WEBVTT - Apple at Risk if iPhones Don't "Sell Like Hotcakes," Ovide Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.240 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well. 0:00:32.280 --> 0:00:35.600 As Greg was saying, Apple shares are down for the 0:00:35.640 --> 0:00:40.000 worst to day route since April two thousand and sixteen, 0:00:40.400 --> 0:00:43.479 giving up some of the unbelievable games this year. Just 0:00:43.520 --> 0:00:46.120 to put into perspective, even with the past two days 0:00:46.120 --> 0:00:49.840 of losses, Apple shares are up more than twenty six 0:00:49.920 --> 0:00:52.479 percent year to date share over day. Is a Bloomberg 0:00:52.479 --> 0:00:54.680 gad Flight columnus and she joins us here in our 0:00:54.720 --> 0:00:58.160 Bloomberg eleven three oh studios. Shira, Uh, you know, first 0:00:58.160 --> 0:01:01.520 of all, before we get to sort of whether this 0:01:01.640 --> 0:01:04.600 route can deepen, while I mean, is this just basically 0:01:04.640 --> 0:01:07.600 to be expected after such a massive rally earlier in 0:01:07.600 --> 0:01:11.319 the year. Yeah, there is no particular trigger for the 0:01:11.360 --> 0:01:13.560 tech stocks, and it's not just Apple right all. A 0:01:13.600 --> 0:01:16.839 lot of the big tech stocks, including Google and Facebook 0:01:16.840 --> 0:01:19.360 and Amazon and in video, the chip company that has 0:01:19.400 --> 0:01:21.360 been one of the better performing tech stocks in the 0:01:21.400 --> 0:01:25.600 last couple of years, Fang plus others. Uh, they are all, 0:01:25.959 --> 0:01:28.800 you know, getting punched in the nose basically since Friday. 0:01:28.840 --> 0:01:32.680 And there's no particularly good reason. But as you pointed out, 0:01:32.720 --> 0:01:35.759 a lot of those tech stocks have done exceptionally well 0:01:35.840 --> 0:01:39.840 this year and has helped drive you know, the overall 0:01:39.880 --> 0:01:42.240 stock market in the US up, and so I think 0:01:42.280 --> 0:01:45.160 there was a little bit of a realization that, oh, shoot, 0:01:45.680 --> 0:01:47.880 maybe this has gotten a little bit overdone and we 0:01:47.920 --> 0:01:50.560 need to sell and move into other sectors of of 0:01:50.640 --> 0:01:53.400 the industry of technology and beyond. Well, I was just looking, 0:01:53.400 --> 0:01:56.360 for example, at the NAS deck and you'd have to 0:01:56.440 --> 0:02:00.320 shed another hundred and ten points let's say, just get 0:02:00.360 --> 0:02:03.280 back to the fifty day moving average, and you'd have 0:02:03.320 --> 0:02:06.880 to lose even more to get to the ninety day 0:02:06.920 --> 0:02:11.400 and the well the even longer the two day moving average. 0:02:11.440 --> 0:02:16.360 So the technicals are not looking great for the technology stocks. Apple. 0:02:16.480 --> 0:02:20.600 Let's talk specifically about Apple. The most recent conversation we've 0:02:20.600 --> 0:02:23.000 had has to do with a qual Con chip and 0:02:23.080 --> 0:02:27.359 an Intel chip going into their newest iPhone and how 0:02:27.360 --> 0:02:30.320 they're going to limit the speed in the iPhone to 0:02:30.480 --> 0:02:34.120 the Intel chip because they do not offer this fast 0:02:34.160 --> 0:02:37.840 processing power. Has Apple gotten to the point where it 0:02:38.000 --> 0:02:42.040 is so big that it cannot find enough vendors to 0:02:42.240 --> 0:02:45.160 offset the potential for picking a vendor that they're going 0:02:45.160 --> 0:02:47.840 to either be in a lawsuit with or provides technology 0:02:47.880 --> 0:02:51.639 that doesn't match what Apple wants. So Apple is always 0:02:51.760 --> 0:02:55.600 very conscious about becoming overly reliant on one or two 0:02:55.680 --> 0:02:59.600 parts suppliers, particularly of crucial parts like computer chips that 0:02:59.639 --> 0:03:02.640 go into its phones, right and modem chips, which is 0:03:02.680 --> 0:03:06.919 the Qualcom Intel issue. Um. The The issue is there 0:03:06.960 --> 0:03:11.440 are only two companies, Intel and Qualcom that are really 0:03:11.880 --> 0:03:15.760 at scale suppliers of these kind of crucial modem ships 0:03:15.800 --> 