Analysts Sour On Apple As China Nationalism Hits iPhone

four per cent. What's interesting is that Wall Street analysts, notorious for their bullishness, have turned bearish largely about Apple and haven't been this pessimistic about Apple in a very long time, multi decades. Joining us now, John Butler, senior Telecom Services and Equipment analysts for Bloomberg Intelligence here in our Bloomberg Interactive Broker's Studios to John, why have Wall

Street cell side analysts gotten so bearish on Apple? Honestly, Lisa, I think it's a whole subset of factors at work right now. Um, you know, we're still in the midst of this trade turmoil with China, and my concern is that, you know, some of the tensions we've had with with Beijing and some of the issues with Huawei have fueled nationalist buying sentiment among the Chinese consumers. And keep in mind that China is well over n of Apple sales in any given quarters, so it's a big important region

for them. And I think if we continue to see weakness, they're stemming from that nationalist sentiment. Uh, that's an issue. And also I think that the departure of chief designer Johnny i've Is is a big concern, you know, because well he was the face of the brand, you know, whenever they launched new iPhones, I this front and center in presenting the new product. He is an industrial designer with um you know, a real folk us on every

little detail. And so the question is can the new team that's taking over that was trained by him really fill those huge shoes? And I think there's a question mark around that, and so you know, it's just and you couple that with the with the mature status of the smartphone market itself. The global market looks like the PC market. You know, it's growing low single digit in a good year. And so you know the question is

will Apple and make that pivot to services? I think yes, But how quickly is really on people's minds right now. So I think it's all those factors. Just to give you a sense of the names behind this, rosen Platt Securities downgraded the company to sell today, joining New Street Research and HSPC, which had previously lowered the ratings in this dock to sell uh in April and in January, and also on the iPhone, just to give you a sense, more than sixty Apple's revenue last year was related to

the iPhone coming from China. Key question for people who want to feel a little bit bullish and Apple after a twenty seven and a half percent gain so far year to date, what could drive the company higher at this point? So a couple of things. Number One, it's a cyclical growth story. Now. I think people have been sort of slow to realize that those glory days of sustained quarter and in quarter out growth for Apple is over.

They're going to have good years in bad and we're currently going through a tough year in terms of iPhone sales. But I think we're going to come into a good year, or the advent of a good year, let's say for iPhone sales starting a year from September, when we see what I hope will be the first five G I phone hit the market. UM, So iPhone sales are tough

right now. We'll get into next year the comps begin to ease, because they'll be the growth will be in compar harrison to this year, which so far has been very difficult. The bar will be lower. The bar will be lower more easily, and we'll get that new five G phone hopefully. Talking about five G and talking about networks, there was another bit of tech news that I'd love

to get your views on. There was a rumor that Google was in the running to acquire Dish Network UH possibly part of Dish Network, to create that fourth carrier. And this comes as T Mobile and Dish we're trying to have a tie up at the antitrust concerns, they're

Google now denying it. What's the latest. This is interesting to me because Google has flirted with the wireless market BEFO with Google five, which is basically their whole saling UH network UM carriage from a T and T Verizon sprint from a major carrier, reselling it as Google Fly. So they have an interest in the business. They've toyed with it. Could they become a carrier in partnership with Dish or would they have an interest doing so maybe. My my first thought when I saw the news was though,

why would they want to become so heavily regulated? Right? Because Google or Amazon or whoever, they've both been rumored if you get into the wireless business in a big way, you're you're you threatened with regulation by the federal government, right because telecoms a regulated business, wire line more so

than wireless. But I think in coming years wireless is going to become more heavily regulated, and so I don't know why they would want to step into that world, but from from that angle, but then again, they're an ad company, and if you believe the Internet is going mobile, which I do, internet advertising is going mobile. So if you actually own the subscribers, you can get a lot of data from that subscriber base, perform analytics on it,

and get higher rates for your advertising. So I think from Google standpoint, that would be the rationale to buy into it. So this, of course, just to give you some sense of the details. Here, New York Post reporting uh that Alphabet was recently in talks with Dish Network about creating a fourth US mobile carrier, and this would stem from the the whole issue of whether to create a new network UH stemming from the T Mobile UH Sprint tie up and Google saying no, this isn't happening. Well,

let's clarify for a sex. So Dish has already said they're going to build a five G wireless network from scratch, but with the T Mobile Sprint deal under pressure from regulators, one of the concessions is rumored to be the sale of Sprints prepaid business and that would open the lane for Dish and Goal to get into the business. John Butler always a pleasure, so much to talk about. John Butler is senior Telecom Services and Equipment Analyst with the

