August 6, 2025 • 31 mins
Watch Bloomberg Businessweek Daily every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump announced that Apple Inc. will commit to spending another $100 billion on domestic manufacturing, the latest pledge by the tech giant to increase US production of its products as it seeks to avoid punishing tariffs on its flagship iPhones.
The announcement at the White House on Wednesday included a new manufacturing program designed to bring more of Apple’s supply chain to the US, with an eye toward assembling additional critical components domestically, according to a White House official who detailed the announcement on the condition of anonymity. Apple Chief Executive Officer Tim Cook attended the event.
The company had previously announced it plans to spend $500 billion in the US over the next four years, which will include work on a new server manufacturing facility in Houston, a supplier academy in Michigan and additional spending with its existing suppliers in the country. Wednesday’s announcement brings Apple’s cumulative commitment to $600 billion, the White House said.
Today's show features:
- Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman on Apple’s $100 billion US investment and Tim Cook’s visit to the White House
- Bloomberg Intelligence Global Equity Strategist Associate Gillian Wolff on her latest market research
- Bloomberg Intelligence Senior Media Analyst Geetha Ranganathan on Disney’s quarterly earnings report
- Amy Rubenstein, CEO of Clear Investment Group, on the distressed real estate market
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy, plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 1 (00:31):
All right, we're all in on tech, older tech, new tech.
We're going to talk about open a eyes, possible valuation.
We're going to get to that in just a mont.
Speaker 3 (00:41):
We've got to talk about that Apple, Matt, Yeah, no, absolutely.
I mean, look, it's a three trillion dollar company.
Speaker 1 (00:48):
Hesitated because it's like old new like it's all kind
of Chris Cross.
Speaker 3 (00:51):
Apple is definitely high tech. Still, it's not the cond press.
Speaker 1 (00:54):
But it's old tech, or is it.
Speaker 4 (00:56):
I think Apple is. As much as we.
Speaker 3 (01:00):
Sort of joke about or talk about the fact that
they don't seem to be on the forefront of AI,
they still are doing things that amaze us and change
our lives for the better, right.
Speaker 1 (01:13):
And that everybody uses as a benchmark. We're also focusing
on what seems to be an announcement that's expected to
come from President Trump around four to thirty pm. Wall
Street Time about another big investment by Apple into the US.
Lots of questions. We knew we needed to kind of
get a reality check once more. From Bloomberg News, Managing
editor for Global Consumer Tech. We're talking about Mark German.
He's out there in La Mark, good to have you back.
(01:36):
Apple shares investors are bidding it up more than five
and a half percent as we speak. We've talked about
these investments that Apple is doing in the United States previously.
Some were already I think announced. But this isn't about
bringing the iPhone supply chain to the US, is it.
Speaker 5 (01:53):
Here's why the stock is up.
Speaker 6 (01:55):
Stock is up because investors, I think there's just a guess,
no exist exactly what's going on here.
Speaker 5 (02:02):
This is marketing.
Speaker 6 (02:04):
Tim Cook, the CEO of the world's greatest marketing company,
is telling Donald Trump, who wants to tell his base
that he's getting the biggest company based in the US
to do whatever he wants, that they're going to be
doing more.
Speaker 5 (02:18):
In the US.
Speaker 6 (02:19):
The reality is that Apple invests billions per year already
in the US. Right They make glass through Corning in
Kentucky for iPhone screens. The manufacturer with the company called
Finisaur face ID Components, that's for three D facial recognition scanning.
They do some chip production in Arizona. And so Apple
(02:42):
is earmarking another one hundred billion, We're told to a
total of about six hundred billion over the next half
decade or so for US based manufacturing.
Speaker 5 (02:50):
They're going to put a fancy name on it, right.
Speaker 6 (02:53):
They're calling it the Apple Manufacturing something related to Apple Manufacturing,
US Manufacturing, American Manufacturing string Program AMP.
Speaker 5 (03:02):
I believe Apple is going to call it.
Speaker 6 (03:04):
The reality is, unless they announced that they're building plants
in the US to do final assembly, to do mass
manufacturing of iPhones and max and other products, they're not
doing what Trump has been talking about for years. They're
not doing what we've been talking about for years. As
far as I'm concerned, I don't believe that's happening. But
anything short of that, this is more marketing.
Speaker 4 (03:26):
Do we know.
Speaker 3 (03:27):
I mean, one hundred billion dollars is a heck of
a lot of money.
Speaker 4 (03:30):
But are they in one year?
Speaker 3 (03:33):
Are they spending that in five years? You know? Are
they adding that to the haven't they already earmarked half
a trillion to spend over the next four.
Speaker 6 (03:42):
Yeah, they've already earmarked half a trillion.
Speaker 5 (03:44):
Uh, so they're going to add to that. We don't
have the exact details.
Speaker 6 (03:47):
Yet because obviously Apple is not put in an announcement yet.
Trump and Cook haven't made their joint Oval Office announcement yet.
But in all likelihood, this is going to be about
further investments in companies in the US doing manufacturing n
R and D and development of components that are then
flown to China, India, Vietnam, Malaysia, Thailand to then be
(04:08):
mass produced in Asia to be.
Speaker 5 (04:11):
Sent all around the world.
Speaker 6 (04:12):
Now, I want to be very clear, I'm not criticizing
Apple's manufacturing strategy. Obviously, Apple's manufacturing strategy of production in India,
in China and elsewhere in that part of the world
is the only way that they are able to produce
the quantity that they produce today, at the fit and
finish they produce today, and the cost.
Speaker 5 (04:32):
That they produce today.
Speaker 6 (04:34):
There are so many reasons why mass production in the
US is just not feasible. But I don't want anyone
to be under the belief that a change is going
to be happening this afternoon where all of a sudden,
iPhones and macs and iPads and watches can be made
in the US. If Apple is able to say that
and then execute on that, I will be hugely surprised.
(04:54):
But my belief this is going to be a lot
of spin and more of the same. And the background
here is obviously tariffs. Those smartphone exemptions are running out today.
Apple has basically said in total across last quarter in
the current quarter about a two billion dollar headwind because
of harriffs. That's absolutely nothing right. That's like Tim Cook
could sleep fourteen hours a night knowing if that they're
(05:17):
going to get tax two billion a quarter. The problem
is that those exemptions are going to start running out,
and Apple wants to avoid that.
Speaker 5 (05:23):
So how do we avoid that. We make a deal.
Speaker 6 (05:26):
I'll come to the Oval office, as Tim Cook and
say we're going to do more in the US.
Speaker 5 (05:30):
We're going to make Trump look good.
Speaker 6 (05:32):
Trump will be happy, maybe give us some exemption, so
we'll see it all works out.
Speaker 5 (05:35):
But that's exactly what's going on here.
Speaker 1 (05:37):
So transactional, and it's just getting some of the heat
off of Tim Cook and Apple.
Speaker 6 (05:41):
Textbook definition yeah, getting the heat off of Tim Cook
and Apple.
Speaker 5 (05:45):
We'll see if it works. Right.
Speaker 6 (05:47):
Donald Trump can say anything in that Oval Office meeting.
Tim Cook can say anything in that Oval Office meeting.
We'll see how it goes. This is a tried and
true playbook. Tim Cook has done this with Trump so
many times, and it's basically worked every time. Apple has
never been largely impacted to any material degree by any
of Donald Trump's policies or tariffs, either in the first
(06:08):
administration or thus far in the second administration.
Speaker 3 (06:11):
All right, let's talk about the fun stuff now, the products. Right,
you mentioned the Apple Watch. Obviously we're both using iPhones.
I was on an iPad this morning. I have a
Mac at home. I just tried to buy a thunder
maax ECU from my Harley Davidson, and I found out
it only works with Windows, and I thought people use windows.
(06:33):
How much market share does Apple actually have? Because Carol
and I live in this ecosystem Apple, we don't even
think of, you know, Android products, but people do use those.
Speaker 1 (06:43):
And like them.
Speaker 5 (06:44):
Well, the US is basically half and half.
