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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

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Speaker 1: SoundCloud and at Bloomberg dot com. Now we want to

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Speaker 1: prepare for what's to come in the world with Fica Sebzma.

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Speaker 1: We are very pleased to have you here, CEO of

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Speaker 1: Royal ds M with more than twenty employees, a company

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Speaker 1: with more than ten billion dollars of market capitalization. Uh faca.

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Speaker 1: You have outlets all across the world, and I want

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Speaker 1: to ask you about one place in particular, that's China.

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Speaker 1: Can you give us a sense, given that you oversee

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Speaker 1: operations on the ground in one of the most uh

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Speaker 1: uh questionable areas, people don't have a sense of what's

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Speaker 1: actually going on with the economy. What's your perspective? I

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Speaker 1: just wanted to tell what what is world s M.

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Speaker 1: Thank you for having me here. I indeed factor superman,

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Speaker 1: CEO of Royal ds M, founded in an alands, operating worldwide.

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Speaker 1: More than two and fifty locations and all continents in

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Speaker 1: the world, being the biggest in nutritional ingredients in the world.

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Speaker 1: So people who eat sometimes and many people do, half

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Speaker 1: a chance that they eat our ingredients every single day.

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Speaker 1: Please continue to do so, including our ingredients, but also materials,

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Speaker 1: materials for solar panels, for second generation bio fields, new energies,

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Speaker 1: so sustainability. So sustainability and nutrition are two core areas

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Speaker 1: which we deliver to our customers globally. Okay, So now

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Speaker 1: now China and China, I think there's many elements in China,

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Speaker 1: second largest economy of the world, still smaller than the US,

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Speaker 1: but running up more than five six annual growth? Is

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Speaker 1: that bad? Should we be concerned? I don't think at all.

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Speaker 1: The fundamentals I will come back on that. There is

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Speaker 1: a there is a point. I agree with you. I

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Speaker 1: agree with you. P please interrupret me as much as possible.

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Speaker 1: But it is not only positive, but the fundamentals are

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Speaker 1: not bad. I mean, there's a middle class, there is urbanization.

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Speaker 1: There's new people every single day coming on the markets

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Speaker 1: who would never purchase before, and once they move from

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Speaker 1: the rural area to the domestic area, they do purchase.

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Speaker 1: So the fundamentals in China is not bad. Two million

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Speaker 1: people from from universities, a big need, six percent grows.

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Speaker 1: But ask me your question about the concerns, because you

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Speaker 1: seem to be concerned or not well. I mean just

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Speaker 1: the fact that they're financing at all with the fastest

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Speaker 1: pace of debt creation that know everybody is seen in

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Speaker 1: the world. I mean, this is a tremendous concern for

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Speaker 1: people in my world and focus. Yes, I know, state

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Speaker 1: that deficit pretty low, still one of the lowest in

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Speaker 1: the world. But I agree with you. The deficits on

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Speaker 1: companies is you and many companies are state owned and

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Speaker 1: it's not counted the state deficits, So there you have

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Speaker 1: a point. But also deficits in provinces and lower government

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Speaker 1: levels is pretty huge. And even the big thing is

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Speaker 1: unclear to everybody how big the deficit is. For me,

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Speaker 1: a bigger underlying issue is where is the gross coming

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Speaker 1: from in China? And the gross is coming from investments,

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Speaker 1: the growth is coming less and less from exports, and

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Speaker 1: the growth is not coming yet enough from domestic consumption.

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Speaker 1: And there are three very clear reasons why the people

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Speaker 1: save money in China and do not consume, and that

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Speaker 1: is because their concerns about education, their concerns about the

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Speaker 1: health care, their concerns about pensions. Later on, it sounds

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Speaker 1: just like Americans. No, not at all. You know are Americans.

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Speaker 1: They're concerned about their pensions, they're concerned about their health care,

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Speaker 1: and they're concerned about education. You are totally right. However,

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Speaker 1: having said so, you know, the afforage spent of the

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Speaker 1: dollar earned of the average American, it's a little bit

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Speaker 1: over the dollar. And the average spent of the dollar

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Speaker 1: earned in China is around sixty cents. The average spent

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Speaker 1: in Europe is around eighty cents of the dollar earned.

