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Speaker 2: Well, sure's an Apple lower right now by about a
Speaker 2: percentage point. The company holding its product launch event at
Speaker 2: its headquarters today at Apple Park in Coopertino, California, right now,
Speaker 2: announcing details of the iPhone sixteen, refresh of AirPods, Apple
Speaker 2: Watch as well and more. The keynote continuing to be underway.
Speaker 2: We've also got a great live blog covering the event.
Speaker 2: I encourage everybody to check that out too. Let's go
Speaker 2: now to Ed lud Though, co host of Bloomberg Technology
Speaker 2: on Bloomberg TV. He's been at Apple Park in Coopertino,
Speaker 2: California since the wee hours of the morning. We appreciate
Speaker 2: that he joins us Now, Ed, what is one new
Speaker 2: thing that you learned today?
Speaker 3: Oh goodness, Well, one new thing that I learned today
Speaker 3: is that what's old is new. We have a button
Speaker 3: called camera control on the iPhone sixteen generation, and you
Speaker 3: think if it as something akin to the shutter button
Speaker 3: on a DSLR camera. For you photography enthusiasts out there,
Speaker 3: you know very simply, if you're holding the iPhone sixteen
Speaker 3: in your hand and you see something you're desperate to
Speaker 3: take a photograph, Bam, hit the camera control button. Camera
Speaker 3: comes up. But don't worry, Tim, You don't need to
Speaker 3: turn your hands or readjust or turn the screen boom,
Speaker 3: just hit the button again and it takes a photo.
Speaker 3: This is groundbreaking innovation. Is this, as you guys know
Speaker 3: enough report?
Speaker 4: Yeah?
Speaker 2: Is this enough to get people to buy the iPhone
Speaker 2: sixteen to upgrade from the fifteen or the fourteen or,
Speaker 2: like me, the lowly thirteen.
Speaker 3: Joking aside as I've heard them talk about camera control
Speaker 3: actually sounds like an awesome idea and I can't wait
Speaker 3: to get my hands on it and test it. But
Speaker 3: it probably isn't enough. And so you need to separate
Speaker 3: the hardware story from the software story. And when I
Speaker 3: say software, I mean AI and so these are not
Speaker 3: substantive hardware upgrades from the prior generation I've one fifteen,
Speaker 3: although there is some improvement to the capabilities of the
Speaker 3: processor in the Base sixteen. What they're talking about in
Speaker 3: real time because the events ongoing obviously, is why we
Speaker 3: need Apple Intelligence their AI suite in our lives. And
Speaker 3: very simple summary is that it basically improves the tasks
Speaker 3: that we already do on our phones each day, makes
Speaker 3: them more efficient, easier to do, rather than being some
Speaker 3: kind of wholesale change to how we interact with our
Speaker 3: mobile phones.
Speaker 5: Just very briefly, on the camera, Timmy, my husband.
Speaker 2: He's he's a photographer, a real photographer.
Speaker 5: Yeah, he actually switched from the Android to the Apple
Speaker 5: a couple of years ago just because of the camera.
Speaker 5: But add to your point, I don't know if this
Speaker 5: is enough. It's very cool, but I don't know if
Speaker 5: it's enough to sort of pull forward that upgrade cycle.
Speaker 5: I mean, tod just a little bit more about the
Speaker 5: software though, about Apple Intelligence, because the narrative is out
Speaker 5: there that Apple is kind of behind where they should
Speaker 5: be when it comes to AI. And of course this
Speaker 5: arms race that's underwayo big among all the big tech companies.
Speaker 5: How far does this event go if it all in
Speaker 5: dispelling that storyline.
Speaker 3: Well, the most important piece of news I suppose so
Speaker 3: far is that it will start rolling out in October,
Speaker 3: which confirms Bloomberg's existing reporting, And so then think about
Speaker 3: chronology of events. You know, we'll get the full details
Speaker 3: of the handsets themselves today, they'll start shipping probably by
Speaker 3: the end of the September, and you won't get access
Speaker 3: Sapple Intelligence until next month. So it's actually a slight
Speaker 3: delay in terms of like, well, hold on, I just
Speaker 3: got a new phone, but I don't yet have access
Speaker 3: to those tools. But the thing I re emphasized, and
Speaker 3: I think I just did a post in the blog
Speaker 3: that they'll put out soon, is that this isn't sort
Speaker 3: of a new functionality. A lot of what they outlined,
Speaker 3: be it photo related or task related drafting of an email,
Speaker 3: reviewing information, it's just a sort of more automated way
Speaker 3: of doing things we already do, rather than some new
Speaker 3: brilliant functional task that Generative AI has brought us through
Speaker 3: the handset. But again Apple being Apple, super heavy emphasis
Speaker 3: on privacy data security. That's something they always go back
Speaker 3: and lean into because they feel they're in a strong
Speaker 3: position there and they have a great track record.
Speaker 2: Maybe that's a good segue to talk about some of
Speaker 2: the health features that were announced today. In Cooper Tino
Speaker 2: ed give us an idea from a health perspective, not
Speaker 2: just when it comes to sleep apnea, but also what
Speaker 2: we heard about audio and ear health in the new
Speaker 2: AirPods lineup.
Speaker 3: Yes, so sleep apnea starting with Apple Watch series ten
Speaker 3: pending FDA approval, but it's close a really interesting piece
Speaker 3: of technology. You know, we don't need to the three
Speaker 3: of us go into our sleeping habits, but sleep apnea
Speaker 3: is a real thing. You know, many people listening to
Speaker 3: the pro will have loved ones that have some sort
Speaker 3: of degree of sleep ATNA. I know people that have
Speaker 3: had strokes as a result of sleep ATNA. And I
Speaker 3: can tell you that inside the Steve Jobs Theater when
Speaker 3: they confirm that function, there was real engagement with the audience.
