Latest / Bloomberg Intelligence / Are Bank Jobs at Risk From Technology?

Transcript

Are Bank Jobs at Risk From Technology? · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Pimp Fox.
• 0:32
  Speaker 1: There was a story that caught my eye yesterday about
• 0:36
  Speaker 1: expectations for technology and robots to come in and throughout
• 0:40
  Speaker 1: all the humans. Speak from Pandit, who ran City Group
• 0:43
  Speaker 1: during the financial crisis, said that technological developments could result
• 0:48
  Speaker 1: in a thirty percent decline of banking jobs in the
• 0:52
  Speaker 1: next five years. That is soon, and that is a lot.
• 0:55
  Speaker 1: That is thousands and thousands of people. So here to
• 0:57
  Speaker 1: give us some context, perspective and perhaps uh an alternative
• 1:00
  Speaker 1: view is Kevin McPartland, who is a principal market structure
• 1:03
  Speaker 1: and technology analysts with Greenwich Associates, which is based in Connecticut. Um, Kevin,
• 1:09
  Speaker 1: so what's your take on this? I would love to
• 1:11
  Speaker 1: get your sort of in the ground observation. Does this
• 1:15
  Speaker 1: seem realistic? Sure? Yeah, I'm gonna I think I'm gonna
• 1:18
  Speaker 1: side with Jamie Diamond on this one. This isn't about
• 1:21
  Speaker 1: a loss of jobs, but really a change in jobs.
• 1:23
  Speaker 1: And I think, you know, we saw this, I think
• 1:25
  Speaker 1: in the first dot com bubble back in thousand, when
• 1:30
  Speaker 1: you electronic trading was really starting to take over and
• 1:33
  Speaker 1: the trading desk makeup was starting to change. It wasn't
• 1:37
  Speaker 1: that you were losing jobs. It was that you were
• 1:39
  Speaker 1: taking what maybe before we're business school traders and replacing
• 1:43
  Speaker 1: them with you know, computer science PhD s. Now. Obviously,
• 1:46
  Speaker 1: technology and the markets have evolved quite a bit since then, UM,
• 1:49
  Speaker 1: but I think we're in I think we're going through
• 1:51
  Speaker 1: a similar transition where it's not just also in this
• 1:55
  Speaker 1: time around, it's not just about the skill set of
• 1:58
  Speaker 1: the people in those jobs, but where those jobs are.
• 2:01
  Speaker 1: Some of those jobs maybe that we're at banks, the
• 2:03
  Speaker 1: banks that are looking to increasingly outsource UM, you know,
• 2:07
  Speaker 1: pieces of their technology infrastructure, UM too, you know, sometimes
• 2:12
  Speaker 1: large firms that often UM startups as well. That we're
• 2:15
  Speaker 1: just going to see some jobs shift around, right, more
• 2:17
  Speaker 1: so than seeing these jobs just you know, disappear into
• 2:20
  Speaker 1: thin air and have the robots take them. Kevin, let's
• 2:22
  Speaker 1: let's focus if we can, on retail banking for for
• 2:25
  Speaker 1: just a minute. I mean, is that the area that
• 2:27
  Speaker 1: you're going to see the biggest job losses? I mean,
• 2:31
  Speaker 1: I really think it's across the board. There's no question
• 2:34
  Speaker 1: the industry is being disrupted. Um, you know, everything from
• 2:38
  Speaker 1: you know, when you call for an issue on your
• 2:39
  Speaker 1: credit card and you're talking to an automated voice. Um,
• 2:42
  Speaker 1: but right down to the institutional trading desk, right where
• 2:45
  Speaker 1: there's you know, less traders covering more clients, and they're
• 2:48
  Speaker 1: able to do that because they have you know, more
• 2:50
  Speaker 1: sophisticated technology in front of them that allows them to
• 2:53
  Speaker 1: service those customers. And those customers also have more self
• 2:56
  Speaker 1: service technology than they did. So I really do think
• 2:59
  Speaker 1: this spans the gamut from you know, retail all the
• 3:01
  Speaker 1: way through to the institutional markets. So when you talk
• 3:04
  Speaker 1: about the disruption that's already happening, what do you see
• 3:07
  Speaker 1: as the biggest technological development that will result in a
• 3:11
  Speaker 1: mass shift in banking jobs over the next five years?
• 3:15
  Speaker 1: I I so, I think it's a back end phenomenon
• 3:18
  Speaker 1: that we don't really see, right, It's not the There's
• 3:20
  Speaker 1: a lot of cool stuff that's going on that's on
• 3:23
  Speaker 1: the screens, that's on your phone. But our ability to
• 3:25
  Speaker 1: process data and analyze data, just the compute power that's available. Um.
