthy economy with their decent jobs is still the 0:03:35.680 --> 0:03:37.520 overriding thing. So I think markets are a little bit 0:03:37.560 --> 0:03:40.920 more volatile, volatile right now than the underlying economy is. 0:03:41.080 --> 0:03:43.040 So if you put this together to what you said 0:03:43.120 --> 0:03:46.480 earlier that you see benchmark ten year yields getting down 0:03:46.520 --> 0:03:49.360 to four point three to five percent before going back 0:03:49.400 --> 0:03:52.160 up to four point seventy five percent, or just basically 0:03:52.680 --> 0:03:55.920 they're heading lower. Does that mean that we're going to 0:03:55.960 --> 0:03:58.800 have slower growth but still the soft landing and that 0:03:58.840 --> 0:04:01.320 it basically people are going to a little concerned about stocks, 0:04:01.320 --> 0:04:03.040 but that it sets up a rally. And I'm just 0:04:03.040 --> 0:04:06.600 trying to understand. No, I think a very convoluted range 0:04:06.600 --> 0:04:07.080 of thoughts. 0:04:07.200 --> 0:04:09.280 So I think as we move towards four thirty five, 0:04:09.320 --> 0:04:11.200 you get this, oh, this is all good for stocks, 0:04:11.240 --> 0:04:13.120 And then as you start moving below four forty, I 0:04:13.120 --> 0:04:15.600 think people realize, oh, man, we're getting there because things 0:04:15.600 --> 0:04:17.960 are not good in the economy. The job market has changed, 0:04:18.600 --> 0:04:20.720 you know, white collar workers aren't doing as well as 0:04:20.720 --> 0:04:23.320 they were. You're seeing, I think, some potential for spending. 0:04:23.320 --> 0:04:26.480 You're seeing little cracks in the housing prices. So I think, 0:04:26.560 --> 0:04:28.160 all of a sudden, by year end, we're going to 0:04:28.200 --> 0:04:30.400 be back on a hard landing discussion, and it'll be 0:04:30.440 --> 0:04:32.400 the boy who cried Wolf, but we'll all be back 0:04:32.440 --> 0:04:35.080 talking about no more soft landing. We've overdone it. 0:04:35.360 --> 0:04:37.720 So you think that at that point treasures will continue 0:04:37.760 --> 0:04:41.960 to be Haven's once again, even though arguably one of 0:04:41.960 --> 0:04:44.239 the biggest drivers of the yield move has been Washington, 0:04:44.320 --> 0:04:46.240 d C. And it doesn't look like that's changing. 0:04:46.600 --> 0:04:49.000 That's not changing. But again that's a three five, ten 0:04:49.080 --> 0:04:51.120 year sort of pain. It's you know, we get ahead 0:04:51.120 --> 0:04:53.200 of ourselves. And I do think the one problem we 0:04:53.240 --> 0:04:55.200 all have is the bond market's so big. You talk 0:04:55.240 --> 0:04:57.760 about these numbers, two hundred and fifty billion, and it's huge, 0:04:58.000 --> 0:05:01.520 but it's you know, a action of twenty five trillions. 0:05:01.560 --> 0:05:04.240 So I think the ability to digest this. You see 0:05:04.240 --> 0:05:06.479 corporate bonds come out twenty two billion yesterday, I believe 0:05:06.480 --> 0:05:08.640 it was you know, there's no problem digesting this. So 0:05:08.680 --> 0:05:11.159 I think the market's pretty healthy. I think people see 0:05:11.240 --> 0:05:13.600 yields as attractive. You're going to see people continue to 0:05:13.640 --> 0:05:16.000 add to that, so I think that's fine. It's going 0:05:16.040 --> 0:05:17.760 to be the risk side of things that gets people 0:05:17.800 --> 0:05:18.760 a little bit more spooked. 0:05:19.279 --> 0:05:22.719 Tell me about the November real yield shift we've seen. 0:05:22.760 --> 0:05:25.320 We've seen the ten year real yield migrate two point 0:05:25.480 --> 0:05:28.160 five zero percent to two point one nine percent. 