1 00:00:02,520 --> 00:00:15,960 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:14,160 --> 00:00:18,000 Speaker 2: Single best idea on an odd Monday. There's no other 3 00:00:18,040 --> 00:00:20,840 Speaker 2: way to put it. Odd for the newsflow, odd, for 4 00:00:20,920 --> 00:00:24,760 Speaker 2: the immediacy of the newsflow, which is through the weekend 5 00:00:24,800 --> 00:00:30,280 Speaker 2: news and then overnight Tokyo opening, the Asian markets news, 6 00:00:30,840 --> 00:00:35,920 Speaker 2: Taiwan dollar explodes in strength and beyond much more than that, 7 00:00:36,080 --> 00:00:40,120 Speaker 2: just other news. So it's such a clumsy, clumsy Monday. 8 00:00:40,159 --> 00:00:44,360 Speaker 2: We demanded clarity. Thank you, Dana Telsey. Really appreciate her 9 00:00:44,400 --> 00:00:46,959 Speaker 2: coming in in the state of retail in America, very 10 00:00:47,080 --> 00:00:51,600 Speaker 2: very informative and fluid and uncertain is the future for 11 00:00:51,680 --> 00:00:56,040 Speaker 2: retail America. Ian Lingoln was in with our question our 12 00:00:56,520 --> 00:01:00,160 Speaker 2: Global Wall Street Interview of the Day. Ian lingn here 13 00:01:00,480 --> 00:01:02,320 Speaker 2: on the bar market, he looks for the ten year 14 00:01:02,440 --> 00:01:06,000 Speaker 2: yield out there to move from the four point three 15 00:01:06,120 --> 00:01:09,440 Speaker 2: zero level down to three point six percent. Let's listen. 16 00:01:09,880 --> 00:01:13,080 Speaker 1: I do think tariffs complicate the calculus for lower rates, 17 00:01:13,160 --> 00:01:16,000 Speaker 1: but I do think that the Fed is ultimately going 18 00:01:16,080 --> 00:01:19,520 Speaker 1: to start the process of normalization again, but not until 19 00:01:19,520 --> 00:01:22,160 Speaker 1: we've got greater clarity on what the trade war really means. 20 00:01:22,200 --> 00:01:24,600 Speaker 1: And I do think tenure yields in this year at 21 00:01:24,600 --> 00:01:28,800 Speaker 1: three sixty five. Implicitly, because the President keeps changing the 22 00:01:28,880 --> 00:01:31,880 Speaker 1: rules or changing the trade dynamics, it's very difficult to 23 00:01:31,959 --> 00:01:35,200 Speaker 1: estimate what this all means for core PCE and therefore 24 00:01:35,280 --> 00:01:37,560 Speaker 1: the FED and the trajectory of the economy. I think 25 00:01:37,560 --> 00:01:41,080 Speaker 1: the one clear takeaway is that there has been a 26 00:01:41,240 --> 00:01:44,080 Speaker 1: concern raised about the dollars status as a reserve currency 27 00:01:44,240 --> 00:01:47,680 Speaker 1: and whether treasuries are still flight to quality assets, and 28 00:01:47,800 --> 00:01:50,720 Speaker 1: the recent price action suggests that those two still hold 29 00:01:50,760 --> 00:01:52,360 Speaker 1: for the time being. But that's going to be the 30 00:01:52,400 --> 00:01:54,200 Speaker 1: major question for the next several months. 31 00:01:54,320 --> 00:01:58,920 Speaker 2: Ian Lincoln with us there from BMO Capital Market. Sometimes 32 00:01:58,960 --> 00:02:02,280 Speaker 2: news comes out you expect it, you've been waiting for it. 33 00:02:02,320 --> 00:02:04,600 Speaker 2: That's the case with an Apple debt offering. I've been 34 00:02:04,640 --> 00:02:07,400 Speaker 2: waiting for it about nine months, two years since they 35 00:02:07,440 --> 00:02:10,680 Speaker 2: did their last offering. It's a triage of four if 36 00:02:10,680 --> 00:02:13,880 Speaker 2: this taping, unknown what those levels will be, and I'm 37 00:02:13,880 --> 00:02:16,320 Speaker 2: sure it'll be price up, yield lower, and very near 38 00:02:17,040 --> 00:02:22,000 Speaker 2: a treasury yield. We are so advantaged at Bloomberg Intelligence 39 00:02:22,400 --> 00:02:24,880 Speaker 2: to have Robert Shiftman with us and his team looking 40 00:02:24,919 --> 00:02:29,200 Speaker 2: at corporate at paper he published immediately on the known 41 00:02:29,360 --> 00:02:33,040 Speaker 2: and the unknown of the Apple transaction here, Robert Shiftman 42 00:02:33,360 --> 00:02:34,639 Speaker 2: of Bloomberg Intelligence. 43 00:02:34,800 --> 00:02:37,280 Speaker 3: It sort of goes back to my early days at 44 00:02:38,120 --> 00:02:42,320 Speaker 3: math Camp. Their weighted average cost of capital is dominated 45 00:02:42,440 --> 00:02:45,400 Speaker 3: by their cost of equity, which is about nine and 46 00:02:45,440 --> 00:02:49,120 Speaker 3: a quarter percent, and their weighted average cost of debt 47 00:02:49,200 --> 00:02:51,960 Speaker 3: is effectively zero. When you have a three trillion dollar 48 00:02:52,240 --> 00:02:55,600 Speaker 3: equity market cap, that the cost of debt is nothing, 49 00:02:56,280 --> 00:02:58,960 Speaker 3: and that's why they keep one hundred billion dollars of 50 00:02:59,120 --> 00:03:02,120 Speaker 3: debt on the book. So it makes math sense to 51 00:03:02,240 --> 00:03:05,520 Speaker 3: borrow money and buy back more shares or give it 52 00:03:05,520 --> 00:03:08,560 Speaker 3: away and dividends, and that's what they do. The real 53 00:03:08,560 --> 00:03:11,600 Speaker 3: issue with Apple is they have a problem, and their 54 00:03:11,639 --> 00:03:14,400 Speaker 3: problem is they make too much money. They have one 55 00:03:14,520 --> 00:03:17,400 Speaker 3: hundred billion dollars of annual free cash flow, so it 56 00:03:17,560 --> 00:03:21,799 Speaker 3: keeps flowing in. So what do they eventually do with it? Well, 57 00:03:21,880 --> 00:03:23,960 Speaker 3: they give it away, But you know, you borrow a 58 00:03:24,000 --> 00:03:25,919 Speaker 3: little bit at a time, and for Apple, that's five 59 00:03:26,000 --> 00:03:27,160 Speaker 3: or ten billion dollar chunks. 60 00:03:27,360 --> 00:03:30,400 Speaker 2: Robert Schiffman on short notice there and the Apple transaction. 61 00:03:30,840 --> 00:03:34,840 Speaker 2: Look to our Bloomberg Intelligence team and also to Bloomberg 62 00:03:34,920 --> 00:03:39,640 Speaker 2: News for the publication of that transaction, always anticipated on 63 00:03:39,840 --> 00:03:43,800 Speaker 2: Wall Street. Thank you for your listening on commute. Particular 64 00:03:44,000 --> 00:03:47,360 Speaker 2: thank you to those in serious XEM Channel one twenty 65 00:03:47,400 --> 00:03:52,200 Speaker 2: one greatly appreciate that. On YouTube, building every day subscribe 66 00:03:52,400 --> 00:03:56,200 Speaker 2: to Bloomberg Podcasts. Just can't say enough about that. And 67 00:03:57,000 --> 00:04:03,880 Speaker 2: on YouTube podcasts, this is single best idea.