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 Waits. 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 Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,800 Speaker 1: at Bloomberg dot com. It is the blockbuster event of 8 00:00:23,840 --> 00:00:27,040 Speaker 1: the week, of the month, possibly of the year. It 9 00:00:27,160 --> 00:00:29,560 Speaker 1: is the Federal Reserve decision that will be announced at 10 00:00:29,600 --> 00:00:33,320 Speaker 1: two pm, and more importantly, the two thirty pm press 11 00:00:33,360 --> 00:00:37,040 Speaker 1: conference with FED Chair j Powell indicating perhaps how the 12 00:00:37,040 --> 00:00:40,360 Speaker 1: Federal Reserve is thinking about future rate cuts. Joining us, 13 00:00:40,520 --> 00:00:43,120 Speaker 1: I'm so pleased to say is at Al Hassani. He's 14 00:00:43,159 --> 00:00:46,760 Speaker 1: senior interest rate, rates and Currencies analyst for Columbia thread 15 00:00:46,760 --> 00:00:51,599 Speaker 1: Needle Investments, which overseas nearly four hundred and sixty billion dollars. 16 00:00:51,640 --> 00:00:53,800 Speaker 1: And thank you so much for being with us. What 17 00:00:53,880 --> 00:00:57,000 Speaker 1: are you expecting from the Fed today? Great to be 18 00:00:57,040 --> 00:01:00,080 Speaker 1: with you, so you know when the Fed decision and 19 00:01:00,120 --> 00:01:02,360 Speaker 1: today I mean, let me just start by saying that 20 00:01:02,560 --> 00:01:07,560 Speaker 1: the case for a frontloaded easing cycle. It's pretty aggressive, 21 00:01:07,600 --> 00:01:10,720 Speaker 1: starting perhaps with the fifty basis point cut today is 22 00:01:10,840 --> 00:01:13,880 Speaker 1: very compelling. And yet at the same time, on the 23 00:01:14,000 --> 00:01:16,919 Speaker 1: from c UM, I would say this is pretty violent 24 00:01:16,959 --> 00:01:21,200 Speaker 1: disagreement in terms of whether to proceed with something that aggressive. UM. 25 00:01:21,319 --> 00:01:22,760 Speaker 1: So I think the base case has to be a 26 00:01:23,319 --> 00:01:27,080 Speaker 1: basis point cut with some guidance in terms of UH 27 00:01:27,160 --> 00:01:30,800 Speaker 1: cuts later on this year as well. But in my mind, again, 28 00:01:30,880 --> 00:01:34,679 Speaker 1: the case for frontloading and being quite aggressive at this 29 00:01:34,760 --> 00:01:38,000 Speaker 1: stage is very compelling. So at your case again, your 30 00:01:38,360 --> 00:01:41,520 Speaker 1: case for more aggressive frontloading of interest rates maybe fifty 31 00:01:41,520 --> 00:01:45,080 Speaker 1: basis points today, UM, what's that predicated upon? Because it 32 00:01:45,080 --> 00:01:47,800 Speaker 1: seems like some of the cyclical data that we're getting 33 00:01:47,840 --> 00:01:51,480 Speaker 1: recently is actually pretty decent, whether it's UH jobs or 34 00:01:51,520 --> 00:01:55,520 Speaker 1: you know, other the consumer seems pretty strong. Yeah, And look, 35 00:01:55,560 --> 00:01:58,440 Speaker 1: and I want to acknowledge that there there there's basically 36 00:01:58,920 --> 00:02:02,520 Speaker 1: two buckets. A factor is driving this decision. There's the 37 00:02:02,600 --> 00:02:06,120 Speaker 1: cyclical factors UH, which really kind of focus on some 38 00:02:06,200 --> 00:02:08,320 Speaker 1: of the shorter term data that we've had come through 39 00:02:08,320 --> 00:02:11,440 Speaker 1: over the past six months. There's obviously a manufacturing stall, 40 00:02:11,840 --> 00:02:15,360 Speaker 1: there's a slowdown globally UH, you know, quite pronounced in 41 00:02:15,360 --> 00:02:18,919 Speaker 1: in Europe that was confirmed by GDP data today. Obviously 42 00:02:18,919 --> 00:02:22,200 Speaker 1: a slowdown in in China and Asia and more broadly uh, 43 00:02:22,200 --> 00:02:25,440 Speaker 1: and weakness in domestic capex. Uh. The labor market in 44 00:02:25,480 --> 00:02:29,320 Speaker 1: the US looks relatively healthy, but there as well, we're 45 00:02:29,320 --> 00:02:33,359 Speaker 1: seeing on the margin weakness versus where we were last year. 46 00:02:33,560 --> 00:02:36,120 Speaker 1: And you see that pretty clearly in in in wages, 47 00:02:36,440 --> 00:02:39,560 Speaker 1: wage growth has stagnated or on three and you see 48 00:02:39,560 --> 00:02:41,640 Speaker 1: that being confirmed by the employment cost in next day 49 00:02:41,680 --> 00:02:44,560 Speaker 1: as well. So there's some short term data that I 50 00:02:44,600 --> 00:02:47,120 Speaker 1: would say has weakened. And if you if you focus 51 00:02:47,160 --> 00:02:49,840 Speaker 1: in in terms of data flow over the past six weeks, 52 00:02:50,480 --> 00:02:52,840 Speaker 1: you can feel a little bit more optimistic. Uh. Like 53 00:02:52,880 --> 00:02:55,840 Speaker 1: you said, labor market is okay. Uh. Confidence both in 54 00:02:55,919 --> 00:03:00,320 Speaker 1: terms of consumer confidence and business confidence is pretty solid. Um. 55 00:03:00,400 --> 00:03:02,880 Speaker 1: And the household sector in general has been very healthy, 56 00:03:03,000 --> 00:03:05,079 Speaker 1: and that's been true for for a number of years now. 57 00:03:05,760 --> 00:03:09,320 Speaker 1: So UM, go ahead, But I was gonna say that, 58 00:03:09,320 --> 00:03:13,720 Speaker 1: you know, the structural reason is really a risk management reason. 59 00:03:14,440 --> 00:03:19,280 Speaker 1: From perspective, real rates remain quite low, uh, and yet 60 00:03:19,400 --> 00:03:22,480 Speaker 1: we are significantly above real rates in the rest of 61 00:03:22,520 --> 00:03:26,160 Speaker 1: the world. Uh. That's a dynamic that's unlikely to be sustainable. 62 00:03:26,520 --> 00:03:31,760 Speaker 1: So while real rates are coming down, growth continues to decelerate. UM. 63 00:03:32,240 --> 00:03:34,280 Speaker 1: Whether our potential is somewhere between one and a half 64 00:03:34,280 --> 00:03:37,440 Speaker 1: and one seventy five, we're we're going to that level 65 00:03:38,080 --> 00:03:43,280 Speaker 1: um and the margin for error for the FAD is shrinking. 