0:03:19.919 where the phone is basically connecting with cellular networks, and 0:03:20.400 --> 0:03:24.640 Qualcom is the undisputed leader. But Apple doesn't want to 0:03:24.680 --> 0:03:28.320 become too reliant on Qualcom, in part because Qualcom and 0:03:28.360 --> 0:03:33.079 Apple are now engaged in this very messy, angry, high 0:03:33.160 --> 0:03:37.280 stakes financial litigation over whether Qualcom is kind of overcharging 0:03:37.880 --> 0:03:42.920 for its chips to Apple and others. Uh And so 0:03:43.040 --> 0:03:45.240 as a consequence, Apple wants to have a little bit 0:03:45.240 --> 0:03:49.720 of you know, vendor choices, and it's it's using both 0:03:49.720 --> 0:03:53.320 Apple and I'm sorry, Intel and Qualcom chips in the phone. Well, 0:03:53.360 --> 0:03:55.400 you know, we're talking to John Butler about this last 0:03:55.400 --> 0:03:58.160 week of Limberg Intelligence, and he was saying, Okay, look, yes, 0:03:58.320 --> 0:04:02.320 Apple may not have the highest speed UH connection available 0:04:02.360 --> 0:04:04.840 to its a new iPhone, but most people aren't going 0:04:04.880 --> 0:04:07.320 to care. And frankly, people who are in the iPhone 0:04:07.320 --> 0:04:10.080 world and our devote devotees to Apple are going to 0:04:10.160 --> 0:04:12.680 stay devotees to Apple. And I just have to wonder, 0:04:12.800 --> 0:04:15.720 you know, at this point, is this dip in the 0:04:15.760 --> 0:04:20.080 share prices does this signify the people have reached their 0:04:20.160 --> 0:04:24.720 limit in buying on pure faith that something is going 0:04:24.760 --> 0:04:28.640 to change and a shift into show me mode? And 0:04:28.640 --> 0:04:30.800 that's going to This is going to really be a 0:04:30.839 --> 0:04:33.080 shift in sentiment that isn't necessarily going to mean a 0:04:33.160 --> 0:04:36.040 deep sell off, but will mean more skepticism going forward 0:04:36.279 --> 0:04:38.839 and a need to see more evidence that they can 0:04:38.880 --> 0:04:40.760 consustain the growth that they have seen in the past. 0:04:40.880 --> 0:04:43.440 I think that's very good point. Look, the fact remains 0:04:43.560 --> 0:04:46.159 that the run up we've seen an Apple's share price 0:04:46.279 --> 0:04:50.080 this year and starting last late last year is largely 0:04:50.200 --> 0:04:55.480 because of expectations of a big surgeon iPhone stale sales 0:04:55.520 --> 0:04:58.520 starting later this year, when Apples expected to introduce a 0:04:58.640 --> 0:05:04.159 new kind of dramatically overhauled iPhone, and if that thing 0:05:04.360 --> 0:05:07.760 doesn't sell like hotcakes, I don't know what happens to 0:05:07.800 --> 0:05:11.520 Apple share price. You saw one of the Mizuho, one 0:05:11.520 --> 0:05:15.159 of the Apple animals downgrade the stock this morning or 0:05:15.200 --> 0:05:19.160 overnight on basically saying, look, a lot of the enthusiasm 0:05:19.200 --> 0:05:21.640 for this new iPhone. It's gonna have, you know, fancier 0:05:21.680 --> 0:05:26.520 screen and um, all kinds of advanced features. If a 0:05:26.560 --> 0:05:29.119 lot of that enthusiasm is already baked into the share price, 0:05:29.240 --> 0:05:33.040 So that's the big risk for Apple. I'm just curious. 0:05:33.040 --> 0:05:34.920 Do you have any idea what the new iPhone eight 0:05:35.000 --> 0:05:37.080 might cost? There are some reports that it could be 0:05:37.160 --> 0:05:40.880 upwards of a thousand dollars. Yes, we don't know. UM. 0:05:41.160 --> 0:05:44.520 The reporting from Bloomberg and others has said there's going 0:05:44.560 --> 0:05:48.360 to be three new models of the iPhone, the you know, 0:05:48.720 --> 0:05:52.479 regular iPhone, the hot larger screen plus model, and then 0:05:52.520 --> 0:05:56.799 this kind of third probably fancier and even more expensive 0:05:56.800 --> 0:05:59.200 iPhone model. And yes, some of the reports are it 0:05:59.279 --> 0:06:02.400 might cost a thousand dollars or more, which is kind 0:06:02.400 --> 0:06:05.800 of a staggering sum to think about paying for, you know, 0:06:05.839 --> 0:06:08.520 a slab of glass and circuits. You could use an 0:06:08.520 --> 