Transcripts For BLOOMBERG Bloomberg Markets Americas 20170912

All the major averages are in the green and hanging onto gains. We have seen price swings pickup. That was anticipated. September can be a volatile month. It is the most volatile month of the year by far if you look at the bloomberg. This is the average percentage change for the s p 500 did you can see september is the highest this year. It is still lower than december and last year. We have the biggest swings of the year, it is dwarfed by what we saw a year ago. We still have a few weeks ago in this month. It is the most volatile we have seen, not compared with any volatility thus far this year. We will keep an eye on that trade retail is relatively strong area that we are watching. The gap is leaving the game. The old navy unit is worth 30 more than the total Companies Enterprise value. He said the divisional margins are being disclosed for the first time. About 75 ofrating the profit. Also one, l brands are the rise. Macys and nordstrom are trading higher. The latest Johnson Redbook numbers show growth of 4. 5 for the month. That is higher than estimated. Before going to stores ahead of the hurricanes and as we see, some of the recovery shopping as well. Lets look at what its going on in the bond market as we continue to see yields climbing on the 10year note. 2. 17 . Low,friday, we had that the lowest since last november. It is a 16 basis point climate. That has been feeding into the gains weve seen in the financials. That has also been propelling the overall gains in the stock market. Vonnie thank you for that grade we will check back in a little bit. Our next guest things we should be closer. Its hard to know what happens next. They manage the global value fund. Sayhew, a lot of people markets have defied expectations. We are going to continue until something happens. Matthew markets are inherently unpredictable. We have step act from the current sentiment. The problem with markets today is we see cyclical risks. Confidence has gone from low to high already. To 4 . Nt is 4 a lot has gone right already. The s p profits are supposed to be at peak levels. 2007. Oblems we saw before that levels are higher than back then. Seee look forward, we geopolitical risks. Its in on foggy crystal ball. Its not a vonnie reason to take your money out. Valuations are not that heavy. Capital we think of the one security at a time. We look at what opportunities are available to us. Today is an environment in which we are struggling to find good businesses at good prices. Most sectors of the market are expensive. This is not a cheap market bottom up. What that means in an environment like that is our cash levels have to fairly high levels. We are struggling to find individual opportunities. Vonnie are you talking about all areas of equities joe graphically speaking geographically speaking . Across the globe in the capital structure. We can look anywhere. What we see are markets are fully valued. There are some select areas that are out of favor, where we are able to put capital to work. We see more opportunity to trim positions. Lets take a quick look at this chart before we get to what you are trimming. This is the spread between value and growth. Value is lagging growth right now. How long will that last . Matthew we dont know. We are through the cycle on investors. We think of attractive real returns to the cycle. This is the downtown of the cycle. We dont try to get too caught up in the moment of was working today and what worked yesterday. We think we are in good businesses. We have some part of our portfolio in cash, awaiting better opportunities. We have some potential hedges. Vonnie gold has been rising. Will it rise more . Matthew if you look at the history of gold, it reaches its highest valuations when risk assets are in a more depressed state evaluation. We are not trying to predict where gold is going over the next 18 months. We view it as a longterm complement. It serves as a hedge for us in the port olio. Portfolio. Real returns are depressed on sovereign bond markets. Did it isprint gold gold. As we extend our time horizon, we see a as a superior it as a superior hedge. Vonnie is apple growth stock . Matthew it has reasonably high expectations. There are two parts to its business. There is the hardware and the software. We love the software piece of apple. Apps thesed to using hardware side of the business makes it more difficult to predict. They have to keep coming up with innovation after innovation. Thats where we struggle to deal comfortable with the structure of the company. Assets righteal now. Whether its gold or commodities that are tramadol, we been investing in energy. It can be upstream reducers of energy or oil service companies. Over time, they are extracting oil from unconventional yields. You, head of global value at price legal investments. Here is taylor riggs. Taylor people chased away by Hurricane Irma are returning to some of the florida keys. They have been allowed back into some of the upper islands. The highway to the lower keys has been washed out or it water and power has been cut off and all hospitals are close. An Aircraft Carrier will help with the search and rescue. President trump is planning an aggressive roadshow about tax overhaul. He will travel to 13 states in the next seven weeks. The white house is trying to avoid Communications Failure they experienced failing to rip repeal obamacare. Sanctionsa called the illegal and unlawful. Issaid they are the u. S. Evil intention to destroy north korea. The u. S. Had to water down the sanctions to get russia and china on board. The ntsb is cautioning drivers that they cannot turn the wheel over to driverless systems. The chairman said the automation replaceaugment not human drivers. That is the likely cause of a fatal crash last year involving a driverless car. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. I am taylor riggs. Vonnie thank you. Coming up, the big apple hoopla is set to begin in less than an hour. Its one of the biggest events in years. The latest push of its big moneymaker, this is bloomberg. Vonnie it is time for the latest Bloomberg Business flash, some the biggest business stories. Ors are waiting on Goldman Sachs. We spoke to the president Harvey Schwartz in an interview about the business. A lot of the Market Conditions will continue into the third quarter, low volatility. The fund is performing well. It remains a challenge for us. Vonnie they are planning on cutting senior staff and risk related assets. That is your latest Bloomberg Business flash. We are going to take a look at how apple is trading right now. Todays the big reveal in 47 minutes. Hey are down about. 