66 00:03:43,560 --> 00:03:46,960 Speaker 1: And we see what happens when that margin disappears in 67 00:03:47,040 --> 00:03:49,840 Speaker 1: terms of outcomes in Europe and Japan. And that's a 68 00:03:49,920 --> 00:03:52,880 Speaker 1: place we we desperately don't want to be. So here's 69 00:03:52,920 --> 00:03:56,280 Speaker 1: here's my concern actually with all of this is that 70 00:03:56,440 --> 00:03:59,200 Speaker 1: ultimately this comes down to a currency play, because if 71 00:03:59,240 --> 00:04:01,640 Speaker 1: this is a relative value game with respect to the 72 00:04:01,640 --> 00:04:04,560 Speaker 1: rest of the world, it comes down to weakening the 73 00:04:04,640 --> 00:04:08,360 Speaker 1: dollar uh and and thus lowering yields. Here and I'm wondering, 74 00:04:08,400 --> 00:04:11,840 Speaker 1: I mean, is that the ultimate goal sort of implicitly 75 00:04:12,080 --> 00:04:15,920 Speaker 1: of the Federal Reserve at this point? I know how 76 00:04:15,960 --> 00:04:18,680 Speaker 1: much put back against that a little bit in the 77 00:04:18,720 --> 00:04:22,800 Speaker 1: sense that the currency sensitivity of the U. S economy 78 00:04:22,880 --> 00:04:26,440 Speaker 1: is actually quite low. The pass through of the currency 79 00:04:26,480 --> 00:04:29,919 Speaker 1: into inflation is quite low. Obviously it has a it 80 00:04:30,000 --> 00:04:32,680 Speaker 1: has a short term impact. But as we've seen, the 81 00:04:32,760 --> 00:04:36,520 Speaker 1: dollar has strengthened uh and as weekend has gone through 82 00:04:36,560 --> 00:04:39,200 Speaker 1: cycles over the course of the past decade, and the 83 00:04:39,320 --> 00:04:42,920 Speaker 1: pass through and the impact of inflation is marginal. Although 84 00:04:43,160 --> 00:04:45,599 Speaker 1: although that said, a lot of people say that the 85 00:04:45,640 --> 00:04:50,080 Speaker 1: reason why yields on on U S treasury treasuries are 86 00:04:50,200 --> 00:04:53,080 Speaker 1: so high relative to the rest of the world is 87 00:04:53,160 --> 00:04:56,360 Speaker 1: only because of the FED, and frankly because the FED 88 00:04:56,640 --> 00:05:01,200 Speaker 1: is in a raising cycle or has been. UM that 89 00:05:01,240 --> 00:05:04,120 Speaker 1: has kept the dollars stronger, and the hedging costs have 90 00:05:04,240 --> 00:05:07,320 Speaker 1: been higher, and the hedging costs will come down if 91 00:05:07,320 --> 00:05:10,280 Speaker 1: the FED cuts, and that will draw more foreign investors 92 00:05:10,320 --> 00:05:14,800 Speaker 1: back into US UH assets, and then we'll just lower 93 00:05:14,839 --> 00:05:17,239 Speaker 1: the rates substantially. I mean, do you buy that argument? 94 00:05:18,760 --> 00:05:21,000 Speaker 1: I don't think so. I mean, like the curve has 95 00:05:21,080 --> 00:05:24,640 Speaker 1: flattened as the set has heighted, so the feeds ability 96 00:05:24,680 --> 00:05:27,000 Speaker 1: to impact the longer end of the curve has been 97 00:05:27,040 --> 00:05:31,400 Speaker 1: relatively muted. Um. This is this is I think quite 98 00:05:31,400 --> 00:05:33,960 Speaker 1: similar to hikes that we saw in the nineties and 99 00:05:34,000 --> 00:05:38,240 Speaker 1: the two thousand's right, So we have the curve flatten. Um. 100 00:05:38,400 --> 00:05:42,120 Speaker 1: The hedging cost issue, UH, I think you're right of it, 101 00:05:42,240 --> 00:05:45,200 Speaker 1: but but it's I think it's much more relevant for 102 00:05:45,400 --> 00:05:48,680 Speaker 1: risk assets in the US. If you think about foreign 103 00:05:48,720 --> 00:05:51,680 Speaker 1: demand for risk assets and the fact that you know, 104 00:05:51,839 --> 00:05:57,080 Speaker 1: about half of fixed income outside of the US now 105 00:05:57,240 --> 00:06:02,240 Speaker 1: yields below zero. There's obviously robust demand for US risk 106 00:06:02,800 --> 00:06:06,600 Speaker 1: UH from Europe, from Japan, from the broader Asian complex, 107 00:06:06,800 --> 00:06:09,760 Speaker 1: and high hedging costs have kept some of those buyers 108 00:06:09,800 --> 00:06:13,080 Speaker 1: on the sidelines. UM. At the same time, it's not 109 00:06:13,160 --> 00:06:19,320 Speaker 1: the Fed's job to manage hedging costs for international investors. UM. 110 00:06:19,400 --> 00:06:22,240 Speaker 1: That's that's a byproduct of what they're trying to do here. 111 00:06:22,360 --> 00:06:26,120 Speaker 1: That's the book. It's not in their band aid book. 112 00:06:26,480 --> 00:06:29,479 Speaker 1: I mean, um, um look at it. It's a fairy 113 00:06:29,480 --> 00:06:32,080 Speaker 1: thing to say. UM. If we zoom out a little bit, 114 00:06:32,240 --> 00:06:36,240 Speaker 1: Foreign demand for treasuries, for example, has diminished, and it's 115 00:06:36,279 --> 00:06:40,280 Speaker 1: been in structural decline over the past five years, but 116 00:06:40,360 --> 00:06:43,239 Speaker 1: domestic demand has stepped in and we're really not seen 117 00:06:44,200 --> 00:06:46,719 Speaker 1: any impact of that on the long end of the curve, 118 00:06:47,440 --> 00:06:50,960 Speaker 1: despite the fact that issuance has increased obviously due to 119 00:06:50,960 --> 00:06:55,240 Speaker 1: the deficits and demand. Foreign demand has stepped back UM. 120 00:06:55,279 --> 00:06:57,760 Speaker 1: And as a thought experiment, I would say this, if 121 00:06:57,800 --> 00:07:04,440 Speaker 1: we didn't have this fiscal um um SURPLUSA and the 122 00:07:04,440 --> 00:07:08,080 Speaker 1: fiscal deficit of the last several years, UH, US long 123 00:07:08,480 --> 00:07:12,240 Speaker 1: end rates would be substantially below where they are today, 124 00:07:12,440 --> 00:07:15,200 Speaker 1: and that should be very worried for the Fed. UM. 125 00:07:15,240 --> 00:07:17,360 Speaker 1: It means we would be much closer to where Germany 126 00:07:17,440 --> 00:07:21,440 Speaker 1: is today. UM. And that's again a reflection of our 127 00:07:21,480 --> 00:07:25,560 Speaker 1: growth and inflation dynamics rather than anything that the set 128 00:07:25,680 --> 00:07:28,520 Speaker 1: is trying to do. Ed Al Hussini, thank you very much. 129 00:07:28,640 --> 00:07:31,400 Speaker 1: Ed is a senior interest rate uh IN currency analyst 130 00:07:31,440 --> 00:07:50,520 Speaker 1: at Columbia thread Needle Investments, based in Minneapolis. Well Apple 131 00:07:50,600 --> 00:07:53,320 Speaker 1: reported some pretty decent results, better than expected for its 132 00:07:53,360 --> 00:07:56,600 Speaker 1: fiscal third quarter fourth quarter forecast, also a little bit 133 00:07:56,640 --> 00:07:58,320 Speaker 1: better and expected than looking at the stock here on 134 00:07:58,320 --> 00:08:00,840 Speaker 1: the Bloomberg terminal, up about four points re percent today, 135 00:08:00,920 --> 00:08:03,720 Speaker 1: up about thirty for the year, so investors certainly liked 136 00:08:03,720 --> 00:08:05,400 Speaker 1: what they heard there. They'll us break it down a 137 00:08:05,440 --> 00:08:07,360 Speaker 1: little bit. We welcome back our good friend Lauren Martin. 