What's Next In The Apple, Epic Saga?

the founder of Mountain. This is a company that builds advertising software for brands to drive UM conversations, conversions, revenue, site visits, all you can imagine. Really, it's basically a digital advertising tool and it's so important. Um the uh, the Apple ecosystem to this world. Mark Douglas is the CEO and founder of Mountain. He joins us now to talk about what's happened just now at the app Store

and Epic in this court ruling. Um, Mark, give us your take first off on um on how important the app store is the Apple App Store for you know, the entire business. Yeah, so the the obviously, the iPhone is arguably one the most important devices ever created. And the way you get software on there is the App Store and Apple. People forget the first iPhone you could

only use software from Apple. So when Apple opened that up and allowed people anyone to create software for the iPhone, they created this app store, and they started to c two developers for any revenue that's created on it. And so this ruling starts to essentially possibly shape loose that

which I think arguably is really excessive. So Mark, I guess app Apple's contention has been that, yes, it's is by some measures excessive, you know from the app developers perspective, But boy, you get access to Apple's two billion device users. That's huge in tern is a value to uh these app developers. Now, Yeah, but the Apple also has a Mac, and I get access to all Mac users for free.

So the and all and the software is often very similar, and you know the means of distribution there's the Internet. So I think that the ruling here. I think also one thing to keep in mind on this ruling, there were ten planes against Apple. Apple one nine of the ten planes, and and it it lost one of the planes, which I think has people, um, you know, kind of very excited about the possibility that the app store fees

are going to go away. But um, I think people are just excited because Apple loss that the This is not a complete loss for Apple, and it's not a complete win for developers, but it starts to make a dent in in what I think is, clearly my opinion, is a monopoly. But the judge did not rule a monopoly. They just ruled that was unfair competition, and developers can now make changes that potentially eating that, you know, retain

some of that. If I'm a user, I want the money for the app to go to the person that created I run, not to Apple that you know, that's my personal perspective. Let me make this personal for a second, because I always pull out of your bio mark that you grew up in the Bronx near Yankee Stadium, and you know, you're a normal person, and you went out west and started a bunch of um your own companies, and now have created this incredibly successful business and you're

living the American dream. You fly to work in your own private plane every day. I don't know if you really do that, but you could if you wanted to, because you're a pilot. So isn't this um a story also uh from Apple's perspective of private property, of the American dream of you know, a company that builds something

and gets to control how it's used. Right, Yeah, an Apple sells me and you know millions a hundreds of millions of other people are an incredible device and we gladly while gladly, but we pay over a thousand dollars devid device and then and then and and then they say, oh, and by the way, if you want to use anything on that advice were it takes of that also even though we didn't create what you're using. Yeah, but dude, for them that they made the device, they made the store.

That's that's a good for good for Apple. Shouldn't they be able to do what they want with their own stuff? Well maybe, But that's also kind of a plastic example of a monopoly. And that was the argument that was made here, and the judge didn't go so far as to say it's a monopoly. Um And monopolies are generally anti competitive. It's not another competing app store, for example, with you know, a Apple devices, um and of accept the profit. And I think this ruling will potentially have

some dent on Apple's profit if you're an investor. That's why it's one of the reasons that stock drops. But you know, the ruling is it should Apple take a cut of the whole equal system? And the ruling is is that potentially not? And um, but yeah, Apple's a great success story they've been. That's a lot. It's quite frankly, they make a lot without taking out the development well so as so is Mountain. We were talking, by the way,

earlier about your acquisition of Ryan Reynolds. Ryan Reynolds Maximum Effort, such a cool agency, and um, we were each giving our favorite Ryan Reynolds movies. What's yours? Just out of curiosity, Mark, what's what's your favorite riots Ryan reylds production? Um, I'm terrible, nately, but that's Ryan asking question over dinner two months ago. And it was the vampire movie he was in. Oh my god, I'm blanking on a name. This is so embarrassing.

