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iPhone Shipments Fall in China , Baltimore Bridge Collapse · Bloomberg Intelligence

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  Speaker 2: I think it's starting to get serious. Here here's the
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  Speaker 2: news today again on Apple. Apple iPhone shipments in China
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  Speaker 2: fell about thirty three percent in February from a year earlier,
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  Speaker 2: according to official data, extending a slump in demand from
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  Speaker 2: the flagship device in its most important overseas market. This
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  Speaker 2: is getting my attention now. I need to check in
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  Speaker 2: with men Deep Singh. He's our senior tech analyst for
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  Speaker 2: Bloomberg Intelligence. Man Deep, I mean one month, okay, two months?
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  Speaker 3: I mean it's starting to stack up here.
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  Speaker 2: What are we hearing from Coopertino about China risk and
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  Speaker 2: opportunities for them right now?
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  Speaker 4: I think the two data points that you got this year,
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  Speaker 4: one in February from this source called Counterpoint, where they
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  Speaker 4: said iPhone sales were down twenty four percent for six weeks.
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  Speaker 4: Now it's validated that they are actually down thirty three
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  Speaker 4: percent for the month of February, so clearly, you know
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  Speaker 4: they have a problem both with the demand for iPhone
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  Speaker 4: as well as competition. I think one of the things
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  Speaker 4: that doesn't get as much attention right now is the
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  Speaker 4: fact that Huawei has a comparable phone to iPhone. And
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  Speaker 4: the reason they've been able to do it very quickly
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  Speaker 4: is because of the supply chains that Apple created in
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  Speaker 4: the region. So a lot of those suppliers are actually
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  Speaker 4: making the phone for Huawei and they don't have to
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  Speaker 4: do much because Apple is at the cutting edge when
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  Speaker 4: it comes to the chip, the assembly, and so all
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  Speaker 4: the supply chains. Guys are actually diversifying themselves and making
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  Speaker 4: phones for Shami Huawei. Huawei is the notable share gainer here,
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  Speaker 4: but that just goes to show that, you know, they
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  Speaker 4: are also diversifying.
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  Speaker 5: Which also goes to show why Tim Cook is in
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  Speaker 5: China and saying that extra day to meet with quote
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  Speaker 5: unquote top leadership, which everyone seems to think is he's
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  Speaker 5: in paying what's going to be his pitch?
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  Speaker 4: I mean, look, I think my phones, yes, and they
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  Speaker 4: used to have twenty percent revenue exposure to China. It's
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  Speaker 4: gone down to about fifteen percent now. But when you
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  Speaker 4: think about the weight of China both as their biggest
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  Speaker 4: supply chain. You know, ninety five ninety eight percent supply
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  Speaker 4: chain still resides in China and fifteen percent revenue exposure.
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  Speaker 4: He doesn't have a choice, and that's where he has
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  Speaker 4: to make sure. You know, he's aligned with the party
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  Speaker 4: and you know, the locals, and they just want to
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  Speaker 4: make sure they don't end up losing share. Forget about
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  Speaker 4: growing in the region. It's all about keeping the share
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  Speaker 4: they have Right now, I.
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  Speaker 3: Don't know the answer.
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  Speaker 2: I can't think of an answer for Apple, particularly on
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  Speaker 2: the supply chain. I can pencil out China going to.
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  Speaker 3: Close to zero terms of sales.
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  Speaker 2: I could pencil that out, put a multiple on it,
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  Speaker 2: and there we go. There is no Apple without China
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  Speaker 2: in terms of supply chain. There is no Apple without
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  Speaker 2: that supply chain.
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  Speaker 4: And for the longest time we thought the risk for
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  Speaker 4: the suppliers is if Apple is not giving business to them,
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  Speaker 4: they don't have anything to manufacture. Well guess what they have,
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  Speaker 4: you know, a Huawei and the local guys, and so
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  Speaker 4: that's how they are going about the business right now.
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  Speaker 5: So if I'm Tim Cook and I have seen this
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  Speaker 5: for years and I want to diversify my supply chain.
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  Speaker 5: What does that look like?
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  Speaker 6: What is that?
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  Speaker 4: I mean, it's we did a big report. It's a
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  Speaker 4: multi year yes, and you know, the assembly part is
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  Speaker 4: already moving to India. We've seen a big rampop in India.
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  Speaker 4: Almost twenty two percent of the phones last year iPhones,
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  Speaker 4: not the highest end, but a lot of the models
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  Speaker 4: were assembled in India, and gradually they will have to diversify,
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  Speaker 4: you know, the assembly side. The problem they are running
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  Speaker 4: into is the com all the components that you need
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  Speaker 4: to manufacture an iPhone and the complex device that it is.
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  Speaker 4: It's not that easy to just you know, lift and
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  Speaker 4: shift your supply chains into a different regions. You need
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  Speaker 4: so many there's so many dependencies both with TSMC and
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  Speaker 4: the other suppliers that feed into the Chinese assembly. So
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  Speaker 4: all that needs to be relocated, and it will happen.
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  Speaker 4: It's just it's a multi year effort. And right now
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  Speaker 4: the focus is also shifting towards on device AI. I
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  Speaker 4: feel the reason why Chinese government is really cracking down
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  Speaker 4: is because the next wave of this is AI will
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  Speaker 4: run on device and they don't want a US based
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  Speaker 4: company probably to be running AI. You know, on device
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  Speaker 4: in the in the region. So that's the other aspect
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  Speaker 4: of it.
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  Speaker 2: Here to date stocks down eleven percent trailing twelve months,
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  Speaker 2: it's up seven percent. Well, that can make it from
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  Speaker 2: here a bear case could be made here big time.