4 lets go to emily chang. She is the bloomberg Tech Knowledge he anchor. Technology anchor. Everyonee ask is what x is what everyone is waiting for. Reporter haseat to tellking furiously us all about what we are going to see today. As you said it, we are going to see the 10th generation of the iphone. We dont know what it will be called. We know it will have 3d facial recognition technology. Many of these features you will see on other phones already around the world. Its not about being first for apple, its about being the best. Its about being the best. An experiencer that the lights them. Impatiencet that result in shipping something that is not great. Emily apple is unveiling three new phones today, as well as a iphone 8e 8 and an plus. I have to say this is my first time on the new campus at the steve jobs theater. It is breathtaking. This is an omans to steve and its about a fresh start for apple. Its the start of a new era. Its a very critical moment to date watching launching the new phone. Vonnie its great to see the new campus itself. Tell us about the cost of this iphone x. Theious iphones cost in 188 range to manufacture. About 387pected to be dollars. By do they insist on holding on to its margins . Does it really need to charge 1000 . Biggest revenue driver for apple. Decreaseeen trying to its dependence on iphone revenue. This is the moneymaker. They are selling the highest priced phone at 969 and we are expecting this to go past that. This is a luxury product. Those models have sold around the world to mixed results. They have cornered the luxury highend market. That is their strategy going forward. Vonnie what about services . We just showed that chart you were referencing about the revenue for apple and where the iphone plays in. Apple seehere does its product mix going . Agoy tim cook said a while that he hoped services would become a sizable fortune company. Services revenue increased 22 . That was just in that quarter. When i spoke to tim cook about that, he said it happened cap are faster than they expected. They are moving forward on diversifying revenue when it comes to services. We cant ignore the fact that the iphone makes up two thirds of its revenue going forward. Change, butthat to it will change slowly. The iphone is going to remain incredibly important to the ecosystem and the bottom line. Vonnie its all about product and the core fundamental modus operand this. Plays a big role in politics and in the corporate death market. What could we see over the next quarter in those roles . Thats always in the background. Emily its been fascinating to see tim cook come forward, speaking out on issues like diversity and moral issues and the events that happened in charlottesville. Hes been talking about how he believes companies in general need to take a moral responsibility and stand up for what they believe. Thats what weve seen tim cook do. It seems like this could he his legacy, something that steve jobs really spoke too much. He did not speak about philanthropy or politics. He talked about the product. Tim cook has taken it upon itself and seems to be leading the Business Community in taking on these issues are it issues. Vonnie emily chang is at the new apple campus. We will be bringing you special coverage of that event. In, you will want to know exactly what that gasp moment is. This is bloomberg. Vonnie this is Bloomberg Markets. I am vonnie quinn. Investors are waiting on Goldman Sachs is strategy to turn around its fixed income. This is what he had to say to alix steel. Presentation was for investors. What is the Growth Strategy . Broadwth, we had a strategy. Discussion, we spent time talking about fixed income. What weve done with the business over the last several years, taking resources out of 5 business, we identified billion. To someone like me, that doesnt sound like that much. We made a series of assumptions, one assumption is the environment doesnt change. Environment,f the nothing changes. We thought that provided our investment with maximum clarity. We assume nothing changes and we went through does this by business specifically, making our lending platform and identifying the Revenue Opportunities across the next three years. It totaled 5 billion. These are achievable because they grow our client footprint and it is related to the firm. This is not new. Have a vix when you 811, are we going to be having a different conversation . Other banks been navigating that and iron year. Environment for years. The difference between us and some of the large universal banks, some of the differences are quite obvious. The underlying assumption of the environment doesnt change. In fixed income, we have identified 600 million that allows us to Grow Market Share and drive revenue. That is told by very specific client lands. Its wellknown we are number one with hedge funds. We are number one with asset managers. We can provide lots of value for those clients. Alix steel other banks of already made those changes. Im have thinking of Morgan Stanley in particular. They trump you guys in terms of trading. Are they better at navigating that new environment . Are they taking on more risk . Morgan stanley is a great firm. I dont have any insight into what they are doing. I can only talk about what we are doing as a firm. We talked about this in the presentation. At2009, our market your peak 19 to share. At 19 . Share the at 19 . The at 19 . We reduced the balance sheet. We were able to do that during that decline. Was enabled us to do allocate money across the firm. We of our market cap, created operating leverage. Had to billion dollars in revenue, i would share those with you. The billion dollars with our leverage, that is quite significant. Vonnie that was Harvey Schwartz of Goldman Sachs. Mayor on, the naples how his city is coping. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. A beautiful shot out there of midtown manhattan. That is where we are broadcasting from live from bloomberg will headquarters in new york city. I am vonnie quinn. This is Bloomberg Markets. A meeting with president donald trump. Says that they are working on a trade deal. The trade deal will involve maybe a boeing jet deal which could be worth between 10 billion and 20 billion. This is what the malaysian Prime Minister. Under you clinical matters, trump says more has to be done after the north korean sanctions vote taken in the u. N. Once again, President Trump and the malaysian Prime Minister are working on a very large trade otherinvolving boeing and industrials. Its get over to the first word news desk. French president Emmanuel Macron says that his governments top priority is to help residents returned to normal life in the french caribbean territories were hit hard by Hurricane Irma. Speaking in a guadalupe today, macron said that power has been restored to half of the homes in st. Maarten. He said that he hopes some of ools will reopen next week. The senate has passed a resolution condemning hate groups. Theecognizes heather heyer, woman who was killed, and the 19 others who were injured when a car slammed into a group of demonstrators protesting a white supremacist rally last march. Congressional republicans are opting out of seeking reelection. Trott has announced that he will not run in primaries next year. He joins a string of moderate have decided not to contest their seats. Are alsoeran gop reps reportedly considering retirement. Bob corker announced monday that he is still undecided. President trump will visit china in november as tensions flared around the Korean Peninsula door to the test due to the north korean around the Korean Peninsula due to north Korean Missile tests. The president has repeatedly called on china to stop north Korean Nuclear advancement, and he said in july they could easily end the crisis. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Vonnie mark, thank you. Irma was forecasted to be one of the most expensive storms in u. S. History. In Bloomberg News reporter eric chester who is live at a gas station in florida north of miami. Florida has possibly escaped the worst, and the dollar amount may not exceed 200 million as some had forecasted. However, the state needs to work at getting the economy back up and working. This gas to get this asks station is the perfect example. 