Speaker 6 (06:47):
It tilts a little bit more to Apple when you're
talking about phones tablets. Apple is really the market leader.
Smart watches Apples the market leader by far. When you're
talking about computers. Right in the US, they have pretty
good market share, but on a global level, the vast majority,
you know, close to eighty percent of the market is
(07:08):
still dominated by Windows. But they have made strides. And
you know, the most important thing with the Mac is
people keep buying them. People are holding onto them, people
are sticking in the ecosystem, and they're buying more iPhones.
Speaker 5 (07:19):
And iPads because of it.
Speaker 6 (07:20):
People get exposed to one product, they want to buy
other products.
Speaker 1 (07:23):
Thirty seconds. Does Tim Cook hate all of this?
Speaker 6 (07:28):
Well, I don't know how Tim Cook feels. I mean,
if I were Tim Cook, I mean, this is kind
of exciting, right Get to go to the Oval Office,
get to have a press conference the president, regardless of
who the president is. I get to usher in all
these new products. You know, Apple is dealing with some
complexities right now with the AI not everything is going well.
(07:48):
So it's kind of exciting that he gets to kind
of put his foot down right now and try to
like hammer people home that something needs to change.
Speaker 5 (07:55):
So no more coasting.
Speaker 3 (07:57):
I'm guessing he loves his job and this is just
one abouting part of it.
Speaker 1 (08:03):
Well, I have to say investors pretty excited too, because,
as we said, this is a stock that has definitely
lagged some of the other MAGS seven and big tech companies.
Right now up about just shy of six percent here
in the trade.
Speaker 2 (08:14):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
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Speaker 1 (08:28):
I want to talk a little bit about the markets.
As Matt was talking about the outperformance in terms of
the impact on the overall market, we're talking about Apple,
right really pushing up the overall trade today.
Speaker 3 (08:39):
Yeah, Apple has been a bit of a loser lately. Right,
it's this is the second worst performers.
Speaker 4 (08:47):
Okay.
Speaker 3 (08:47):
It's a three trillion dollar company and I buy everything
they make?
Speaker 7 (08:51):
Yeah, no, do it? Okay?
Speaker 3 (08:53):
Is the stock has underperformed five of the MAG seven
stocks this year to date and five of the MAG
seven stocks over the past five years. So it's not
doing as badly as say Amazon. I'm sorry Tesla this year,
Amazon over the last five.
Speaker 4 (09:12):
Years, but.
Speaker 3 (09:14):
It needs a push, right, and right now it's getting
a push from this announcement. But what the market really
wants is some AI news out of Apple.
Speaker 4 (09:22):
What are they going to do to solve the A problem.
We know they'll do something.
Speaker 1 (09:25):
It's kind of interesting though, but again maybe the read
is that if they're doing this deal, maybe the White
House will back off of Apple and I don't know,
maybe be a little more sensitive to you.
Speaker 3 (09:34):
Like I whenever I say something about their lack of
leadership in AI, You're like, ah, don't worry about it,
because we know you're going to buy the next iPhone
and whatever they do, they could buy any AI.
Speaker 1 (09:45):
Buy new phones ahead of utaros because yeah. So anyway,
let's get to Gillian Wolf. She is Bloomberg Intelligence Global
Equity strategist. She's here in studio in our Blomberg Interactive
Broker studio. Sorry for our rant and Rave.
Speaker 5 (09:57):
That's fine.
Speaker 8 (09:58):
I love a good rant and Rave.
Speaker 4 (10:00):
Do you sit down there with Gma or what?
Speaker 8 (10:01):
Do you sit right next to Gma?
Speaker 4 (10:03):
Nice?
Speaker 8 (10:04):
So all day it's just me and Gma going, how
are the equities power pub market? I think we drive
everybody else crazy.
Speaker 3 (10:10):
Probably now I read your note every morning before we
do our editorial meeting for the show.
Speaker 4 (10:16):
So thank you very much.
Speaker 8 (10:17):
You appreciate your guys.
Speaker 1 (10:18):
Thank you so talk about us about Apple and how
much that is impacting the trade today.
Speaker 8 (10:23):
So I think one of the broader things we're worried
about just in the tech space in the US that
we've noted is that the premium for US tech in
particular over international tech is really at an all time high.
It's not to say that US tech maybe doesn't warrant
some premium, because it probably does, But does it warrant
this much of a premium is a big question. And
one of the things we've found that's a bit of
(10:43):
a driver of this US premium over the last decade
is they've really been able to expand their operating margins
faster US tech over international tech. And one of the
things we're starting to maybe see come up is that
if you're going to have this reshoring from companies like Apple,
what is that going to do to this operating margin
ed that these companies used to have. If that was
really driving the premium up so much, does it put
(11:05):
that premium at risk if their costs are going to
go up, if they do invest more in the US.
So there's a media good news of yes, maybe there'll
be some deal with Trump and Trump's going to help
them out. But in the longer run, there's this broader
concern of can these US companies maintain their edge if
their costs start to go up?
Speaker 4 (11:22):
But they're not really going to invest in the US.
I mean exactly, we say, what we all know is just.
Speaker 3 (11:28):
Paying lip service to Donald Trump, telling him what he wants.
Speaker 4 (11:32):
To hear, stroking his ego. Yes, and of course you
know when he's out.
Speaker 3 (11:38):
Of office, they're going to focus back on Chinese factories,
Indian factories, exactly, getting US cheaper stuff because that's what we.
Speaker 4 (11:47):
Want more than anything, is cheap goods in this country, right, I.
Speaker 8 (11:50):
Mean, it's what makes sense most for their business model.
But even Tim Cook said on the latest two Q call,
he really emphesized how much uncertainty there is. He specifically
said not to take their smer Q three guidance numbers
and use that to extrapolate much further forward, because they
don't know what's going to happen with tariffs, because they
don't know what's going to happen with prices. So it's
definitely a concern that's hanging over the market. I mean,
(12:11):
I think one of the bigger pieces of news you
were just mentioning AI was what happened a month ago
with the AWS deal in Korea. Right, they're building this
massive AI data center out of Korea, not in the US,
and that's allowed the Korean stock market to be the
best performing market by far over the last three months.
I mean, they're up over twenty five percent because one
of their largest companies, SK Group, is going to be
(12:32):
in charge of building that. So now you're starting to
see US companies, if anything, further invest in key areas
like AI in emerging Asia.
Speaker 1 (12:40):
But that's what Jillian companies do, right, I mean, they
tend to also like to do buildouts in the markets
that they sell in. It's not always the case, and
there's some goods that just makes sense to make in
certain places because it's just that much cheaper. But you
do increasingly kind of see companies doing that. Right, Is
it really that much more ramped up or I don't know,
(13:02):
Like I'm not quite sure what the read is on that.
Speaker 8 (13:04):
It's difficult to say because you're getting a lot of
conflicting information, right, You're getting that you might have this
hundred billion dollar investment from Apple in the US, you
have this AWS build out in Korea. Ultimately, companies are
going to keep looking for cheap ways to build their.
Speaker 1 (13:18):
Products, right, right, that's just smart business, it is.
Speaker 8 (13:21):
And the US market has broadly we talk a lot
on our team about how the economy is not the
stock market. Right, So, while improve US manufacturing obviously helps
for the US economy, where.
Speaker 3 (13:30):
You're sitting, No, I hate it when people this has
become a mantra. You know, Carol said it. I heard
somebody on Romaine shows say it. Now you say it.
No one ever said the economy is the stock market,
or the stock market was the economy. The stock market
is a discounting mechanism that looks at the future of
the economy.
Speaker 8 (13:47):
Maybe, but sorry, well but it's been difficult because you've
seen the market hit these new highs. Manufacturing data is poor,
consumer sentiment data is poor. So what's happening? And the
answer is, particularly in the US, maybe more so than
even in markets, you're seeing the equity market really on
moore itself from manufacturing results. The stocks in the US
don't really rely on manufacturing activity. In the US, we're not.
Speaker 1 (14:10):
Really a manufacturing it comes.
Speaker 4 (14:11):
Let me tell you something that.
Speaker 3 (14:12):
I have a three year old daughter and a one
year old daughter, and I'm not hoping that they end
up building iPhones at a factory. And like Elizabeth, New Jersey, like,
that's not the future that I'm planning for.
Speaker 1 (14:24):
That again with the New Jersey, I said, Elizabeth, I know,
but anyway.
Speaker 8 (14:28):
It's not a lifelong New Yorker.
Speaker 4 (14:29):
I'm is, Jillian.
Speaker 3 (14:31):
Is this market going to rotate our investor is going
to finally rotate out of this megacap concentration. Because we
were talking to Bill Smead the other day and he
said it reminds him of nineteen eighty seven. You know,
we have ten stocks making all the profits and getting
all the games.
Speaker 4 (14:50):
Like when does that change?
Speaker 8 (14:52):
It's very concentrated right now. But what we're seeing we
break down the earnings growth of the Mag seven versus
the x mag seven on our team. You look at
that a lot, the Max seven being those Magnificent seven
stocks in the S and P five hundred and right now,
what we're still seeing, what analysts are still projecting on
the street, is that the Mag seven are going to
grow earnings and aggregate faster than everyone else, but that's
(15:12):
expected to slowly converge as we move into twenty twenty six,
So we see that as a potential driver out of
that maybe MAG seven or nothing trade, but we're still
seeing it take place. The MAG seven are still have
been growing earnings faster, are projected to keep growing earnings
a bit faster for the next few quarters. We're really
going to need to see the rotation pick up. But
(15:32):
I think it's something that investors are keeping an eye on,
particularly as tech just becomes so expensive in the US
as well. I mean, at what point are the strong
fundamentals going to justify these multiples.
Speaker 1 (15:42):
But beyond the MAG seven you are saying you're seeing
earnings growth in other sectors, right, So that is the
opportunity for catch up, right.
Speaker 8 (15:49):
There is, And the gap between the earnings growth of
the MAG seven and the other sectors is narrowing. I mean,
in twenty twenty four is huge because the MAG seven
had this big AI bump, right, I mean, we had
a little bit of this. There is no alternative to
the Max seven because they just looked so much better.
It's not to say that everything else looked bad, it
just looked significantly less.
Speaker 4 (16:07):
I just didn't stand.
Speaker 3 (16:08):
They're twenty six percent and the rest is four percent,
whereas they previously were like sixty eight percent.
Speaker 8 (16:13):
And the rest was Yeah, I mean there was a
period of time where the rest was negative, honestly, and
all the growth was coming from the MAG seven. So sly, yeah,
we have at least got a return to growth outside
of the MAG seven.
Speaker 4 (16:23):
I know this because I read her research all the time.
Speaker 1 (16:25):
I can tell it.
Speaker 4 (16:26):
I feel like I have to date.
Speaker 1 (16:29):
Thank you, come back anytime. Jillian Wall, Global equity Strategist
at Bloomberg Intelligence.
Speaker 2 (16:35):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1 (16:53):
From a tech company that we don't but probably should
be talking a lot more about, to an iconic corporate
brand company and stock. It's a company that continues to
kind of mesh its long standing businesses with new ones
and kind of evolve along the way. We're talking about
Walt Disney stock is down about two percent in the trade.
It was down as much as five point two percent
earlier on. Let's get to what you want need to
(17:14):
know about their earnings and also some of the news
that we got earlier this morning. Kita Ranganathon is with us.
She's Bloomberg Intelligence senior media analyst again out there in Princeton,
New Jersey, API headquarters. All right, Gita, I think initially
Disney was up in the pre market on some of
that ESPN news, and then earnings came out, and then
it kind of shifted in another direction. Walk us through
(17:37):
all of the news flow this morning.
Speaker 9 (17:39):
Yeah, plenty of news this morning, Carol. I actually thought
that the earnings was extremely strong. I mean, if you
were looking for a beat and raise, you got it.
I think why we saw a little bit of that
pullback in the shares after they reported was because maybe
the guidance race was not as much as people had
hoped for. So they did take their EPs for the
full year up to eighteen percent growth from last year,
(18:01):
and that compares to sixteen percent is what they had
projected earlier. I think maybe the street the byside was
looking for something closer to twenty percent or over that.
But really, I mean the big news, of course, and
you spoke about this the pre market, was, you know,
the NFL taking a ten percent equity stake in ESPN,
ESPN getting control of some of those NFL media assets,
(18:22):
including NFL Network and Red Zone. And why this is important,
Carol at this point of time, is because ESPN is
actually going a la carte for the very first time,
you know, in its history. They're going to offer all
of the ESPN TV content on a streaming platform that's
going live in a few weeks August twenty.
Speaker 1 (18:38):
First big deal. That's what makes me say, it's a
huge deal.
Speaker 4 (18:41):
Yeah.
Speaker 3 (18:41):
I mean the reason, Gtha, that makes me happy and
probably everyone else who pays eighty dollars a month for
a cable subscription that he doesn't use is I can
now cut that cord completely because all I want from
it is NFL football and I can just buy that
from ESPN.
Speaker 4 (18:58):
Plus.
Speaker 9 (19:00):
Yeah, and you're going to get even more of it, Matt.
So they're you know, they're basically really kind of buffering
up their whole lineup. Now they get additional games with
the NFL Network. You're going to have Red Zone, which
is again a huge property on Sunday afternoons, So this
really kind of helps them, you know, first of all,
gives them much more content if you're big into fantasy football. Again,
they're merging the NFL Fantasy football with the ESPN Fantasy
(19:22):
football offering, So you know, there's just a lot in
terms of the offering itself. And then if you look
at it more from a long term perspective, Carolyn Matt,
I mean, just kind of having the NFL as an
investor in ESPN, I think just speaks to a much
more sounder future. It kind of really is future proofing
the business for Disney and for ESPN.
Speaker 1 (19:41):
Why can you explain that. Is it just because you're
going to have that NFL franchise and you own it basically, Yeah,
got a good friend genetic. Yeah, that's a.
Speaker 9 (19:49):
Huge part of it. So NFL of course is the
premier sports property when it comes to you know, TV
viewing and in America. So you're looking at the top
one hundred broadcasts every year, eighty of those or eighty
five of those are actually NFL football games, So again huge.
The other thing is that NFL has media deals right
now with Disney, with CBS with Fox, but they do
(20:11):
have this opt out clause so they can get out
of those deals in another three to four years. And
what we think this does, this whole ESPN NFL, you
know kind of equity stake and exchange of assets is
I think it really kind of secures ESPN's future. So
I don't think, you know, the NFL would ever want
to opt out now with ESPN as their partner.
Speaker 1 (20:32):
I so, yeah.
Speaker 4 (20:34):
Sorry, Eith.
Speaker 3 (20:35):
I look at you know, I always look at a
stock performance over a five year That's my default, mainly
because it's the terminal default when I do the comp function,
but also because I think it's a fair window by
which to judge pretty much every stock.
Speaker 4 (20:48):
Now I'll go for Disney.
Speaker 3 (20:51):
I'll just go three years, because I don't think it's
fair to include the pandemic. We were locked down, we
couldn't go to the Magic Kingdom. But over three years
it's still only up ten percent. And I hear from
Paul Sweeney every morning that the parks business he probably
hears it from you that the Partis business is on fire.
Speaker 4 (21:10):
So why isn't this company doing better?
Speaker 9 (21:14):
Parks is on fire? Matt, I mean they reported twenty
two percent growth profit growth that theyir domestic parks, and
they have just so much more coming on board over
the next year or so. So Yeah, it has been
kind of a roller coaster right up and down with
the Disney stock price. I think the really two things
I think that investors are looking now in the Disney
narrative is theme parks and you just brought that up.
(21:34):
And we're going to continue to see pretty good momentum
both domestically, internationally, cruises all of that. You've got everything
going there, and then streaming, right, so streaming is kind
of the big thing. We've seen some good profit, but
we need more.
Speaker 1 (21:48):
Githa, thank you, Thank you. Disney's a company we just
love talking about with Etha, Githa Ring andath On of
our BI team. Shares of Disney down about two percent.