But it's not. It's not. It's because I don't remember the Vampire movie either, And I feel like I've seen everything that he's been well states of movie he made, with the wedding movie he made, and that's what I'm talking about the proposal. I loved it too, also, it's amazing. Yeah, it was a great movie. I watched that a few months like two months ago, and I've seen a lot of Ryan movies. But I did a little refresh your course once I was put on the spot, and he

didn't ask that question to him. He doesn't go around, Bud, what of my movies? Do you like? Someone else at the table at Okay, our producer Sarah Lives Lives. He told me that Blade Trinity is the vampire movie he's done. So um, that's correct. Owner Mark Douglas, founder of Mountain Just get over to David Kotalk right now, Chairman and chief investment officer at Cumberland Advisors. It's always great to

get David's thoughts on the markets and the economy. David, what what do you make of this resurgence of the virus along with the incredible resistance of American people to vaccines, Not just Americans, but you know in the Western world there's such resistance to these vaccines. It looks like it's gonna the pandemic may last longer than we may have anticipated. Yeah, I fear it will. Um um. And of course there's mixed views of this vaccine hesitancy is something that we

have seen in the past. We don't see a way to resolve it. I found a quote from Robert Kennedy in nineteen sixty four and he said, one of the persons are against everything all the time, and I guess that characterizes uh, this human condition. So we don't vaccinate,

we get the results. I'm a little worried. Mike ostar home in his By the way, David, it's interesting because his son, Yeah, UM is one of the biggest anti vaxers who supports conspiracy theories about things like you know, Bill Gates working with UM the global elite, to inject us all with like five g nanobots. It's so true. What a quirk of fate. You know, Why can't somebody come up with something that says Ivermectin has a Chinese chip instead of Maderna. I mean, we have a crazy

world and that's the nature of the human being. And unfortunately, what that does is extend the pandemic and it makes it works. It gives more time for more mutations, I was saying. Mike Osterholmen his podcast issued a warning because we're going to find out what happens when we open these large school systems, and of course we hope and pray that we don't have a lot of sick people, but we're doing it and that's the nature of the evolution.

So I'm I don't think we're rather than Woods on delta virus our positions in their ports, oios in our management says, this is a pandemic and it's still underway worldwide and it's too soon to declare that it's over all. Right. So the pandemic is an issue for you, David, and for these markets. So is China. Um. You know, we've seen the crackdown that China has had on a number of its industries and the impact it's had on Western investors.

How do you kind of contextualized that? Well, this is interesting. We published on this last weekend and on our morning call this morning, we had an extensive conversation uh Matt McLear and Bill Witheral and others on the call about the difference between the A shares and the eight shares and the old days the eight shares the A d R s the US capital market rules were accepted worldwide

is the highest standard. And now it looks like this is a rotation or reversal, and we see the a Jing is going to open a Beijing stock exchange for small caps and new startup companies. So what does it mean if China says we don't need New York, we don't need the capital markets anymore. We're big enough, we're advanced enough. The rules have changed, the game has changed. That's a monumental shift between the two largest economies of

the world. We're actually looking at the A shares and we haven't taken the position yet, but we're looking at the A share side and we're underweight China, and it's really in the eighth share side that we're underweight. So this will be fascinating to see how this turns out. It's huge, two largest economies in the world face off with each other. Yeah, and George Soros, I thought had an interesting opinion piece. I wonder what your take is.

