Markets, Banks, Bioscience, and Tech (Podcast)

this stuff for a living. Natalie Wolfson, CEO at Asset Mark. Natalie, thanks so much for taking the time to join us here. I love to get your thought here as we kind of put a bow on uh two, what do we do for? Because I got crushed in my equities, I got crushed in my bonds. I have a big barrel of oil in my house. I'm okay there, But what do you do? You know? It's it's interesting, um as a result of sort of of the feds um really relentless tightening in the second half of this year, they're

actually interesting opportunities right now in short term treasuries. If you want to build a short term treasury portfolio with the duration of you know, roughly half a year you can get four point six percent in yield. And so right now, I think all of us, whether you're a CEO looking to manage your cost structure or an investor looking into next year, feeling a little risk averse and maybe like we want to wait and see, and so

that's a good way to do that. But is that I mean I heard the same thing from my financial advisor recently. Is that the only thing out there? I mean, are there do you have some riskier ideas that maybe higher return because four point six percent is great, especially if it's completely risk free. I love it, and so short, Um, but what else you know, it's it's interesting. Um, clearly there's a lot, you know, going on right now in

the alternative side of the arena. So if you look at some of the investments that private equity is making right now, if you're willing to hold it for the long term, um, that's clearly a part of the market that has historically done well, and markets this where things are a little volatile on the public side. So I would absolutely absolutely look there. Um. In addition to that, you know, if you're willing to take a little risk

in the first year post a bear market. In that first year, fifty percent of the total bell bear returns it's actually forty eight percent, but roughly fifty percent of the total bear returns on average happen in that first year. So legging into equities, even if you want to do it in a passive way, UM, as long as you're willing to stay the course if things get a little worse from here, you won't miss that first year, which is really important. Natalie are you you're based in California?

I am What are you doing in New York? Then? I am here for a board meeting? Okay, all right, I just want to check you know, people coming into tourists. You're coming back big time, Matt. I was kind of out and about Midtown yesterday and they are out. I mean, every language on the planet's being spoken. Here is the last place I want to be right now? Why not? The weather is off? Please, it's it's the greatest. Talk to us about asset mark. I mean, you work with

independent advisors. What do they sing? Are they seeing money come their way? What do you guys, asset mark? Where where do you add value? How do you try to help your clients as Mark helps our clients by helping them compete at any size, and so we provide outsourced and investment services, technology and support, the support and entrepreneur

needs to run a thriving business for our advisors. And as a result, advisors who use us have on average about fourteen points more operating leverage than their competition if you look at publicly available data UM, which is great because advisors can use that fourteen points to invest in areas that are really important to their clients, which helps them grow. So are advisor groups Are they leaving the Merrill Lynch platforms, the Smith Barney platforms and all that

and kind of going out on their own. Is that still a trend? Yes, the move to independence is still a trend. In addition, advisors often they start, they get their uh c f A or c a P certification and they start and they want to be an entrepreneur and serve clients and their local community. I have one advisor who decided that she wanted to move away um from UH that he I'm sorry, I wanted to move away from the auto manufacturing industry and become an advisor.

And now he serves clients in that industry because no one understands it better than him. Interesting, what what do you think about value stocks right now? I see first eagle on your resume? Yes, yes, uh, first eagle. I clearly value is near and dear to my heart, and um, you know I always love value stocks that you know, it's important to understand the companies you're investing in, and at the heart of the matter, that's value. So I

like that. Right now, how do you define value? Do you go to the typical price, earnings price the book? How do you think of value? Because I guess values a relative term for a lot of people. Yeah, so for me, it's definitely more price to book and then looking at sales, making sure you really understand what's driving sales and what's driving revenue growth. Are there tools newer tools? I'm thinking about et F, But maybe there's something else that you think are trending up for for the right

reasons right now? Um. So, one thing that I think is really important is personalization is finally coming to investing, and so I'm a really big believer in direct indexing as being a trend that's going to stay with us. Um And the reason for that is I think in in every part of investors lives. They're able to personalize

what they do. Why not with their investments. You know, if you're if you're feeling that you don't want to invest in a particular part of the market because of a value you have, or you really want to double down on that part of market, you should be able to do it and still have a portfolio that has um return characteristics that you're comfortable with. Direct indexing, you can basically build your own index, right. You can take someone else's index and say, um, you don't want Google

