This is Bloomberg Business. Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Well, today is the day the data world sees in your iPhone.
I don't know.
It's not like it used to be.
Maybe it is, I don't know. We'll talk about that with our next guests.
Apple adveiling its iPhone fifteen, along with a hefty year price for the top model. The Pro Version's going to remain at nine hundred and ninety nine bucks, but the Pro Max will now start at one and ninety nine dollars. That's up one hundred dollars from last year's version. We also saw some new Apple watches with eco friendly materials and more Apple shares by the way down two point three percent. Mark German is chief Technology correspondent at Bloomberg News.
He joins us on Zoom from our Los Angeles bureau, and we got Ed Ludlow, the co host of Bloomberg Technology on Bloomberg Television. He joins us from Cooper Tino and I want to start with if you I've been to a few of these iPhone unveilings back in my day, place three or four of them, and you know they're always, you know, exciting events. There's a lot of pop and circumstance around them. What's the vibe there today?
I don't know, Man, the vibe is strong.
I don't know.
I think this says all of the energy and allures every generation event has gone before it. It was packed down there, and I'm going to let Mark talk about how substantive or not these hardware upgrades are. But the intense interest in the Pro and Pro Max was phenomenal. German, if you're listening, I had just held both of them in my hand, and you were absolutely right on every single detail. The titanium sides really jump out at you. It's definitely a lighter weight product, right. You can feel
its durability. And everyone down there in the Steve Jobs theater is talking about this a seventeen processor three nanometer tech. Everything that you reported basically you were spot on with. But I would say, Tim, you know the energy here. Tim was taking selfies with all of the attendees. It has matched prior events I've been.
To Okay, that's good to know. Hey Mark Kerman, come on in here and just follow up on that. Ed says, everything you've reported about these phones was right. No surprises for us, any surprises for you.
Thanks for having me. I mean, the important thing is now that the news is out and people get digested and people are excited about what these new phones mean, both consumers who just want to get the new iPhone in their pocket and shareholders who are trying to see how these new devices will have an impact on the company's stock. I think Apple did what they needed to do today. Certainly they drummed up a few things with their marketing. Might they put that new fancy A seventeen
pro name on the A seventeen chip. They talked about some of the advancements there, but if you really take a step step back, ten percent CPU leap, twenty percent GPU leap not entirely significant compared to overhauls to the chip in prior years. The titanium is basically the biggest introduction they had today. One pretty nifty feature that I think wasn't expected ahead of the announcement today is certainly the use of a spatial video camera on the back
of the iPhone fifteen, Pro and Pro Max. I mean you can take three D video watch it on the Apple Vision Pro next year. Now, this is not going to impact most consumers, but it's a niftyqual feature that shows the power of these new cameras. You know, if Ed is still there, I'm curious on the new colors for the Pro versions. What stood out to him?
Yeah, Ed, let's bring you back in here.
What's your take colors? Yeah, of the Pro models, there's colors.
Colors.
Yes, I am curious. Blue blue, You're exactly right.
No, No, this was my other main takeaway because if you put side by side the fifteen, Pro and Pro Max with the base version fifteen and fifteen Plus, the fifteen and fifteen plus come in these beautiful, vibrant pastel colors, yellows, greens, nice if you're into that. I always get a blue iPhone for the Celse of Chelsea Football Club. That's just I've always been honest about that.
On air.
I also use a Samsung. By the way, I'm technology agnostic, but the Pro lines come in a much more limited color range, and that is very clear mark, especially when you're inside the Steve Jobs Theater display room and they're all on display side by side. You know, I don't know why they went that way.
Yeah, certainly it's an interesting dynamic with that new titanium frame. But I think that happened here is the titanium allows them to try some new things. One of those things is not polishing with the color the material, which is something you need to do with stainless steel, so they're able to have that raw, natural color for one of the models. I think the blue personally looks interesting. I have the black fourteen Promax right now, so don't think
I'm gonna get the black again. No gold, which could be interesting for some markets in China in particular, gold is a very powerful and popular color. Red would have been a very popular and powerful color in China, but those two colors are elusive for this generation. Maybe they'll figure out a way to get next year red and gold out there, but certainly color is a big part of this iPhone launched the overall appearance. I think the periscope camera, the new lens system on the fifteen Promax
is going to be quite impressive and quite useful. But I certainly think that this is they've done enough to make this a hot cellar of this fall.