He was basically saying, Um, you know, put aside the profit to for a second, you can't be supporting this anti democratic regime from a moral standpoint. Well, that's that's a that's a debate. In fact, you know, there's there are e t s which are built on E s G standards and governance. They would say stay away from China. Um that there is a the behavior of large institution sorrows Cathy arc What do you do, do you go there, don't you go there? Where do you draw the line

between the profit and the ethics or morals? And how do you do it? And are there ways to do it so they are aligned because and that's a difficult one for me personally, because I'm involved in policy organizations, and in the policy organization you want the best outcome from the world. And I'm a money manager. They have clients and they say, hey, your job is to make a profit for me, and so there's a tension between

those things. A very profound question for the financial services industry. Hey, David, thank you so much for joining us. As always, we always appreciate your perspective. David Kotok, chairman and chief investment Officer of Cumbland Advisors, over about four billion dollars in assets under management, and he is located today out in Colorado. Good for him. All Right, We've got markets this year hitting nearly all time highs, nearly on a on a

daily basis. Yet we have Wall Street strategies coming out with increasing caution. Let's get a view from the street. If you are Katarina Semeneti, Senior Vice president and Private wealth advisor for Morgan Stanley Private Wealth Management, joining us on the phone from the town of brotherly love. That would be Philadelphia, Katarina, thanks so much for joining us. What are you hearing from your clients as you talk to them over the last several weeks and months, Well,

thank you for having me on the show. And you're right, it's um. You know, it's been crazy market and investors can't ignore the fact that S and T five hundred is up over twenty percent UM so far for the year. And as exciting as it might be, you know, seeing your portfolio go up this much, you know, it also raises concerns and investors are naturally worried about the economy

staying power. Um. They're looking at the position of their portfolio and they're hearing about the negative impact on the future earnings of the companies based on everything they're seeing, including the labor shortages, strice pressures, supply chain interruptions. You know,

it's something that we see every day. You know, there's a lot of talk about inflation, and it's one thing talking about it theoretically, and another thing is when the consumers and investors see the increased cost of goods and services the normal basket. You know, that is something that is their day to the experience, so naturally, you know, it's something that on our side, from the investment and

vice perspective, we are advocating to risking portfolios. We're advocating taking profits reasonable profits within uh certain parts of the portfolio, specifically when it comes to the market indexes. But this would be a great time to take profit from S and D by hundred from Russell two thousand in reposition into individual equities and very carefully selected um specific sectors.

Like so it's time to pick stocks. I mean, Lisa Shallott was on with US last week and she said ten to fifteen percent pullback isn't unlikely by the end of the year. I agree with her. You know, as a matter of fact, like everything that we're hearing from the US corporations is that all of the pressures that I already mentioned are going to be resulting in the earnings that are not going to be quite as exciting as what we have been seeing so far. There's a

lot of negative pressures. Intend to fifteen percent correction in this space would be there, very much expected, but it also presents great buying opportunity for investors as long as they are strategically prepared for that. So if I want to de risk my portfolio, how do I do that? Though I just raise cash? Or how do I do that?

I would take profits from the broad market sectors profits from S and P five hundered from Russell two thousand, and look specifically at sectors that are well positioned for this environment. Sectors like healthcare, sectors like financials, like consumer staples. Were less excited about consumer discretionary for example, because we feel like the buying power of consumer went down. Stimulus

check already went out. You know that they are not not that many of them are expected to go forward, and all of these discretionary purchases that we so initially happening are really subsiding right now. We see a lot of appetite for services still. But coming back to the sectors that I've mentioned, health care, for example, is a perfect sector to be There's a lot of pent up demand in that state. Both pharmaceutical companies and healthcare in general.

Financials are historically positively correlated for writing interest rate environment, so banks, um steam and facilitators are very well positioned. So again We'll have to look at valuations, we have to look at future earnings, we have to look at the overall positioning or these individual equities within their sectors.