Speaker 7 (21:58):
That's coming in.
Speaker 5 (21:59):
I'm cool, great business.
Speaker 2 (22:01):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 1 (22:15):
Hey, a few stories with some news in the real
estate space. You've got Apollo Global agreeing to acquire a
majority stake and Stream Data Centers, making its first such
acquisition in the alt asset manager as it really looks
to diversify, I should say this is I.
Speaker 3 (22:29):
Think fascinating data center investments. I have so many questions.
Speaker 7 (22:32):
I do too.
Speaker 1 (22:33):
There's a lot of money going into it, a lot
of money.
Speaker 3 (22:35):
But how fat are margins going to be in that business?
I mean, if power prices go up, who eats that?
Speaker 4 (22:41):
And I just don't know.
Speaker 1 (22:43):
I don't know.
Speaker 3 (22:44):
There are examples of companies that have done really well.
Digital Bridge has really boosted its top line and has
now started to turn a profit, and they do a
lot of that business.
Speaker 1 (22:52):
Everybody talks about that we're just going to need more
and more power, But you're right, I don't know. It's
a good question. Our next guest, though, really focuses on
distressed real estate. We kind of want to get into that,
especially when it comes to mid size multifamily sector housing.
So let's get into it. Back with us as Amy Rubinstein,
she's CEO of Clear Investment Group, and she comes to
(23:14):
us from our Chicago News bureau. Amy, good time to
have you here. Last time we talked was December there's
a few things that have happened, like a new president
coming in and lots of changes from the White House.
Talk to us a little bit about how your market
has changed.
Speaker 5 (23:28):
What's going on.
Speaker 7 (23:29):
Yeah, we started off the year really strong.
Speaker 10 (23:32):
We started to see transactions pick up, and then tariffs
got announced in April and it started to slow things
down again. I think people sort of took a little
bit of a backseat trying to wait and see what
was going to happen. And now I think we're starting
to see things normalize a little bit again. The fundamentals
of affordable housing or low income housing, workforce housing are
(23:52):
all still really strong.
Speaker 7 (23:54):
Unemployment is still really.
Speaker 4 (23:55):
Low, or is affordable housing were.
Speaker 6 (24:00):
Oh?
Speaker 10 (24:00):
Yes, That brings us to a great point is we
do have a massive shortage of affordable housing, which makes
that market and that sector really strong.
Speaker 3 (24:08):
You know, Amy, when I talk to people in the
real estate world, I always get question sent over from
the reporters more knowledgeable on this space than me, and
they always, well, lately, they always want me to ask
does this person have enough cash saved up to go
in and make the purchases? Because now is one you
(24:29):
want to be in your industry and distressed real estate investing.
Speaker 4 (24:35):
Is that true in multifamily as well? Is that true
and residential as well?
Speaker 5 (24:39):
Well?
Speaker 10 (24:40):
So the multifamily that we're dealing with, if you're talking
about individuals buying housing, we are dealing with renters buying
necessity and not lifestyle, renters that are choosing between a housing,
choosing a house to purchase or an apartment to live in.
And so we're never competing against that particular market. But
right now, the the question is for people buying multifamily
(25:02):
is can you get the loans? And that's you know,
comes back to where our interest rates are at right now,
how banks are doing right now, and we are seeing
it to be an easier market to get loans in
today than we were at twelve months ago or even
six months ago.
Speaker 1 (25:17):
Well, so let's talk to you about where are the
opportunities right now. Talk to us about maybe a recent
deal you have done and give us just you know, geography.
The particulars were always interested in that and kind of
what is getting done as you work within your space.
Speaker 10 (25:32):
Sure, sure, So the last deal we bought was about
seven hundred units in Washington, d C.
Speaker 7 (25:38):
It was bought out of bankruptcy court.
Speaker 10 (25:40):
So there was a lot of distress in the deal
in the sense that there just was not a focal
point of leadership at that property for a while. Tenants
were upset, the city was upset. It needed a clear
focus and a path forward to get to stabilization. So
we bought that deal and have since then started to stabilize,
mostly stabilizing through communication with tenants, communication with the city,
(26:02):
and really trying to then dig into where the deferred
maintenance that needs to be that needs to be fixed
and taken care of, and how do we get to
that stabilization, which is pretty straightforward when you have a
property that has that type of distress on it.
Speaker 3 (26:16):
You're at a shop with a great reputation, a clear
investment group. You have raised a ton of money, right,
I think you just raised another three hundred million dollar
fund and you seem like a super of that. You
seem like a super nice person. So how do you
avoid being a slumlord? Right at these levels? What do
you do to make sure you'll make money and have
(26:37):
a clear conscience?
Speaker 5 (26:39):
Oh?
Speaker 10 (26:39):
Absolutely, so, we're our model is fully aligned with our
tenants and fully aligned with the other stakeholders of the
property of the city, the municipality.
Speaker 7 (26:47):
We often are buying from slum lords.
Speaker 10 (26:49):
Not always, but often when we do see that type
of stereotype, that's the kind of property that we're actually buying.
So then we're stabilizing it to get to a place
where we're providing safe, habitable housing for our tenants. And
so that is our business model, which aligns with what
those tenants are looking for.
Speaker 7 (27:07):
And so we're the opposite of a slum lord.
Speaker 10 (27:09):
We're actually trying to fix something that would cause a
property to be classified in that way.
Speaker 1 (27:15):
Why does that happen? And I asked that kind of
naively because I want to because is it just bad people?
Is it just because the business dynamics don't really work.
You guys are on a mission to make quality housing
available to the working class, Like, is it just it
doesn't work on a business level? Or what what goes wrong?
Speaker 10 (27:35):
So what goes wrong is it can happen a few
things that happen, but usually what it comes down to
is the seller actually being distressed. So the current owner
of the property has some sort of distress in their lives,
whether that's a financial distress and some other business that
they have or a financial distress that's coming from some
other form. It's usually not coming from the property itself,
(27:56):
but some things could push it over the edge, like
interest rates, like COVID. Those are the types of things
that could push an owner over the edge. What starts
to happen is communication starts to break down between the
tenants and the landlord. The landlord stops putting money into
the property, and therefore tenants start to get upset and
stop paying rent. Maintenance isn't taken care of because tenants
(28:18):
aren't paying their rent, and then more tenants stop paying
their rent, and it's a really bad downward spiral that
starts to happen. So I don't think it's that anybody
goes out trying to achieve distress property, but it just happens,
and it happens quickly.
Speaker 1 (28:33):
How are renters doing? Are you seeing stress though in
their ability to pay rent?
Speaker 5 (28:39):
You know?
Speaker 10 (28:39):
I think that the fundamentals right now are really strong.
So we for a while we were seeing expenses rise
at a very rapid pace on apartment buildings and then
also for individuals in their homes right inflation was really
high for a while. It has start to come down.
Employment is really strong right now, so people have jobs
(29:00):
where I do think it was a struggle for a
little while. There was a period of time where we
did see people struggling more, and I see that starting
to settle and starting to stabilize now.
Speaker 3 (29:10):
Amy, I want to get your take as not as
an investor necessarily in this market, but just as someone
who sees what's going on and understands the industry better
than anybody. New York City is like unaffordable for most
people right four thousand dollars is what you need to
get into a one bedroom in Manhattan.
Speaker 5 (29:29):
We have.
Speaker 3 (29:31):
Self proclaimed socialists. Mayoral candidate is doing very well. He
wants to put on rent caps. What do you think
about this situation? How would you assess it?
Speaker 7 (29:40):
I strongly disagree with it.
Speaker 10 (29:42):
I think it's really really bad for the housing market
because what happens is now landlords are in a situation
where they can't rise, They can't raise their income as
much as their expenses are rising, and no one's capping
their expenses. So when you get a rent control situation
like that, what happens the landlord usually will start to
spend less in the property, especially when they weren't prepared
(30:05):
for it. In the onset, you go and you buy
a property that was not rent control and now all
of a sudden, rank control is placed on it. Your
model was just thrown off, so you might not be
able to have that sustainability or that wherewithal. And that's
where you see landlords get into a lot of trouble
and what happens is that ends up negatively affecting the
tenants themselves, so they're the ones that end up losing.
Speaker 1 (30:25):
You always open up a window into, certainly this part
of the housing market to really appreciate it. Amy Amy Rubinstein.
She is CEO of Clear Investment Group. Joining us from
our news bureau in Chicago. When we come back, check
on trading at some of the stocks on the move.
Carol Master, Matt Miller, and this is Bloomberg Business weekdand.
Speaker 2 (30:41):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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You can also watch us live every weekday on YouTube
(31:02):
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Speaker 2 (00:08):
This is Bloomberg business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy, plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 1 (00:31):
All right, we're all in on tech, older tech, new tech.
We're going to talk about open a eyes, possible valuation.
We're going to get to that in just a mont.
Speaker 3 (00:41):
We've got to talk about that Apple, Matt, Yeah, no, absolutely.
I mean, look, it's a three trillion dollar company.
Speaker 1 (00:48):
Hesitated because it's like old new like it's all kind
of Chris Cross.
Speaker 3 (00:51):
Apple is definitely high tech. Still, it's not the cond press.
Speaker 1 (00:54):
But it's old tech, or is it.
Speaker 4 (00:56):
I think Apple is. As much as we.
Speaker 3 (01:00):
Sort of joke about or talk about the fact that
they don't seem to be on the forefront of AI,
they still are doing things that amaze us and change
our lives for the better, right.
Speaker 1 (01:13):
And that everybody uses as a benchmark. We're also focusing
on what seems to be an announcement that's expected to
come from President Trump around four to thirty pm. Wall
Street Time about another big investment by Apple into the US.
Lots of questions. We knew we needed to kind of
get a reality check once more. From Bloomberg News, Managing
editor for Global Consumer Tech. We're talking about Mark German.
He's out there in La Mark, good to have you back.
(01:36):
Apple shares investors are bidding it up more than five
and a half percent as we speak. We've talked about
these investments that Apple is doing in the United States previously.
Some were already I think announced. But this isn't about
bringing the iPhone supply chain to the US, is it.
Speaker 5 (01:53):
Here's why the stock is up.
Speaker 6 (01:55):
Stock is up because investors, I think there's just a guess,
no exist exactly what's going on here.
Speaker 5 (02:02):
This is marketing.
Speaker 6 (02:04):
Tim Cook, the CEO of the world's greatest marketing company,
is telling Donald Trump, who wants to tell his base
that he's getting the biggest company based in the US
to do whatever he wants, that they're going to be
doing more.
Speaker 5 (02:18):
In the US.
Speaker 6 (02:19):
The reality is that Apple invests billions per year already
in the US. Right They make glass through Corning in
Kentucky for iPhone screens. The manufacturer with the company called
Finisaur face ID Components, that's for three D facial recognition scanning.
They do some chip production in Arizona. And so Apple
(02:42):
is earmarking another one hundred billion, We're told to a
total of about six hundred billion over the next half
decade or so for US based manufacturing.
Speaker 5 (02:50):
They're going to put a fancy name on it, right.
Speaker 6 (02:53):
They're calling it the Apple Manufacturing something related to Apple Manufacturing,
US Manufacturing, American Manufacturing string Program AMP.
Speaker 5 (03:02):
I believe Apple is going to call it.
Speaker 6 (03:04):
The reality is, unless they announced that they're building plants
in the US to do final assembly, to do mass
manufacturing of iPhones and max and other products, they're not
doing what Trump has been talking about for years. They're
not doing what we've been talking about for years. As
far as I'm concerned, I don't believe that's happening. But
anything short of that, this is more marketing.
Speaker 4 (03:26):
Do we know.
Speaker 3 (03:27):
I mean, one hundred billion dollars is a heck of
a lot of money.
Speaker 4 (03:30):
But are they in one year?
Speaker 3 (03:33):
Are they spending that in five years? You know? Are
they adding that to the haven't they already earmarked half
a trillion to spend over the next four.
Speaker 6 (03:42):
Yeah, they've already earmarked half a trillion.
Speaker 5 (03:44):
Uh, so they're going to add to that. We don't
have the exact details.
Speaker 6 (03:47):
Yet because obviously Apple is not put in an announcement yet.
Trump and Cook haven't made their joint Oval Office announcement yet.
But in all likelihood, this is going to be about
further investments in companies in the US doing manufacturing n
R and D and development of components that are then
flown to China, India, Vietnam, Malaysia, Thailand to then be
(04:08):
mass produced in Asia to be.
Speaker 5 (04:11):
Sent all around the world.
Speaker 6 (04:12):
Now, I want to be very clear, I'm not criticizing
Apple's manufacturing strategy. Obviously, Apple's manufacturing strategy of production in India,
in China and elsewhere in that part of the world
is the only way that they are able to produce
the quantity that they produce today, at the fit and
finish they produce today, and the cost.
Speaker 5 (04:32):
That they produce today.
Speaker 6 (04:34):
There are so many reasons why mass production in the
US is just not feasible. But I don't want anyone
to be under the belief that a change is going
to be happening this afternoon where all of a sudden,
iPhones and macs and iPads and watches can be made
in the US. If Apple is able to say that
and then execute on that, I will be hugely surprised.
(04:54):
But my belief this is going to be a lot
of spin and more of the same. And the background
here is obviously tariffs. Those smartphone exemptions are running out today.
Apple has basically said in total across last quarter in
the current quarter about a two billion dollar headwind because
of harriffs. That's absolutely nothing right. That's like Tim Cook
could sleep fourteen hours a night knowing if that they're
(05:17):
going to get tax two billion a quarter. The problem
is that those exemptions are going to start running out,
and Apple wants to avoid that.
Speaker 5 (05:23):
So how do we avoid that. We make a deal.
Speaker 6 (05:26):
I'll come to the Oval office, as Tim Cook and
say we're going to do more in the US.
Speaker 5 (05:30):
We're going to make Trump look good.
Speaker 6 (05:32):
Trump will be happy, maybe give us some exemption, so
we'll see it all works out.
Speaker 5 (05:35):
But that's exactly what's going on here.
Speaker 1 (05:37):
So transactional, and it's just getting some of the heat
off of Tim Cook and Apple.
Speaker 6 (05:41):
Textbook definition yeah, getting the heat off of Tim Cook
and Apple.
Speaker 5 (05:45):
We'll see if it works. Right.
Speaker 6 (05:47):
Donald Trump can say anything in that Oval Office meeting.
Tim Cook can say anything in that Oval Office meeting.
We'll see how it goes. This is a tried and
true playbook. Tim Cook has done this with Trump so
many times, and it's basically worked every time. Apple has
never been largely impacted to any material degree by any
of Donald Trump's policies or tariffs, either in the first
(06:08):
administration or thus far in the second administration.
Speaker 3 (06:11):
All right, let's talk about the fun stuff now, the products. Right,
you mentioned the Apple Watch. Obviously we're both using iPhones.
I was on an iPad this morning. I have a
Mac at home. I just tried to buy a thunder
maax ECU from my Harley Davidson, and I found out
it only works with Windows, and I thought people use windows.
(06:33):
How much market share does Apple actually have? Because Carol
and I live in this ecosystem Apple, we don't even
think of, you know, Android products, but people do use those.
Speaker 1 (06:43):
And like them.
Speaker 5 (06:44):
Well, the US is basically half and half.
Speaker 6 (06:47):
It tilts a little bit more to Apple when you're
talking about phones tablets. Apple is really the market leader.
Smart watches Apples the market leader by far. When you're
talking about computers. Right in the US, they have pretty
good market share, but on a global level, the vast majority,
you know, close to eighty percent of the market is
(07:08):
still dominated by Windows. But they have made strides. And
you know, the most important thing with the Mac is
people keep buying them. People are holding onto them, people
are sticking in the ecosystem, and they're buying more iPhones.
Speaker 5 (07:19):
And iPads because of it.
Speaker 6 (07:20):
People get exposed to one product, they want to buy
other products.
Speaker 1 (07:23):
Thirty seconds. Does Tim Cook hate all of this?
Speaker 6 (07:28):
Well, I don't know how Tim Cook feels. I mean,
if I were Tim Cook, I mean, this is kind
of exciting, right Get to go to the Oval Office,
get to have a press conference the president, regardless of
who the president is. I get to usher in all
these new products. You know, Apple is dealing with some
complexities right now with the AI not everything is going well.
(07:48):
So it's kind of exciting that he gets to kind
of put his foot down right now and try to
like hammer people home that something needs to change.
Speaker 5 (07:55):
So no more coasting.
Speaker 3 (07:57):
I'm guessing he loves his job and this is just
one abouting part of it.
Speaker 1 (08:03):
Well, I have to say investors pretty excited too, because,
as we said, this is a stock that has definitely
lagged some of the other MAGS seven and big tech companies.
Right now up about just shy of six percent here
in the trade.
Speaker 2 (08:14):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 1 (08:28):
I want to talk a little bit about the markets.
As Matt was talking about the outperformance in terms of
the impact on the overall market, we're talking about Apple,
right really pushing up the overall trade today.
Speaker 3 (08:39):
Yeah, Apple has been a bit of a loser lately. Right,
it's this is the second worst performers.
Speaker 4 (08:47):
Okay.
Speaker 3 (08:47):
It's a three trillion dollar company and I buy everything
they make?
Speaker 7 (08:51):
Yeah, no, do it? Okay?
Speaker 3 (08:53):
Is the stock has underperformed five of the MAG seven
stocks this year to date and five of the MAG
seven stocks over the past five years. So it's not
doing as badly as say Amazon. I'm sorry Tesla this year,
Amazon over the last five.
Speaker 4 (09:12):
Years, but.
Speaker 3 (09:14):
It needs a push, right, and right now it's getting
a push from this announcement. But what the market really
wants is some AI news out of Apple.
Speaker 4 (09:22):
What are they going to do to solve the A problem.
We know they'll do something.
Speaker 1 (09:25):
It's kind of interesting though, but again maybe the read
is that if they're doing this deal, maybe the White
House will back off of Apple and I don't know,
maybe be a little more sensitive to you.
Speaker 3 (09:34):
Like I whenever I say something about their lack of
leadership in AI, You're like, ah, don't worry about it,
because we know you're going to buy the next iPhone
and whatever they do, they could buy any AI.
Speaker 1 (09:45):
Buy new phones ahead of utaros because yeah. So anyway,
let's get to Gillian Wolf. She is Bloomberg Intelligence Global
Equity strategist. She's here in studio in our Blomberg Interactive
Broker studio. Sorry for our rant and Rave.
Speaker 5 (09:57):
That's fine.
Speaker 8 (09:58):
I love a good rant and Rave.
Speaker 4 (10:00):
Do you sit down there with Gma or what?
Speaker 8 (10:01):
Do you sit right next to Gma?
Speaker 4 (10:03):
Nice?
Speaker 8 (10:04):
So all day it's just me and Gma going, how
are the equities power pub market? I think we drive
everybody else crazy.
Speaker 3 (10:10):
Probably now I read your note every morning before we
do our editorial meeting for the show.
Speaker 4 (10:16):
So thank you very much.
Speaker 8 (10:17):
You appreciate your guys.
Speaker 1 (10:18):
Thank you so talk about us about Apple and how
much that is impacting the trade today.
Speaker 8 (10:23):
So I think one of the broader things we're worried
about just in the tech space in the US that
we've noted is that the premium for US tech in
particular over international tech is really at an all time high.
It's not to say that US tech maybe doesn't warrant
some premium, because it probably does, But does it warrant
this much of a premium is a big question. And
one of the things we've found that's a bit of
(10:43):
a driver of this US premium over the last decade
is they've really been able to expand their operating margins
faster US tech over international tech. And one of the
things we're starting to maybe see come up is that
if you're going to have this reshoring from companies like Apple,
what is that going to do to this operating margin
ed that these companies used to have. If that was
really driving the premium up so much, does it put
(11:05):
that premium at risk if their costs are going to
go up, if they do invest more in the US.
So there's a media good news of yes, maybe there'll
be some deal with Trump and Trump's going to help
them out. But in the longer run, there's this broader
concern of can these US companies maintain their edge if
their costs start to go up?
Speaker 4 (11:22):
But they're not really going to invest in the US.
I mean exactly, we say, what we all know is just.
Speaker 3 (11:28):
Paying lip service to Donald Trump, telling him what he wants.
Speaker 4 (11:32):
To hear, stroking his ego. Yes, and of course you
know when he's out.
Speaker 3 (11:38):
Of office, they're going to focus back on Chinese factories,
Indian factories, exactly, getting US cheaper stuff because that's what we.
Speaker 4 (11:47):
Want more than anything, is cheap goods in this country, right, I.
Speaker 8 (11:50):
Mean, it's what makes sense most for their business model.
But even Tim Cook said on the latest two Q call,
he really emphesized how much uncertainty there is. He specifically
said not to take their smer Q three guidance numbers
and use that to extrapolate much further forward, because they
don't know what's going to happen with tariffs, because they
don't know what's going to happen with prices. So it's
definitely a concern that's hanging over the market. I mean,
(12:11):
I think one of the bigger pieces of news you
were just mentioning AI was what happened a month ago
with the AWS deal in Korea. Right, they're building this
massive AI data center out of Korea, not in the US,
and that's allowed the Korean stock market to be the
best performing market by far over the last three months.
I mean, they're up over twenty five percent because one
of their largest companies, SK Group, is going to be
(12:32):
in charge of building that. So now you're starting to
see US companies, if anything, further invest in key areas
like AI in emerging Asia.
Speaker 1 (12:40):
But that's what Jillian companies do, right, I mean, they
tend to also like to do buildouts in the markets
that they sell in. It's not always the case, and
there's some goods that just makes sense to make in
certain places because it's just that much cheaper. But you
do increasingly kind of see companies doing that. Right, Is
it really that much more ramped up or I don't know,
(13:02):
Like I'm not quite sure what the read is on that.
Speaker 8 (13:04):
It's difficult to say because you're getting a lot of
conflicting information, right, You're getting that you might have this
hundred billion dollar investment from Apple in the US, you
have this AWS build out in Korea. Ultimately, companies are
going to keep looking for cheap ways to build their.
Speaker 1 (13:18):
Products, right, right, that's just smart business, it is.
Speaker 8 (13:21):
And the US market has broadly we talk a lot
on our team about how the economy is not the
stock market. Right, So, while improve US manufacturing obviously helps
for the US economy, where.
Speaker 3 (13:30):
You're sitting, No, I hate it when people this has
become a mantra. You know, Carol said it. I heard
somebody on Romaine shows say it. Now you say it.
No one ever said the economy is the stock market,
or the stock market was the economy. The stock market
is a discounting mechanism that looks at the future of
the economy.
Speaker 8 (13:47):
Maybe, but sorry, well but it's been difficult because you've
seen the market hit these new highs. Manufacturing data is poor,
consumer sentiment data is poor. So what's happening? And the
answer is, particularly in the US, maybe more so than
even in markets, you're seeing the equity market really on
moore itself from manufacturing results. The stocks in the US
don't really rely on manufacturing activity. In the US, we're not.
Speaker 1 (14:10):
Really a manufacturing it comes.
Speaker 4 (14:11):
Let me tell you something that.
Speaker 3 (14:12):
I have a three year old daughter and a one
year old daughter, and I'm not hoping that they end
up building iPhones at a factory. And like Elizabeth, New Jersey, like,
that's not the future that I'm planning for.
Speaker 1 (14:24):
That again with the New Jersey, I said, Elizabeth, I know,
but anyway.
Speaker 8 (14:28):
It's not a lifelong New Yorker.
Speaker 4 (14:29):
I'm is, Jillian.
Speaker 3 (14:31):
Is this market going to rotate our investor is going
to finally rotate out of this megacap concentration. Because we
were talking to Bill Smead the other day and he
said it reminds him of nineteen eighty seven. You know,
we have ten stocks making all the profits and getting
all the games.
Speaker 4 (14:50):
Like when does that change?
Speaker 8 (14:52):
It's very concentrated right now. But what we're seeing we
break down the earnings growth of the Mag seven versus
the x mag seven on our team. You look at
that a lot, the Max seven being those Magnificent seven
stocks in the S and P five hundred and right now,
what we're still seeing, what analysts are still projecting on
the street, is that the Mag seven are going to
grow earnings and aggregate faster than everyone else, but that's
(15:12):
expected to slowly converge as we move into twenty twenty six,
So we see that as a potential driver out of
that maybe MAG seven or nothing trade, but we're still
seeing it take place. The MAG seven are still have
been growing earnings faster, are projected to keep growing earnings
a bit faster for the next few quarters. We're really
going to need to see the rotation pick up. But
(15:32):
I think it's something that investors are keeping an eye on,
particularly as tech just becomes so expensive in the US
as well. I mean, at what point are the strong
fundamentals going to justify these multiples.
Speaker 1 (15:42):
But beyond the MAG seven you are saying you're seeing
earnings growth in other sectors, right, So that is the
opportunity for catch up, right.
Speaker 8 (15:49):
There is, And the gap between the earnings growth of
the MAG seven and the other sectors is narrowing. I mean,
in twenty twenty four is huge because the MAG seven
had this big AI bump, right, I mean, we had
a little bit of this. There is no alternative to
the Max seven because they just looked so much better.
It's not to say that everything else looked bad, it
just looked significantly less.
Speaker 4 (16:07):
I just didn't stand.
Speaker 3 (16:08):
They're twenty six percent and the rest is four percent,
whereas they previously were like sixty eight percent.
Speaker 8 (16:13):
And the rest was Yeah, I mean there was a
period of time where the rest was negative, honestly, and
all the growth was coming from the MAG seven. So sly, yeah,
we have at least got a return to growth outside
of the MAG seven.
Speaker 4 (16:23):
I know this because I read her research all the time.
Speaker 1 (16:25):
I can tell it.
Speaker 4 (16:26):
I feel like I have to date.
Speaker 1 (16:29):
Thank you, come back anytime. Jillian Wall, Global equity Strategist
at Bloomberg Intelligence.
Speaker 2 (16:35):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 1 (16:53):
From a tech company that we don't but probably should
be talking a lot more about, to an iconic corporate
brand company and stock. It's a company that continues to
kind of mesh its long standing businesses with new ones
and kind of evolve along the way. We're talking about
Walt Disney stock is down about two percent in the trade.
It was down as much as five point two percent
earlier on. Let's get to what you want need to
(17:14):
know about their earnings and also some of the news
that we got earlier this morning. Kita Ranganathon is with us.
She's Bloomberg Intelligence senior media analyst again out there in Princeton,
New Jersey, API headquarters. All right, Gita, I think initially
Disney was up in the pre market on some of
that ESPN news, and then earnings came out, and then
it kind of shifted in another direction. Walk us through
(17:37):
all of the news flow this morning.
Speaker 9 (17:39):
Yeah, plenty of news this morning, Carol. I actually thought
that the earnings was extremely strong. I mean, if you
were looking for a beat and raise, you got it.
I think why we saw a little bit of that
pullback in the shares after they reported was because maybe
the guidance race was not as much as people had
hoped for. So they did take their EPs for the
full year up to eighteen percent growth from last year,
(18:01):
and that compares to sixteen percent is what they had
projected earlier. I think maybe the street the byside was
looking for something closer to twenty percent or over that.
But really, I mean the big news, of course, and
you spoke about this the pre market, was, you know,
the NFL taking a ten percent equity stake in ESPN,
ESPN getting control of some of those NFL media assets,
(18:22):
including NFL Network and Red Zone. And why this is important,
Carol at this point of time, is because ESPN is
actually going a la carte for the very first time,
you know, in its history. They're going to offer all
of the ESPN TV content on a streaming platform that's
going live in a few weeks August twenty.
Speaker 1 (18:38):
First big deal. That's what makes me say, it's a
huge deal.
Speaker 4 (18:41):
Yeah.
Speaker 3 (18:41):
I mean the reason, Gtha, that makes me happy and
probably everyone else who pays eighty dollars a month for
a cable subscription that he doesn't use is I can
now cut that cord completely because all I want from
it is NFL football and I can just buy that
from ESPN.
Speaker 4 (18:58):
Plus.
Speaker 9 (19:00):
Yeah, and you're going to get even more of it, Matt.
So they're you know, they're basically really kind of buffering
up their whole lineup. Now they get additional games with
the NFL Network. You're going to have Red Zone, which
is again a huge property on Sunday afternoons, So this
really kind of helps them, you know, first of all,
gives them much more content if you're big into fantasy football. Again,
they're merging the NFL Fantasy football with the ESPN Fantasy
(19:22):
football offering, So you know, there's just a lot in
terms of the offering itself. And then if you look
at it more from a long term perspective, Carolyn Matt,
I mean, just kind of having the NFL as an
investor in ESPN, I think just speaks to a much
more sounder future. It kind of really is future proofing
the business for Disney and for ESPN.
Speaker 1 (19:41):
Why can you explain that. Is it just because you're
going to have that NFL franchise and you own it basically, Yeah,
got a good friend genetic. Yeah, that's a.
Speaker 9 (19:49):
Huge part of it. So NFL of course is the
premier sports property when it comes to you know, TV
viewing and in America. So you're looking at the top
one hundred broadcasts every year, eighty of those or eighty
five of those are actually NFL football games, So again huge.
The other thing is that NFL has media deals right
now with Disney, with CBS with Fox, but they do
(20:11):
have this opt out clause so they can get out
of those deals in another three to four years. And
what we think this does, this whole ESPN NFL, you
know kind of equity stake and exchange of assets is
I think it really kind of secures ESPN's future. So
I don't think, you know, the NFL would ever want
to opt out now with ESPN as their partner.
Speaker 1 (20:32):
I so, yeah.
Speaker 4 (20:34):
Sorry, Eith.
Speaker 3 (20:35):
I look at you know, I always look at a
stock performance over a five year That's my default, mainly
because it's the terminal default when I do the comp function,
but also because I think it's a fair window by
which to judge pretty much every stock.
Speaker 4 (20:48):
Now I'll go for Disney.
Speaker 3 (20:51):
I'll just go three years, because I don't think it's
fair to include the pandemic. We were locked down, we
couldn't go to the Magic Kingdom. But over three years
it's still only up ten percent. And I hear from
Paul Sweeney every morning that the parks business he probably
hears it from you that the Partis business is on fire.
Speaker 4 (21:10):
So why isn't this company doing better?
Speaker 9 (21:14):
Parks is on fire? Matt, I mean they reported twenty
two percent growth profit growth that theyir domestic parks, and
they have just so much more coming on board over
the next year or so. So Yeah, it has been
kind of a roller coaster right up and down with
the Disney stock price. I think the really two things
I think that investors are looking now in the Disney
narrative is theme parks and you just brought that up.
(21:34):
And we're going to continue to see pretty good momentum
both domestically, internationally, cruises all of that. You've got everything
going there, and then streaming, right, so streaming is kind
of the big thing. We've seen some good profit, but
we need more.
Speaker 1 (21:48):
Githa, thank you, Thank you. Disney's a company we just
love talking about with Etha, Githa Ring andath On of
our BI team. Shares of Disney down about two percent.
Speaker 7 (21:58):
That's coming in.
Speaker 5 (21:59):
I'm cool, great business.
Speaker 2 (22:01):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 1 (22:15):
Hey, a few stories with some news in the real
estate space. You've got Apollo Global agreeing to acquire a
majority stake and Stream Data Centers, making its first such
acquisition in the alt asset manager as it really looks
to diversify, I should say this is I.
Speaker 3 (22:29):
Think fascinating data center investments. I have so many questions.
Speaker 7 (22:32):
I do too.
Speaker 1 (22:33):
There's a lot of money going into it, a lot
of money.
Speaker 3 (22:35):
But how fat are margins going to be in that business?
I mean, if power prices go up, who eats that?
Speaker 4 (22:41):
And I just don't know.
Speaker 1 (22:43):
I don't know.
Speaker 3 (22:44):
There are examples of companies that have done really well.
Digital Bridge has really boosted its top line and has
now started to turn a profit, and they do a
lot of that business.
Speaker 1 (22:52):
Everybody talks about that we're just going to need more
and more power, But you're right, I don't know. It's
a good question. Our next guest, though, really focuses on
distressed real estate. We kind of want to get into that,
especially when it comes to mid size multifamily sector housing.
So let's get into it. Back with us as Amy Rubinstein,
she's CEO of Clear Investment Group, and she comes to
(23:14):
us from our Chicago News bureau. Amy, good time to
have you here. Last time we talked was December there's
a few things that have happened, like a new president
coming in and lots of changes from the White House.
Talk to us a little bit about how your market
has changed.
Speaker 5 (23:28):
What's going on.
Speaker 7 (23:29):
Yeah, we started off the year really strong.
Speaker 10 (23:32):
We started to see transactions pick up, and then tariffs
got announced in April and it started to slow things
down again. I think people sort of took a little
bit of a backseat trying to wait and see what
was going to happen. And now I think we're starting
to see things normalize a little bit again. The fundamentals
of affordable housing or low income housing, workforce housing are
(23:52):
all still really strong.
Speaker 7 (23:54):
Unemployment is still really.
Speaker 4 (23:55):
Low, or is affordable housing were.
Speaker 6 (24:00):
Oh?
Speaker 10 (24:00):
Yes, That brings us to a great point is we
do have a massive shortage of affordable housing, which makes
that market and that sector really strong.
Speaker 3 (24:08):
You know, Amy, when I talk to people in the
real estate world, I always get question sent over from
the reporters more knowledgeable on this space than me, and
they always, well, lately, they always want me to ask
does this person have enough cash saved up to go
in and make the purchases? Because now is one you
(24:29):
want to be in your industry and distressed real estate investing.
Speaker 4 (24:35):
Is that true in multifamily as well? Is that true
and residential as well?
Speaker 5 (24:39):
Well?
Speaker 10 (24:40):
So the multifamily that we're dealing with, if you're talking
about individuals buying housing, we are dealing with renters buying
necessity and not lifestyle, renters that are choosing between a housing,
choosing a house to purchase or an apartment to live in.
And so we're never competing against that particular market. But
right now, the the question is for people buying multifamily
(25:02):
is can you get the loans? And that's you know,
comes back to where our interest rates are at right now,
how banks are doing right now, and we are seeing
it to be an easier market to get loans in
today than we were at twelve months ago or even
six months ago.
Speaker 1 (25:17):
Well, so let's talk to you about where are the
opportunities right now. Talk to us about maybe a recent
deal you have done and give us just you know, geography.
The particulars were always interested in that and kind of
what is getting done as you work within your space.
Speaker 10 (25:32):
Sure, sure, So the last deal we bought was about
seven hundred units in Washington, d C.
Speaker 7 (25:38):
It was bought out of bankruptcy court.
Speaker 10 (25:40):
So there was a lot of distress in the deal
in the sense that there just was not a focal
point of leadership at that property for a while. Tenants
were upset, the city was upset. It needed a clear
focus and a path forward to get to stabilization. So
we bought that deal and have since then started to stabilize,
mostly stabilizing through communication with tenants, communication with the city,
(26:02):
and really trying to then dig into where the deferred
maintenance that needs to be that needs to be fixed
and taken care of, and how do we get to
that stabilization, which is pretty straightforward when you have a
property that has that type of distress on it.
Speaker 3 (26:16):
You're at a shop with a great reputation, a clear
investment group. You have raised a ton of money, right,
I think you just raised another three hundred million dollar
fund and you seem like a super of that. You
seem like a super nice person. So how do you
avoid being a slumlord? Right at these levels? What do
you do to make sure you'll make money and have
(26:37):
a clear conscience?
Speaker 5 (26:39):
Oh?
Speaker 10 (26:39):
Absolutely, so, we're our model is fully aligned with our
tenants and fully aligned with the other stakeholders of the
property of the city, the municipality.
Speaker 7 (26:47):
We often are buying from slum lords.
Speaker 10 (26:49):
Not always, but often when we do see that type
of stereotype, that's the kind of property that we're actually buying.
So then we're stabilizing it to get to a place
where we're providing safe, habitable housing for our tenants. And
so that is our business model, which aligns with what
those tenants are looking for.
Speaker 7 (27:07):
And so we're the opposite of a slum lord.
Speaker 10 (27:09):
We're actually trying to fix something that would cause a
property to be classified in that way.
Speaker 1 (27:15):
Why does that happen? And I asked that kind of
naively because I want to because is it just bad people?
Is it just because the business dynamics don't really work.
You guys are on a mission to make quality housing
available to the working class, Like, is it just it
doesn't work on a business level? Or what what goes wrong?
Speaker 10 (27:35):
So what goes wrong is it can happen a few
things that happen, but usually what it comes down to
is the seller actually being distressed. So the current owner
of the property has some sort of distress in their lives,
whether that's a financial distress and some other business that
they have or a financial distress that's coming from some
other form. It's usually not coming from the property itself,
(27:56):
but some things could push it over the edge, like
interest rates, like COVID. Those are the types of things
that could push an owner over the edge. What starts
to happen is communication starts to break down between the
tenants and the landlord. The landlord stops putting money into
the property, and therefore tenants start to get upset and
stop paying rent. Maintenance isn't taken care of because tenants
(28:18):
aren't paying their rent, and then more tenants stop paying
their rent, and it's a really bad downward spiral that
starts to happen. So I don't think it's that anybody
goes out trying to achieve distress property, but it just happens,
and it happens quickly.
Speaker 1 (28:33):
How are renters doing? Are you seeing stress though in
their ability to pay rent?
Speaker 5 (28:39):
You know?
Speaker 10 (28:39):
I think that the fundamentals right now are really strong.
So we for a while we were seeing expenses rise
at a very rapid pace on apartment buildings and then
also for individuals in their homes right inflation was really
high for a while. It has start to come down.
Employment is really strong right now, so people have jobs
(29:00):
where I do think it was a struggle for a
little while. There was a period of time where we
did see people struggling more, and I see that starting
to settle and starting to stabilize now.
Speaker 3 (29:10):
Amy, I want to get your take as not as
an investor necessarily in this market, but just as someone
who sees what's going on and understands the industry better
than anybody. New York City is like unaffordable for most
people right four thousand dollars is what you need to
get into a one bedroom in Manhattan.
Speaker 5 (29:29):
We have.
Speaker 3 (29:31):
Self proclaimed socialists. Mayoral candidate is doing very well. He
wants to put on rent caps. What do you think
about this situation? How would you assess it?
Speaker 7 (29:40):
I strongly disagree with it.
Speaker 10 (29:42):
I think it's really really bad for the housing market
because what happens is now landlords are in a situation
where they can't rise, They can't raise their income as
much as their expenses are rising, and no one's capping
their expenses. So when you get a rent control situation
like that, what happens the landlord usually will start to
spend less in the property, especially when they weren't prepared
(30:05):
for it. In the onset, you go and you buy
a property that was not rent control and now all
of a sudden, rank control is placed on it. Your
model was just thrown off, so you might not be
able to have that sustainability or that wherewithal. And that's
where you see landlords get into a lot of trouble
and what happens is that ends up negatively affecting the
tenants themselves, so they're the ones that end up losing.
Speaker 1 (30:25):
You always open up a window into, certainly this part
of the housing market to really appreciate it. Amy Amy Rubinstein.
She is CEO of Clear Investment Group. Joining us from
our news bureau in Chicago. When we come back, check
on trading at some of the stocks on the move.
Carol Master, Matt Miller, and this is Bloomberg Business weekdand.
Speaker 2 (30:41):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(31:02):
and always on the Bloomberg terminal
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