Speaker 3: This is part of the Apple story about getting wanting
Speaker 3: to get into more healthcare services and very similarly with
Speaker 3: the current general next generation of AirPods being used as
Speaker 3: a sort of hearing aid device. You know, they gave
Speaker 3: the example in the presentation of a woman who was
Speaker 3: hard of hearing and her son speaking to her at
Speaker 3: a special event and saying like this is why you're
Speaker 3: so important to us, and using the sort of audio
Speaker 3: experience of normal hearing versus amplified hearing using the airpod's
Speaker 3: new territory in some sense for Apple, but again confirms
Speaker 3: Bloomberg Mark German's reporting.
Speaker 5: So that's ears. Let's move to the risk and let's
Speaker 5: talk about the watch. The watch is interesting, I mean,
Speaker 5: some new stuff coming there, especially with sleep apnea, but
Speaker 5: talk to us a little bit about blood oxygen sensing.
Speaker 5: This goes back to the beginning of the year. Of course,
Speaker 5: that lawsuit with Massimo. I mean, is there any sense
Speaker 5: of whether that'll affect users, Are users holding out for
Speaker 5: that or is that sort of just indefinitely off the table, you.
Speaker 3: Know, I remember that week. Well, there are a lot
Speaker 3: of noise at the time. I don't think there is
Speaker 3: that much evidence that it sort of puts people off
Speaker 3: this product and makes them look elsewhere, because it's something
Speaker 3: core to what they want.
Speaker 2: You know.
Speaker 3: The sleep apnea detection, along with other monitoring, is a
Speaker 3: big selling point for the Apple Watch. There's one point
Speaker 3: that Bloombergsy and King and I made in the blog though,
Speaker 3: that I would say the health stuff's really important, but
Speaker 3: you also have to remember what wearables and Apple watches
Speaker 3: and to all intents and purposes. It's a lower barrier
Speaker 3: to entry. Think about the price of the series ten, three,
Speaker 3: nine nine, right, and think about the price of an
Speaker 3: iPhone handset. We're yet to get the details. I think
Speaker 3: for the pro if we get it, you'll jump in.
Speaker 3: But the handset's probably one thousand dollars. So there is
Speaker 3: a consumer audience out there that can't afford the smartphone,
Speaker 3: but maybe they can afford the wearables. Low is the
Speaker 3: barrier to entry for the Apple ecosystem. It's fashion, you know, Katie,
Speaker 3: this one's for you. It's a piece of jewelry and
Speaker 3: the heavy emphasis on the materials, the partnership with themes,
Speaker 3: on the on the wrist straps. There's an audience for
Speaker 3: that out there right there.
Speaker 5: Definitely is. I have to say, though, Ed, I'm a
Speaker 5: garment gal and she's gonna take a lot to get
Speaker 5: me away from brand loyalty. But no, they're probably I
Speaker 5: like this because you know, it really communicates a piece
Speaker 5: of my personality. I'm sporty, tim. I don't know if
Speaker 5: the Apple Watch does that.
Speaker 2: She's wearing hookahs. That is true. That's not a joke.
Speaker 2: She actually is. Before we let you go, a couple
Speaker 2: questions I have about this. I was able to tune
Speaker 2: into some of the presentation as I was preparing for
Speaker 2: this show. All of it that I saw was pre
Speaker 2: recorded and very heavily produced. I mean, I'm old enough
Speaker 2: to remember when very little was pre produced, and a
Speaker 2: lot of it had to do with like Tim Cook
Speaker 2: and Craig Frederighi on stage telling you that you know
Speaker 2: you two was coming to your iPhone. How much of
Speaker 2: this is pre produced versus live demos?
Speaker 3: Honestly, I think it's really important to say that it's
Speaker 3: largely all pre produced. A really interesting question posed in
Speaker 3: the blog by Ian King is was AI used because,
Speaker 3: for example, you know, they have key executives standing in
Speaker 3: front of the Golden gate Bridge in San Francisco and
Speaker 3: chrissy Field the Palace of Fine Arts, like very well
Speaker 3: known known landmark, there are no people around them. I mean,
Speaker 3: these are places that I go almost every day, and
Speaker 3: I can tell you there's often at least five people there,
Speaker 3: more than zero, you know, if not dozens or hundreds
Speaker 3: of tourists. So that's kind of interesting. But you are right.
Speaker 3: I mean, the notable thing is that Apple has a
Speaker 3: deep bench of talent you know, there are many product
Speaker 3: leads and number two's in the hierarchy that are part
Speaker 3: of this presentation, and that's become normal in the pandemic
Speaker 3: post pandemic era for sure.
Speaker 2: Ed Ludlow, co host of Bloomberg Technology on bloom Bloomberg TV.
Speaker 2: He's got to get back to that demo happening at
Speaker 2: the Steve Jobs Theater at Apple Park in Coupertino, California. Ed,
Speaker 2: thanks so much for joining us with all the updates. Again,
Speaker 2: we do have a live blog going. It's contributing to that.
Speaker 2: We got a great team contributing to that. Do check
Speaker 2: that out on the Bloomberg terminal and at Bloomberg dot com. Well,
Speaker 2: speaking of Apple, it's worth three point four trillion dollars.
Speaker 2: It's more than any other company in the world. Twenty
Speaker 2: twenty three revenue came in at nearly four hundred billion dollars.
Speaker 2: It's about as big as the entire economy of Denmark
Speaker 2: or the Philippines. Most of the business is about iPhones,
Speaker 2: but last quarter Apple sales just from digital services reached
Speaker 2: twenty four point two billion dollars. It's more than the
Speaker 2: combined revenue of Adobe, Airbnb, Netflix, Palanteer, Spotify, Zoom and
Speaker 2: x from Elon Musk. Investors seem to have no problem
Speaker 2: with this kind of dominance, as Apples storing stock price
Speaker 2: over the past decade, it makes clear regulators, on the
Speaker 2: other hand, have some questions. It's today's Big Take, written
Speaker 2: by Austin Carr and Max Chafkin. Austin is a Bloomberg
Speaker 2: News technology reporter. He joins us from our Boston bureau.