I've always been a fan of the gold or the rose gold.
But ed Mark was just mentioning earlier to about Apple stock price down more than two percent as we had closer into the closing bell here. But historically the product releases initially just haven't always pushed shares higher. What's your sort of view on this for today?
Yeah, let's regroup in twenty four hours and look at the cell side and invest in notes. But you know, go back to twenty eleven, there have been thirteen iPhone events, including today's. The stock has fallen on ten out of thirteen occasions. In the session on the day that Apple's had an iPhone event, the bar is kind of high.
You know.
The story with Apple and Apple has dominated newsflow recently. Is three quarters of overall sales declined guidance that indicated are heading towards a fourth consecutive quarter of overall sales decline. And in the June quarter, China was a bright spot. Greater China grew top line eight percent, with a heavy emphasis on switchers consumers switching to iPhone, either for the
first time or from another brand. The news flow and the stories and reporting about China's central government clamping down on iPhone use in the public sector changes the narrative potentially for the rest of the year, but the market doesn't agree to what extent. What we wanted to know was the hardware upgrades and the tech upgrades here and Marx really walked us through them. Do they resonate with the Chinese consumer? That's a big question going forward.
Mark Apple is also said to sell made in India iPhones on its launch day for the first time.
What's behind this move?
So, yeah, they've been producing iPhones in India for a couple of years now, they've really ramped it up in recent quarters, and so the goals to get in India the maide in India models on launch day for the first time. They've actually sold iPhones in their India stores and in the India online store from launch day in prior years. But according to my colleagues reporting usill with the first time that the first models will be the made in India models.
Hey, ed, what should we make of the sustainability initiatives that we heard from from Apple today? They're making the new aluminum watches first carbon neutral devices. They're dropping leather from all iPhone and Apple Watch accessories.
What do you make of it?
Yes, yeah, I'm glad that you noticed it, because what was interesting in the lead up to this and indeed during the event is almost every analyst, market analyst, research analysts, and investor that I've spoken to was actually interested in that. You know, they buy into the idea of Apple's net zero goal for twenty thirty. But the reason that we focus on it from kind of markets perspective well is
supply chain. You know, Apple seems to be able to move quite nimbly and swiftly on its supply chain, and they confirmed the number of products today are going to be either at zero from this point on or in the very near term. You know, one of the things I'm going to review on my social media piece that's coming shortly is you know, they scrap leaver from the accessories offering and using more sustainable materials on that side
as well. It kind of fits with the brand of this company, and as we know for investors from an SG perspective, that can count. You know, you see many of the megatap cap tech names, you know, think about their impact on the world, and you know, Mark reported in the top Life blog on all of those that you can recap.
Mark, we only have about fifteen seconds left.
But our producer, one of our producers, wants to know are their plans for Apple to lower the cost of the iPhone fourteenth.
Now, I believe the iPhone fourteen is sticking around on saying you'll be able to get them at a cheaper price.
We don't know how much cheaper though, right.
Not yet, probably one hundred dollars.
Okay, but Mark, you're still upgrading.
I'm still upgrading.
You have do you do every year? You do every year?
Yes?
All right?
Mark im in chief Technology correspondent at Bloomberg News. He joins us on zoom from our Los Angeles bureau. Also had Lovelow, the co host of Bloomberg Technology on Bloomberg TV, joining us live from Cooper Tino.
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.
It's Tim Centeveek and Jess Bennen relyve from the Bloomberg Interactive. A broker's studio here in New York. It is Bloomberg Business Week, having a fun chat with our friends over at Bloomberg TV, Romain Bostick and Scarlett feu. Our next guest, though, a veteran of Walmart and Levi Strauss. If you were listening to us just now, you heard me introduce him.
Already he perhaps faces his toughest challenge yet reviving the storied brand of j C. Penny, the department store chain out for bankruptcy shortly after the start of the pandemic. That was back in twenty twenty. Then in November of twenty twenty one, Mark Rosen became the CEO. Just last month, the company announced a one billion dollar reinvestment plan that
focuses on digital and in store experiences. Very pleased to have with us, Mark Rosen, CEO at jcpenny, joining us on Zoom from jcpenny headquarters in Plano, Texas.