0:06:13.120 eyebill on your Apple Watch and maybe through Apple Pay. Sure. Ovida, 0:06:13.200 --> 0:06:15.240 thank you so much for joining us. Hearra Ovida is 0:06:15.240 --> 0:06:18.520 a technology columnist with Bloomberg gad Fly and joins us 0:06:18.560 --> 0:06:34.599 here in our Bloomberg eleven three oh studios. Well, emerging 0:06:34.640 --> 0:06:37.360 markets debt has absolutely been in a hotspot this year. 0:06:37.360 --> 0:06:40.719 I'm just looking and that flows to mutual funds, most 0:06:40.760 --> 0:06:45.080 of which track some kind of broad index inflows total 0:06:45.120 --> 0:06:49.080 more than forty billion dollars to emerging markets debt uh 0:06:49.240 --> 0:06:52.360 so far this year. To get some perspective on why 0:06:52.480 --> 0:06:55.480 the flows have been so intense, at what these people 0:06:55.480 --> 0:06:57.800 are really investing in, I want to bring in Damien Sassaur. 0:06:57.920 --> 0:07:01.120 He's a fixing strategist for bloom Intelligence. He joins us 0:07:01.120 --> 0:07:04.159 here in our Bloomberg eleven three oh studios. Damien, I 0:07:04.240 --> 0:07:06.880 was looking at the biggest e t F that focuses 0:07:06.920 --> 0:07:09.640 on emerging markets debt, and last week alone, this e 0:07:09.760 --> 0:07:14.000 t F had some unprecedented flows almost a billion dollars 0:07:14.200 --> 0:07:18.280 in a week coming in. And yet you pointed out 0:07:18.320 --> 0:07:23.240 in recent research that the underlying index is actually getting 0:07:23.520 --> 0:07:27.080 weaker from a credit perspective. Yeah, no, that's right. So 0:07:27.120 --> 0:07:29.920 in terms of credit quality, lisa UM, what we're seeing 0:07:30.200 --> 0:07:32.840 are UM a lot of EM high held sovereigns being 0:07:32.840 --> 0:07:35.560 added to the index. We're seeing I guess, you know, 0:07:35.720 --> 0:07:39.000 fundamentally weaker corporate and quasi sovereign credits, specifically in the 0:07:39.000 --> 0:07:44.120 financial sector coming from some um, some suspect EM economies 0:07:44.160 --> 0:07:46.440 such as Nigeria, which I pointed out. I mean, just 0:07:46.560 --> 0:07:49.680 last week we saw the Ivory coast Um issue nearly 0:07:49.760 --> 0:07:53.040 two billion dollars in HARDCORENCY bonds. Yet only a month 0:07:53.040 --> 0:07:56.920 ago there's a forty mutiny by soldiers and in twenty eleven, 0:07:57.160 --> 0:08:00.680 the company a company the country the faulted on its 0:08:00.720 --> 0:08:04.080 sovereign bonds. So I mean these are not UM you know, 0:08:04.320 --> 0:08:07.600 these are just not your everyday high quality credits. And 0:08:07.640 --> 0:08:10.760 you were talking about a Nigerian bank that sold a debt. 0:08:10.880 --> 0:08:14.280 It was the first benchmark bond offering benchmark eligible bond 0:08:14.320 --> 0:08:17.760 offering from a Nigerian bank since two thousand fourteen, and 0:08:17.880 --> 0:08:20.800 Nigerian banks have a history of defaulting. Now that's correct, 0:08:20.800 --> 0:08:22.600 So I mean access bank issued at the end of 0:08:22.680 --> 0:08:25.040 last year, but they are not benchmark eligible. They're only 0:08:25.040 --> 0:08:27.280 three hundred million, although that might make them eligible for 0:08:27.320 --> 0:08:29.360 the JP Morgan and hence the e M b E 0:08:29.440 --> 0:08:31.800 t F, But the Bloomberg Barkley's e M Hard Currency 0:08:31.840 --> 0:08:33.800 agg which is, you know, the broad measure that we 0:08:33.840 --> 0:08:36.240 follow here. You have to have a minimum five million 0:08:36.240 --> 0:08:38.079 dollar a new issues in order to be included within 0:08:38.120 --> 0:08:40.880 that index. So we don't really we didn't really include 0:08:40.920 --> 0:08:43.400 access in our analysis. But Zennith Bank, who just um 0:08:43.520 --> 0:08:45.920 issued last week and I'm sorry last month, and then 0:08:46.000 --> 0:08:48.640 Uba on the heels of that, they're having no problems 0:08:48.679 --> 0:08:51.400 happing these markets and they're you know, it's it's green 0:08:51.480 --> 0:08:55.040 light Gopher Nigeria. Four and a half percent. That's the 0:08:55.120 --> 0:08:59.160 yield at least currently on the Bloomberg Barkley's Emerging Markets 0:08:59.520 --> 0:09:02.280 US are Aggregate bond index right about that four and 0:09:02.280 --> 0:09:05.959 a half percent. What kind of duration risk are people 0:09:06.000 --> 0:09:09.160 taking on to get that whopping four and a half percent? 0:09:09.280 --> 0:09:11.280 You know, that is a great point, I mean, PIM. 0:09:11.360 --> 0:09:14.880 You know, on the sovereign side, what you're seeing now 0:09:15.120 --> 0:09:18.760 is the duration has i think extended out nearly seven years. 0:09:18.760 --> 0:09:21.120 So you're getting seven year em sovereign debt, you know, 0:09:21.160 --> 0:09:23.199 and and the way you have to look at buying 0:09:23.200 --> 0:09:26.320 a car, right, I mean because the car payments right, 0:09:26.320 --> 0:09:30.199 I mean sixty months. And pim those Ivory Coast bonds 0:09:30.200 --> 0:09:33.000 have a sixteen year maturity, I mean sixteen years. I 0:09:33.000 --> 0:09:36.720 mean this again is a country that defaulted last eleven 0:09:36.920 --> 0:09:39.079 and a month ago. You know that there was a 0:09:39.200 --> 0:09:41.720 mutiny by by the military. Meanwhile, four and a half 0:09:41.760 --> 0:09:44.400 percent is not very much relative to history, right, So 0:09:44.480 --> 0:09:47.200 this isn't exactly a high yield that investors are getting. 0:09:47.840 --> 0:09:50.320 That said, a lot of investors continue to pour money 0:09:50.360 --> 0:09:52.719 into this space. And you hear a lot of sophisticated 0:09:52.760 --> 0:09:56.480 money managers, including PIMCO, say, you know what you do 0:09:56.640 --> 0:09:59.640 have developing markets? Uh that in some cases hold more 0:09:59.640 --> 0:10:02.319 promise the developed markets where rates are really low and 0:10:02.559 --> 0:10:05.360 growth is slowing and the population is aging. So how 0:10:05.360 --> 0:10:07.440 do you sort of square these ideas well? I think 0:10:07.480 --> 0:10:10.160 I think, you know, shifting to high grade. And this 0:10:10.200 --> 0:10:11.840 is an important point that a lot of people also 0:10:11.840 --> 0:10:15.640 aren't considering um GCC. The Middle East has I mean 0:10:15.640 --> 0:10:19.000 there have been massive, massive issues from Saudi Arabia, from Aman, 0:10:19.160 --> 0:10:22.360 from Kuwait, I'm talking eight nine. I mean just last year, 0:10:22.400 --> 0:10:24.240 we know Saudi issued nineteen billion, but they just did 0:10:24.280 --> 0:10:26.840 a cook issue this year for nine billion. On top 0:10:26.880 --> 0:10:29.480 of that, I mean, their leverage at the sovereign level 0:10:29.520 --> 0:10:33.760 has increased. It's just been huge. So now you know, 0:10:33.840 --> 0:10:37.040 you look at these countries. These are countries that generate 0:10:37.120 --> 0:10:40.480 their revenue through oil, and if oil stays weak or 0:10:40.480 --> 0:10:42.600 continues to week and these are high grade you know, 0:10:42.640 --> 0:10:46.440 single double A credits that are fundamentally weaker also, but 0:10:46.480 --> 0:10:49.360 again you know, forgive me, those are high grade credit 0:10:49.400 --> 0:10:52.080 quality issues, right. But the reason why I ask is 0:10:52.120 --> 0:10:54.120 because you do have so much money coming in, you 0:10:54.160 --> 0:10:57.079 do have yields dropping at a faster pace in some cases, 0:10:57.120 --> 0:11:01.680 and similarly rated US credit it and you have to wonder, 0:11:01.800 --> 0:11:05.760 are people uh just blind to this risk and going 0:11:05.840 --> 0:11:08.240 into indexes that have all sorts of things that they're 0:11:08.280 --> 0:11:11.199 not aware of, or people fully aware, but they still 0:11:11.240 --> 0:11:14.400 think that there's an attractiveness here. Well, Muhammad al Arean, 0:11:14.440 --> 0:11:16.400 I mean he said that fundament you know, we've pretty 0:11:16.480 --> 0:11:18.520 much the coupled from fundamentals, and I have to kind 0:11:18.520 --> 0:11:20.679 of agree in large respect to that. I mean, if 0:11:20.679 --> 0:11:22.560 you just look at the three drivers. We just did 0:11:22.600 --> 0:11:24.760 our mid year outlook at b I on the e 0:11:24.920 --> 0:11:27.720 M side, and if you just look at China five 0:11:27.800 --> 0:11:31.920 year CDs UM, the US dollar and oil prices collectively, 0:11:32.200 --> 0:11:34.800 they mean e M spreads are eighty percent correlated to 0:11:34.840 --> 0:11:37.880 these three factors. And those three factors alone are responsible 0:11:37.920 --> 0:11:40.439 for determining six of the movement and EUM credit spreads 0:11:40.440 --> 0:11:43.600 of the last two years using weekly data. So yeah, 0:11:43.600 --> 0:11:47.080 it's market it's external factors that are driving spreads. So 0:11:47.120 --> 0:11:51.520 if they're external factors driving spreads, external factors could also 0:11:51.600 --> 0:11:55.000 make these investments go south pretty quickly if if if 0:11:55.040 --> 0:11:57.400 they do go the other way. PIM, That's exactly what. 0:11:57.720 --> 0:11:59.840 There's nothing underneath it, right, I mean, there there's no 0:12:00.040 --> 0:12:02.880 bid that is holding this up, or is there. I'm 0:12:02.880 --> 0:12:05.480 not I am not an oil I am not the 0:12:05.559 --> 0:12:08.760 right guy to be talking to you about sovereign set 0:12:08.840 --> 0:12:10.400 for example. I mean it's not as if you're going 0:12:10.440 --> 0:12:15.200 to find the Bank of Japan buying Nigerian government bonds. Um, 0:12:15.280 --> 0:12:17.200 You're right, I mean, look, you know, I mean it's 0:12:17.240 --> 0:12:19.800 it's funny how some of these some of these e 0:12:19.920 --> 0:12:21.920 M portfolios where you know who's buying them and where 0:12:21.920 --> 0:12:24.160 they're winding up these days, and how people are you know, 0:12:24.800 --> 0:12:27.920 looking for incrementally yielding new places. So for all I know, 0:12:28.240 --> 0:12:31.760 the Bank of Japan could be buying You've been even 0:12:31.800 --> 0:12:35.160 covering this area for a long time, Damien. And have 0:12:35.320 --> 0:12:39.920 you seen a shift with investors going more into indexed 0:12:40.040 --> 0:12:43.080 strategies and could that pose a risk? Yes, now that 0:12:43.080 --> 0:12:46.040 that is definitely a risk if if flows turn the 0:12:46.120 --> 0:12:48.560 other way. I mean, I think, you know, and again 0:12:48.600 --> 0:12:50.960 I'm gonna you know, use my colleague Mike mcgloan who 0:12:51.000 --> 0:12:54.200 runs commodity, who's the commodity strategy that b I you know, 0:12:54.360 --> 0:12:57.080 e m takes the escalator up and the elevator down, 0:12:57.240 --> 0:12:59.160 and you know, when things turn the other way and 0:12:59.160 --> 0:13:02.480 sentiment shifts, uh negatively, you could really see you know, 0:13:02.600 --> 0:13:06.000 spreads uh you know, potentially wide and quite quite quite quickly. 0:13:06.200 --> 0:13:09.520 I wonder if you could use Petro Brass, the Brazilian 0:13:09.920 --> 0:13:12.720 oil giant, as an example of some of the things 0:13:12.720 --> 0:13:15.839 that can happen that you don't expect and they're trying 0:13:15.880 --> 0:13:18.600 to get ahead of the game, but it's challenging. You know. 0:13:18.960 --> 0:13:21.720 Petro Brass is an interesting one because they they've done 0:13:21.760 --> 0:13:23.440 a great job. Look they're coming off a low base, 0:13:23.559 --> 0:13:26.679 and they have effectively been extending their maturities, restructuring their 0:13:26.720 --> 0:13:29.760 day that they've been selling non core assets, they've actually 0:13:29.760 --> 0:13:32.920 been cleaning up their balot sheets. So all this negative, 0:13:33.080 --> 0:13:36.079 you know Michi Goswork talking about with regard to em credit, 0:13:36.120 --> 0:13:38.080 Petro brass I can't put in that category. They've done 0:13:38.120 --> 0:13:41.080 a really good job of cleaning things up. And and 0:13:41.120 --> 0:13:43.440 look there are examples of that, you know where you know, 0:13:43.640 --> 0:13:47.000 fundamentally the companies are getting better and and so you know, 0:13:47.160 --> 0:13:49.600 it's a big universe. It's a two trillion dollar universe. 0:13:49.679 --> 0:13:52.200 You know, at least if you're looking at the Bloomberg Barkleys, 0:13:52.240 --> 0:13:55.200 you know, kind of aggregate and you know you've got 0:13:55.520 --> 0:13:57.880 you've got good stories and you've got bad stories. I 0:13:57.880 --> 0:14:00.000 want to thank you very much forgiving us the story. 0:14:00.000 --> 0:14:02.720 Are you guys always Damian Sasaur expert when it comes 0:14:02.720 --> 0:14:06.520 to fixed incomes strategies for Bloomberg Intelligence. In fact, he 0:14:06.600 --> 0:14:21.200 just knows everything about emerging markets. Much appreciated. I want 0:14:21.280 --> 0:14:24.080 to bring in Jeffrey Quisena, Chief Investments for a just 0:14:24.480 --> 0:14:27.000 at Fifth third Bank in Chicago, to talk about an 0:14:27.000 --> 0:14:29.720 issue that i've been thinking a lot about Recently, after 0:14:30.040 --> 0:14:34.240 President Trump withdrew from the Paris Accord, we heard executives 0:14:34.280 --> 0:14:38.520 from Disney, Goldman, Sachs, IBM, Tesla's Elon Musk come out 0:14:38.560 --> 0:14:41.160 denouncing the decision and saying that this was a big, 0:14:41.280 --> 0:14:45.600 big mistake. But the mood was very different among small 0:14:45.680 --> 0:14:48.360 business owners and I want to get a sense of 0:14:48.560 --> 0:14:51.280 how they responded to this and why. Jeffrey, thank you 0:14:51.280 --> 0:14:53.320 so much for joining us. Can you just give us 0:14:53.320 --> 0:14:56.960 a sense and your discussions with businesses in Middle America 0:14:57.000 --> 0:15:00.160 smaller businesses, Why is it that some of them have 0:15:00.440 --> 0:15:03.080 embraced this decision for the US to withdraw from the 0:15:03.120 --> 0:15:05.960 Paris Climate Accord. For the most part, it is not 0:15:06.080 --> 0:15:10.720 because it directly impacts their business, but it's the symbolism. 0:15:10.400 --> 0:15:14.000 From their standpoint, this is a president who is still 0:15:14.040 --> 0:15:17.960 on track with many of the campaign promises towards deregulation. 0:15:18.400 --> 0:15:22.000 They understand that the Paris Accords would carry some burdens 0:15:22.120 --> 0:15:27.800 uh with it for for regulation, particularly energy sector. Energy 0:15:27.840 --> 0:15:30.760 drives a lot of manufacturing, so so they're seeing this 0:15:30.920 --> 0:15:36.680 as the symbolic value of yet another step that supports deregulation, 0:15:37.040 --> 0:15:40.800 and that's really important. To small business owners, can you 0:15:40.920 --> 0:15:43.840 just bring in the debate about healthcare as well, because 0:15:43.960 --> 0:15:47.120 that also is a focus of small business owners and 0:15:47.200 --> 0:15:50.080 it is something that will affect their bottom line. Sure. 0:15:50.160 --> 0:15:52.600 What one of the things that I think is important 0:15:52.720 --> 0:15:55.200 is the definition. When I speak about small business owners, 0:15:55.200 --> 0:15:58.720 I often hear from people who are are sold proprietors, 0:15:58.800 --> 0:16:01.240 or of one or two employees. What I'm really talking 0:16:01.240 --> 0:16:04.520 about is the economic definition of small business, which is 0:16:04.560 --> 0:16:09.400 generally five hundred employees or fewer um. When you get 0:16:09.960 --> 0:16:12.680 My observation is that when you get to the fifty 0:16:12.760 --> 0:16:15.480 to a couple hundred employees, that's where they feel the 0:16:15.520 --> 0:16:18.160 burdens the most. So the affordable health care is has 0:16:18.760 --> 0:16:24.200 been a costly imposition um. And again this is from 0:16:24.240 --> 0:16:26.920 their viewpoint. This is as citizens, we just can decide 0:16:26.920 --> 0:16:29.080 whether this is good or bad. But from their standpoint, 0:16:29.320 --> 0:16:33.040 it's a cost cost. The imposition of new rules and requirements, 0:16:33.760 --> 0:16:36.160 many of the environmental many of the labor laws, all 0:16:36.200 --> 0:16:39.520 of these things have been particularly burdened. Some small business 0:16:39.560 --> 0:16:43.760 owners view this differently. UM. These are generally privately held businesses. 0:16:44.240 --> 0:16:48.440 Any dollar cost of regulation or our other requirement is 0:16:48.520 --> 0:16:50.960 essentially a dollar out of their pockets. So they've taken 0:16:51.080 --> 0:16:53.960 very personally. That doesn't mean it's right or wrong, um, 0:16:54.040 --> 0:16:56.560 that they should take it this way, but it's certainly understandable. 