Speaker 2: Check out their story and more from the Bloomberg Big
Speaker 2: Take on the Bloomberg Terminal and at bloomberg dot com
Speaker 2: Slash Big Take. Austin give us an idea of the
Speaker 2: way that regulators, not just here in the US, but
Speaker 2: around the world have attempted to take aim at Apple's dominance,
Speaker 2: and also described that dominance this so called Apple tech.
Speaker 6: Yeah, so the controversy comes down to how much Apple
Speaker 6: controls its ecosystem, what they will let into It's so
Speaker 6: called waldgarden, the sort of confines of its platform. And
Speaker 6: the truth is they don't let a whole a lot
Speaker 6: in that they don't regulate review and also charge certain
Speaker 6: commissions and fees on which is what a lot of
Speaker 6: developers are taking issues with. If you want to see
Speaker 6: where the market is seeing a little bit of change.
Speaker 6: It's actually in Europe with the DMA, the Digital Markets
Speaker 6: app with the European Union has put Apple on a
Speaker 6: under some pressure to actually change its ways and open
Speaker 6: up that's Apple Guard, that walled garden effect. So actually
Speaker 6: there you're seeing some pretty novel differences with how you
Speaker 6: have an iPhone in the US. Just for example, they're
Speaker 6: opening up alternative marketplaces in Europe, so you can actually
Speaker 6: download a different app store if you want a different
Speaker 6: set of experience from different software makers, like Epic Games
Speaker 6: or another called Alt Store. In fact, over in the EU,
Speaker 6: you can actually delete Apple native apps, like soon you'll
Speaker 6: be able to delete the browser Safari, the camera app,
Speaker 6: and even the app store itself, which is opening up
Speaker 6: a sort of fundamentally different experience that's a little bit
Speaker 6: more flexible and open than what we have in the
Speaker 6: rest of the world. So that's actually a good preview
Speaker 6: of what you might see on the horizon depending on
Speaker 6: how regulation shapes up in the US.
Speaker 5: And it's interesting because you can trust that with investors.
Speaker 5: It feels like potentially a case where regulators are and
Speaker 5: investors are at odds here because I don't know, Austin,
Speaker 5: do you see any signs that investors are uneasy with
Speaker 5: just how dumb an Apple is?
Speaker 6: No. I mean, I think that lock in effect is
Speaker 6: actually what ironically makes it so enticing for investors and
Speaker 6: also such a beloved company for consumers. I mean, look,
Speaker 6: the tough thing for the DJ here in the US,
Speaker 6: which filed its anti trust complaint earlier in March, is
Speaker 6: that what they take issue with the way that Apple
Speaker 6: controls its ecosystem and integrates its hardware, software and services
Speaker 6: is usually what consumers really love about it. You know,
Speaker 6: we like that it works really together if you have
Speaker 6: a MacBook and Apple Watch, AirPods and an iPhone at.
Speaker 2: The same time.
Speaker 6: We don't really quite grasp that because of that integrated experience,
Speaker 6: what it's locking out it can be a detriment to
Speaker 6: the experience itself, even if we like the Apple sort
Speaker 6: of day to day incremental updates. So I think actually
Speaker 6: today's event with AI, where they didn't really release any
Speaker 6: new AI features that they hadn't already previewed, they're not
Speaker 6: actually going to come for a few months. That's one
Speaker 6: example of the ways that perhaps they're not incentivized to
Speaker 6: move as fast and as risky and as innovatively as
Speaker 6: they had in years past, because there's not a lot
Speaker 6: of risk that I as an iPhone user and going
Speaker 6: to leave to a different ecosystem.
Speaker 5: Right, Well, let's talk about that a little bit more,
Speaker 5: because we're talking about regulators. Then we talked about investors,
Speaker 5: and you bring up the end user of course, the customer,
Speaker 5: the person who is buying into this walled garden. I mean,
Speaker 5: what is the sense there are users getting frustrated with
Speaker 5: the fact that you do have to buy into an ecosystem.
Speaker 5: You can't really buy just a product one off and
Speaker 5: then integrate it with other products from other companies.
Speaker 6: The thing is that this isn't an overnight switch. This
Speaker 6: is something that they've essentially been building out from when
Speaker 6: Steve Jobs came back and released the iMac, then the
Speaker 6: iPod and so on. You started building up that ecosystem
Speaker 6: over the course of decades, where if you have an iPhone,
Speaker 6: remember that device came out before there was an app store.
Speaker 6: Then they introduced the app store a year later. Then
Speaker 6: they introduced a lot of companion devices like the iPad,
Speaker 6: like the Apple Watch, like air pods, and then on
Speaker 6: top of that part of what makes CEO Tim Cooks
Speaker 6: Era so monumental has been this push into services. So
Speaker 6: you subscribe to iCloud, you subscribe to TV plus, fitness subscriptions,
Speaker 6: things like that, and so these are all things that
Speaker 6: add on to the experience and make it just that
Speaker 6: much easier to add a new Apple device or a
Speaker 6: new Apple subscription because that's your default, that's what you're
Speaker 6: going to want to add to. Now. That also makes
Speaker 6: it easier to escape that ecosystem. You know, once you've
Speaker 6: invested thousands of dollars in the Apple ecosystem, you're not
Speaker 6: going to suddenly overnight switch to a Windows PC or
Speaker 6: a Google Pixel phone just because they add a new
Speaker 6: AI feature. It makes that sort of mote that Apple
Speaker 6: has all the wider because it is very difficult to
Speaker 6: people not just to switch one device, but to switch
Speaker 6: their entire portfolio of hardware and software. And I think
Speaker 6: that's why shareholders really love Apple stock, because its mode
Speaker 6: is so wide. It's walled garden barriers are so tall.