But this is a great time to pick up some high quality positions and be ready for a market callback and be ready to you know, have some cash on the sidelines in order to be making the strategic purchases. What when you look at individual stocks, what are you looking at? What do you like here? Or how do you go ahead and screen for those We we look at quality, you know, we look at the valuation, the

earning positioning. In other words, you know, when we are discussing all the cost pressures, there are certain sect ares and certain stocks that are someone just just sensitized to this risk. So that's where security selection comes into play. You know, this is not you know, there are going to be times again when we look at broad market

index ism they will make a lot of sense. But right now, you know, looking at quality, looking at dividend fields, looking at just overall, how is this certain positions a certain certain company positions within their overall sector, what is their competitive advantage? This is the time to to make

this deep dive analysis. You know, and know what you own going into this market, this mid cycle transition, as we see, there's going to be a lot of volatility, there's going to be a lot of noise, and knowing what we own, having higher quality portfolios, um having this this very thoughtful type of accidilication. This is the time for that. Karina, just thirty seconds, do you recommend any bonds in your portfolio? We got the tenure at one

point three. Absolutely, there's always time for the bonds in the portfolio. This is like when you're building a house. You absolutely need that foundation. You know, this is our risk management. But with bonds, just like with stocks, this is the time to look at quality and this is the time to make sure that the bonds positioning the portfolio makes a lot of sense. You know, get away from high yield, get away from those higher risk exposures and bonds, you know, and look at the very very

high quality of strategic positioning in that sector. But they always make sense in the portfolio. Katerina, thanks so much for joining us, Katerina Seminetti. They're a private wealth advisor, Senior VP at Morgan Stanley Private Wealth Management. Great to get your outlook on the market. Especially as UM we bounce along the top here, it's time maybe to take

some profits. Katerina tells us this is Bloomberg. Just get over at Matt Maldy now managing director and chief market strategy did Miller tay back And there's a number of things that I want to get to with you, Matt, but I'm gonna start off with UM rates. We're looking at a tenure that's now coming back down to one thirty two, and it has looked like since Jackson Hole it was rising from one UM and headed for one forty. Where do you see rates and y well, I mean, yeah,

they have been climbing here. It's it's very interesting because we had that you know, that period from last August August for two thousand twenties through March where obviously they were training higher from his you know, crazy historic low level, and then of course we went for four or five months there from March to early August where it was going down. Now they're keeping back up. I think they're poised to go higher. I mean, this whole issue with inflation,

I think is is a big concern. And I'm looking at the one point three seven level that was the high we saw a couple of times in August and the once just a little over a week ago. But the real number gonna be one. It for because you always need to see more of it, more than just a slight move above any key resistance level. At one point four, that's gonna be a problem. I'll pose a John Farrell question for you, do we get to two percent or one percent? For well, I mean, the thing

is I I definitely think we get to two percent. First. The one thing, of course, that we're in the seasonally a tough time for the stock market. People get worried if there's a severe correction rather than just a mild one. Uh, you'd have flight to safety that may take us down to one percent. But I just don't see that from happening. I think we could very well see a correction, but not want to send it that low and then uh

uh And I do think that right. I think the changing we get above one point four uh in the tenure, that's gonna signal important change in the near term trend FORER for interest rate, So that's going to be important. Him at um you know markets, equity markets hitting a new high seemingly on a daily basis. Yet we've seen Tom Keene this morning was just pointing out in his email inbox over the weekend a lot Wall Street strategist getting more and more cautious. Here, how do you think

about these equity markets? Again, this wall of worry, everybody's been climbing it. But are we getting a little yes, exactly, And yeah, It's it's funny because as more people get more concerned, you tend to see that there's say, there's too many bears around, and then that should actually be a you know, a contrary contrary and indicator and and be bullish for the market. But I do understand why people are coming more more concerned. I mean, I'm just

thinking and I'm in that boat. I mean, look just what we saw again today with the market opened very strongly. Uh, and now it's sold off. It's it's it's not down, it's down unchanged. All the NASDAC is down. But that's a definite And we've seen that for a couple of days in the last week. You know, we really saw it almost every day last week. We're seeing it again today. And we used to see just the opposite where the market opened down and then rallied then to the end

of the day. And so this kind of change in trend is has got some people worried and and rightfully so I just think that with the concerns over inflation and maybe even stagflation, uh, those aren't good from markets. And you know, correcsitions are normal and healthy and there's nothing to worry about. But uh, do people do do need to be careful about them? But do we expect do you expect the correction? So many people have come out, from Deutsche Bank to Morgan Stanley to Goldman Sachs saying