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Speaker 1: So the Chinese are one of the biggest safest in

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Speaker 1: the world. So maybe they're concerned about the same issues

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Speaker 1: as the Europeans or the Americans, but they saved much

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Speaker 1: more money for those occasions in pension, healthcare, and education. Well,

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Speaker 1: I have to also because there is no safety net

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Speaker 1: that has really been in place like the one that

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Speaker 1: exists in many European countries and also uh in the

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Speaker 1: United States. And I want to turn if you can

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Speaker 1: to Europe and tell us you think that there's going

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Speaker 1: to be another country that will vote on leaving the

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Speaker 1: European Union. Obviously we had Brexit in during Yes, baby Italy,

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Speaker 1: they have a reference coming up in December. What's your

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Speaker 1: thought and what do you think will Europe look like

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Speaker 1: a year from now? Please? No, please, we need to

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Speaker 1: have a strong Europe. It's the only way. I mean,

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Speaker 1: a strong Belgium. Maybe get them to get their government together, right, yeah,

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Speaker 1: United Belgium would already be a great step forward now

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Speaker 1: breaking up even the European Treaty with Canada almost as

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Speaker 1: a part of Belgium. But I think what we need

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Speaker 1: in Europe is not a split of Europe in twenty

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Speaker 1: seven pieces. That's the way we started. That's not the

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Speaker 1: direction we should go to. So we need to be

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Speaker 1: united to form an economic power block um compared with

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Speaker 1: the US, compared with China, compared within the compared to

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Speaker 1: what it looked like tim Brazil um. So that is

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Speaker 1: what what we need. But my big concern is if

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Speaker 1: I look to maybe also the elections here in the country,

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Speaker 1: if I look to the elections and the Brexit in

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Speaker 1: European countries, is are our leaders and maybe not only

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Speaker 1: the political leaders, but also leaders of businesses or institutions,

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Speaker 1: are our leaders still trusted by the voters? Are the

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Speaker 1: leaders still trusted by the people they represent? Um? And

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Speaker 1: that is I think a concern. And the British people

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Speaker 1: were just angry and they voted, and I think maybe

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Speaker 1: they did not voted so much for stepping out to

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Speaker 1: you being a union, but they voted for being very

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Speaker 1: angry and felt to be left alone. And that is

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Speaker 1: a concern and broader than in Europe or the United States. Well,

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Speaker 1: and to that question you're saying, you know, do the

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Speaker 1: voters trust the politicians and the corporate leaders? I think

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Speaker 1: that in a lot of corners the answer is no.

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Speaker 1: Uh So what do the politicians and the corporate leaders

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Speaker 1: such as yourself do too? And gender more trust to

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Speaker 1: do what you stand for and to define where you

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Speaker 1: stand for. As a company. Should I only make money?

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Speaker 1: Should I take care my shareholder has become as rich

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Speaker 1: as possible, as fast as possible? Is that the only

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Speaker 1: thing I stand for? Please know I ever brought a

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Speaker 1: purpose to serve. I of course should take care of

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Speaker 1: my shoulders, but it should take care of my own people.

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Speaker 1: I should take take care of my customers. I should

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Speaker 1: take care of society as a whole. We have a

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Speaker 1: big influence in the world in terms of nutrition or

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Speaker 1: in terms of climate change. And I see that as

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Speaker 1: a priority, as a goal for our company, and I

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Speaker 1: hope that our companies do it too, because that's the

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Speaker 1: concern of the people, like you said, about their pensions,

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Speaker 1: about the future, about the climate, and a few yields

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Speaker 1: more on your investments, and a few percentage more and

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Speaker 1: investing in the wrong things which kills our climate later

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Speaker 1: on will cost our citizens later on much much more money.

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Speaker 1: So that's the way we should run our countries, our companies,

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Speaker 1: and that's the way I try to do with them.