Speaker 2: Austin and you and Max I love the way you
Speaker 2: start the piece that iconic nineteen eighty four Apple ad
Speaker 2: the sort of David versus Golias, you know, and where
Speaker 2: Apple has come since then and from then. I wonder,
Speaker 2: just in the last thirty seconds that we have with you,
Speaker 2: what the biggest threat to Apple is right now moving forward.
Speaker 6: I mean, I think it is sort of a feeling
Speaker 6: of incrementalism of you know, things aren't seemingly disruptive until
Speaker 6: they are being able to disrupt, until they are disrupted.
Speaker 1: You know.
Speaker 6: I think when chat ChiPT came along in late twenty
Speaker 6: twenty two, that shocked a lot of people. No one
Speaker 6: had ever seen anything like that. And here we are
Speaker 6: two years later and Apple's just getting around to rolling
Speaker 6: out its AI features, many of which won't roll out
Speaker 6: to twenty twenty five. Now, did that disrupt you know,
Speaker 6: sales of the iPhone going forward? No, there's not really
Speaker 6: a chat ChiPT phone that's out there. But you can
Speaker 6: see the risks of sort of slowly introducing some of
Speaker 6: this this innovation. You know, it has downsides for consumers.
Speaker 6: At what point are they going to say, you know what,
Speaker 6: I want something a little bit sooner. I want something
Speaker 6: a little bit faster and cooler.
Speaker 2: Austin Carr, one half of the team that did today's
Speaker 2: at Bloomberg Big take. Check it out at Bloomberg dot com,
Speaker 2: slash the Big Take, and of course, on the terminal.
Speaker 1: You're listening to the Bloomberg Business Week. Catch us Live
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Speaker 2: Home sales in Manhattan rose to the first time in
Speaker 2: two years. This was in the second quarter of the year.
Speaker 2: This as impatient buyers who'd been waiting for interest rates
Speaker 2: to fall took the plunge. Closings of co ops and
Speaker 2: condos byke twelve point two percent in Manhattan in the
Speaker 2: three months through June from the same period in twenty
Speaker 2: twenty three. That's according to appraiser Miller Samuel and brokerage
Speaker 2: Douglas Elman Real Estate. The median price of one point
Speaker 2: one eight million dollars in the quarter dips slightly from
Speaker 2: year earlier, still though hovering near record since rate stored
Speaker 2: back in mid twenty twenty two. For an update on
Speaker 2: how things look in this quarter and forward, we turned
Speaker 2: to Barbara Fox. She's president of Fox Residential Group. It's
Speaker 2: a brokerage firm that works with buyers and sellers throughout
Speaker 2: New York City, and that is where this afternoon we
Speaker 2: find at Barbara. Barbara, how would you describe where we
Speaker 2: are in the third quarter of the year, now that
Speaker 2: we're in the final month of the quarter.
Speaker 7: Well, it's an interesting market and we can rest assured
Speaker 7: of one thing. Our market never is static. We came
Speaker 7: off of a very slow summer, very little activity, and
Speaker 7: it didn't really change prices very much. But we're now
Speaker 7: into a little bit more of an active, frisky market,
Speaker 7: one that we haven't seen in a while.
Speaker 5: A frisky market, A frisky at New York real estate market.
Speaker 5: I mean, what does that mean in terms of prices?
Speaker 5: And I mean actually zooming back from that even what
Speaker 5: do you attribute that to? Because of course rates have
Speaker 5: come down, mortgage rates, but not by that much.
Speaker 7: They haven't and we're not going to see the mortgage
Speaker 7: rates we saw before ever again. And I think people
Speaker 7: are getting more used to that. You know, everything becomes
Speaker 7: a new normal in New York. The what's happening right
Speaker 7: now is that there is very little product on the market.
Speaker 7: There's a real shortage of products. There are a lot
Speaker 7: of apartments on the market and properties, but there's a
Speaker 7: shortage of compared to other periods of time, but prices
Speaker 7: have never been higher than they are right now, So
Speaker 7: you have sort of this juxtaposition of two things that
Speaker 7: don't necessarily jive. What we really are seeing is with
Speaker 7: this increase in activity that's come up in the last
Speaker 7: couple of weeks, and this actually started before Labor Day,
Speaker 7: I think people are realizing that everybody, you know, there's
Speaker 7: a market, always an active market in New York. It's
Speaker 7: just the degree of activity. So people are thinking that,
Speaker 7: you know, it's time to start looking again, because once
Speaker 7: more comes on, the more product comes on the market
Speaker 7: and more people come into the market, the prices, it
Speaker 7: will push the prices even higher. So buyers will looking
Speaker 7: still looking for good buys which they can still get
Speaker 7: and and it's it's just interest rates probably aren't going
Speaker 7: to go down too much more than they have already.
Speaker 7: I think the UH they averaged about six and six
Speaker 7: point three five percent over in the last eighteen months
Speaker 7: or so. I'm not sure something like that, and I
Speaker 7: don't think they're gonna we're going to see interest rates
Speaker 7: much for a six percent. So people are getting used
Speaker 7: to these new numbers. People still need to buy things.
Speaker 7: They need to buy homes, and I really think that
Speaker 7: the buyer demand is going to pick up as long
Speaker 7: as interest rates don't go back up.
Speaker 5: Yeah, and of course, I mean six percent is still
Speaker 5: so high. Uh, it's not four percent historically, though, certainly
Speaker 5: better than eight percent.
Speaker 2: Yeah, and better than where things were in the nineteen eighties.
Speaker 2: That's what you know. Carol always reminded, I was.