it's time and um, you know, maybe ten to fifteen percent. Yeah, I don't want to sound too alarming, but the one problem we get, we get is if we get to tender tender fifteen percent. Uh you're well, if you get to ten to twelve percent, I think you get the fifteen and I do think there's a good chance of that. And the reason why I say, why why would get there, why would accelerate, is because of this massive levels of leverage in the system. You know, this whole thing with

margin dead. Margin dead isn't a problem when it's going up, it's when it rolls over. Well, sure enough, in July started to roll out a little bit. If it's starts if the markets down, people don't get margin calls until the market has gone down a certain amount. So the market goes down ten percent, it's almost certainly going to kick in some margin calls and therefore be a little

bit more severe. Uh so it could be as much as fifteen to That may sound like a lot of alarming, but I think if people raise just a little bit of cash right now, then you're gonna be one here, will be gonna be the one who keeps your head. What of those around them are losing theirs or being forced to sell, and you're gonna be able to pick up some unbelievably great bargains. Yeah, that's kind of where I wanted to go, Matt, if I wanted to get

a little bit more. If I if I'm thinking about the next movements, market could be a ten percent or so moved to the downside. Do I raise cash? Do I just rotate into some safer names? How do I prepare for that? Well? I think again, I do think raising cash is a good idea. And again it's not saying, oh my gosh, you're gonna miss this move It's like we're not saying going to or fift percent cash, just

maybe five or ten percent cash. And it's not just because you can take advantage of it, but psychologically, especially for individual traders, it's really really helpful because you're sitting there going, oh my gosh, uh, I don't have any I don't have any cash. On the market's going down, it may go down more. I've got to sell and

the end up selling at the exact wrong time. If you have a little bit of cash, even if it's only five or ten percent, you're gonna be much more Even if you don't get the exact bottom, uh what's the bottom is in, you're gonna be willing to buy rather than selling it. You know, similars, You're gonna be a buyer rather than the seller at the at the right time. And most of the people are gonna be selling at the exact wrong time. And so I think raising a bit of cashier is a good idea. Matt

is crypto currency here this day. I mean, does it make sense for an investor um to allocate one percent of his or her portfolio to bitcoin A theory um, etcetera. Well, you know, it's it's it certainly seems to be here here to stay. Um, you know, very bullish on it on a longer term basis. I mean, it's gonna run

into regulatory issues and it's going to remain incredibly volatile. Uh. So that's why I think these are things that you buy, uh, you know, spread out any kind of purchases, Like you said, you don't want to be loading up with you of your portfolio there but adding it over time. Uh And uh, I guess you know, I kind of look at we look at all of them a theoryum, probably more closer

than others. But let's look at that theory two thousand dollar level on bitcoin that has been unbelievably key support this year, and if it breaks below that level at any time, uh, you might want to take some chips off the table and look for for a lower basis away from that exactly. So that's but we got you know, we rallied back. This rally above forty has been very important because it's been it was stuck in a sideways range. It broke out of that range, it got overbought. It's

settling back in, but it's nice and stable. I think the thing is the upside is still pretty good here. Uh, and uh, I think over a long term basis again, ease into it. Uh, you don't. You don't have to be you know, money a little money in every month and and like you said, keep that to you know, three to five percent of your portfolio. All right, Matt, thank you so much for joining us. We always appreciate

getting your thoughts and perspective. Matt Maley, Managing director in chief market strategist at Miller tay Back, also the founder of The Maine Report, joining us on the phone from Newton, Mass Patriots lost, I believe in the first week, so can't be too happy up there. But Matt, we've kind of got a market here. That's you know, We've got the down SMP higher, Uh, the Nastack pulling back, but still pretty steady. She goes, This is Bloomberg. Thanks for

listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On Ball Sweeney I'm on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio,