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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app.

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Speaker 2: Helene Becker joins now senior research analyst at TD Cowen,

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Speaker 2: and we're thrilled that she could be with us today.

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Speaker 1: Helene, January twenty second.

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Speaker 2: I guess we get an earnings report from United, the

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Speaker 2: others will lined up. What is their urgency to act,

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Speaker 2: not so much off the Boeing accident, but their urgency

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Speaker 2: to act because of the topsy turvy markets they're in now.

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Speaker 3: I think that we have a situation where we're expecting,

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Speaker 3: or we saw fourth quarter traffic was pretty good. The

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Speaker 3: further we get away from twenty twenty, the more we'll

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Speaker 3: see managed corporate travel come back. I think the trip

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Speaker 3: where you have maybe a one day trip isn't coming

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Speaker 3: back anytime soon. I feel like it's a lot like

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Speaker 3: after nine to eleven tom when the really short haul

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Speaker 3: trips went away, and we expect that to continue really now.

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Speaker 3: But the longer haul trips. People need to get out,

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Speaker 3: they need to see their clients. We've been talking about

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Speaker 3: this for about a year now and we're seeing that.

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Speaker 3: We're seeing that increase in managed travel, and we think

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Speaker 3: that we'll continue into the rest of this year.

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Speaker 2: With the Boeing accident, with the rivets, the fasteners, whatever,

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Speaker 2: we're going to see in the coming weeks of that analysis,

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Speaker 2: even months, I should say, of that analysis, what does

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Speaker 2: it mean for the dynamic of refleeting A word I

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Speaker 2: discovered last week. I think Helene Becker, you know, refleeting

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Speaker 2: is going out and buying the bright, shiny new thing accelerated.

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Speaker 3: Yeah, well yes, and no American did their refleeting in

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Speaker 3: the last decade, so they're on the downside of that.

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Speaker 3: United is doing it now and into twenty thirty two.

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Speaker 3: Delta is in the middle of it. But Delta has

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Speaker 3: a different and Southwest actually have different viewpoints on the

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Speaker 3: way they refleet. They kind of spend about ten percent

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Speaker 3: revenue on capex, somewhere between eight and ten percent every year,

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Speaker 3: so they're continually refleeting, so we view that fairly favorably.

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Speaker 3: I don't think anything changes. There's a lot of pressure

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Speaker 3: on the industry to lower their carbon footprint. I know

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Speaker 3: aviation only makes up two percent of total transportation carbon,

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Speaker 3: but others are doing the whole reduction carbon faster, so

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Speaker 3: aviation over time will become a bigger percentage of it.

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Speaker 3: So there's a lot of pressure to fly young are

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Speaker 3: more fully efficient aircraft oleane.

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Speaker 4: I can't get past this comment from George ferguson words

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Speaker 4: you never want to hear, when he basically came out

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Speaker 4: and said it's not as safe as it was before

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Speaker 4: the pandemic, talking about the safety of flying at a

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Speaker 4: time when we did just have this incident with Alaska Airlines,

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Speaker 4: also the incident that we saw in Japan, Questions around

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Speaker 4: the competency and staffing levels at some of the agencies.

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Speaker 4: Are you concerned? Do you feel like that is an

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Speaker 4: accurate statement that it is not as safe to fly

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Speaker 4: today as pre pandemic.

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Speaker 3: No, no, no, I disagree with that completely. The fact

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Speaker 3: that there were no casualties on the japan Air A

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Speaker 3: three thirty is hugely significant. They were able to evacuate

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Speaker 3: that entire aircraft without any incident, with half the doors

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Speaker 3: being half the emergency doors being unusable because of fire.

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Speaker 3: So I think that's one thing to consider. I think

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Speaker 3: from an aviation perspective and a safety perspect that every

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Speaker 3: time there's an incident, there's an investigation. There is no

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Speaker 3: cover up. You never see that as you would in

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Speaker 3: some as you may in some other industries. There have it.

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Speaker 3: I mean, not to cha the industry, but there really

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Speaker 3: haven't been any major accidents. The fact that Alaska air

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Speaker 3: pilots were able to declare any emergency turnaround land safely

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Speaker 3: with no injuries is hugely significant. And I think aviation

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Speaker 3: is still the sepest form of transportation. No other industry

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Speaker 3: does the deep dive into accidents that aviation does, and

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Speaker 3: then aviation trains for every accident, and I think I

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Speaker 3: think it's I think aviation is still very safe.

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Speaker 4: I think that a lot of people will point to

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Speaker 4: what happened in Japan and point out that that plane

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Speaker 4: that everyone did manage to get out of I believe

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Speaker 4: was an air bus and not a poet. But nevertheless, Yeah,

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Speaker 4: So going forward, though, I'm curious what about some of

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Speaker 4: the air traffic control issues and some of these other things.

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Speaker 4: How important is it for airlines to do some sort

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Speaker 4: of pr job, if nothing else, to assuage some of

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Speaker 4: the concerns of neurotic people like myself. Where you're looking

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Speaker 4: at this and thinking like, I don't.

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Speaker 3: Know, well, I think you have to think aviation is

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Speaker 3: safe number one. Number two, Yes, we do need to

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Speaker 3: address the air traffic control situation, and the fact that

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Speaker 3: we now have a permanent administrator is hugely important. That's another,

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Speaker 3: you know, another thing that we view favorably. The FAA

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Speaker 3: is certified to March eighth, so the government needs to

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Speaker 3: really step up its efforts and get it certified permanently.

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Speaker 3: My views are different than some of my peer group.

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Speaker 3: I personally think the government should be responsible for safety

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Speaker 3: and security, and I think your traffic control should be

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Speaker 3: a separate corporation that's public that's paid for everybody. Right now,

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Speaker 3: General Aviation, TOLUM and least in John don't pay for

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Speaker 3: using air traffic control system.

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Speaker 2: Helen, this is I wish we had another hour to

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Speaker 2: cover this because I think each and every listener and

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Speaker 2: viewer want to know about Back to the Reagan uproar

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Speaker 2: and unions of years ago. How different is our transportation

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Speaker 2: safety structure versus other major developing countries.

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Speaker 3: Yeah, so euro Control runs Europe and that's a public

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Speaker 3: company and Canada's public company and Canada it's just run differently.

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Speaker 3: And I'm not saying it's better. I'm not saying it's worse.

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Speaker 3: I'm just saying it's different, and you don't have the

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Speaker 3: puts and starts that you have here. I've been talking

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Speaker 3: about next gen since I started covering the industry four

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Speaker 3: decades ago, and we're still talking about it. It's years

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Speaker 3: behind schedule, it's over budget. Air traffic control, to your point, Tom,

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Speaker 3: the Reagan administration fired all the air traffic controllers. They

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Speaker 3: retrained them NAT because the union that represents them. They're

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Speaker 3: they're well trained, but they're overworked, they're fatigued. We don't

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Speaker 3: have enough of them to handle what we're doing right now,

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Speaker 3: and so the aviation system will slow down. You won't

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Speaker 3: be able to We'll see growth through replacing smaller aircraft

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Speaker 3: with larger aircraft. We don't think we'll see the same

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Speaker 3: level of pilot hiring in twenty four and twenty five

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Speaker 3: that we saw in twenty one, two and three. That

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Speaker 3: from that perspective. As we move further into the decade

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Speaker 3: and people have more experience, that will be beneficial. But

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Speaker 3: we're not going to grow as fast as we grow

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Speaker 3: in prior decades because we just don't have the experience,

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Speaker 3: and we can push the air traffic controllers to too

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Speaker 3: much over time because it's a very taxing job to

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Speaker 3: begin with, and we don't want any accidents to occur

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Speaker 3: in the US because we want to continue to be

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Speaker 3: able to say it's the safest form of transportation.

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Speaker 5: Helen, I've got sixty seconds left on a clock top

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Speaker 5: pic if ivor trade this year? What is it?

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Speaker 1: Oh?

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Speaker 3: Yeah, our favorite trade this year is Delta after United

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Speaker 3: was our face for trade for the past two years.

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Speaker 5: Why the change?

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Speaker 3: The difference in capex, frankly is the biggest difference. I

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Speaker 3: think United will continue to do well, but they're going

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Speaker 3: to borrow a lot of money, sick. They have a

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Speaker 3: sixty billion dollar capex program between now and twenty thirty two,

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Speaker 3: and Deltas is not nearly as big, so you won't

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Speaker 3: see the stress and the balance sheet that you may

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Speaker 3: see at United.

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Speaker 5: Interesting, Helene, thank you, thanks for the up date and

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Speaker 5: lane backing there of td count, Thank you very much.

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Speaker 5: Starting in the conversation this morning with Lori Cavassino, the

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Speaker 5: head of US screty strategy at RBC Capital Markets, Loury,

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Speaker 5: Good morning to you. This line jumped down from your

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Speaker 5: most recent note, the week's start in January is just

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Speaker 5: the beginning of a phase of turbulence. How concerned are

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Speaker 5: you about that?

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Speaker 6: Well, well, Johnny, I was talking to one of my

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Speaker 6: traders last week and we were discussing the CFTC data.

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Speaker 6: We're starting to see it's really just looking very very stretched,

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Speaker 6: and I said, this looks scary, and I think we

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Speaker 6: need to keep in mind that sentiment has been oscillating

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Speaker 6: very very quickly over the last six months, so this

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Speaker 6: isn't necessarily something that has to derail a call for

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Speaker 6: the year. Maybe damp an enthusiasm just a little bit,

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Speaker 6: but really what we've started to see the CFTC data

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Speaker 6: on institutional investor positioning line up with what we're seeing

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Speaker 6: on the retail survey for aaii, and both are looking

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Speaker 6: very very stretched right now. I think there are a

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Speaker 6: number of things that could come in and trip this

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Speaker 6: market up a bit, but usually it's something the market

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Speaker 6: doesn't see coming, So I think we need to focus

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Speaker 6: here on the idea that sentiment itself just got carried

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Speaker 6: away at the end of last year.

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Speaker 2: Laurie Mike Wilson has been cautious on the markets. Over

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Speaker 2: at Morgan Stanley has a brilliant paragraph parketing to nominal

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Speaker 2: growth could be the surprise this year. It's one of

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Speaker 2: his more optimistic constructions of where we're heading in the

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Speaker 2: mystery of twenty twenty four, what do mid caps and

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Speaker 2: small caps do?

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Speaker 1: If we get legitimate.

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Speaker 2: Animal spirit, we get legitimate nominal GDP.

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Speaker 6: So what we've done typically seen is that when GDP

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Speaker 6: and we tend to look at it in real terms

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Speaker 6: as opposed to nominal terms. But if you're looking at

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Speaker 6: real GDP above two point six percent, and two point

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Speaker 6: six percent has been the long term average since the

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Speaker 6: late seventies, we typically see that small caps and value

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Speaker 6: stocks outperform in that environment. When GDP is running cool

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Speaker 6: below trend, that's when large caps and growth tend to outperform.

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Speaker 6: So it goes back to this question of leadership and

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Speaker 6: rotation in the market. We've got GDP forecasts sitting at

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Speaker 6: about one point three percent this year. That's up from

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Speaker 6: about one percent back in November, so they're moving in

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Speaker 6: the right direction. But if we really want to get

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Speaker 6: a lasting, sustainable, durable leadership rotation away from the megacap

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Speaker 6: growth stocks and into basically everything else in the market,

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Speaker 6: you need to see GDP expectations move up quite a

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Speaker 6: bit more from where they are right now.

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Speaker 2: I mean, okay, well, the GDP's got to come up.

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Speaker 2: I get that, But what do we do right now?

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Speaker 2: I mean, you're deploying.

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Speaker 1: Cash to small you know they've pulled back.

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Speaker 2: You deploying cash this morning to small caps and mid caps.

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Speaker 6: So I still like them, I don't like them quite

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Speaker 6: as much as I did, you know, say four or

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Speaker 6: five weeks ago when we last spoke. One of the

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Speaker 6: things we've seen is that, in addition to sentiment getting

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Speaker 6: a little frothy at the broader market, if you look

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Speaker 6: at small cap positioning on the CFTC data, we're at

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Speaker 6: important crossroads. We're basically at the three year highs, but

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Speaker 6: we're not at all time highs. So we're going to

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Speaker 6: know pretty soon whether or not small caps are really

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Speaker 6: able to power through and take things up another leg

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Speaker 6: of we's also still seeing that small caps look very

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Speaker 6: cheap relative to large But if you look at a

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Speaker 6: Russell two thousand and forward pe, it's back to average.

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Speaker 6: Now that's not usually where things top out at, but

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Speaker 6: it is telling us that maybe we have made a

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Speaker 6: lot of the easy money in small caps already. So

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Speaker 6: do I like them? Yes? Do I like them as

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Speaker 6: much as I did a month ago? Not quite?

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Speaker 4: This sounds all kind of negative, and yet you just

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Speaker 4: upgraded your forecast for year end twenty twenty four to

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Speaker 4: a fifty one fifty. That's a ten percent upside from here.

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Speaker 4: If it's not small caps what leads.

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Speaker 6: So I think that the value stocks in particular are

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Speaker 6: something to keep an eye on. From here. We've seen

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Speaker 6: the financials act quite well now I'm actually a little

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Speaker 6: bit nervous about that heading into reporting season, but we've

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Speaker 6: started to see some more favorable views emerge on the

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Speaker 6: industrials as well. So I think we're going to get

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Speaker 6: some interesting clues in this reporting season. But I do

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Speaker 6: think sector composition is very, very tough right now. I

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Speaker 6: do think, Lisa, if you kind of go back to

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Speaker 6: our target, we were anticipating about a ten percent return,

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Speaker 6: and we put that target out in early our mid

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Speaker 6: November we were on sort of the earlier side of

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Speaker 6: putting targets out. We trued up all of our you know,

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Speaker 6: sort of models for year end. We did have this big,

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Speaker 6: ferocious run in December, and now where we're sitting today,

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Speaker 6: even with this upgrade on the fifty one to fifty,

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Speaker 6: it's only about an eight percent return on the year,

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Speaker 6: So it's not necessarily getting more bullish. It's just kind

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Speaker 6: of truing up our model for the year ahead based

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Speaker 6: on the moves that we had in December.

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Speaker 4: You mentioned banks, and I find this interesting. How important

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Speaker 4: is Friday going to be as JP Morgan kicks off

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Speaker 4: earnings to give a sense of what the landscape is

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Speaker 4: for banks? Or is it just JP Morgan's world and

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Speaker 4: everybody else is living in it?

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Speaker 6: So I think they all matter, Lisa. You know, I

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Speaker 6: don't think it's just any one particular bank. I know

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Speaker 6: some get more attention than others, especially the one that

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Speaker 6: come at the beginning. But I tell you what I

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Speaker 6: think is important for the banks is one, are those

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Speaker 6: sort of strong numbers that we've seen in terms of

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Speaker 6: performance going to hold up. Sometimes we do see, you know,

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Speaker 6: sort of the banks give back when they've had a

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Speaker 6: strong lead into reporting season, So are the numbers going

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Speaker 6: to be good enough to really justify sustaining some of

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Speaker 6: the better trends we've seen recently. I think that's one thing.

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Speaker 6: But also I think for someone like me who's not

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Speaker 6: a specialist in the financials, we really go in and

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Speaker 6: look at the financials for clues on the plumbing of

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Speaker 6: the economy, on the health of the consumer. And I

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Speaker 6: think that's probably going to be the most important thing

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Speaker 6: coming out of the next kind of week or so

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Speaker 6: with those banks earnings.

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Speaker 5: The real headline over the weekend coming into this morning

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Speaker 5: a positive surprise in Washington, d C. Laurie this story

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Speaker 5: congressional leaders announcing a deal on top line spending for

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Speaker 5: the current fiscal year. Laurie, I was speaking to Wemy

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Speaker 5: with Silverman in the last week and we talked about

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Speaker 5: your line that talking about politics the election this year

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Speaker 5: specifically is like staring at the sun. Is it that

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Speaker 5: bad this year for you and the team?

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Speaker 6: Yeah, it's pretty awful, John. I mean it's interesting that

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Speaker 6: line comes from my conversations with US based investors who

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Speaker 6: are like, Okay, it's time to write our outlooks. You know,

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Speaker 6: this is kind of thinking back the last month or so,

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Speaker 6: you know, what do we say about this? And we

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Speaker 6: kind of walk people through data, We get through it quickly,

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Speaker 6: and then we move on European and Canadian investors. I mean,

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Speaker 6: you could easily spend a whole meeting on this. It's

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Speaker 6: like it's like a spectator sport for them at this point.

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Speaker 6: But I do think it's a major source of uncertainty.

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Speaker 6: And I'll tell you what it was interesting to me

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Speaker 6: last week when I was working through some of the

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Speaker 6: data we saw at the end of the year in

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Speaker 6: the beginning of this year, is that you are starting

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Speaker 6: to see money flows improve or turn positive to Japan,

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Speaker 6: to emerging markets, to China, and to Europe. US flows

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Speaker 6: are still holding up, but we are starting to see

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Speaker 6: non US geographies really attract, you know, some better flows.

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Speaker 6: And I think part of that has to do with

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Speaker 6: the election. Based on what I'm hearing from the non

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Speaker 6: US investors.

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Speaker 2: Laurie answer a question for OURBC clients watching listening, which is, jeez,

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Speaker 2: we started the year week and.

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Speaker 1: That signals a terrible year ahead. Is there any valid

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Speaker 1: to that emotion?

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Speaker 6: So I tend to be very skeptical of you know,

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Speaker 6: these seasonal, you know kind of studies. Whenever we do

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Speaker 6: this on this day, we do this for the rest

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Speaker 6: of the week. I think that those kinds of studies

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Speaker 6: can be massaged frankly, you know, change your starting point

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Speaker 6: to show whatever you want to show. I've been actually

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Speaker 6: looking at seasonality over the last ten years. We've had

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Speaker 6: some good ones, we've had some stinkers, but we have

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Speaker 6: seen that January has been pretty much a mixed bag.

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Speaker 6: There have been some difficult ones if you especially look

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Speaker 6: over the last five years. So it would be sort

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Speaker 6: of keeping with a recent seasonality to have a rough

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Speaker 6: start to the year. Does that necessarily tell you that

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Speaker 6: you have to run away for the rest of the year.

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Speaker 6: I don't think so. And I go back to what

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Speaker 6: we talked about at the top of the show. Sentiment

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Speaker 6: has been oscillating so quickly. We were basically overbought in August,

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Speaker 6: oversold in November, overbought in December again, and that all

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Speaker 6: round tripped off of oversold conditions last October and post SVB.

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Speaker 6: So I think that sentiment helps you tactically. I don't

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Speaker 6: think you can use it that much to make a

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Speaker 6: really kind of longer term view. At this point, Laurie.

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Speaker 5: Wonderful to get your views this morning. Thanks Obama. This

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Speaker 5: lor Convasaye of the vampy seat capital market.

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Speaker 2: Claudia sam will be up all night watching a football

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Speaker 2: game as well. Claudia for the Department of Economics at Michigan,

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Speaker 2: all that heritage. What does blue football actually mean? Do

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Speaker 2: you completely ignore it? Or are you at the fifty

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Speaker 2: yard line for every game?

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Speaker 7: Well, they don't.

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Speaker 8: Let the grad students have very good seats.

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Speaker 3: But we went.

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Speaker 8: You know, it's it's Michigan.

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Speaker 1: Go Blue, Go Blue.

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Speaker 2: We'll see tonight. Thank you so much for joining Claudia.

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Speaker 2: Barry rid Oldson. You had a great idea out there

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Speaker 2: that in our hysteria right now of single statistics.

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Speaker 1: We have denominator blindness.

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Speaker 2: Let's take the national debt the interest expense of that,

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Speaker 2: and we forget how large our economy is or how

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Speaker 2: large our labor force is. How is hysterical are we

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Speaker 2: right now? And do we need to calm down?

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Speaker 8: Well, we've needed to calm down for decades. This is

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Speaker 8: not a new conversation. The debt has to be put

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Speaker 8: in context, not just of our GDP. That's a flow

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Speaker 8: that we get.

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Speaker 6: That every year.

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Speaker 8: We need to think about in terms of their wealth,

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Speaker 8: which is multiples of what that debt is. And I

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Speaker 8: also a firm believer, and we need to look under

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Speaker 8: the hood and what are we spending our money on.

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Speaker 8: There's good ways to do it investment R and D,

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Speaker 8: and there's ways that aren't as good, maybe really high

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Speaker 8: income tax cuts. So that's where we need to have

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Speaker 8: a conversation, not just throwing around big numbers.

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Speaker 2: Is the FED throwing around big numbers? Are they having

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Speaker 2: a conversation as they move out into twenty twenty four

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Speaker 2: that you would consider appropriate and rational.

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Speaker 8: In terms of the debt or in terms of what they're.

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Speaker 2: Doing in terms of what they're going to do with

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Speaker 2: their monetary policy?

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Speaker 1: Excuse me?

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Speaker 8: Yeah, no, I mean the FED is trying to do

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Speaker 8: the impossible. Well, right now, my heart goes out to them,

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Speaker 8: and we will play a parlor game for the next

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Speaker 8: year or two and what their next move is. And yeah,

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Speaker 8: they've got the eye on the prize, right. They work

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Speaker 8: through financial markets, but they really don't care about financial markets.

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Speaker 8: It's about getting inflation down, it's about keeping people with jobs.

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Speaker 8: And we're well on our way, but it's going to

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Speaker 8: be tough. To know when they're there and can say, okay,

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Speaker 8: we can back off.

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Speaker 4: Let's do an anatomy of what happened on Friday, because

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Speaker 4: it was some confusing data that I tried to parse

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Speaker 4: through and continue to and read more reports, and I'm

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Speaker 4: just as confused. Which data screams the truest to you

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Speaker 4: at a time where we got stronger than expected headline number,

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Speaker 4: some real shows of strength, and then real signs of weakness,

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Speaker 4: particularly in services. Employment.

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Speaker 8: Big picture of Friday's payrolls was a good day. We

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Speaker 8: had unemployments staying at three point seven percent. We're averaging

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Speaker 8: a little under two hundred thousand jobs in recent months.

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Speaker 8: If you think about what the labor market is buffering,

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Speaker 8: we have a five percentage point more than that increase

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Speaker 8: in the federal funds rate. This is a labor market.

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Speaker 1: Now.

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Speaker 8: You can go under the hood. You can do this

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Speaker 8: in almost any month and say, ugh, that doesn't look

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Speaker 8: so good now. Granted, there were some real science things

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Speaker 8: to keep an eye on, you know, and we always

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Speaker 8: need to, but this was not a flashing red We're

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Speaker 8: going over the cliff. I mean, come on, we've been

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Speaker 8: under the one employer it's been under four percent for

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Speaker 8: the longest stretch since the nineteen sixties.

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Speaker 3: Well, it's good.

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Speaker 4: What about the services ISM data. That's fact that hiring

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Speaker 4: fell the most, the sort of sub index for that

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Speaker 4: particular data point came in the most going back to

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Speaker 4: twenty twenty at the height of the pandemic. Does this

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Speaker 4: make you feel like we're at a tipping point? Even

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Speaker 4: if no, we're not heading into the abyss that we

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Speaker 4: are cooling off in a much more material way.

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Speaker 8: It's been like case last year. We needed to rebounce.

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Speaker 8: We needed to get to a place that was expansionary

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Speaker 8: but not red hot. I mean, we were coming out

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Speaker 8: of a really bad labor market with COVID. So we

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Speaker 8: do need to see things normalizing slowing, not just this

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Speaker 8: pace that's been so strong, because we want to get

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Speaker 8: to a sustainable place and there are going to be

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Speaker 8: all signs. Frankly, I take a lot more out of

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Speaker 8: the payrolls data than I do the ISM and we

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Speaker 8: need to look at everything. And yet we've gotten a

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Speaker 8: lot of mixed signals from the data you know so far.

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Speaker 2: So we adres a Samrell for us right now? How

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Speaker 2: many states are in a miserable situation, doctor Son?

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Speaker 8: So I haven't looked at every state recently. One that

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Speaker 8: has stood out, and I imagine is still in the

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Speaker 8: same place as California.

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Speaker 6: That's a really.

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Speaker 8: Good example of how you can have an industry that's

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Speaker 8: having a tough time. I mean, tech in the Bay

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Speaker 8: Area is legitimately having some tough times, and yet we

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Speaker 8: have seen no signs of its spreading because it's an

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Speaker 8: industry issue, it's not like a broad based contraction. And

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Speaker 8: I will say at the national level, the samrull went

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Speaker 8: back down to two tenths of a percentage point, So

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Speaker 8: looking good so far.

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Speaker 5: Coldly, I just want to weigh in on some of

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Speaker 5: the politics, and I don't want to beg you too much,

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Speaker 5: but whenever I listen to you talk about the labor market,

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Speaker 5: you offer clarity where clarity can be found, and why

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Speaker 5: there isn't any It leaves the question open. It's ready digestible,

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Speaker 5: very very intuitive. Why do you think this administration is

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Speaker 5: struggling with the messaging so much around what's happening with

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Speaker 5: this economy?

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Speaker 8: For a long time, Democrats have really put an emphasis

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Speaker 8: on being the adult in the room. When I saw

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Speaker 8: the jobs number, I had a gift that I use

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Speaker 8: as like boom. You know, it's like, come on, let's

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Speaker 8: get excited about this. Yes, there's more to do, and

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Speaker 8: yet when I look at all it has been accomplished

437
00:21:29,920 --> 00:21:32,440
Speaker 8: in the last four years and even during the Trump administration,

438
00:21:32,560 --> 00:21:35,560
Speaker 8: the big push with CARES Act we really help people.

439
00:21:35,880 --> 00:21:39,119
Speaker 8: Is not perfect, but like, don't hide behind what you've done,

440
00:21:39,280 --> 00:21:41,160
Speaker 8: like go out and say we did agree. Job Okay,

441
00:21:41,200 --> 00:21:41,960
Speaker 8: Then why can't.

442
00:21:41,760 --> 00:21:42,159
Speaker 1: They do that?

443
00:21:42,200 --> 00:21:45,200
Speaker 2: I mean, John brings up an incredibly important point. Claudie

444
00:21:45,240 --> 00:21:47,879
Speaker 2: sim You've been in the trenches. Why can't somebody just

445
00:21:48,000 --> 00:21:51,080
Speaker 2: come out not say, you know, Rosie Morning in America

446
00:21:51,119 --> 00:21:54,080
Speaker 2: and all that, but say, look, we understand the agonies

447
00:21:54,119 --> 00:21:57,080
Speaker 2: out there, but boy has this worked out from COVID

448
00:21:57,200 --> 00:22:00,000
Speaker 2: versus many other countries and continents.

449
00:22:01,320 --> 00:22:03,679
Speaker 8: I really don't know. I mean, I have come across

450
00:22:03,680 --> 00:22:07,000
Speaker 8: the fact that across the democratic spectrum there's just so

451
00:22:07,119 --> 00:22:09,199
Speaker 8: much anger at each other. I mean, I've gotten the

452
00:22:09,240 --> 00:22:12,680
Speaker 8: worst feedback from far left, and you know center isn't

453
00:22:12,680 --> 00:22:16,720
Speaker 8: exactly happy with me either. So it's just it's so strange, right,

454
00:22:16,920 --> 00:22:19,119
Speaker 8: But you know, I don't know. I hate politics. I

455
00:22:19,160 --> 00:22:21,440
Speaker 8: really don't understand it. I just keep doing my work

456
00:22:21,480 --> 00:22:23,719
Speaker 8: and trying to explain and trying to learn from what

457
00:22:23,800 --> 00:22:25,119
Speaker 8: people are going through.

458
00:22:25,240 --> 00:22:28,120
Speaker 5: And we value your work. Clodia, thank you as always,

459
00:22:28,119 --> 00:22:31,760
Speaker 5: just fantastic to hear from you. Todi Samda of some consulting.

460
00:22:35,640 --> 00:22:37,360
Speaker 1: Right now on your Washington.

461
00:22:37,400 --> 00:22:42,159
Speaker 2: Isaac Multanski joints Director of Policy Research at BTIG. Isaac,

462
00:22:42,200 --> 00:22:44,040
Speaker 2: I got to go with the lead a headline, which is,

463
00:22:44,080 --> 00:22:47,240
Speaker 2: I guess all clear in Congress we've actually passed a budget.

464
00:22:47,359 --> 00:22:48,200
Speaker 1: Is that true?

465
00:22:49,080 --> 00:22:49,800
Speaker 3: Absolutely not.

466
00:22:50,119 --> 00:22:53,000
Speaker 7: That couldn't be farther from the truth. We now have

467
00:22:53,160 --> 00:22:55,679
Speaker 7: top line agreement on what we can spend for the

468
00:22:55,720 --> 00:22:59,080
Speaker 7: fiscal year. That's great, it's wonderful, and that just means

469
00:22:59,080 --> 00:23:01,679
Speaker 7: that the hard work gets to begin now. You know,

470
00:23:01,840 --> 00:23:04,080
Speaker 7: I think you're two points to highlight. Number one is

471
00:23:04,680 --> 00:23:07,640
Speaker 7: you've got to notice how angry the far right flank

472
00:23:07,920 --> 00:23:11,879
Speaker 7: of the House GOP is this morning. We need to

473
00:23:11,960 --> 00:23:16,639
Speaker 7: understand that the speaker, Speaker Johnson is operating with no

474
00:23:16,840 --> 00:23:20,399
Speaker 7: room for error and he will almost certainly need democratic

475
00:23:20,440 --> 00:23:24,040
Speaker 7: support to pass his bill. That's something that former Speaker

476
00:23:24,119 --> 00:23:27,800
Speaker 7: McCarthy didn't want to do, ended up doing and then

477
00:23:27,840 --> 00:23:30,840
Speaker 7: got thrown out from the speakership. And the number two

478
00:23:31,000 --> 00:23:35,280
Speaker 7: is there are so many points of departure between Democrats

479
00:23:35,280 --> 00:23:38,199
Speaker 7: and Republicans when it comes to the specifics of the

480
00:23:38,280 --> 00:23:42,000
Speaker 7: spending agreement. There are upwards of forty different poison pills

481
00:23:42,359 --> 00:23:45,200
Speaker 7: some groups have counted that could shut down the talks

482
00:23:45,240 --> 00:23:47,840
Speaker 7: around this. So look, I think the temperature has been

483
00:23:47,840 --> 00:23:50,800
Speaker 7: taken down. The risk of a shutdown is slightly lower

484
00:23:51,200 --> 00:23:53,199
Speaker 7: this morning. But there's still a lot of work that

485
00:23:53,240 --> 00:23:55,119
Speaker 7: needs to be done over the next eleven days.

486
00:23:55,280 --> 00:23:58,359
Speaker 2: So what's the primary to do list arking over the

487
00:23:58,359 --> 00:23:59,399
Speaker 2: next eleven days.

488
00:24:00,320 --> 00:24:03,800
Speaker 7: Yeah, So what I'm looking looking at is I can

489
00:24:03,840 --> 00:24:09,040
Speaker 7: get movement on the other issues around the spending bill.

490
00:24:09,160 --> 00:24:10,800
Speaker 7: So it's good that we've got this, and now I

491
00:24:10,800 --> 00:24:14,119
Speaker 7: think the appropriators will slink back into their offices and

492
00:24:14,160 --> 00:24:17,280
Speaker 7: you'll see some backroom negotiation and maybe not much on that.

493
00:24:17,760 --> 00:24:21,000
Speaker 7: I'm interested in the border deal, Tom, because we've got

494
00:24:21,000 --> 00:24:23,680
Speaker 7: to keep in mind, the spending agreement is just part

495
00:24:23,800 --> 00:24:27,040
Speaker 7: of this three D chess game that we have going on.

496
00:24:27,119 --> 00:24:30,960
Speaker 7: The other part is the supplemental spending measures, and here

497
00:24:31,000 --> 00:24:36,040
Speaker 7: I'm talking about border security, and then of course funding

498
00:24:36,240 --> 00:24:39,879
Speaker 7: for Taiwan, Ukraine and Israel. That's the other part of it.

499
00:24:39,920 --> 00:24:43,280
Speaker 7: And we'll Lynch. All of that is the border security

500
00:24:43,320 --> 00:24:45,760
Speaker 7: deal that we're now expecting to come later this week.

501
00:24:46,320 --> 00:24:49,960
Speaker 5: You mentioned the international security concerns, big foreign policy issues.

502
00:24:50,320 --> 00:24:52,800
Speaker 5: We've got to talk about the curious case of the

503
00:24:52,840 --> 00:24:55,840
Speaker 5: missing Defense Secretary now Isaac. First of all, we wish

504
00:24:55,920 --> 00:24:58,320
Speaker 5: him all a speedy recovery from what none of us

505
00:24:58,320 --> 00:25:01,840
Speaker 5: sink to know the detail. According to our reporting, Lloyd

506
00:25:01,880 --> 00:25:06,320
Speaker 5: Austin underwent an elective procedure in late December, didn't tell

507
00:25:06,320 --> 00:25:08,800
Speaker 5: his staff they should notify others when he was admitted

508
00:25:08,800 --> 00:25:11,080
Speaker 5: to Walter Reed Medical Center on New Year's Day after

509
00:25:11,119 --> 00:25:14,080
Speaker 5: experiencing severe pain at the same time as chief of

510
00:25:14,200 --> 00:25:17,600
Speaker 5: staff was ill with the flu, and failed to notify anyone,

511
00:25:18,000 --> 00:25:20,879
Speaker 5: the person said that we've been speaking to. According to

512
00:25:20,920 --> 00:25:23,840
Speaker 5: our source, that Austin's military aid quickly put Deputy Secretary

513
00:25:23,840 --> 00:25:26,840
Speaker 5: of Defense Kathleen Hicks in charge of running the Pentagon,

514
00:25:27,160 --> 00:25:30,080
Speaker 5: although she wasn't informed of the reason for this decision,

515
00:25:30,440 --> 00:25:33,080
Speaker 5: and the President seemingly for days didn't have a clue.

516
00:25:33,119 --> 00:25:35,560
Speaker 5: I say, what was going on? What is going on?

517
00:25:37,040 --> 00:25:38,639
Speaker 7: This is one of the weirder stories you're going to

518
00:25:38,640 --> 00:25:41,399
Speaker 7: come across in the Biden administration, which by and large

519
00:25:41,440 --> 00:25:44,320
Speaker 7: has been pretty tame when it comes to these personnel stories,

520
00:25:44,400 --> 00:25:48,840
Speaker 7: especially compared to the previous four years. But it's deeply unsettling, right,

521
00:25:49,040 --> 00:25:53,760
Speaker 7: I know that the secretary is an incredibly personal excuse me,

522
00:25:53,840 --> 00:25:57,919
Speaker 7: an incredibly private person, and that this is something that

523
00:25:57,960 --> 00:26:00,679
Speaker 7: all the staff have highlighted about him. Don't get to

524
00:26:00,720 --> 00:26:03,320
Speaker 7: be this private when you're sixth in line in the

525
00:26:03,359 --> 00:26:07,359
Speaker 7: presidential line of succession, and so, Look, this is deeply unsettling,

526
00:26:07,720 --> 00:26:11,200
Speaker 7: especially given that transparency is one of the pillars of

527
00:26:11,240 --> 00:26:14,520
Speaker 7: our political system. But ultimately, this too shall pass, and

528
00:26:14,560 --> 00:26:17,240
Speaker 7: I think it just reminds you of some of the

529
00:26:17,400 --> 00:26:22,240
Speaker 7: stories of personnel volatility that we saw during the Trump administration,

530
00:26:22,359 --> 00:26:24,679
Speaker 7: which is going to be one of the campaign trail

531
00:26:24,800 --> 00:26:26,120
Speaker 7: considerations as well.

532
00:26:26,359 --> 00:26:28,360
Speaker 4: You said volatility. Do you expect him to step down?

533
00:26:29,720 --> 00:26:32,520
Speaker 7: No, Look, I think that, depending on health, of course,

534
00:26:32,600 --> 00:26:34,240
Speaker 7: that he is going to be fine. I mean, the

535
00:26:34,280 --> 00:26:38,600
Speaker 7: President has not made any comment that suggests that the

536
00:26:38,640 --> 00:26:41,000
Speaker 7: Defense Secretary won't will leave here, so I think he

537
00:26:41,040 --> 00:26:44,280
Speaker 7: will stay. I wouldn't be surprised if he's replaced if

538
00:26:44,400 --> 00:26:47,080
Speaker 7: the President Biden does win reelection, though, I think this

539
00:26:47,200 --> 00:26:49,920
Speaker 7: is the type of thing that doesn't get you reappointed.

540
00:26:50,119 --> 00:26:52,200
Speaker 4: Well, this raises a question though, in general about foreign

541
00:26:52,200 --> 00:26:55,560
Speaker 4: policy and also the platform for President Biden going forward.

542
00:26:55,840 --> 00:26:57,880
Speaker 4: There were a list of asks that people are talking

543
00:26:57,920 --> 00:26:59,639
Speaker 4: about his new platform, all of which you're going to

544
00:26:59,640 --> 00:27:01,800
Speaker 4: get red and are dead in the water. Is he

545
00:27:01,840 --> 00:27:04,560
Speaker 4: going to basically be running on the anti Trump candidacy

546
00:27:04,680 --> 00:27:07,240
Speaker 4: once again at a time when Trump is consolidating a

547
00:27:07,240 --> 00:27:08,400
Speaker 4: lot of popular support.

548
00:27:10,080 --> 00:27:10,280
Speaker 1: Yeah.

549
00:27:10,320 --> 00:27:13,119
Speaker 7: Look, I mean there's obviously you've heard that line a

550
00:27:13,160 --> 00:27:15,920
Speaker 7: thousand times that you campaign in poetry, but you govern

551
00:27:16,000 --> 00:27:18,240
Speaker 7: in pros I don't think anyone's going to like the

552
00:27:18,280 --> 00:27:21,159
Speaker 7: poetry we see from a campaign trail this time around.

553
00:27:21,359 --> 00:27:24,520
Speaker 7: It is truly going to be a fear driven campaign.

554
00:27:25,040 --> 00:27:27,240
Speaker 7: It is fear of the other side. It is fear

555
00:27:27,400 --> 00:27:30,639
Speaker 7: of reversal, is fear of retribution. I don't seem to

556
00:27:30,640 --> 00:27:33,520
Speaker 7: think that we're going to see much hope and excitement

557
00:27:33,560 --> 00:27:36,480
Speaker 7: coming from the campaign trail over the next few months.

558
00:27:36,720 --> 00:27:39,440
Speaker 2: Isaac, you know the polarity of the states with Ohio

559
00:27:39,480 --> 00:27:43,159
Speaker 2: and Ohio Wesleyan, I'm absolutely fascinating of the polarity in

560
00:27:43,200 --> 00:27:46,760
Speaker 2: the Iowa caucuses. What is the distinctive tension as we

561
00:27:46,880 --> 00:27:49,119
Speaker 2: begin the political season in Iowa.

562
00:27:50,200 --> 00:27:55,679
Speaker 7: I mean, looking, presidential primaries are about retail politics, and

563
00:27:55,720 --> 00:27:59,359
Speaker 7: they're about and they're about personal preference more so than

564
00:27:59,359 --> 00:28:02,320
Speaker 7: any national old pole could ever understand. And then when

565
00:28:02,520 --> 00:28:05,240
Speaker 7: we think about Iowa, we've got to think about President

566
00:28:05,240 --> 00:28:08,680
Speaker 7: Trump having a thirty two point leaked and we've got

567
00:28:08,680 --> 00:28:10,520
Speaker 7: to think about also, and I think this is important.

568
00:28:10,560 --> 00:28:14,920
Speaker 7: Tom DeSantis went all in on Iowa. This is it

569
00:28:14,960 --> 00:28:17,840
Speaker 7: for him. And if he comes in second and loses

570
00:28:17,880 --> 00:28:21,840
Speaker 7: by thirty points, which the polls are suggesting, pretty hard

571
00:28:21,960 --> 00:28:25,399
Speaker 7: to imagine him being considered a serious contender going to

572
00:28:25,520 --> 00:28:29,040
Speaker 7: New Hampshire where he's clearly third at far behind Haley.

573
00:28:29,080 --> 00:28:30,920
Speaker 7: And so really this is to me, Iowa is a

574
00:28:30,920 --> 00:28:33,879
Speaker 7: little assess for the DeSantis campaign. If he loses as

575
00:28:33,920 --> 00:28:36,240
Speaker 7: badly as it looks, I think that his campaign, which

576
00:28:36,280 --> 00:28:38,960
Speaker 7: already been floundering, will effectively be over. And it's really

577
00:28:38,960 --> 00:28:42,160
Speaker 7: a question then of how strongly Nikki Haley can look

578
00:28:42,160 --> 00:28:43,520
Speaker 7: in New Hampshire a week later.

579
00:28:43,600 --> 00:28:45,600
Speaker 5: But to that point, Isaac, if he loses and he

580
00:28:45,640 --> 00:28:48,200
Speaker 5: has to drop out, who does he back? Where do

581
00:28:48,240 --> 00:28:48,960
Speaker 5: those votes go?

582
00:28:50,320 --> 00:28:50,560
Speaker 1: Look?

583
00:28:50,600 --> 00:28:52,840
Speaker 7: I think it will be incredibly difficult for him to

584
00:28:54,040 --> 00:28:57,240
Speaker 7: back anyone. I think that he will remain in the background.

585
00:28:57,360 --> 00:29:00,640
Speaker 7: My bet though, is that those bets, those vote's actually

586
00:29:00,680 --> 00:29:03,320
Speaker 7: split somewhat to Haley and the rest stay home from

587
00:29:03,360 --> 00:29:06,680
Speaker 7: the primary. But my point to clients say is Trump

588
00:29:06,720 --> 00:29:08,840
Speaker 7: is going to be the nominee. That is very clear

589
00:29:08,920 --> 00:29:11,680
Speaker 7: right now. He is the likely nominee. Those votes weren't

590
00:29:11,760 --> 00:29:13,640
Speaker 7: trying to figure out where they're going. They're going to

591
00:29:13,720 --> 00:29:16,600
Speaker 7: him in the general election. And so that's the important

592
00:29:16,600 --> 00:29:19,080
Speaker 7: point here. There's still so many clients and so many

593
00:29:19,120 --> 00:29:22,200
Speaker 7: people in DC who don't want it to be Trump v. Biden,

594
00:29:22,360 --> 00:29:25,840
Speaker 7: and I understand that. But all indications are it's Trump

595
00:29:25,960 --> 00:29:29,600
Speaker 7: vi Bide, and that's what the market and DC folks

596
00:29:29,600 --> 00:29:31,480
Speaker 7: need to start wrapping their heads around when we think

597
00:29:31,480 --> 00:29:33,800
Speaker 7: about the politics and the policy of it all.

598
00:29:33,960 --> 00:29:47,440
Speaker 5: Isaac, thank you, sir, isa Boltanski then of b tch bot,

599
00:29:47,440 --> 00:29:50,600
Speaker 5: a Crockett senior research analyst that rusn't black securities join

600
00:29:50,680 --> 00:29:52,800
Speaker 5: just not for more. But and let's talk about that

601
00:29:53,280 --> 00:29:56,480
Speaker 5: the prospective. Say I was picking up for the iPhone

602
00:29:56,520 --> 00:29:58,840
Speaker 5: and what's been holding them back over the last year.

603
00:30:00,320 --> 00:30:03,760
Speaker 9: Well, look, I think that you know, we downgraded Apple

604
00:30:04,000 --> 00:30:07,200
Speaker 9: in August early August. We currently have one hundred and

605
00:30:07,280 --> 00:30:10,360
Speaker 9: eighty nine dollars price target neutral rating, And you know,

606
00:30:10,400 --> 00:30:11,880
Speaker 9: our concern at that time is that you had a

607
00:30:11,920 --> 00:30:16,320
Speaker 9: combination of a muted growth trajectory really across much of

608
00:30:16,320 --> 00:30:19,960
Speaker 9: the company, including the iPhone, certainly factoring prominently into that,

609
00:30:20,960 --> 00:30:25,240
Speaker 9: and a high valuation. So that combination, in our mind

610
00:30:25,320 --> 00:30:28,160
Speaker 9: was not compelling, not something you needed to be overweight on.

611
00:30:28,360 --> 00:30:32,560
Speaker 9: I think the issue with the iPhone is the feature set,

612
00:30:32,600 --> 00:30:38,760
Speaker 9: innovation and the consumer pocketbook and some question about China,

613
00:30:38,800 --> 00:30:40,880
Speaker 9: and I think all of those things have you know,

614
00:30:40,880 --> 00:30:43,520
Speaker 9: given us data points that are very supportive of the

615
00:30:43,560 --> 00:30:45,520
Speaker 9: notion that you're in a very muted place right now

616
00:30:45,520 --> 00:30:47,880
Speaker 9: for iPhone. And I think given that that's something like

617
00:30:47,920 --> 00:30:50,720
Speaker 9: fifty percent of sales, very difficult for that stock to

618
00:30:50,720 --> 00:30:52,720
Speaker 9: have a lot of excitement. I think if there's not

619
00:30:52,760 --> 00:30:54,520
Speaker 9: a lot of excitement in the iPhone.

620
00:30:54,440 --> 00:30:56,920
Speaker 2: Marton, the basic idea here I guess for the bulls

621
00:30:56,960 --> 00:30:58,840
Speaker 2: is they're running it for profit. If you look at

622
00:30:58,840 --> 00:31:03,160
Speaker 2: the Evada margin from COVID twenty nineteen, they've moved from

623
00:31:03,200 --> 00:31:06,000
Speaker 2: twenty nine cents on the dollar up to thirty three

624
00:31:06,040 --> 00:31:08,920
Speaker 2: cents in the dollar. Even if they get a Barton

625
00:31:09,080 --> 00:31:13,160
Speaker 2: krack at sales lassitude. Can they maintain margins?

626
00:31:14,680 --> 00:31:14,880
Speaker 6: You know?

627
00:31:14,920 --> 00:31:18,880
Speaker 9: The company I think can maintain margins, you know, but

628
00:31:19,120 --> 00:31:21,960
Speaker 9: I don't know that that's type of story, you know,

629
00:31:22,360 --> 00:31:26,160
Speaker 9: nickel and diming margins, muted growth is something that's going

630
00:31:26,240 --> 00:31:30,240
Speaker 9: to be really compelling at currently about twenty ape thirty

631
00:31:30,280 --> 00:31:33,719
Speaker 9: PE when we downgrade it, I think the certainly, it's

632
00:31:33,760 --> 00:31:36,040
Speaker 9: a great company. It's a good company that you could

633
00:31:36,080 --> 00:31:38,400
Speaker 9: want to own at the appropriate price. But I think

634
00:31:38,440 --> 00:31:40,160
Speaker 9: you've got to be price sensitive. I think it's a

635
00:31:40,200 --> 00:31:43,520
Speaker 9: maturing company, and you can't buy it at any multiple,

636
00:31:43,520 --> 00:31:46,320
Speaker 9: and you can't sit back and predict blue sky multiple

637
00:31:46,320 --> 00:31:49,560
Speaker 9: expansion and perpetuity with this type of business as we

638
00:31:49,600 --> 00:31:50,320
Speaker 9: see it right now.

639
00:31:51,680 --> 00:31:54,160
Speaker 2: I look at the center tendency of a long term

640
00:31:54,240 --> 00:31:57,040
Speaker 2: chart when you say a pullback, how much would that

641
00:31:57,080 --> 00:31:59,920
Speaker 2: be if you do get some negative news out of China,

642
00:32:00,760 --> 00:32:02,600
Speaker 2: et cetera. Is this from one to eighty down to

643
00:32:02,640 --> 00:32:04,760
Speaker 2: one sixty, which is a center distribution?

644
00:32:06,480 --> 00:32:08,800
Speaker 9: You know, certainly we would feel more comfortable with a

645
00:32:08,800 --> 00:32:12,160
Speaker 9: healthy double digit return to our price target. You know,

646
00:32:12,280 --> 00:32:15,680
Speaker 9: I do have some comfort with our estimates and with

647
00:32:15,720 --> 00:32:18,360
Speaker 9: the street consensus. I do believe that you know, people

648
00:32:18,440 --> 00:32:21,520
Speaker 9: have baked in the idea of a very muted iPhone.

649
00:32:21,640 --> 00:32:23,080
Speaker 9: You know, this is a company you can own at

650
00:32:23,080 --> 00:32:26,000
Speaker 9: the right price, but it's a mature company price. It's

651
00:32:26,040 --> 00:32:26,920
Speaker 9: not a growth multiple.

652
00:32:26,960 --> 00:32:29,720
Speaker 4: I think, Martin, is this an Apple problem or is

653
00:32:29,760 --> 00:32:31,240
Speaker 4: this a big tech problem?

654
00:32:31,320 --> 00:32:34,440
Speaker 9: More broadly, you know, I think this is much more Apple.

655
00:32:34,440 --> 00:32:36,200
Speaker 9: I mean, we look at some other big tech companies

656
00:32:36,200 --> 00:32:40,480
Speaker 9: in our coverage and we see a really great confluence

657
00:32:40,520 --> 00:32:45,880
Speaker 9: of things developing lower interest rates, certainly supporting multiples, expansion,

658
00:32:46,520 --> 00:32:49,200
Speaker 9: certainly favoring scarce growth, which you don't have it Apple,

659
00:32:49,240 --> 00:32:51,720
Speaker 9: but you do have it things like Amazon, And I

660
00:32:51,720 --> 00:32:53,640
Speaker 9: think there's been a reset in the Internet model. People

661
00:32:53,640 --> 00:32:56,280
Speaker 9: have understood that you can run these businesses with much

662
00:32:56,320 --> 00:32:57,920
Speaker 9: better margins, much more efficiently.

663
00:32:58,320 --> 00:32:58,520
Speaker 6: You know.

664
00:32:58,520 --> 00:33:01,000
Speaker 9: So while you're nickel and diming some mar improvement at Apple,

665
00:33:01,160 --> 00:33:05,720
Speaker 9: you're seeing explosive margin improvement at Amazon, at Meta, Pinterest,

666
00:33:05,760 --> 00:33:08,120
Speaker 9: at Spotify. You know, those that I think are much

667
00:33:08,160 --> 00:33:10,440
Speaker 9: more interesting opportunities in this environment.

668
00:33:10,440 --> 00:33:12,560
Speaker 4: I've never thought that people would say Pinterest in Spotify

669
00:33:12,640 --> 00:33:16,200
Speaker 4: would trump Apple when it came to potential opportunities. Is

670
00:33:16,200 --> 00:33:18,800
Speaker 4: it negative enough in your view for them to really

671
00:33:18,880 --> 00:33:21,040
Speaker 4: drop out of the mag seven for this to be

672
00:33:21,120 --> 00:33:23,440
Speaker 4: defined by a very different narrative that Apple is just

673
00:33:23,480 --> 00:33:25,400
Speaker 4: not included in in twenty twenty four.

674
00:33:26,320 --> 00:33:29,760
Speaker 9: Well, you know, I mean max seven certainly, that's kind of,

675
00:33:30,920 --> 00:33:33,360
Speaker 9: you know, a term of art. I guess the thing

676
00:33:33,400 --> 00:33:35,480
Speaker 9: with Apple is, I think it's a CpG company. I

677
00:33:35,520 --> 00:33:39,000
Speaker 9: think that, you know, it's a company that you'd like

678
00:33:39,040 --> 00:33:41,520
Speaker 9: to own at the right price, you know, in a

679
00:33:41,560 --> 00:33:45,520
Speaker 9: certain macro environment where perhaps it's defensive, if the economy

680
00:33:45,560 --> 00:33:48,200
Speaker 9: is slowing, maybe it's more interesting. But you don't need

681
00:33:48,240 --> 00:33:51,880
Speaker 9: to be overweight Apple in every environment. You should pick

682
00:33:51,920 --> 00:33:52,920
Speaker 9: and choose your places.

683
00:33:53,120 --> 00:33:55,480
Speaker 5: I always wonder what the appropriate multiple on that name

684
00:33:55,720 --> 00:33:59,440
Speaker 5: actually is. You've got the core good, the iPhone going

685
00:33:59,520 --> 00:34:01,880
Speaker 5: ex grow, You've got a multiple that still looks pretty

686
00:34:01,920 --> 00:34:05,640
Speaker 5: growthy as the revenue mix starts to shift towards services.

687
00:34:06,560 --> 00:34:08,440
Speaker 5: I'm ordering from your perspective, what most part did you

688
00:34:08,440 --> 00:34:09,760
Speaker 5: put on that business?

689
00:34:10,600 --> 00:34:12,279
Speaker 9: Well, look, I mean I think that it's trading at

690
00:34:12,280 --> 00:34:14,920
Speaker 9: about one point four times or so the market multiple.

691
00:34:15,800 --> 00:34:19,080
Speaker 9: You know, I think a lesser premium is appropriate. You know,

692
00:34:19,120 --> 00:34:22,319
Speaker 9: you can give it some premium given the strength of

693
00:34:22,480 --> 00:34:25,360
Speaker 9: its franchise, the strength of its brand, the durability you know,

694
00:34:25,480 --> 00:34:29,479
Speaker 9: the iPhone's not going away, and they've got good cash

695
00:34:29,480 --> 00:34:31,880
Speaker 9: flow and good share repurchase. So to think that this

696
00:34:31,960 --> 00:34:35,640
Speaker 9: could be a load image twenties multiple makes more sense

697
00:34:35,680 --> 00:34:37,000
Speaker 9: to me than a thirty multiple.

698
00:34:37,160 --> 00:34:39,440
Speaker 5: Bana, Thank you, sir for your insight. The update to

699
00:34:39,480 --> 00:34:42,520
Speaker 5: a new year. Bona Crockett there of Rosenblat Securities.

700
00:34:42,719 --> 00:34:46,560
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701
00:34:46,719 --> 00:34:50,920
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702
00:34:51,160 --> 00:34:56,160
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703
00:34:56,480 --> 00:34:58,880
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704
00:34:58,480 --> 00:35:00,719
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705
00:35:00,920 --> 00:35:04,520
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706
00:35:04,880 --> 00:35:09,080
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