Bloomberg Intelligence. There is a big question as in a number of investors focus on companies and say, hey, we want you to do the right thing. What does it mean to do the right thing? And joining us now in our Bloomberg Interactive Broker Studios is Joey Bergstein, chief executive officer of Seventh Generation. He normally is based in Burlington, Vermont,

but here in New York today Seventh Generation. Of course, if you ever have had a child and bought diapers for them and want them to be more environmentally sustainable. UH seventh Generation has that as well as cleaning products and other household items. Joey, I want to start with I know that you have been very active in lobbying for responsible environmental policy is in Washington, d C. What is the most basic step that companies could currently take

to make themselves better for the environment. I think the most important thing is for companies to take accountability for the impact they're having on the world around us. So we as a company, we've got a mission which is about transforming the world into a healthier and more sustainable and more equitable place for the next seven generations. It's not just about selling more eco friendly home and personal

care products. Of course that's really important, UM, But what we really want companies to do, and starting with ourselves, is to take accountability for the impact that we have on the world. So starting with an internal carbon tax, taxing yourself on the pollution that you're putting out into the world around us, taking a stance in the industry, and trying to have an impact to move to move

all companies to take that kind of a stance. We think that there's what we know that there's a real consensus today not just around climate change, with climate scientists have a consensus on, but that the economists around us also have reached a consensus that the best way to address climate change is in fact through carbon pricing, which is very simply just companies being held accountable for the

pollution that they create. How much do you feel like an outlier in terms of a company taking these actions, because we've heard from a number of big companies, whether it's Nestly or or or Coca Cola, that they're trying to do the same. I mean, do you feel like there is an earnest effort on behalf of the world's biggest corporations to do what you're doing. Yeah, Well, rather than outlier, I prefer to think about us as a

pioneer um. But interestingly, we were with the Series, which is a tremendous organization that's pulling the business voice together around the need for climate change. We were together in d C. There's over a hundred CEOs getting together to to talk about the change that we need to create. It represented over three trillion dollars worth of revenue, over

seven hundred thousand employees represented. So I would say we are definitely not at the fringe that more and more businesses are waking up of the need to actually take these kinds of stances and have an impact on the world around us. So what are some of the next innovations that you expect with respect to both housing products as well as how to create them in a sustainable manner. Yeah, I think, um, there's a lot of innovation around how do we reduce the impact that we're having around in

the world around us, particularly around plastic and eliminating the plastics. UM. We're doing some work right now in concentrating our laundry detergent uh into a for the for the same amount of loads of sixty six loads delivered through twenty three instead of a hundred ounces, So that means less plastic less um uh sorry, seventy less weight, sixty less plastic, fifty less water. All those things reduce the environmental footprint of the products that we sell. And want to see

other companies taking similar conds of stances. Could you see a realistic scenario in which UH consumer good companies did eliminate plastics in their future? I think so. I think yeah, I think, well, we're seeing it's not going to happen in the in tomorrow. Um, but I think we're seeing companies across the spectrum looking at how can they eliminate the plastics is the single use plastics associated with the products that they make. The issue, though, is not necessarily

just plastic. The issue is plastic waste and really creating systemic solutions to address the waste that we're all faced with today and to take that out of the world around us, meaning basically coming up with innovative ways to recycle. Is that the idea, I think so in making recycling systemic. So today only about thirty percent of plastic gets recycled in this country, if we can move it up to that addresses a huge amount of the issues that we

are that we're faced with today. Just real quickly here, I'm wondering, how do you pair the idea of having this important mission while squaring that with making money and offering products that people want to buy and you know, trying to have the highest quality of goods. I think

that you go hand in hand. I think people really respect companies that are taking a stance and doing the right thing, that are a champion for their rights, and we see that paying back with with loyalty, with people really appreciating our brand or products and the difference that we're trying to make in the world. And I think when you stand up for consumers, they stand up for you. Joey Berkstein, thank you so much for being with us.

Thank you. Joey Bergstein is chief executive officer of Seventh Generation. Joining us here in New York. We are watching Deutsche Bank shares off earlier lows, which had been down nearly seven percent. I'm looking at the A d R S American Depository receipts right now. Shares in the US trading down five point two percent as those eighteen thousand job cuts begin. Joining us now from London. A Lisa Martin newsy a columnist ring Finance for Bloomberg Opinion. A. Lisa,

thank you so much for being with us. Before we get into the details of the plan. What is the mood like that you're hearing about among some of the people who are being told today they will no longer be working at Deutsche Bank. I think it feels a little bit like Deutsche Bank's Lehman moment, where you have hordes of traders and bankers that are being told to go as the bank starts cutting these eighteen thousand jobs,

so in total, about twenty of the global workforce. Um. So, yes, that that's kind of how it feels internally at the moment, and it contrasts with a somewhat upbeat tone that the management has tried to convey today. They're keen to show the bankers finding is reinventing itself. It's finding its new north star, so to speak, which is going to be you know, significantly away from the trading floor. So Alisa, why our shareholders not buying this? Why are they? Why

are they selling this news? And you're seeing it in the bonds too that were initially higher but now they're lower. Why is everybody so pessimistic about the efficacy of this plan? I think there are a couple of things going on here. First of all, there has been a drip feed of information for the last three or four weeks about what

this plan would look like. So you know, there was a little bit of news um in terms of the magnitude of the bad bank and the the you know, the potential for how much the bank can return to shareholders over time, So that should have provided some obside. But I think a lot of the expectations have already been priced in, and secondly, I think investors are concerned about the credibility of this plan with regards to the execution risk. There's a lot that needs to happen for

this to work. The downsizing of the of the bad bank needs to happen um and revenue at the core bank or the bits and pieces that Deutsche Bank can tells to maintain, also needs to grow. And that where you know the bank has failed miserably over the last few years, is to grow revenue. So I think investors

are pricing in those concerns as a day progressive. So where does Deutsche Bank plan to increase revenue, especially as they cut their equities unit almost entirely and uh in at least stick with their debt unit that has actually underperformed recently. That's right, I mean, I think one way to describe it will be a sort of pivot away from servicing financial services clients such as hedge funds, to a greater focus on on servicing customers such as German companies.

This is basically seeing the bank going back to its routes to where you know, to what it was doing when it was founded in eighteen seventy, which is financing German industry. UM, so it's going to be more of a corporate lender, and equally it's going to be trying to expand existing businesses in private banking, wealth management and

asset management. One saving grace, potentially for Deutsche Bank is that reaffirming its mission as a German lender catering to German companies, perhaps they will get increasing backing from the German government and there will be pressure on companies in that nation to really rely more heavily on Deutsche Bank for some of the things that they need done. Do you think that that's a positive for Deutsche Bank going from here? I think, I mean, that's an interesting question.

One of the analysts asked on on the call earlier. You know, why is it that they expected to make more money to grow in Germany? How can they possibly beginning market share? But obviously they are, you know, a

large German bank to begin with. Um. You know, that might reflect partly the fact that they have been um less focused on some of the clients, particularly the small and medium sized businesses, and also but also some greater confidence from clients that the bank is you know is here to stay, it's stable, and it's going to be looking after them because you know, its effectively shunned those

types of customers for ver long time. Just real quick here, Lisa, in twenty seconds, Which banks are gonna be the biggest gainers from Deutsche Bank's exit of certain businesses. Must keep your eyes on bm he, of course, which has a preliminary agreement to take on a part. We don't know how much of the equity business, so we'll definitely want to hear more about that over the coming days. Elsa Martin News, thank you so much for being with us.

Alisa Martin News is a columnist covering finance for Bloomberg Opinion. Coming to us from London. Definitely a somber day on Deutsche Bank floors, where people are packing up their things, getting notices saying that they will no longer have a job at the bank as it cuts nearly one fifth of its workforce in an attempt to shore up its profitability and create a leaner and more sustainable UH framework

to go forward with. When there's too much gloom and doom among fund managers, some people point to a jobless rate in the United States that is near it's all time lows. The question is do those numbers really reflect reality. Joining us now is Lakshman than He is co founder and chief operating officer of the Economic Cycle Research Institute. He's also a Bloomberg Opinion calumnist who penned a column I found fascinating the myth of the tight US labor market. So, Lakshman,

thank you so much for being with us. Can you start by why do you call the tight US labor market a myth? Well, a, Lisa, thanks thanks for having me. And the reason I call it a myth, well, look, it's a it's a ten year long expansion. There's been a lot of jobs growth over those ten years. Uh. And that is all well and good. I'm not taking

anything away from that. But at aquery Economic Cycle Research Institute, we're studying cycles, you know, the the acceleration and the deceleration in the economy, and we currently are in a slowdown. We're growth is actually decelerating and and it's possible for that to happen even when you have the unemployment rate

near half century lows. And and that's what we were getting at in the op ed that we penned that came out on Friday and right in the in the wake of a of a stronger than expected jobs report. So why do we say that. We say that because we're looking at a lot of different coincident measures of employment activity, and collectively they're actually decelerating. If you look past the headlines of the unemployment rate or even the

headline jobs growth numbers, you can see that. And that's what we present, uh in that op ed. So there's a question that I had as I read the piece, which is the labor force and understanding, uh, you know how big it is, the direction of it, and what the underemployed or unemployed population is of people who are of working age who just have bowed out or have gotten discouraged. Do you have a sense of that? Yeah, and so um for listeners and and and for everybody,

just a couple of basics. There's all these different types of employment statistics. That non farm payrolls number you hear is from the Establishment Survey. When we get into the labor force, we were looking at the household survey and UM through May, which is the data that we had when we were writing the op ed. The household survey showed the number of unemployed had dropped by over four hundred thousand, or six and a half percent this year.

Uh and the number of employed had also fallen by a couple of hundred thousand over the same time frames. So the sum total four hundred and six hundred was showing the labor force had actually dropped by almost six hundred thousand, or a third of one percent this year. Now with the June data in hand, um, we see that it's not quite as large of a drop, but it's still dropping by about a quarter of a million this year. When that is showing weakness. Is that weakness?

I mean could that be people retiring? Because there is an aging workforce in population the United States? I mean, how do you determine what that means? Sure? Sure? No, no, no, Well, months and months, there's just gyrations and data. So you are wanting to look at longer term trends with people retiring and other structural shifts in the labor force. That's over many, many years. The timeframe that we're operating with when we're looking at cyclical moves is on the order

of a few quarters. And that's why we're saying, hey, if you look at this year in the jobs data, you see deceleration when you look at don't pick on anyone, look at them all together, which is what we do in a coincident employment index. And we see that that's been d ccelerating its growth rate. It's still growing, it's growing slower. And there's there's another statistic out there, UM that I think is almost UM more important, although it gets UM very very little attention. UH. And and that's

this UH. It's also from the Labor Department. It's the Quarterly Census of Employment in Wages. And so unlike the Jobs Report, which are surveys right there, you're you're trying to very quickly count UM, how much has happened in the past month. This quarterly census it's it's it's less frequent, so they can actually go out and count rather than surveying UM. And we believe that and it actually shows

you a truer trend of what's going on. And and for listeners and for everybody to understand, when they do the benchmark revisions to the establishment survey data, the headline data that everybody he's off of, they revise it to agree with the quarterly census. And you know, I know a lot of guests don't come on and say we should look at this half year old data because everybody is very fixated on the freshest data. What happened with the jobs report? Um, but here it's very very telling.

And what you see is that this they call it the qc e W or the Quarterly Census Employment and Wages, and it shows a sharp deceleration in jobs growth. So, um, right now, it's probably it's it's it's it's suggesting that the establishment survey is overstating the real numbers by about So that's again, we're still growing. We're just not growing as fast as these headlines are saying. We're actually decelerating.

And it's that rate of change which is super important for business managers or i'd say investors, you know, is that's going to be related to um profits growth. Yeah, so lax one, just just about a minute here, I'm wondering, can you look into your crystal ball. Given the deceleration, it still isn't bad. We're still growing. What does that mean in terms of when the economic cycle will end or you know, whether we're actually running out of steam

enough to enter some sort of downturn in the near future. Well, okay, so we're decelerating. This is the fourth growth rate cycle slowdown, which will include slowdowns in jobs since the recession. We had one in eleven sixteen and we're having one now. So right there, you see that it doesn't have to end. The slowdown does not have to end in recession. Although every time you have a slowdown, by definition, your recession

risk is starting to rise. So I know a lot of people have said that, you know, they think of recession is this year, next year whenever. We don't see We don't even forecast that way. We look at our leading indexes to see if a window of vulnerability has opened up where any shock can cause a hippis into recession. That hasn't happened yet, but until the leading indicators turned back up, we have to remain super village vigilant and we're doing that. So more bottom line is more slow

down ahead, but a recession is not guaranteed yet. Lakshmanatan, thank you so much for being with us. He's co founder and chief operating officer of the Economic Cycle Research Institute, also a Bloomberg Opinion columnist. His latest column, which came out Friday, The myth of the tight US labor market. Thanks for listening to the Bloomberg PANL podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at

pt Sweeney. I'm Lisa bram Woyds. I'm on Twitter at Lisa bramwo wits one before the podcast, you can always catch us worldwide on Bloomberg Radio