Surveillance: Fed Needs To Be Flexible, Laidler Says

and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot com, and of course on the Bloomberg December John and I were working what Yeah, And then there was a crater and there was a whole bunch of notes that said get on board, but there was one note that he had the courage to like get on board and also mentioned magnitude and he said up twenty And after everybody picked themselves up off the floor laughing,

said Ben Laidler, you're out of here. Remember this crazy guy turns up from HSBC and starts talking about massive upside in and everyone's looking at him like his crazy, including me. I'm really pleased to say that the former chief equity strategist of HSBC and now the CEO of Tower Hudson Research, Ben Labor joins us on the phone.

Been a fantastic call through and as Tom and I and least have been discussing for weeks, months, if not years now, the courage to stay invested when everybody is obsessed with the down side risk, Ben, how important is that story right now? Yeah? Very I mean, you know, to to Tom's point, you know, I don't really know how the coronavirus thing, um, you know, pans out right. We have some sort of historical precedent, But you know, I ultimately I think I think markets are sort of

going to be fine here, right. I mean, I think the global business cycle is sort of stabilizing. Whether the coronavirus um, you know, delays that a quarter, and whether we need a bit more policy stimulus, you know, I don't know, But ultimately I think this is a macro narrative of a sort of stabilization of GDP, a stabilization of earnings um, you know, particularly in the US. I mean the US earnings or say, and I think is now over with the fourth quarter, after after three quarters

of negative earning UM. And I think and I think valuations which people think are super expensive, I actually think that I can see here ten minutes and justify them. I think they're very well supported by a whole bunch of reasons, and this narrative that they're very expensive versus history. I think just you know, it's sort of a little

bit intellectually lazy. And this is the fact that you know, we now have a huge tech sector, the bond deals are very low, that the US is growing more than any other developed market out there, and the BED can still cut rates if it if it wants to, no one else can. Well, let's stress test that intellectual laziness, shall we a little bit? Ben? I won't be as

brutal as you. I think there's a lot of reasons to be cautious, to be less constructive, to be not the big over bowl that we saw, perhaps through parts of what did they get wrong? Though? Ben? I don't want to call them the doom crew because I think they're worries, irrational, they're well reason what do they get wrong? Though? Ben? Yeah? So I you know, I think what are the two

big risks out there today? Because they're the same as they were back in Q four eighteen, Right, I mean you know which is which is that we get a big economic slowdown? Um, and you know all the focuses on China, right, that's global GDP growth, it's it's it's reasonably opaque. We think they have the policy flexibility, but they also have a lot of debt, right, so that you know, and the coronavirus just plays right into that again. So you know, China and how that feeds into the

global economy is a big one. And the amount of policy flexibility that is out there globally, and that's obviously been getting less and less over the years of people have been getting more and more worried about it. And SPED has more than anybody else, you know, you know, negative rates in Europe and and and and and and essentially in Japan. Um. You know, those are the two issues. It's it's policy flexibility and and and global growth. I

want to pick up on the policy flexibility. How much is your bullish call hinged on more stimulus from both the FED and the PBOC UM. I mean the p BOC, I think is is going to introduce you know, liquidity and credit measures here to support GDP at at current levels. But I think that's very coronavirus driven. The In terms of the FED, I think the FED just needs to be flexible. I mean, you know, why do we get

this big sell off in in Q four eighteen. You know a big part of that was you know, people thinking the FAD was making a policy mistake by staying overly cautious for too long. So I think, um, you know, the first just cut three times here now there and holds at the moment. I think they just need to be um, you know, flexible and and you know growth in gend P growth in the US is still above potential. Um, you know, there's the stuffing at that and the first

just kind of fests cut three times. So I think there's a lot of sort of insurance out there, um for for GDP growth and and and frankly for US earnings. I mean not to dwell on US earnings, but you know we're gonna get one percent earnings growth this quarter, which doesn't sound like very much, but it comes with negative drag from the energy sector and a five percentage point negative drag from international stocks, So you know, domestic corporate USA, well, I would argue it's in pretty rude

health right now. Then what did Tara Hudson when you call on a bunch of fancying people that you're probably calling on Henry and Megan over in Vancouver for all I know. But then the fancy people, are they over owned in equities or not? I mean, are they are they all in on this bull market? Are you finding real skepticism out there? Yeah, there is a lot of skepticism. I mean, you know, I think there's a lot of sort of tourist and equities. People have sort of been

stuck into equities but don't have very much conviction. Uh. You know, it's that classic sort of fear of missing out trade. So you know, there's a lot of there's not a lot of conviction. Um, you know a b I think a lot of people are the wrong stuff. Um. You know a lot of people in course of text run away from a lot of people that you know, they're very nervous about chasing it. And and there's this sort of siren call of international equity versus versus the US.