0:05:28.600 --> 0:05:31.400 That makes things easier for everybody, right, it does. 0:05:31.440 --> 0:05:33.400 But I think the nominal yields still play a big role. 0:05:33.440 --> 0:05:35.560 They're still relatively high, and we had that move from 0:05:35.600 --> 0:05:37.640 you know, three seventy five to five, so we haven't 0:05:37.839 --> 0:05:40.479 clawed a lot of that back. I think there's this 0:05:40.720 --> 0:05:43.680 long you know, invariable lag time is really long. This 0:05:43.760 --> 0:05:46.679 time people did such a good job locking in yields. 0:05:46.800 --> 0:05:48.599 It's only now that you're hearing more and more people 0:05:48.600 --> 0:05:50.359 have to roll over their debt. Right if you issue 0:05:50.360 --> 0:05:52.240 to your debt back in the hey day, Now it's 0:05:52.320 --> 0:05:54.599 rolling over three year debts not quite rolling over. So 0:05:55.240 --> 0:05:57.720 I think we're just starting to see that slow down impact. 0:05:57.839 --> 0:05:59.600 And I think one point John brings up, we've got 0:05:59.640 --> 0:06:02.000 what we've been calling this full liquidity, this fake liquidit 0:06:02.000 --> 0:06:04.400 idiot feels like the markets are super liquid at any 0:06:04.400 --> 0:06:07.200 given price point, but the ability to gap high or 0:06:07.200 --> 0:06:09.320 low is there. So I think we got pushed to 0:06:09.360 --> 0:06:12.440 five percent by people getting stopped out pushing on yields. 0:06:12.480 --> 0:06:14.440 Were now got back to four fifty in a heartbeat 0:06:14.480 --> 0:06:16.520 because people are getting stopped out the other way. So 0:06:16.520 --> 0:06:18.159 that's what we're trying to I think manage is like 0:06:18.279 --> 0:06:19.880 what's the real noise versus the signal? 0:06:20.040 --> 0:06:23.760 You mentioned the Great financinc. The Great financcinc of the pandemic, 0:06:23.800 --> 0:06:27.640 the huge wealth transfer we had from Treasury to the consumer. 0:06:28.040 --> 0:06:31.480 Consumer balance sheets were stronger. Everyone under the Sunny wonder 0:06:31.520 --> 0:06:35.160 House remortgage termed out that debt low rates. Corporate America 0:06:35.160 --> 0:06:39.039 did the same thing. One place didn't, Treasury Stan Drug 0:06:39.080 --> 0:06:42.480 AMLA has been very critical of leadership at Treasury over 0:06:42.520 --> 0:06:44.880 the last i don't know, five years through that low 0:06:44.880 --> 0:06:47.279 interest rate period not termin out the debt. What are 0:06:47.320 --> 0:06:49.479 your thoughts on that? What do you think about that conversation? 0:06:49.880 --> 0:06:51.720 Yeah, I think they should have done what corporations did. 0:06:51.760 --> 0:06:54.120 I'm always a big believer, right, you know, borrolong it 0:06:54.160 --> 0:06:56.839 blocks in, You've reduced volatility, and we're having a lot 0:06:56.880 --> 0:07:00.080 of conversations with clients. Probably a little bit hypothetical at 0:07:00.080 --> 0:07:02.400 this point, but maybe people are supposed to be under 0:07:02.960 --> 0:07:05.880 weight treasuries and tea bills and way overweight whether it's 0:07:05.920 --> 0:07:10.000 commercial paper, corporations. That right, if you take a step 0:07:10.040 --> 0:07:12.480 back and talk about this as being governance, right, the 0:07:12.680 --> 0:07:15.320 US governance is awful right now in terms of our spending, 0:07:15.360 --> 0:07:18.400 in terms of we talk about not spending paying our bills. Right, 0:07:18.640 --> 0:07:20.600 you look at the large corporations world, they have good 0:07:20.600 --> 0:07:24.040 corporate governance, they have global plans. They never once would 0:07:24.080 --> 0:07:25.800 ever even think about saying, oh, we're not going to 0:07:25.800 --> 0:07:27.560 pay our debt on time because we don't feel like it. 0:07:27.880 --> 0:07:30.119 So I think you're supposed to be starting to push 0:07:30.160 --> 0:07:34.280 really heavily to overweight high quality corporates, maybe in commercial paper, 0:07:34.360 --> 0:07:37.560 maybe some abs, and move really underweight T bills. 