40 of gas stations in florida do not have fuel. Anyone percent do not have electricity. This is one of the gas stations which does not have electricity, but there is fuel here. The people you have seen in these cars are waiting for longer than three hours in the hopes that they will hook up a generator to the gas station so that people can start pumping fuel into their tanks. Three hours with no gas in the hopes that the generator will start working. Gasoline will find its way into those stations will find those stations with no gasoline, in two of the main locations tampa and Fort Lauderdale were somewhat impaired by the hurricane. The will have to bring gasoline in from the tankers and deliver them to gas stations. It will need to go to First Responders first, and then it will go to people waiting here. Vonnie so, the Biggest Issue is the supply of gasoline which will hopefully improve as more refineries come back online. Also, there is the power issue. You cannot pump gas unless there is power. What is the utilities situation . The outlook for power is, in some circumstances, somewhat worse than the situation for gasoline. The gas situation should be alleviated in a few days. Will be bringing in gas to stations like this and others, but getting the power lines repaired after all the trees have brought them down will take Florida Power and light, duke energy, and other utilities much longer. As of this afternoon, 5. 4 million florida accounts still lack our. That is 52 of the state from down here in miami all the way up to jacksonville. You saw the flooding. It will take weeks to bring the power online. It is sunny out here and above 90 degrees. All the people without power do not have air conditioning either. I cannot run their freezers or refrigerators. It is an enormous problem. To see theis nice sunshine, but that brings its own challenges. Nice to see you on the ground there, eric. Hit the western coast of florida, when city found itself directly in one city found itself directly in the path of the hurricane. Theor of bill naples mayor of naples, florida joins us now via phone. Thank you for having me on the phone today. We just started, day one was yesterday, where we received our first estimate of the damage in the city of naples. Million. About 180 i could not even guess what the. Umber was is justnt of damage hard to explain, but you cannot drive anywhere without seeing just how powerful the storm was. 100 million in the city of naples alone. How much of that will come from Insurance Companies for congress . I do not exactly know the answer to that, but i can tell we were will fully reimbursed. Femall take a while, but will step in. Everything has to be documented, and it will take some time. It comes from insurance and other sources, but we try and do this ourselves first. Vonnie what are the agencies doing right now . Give us a glimpse of how things look in the city. We were so, so lucky. Earlier, the tremendous storm surge would have been catastrophic for us, and it did not hit us. We do have flooding and some blocked neighborhoods. Of course, power is the most important priority, but other than that our crews have been out and putting into action our preparations. Hey are doing a tremendous job they are out from sunrise to sunset, and they are going full tilt head. We will get this done, and we will recover. Vonnie how long do you into 78 it taking to get the big work do you anticipate it taking to get the big work done . Just the more obvious work. How long will that take . I might be optimistic, but i will say within a month, month and a half, or two months, you will be able to drive through here. You will still notice the effect , but we are pretty resilient. We have a very amazing staff. Our employees give it 100 . Vonnie mayor bill of naples, florida, thank you. Coming up, tim cook is set to take the stage in a few minutes. We will take you to the event live. This is bloomberg. Vonnie this is Bloomberg Markets. Imf vonnie quinn. I am vonnie quinn. Here to discuss apple stock before the big event is abigail doolittle. Sometors may be getting jitters . It could be because of the rumors and the news. We have been talking about this for more than a year, since the last year 10th anniversary phone since last year, the 10th anniversary phone. Today,ters we are seeing the question is if we will see a bigger version of this . Far,his stock grown too too fast . Investors are naturally pumped for this new bone, so will it live up to the hype . Vonnie the stock up about 90 . It is a huge move. Some are bullish on the stock, but he does wonder if it has been hyped up in little bit in the near term. There are concerns about if there will be supply constraints. There also seems to be a bit of bust and a lust and a cycle for apple. You can see the big uptrend between 2007 and 2012. There was a very disappointing iphone 5 in 2012, and you see that drop. There was also that disappointment with the iphone 6 as which caused another drop. So, we will have to wait and see if this will be another bust situation. Facte how will infect how will it affect the rest of the market . Taking a look at this terminal, it really tells the story. It is a longer term chart. In blue at the top, we have apple. Look at the massive outperformance. That is stunning. Apple is up 690 over that time period. It is doing a very well against the s p 500. There is a lot resting on this new iphone. Vonnie the event will start in about 16 minutes, but they always do make us wait for a little more hype. Abigail, thank you. Lets get a little more about the big event. Thats go out to emily chang. Emily, we are clearly going to get some things like facial recognition. Would up things that the price target, but could this be a letdown when it is all revealed . Emily one of the things i think is interesting is that, bob odonnell suggested to us that this new phone would be so great , why would you want to buy one of the two other phones . Could there be some degree of cannibalization there . Bloomberg gadfly had some couldis that iphone sales increase anywhere between 11 to 45 . That is a huge spread. We do not know exactly where that is going to fall, but we know that a vast majority are going to buy this new phone already own an iphone. In terms of other things we will see, we will see a new apple watch which you can use untethered. You do not have to take your phone with your watch. We will also see a new apple tv set. It will have four k video and higher resolution. You will need a four k tv to able to take be advantage of that, and apple is speaking with manufacturers about four k manufacturing. Hear moreke might about the apple home speaker. There was some chatter that we could see some partnerships as far as content such as radio partnerships or some other type of partnership. Is there any chance we might hear more about that . Emily we know that apple is giving its toes into video. Tim cook told us he was very excited about it, but it is still early days. We know apple has done some extra mentation with original content. It has not gotten the best reviews, but it is something they are continuing to invest in. When it comes to four k video, there needs to be content to support their system taking off. It all goes back to the idea of diverse time idea of diversifying revenue. Ultimately, apple wants to reduce its dependence upon the iphone as a sole stream of revenue. Vonnie is there anything else we might hear about other units . Emily what is interesting is that the air pods, the new wireless headphones, are incredibly top sellers. Who knew they would be so popular . I think there were probably about two people at least who knew. Popularity of the headphones goes back to the fact about acquisition of beats. It is another big part of the apple music system. They are betting on the new apple home speaker system working well with the air pods. That divisionvoid thats easy see with amazon and the amazon echo. We cannot overestimate the power of the iphone as part of the Apple Ecosystem. How much it contributes to the bottom line. It is a huge, critical day for the iphone today. Vonnie what kind of impact is the new campus having on you . Emily it is breathtaking. When i showed up, there were about hundreds of people standing around. I do expect a few more surprises in terms of presentation. The theater has some new bells and whistles. There is a wall on the inside that will reveal a hollow area and showcase the products. This is the steve jobs theater. It is a huge thomas to steve jobs a huge omage to steve jobs, and i expect some sign of that as we get in there today. This is a fresh start for apple, a new campus. Cooknnot wait to see tim carve out his own legacy at apple. Vonnie all right, emily come a thank you. That special all right, emily, thank you. That special event is just 10 minutes away. We will bring you live coverage of the event was a gets underway. You can check out live coverage online and on your bloomberg terminal. The thick look at your Bloomberg Business flash. Investors in the Canadian Mortgage lender turned down the bid on the grounds it was too soft, and would have raised Berkshire Hathaways state to 28 . He will remain with home capital regardless of the vote. Eliminating 40 of the workforce, and they will streamline resources and manufacturing. The Biotech Company is moving from new haven, connecticut to boston. They hope to recover from questionable marketing practices and lower sales. Is the latest Bloomberg Business flash. , a Water Bottle Company dedicated to style and sustainability. We will hear from the founders and ceo. This is bloomberg. Vonnie this is Bloomberg Markets. I am vonnie quinn. Calledceo and founder bottles aanys water statement on fashion. It has given them a huge boost in sales. She tells us how she achieved that Business Growth the idea well was that i wanted to create a better looking water bottle that would encourage people to carry a water bottle wherever they went into stop toting around plastic Water Bottles. I started with my personal savings, and i worked with a team of industrial engineers. It is stainless steel with a layer of copper on the inside and it is almost indestructible. The first year when i started, i went to trade shows all by myself. I spoke with a lot of customers. They would ask me if i could make it in this other color or in a bigger size, because they would like to take it into the park. Really, that first year was just a learning lab. We went from 3 million in sales to about 10 million in sales to about 50 million in sales and now to 100 million in sales. Is of the challenges we face that we outgrew our office and our system. We were running this company on spreadsheets. We had to update our website. For the most part, we tried to keep things uptodate. , it was hard to turn my attention inward. Not to takefor me every marketing and sales opportunity, every innovation opportunity. We had to put a lot of things on pause while we built the infrastructure. Moving the warehouse, moving the a 100, we can now be million company, because we have the system. Last year, i had the idea to launch a new line. Targetinally launched in stores nationwide. It was part of my idea to create something new for a different type of customer. Our customers like to collect them. We found that the average customer actually has five bottles at home. Today, we are still a self funded company, and we do not have any outside investors. I do not have a board. I do not have any metrics. I could not tell you any numbers. I am always interested in potential advice and expertise. How we might be able to partner with someone who could help us grow bigger, faster, stronger. Im not saying that anything is coming, but you never know. I think the balance of seeing plastic now versus swell Water Bottles is starting to change. We still have some education to do, but i am excited about the progress. Vonnie coming up, our special coverage of the apple anniversary event. Stay tuned. It is 1 00 p. M. In new york and 6 00 p. M. In london. I am david gura in new york. Come to our viewers on Bloomberg Television and our listeners on Bloomberg Radio or special coverage of the apple product event. They have sold over one billion iphone and its launch 10 years ago. They are expected to stun viewers once again with a of products. With a new line of products. Also are expected some announcements about the apple watch and apple tv with the goal of that person find the product line. A new look at the apple campus, too. The new theater named after the companys iconic founder, the jobs. Jobs. Nder, steve apples against event in years is just now kicking off. Tims the first time that cook will take the stage at the new theater. Anniversary of the original iphone, a gadget that of ended the phone industry. Consumers trust of the company to deliver their signature performance. More than 1. 2pt, billion iphones have been sold in the last decade. We are going to be kicking off our special coverage of the reporters atith the scene and in studio. Selena, let me start with you. You are at the apple campus. What does the place look like and what can we expect today from the event . Right behind me is the famous steve jobs theater. You can see there is a sort of glass cylinder on top. Underneath, there are actually four stories that journalists will descend down the spiraling staircase. Jobs the classic steve design, elegant and beautiful. The entire campus cost about 5 billion. It certainly was not cheap to create. In just a few minutes, we will see a number of devices unveiled. David how important is this place . Why is it so important it is in this new facility . It feels important right this minute, even though i was a huge epic about spending 5 billion on a building rather than better product. Have a lot of enthusiasm for this launch, weirdly even more than usual, severalink it is things, the 1000 price tag to the new phone, the new building, it all as a little bit of glitz to the event. Such is already at nosebleed levels that they have to keep moving the needle. Cory, looking at the bloomberg, we see apples dependence on the iphone. Are the three new models of the contextcan you put into for us how important this device is still to this company . It is pretty much everything. It is also true that most of the profits in the entire mobile phone is this are due to the iphone. It is somewhere near 80 of all sales in the industry. As dominant as smart phones are in the global economy, the profits are due to mostly apple and really the only other competitor, samsung. So, the iphone is massively important to apple, and it is also massively important to the world economy. Apple is making a lot of money on these devices. More than anyone else in the industry. David you have been talking with analysts, and i will put up another chart looking at apples performance over periods. You can see the outperformance over the s p 500 tech sector and the s p 500 overall. Symbolically david what are you hearing from analysts about todays event . X analysts are highly anticipating analysts are highly anticipating the event. We expect to see the new, three phones which analysts are excited to see. There is coming there is some concern they could potentially cannibalize sales to the existing lines. Some analysts say this will tell the 1000 dollars price tag, where some consumers are not going to be willing to give up that much of their paycheck to get the new phone. There also might be some interest in apple is willing to Bundle Services if it means further justifying that four digit number. David lets talk more about that price tag. With financing, you are not going to see that 1000 price tag upfront here, but are we making too much of this price tag in the year 2017 . As i am thinking about it, i think the price tag is more of a asset and not a liability. , these devices are the central tools that we used to exist in modern society. People i think are increasingly willing to spend more. Second of all, Something Like this, or any product that people see being used by you or me, it becomes a personal attribute. I think people will want to be seen by this device, even possibly more than other iphones in recent years, because this one will look a little different. I think people may sort of stretch to get it. I think anyone who can afford it will want to get it, and it will likely be able to get it. Follow along with us on Bloomberg Television and Bloomberg Radio. We are already getting some great stills of the event unfolding. Tim cook will be speaking in front of this visage of steve jobs. Corey, let me ask you about leadership here. Steve jobs has kind of been looming large over this whole campus. What is the role he is playing in todays event . I think the history of apple looms large. Talking about pricing and profitability, the neardeath experience that apple went to almost 15 years ago really changed the way that the Company Managed itself in almost every way. The fantastic cash cushion that everyone looks at has unreasonably large looks at as unreasonably large, but for the company to go through such a volatility, the memory also looms large for them. The high profit margin on this device is the reason why it is a 1000 device and not a 600 device. They are a business that really wants to keep profits flowing at all times, because they recognize with the Tech Industry giveth, the Tech Industry takes away. David we have a huge team of some reporters there at the event and theater. What can you tell us by who is there and in attendance, ice there,e s Steve Wozniak is who else is there . This is really a private, the ip event. I know employees at apple who are not even allowed into the event themselves. There are about 1000 journalists inside the event right now. There are also a lot of the executive ranks of apple. That includes Steve Wozniak who was spotted as well as the cfo of the company. We do know a lot of details about what we are about to see, but i do think there will be a lot of surprises. I think it will be involving how they frame the phone, steve jobs and his legacy, but also the new software and features they bring to this phone. The augmented reality capabilities of this phone are a highlight. It is really going to take this emerging technology to a new level and hopefully bring it to the masses with at her sensors and possibly even 3d facial recognition and cameras to better since the environment. You can check out the latest model Details Online on the bloomberg. About some ask you of the other things here. We did hear about services, but there could also be potential updates to the watch as well. The watch is a big deal. I think it is debatable to see how many people will want it, but i think it will be desirable. Is if theestion battery life is not ridiculously short. Certainly, the home pod speaker is something new. It is not particularly revolutionary for them, but i think the big point is software. What might they bundle with the new, high end phone is an interesting question. If they are able to bring some sort of icloud super capability along with it along with some other services and software, it might be rather beneficial to them. Tim cook saying that they are going to move into the apple park here later this year. Innovation ines the context of apple . There is the disappearing home button. How significant are advances like that . They are tweaks. They are not momentous innovations, but, on the other hand, going back to my point, going given how central these devices are two modern society, basically matters how they work. Until we get to some sort of theseted reality thing, are going to be the devices that we depend on day in and day out. Little changes can be important. Apple has not delivered massive innovation in any recent time. Even this device could said to be in imitation of certain devices that apple samsung has out for years in some cases. David we will be back throughout the hour with our guests talking about this special event coverage. Apples we will recap notable stock story this year. This is bloomberg. And there is not a day that goes by that we there is not a day that goes by that we do not think about, and memories especially, rushing back as we prepare for today and this event. It has taken some time, that we can now reflect on him some time, but we can now reflect on him with joy instead of sadness. Was tim cook just moments ago. We are continuing our special coverage of the apple product even underway. Apples stock at performance so far this year. Angela joins us now julie joins us now to talk about it. Retail has been a big part of apples business. In terms of stock price, the stock has not been doing very much today, but it has been rising in recent days. A 41 . P some the chart here shows all of the times that it has hit records over the past years. All of the yellows are present closing highs for apple shares. It will become its best year if it keeps up this pace. You can see the frequent clusters that apple has hit. Also, we can look at the valuation, and where analysts are expecting the stock to go. Is apple market cap currently here in the white line. Here is the estimated market cap. If you judge it by the consensus price estimate by analysts. The highest came in today from Morgan Stanley. The valuation at 253 a share. The average price target is 176. In other words, this is what analysts are forecasting for the future side of apple as it continues to benefit them some of these new product introductions. David julie, they do so much. As we had to break, i want to bring up the apple event on the bloomberg. We have a lot of manpower out in cupertino right now. The head of retail is currently on stage at the apple event. Be sure to check out the event live on the bloomberg. Coming up, we will speak with an apple executive. We will see if they can score a major comeback against the likes of alexa and quintana. And cortana. This is bloomberg. David on Bloomberg Radio and Bloomberg Television, this is Bloomberg Markets. we are continuing our special coverage of the apple event in cupertino, california. Apples leadership in the tech space is on display. One declaring area where they have lost their lead against rivals is in a. I. Assistance. Joining us now to discuss from ceo johnisco is a. I. Burkey, a former apple ceo. Can you tell us what the goal was for siri . What was it intended to do versus what it is today . How much cap is there in realizing its full potential much gap is there in realizing its full potential . S brainstorm, the idea was to create something we could ask him any kind of question, and it would provide you with a solution. To your point, one of the things that has happened is that apple this reteam apple took over the siri team which turned it more into a general question and answer, entertainment, funny answers, sort of device. It lost some of the openness it originally had. Heard criticism that there has not really been eight stickiness factor yet in place when it really been a stickiness factor yet in place when it comes to these a. I. What kind of functionality can they provide to make them more ubiquitous . Companies do go a bit a straight with a focus on shininess. We try toiri team, focus on things that people do daily. We know that siri use has been dropping off daily year after year. When you think about the times that you had a good experience with siri, it was when she understood you, and it was something a little more tactical that you are trying to do. Siri is now that under craig. , when you try to use your iphone for things you are trying to accomplish rather than entertainment, it is aims like checking mail or messages it is things like checking your mail or messages, then siri becomes more integrated with the rest of the services. Can get better, and the rest of the device can get better. Designers can focus on getting one, rathertask d than thinking of whatever cool joke they could say about the results of the big game. David just to recap a bit of what tim cook has been saying at the steve jobs theater, he was talking about the apple watch and indicating that it surpassed rolex as the number one watch in the world. We have seen a deal here between alexa and cortana working together. Could you see apple brokering some type of similar deal in the future . A way to get these ai working together in great ways . Way back when when you were talking about the neardeath experience, we would use the and fit in. ut i think that is an ideal need to go back to with apple where we do stand out and create the best products, but that we also work better with others. This case you are talking about is exactly this case. You can imagine, for example, in the assistant case, being able keywords tople start sentences and create better integration. One of the things we learned in the neardeath experience in addition to just managing our money well is to not make life or death, make or break decisions with other companies. You will find that apple will be a little more conservative about these ideas than other companies, because they are afraid what could happen to them is what happened to them back in the 1990s. You and i both know that that is the thing about neardeath experiences, they are emotional. I think there is some emotional conservatism there. Also, apple thinks of itself a lot like disney. They tend to be very conservative about experiences. That the the key thing i want you to hear there is just like how disney had to create a touchstone brand to make some at your movies in the 1980s and 1990s, apple had to find a way to break out of their apple has to find a way to break out of their mold to be this nice, shiny thing. This began with a lot of talk about steve jobs. There is a role he continues to play at this company. You see that as a positive and that he continues to cast a shadow over and motivate the rest of the company . I think ofh steve jobs similar to Michael Jordan back in the old days of the chicago bulls. The team was built around him, and it had a hard time functioning at first. Now, i think tim cook has his legs under him. I do think he doesnt cast a shadow, and i do think there was a lot of sadness and grief once steve jobs died. I think a lot of people did not know what to do, because steve had so many honed skill sets. They had to rebuild a lot of those same skill sets. David we appreciate your time today. They you for joining us, john. Will have much more of our special coverage of the apple product event on the Gray Television and Bloomberg Radio. Tim cook was on stage along with the coo of apple talking about advancements in the apple watch os for os four. Much more to come on our apple special. This is bloomberg. David this is Bloomberg Markets continuing our special coverage of the apple event going on and in cupertino. On stage ins is cupertino talking about features of the apple watch, and theres watchto be a new available in september. Some details about how the company intends to do more with the help data announced. Whether that will be an lte apple watch or series iii apple watch coming up to read more reactions to these headlines. My face fire Michael Facemire. Cory johnson and selina wang. David kirkpatrick. David, let me ask about this new feature of the apple watch. Whylte enabled apple watch, is this important and such a . Evolutionary change i tend to be a skeptic. On a watchike rides and i stuffed my phone into my pants. I want to have my phone in case i need to call my wife. The battery life is going to be critical. If you have an apple watch that only last for a couple of watch a couple of hours, may be determined on when you need it, it might make sense. I do think its important and i think people will want to. Im impressed this is the bestselling watch in the world. It seems to be catching on and i do wear one. I would want a better one. David looking at new software, lets talk about how apple approached the revolution of Software Like this. The software and the apple watches changed dramatically. How is the company doing keeping up with what people want and expect out of the apple watch . Mr. Facemire theyre coming along way. The initial watch did what it was supposed to do, and thats about it. Now we see the evolution of it overall user ecosystem. It works very well for health and fitness and they are focusing on those types of experiences with new exercises being monitored and new heart rate monitoring, finding out are you healthy and having a bad life events. They are doing a great job of focusing on what the watch should do and experiences for the users context and ecosystem. David cory johnson, apple is going to be working with stanford on heart arrhythmia. Apple collects a lot of information from the apple watch and it hasnt done much with it. What kind of data has apple collected and what opportunity is there for apple to enter into partnerships with Health Care Providers . Cory the combination of data they picked up both from the phone and the watch. Tim cooks athlete, he works out and spends a lot of time on his bike. I dont know if he would also called davids wife if he had of that trip on the wife. If anyone needs help, just called davids wife. Tim thinks like an athlete. He thinks about those things like health. We should also talk about the earpieces that apple released that has the capability of gathering information about the user and recording it on a macro level understanding whats going on healthwise with the user. You can imagine the kind of a structure that goes away with that, talking to the air but without the phone ever being involved. Collecting the data and telling you what it says above users health is a personal project of tim cooks. David apple doesnt break down data, but how is it doing . How is the evolution of this piece of hardware going . Tim cook did just say it became the worlds number one selling watch had of the rolex. Weve not see the data, but is clearly picking up speed. It did overtake fitbit is the number one selling smart watch. Although this industry is still nascent, its clear that apple is able to take the lead in this area. Make thatoday should very worried. They just came out with a new smart watch, its health and fitness focused smart watch, unlike whatever the apple watches doing. But we heard from the apple executives so far, they really have a big emphasis on how to we track user data and push harder notification . This watchntegrate and their fitness lifestyle, connecting with gym equipment . Apple has a lot of green space to take the field here in terms of working with Health Insurance and universities to push the data Human Connection forward in the health space. David im going to tliv on the bloomberg. Stageilliams live on the from the device, theyre showing a live feed of an engineer the middle of the ocean panel warning. Let me ask you about the robustness of the software ecosystem. I can Start Talking typing on my iphone, go to my ipad and find the writing in progress and go to mac and continue to work on it. How will sink is the Apple Software ecosystem how will ellsynched is the Apple Ecosystem . Mr. Facemire too much of the watch required the phone. They required each other for tethering and what they are realizing is customers arent tethered. The example of the woman paddle , you dont the water want to fall in with the phone in your pocket, but the watch can. That was one of the big advances we saw, the ability to use the crown and play the speaker to push out water. These are really exciting engineering advances they have done to take their ecosystem decoupled from each other, they can meet the needs of their consumers were really are. Somewhere where it doesnt make sense to keep my phone, especially as new phones come out that might be significantly more expensive than they have been in the past. , you David Kirkpatrick have to look at competitors as well. Fallingd about rolex, on the news of the new apple watch, garmin shares pairing games, there will be an altimeter in the new apple watch. Public understand the competitive landscape. We start with computers and moved to smartphones and other different sectors. Mr. Kirkpatrick i dont think they are really competitors. They are rolling things together and the thing that apple is doing quite well today is they are creating this ecosystem of products and software, that none of the other softwares have talked a lot about how the software and data will be additive, creating new opportunities for the company but also for the user. Ipode the watch and the and phone and the macbook sitting right here. They are tied together with software. Samsungsomething that will ever have by any stretch of the imagination. If apple can continue to make these things stay logically connected, thats their big win. They can add other pieces to that and they can make more money. Ive been skeptical, but today im feeling more optimistic about apples ability to dominate going forward. David or patrick, continuing to watch was unfolding in cupertino. I think there will still be 80 hours of battery life. Lets see what he had to say about this new lte quit apple watch. Three hasatch series cellular builtin. [applause] now you have the freedom to go anywhere with jester apple watch. With just your apple watch. Our goal from the beginning of this is the ultimate expression of the apple watch. Jeff williams talking about the new apple watch. Davidohnson and kirkpatrick and Michael Facemire will stay with us. Much more coverage of apples Product Announcement on Bloomberg Television and Bloomberg Radio, coming up. This is bloomberg. David this is Bloomberg Markets, a special on the apple Product Announcement taking today. Jeff williams on stage talking about the apple watch three minnesota lowly capable apple watch that will retail for 399. New health care functionality associated with that and the fact that its not going to have a shorter battery life than the version of that watch without the cellular capability. More reaction on the headlines, Mike Facemire joining us from cambridge, massachusetts. Editoratlarge cory johnson, selina wang and david turn to you,let me 399. It strikes me as low. When i saw onit the bloomberg. Lets talk about that in the context of margins. What is apple try to do with the apple watch when it comes to pricing . Mr. Kirkpatrick cory cory somewhere in the 35 range. Volume helps and that price helps them out. Functionality the in focus and the ability to get the thing wet is important. No accident they decided to demo r. With a standup paddle demonstrating some sort of functionality that competitors products typically dont have. In terms waterproofing. Today this point about ecosystems, its a very clever sort of notion that ties all these things together and makes them Work Together, ostensibly make them work simply. Complexity,this there are some difficulties with the operating system unlike days of your. We will see a big and full enough we will see if they can pull it off. Ons important to focus reality. Lets not dismiss the pokemon go phenomenon is something that caught people by surprise. Nintendo had to create these features themselves. Into the operating software and the hardware itself. David the climax is the announcement of the new models. Talking about four k video in the next iteration of apple tv. As you observe that, the evolution of apple tv, how big a deal is this . Andwill need a four k tv high games high range dynamic video. We went fromck the apple watch that is really pushing the envelope as far as what Consumers Want and what they can do and how it will make their life better. To the apple tv in which it seems like there try to catch up to 2014. Mr. Facemire its interesting to play a game of catchup on features and hardware and 40 in hdr, is not a place that apple was traditionally gone. How does this make my life better . How does this make my entertainment better . It is if i dont see consumers rushing out to get one of these just to get this better resolution. This is not there yet. David how cognizant is this company of that, that this has been a deficit . They talk about apple tv, but they havent seen widespread adoption. It with the ipod or ipad or apple watch. I think mr collects apple has only about 15 of the settop box market and a lot of ways to go. I also think is important to mention that weve been talking a lot about how apple is not invading innovating and just playing catchup. Apple has never been about being first, theyve always been about coming later and perfecting it, making a beautiful and simple. A lot of the features in this hardware is not necessarily innovative and new, the way the user experiences it is often very new. Is thisow content company under tim cook to be that company . Not to be at the vanguard, but to be improving technology that is out there . Phone companies have done away with the bezel. Is that enough for this company or investors to view this company is one that is perfecting rather than creating . Mr. Kirkpatrick the company does not see itself is not innovative. They tell themselves a story that is different from the one we might say. It does have to do with integration and the centrality of software. Ofs an interesting sort circumstances. But the point at which they actually do sell a tv, not just a box that goes with the tv, that can be a time that they start to really gains in revenue from the tv side. The margins on tvs per se are so low, they havent been attracted to that. There might come a time when they can build some kind of bundled device that you want in your living room that looks really cool. About the saying 1000 iphone, it says to your friends who come over this guy has apple tv. Not just the thing there it in a drawer with a wire connecting it. I dont think apple worries about they believe themselves to be innovative. I dont think they are always right. I think they copied samsung, but samsung cannot copy apple when it comes to software innovation. Integration. Showld bet everyone on the has had an apple product that was correct during an upgrade at some point. About tim cook talking this in cupertino. We are at the next major inflection point, the one that has the most stunning visuals ever, that are ideal for the large tv screens that are coming into our living rooms. This will bring cinematic quality to virtually everything that you watch. Excited toi am so introduce apple tv four k. David cory johnson, theres been a lot of talk of this northsouth connection for some time, apple buying the studio and getting more into content. What is the status of that conversation now . We have apple executives at a clip from spiderman as part of the marvel franchise owned by disney. Wheres the conversation about content and apple right now . I think increasingly, all the Tech Companies are looking at content creation as a tool they want to ask they want to have. If only because competitors are doing it and making it hard for them to get out it. Apple is taking a look at that as well. The legacy of what happened with apple music in the uncomfortable relationship apple had when it dominated the industry for a while, left a trail of executives that would never let that happen again. Apple has been challenged on the streaming music front and the movie front and unable to dominate this business the way it was dominated music. Apple hasnt quite figured out there content strategy yet, but we can see them dabbling with this. He doesnt let us see it and do the things that i was on does come a all kinds of business. Odels and does it publicly apple doesnt do that, but is doing that a little with content. Lets recap we know from cupertino, california learning about apple tv, apple tv is going to have more live tv capabilities, this four k technology, new Video Technology as well, and also talking about the apple watch three. Jeff williams talking about the potential for the new watch to include Cellular Technology battery life of 18 hours and retail for 399. Watch orders begin september 15 and they start shipping september 22. Apple loading all major movie studios have signed up with apple and hd videos have been upgraded for free to 4k. Most tvs do have4k capabilities. As part of tvs that are being sold today. When it comes to the software that will be on laptops and on imax as well imacs as well. Its upgrades that make things Work Together better. We see a lot of things to make your mac operate better and more efficiently and not use as much battery. Battery across the entire ecosystem is a concern. With the watch and phone as well. We expect to see some charging capabilities on the phone to make the battery life and charging faster and left longer last longer. Ee the same thing with mac ios the overall theme continues to be the ecosystem. How does apple in my life better by using more apple things . If they are successful, thats how they can have a force multiplier in the things and devices and Services People buy. Grow that ecosystem and make it happens. Thats why the apple tv stands out like a sore thumb. What the thing that forces me to go buy this thing and start watching my tv on it as opposed to watching it on whatever my tv article is with already comes with . Many tv is already come with , netflix, hulu, amazon. Why do i need another device to do that . Content wins over hardware in that world. Kirkpatrick, genova in cupertino talking about the potential to do more with gaming. How has that been embraced with gaming . They repeatedly embraced it and gamers never embrace them. Its not so many we associate with gaming success. In the highend demographics that use apple products, there are a lot of gamers. It is just something sort of like tv, something they put their heads against from time to time have not gotten very far. David tim cook back on stage now, we are getting to the point at which we are going to learn more about the iphones. Weve talked a lot about the iphone 10, how about these other iterations of the iphone . Improvements, what can we expect . I think what we are going to see is a parental improvement even more incremental and the ways they might run faster or better battery life and price points are going to be very interesting. Whats notable is that what apple has done has taken really cutting edge devices and about a year into it, significantly dropped the prices of at devices. People are upgrading if they are not going to the highest and phone and those phones have done quite well for apple as well. They help them preserve that margin and they may have larger margins than the topoftheline phone. Maintain massive profits phone. David you focus on software and look at what the iphone has initialrom the presentation of that folder consumers, how far it would we come and where is it going . Ai, what about ar and is the iphone going to look like in the future and how much of what we see today will be a glimpse of that . Mr. Facemire i think this is a really big year for apple and the iphone. When the first iphone came out 10 years ago, we already had mobile phones. This wasnt the first mobile phone. We had windows ce and palmpilot. This was the one that mattered and made Consumers Want to the experience again because of the ecosystem and apps. Now is the ai and i want to express intent, i want to go home or do a thing or im hungry. How can my phone help meet that need . This is the first year where the phone becomes what we call it, which is a smart phone. It starts to make use of my context and all the devices around me directly do something for me, this is the jumping off place for that. As we look forward with these devices, we start to get that ecosystem. We start to get a are help me out as opposed to be fun for games. Can developers harness that power . As i build things, and used to building things on flat screens. Thinking about how the world works in 3d and with overlays, this will be a challenge to the development world, but apple is giving us a platform in which to build that. David David Kirkpatrick, you have tim cook in the temple of steve jobs preaching to the converted about this new iphone going over the history of what the iphone has become. It was to buy these new models who is going to buy these new models . Those who bought iphones tend to be once you have bought iphones in the past. Are in a literature today going to people who have not bought iphones before . Mr. Kirkpatrick today they are celebrating the highend. The whole have they have a whole range of less extensive devices, but their key initiatives is to the iphone into the hands of everybody and i have some lowend devices for that. Heare are not going to about that today. The most support group for this announcement is rich people. Rich people globally as a 1. 2 billion richest people in the world are their customers who bought iphones as far. They will continue to be their customers primarily. David tim cook saying we have the iphone 8 at a third model, the iphone 10. Forwardying a huge step for the iphone. I may ask you about the innovation baked into it. The screen is going to be better. What does that mean for the user . Why do i care how sharp the screen is . Will be on theou elevator next is someone else with a better looking screen. Ultimately how the apps are going to work really make the difference. The entire discussion about gaming and using augmented reality, thats baked into the new offering system. Operating system. There are very complex things written into the code to allow developers to not have to start developers to not have to start from developers to not have to start from so we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Same size wise as predecessors and they will have something called true tone, which allows screen temperature to change based on the environment. Selina wang, lets ask about incrementalism. Phil shiller talking about how they improve on everything. This is a huge step forward. It seems like he is not talking about some sort of radically new device. Ms. Wang we are all waiting for x. E upcoming iphone we expect them to rid themselves of the home button with facial recognition. And there is going to be some surprise from the phone from the crowd, which this facial recognition will be able to read your expression. If youre making a happy face, it will suggest that you send a smiley face emoji. This type of sensing has not been seen before, and its really going to change the way that people interact with this phone. 40 may findre above this creepy and may not want to interact with these new features, but the younger demographic will find this dramatic improvement interesting