• 3:31
  Speaker 1: And there's a whole host of technologies that have made
• 3:33
  Speaker 1: that possible. That's what we didn't have five or ten
• 3:36
  Speaker 1: years ago. It's so so much compute power. Right. The
• 3:39
  Speaker 1: fact that you know, with Apple's announced me yesterday that
• 3:41
  Speaker 1: they can do um, that amazing face scanning and within
• 3:45
  Speaker 1: a chip that's in your phone. UM. To think about
• 3:48
  Speaker 1: that on on an institutional scale, with an Amazon or
• 3:51
  Speaker 1: a Microsoft or Google data center. UM, there's just so
• 3:55
  Speaker 1: much that computers can do with that power. UM that
• 3:57
  Speaker 1: just wasn't available or affordable five or ten years ago.
• 4:00
  Speaker 1: So let's just talk about you're saying the shift in jobs.
• 4:03
  Speaker 1: But when you talk about that back end stuff, I
• 4:05
  Speaker 1: think about Bank of New York, Melon, I think of
• 4:07
  Speaker 1: some of these you know, classic processing focused firms that
• 4:11
  Speaker 1: are big, have a lot of people. Are they going
• 4:13
  Speaker 1: to go bankrupt? No? No, I think they they'll you know,
• 4:18
  Speaker 1: their business model and they're the economics of the business
• 4:20
  Speaker 1: will have to change as they you know, continue to uh.
• 4:24
  Speaker 1: If we if we call it outsource more and more
• 4:27
  Speaker 1: functions to computers. UM, they'll be able to then take
• 4:30
  Speaker 1: the people that they do have and push them further
• 4:32
  Speaker 1: upstreaming to get their you know, their customers, facing their
• 4:35
  Speaker 1: their their new business, their innovation. They'll be able to
• 4:38
  Speaker 1: have people more focused on those UM I guess you
• 4:41
  Speaker 1: would call them like neck up tasks, where the computers
• 4:43
  Speaker 1: can automate more, you know, more of what can be automated.
• 4:46
  Speaker 1: Which I think that process is going on for arguably
• 4:49
  Speaker 1: for decades. We're just continuing to move down that spectrum more,
• 4:52
  Speaker 1: more and more complicated things can be automated. Kevin, I
• 4:55
  Speaker 1: got one question for you, and it's only a word Equifax.
• 5:01
  Speaker 1: I mean, there's you know, there's always going to be uh,
• 5:03
  Speaker 1: you know, where where there's technology, the technology was still
• 5:06
  Speaker 1: developed by humans. There always can be issues and there's
• 5:09
  Speaker 1: always going to be some bad apples in the world.
• 5:11
  Speaker 1: But you know, the industry is resilient and continues to uh,
• 5:15
  Speaker 1: you know, continue, So you don't think it's gonna be
• 5:16
  Speaker 1: a problem. You don't think it's gonna you know, you
• 5:19
  Speaker 1: don't think some smart banker is going to say, you
• 5:21
  Speaker 1: know what, maybe we've been a little overboard with all
• 5:23
  Speaker 1: this technology and maybe we just ought to have people
• 5:25
  Speaker 1: dealing with each other. You know what, it's a it's
• 5:28
  Speaker 1: a it's a good point. So there's always going to
• 5:30
  Speaker 1: be a relationship component where people will trust people. Um.
• 5:34
  Speaker 1: But you know, we've also all become more comfortable with
• 5:37
  Speaker 1: technology over the last ten years. Right, You're you're comfortable
• 5:40
  Speaker 1: putting all of your banking information to paying your bills
• 5:42
  Speaker 1: online and ten years ago you probably weren't, Thanks very much,
• 5:45
  Speaker 1: Kevin McPartland. He is the principal Market structure and Technology
• 5:49
  Speaker 1: at Greenwich Associates. Well, the rebuilding in Texas as well
• 6:06
  Speaker 1: as in Florida continues, and here to tell us more
• 6:09
  Speaker 1: about the people that will do a lot of the
• 6:11
  Speaker 1: rebuilding is our own pressant. Gopaul Prashant joins us from
• 6:14
  Speaker 1: our Boston bureau home to Bloomberg one oh six one Boston,
• 6:18
  Speaker 1: Newburyport thirteen thirty in Metro West and the South Shore Pressant.
• 6:22
  Speaker 1: Always a pleasure and maybe just to start off by
• 6:24
  Speaker 1: describing this industry which really sort of favors mom and
• 6:29
  Speaker 1: pop outfits, uh that are really expected to make a
• 6:33
  Speaker 1: decent amount of money because there's a lot of clean
• 6:35
  Speaker 1: up to go around. Well, it's it's kind of an
• 6:38
  Speaker 1: industry that's sort of floorat of the radar. I don't
• 6:41
  Speaker 1: think people even realized it was an industry. UM. But
• 6:46
  Speaker 1: you know, you have uh, you have various sizes of companies.