Mark, how are you. I'm good.
Thank you very much for having me today.
Yeah, it's good to have you with us. Hey, give us an update.
It's a privately held company, so we don't get any insight into the finances. We know that the company's planning to hire twenty thousand employees ahead of the holiday season. But give us some more numbers we can work with.
Yeah, so Lake, you said, we are a private company, but what I can share is we now have sales that are over eight billion dollars. We have just over six hundred and fifty stores across the country, and we also operate JCP dot com, So we're serving customers everywhere
right now. And the business is really You mentioned that we emerge from bankruptcy, and we emerged with a very very clean balance sheet, in a strong, strong financial position with less than half a billion dollars with less than five hundred million dollars of debt on the balance sheet, so really financially positioned to drive forward and really reinvigorate this brand and re establish our relationship and our relevance with our consumers, which is really the core of America.
You might have heard Romayne just a little earlier talking about over the weekend visiting a mall, seeing a JC Penny that was no longer operating, and even having the conversation with his family about whether or not the store still exists. How do you change that narrative and let people know that yes, JC Penny is here, and we've got six hundred and fifty stores across the country.
How do you do it?
Well, that's actually part of so you mentioned that we just announced an over a billion dollar investment back into the business, and that that investment is focused on remodeling our stores and reinvesting in the store platform, putting new technology, a new point of sale, in in revitalizing our online shopping experience and really improving THEJCP dot com shopping experience, and then also our supply chain. But I would say we're a retailer, and so it all really starts out
with product. And over the last couple of years, what we've done is reintroduce over twenty five of our brands, brands like Stafford that every customer knows and loves and a lot of customers grew up with brands like Liz Claiborne and brands like Cooks in our homes, in our
home area, and so we've reintroduced that product. And now what we're investing in also along with that a billion dollars is a what we're calling a brand reinvigoration that is centered around really helping our customers make it count. And when we look at our customer. I set our customers the core of America. It's the school teachers that teach our children. It's the construction workers that build our homes in the buildings we work in. It's medical workers
who take care of our families. And that customer is looking for a sense of belonging there, looking for a place where they can find accessible fashion that they can still get at a great value, because that customer is
making trade offs every day in their life. And so what we're introducing also is a campaign to reinvigorate the brand, centering around how we help our customers make every moment in their lives, whether it's a big moment like their daughter's wedding, or whether it's a smaller moment like getting
their kids ready for school in the morning. But how do they use the products that we have at jcpenny to make that count but be able to make a count, but still have money left to put breakfast on the table for the kids.
Hey, Mark, whenever you're talking about middle income shoppers, and especially with this inflation dynamic, how do you sort of view that as far as how to get shoppers back in when they are trying to figure out where to sort of shift their spending at this point.
Right inflation is an issue for our customer. We look right now, we see that our customer is spending over seven hundred dollars a month more us for rent or mortgage, for groceries, for gas, and that means that every dollar is even more important to them, and it's more important that they make every dollar count. And that's really what we're here for is to help them do that. And I think the unique thing that we can bring to the table is we can bring great fashion and great
product at a really accessible price to our customers. And that's what that's what they need, that's what they're looking for right now in their lives.
When you talk about technology upgrades to some of these stores, kind of build on that. What more specifically are you doing.
Within the stores. It's a lot of it's mobile and it's point of sale or checkout technology. So we'll be within the stores centralizing the checkout, but we'll also be putting in the hand of hands of all of our associates in the stores mobile devices that will help them manage inventory better. It'll help them ship and fulfill online orders, it'll help them check inventory and order online for a
customer or I've talked about centralized checkout. What it really will do is move check out anywhere so that they can mobile check out a customer anywhere in the store.
Hey, Mark, God, I got so many questions for you. We got three minutes left, So we're going to do sort of a you know, try to do some rapid fire questions. Sales of over eight billion dollars, Where do more sales happen right now at the six hundred and fifty stores across the country or jcpenny dot com.
