This is Bloomberg BusinessWeek Inside from the reporters and editors who bring you America's most trusted business magazine, plus gloom O Business Finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Apple shares surging today by more than three percent, the stock's best day since May. This after an upgrade from Bank of America, that bank noting that the upside from augmented reality and virtual reality ieed vision pro is there, they said. Other analys on Wall Street are anticipating modest sales the device, we should note, which does cost Carol thirty five hundred dollars, and Apple sets a start taking orders for that headset tomorrow.
Good to note. Oh and one app that will not be on the new headset is Netflix, the high profile snub of the new tech. And then, of course, there's the news that cross yesterday that Apple will sell versions of its watches without a blood oxygen feature in the US following a legal setback in its patents with massa ol A lot of yeah.
A lot of Apple headlines For this and more, We go to Mark German, He's chief technology correspondent for Bloomberg News. He joins us on zoom from Los Angeles. Mark, I want to just start with the news here, just of the stock move today. This is notable for a couple of reasons. One, at the beginning of the year, we talk to you a lot about a series of downgrades that the company got. Now Bank America coming out and saying, hey, we're actually changing our view on the stock as a
result of this augmented reality or virtual reality headset. What did you make of this?
Well, I can tell you, like you said, it has been an overwhelmingly busy week of Apple news, and that'll continue over the next you know, three weeks or so. In terms of the prior downgrades about the iPhone, you know, we talked about that. Now the upgrades about the division pro It's really interesting because I don't anticipate the vision pro to ship in any quantity of significance or generate any revenue of significance for probably the next five years.
So maybe they're seeing something I'm not seeing. I certainly think it's a promising category, but we are quite ways away from it being a needle mover for Apple. It's going to take quite a while before that happens, it's going to take them releasing AR only glasses before that happens. Personally, I'm extremely optimistic about the category, but there are just realities for how much money it could bring in and how many units they could sell. So that was quite
an interesting upgrade. There are reasons to be optimistic about Apple. You know, Apple's really I think a dark horse contender for artificial intelligence. I think that Apple is two years behind the competition on this, But for some reason, I just believe they're going to do a killer job on weaving in AI into the iPhone sixteen in the fall. So I think that has a lot of folks pretty optimistic internally and has me pretty excited too for the future of the product.
So AI a bigger mover in your view versus this headset, Oh.
Yeah, oh yeah, Oh my god. I think this headset in terms of revenue moving for the company is going to be a while. I think AI is where it's at for Apple. They've been silent, they've been under a rock on this, and they're going to appear in June and they're going to make a pretty fantastic announcement related to AI and integration into the iPhone and the iPad. It's going to take you know, nine months for it to hit the market. The new phones won't go and
sail to September. The new iOS eighteen won't be available till September. But I think it's going to be a really big deal for the company in terms of how that's going to bring Apple revenue in directly, I think people are going to buy more iPhones because of that. It's going to be really excited.
Either soon or I will now wait for this upgrade.
This is really interesting, Mark, because Apple, you know, when when we think about AI and Apple like the iPhone and iOS do certain things right now that anticipate what its users want, which I which I've noticed and I find really interesting. For example, when I got off the subway and I, you know, go to look for an app, it immediately pulls up the Lift app because it knows that I want a city bike because I do that
every day at that time. Mark, what other what are the examples of AI being integrated into the phone now? And well it's division please yeah, go ahead.
That's that's really basic, right them being able to predict that you need the Lift app. What if your list is already They're waiting for you when you land because it already did it for you.
Right.
What if your web browser, instead of you needing to read articles, it's like your new Samsung phone and can translate articles for you. What if you're on the phone with someone who speaks another language. Let's say you speak English and they seek speak Spanish. You're talking into the phone in English and they're hearing you in Spanish. They're talking into the phone in Spanish and you hear them in English.
Right.
These are the types of things that Samsung introduced earlier this week, and these are the types of things I expect the Apple to eventually get into as well, playlist creation and Apple Music. Using AI, you need to make a presentation and you plug in some of your data points, you plug in what you want the presentation to be about, and it can make the presentation for you. I think those are the powerful AI tools that I'm talking about.
Take a look at what Samsung did this week. If you're watching this and I think you have a little bit of a blueprint of what Apple's looking.
At, that is, well, you know it's interesting too. It's funny because we had the CEO the online languaging language learning service yesterday and we talked to her about like AIS it's gonna basically make it possible that people don't necessarily have to learn a new language. They can just use AI right in advanced technology to kind of just communicate with people of a different who speak a different language. And it's already happening.
Yeah, it could be a new era for for learning and education. You know, I got to tell you, On one hand, that sounds very exciting. On the other hand, you know, that sounds very scary.
Right.
Imagine your kids growing up in an era where instead of taking a second language, they don't have to because they're not actually doing the learning themselves. I'm not sure how good that's going to be for the brain and the you know, the the educational development for kids in the future. So you know, I'm gonna when I have kids, will keep AI away from them maybe for a little bit.
That reminds me of all the tech CEOs for a long time. We're like, yeah, my kid doesn't have a computer, My kid doesn't have this interesting coming.
This is a whole new level, right, Like I would be so disappointed, maybe I would No, I would be disap point. Let's say my kid has to do a presentation or write an essay, uh, and they're not going to do it themselves. They're gonna use AI or chut GBT to write it for them. I think that's, you know, disturbing in some sense. What is it going to mean for teachers and grading papers and how things are taught? Are no education institution's going to have to revamp homework?
Right?
I mean, I was just going to say that it's striking to hear this from Mark not scary. I don't disagree, and I think there were a lot There are a lot of people who would agree with you. In your career covering tech, which, even though you're a young man, your career covering this has been quite long because you were doing this as a teenager, we should doubt is Uh is this sort of the most pivotal moment that you've seen.
It's the second most pivotal moment I've seen. The most pivotal was the iPhone, Right, the shift from pre iPhone to post iPhone has been significant, And let me just say this, the i phone created the whole idea of mobile software platforms with sensors and advanced processors and such. So this AI revolution that we're walking into right now would not exist if it were not for the iPhone's
creation sixteen years ago. So I would have to put the iPhone at number one in AI at number two, just because AI doesn't exist without the iPhone, right, I mean, you can't put the iPad in that category or VR. It's really the iPhone then AI.
I understand that. But at the same time, you know, we've always sort of adopted and accepted technology, I guess save for something like Google Glass. But they're trying again with all the head mounted stuff. But it does seem like you have a sort of reticence around around the way that AI could shape our lives.
Yeah.
I think there are really interesting and exciting use cases. I think being able to get summaries of web articles. I think being able to use generative AI to fill in photos and help you with photo editing. I think being able to take information that you provide and turn that maybe into a keynote or a power point presentation for you. Using AI to create music playlists. Those are
all really exciting use cases for AI. But when you start using AI to talk on your behalf, I didn't love the Samsung Future that was introduced earlier this week, where you could have it change your tone based on who you're talking to. Let' say I'm sending an email to coworkers, right, or sending an email to my brother, or doing a tweet and it knowing to portray a different tone in any of those use cases. That's a little scary. I don't want to be in a world
where people aren't being able to think for themselves. Right. There's using AI to enhance the tools you're using today, and then there's using AI to replace your brain and your thinking. And I think that's when AI crosses the line. And unfortunately, there's so much money to be earned and so much to be won in the technology landscape by these multi trillion dollar behemoths that I think they're unfortunately
going to have a very hard time towing that line. So, you know, it's a little scary what's about to happen over the next few years.
Yeah, And I do wonder, you know, I know regulators are all looking at it, thinking about it and how it kind of affects their specific you know, world and overview. I think it was I just I think Gary Gary Ginsler of the SEC made some some comments about AI specifically this week in terms of financial instruments. I'm kind of shocked. I think both Tim and I are about kind of the warnings you're putting out there, but I think obviously so relevant as we are kind of very
fast moving into this space. Mark, thank you, really appreciate it. Have a good weekend. I'm feeling I'm feeling a little stressed. I'm feeling a little stressed. Stressed.
Mark will save us? Okay, Yes, Mark German, Chief Technology correspondent for Bloomberg News.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on.
YouTube elon Musk SpaceX. It is set to launch the first all of European commercial true to the International Space Station. It's the landmark mission for a region yearning for a better year of space exploration following a series of setbacks. By the way, it would be the third commercial flight to the space station, and if all goes as planned, we'll kick off a two week research mission and it's an interesting in terms of its crew.
Well, we're actually looking at a picture right now of the Falcon nine rocket that is set to lift off any minute at four forty nine pm from Kennedy Space Center in Florida. We've got a great roundtable of space experts who also both happen to have new books out with us this afternoon. Lauren Grush's space reporter here at Bloomberg News. She's also the author of The Six, The Untold Story of America's first women Astronauts. She joins us from our Austin, Texas bureau, and Kelly Wiener Smith is
back with us. She's adjunct professor in the Rice University Biosciences Department, also the author of A City on Mars? Can we Settle Space? Should we settle Space? And have we really thought this through? She joins us on zoom from Charlottesville, Virginia.
All right, so Lauren, let's start. Let's thank you to both of you. Welcome, Welcome, Lauren. Let's start with you, though, because you're watching this closely and are reporting it out for Bloomberg. Top of mind is you wait this liftoff?
Well, you know it's I think what's top of mind? For me is just how routine these kinds of launches are becoming. This is the third mission for Axiom Space as part of their partnership with SpaceX, and Axiom Space has been conducting these missions to prepare for their own commercial space station, which they are hoping to launch this decade.
So yeah, it's just you know, the fact that these are becoming routine when just a few years ago, you know the fact that SpaceX was launching people at all was a novel thing.
Lauren, can you explain what it means that the mission is actually operated by Axiom versus operated by a government agency or operated by SpaceX for example, Right.
So, you know, SpaceX is operating the mission in terms of you know, they're in charge of the Crew Dragon. They're in charge of the Falcon nine that launches the Crew Dragon of space. But it's really kind of that Axiom is brokering this mission. You know, they're the ones that go out and find the astronauts to launch to
the International Space Station. They make sure that they have the agreements with NASA in place to be able to use the International Space Station's resources, and they're also in charge of coming up with the experiments that the astronauts will do when they're on the International Space Station. So they're kind of in charge of putting it all together, but obviously SpaceX is in charge of, you know, making sure that they get to space safely.
It's very different from like the sixties, right, and the race to put a man on the Moon, when it was all over the government, all the government.
It was a whole of government approach, right, it was just NASA.
All in all in all in this mission, research mission, what do we know about it?
So they'll be conducting over thirty research missions on board in roughly two weeks. It's a pretty quick trip compared to what you know, the NASA astronauts do when they go to the space station. They usually stay for about six months at a time. But it will give them a lot of opportunities to perform in the space environment that they wouldn't be able to do otherwise. And then they'll come home and splash down in the crew Dragon when they're done.
Hey, Lauren Grush, we got to let you go because your space reporter and you are supposed to be covering this launch and it's t minus what less than four minutes right now?
I think we have about four minutes ago. So I'm going to run, but I'm glad to have joined you guys, and I'll go cover this mission.
We always love it when you joined us. Lauren. She's space reporter here at Bloomberg News, also the author of The Sixth The Untold Story of America's first women Astronauts. She joins us from our Austin, Texas bureau. Let's get over to Kelly Wiener Smith, the author of A City on Mars? Can we Settle Space? Should we settle Space? And have we really thought this through? She joins us on a zoom from charlotte Ville, Virginia. Good to have
you back with us, Kelly. So I want you to build on what Lauren was talking about just now, and the idea that this stuff has become so routine. So that's kind of what sticks out to me too, is like, you know, the first time this happened, it was a really big deal. The first time SpaceX landed one of its reusable boosters. In the second and third and fourth and fifth times, those were pretty cool. That was news.
But now this stuff is us so routine, it's like just another day in the life of a space explorer.
Yeah, it has become routine, and I'm super excited to see us launching astronauts from the US again. So, you know, we retired the Space Shuttle in twenty eleven, and then for almost a decade there when we wanted to send our astronauts to space, we have to pay for tickets aboard the Russian Soya's craft. And so now it's exciting to have SpaceX working on just about their tenth crew launch to the International Space Station. And as you said, it's become routine and it's exciting to be there again.
Well, you know, that's what's interesting to me. I was thinking as we were talking with our reporter, when we're talking with Lauren you know where, she said, it's become routine, and I think, okay, that's kind of I think boring, But I also think how cool that, you know, it's you know, go back to July twenty first, nineteen sixty nine. People got up, people were glued to their TV sets to think, oh my god, there's a man on the
moon and my team knows it. My dad was involved with a lot of space work early on, so it was just like a very big d the whole world watched. But how cool that we are a part in our civilization if you will, that they have become somewhat routine, and I don't know, I think about where that could possibly take us. And that's your book gets into it
about kind of living on another planet. I mean, how do you think about the big you know, bigger picture when it comes to space exploration here in twenty twenty four.
Yeah, well, so tying that question into this this point that it's becoming routine, you know, so today the first astronaut from Turkey is flying. And so as it becomes more routine, we're getting a more diverse group of people up into space and we learn more about how different cultures, different bodies respond to the space environment. And we're going
to need that kind of information. And so Axiom does commercial launches, so you can pay to send astronauts up to the International Space Station and that's sort of changing the criteria a little bit for going to space. So, you know, NASA astronauts are like the finest specimens that
are human species has to offer. And as you start having more tourism, you get, you know, people who are older than maybe the ideal we would imagine for sending someone to space and you get a broader sense of how bodies in different ages and different states start to respond. And that kind of information is going to be important if we're going to start setting up settlements or something at some point. So as this stuff comes becomes routine,
we learn more. And also, you know, as the equipment goes up there, more often we learn what you know, how often it fails.
Hey, just to remind everybody, we are awaiting Elon Musk. SpaceX set to launch the first all European commercial crew to the International Space Station. We are looking at what about forty three seconds to go.
Yeah, we're looking at pictures right now of that launch that is set to happen just about forty seconds. It's a landmark mission for a region yearning for a better year of space exploration following a series of setbacks. This Falcon nine rocket is set to lift often about thirty seconds from NASA's Kennedy Space Center in Florida. This launch originally planned for Wednesday, but was delayed to day to have SpaceX more time to do analysis and checkouts of
the rocket encapsule. That is according to the company, and we did.
Mention an international flight. We've got eleven ten seconds to go here, So we're watching whether or not we see it. Looks like everything is kicking in, and let's listen in one big mission hits and full powers, and let's go as.
Falco NI takes that LAS.
Further beyond, opening the door for more to follow.
All Right, everybody, you're listening as that Falcon nine rocket SpaceX Falcon nine rocket did take off on time four forty nine. Talk about being on time from Kennedy Space Center in Florida. It is the first you all European commercial crew to the International Space Station. And you're talking about a NASA astronaut, an Italian co pilot. You've got a couple of mission specialists, one from Turkey, one from Sweden. So we're talking about two week research mission as well.
So big deal. Yes, it's become routine, but I got to tell you, every time I see it and they take off and they go into space, I kind of get chills.
Yeah, it is pretty spectacular. We're seeing images of the rocket taking off about exactly one minute at this point into the launch sequence. Commanding Thursday's flight is Michael Lopez Allegria, who led the AX one mission back in twenty twenty two. That was Axiom's first mission to the ISS pilot Walters via Day from the Italian Air Force and mission specialist Marcus want of Sweden, as well as Alper Gazvaci of Turkey, and they're going to participate in that two week mission.
Remember this was supposed to happen yesterday, so a little bit of a delay here, but nonetheless on time four to forty nine, that Falcon nine rocket setting off from Kennedy Space Center in Florida, home to so many space missions. Really the history if you think about US space work, that is where is really kind of such a key point, and so whenever you see it, it just really takes you back throughout the history of what over fifty years
or so that the US has been involved. I should say the pilot, I believe it, or the NASA astronaut he is sixty five, holds dual US Spanish citizenship, a veteran of five previous space flights and ten spacewalks.
We should note some other context here that Thursday's launch comes as europe space industry has struggled to get off the ground due to delays. We should know too that the rocket which is four years behind schedule, is expected to blast off this summer. That's the Arian six from Europe. Will the Vegas Sea Rocket is set to lift off during the fourth quarter after a mission failure at the end of twenty twenty two.
All right, so let's go back to Kelly Wienersmith, who's been watching with us as well or listening along, adjunct professor in the Rice University Biosciences Department Department. We've talked with her about her book that was out recently, A City on Mars? Can we Settle Space? Should we settle Space?
And have we really thought this through? How do you what do you teach your students today who are probably kind of, oh, yeah, there's another thing that's flying up in space, like they too have kind of got used to it. It's a very different era. But what is it that you want to kind of relay to them or teach them about space exploration.
Well, I'd like them to be excited about how international this activity is. You know, you have four different countries from Europe represented on this one flight, and there's even more countries represented up at the International Space Station. And additionally, you know, the more times we go up and the more experience we get, the better we get at space, and the better that helps us with various exploration stuff.
And you know, we're we're working our way back to the Moon, which is exciting as well.
We should know to continue to follow the launch here. The Falcon nine first and second stages are separating, and we just saw an image of the crew actually clapping as that did occur. Hey, Kelly, it's always like a yeah, yeah, it is. Well, talk to us, talk to us a little bit about the process here, Kelly, And it's really what we should be listening for and what should we should be watching for as this crew makes its way to the ISS.
Well, I'm not really a launch experts and so I'm not really sure what we should be looking for at this point. I'm more about space settlements.
Well, and one thing I will want to say, what's interesting and I you know, I was telling these guys my dad was involved in early on. You know, the idea that these rockets go back down to Earth, right, that the return to Earth is just kind of fascinating
because that's not how it used to be. You lost a rocket that would send something into space, So it's such a different you know, if you think about how it has evolved is just kind of mind blow I think about I don't think it was in my dad's error because he's passed away, but it's just kind of wild that we have progressed to that point that we can reuse these rockets.
Well, it's something you know, we should. We'll go ahead, Kelly.
The Shuttle was supposed to be reusable but ended up being so expensive to reuse it that it just didn't become a viable way to get stuff to space. And the fact that SpaceX has not only made things reusable, but you know, made reusing these things so cheap, has really lowered the cost of going to space.
Okay, so I'm glad he brought that up, because that's exactly where I was go How much I was going to go. How much credit is due to Elon Muskin SpaceX for revolutionizing the way that these things can be reused.
You know, I think a lot I've heard a lot of people complain that, you know, must gets government money, and so I don't know why it's so exciting, like we did this with the Space Shuttle, but you know, lots of companies get government money, but no one has been able to drop the cost the way SpaceX has been able to drop the cost, and so I remain very impressed.
So Kelly, when you think about kind of where we should go with this, I mean, all of the NASA work and lead up to getting and putting a man on the moon back in the nineteen sixties, you know, led to some innovation, some development. You know, a lot of investment went in that. We talk about it often today that there isn't enough investment maybe in this world or we're shortsighted minus maybe an elon Musk and some others.
So when you think about it, I think about your book seat down Mars, like, why is it so important or why is it not? Like what's your view on that in terms of investing in this and what it brings to a nation or to a world, to citizens of the world.
Well, investing in space has lots of benefits back here on Earth, as you know. So for example, if you study Venus, you can learn about what climate change can do to a planet, and that gives us some lessons that are helpful back here on Earth. So exploration can teach us not just about space, but you know about Earth as well. We get experience working together on the International Space Station. I don't think that's going to solve a lot of our geopolitical problems, but it's nice to
have some areas where we're connecting with other people. And you know, I just think humans, we love to learn about our environment in space just sort of helps us learn about the world around us.
You're also, though, I've taken sort of a in the in the book, and we spoke about this back in October November when we had you on the program, a critical look at the way that we're thinking about planets and settling planets outside of Earth. Of course, talk to us a little bit about you know why you think, and it's in the book's title, we haven't necessarily thought the idea through that we should be settling other planets.
Well, you know, there's only so much that you can learn on the International Space Station about how human bodies respond to space or protected from a lot of space radiation by the magnetosphere if you're on the International Space Station, for example, So we don't really know how space radiation impacts human bodies. And so you know, i'd say we've done a lot of cool things in space, and we
have a really exciting low Earth orbit economy. But in terms of whether or not we know enough to be having babies and growing families on a place like the Moon or Mars, we're just we're really not there yet.
Yeah, it's kind of interesting, right. Hey, Just to re remind everybody if you're just tuning in here, SpaceX rocket blasting off today, carrying the first all European commercial crew to the International Space Station Landmark mission. As we've been talking about for a region, looking to mount a comeback following a series of setbacks, it's been a little bit of a rough ride over the last year or so.
SpaceX's Falcon nine rocket, topped with its crew dragon capsule, lifted off at four forty nine pm Local time on time from NASA's Kennedy Space Center in Florida. This is according also to a webcast of the mission, but we watched it listen in a little bit sick.
We did stick that landing. Falcon nine has landed once again.
But turning our.
Attention back to the crew, as you see there, our next event is second engine cutoff or SICCO as it's referred to there at the bottom of your screen. Second stage we'll coast for a few minutes until Dragon is commanded to separate a lot of just the energy. Here as BaseX mission control is buzzing, you can hear commentary behind us. Right now, the crew is experiencing about three g's, so pretty much a roller coaster for those thrill seekers out there.
All right, everybody, so you are listening to NASA's Kennedy Space Center obviously telling us exactly what is happening to the crew aboard the rocket there the.
Falcon nine Dragon, Yeah, should say Falcon nine.
Excuse me, And just keep in mind that this crew expected to dock at the Orbiting Research Lab some two hundred and fifty miles above Earth and roughly around five fifteen am New York time on January twentieth, so we've got to give it a little bit of time to ultimately get there.
Yeah, this crew is expected to dock at the Orbiting Research Laboratory. They are in the Crew Dragon capsule from SpaceX right now, some two hundred and fifty miles above Earth. That's set to be happened at roughly five point fifteen am on January twentieth, So there is some time they're going to be spending getting to the ISS.
A couple of movies, some peanuts that kind. No, that doesn't happen. Kelly Wiener Smith is here with us, of course, the adject professor in the Rice University of bio Sciences Department, her book that we've talked about City on Mars. Just got about forty five seconds or so. Final thoughts here as another mission goes up. YEP, routine, but it's still pretty amazing.
Yeah, still totally amazing and exciting to see astronauts coming from US soil Way to go, SpaceX and Axiom in NASA.
Hey, one last question, your students. Are they interested in being involved in space development and working either with the government or private companies like a SpaceX Again just about twenty seconds or so.
Yeah, they are, and I think they're interested in seeing it done in a way that also protects the Earth and you know, takes into account diverse perspectives. It's very exciting working with students.
They've got a good perspective, very very cool stuff. Hey, really appreciate you joining us this afternoon. Kelly Wiener Smith, adject professor in the Rice University Biosciences Department, also the author of A City on Mars can we settle space? Should we settle space? And have we really thought this through? Joining us on zoom from Charlottesville, Virginia.
All right, off and running that SpaceX rocket blasted off, and we've got an international are all actually all European commercial crew to the International Space Station. So we'll continue to monitor it. Everybody, This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty Yummy, yummy.
Yummy, Fine, all right, yummy, yummy yummy. We're talking gummy gummy gummies from This is a great story, man. We have talked about this a lot. On this Thursday, I realized I can't get.
Enough of this story. Nobody can get enough of this story. It turns out everybody loves gummy bears.
Oh my god, it's a real left candy factory out of Charlie the Chocolate Factory. It's not this is real.
This is like this is like a you know, sanitized like simple. There's no Willy Wonka there. You're not going to fall into a river. Everything is, you know, very very everywhere. This we're talking about the Harry Boat Plant and Pleasant Prairie, Wisconsin. It's the company's first one in North America. It's a cavernous facility that's mostly colorless and meticulously clean, staffed largely by robots. How do we know
all of this? Well? In her latest for Bloomberg Business Week, Tina Shanker got to spend some time inside the new Harry Boat Plant in Wisconsin. A pretty sweet assignment, I would say. Dina Shanker is consumer reporter for Bloomberg. Nars is with us on Zoom from New York City. Also here is Laura Bliss, who edited this story. Laura is City Lab editor. She joins us from San Francisco. Dina, First off, how many gummy bears did you eat in the production of this story?
Do we count the ones I was eating right before I came on camera?
Yes, all flavors, all the flavors. I mean, I am on the gummy bears, I am on the twin snakes, which I didn't even.
Know about twin snakes until before the story.
They're so good, the Harribo peaches, I mean everything, They're.
All just they're really good.
And they don't all taste the same, which you might expect that the just the shapes are different, but the flavors are the same.
They're not. They are all different and they are all delicious.
So, Dina, a lot of our viewers and listeners know you from the I don't want to call it fake meat beat, but the not quite meat plant based meat beat, Like that is what you do. The factories that you cover are the ones that produce the impossible and beyond, and you've been doing that for years. How did you end up finding yourself in the gummy bear fact?
What was the pitch to the editors and the editorial Dude Like, hey guys, I kind of like gummies. No, what was the pitch?
I have to say this actually this story.
I'm so lucky this story came to me that they asked me to write it because they had a photographer who was obsessed with hairbo and really wanted to do this story.
And they were like, Dina, would you do it? And I was like, obviously, I will do this. Thank you so much.
I will be there tomorrow, thank you, And I'm going to bring some home, all.
Right, Yeah exactly. Lord, come on in. You edited the story your City City Lab editor here at Bloomberg size and scope. This story has it all.
Yeah, this was so much fun to work on with Dina and the photographer who just produced these incredible photos and videos and likes. As you guys were talking about, you know, the photos kind of give you a sense of its place. It's just like full of rainbow colored fun. But that's actually not what Dina found it to be at all. It was actually this like pretty, you know, serious, like totem to like Germanic manufacturing. And I don't know, I would love to hear Diana talk more about that.
You know, did that surprise you?
Like?
Learning more about how this company actually works and makes these beloved candies?
It?
You know, it did. I've been to so many food manufacturing plants.
I mean, I've been to the fake meat plants Shore, but I've been to real meat plants.
I've been to you know, fish and pet food and so.
Many kinds of food plants. This was by far the cleanest one I have ever been in. It was so orderly, everything was running like exactly as it was intended to.
There was just and they were so happy. Everybody was very happy, but.
They were very serious about the work at hand.
They were there to make the best gummies, and they know how to make the best gummies because they've been doing it for so long and they really weren't interested in trying to do anything other than make the world's best gumpies.
Well, Dina, what's interesting too write from something that looks so playful and fun and colorful, like you think that there would be some whimsy behind the scenes. But like right at the top of your story you talk about I think it's with the chief operations officer at Harrabo, you know, embodying a German approach. Their words, don't like to change things, right. It's just kind of interesting their approach to it. But I guess if it works, why would you change it?
Yeah, And you know, I just have to say that everything Hakan the COO, everything he said he said with like such a smile.
You everyone was so delighted to be there.
Everyone was so happy, but they were also so serious about how committed they were to quality and to doing everything just so.
And I really I respect it very much.
Was.
It was just fantastic. It was really I was so delighted to be there.
Let's talk a little bit about scale Dina and this new factory in Wisconsin, the first for Harry Bow in North America. How much is produced there, what are their plans for increasing output, and just contextualize this with how much candy they're actually selling when you look at the whole global the whole global industry.
So they make sixty million gold bears every day at this plant. Their plan is to double that by twenty twenty five. They're also going to add in manufacturing lines for the Twin Snakes, which are a big hit in the United States, which I just have to add. The twin Snakes are this like it's like one is sweet and one is sour. And they said that they're a really big hit with adolescents who are like in the rebellious stage, which I just thought was so funny.
I thought you were going to say they're like a big hit for adults with young kids, because I texted this to a friend group this story. Really you did.
Yeah.
By the way, you can get a Bloomberg gift link. Okay for people who don't have subscriptions to Bloomberg if you are a subscriber to Bloomberg. Yeah, and I sent it to the whole group. They loved it, and they mentioned the Twin Snakes part of this, Dina, because I guess this is a huge sleeper hit that I had no idea about.
I know, same, it was the same for me. And they're they're really good. They're they're really good. And yeah, the gold Bears are the most popular in major markets all over the world, but the different regions have their own favorites, and here in the US, we just love those Twin Snakes. I feel like we're just not as sophisticated as like the people in the Nordic countries who love like the black licorice, But the Twin Snakes are good for us.
Come on in. I don't know if you have another question for Dina, because it's always curious about kind of the editing process on this story and like kind of the things you guys wanted to know or how you kind of worked it through.
Yeah.
Well, I was so interested in the fact that you know, there are these sort of like regional, you know, favorites that Dina talks about, you know, all over the world. Gold there's obviously being the number one everywhere, which she pointed out. But I thought it was so fascinating that every factory is identical, right, I guess except for like
the molds of the gummy because they're producing. But like that, this factory, which I think is they're the first in the US that they've opened, kind of to to the point of, you know, how they're trying to expand their market share, is like a replica, right of factories in Germany and all over the world. Is that right, Dina?
Yeah, this is their sixteenth factory, and they said that it's basically like it's inspired by all the other factories. Everything runs just the same as it always has. One of the few changes they make is like they when technology evolves, they'll they'll evolve with it. So they now have automatically guided vehicles doing forklift work instead of manual forklifts. But even those robot forklifts are made by you know, the same German company that they've.
Been working with for decades.
So they really like they've got their faves and they just stick with them.
So can I ask you, Dina, why North America? Finally?
I mean, this is the this is the place to be.
I think the US is a huge market and they have a lot of room to grow here. They are the Harribo brand is the number one sugar confectionery brand in the world, but here in the US it actually trails behind Skittles and Twizzlers. And so they could, you know, use a bump in production and get themselves up at the top here.
Maybe I'm just surprised, you know, that it took them so long to open up plant here in the US, so that in the north, in North America. So that means that all the harry Bows that I've been eating for many years of my life have come from some other facility. Was it Germany? Like you know where were they? Do we know where they were importing them from? I
will say just a side note. When I was growing up, like and we would have visitors come stay with us from outside of the US, like they would always bring Haribo. Really yeah, like that maybe they've got him a duty free or maybe it was like cheaper in Europe or something, but like cool, I was, like I always thought it was like a foreign thing as I was growing up, But yeah, it turns out, you know, maybe that's why I like the gummy bears.
So much now, honey, I always thought it was a Japanese brand for some reason, like only recently learned that. And the actually the story of the Horribon name is kind of interesting. It's like a a portmanteau, right Dina of the founder's name.
That rightiation of that word, but yes.
An acronym sort of. It's the first two letters of the of Hans Regal and Bond, Germany, right where he founded the company, Harry bo so creative.
Hey, you know what, I'm always curious and it makes me think of the Island of Misfit Toys, you know, the Christmas Special but those irregular bears. There's only small percentage. But what happens to them, Like I don't mind if it doesn't have an ear or something like what happens and.
What they never they never leave the plant? I know it was, Actually it was.
It did feel like the Island of Misfit Toy seeing the band where they land. But it's actually pretty amazing that it's only that it's less than one percent of production.
But yeah, I mean, I know I should have just been like, you know what, I'll take me.
I did try to get Dina to like, you know, get an employee to admit that they've been snacking off.
The reject their pile, but.
They were too professional. I guess, okay, Dina.
What goes into a got me bear?
It is not very surprising.
It's mostly like sugar and gelatine and they get sprayed with their you know, waxes and oils, et cetera, to make sure that they don't stick together.
But it was pretty amazing that they said.
The recipe hasn't changed in more than twenty five years, and that so as a as a food reporter who's been on this beat for some time now, that's just incredible that that's how long they've been sticking with the same thing, especially after the supply chain challenges during COVID because a lot of companies were changing recipes at that time because they just couldn't get what they were used to.
But they've been doing the same thing for more than twenty five years.
It is just wild. Like I'm obsessed with watching these pictures. Sorry, I'm getting a little distracted here. What was it? I wanted to ask you, Laura, like, as you read the story and you guys went through it, like, what was the biggest thing that jumped out for you, and it just kind of blew your mind.
Yeah, I mean I think it just goes back to that kind of hilarious tension that Dina found in the story. You know, as journalists were always looking for what's gonna draw a reader in. You know, it's not just the pictures, but it is kind of this like just contrast between the rainbow colored candies that we all love and this
kind of highly regimented production process. I also thought it was really interesting you did ask Horrbo if they had considered getting in, you know, speaking of what adults like for children, into the cannabis of gummy market, the weed gummy market, and they had actually contemplated that. It sounded like, do you know, what did they tell you about that?
So I would say, I don't know if they contemplated it internally in any real way. My guess is probably not. But they had the answer ready, so certainly my guess is they've been asked before and it was no, no, This is not like they're not looking to make anything functional or anything along those lines. This would also narrow the consumer base. This is just supposed to be like a treat you know, just like something to enjoy, and they actually also differentiated between like they would say like.
It's a treat, not a snack.
I mean, I would say for me in the past couple of weeks working on this story, it's it's been a little bit of both.
But they're really focused on just making like gummies that make people happy.
They're not trying to you know, displace anything or be medicine or you know, I.
Will say too.
I mean they were really you know as as they have every right to be, like very protective right of certain parts of the process, and certainly like the you know, full recipe behind the gummy bears and sort of some of the precision, you know, technologies that they're using. That was really interesting to me too. Just get thinking, getting inside the mind of you know, the gummy CEOs and the sort of you know, competitive aspect of this, the big the big you know candy makers they're up against.
Do you know, we only have about twenty seconds left. But were there any fans or like groupies outside the factory, Like do they have like a company store where you can buy them there?
No, but they did have this like V double like like fake v W Harribo van kind of thing that you.
Could take pictures in front of, which I.
Enjoyed and took some pictures in front of them, so they had It was really out in the middle of nowhere. I mean, sorry to a pleasant prairie, but it was like a two hour drive from Chicago, and it was not an easily accessible plant.
And you're still eating them and snacking on them, so you didn't get turned off by seeing so many, which is really had a while.
Not even a little bit. Oh my god, I'm eating them more than.
I'm all right, guys, thank you so much. Danish Anka Luwer plus, thank you so much took out this story. It's a good one.
I'm brothering my.
Journal.
Now about you?
Let me drive?
No, no, no, no, please go drive, honey, please, how do the riding gravels?
Let's wait, I want to drive.
It's a good question.
This is the drive to the Globes dot.
Com for me.
I think we'll buy around.
Yoga don on Bloomberg Radio.
All right, everybody, I do you want to mention a headline crossing the Bloomberg terminal. US regulators are preparing to introduce a plan to require that banks tap the Federal Reserves discount window at least once a year to reduce this stigma and ensure lenders are ready for troubled times. We talk about that when they're stressed within the financial system or tightening, if you will, and that is looked
often if someone does it, that maybe there's concerns. So this looks like that the FIT is looking to do this. Our regulators are looking to get banks to do this so that there is again no stigma when you do well.
In the meantime, I want to talk a little bit about the equity markets and specifically a handful of stocks because our next guest fund beating just about everyone in its category in the past one year, Carol. The Rational Dynamic Brands Fund invests in a basket of company stocks with attractive and leading brands names such as Amazon, Live, Nation, Costco, and Microsoft.
All right, so let's get to it. Back with us as Eric Clark, He's portfolio manager at Rational Dynamic Brands Fund. He joins us on Zoom from San Diego as we drive to the clothes on this Thursday. Eric, good to have you back with us. Happy New Year. We've been looking at your portfolio. We always love because you talk brands, but based on Bloomberg data, yet I think around thirty four stocks at the end of last year, Microsoft, Meta, Apple,
Alphabet in the fun Top Holding Amazon. You did some selling at the end of last year, Disney, Ali Baba sd Lauder Regeneron talk to us about first of all, the strategy at the end of the year. Was it just selling some big decliners, pocketing some gains, some tax reasons why the selling first?
Yeah, exactly, and happy New Year to everybody too. You know, if you have some good gains and you want to be as tax efficient as possible, then you harvest some losses along the way.
That kind of build up.
So when you do take some gains, they're they're not as meaningful from a cap gains perspective. And that's just really what that was.
So do you plan on getting back into any of those companies that Carol mentioned Disney, Celsius. I mean, Celsia's hard to find a time when in the last few years when that's been a declining stock. I mean, the performance over the last fe years has been absolutely incredible. Are you planning to get into any of those.
Celsius is always on the radar, it's a wild, wild stock times, but I think it's you know, it's got some more upside. It's just very volatile and stay Lauder is intriguing. But I need to see one data point that says they're getting back on the right track. And they're so tethered to China and China just just can't seem to get off the mat for a variety of reasons. So that we're you know, it's on the list along with PayPal too, but we haven't jumped into any of those names just yet.
Yeah, a STEI a lot of Asia Pacific five point two billion revenues of twenty twenty three, so that's just slightly below Europe, the Middle East, in Africa, so yeah, the big overseas. Hey, having said that, all right, so let's go to where you are all in Amazon, your top holding looks like you added a little bit to it maybe end of the year, Live Nation two at the end of the year, these two continue to be favorite. So let's start with Amazon, Eric, why is this your
top holding? Why do you continue to like it? What's your strategy for when you add or pull back a little?
Sure?
I mean, we've always loved Amazon, we've owned it the entire time. But when they go through these big spending cycles, and this last one was the most epic of all time, probably in relative and absolute terms, the stock tends to lag. And they essentially built a ups over the last three years, which is pretty astonishing. They did a lot of hiring and now they're starting to monetize that logistics spend, allowing us to order more from Amazon more frequently, which gives
them better profitability. And you know, the retail business kind of gets ignored. It's still something like four hundred billion or something in revenue, and everybody only focuses on AWS and the cloud initiatives so detail.
So it makes sense that people focused on.
Absolutely, but if you think about it, the real look, I look at the retail business, it's kind of like a costco's it's actually worth two costcos. So when you know high volume, low margins, great business, high brand relevancy. So the thesis is Amazon has lag for three years, which is very rare anyway, and there's some mean reversion just in a great business as long as it stays really relevant and it has the AWS will re accelerate
with AI et cetera. The retail business is doing just fine getting back to profitability, better net incomes, the stock will recover that his historically what's happened so plus the ad business, etc. I mean, they just have a lot of levers to pull.
Well, it's that whole idea in terms of the retail sale. Like you think about what Walmart right build a business out of selling a lot of stuff with pretty low margin, probably most of it or a lot of it. So it's kind of interesting, but you're right, I mean we kind of ignore that business. As Tim said, though the profitable business aws, but nonetheless they still a lot of stuff increasingly, so everybody's go to is Amazon when it
comes to retail Live Nation. What's the strategy on this one and why you believes it's a buy and you continue to like it?
Yeah, I mean along with Expedia too. I mean we like the experiences over the goods theme. I think people, you know, we over consume goods and we've just been continuously getting out, eating, out, going on vacation, et cetera. And you know, something happened with a lot of companies through the pandemic, particularly in the travel and the entertainment category.
They were forced to get really lean and really fit from an operational perspective, and so those will pay dividends that just better profitability, better margins, better free cash flow, will pay dividends over the years because they're not going to revert to that lower margin profile if they have good brand love, if the category, the spending category is still really popular, and we have seen no evidence of a slowdown in entertainment and events around the world, and
so Live Nation is just a better business than they once were, and the demand is still super strong, and the stock doesn't reflect it at all. So we added to it today on this little dip. I think it's gift down here under ninety bucks.
I will say nine percent. Afloat is shorted right now, so there's some folks betting big time against it. We want to ask you about Envidio.
Yeah, we got a minute left, Eric. We were shocked to see no in Vidia in the portfolio in the fund. What's going on here?
Why?
Why not?
You know what?
We love?
We love Nvidia, the AI story.
It's up fifteen this year.
Yeah, and they and they've done it without us, sadly. We just you know, it was resting and then it kind of broke out. Basically the first week of the year, and we just didn't jump on it. But you know, in Vidio is going to give us an another shot. It's just such a wild child. It's it's I I'm not unsure that that this pull forward of AI won't be reflected in Earning's disappointment over the next couple of quarters.
But listen, we've we had great returns last year and we and we didn't known in Vidia barely at all. So yeah, you know, we have a lot of names that we really love that we think have some great upside.
It's up another one point seven percent?
Is there?
Would you buy it a pullback? And what's the level right now? Five sixty nine change? Just fifteen seconds here? Would you buy it up?
Yeah?
Probably, yeah, Yeah, we'd love to We'd love to buy it probably, you know, eight percent or more, which you know that thing moves around like crazy. It could be in two days.
All right, Really, really well done. Love love talking names with you. I'm so appreciate it. Eric Clark, of course, portfolio manage at Rational Dynamic Brands fun on Zoom from San Diego has fun by the way down a little bit here today at Corinebor Bloomberg Data, but up about twenty eight percent in the past one year, so good to check in with him.
Yeah know in video. Yeah eight percent was that eight percent of the beginning early in the going.
In the year, So we'll see.
This is Bloomberg.
This is the Bloomberg Business Week podcast. I've a little bit of Apple, Spotify and anywhere else you get your podcast. Listen live weekday afternoons from three to six Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal alone.