• 6:50
  Speaker 1: You know, the largest company in the space is a
• 6:53
  Speaker 1: company called belfour out of Michigan. And and they do
• 6:57
  Speaker 1: this reconstruction work around the globe. And I know they
• 7:00
  Speaker 1: they've they're expecting record revenues this year at one point
• 7:04
  Speaker 1: seven billions. So it's a it's a pretty large company.
• 7:07
  Speaker 1: Um And and then you have a mid sized players
• 7:10
  Speaker 1: like the one I wrote about, UM, a company called
• 7:14
  Speaker 1: Cavalry Construction. Uh. You know, the name is pretty appropriate.
• 7:19
  Speaker 1: They they mark they kind of ride into areas where
• 7:23
  Speaker 1: they're hurricanes and other storms around the South and rebuild
• 7:28
  Speaker 1: homes and businesses. Um and and then you have sort
• 7:33
  Speaker 1: of smaller players. Many of them are sort of shady.
• 7:37
  Speaker 1: So it could be people who just show up your
• 7:39
  Speaker 1: door with a pickup truck after a storm. Uh. And
• 7:42
  Speaker 1: you know, in some cases they might steal from you
• 7:45
  Speaker 1: or or uh take a down payment and then leave.
• 7:48
  Speaker 1: So not all of them are like that, of course,
• 7:51
  Speaker 1: but there's they're they're various kinds of these companies. So
• 7:53
  Speaker 1: how expensive is it bresciant to rebuild your home after
• 7:57
  Speaker 1: it's gotten flooded. And what's the process of, say a
• 8:00
  Speaker 1: Michigan based company, of going down to Houston, getting enough
• 8:04
  Speaker 1: workers and flooding the zone, getting in there and uh
• 8:08
  Speaker 1: and reconstructing things quickly. Well, okay, so let me take
• 8:12
  Speaker 1: these two things. So in terms of the cost um
• 8:15
  Speaker 1: it varies, so that the cavalry construction charges six to
• 8:19
  Speaker 1: eight dollars a square foot for the first step of
• 8:22
  Speaker 1: the process, which is to um, you know, pull out
• 8:25
  Speaker 1: the soggy wood and dry wall and um uh and
• 8:30
  Speaker 1: and and everything else in the house, rip it all out,
• 8:34
  Speaker 1: bring in fans into human fires, treat for mold um.
• 8:37
  Speaker 1: So that so for a three thousand square foot house,
• 8:40
  Speaker 1: that alone would cost you about twenty four thou dollars um.
• 8:44
  Speaker 1: And then to reconstruct a house of that size it
• 8:48
  Speaker 1: would be about hift um for But you know, of
• 8:52
  Speaker 1: course they're doing you know, houses up to twenty million,
• 8:55
  Speaker 1: and those larger and more expensive houses are going to
• 8:58
  Speaker 1: get much more expensive finish is and that will be
• 9:01
  Speaker 1: very costly. And so that's one part of it. And
• 9:03
  Speaker 1: the US about the company's the company from Michigan. So
• 9:06
  Speaker 1: how do they go go about this day. I think
• 9:08
  Speaker 1: they have even people that they sent to Texas. You know,
• 9:12
  Speaker 1: they they have employees UM and so they sent I
• 9:17
  Speaker 1: think at least that many there, and they have I
• 9:20
  Speaker 1: think they're to start with in Florida. I think they
• 9:22
  Speaker 1: were going to have uh fiveing or and forty, doubling
• 9:26
  Speaker 1: the size of their existing force in Florida. They have
• 9:29
  Speaker 1: people all over the country in the world, so there
• 9:32
  Speaker 1: are already people in place, and they bringing additional people.
• 9:35
  Speaker 1: For Sean, maybe you could speak about the the the
• 9:37
  Speaker 1: additional people that might not be available because of either
• 9:42
  Speaker 1: immigration laws or immigration fears, or just the disposition of
• 9:47
  Speaker 1: the workforce. Yeah, that's a that's a tough issue because
• 9:51
  Speaker 1: we we've had a kind of a labor shortage and
• 9:54
  Speaker 1: construction for quite some time now, and uh so this
• 9:59
  Speaker 1: is just sort of exact surbating that in places like
• 10:02
  Speaker 1: UH Florida and Texas, UH and and Texas. UM. You know,
• 10:07
  Speaker 1: a lot of these companies, including the ones reconstructing houses
• 10:11
  Speaker 1: and also home builders UH and others who need construction
• 10:15
  Speaker 1: workers are are struggling to find people. And that's it's
• 10:20
  Speaker 1: getting worse because of uh, sort of the crackdown on
• 10:24
  Speaker 1: undocumented workers. Many of them are sort of uh, you know,
• 10:28
  Speaker 1: in hiding. Uh. What I've heard is in some cases,
• 10:31
  Speaker 1: if you have a family, or say a husband and
• 10:34
  Speaker 1: wife and kids, um, one of them on one of
• 10:39
  Speaker 1: the parents will stop working and stay at home with
• 10:42
  Speaker 1: the kids just in case the other, you know, the
• 10:45
  Speaker 1: other one is uh is deported. So someone's home with
• 10:50
  Speaker 1: the kids. So there's a lot of a lot of fear. Um.