or Facebook in your SMP. You can just pull them out and have the rest of the SMP um. I mean, you can do anything you want, right, that's right, and you can pull them out and then you can put something in that has a similar return characteristic, or you can double weight something that has a similar return characteristics, so you still have um you know, on paper roughly

the performance of the SMP. Not as a retail investor, but this is something that the advisors with whom you work can do and that offer their clients both actually advisors with whom my work can help retail investors build the index that's perfect for them and it's extremely important for an investor to understand, you know, tracking error and concepts that might not be immediately evident um. But also investors can do it directly using several retail platforms. All right,

good stuff cool. Natalie Wolfson, CEO of Asset Mark, joining us live here in our Bloomberg Interactive Broker studio in from California. Marijuana stocks are tumbling today after Senate Minority Leader Mitch McConnell criticized attempts to add a marijuana banking bill the National Defense Authorization Acts. So we said, let's talk about the cannabis biz. Does Mitch McConnell have against weed? He just doesn't look like a weed friendly dude when you look at him, you know, So it doesn't true.

They grow some of the best weed in the whole country. There absolutely some good bourbon too. Josh Joseph joins us. He's the CEO and founder of Big Plan Holdings. Josh, thanks so much for joining us here. I love for you to give us just kind of the lay of the land. What do you guys do at Big Plan Holdings. I don't believe Josh is there. I don't believe Josh is there. Somebody's gotta push like the button that brings Josh back. But so to I'm lo gonna till ray

the stock is off today. That's like one of the big weed companies. UM, Josh Joseph CEO and founder Big Plan Holdings. You there, my friend, can you hear me? Okay, yes we can absolutely. We're just talking cannabis here. We we we love to get a sense of what you guys at Big Plan Holdings are up to these days. All right today guys much appreciated, and you have to jump into a Big Plan Holdings and you know what we're what we're all about is UH a family office diversified

in many different investment verticals. UH, you know, with one of our primary focals, UH focal points certainly based in the cannabis and UH and CBD industries. UM, coming out of a great deal of experience in cannabis. It's two thousand fourteen. So you've been what you did? You start off in real estate and then get into we'd real

estate and then go to Big Plan Holdings. Yeah. Yeah, my my quick professional track and I'll give you you guys an abbreviated version of that is have specialized in commercial real estate around the country probably for about twenty six or twenty seven years, all facets of real estate from uh, you know, development to straight up ownership of existing assets to a lot of bankruptcy and distressed real estate sales and transacted and you know, probably forty or

forty five states around the country. So I've had a very very fortunate run in the commercial real estate sector. That that then evolved into jumping into the state of Illinois UH their cannabis program in two thousand fourteen as an applicant UH and successfully securing seven of the initial fifty medical retail dispensary licenses. UM, which also cannabis, also has a very very big overlap within real estate as well. You can't have a dispensary or a growth facility or

extraction or manufacturing facility or anything without real estate. So they really did go hand in hand. But what's the infrastructure look like, Josh um in terms of the grow I mean, Humble County is so famous in California. I know, UM Athens, Ohio, and we were just talking about Kentucky. UM, you know used to grow some pretty good weed when I was in high school. So what what's it look like now where where where is? Uh? Where the best operations? You know, you know this, this has become a real

big business. You know when when when I got involved in two thousand THO team, it was it was still really an incubator in a very very immature industry. You fast forward to two thousand twenty two. Uh, this industry, the cannabis industry as a whole, is um dramatically different, dramatically more mature. Still has a significant amount of runway to it, I think in many many respects. But you know what you're seeing now is you're seeing the technology.

