From Mahard where Innovation of Money and Power colle in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Hyder Bloomberg's World headquarters in New York, and I'm Ed Lovelow in San Francisco.
This is Bloomberg Technology Happy twenty twenty four.
Yeah, a brand new year, and coming up on our first program of the year, Full market coverage ahead, US stocks and bonds. Look, they kickstart the day in.
The red and we'll look at the movers, weighing on the benchmarks as Apple drops amid a Barclay's downgrade on calling iPhone demand details ahead, plus.
The latest read on the health of the EV market. That's as Tesla falls behind China's EYD in terms of production. That and so much more coming up on the show. But first it's check in on the markets, because when we know that we've had the push the pull of the Apple and the Tesla with of course some of those sales maybe up to expectations, but losing when it comes to a key Chinese competitor. But and now's that currently off by one and quarter percent. Two year yields
sell off. This is a global bond market sell off. We've seen it in the UK over in Europe in particular. And remember we've got a lot of corporate issuants coming through. Some slight supply side issues probably at play here a little bit with the boring costs Bloomberg dollar indext that rises on higher. Have we called it right that we're going to see as many rate cuts in twenty twenty four as the market currently anticipates. Market just recalibrating that
this morning. Move on, have a look at what's happening in the world of crypto, because as the dollar strengthens, it's interesting the bitcoin does too. We are up four tens percent for bitcoin versus us or actually eclipsing that forty five thousand dollars hand or are all important as we watch out for that ETF where the SEC approves the spot bitcoin ETF.
Yeah, and the logic follows understandably that most crypto related stocks in.
The equities markets are also higher.
Some of the familiar names you see high single digit gains in the green. One exception to that rule is Coinbase, softer by four point four percent. Happen even lower, I guess look at the performance of that stock in twenty twenty three, and then look at the run up that it had from the end of October through to the year end. Maybe there is some profit taking or you know, rs I think was eighty going into the pre market this morning. There's something going on there. We're not entirely
sure what it is. The biggest single story and downward pressure on the market more broadly is Apple. Barkley's downgrading to underweight, a new price target slightly lower one hundred and sixty dollars per share. They basically said, we're looking at the volumes and mix for the iPhone fifteen, we're not convinced. They're also saying that if we get an iPhone sixteen, we don't see the technological upgrades in that
generation to move this stock high. Remember, Apple had multiple quarters in twenty twenty three where expectations were missed, but the stock continued to run up. That's an interesting equation going into it, and it's the biggest points drag as it stands on both the NAS that one hundred and the S and P five hundred this Tuesday morning, and look when.
It's just shy of two point nine trillion dollar market cap the odd percentage point does have a huge impact on the overall SMP. Let's just talk about all of this with Iako Yoshioka put Poto, manager over at Wealth Enhancement Group. Is so good to kick off twenty twenty four with you, Iaco and just talk to us a little bit about some of the impact of these Magnificent seven.
The impact that Apple had had is fifty percent run off in twenty twenty three, and then on the day of course, people starting to think that they can really continue to outperform. That seems to be questioned.
Hi Caroline, Happy new year to you. Yes, you know, with Apple, it's probably our least favorite among the Magnificent seven. You know, tech overall without fifty six percent as a sector within the F and P five hundred and twenty twenty three. So starting off twenty twenty four with a little bit of a breather, not a big surprise here. And then with Apple, you know, as Barclay's mentioned in their down you know, the slowing of their overall hardware
sales is going to be a problem. And you know, the one thing that keeps the stock up with all the buybacks, but you know, when the multiple is closer to thirty times. It's just less attractive sort of on a you know, going forward basis.
Here, how much does the reaction in Apple signify a broader concern that all of the fantastic growth inequities and the tech sect we saw in twenty twenty three it's not going to carry through to twenty twenty four.
Hi, ed, Yes, you know, reversals tend to happen in January. You know, we all love to hear about the dogs of the Dow and how they tend to perform better in January, and so, you know, we do see a little bit of profit taking clearly going on today in many of these Magnificent seven names. You know, we like technology from a long term perspective. I think a lot of these names have a lot of growth in them over the long term. However, you know, in the short term,
you know, profit taking happens. It's good to lock in some of those great returns that we saw in twenty twenty three and pay those taxes in twenty twenty five.