So it's about a seventy thirty split with stores the seventy percent and with the online business about thirty And where are you more bullish? So both are actually growing, and we're focused on growing both. But I do believe that right now, we've done a significant amount of reimagining our online experience and investing in JCP dot com, and we think there's significant growth there.
So do you think that it'll is it growing at a faster rate? In like yelly clips store sales with JCP dot com in a number.
Of years, the JCP dot com business is growing faster than the store business. I don't believe that it's ever going to eat clips. I think you could reach, like, you know, a forty sixty or something like that. But the reality is what we're seeing is that customers still
want to shop in stores. They still want to come in, they want to have that try and experience, They want to get help from an associate to put together an outfit, and in important areas like we reintroduce beauty, a customer is looking to come in and get help and try product.
When you look at this portfolio, whether it's fashion, apparel, home, beauty as well as jewelry, where are you seeing spending the strongest and where do you see people pulling.
Back the most.
It's interesting because if we look across the business, we're really pleased with the growth that we've seen in our home business and in our men's and women's apparel business, and we believe we've gained share in all of those areas because customers are spending there. Our jewelry business is another one that continues to be really strong right now.
I think rather than seeing people reduce spending in particular areas, we're actually seeing that within an area, they're being a little bit more selective about what they're choosing, and we are seeing some more growth come from some of our private label brands. For example, in home, we're seeing products like Cooks, which is a private label opening price point, small small appliance think like blenders and toasters and things
like that, and cookwear. We're seeing customers choose that product in some cases because they realize it's great value and they can save money by going for that product.
So are you going to stay a private company forever? Is there an IPO on the horizon?
So right now, we're really actually focused on just driving sustainable, profitable customer growth within the business, and we're very fortunate that we have an ownership group that is aligned with doing that and focused on the long term.
And right now the.
Focus is building that relationship with customers, driving customers back to the brand, and then we'll see where it goes from there.
Mark Rosen, CEO at jcpenny, joining us on Zoom from jcpenny headquarters in Plano, Texas. Hey, Mark, really appreciate you taking the time. Come visit us next time you're in New York.
You're listening to the Bloomberg Business Week podcast. Catch us live week day afternoons from three to six Easter 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.
Oh you need to store on a new Steve Beava.
Bevag Well. For the last several years, people visiting Las Vegas might have been as puzzled as they gaze westward from the strip. Looming in the distance was a three hundred and sixty six foot tall sphere. The dark orb bore a familial resemblance to the Death Star, but lacked any signage offering a clue to its purpose. It was obviously an attraction, but what kind. Well to understand what it is and how it got there, you have to go all the way back to twenty sixteen and to
a sketch on a notepad. Devin Leonard is out with a new feature that delves into the convoluted history and promise of what's known as the Sphere. Devin's story is going to be featured in the forthcoming issue of BusinessWeek magazine. You can read it now though on the Bloomberg and at Bloomberg dot com slash BusinessWeek. Also here is the editor of Bloomberg BusinessWeek, Joel Webber, he's with us along with Devin in our Bloomberg Interactive Broker's studio.
So, Joel, are you a fan.
Of the Knicks?
Uh?
I kind of this is hard to say.
You did not know that was?
You know? I I love basketball. I grew up playing basketball.
The for the Mets, the Nets and the Jets last night was heartbreaking.
Sorry about that.
I mean got the wind, but you know, that's just nuts. It kind of locks you into the rhyme like the Nick doesn't. But look, the Knicks h have a very interesting owner in James Dolan, who owns his own MSG and that we have written James Dolan stories because he is not thought highly of by NBA fans, specifically Nick fans. But what this story was really about wasn't that. And you know, I wanted to approach this story, and I
think Devin did a great job of this. He's actually kind of fascinating in that he has other interests and music's a big one, and he saw this opportunity to basically build something in Vegas that had never been built before, and he had a vision that I think originated more or less with him and he went and like did it and now it's like gonna open and there has never been a music venue like this, So yeah, it's really easy to hate on James Dolan and the guy
may have pulled off like what's basically the perhaps we'll find out a world class music venue unlike any other. And it's shaped like a sphere.