0:07:37.640 --> 0:07:40.760 So do you foresee a time when Apple can borrow 0:07:40.760 --> 0:07:42.400 at a lower rate than the US government. 0:07:42.800 --> 0:07:46.320 You know that ability to break the sovereign ceiling rarely happens, 0:07:46.320 --> 0:07:48.520 even in emerging markets. I don't think it happens here, 0:07:48.560 --> 0:07:51.560 But I do think you can see really tight spread compression, 0:07:51.800 --> 0:07:53.720 especially at the front end of the corporate bond curve. 0:07:53.800 --> 0:07:55.440 So I like that as a trade. 0:07:55.440 --> 0:07:58.240 Do you think we get conversion spread compression on governance 0:07:58.280 --> 0:07:59.280 issues alone? 0:07:59.640 --> 0:08:00.840 I think that will play a part of it. 0:08:00.880 --> 0:08:01.080 Yeah. 0:08:01.080 --> 0:08:03.440 I think the top quality companies have a ton of cash. 0:08:03.560 --> 0:08:05.800 The liquidity in the bond market's not what it once was, 0:08:05.880 --> 0:08:08.040 so whatever you have to pay up their own T bills, 0:08:08.240 --> 0:08:10.880 maybe you don't. And I think this government issue is 0:08:10.920 --> 0:08:13.400 going to become a real thought again if you think 0:08:13.440 --> 0:08:15.720 about it, why would you lend to someone who talks 0:08:15.760 --> 0:08:16.760 about not paying your. 0:08:16.680 --> 0:08:18.640 Debt because for a long time they've had the privilege 0:08:18.640 --> 0:08:21.120 of acting recklessly correct talked about this so many times 0:08:21.120 --> 0:08:22.520 there's been a consequence for it. 0:08:22.720 --> 0:08:23.760 Why is this time different. 0:08:24.240 --> 0:08:26.800 I think something we talked about before snapped in the market, 0:08:26.800 --> 0:08:28.680 and all of a sudden people are really questioning this 0:08:28.800 --> 0:08:33.600 whole you know, correlation or coalescence of events that have 0:08:33.679 --> 0:08:35.719 been on the back of everyone's mind. I don't think 0:08:35.760 --> 0:08:37.840 it cracks this time, certainly, but I think it starts 0:08:37.920 --> 0:08:39.679 setting us in stage again. I always go back to 0:08:39.679 --> 0:08:42.320 the Great Financial Crisis. It started breaking in two thousand 0:08:42.320 --> 0:08:44.880 and six, got fixed, broken in in two thousand and seven, 0:08:44.960 --> 0:08:47.240 got fixed, broken in two thousand and seven, got fixed. 0:08:47.240 --> 0:08:50.120 So I feel now we've started this unwined, and unless 0:08:50.160 --> 0:08:52.080 DC gets its act together, this is going to be 0:08:52.600 --> 0:08:54.840 Every time it rears, Itt cetera will get uglier. But 0:08:54.880 --> 0:08:56.600 it's not this year's story anymore. 0:08:56.679 --> 0:09:00.599 Pey love it always thoughtful, pitecher there of academy securities. 0:09:11.240 --> 0:09:14.960 Libby Cantrell, joints now Managing director, had a public policy 0:09:15.160 --> 0:09:15.559 at PIMCO. 0:09:15.679 --> 0:09:17.319 Libby, You're the only one I can do this with. 0:09:17.400 --> 0:09:20.560 Can you take the election results and you can fold 0:09:20.600 --> 0:09:24.320 them into a government shutdown, which happens in about three 0:09:24.360 --> 0:09:27.280 cups of coffee. Can you make that exercise happen? 0:09:28.320 --> 0:09:28.520 Yeah? 0:09:28.559 --> 0:09:30.440 Well, good morning, and thank you for not asking me 0:09:30.480 --> 0:09:34.360 a question about ORGO. I did not take organic chemistry school, 0:09:34.440 --> 0:09:37.840 so thanks thanks for testing me on that. Yeah, so 0:09:37.920 --> 0:09:40.839 I do think that the read through actually from last night, Tom, 0:09:40.880 --> 0:09:44.480 so thanks for thanks for a layup. Here is actually 0:09:44.920 --> 0:09:48.120 Democrats won a special election in Rhode Island. This was 0:09:48.160 --> 0:09:50.719 a is a blue race, a blue seat. This is 0:09:50.960 --> 0:09:53.720 a House seat. That means that they have two hundred 0:09:53.720 --> 0:09:57.920 and thirteen seats in the House. Republicans, however, only have 0:09:57.960 --> 0:09:59.880 two hundred and twenty one. They have a special election 0:10:00.120 --> 0:10:02.160 Utah in a few weeks. The reason why this actually 0:10:02.200 --> 0:10:05.320 means is important from a government shutdown perspective is that 0:10:05.360 --> 0:10:08.720 means practically that Republicans now can only lose three seats 0:10:09.920 --> 0:10:12.600 excuse me, three votes in order to pass a funding 0:10:12.640 --> 0:10:15.000 bill that they need a pass to avoid a shutdown 0:10:15.080 --> 0:10:17.679 by by next Friday. So it just means that the 0:10:18.080 --> 0:10:22.880 margin of error is much more narrow for Republicans. Speaker 0:10:22.920 --> 0:10:26.760 Johnson was already needing to thread a needle, if you will, 0:10:26.840 --> 0:10:29.559 and that a needle point has just gotten even more 0:10:29.640 --> 0:10:32.240 narrow from from the result from last night. 0:10:32.120 --> 0:10:36.720 And threading the needle. What will moderate Republicans do. I 0:10:36.720 --> 0:10:38.240 don't have it in front of me, but I'm going 0:10:38.280 --> 0:10:41.360 to suggest on Long Island east of New York City, 0:10:41.400 --> 0:10:44.480 the Republicans had a good night. What are the moderate 0:10:44.760 --> 0:10:48.160 I guess the former president would say, Republicans in name only? 0:10:48.559 --> 0:10:50.920 How do they adapt an adjust off thee selection? 0:10:52.080 --> 0:10:54.439 You know, I think that what we what we learned 0:10:54.520 --> 0:10:58.480 last night is that the abortion rights still very much resonate. 0:10:58.559 --> 0:11:00.800 That was obviously a take away from the twenty two, 0:11:01.280 --> 0:11:06.800 twenty twenty two midterms, where abortion really emboldened turnout. It 0:11:07.000 --> 0:11:11.000 shows last night that this really is very much an issue, 0:11:11.120 --> 0:11:13.280 especially when it is on the ballot. 0:11:13.320 --> 0:11:13.480 Now. 0:11:13.480 --> 0:11:16.240 I think for twenty twenty four, many of these folks, 0:11:16.280 --> 0:11:19.920 particularly in those districts Tom that you mentioned, where there 0:11:20.000 --> 0:11:23.640 are you know, Republicans who are defending Biden districts, the 0:11:23.720 --> 0:11:26.360 Democrats will make this an issue. You're going to hear 0:11:26.400 --> 0:11:29.160 a lot about abortion rights over the next year because 0:11:29.160 --> 0:11:32.520 of the results of last night, just sort of underscoring 0:11:32.760 --> 0:11:37.240 that this clearly is a resident voting issue for voters 0:11:37.240 --> 0:11:39.160 now in terms of the government shutdown, what does that 0:11:39.480 --> 0:11:42.600 make those modern Republicans do they are voting in lockstep here? 0:11:42.640 --> 0:11:45.360 They really are trying to give Speaker Johnson, you know, 0:11:45.440 --> 0:11:48.199 the benefit of the doubt. I think that will continue. 