Speaker 7: I was in the business in the I was in
Speaker 7: the business of the eighties, and we we had eighteen
Speaker 7: percent interest rates at that point. I know, it's crazy,
Speaker 7: I cannot and then they went down to two three percent,
Speaker 7: so go fig Yeah.
Speaker 5: Well, let's talk about about the price dynamics a little bit.
Speaker 5: I'm looking at some of the listings that you have,
Speaker 5: the sales you're currently representing some pretty big price tags
Speaker 5: multimillion dollars there. I mean, are you we seeing big markdowns?
Speaker 5: I mean, how are Okay, maybe these buyers are getting
Speaker 5: used to, you know, interest rates where they are, but
Speaker 5: how are we seeing that translate into the prices that
Speaker 5: sellers can ask.
Speaker 7: For When you're in a market which is very volatile
Speaker 7: as we are seeing now, And I think this volatility
Speaker 7: will pretty much remain until after the election. I mean,
Speaker 7: we have so much bad stuff going on all over
Speaker 7: the world right now. It's it's going to be volatile
Speaker 7: for a while, and sellers need to understand that even
Speaker 7: though their prices are are they even though they price
Speaker 7: their units at a certain point and hopefully they've gotten
Speaker 7: some good advice from brokers, it doesn't necessarily mean there's
Speaker 7: going to be a buyer to buy it at that
Speaker 7: price point. So sellers really need to be lefts rigid
Speaker 7: in their expectation of sale prices in this kind of
Speaker 7: volatile market. I think finding, particularly in New York, finding
Speaker 7: the right buyer and the right timing is a little
Speaker 7: more important even than finding the right price, and prices
Speaker 7: are always negotiable.
Speaker 2: So, Barbara, over the last few years, when we've spoken
Speaker 2: to you, and we've spoken to folks in New York
Speaker 2: City who are in the real estate industry, we've seen
Speaker 2: different themes emerge. Early on in the pandemic, it was
Speaker 2: people leaving the city, and then a little later it
Speaker 2: was people coming back to the city. We saw an
Speaker 2: explosion of all cash deals when rates went higher. Initially,
Speaker 2: what's the pattern and the theme that you're seeing right
Speaker 2: now when people are who are moving to the city
Speaker 2: or moving within the city, why are they moving and
Speaker 2: how are they buying and where are they going?
Speaker 7: Well, I don't think there's any great desire to move
Speaker 7: out of the city right now. We're not seeing a
Speaker 7: lot of that, which is why the supply of apartments
Speaker 7: and properties in New York and Manhattan are so low.
Speaker 7: There's not a lot of people moving. There are not
Speaker 7: a lot of people moving for a lot of reasons.
Speaker 7: But for one reason is they they a lot of
Speaker 7: people are sitting with these fixed three, two and three
Speaker 7: or four percent interest rates and they don't want to
Speaker 7: have to redo those into a six or seven percent
Speaker 7: interest rate, so they're not moving for that reason. And
Speaker 7: just generally, I don't think that there is a particular
Speaker 7: there's no desired to escape the city anymore, and that
Speaker 7: was very prevalent after COVID and during COVID. But I
Speaker 7: think a lot of people have moved back to the
Speaker 7: city and are happily ensconced here. And that's great, and
Speaker 7: you know, everything that's great about the city remains really great,
Speaker 7: and it's very buoyant.
Speaker 2: Right now, Barbara, we're gonna have to leave it there.
Speaker 2: Do appreciate you taking the time. Always good to check
Speaker 2: in with you. Barbara Fox as president of Fox Residential Group.
Speaker 2: It's a brokerage firm that works with buyers and sellers
Speaker 2: throughout New York City.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 2: Well shares of the cybersecurity company Secure Works rallied late
Speaker 2: last week Thursday and Friday, this after the company narrowed
Speaker 2: its total revenue forecast for the full year and Barkley's
Speaker 2: raised its price target on the stock. We've got back
Speaker 2: with us Wendy Thomas, president and CEO at Secure Work.
Speaker 2: She joins us from Atlanta. Wendy, how are you?
Speaker 4: I am well, Thanks for having me.
Speaker 2: Yeah, thanks so much for joining us. I want to
Speaker 2: talk about the latest quarter and then big picture of
Speaker 2: cybersecurity in just a minute. But talk about the most
Speaker 2: recent quarter, what worked and what investors really we're happy with.
Speaker 4: They were thrilled that we more than met our financial commitments,
Speaker 4: growing our revenue and arr on our new security platform business.
Speaker 4: We are done with our transformation to build our AI
Speaker 4: platform and move our customers over to it, and that's
Speaker 4: led to expanding gross margins positively but cash flow positive
Speaker 4: quarter and all that on the backs of bunching new
Speaker 4: products and offerings like identity detection and response. So we're
Speaker 4: thrilled with what we were able to deliver and we're
Speaker 4: nowhere close to done yet.
Speaker 5: And maybe for our listeners who aren't as well acquainted
Speaker 5: with what Secure Works does, cybersecurity obviously a broad church
Speaker 5: tell us a little bit about what you do, who
Speaker 5: your customers are, whether of course it's businesses or you
Speaker 5: protecting individuals for example, with their own cyber hygiene.
Speaker 4: So we do protect businesses and nonprofit organizations around the globe.
Speaker 4: We operate in about sixty countries around the world, and
Speaker 4: we provide a holistic approach to security for customers. In
Speaker 4: the industry parlance, it's called managed detection and response, but
Speaker 4: it is what it is across their entire technology estate.
Speaker 4: We can detect any security events or possible security events,
Speaker 4: help them proactively manage their security posture to prevent breaches
Speaker 4: from happening and help them in the event that something
Speaker 4: does occur someone clicks on that fishing link, We're able
Speaker 4: to respond quickly again to prevent any expltration of data
Speaker 4: or deployment of ransomware, to keep those customers secure twenty
Speaker 4: four to seven, three sixty five.