0:16:56.800 --> 0:17:00.160 So Jeffrey, UM, I don't have the sense that there 0:17:00.200 --> 0:17:04.040 have been huge sweeping changes made yet that will materially 0:17:04.720 --> 0:17:07.760 change their outlook. Am I wrong with that that? No? 0:17:07.880 --> 0:17:12.399 I I think that's right. But there is a broad understanding, UM, 0:17:12.520 --> 0:17:15.159 in the in the businesses that I've spoken to, and 0:17:15.160 --> 0:17:17.520 I speak in front of thousands of small business owners 0:17:17.520 --> 0:17:20.440 every year and speak directly to hundreds over the course 0:17:20.480 --> 0:17:24.680 of the year, there is an understanding that much of 0:17:24.720 --> 0:17:28.520 the deregulation can be accomplished through the executive branch, and 0:17:28.560 --> 0:17:33.680 so they see that as something that is moving forward. UM. 0:17:33.720 --> 0:17:36.639 I don't believe they're out over their skis and anticipating 0:17:36.680 --> 0:17:40.680 too much progress on legislative action, that they're not banking 0:17:40.680 --> 0:17:44.280 on that. Uh. As it's been explained to me, it's 0:17:44.320 --> 0:17:49.480 not just deregulation, it's the fact that the constant adding 0:17:49.520 --> 0:17:52.520 of regulations that was going on has halted, and that 0:17:52.800 --> 0:17:54.840 I think is fair to say. And and Jeffrey, do 0:17:54.880 --> 0:17:57.440 you get the sense that among these hundreds of small 0:17:57.440 --> 0:18:01.240 businesses that you speak with every year. They are pleased 0:18:01.520 --> 0:18:04.200 with what they're seeing so far, and that they approve 0:18:04.320 --> 0:18:08.400 of President Trump's performance. I think that's that's generally true. 0:18:08.400 --> 0:18:11.959 That's that's obviously a very big generalization that is in 0:18:11.960 --> 0:18:15.880 some ways unfair to make. But I think that the President, 0:18:16.320 --> 0:18:21.520 for whatever reason, speaks well to that community, UM, and 0:18:21.560 --> 0:18:27.520 they feel that he, having run businesses himself, UM and 0:18:28.040 --> 0:18:31.160 essentially being a private business owner, is one of them. 0:18:31.200 --> 0:18:34.840 So there's a level of sympathy or empathy that they're 0:18:34.840 --> 0:18:39.159 feeling that they have not felt in some previous administrations. Alright. So, 0:18:39.280 --> 0:18:42.399 having said all that, though, I'm wondering do they feel 0:18:42.520 --> 0:18:46.720 any uh, any sort of anxiety over the ability of 0:18:46.720 --> 0:18:50.360 the United States to do business with international partners like Mexico, 0:18:50.480 --> 0:18:52.760 like Canada. It's it's not great to do business with 0:18:52.840 --> 0:18:56.919 people that you've just in many cases disrespected, you know. 0:18:56.960 --> 0:19:01.320 I think that's a very legitimate point. Again, UM, this 0:19:01.480 --> 0:19:05.920 is my interpretation, but I've seen it fairly consistently. UM. 0:19:05.960 --> 0:19:09.199 I think most people UM in that position, small business 0:19:09.200 --> 0:19:12.359 owners UM, are giving the president the benefit of the 0:19:12.520 --> 0:19:18.240 doubt and see this as negotiating tactics rather than his 0:19:18.320 --> 0:19:21.080 views reflecting an end result. All right, we're gonna leave 0:19:21.119 --> 0:19:23.000 it there, but thanks very much for giving us this. 0:19:23.040 --> 0:19:26.240 Inside the mid market and focus Jeff Corzeneck. He is 0:19:26.280 --> 0:19:29.760 an investment strategist for Fifth Third Bank. Speaking about the 0:19:29.760 --> 0:19:33.199 divide between what big businesses and Lisa, you mentioned some 0:19:33.240 --> 0:19:36.119 of those chief executives such as Lloyd blank Find and 0:19:36.240 --> 0:19:40.440 Elon Musk coming out and saying that they proposed that 0:19:40.520 --> 0:19:43.240 the U s stay in the Paris climate of Bardon 0:19:43.400 --> 0:19:46.639 Goldman Sacks. Lloyd blank Find joined Twitter precisely for the 0:19:46.680 --> 0:19:48.960 purpose of coming out