You're seeing real R and D. You're seeing real science take place with the larger with the larger cannabis operators around. Um. You know, whether they be the public companies, whether they be the private companies that remain um yet to go public or yet to sell to larger, larger operators. Uh. You know again, guys, remember you know, the whole cannabis industry. We can talk about this for hours, but you know it violates federal law still yet today. So it's a

federal ob versus state law issue. And then when when states enact legislation, they will typically get what they will always out of the gate, always, always, always go medical with a medical program first, you know, That's how they dip their toe in the water. Uh. With a medical program, they usually typically give it twelve or twenty four months. They then go to adult use, which is also known as recreational use, and then that process kind of evolves,

if you will. Um. Well, I was just trying to pin down because this is the reason I wanted to talk about it today. We thought that the Safe Act, the you know, Marijuana Banking Act, was going to get put into a defense bill and make it a lot easier for you guys to do business. Um, it got taken out. So I'm wondering, when you look at just this, um the skeleton of the marijuana business around North America, is it still you know, scary looking Greg Almond dudes

with shotguns and pickup trucks that are growing up? Or is it nothing nothing near that, nothing near that whatsoever. This is a real industry that's not going anywhere. This is a heavily politicized and polarized, um, you know situation as it relates to the Safe Banking Act and and and the number of other nuances and really key elements to the industry being able to continue to grow successfully

in this country. No, this is that this is not the old school head shop approach, if you will with h you know the cartel and uh you know the the gangs, and you know there certainly is still a black market out there without question. But no, this is a real deal, professional industry that has UH, that has stabilized itself in many many ways, and we need safe

banking to pass. So it must so. And there's still I think some optimism and analystic Cowan said, he thinks it's going to get done by the end of the year. When that happens and you're running uh, you know UH UM invest an investment office here, What do you like if I look in UM for example the e t F, I see til Ray as a huge UH player, innovative industrial canopy growth. What what do you like out there? Company wise? Is that what you're talking about? Yeah? So so I'm a I'm a big I'm a big fan.

I founded a company called Grassroots Canabas based out of Chicago. Today we are either the number one or number two largest exit it has taken place in the cannabis industry. We sold our company July twenty to cure a Leaf. At the time of that sale, we're the largest privately held cannabis company in the US and including all the pub codes you can only be public up in Canada. Right now we're probably the third or fourth largest cannabis company in the country. Pure A Leaf, who is the

largest cannabis company in the world. They happen to be baked based in Wakefield, Massachusetts, but they have a very large European footprints as well. Um you know, came in and they acquired us. And so here's what I here's

what I see. I see the stronger going to survive in this in this industry, Like a lot of industry, I think at the end, at the end of all of this, when we fast forward five years, ten years, fifteen years, I think what we're gonna see is we're going to see companies like Kira Leaf, g t I, Green Thumb Industry is you know, known as g T I, Cressco. I think we'll see True Leave. I think we'll see Murano. I think we'll see um, you know, I think we'll

see you know, maybe another couple out there. We'll see somewhere. We'll see somewhere guys between five and ten of the big of the big boys and girls, if you will, that will be the industry leaders. I think there's gonna be a significant drop off, and we call those tier one m s os in in in our world in cannabis. I think when you drop down to the tier two and the tier three m s o s, a lot of those folks are gonna be gobbled up over time.

I think some will continue to survive and they'll be successful. Um, but I think a lot of those will you know, will be gobbled up over time. As regulatory hurdles are are you know, continue to kind of you know, unwrap if you will. You know, right now we are all as large M s o s um we are. We are stuck with certain regulation caps, if you will, on the numbers of licenses that we can have in the state.

So um, you know, once those once those things changed, for example, and you can have more than for as in Illinois, you cannot have more than ten dispensaries in the state of Illinois. Once that's lifted or that's modified, if you will, and you can flex up to fifteen or twenty or thirty or unlimited, You're going to see a major, major push towards your consolidation of the large of the large companies, the large MSOs coming in and buying the smaller companies in my opinion, Thanks very much,

Josh Joseph there. Well, the investment banks were in the news this week. Gold Sas had their annual conference, financial services conference, all the big I know, it almost like a set up. Yeah, like they're talking recessions, they're talking laying off people, cutting bonus pools. It was a real downer. Shelly Bassett was there, I put something to blame on? Was there? She like lad the whole conference. I know,

she had some awesome interviews. So we've got the bass Bloomberg News Wall Street reporter here in our studio, as well as Alison Williams, senior banks analyst at Bloomberg Intelligence. So Chanali, let's start with you. You were at the Goldman conference. Boy, the Bloomberg News stories your interviews coming across the Bloomberg television sounded kind of like a bummer. What was it? You know, it's interesting this is the thirty third year of the conference. It's not over. It's

still on today. And I was told at the conference that every year is either like a super happy year, super gloomy gloomy one, and this year was definitely gloomy. Um, but is that so surprising most of the folks, they are expecting a recession. In every conversation was how to prepare for that? And it seemed like every conversation was bank ceo telling his star performers to get ready for

crappy bonus on background, guys, something so interesting. I was wait, wait, this is live well on background to employee other banks from me the record, Yes, live radio now on background. A lot of other folks arrivals of Goldman Sachs would tell me they were hoping that Solomon would be very negative. Why because if he set the bar low, it made

it easier for everybody else to also do that. Yeah, so Alice, Because when Paul goes to his manager, um, you know, and says I want to raise The manager says, it's been a crappy year. I'm sorry, we're giving you a cut, and he says, I'm going across the street. The manager says, hey, dude, did you hear Shinali Bastic's interview with David Solomon. Don't go over there. Did you see Rich Handler's note don't go over there, So I

sulk back to my desk and table between man legs. Alison, you've got your three outlooks out like most of the other Bloomberg Intelligence analysts. What's your out look for some of these big banks next year? I mean, we got rates rising, that's a good thing from an interest market. The markets can't be any worse. Something work this year, I think. I mean it's all about we have a recession.

How deep is the recession? When the recession right, I would say that, um, you know the banks are prepared, right, So I think that's the point that they were making, is like, oh, there's a lot of negative there's risks out there. But I have a question for Alison. Sure trading is up, trading is up, but not as much as fees are down. Yeah, and that's does volatility still keep that trading a head when next year? I think

it does? I mean keep in mind, right, so macro trading is at record levels, right, Equity trading is down five from record levels. Investment banking, yes, down from record levels. So going but going into next year, right, if something's down for a few percent, it's half is important to your bottom line next year? And there will be some recovery. I think it's going to be all about for the fees. It's all gonna be about one queue. What can they

push out in the seasonally strong recorder. I think there is some you know, there's this term labor hoarding. I think they're bank reboarding. Right. So we've heard about cuts, but they're like very small cuts, and again after a scramble to add talent, they're hesitant to let them go. And you have people like Daniel Pinto, who's the head of JP Morgan c ib saying, you know, we're gonna cut comp but we're gonna keep heads, you know, after all the work we did to get the people in place.

My suspicion here is that a few star traders who are going to get higher bonuses still I mean, at the end of the day they have to write or they where they go to hedge funds. There's a hedge funds still high. They go to hedge funds, and I mean hedge funds it's not a great year either. They have a lot of outflows, but macro hedge funds have had a pretty good year. Commodities hedge funds there's I mean, there's always opportunities sponsor back and places like hedge funds

and you know these you know boutiques. It's much more to eat what you kill. And so if you r a star trader, there's a big opportunity for you. What are the returns Allison in your investment banking world these days? I mean when you and I were there, we were generating high teens, low twenties. Are those days because those

are the days of leverage? But I would say that you know, if you so if we look at like sort of the the the are we on the global investment banking units of say like the top ten to thirteen banks, you know, we hit like fifteen per cent last year excluding our goes that you know, that would be like a hundred and ten basis point hit. But you know that was the best we've seen since before

the crisis. So that was pretty good. You know, this year obviously that's that's going to come down, but we think still double digit and that's really what you know from the bank investors standpoint for next year. The bottom line is the profitability is still good because we had this we had this huge revenue. We didn't hire that we you know, we hired, but not nearly as much as uh, you know, as much as the revity grew up to the profitability is something we haven't seen in

a long time. Like if they have to adjust some of their longer term targets, JP Morgan said, sev right, if they don't hit that next year, I think you know,

Crimie River, it's it's a recession, right, that's fine. But if they start to have to say, Okay, this is not something that we can hit at a more meaningful rate, then that's when you have questions about what businesses in the longer term are going to make the most sense into this new economy, right right, And I think you know with JP Morgan, the most interesting things is going to be what happens on the cost side. That's where we got the big surprise this past January, huge upticking costs.

You know, people are you know, they sort of signaled like, look, this isn't going away anytime soon. But that was in the beginning of the year. So could those costs, could that guidance be a lever for next year in terms of actually with tech tech talent is getting cheaper too. That's the reality. Also, that's a huge, huge, huge thing

that all Street. You know, I had a big competitive challenge from absolutely young kids coming out of school, even everybody Jane Street for f t X. That's turned around. That's real. So what was the feeling at your at the Goldman conference about just crypto just generally? I it

was funny. I was on radio with um, you know, Alex and Guy, and I made this comment about how nobody in that room was going to cry a river about cryptocurrencies falling off a cliff, and very senior bank executive walks over to me and hears me say that and just starts laughing and walks away. So yeah, I mean they're pretty thrilled because that talent war for them

is gone. And another executive told me everyone that left their bank Goldman Sachs is now calling back again and saying what can I come back, which is, as you know, not a common practice of these branks. All Right, Sanelli Baskett, thank you so much. We appreciate it. Selie bast she's our Wall streetporter. She was at the Goldman conference getting some great, great interviews Brian moynihan, Mr Solomon and Goldman, so some good good stuff. We appreciate that. Alison Williams

as always Bloomberg Intelligence. She's our senior banks analysts, covers everything anything you want to know about the banks. She knows that she's been doing this, uh four decades. We appreciate getting both of them here in our Bloomberg Interactive Broker's studio. Now, let's get to Kevin Tynan right now. He is our automotive senior automotive analysts from Bloomberg Intelligence. He's somewhere in the armpit of America? Is he in New Jersey? That you keep playing that game. I'm just messing.

We've got enough people in. I'm just messing with you. I'm just messing with you. Kevin Um What a ride for especially dealers? Right? UM last year was insane? Uh. In terms of inventory, they had troubles. In terms of pricing, it was off the charts. And then there were some stocks like Carbonna which were crazy easy. What was the trading it like three d and now um an analyst is slashing it down to one dollar? Is this? Uh? This is not an industry problem with Carbona, right, this

is a company specific issue. Yeah. I believe so. I mean I think when you look at it fundamentally and part of the problem, amongst many other things with carbon is that they are used vehicle only, right and and one of the things I like about the retail automotive space is that a full line legacy dealer can diversify its revenue and sort of hop to the hot business units. So when new vehicle margin was gross margin was below five, you started to see a push towards the used vehicle market,

where that gross margin could be double UM. And that's where legacy dealerships would create private label CARBONNA, pops up, room shift and all these other things. Uh. The problem is as that market shifts, UH, supply is constrained on the new side and gross margin goes to twelve on new vehicles, Carbon can't go anywhere right there. CarMax is a similar story right there, only doing used vehicles, so they have less flexibility to kind of go where the

margin is. And I would also put parts in service in that as well, where legacy dealers can do that business. Where CARBONA and CarMax are beholden only to use vehicle market, Kevin, are the US automakers Are they producing as many cars as they want to use? The supply chain cleaned up? Do they have enough labor. Are they producing where they want to produce in terms of volume? Yeah, I think

so we're getting back there. I just looked at the December one inventory levels in the US and it was about one point seven million dollar units, and that was that's about double right at the bottom. It was under a million. At the peak it was over four million. So obviously we're not anywhere near oversupplied in historical terms. Um. But but that kind of inventory level, like a one point seven million if you think about it, the the industry will average about one to one point five million

unit transactions per month, So we're kind of appropriate supplied. Uh, you want to be a little bit above thirty days supply. We're getting back to that, but you don't want to be where we were, which was days. But you also don't want to be, um, looking at lots that are all completely full and having buyers come in and um, you know, try and get five or ten thousand dollars off the price. Are we going to ever get back

to that? Um? Well, ever is a long time. But are we going to get back to that in the next couple of years? I? I don't think so. And and look, it's just it's bad for everybody, right, It's bad for the manufacturers, it's bad for the dealerships that carrying costs um. So I think that the not it's not random, right, it's not just the way the market moves, and the dealers and the manufacturers are just stuck in

this loop of over supply. They control the output um, the manufacturers do, and then the dealers can only sell what they're given. And I think everybody has seen the light in terms of price and margin in this environment and said, this is actually a pretty good place to be. I think we're in that window where we're tweaking it a little bit. Let's get a couple more units on the ground and not lose sales um. But we certainly don't want to go back to four million units on

the ground. All right, I gotta talk to you about something that kind of grinds my gears. Using a good metaphor, we have a situation with some carmakers. Mercedes is one, Volvo is another. BMW infamously another where they're making people pay for over the air updates to access features that are already in the car. For example, BMW wants you

to subscribe to heated seats. Yeah, so your seats and you buy the car from them, right, your seats have heating capability, but unless you give them eight dollars a month or something, they won't let you turn it on through over the air software updates. Now, recently I saw a situation where Mercedes was doing the same thing with horsepower.

They're they're gonna sell you a car that has I don't know the exact numbers, but like three hundred horse power and if you want four hundred horse power, you need to be giving them like a thousand dollars a year. Or Volvo um is doing the same thing, although fortunately at least they're doing it as a one time charge.

This is a horrible new Frontier Kevin, it is, And and think about what that would do to the used vehicle market, right, what are you actually buying is is every vehicle wiped clean when you see it on the lot. So essentially you have to menu up your vehicle if you're buying pre owned also, so it's a strange thing, you know, And then think about how how are you um buying wholesale vehicles? Like is everything go back to

a base vehicle when it changes hands? And then and as a consumer, do my heated seats that I paid BMW four come with me to my next one? Or you know, it's it's a strange thing, and I've yet to believe that it can actually work over the long term. All right, and that your industry continues to go under tremendous change. Kevin Tiden, senior autos analysts with Bloomberg Intelligence

with some great stuff. Uh there? All right? So I want to talk technology because you know, when he came out of the last quarters earnings, to me, it felt like there are a lot of disappointments around the tech space and I'm wondering if the tech sector has lost its leadership role in this market. I want to talk Apple, Amazon, Google, all that kind of stuff. So we're gonna roundtable this thing, folks. Mark German, he's a reporter. He covers Apple, that covers

all the consumer tech and hardware. Is that in our San Francisco office? Usually sometimes I find him in the desert doing stuff. I don't know what's going on there with rockets and stuff. Um and then also on rock Rona. He is our senior technology analyst for Bloomberg Intelligence. Um. So, Mark, I want to start with you because there's a lot of news add on Apple here today. I'm not I don't get this fully autonomous car thing from the get go. But Apple seem to throw it's hat in the ring

there a while back. But are they kind of pulling back from that here? And if so, why they're pulling back initially? So Tim Cook gets asked this all the time when Apple comes out with the new products. What took you so long? Right? Other companies have had phones, watches, sets up boxes, etcetera, tablets forever and now you guys are doing that. What's the difference? What he likes to say, and what is in my opinion absolutely true, is we wanted to be the best, not the first. We wanted

to do things a little bit differently. Right, So the iPhone wasn't the first smartphone, but there was nothing before. You can see the same about the iPod to the

MP three player. The Apple watched the smart watch, etcetera, etcetera, And so they wanted to come at the car with the same approach, and they, along with every other car manufacturer, decided that the real holy grail, the real differentiator for how you can make a car different than anything that's come before it is level five full self driving, tell the car where you want to go, it gets you there,

no issue. Right, that is just not possible. It's not feasible, and it's probably not going to be feasible for twenty thirty years, if not even in our lifetime. So in order to get something on the road this decade, because that is going to be a hot area, they needed to pair back. And so what they're doing is they're moving to a level four design, which means they're scrapping

their vision of no steering wheel and no pedals. They're going to have those key parts of the car as we all know, and it's only going to have self driving functionality in places like highways and freeways. So that is a major shift, and they're really going to have to compete on area technology, on industrial design, on software and other features that you might want in a car

in the future. And handling. You know, one of the things I love about my iPhone is how it handles, and I want a car that handles just as well. So I mean, who are they going to work with. Is it a Porsche or is it a Kia. That's funny, Yes, I definitely want an Apple car. That will you can get me whoever I want to go at as fast as I can, right, I'll always take a need for speed type of of car. I think it's going to

be something closer to a Porsche. I think it's something that's probably going to cost around a hundred thousand per unit. This is going to be a consumer car. It's probably going to be in the same territory as a baseline Tesla models. Originally they were going to go for a higher price point that would put it in the Porsche take Hand range, selling on the higher end take Hands in the north of a hundred and fifty thousand US,

but now they're downscaling. Uh. There had been rooms about them doing something more on the Kia spectrum, even working with con Day and Kia. I'm told those rumors were never true and they were probably floated by those companies in Asia. There has been some accusations that I heard about trying to you know, inflate their stock prices. But who really knows. The truth of the matter is it will be something closer to a model as I think

it will probably do incredibly well. And I'm sure you'll ask on rock this, but the quickest way for Apple to sort of triple its revenues over time is to come out with a hundred thousand dollar product, right, So yeah, exact way that they're going to inflate their own revenue. What do you think about it? Yeah, let's hope they don't come up with a model because you can't make any money off of it. You know, in my view, you don't want to go down the you know, the

price point. They will go out for whatever product they go out at at a you know, gross mog and that's the style Apple goes. It doesn't care about markets here from a any point of view. It care about gross profit margins. And I'm you know, very optimistic that's what they're focusing on. And they don't you know, cheapen the car, so so an just across the text space, I mean, it's the rose the bloom kind of came off the roads a little bit for me at least,

and I'm wondering if it's true for the market. After the last quarters earnings, we had some disappointments, some cautious outlooks as you talk to institutional investors, kind of what's the feeling out there about tech in general? So I think Paul. In all honesty, I think the cell side truly forgot what a recession or slowdown looks like. If I look at the top twenty software company, they have been growing sales at the rate of twenty percent per

year for the past six years. So you know, there has to be a time when when the economic activity slows down that people will pull back onto eke spending. And I don't think anybody remembers eight oh nine, And I think this is the time that they are coming back to the realization that everything slows down in a downturn. And I think, frankly speaking, at this point, I see numbers for next year, I feel a little bit happier

than I did prior to the last quarter. But if we get into a deep procession, um I mean, probably the first thing that people do when they tighten their belts is not buy a new iPhone, right, I mean, you only buy one when you absolutely have to, if you can't justify. He always buys the newest model. He always buys the newest model because he has a great

job with a great company. But if he loses his job, he's probably not going to Um no, absolutely right, Yeah, you have it, right, I mean see from an enterprise point of view, it's the same argument that you make. But frankly speaking, one of the things you also have to think about is the technologies that you're spending with Microsoft, with Google, with the likes of it, take sales Force or Workday or Shopify. These companies are critical to making

your company go digital. It's not as if this is these are you know, an ad hoc product that you get just because you know it's a shiny new object and what we think is going to happen. You know, we saw that the a w IS very clearly. During the pandemic, growth slowed down because the sectors that operate with them slowed down. But the year after that we saw a massive bounce back because digital spending has to

be done. You have to go digital. It's it's not something it's not a fashion, it's something that's required for you to do. So we think if you thinks slow down in twenty three, we think a massive bounce back. Hey, Mark your base in l A, San Francisco. I thought in l A, Mark, Yeah, yeah, So it changes my entire vision of Mark German. Well, he's just he's m

Mr California in general. I mean, what's the feeling a lot of your companies that you cover, Mark, A lot of the consumer technology companies, they've been laying some people off. Here is is it? Is it a thing? Wow? It's definitely a thing. Who would have ever thought that Amazon and Meta would start cutting north to five seven, ten thousand people right when you know the economy is really in the in the trash? Is if Apple starts cutting people.

To date, they have not started cutting people. They're not hiring, which is a really really big deal. There's a complete pause there. But they're not firing or laying off anyone. All right, Mark, good stuff? Mark German. Uh. He is our consumer tech uh reporter out there in l A covering all that cool consumer tech stuff. Big big focus on Apple because why not. It's a huge company. And Anagrana, he's our senior technology analysts for Bloomberg Intelligence kind of

round table and you're talking about tech. You know, it's it's been such a leader in this market for such a long period of time. Um, But as Anorag suggested, Um, they're impacted by the headwinds of a recession as well. Maybe not as much as other industries, but certainly there is an impact, and kind of where we're seeing it is in the head count, seeing a lot of headcount being like a technology, so I have to keep an eye on that. Thanks for listening to the Bloomberg Markets podcast.

You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Put on fall Sweeney. I'm on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio.