WEBVTT - Anglo Rejects BHP Again , Hwang Trial 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.040 Eastern on Apple Card playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.520 or watch us live on YouTube. 0:00:25.079 --> 0:00:27.280 An m and a trade up you on the blocks 0:00:27.600 --> 0:00:28.280 on the rocks here. 0:00:28.400 --> 0:00:33.000 Anglo American rebuffed a sweetened takeover offer from BHP Group 0:00:33.000 --> 0:00:36.800 divided at about forty three billion dollars US, leaving it 0:00:36.880 --> 0:00:39.080 up to the Australia minor to make a better bid 0:00:39.479 --> 0:00:41.920 or lose out of what could be the industry's biggest 0:00:41.960 --> 0:00:42.840 deal in a decade. 0:00:42.880 --> 0:00:44.280 Let's bring in an expert on this stuff. 0:00:44.280 --> 0:00:48.199 Alon Ulsha, Bloomberg Intelligence senior Metals and mining analyst. 0:00:48.560 --> 0:00:50.760 He joins us from London. I did not hire him. 0:00:50.800 --> 0:00:55.160 He's a recent simple check him out here, Aylon, what 0:00:55.200 --> 0:00:55.760 do you got for us? 0:00:55.760 --> 0:00:57.800 What's going on in the global mining space? He says, 0:00:57.800 --> 0:00:58.600 with these names. 0:01:00.960 --> 0:01:04.400 Looking for Copper is the most coveted metal out there 0:01:04.400 --> 0:01:08.520 in the mining industry. It's in short supply, it's expensive 0:01:08.560 --> 0:01:11.000 to build new minds, it's risky to build new mines, 0:01:11.400 --> 0:01:15.040 and demand is set to climb significantly because of applications 0:01:15.080 --> 0:01:18.880 around the energy transition. So mineers are looking for opportunities 0:01:18.959 --> 0:01:22.120 to grow exposure, and that's one of the main reasons 0:01:22.160 --> 0:01:25.520 Beuchp's gone after Anglo American, which Anglo American has been 0:01:25.560 --> 0:01:27.560 around for a while. They've got a bunch of assets 0:01:27.560 --> 0:01:29.880 in they're not just copper. But it's always been a 0:01:29.920 --> 0:01:33.240 difficult business to buy because there's some assets in there 0:01:33.280 --> 0:01:37.119 that are problematic, that are unwanted. They've effectively served as 0:01:37.200 --> 0:01:41.880 poison pulls for a takeover. But buchb has now come 0:01:41.920 --> 0:01:45.760 with us, but it's structured in any interesting way, basically 0:01:45.840 --> 0:01:48.720 saying we'll buy you, but you need to emerge some 0:01:48.800 --> 0:01:51.840 of your South African assets, spin them off to your shareholders, 0:01:51.920 --> 0:01:52.960 and we'll pick up the rest. 0:01:53.600 --> 0:01:56.160 And that therein lies the problem. Like that's why no 0:01:56.200 --> 0:01:59.000 one really wants that for Anglo American, right, because they're saying, 0:01:59.040 --> 0:02:01.280 you go spin this off, then will buy the rest 0:02:01.280 --> 0:02:04.480 of your company. Why don't they just buy the whole 0:02:04.520 --> 0:02:05.480 company and then. 0:02:05.400 --> 0:02:06.000 Sell it off. 0:02:07.280 --> 0:02:10.480 Yeah, you're absolutely right. It's one of the reasons shareholders 0:02:10.800 --> 0:02:13.920 don't seem to like it. It's a complicated structure. It 0:02:14.200 --> 0:02:17.400 basically introduces a whole lot of risk for those shareholders 0:02:17.400 --> 0:02:21.720 that will be inheriting these assets execution risk, value risk. 0:02:22.520 --> 0:02:24.639 But for BHP, it's also a headache that they don't 0:02:24.639 --> 0:02:26.400 want to absorb themselves. I don't want to take it 0:02:26.440 --> 0:02:30.239 on there effectively would be taking on potentially the value 0:02:30.280 --> 0:02:34.200 trap that has been plaguing Anglo American for so many years. 0:02:35.280 --> 0:02:38.359 And remember BHP kind of has withdrawn from South Africa. 0:02:39.600 --> 0:02:44.119 The BHP was until not so recently BHP Bulletin and 0:02:44.160 --> 0:02:47.600 then and that was an acquisition of a business, a 0:02:47.680 --> 0:02:50.840 merger with the business that had a huge South African presence, 0:02:50.919 --> 0:02:52.639 and then they spun it off in South thirty two. 0:02:52.919 --> 0:02:54.880 So there goes to South African assets. So they don't 0:02:54.919 --> 0:02:57.600 really want to be there, and it's kind of understandable. 0:02:57.680 --> 0:02:59.960 South Africa is a difficult place to operate at the moment. 0:03:01.240 --> 0:03:04.440 So for them yourself, well, I. 0:03:04.480 --> 0:03:08.480 Know, I do feel bad saying it, but it's it's 0:03:08.520 --> 0:03:10.920 the truth. It's the truth, and we speak the truth. 0:03:10.760 --> 0:03:10.840 And. 0:03:13.800 --> 0:03:17.160 So it's yeah, I think it's just it's a tough 0:03:17.240 --> 0:03:19.400 it's a tough one for them to get the hit around. 0:03:19.639 --> 0:03:20.799 I think that in. 0:03:20.840 --> 0:03:24.680 Essence, what this just also boils down to, is the 0:03:24.680 --> 0:03:29.280 the money made in discovering new copper assets is minimal, 0:03:29.360 --> 0:03:31.560 Like the hurdle rates really high. So the way to 0:03:31.600 --> 0:03:35.160 do that is you have to buy competitors. It's very 0:03:35.200 --> 0:03:37.840 difficult to get the kind of scale right. Building a 0:03:37.880 --> 0:03:40.200 mind is really hard. There are a lot of different 0:03:40.240 --> 0:03:42.600 labor laws in different countries. Look what happened in South 0:03:42.600 --> 0:03:45.000 America all all of a sudden, like mining just was like, 0:03:45.080 --> 0:03:45.760 know what, we're good? 0:03:45.800 --> 0:03:47.320 Like you can't take any copper out of here? I 0:03:47.320 --> 0:03:50.160 think that was in Peru. Does that just speak to 0:03:50.200 --> 0:03:53.080 that problem? And there? What is? What's the other solution 0:03:53.200 --> 0:03:53.440 to that? 0:03:53.480 --> 0:03:56.040 The geopolitical risk premium for copper is a very different 0:03:56.080 --> 0:03:58.200 proposition than I feel like it's been the last few decades. 0:03:59.320 --> 0:04:02.920 Yeah, that that's absolutely right. I mean, geopolitics has made 0:04:02.920 --> 0:04:06.560 things more difficult, but it's not really new. It's been 0:04:06.560 --> 0:04:09.720 a bit of a slow burn issue. It's also the 0:04:09.800 --> 0:04:13.720 reality is, you know, geologically, it's just it's tough to 0:04:13.760 --> 0:04:17.320 find the deposits that are close to surface in really 0:04:17.360 --> 0:04:20.400 high grades. And those deposits tend not to be in 0:04:20.440 --> 0:04:22.600 the US or Australia. They tend to be in some 0:04:22.640 --> 0:04:29.279 tougher jurisdictions like the Congo, the DRC or in Argentina, 0:04:29.480 --> 0:04:32.880 which is politically seems to be always always in flex. 0:04:33.000 --> 0:04:34.480 So if you want to go after these assets, you 0:04:34.480 --> 0:04:37.440 would have built exposure and build these minds. You need 0:04:37.480 --> 0:04:39.120 to take on that risk, and as you say, the 0:04:39.200 --> 0:04:42.880 hurdle rate needs to be is very high, and at 0:04:42.920 --> 0:04:46.440 current copper prices it probably starts to make sense. But 0:04:46.680 --> 0:04:49.600 just a few months ago before kind of the resurgence 0:04:49.640 --> 0:04:53.000 we'd seen when copper was trading, you know, eight and 0:04:53.000 --> 0:04:57.120 a half thousand dollars a ton minusers couldn't make the 0:04:57.160 --> 0:05:00.960 economics work. Now it's a little bit easy at close 0:05:01.000 --> 0:05:03.560 to ten thousand dollars a ton, but even still there 0:05:03.560 --> 0:05:05.839 in these questions as to how sustainable that price is 0:05:05.880 --> 0:05:06.560 in the near term. 0:05:06.880 --> 0:05:09.080 So Ellen, you know, I'm just putting on my investment 0:05:09.080 --> 0:05:12.599 banker cap here. I think Anglo Americans got a great position. 0:05:12.680 --> 0:05:14.600 They don't have to do anything, and they don't. If 0:05:14.640 --> 0:05:16.520 I were them, I'd be like, no, if you guys 0:05:16.520 --> 0:05:19.200 want us, buy the whole thing and then you deal 0:05:19.240 --> 0:05:22.440 with it, you know, pay me a premium, or I'll 0:05:22.480 --> 0:05:25.520 just stay with my copper. Here, I mean there's really 0:05:25.600 --> 0:05:27.680 no reason for Anglo to cave in here, right. 0:05:28.760 --> 0:05:31.279 Yeah, that seems to be the way they're going for 0:05:31.360 --> 0:05:33.000 the time being. But there is a lot of pressure 0:05:33.000 --> 0:05:35.240 on Anglo Americans. So at the end of last year 0:05:35.279 --> 0:05:38.520 they came out with an investor update. You know, Anglo 0:05:38.520 --> 0:05:42.000 American before the end of last year, before December, was 0:05:42.040 --> 0:05:44.640 the go to play in the mining space for growth. 0:05:44.640 --> 0:05:47.200 They had a great growth profile, that had good projects, 0:05:47.200 --> 0:05:49.800 that had been investing through the cycle, so growth was 0:05:49.800 --> 0:05:51.560 coming in at the right point in the cycle when 0:05:51.560 --> 0:05:54.839 most of their peers had pulled back and had a 0:05:54.839 --> 0:05:57.440 bit of a growth gap. Then came December last year 0:05:57.560 --> 0:06:02.080 investor update and they slashed guidance the board. Share price 0:06:02.240 --> 0:06:04.359 was decimated, and that's why we're in the position that 0:06:04.360 --> 0:06:08.120 we're in now, and it's it's it's shaken the credibility 0:06:08.600 --> 0:06:10.719 or shake the confidence of investors in the in the 0:06:10.760 --> 0:06:15.920 credibility of management. So yes, they can reject this, but 0:06:15.920 --> 0:06:18.039 but the onuses will then to come up with a 0:06:18.160 --> 0:06:22.600 credible strategy to unlock the value in the stock. And 0:06:22.640 --> 0:06:25.440 that's probably actually going to happen tomorrow in some way, 0:06:25.440 --> 0:06:28.360 shape or form. Where they said they are coming out 0:06:28.400 --> 0:06:31.840 with their standalone strategy. So that'll be really interesting to watch. 0:06:31.880 --> 0:06:33.560 All right, we'll circle back with you and see what 0:06:33.600 --> 0:06:35.920 the see what the market thinks about that. Alon Ulsha 0:06:36.200 --> 0:06:40.520 he's his senior Medals and mining analyst Bloomberg Intelligence in London, 0:06:40.560 --> 0:06:41.960 the Pride of South Africa. 0:06:42.040 --> 0:06:42.919 Although it's tough. 0:06:42.760 --> 0:06:44.080 To be a miner, and so I don't know you 0:06:44.160 --> 0:06:45.960 knew all about the mining stuff too, You're not. Oh, 0:06:46.320 --> 0:06:48.280 you're just at the global energy space. 0:06:48.160 --> 0:06:48.560 You know what. 0:06:48.760 --> 0:06:51.560 No, I can all explain you that too, for sure. 0:06:51.760 --> 0:06:54.640 I started in gold, you started that. I went to copper, 0:06:54.640 --> 0:06:55.479 then I went to oil. 0:06:55.839 --> 0:06:57.880 All right, very good stuff. You learn stuff every day. 0:06:57.880 --> 0:07:00.000 Here. 0:06:59.680 --> 0:07:03.600 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:03.680 --> 0:07:07.200 weekdays at ten am Eastern on applecar Play and Android 0:07:07.240 --> 0:07:10.040 Auto with the Bloomberg Business Act. You can also listen 0:07:10.160 --> 0:07:13.240 live on Amazon Alexa from our flagship New York station 0:07:13.600 --> 0:07:16.360 Just Say Alexa playing Bloomberg eleven thirty. 0:07:18.280 --> 0:07:20.239 The only big story that we're following is Paul alluded 0:07:20.240 --> 0:07:21.280 to Happy Monday everybody. 0:07:21.280 --> 0:07:22.360 By the way, is. 0:07:22.280 --> 0:07:26.000 Bill Huang's trial on our Keego's capital management. The real issue, 0:07:26.040 --> 0:07:28.600 of course, is that the accusation and what the prosecutors 0:07:28.600 --> 0:07:31.520 are looking at is if he actively lied to the 0:07:31.560 --> 0:07:34.600 banks that were helping him fund these swaps to bet 0:07:34.640 --> 0:07:38.680 on basically ten stocks that came spectaclarly crashing down. 0:07:38.480 --> 0:07:40.480 On him in the last few years. 0:07:40.720 --> 0:07:43.480 Janey Basik is Bloomberg television anchor and she is joining 0:07:43.520 --> 0:07:46.280 us outside of the New York City Federal District Court House. 0:07:46.320 --> 0:07:49.320 Shanellie, what's at stake in this trial? 0:07:52.160 --> 0:07:54.360 Well, there's a lot at stake for Bill Lang and 0:07:54.400 --> 0:07:58.280 of course his chief financial officer, Patrick Halligan, who we're 0:07:58.320 --> 0:08:01.840 being accused here by regulator and of course the Justice 0:08:01.880 --> 0:08:06.760 Department of manipulating the markets of racketeering, wires fraud and 0:08:06.800 --> 0:08:09.760 securities fraud are in particular the charges that they're facing. 0:08:10.080 --> 0:08:13.320 They could face significant jail time depending on how this 0:08:13.560 --> 0:08:16.120 trial goes. Of course they are planning to defend themselves 0:08:16.200 --> 0:08:20.320 quite vigorously here. But there's also what happened, right, We 0:08:20.440 --> 0:08:22.960 know a lot about what happened in the sense of 0:08:23.080 --> 0:08:26.000 the banks had lost billions of dollars off the heels 0:08:26.040 --> 0:08:30.000 of this alex. But remember, as a family office, there 0:08:30.480 --> 0:08:35.440 was not required by means of disclosure for par Kagos 0:08:35.480 --> 0:08:38.880 and Bill Wang in the initial indictment. You did see 0:08:39.120 --> 0:08:42.880 prosecutors not to that fact, but said they did lie 0:08:42.920 --> 0:08:46.240 to the banks and indeed attempt to manipulate the market. 0:08:46.360 --> 0:08:49.240 So it will be a trial unlike we've really seen 0:08:49.280 --> 0:08:50.840 before in the world of white collar crime. 0:08:51.440 --> 0:08:51.880 Chanale. 0:08:51.960 --> 0:08:54.160 The best I can tell from just reading into the 0:08:54.280 --> 0:08:57.760 story is that mister Wang's defense is basically, hey, I'm 0:08:57.760 --> 0:08:59.360 not responsible for the other. 0:08:59.200 --> 0:09:01.760 Sides losses here. They're big boys too. 0:09:02.160 --> 0:09:06.160 Does that does that have mary? 0:09:06.559 --> 0:09:09.400 That is a fair assessment here if you think about 0:09:09.440 --> 0:09:11.360 Credit Suis in its own right, this is not the 0:09:11.360 --> 0:09:14.160 only place they've lost significant money tied. 0:09:13.920 --> 0:09:14.600 To a client. 0:09:15.000 --> 0:09:17.080 You have the banks saying that they were lied to, 0:09:17.440 --> 0:09:20.200 but you have Bill Hung saying, well, okay, his defense 0:09:20.280 --> 0:09:23.080 might bring up Credit Suise his own risk management report 0:09:23.360 --> 0:09:26.360 outlining its own failures in risk management at this point 0:09:26.360 --> 0:09:29.760 in time, So we can see that scuffle between the 0:09:29.800 --> 0:09:32.880 banks and Bill Hung's defense come up into this course 0:09:32.920 --> 0:09:33.520 of this child. 0:09:33.960 --> 0:09:34.160 Yeah. 0:09:34.240 --> 0:09:36.800 See, I think that's so interesting because it really is 0:09:36.840 --> 0:09:41.160 about the banks helping buy a COMCBS issue the shares, right, 0:09:41.200 --> 0:09:44.480 that's one part of investment banking that led to the selloff, 0:09:44.520 --> 0:09:46.200 that led to the margin calls that led to all 0:09:46.240 --> 0:09:47.079 of this unroundling. 0:09:47.160 --> 0:09:49.760 So it's like the two sides shouldn't talk to each other. 0:09:49.720 --> 0:09:51.480 The ones that are working with Bill Huang and the 0:09:51.520 --> 0:09:54.040 ones that are helping buy ACOMCBS issue shares. But in 0:09:54.080 --> 0:09:56.400 this case they probably should have been able to talk 0:09:56.440 --> 0:09:58.120 to each other to see what each other was doing. 0:10:00.240 --> 0:10:03.120 Yeah, let's go back and talk a little bit about 0:10:03.360 --> 0:10:04.320 what prompted all of this. 0:10:04.440 --> 0:10:06.640 It's the idea that he became. 0:10:06.400 --> 0:10:09.520 A family office with an expected one point five billion 0:10:09.760 --> 0:10:13.400 in capital to more than thirty five billion in capital 0:10:13.440 --> 0:10:15.920 in a very short amount of time. And the reason 0:10:15.960 --> 0:10:19.560 he was able to amass these massive positions was really 0:10:19.600 --> 0:10:23.160 buying a lot of these shares on swap agreements. And 0:10:23.480 --> 0:10:28.000 what happened was he had amassed size so sizable in 0:10:28.160 --> 0:10:31.559 ViacomCBS that when the banks went on behalf of the 0:10:31.600 --> 0:10:34.680 company to try to offload or sell more shares on 0:10:34.720 --> 0:10:38.439 behalf of Viacom, that's when that created pressure on the shares. 0:10:38.600 --> 0:10:42.000 That's when the banks started to really look at our chagos, 0:10:42.080 --> 0:10:44.679 how much they were holding their exposures and the needs 0:10:44.679 --> 0:10:49.040 for potential margin calls. Interestingly, on Monday, after those opening arguments, 0:10:49.120 --> 0:10:52.160 we may hear from the first witness for this trial, 0:10:52.360 --> 0:10:56.800 and it may be a counter party at UBS that 0:10:57.000 --> 0:11:00.960 was behind one of those first early calls that really 0:11:01.240 --> 0:11:03.880 talked through those margin calls and how quickly our Chagos 0:11:03.920 --> 0:11:05.880 would be able to put those up. So what do 0:11:06.000 --> 0:11:07.720 they know and not know? What do they need to 0:11:07.760 --> 0:11:09.520 know and what do they need to know by law? 0:11:09.640 --> 0:11:12.600 I think that that's the critical part of this discussion here. 0:11:12.600 --> 0:11:14.520 He Shanan, just real quickly, what's the time you hear? 0:11:14.559 --> 0:11:16.199 How long will this trial is? How long is it 0:11:16.280 --> 0:11:17.040 expected to last? 0:11:18.960 --> 0:11:20.800 It will be weeks. It will be a number of weeks. 0:11:20.800 --> 0:11:23.199 So we're expected to hear not only from two of 0:11:23.240 --> 0:11:26.640 his former employees, remember two of them also already pled guilty, 0:11:27.040 --> 0:11:29.560 but there could be a list of more than two 0:11:29.800 --> 0:11:34.560 dozen people from counterparties these banks that might step forward 0:11:34.559 --> 0:11:35.480 in the wake of this trial. 0:11:35.760 --> 0:11:38.120 In the course of this trial, Hi, shanaa Bassek, thank 0:11:38.160 --> 0:11:39.520 you so much for joining a Shana on the basics. 0:11:39.559 --> 0:11:40.880 She's downtown at the courthouse. 0:11:42.000 --> 0:11:46.040 Our Chagos capital trial starting today could take several weeks. 0:11:46.440 --> 0:11:49.760 Big dollars involved a lot of big important investment banks 0:11:49.880 --> 0:11:50.679 in Vahome to here. 0:11:50.760 --> 0:11:52.760 But this was certainly the news. 0:11:52.920 --> 0:11:55.959 Oh my gosh, it was spectacular. I mean just I've 0:11:56.000 --> 0:11:57.120 never seen anything like that before. 0:11:57.360 --> 0:12:00.199 No, And of course, you know, the biggest manifestation is 0:12:00.240 --> 0:12:04.080 it just contributed didn't cost, but it contributed to the 0:12:04.080 --> 0:12:06.320 demise of Credit Swiss, my former employer. 0:12:08.280 --> 0:12:12.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:12.240 --> 0:12:15.319 weekdays at ten am Eastern on Affo card playing Android 0:12:15.360 --> 0:12:18.440 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:18.520 --> 0:12:22.360 you get your podcasts, or watch us live on YouTube. 0:12:23.520 --> 0:12:26.400 Alex Steel alongside Paul Sweeney. It's a Bloomberg Intelligence Radio. 0:12:26.400 --> 0:12:28.920 We cover all the top news in finance and economics 0:12:28.920 --> 0:12:31.719 with our analysts worldwide. They cover two thousand companies and 0:12:31.720 --> 0:12:34.320 one hundred and thirty industries. We also get the best 0:12:34.360 --> 0:12:36.880 in the brightest to come into the Bloomberg studio on 0:12:36.960 --> 0:12:40.040 a Monday and give us their take on the markets. 0:12:40.080 --> 0:12:42.360 And for that we go to Dryden Pence see io 0:12:42.440 --> 0:12:46.600 at Pence Wealth Management. Now typically Dryden, you're in California. 0:12:46.400 --> 0:12:47.000 That's correct. 0:12:47.559 --> 0:12:50.240 You know, why are you here? Isn't that fun for you? 0:12:50.600 --> 0:12:51.199 Good for us? 0:12:51.480 --> 0:12:51.800 Well? 0:12:51.880 --> 0:12:54.320 Yeah, Now I come to New York about once a quarter. 0:12:54.360 --> 0:12:56.280 We have a lot of you know folks in this area, 0:12:56.400 --> 0:12:58.600 and so it's good to come here. So I'm really 0:12:58.600 --> 0:12:59.480 happy to be here today. 0:12:59.520 --> 0:13:01.679 Thank you for we welcome to you yesterday with rain 0:13:01.760 --> 0:13:03.640 and coldness, so you're welcome on that point. 0:13:04.040 --> 0:13:05.840 So there was a great piece in the Bloomberg. 0:13:05.880 --> 0:13:07.680 They talked about how S and B five hundred companies 0:13:07.720 --> 0:13:09.760 are on track to post their best quarterly earning this 0:13:09.880 --> 0:13:12.760 relative to expectations in at least two years, because nothing 0:13:12.880 --> 0:13:17.319 disastrous happened, we didn't get that recession. And this dovetails 0:13:17.320 --> 0:13:19.800 with your note saying that this year has been much 0:13:19.800 --> 0:13:20.920 ado about nothing. 0:13:21.400 --> 0:13:23.720 It's it is. I mean, people kind of dance on 0:13:23.760 --> 0:13:25.440 the head of the Fed's pen. But I mean the 0:13:25.440 --> 0:13:28.640 point is is that if you look at basic earnings, 0:13:28.840 --> 0:13:31.120 you know we're probably going to have record earnings across 0:13:31.120 --> 0:13:33.480 the S and P five hundred. And we started off 0:13:33.520 --> 0:13:36.880 with the Magnificent seven leading the market, but now the 0:13:36.880 --> 0:13:39.760 rest of them are beginning to catch up. And and 0:13:39.800 --> 0:13:41.400 I think that we're going to see this four to 0:13:41.480 --> 0:13:44.320 ninety three continue to spread out and go, and that 0:13:44.360 --> 0:13:46.720 earnings are going to It's basically the beat goes on 0:13:46.960 --> 0:13:49.000 every time we come where the beat goes on. 0:13:49.559 --> 0:13:52.280 What's the pin on your lapel? People on radio can't 0:13:52.280 --> 0:13:54.199 see it, but what's the pin on your lapel? That's 0:13:54.240 --> 0:13:56.800 a bronze star, Bronze star US Army. 0:13:57.000 --> 0:13:59.320 That's correct. Thank you for your service, my friend, to. 0:13:59.440 --> 0:14:00.760 Thank you for your taxes. 0:14:00.840 --> 0:14:03.480 Yeah, exactly, that's what I'm good at. You don't want 0:14:03.480 --> 0:14:04.280 me in a foxhole. 0:14:04.320 --> 0:14:05.400 You want me writing check. 0:14:05.400 --> 0:14:09.320 You write those checks the way you buy body armor. 0:14:09.320 --> 0:14:11.719 And that says soldier's life. So thank you very much. 0:14:11.760 --> 0:14:14.719 All right, total spent this earning cycle. We're just kind 0:14:14.720 --> 0:14:17.160 of getting through. We'll here from some of the retailers here, 0:14:17.360 --> 0:14:19.320 anything that kind of knocked you off your game one 0:14:19.320 --> 0:14:20.800 way or the other from this earning cycle. 0:14:20.880 --> 0:14:23.000 Well, in the earning cycle, of course, we've got Walmart 0:14:23.000 --> 0:14:25.040 coming up at the at the end of the at 0:14:25.080 --> 0:14:25.800 the end of the week here. 0:14:25.960 --> 0:14:30.720 But I think that what we're seeing is that, you know, consumers. 0:14:30.120 --> 0:14:33.440 Are continuing to spend uh and and that's beginning to 0:14:33.440 --> 0:14:37.040 transfer into earnings. Everybody, you know, lowered their expectations and 0:14:37.120 --> 0:14:39.160 kind of put them down, and so we're coming in 0:14:39.160 --> 0:14:41.400 this thing. It's it's an easy beat cycle, and we 0:14:41.440 --> 0:14:44.200 continue to do that. But consumer, you know, yeah, wages 0:14:44.240 --> 0:14:46.200 are at an all time high. You know, earnings are 0:14:46.240 --> 0:14:48.560 at all time high. We've got more people working than 0:14:48.600 --> 0:14:51.560 ever before, and that drives consumers. And if you give 0:14:51.600 --> 0:14:54.560 an American consumer money, they're. 0:14:54.400 --> 0:14:55.080 Going to spend it. 0:14:55.360 --> 0:14:57.960 So I think that we're continuing to see that across retail. 0:14:58.320 --> 0:14:59.360 We'll continue to see that. 0:14:59.560 --> 0:15:02.280 But it but people break break up. You have certain 0:15:02.320 --> 0:15:03.240 amount of trade downs. 0:15:03.240 --> 0:15:05.920 When we mentioned the Walmart piece of it is that 0:15:06.000 --> 0:15:10.280 the largest fastest growing group of Walmart shoppers are folks 0:15:10.280 --> 0:15:12.280 that make over one hundred thousand dollars a year really 0:15:12.320 --> 0:15:13.000 and so oh. 0:15:12.960 --> 0:15:14.800 Yeah, and then they get in there. 0:15:14.960 --> 0:15:17.400 They get in there because you know, they come for groceries. 0:15:17.520 --> 0:15:19.560 You know, inflation is kicked up groceries quite a bit. 0:15:19.600 --> 0:15:22.440 People feel that they go in and then you know, 0:15:22.600 --> 0:15:25.640 so there really is an opportunity for continued increase in 0:15:25.720 --> 0:15:28.280 market share, and so you kind of get, you know, 0:15:28.280 --> 0:15:30.480 then you get the aspirational side is you have you know, 0:15:30.760 --> 0:15:32.360 the very high end is doing well. 0:15:32.440 --> 0:15:34.760 I mean, gosh, I. 0:15:34.760 --> 0:15:37.160 Mean forty percent of consumer spinning is done by the 0:15:37.280 --> 0:15:38.600 top twenty percent of the population. 0:15:38.800 --> 0:15:41.640 So yeah, and Torsten Slot had a great chart out 0:15:42.080 --> 0:15:43.040 just and he kind of. 0:15:42.960 --> 0:15:45.480 Recycles his chart every once in a while over at Apollo. 0:15:45.240 --> 0:15:47.920 And it's basically those that have either no mortgage on 0:15:47.960 --> 0:15:50.880 their home or have a mortgage below four percent, which 0:15:50.920 --> 0:15:54.480 to that point just freeze up all that cash. 0:15:54.760 --> 0:15:57.040 Exactly if your if your mortgage is at four if 0:15:57.040 --> 0:15:58.920 you have a thirty year mortgage at four percent, you 0:15:58.960 --> 0:16:02.320 don't really work worry too much about mortgages going to 0:16:02.360 --> 0:16:03.120 seven or eight percent. 0:16:03.120 --> 0:16:04.640 Now, if you're a millennial trying to be a first 0:16:04.680 --> 0:16:07.600 time home buyer, your brain's going to explode. But for 0:16:07.680 --> 0:16:10.560 everybody else it's really not as big an issue. 0:16:10.600 --> 0:16:12.520 One of the names on your list is really interesting 0:16:12.520 --> 0:16:15.000 to me, which is Apple, because for the first time 0:16:15.160 --> 0:16:18.880 in a collective memory of a lot of investors, there's 0:16:19.040 --> 0:16:20.760 serious and fundamental headwinds for Apple. 0:16:20.800 --> 0:16:23.240 And if you bull it down to one word's China. 0:16:23.440 --> 0:16:25.800 How do you guys get comfortable with that? We get comforted. 0:16:25.960 --> 0:16:30.000 But I think people underestimate the massive size of Apple. 0:16:30.120 --> 0:16:33.080 If you take a look at the app Store, that's 0:16:33.120 --> 0:16:36.280 an environment of two point two billion active users, and 0:16:36.360 --> 0:16:39.640 they've got two billion active devices that are out there, 0:16:39.720 --> 0:16:41.920 So that's nine hundred million people more than the entire 0:16:41.920 --> 0:16:45.400 population of China. Why so sometimes when you think, okay, 0:16:45.440 --> 0:16:47.720 it's a China story, now it's a global story. 0:16:48.000 --> 0:16:50.200 You know, if you take a look at the app Store, the. 0:16:50.200 --> 0:16:53.200 Total merchandise value that's traded on that is over one 0:16:53.200 --> 0:16:58.600 point one trillion dollars. It's bigger than the Netherlands. 0:16:58.440 --> 0:17:00.320 It's amazing how big it really is. 0:17:00.840 --> 0:17:02.400 So, I mean, I guess the issue there for for 0:17:02.480 --> 0:17:05.399 Apple is, you know, it's can they manage around China? 0:17:05.920 --> 0:17:08.119 Number one? And I think there are a lot of 0:17:08.119 --> 0:17:10.560 people that are on both sides. And then the number two, 0:17:10.640 --> 0:17:12.640 what is their AI strategy? Again, do you think they're 0:17:12.680 --> 0:17:15.119 a tech company that has to have an AI strategy 0:17:15.160 --> 0:17:17.560 because really, at the moment, I don't know. 0:17:17.800 --> 0:17:21.160 I think they have the luxury a because they're so big, 0:17:21.400 --> 0:17:23.439 they have the luxury to take a little time to 0:17:23.520 --> 0:17:26.280 make sure it's right. I mean, Apple doesn't make many mistakes, 0:17:26.560 --> 0:17:29.080 and I think that that you know, they really they're 0:17:29.119 --> 0:17:30.960 really to use of military parliance. 0:17:31.080 --> 0:17:32.520 They're really about you. 0:17:32.480 --> 0:17:37.199 Know, ready aim fire, and so I think rather than 0:17:37.280 --> 0:17:40.280 jump into just anything AI, they want to get it right. 0:17:40.680 --> 0:17:43.200 And I think that's why people trust that brand, They 0:17:43.200 --> 0:17:46.040 trust equipment, they trust all those things. So you know 0:17:46.080 --> 0:17:47.919 the fact that they're not rushing in to be the 0:17:47.960 --> 0:17:49.960 exact leader on integration. 0:17:49.600 --> 0:17:51.360 Of AI means that they're going to try to get 0:17:51.359 --> 0:17:51.680 it right. 0:17:51.920 --> 0:17:53.280 And I think that that's going to be important. 0:17:53.320 --> 0:17:55.840 Well, you mentioned Walmart earlier. We talked about that. What 0:17:55.960 --> 0:17:56.720 about Amazon? 0:17:57.000 --> 0:17:59.880 What why do you own a stock like Amazon? 0:18:00.960 --> 0:18:04.640 You know, Amazon gets about you know, forty cents out 0:18:04.680 --> 0:18:07.720 of every dollar, four out of ten, you know, of 0:18:08.040 --> 0:18:12.119 everything online. And so when you think about how massively 0:18:12.240 --> 0:18:15.159 large that is, and we have a consumer that's moving 0:18:15.320 --> 0:18:18.240 more and more online. If you move from right now, 0:18:18.240 --> 0:18:20.680 we're going like fifteen percent of retail is online. 0:18:20.720 --> 0:18:21.760 If they just move up to. 0:18:21.800 --> 0:18:24.800 If they move to twenty five, which is kind of 0:18:24.800 --> 0:18:26.480 where the most of the world is going, that's a 0:18:26.520 --> 0:18:30.639