Speaker 2: Before we go any further, Wendy got to ask about
Speaker 2: some news that came out late last month from Reuter's
Speaker 2: Dell Tech exploring a possible sale of secure Works. According
Speaker 2: to Reuter's, they said it unidentified people familiar with the matter.
Speaker 2: Shares of secure Works that day jumped as much as
Speaker 2: thirty five percent. It was an intra day record. We
Speaker 2: do know that Dell holds pretty much all the company's
Speaker 2: Class B shares, so they do have about eighty percent
Speaker 2: of the company, and they explore a sale of secure
Speaker 2: works back in twenty nineteen. Help us and our investors
Speaker 2: understand what's going on here.
Speaker 4: Sure, there's no shortage of rumors in our technology space
Speaker 4: and security in particular, And well, I can't comment on
Speaker 4: speculations that come and go years past or currently. I
Speaker 4: can say that our shareholders talk to us about how
Speaker 4: pleased they are with the value that we have created
Speaker 4: in the business and that they are looking toward the
Speaker 4: future when the stock can really start to reflect that
Speaker 4: change in the underlying business. We are absolutely at an
Speaker 4: inflection point focused on executing our business strategy, have completed
Speaker 4: this transformation and turn profitable, So it's not a surprise
Speaker 4: to me that the shareholder base is interested in the
Speaker 4: stock and sort of waiting for that inflection point to hit.
Speaker 4: And we've got the capital structure we need today and
Speaker 4: tomorrow to be able to deliver that for shareholder.
Speaker 2: As a publicly traded company, you have the capital.
Speaker 4: Structure, you do absolutely. I always view capital structure as
Speaker 4: a tool, not a goal, and the backing that we
Speaker 4: have had and continue to have from Dell is an
Speaker 4: important thing for us, but it's not everything to who
Speaker 4: we are as a company. We were able to make
Speaker 4: this incredible investment in our platform, some two hundred and
Speaker 4: fifty million dollars in building out this AI powered technology
Speaker 4: for security detection and response, and that support has been
Speaker 4: tremendous from both our shareholders and from Dell's, our biggest shareholder,
Speaker 4: But it is not the thing that makes our breaks.
Speaker 4: Our ability to stay ahead of the adversary, or to
Speaker 4: become profitable, to grow our revenue. All of those are
Speaker 4: moving in the right direction. And like I said, it's
Speaker 4: important to think of capital structure as a tool, not
Speaker 4: a goal.
Speaker 5: Well, let's talk about some of the risks that are
Speaker 5: out there in the cybersecurity space. Of course, we are
Speaker 5: counting down to the US presidential election in less than
Speaker 5: two months to go. How are you viewing the threat
Speaker 5: landscape amid those upcoming elections?
Speaker 4: Sure, so it is an important time in terms of
Speaker 4: a couple of areas of threat around elections in particular.
Speaker 4: So we think of things around the ability to use
Speaker 4: generative AI in particular right now for social engineering and
Speaker 4: sort of those fishing emails that are so much better
Speaker 4: personalized potentially scraping social media information about you, and also
Speaker 4: used for we call information operations right political misinformation or
Speaker 4: interference in some way. And we do certainly see recent
Speaker 4: campaigns exposed by different law enforcement agencies, both in the
Speaker 4: US and overseas, targeting both the Trump and the Harris campaigns.
Speaker 4: These actions are to be expected that the difference is
Speaker 4: our ability to see prevent damage from those quickly communicate
Speaker 4: around those so that the wider community is aware of those.
Speaker 4: It's so important to ensuring that we don't undermine even
Speaker 4: the perception of the integrity of our elections because our
Speaker 4: elections they are secure, and so between law enforcement the
Speaker 4: private security community, this is something that we're going to
Speaker 4: be particularly vigilant about now through November.
Speaker 5: And I'm curious about how AI wraps into that conversation,
Speaker 5: especially with these developments and generative AI that you know
Speaker 5: we all watch. Do you think that that will make
Speaker 5: cyber attacks worse potentially or do you think that it'll
Speaker 5: actually help companies more when it comes to preventing attacks
Speaker 5: we're talking about just general attacks and also election risk.
Speaker 1: Sure.
Speaker 4: I always talk about the power and the peril of
Speaker 4: new technologies, and so generative AI is one of them.
Speaker 4: It has already for Secure Works been a boon to
Speaker 4: help with the effectiveness of our detection and response where
Speaker 4: we can use large language models to do a lot
Speaker 4: of the work to author an initial security report for
Speaker 4: our customers using the reports that our team has written,
Speaker 4: you know, thousands and thousands each year as the training
Speaker 4: data for that. Now, we never let anything go out
Speaker 4: without a human expert looking at it, but having our
Speaker 4: platform explain and sort of consumable everyday language or even
Speaker 4: translate to other languages what we see in terms of
Speaker 4: a security threat, to take it out of the technical
Speaker 4: into the business speak. Those are powerful applications that are
Speaker 4: already helping. When you think about the pyrel we certainly
Speaker 4: are seeing, especially in the realm of deep big videos,
Speaker 4: the use of AI to make old techniques, particularly around
Speaker 4: social engineering or phishing emails, harder to detect.
Speaker 2: More belise, I mean, it's pretty terrifying. It's pretty terribly
Speaker 2: Some of the videos that I've seen, and they've been
Speaker 2: clearly marked as AI, they're out of this world accurate
Speaker 2: and getting better I can do. Yeah, it's pretty wild.
Speaker 2: What I mean, if people are you know, if people
Speaker 2: are convinced by fake like actual fake news, that's you know,
Speaker 2: clearly something that's not right. What kind of prayer do
Speaker 2: we have have, Wendy in this world?
Speaker 4: This is all about. Even if they're able to convince
Speaker 4: a human that they are who they say they are
Speaker 4: in that video or that phone call or that email,
Speaker 4: we can use the power of technology to prevent data
Speaker 4: from going outside of our systems, to prevent to create
Speaker 4: multiple layers of checking things against a baseline or identity
Speaker 4: verification that can prevent actual damage from being done. And
Speaker 4: that's why we introduced this identity detection response because this
Speaker 4: deep big videos, the phishing emails that are targeting individuals.
Speaker 4: Securing your identity, what you're able to access, what you're
Speaker 4: able to do is kind of the next edge in
Speaker 4: security because of this world of we can no longer
Speaker 4: count on our instincts as humans to figure out whether
Speaker 4: something is real or not. We need the machine to
Speaker 4: help protect us.
Speaker 2: Hey, Wendy, you're joining us at the beginning of September,
Speaker 2: and it's something that we talk about each and every
Speaker 2: year as the anniversary of the nine to eleven attacks
Speaker 2: comes upon us. I was Katie looking over Lower Manhattan
Speaker 2: over the weekend and they have the lights up already
Speaker 2: commemorating at nine to eleven. Wendy, I know you've done
Speaker 2: a lot of work with the nine to eleven Memorial
Speaker 2: and Museum. That's actually how you got on our radar
Speaker 2: because you and Carol were down there doing a panel
Speaker 2: in the fall of last year. I talk to us
Speaker 2: a little bitbout the work that you do there and
Speaker 2: how you try to keep the memory and the legacy
Speaker 2: of those loss there alive.
Speaker 4: Absolutely. So this is the twenty third anniversary of those attacks,
Speaker 4: and we are incredibly proud to secure the memorial and
Speaker 4: the museum and have been for years through the pandemic
Speaker 4: and everything. I think we all remember where we were
Speaker 4: when that happened, and so for us, it's all about
Speaker 4: continuing to remember and honor the victims and survivors and
Speaker 4: first response, but also to continue to fortify their cyber defenses. Unfortunately,
Speaker 4: they are under attack each day, and so by the
Speaker 4: nature of what it represents, they continue to be a
Speaker 4: high profile target. And our ability to help them scale
Speaker 4: their small team and equip them with the protections they
Speaker 4: need at a at a price that makes sense for
Speaker 4: an organization of their type. We're absolutely proud to do
Speaker 4: it as Cure Works.
Speaker 2: Wendy always appreciate you taking the time and joining us.
Speaker 2: That's Wendy Thomas, president and CEO at Secure Work. She
Speaker 2: joins us this afternoon from Atlanta, Georgia.
Speaker 4: I'm brothering Mack.
Speaker 3: Journal about you let me drive?
Speaker 2: Oh no, no, no, no, all right, please, I'll do these.
Speaker 1: I want to try it.
Speaker 2: It's a good question to good time.
Speaker 1: This is the drive to the Globe.
Speaker 5: Comer thing on.
Speaker 1: Bloomberg Radio.
Speaker 2: You know what time it is, Katie, Almost four o'clock. Yeah, yeah,
Speaker 2: pretty much three forty two.
Speaker 5: Yeah, we're pretty much there.
Speaker 2: Pretty much eighteen minutes ago until the close of trading
Speaker 2: on this Monday, the ninth of September. Kind of feels
Speaker 2: weird having a real full week, I know, given that
Speaker 2: last week was a holiday shortened trading week. I think
Speaker 2: everybody's back now.
Speaker 5: So just in general, the five day work week is
Speaker 5: unrealistically long.
Speaker 2: I agree with you. What does your boss think about?
Speaker 5: Uh, you know, it's a hard subject to bring up.
Speaker 7: It is.
Speaker 2: I'm not going to make you talk about it right now. Instead,
Speaker 2: we're going to talk about the markets, because we got
Speaker 2: Katie Kaminski sanding By. She's chief research strategist and portfolio
Speaker 2: manager at Alpha Simplex Group. She joins us from Cambridge, Massachusetts. Katie,
Speaker 2: good to have you back with us. The volatility that
Speaker 2: we saw last week, Katie and I brought up some
Speaker 2: of the superlatives a little bit ago. Yeah, worst week
Speaker 2: on the socks since twenty twenty, worst week for the
Speaker 2: and P five hundred going back to twenty twenty three,
Speaker 2: the regional banking crisis, Katie, is the volatility behind us
Speaker 2: in the short term?
Speaker 8: Unfortunately, I don't think so. I feel like it's September's
Speaker 8: difficult month and October tends to be difficult. So there's
Speaker 8: just a lot of stuff up in the air right now.
Speaker 5: Yeah, it's a good reminder that we are going according
Speaker 5: to script. We all know that September seasonally is terrible
Speaker 5: for the S and P five hundred.
Speaker 2: We notice that, though I don't know, we.
Speaker 5: Know that seasonally November is great. I mean, Katie, what
Speaker 5: is the rhyme or reason or do you just have
Speaker 5: to kind of respect seasonality here and let the market
Speaker 5: work through this spout of volatility.
Speaker 8: Well, I think what we've really been seeing is the
Speaker 8: market is going through rotation. We went through a period
Speaker 8: where we were really focused on inflation as the key
Speaker 8: culprit for monetary policy remaining on hold, and now we're
Speaker 8: shifting to a point where we're going to soon be
Speaker 8: going most likely through a cutting cycle, and economic data
Speaker 8: is coming out more mixed and more challenging, and so
Speaker 8: the market is focused on what are the impacts of
Speaker 8: this policy, and through that we're actually seeing some very
Speaker 8: defensive signals, especially outside of equities.
Speaker 5: Outside of equities, we'll talk to us about that. Fixed income,
Speaker 5: of course, treasuries have rallied pretty mightily. It feels like
Speaker 5: maybe a make or break moment is approaching with the
Speaker 5: FED twenty five or fifty basis points. But how much
Speaker 5: does it truly matter for your treasury's position right now
Speaker 5: or is are just the direction of travel?
