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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Looking at the shares of Apple fifty two week, Hi,

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Speaker 2: there's a little bit better feeling I think about iPhone

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Speaker 2: sales in particular. It's kind of helping this story here today.

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Speaker 2: Mandy Sink joined us. He's our senior technology channels for

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Speaker 2: Bloomberg Intelligence. Mandy, what's going on with Apple here? A

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Speaker 2: little bit of a rerating? Is it just trying to

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Speaker 2: catch up? Is there a different view that's forming out

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Speaker 2: there on these shares?

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Speaker 3: I mean I would call it a positive data point

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Speaker 3: after the new iPhone launch and look, you know everyone

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Speaker 3: was quite negative about Apple's ability to grow unit shipments.

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Speaker 3: What they're suggesting here is people who were waiting for

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Speaker 3: a new device are upgrading, and especially China is always

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Speaker 3: a focus given you know what is going on with Nvideo.

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Speaker 3: So Apple being a hardware company, you know, being able

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Speaker 3: to sell into China is always a positive and looks

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Speaker 3: like there are positive data points over there.

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Speaker 4: As well, so many what's the attraction to this one?

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Speaker 4: I mean, I'm sitting here with the iPhone. I don't

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Speaker 4: even know what this is. I don't even know what

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Speaker 4: model that's not about. But what's the attraction to this

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Speaker 4: new phone? Why is it doing so much better?

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Speaker 3: Well, so that's why I want to put it in context.

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Speaker 3: It's not as if, you know, at least from my

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Speaker 3: vantage point, we shouldn't be thinking about a big upgrade

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Speaker 3: cycle here. This is normal refresh here. With that being said,

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Speaker 3: you know, they launch a couple of news cus there

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Speaker 3: is a lighter iPhone this time around, so the attractiveness

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Speaker 3: is just people. People who want to upgrade for a

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Speaker 3: new battery, for a faster processor, probably for a lighter

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Speaker 3: from factor are doing that. But to my mind, the

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Speaker 3: missing ingredient here is a large anglid model running natively

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Speaker 3: on device, and that is where Android still is a

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Speaker 3: better experience when it comes to, you know, the LLM

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Speaker 3: side of things, and Apple has to step up either

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Speaker 3: through their own efforts or through a tie up with

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Speaker 3: one of these frontier lms, but there is no doubt

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Speaker 3: that they need more to do when it comes to

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Speaker 3: a generative AI.

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Speaker 2: Is there any sense Mandeep that Coopertino shares your sense

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Speaker 2: of we got to get going now kind of thing.

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Speaker 3: I think so. But look, I mean there are two

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Speaker 3: ways to go about it. One is you step up

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Speaker 3: in terms of your CAPEX investments, the way hyperscalers have done,

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Speaker 3: you know, whether it's a Microsoft, Google, or Amazon or Oracle.

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Speaker 3: The other is, you know, you take the acquisition route.

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Speaker 3: And everyone is sort of thinking, you know, Apple will

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Speaker 3: go the acquisition route or maybe partner with someone like

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Speaker 3: Google now that that antitrust overhang is behind them. So

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Speaker 3: either of those two I think should work because Apple

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Speaker 3: still controls a distribution. And look, when it comes to hardware,

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Speaker 3: I am excited about an AR glass form factor. I

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Speaker 3: think they are working on a chip when it comes

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Speaker 3: to these new AR glasses, and there will be relevance

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Speaker 3: of AI when it comes to your you know, glasses

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Speaker 3: form factors. So from that perspective, there is something to

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Speaker 3: look forward to. From a hardware standpoint. They already launched one,

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Speaker 3: you know, AirPod Pro three with real time transcription. That's exciting.

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Speaker 5: So those are the.

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Speaker 3: Kind of features they will be looking to add. But

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Speaker 3: I don't think they are going the Capex route in

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Speaker 3: terms of you know, one hundred billion dollars in Capex,

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Speaker 3: the same way Hyperscalers are doing.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am, heasterned on Apple, Coarcley, and Android

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Speaker 1: Otto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's get to another story here today in the luxury business.

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Speaker 2: Here carrying the big company that owns a lot of

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Speaker 2: big brands, I think Gucci as well. They're backing away

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Speaker 2: from their beauty business. They're selling it to Loreal four

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Speaker 2: point seven billion dollars. Let's get a breakdown on what's

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Speaker 2: going on there. Andrea Felstad, she's a Bloomberg in opinion.

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Speaker 2: Commis Andrew, can you tell us what Caring is doing here?

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Speaker 5: What this transaction shows.