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  Speaker 2: I mean, look, I mean a long term multi bear
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  Speaker 2: case here. I've got supply chain issues. I've already zeroed
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  Speaker 2: out my China revenue.
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  Speaker 5: And revenue is going to be changing because of all
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  Speaker 5: the new laws.
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  Speaker 4: Right in terms of core cases could be Yeah, the
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  Speaker 4: DJ lawsuit, it's coming at the worst time for Apple.
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  Speaker 4: I mean, they should be doubling down on other markets
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  Speaker 4: where they can acquire share that they may end up
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  Speaker 4: losing in China. Obviously, the DJ lawsuit is not helping.
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  Speaker 4: And the EU regulation the digital markets acts, so from
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  Speaker 4: a regulatory perspective, you're right. I think the bear case
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  Speaker 4: is really around the revenue exposure and I'm sure the
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  Speaker 4: supply chains they'll moddel through in terms of making sure
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  Speaker 4: they can still make the phone. And you know, as
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  Speaker 4: long as the manufacturers or they are getting the business,
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  Speaker 4: they don't mind Apple continuing to you know, have the
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  Speaker 4: supply chains remain intact there. But I think the hard
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  Speaker 4: part would be the EPs drawdown as a result of
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  Speaker 4: the Chinese revenue going down.
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  Speaker 2: I mean, you know, thirty two buys eighteen holes out
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  Speaker 2: there in five cells. That's about as middle of the
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  Speaker 2: road as I've seen Apple in twenty years in terms
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  Speaker 2: of the street.
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  Speaker 5: And it's waiting in the s and p is also falling. Yeah,
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  Speaker 5: that too, So I mean.
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  Speaker 4: I equate it. It's similar to Tesla. Actually, in some ways,
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  Speaker 4: Tesla and Apple are very similar because Tesla also has
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  Speaker 4: a revenue exposure. It also manufactures it cars, But I
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  Speaker 4: think Tesla's supply chain is more diversified. That's the one
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  Speaker 4: big difference is they do manufacture elsewhere.
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  Speaker 5: Here's a dumb question, why can't they just build stuff
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  Speaker 5: in the US? Like, I know, it's not as easy
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  Speaker 5: as like here's a plant, let's PLoP it down in
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  Speaker 5: the US. But like why is India the next port
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  Speaker 5: of call? Like why not the US?
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  Speaker 4: Well, again, it's the components. So think of the bill
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  Speaker 4: of Yeah, there are certain components that can only be
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  Speaker 4: sourced over there, and over time they can move things around.
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  Speaker 4: But if you're talking about you know, a twelve hundred
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  Speaker 4: dollars phone, it has a certain bill of material things
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  Speaker 4: are done in a certain way. That's why it comes
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  Speaker 4: at that cost. We're not talking about a five thousand
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  Speaker 4: dollars phone. If they you know, relocate things overnight, that
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  Speaker 4: price could double triple.
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  Speaker 5: I mean, okay, that's crazy. But you remember when the
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  Speaker 5: iPhone was coming out of a thousand and it was like,
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  Speaker 5: no one's going to pay that. This is insane, this
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  Speaker 5: is ridiculous. Now it's like twelve hundred whatever.
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  Speaker 3: Yeah, exactly.
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  Speaker 2: The market adapts, as we've seen here. All right, So
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  Speaker 2: if you're a bull, are you simply saying there's two
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  Speaker 2: billion units out there, they'll forgret to way to make
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  Speaker 2: money off of those things, and that ecosystem, I.
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  Speaker 4: Mean, the bull case is still the ecosystem and the
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  Speaker 4: fact that they have an install base of one point
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  Speaker 4: three billion users you know who still have the iPhone
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  Speaker 4: and they will refresh the phone at some point, and
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  Speaker 4: everyone still likes the iOS ecosystem. I think what Huawei
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  Speaker 4: is doing is laying out a path where people can
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  Speaker 4: move out of the iOS ecosystem. And then the whole
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  Speaker 4: AI thing and the regulatory stuff I think is just
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  Speaker 4: making it worse. Word the timing of it is just
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  Speaker 4: words for Apple, right, now interesting.
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  Speaker 2: Interesting, So the developer conference in June, right, that's gonna
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  Speaker 2: the pressure is gonna be big for them to reach.
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  Speaker 4: And remember they're looking at leveraging by DO. Now that
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  Speaker 4: the reason for leveraging by DO for AI in Chinese
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  Speaker 4: region is just to please you know that, the fact
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  Speaker 4: that they're using a local AI player as opposed to
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  Speaker 4: deploying their own AI.
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  Speaker 2: So that's the other aspect of it, all right, Man,
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  Speaker 2: Deep sing thank you so much. Is he's the best man,
• 8:29
  Speaker 2: Deep Singh. He covers all the technology for Bloomberg Intelligence
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  Speaker 2: team in Asia as well, so we've got the global
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• 9:05
  Speaker 2: Michael McKee joins us, our global economics editor here and Michael,
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  Speaker 2: when we see a bridge in a major port city
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  Speaker 2: like Baltimore collapsed into the river. There are economic implications here,
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  Speaker 2: and we're just learning more and more about Baltimore as
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  Speaker 2: a port city, Baltimore as a city where a lot
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  Speaker 2: of cargo transit.
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  Speaker 3: Its over that bridge.
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  Speaker 2: How are you thinking about it from I guess a
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  Speaker 2: regional economic impact.