Speaker 8: Well, it's that has been the strongest trend in the
Speaker 8: recent period, and I think whenever you have a really
Speaker 8: strong risk off type moves, it definitely is very positive
Speaker 8: for fixed income. The fact that we have rate cuts
Speaker 8: on the horizon that's also generally positive for fixed income,
Speaker 8: But it also to me, represents a little bit of nerves.
Speaker 8: A lot of investors are concerned about valuations and the
Speaker 8: equity markets. They're concerned about the impact of policy and
Speaker 8: the timing. So I do think fixed income is sort
Speaker 8: of your go to right now. But we've also seen
Speaker 8: other asset classes like commodities be very different short signals there,
Speaker 8: and the dollar has really been under pressure as well,
Speaker 8: so a lot of moves in the last two to
Speaker 8: three months.
Speaker 5: I'm just going to keep going tim you.
Speaker 2: Yeah, you're you know what, you can do whatever you want, Katie.
Speaker 2: You are my guest here, Katie to.
Speaker 5: Katie having a conversation right now, and given that you
Speaker 5: have this unique cross asset perspective, I mean, talk to
Speaker 5: us about how the different asset classes are talking to
Speaker 5: each other right now. Is this a very correlated market
Speaker 5: or are we starting to see some nuance in how
Speaker 5: the dynamic between these different asset classes are actually performing.
Speaker 8: So what's been interesting to me is you've really seen
Speaker 8: a pivot in cross asset class themes. It hasn't happened
Speaker 8: in the equity markets yet, but this is very common
Speaker 8: during a period where we might have a recession or
Speaker 8: a crisis. But of course each crisis or draw down
Speaker 8: is so different in history. But if you look at
Speaker 8: a time like COVID, you actually saw somewhat similar signals
Speaker 8: to now. So that would be short commodities, long fixed income.
Speaker 8: That's a risk off type of move. It really suggests
Speaker 8: that the market is a little nervous about growth and
Speaker 8: it's nervous about valuations, and so that is a big
Speaker 8: difference from what we've been dealing with for the last
Speaker 8: two or so years, where it's really been about higher rates,
Speaker 8: it's been about inflation, and so to us, it's definitely
Speaker 8: something we've been studying a little bit, just looking at
Speaker 8: how how often does this happen that you really see
Speaker 8: this type of pivot that looks more defensive in other
Speaker 8: asset classes.
Speaker 2: First, how nervous should we be about growth?
Speaker 8: I'm myself a little nervous, and that's just because what
Speaker 8: makes me nervous is, you know, there's a lead lag
Speaker 8: effect in policy. And I think why people have been
Speaker 8: so concerned about different economic data coming out, particularly employment,
Speaker 8: is that maybe somewhat of an indication that the effect
Speaker 8: of tighter policy does actually have effects, and we might
Speaker 8: need to wait to see if cutting rates is able
Speaker 8: to slow that down. And I think that's where a
Speaker 8: lot of people are going to be concerned, is that
Speaker 8: you could growth be stunted a little bit, and then
Speaker 8: that could cause pressure and equities.
Speaker 5: I want to talk about sentiment a little bit here,
Speaker 5: because going back to the twenty five versus fifty debate,
Speaker 5: I've been listening to a lot of Neil Dutta, for example,
Speaker 5: who has just been pounding the table that this FED
Speaker 5: should move by fifty basis points you read into Christopher
Speaker 5: Waller's speech on Friday talking about the possibility of front
Speaker 5: loading hikes or rate cuts rather if appropriate, sort of
Speaker 5: opening the door to it but not exactly going through.
Speaker 5: But we are in a blackout period for the FED,
Speaker 5: any of the likes of Morgan Stanley's Mike Wilson saying
Speaker 5: that that would really freak markets out if they want
Speaker 5: ahead with a fifty basis point cut. Where do you
Speaker 5: fall on what the FED should do at this month's
Speaker 5: meeting and we're what they actually will do, Katie.
Speaker 8: Well, I think they I probably think more in the
Speaker 8: camp of Williams that twenty five is sort of starting
Speaker 8: the force of rate cuts. If you go with fifty,
Speaker 8: I would agree that that might sort of send a
Speaker 8: signal that we know more than you, that you know,
Speaker 8: what we're concerned about is real. And so I think
Speaker 8: starting with twenty five is sort of a safe way
Speaker 8: to start the process of easing. And so I think
Speaker 8: that I'm tending to think that it's going to be
Speaker 8: about easing into the process instead of jumping in.
Speaker 2: Okay, how do you ease into it?
Speaker 8: Starting with twenty five? I'd say, I mean, what that's yeah, sorry, oh.
Speaker 2: No, I mean but what if you get what if
Speaker 2: you get data between now and then that says, hey,
Speaker 2: this is not something we need to be easing into
Speaker 2: right now. And if they do ease into it, then
Speaker 2: the market reacts negatively that Yeah.
Speaker 8: That's tricky because I think we only have a short
Speaker 8: period and only a couple of numbers of data that's
Speaker 8: in between now and the first cut. And if you
Speaker 8: look at what happened in August, there was a huge
Speaker 8: reaction and the Fed didn't react. So to me, it
Speaker 8: seems that they would hedge themselves and say, you know,
Speaker 8: this may be one number, but we're looking at all
Speaker 8: the data and we're sort of going in that direction.
Speaker 8: So I'm a little bit more towards the camp that
Speaker 8: they'll be cautious.
Speaker 1: All right.
Speaker 2: Katiekaminski the camp that they should be cautious. She's Chief
Speaker 2: Research Strategies and portfolio manager at Alpha Simplex Group, joining
Speaker 2: us from Cambridge, Massachusetts.
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