• 10:54
  Speaker 1: Texas in particular, there there's a bill in place that
• 10:57
  Speaker 1: uh scaring people um uh immigration bill. So so there's uh,
• 11:03
  Speaker 1: there's a lot of reasons why this could the the uh,
• 11:06
  Speaker 1: the shortage could really slow down the reconstruction, and it
• 11:10
  Speaker 1: will also potentially make it more who pays for this. Uh.
• 11:17
  Speaker 1: So in the case of flooding, it's pretty much we
• 11:22
  Speaker 1: have a we have National flood insurance, and so it's
• 11:26
  Speaker 1: those premiums um and I think they're they're gonna have
• 11:29
  Speaker 1: to they're subsizing that with taxpayers uh and UM. So
• 11:35
  Speaker 1: there's that, and then you have homeowners dipping into their pockets.
• 11:39
  Speaker 1: I think that's the bulk of it in Texas because
• 11:42
  Speaker 1: you know, in the Houston area, for example, only fourteen
• 11:45
  Speaker 1: percent of people have flood insurance of homeowners, so the
• 11:50
  Speaker 1: bulk of these victims probably also do not have flood insurance,
• 11:54
  Speaker 1: so they're going to have to figure something out. Shan.
• 11:57
  Speaker 1: Then there's also the whole interest ructure and economy that
• 12:01
  Speaker 1: needs to be put in place in order to support
• 12:02
  Speaker 1: the workers once they arrive at the places where they're
• 12:05
  Speaker 1: going to do all this reconstruction. Yeah, you can if
• 12:09
  Speaker 1: you think about it, it's a it's a pretty uh
• 12:13
  Speaker 1: difficult situation because it's there's a housing shortage. So a
• 12:17
  Speaker 1: lot of the homes, you know, tens of thousands of apartments,
• 12:22
  Speaker 1: I don't know the exact number of a hundred and
• 12:24
  Speaker 1: fifty thousand houses or something like that were damaged and
• 12:28
  Speaker 1: in Texas as a result of the storm. So there's
• 12:31
  Speaker 1: a shortage of housing that just got a lot worse. Uh.
• 12:34
  Speaker 1: And then you bring in all these people to kind
• 12:36
  Speaker 1: of reconstruct, and they need a place to live. Uh.
• 12:40
  Speaker 1: So you can imagine that houses that were not flooded
• 12:43
  Speaker 1: or properties that were not flooded, those those uh, it's
• 12:46
  Speaker 1: gonna get a lot more expensive to live there. So
• 12:48
  Speaker 1: this is this is gonna be an ongoing issue. I
• 12:51
  Speaker 1: gotta say, whoever got into this business is a genius,
• 12:54
  Speaker 1: because I'm sure that they will only get busier, uh,
• 12:56
  Speaker 1: and it's only going to get more lucrative. Or any
• 12:58
  Speaker 1: of the real big property companies getting in on this.
• 13:03
  Speaker 1: You know, I haven't heard about it yet. UM, I
• 13:05
  Speaker 1: wouldn't be surprised. Uh. You know, it's a pretty It's
• 13:08
  Speaker 1: still there's some big players, but there aren't that many.
• 13:13
  Speaker 1: This company, bell for UH just keeps buying up smaller players,
• 13:18
  Speaker 1: and you know, there were some regional ones that they've
• 13:20
  Speaker 1: purchased and they're you know, so they're not that many
• 13:23
  Speaker 1: very large companies, right. Preshanko Paul, thank you so much
• 13:27
  Speaker 1: for joining us. Really a fabulous story and really interesting
• 13:30
  Speaker 1: and I'm curious to see how many people actually shell
• 13:32
  Speaker 1: out for for full renovations and making sure it's all okay.
• 13:36
  Speaker 1: Praushanko Poul. He covers real estate for US. He is
• 13:38
  Speaker 1: based in Boston, UH and he is a Bloomberg News
• 13:42
  Speaker 1: reporter on Lisa Brown Waits along with Pim Fox. Yesterday,
• 13:57
  Speaker 1: JP Morgan chief executive officer Jamie Diamond spoke at an
• 14:02
  Speaker 1: investor conference in New York. He said that bitcoin bitcoin
• 14:06
  Speaker 1: won't end well. It's a quote fraud and quote worse
• 14:10
  Speaker 1: than tulip bulbs. Talking about the uh most well known
• 14:16
  Speaker 1: example of a bubble in financial markets to discuss, I
• 14:20
  Speaker 1: want to bring in Leonel Laurant. He's a columnist covering
• 14:22
  Speaker 1: finance and markets for Bloomberg goad Fly based in London. Leonella,
• 14:26
  Speaker 1: you wrote a column saying that perhaps Jamie Diamond is
• 14:30
  Speaker 1: onto something and the bitcoin very much won't end well
• 14:35
  Speaker 1: and will end up kind of blowing up. Can you
• 14:37
  Speaker 1: explain your argument here? Yes, I think that even though
• 14:42
  Speaker 1: Diamond's words may have got everybody excited and keen to
• 14:46
  Speaker 1: point out how wrong and maybe even you know, outdated,
• 14:50
  Speaker 1: his view is. I think his point is basically that
• 14:53
  Speaker 1: this is a market mania like tulips, and that ultimately
• 14:56
  Speaker 1: this is going to eat itself and collapse on it
• 14:59
  Speaker 1: so and before any regulator gets involved. And my view
• 15:03
  Speaker 1: and I look at bitcoin but also other sort of
• 15:06
  Speaker 1: hyped up millennial alternative asset classes like marijuana stocks as well,
• 15:12
  Speaker 1: and I just think that the amount of supply that's
• 15:15
  Speaker 1: coming in and excitement around it maybe doesn't quite match
• 15:18
  Speaker 1: the demand that we see on the ground. And I
• 15:20
  Speaker 1: think that is reason enough to at least be skeptical
• 15:23
  Speaker 1: about this idea that you can just keep growing exponentially. So, Lena,
• 15:27
  Speaker 1: can you give us a little more example what you
• 15:28
  Speaker 1: mean about supply. I know that you pinpointed the fact
• 15:32
  Speaker 1: that even though bitcoin has attracted a lot of investor money,
• 15:36
  Speaker 1: you can't actually use it to buy that much more
• 15:39
  Speaker 1: in stores or common places of of buying stuff. So
• 15:45
  Speaker 1: is that what you're talking about or is it something else? So?
• 15:48
  Speaker 1: I think it's something else for me. There's a there's
• 15:50
  Speaker 1: a couple of issues in terms of supply. I mean,
• 15:52
  Speaker 1: first of all, there are new coins being created all
• 15:55
  Speaker 1: the time. Uh the I think there's something like eight
• 15:58
  Speaker 1: hundred cryptocurrencies you can track now on on coin cap
• 16:02
  Speaker 1: and um, what's what's happening? There is essentially more and
• 16:06
  Speaker 1: more new increasingly, Uh, you know, volatile and potentially risky
• 16:11
  Speaker 1: currencies are being created. Bitcoin itself recently split into effectively
• 16:17
  Speaker 1: with a new currency called bitcoin Cash that was supposed
• 16:19
  Speaker 1: to improve upon the original. I mean that that alone
• 16:22
  Speaker 1: has been enough to actually have investors questioning just how
• 16:26
  Speaker 1: unique and valuable the If you just look at the technology,
• 16:30
  Speaker 1: pind it, how unique and valuable it is I mean,
• 16:32
  Speaker 1: if you have hundreds of this type of currency and
• 16:36
  Speaker 1: you can't really pinpoint any increase in consumer adoption, right
• 16:40
  Speaker 1: because analysts will tell you that since there's been a
• 16:44
  Speaker 1: huge boom in trading bitcoin and other cryptocurrencies, but maybe
• 16:48
  Speaker 1: not at all an increase in using it on the ground,
• 16:52
  Speaker 1: that's enough for people to think, well, if there's a
• 16:55
  Speaker 1: if there's a heck of a lot of supply and
• 16:57
  Speaker 1: not a lot of actual on the ground adoption, isn't
• 17:00
  Speaker 1: that a disconnect? In times of the investment thesis? Leonel,
• 17:03
  Speaker 1: I want to just play Devil's advocate and separate these
• 17:06
  Speaker 1: two issues for just a moment. Let's start with bitcoin,
• 17:08
  Speaker 1: because I mean, there are new stocks that come onto
• 17:10
  Speaker 1: the market all the time. Some of them are traded
• 17:12
  Speaker 1: on exchanges that we know about, some of them are
• 17:14
  Speaker 1: traded on exchanges that you don't want to know about.
• 17:17
  Speaker 1: New bonds are created all the time, new asset classes,
• 17:19
  Speaker 1: new investment instruments are created all the time. And you
• 17:23
  Speaker 1: only have to ask someone who bought a commercial mortgage
• 17:25
  Speaker 1: backed security what it's like to buy something that's new
• 17:28
  Speaker 1: that doesn't have a ready market. We understand that, but
• 17:31
  Speaker 1: isn't this a challenge to the way that banks operate,
• 17:34
  Speaker 1: And doesn't it make sense that Jamie Diamond would say this,
• 17:38
  Speaker 1: So you use a couple of interesting points. Do see
• 17:40
  Speaker 1: the idea that new coins and they call themselves initial
• 17:44
  Speaker 1: coin offerings, I think in a nodes to initial price offerings, right,
• 17:47
  Speaker 1: I think the people who come up with these new
• 17:49
  Speaker 1: coins want to be seen as new companies and I
• 17:51
  Speaker 1: p s in their own right. Um, I honestly see
• 17:55
  Speaker 1: this as much more speculative. I mean, if you look
• 17:57
  Speaker 1: at the prospectus of an i P O, if you
• 18:00
  Speaker 1: look at the attempts to actually make some claim to
• 18:04
  Speaker 1: maximize shareholder value for a for a for a stock,
• 18:07
  Speaker 1: I just don't see that happening on on the on
• 18:10
  Speaker 1: the tokens, on on the I c O s. Hold
• 18:12
  Speaker 1: on a second, because there's a difference between some of
• 18:14
  Speaker 1: the new cryptocurrencies that are coming out through initial coin
• 18:18
  Speaker 1: offerings and Bitcoin. For one, there actually is a critical
• 18:23
  Speaker 1: mass with Bitcoin, and there is an established following and
• 18:27
  Speaker 1: miners and everything else. So it's not quite the same
• 18:30
  Speaker 1: as an i c O tied to a company that
• 18:33
  Speaker 1: is a startup that no one's heard of. So I
• 18:36
  Speaker 1: guess I have to wonder, you know, is that you
• 18:38
  Speaker 1: know there will be a winner from the cryptocurrency boom,
• 18:41
  Speaker 1: and there could very well be one cryptocurrency that gets
• 18:45
  Speaker 1: adopted and becomes the thing, and I think that that
• 18:47
  Speaker 1: could be the bet really with bitcoin now, I think
• 18:50
  Speaker 1: we're maybe delving too much into the technology itself and
• 18:54
  Speaker 1: whether it's and whether it serves a purpose and the price.
• 18:57
  Speaker 1: I think the main reason why we are talking about
• 18:59
  Speaker 1: this today is that it is now trading around four
• 19:02
  Speaker 1: thousand dollars and slightly below, and at the start of
• 19:04
  Speaker 1: the year it was one thousand dollars. I think that
• 19:06
  Speaker 1: if this was just a question of saying, do you
• 19:08
  Speaker 1: like the idea of bitcoin, do you like the code
• 19:10
  Speaker 1: behind it? Do you see a community behind it? That's
• 19:13
  Speaker 1: one thing the main reason why people are betting on it,
• 19:15
  Speaker 1: speculating on it, playing it. I mean, I'm sorry. I
• 19:18
  Speaker 1: think it's got to be the fact that that the
• 19:20
  Speaker 1: price has gone up so much again some of like
• 19:22
  Speaker 1: a fift increase in transaction volumes, but very little increase
• 19:26
  Speaker 1: in consumer adoption on the ground. To me, that spells speculation,
• 19:30
  Speaker 1: and it doesn't spell the kind of quote unquote good
• 19:32
  Speaker 1: speculation where you think that something is going to be
• 19:35
  Speaker 1: worth something for a fundamental reason. And to your other point,
• 19:38
  Speaker 1: excuse me about about the bagging industry and whether Jamie
• 19:41
  Speaker 1: Diamond has a vested interest. Well, okay, maybe, but I
• 19:45
  Speaker 1: also feel like I think people people know that. I mean,
• 19:47
  Speaker 1: there are there are plenty of bankers out there who
• 19:50
  Speaker 1: might change their mind, who might even say, well, um,
• 19:54
  Speaker 1: you know, I was very dismissive of it a few
• 19:57
  Speaker 1: years ago. Now I'm not really going to take a view. Um,
• 20:00
  Speaker 1: And frankly, I think it's totally okay, and it's good
• 20:03
  Speaker 1: to change your mind. I think that the fact that
• 20:05
  Speaker 1: he hasn't doesn't necessarily mean that this is just because
• 20:08
  Speaker 1: he's he feels it's a threat to backs. I mean,
• 20:10
  Speaker 1: we've got to leave it there. A line on Lauren,
• 20:12
  Speaker 1: Thanks very much our Bloomberg gad Fly columns. Great column.
• 20:15
  Speaker 1: Check it out on Bloomberg dot com. By one get
• 20:30
  Speaker 1: one free. Yes, this applies to the iPhone eight and
• 20:33
  Speaker 1: eight plus, among other phones from eight T and T
• 20:36
  Speaker 1: now A T and T hasn't said whether the deal
• 20:39
  Speaker 1: will be extended to Apple's most expensive phone ever, that's
• 20:43
  Speaker 1: the nearly one thousand dollars I Phone ten. Here to
• 20:47
  Speaker 1: tell us more is Shira Ovid are Bloomberg gad Fly
• 20:50
  Speaker 1: columnists knowing all things technology and Apple? Shira, have you
• 20:54
  Speaker 1: already set aside a little fun to purchase your new
• 20:58
  Speaker 1: iPhone ten? I have not, I will confess, although I
• 21:02
  Speaker 1: did walk by the Fifth Avenue Apple store this morning
• 21:05
  Speaker 1: and there were a couple of dudes and lawn chairs
• 21:08
  Speaker 1: on the sidewalk. Maybe they were just hanging out on
• 21:10
  Speaker 1: the sidewalk, or maybe they were already starting a line
• 21:13
  Speaker 1: for the new phones. Can I just before we get
• 21:16
  Speaker 1: into any real substance, iPhone X is really iPhone ten? Well,
• 21:21
  Speaker 1: I mean yes, doesn't that kind of why? Why the
• 21:26
  Speaker 1: naming conventions are a little bit confusing now? Right? So
• 21:29
  Speaker 1: the UM properly, the non fancy new iPhones should be
• 21:36
  Speaker 1: called the seven s, but they called them eight, and
• 21:40
  Speaker 1: then the iPhone ten. It's the letter X, but they
• 21:44
  Speaker 1: pronounced it ten. Romanumer. It's the tant anniversary edition of
• 21:49
  Speaker 1: the iPhone. UM. Apple is gonna have a hard time
• 21:52
  Speaker 1: convincing people to call it the iPhone ten rather than
• 21:54
  Speaker 1: the iPhone X, And just to annoy them, I'm going
• 21:57
  Speaker 1: to call it the iPhone X. Okay, Well, that's got
• 22:00
  Speaker 1: is there's more free publicity for Apple, because of course
• 22:02
  Speaker 1: they don't get enough. Yeah, right, exactly, you can end
• 22:06
  Speaker 1: up talking about them. We'll talk about what's inside the phone,
• 22:08
  Speaker 1: what what can you expect. Let's say, before we get
• 22:10
  Speaker 1: to the the iPhone ten, let's talk about the iPhone
• 22:14
  Speaker 1: eight in the eight plus. What is so great about
• 22:17
  Speaker 1: those phones that they bother to bring them out as
• 22:19
  Speaker 1: new editions. Well, look, i mean the Apple does what
• 22:21
  Speaker 1: it does every year, which is it It upgrades the
• 22:26
  Speaker 1: current edition of the phone with more features and functions.
• 22:30
  Speaker 1: So the processor is faster, the battery life is longer.
• 22:34
  Speaker 1: They have a glass back now, which some people like
• 22:37
  Speaker 1: for aesthetic and other reasons. They'll be able to charge
• 22:41
  Speaker 1: wirelessly through these magnetic chargers, which again some people like.
• 22:46
  Speaker 1: Um So you know, there there's upgrades to them, although
• 22:49
  Speaker 1: they are certainly more modest upgrades than the higher priced
• 22:52
  Speaker 1: UM iPhone X as I'm calling it. Well, the post
• 22:56
  Speaker 1: phone reveal is is proving to be somewhat of a
• 22:59
  Speaker 1: hang over. The shares are down a little more than
• 23:02
  Speaker 1: one percent, and I'm wondering how much this is just uh,
• 23:06
  Speaker 1: you know, some of the excitement just coming down. I mean,
• 23:08
  Speaker 1: literally there was so much enthusiasm and the shares have
• 23:11
  Speaker 1: risen so much, and how much is this a bit
• 23:14
  Speaker 1: of skepticism about this transformation that's going on from the
• 23:18
  Speaker 1: phone becoming the primary point of technology, skipping over the PC,
• 23:23
  Speaker 1: skipping over the laptop, uh, and how well this will
• 23:26
  Speaker 1: be adopted. So there's a couple of things happening in
• 23:28
  Speaker 1: the stock price. You're right that the share price. Apple
• 23:32
  Speaker 1: share price has gone up significantly this year forty percent
• 23:35
  Speaker 1: plus before this week, and a lot of that is
• 23:38
  Speaker 1: on on anticipation that these new phone models will kind
• 23:41
  Speaker 1: of unleash this new sales cycle and kind of really
• 23:45
  Speaker 1: spike Apples revenor growth to a level it hasn't been
• 23:48
  Speaker 1: in a couple of a few years. UM. The other
• 23:51
  Speaker 1: issue is that the iPhone tan iPhone X model is
• 23:54
  Speaker 1: coming out quite late. Um, it's not going to go
• 23:58
  Speaker 1: on sale officially until November three, which is pretty unusually
• 24:03
  Speaker 1: late for a new iPhone model, in an indication that
• 24:05
  Speaker 1: there's probably a very limited supply of these phones. They're
• 24:09
  Speaker 1: hard to make, they have expensive, complicated components, uh, and
• 24:13
  Speaker 1: so that's gonna push some sales into later quarters. I
• 24:16
  Speaker 1: think that was reflected in the share price. But to
• 24:18
  Speaker 1: your broader point about the iPhone, Look, these smartphones are
• 24:22
  Speaker 1: the center of people's digital lives in many countries around
• 24:25
  Speaker 1: the world, and in places like China and Africa. You're
• 24:29
  Speaker 1: talking about a generation that sort of skipped over the
• 24:32
  Speaker 1: personal computer as the center of people's work and home
• 24:36
  Speaker 1: digital lives, and now the smartphone has become that. So
• 24:41
  Speaker 1: I mean a thousand dollars for something that people spend
• 24:45
  Speaker 1: hours on every day. You know, you start to amortize
• 24:48
  Speaker 1: the cost over the amount of time you spend. These
• 24:50
  Speaker 1: look less like luxury items and more like must have. Sure.
• 24:54
  Speaker 1: One of the things I noticed was that if you
• 24:55
  Speaker 1: were to be able, I know it comes available. I
• 24:58
  Speaker 1: guess the next month on pre order. This is for
• 25:01
  Speaker 1: the iPhone ten. If you're looking for those iPods AirPods,
• 25:05
  Speaker 1: I beg your pardon the air pods right the the
• 25:08
  Speaker 1: wireless your phones? Yeah? Um, thank you. Uh, they're not
• 25:13
  Speaker 1: They're not included in the box. You don't get that.
• 25:15
  Speaker 1: You don't get the fast charger. Um. You do get
• 25:18
  Speaker 1: the lightning cable, but you don't get a USBC. Um.
• 25:22
  Speaker 1: What what is Apple thinking? Why don't they put all
• 25:25
  Speaker 1: the latest stuff into their latest, you know, anniversary phones.
• 25:30
  Speaker 1: They don't have to. They don't have to. Well they
• 25:31
  Speaker 1: do have, um, they do include headphones with the new iPhones.
• 25:35
  Speaker 1: They're just not the wireless heads right your pods right
• 25:38
  Speaker 1: there yours? Um, but yes they don't have to. I mean, look,
• 25:42
  Speaker 1: Apple's not dumb. They want you to buy all of
• 25:46
  Speaker 1: their all of their things. And as someone who has
• 25:49
  Speaker 1: been to the Apple store and gritted my teeth to
• 25:52
  Speaker 1: pay eighty dollars for a new laptop charger, I mean,
• 25:56
  Speaker 1: these people are not morons. Right. There's getting high margins
• 26:00
  Speaker 1: on these accessory sales, and there's no reason for them
• 26:04
  Speaker 1: to include that with your already thousand dollar iPhone. It
• 26:07
  Speaker 1: is an amazing experience to go to an Apple store
• 26:10
  Speaker 1: and see a line extending down the center of the
• 26:13
  Speaker 1: store with people with like thousand dollar items in their
• 26:16
  Speaker 1: hands buying them like groceries. I mean, it is just
• 26:19
  Speaker 1: really truly a remarkable marketing feat that they have accomplished. Um,
• 26:25
  Speaker 1: Shara Ovida, thank you so much and keep on keeping
• 26:28
  Speaker 1: on with that iPhone X. I'll look to you to
• 26:30
  Speaker 1: be the rebel. Shara Ovida is a Bloomberg Gadfly columnist
• 26:34
  Speaker 1: focusing on all things technology and my fellow skeptic. I
• 26:37
  Speaker 1: love talking with Shia always. Thanks for listening to the
• 26:43
  Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
• 26:46
  Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
• 26:50
  Speaker 1: you prefer. I'm Pim Fox. I'm on Twitter at pim Fox.
• 26:54
  Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
• 26:58
  Speaker 1: You can always catch us worldwide on Bloomberg Radio. H