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  Speaker 7: Well, it's a regional impact and to a certain extent,
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  Speaker 7: a national impact because of the type of cargo that
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  Speaker 7: Baltimore handles.
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  Speaker 1: It is the.
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  Speaker 7: Largest port for automobile.
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  Speaker 3: Imports, and I didn't know that before.
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  Speaker 7: Most nine hundred thousand cars, cars and other trucks came
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  Speaker 7: through there. Plus they also handle what they call roll
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  Speaker 7: on rollofs for big companies like Caterpillar and John Deere,
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  Speaker 7: so a lot of equipment goes through that port. It
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  Speaker 7: is one of the bigger ports on the east coast
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  Speaker 7: of the US. So there's going to be an interruption there,
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  Speaker 7: first of all, because there's no way to get in
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  Speaker 7: or out of the port at the moment until they
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  Speaker 7: clear the wreckage of the bridge. Bloomberg's trade people have
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  Speaker 7: noted there's twenty one ships behind them ridge, so I can't.
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  Speaker 3: Get out again.
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  Speaker 7: And then there are more that would be coming in
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  Speaker 7: that in theory can be diverted, but it's going to
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  Speaker 7: be a question of capacity for getting the tonnage off
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  Speaker 7: those ships others.
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  Speaker 3: It's interesting.
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  Speaker 2: I have to admit I am a kind of a
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  Speaker 2: trade shipping geek, and I have an app on my
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  Speaker 2: phone that tracks this stuff. So I'm sitting on the
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  Speaker 2: Jersey Shore beach and I say a big cargo ship, gup.
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  Speaker 2: I want to know where it came from, where it's
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  Speaker 2: going when it's carrying. And what I do notice is
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  Speaker 2: the ones leaving the New York Harbor often the next
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  Speaker 2: stop is actually Norfolk, Virginia, more so than you would
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  Speaker 2: say Philadelphia, Baltimore. So perhaps, but I can't imagine putt
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  Speaker 2: nine hundred thousand cars. Who's got room for that, right, Yeah, that's.
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  Speaker 7: Going to be a bit of an issue. They also
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  Speaker 7: it's a major distribution hup there on the north side
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  Speaker 7: of the bridge. They have Amazon FedEx under Armor Home Depot.
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  Speaker 7: They all have big warehouses there and the stuff that
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  Speaker 7: comes in and out to those warehouses and this will
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  Speaker 7: be more of a regional impact but won't be coming
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  Speaker 7: in and out. So there's going to be have to
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  Speaker 7: be a lot of logistical changes made. Now the good
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  Speaker 7: news is to the extent that I don't know if
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  Speaker 7: it's good news or not. But we have had some
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  Speaker 7: bridge collapses in recent years, remember in Minnesota and in
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  Speaker 7: the Bay Bridge in Oakland. Others like that have happened.
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  Speaker 7: Philadelphia had the I ninety five bridge, and putting a
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  Speaker 7: bridge back together is easier than building it from scratch.
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  Speaker 3: Now, this is a.
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  Speaker 7: Much worse This is a much worse situation than those.
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  Speaker 7: They were able to get them rebuilt on a fairly
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  Speaker 7: quick timetable. It took five years to build this bridge,
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  Speaker 7: so the hope is it would not take that long
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  Speaker 7: to rebuild this bridge.
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  Speaker 5: So let me ask how long This is a completely
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  Speaker 5: unfair question and give you in a minute, But how
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  Speaker 5: long does it take for these kind of issues to
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  Speaker 5: filter down into prices for example? And then how is
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  Speaker 5: the feggan to look at it, because yes, it's transitory,
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  Speaker 5: but two and a half years and then the confidence
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  Speaker 5: and the expectation of inflation that isn't transitory.
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  Speaker 7: Well, it's hard to say at this point because companies
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  Speaker 7: are much better and the pandemic forced them to be
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  Speaker 7: much better at being able to change their supply routes
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  Speaker 7: and supply lines on short notice. If we don't get
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  Speaker 7: stuff or we can't ship stuff, it will raise the
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  Speaker 7: price probably, but it has to last for a while
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  Speaker 7: if they can find alternate ways around it. Transportation is
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  Speaker 7: a very very small part of overall goods prices, so
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  Speaker 7: it's probably not going to have a major national impact.
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  Speaker 7: It may have an impact, certainly on Baltimore, and obviously
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  Speaker 7: it's going to be a major impact for a while
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  Speaker 7: in terms of traffic going up and down Interstate ninety five.
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  Speaker 7: The probably the biggest impact is going to be with
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  Speaker 7: hazardous materials because they can't go through the two Baltimore tunnels.
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  Speaker 7: They can only go over the bridge. So now they're
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  Speaker 7: going to have to make a wide detour around Baltimore.
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  Speaker 7: That'll slow things down.
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  Speaker 2: All right, Michael McKeith, thank you so much. We appreciate that.
• 13:28
  Speaker 2: Michael mckea economics editor.
• 13:32
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• 13:48
  Speaker 5: Okay, let's get to some breaking data we had at
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  Speaker 5: the top of the hour. And that's a consumer confidence.
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  Speaker 5: So the Conference Board consumer confidence for March coming in
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  Speaker 5: a little light, coming in at one oh four point seven. Also,
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  Speaker 5: or was revised lower the present situation a bit better
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  Speaker 5: one point fifty one. But it was the expectation number
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  Speaker 5: that disappointing, coming in at seventy three point eight. So
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  Speaker 5: let's dig through the numbers here. Joining us is Dana Peterson,
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  Speaker 5: chief economist at the Conference Board. Dana, what led to
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  Speaker 5: the lower expectation number?
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  Speaker 8: Sure, the expectations number is made up of three pieces, employment,
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  Speaker 8: incomes and business conditions, and all three you were down
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  Speaker 8: in the month.
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  Speaker 5: Well what does that tell us?
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  Speaker 8: Well, tells us that consumers are a little bit worried
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  Speaker 8: about the future. Certainly, this expectations gauge has been dancing
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  Speaker 8: in around eighty and eighty really is the threshold for
• 14:42
  Speaker 8: which below that consumers think there's a recession coming. But
• 14:46
  Speaker 8: we also do have a separate recession question where we
• 14:48
  Speaker 8: ask consumers do you think there's going to be a
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  Speaker 8: recession of the next twelve months, And they've been continuing
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  Speaker 8: to be less convinced of that. So there's some mixed
• 14:56
  Speaker 8: implications here. Certainly they are a little bit concerned, but
• 14:59
  Speaker 8: they don't think of recession on the way.
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  Speaker 2: So, Dana, it seems like from all the polling you
• 15:04
  Speaker 2: see out there that inflation is probably issue number one
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  Speaker 2: with consumers out there. Yes, the rate of inflation has declined,
• 15:10
  Speaker 2: but boyd, prices are still high, whether it's food in
• 15:13
  Speaker 2: the supermarket, gasoline for your car.
• 15:16
  Speaker 3: What's your data show you about that.
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  Speaker 8: Sure, we have write ins where we ask consumers what's
• 15:21
  Speaker 8: your most important issue, and complaints about inflation and prices
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  Speaker 8: are still number one. They're still complaining about food and
• 15:28
  Speaker 8: energy prices, but in terms of energy, the complaints are
• 15:31
  Speaker 8: a little less severe, a little less intense. So consumers
• 15:35
  Speaker 8: are seeing a little bit of a break there, but
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  Speaker 8: for the most part, there's still very worried about prices
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  Speaker 8: being elevated. Eggs and gasoline costing more than they'd like.
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  Speaker 5: Yeah, dot dot dot, because you take a look, there's
• 15:44
  Speaker 5: a survey out that shows that gasoline in the summer
• 15:47
  Speaker 5: could top four dollars. Now, so there is that coming
• 15:50
  Speaker 5: out there. You look, cocoa prices top and ten thousand dollars.
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  Speaker 5: And then you have this issue at the Port of Baltimore, right,
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  Speaker 5: and then you have this bridge collapse and that could
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  Speaker 5: wind up affecting supply chains, et cetera. How do consumers
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  Speaker 5: react to these kind of headlines, right, four dollars gasoline
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  Speaker 5: bridge collapse, Like, how does this affect their level of
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  Speaker 5: confidence and their level of spending?
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  Speaker 8: Sure, I mean, we can't tell from this report because
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  Speaker 8: you know, the data was fielded. Sure start, we redialed
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  Speaker 8: it before this happened this morning. But certainly if consumers
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  Speaker 8: think that there's going to be higher gasoline prices or
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  Speaker 8: that supply chain disruptions from the incident in Baltimore are
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  Speaker 8: going to make clothing and cars more expensive, then certainly
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  Speaker 8: their confidence is probably going to wane.
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  Speaker 2: All Right, Dana, thank you so much for joining us.
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  Speaker 2: Dana Peterson, she said, Chief economists at the Conference Board.
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  Speaker 2: We had the Conference Board coming out with some consumer
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  Speaker 2: confidence data today, a little bit weaker then expected, and
• 16:44
  Speaker 2: certainly and some downward revisions from the prior month. So again,
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  Speaker 2: consumers a little bit wavering, some confidence out there. Inflation
• 16:51
  Speaker 2: remains stubborn for many folks out there.
• 16:55
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  Speaker 3: All right, let's see what's happening with these markets?
• 17:15
  Speaker 2: Checking with he does his stuff. We're a living Carolshlife,
• 17:18
  Speaker 2: chief investment officer of BEMO Family office located there in Minneapolis,
• 17:23
  Speaker 2: and she's joining us via zoom. So, Carol, what do
• 17:25
  Speaker 2: you make of this market here? What's driving stock price
• 17:29
  Speaker 2: is higher?
• 17:30
  Speaker 9: In your opinion, I think there's a growing belief that
• 17:35
  Speaker 9: whether it's not even a soft landing, it's no landing
• 17:38
  Speaker 9: at all. There's a growing belief in the sturdiness of
• 17:41
  Speaker 9: the economy and what's going on in the US. There's
• 17:44
  Speaker 9: also a lot of physcal stimulus that's finally freed up.
• 17:47
  Speaker 9: It's been teed up for the last couple of years,
• 17:50
  Speaker 9: and now it's actually moving into markets and supporting things.
• 17:54
  Speaker 9: We're doing exciting things like reshoring, we're building artificial intelligence
• 17:59
  Speaker 9: data center hub. There's a lot of activity going on,
• 18:02
  Speaker 9: and if you look under the hood at what the
• 18:04
  Speaker 9: markets are showing, they're showing it's not just those Magnificent
• 18:07
  Speaker 9: seven leading the pack.
• 18:09
  Speaker 6: Anymore.
• 18:09
  Speaker 9: It's a much broader basis, and you've seen a broadening
• 18:13
  Speaker 9: out of the leadership, which is very reassuring and supportive
• 18:17
  Speaker 9: for constructive markets.
• 18:18
  Speaker 2: So again, a lot of folks, I guess we did
• 18:21
  Speaker 2: see that that November December moving the market, a broadening
• 18:24
  Speaker 2: out of performance.
• 18:27
  Speaker 3: How important is that for the market.
• 18:29
  Speaker 2: Because it just seems like technology has got to lead
• 18:32
  Speaker 2: this market, but you need to see us some other
• 18:34
  Speaker 2: sectors participate as well.
• 18:36
  Speaker 6: Yeah, it's definitely.
• 18:38
  Speaker 9: It's definitely important for the sustainability and durability of a
• 18:42
  Speaker 9: market advance to have most of the participants or most
• 18:47
  Speaker 9: of the constituents participating.
• 18:50
  Speaker 6: And you're definitely seeing that.
• 18:51
  Speaker 9: You're seeing a turnover where you've got stabilization, some interesting
• 18:55
  Speaker 9: things going on with financial services, you've got consumer goods
• 18:59
  Speaker 9: companies moving both staples and but more particularly the discretionary.
• 19:05
  Speaker 6: Side of things.
• 19:06
  Speaker 9: We'll have earnings coming up in a couple of weeks,
• 19:08
  Speaker 9: so we'll be able to start parsing through some of that.
• 19:10
  Speaker 9: But it really is vital for the for this for
• 19:13
  Speaker 9: the ability of the markets to carry on that more
• 19:16
  Speaker 9: and more are participating in it, and it's interesting on
• 19:19
  Speaker 9: a day like today, even a lot of those magnificence
• 19:22
  Speaker 9: haven't aren't in the top tier. They're they're holding their own,
• 19:26
  Speaker 9: but they're way down the list of contributors. And so
• 19:28
  Speaker 9: it's really important for this market to continue to see
• 19:33
  Speaker 9: more and more stocks participating.
• 19:36
  Speaker 5: How do you judge that, Carol, I mean, because there
• 19:39
  Speaker 5: are because they're they're not going to be able to
• 19:41
  Speaker 5: catch up to like pre pandemic levels. You can make
• 19:43
  Speaker 5: an argument like maybe energy and industrials we've seen, but
• 19:47
  Speaker 5: how do you know which sectors are going to be
• 19:49
  Speaker 5: able to have that real balance and which ones are
• 19:52
  Speaker 5: just going to be too exposed to rates, say and
• 19:54
  Speaker 5: the consumer.
• 19:56
  Speaker 6: I think it's really important to not necessarily just invest sectors.
• 20:01
  Speaker 6: But what you saw, especially in the last quarterly earnings.
• 20:04
  Speaker 9: As you saw a big dispersion even within sectors in
• 20:08
  Speaker 9: terms of who was adapting the higher rates, who was
• 20:11
  Speaker 9: adapting the higher costs, who wasn't. You saw a lot
• 20:14
  Speaker 9: of credit attributed to individual companies that talked about right
• 20:19
  Speaker 9: sizing businesses where they were laying off in one part
• 20:22
  Speaker 9: in investing strategically in another.
• 20:24
  Speaker 6: So it really is a stock pickers market.
• 20:26
  Speaker 9: So maybe the bigger question is do we go back
• 20:29
  Speaker 9: to a predominance of active management and those active managers
• 20:33
  Speaker 9: who are able to parse through the companies that are
• 20:36
  Speaker 9: really able to accommodate. But one of the things that's
• 20:41
  Speaker 9: helpful as companies try to figure out can they adjust
• 20:44
  Speaker 9: to higher in overall higher terminal rate is if the
• 20:48
  Speaker 9: FED is done raising rates, which they seem for all
• 20:51
  Speaker 9: intents and purposes to have indicated in a variety of
• 20:54
  Speaker 9: ways that they're done raising regardless of when they start
• 20:58
  Speaker 9: to lower, it's easy to model out what impacts rates
• 21:03
  Speaker 9: have if they're not continuing to rise. At least you
• 21:06
  Speaker 9: can figure out what your cost of capital is and
• 21:09
  Speaker 9: play that through. So you know, it's a real arduous task,
• 21:14
  Speaker 9: if you will, because it's a company by company, not
• 21:17
  Speaker 9: necessarily industry by industry exercise.
• 21:20
  Speaker 2: Are there some sectors, given given that the bottoms up
• 21:23
  Speaker 2: pickers market in some people's perspective, are there some sectors
• 21:26
  Speaker 2: that generally you guys are favoring at this point?
• 21:29
  Speaker 6: Yeah, I think. I mean there's a variety of sectors.
• 21:31
  Speaker 9: We've liked industrials for a very long period of time,
• 21:34
  Speaker 9: not the least of which is because the fiscal stimulus
• 21:38
  Speaker 9: tied up are or teed up if you will, for
• 21:42
  Speaker 9: those sectors we've liked industrials. We do think financials will
• 21:46
  Speaker 9: need to play. Healthcare is very important as well, and
• 21:49
  Speaker 9: there's a lot of innovation going on in medical devices,
• 21:52
  Speaker 9: biotechnology services, lots of different things that are benefiting.
• 21:57
  Speaker 6: And technology and communication service.
• 22:00
  Speaker 9: Are important as well because they, as you mentioned, there's
• 22:03
  Speaker 9: such a significant component and they builter over into virtually
• 22:07
  Speaker 9: every other industry as well.
• 22:09
  Speaker 10: What do you do?
• 22:10
  Speaker 5: This is totally talking my own book, but some of
• 22:12
  Speaker 5: the stocks that have done really well this quarter is
• 22:15
  Speaker 5: Constellation Energy. It's a straight up nuclear power company, and
• 22:20
  Speaker 5: that has done really well as a derivative play of
• 22:22
  Speaker 5: data centers and AI because you need so much power.
• 22:24
  Speaker 5: And I'm wondering if this is like the octopus legs
• 22:27
  Speaker 5: for AI, like you have to go into those sectors
• 22:30
  Speaker 5: that will also really benefit. How do you think about that?
• 22:33
  Speaker 6: Yeah, I think it's really important because it's not just
• 22:36
  Speaker 6: to me.
• 22:37
  Speaker 9: It parallels very much what happened in the first dot
• 22:40
  Speaker 9: com first internet build out in the ninety five to
• 22:42
  Speaker 9: two thousand. You had a lot of short term exuberance
• 22:46
  Speaker 9: around anybody who could put dot com in their name,
• 22:49
  Speaker 9: but the.
• 22:50
  Speaker 6: More important longer term play.
• 22:52
  Speaker 9: There were the people building out the actual infrastructures, the routers,
• 22:56
  Speaker 9: the data centers at the time, and similarly here it
• 23:01
  Speaker 9: really is the play on It's great to say you're
• 23:03
  Speaker 9: going to put up a data center, but you have
• 23:05
  Speaker 9: to hook it to the energy grid. You also have
• 23:07
  Speaker 9: to make sure you have water rights for the cooling
• 23:10
  Speaker 9: technology there. So there's a lot of secondary in tertiary
• 23:14
  Speaker 9: knock on effects that go there. And so I think
• 23:17
  Speaker 9: investing more broadly that way, because artificial intelligence, data centers,
• 23:23
  Speaker 9: reshoring all of that stuff is not just a short.
• 23:26
  Speaker 6: Term cyclical play. It's a secular play, and.
• 23:30
  Speaker 9: So figuring out who's going to benefit and where the
• 23:33
  Speaker 9: stocks may not have moved, not Constellation may have moved,
• 23:36
  Speaker 9: but there are other broader implications for those industries that
• 23:40
  Speaker 9: you're spot on in terms of highlighting those.
• 23:44
  Speaker 3: So you know, outside of let's work it up earnings.
• 23:48
  Speaker 2: You mentioned in a couple of weeks, what are you
• 23:51
  Speaker 2: going to be looking for here? I mean, I'm thinking
• 23:53
  Speaker 2: about valuation in this market, Carol. I mean, we've seen big,
• 23:56
  Speaker 2: big moves off the October lows. I'm not sure I've
• 23:58
  Speaker 2: seen a commensurate move higher and analyst estimates here, what's
• 24:02
  Speaker 2: your valuation call, and how important earnings coming up?
• 24:05
  Speaker 9: Well, earnings will be really important to watch and listen for,
• 24:10
  Speaker 9: and there will be a lot, as there have been
• 24:12
  Speaker 9: in the last few quarters, there will be a lot
• 24:15
  Speaker 9: of analysis not just of worthy earnings come in, but
• 24:18
  Speaker 9: what the companies say in those transcripts and in those
• 24:20
  Speaker 9: earnings calls. And people will be watching pricing power, what
• 24:25
  Speaker 9: they're doing with employment, what they're doing with capex and
• 24:31
  Speaker 9: expansion plans, what they might be doing with mergers and acquisitions,
• 24:35
  Speaker 9: how much cash is on the balance sheet.
• 24:36
  Speaker 6: There'll be a lot of details that people will be
• 24:39
  Speaker 6: looking for in those earnings. And you're right, valuations are
• 24:42
  Speaker 6: not cheap.
• 24:44
  Speaker 9: They're not hyper expensive necessarily, and particularly when you look
• 24:49
  Speaker 9: at technology and the way that those growth trends have
• 24:52
  Speaker 9: come in. Those growth trends have supported where the stock
• 24:57
  Speaker 9: price movements may have gone, even though evaluation and are
• 25:00
  Speaker 9: somewhat high. But you know, critical sectors to watch will
• 25:03
  Speaker 9: be those consumer names. How much pricing power do they have,
• 25:07
  Speaker 9: because it does feel like in the last couple of
• 25:09
  Speaker 9: quarters there's a lot of consumer pushback in terms of
• 25:14
  Speaker 9: you know, what the grocery bill is going to cost
• 25:16
  Speaker 9: her what they're willing to spend on and what they're
• 25:18
  Speaker 9: not willing to spend on.
• 25:19
  Speaker 6: But consumers are still spending, companies are still spending.
• 25:23
  Speaker 5: So before we let you go, what do you think
• 25:29
  Speaker 5: the lever will be? Because I feel like in the
• 25:31
  Speaker 5: last running season we did learn that the pricing power
• 25:33
  Speaker 5: of companies had kind of hit its max. Then the
• 25:36
  Speaker 5: levers to keep the margins going, what is it going
• 25:38
  Speaker 5: to be?
• 25:40
  Speaker 4: Well?
• 25:40
  Speaker 9: I think on the intermediate longer term, investors have to
• 25:44
  Speaker 9: realize that margins are at or close to all time highs,
• 25:49
  Speaker 9: and in terms of growing that and sustaining that gets
• 25:52
  Speaker 9: to be pretty tough. But companies will be looking at
• 25:56
  Speaker 9: you know, is there is somewhat of an easing end
• 25:59
  Speaker 9: because there was a lot.
• 25:59
  Speaker 6: Of pressure on.
• 26:02
  Speaker 9: Employee employee salaries and overall income and the hiring. You've
• 26:10
  Speaker 9: seen employment come into better balance, So hopefully people won't
• 26:13
  Speaker 9: be as pressure to offer substantial signing bonuses and.
• 26:19
  Speaker 6: Increases, although it would be.
• 26:20
  Speaker 9: Nice from a consumer standpoint to keep at least keep
• 26:23
  Speaker 9: pace with where the inflation rate is. So companies will
• 26:27
  Speaker 9: be parsing every item they have in terms of looking
• 26:31
  Speaker 9: at cost.
• 26:31
  Speaker 6: Efficiencies and where they can save a buck there.
• 26:35
  Speaker 9: But it'll be tough and as investors, we're going to
• 26:38
  Speaker 9: have to adjust to the fact that margins can't grow
• 26:41
  Speaker 9: to the moon anymore than stock price isn't necessarily.
• 26:44
  Speaker 2: Can Okay, Cal, thank you so much for joining us.
• 26:46
  Speaker 2: Really appreciate a Cowurchlafe. She's a chief investment officer PIMO
• 26:49
  Speaker 2: Family Office, and we appreciate getting some of our thoughts.
• 26:53
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 26:57
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• 27:01
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• 27:04
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• 27:07
  Speaker 1: Just say Alexa Play. Bloomberg eleven thirty.
• 27:12
  Speaker 5: President Joe Biden has gained some ground against Republican Donald
• 27:15
  Speaker 5: Trump in six and seven key swing states. So we
• 27:18
  Speaker 5: want to get more on this with Real Economy reporter
• 27:21
  Speaker 5: for Bloomberg, Mark Niquette. He's joining us on this poll.
• 27:25
  Speaker 5: What are the findings that you have?
• 27:28
  Speaker 11: Well, the poll shows it's a monthly tracking poll that
• 27:31
  Speaker 11: we've been doing since October, and it shows that Trump's
• 27:33
  Speaker 11: still doing pretty well in Georgia, Arizona, Nevada.
• 27:36
  Speaker 10: But the most significant findings is that.
• 27:41
  Speaker 11: Biden has improved his standing in Michigan, Wisconsin, and Pennsylvania,
• 27:46
  Speaker 11: sort of the blue Wall. I think these states are
• 27:49
  Speaker 11: going to decide the election, and he needs to win
• 27:53
  Speaker 11: these states if he's going to get a second term.
• 27:55
  Speaker 11: In Wisconsin, Biden now holds a one point lead over
• 27:59
  Speaker 11: Trump after trailing him by four points in February. In Pennsylvania,
• 28:04
  Speaker 11: the candidates are tied after Trump had a six point
• 28:06
  Speaker 11: lead in February, and they're also tied in Michigan.
• 28:09
  Speaker 2: Any common denominator here, Marcus to what might be driving
• 28:13
  Speaker 2: some of these poll numbers.
• 28:15
  Speaker 10: Well, the timing of the poll was interesting.
• 28:17
  Speaker 11: It was conducted March eighth through the fifteenth in the
• 28:22
  Speaker 11: swing states, and that March eighth is.
• 28:26
  Speaker 10: A day after Biden's State of the Union address, which was.
• 28:29
  Speaker 11: Pretty fiery and I think, you know, alleviated some Democratic
• 28:33
  Speaker 11: concerns about the president's age and his fitness.
• 28:37
  Speaker 10: To take on Trump a second time in a rematch.
• 28:40
  Speaker 10: And it's also.
• 28:43
  Speaker 11: Midway about March twelfth is Super Tuesday, when both Biden
• 28:47
  Speaker 11: and Trump sort of si clinch the respective nominations. They
• 28:52
  Speaker 11: got enough delegates to clinch, So it kind of really
• 28:56
  Speaker 11: made it a binary choice. You know, we knew this
• 28:59
  Speaker 11: was going to be the out, but I think the
• 29:01
  Speaker 11: Democrats in particular, we're thinking that until it was really
• 29:05
  Speaker 11: clear in voters minds that this was going to be
• 29:07
  Speaker 11: a rematch and it was Trump or Biden, that's their choices,
• 29:12
  Speaker 11: that Biden was not going to do as well in
• 29:14
  Speaker 11: the polls. So this is sort of the first poll
• 29:17
  Speaker 11: that we have clearly established that it's going to be
• 29:20
  Speaker 11: a Trump Biden rematch.
• 29:22
  Speaker 5: Are voters voting because they like the candidates or because
• 29:25
  Speaker 5: they don't like the other one?
• 29:28
  Speaker 10: Well?
• 29:28
  Speaker 11: Interestingly, our polls showed that in the case of Trump,
• 29:33
  Speaker 11: most of the support is coming from.
• 29:34
  Speaker 10: People who like Trump. Only three and ten Trump supporters
• 29:40
  Speaker 10: said they were voting for Trump because they didn't like Biden.
• 29:43
  Speaker 10: There essentially voting against Biden. But the case was different
• 29:48
  Speaker 10: for Biden.
• 29:49
  Speaker 11: About half the supporters of Biden's and they were voting
• 29:52
  Speaker 11: for the president essentially as a vote against Trump.
• 29:54
  Speaker 10: They didn't want to see Trump get back into the
• 29:56
  Speaker 10: White House.
• 29:57
  Speaker 11: There was even more pronounced in Wisconsin, were like six
• 29:59
  Speaker 11: and ten of the supporters of Biden, we're voting for him.
• 30:03
  Speaker 10: Because they were voting against.
• 30:04
  Speaker 5: Trumpet to that point, are those voters more sticky or not? Like,
• 30:09
  Speaker 5: is the anti vote stickier than the pro vote?
• 30:13
  Speaker 10: What is?
• 30:13
  Speaker 11: What we're going to find out is what's more motivating, right,
• 30:16
  Speaker 11: support for your candidate or desire not to see the
• 30:20
  Speaker 11: other candidate win. You know, I think Trump has benefited
• 30:24
  Speaker 11: over time from enthusiastic support from his base and base
• 30:30
  Speaker 11: turning out to support for him. But you know, the
• 30:33
  Speaker 11: negative feeling can also be a very strong motivating factor
• 30:37
  Speaker 11: and could drive folks to the polls, specifically to vote
• 30:40
  Speaker 11: against Donald Trump because they don't want to see him
• 30:42
  Speaker 11: back in the lighthouse.
• 30:43
  Speaker 10: We're going to find out what's more motivating, you know,
• 30:45
  Speaker 10: voting for your guy or voting against the other guy?
• 30:48
  Speaker 2: What is a polling show about some of these swing voters,
• 30:51
  Speaker 2: the more independent folks. What I've been told, or we've
• 30:54
  Speaker 2: been told by a lot of pollsters is that the
• 30:56
  Speaker 2: core Trump folks are going to stay with Trump no
• 30:59
  Speaker 2: matter what, and probably something similar on the Democratic side.
• 31:02
  Speaker 3: It's the folks in the middle. What do we know now?
• 31:06
  Speaker 11: I think we still don't know exactly how those folks
• 31:08
  Speaker 11: are going to play out, because we're We're particularly interested
• 31:11
  Speaker 11: in how suburban voters, particularly suburban women, are going to
• 31:14
  Speaker 11: vote in this election, and we've seen even in our
• 31:18
  Speaker 11: tracking poll, you know, changes in that subgroup, you know,
• 31:23
  Speaker 11: particularly in views about the economy. So I think we
• 31:27
  Speaker 11: have to get closer to the election to really see
• 31:29
  Speaker 11: how these folks are going to play out, and it's
• 31:31
  Speaker 11: going to be you know, maybe the deciding factor. You know,
• 31:34
  Speaker 11: how these independence and in particular suburban voters, you know,
• 31:39
  Speaker 11: decide between Trump and Biden.
• 31:40
  Speaker 10: And frankly, you know how motivated they are to turn
• 31:43
  Speaker 10: out because you know, particularly but.
• 31:45
  Speaker 11: Biden's going to win these these swing states, you know,
• 31:49
  Speaker 11: particularly Wisconsin, Pennsylvania, and Michigan, He's going to need a
• 31:54
  Speaker 11: very strong turnout in democratic cities.
• 31:57
  Speaker 9: MH.
• 31:58
  Speaker 5: Do what voters care about? Did that change Jital month
• 32:00
  Speaker 5: to month?
• 32:02
  Speaker 11: Interestingly, we saw a little bit of a decline in
• 32:06
  Speaker 11: the importance of the economy as a top issue for
• 32:10
  Speaker 11: voters and an increase in immigration as a top issue,
• 32:15
  Speaker 11: So sort of a listening of the economy and the
• 32:18
  Speaker 11: more heightened epsis on immigration, which presumably would be bad
• 32:22
  Speaker 11: news for President Biden.
• 32:26
  Speaker 10: But we also saw.
• 32:28
  Speaker 11: Folks who trust Trump more than Biden on the economy,
• 32:32
  Speaker 11: that that number go down a little bit. And also
• 32:35
  Speaker 11: the folks who feel they were better off financially under
• 32:39
  Speaker 11: Trump than Biden also that also go down a little bit.
• 32:42
  Speaker 11: So we're seeing a little bit of softening of the
• 32:45
  Speaker 11: advantage that Trump had on the economy and in particular
• 32:48
  Speaker 11: how voters feel about the economy.
• 32:50
  Speaker 2: Mark thirty seconds, how about the age issue. Both sides
• 32:53
  Speaker 2: are playing that up at the expense of the other.
• 32:56
  Speaker 10: Yeah, exactly.
• 32:57
  Speaker 11: And I think, you know, the one takeaway from this
• 32:59
  Speaker 11: pole is, you know, Biden has sort of helped in
• 33:02
  Speaker 11: that regard, I think primarily because of the State of
• 33:05
  Speaker 11: the Union address.
• 33:06
  Speaker 10: You know, age is still going to give a concern.
• 33:09
  Speaker 10: It will be a concern I think, you know, up
• 33:11
  Speaker 10: into the election.
• 33:13
  Speaker 11: But if nothing else, Democrats, i think, feel a little
• 33:15
  Speaker 11: more comfortable that it's not going to be a decisive
• 33:19
  Speaker 11: issue that's going to sing Biden's campaign.
• 33:22
  Speaker 5: All right, great stuff, Really appreciate it. Thank you very much.
• 33:24
  Speaker 5: We look forward to the next poll as well. Mark nqutte,
• 33:28
  Speaker 5: he's Bloomberg Real Economy reporter joining us in the latest
• 33:31
  Speaker 5: Morning Console poll. I want to see what apparently in
• 33:34
  Speaker 5: the poll too, Nikki Haley. Voters seemed to be moving
• 33:37
  Speaker 5: towards Trump, which I found to be quite interesting because like,
• 33:41
  Speaker 5: why I don't But then is that like an anti
• 33:44
  Speaker 5: Biden thing versus a true Trump, a pro Trump thing.
• 33:47
  Speaker 3: You know, it's interesting.
• 33:47
  Speaker 2: We'll have to see, we'll we get closer to the
• 33:49
  Speaker 2: election to see how some of these things start breaking.
• 33:52
  Speaker 1: Here this is the Bloomberg Intelligence podcast, available on Apple, Spotify,
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• 34:00
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