And that's what it's called, right Devin, The sphere. Yeah, I mean, I mean, look, you know this, this is this guy. He embarks on this thing. You know, he's he's past sixty, He's got, you know, all the money he needs. He's the son of you, the son of a billionaire Charles dall On, the cable you know, Cable TV pioneer, and you know, his family controls already controls, you know, some of the world's most you know, famous venues. You know, some people call him Madison Square Garden, you know,
you know, the most famous venue in the world. And yet he has this idea he wants to he wants to disrupt live entertainment by building you know what's basically what is it's you know, it's around it's an orb like you know, sphere, and it's it's sort of three different things. You know, at night, it's going to be a concert hall with this with this sort of state
of the art sounds. So someone also this huge LED screen that's his biggest, bigger than I should say, three football fields, and you know the high they're calling it the highest resolution LED screen.
If you're watching us on YouTube right now, you can actually see the video and images on the screen.
In the world.
In the daytime, it's going to be sort of more of a tourist attraction, immersive entertainment. Uh you know, seats will shake, the wind will blow, you know they have. Then they're gonna be debuting a movie in October, directed by Darren Aronofski that uh you know, the director of uh uh you know, a Black Swan and record for Dream and just just to wrap it up, and what you're looking at now, if you are looking at TV,
that's the exosphere. The outside that's gonna be a giant billboard and uh you know, they're they're gonna run ads on that among many other things.
You've got to see pictures and videos of this thing to actually do a justice. I mean, you you know, hearing about it is one thing totally, but this thing is actually really, really cool.
No that, I mean that That's something that really kind of blew my mind was that when I went out to Vegas to go take a tour, I actually actually I stayed in the West and you know, we just sort of overlooking it, and I asked them, you know, hey, can I can I I want to look out at the sphere because it was because it was one hundred and fourteen degrees, I got to do it. I'm not gonna go outside. But but no, but but I got in there and just looked at it out the window.
I know, I couldn't believe it. I mean that that's when, you know, again, as I say in the store, a lot of people, you know, we're doubting. A lot of people are saying this is you know, this is never going to work, this is the death Star. And then they turned it on and you know, everybody had, you know, people just kind of went nuts.
So why is spear? What was the inspiration behind it?
You know, that's a really good question. You know, in twenty sixteen, you know, his family just sold Cable Vision. They just they just sold it for eighteen billion dollars, you know, And I make a joke in the story the guy plays in the band. I mean he could have gone off and played and played in the band. And he's like he drew a picture, you know, on on a notepad and you know, and told this guy been the chief technology officer of a cable vision, this is the venue of the future. Let's go out and
disrupt the live entertainment is. I don't actually know where, No worry, he got that idea.
But but it turns out that from an engineering standpoint, it is incredibly difficult.
No, it's insane to playing music in. So how did they go about solving that. Well, it's about.
It's an acoustical nightmare because everything just echoes inside of sperciality. They they found a company in called hola Plot in Germany. That's that basically beams audio to using algorithms to different places and you know, to where wherever you're sitting that the algorithm set up so they're basically measured. They're creating these beams you know, sound and and and they're measured.
So everybody sort of here's the same thing. But that way, since you're sending the audio right to the people, you're everything isn't just bouncing all around and echoing and that's just one of the sort of crazy crazy and and and I think ultimately expensive things they did, and and helps explain why this thing went from one point two billion dollars you know price tag to uh two point three billion inflation.
That's the thing.
Who's so so wait, there's gonna be a big act that's gonna open this up.
And because this is gonna happen, and I mean it's.
Already in Vegas, it's built, they're already doing weird stuff on the strip.
Right who's opening a little bit? And from Ireland called you two of them?
Yeah, I think if you're gonna be there, yeah, if you're gonna make if you're gonna make a splash like launch with with with YouTube.
How long are they going to be opening there?
They're good.
They're the're gonna be playing for twenty five twenty five nights, and tickets are how much?
You know?
I think they started around one hundred and fifty dollars.
Yeah, but I mean I'm going well, I mean.
They're almost all sold out, so I think if you want to go, Joel, you're gonna have to look them stuff hop and those prices are.
Right, yeah, I mean it's a good point though, Joel, that you bring up if it's good enough for Bono, all right, then you know it's good enough for other musicians, right.