against this, and Elon Musk resigned 0:19:49.000 --> 0:19:51.800 from President Trump's Advisory council. So a lot of anger 0:19:51.840 --> 0:20:05.919 on that side. We've seen a lot of changes in 0:20:05.960 --> 0:20:09.120 the advertising business over the past decade, in large part 0:20:09.160 --> 0:20:12.480 because of the changing way that people consume media. Well, 0:20:12.520 --> 0:20:15.880 Andrew Esx has had a front row seat on all 0:20:15.920 --> 0:20:19.879 of these changes. Andrew Esx CEO of Rebeca Enterprises in 0:20:19.920 --> 0:20:22.960 New York, which of course is the host of Rebeca 0:20:23.000 --> 0:20:25.199 Film Festival, which is also in New York. But he 0:20:25.240 --> 0:20:28.240 also was the former chief executive officer of advertising agency 0:20:28.320 --> 0:20:31.200 Droga five and he wrote a new book called The 0:20:31.359 --> 0:20:34.520 end of advertising, why it had to die and the 0:20:34.600 --> 0:20:39.199 creative resurrection to come. Very dramatic. Why are we seeing 0:20:39.280 --> 0:20:42.640 the death of advertising? What is this death? And uh? 0:20:42.680 --> 0:20:44.720 And where do we go from here? I really wanted 0:20:44.760 --> 0:20:46.879 to call it the death of traditional advertising, but that 0:20:46.960 --> 0:20:49.480 was a little less clickable. Yeah. Now this it's it's 0:20:49.560 --> 0:20:52.080 much more dramatic, you know. But we're talking about the 0:20:52.119 --> 0:20:54.920 eventual demise of three traditional forms, which is the thirty 0:20:54.960 --> 0:20:58.160 second spot, the print insertion, and the classic display at 0:20:58.200 --> 0:21:00.720 the banner at and that's driven by the rise of 0:21:00.760 --> 0:21:04.840 ad blocking, the phenomena of over the top television which 0:21:04.880 --> 0:21:08.440 has no commercial interruption, and general consumer behavior on platforms 0:21:08.480 --> 0:21:10.920 in which traditional advertising is not native. So the whole 0:21:10.920 --> 0:21:13.479 world is coming together to conspire against an old way 0:21:13.520 --> 0:21:20.160 of doing things, and that's called evolution. Will okay, evolution? Andrew, 0:21:20.160 --> 0:21:21.600 I'm wanting if you could just speak a little bit 0:21:21.600 --> 0:21:26.199 about your evolution to become the head of Tribeca Enterprises, because, 0:21:26.600 --> 0:21:29.280 as Lisa just said, many people will know it because 0:21:29.280 --> 0:21:32.840 of the Tribeca Film Festival and the creation of Jane 0:21:32.880 --> 0:21:36.440 Rosenthal and Robert de Niro. Maybe just give a little 0:21:36.440 --> 0:21:39.119 bit of your background in the print industry as well, 0:21:39.200 --> 0:21:41.359 and how you got to this role. I'm kind of 0:21:41.359 --> 0:21:43.760 a Darwin in mutation. I started in publishing, then I 0:21:43.800 --> 0:21:46.320 went to what was called the dark side, which is advertising, 0:21:46.760 --> 0:21:49.880 and now evolution you could still use exactly. And now 0:21:50.000 --> 0:21:52.480 I'm at an event, a live event, which is really 0:21:52.520 --> 0:21:56.080 about storytelling and storytelling on any platform. So though although 0:21:56.119 --> 0:21:59.240 we do film, we do amazing television, we do amazing talks, 0:21:59.280 --> 0:22:02.800 we date a using music, amazing VR, amazing gaming, any 0:22:02.800 --> 0:22:05.160 platform which you can tell a story. And I find 0:22:05.160 --> 0:22:07.280 it's a natural conclusion of what I've been trying to do, 0:22:07.280 --> 0:22:09.680 which is just to add value to people's lives through 0:22:09.680 --> 0:22:12.080 good content. Well, you know, going going back to this 0:22:12.119 --> 0:22:16.399 idea of moving away from the banner ad or the 0:22:16.440 --> 0:22:20.840 thirty second spot, I mean, we are seeing native advertising. 0:22:20.880 --> 0:22:23.520 We're seeing people who are getting paid explain explain what 0:22:23.840 --> 0:22:27.240 explain what native advertising? Well, I've actually talked with people 0:22:27.320 --> 0:22:31.200 who are paid to go to UH people's parties in 0:22:31.240 --> 0:22:33.760 their homes, are paid to go to a bar and 0:22:34.240 --> 0:22:37.800