In order to realize some of those returns last year, you needed to buy seven names, the Magnificent Seven. How will that be different in twenty twenty four, there were so many unique stories within those seven. You know, in Video was a really clear AI story on the compute side. Can it just continue on or do you have to go very specific? Forget the bundle of seven. The magnificent one is when you've got to go down.
Well, in Video was definitely a leader within that magnificent seven, up over two hundred and thirty nine percent. I believe in twenty twenty three, you know, will that repeat not likely? And we have to remember that in twenty twenty two, in video was down over fifty percent, and so that you know, great growth that we saw in twenty twenty three was after significant decline.
You know.
Longer term, we continue to like Nvidia and you know what they are doing. They continue to grow their total addressable market with you know, starting with gaming, leading into machine learning and then going on to the data center and AI, and so we continue to like that. We just don't think that it's going to have the type of returns that we experience in twenty twenty three. And
diversification really wasn't your friend in twenty twenty three. But I think going into twenty twenty four, we believe that a broadening of the overall market is what's going to benefit investors.
Ah, So talk about that broadening, IACO. Do you go broader within the US, do you go for smaller market capitalizations or do you go global?
Yeah?
I think you go all of it. You know, we saw in at the end of twenty twenty three small caps had a significant comeback in November and December, having you know, I think December small caps are up over twelve percent, and so you know how having that diversification really helps out. And then you know, I know we talked about the dollar sort of rebounding at least recently, but you know, the dollar weakness does help out international
and emerging market stocks. So we expect some of that broadening to benefit overall investors, especially as interest rates you know, come down, or at least if that's the expectation.
So you said, how perhaps Apple was you know, the least favored among some of those key names. Which one is your star forma? Which name do you have to hold onto with both hands?
You know, we really like Microsoft. I think here it's a broad again, diversified name. They've got so many areas of growth, they continue to grow within cloud. They do have the partnership with open Ai in regards to artificial intelligence,
and so we like all of that. They continue to grow, you know, outlook in Microsoft three sixty they have co Pilot which launched in November, which will introduce more AI capabilities across all of the Microsoft platform, and so we continue to like Microsoft over the long term.
A Yaka Yo Shoka of WELC and Hansman Group. Just a terrific way to kick off what I'm sure is going to be a ginormous year for the Magnificent seven or otherwise, Thank you very much. Turning to the ev Or auto makers, Tesla topping Q for delivery estimates, Rivian falling short, beating on production. Will start with Tesla with our Global Auto's za Or editor Craig Tude's out of London. So Tesla does four hundred and eighty four thy five hundred and seven EV's in the final three months of
the year. It beats estimates, It beats the target of one point eight million vehicles for the year. But the other storyline is that they lose their crown as the world's biggest seller of EV's.
Yeah, that's right, and it wasn't particularly close. In the fourth quarter, BYD outsold Tesla by about forty two thousand evs. So this was a trend that we really could see coming just looking at you know how BYD was trending, particularly in China. They really dominate to that market and have done so in sort of dramatic fashion very quickly.
Just a few years ago. You know, this was a company that decided to make a full transition to only battery electric and plug in hybrid sales for their lineup and in very short order managed to pass up Tesla in that market. They're now ahead on a global basis, and this is a company that you know, you hear Elon Musks talk about vertical integration and sort of controlling your own destiny, making all of your parts or many of your parts in house. BYD does that to an
even greater extent than Tesla does. They make their own batteries, they make chips. So this is a company that has kind of you know, out Tesla and Tesla in the the last couple of.
Years and selling at a pace five hundred and twenty six four hundred and nine fully electric in the last quarter. But there is going to be increasing competition coming on its home turf. BYD is selling cheaper cars, it's making therefore less profit than Tesla is, and they're likely to even more competition coming from China as well. How do you think Tesla will fare in that, Craig.
It's a massively competitive market, and you're right to call out that the price differences here between Tesla and BYD are hugely different. The estimate for the average transaction price for Tesla among analysts survey by Bloomberg is you know, something on the order of forty five thousand dollars. BID is roughly half that. So this is a very different
couple of companies. But we are seeing BYD also move up market, whereas you know, Tesla has been moving in the other direction, right, And so you know, the China market is hugely competitive. Musk himself will tell you it's the most competitive in the world weather bew ideas able to sort of weather that. I think they've you know, really made a statement in terms of their ability to
do so. But it only will get more difficult in the year to come, especially as we see, you know, some of the cell phone makers in China enter the space and do so through contract manufacturing arrangements with some of the state owned companies, and that's going to be a trend that's really interesting to watch in twenty twenty four.
Craig I was in the hot seat this morning for Rivian, and when I was writing about production and delivery, it was interesting the severity of the share reaction. Right, they quite comfortably beat their full year production guidance, but you were drilling down and made a wonderful chart that looks at kind of how sequentially deliveries have started to lag a bit.
Yeah, I think this is a company that you know, was really production constraint that was their issue for sort of you know, quarter after quarter, which ad you documented really well. You know, this is a company that's managed to sort out some of the kinks and in production and over some of the growing pains the the deliveries,
you know, part of the equation. They still have some work to do and of course, you know, the the investors aren't going to look particularly fondly when you outproduce, you know, relative to deliveries by the amount that that Rivian did in.
The fourth quarter.
There's going to be some concern about whether you're pushing on a string and whether you may need to cut prices you know, in the future, and so that will
be something for us to watch. Also, I'm you know, very curious and whether you know the delivery van production, you know, and the change in Rivian being constrained to only being able to deliver those to Amazon to just you know, very late in the quarter, uh, sort of being able to sort of get out of that deal and you know, start delivering delivery vehicles to to other customers. You know, maybe there was a complication with that in the fourth quarter that accounts for this differential.
We're going to drill in to demand side equation of all these things so much more. With that credited out. Always great to have you, Thank you, And later on the show, we are going to do a real deep dive on Tesla in particular Dan Levy from Barkley's going
to be joining us on his latest thought. And note, meanwhile, let's talk about well the other Elon Musk company when one of what's six or seven of them, we're going to talk X because Fidelity has just cut the valuation of the state that it has in the social media company. This is the latest in a series of markdowns by Fidelity ever since Musk concluded the acquisition of the social media platform all the way back in October twenty twenty two feels like a lifetime ago. Someone who's been tracking
that ever since. As Blue Merg's Kurt Wagner and we got the numbers, just remind us how much they're cutting and what sort of number we're now looking at for evaluation of Twitter now.
Xeh, I believe the cut from the end of November, I think it was was around eleven percent, but in total, more than seventy percent. The value has been cut down since the close of the acquisition. Now you will remember that was a forty four billion dollar acquisition at the end of twenty twenty two.
If it's been cut.
By more than seventy percent, we're now looking at a company that at least Fidelity believes is valued closer to twelve and a half thirteen billion dollars. And so, you know, to put that into a little bit of historical perspective, you may remember Caroline back in way back in twenty sixteen, Twitter almost ald the Disney almost ald the salesforce. The company was around the same value way back then in
twenty sixteen as it is today per Fidelity. So you know, We've just seen a huge erasure of value from X since Elon took over.
The curious thing about this is that Fidelity is one of the investment firms that participated in the take private deal in the first place. Behind this, I guess we don't know, you know, the fact is behind Fidelity's decisional how they arrived.
At that valuation.
But you've done some reporting on how the financials have changed in the last twelve months.
Yeah, we talked about this, ed if you'll remember, right before the new year, right, we had a story come out and Bloomberg that the advertising revenue at X is projected to be you know, somewhere around two point five billion, and that may even be on the high side, right, because some of these productions were made earlier in the quarter before Elon went on stage at deal Book and you know, started swearing at Twitter's advertising partners, and so
you know, the value of Twitter's business or excuse me, the size of Twitter's business has just decreased so much. Even just a few years ago before Elon showed up, you know, they were bringing in more than five billion dollars a year, most of that in advertising revenue. We're now talking you know about half of that. And a
lot of this is quite frankly self inflicted, right. A lot of the issues that they've had seem to be things they could have avoided with you know, some different approaches, I think to the advertising business.
And to that end, self inflicted wounds as they are does ultimately bother the management, the leadership of the erosion of value might well bother some of the partners who well went in on the deal to take private, but ultimately us real pressure being put on turning this company around and building back is value.
Well, they're in a unique position, right, and not only are they not a publicly traded company, but a lot of their investors are sort of investing in Elon Musk and X may be one of part of that investment, but they also want to be involved with Elon when it comes to SpaceX or neuralink or boring company or whatever types of things he does, right, And so I think there's a lot more patience from the people who invest alongside Elon Musk because they see the bigger picture,
right and they say, Okay, maybe we are losing some money on our X investment right now, but the relationship that we've built with Elon. The support that we're giving him on that side will pay off in some of the other businesses that he runs. Right at least, that's
how it's working right now now. I don't think there's going to necessarily be a willingness to just continue to run this into the ground over time, but I think he has a little bit more runway than most companies would in this situation because of all the other businesses that he has.
Bloomberst Cowagonist Star in the year with the store of X the company and platform for me known as Twitter. Just as we started twenty twenty three, some things don't change. Happy new year to you now. Coming up here on Bloomberg Technology, another big, big story, Biden blocks chip making equipment to China. Details behind the administration's attempts to curtail China's tech advances. That's coming up next. This is Bloombog Technology. Okay, it's time for talking tech. First up in the news,
Dish Network and Echo Star finalizing their merger. The two companies close the deal on December thirty.
First.
The move comes as Dish chairman Charlie Ergin seeks to move away from the dwindling pay TV businesses into wireless services to challenges the likes of Verizon AT and T and T Mobile and Bido's bid for live streaming company
Joy lapses. The three point six billion dollar offer did not get approval by December thirty, first deadline from regulators by whose first announced the present potential acquisition back in November of twenty twenty, as the Chinese search giant was trying to get into advances in the digital video arena. Plus in the UK, BT Group may face some fines. The telecom company missed UK deadlines to move data out of core network equipment, which was manufactured by China's Huawei.
The UK banned the usage of Huawei from its telicon infrastructure back in twenty twenty over national security concerns.
Caroc Let's stick on those national security concerns the geopolitics, that is China versus or developed nations at the moment because chib equipment manufacturer ASML faced over there in the Netherlands, it's canceled shipments for some of its machines that were headed to China at the request of the Biden administration. This is calling to people familiar with the matter for more. We're welcomed in Mackenzie Hawkins joining us NOLU from Washington.
And the interesting thing is they front run basically the date that the ban was coming in. They had to hold back even when well theory they were still allowed to be selling them right exactly.
So the Dutch government had actually imposed restrictions on these machines that were set to go into effect on January first, but the Biden administration pressured the Dutch government to cancel licenses for ASML through the end of last year because they were worried that China could use those chip making machines to continue making semiconductor advances.
This is an instance where it's really important to be clear what we're talking about chip making equipment, or more specifically the cutting edge of ultra violet lithography machines, and this is what ASML defined that as but in layman's terms, it is the ability to cram as many transistors onto a chip as possible etch on in the smallest form factor.
And the relevance Mackenzie, as you know, is that reporting last year about Huawei and what they were able to do at the cutting edge using ASML machine, but some different machines exactly.
So.
The most advanced chip making machines are so called EUV machines. ASML is the only company that makes these machines, and the Dutch government has banned ASML from sending those machines to China for a long time. But Huawei, China's tech giant, was able to produce a ship with its chip making partner Smith using DUV machines, which are still highly advanced, but a slightly less advanced model that ASML was still
allowed to ship to China. And so what the US had been working with the Dutch government on was a set of restrictions on the shipment of those immersion DUV machines to Beijing, and the Dutch government implemented such a restriction, but gave a lag time to ASML to continue making shipments through January. First, the US stepped in and said, you need to actually cancel those shipments. And those are the conversations that.
Happened over the last time.
There is some interesting politics behind this as well. So, according to Bloomberg's reporting, US National Security Advisor Jake Sullivan phones the Dutch and says, can you get a sm to do it? And the Dutch say just phone them yourselves, make their request direct.
Exactly. So first you had Jake Sullivan reaching out to the Dutch government. They say contact ASML. The US has this conversation with ASML, and then you see the Dutch revoke some of these licenses. So you're working with a little bit of a workaround here where the Dutch government wants to be able to point to the US and
say this restriction is coming from Washington. And of course you saw the US tighten its restrictions on overall chip making equipment and advanced computing exports to China earlier this year, additionally affecting some Dutch machines, some of the emerging duvelethography equipment from ASML. So you have a bit of a tension between Washington and Amsterdam as the US plas ahead with its chip war against Beijing and the Dutch, the Japanese, other governments around the world are sort of dragged.
Into a well as well.
Bloomberg's Mackenzie Hawk and it's just terrific reporting. Worth noting chip stocks are underpressure today carrec.
Yeah, particularly in China, those that would depend on such sort of EUV lithography. We thank you so much McKenzie has always.
Welcome back to bliogow Technology Ed Lovelow here in San Francisco, and I'm.
Karen Hide in New York. Let's get you a quick check on these markets. First day, I've traded A twenty twenty four and will there's a little bit of profit taking risk coming off the table. Call it what you will. We're reassessing how much rates are going to rise all fall and how quickly they might be cut. Here in the United States in particular, we're looking at therefore two year yield that backs up at some seven basis points. It's a global bond sell off, and indeed it's in
everything sell off. Kind of a day equities down and bonds were seeing then aw's like one hundred curry off by one point four percent. Worst day for generally tech stocks is December the twentieth. Now we are seeing bitcoin though still getting a little bit of love. We anticipate, of course, a spot Bitcoin et have been signed off as as soon as June January eighth, January tenth, we're looking at it up some three point seven percent, eclipsing
that forty five thousand dollars handle. Moving on and look at some of the individual players that we're looking at, because well, when you are seeing a juggernaut such as Apple on the downside after a keynote out of Barclays, well, no wonder the overall benchmarks fall and we're off by more than three percent for a company that's worth well at one point three trillion dollars, So no wonder it has a key points waiting micro strategy. Of course, a
lot of the cryptonames on the higher side. As bitcoin goes high, we know micro strategy of course, key element of the balance sheet is indeed and bitcoin we're up eleven percent. Lastly though, just looking at Tesla, and this has been the news of the morning. Ultimately Tesla managing to live up to the one point eight million for the full year in terms of evs sold, but it's been eclipsed by a big Chinese player now and we've got a dissectors to how much that really matters.
Yeah, it's interesting that the stocks flat.
I mean, it's kind of been a way over the place since the market open, markedly higher than lower, and then higher and then lower again. Let's keep the conversation going and bringing Dan Livy Ananist for Barkleys who has an equal weight rating on Tesla a two hundred and sixty dollars price target.
What is the storyline for you? Dan?
You know, you meet the stated one point eight million target, But I remember a year ago the first earning score of the year in January twenty twenty three, musked outing, well, we could do two million maybe, So what does the score cards show?
All told?
Hey, Edon Carlin, thank you so much for having me. Yeah.
I think the story of twenty twenty three was that we were pulling back from a period of evuphoria. And if we just contrast what's going on now versus where we were two years ago, where the market was fully supply constrained and demand was not at all concerned.
That's not the case now.
Now we have questions about demand, even so much to the point that Tesla acknowledged on the last earnings call that there were some macro concerns and it would not be producing as much as it could in its Often and Berlin facilities simply because of some of these macro questions. And so the story going forward is, you know, how do we deal with this period of some demand uncertainty within the EB market?
The storyline that we're leading on at Bloomberg is that Tesla's lost its crown to BYD. BYD the sort of biggest standalone seller of battery electric vehicles, and we knew.
That was coming.
Does it matter if Tesla is eclipsed by BYD, which is kind of predominantly focused on the domestic Chinese market.
It doesn't necessarily matter per se in the sense that there is room for multiple players. And if we just break apart the markets, yes, BYD eclipse Tesla. This year within battery electric vehicles, Tesla still BYD Tesla was at one point eight million, I believe BYD on battery electrics was one point six million something along those lines, with
the remainder being plug in hybriardy vehicles. If you look at it on a regional base, that's where the dynamics really vary, because in the US, Tesla is still the dominant EV name.
You know, in Europe.
Tesla is still a top three or so player in the beeB market. China Tesla is still you know, top two or three. It's BYD that's really taken the crown. And it's China where we saw a lot of bid sales accelerate The other story that we saw merging in twenty twenty three was the rise of Chinese exports to Europe and to other markets. So, yes, there's more competition Tesla from BYD, but there is still room for Tesla
to grow. It's just a question of in the markets where Tesla is serving, where is the demand for that?
Yeah, and spin us then into twenty twenty four, when we're thinking of a BYD getting into Hungary and producing there, when we're thinking of two very different price points, ultimately remain on top for Tesla in terms of profits and revenue because they make more expensive cars. Will Tesla ever want to go lower to be able to serve and get in on that highly competitive state that there is in China or should we be staying in its lane?
Well, that's ultimately the goal for Tesla, right. That was something that they outlined at their investor day last March, the path to megascale. Right, you know, twenty twenty four, from a volume perspective for Tesla, we're at two million units.
That's below consensus of two point two million.
So it is some growth, it's low double digit growth versus twenty twenty three, but.
It is below you know the long.
Term growth curve Tesla has laid out, and that's really because there is not much in the way of do incremental product for Tesla in twenty twenty four. Yes, their cyber truck that we think that's niche, it's really Model three and why, which are somewhat dated models. And so really the story for Tesla on volume growth going forward is going to be modeled to whenever that is released. We have that as you know, sometime in twenty twenty five, where they really go down to that lower price point.
Are ways to go to get to that lower price point, they have to drive out a lot of cost to get there.
Let's just go back to this cyber truck because that was something that I'm sure frustrated you and many an analyst investor is they didn't strip out give us the intricacies of how many they actually sold. Was it five hundred on the low end, was it five thousand on the high end? Was where do you think the cyber truck is landing? And doesn't really matter if it's just getting people in to have a look at the other cars.
It was probably a small set of volumes.
We modeled in something like two hundred units.
You know possible it was below that number.
Look, I think Tesla has has been clear that there are a number of production challenges along the way that need to be met with Cybertruck, and so that's why to us, yeah, cybertruck is a different model for them, and it does help give some model diversification which they've needed. That being said, we'd set our expectations accordingly on cyber truck. We're assuming that you know, you're not going to get more than twenty thousand units in twenty twenty four.
Because it is such a slow ramp. There are likely some questions as well. On demand.
We think that it will draw on some consumers who want more of a lifestyle type vehicle, But if we don't see cyber truck really penetrating that core large pickup.
Market which is used for work purposes and commercial purposes.
Dan, I want to go back to the demand question and zoom out. You can apply it to the legacy auto names Ford and GM. You can bring in Rivin you want, But there is certainly a question now about the wave of first or early adopters being gone and how you just go after the everyday household. Tesla has used price cuts as its lever the federal tax credit in this country is clearly a big factor. How do you model demand for this year.
Volume the EV market will increase even for the legacy players where there are questions on demand and where clearly they are slowing the pace of volume, there is still going to be growth, you know, from a subsidy standpoint. In the US, one key step forward is that the seventy five hundred dollars credit will now be made on a point of sale basis, meaning you get it immediately when you purchase the vehicle as opposed to when you're filing your taxes.
So that can help.
That being said, there are some vehicles losing eligibility, and as you note that, there is clearly a question about you know, going from the early adopters to the early majority, where now you have to deal with the questions of range anxiety and charging availability, and so these are all things that need to be addressed. So I think that there is clearly still path forward for EV volumes to be increasing in in twenty twenty four. It's just that
the pace of growth is slowing. The other piece of this, and you alluded to this on the point of the price cut. Tous Look can cut its price because it's cost structure allows it to do so. For the legacy automakers, they've struggled with evs on the cost front, and there's only so much that they can cut on price because the costs are what they are.
So they have some work to do on the cost side so.
That they can sell more volumes at a more appropriate price.
Cort Danley Vee, it's been so good to get you on the back of these production numbers today, of course, DANLEYB of Barclay's, we thank you so much and sales data at that. Meanwhile, the coming up, we're going to be talking about Apple facing a ban on imports of its watches. You know, it's on ice of the short term, but what about the longer term? The conversation is up next with James Gagan Technology Litigator over at Alan and.
Overary and what's we got, Yeah, quick check at Maderna that's really spiking, shares up around sixteen percent as it stands, trading at their highest levels since late August of twenty twenty three, the news being that the stock has been given an upgrade to outperform from performing. Oppenheimer the firms, saying they expect to see real return to top line sales grow Formerderna in twenty twenty five, and they're talking about increased visibility on the sale of COVID nineteen vaccine.
That's a big move of sixteen percent on Maderna in this this Bloomberg Technology.
Let's just check in on shares of Apple because they took a hit and so therefore have the big benchmarks. It's all after Barclay's cut the tech giant to underweight for the first time since twenty nineteen, following expectations of what they see as soft demand for its latest iPhone, saying they expect quote a reversion after a year when most quarters were missed and the stock out performed nevertheless joining us now Bloomberg's. And that's the point, isn't it.
We just think back to the February earnings that they posted twenty twenty three, and they missed the streets expectations, but still shares rallied almost fifty percent on the twenty twenty three So why does Barklays now think it can't manage to pull that out of the bag?
Yeah, Barkleys has seen some holes in the Apple story. I mean, certainly you've had four quarters plus in a row of holiday declines. The earnings report that's coming at the end of January early February will indicate that Q one was either in line, maybe a little bit more a little bit less in the prior quarter. You have these patent situations which are likely to crop up in
higher frequency. Now, given the success that Massimo has had over the past few months, you're not seeing anything in the twenty twenty four product pipeline that is in the short term going to juice sales to any considerable degree. So they're sensing some fragility there in the Apples story, and that's what sent the shares down pretty considerably. You know, this Tuesday morning after New Year's Day, there's certainly going to be new iPhones. I'm not expecting anything significant the
bigger picture. There will be some camera improvements on the smaller Pro model, but some minor size and preases of the displays on both of the hind iPhones. You're going to get the biggest iPad revamp in five six years. You're also getting the Vision Pro that's going to be coming within the next thirty days a month or so. But certainly I'm not expecting the vision pros to drive a lot of revenue, certainly this year or even.
In twenty twenty five.
The iPad should do pretty well for that segment, but that has been underperforming the last couple of years or so, and the iPhone I would expect to be stagnants. Not necessarily in hypergrowth. It is as it has been, you know, in prior years.
But certainly you know.
It is a risk to bet against Apple because they always do seem to find a way to come out with numbers that could surprise the street.
Yeah, the share performance of twenty twenty three would speak to that argument. Bloombogs Mark German, thank you very much for the latest on the stock. The other story is that Apple's facing a ban on imports of its watches. The company is now seeking alternate paths to overcome a patent infringement loss that forced its most popular Apple Watch
models off shelves over the holidays. Here to keep the conversation going is James Gagan, technology litigator at Alan and Ovary, who's practice focuses on high tech intellectual property, international trade competition. There are some avenues they can go down on a fix.
There are some deadlines coming up, but in the first instance, it was a wild holiday period where Apple seemed to rely on procedural wrangling to push back as best they could against that original ITC decision, which was two months ago.
Yeah, that's right, ed, and thanks very much for having me.
You know, as someone who practices in the International Trade Comme quite a bit, this has been an interesting case so follow I think what it shows is that when companies like Apple are facing a potential import ban in the International Trade Commission, they can actually consider during the lawsuit making changes to their product designs and then getting authorization to sell those redesigned products, even if the Commission would find infringement and order a ban on the current models.
And this is a common plan B that we see often in these cases, at least based on my review of the Commission's public decisions, that doesn't appear to have
happened here. Apple didn't have an authorized backup design it could switch to, and so when the Commission decided to order that ban on the Series nine and Ultra two watches at the end of October, you've seen Apple scrambling to implement these emergency strategies over the last several weeks, and so I think it shows that when companies don't litigate this plan B and they don't have a fallback position in these cases, then they're exposing the business to
lost sales, and I think it limits their options going.
Forward, and not only just to lost sales, but also so probably a mental impact on a consumer that suddenly questions that the winning formula and technology of an Apple. To that end, if Apple does want certainty in the here and the now, what do they need to pursue How do we see this being ironed out? Is it just about settlement or in agreement with Massimo?
Well, it could be settlement that would bring certainty, you Caroline. But if companies like Apple that are in this position want certainty, then they need to implement hardware or software changes to the products and then prove that those changes do not infringe the patents, and then obtain authorization to import and sell these new product versions. And so according to Apple, it has already started this process. It's already presented redesigns to US customs, and it's said that it
expects the decision. I think by the end of next week. It's confidential. We don't know what that redesign will look like. But when companies go this route and they need a quick approval to get products back on the market, generally they'd want to present customs with a very simple hardware or software change that they've already implemented and that there's no dispute, doesn't infringe the patterns, and often this means
removing the infringing future completely from the product. So it is possible that Apple could get approval to sell these watches again, but they may not have the same features that they do right now, including one oxygen monitoring.
That is the fascinating part for me that we reported on December twenty eighth that Apple sees software as being the long term fix, but it relates to a specific functionality on a hot piece.
Of hardware, a wearable.
Who are the people on the other side of the table, customs who are reviewing the compromise and then deciding if it works or not because it is a software fix to hardware functionality.
That's right.
So Apple is asking for approval from a specific branch of customs that their entire job is to administer these exclusion orders from the Commission, So they're very experienced in
assessing these types of redesigns. But it is true that if Apple is proposing some sort of complicated software fix, we don't know, but if they are, then it would be challenging to get a fix like that through customs in the time they have a lot of and so you know, for example, Apple may want to present the cleanest, most obvious fix that it can to get these products
back on the market. We know that the Apple Watch series SC can be sold because it's not equipped to measure blood oxygen levels, and so Apple may be presenting a solution with us such as that.
James Gagan, we thank you for pushing us forward on this technology Litigator, someone who knows the ITC well, We really appreciate it. Verrett Allen and Ovary.
There are now other products out there that we can use to gain exposure to bitcoin in this moment, and it's just a moment of uncertainty between now we think and January January eighth to tenth, somewhere in that range perhaps, but we're out of an abundance of caution.
Didn't want to take any risk that abundance of caution that Kathy would have. ARC Investor talks about is why they exited Grayscale Bitcoin Trust but actually plow their money from our next generation ETF instead into pro Shares Bitcoin Strategy ETF. All of this, of course on the question of whether or not gray scale Bitcoin Trust will indeed
be converted into an ETF. And all of this, of course, the anticipation of an approval of a spot bitcoin ETF investment opportunity has been driving the price of bitcoin up more broadly past forty five thousand. Uti Yang is here to break it all down. So there's the intricacies of who and how and when, but ultimately any spot bitcoin ETF is going to be good for holders of the bitcoin of bitcoin in and of itself.
Yeah, so we're looking at a big wig coming ahead for the bigcoin industry. There's wide expectation there CC will make a decision finally on whether they will approve a spot bcoin ETF. So we saw bicoin really rallied in the past year based on the anti anticipation of this news, which analysts thinks will drive institutional funding into bigc one. But still there's uncertainty and approval is not one hundred percent guaranteed.
And many embracing paths for a buy the room and sell the news kind of fact. Maybe we even see a bit of a dip as and when it is infanty, it does get approved, But do you know any of the details is to actually what happens. Say January eighth to tenth, the SEC says yes, will immediately the ETF be there for the tradings that take days or weeks or months to be executed on.
We don't know yet if the SEC does approve a big one ETF fund. It seems that all the issuers and operators that are associated with a big one et F are have been preparing to get ready to launch and to trade the shares. Coinbase, for example, which is the custodian provider for a lot of these pecoin ETF issuers told us last week that they're operationalready. Once they get the green light, they are able to handle the volume and the trades.
So we'll see.
It seems like everybody is preparing as if they will be able to get approval. But then we'll get to see how much trading or how much buying eventually it will contribute to Bitcoin.
And just as I know, my husband is a senior manager over there at Coinbase. But meanwhile, Hiang, we thank you so much for all the details. We brace ourselves. That's going to be busy for the next couple of days for her and indeed anyone who's out there in the world of crypto and interestingly and of course now that does it for our first edition of lue Meg Technology twenty twenty four.
Yeah, one day into the new year. I'm not going to say what the story of the year is because after twenty twenty three you just wouldn't.
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