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Speaker 6: Well, it's being dressed up as a partnership between Caring

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Speaker 6: and Loreal, but what it really is is effectively the

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Speaker 6: sale of their beauty brands to Loreo. They've got a

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Speaker 6: new CEO, Luke to Mayo. He's come in at a

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Speaker 6: time when the balance sheet is very stretched. His predecessor,

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Speaker 6: who is now chairman, well bought a lot of things,

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Speaker 6: including Creed, this very very upmarket perfume business as share

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Speaker 6: in Valentino to try to make the group less dependent

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Speaker 6: on Gucci. But that really increased debt. At the same time,

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Speaker 6: Gucci's really slowed down and they're having to revive it.

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Speaker 6: So they're saying it for four billion euros in cash.

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Speaker 6: That gets some money in to deal with the debt

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Speaker 6: and gives the new CEO a bit more time to

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Speaker 6: turn around Gucci.

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Speaker 4: Andrew, isn't this a complete turnaround? I mean, didn't the

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Speaker 4: company want to bulk up the beauty and cosmetics division exactly?

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Speaker 6: I mean they're saying, you know, this is built on

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Speaker 6: the potential that they created. I mean, to be fair,

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Speaker 6: they bought Creed. They paid a lot for Creed three

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Speaker 6: point five billion euros. Try worked out to be about

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Speaker 6: fourteen time sales, you know, an awful lot. But what

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Speaker 6: they did it had a supply chain. They did that

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Speaker 6: as a play perform to build for beauty. And the

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Speaker 6: argument is they have been able to do this deal

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Speaker 6: because of that platform. That's probably kind of rather generous

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Speaker 6: looked at him. I had a big decision to make

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Speaker 6: when he got in. He either had to stick with

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Speaker 6: beauty and invest in it. But with that day, it's

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Speaker 6: gone in awe and the need to reinvigorate Gucci. It's

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Speaker 6: got an awful lot more calls on its cash, so

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Speaker 6: he just decided beauty wasn't a priority.

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Speaker 2: I consider myself a Gucci expert. I read the book,

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Speaker 2: I saw the movie. In the movie, yes exactly, so Andrew.

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Speaker 2: I mean, it's obviously an iconic brand. What are the

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Speaker 2: experts saying that needs to be done? Because it's such

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Speaker 2: an important part for caring.

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Speaker 6: It is it really is. It would add its peak

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Speaker 6: and in sort of twenty eighteen nineteen, around that time,

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Speaker 6: it was sixty percent group sales. Now, you know, Kerring

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Speaker 6: had an amazing run with Gucci. They put in this

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Speaker 6: quite unknown designer, Alessandro mckayley, and the prevailing look has

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Speaker 6: been very minimalist, and he came in with these big logos,

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Speaker 6: clashing print, granny chek and it was just a bread

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Speaker 6: of breath of fresh air and it change prevailing fashion.

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Speaker 6: But that was in Stor twenty sixteen, after the pandemic,

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Speaker 6: when Obviously, nobody was feeling terribly good soaring inflation. It

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Speaker 6: just felt very out of sync with how people were feeling.

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Speaker 6: And they tried to turn it round and have a

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Speaker 6: much more minimalist look, and it just wasn't Gucci. Gucci

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Speaker 6: works best when it's very fashionable, when it's over the top.

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Speaker 6: So they brought in Dumna Versalia, who was at Valenciaga,

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Speaker 6: and he is trying to, you know, really revive it.

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Speaker 6: He's gone back to the Tom four days when it

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Speaker 6: was very successful. He's gone back to the Alessandro and

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Speaker 6: Kaylee days. He did this crazy film in Fashion Week.

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Speaker 6: There was absolutely bonkers, but it got people talking about

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Speaker 6: Gucci again. I was in New York a couple of

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Speaker 6: weeks ago and I went to the store in Soho

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Speaker 6: and there was a big installation of all his things

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Speaker 6: and the capsule collection. It's trying to get people interested

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Speaker 6: in Gucci again, and he's sort of going back to

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Speaker 6: the future to try and revive its magic. Whether it's

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Speaker 6: going to work, I'm not sure. I thought he was

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Speaker 6: the wrong person to be appointed, but so far he

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Speaker 6: seems to be doing all the right things.

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Speaker 4: Andrew, can you tell us some of the challenges krig

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Speaker 4: has been facing. I mean, there's that slump in Chinese demand,

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Speaker 4: higher US tariffs as well, what are they facing.

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Speaker 6: So what we what we've got at the moment is

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Speaker 6: the one percent of still doing very well. But they're

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Speaker 6: not buying Gucci. They're buying Hermes, they're buying Brunello, Cuccinelle,

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Speaker 6: Laura Piano. They want these very expensive upmarket things. Now

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Speaker 6: the rest of the less rest of the luxury market

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Speaker 6: that aspirational customers coming under pressure. And she had a

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Speaker 6: lot of those aspirational customers, particularly in the US. So

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Speaker 6: you've got the sort of esthetic going out of fashion

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Speaker 6: and you've got these aspirational customers coming under pressure. It's

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Speaker 6: really had a bit of a perfect storm and it

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Speaker 6: needs to really revive Guccini and it had the take

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Speaker 6: of Annetta wasn't doing too bad and their designer went

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Speaker 6: to Chanel. So you know, every brand is sort of

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Speaker 6: you know, got its challenges.

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Speaker 5: Stay with us.

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Speaker 2: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Otto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts or watch us live on YouTube.

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Speaker 2: Talking about AI. That's been a theme for this marketplace

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Speaker 2: for it seemingly three years now. Everybody says that AI

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Speaker 2: is going to revolutionize their business. Even McDonald's say it's

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Speaker 2: going to revolutionize how you go through the drive through.

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Speaker 5: I'm like, all right, whatever, just get my order right.

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Speaker 2: It's also you here in the financial services business, Patrick

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Speaker 2: Daniel Joines is here, vice President Advisor Digital Solutions at

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Speaker 2: Commonwealth Financial Network. Patrick, is AI going to replace the

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Speaker 2: financial advisor?

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Speaker 7: Absolutely not the you know what we're seeing today in

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Speaker 7: terms of there's a there's an experimentation and a scale

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Speaker 7: that's happening within the AI space in terms of advisors,

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Speaker 7: and you know we heard that with the robo advisor

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Speaker 7: years ago in terms of will it replace and so

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Speaker 7: from an AI capability, absolutely there's going to be an

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Speaker 7: elevation of the advisor in terms of what they are

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Speaker 7: possible and what they can do in terms of the

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Speaker 7: art of the possible.

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Speaker 5: But absolutely not. There's going to be a need for empathy,

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Speaker 5: there's going to be.

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Speaker 7: A need for understanding human behavior, and really from a

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Speaker 7: technology perspective, that's going to be very difficult to do. Now.

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Speaker 7: With that said, you know, if I were to look

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Speaker 7: into the three to five year sort of glass in

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Speaker 7: terms of what's going to look like, it's going to

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Speaker 7: be very difficult. In terms of how that may look like.

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Speaker 7: You might have digital assistance right that are paired up

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Speaker 7: with a human advisor that is using hyper personzed information

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Speaker 7: and services to help the advisor support those clients, but

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Speaker 7: generally speaking, you're not going to see that replaced completely

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Speaker 7: in terms of what a financial advisor can provide their clients.

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Speaker 8: So the human relationship not dying basically, So how is

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Speaker 8: a I then changing the way you manage money?

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Speaker 7: So there's just a tremendous opportunity in that space in

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Speaker 7: terms of right now, what we've seen over the last

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Speaker 7: two to three years in terms of experimentation has been

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Speaker 7: around client meetings and note taking any efficiency within the space,

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Speaker 7: and so you're seeing advisors freeing up time to focus

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Speaker 7: more on financial conversations with their clients or asset management.

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Speaker 7: And so what we're going to see in the future

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Speaker 7: as this technology evolves, and we're starting to see it already,

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Speaker 7: is in the space of doing business modeling or financial

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Speaker 7: modeling or looking at it from a model's perspective in

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Speaker 7: terms of where I should be putting from a next

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Speaker 7: best action perspective. And so we're going to start to

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Speaker 7: see a lot of that in terms of informing advisors

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Speaker 7: to make sure that they're having those conversations in a

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Speaker 7: timely fashion and potentially identifying maybe gaps that if they

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Speaker 7: didn't have, say an agent or this digital assistant next

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Speaker 7: to them, that they could identify in a timely fashion

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Speaker 7: from a tax efficiency perspective, or just from a a

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Speaker 7: from a scale perspective, or from an a s allocation perspective.

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Speaker 2: You know, when I talked to some of the advisors

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Speaker 2: here at a conference like a Commonwealth, they say, you know,

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Speaker 2: I really want the platform to kind of free up

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Speaker 2: more of my time so I can go out and

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Speaker 2: work with my clients, prospect for new clients, really help

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Speaker 2: me with the back office, help me with the technology,

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Speaker 2: help me with all that. How are you guys integrating

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Speaker 2: AI into that part of the platform.

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Speaker 5: Yeah, absolutely so where we started.

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Speaker 7: So, first off, before we started from an AI implementation

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Speaker 7: perspective with our affiliates, there was a there's a risk obviously,

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Speaker 7: right from a compliance and a regulatory perspective.

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Speaker 5: So years ago we.

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Speaker 7: Formed an AI or a JENAI Risk Committee at Commonwealth

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Speaker 7: to try to make sure that whatever we provide from

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Speaker 7: a support perspective as we move forward within the AI space,

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Speaker 7: that we do so in a compliant and make sure

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Speaker 7: from a data retention and risk perspective that we take

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Speaker 7: care of that.

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Speaker 5: As I mentioned earlier two years ago, it was more.

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Speaker 7: Around around a curiosity with the technology. I'd say a

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Speaker 7: year ago, twelve to sixteen months ago, it was more

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Speaker 7: around experimentation and now what we're seeing at Commonwealth. We

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Speaker 7: just rolled out an AI meeting tool or a couple

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Speaker 7: of them actually earlier this year, and we're seeing now

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Speaker 7: at scale and that's where I think you're going to

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Speaker 7: start to drive the adoption. So we rolled out a

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Speaker 7: new platform. It's a third party platform. From the AI

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Speaker 7: meeting perspective, we already have twenty percent adoption on that

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Speaker 7: and just folks talking to one another at events like

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Speaker 7: this from a networking perspective, we're going to start to

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Speaker 7: really see that driven in terms of adoption and acceleration

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Speaker 7: within our space.

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Speaker 8: Now I see the.

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Speaker 4: Excitement coming from you when you talk about you know,

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Speaker 4: AI and all that can do. But what concerns you

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Speaker 4: when it comes to AI in the space.

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Speaker 7: Yeah, there's a lot of things. And honestly, the first

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Speaker 7: thing I think about is just deep connections. And I

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Speaker 7: think about AI not just generally speaking in terms of

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Speaker 7: from a financial management or in our space, but you

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Speaker 7: think about and I think about my own personal life

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Speaker 7: where I would call my folks, whether it's my dad

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Speaker 7: on some advice or I need, you know, help with

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Speaker 7: whatever it might be in terms of life. Well, I

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Speaker 7: think you're finding a lot now people are just going

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Speaker 7: to gen AI or it's a large language models for that.

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Speaker 7: And so the face, the face, the deep connections, and

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Speaker 7: that's what really our industry.

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Speaker 5: Is rooted in. You know that, That's what really.

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Speaker 7: Concerns me in terms of how do you balance you know,

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Speaker 7: from you know, making sure that the human's still in

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Speaker 7: the loop and the technology. And I think there's going

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Speaker 7: to be a way to do that. But that's what

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Speaker 7: really concerns me. It's the connections, It's the people, it's

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Speaker 7: the face.

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Speaker 5: The face.

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Speaker 8: What's sure some people go to chat GPT for financial advice.

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Speaker 8: I mean it's well.

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Speaker 7: Eighty percent of the people that are using a large

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Speaker 7: language model today have actually used it for financial advice,

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Speaker 7: and it's a little bit higher for the younger, the millennials,

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Speaker 7: et cetera. It's about an eighty two to eighty three

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Speaker 7: percent adoption of people using it for financial advice. And

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Speaker 7: so again that's an opportunity for financial advisors to make

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Speaker 7: sure that they get in front of that and to

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Speaker 7: guide that direction in terms of where they go and

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Speaker 7: how they use it.

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Speaker 2: My number three off bring his into financial services business.

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Speaker 2: He's at the stage of his career where he is

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Speaker 2: dialing for dollars, doing all the basic grunt work. But

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Speaker 2: he finds it as a challenge that a lot of

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Speaker 2: the young people that he prospects come back and say, well,

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Speaker 2: I've got chatter GPT, how do you put that in

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Speaker 2: your training?

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Speaker 8: What's the response to that?

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Speaker 7: Yeah, so from a financial advisor in terms of when

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Speaker 7: they're having that conversation. Yeah, So it's all about guidance,

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Speaker 7: and so you know, there's an opportunity there, I think

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Speaker 7: in terms of making sure that you're directing, and that's

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Speaker 7: where the value of the advisor comes in, right, and

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Speaker 7: so it's trying to get in front of that and

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Speaker 7: providing information that's more curated and but also recognizing that

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Speaker 7: there's this other and that's been in the industry for

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Speaker 7: years in terms of whether it's various websites you can

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Speaker 7: go to, et cetera. It's just getting elevated more accessible.

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Speaker 7: But I think you just need to make sure that

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Speaker 7: you call you know, you sort of you address it

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Speaker 7: and then you account for it.

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Speaker 8: So and what emerging technology are you keeping an eye on?

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Speaker 5: Oh?

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Speaker 7: Yeah, So, so for me, from an AI perspective, there's

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Speaker 7: a couple of things. One is quantum computing actually, and

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Speaker 7: so with quantum computing, you're seeing it's a it's a

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Speaker 7: symbiotic relationship actually, so you're seeing AI improve the quantum

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Speaker 7: computing in terms of what's capable, and then from a

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Speaker 7: quantum computing perspective in terms of the.

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Speaker 5: Power and what can be provided. It's elevating the AI.

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