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Speaker 1: I want to thank you very much for spending time

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Speaker 1: with us. Figures the best money is the chief Exam Kitti,

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Speaker 1: Chairman of Royal d s M. This is Bloomberg. I

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Speaker 1: want to talk with someone about what the implications are

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Speaker 1: about this latest election season. I really don't have a

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Speaker 1: sense of that, but you know who does, Pim Michael Jesus.

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Speaker 1: I was going to say, Michael Jesus, he knows everything

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Speaker 1: about this Chief municipal ready for you, and he's here

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Speaker 1: with us. Michael, thank you for joining us. Hey, thanks

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Speaker 1: for having me on. Very flattering. So I was reading

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Speaker 1: your your latest note, and uh, you seem to believe

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Speaker 1: that they will not get some kind of definitive results,

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Speaker 1: such as a president that's a Democrat as well as

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Speaker 1: Congress that's Democratic, but the sort of split the difference,

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Speaker 1: and that there'll only be incremental changes. But even so,

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Speaker 1: you said that even that would create a risk to

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Speaker 1: tax policies pro sectors like financials and commercial real estate.

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Speaker 1: Can you explain that, Yeah, well, to the extent that

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Speaker 1: there's overlap between um, what Hillary Clinton would like to

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Speaker 1: do in her policy proposals and House Republicans, and we

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Speaker 1: think the House is very likely to stay Republican. There

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Speaker 1: is some overlap on the tax reform side, particularly on

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Speaker 1: the corporate reform side around repatriation, and in particular around

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Speaker 1: the idea of using some of that money to fund

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Speaker 1: infrastructure spending. So in the devil's really in the details

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Speaker 1: as to how you execute that, of course, but just

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Speaker 1: from a political standpoint, Um, if there is a path

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Speaker 1: of lease resistance for any policy proposal on either side

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Speaker 1: at this point, that's probably This is probably the area

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Speaker 1: where there's maximum overlap. Michaelm wondering if we could just

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Speaker 1: kind of ground ourselves in a little, uh, sort of

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Speaker 1: yield so that we understand, you know, what you're actually

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Speaker 1: getting as an investor if you're let's say, buying triple

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Speaker 1: tax free munis State of California one point nine seven percent,

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Speaker 1: New York one point eight oh percent, Florida flaridest different

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Speaker 1: one point eight four Just give us a little idea

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Speaker 1: of of what the landscape looks like right now. Yeah, Well,

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Speaker 1: yields are are obviously near all time lows at this point, uh,

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Speaker 1: and that seems to be the story every subsequent year.

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Speaker 1: I think that story is sort of divorced from what

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Speaker 1: you get out of fixed income as a as a

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Speaker 1: sort of mix of your entire asset allocation. And we

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Speaker 1: we've been arguing anyway that the macro economic environment is

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Speaker 1: such that lower for longer yield, that the yield level

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Speaker 1: itself isn't necessarily what you're supposed to be pointing to.

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Speaker 1: By the macro economic environment of low inflation and slow

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Speaker 1: growth is pretty good for owning fixed income, pretty good

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Speaker 1: for owning US dollars and fixed income in particular, and

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Speaker 1: because of the tax advantages of munies. Uh, that's still

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Speaker 1: a core part of your asset allocation and Uh, not

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Speaker 1: just owning short munies, but kind of owning longer duration

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Speaker 1: munies paired with short meunis to have a relatively even

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Speaker 1: barbell across the curve to take advantage of that macroeconomic environment.

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Speaker 1: And so uh, you know how this pertains to the election,

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Speaker 1: obviously is to the extent that major tax reform comes in. Um.

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Speaker 1: Is there something in the cards that either lowers the

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Speaker 1: value of tax exempt income because tax brackets are going

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Speaker 1: lower like under Donald Trump's plan? Uh, and from either

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Speaker 1: side the idea that they might eliminate or at least

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Speaker 1: reduce uh tax exclusions and preference items like the fact

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Speaker 1: that you don't have to pay interest on your muni debt. Uh.

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Speaker 1: That is implicitly a feature of both plans the way

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Speaker 1: we judge it at this point, though, because the divided

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Speaker 1: government scenario that we talked about earlier, we argue the

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Speaker 1: odds are still against that. Well, given that, but given that,

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Speaker 1: it seems like, I mean, I'm trying to imagine what

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Speaker 1: you're saying. In other words, Uh, if there is some

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Speaker 1: sort of reduced taxes, then it will actually reduce the

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Speaker 1: allure of tax exempt bonds because you can get income uh.

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Speaker 1: And from other places that won't be taxed as much. Um,

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Speaker 1: Is that correct? Yeah, Okay, that's that's the right way

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Speaker 1: to think about it. So I think about if you

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Speaker 1: want to hopefully I get too specific on it, but

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Speaker 1: if you have a thousand dollars of tax exempt income

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Speaker 1: right now you're in and you're in the thirty tax bracket,

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Speaker 1: you're basically shielded from three d fifty of tax. If

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Speaker 1: you if tax rates were to go down and you

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Speaker 1: found the percent bracket, you're only shielded from two eighty

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Speaker 1: dollars of tax. So the value of that tax shield

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Speaker 1: goes down, and therefore the value of the bond on

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Speaker 1: one thing, you know, you seem rather unfazed about the

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Speaker 1: sort of political season and and the hysteria that some

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Speaker 1: people have worked themselves up into. But one thing that

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Speaker 1: perhaps is more realistic, certainly for these municipalities, is the

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Speaker 1: pension burden. How much do you look at the fact

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Speaker 1: I mean, this is a this is a really important

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Speaker 1: part of our investment philosophy around Muni's UH state and

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Speaker 1: local governments. We think have historically been kind of a

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Speaker 1: less cyclical part of the muni market and have become

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Speaker 1: muni market. Uh. In no small way do the pension

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Speaker 1: issue that you're talking about. State revenue growth is really

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Speaker 1: kind of flat at this point, and the claims on

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Speaker 1: whether it be physical capital with h deferred spending on

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Speaker 1: roads and bridges and schools, or the underfunded liabilities that

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Speaker 1: you're talking about. And UH, it's a situation where there

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Speaker 1: aren't any easy legal um uh fixes to this and

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Speaker 1: where you know, over the long term, UH, you're likely

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Speaker 1: to hit a crisis point and frankly, the market is

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Speaker 1: not really compensating you and most areas to uh to

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Speaker 1: deal with this. So we think it's a very easy

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Speaker 1: sector uh to underweight and um uh. And we really

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Speaker 1: would prefer being in enterprise sectors as a consequence, transportation

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Speaker 1: and water, sewer utilities and the like. Hey, Michael, I

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Speaker 1: wonder if you could just tell us a question that

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Speaker 1: you would like answered from a top economic advisor to

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Speaker 1: the Trump campaign, because coming up we're gonna be speaking

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Speaker 1: with Anthony Scaramucci, who has been advising the Trump campaign

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Speaker 1: on economic policy. Yeah, um, you know that. I'd say

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Speaker 1: the question that we get the most from clients on

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Speaker 1: the Trump tax policy is how do they how do

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Speaker 1: they lower the business tax rates but also eliminate the

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Speaker 1: carried interest loophole um. And the reason we get that

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Speaker 1: question a lot is because for asset managers, the question

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Speaker 1: is are they going to be worse off or better

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Speaker 1: off under that? Because obviously they enjoy carried interest, but

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Speaker 1: if he's also offering a corporate rate, or they actually

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Speaker 1: somehow better off under that scenario, even though he's been

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Speaker 1: touting the idea that that eliminating carried interest is a

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Speaker 1: is something that would hurt the asset management crowd. Good question,

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Speaker 1: all right, thank you. Yeah, because we're gonna be speaking with,

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Speaker 1: as I said, Anthony Scaramucci. But he also is, of course,

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Speaker 1: the founder of a Skybridge Capital, and he's got a

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Speaker 1: new book out called I Think It's What Hopping Over

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Speaker 1: the rabbit Hole. Now let's turn our attention to the

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Speaker 1: world of politics and money. Our guest is Anthony Scaramucci.

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Speaker 1: He is the founder of Skybridge Capital, helping to manage

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Speaker 1: more than twelve billion dollars of customer assets. He is

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Speaker 1: also the author of his This is his third book.

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Speaker 1: It is entitled Hopping Over the rabbit Hole. How Entrepreneurs

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Speaker 1: Turn Failure into Success. Anthony, thank you very much for

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Speaker 1: coming in and spending time with him. It's a pleasure

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Speaker 1: to be here. Thank you. Let's begin by talking just

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Speaker 1: a second about hopping over the rabbit hole. Do you

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Speaker 1: feel like you kind of hopped over the rabbit hole

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Speaker 1: during the selection season and the New kind together. I

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Speaker 1: can't speak for the election until after it's over. If

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Speaker 1: if the outcome comes out the way I think it's

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Speaker 1: going to come out, then I've hopped over it. But

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Speaker 1: I think all of us, in some ways, and the

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Speaker 1: American electorate in general, has fallen into the rabbit hole

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Speaker 1: a little bit because at the end of the day,

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Speaker 1: our politics is becoming too personal, it's becoming too emotionally

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Speaker 1: charged in an ad hominum way, and we've got to

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Speaker 1: discuss the policies and the issues a way more than

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Speaker 1: we're currently doing, and that's going to be way more

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Speaker 1: beneficial to the American people. So, um, just to stick

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Speaker 1: with your book for for one second, what's been your

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Speaker 1: biggest failure? Well, I got so many of them. I

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Speaker 1: I think, Adam of the biggest failure was my near

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Speaker 1: death experience with Skybridge, which is the whole genesis of

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Speaker 1: the book. We went from a four d and fifty

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Speaker 1: million dollars of assets under management to two hundred million,

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Speaker 1: and we were on our way out of business, and

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Speaker 1: so we had to literally adapt and pivot and redesign

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Speaker 1: the business. And frankly, if I wasn't successful or we

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Speaker 1: weren't successful in buying City Banks alternative investment management company,

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Speaker 1: I'm not sure if Skybridge could have survived. So that

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Speaker 1: would be failure big time. Number one. I did fail

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Speaker 1: the bar exam twice. I know my mom is listening,

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Speaker 1: so I took it the third time to eventually pass

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Speaker 1: it here in New York State. That was due to

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Speaker 1: intellectual arrogance. I wasn't studying enough for the exam. As

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Speaker 1: a younger man, I got fired from Goldman Sachs h

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Speaker 1: We could blame it on structural layoffs, but the truth

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Speaker 1: of the matter is I stunk at the job of

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Speaker 1: being an investment banker. Um. So those are a few

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Speaker 1: big failures, but I've got a ton more. Well, you know,

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Speaker 1: I just want to quickly ask, how does it affect

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Speaker 1: you to hear when people like Jamie Diamond or Warren

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Speaker 1: Buffett come out against Donald Trump, including his economic plans. Listen.

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Speaker 1: I mean, these guys look at an enormous amount of

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Speaker 1: respect for them in business, but I think they're missing

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Speaker 1: something about what's going on in the American public right now.

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Speaker 1: And so what has happened, And we have to all

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Speaker 1: be very careful of this because of where we live

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Speaker 1: and who we interact with. We've gotta it's a very

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Speaker 1: dangerous circle of elitism. We've got to be super careful

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Speaker 1: because the working class that used to be an aspirational

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Speaker 1: working class is now becoming the working poor, and the

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Speaker 1: middle class is shrinking while the rest of us are

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Speaker 1: sitting in salons talking to each other about how great

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Speaker 1: everything is. And so I think that's a real big fallacy.

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Speaker 1: And you can see that in the Bernie Sanders supporters,

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Speaker 1: and you can see that in the Donald J. Trump supporters.

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Speaker 1: And so I love Jamie Diamond. I have an enormous

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Speaker 1: amount of respect for him. Uh, The big corporate CEOs

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Speaker 1: like the status quo. They like to predictability of that.

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Speaker 1: But if we're not careful in our society and we

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Speaker 1: don't figure out a way to solve the problems for

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Speaker 1: the working poor and for the middle class, you're gonna

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Speaker 1: see a massive disruption in the society. This is a

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Speaker 1: minor tremor what's gone on in the two thousand and

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Speaker 1: sixteen election. The biggest risk, and Frank, I'll speak very candidly,

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Speaker 1: you don't mind being a little bit political here, is

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Speaker 1: that you end up with a charismatic, good looking socialist

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Speaker 1: that comes in and totally subverts and disrupts the American society.

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Speaker 1: And so for me, I think that I respect Warren Buffett,

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Speaker 1: I respect Jamie Diamond. They also have boards that they

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Speaker 1: represent and their publicly traded companies, and I understand where

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Speaker 1: they're coming from. But I do think that neither of

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Speaker 1: them have been to with Donald Trump rally, and my

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Speaker 1: guess is neither of them have been to a Bernie

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Speaker 1: Sanders rally. And if you go there, you can feel

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Speaker 1: the quiet desperation that's in the United States that we

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Speaker 1: have to fix. I want to turn your attention to investments,

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Speaker 1: because it's not often that I get to talk to

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Speaker 1: you about where the money really is going, and you've

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Speaker 1: got to follow the money. Someone comes to you, let's

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Speaker 1: say they want to open a new account, maybe they

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Speaker 1: got attended. They tell you that they have a tenure

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Speaker 1: horizon and the uh, they don't want run of the

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Speaker 1: mill plane vanilla, because I can get that anywhere else.

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Speaker 1: Tell tell people a little bit about strategy and about

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Speaker 1: where you'd be looking right now. Well, the number one

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Speaker 1: thing that we have to do in our business is

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Speaker 1: mental conditioning, because everybody is a long term investor until

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Speaker 1: they have short term losses, and that's typically what happens.

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Speaker 1: So the losses come in short term, they set their

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Speaker 1: hair on fire and they want to change their strategy.

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Speaker 1: And so what I tell people about Skybridge, You should

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Speaker 1: have a stock and bond portfolio pretty much plain vanilla,

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Speaker 1: but five to fifteen cents of your portfolio should be

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Speaker 1: in products like what we offer. Now, what is that

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Speaker 1: we have a hedge fund business where we're actually taking

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Speaker 1: your money and we're allocating it to a group of

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Speaker 1: hedge funds and our portfolio now it's about thirty funds.

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Speaker 1: The funds are designed to give you a non correlated

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Speaker 1: absolute return over a market cycle. That is above bonds,

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Speaker 1: and so I don't even know if I'm allowed to

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Speaker 1: talk about my performance or not, so I won't, but

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Speaker 1: somebody can go look it up. The performance has been

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Speaker 1: very good, and the reason it has been very good

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Speaker 1: is that we're we're we're targeting a certain lower risk

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Speaker 1: targeted to return, and so I tell people you're trying

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Speaker 1: to reach an actually our real goal. The market is

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Speaker 1: going to become more volatile as the feed is normalizing rates.

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Speaker 1: Passive indexes which have worked and so have e t s,

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Speaker 1: they may not necessarily work with the same success over

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Speaker 1: the next five years. So diversify a little bit into

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Speaker 1: products like ours. Real quick to Donald Trump, give you

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Speaker 1: autonomy to come up with your own economic plans as

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Speaker 1: you weigh in. There's no question he weighs in. I mean,

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Speaker 1: you see, this is the thing that I think that

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Speaker 1: has been distorted through the media prism and probably also

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Speaker 1: from his stump campaigning. He is a very thoughtful, very

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Speaker 1: methodical guy. He is a doer with a big long

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Speaker 1: list on a on a yellow pit. Anthony Scaramucci, thank

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Speaker 1: you so much for being with us. Anthony Scaramuchie, founder

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Speaker 1: of Skybridge Capital and author of his third book Hopping

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Speaker 1: over the rabbit Hole. Thanks for being with us. This

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Speaker 1: is Bluebird and to learn more about Apple, we have

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Speaker 1: brought in none other than the expert Shira O Vida

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Speaker 1: columnists covering technology a Bloomberg gad fly, which just means

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Speaker 1: that fast commentary section. Boy, you know, it's great to

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Speaker 1: have you here. My pleasure, Thank you, and I just

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Speaker 1: want to point out that you're followable on Twitter at

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Speaker 1: Shira O v Day. Yes O v I D Thank you.

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Speaker 1: Um Apple, you got this column out fast. What's been

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Speaker 1: going on? You're fast? Oh no no. But the reason

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Speaker 1: I say that is is because you got it out fast.

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Speaker 1: But you make a long term point in the piece,

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Speaker 1: maybe just to describe that, expand on that. So it's

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Speaker 1: really two points. The basic message is, look, the party's

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Speaker 1: over for Apple. So on the one hand, you have

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Speaker 1: a company that was this incredible growth story for basically

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Speaker 1: fifteen years. Revenue increased annually for fifteen years, and this

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Speaker 1: was the first time since two thousand one that fiscal

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Speaker 1: year revenue declined for Apple, and looking ahead, it doesn't

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Speaker 1: look that much better. We have a company that, I

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Speaker 1: mean generates incredible profits, by far the most profitable company

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Speaker 1: in the world. But the basis of Apple has been

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Speaker 1: this is a company with incredible profits and incredible growth,

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Speaker 1: and incredible growth is no longer on the horizon. So

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Speaker 1: the big question is what's next for Apple, and they

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Speaker 1: don't have an immediate answer. At the iPhone is now

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Speaker 1: their annual sales or so, and there really isn't a

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Speaker 1: product again on the near term horizon to replace the

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Speaker 1: incredible sales and profit growth that the iPhone is generated.

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Speaker 1: So let's say that this is the end of the

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Speaker 1: Party's Sorry, Apple, it's over. You've gotten to your peak size.

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Speaker 1: What does that mean for investors in the stock? I

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Speaker 1: mean there's still throwing off so much cash. I mean

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Speaker 1: they still have this fortress of money on their balance sheet, right,

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Speaker 1: and that's always been the bowl case on Apple, that

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Speaker 1: been during its most heady growth period. It still looks

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Speaker 1: like an incredibly cheap stock. I believe it's trading right now,

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Speaker 1: or at least before today, it's something like thirteen times

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Speaker 1: next twelve month revenue, and for a tech stock compared

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Speaker 1: to something like Google or Facebook, that's incredibly inexpensive. So

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Speaker 1: if you believe that this profit machine at least continues

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Speaker 1: for the foreseeable future, and I do, then that's a

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Speaker 1: reason to back the stock. But again, if you are

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Speaker 1: an investor in Apple and you want incredible growth and

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Speaker 1: incredible profits, um, the growth picture is probably not part

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Speaker 1: of the story anymore. But how many people really predicted

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Speaker 1: that Apple would reach to these heights, let's say, twenty

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Speaker 1: years ago. It's a good point. I I don't think

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00:24:45,960 --> 00:24:49,080
Speaker 1: anyone did. I mean, this was a company that almost died,

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00:24:49,800 --> 00:24:52,520
Speaker 1: right and has been on this incredible march, the likes

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00:24:52,560 --> 00:24:55,159
Speaker 1: of which we've probably never seen in the corporate world. Well,

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00:24:55,200 --> 00:24:56,679
Speaker 1: and the reason I say that is because I know

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00:24:56,720 --> 00:25:00,399
Speaker 1: that the new iPhone seven does not have let's say

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00:25:00,400 --> 00:25:03,720
Speaker 1: an extension a plug for earphones. It does not have

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00:25:03,760 --> 00:25:06,399
Speaker 1: an earphone plug that right, So that may change. You

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00:25:06,440 --> 00:25:09,440
Speaker 1: don't know what the third and fourth iteration is, specifically,

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00:25:09,480 --> 00:25:12,760
Speaker 1: since they have the Beats acquisition, you don't know what

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00:25:12,840 --> 00:25:15,720
Speaker 1: the technology is going to evolve into in order to

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00:25:15,800 --> 00:25:18,680
Speaker 1: best the competition. And right now, the competition is all

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00:25:18,840 --> 00:25:20,879
Speaker 1: outside the United States. So if you want a US

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00:25:20,960 --> 00:25:23,439
Speaker 1: company and you believe that cell phones are going to

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00:25:23,480 --> 00:25:26,560
Speaker 1: continue to be in demand, what else is there? Yeah,

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Speaker 1: that's that's fair. It's you're right. It's not as though

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00:25:28,560 --> 00:25:32,040
Speaker 1: Apple's smartphone competitors are in much better shape, particularly Samsung

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00:25:32,119 --> 00:25:35,639
Speaker 1: with this um problem with their exploding smartphones. The issue

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00:25:35,720 --> 00:25:39,240
Speaker 1: is that the smartphone industry is not growing anymore worldwide

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00:25:39,680 --> 00:25:42,760
Speaker 1: and um, Apple can't change that, probably on its own.

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00:25:43,359 --> 00:25:46,880
Speaker 1: So to me, the most telling moment on the earnings

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00:25:46,920 --> 00:25:49,040
Speaker 1: call the Apple earnings call last night was one of

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00:25:49,080 --> 00:25:54,680
Speaker 1: the veteran Apple analysts asked him Cook, what's the next

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00:25:54,720 --> 00:25:58,400
Speaker 1: big thing for Apple beyond the iPhone? The Apple Watch

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00:25:58,520 --> 00:26:02,040
Speaker 1: is not a blockbuster it quite yet. Apple music is

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00:26:02,040 --> 00:26:04,760
Speaker 1: not a blockbuster hit quite yet. You're not generating a

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00:26:04,760 --> 00:26:07,439
Speaker 1: lot of money from Apple pay. There's nothing on the

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00:26:07,440 --> 00:26:10,880
Speaker 1: current product lineup that is the next growth driver. So

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Speaker 1: do you have a vision of what that growth driver

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Speaker 1: is for the next generation of Apple? And Tim Cook answered,

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Speaker 1: I think rather grumpily that they have the best product

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00:26:21,240 --> 00:26:24,800
Speaker 1: pipeline they've ever had, which is what Apple CEOs always

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Speaker 1: say from the beginning of time. And he also said,

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00:26:27,520 --> 00:26:29,480
Speaker 1: we're not going to tell you what it is. Basically,

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00:26:29,720 --> 00:26:31,880
Speaker 1: it's the sort of trust us message from Tim Cook.

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Speaker 1: The problem is the trust us message from Apple doesn't

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Speaker 1: work anymore. Just real quick, did they mentioned Samsung and

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Speaker 1: how much market share they could end up getting. They

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Speaker 1: got asked that question and they punted it. I think

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Speaker 1: it's clear they're not going to pick up huge sales

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Speaker 1: from Samsung. Shara over Day, thank you so much for

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Speaker 1: being with us. Thanks for listening to the Bloomberg P

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00:26:57,680 --> 00:27:00,920
Speaker 1: and L podcast. You can subscribe in listen to interviews

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00:27:00,960 --> 00:27:06,120
Speaker 1: at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm

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00:27:06,160 --> 00:27:09,200
Speaker 1: pim Fox. I'm out there on Twitter at pim Fox.

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00:27:09,480 --> 00:27:12,200
Speaker 1: I'm out there on Twitter at Lisa Abramo. It's one

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00:27:12,480 --> 00:27:15,200
Speaker 1: before the podcast. You can always catch us worldwide on

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00:27:15,240 --> 00:27:20,119
Speaker 1: Bloomberg Radio