138 00:08:07,400 --> 00:08:09,560 Speaker 1: She's a senior analyst that need him in company. She 139 00:08:09,680 --> 00:08:12,560 Speaker 1: joins us live here in a Bloomberg eleven three oh studio. Laura, 140 00:08:12,560 --> 00:08:15,960 Speaker 1: thanks so much for being with us. Key takeaways from Apple. 141 00:08:16,000 --> 00:08:17,520 Speaker 1: You have a strong buy on the stuff we do. 142 00:08:17,600 --> 00:08:19,680 Speaker 1: It's our one strong by name, it's our top pick 143 00:08:19,760 --> 00:08:22,400 Speaker 1: for this year, UM, And what I would say is this, 144 00:08:22,560 --> 00:08:25,200 Speaker 1: I think the three most important metrics that drive Apples 145 00:08:25,320 --> 00:08:29,080 Speaker 1: upside are the number of installed based unique users, and 146 00:08:29,120 --> 00:08:32,560 Speaker 1: then um the actual revenue per user, and then how 147 00:08:32,600 --> 00:08:35,880 Speaker 1: long they stay in the Apple ecosystem, which generates this 148 00:08:35,920 --> 00:08:39,040 Speaker 1: lifetime value per user. And what you saw yesterday from 149 00:08:39,040 --> 00:08:41,319 Speaker 1: their earnings, which was so important, was that they hit 150 00:08:41,640 --> 00:08:44,240 Speaker 1: all time highs in every product, which means the installed 151 00:08:44,240 --> 00:08:47,880 Speaker 1: basis growing. The penetration per unique we think there's nine 152 00:08:48,240 --> 00:08:51,839 Speaker 1: and fifty unique users. The penetration is now one point 153 00:08:51,880 --> 00:08:55,160 Speaker 1: six products per user, up from one point five a 154 00:08:55,240 --> 00:08:58,200 Speaker 1: year ago, so they're getting deeper penetation of products. And 155 00:08:58,240 --> 00:09:00,840 Speaker 1: finally we're getting we have four four hundred and twenty 156 00:09:01,320 --> 00:09:06,160 Speaker 1: million subscriptions, up from three sixty ninety days ago and 157 00:09:06,280 --> 00:09:08,840 Speaker 1: up from three twenty ninety days before that. All of 158 00:09:08,880 --> 00:09:11,840 Speaker 1: which said, and that lowers churn, because every time somebody 159 00:09:11,840 --> 00:09:15,439 Speaker 1: subscribes to a service, it lowers your churn, which elongates 160 00:09:15,440 --> 00:09:18,520 Speaker 1: the amount of time someone stays in the ecosystem. Coming 161 00:09:18,520 --> 00:09:21,720 Speaker 1: on that, looking forward as the next catalyst, we have 162 00:09:21,920 --> 00:09:25,960 Speaker 1: the Arcade service coming, we have the card coming. Apple 163 00:09:26,000 --> 00:09:28,400 Speaker 1: Pay is getting more widely used they're going to try 164 00:09:28,440 --> 00:09:32,560 Speaker 1: to add services that displace other services in the market, 165 00:09:32,600 --> 00:09:34,720 Speaker 1: which is one of the reasons Spotify is correcting today. 166 00:09:34,960 --> 00:09:37,600 Speaker 1: And all of that should lower churn, which makes the 167 00:09:37,720 --> 00:09:41,160 Speaker 1: lifetime value per customer go up, both because they're in 168 00:09:41,200 --> 00:09:43,720 Speaker 1: the ecosystem longer and because they're spending more money on 169 00:09:43,760 --> 00:09:47,200 Speaker 1: new services. Although some people would argue that they're trying 170 00:09:47,280 --> 00:09:50,680 Speaker 1: to shift their focus to a services company and yet 171 00:09:50,679 --> 00:09:56,800 Speaker 1: their services revenue came in below expectations, So what's sort 172 00:09:56,840 --> 00:09:59,480 Speaker 1: of your reasoning behind why that's okay? So I think 173 00:09:59,520 --> 00:10:02,120 Speaker 1: I think the important point for me anyway, is that 174 00:10:02,200 --> 00:10:05,520 Speaker 1: services has a seventy percent profit margin and product has 175 00:10:05,559 --> 00:10:08,400 Speaker 1: a thirty percent profit margin. So I think an interesting 176 00:10:08,440 --> 00:10:11,600 Speaker 1: frame way to frame Apple is razor, razor blade. Let's 177 00:10:11,640 --> 00:10:14,000 Speaker 1: give a loss leader on the product. Okay, it's a 178 00:10:14,000 --> 00:10:16,600 Speaker 1: thirty percent margin, not a loss like a razor, And 179 00:10:16,640 --> 00:10:19,800 Speaker 1: then what you're really selling is the seventy percent margin services. 180 00:10:19,840 --> 00:10:21,760 Speaker 1: So every time they tell you they're adding a new 181 00:10:21,800 --> 00:10:26,679 Speaker 1: seventy a new service, that's another new green field of 182 00:10:26,720 --> 00:10:29,680 Speaker 1: adding a seventy percent margin. So to me, that's the 183 00:10:29,720 --> 00:10:33,080 Speaker 1: more important point here, because that's like a supercharger for 184 00:10:33,280 --> 00:10:35,560 Speaker 1: the Ebat dog growth and the stock trades on a 185 00:10:35,640 --> 00:10:39,000 Speaker 1: pe and it trades at fifteen times earnings and it's 186 00:10:39,000 --> 00:10:41,360 Speaker 1: going to grow seventeen percent, which means you're buying this 187 00:10:41,440 --> 00:10:44,600 Speaker 1: stock at a PEG ratio of nine point nine zero 188 00:10:44,640 --> 00:10:48,319 Speaker 1: point nine, meaning below one. Even though it's now the 189 00:10:48,320 --> 00:10:50,520 Speaker 1: biggest company on Earth. It's has a nice growth now 190 00:10:50,559 --> 00:10:53,560 Speaker 1: they've got When when the China trade issues flared up, 191 00:10:53,600 --> 00:10:56,120 Speaker 1: Apples certainly got hit. It was highlighted as one of 192 00:10:56,120 --> 00:10:58,320 Speaker 1: those companies that's really exposed. They sell a lot of 193 00:10:58,320 --> 00:11:01,280 Speaker 1: product in China, they manufacture a product in China. Did 194 00:11:01,280 --> 00:11:03,680 Speaker 1: there have anything last night on the conference call to 195 00:11:03,679 --> 00:11:06,480 Speaker 1: talk about kind of how they viewed China. Yeah, so, 196 00:11:06,520 --> 00:11:08,160 Speaker 1: I mean I sort of thought one of the things 197 00:11:08,160 --> 00:11:09,920 Speaker 1: that came out of last night's call was they've sort 198 00:11:09,960 --> 00:11:12,679 Speaker 1: of solved China. And what they said was they had 199 00:11:12,679 --> 00:11:15,120 Speaker 1: to lower price for sure because the US dollar has 200 00:11:15,120 --> 00:11:17,840 Speaker 1: been so strong, but they said that the Chinese consumer 201 00:11:17,920 --> 00:11:21,160 Speaker 1: has not had a negative reaction to American products, which 202 00:11:21,200 --> 00:11:24,040 Speaker 1: was something we're super worried about. That the Chinese government 203 00:11:24,040 --> 00:11:27,240 Speaker 1: had become much more aggressive at stimulating the consumer economy, 204 00:11:27,320 --> 00:11:30,760 Speaker 1: so they were getting more acquisitions of in China of 205 00:11:30,800 --> 00:11:34,079 Speaker 1: iPhones UM, and that the trade talks. You saw that 206 00:11:34,160 --> 00:11:37,640 Speaker 1: the the administration said they were constructive. The China trade 207 00:11:37,640 --> 00:11:40,560 Speaker 1: talks were constructive today UM, so that all of that 208 00:11:40,720 --> 00:11:43,560 Speaker 1: sounds like China might be solved at least for the 209 00:11:43,600 --> 00:11:46,600 Speaker 1: near term. And it definitely was a driver of Apple's 210 00:11:46,679 --> 00:11:49,040 Speaker 1: unit upside in the quarter. I want to shift gears 211 00:11:49,040 --> 00:11:51,800 Speaker 1: a little bit as we head into the second half 212 00:11:51,880 --> 00:11:54,679 Speaker 1: of this earning season and go back and look at 213 00:11:54,679 --> 00:11:57,040 Speaker 1: some of the ones that came out earlier. Netflix reporting 214 00:11:57,040 --> 00:12:01,439 Speaker 1: on July sevente July eighteenth, and they showed that they 215 00:12:01,640 --> 00:12:04,079 Speaker 1: lost subscribers. It was a big disappointment. You saw the 216 00:12:04,160 --> 00:12:08,160 Speaker 1: shares decline substantially. I'm wondering what your view is here. 217 00:12:08,200 --> 00:12:11,520 Speaker 1: Is this a buying opportunity? We would say no. I 218 00:12:11,520 --> 00:12:15,400 Speaker 1: mean our thesis is that UM subscriber losses in the 219 00:12:15,520 --> 00:12:19,160 Speaker 1: US is the new normal. Uh. They raised price, which 220 00:12:19,200 --> 00:12:21,720 Speaker 1: is what drove the subscriber losses in the June quarter. 221 00:12:22,200 --> 00:12:24,480 Speaker 1: But starting on November twelve, you're gonna get the Walt 222 00:12:24,480 --> 00:12:27,760 Speaker 1: Disney Company coming in UM with a new competitive enter 223 00:12:27,880 --> 00:12:30,439 Speaker 1: at half the price. It's going to be seven dollars 224 00:12:30,600 --> 00:12:33,439 Speaker 1: versus Netflix is now you know, sort of twelve to 225 00:12:33,480 --> 00:12:37,840 Speaker 1: fourteen dollars, and um, you're gonna have every movie that 226 00:12:37,960 --> 00:12:42,160 Speaker 1: Disney's ever made in that service for seven dollars, from Lucasfilm, 227 00:12:42,200 --> 00:12:45,000 Speaker 1: from Marvel, from Pixar, and from Disney Animation like Frozen. 228 00:12:45,320 --> 00:12:47,880 Speaker 1: So every big film they've ever made in fifty years 229 00:12:47,920 --> 00:12:50,920 Speaker 1: will be on that service, watchable fifteen times by your 230 00:12:51,040 --> 00:12:54,000 Speaker 1: twelve year old girl if they want to. So I 231 00:12:54,040 --> 00:12:57,000 Speaker 1: think you're gonna get trial. What we saw from Game 232 00:12:57,000 --> 00:12:59,360 Speaker 1: of Thrones is that so long as Game of Thrones 233 00:12:59,440 --> 00:13:02,240 Speaker 1: was on, Peep will subscribe and paid fifteen dollars for HBO, 234 00:13:02,360 --> 00:13:05,200 Speaker 1: and they had stopped paying for Netflix. Then Game of 235 00:13:05,200 --> 00:13:08,360 Speaker 1: Thrones ended, they went back to Netflix. So it's gonna 236 00:13:08,360 --> 00:13:10,600 Speaker 1: happen is people are going to turn off Netflix and 237 00:13:10,640 --> 00:13:13,760 Speaker 1: spend seven dollars buying Disney, and when they finished watching 238 00:13:13,800 --> 00:13:17,040 Speaker 1: all those movies, Disney's challenge will be to transport them 239 00:13:17,040 --> 00:13:20,000 Speaker 1: to the Fox programming, which is more TV series. Otherwise 240 00:13:20,000 --> 00:13:21,920 Speaker 1: they're going to go back to Netflix. But meanwhile, it's 241 00:13:21,960 --> 00:13:24,160 Speaker 1: going to be a hellish three months six months for 242 00:13:24,240 --> 00:13:27,040 Speaker 1: Netflix U S subscriber subs as people go over to 243 00:13:27,080 --> 00:13:30,160 Speaker 1: Disney and and sort of rewatch all those great movies. 244 00:13:30,440 --> 00:13:31,839 Speaker 1: So one of the things we've also seen, as it 245 00:13:31,840 --> 00:13:34,480 Speaker 1: relates to Netflix and a lot of the traditional media companies, 246 00:13:34,480 --> 00:13:36,200 Speaker 1: which you've covered for a long time, law, is a 247 00:13:36,200 --> 00:13:37,920 Speaker 1: lot of the media companies are bringing some of their 248 00:13:37,920 --> 00:13:41,000 Speaker 1: content that they had been licensing to Letflix bringing back 249 00:13:41,040 --> 00:13:43,680 Speaker 1: because they are launching their own service, whether it's Disney 250 00:13:43,760 --> 00:13:47,080 Speaker 1: or Comcast or NBC, you know all those folks. How 251 00:13:47,080 --> 00:13:50,000 Speaker 1: big of the risk is that for Netflix losing some 252 00:13:50,080 --> 00:13:52,400 Speaker 1: of that content. Yeah, I mean, I think it's a 253 00:13:52,520 --> 00:13:55,040 Speaker 1: I think it's a risk because the value proposition is 254 00:13:55,080 --> 00:13:58,240 Speaker 1: getting worse because they used to have The Office and 255 00:13:58,280 --> 00:14:00,520 Speaker 1: they used to have Friends, and those were two of 256 00:14:00,520 --> 00:14:03,320 Speaker 1: their highest rated shows or viewed shows. And now those 257 00:14:03,320 --> 00:14:05,520 Speaker 1: are leaving and they're splitting up. One's going to Warner 258 00:14:05,559 --> 00:14:08,199 Speaker 1: and one's going to NBC. So what's about to happen 259 00:14:08,200 --> 00:14:10,640 Speaker 1: to the consumer is he's going to have five choices 260 00:14:10,640 --> 00:14:12,760 Speaker 1: where it used to all be aggregated for a ten 261 00:14:12,800 --> 00:14:15,720 Speaker 1: dollars a month under Netflix, which was an awesome value proposition. 262 00:14:16,280 --> 00:14:17,880 Speaker 1: So what the consumer is going to have to do 263 00:14:17,960 --> 00:14:20,680 Speaker 1: now is figure out which services he wants. And so 264 00:14:20,720 --> 00:14:23,720 Speaker 1: we're gonna have this chaotic period of sort of open, 265 00:14:23,840 --> 00:14:26,840 Speaker 1: free for all competition for let's say three to five years, 266 00:14:26,960 --> 00:14:29,240 Speaker 1: but at the end of five years, consumers are all. 267 00:14:29,240 --> 00:14:31,320 Speaker 1: The research shows that consumers are going to take three 268 00:14:31,360 --> 00:14:34,560 Speaker 1: of these big entertainment services, probably including a spinning bundle 269 00:14:34,640 --> 00:14:36,680 Speaker 1: or the big bundle, plus a couple O t t s. 270 00:14:37,000 --> 00:14:38,840 Speaker 1: So the consumer will decide and it will be winner 271 00:14:38,880 --> 00:14:42,000 Speaker 1: take all, and then whoever wins, they'll have to license 272 00:14:42,040 --> 00:14:43,760 Speaker 1: the contract for the guy who went out of business. 273 00:14:44,800 --> 00:14:47,240 Speaker 1: Who are the three winners? So I think the three 274 00:14:47,280 --> 00:14:49,480 Speaker 1: I think Disney wins because they're big, they got a 275 00:14:49,520 --> 00:14:51,200 Speaker 1: balance sheet, and they bought Fox to do this for 276 00:14:51,240 --> 00:14:53,120 Speaker 1: seventy billion to do this, so they're really all in 277 00:14:53,160 --> 00:14:56,360 Speaker 1: on this name. I think at biggest risk is Warner 278 00:14:56,400 --> 00:14:59,240 Speaker 1: because they have to price that HBO product above fifteen 279 00:14:59,280 --> 00:15:01,480 Speaker 1: dollars and so they're going to throw the turner stuff 280 00:15:01,480 --> 00:15:04,560 Speaker 1: in UM and so you know, we'll see if they 281 00:15:04,560 --> 00:15:07,240 Speaker 1: can market around that high price point, because that is 282 00:15:07,240 --> 00:15:09,960 Speaker 1: at the Netflix price point. I think Netflix loses. It's 283 00:15:10,000 --> 00:15:12,360 Speaker 1: already has to raise three point five billion a year. 284 00:15:12,400 --> 00:15:14,880 Speaker 1: It doesn't have the balance sheet withstand a fight. And 285 00:15:14,960 --> 00:15:17,440 Speaker 1: I gotta tell you if you're if you're a T 286 00:15:17,600 --> 00:15:22,320 Speaker 1: and T, Warner Brothers or Disney or Comcast, the NBC Universal. 287 00:15:22,400 --> 00:15:24,120 Speaker 1: You can lose money for ten years on this. It 288 00:15:24,240 --> 00:15:29,480 Speaker 1: doesn't matter. Netflix cannot. Laura Martin really interesting points. Thank 289 00:15:29,480 --> 00:15:31,520 Speaker 1: you so much for being here with us, My pleasure. 290 00:15:31,600 --> 00:15:34,320 Speaker 1: Laura Martin is senior analyst at Needham and Company. Joining 291 00:15:34,400 --> 00:15:53,840 Speaker 1: us here in our interactive broker studios. The earnings parade 292 00:15:53,960 --> 00:15:58,040 Speaker 1: continues this week, in particular for the autos sector. Christ 293 00:15:58,120 --> 00:16:01,520 Speaker 1: Are reported earlier today General Oters tomorrow. Joining us here 294 00:16:01,560 --> 00:16:05,040 Speaker 1: in our interactive broker studios as Craig Trudell, us Autos 295 00:16:05,080 --> 00:16:08,320 Speaker 1: team leader for Bloomberg News. So, Craig, before we get 296 00:16:08,360 --> 00:16:10,440 Speaker 1: started into digging into some of the results we've gotten, 297 00:16:10,440 --> 00:16:14,240 Speaker 1: because we've already gotten forward, Um, let's just talk about 298 00:16:14,280 --> 00:16:18,480 Speaker 1: where we are in this secular decline of the auto industry. 299 00:16:18,520 --> 00:16:22,160 Speaker 1: How low our expectations going into this earnings period. Well, 300 00:16:22,200 --> 00:16:24,560 Speaker 1: we so we started the year with an expectation that 301 00:16:24,600 --> 00:16:28,840 Speaker 1: we would tread water on a global perspective. So so 302 00:16:28,920 --> 00:16:31,440 Speaker 1: the US market is sort of was sort of widely 303 00:16:31,480 --> 00:16:35,240 Speaker 1: expected to start to decline. Uh, there was sort of 304 00:16:35,280 --> 00:16:39,440 Speaker 1: a false positive last year of of sales being up 305 00:16:39,960 --> 00:16:42,760 Speaker 1: just a smidgeon, but it was mostly driven by the 306 00:16:42,800 --> 00:16:44,960 Speaker 1: fact that the car makers were selling a lot more 307 00:16:45,000 --> 00:16:48,560 Speaker 1: to rental fleet companies and and it was you know, 308 00:16:48,640 --> 00:16:52,040 Speaker 1: not really actually a strong year from a retail perspective. 309 00:16:52,760 --> 00:16:56,200 Speaker 1: Relative to the last couple of years. We've seen a 310 00:16:56,240 --> 00:17:00,720 Speaker 1: continuation of retail weakness and uh you know, uh sort 311 00:17:00,720 --> 00:17:02,600 Speaker 1: of a move on the part of the car makers 312 00:17:02,600 --> 00:17:05,840 Speaker 1: to sort of pad the numbers by selling more to fleets. Uh. 313 00:17:05,880 --> 00:17:09,359 Speaker 1: In Europe, the market is deteriorating, especially in the in 314 00:17:09,400 --> 00:17:12,159 Speaker 1: the last month. I think it sort of caught people 315 00:17:12,320 --> 00:17:15,080 Speaker 1: off guard a little bit just how much weakness has 316 00:17:15,160 --> 00:17:17,520 Speaker 1: has been over there. But the big, big story has 317 00:17:17,520 --> 00:17:21,359 Speaker 1: been China. There was an expectation that the government would 318 00:17:21,359 --> 00:17:25,000 Speaker 1: step in, as they have so often uh over the 319 00:17:25,080 --> 00:17:28,440 Speaker 1: years when the auto market there has shown sign of 320 00:17:28,440 --> 00:17:31,960 Speaker 1: of signs of weakness, you've seen uh state support to 321 00:17:32,080 --> 00:17:35,520 Speaker 1: kind of you know, keep the market growing, and we 322 00:17:35,600 --> 00:17:38,359 Speaker 1: haven't seen that. And we've seen China really, um, you know, 323 00:17:38,400 --> 00:17:42,160 Speaker 1: continue to deteriorate. And so you know, a lot of suppliers, 324 00:17:42,200 --> 00:17:43,760 Speaker 1: a lot of O. E M s are talking about 325 00:17:43,800 --> 00:17:47,040 Speaker 1: the idea that you know, they were entering this year thinking, 326 00:17:47,200 --> 00:17:50,000 Speaker 1: you know, the global industry would be you know, roughly 327 00:17:50,440 --> 00:17:53,920 Speaker 1: treading water, when in fact it's it's down roughly about 328 00:17:53,960 --> 00:17:56,560 Speaker 1: five percent. It's looking like for this year down five 329 00:17:56,560 --> 00:18:00,359 Speaker 1: percent globally. So we've got Fiat Chrysler Um numbers and 330 00:18:00,480 --> 00:18:02,200 Speaker 1: stocks up four percent. What do we what are the 331 00:18:02,240 --> 00:18:05,400 Speaker 1: key takeaways there? So with f c A, the the 332 00:18:05,440 --> 00:18:07,960 Speaker 1: big big story is trucks here in the US. So 333 00:18:08,000 --> 00:18:14,840 Speaker 1: they've they've taken Ram truck. Yeah, Ram ram is you 334 00:18:14,880 --> 00:18:19,560 Speaker 1: know please ram Is. Ram is really cutting the checks 335 00:18:19,560 --> 00:18:23,360 Speaker 1: in Detroit. So uh. They they've got a new Ram 336 00:18:23,600 --> 00:18:26,320 Speaker 1: Ram pickup that is really doing well. They also have 337 00:18:26,440 --> 00:18:29,119 Speaker 1: this sort of dual strategy of they've they've continued to 338 00:18:29,160 --> 00:18:32,679 Speaker 1: make the outgoing generation version of the Ram. Uh. They 339 00:18:32,680 --> 00:18:35,000 Speaker 1: actually announced today that they're going to sort of continue 340 00:18:35,080 --> 00:18:38,760 Speaker 1: that two pronged strategy of being able to offer the newer, uh, 341 00:18:38,800 --> 00:18:42,119 Speaker 1: you know, more expensive, higher margin, you know, lucrative truck 342 00:18:42,560 --> 00:18:45,480 Speaker 1: uh that that has been really successful. They've put a 343 00:18:45,520 --> 00:18:48,359 Speaker 1: massive touch screen into that pickup that has you know, 344 00:18:48,400 --> 00:18:52,159 Speaker 1: surprisingly gone over extremely well with with truck buyers. But 345 00:18:52,240 --> 00:18:55,000 Speaker 1: they also have this older generation truck that's a little 346 00:18:55,040 --> 00:18:58,000 Speaker 1: bit more for the budget buyer, and they're giving GM 347 00:18:58,040 --> 00:18:59,679 Speaker 1: a real run for their money in terms of the 348 00:18:59,680 --> 00:19:01,720 Speaker 1: pick up market here in the US. And that's huge 349 00:19:01,760 --> 00:19:05,560 Speaker 1: for profitability, which brings us to General Motors, which reports tomorrow. 350 00:19:05,920 --> 00:19:10,119 Speaker 1: Ford reported last week shares plunged seven and a half 351 00:19:10,200 --> 00:19:13,200 Speaker 1: percent the day that they reported, so not a great 352 00:19:13,240 --> 00:19:15,719 Speaker 1: day for Ford. Are we going to see a similar 353 00:19:15,760 --> 00:19:19,320 Speaker 1: type of disappointment from motors? From what analysts are saying, 354 00:19:19,680 --> 00:19:22,040 Speaker 1: given the fact that Fiat Chrysler might be taking away 355 00:19:22,080 --> 00:19:24,240 Speaker 1: some of their market share, the key for them is 356 00:19:24,520 --> 00:19:27,520 Speaker 1: going to be trucks. So so they too have a 357 00:19:27,560 --> 00:19:30,600 Speaker 1: new pickup on the market. They for who is Truck's 358 00:19:30,680 --> 00:19:34,880 Speaker 1: not the key? Everybody in Detroit. It's everybody. I mean, 359 00:19:34,920 --> 00:19:37,160 Speaker 1: it's it really is still the story is It sort 360 00:19:37,160 --> 00:19:40,280 Speaker 1: of feels like, you know, it feels like a broken 361 00:19:40,320 --> 00:19:43,359 Speaker 1: record talking about Detroit and pickups. But it remains to be. 362 00:19:43,760 --> 00:19:46,160 Speaker 1: It remains the case, despite all of this hype about 363 00:19:46,160 --> 00:19:49,679 Speaker 1: electrification and autonomous vehicles, that is still what pays the 364 00:19:49,680 --> 00:19:53,119 Speaker 1: bills around a town in Detroit. Uh, they have a 365 00:19:53,119 --> 00:19:57,280 Speaker 1: new pickup as well. They've they've had a lot slower 366 00:19:57,280 --> 00:20:01,400 Speaker 1: a ramp for that vehicle than than Fiat cry Sler has. UH. 367 00:20:01,440 --> 00:20:04,400 Speaker 1: And whether or not. They're able to sort of resolve that, 368 00:20:04,560 --> 00:20:06,320 Speaker 1: you know, work out the kinks of of getting that 369 00:20:06,400 --> 00:20:09,440 Speaker 1: new truck onto the market and and sort of help 370 00:20:09,520 --> 00:20:12,720 Speaker 1: the bottom line. That's important And for GM an important 371 00:20:12,720 --> 00:20:14,960 Speaker 1: factor too is they got out of Europe a couple 372 00:20:15,000 --> 00:20:18,840 Speaker 1: of years ago, so they're dodging the recent market weakness 373 00:20:18,920 --> 00:20:22,920 Speaker 1: over there. Uh, the sort of impending doom that is 374 00:20:22,960 --> 00:20:26,280 Speaker 1: being warned warned about in terms of the stricter emission 375 00:20:26,320 --> 00:20:29,359 Speaker 1: standards over there. So GM has really sort of, uh, 376 00:20:29,400 --> 00:20:31,560 Speaker 1: you know, said, you know what, we're we're out of here. 377 00:20:31,800 --> 00:20:33,960 Speaker 1: They sold opal To to p s A a couple 378 00:20:34,000 --> 00:20:37,560 Speaker 1: of years ago and that's no longer a concern for them. 379 00:20:37,640 --> 00:20:40,680 Speaker 1: So that being said, China's weakness is a big deal 380 00:20:40,720 --> 00:20:42,720 Speaker 1: for them. They are huge in that market and they're 381 00:20:42,720 --> 00:20:45,800 Speaker 1: feeling feeling the pain just like everybody else. All right, now, 382 00:20:45,800 --> 00:20:47,520 Speaker 1: we're gonna get to what I really want to talk about, 383 00:20:47,520 --> 00:20:51,399 Speaker 1: which is Elon Musk tweeting production numbers. I thought he 384 00:20:51,440 --> 00:20:53,480 Speaker 1: had an agreement with the SEC not to do that. 385 00:20:54,119 --> 00:20:56,440 Speaker 1: I thought so too, uh, you know, And in the past, 386 00:20:56,520 --> 00:20:59,320 Speaker 1: we've we've heard, we've seen him, you know, talking about 387 00:20:59,560 --> 00:21:03,159 Speaker 1: car earlier this week it was it was about the 388 00:21:03,200 --> 00:21:06,400 Speaker 1: solar roof which, uh in and of itself, was already 389 00:21:06,400 --> 00:21:08,840 Speaker 1: a very controversial product. He showed that a couple of 390 00:21:08,880 --> 00:21:11,080 Speaker 1: years ago really to sort of seal the deal on 391 00:21:11,080 --> 00:21:14,879 Speaker 1: on buying Solar City, which everyone uh you know knows 392 00:21:14,960 --> 00:21:19,240 Speaker 1: as as being a pretty controversial uh merger. Um. He 393 00:21:19,280 --> 00:21:21,919 Speaker 1: talked about, you know, sort of towards the end of 394 00:21:21,960 --> 00:21:25,480 Speaker 1: this year, his hope for how many of those roofs 395 00:21:25,520 --> 00:21:28,119 Speaker 1: he's going to be able to make. He's had real, 396 00:21:28,200 --> 00:21:31,120 Speaker 1: real trouble actually just sort of you know, getting production 397 00:21:31,160 --> 00:21:34,800 Speaker 1: going whatsoever on that product comes out and says a 398 00:21:35,160 --> 00:21:37,800 Speaker 1: thousand a week by the end of this year. That's 399 00:21:38,000 --> 00:21:41,520 Speaker 1: not anywhere you know there. There hasn't been any forecast 400 00:21:41,600 --> 00:21:45,320 Speaker 1: whatsoever from the company from that perspective, and the amended 401 00:21:45,400 --> 00:21:49,359 Speaker 1: language that Tesla that Musk and the SEC agreed to 402 00:21:49,440 --> 00:21:53,200 Speaker 1: earlier this year specifically said production numbers that the company 403 00:21:53,200 --> 00:21:56,919 Speaker 1: has not been communicated previously. He needs pre approval to 404 00:21:56,920 --> 00:22:00,520 Speaker 1: to post about that, and Tesla has not said whether 405 00:22:00,600 --> 00:22:02,600 Speaker 1: or not he got that approval. So all right, I mean, 406 00:22:02,800 --> 00:22:07,719 Speaker 1: I'm amazed that you're surprised. This is this give me him. 407 00:22:08,440 --> 00:22:12,040 Speaker 1: It's funny the stocks not moving because nobody else's was 408 00:22:12,080 --> 00:22:14,919 Speaker 1: going to change. Sorry, I just I was hoping that, 409 00:22:15,160 --> 00:22:17,720 Speaker 1: you know, the Securities and Exchange Commission in the United 410 00:22:17,720 --> 00:22:21,000 Speaker 1: States might have to be able to you like watching 411 00:22:21,040 --> 00:22:23,800 Speaker 1: a train wreck. Craig Trudell, thank you so much for 412 00:22:23,840 --> 00:22:27,080 Speaker 1: joining us US Autos team leader for Bloomberg News. Joining 413 00:22:27,119 --> 00:22:29,880 Speaker 1: us here on Interactive Broker Studio. Craig and the team, 414 00:22:30,320 --> 00:22:33,080 Speaker 1: they do a great job covering the global auto industry 415 00:22:33,119 --> 00:22:51,960 Speaker 1: for Bloomberg News. I've never seen ball this red before. 416 00:22:52,040 --> 00:22:55,560 Speaker 1: I'm so excited for this conversation. We're gonna be talking, 417 00:22:55,760 --> 00:22:59,480 Speaker 1: but it's a very serious conversation. It's about women's underwear 418 00:23:00,119 --> 00:23:03,000 Speaker 1: during athletic endeavors. There is a question what do you 419 00:23:03,040 --> 00:23:06,000 Speaker 1: wear under those yoga pans? And you know, it's interesting 420 00:23:06,000 --> 00:23:10,040 Speaker 1: because there's so much in terms of male athletic underwear 421 00:23:10,480 --> 00:23:12,919 Speaker 1: and it's not awkward to talk about that market, and 422 00:23:13,000 --> 00:23:16,120 Speaker 1: yet for some reason it is to talk about this one, 423 00:23:16,240 --> 00:23:18,119 Speaker 1: even though this is a very real market and it 424 00:23:18,160 --> 00:23:20,760 Speaker 1: doesn't seem to be very filled. Joining us now Stacy 425 00:23:20,840 --> 00:23:26,000 Speaker 1: Hunter Harrington, owner of Quoactive, specializing in exactly this niche 426 00:23:26,040 --> 00:23:29,120 Speaker 1: that has otherwise been largely unfilled, which is women's athletic 427 00:23:29,240 --> 00:23:33,840 Speaker 1: underwear Stacy, how did you get involved to this? Well, uh, 428 00:23:34,080 --> 00:23:36,840 Speaker 1: twenty five years plus in the industry, started mostly in 429 00:23:36,840 --> 00:23:40,520 Speaker 1: the textile side. UM and being an athlete and going 430 00:23:40,560 --> 00:23:43,240 Speaker 1: to enough yoga classes and spin classes and seeing women 431 00:23:44,400 --> 00:23:47,840 Speaker 1: stripped down in a studio going wow, I can't believe 432 00:23:47,840 --> 00:23:51,560 Speaker 1: that that's what they're wearing underneath their leggings. And it 433 00:23:51,600 --> 00:23:55,000 Speaker 1: was either, I would say, without putting a direct stat 434 00:23:55,040 --> 00:23:57,960 Speaker 1: on it, it was women were wearing underwear and the 435 00:23:58,000 --> 00:24:00,879 Speaker 1: other forty were not wearing anything at all, And I 436 00:24:00,960 --> 00:24:05,320 Speaker 1: was shocked. So for me understanding that there had to 437 00:24:05,320 --> 00:24:07,760 Speaker 1: be there's a reason why we wear technical fabrics to 438 00:24:07,800 --> 00:24:09,760 Speaker 1: work out with our leggings. Why did no one create 439 00:24:09,800 --> 00:24:13,959 Speaker 1: a true technical underwear to wear underneath? So it's been 440 00:24:14,000 --> 00:24:17,119 Speaker 1: a topic of conversation more around a white space of 441 00:24:17,160 --> 00:24:20,400 Speaker 1: the market, but really more about hygiene than anything. So 442 00:24:20,600 --> 00:24:24,560 Speaker 1: what does your product do? So, I mean, what's the 443 00:24:25,760 --> 00:24:29,280 Speaker 1: secret sauce? Well, it's kind of it's got some patent 444 00:24:29,640 --> 00:24:31,919 Speaker 1: product around it. It It was knit on a seamless machine 445 00:24:31,920 --> 00:24:36,280 Speaker 1: into two pieces, so it's um got I guess most 446 00:24:36,359 --> 00:24:39,119 Speaker 1: underwear has a thing called a gusset, which is the 447 00:24:39,200 --> 00:24:44,160 Speaker 1: part that sits underneath the women's private parts, and of 448 00:24:44,200 --> 00:24:47,399 Speaker 1: those products are cotton and cotton. I'm here to kind 449 00:24:47,440 --> 00:24:49,560 Speaker 1: of break the myth on what cotton is. Cotton is 450 00:24:49,600 --> 00:24:51,800 Speaker 1: great to wear every day, but not when you sweat. 451 00:24:52,359 --> 00:24:56,600 Speaker 1: So I knit a total seamless gusset part which is 452 00:24:56,600 --> 00:24:59,480 Speaker 1: made of nylon and spandex and it has anti microbium 453 00:24:59,480 --> 00:25:03,119 Speaker 1: moisture WI properties in it, so it keeps you dry. Um. 454 00:25:03,160 --> 00:25:05,479 Speaker 1: It was just something that was missing in the market. 455 00:25:05,520 --> 00:25:07,399 Speaker 1: All right, this is where I'm going to get to 456 00:25:07,480 --> 00:25:09,600 Speaker 1: a place where Paul is going to be awkward. But 457 00:25:10,040 --> 00:25:11,720 Speaker 1: to me, I feel like this is key. Why not 458 00:25:11,800 --> 00:25:14,200 Speaker 1: just wear nothing? I mean, why not go commander and 459 00:25:14,240 --> 00:25:18,040 Speaker 1: just have your wicking pants and be done with it? Lisa, 460 00:25:18,160 --> 00:25:20,760 Speaker 1: it's from I think it comes down to preference. Um. 461 00:25:20,800 --> 00:25:23,000 Speaker 1: I think I look at it as a different having 462 00:25:23,040 --> 00:25:25,200 Speaker 1: another layer too. When you get on a spin bike. 463 00:25:25,760 --> 00:25:30,639 Speaker 1: Oh that's sorry. Um, sometimes you see too much when 464 00:25:30,680 --> 00:25:33,000 Speaker 1: you're in a yoga class, you know. I think it 465 00:25:33,240 --> 00:25:36,920 Speaker 1: just gives a little I think having that little extra 466 00:25:37,000 --> 00:25:39,480 Speaker 1: layer is important and quo is meant to not shift 467 00:25:39,560 --> 00:25:43,600 Speaker 1: and roll and you'll I can't wait till you try it. 468 00:25:43,920 --> 00:25:46,160 Speaker 1: I mean, but This actually goes the whole Lulu Lemon thing. 469 00:25:46,200 --> 00:25:48,240 Speaker 1: When there was a problem when you turned over and 470 00:25:48,240 --> 00:25:50,440 Speaker 1: you saw too much. Yeah, this was the reason why 471 00:25:50,440 --> 00:25:53,360 Speaker 1: you saw too much. Right, it is absolutely Let's talk 472 00:25:53,400 --> 00:25:57,320 Speaker 1: about the business, shall we? Alright, how long has the 473 00:25:57,359 --> 00:26:02,359 Speaker 1: company been in existence? And revenue and sales and numbers? 474 00:26:02,400 --> 00:26:06,080 Speaker 1: Let's go to numbers. Numbers, okay, Um, we launched about 475 00:26:06,119 --> 00:26:10,080 Speaker 1: a year ago. UM. Direct to consumer sales are doing 476 00:26:10,119 --> 00:26:13,080 Speaker 1: really well. Um. Wholesale has been challenging, just as the 477 00:26:13,080 --> 00:26:15,720 Speaker 1: business and retail, and you know, kind of I didn't 478 00:26:15,720 --> 00:26:18,160 Speaker 1: take a traditional route in wholesale. I kind of wanted 479 00:26:18,200 --> 00:26:22,520 Speaker 1: to go after the gym's um there. That way, it 480 00:26:22,560 --> 00:26:25,600 Speaker 1: became a point of purchase. I mean to you know, 481 00:26:25,720 --> 00:26:29,280 Speaker 1: Hanky Panky was a sixty million dollar panty program. It's 482 00:26:29,359 --> 00:26:31,480 Speaker 1: at the beauty about what hanky Panky was? Is it 483 00:26:31,560 --> 00:26:33,320 Speaker 1: sad at the register? I kind of in my mind 484 00:26:33,320 --> 00:26:35,639 Speaker 1: when I created Quo, I wanted that to be this 485 00:26:35,680 --> 00:26:38,439 Speaker 1: product where women would be, oh wow, I didn't know 486 00:26:38,480 --> 00:26:43,000 Speaker 1: I needed that. Why is it that the market for 487 00:26:43,240 --> 00:26:46,880 Speaker 1: men's wiking underwear I'm actually googling that right now, and 488 00:26:47,920 --> 00:26:51,639 Speaker 1: there's so much The options are incredibly nothing nothing up, 489 00:26:51,640 --> 00:26:54,920 Speaker 1: seam comes up. It's all of these lists of companies 490 00:26:54,960 --> 00:26:58,040 Speaker 1: that sell this everywhere, from your local uh, you know, 491 00:26:58,160 --> 00:27:01,679 Speaker 1: Haynes to everything else. Why is it that the market 492 00:27:01,760 --> 00:27:05,760 Speaker 1: is so vacant in the in the women's space at least? 493 00:27:05,800 --> 00:27:08,800 Speaker 1: I don't know, I mean the panty market. I mean 494 00:27:10,880 --> 00:27:12,920 Speaker 1: Victoria's secret a loan is going to be a twelve 495 00:27:13,000 --> 00:27:17,080 Speaker 1: billion dollar you know lingerie brand. I don't. I don't 496 00:27:17,080 --> 00:27:20,920 Speaker 1: know why no one's specifically done it here. I think 497 00:27:21,000 --> 00:27:22,760 Speaker 1: I think people have tried to do it, but it 498 00:27:22,800 --> 00:27:26,160 Speaker 1: gets lost in an assortment of a line. Whereas men, 499 00:27:27,359 --> 00:27:29,199 Speaker 1: for some reason, it just became the it was more 500 00:27:29,240 --> 00:27:31,920 Speaker 1: the under arm or effect. It was a base layer product. 501 00:27:32,359 --> 00:27:35,439 Speaker 1: How much is it twenty four dollars? And how have sales? 502 00:27:35,440 --> 00:27:37,840 Speaker 1: And sales have been picking up? Yeah, I mean we're 503 00:27:37,680 --> 00:27:43,000 Speaker 1: a grassroots you know, we're growing, um in stores or both. 504 00:27:43,080 --> 00:27:44,480 Speaker 1: So what kind of stores? I mean, are you in 505 00:27:44,480 --> 00:27:48,200 Speaker 1: a sports store or wearing them like Barry's boot camp, 506 00:27:48,320 --> 00:27:54,879 Speaker 1: yoga studios? Bandiers are really large. Um uh, fitness retailer 507 00:27:55,080 --> 00:27:59,000 Speaker 1: um Netta Porte picked us up. Yeah, it's growing. So 508 00:27:59,720 --> 00:28:01,560 Speaker 1: mrs sort of anathema to what you should be doing. 509 00:28:01,600 --> 00:28:03,399 Speaker 1: Which is marketing your brand, which is why you're here. 510 00:28:03,440 --> 00:28:06,760 Speaker 1: I'm sure. But if somebody did not have your underpants, 511 00:28:06,800 --> 00:28:10,400 Speaker 1: do you recommend commando or underpants? I would say, if 512 00:28:10,440 --> 00:28:13,959 Speaker 1: you don't have quote or something close, I would say, 513 00:28:14,040 --> 00:28:19,320 Speaker 1: go commando. It's better than wearing cotton to swedding. All right, Paul, 514 00:28:19,359 --> 00:28:22,240 Speaker 1: that's your answer. There you go. I'm not sure that 515 00:28:22,320 --> 00:28:27,359 Speaker 1: question and I woke up this morning, but now you go. 516 00:28:27,560 --> 00:28:29,240 Speaker 1: And by the way, you can wear quote on the 517 00:28:29,240 --> 00:28:31,440 Speaker 1: streets of New York too. When it's hot like that's 518 00:28:31,480 --> 00:28:34,400 Speaker 1: been the last two days. It's it's okay. It's not good. 519 00:28:34,600 --> 00:28:36,679 Speaker 1: It's not going to affect your health if it's just 520 00:28:36,760 --> 00:28:39,480 Speaker 1: meant to break a sweating So there you go. Yeah, 521 00:28:41,240 --> 00:28:45,280 Speaker 1: for your wife's day. Very good. Stacy Hunter Harrington, owner 522 00:28:45,280 --> 00:28:48,520 Speaker 1: of Quo Active, joining us live in our Bloomberg Interactive 523 00:28:48,560 --> 00:28:51,200 Speaker 1: Broker studio. Thank you so much for joining us. Wasn't 524 00:28:51,240 --> 00:28:55,400 Speaker 1: that fun? I survived? Honestly, I don't understand why right 525 00:28:55,440 --> 00:28:57,000 Speaker 1: that you used a good point. I mean, on the 526 00:28:57,000 --> 00:28:59,000 Speaker 1: men's side, there's so much product on the women's side 527 00:28:59,000 --> 00:29:00,720 Speaker 1: and it's not awkward or funny. And I think it 528 00:29:00,760 --> 00:29:03,360 Speaker 1: has to do with people being a little bit less 529 00:29:03,360 --> 00:29:07,160 Speaker 1: inclined to talk about female health in certain areas, uh 530 00:29:07,240 --> 00:29:09,320 Speaker 1: than male health in certain areas. I'm sorry not to 531 00:29:09,320 --> 00:29:11,959 Speaker 1: get on my soapbox, but I have to say this 532 00:29:12,000 --> 00:29:14,960 Speaker 1: does highlight that point yep and quote was filling that 533 00:29:15,080 --> 00:29:18,560 Speaker 1: niche so very well. Thanks for listening to the Bloomberg 534 00:29:18,600 --> 00:29:20,840 Speaker 1: P and L podcast. You can subscribe and listen to 535 00:29:20,840 --> 00:29:24,080 Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer. 536 00:29:24,480 --> 00:29:27,240 Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa 537 00:29:27,280 --> 00:29:29,880 Speaker 1: Abram woids I'm on Twitter at Lisa Abram Woyds one. 538 00:29:30,120 --> 00:29:32,760 Speaker 1: Before the podcast, you can always catch us worldwide. I'm 539 00:29:32,760 --> 00:29:33,600 Speaker 1: Bloomberg Radio