I also just think this is this is the future, right like live event We know that live events are where artists make their money. If you can make an artist a venue, unlike any.
Other what happens, you can get anybody you want.
Well, they don't have to travel. So so I mean, these these bands have like these caravans of trucks that you know they carry there, they're they're they're you know, all the equipment around all that they take their led lighting around, they take their sounds just to surround all these contras halls, and and and and in this case is from what I'm told with you too and other bands, they actually have two sets, you know, two caravans that you know that you know that that move in between
in between venues. So when they're so the one to the next one, you know they're setting up the next venue walk while they're breaking down the first. Anyway, I mean, it's it sounds, it's enormously expensive, and it's a huge headache, and and and I guess if they can spend you know, a couple of months in Vegas. You know, some people are definitely gonna want to do that. And some of the bands, by the way that they're talking about a cold Play and Fish, Harry Styles isish.
A relationship with Yeah, yeah, you packed that house.
Yeah okay, So there's also a possibility that Vegas won't be the only place that has a sphere.
Not if Jim Dog can help. But yeah, no, they're they're, they're they're they're trying to get permission to build one in London, and there's they're scouting other locations. But after spending two point three billion dollars, they want to change their plans to get partners because he's not going to want to do that again. Well he's already said he says he's not going to do that again.
Okay.
So Joel, you mentioned that, you know, with live music in this day and age, the world of Beyonce, the world of Taylor Swift, people will pay for certain acts and certain experiences more than.
One hundred and fifty dollars. Oh for sure.
Yeah, you didn't see me going to beyoncere Taylor Swift as concerts, even though I wanted to, devin it was hard to see this coming, like the post pandemic surge and especially the high prices that people would pay. Talk about the construction of this and the way that the pandemic derailed it, because this thing was in the works before the summer of twenty twenty three.
No, because that's I mean, that's the whole thing. They basically they least eighteen acres of land from from Las Vegas sands and they started to build this thing and then in twenty twenty pandemic hits and it just drives up the cost of you know, steel, computer chips, you know, basically, you know, just saying the story just about anything you need, you know, for a multi billion dollar development led yeah, yea yeah, yeah, no, yes, especially for the inside and
the outside of the excessphere. But so so that effect and also it halted construction. They were initially going to open in twenty twenty one, so that set them back three years. But but but it was also just all this advanced technology, all these things they're experimenting with. They had to create an entirely new camera just to be able to capture images large enough to fit you know, that screen. They were stitching images together for multiple cameras.
Camera and they had to patent this thing because it's like the equality and size of this image is so big. And then like I think this is like there's like some feats of engineering that they passed.
A lot of stuff, and I came, there's I think the numbers on like sixty patents overall and not just that the camera is just you know, like eight or something.
So yeah, so what's it look like, you know in Vegas? I mean we saw those images, but like, give me a sense of the scale of this thing. I mean, the strip is the strip, and like, is this just you suddenly not realize that the strip's there anymore? And there's an eyeball or whatever else they want to make.
Well, it does take take your attention away from anything else. But I mean you fly into Vegas, I mean you can see it from the airport, you know what I mean, it's just you know, it's I think that may be a building or two that are bigger than it, but I mean, you know, it's it's it's there. It dominates, you know, from depending on where you're standing, you know, and if that is, assuming it's lit up, you know, you know, it's you know, I guess in certain sense of dominates the strip.
Wait a sign that says your ad here.
So just how complicated was it to get approval to build that?
Well, that's the funny thing is is that the approval it flew through the approval places in Vegas in Vegas, but in London they they I guess they submitted to the planning application in in twenty nineteen and they haven't built anything yet. You know, there's a local development corporation that overseas the site and they finally signed off last year, but they're still finalizing the deal with Dolan's company and then it goes to the Mayor of London and he
has to consider it. And there's also there's also a Secretary of State you know in the Sunac administration that might be weighing in a too. So that's taken forever and you know, and nothing's been built. So you have two very very different situations. And also you know, if they went to la if they went to New York, much more similar to.
London than you know in Vegas. In Vegas, they.
Where would I where would you find the space for this in other cities? Like where are they doing this in London. You need seventeen eighteen acres, you know that.
That's the funny thing, tim, is that they're building on a much smaller, smaller piece of land in London. I went over there used to be a parking lot. You know, it's kind of been between some train tracks, but uh, it's it's it's on a site that that was originally sort of set aside for the I guess the Olympics in London. But so I guess there's there is and it's over in East London. I guess sort of a more working class, working class kind of area. But uh,
you know that that's a good question. Like where would you build it in New York and Manhattan? I have no idea.
Jersey probably American dream All.
Yeah, yeah, I would go check this out, like I was gonna. It does seem like like one of those things. If you're if you're a fan of YouTube, you will go to Vegas and.
You will watch that.
It sounds like Devin, and you will need to actually do that because you did.
You go ahead, Well we'll see no, sorry, well that's what cut out. What's a good cut out of the story. I interviewed all these YouTube fans including this one guy who'd been who've seen them already more than one hundred and fifty times.
He was going something like ten shows.
Ten shows in Vegas are a couple of guys.
Guys like that.
They were great, but there was just so much build a room for so much stuff.
Why are the tickets so cheap?
Well? Will they remain? That will be the question, right, we'll see.
I mean like, look like this is I think like it's a new thing, and you know, we'll see.
What the think pricing, dynamic dynamic pricing does.
Yet I think it costs like one hundred twenty five bucks to go to the Imax SA movie these days.
Well, you know, Imax briefly comes up in the story because you know this is such a unique venue that you can't even put Imax films there. Well maybe they can, but not to start with.
Well no, but the idea is, you know, to blow I'm blow you know, Imax theaters away.
Yeah, yeah, And I love that they're playing this right now.
There we go give it to us very good stuff, of course, As always from our team here at Bloomberg Business Week, a big thank you to Devin Leonard. He is with us from Bloomberg BusinessWeek magazine. It's featured in the upcoming issue of Bloomberg BusinessWeek, available Bloomberg dot com slash BusinessWeek and thanks as always to Joe Webbermarck.
A journal.
How about you let me drive?
No no, no, no please going to drive home?
Honey please, I'll do the driving gravels Let's mate, I want to try it.
It's good question time.
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On Bloomberg Radio, Jasmin and Tim Stenovik here at the Bloomberg Interactive Broker's studio now, with just twenty minutes under that to go before the closing bell. US socks did lose ground a day after oil prices climbed to their
highest level of the year. We did talk about Apple earlier tim Those shares down more than two percent after its iPhone fifteen event, while Oracles headed for its worst day over two decades after posting revenue and sales guidance that was weaker than analysts had expected.
So big move there.
So that's why you're seeing energy higher and then more of these growth rounded companies and.
Corners and sectors of the market.
Lower. Joining us now to weigh in on all things markets is Katherine Krantz, chief executive officer at the Center for the Macro Specialist Designation. I wanted to start off, Catherine, to tell us about your firm and what it is that you do, because it's really interesting too. This is supposed to be basically a designation that is more complimentary to a CFA.
Correct.
Thanks, Jess.
Absolutely, so.
Our firm is focused on all things macro. So we have basically three ways that we interact with our clients. We have a traditional sell side research product with our founder Franz jatra Han. He has been a macro leader for decades, and so we sell that product to our institutional clients. Last year we started the Macro Specialist designation because we became aware that it's not something Macro is not something that's really taught anywhere.
It's not the same.
Macro investing, is not the same as what you learn in a macro economics curriculum in college, and it's really not something that's part of other designations. It's something that you tend to learn getting beaten up by the cycle year after year.
So say tomorrow eight.
Thirty am, Tim and I were talking about this earlier CPI report comes out. This is different than if you're just reading some of these macro data points that are coming out each morning.
Oh yes, it's different. So basically we teach our framework, which is rooted in monetary policy. Obviously the FEDS moves and how that impacts interest rates, and we look at how interst rates basically lead leading indicators like the stock market with about an eighteen month lag time, and then that helps us by looking at where interest rates have gone. That helps us anticipate the direction of the market and then obviously internally which segments of the market will outperform.
Okay, so given that your CEO at the Center for Macro Specialist designation, where are we right now and where are we going?
What do you like?
Unfortunately, we do not have a very rosy outlook. Something that we hear continually these days is that the lead and lag times of policy's impact on markets has changed just different.
This time, so it's longer and more variable.
Well, people are saying it shorter and we're over any pain.
We disagree. We don't see any evidence that it's different. We are just now coming up to the eighteen month anniversary of the first FED rate hike of this cycle, and it has been the steepest, quickest tightening cycle since basically Paul Voker's day is at the FED. So add into that the already tightening of lending standards you've had due to the banking crisis, and there's a whole lot of tightening in the pipeline that we don't think has been priced in yet.
What pockets within the economy raise some red flags to you at this point when you do have data, say, obviously GDP is backward looking, but when you're looking at that, I know, we'll have another reading of retail sales later this week, but some of this consumer spending data has still held up.
So where's the weakness coming from.
Yeah, we're not surprised by that. Like I said, we're really just getting to the point where the impact of tightening is going to start flowing through to the economy eventually. In stocks in general, you know, we keep a close eye on on earnings. It's basically when earnings growth goes negative that things start to get really bad. So we monitor earnings across all segments of the market. You know,
we've seen the ism manufacturing survey is already in contraction territory. Uh, So you know, we think that things are going to deteriorate from here. As I mentioned earlier, obviously the tighter UH credit standards, which is not something that usually happens until you're much further along into a slowdown. And so the fact that that's already tightened so much is it's very concerning to us. So you know, we're really looking
towards everything defensive. You know, what outperforms is UH boring things like staples and and and you know, the things that have more stable earnings profiles.
So staples, you know, other defenses. Defensives what changes your mind and makes you more optimistic, Like what would you have to see over the next few months to say, wait a second, we actually have the worst of this behind us.
You know, I mean, based on our framework, there's really almost nothing that could change. I mean, we feel like all the tightening is already baked in the cake.
It's there so baked in the cake. But you said that then the it hasn't been.
Priced in, right, But I'm saying that you can't undo it. So even if even if the FED were to suddenly pivot in lower rates. It then will take another eighteen months for that to feed through, So we don't see a way out of this. We think it's going to be a tough year.
How much longer do you think it'll really be able to tell in the economy from the full effects from the last eighteen months and the eleven rate hikes that
we have seen since March twenty twenty two. Yeah, Well, we think this is going to be a story that covers really most of twenty twenty four because, as we said, it's been the steepest, most intense tightening cycle, and so given that we're only coming up on the eighteen months anniversary of the first hike, we still have to we have a long tail to price s and so we think that's going to take some time to play out.
What do you think are some of the risks to your case for the economy to the flip side of that argument.
Yeah, I mean, look, we don't really like to ever say it's different this time. You know, we do stick to the framework, but you know, there's always a chance that things could could evolve and change. We don't think it's likely. We you know, we've had a recession every
time CPI has been above five percent. We've had a recession in ten of thirteen of the past FED tightening cycles, and Sharon Powell pointed to some of those instances where there was not a recession, but in none of those instances did we have an inflation problem.
Did you know you're focused on the macro, you're focused on inflation, but you've talked about the tightening cycle and where we are with the Federal Reserve. Do you think the S and P five hundred has hit its low for this cycle that was about a year ago, back in October, or do you think there's more to come?
No, No, we think there's more to come. And it's funny, you know you mentioned last fall and at that point our framework was telling us that basically because of Chairman Paul's comments about inflation being transitory, we saw about a four or five month dip in interest rates which ended up feeding through. So we said, if our framework holds, which it usually does, we should see a bear market
rally happen. And so I was just looking back at some of our research from that time last year, and we were writing about how we couldn't convince anybody to be bullish, and now it's completely flipped on its head. So we have had that rally. It's been a little bit longer than we anticipated, but we think that's kind of running out.
I really have about twenty seconds left. But is there a danger though, of missing out on it? Since almost been a year there if you missed that rally.
Yeah, I mean we're advising people to get more defensive and little you know, protect their portfolios and take this chance to really realign for what we think could be a tough recession.
All right, Kathin Krantz, chief executive officer at the Center for the Macro Specialist Designation.
Really interesting thoughts here for you to give to us today.
This is the.
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