I mean, how can the US just keep out performing year after year? Um? Well, I would make the case that it can again this year, right, I think growth expectations outside the US too high. A real idea of someone this bull shot, I meant, some of the bearishness. At the same time, we there are a lot of people who agree with him, And Ben, does that make you worry that a lot of people actually agree that

it is time to stay invested and invest more? You know, you're definitely not going to make because you know, we madly decent last year, right, I mean that was a complete aberration. I all, I stand essentially arguing that you know, the US equities are going to move with earnings here, right, I mean we we we have a we have a U S earnings recovery which is going to gradually strengthens thro that the year. I don't think valuations are expensive.

I think that you know, I think they're well supported. I do think the world has changed enough in terms of tech, in terms of discount rate, in terms of tax rate that you know, an eighteen times multiple is is sort of the new normal role than necessarily something to be to be afraid of. Ben. We've gotta get back really great stuff. And I don't think we've managed to talk since the massive call that you made last year. So congratulations on just a stellar coal. Didn't talk about it,

but you know he missed. He missed about temper cent of upside rock. I thank thank you, Ben. Later their tower had some research see formerly of hs f C. John Yarmouth comes out of National Industries Money in Louisville a million years ago. He did what you did if you were liberal in nive, he left the Republican Party and wandered over to the Democrats as well. Speaker Pelosi loves him so much he put him in charge of budget,

which is a good and beautiful thing. And Mr Yarmouth of Louisville joins us this morning, John Yarmouth, what is the state of your Democratic Party? Is that the Will Rogers Party where it's an ungodly mess? Or can some order actually come to your Democrats? Well, I'll tell you what. First of all, thanks for having me. I'm a Cleveland Indians fan, so long suffering, but we've been getting better

and better and and uh there's always next season. Um. Well, obviously right now we're having uh some uh internal struggles. But I think what I pick up in my district and all around the country is that the only thing Democrats want to do is beat Donald Trump. And I really am optimistic that we'll pull together. And um, you know, if Bernie Sanders is is the nominee, everybody else is

going to vote for him. If Bernie Sanders is not the nominee, Bernie Sanders, people are going to vote for the nominee because everyone knows that from our perspective, Trump is a worst fate you are into such a most interesting geography, of course, your battles of the Senate majority leader, and of course the state of an interesting interesting politics of Kentucky as well. Is the prescription here the middle ground of Biden Bloomberg as a prescription here something younger,

hipper like a few of the other candidates. Which way do you cut it? You know, I have not resolved that in my own head. I've listened to both sides, and and I really hate to waffle in this, but I'm not sure. Uh. I do know though, that that the biggest motivating factor right now is is Donald Trump. And so you know, as the pole. The Quinnipiac poll showed yesterday all of the top six beat Donald Trump. Uh. And and Donald Trump is from so he looks to

be pretty much kept at that number. So I'm not overly worried about our nominee, about who our nominee is. I do think, however, that the future of our party is going to arrest to a certain extent, on who can deliver on the promises of the agenda they make. And I worried that m Bernie Sanders or Elizabeth Warren will not be able to deliver on their agenda having been in Congress now, but this is my fourteenth year. Uh, you don't get that kind of revolutionary change in Congress.

So John two points, you're making care winning and governing, And I want to just stress test the winning part of it. Do you really think a self proclaimed democratic socialist can win over people in places like Kentucky and can win other people in the swing tites as well? Is this a candidate in Senator Sanders that can really the country together? No? But I don't think so. But I think what what Bernie Sanders does is he brings

a lot of new voters into the equation. And I think that's the mistake a lot of kind of conventional analysis of this election is people are making and that is to assume it's going to be the same voting uh block, and it's not going to be. There have been one point four million new voter registrations in Wisconsin, Michigan, in Pennsylvania since six Out of those, four hundred thousand registered independent, seven hundred fifty thousand registered Democrats, and two

hundred fifty thousand Republicans. That's a three to one partisan registration advantage that's going to be awfully hard for Donald Trump to overcome. One thing I'm struck by Kevin's really talking about this is our Bloomberg got Washington correspondent from New Hampshire and he was saying, Uh, in Iowa, the swing voter, the middle voter was actually looking at either Sanders or Trump. It was not necessarily a moderate Democrat.

And I'm wondering how represents and if that is. In other words, is that really the swing vote is to a more socialist or more kind of populist Telt, not socialist populist Telt, rather than the middle ground. Well, I think that is at least I think that is um

the key those are those are populous motors. Those are people who they who think the the economy that the advantage they growing economy, the new economy is is passing them by, and they're looking for a government that's going to uh to pay attention to them and to make the economy work for them. So I think that is an interesting voting block, and I think that explains Bernie's appeal to too many of those people. The state review is the Midwest, of course, the key states Michigan, Wisconsin,

and the rest. But I would really look at Kentucky is a really interesting mix of politics as well. How can the Northeasterners, the East coast elites, how can they do in Kentucky right now? Are you going to sell Senator Warren in Kentucky? For that matter, are you gonna sell Michael Bloomberg in Kentucky? Well, I think Michael Bloomberg actually would sell pretty well in Kentucky. I think Elizabeth Warren would. She's been to my district. She sells incredibly

well in Louisville. She has a rock star there, and she would be in Lexington. And you know, we just won the governor's race um last fall, and we did it based on the votes in Louisville, Lexington and the Cincinnati suburbs. I think Elizabeth Warren would appeal very well there. So it's gonna be tough in Kentucky. Donald Trump is still popular in outside of the urban areas and he will remain popular I think through through this election year.

And of course Mitch has sold his soul uh to Donald Trump and and as running as well, So, um, you're gonna have a tough tandem they're running in the state. John Quick final question, if we can just on the budget, if I may, and not on the composition of the budget, just on the size. It's being worried about the size of the budget popular anymore. Anyway, I don't see it anywhere. The President said nobody who cares about the budget. Republicans

have basically given up as well. McK mulvaney has essentially given up the acting cheapest staff has run the OMB and and as a real deficit hawk. And I think one of the things that we focus on is, yes, they're they're sizeable deficits and maybe increased under the Trump administration.

But we've got sizeable deficits in the in this nation deficits and infrastructure deficits, and education and and some other areas, and right now, and we've had a number of economists across the spectrum come to our committee and say, you know, now is the time to make those investments. It's not the time to shrink shrink back very quickly. Here, Congressman, the Louisville Batts is it the best triple A franchise in American baseball? I don't think there's any question about it.

And we have a great, great, great stadium right on the river. The park and uh, and we said attendance record every year. It's a it's a wonderful place. And yeah, now they don't win much, but yeah, small detail. Cincinnati takes all our good players too soon. It has been too long, folks. So Louisville Redbirds always the best of Triple A baseball. Cox and thank you so much. John Yarmouth of Louisville, the Democrat with us this morning from Kentucky.

Let's do this. Let's set up a different issue of foreign affairs. As you all know, I adore it, John Farrow the major thing with Gideon Rose effort, as he writes, with a big fun see John over here. Even old fossils like me can read it. But this time is different. It's a theme. It's about coming home America. But far more, this is the love affair that we have on international relations in foreign policy, and that's exceptionally deep. Gideon Rose

joins us now the force behind Foreign Affairs magazine. Gideon, I want to go to the politics at the moment, the vice president, Vice President Biden writing an essay for you link New Hampshire and the vote today and the desperation of the Biden campaign into what Joe Biden wrote

for you at Foreign Affairs. So what Biden wants to do is to go back to the Obama years, uh, not only when he was in power in the White House, but when American policies were more cooperative and trying to help lead the alliance and the international system rather than sort of aggressively assert just US interests alone or America first policies. And the details of that are pretty frankly

common across most of the Democratic candidates. I think that they all want to put an emphasis on reducing inequality. They all want to put an emphasis on cooperative relations with American allies. Um. And the question is will the world actually first of all, will the Democrats get back in And second of all, will the world be ready to let America play a role uh like it used to once it has gotten the hack it's desire to getting.

We always remember that debate of former President Barack Obama with Mitt Romney and Senator Romney brought up the risk that is Russia, and Barack Obama turned around and said the nineteen eighties would want would like its foreign policy back, And how wrong the former President Barack Obama was on the risk that Russia posed at that given time and the risk that Russia would pose in the coming years.

What strikes me as almost insane watching the debates of these Democratic candidates is how little mention of China we get right now something stunning, Captain. In the last twenty four hours, the d o J announced charges against four members of China's People's Liberation Army for the seventeen hack of Equifax. And this is what Attorney General William Barr had to say. This was a deliberate and sweeping intrusion

into the private information of the American people. Today, we hold p l A Hack as accountable for their criminal actions, and we remind the Chinese government that we have the capability to remove the Internet cloak of anonymity and find the hack because that nation repeatedly deploys against us. Why do I hear so little from the Democrats on the

risk that China poses to the security of this country. Okay, first of all, Johnathan, I'm gonna push back a little bit on what you said, because Russia has indeed been trying to play a major spoiler role. They have not just violated borders in places like Ukraine with force and annexation of crimea, but they've just tried to mess with elections across the board. The Chinese have not done anything like that. The Chinese have been much more responsible than

the Russians. And the threat China poses to American hegemony and to the global order is a long term challenge rather than a media crisis. This is not an attempt. These were individual companies and individual actors. It's not at the same level as the direct Russian challenge. But the question of what how we should compete with China over

the long term is a really interesting one. And the big question that nobody wants to talk about is now that China is so big and strong that it can't be UH squashed and can't be put back in its box, what do they get from that in power? What is the uh is the price that America will have to

pay for withdrawal. We were dominating the world somewhat. If we no longer want to do that, we're gonna have to give up certain things we want, either spears of influence to other countries, or certain issues we used to lecture the world about we won't be able to, or various kinds of things. The question becomes if anybody wants to deal with China. It's not so much what's your policy that's going to protect America in terms of the

immediate Chinese threat, because we're safe from that. It's what is it that you're gonna have to give China to accommodate its rise that you don't currently want to give them. Gideon, let's clarify a cup of things. I've made the point the Russia was a risk. It's transplant that they were indeed a very real risk, and it's a risk that the former President Barack Obama did not acknowledge at the time when he sat across from mit Romney in that debate point at one point two, these are not just

rogue actor? Is this according to the Attorney general? A people from the People's Liberation Army of China? This is the Unfortunately, at this point, the Chinese government has almost at least as much a credibility as the U. S. Attorney General, who has been a politicize a person pushing administration line. The question for American foreign policy is not

just how to deal with the Chinese. Equifax and a few bunch of hackers who are trying to get commercial intelligence in various things The question is, given that China is such a major part of the global economy, is such a major power in the Pacific, can actually dominate certain areas militarily that we used to actually care about, what is it that we're going to do about that. We can't just confront them, We can't just bully getting

The point you're making is to be fragmatic. I think that's an argument that's going to resonate with some people. But we've also made another argument there. Are you saying

the Attorney General is politicizing the hack of Equifax. I'm saying that everything and everybody knows that this administration treats it's foreign policy announcements as part of its broader political agenda, and I would look to other sources for objective assessments of the Chinese threat rather than official American UH diplomats and spokesman at this point. And that's quite worrying. Well,

it is, and it isn't that it's not clear. It's it's not clear to me that American officials have had a great deal of authority for any time now, and this administration has basically continued that process. And so I think that the markets and the world, and your listeners are more than intelligent and mature enough to make their own calls on the substance without necessarily taking guidance from

the White House kitty. And there's a question sort of implicit in the discussion that you're having, which is the policy response to China, whether it's national security, Moving on to trade, and we talk about the Democratic primaries. We have not really heard much on what they will take with respect to the trade war and sort of trying to take a harder stance with China. What is the prevailing line within the Democratic Party right now and how they plan to go after China, not from a national

security standpoint, but from a trade standpoint. So that's a great question, and the answer is there is no single line because there are two major camps in the party. There's the same kind of anti trade forces that have gotten dominance in the Republican Party and this administration are

present in the Democratic Party. UH. Certainly among the standers, voters and many on the progressive side who see trade as having worked against America's interests, But the mainstream foreign policy and trade establishment UH still on the Democratic side, the the centrists and most of the policy people whould

go into the government. Believe that something like the TPP was the Trans Satific Partnership a wonderful idea that would be a way to respond to China by coordinating all the on Chinese forces and countries in the region in an anti Chinese alliance. So trade can be a part of your national security question. But the question that you're gonna fight China on trade and security and everything else

where is it going to stop. Nobody knows what the Democrats are gonna do towards China because there are different forces in the party pulling in different directions. Gideon Rose, thank you so much. It is coming home in America. Just a rave review including important essays from Graham, Allison among others, and Thomas Right. Foreign Affairs can't say enough about it. I'll do a huge splash on Twitter, U

and out on LinkedIn on it as well. They used to not be a statement to Congress, and then there was a thing called the Humphrey Hawkins Full Employment Act of eight and we called these testimonies Humphrey Hawkins testimonies, and they were great. Sherman Greenspan said nothing in Congress. Maybe Phil Graham would get sweaty in the Senate and

say something. But other than that, John, it was a non event until the financial crisis, and I've got to say at the moment home, over the last couple of years, he's become a non event as well. We talk about a grilling on Capitol Hill. What often happens is individual lawmakers make it about their individual constituencies and end up trying to get a campaign video that they can send out to vout in the districts. I don't disagree, and it goes on for hours, and then it happens again

the following day. Steven Stanley Amer's pierpoint with a Stephen, let's go to the mathiness of this before we look at the other headlines. The chairman seas inflation moving closer to two percent over the next few months. Do you agree, Well, I think so. I mean, the core PC deflator has been the one that's running well below the Fitch target, and just we've got three very low monthly readings in a row, dropping out of the twelve month window in January,

silver in March. So I think it's it's really just kind of a basis effect. But most of the other indicators comple they should have been running much closer to too. I mean the statement I guess first do no harm is John Bench, you know, don't talk about the virus us an inflammatory way. What economics will you listen for today? From the chairman? Well, I I think you guys, UM covered a lot of it. I mean, I think what people want to know is is what's the threshold for

a material reassessment? And it seems to me that threshold is pretty high, and it probably as time passes this year it gets higher because I think the closer you get to the election, the higher the bar for the FED to move in either direction. Um. I think they're very comfortable here. Um. You know, I do think that the conversation around inflation is very important because there's been talk of them kind of changing the uh, the goal

posts a little bit with regard to inflation. UH that I don't think they're ready to talk about that too much just yet, but it is important to hear what they're saying about inflation, how they view that. UM. And I think you're right that they want to say as

little as possible about the coronavirus. I mean, there was one literally one sentence in the whatever it was fifty or sixty page monetary policy report that came on Friday about the virus, and you know, the news war headlines were, you know, virus takes key role and fed's outlook, so they can't really say too much about it. The market speaking right now, we gotta one to wait on the euro right now, one weaker euro off of these headlines.

You know, Stephen, there's a question, and I think I want to go back to the point that John raised, which is it becomes an exercise in political punditry on the part of the elected officials more than any kind of actual information from FED share Powell, and I wonder how much that is exacerbated by the repo operation of the New York FED. And today we saw yet another over subscription of the fourteen day repo operation, the third in a row that was oversubscribed, more bids from banks

than there were available. And I'm wondering a lot of people view this as a subsidy for the banks. How much will that be at the center of the questioning. It sounds like it's going to be a big topic. I mean, they were there was a letter sent from a number of senators um in advance of the testimony about that, So I think it is going to be something kind of a populist angle of Hey, you're you know, you're subsidized in the banks again, what are you doing? Um?

And you know, I think Powell has certainly been working very hard on making sure he has a good answer to that question, because it's definitely gonna come up. Are they right? Are the politicians right that the FED has been subsidizing the banks? Uh? Well, I mean, I think that depends on how you want to look at it. I think from the FED standpoint, they would say that that that's almost irrelevant in the sense that they had to do what they needed to do to make sure

that the financial system was running smoothly. Um. If it's a small subsidient bank to banks, so be it. I think in reality, um, the FED had no other choice. I mean, if they wanted to uh support and smooth over the repo market. Uh, you know, the operations that they've conducted were really their only uh way to do

that in a in a in a timely manner. There's been a lot of talk of about a standing repo facility, and I think that if they were to go that route, it would kind of lessen some of this concern because a standing repo facility would be much more broadly available than what we have now, which is UM just goes through the primary dealers. But that's gonna it's gonna take

a lot of work to get that going. I mean, they have to onboard a whole new group of counterparties and set up all the rules and everything, and that takes time. So if they do go the route of a standing repo facility, I suspect at least part of the rationale and their minds will be so that we're kind of giving everybody a chance, so to speak, rather than just limiting it to the primary dealers as is the case now. For many people in this market think

the FED is conducting QA through its bill buying. The FED us of chairman today repeating his pledge that the FED will slow built bying. How do they do that without a market disruption? Given that there are many many people in this market, I'm sure you've spoken to a few of them to believe that bill buying is q A. Yeah, Well, the only thing they can do really is is to be very upfront and and very transparent about what they're doing and give us plenty of notice, and and you

a palace started to do that. We We've got a lot of good color at the January press conference, and I suspect will here more the same today. But they just have to All they can do is make sure that people kind of undertand where we're headed and and if the market chooses to react to that, and there's really not much effect can do. Steve Janey, you're a dieing all the optimists. You're brilliant coming out of the depths of the financial crisis saying look, we're just gonna survive.

We're gonna see abandoned GDP better than good. We had Benjamin later on this morning from London, who's a very optimistic on the equity markets. He's calling about an earnings trough as well. Is it the same thing in the amirous Pierrepont Woods? Is it? Is it the same you know one eight percent g d P and we're just grossly misjudging the resiliency of the American economy and we get a two point x statistic that surprises, say the

fourth of July. I would say that's certainly my view, and and obviously the you know, the virus situation kind of post some clouds on the on the near term horizon. But I do believe that the UM, the US China trade dispute last year had a pretty significant drag effect on the economy, and that coming out of that we should do better. We've seen a number of better than expected economic releases for January, We've seen a significant improvement

in consumer and business confidence over the last month or two. UM. In the very near term, obviously, we're you know, we're kind of struggling through this virus thing and trying to get our hands around the how much of an impact that's going to have here and globally. But I do think that at least in the first half of the year, if we can get past the virus, I think the economy can do a little better than two And to build on that, what does that do for the Federal Reserve?

How do they respond to that given the fact that right now people are expecting at least one rate cut by the end of the year. Yeah, I think that will probably slowly fade if the day to come in the way that I expect. I mean, the fet has been very clear that they don't expect to have to move anytime soon, and um, you know, I'm on board

with that. I think right now it's a steady with a slight easing bias, right I mean, it's more likely if we're going to get a move in the next few months, it would be an easy and a titan. I think if if the data do play out a little better than generally expected, then you just kind of move back to um, no bias and and potentially if you know, if the data is strong enough, obviously you could move to a bias in the direction. But the reality is, I just don't see the FED moving before

the election. The worst business investment right now? Is there any spirit to business investment given all these unknowns? Well, as I said, I think there was, ah, you know, there was a significant pop in business confidence that came on the back of the US China jail. I think there is scope for a nice improvement in business investment. Although you know, if I'm involved in anything in Asia right now, I'm probably sitting on my hands again until until I get our you know, dispised thing put away.

Very valuable. Stephen Stanley, thank you so much for them's pure pond this morning. Following up on that Sprint T Mobile deal. There were four wireless carriers. Now there's gonna be three. We finally get this T Mobile Sprint deal done. Almost two years in the making. Regulatory hurdles, both at the federal and state level all have been cleared. This deal is going to go through, giving us what's the bottom line here? We talked to a good friend, John Butler,

recovers all things telecom for Bloomberg Intelligence. John joins us here on our Bloomberg Interactive Broker studio. So, John, what's the practical implications of T Mobile and Sprint getting together? Finally? So, finally the deal is done. It's great news for both

T Mobile and Sprint. For T Mobile in particular, it gives them access to sprints two point five giga hurt spectrum, which is a big fat block of nationwide spectrum that is ideally suited for five g And so this whole deal here, the approval of the deal is going to allow T Mobile to really move forward I think, quite aggressively on five G. So do consumers, I mean, what's gonna what's it gonna mean for consumers? Is there any gonna be any real difference in the marketplace? I don't

think so, you know. I mean that was the concern coming in the States, really thought, God, you know, if we allow these companies to merge, prices are going to go up across the board. The reality is the wireless business is a commodity business, and I think there's sort of a cap on pricing in general that's out there.

You know, petit you can see it, particularly a Christmas time, you know, the wireless carriers really get into it, and so prices tend to fluctuate over the course of the year, but on balance they tend to move down over time. On a game theory basis, would have Verizon and a T and T do if it's a triopoli now and they have to merge and go against the pink T shirt and all the market share the pink T shirts taking.

Is there an active visible response from Verizon or A T and T. I think for and pushes really hard on the C band spectrums coming a year end. You know. Again, T Mobile now has access to a big fat chunk admit band spectrum, which is ideal for five G. The C band spectrum is very similar to that spectrum block and I think for Verizon to compete on a level of playing field now with T Mobile, they need that spectrum, so they're they're actually gonna, I think, really step up

and be aggressive in most major markets. And I still haven't done. I still haven't downloaded Catalina on the Apple, you know, the major software upgrade of Apple. Because there's so many glitches within it. Why do I need five G AM I gonna download, you know, as a phrase download to get five G? I think five G. It's a great question, Tom. I actually think five G is more well suited to enterprise applications, and that's where the carriers see a lot of money in margin for you

and me in the short run. I think it represents a step up in capacity, just got much more. This is the time I gotta go to Apple and you're just omnibus coverage on it. You've been brilliant about staying in and the product Apple is going to get out of business. They're terrible. And Butler said, wait a minute, what's your next essay you're going to write for Bloomberg Intelligence on Apple? Is it on is it on services? Is it on unit dynamics? I mean, what's the thing

you're thinking about of Apple into two thousand twenty. So in what I'm watching for Apple is number one the diversification the iPhone product line. We have a low cost iPhone coming out initially they said in March, according to Bloomberg. I think that gets pushed out by coronavirus, but not much, probably a couple of months. That gives them play at the low end of the portfolio, and then we have a five G phone coming in September, as you mentioned.

Longer term, I think Apples trying to make that pivot from hardware to software and services. So I'm keeping a close eye on the content business and also the fintech business and health apps to see what they do there. It's it's early days, but I think that's an important new vertical for them. So, John, you mentioned kind of

the vertical, that's exactly so. Kind of this exactly so the kind of the mid range phone in terms of prices that because we've talked about in the past markets like China, like India, mass markets, but not necessarily markets where the high end phone is that competitive from a consumer perspective. Is this new mid range phone kind of targeting some of those international markets. Yes, it is. So it's a sequel to the iPhone. See if you remember

that that was a three phone. This will be priced much the same way, and in terms of look and feel, I think it's going to be fashioned after the iPhone eight in terms of what the body of the phone is gonna look like and like the sc the guts are going to be all updated, the updated processor, operating system,

apps and so forth. So you know, it taps the high end of that mid range market and it expands Apple's addressable market opportunity and gives them a play in those markets like India and China where the you know, there's sort of iPhone Uh eleven is at a reach I think for the average consumer is I don't. I don't agree with that because they get that you can do the financing and it's like fifties sixty bucks a month,

right it is. But you know, if you're making a fraction of the average income here in the US, it's it's still a pricey proposition. Yeah, okay, okay, When when do we have to stop buying Apple stuff for our children? Uh, there's gotta be And I got my twins are approaching birthday and you still feels like the time I need to just cut them off right, Okay, that's what yea good luck and John Butler brilliant on Apple and of course,

I mean, what do you buy? Hold sell and busted his chops folks three share what was a two hundred something and they're going out of business. So I think secret is out on the five G phone and the low end phone. The key for Apple is they need to keep the momentum going in the iPhone product line as we get into twenty one because they're gonna lap tougher cops. John Butler, thanks so much for joining us, John Butler, because all things covers, all things telecom phones,

all that kind of fun stuff Apple for Bloomberg Intelligence. Uh, and we appreciate him for joining us here on Bloomberg Interact up Broker Studio. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane Before the podcast, you can always catch us World One. I'm Bloomberg Radio s