0:11:48.320 --> 0:11:50.280 I think the big question for markets is, though, is 0:11:50.640 --> 0:11:53.640 that enough can they actually avoid a shutdown? If they 0:11:53.679 --> 0:11:56.800 pass apartisan bill, tom, we will see a shutdown next 0:11:57.200 --> 0:11:59.360 next Friday. So again kind of an open question of 0:11:59.400 --> 0:12:02.199 how this all resolves. But as of now, it looks 0:12:02.280 --> 0:12:05.240 like they are voting in a partisan way, which means 0:12:05.280 --> 0:12:09.000 that shutdown risk is you know, I think is increased 0:12:09.080 --> 0:12:10.120 over the last week or so. 0:12:10.520 --> 0:12:13.240 Do markets care though, I mean, it's a shutdown basically, Okay, 0:12:13.280 --> 0:12:14.840 they're going to do it for twenty four hours for 0:12:14.840 --> 0:12:15.840 a fact, and then we'll move on. 0:12:16.240 --> 0:12:18.880 Yeah, least I think that's that's that's the real the 0:12:18.880 --> 0:12:21.720 real issue. If it is a temporary shutdown, no, this 0:12:21.760 --> 0:12:24.400 will just be more DC noise. If it's a longer, 0:12:24.640 --> 0:12:27.680 more prolonged shutdown, it does become I mean, the economic 0:12:27.720 --> 0:12:30.800 impacts of you know, lots of federal workers being furloughed 0:12:30.920 --> 0:12:35.200 not actually collecting a paycheck, could matter. And also, you know, 0:12:35.240 --> 0:12:37.640 the data matters, right. If we don't get data from 0:12:37.920 --> 0:12:41.280 the Department of Labor, for instance, that makes the Fed's job, 0:12:41.559 --> 0:12:43.040 you know, a little bit a little bit harder. And 0:12:43.040 --> 0:12:44.880 we can also see, you know, that this term premium 0:12:44.880 --> 0:12:47.840 that you all been talking about, we could see you know, 0:12:47.880 --> 0:12:50.679 some of the yields back up again as well on 0:12:51.120 --> 0:12:53.520 account of this. So I think you're right. If it's 0:12:53.960 --> 0:12:56.480 a short term shutdown, no, the markets probably don't care. 0:12:56.559 --> 0:12:59.600 If it's longer term, however, you know, it may it 0:12:59.640 --> 0:13:02.320 may weigh on, you know, again on just sort of 0:13:02.320 --> 0:13:06.640 the confidence around sort of the political apparatus in Washington, 0:13:06.720 --> 0:13:06.920 d C. 0:13:07.360 --> 0:13:10.280 Just shifting from last night's elections to what we're expecting 0:13:10.320 --> 0:13:14.240 next year, the presidential election. How much of a certainty 0:13:14.440 --> 0:13:15.840 do you think that it is that we're going to 0:13:15.840 --> 0:13:19.360 see President Biden versus former President Trump. How much will 0:13:19.440 --> 0:13:24.080 tonight's debate really color that discussion about potential other running 0:13:24.120 --> 0:13:26.320 candidates for the Republican Party in particular. 0:13:26.679 --> 0:13:29.440 Yes, I think what we've been messaging to client Lisa 0:13:29.600 --> 0:13:33.120 is with high conviction President Biden will be the nominee 0:13:33.160 --> 0:13:36.640 for the Democratic Party. This idea that he is going 0:13:36.720 --> 0:13:40.920 to drop out, that Governor Newsom, for instance, may jump 0:13:40.920 --> 0:13:43.800 into the race. It just is not it's just not 0:13:43.880 --> 0:13:47.360 realistic at this point. Nor is there any indication from 0:13:47.400 --> 0:13:49.440 the Biden camp that he has you know, he has 0:13:49.520 --> 0:13:52.880 any interest in dropping out or any intention of dropping out. 0:13:52.920 --> 0:13:56.160 So he will be the Democratic nominee again, you know, 0:13:56.240 --> 0:13:59.800 excluding or assuming there's no sort of exident health issue 0:13:59.880 --> 0:14:03.079 or have you. On the Republican side. If President Trump 0:14:03.080 --> 0:14:06.080 obviously has an incredibly formidable lead in the polls, but 0:14:06.160 --> 0:14:09.600 this is actually a really important point. His campaign is 0:14:09.720 --> 0:14:12.719 much more organized, I think by his own emission than 0:14:12.760 --> 0:14:16.080 it was in twenty sixteen, and they have been systematically 0:14:16.160 --> 0:14:19.120 changing the delegate rules in the states in terms of 0:14:19.160 --> 0:14:22.800 how the state primaries allocate delegates to his benefits. So 0:14:22.880 --> 0:14:25.720 not only does he have this formidable lead in the polls, 0:14:25.760 --> 0:14:28.040 but he's also sort of changed the kind of the 0:14:28.080 --> 0:14:31.200 machinations behind the scenes in terms of how these delegates 0:14:31.200 --> 0:14:33.640 are allocated, and of course getting the nominations just a 0:14:33.680 --> 0:14:36.480 delegate game. So the fact that he's been changing these 0:14:36.560 --> 0:14:39.080 rules is to his benefit as well. So, I mean 0:14:39.520 --> 0:14:41.880 a lot would have to happen, I think tonight and 0:14:41.920 --> 0:14:44.400 over the next two months now. I think what we 0:14:44.440 --> 0:14:47.320 can show from even last night that voting behavior is 0:14:47.360 --> 0:14:50.600 the most important thing to look at and polls are 0:14:50.640 --> 0:14:54.920 not always right, and so particularly in Iowa and New Hampshire, Nevada, 0:14:54.960 --> 0:14:58.000 and South Carolina. Those are the four the first contests, Lisa, 0:14:58.040 --> 0:15:00.840 and how we're guiding our clients is if Trump wins 0:15:00.920 --> 0:15:03.640 all of those, then he very likely is going to 0:15:03.640 --> 0:15:06.760 be the nominee. However, if there's somebody can test one 0:15:06.760 --> 0:15:08.880 of those that it could be easily become a two 0:15:08.960 --> 0:15:11.320 person race. But again sort of remains to be seeing. 0:15:11.360 --> 0:15:13.240 In terms of tonight, it's really a race for number 0:15:13.240 --> 0:15:16.760 two DeSantis between and Haley. Yeah, I think we will 0:15:16.760 --> 0:15:19.280 see it be pretty pretty nasty and pretty ugly tonight. 0:15:19.560 --> 0:15:23.200 Looking forward to that debt, Rebe, thank you got to 0:15:23.240 --> 0:15:23.880 catch out you one. 0:15:23.840 --> 0:15:24.240 Of the best. 0:15:24.320 --> 0:15:28.640 You got to catch with at Pencott. 0:15:30.480 --> 0:15:32.840 Le Vis at fourteen point eight four. That is a 0:15:32.920 --> 0:15:36.360 Dana Ives Market is Senior Equity Research Channel Wedbush. He 0:15:36.440 --> 0:15:38.880 refuses to talk to us when Apple learnings come out. 0:15:38.920 --> 0:15:41.440 We only get him to pick up the debris and 0:15:41.520 --> 0:15:43.000 we can tell for those of you on radio, you 0:15:43.000 --> 0:15:43.960 can understand. 0:15:43.680 --> 0:15:46.800 These long Lily Pulitzer as well this morning. Great. 0:15:46.840 --> 0:15:49.880 Look, Dan, I want to talk about your two forty 0:15:49.920 --> 0:15:50.720 call on Apple. 0:15:51.000 --> 0:15:51.760 You're not lonely. 0:15:51.800 --> 0:15:53.800 There's a few other people out there with dan ives 0:15:53.880 --> 0:15:57.520 optimism on Apple. When I saw those margins and a 0:15:57.560 --> 0:16:02.720 company managing for profit not revenue growth, can you raise 0:16:02.760 --> 0:16:03.920 your two forty estimate? 0:16:04.160 --> 0:16:04.360 Yeah? 0:16:04.440 --> 0:16:06.960 Look, I think this is just the beginning of the 0:16:07.000 --> 0:16:09.800 next phase of the Apple store. You look at margins 0:16:10.200 --> 0:16:13.720 that are historical. You look what's happening on services now. 0:16:13.920 --> 0:16:18.560 Mid teen growth and iPhones despite the haters continuing to hate, 0:16:19.440 --> 0:16:22.720 is growing even when you take out currency, and you look, 0:16:22.760 --> 0:16:27.000 it's even growing more asps. The China iPhone demise story 0:16:27.080 --> 0:16:30.640 is a fictional Netflix story, and in my opinion, this 0:16:30.680 --> 0:16:32.960 is just the start of what I ultimately view is 0:16:32.960 --> 0:16:35.280 at three and a half to four trillion dollar markets. 0:16:35.040 --> 0:16:36.600 A slow day, we gotta make some news here. Can 0:16:36.640 --> 0:16:38.720 you pop from two forty up to two fifty this 0:16:38.760 --> 0:16:39.440 morning for us? 0:16:39.440 --> 0:16:42.600 Look, I believe that I believe are the best case 0:16:42.680 --> 0:16:45.800 or the bowl case is probably closer to seventy five 0:16:46.120 --> 0:16:49.680 as this all plays out, because also now you don't 0:16:49.720 --> 0:16:54.120 have AI in those numbers. This is just to get 0:16:54.120 --> 0:16:57.720 out the popcorn moment for when Apple, ultimately, I believe, 0:16:57.760 --> 0:17:01.200 over the next year, introduces the AI App Store, and 0:17:01.240 --> 0:17:03.840 that's just going to be you know, ultimately from a 0:17:03.880 --> 0:17:07.520 services perspective, that could be an incremental five, ten, fifteen million. 0:17:07.720 --> 0:17:09.440 You made a couple of statements, so let's stalk down 0:17:09.440 --> 0:17:10.560 on them. We can do that. 0:17:10.760 --> 0:17:13.199 Your friends, you talked about growth at the iPhone. What 0:17:13.280 --> 0:17:14.919 growth are you talking about? 0:17:15.119 --> 0:17:18.480 So if you look at unit growth, units are growing 0:17:18.760 --> 0:17:22.080 into the December quarter. You also, if you take our currency, 0:17:22.520 --> 0:17:26.920 which is ahead wind, you're basically mid single digit growth. 0:17:28.440 --> 0:17:32.320 You've been talking about a massive boom of people upgrading. 0:17:32.600 --> 0:17:34.400 I guess my question to you, Dan, to be polite 0:17:34.440 --> 0:17:36.200 about it, have you been right for the wrong reasons 0:17:36.560 --> 0:17:38.280 on the stock to acknowledge that? 0:17:38.960 --> 0:17:41.560 I would say that ultimately, if you look at this, 0:17:41.680 --> 0:17:46.120 what I've used a mini supercycle that's playing out. The 0:17:46.160 --> 0:17:49.120 ASP stories played out, and I think our biggest call 0:17:49.200 --> 0:17:52.800 has been China. Despite many yelling fire in a crowd theater, 0:17:53.040 --> 0:17:56.800 the China growth is actually increasing, not decreasing. 0:17:56.840 --> 0:17:58.800 But they had a down quarter right in China. 0:17:58.840 --> 0:18:01.280 Well, if you look at China, meanwhile, in China was 0:18:01.320 --> 0:18:03.720 actually a record for the September quarter. When you look 0:18:03.720 --> 0:18:06.159 at the overall you know, as Keen talks about the 0:18:06.200 --> 0:18:11.480 initial reaction after sure iPads max that and three dollars 0:18:11.480 --> 0:18:13.840 go to your cup of coffee. I'm focused on iPhones 0:18:13.880 --> 0:18:16.720 where units were up in China. 0:18:16.800 --> 0:18:17.639 Well, I'm struggling with that. 0:18:17.680 --> 0:18:19.880 And you'd appreciate this if you came on today and say, 0:18:19.920 --> 0:18:22.440 margins the better they are. I'm with you, Okay, Marchin 0:18:22.520 --> 0:18:24.879 is a great service revenues where the growth is that 0:18:24.920 --> 0:18:27.600 deserves to hire multiple I understand that maybe you can 0:18:27.640 --> 0:18:29.359 make the case for why the stock is high this 0:18:29.440 --> 0:18:31.639