Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: We're keep it a close watch and shares of Tesla.
Speaker 2: Tim It is down about thirteen percent, just off its
Speaker 2: worst session or worst level I should say, of the session.
Speaker 3: Yeah, lots of superlatives to go with here. It's the
Speaker 3: top decliner in the Nasdaq one hundred, it's the biggest
Speaker 3: drag in the S and P five hundred. It's down
Speaker 3: the most in a year to its lowest and wow
Speaker 3: months at this point. Investors loved the stock last year,
Speaker 3: Carol sending it up one hundred and one percent. New
Speaker 3: Year New.
Speaker 2: Tesla, absolutely, and that is really thanks to Elon Musk's
Speaker 2: pitch for investors to look past lower sales growth that
Speaker 2: fell flat Tesla narrowly missing Earning's estimates and warning its
Speaker 2: rate of expansion will be notably lower this year. Their words,
Speaker 2: the company spent all of twenty twenty three cutting prices
Speaker 2: to boost sales, which eight in two profits. So we
Speaker 2: knew in the interview today we wanted to get more
Speaker 2: on Tesla.
Speaker 3: Yeah. For that we bring in Bloomberg business. We call
Speaker 3: him this Max chafkintributor to the Elon Inc. Podcast and
Speaker 3: keep her too, along with a few other Bloomberg colleagues
Speaker 3: of the Elon Musket Bingo card, which, by the way,
Speaker 3: there was no Bingo last night.
Speaker 4: No on for tim. Unfortunately, we did not hit Bingo.
Speaker 4: We came very close, one square away. I believe it
Speaker 4: was in the end column. If he had only said
Speaker 4: production is hard, which he often has used as a
Speaker 4: sort of catchphrase to describe the difficulty manufacturing the cyber truck,
Speaker 4: we would have hit Bingo. But I think, possibly in
Speaker 4: an effort to kind of try to not have told
Speaker 4: tons of bad news, he soft peddled some of those
Speaker 4: difficulties on the earning.
Speaker 5: BINGO card apparently.
Speaker 3: Well, one thing that wasn't on the Bingo card was
Speaker 3: not providing guidance on the number of new vehicles for
Speaker 3: twenty twenty four, which I think surprised a lot of observers.
Speaker 4: You know, and not only that, but you also had
Speaker 4: him saying essentially we're in between two waves of growth.
Speaker 4: I mean in effect saying things that this is not
Speaker 4: going to be a great time. He's saying sort of
Speaker 4: two things going on. One is that they're struggling to
Speaker 4: make cyber trucks. They've they've pursued this incredibly incredibly ambitious design.
Speaker 4: First of all, not clear that anyone wants it, not
Speaker 4: clear that the price is going to be right. And
Speaker 4: even if those things are true, it's going to take
Speaker 4: some time to manufacture, and Tesla is sometime away from
Speaker 4: another car, from this kind of magical, more affordable car
Speaker 4: twenty five thousand dollars sedan rather than a you know,
Speaker 4: thirty five to you know, the Model three can cost
Speaker 4: way more than thirty five thousand dollars.
Speaker 3: But originally it was supposed to do that was the
Speaker 3: original car.
Speaker 2: Yes, yes, don't want to be naive here, but you know,
Speaker 2: so many times he's been counted out, you know, and
Speaker 2: then it just takes a few weeks or a few
Speaker 2: months of sleeping on the factory floor and all of
Speaker 2: a sudden they pull something out. So how do you,
Speaker 2: as someone who has tracked Tesla Elon for a while,
Speaker 2: kind of look at this situation. Are they maybe really
Speaker 2: between two cycles?
Speaker 4: Yeah, well I think, first of all, it's important to
Speaker 4: say that Tesla swings around a lot, and we saw it.
Speaker 4: We saw it drop a lot ahead of the beginning
Speaker 4: of twenty twenty three. It then kind of bounced back.
Speaker 4: It grew in this huge way, largely because as you
Speaker 4: were saying that, you know, they cut prices, sales went up,
Speaker 4: and investors were willing to bet that that wasn't going
Speaker 4: to hurt margins that much.
Speaker 5: And two things have happened.
Speaker 4: Margins have gone down and the demand has not been there,
Speaker 4: And so much of his stock trades on expectations on
Speaker 4: what is Elon going to do next? And we saw
Speaker 4: him yesterday kind of try to do that. He was
Speaker 4: talking about optimists. That's this kind of robot. It feels
Speaker 4: it's hard to say that it's a real product. Although
Speaker 4: Elon Musk was out there saying, hey, this is going
Speaker 4: to change the economics of everything.
Speaker 5: And I think the question is who is going to
Speaker 5: believe him?
Speaker 4: How many people are going to really buy into that
Speaker 4: as a near term possibility.
Speaker 5: And then how do you value that?
Speaker 4: And I think the more Elon Musk promises and when
Speaker 4: he failures to meet those goals, then that hurts his
Speaker 4: ability to spin these fantastical yarns.
Speaker 3: I guess, I guess the question that I have is
Speaker 3: really about control. Because Carol talked about this earlier, and
Speaker 3: it's something that he tweeted about a couple of weeks ago.
Speaker 3: We kind of knew this was was going to come up.
Speaker 3: But this is a guy who has now now wants
Speaker 3: more of his company. He wants you know, it's not
Speaker 3: a dual class share structure, so it's not like he
Speaker 3: controls that like Mark Zuckerberg does, and you know, other
Speaker 3: other leaders of tech put tech and quotes tech companies.
Speaker 3: What did he say about more control? And and just
Speaker 3: a remindered everybody he had a lot of control of
Speaker 3: the company. He sold a lot of equity exactly to
Speaker 3: buy Twitter.
Speaker 4: Yes, so he sold down a bunch of his equity
Speaker 4: to buy Twitter, as you said, and in retrospect looks
Speaker 4: like maybe not the what the best time to buy
Speaker 4: a flailing social media company has lost a lot of value.
Speaker 4: And what he's saying now is that he feels he
Speaker 4: needs to have twenty five percent of equity in Tesla
Speaker 4: in order to to sort of be sufficiently committed to this,
Speaker 4: to this enterprise and not just committed but committed to
Speaker 4: the innovation part of the enterprise.
Speaker 3: Is that a wild thing for an executive to say?
Speaker 1: Like?
Speaker 3: What where? What are I mean?
Speaker 5: Are It would be a wild thing for any executive.
Speaker 3: Look at any executive in the S five hundred, you'd
Speaker 3: be hard pressed to find one that doesn't isn't in
Speaker 3: controlling a family owned company, or does not have dual
Speaker 3: class share structure that own that has that type of contrucy,
Speaker 3: you know.
Speaker 4: And not only that, but things have not gone great
Speaker 4: for Tesla over the past six months. Normally, when you
Speaker 4: ask for a massive pay raise and pay raise that
Speaker 4: could amount to you know, tens or even hundreds of
Speaker 4: billions of dollars in equity, you know, normally, you'd expect
Speaker 4: to do that on a high rather than at a
Speaker 4: time when the stock is kind of has been falling
Speaker 4: and and so on. The thing is Elon Musk has
Speaker 4: so much leverage over this company because so much of
Speaker 4: the company's value is tied up in his own identity.
Speaker 4: It's you know, you have investors from time to time say,
Speaker 4: oh we should you know, we should consider a different CEO,
Speaker 4: But no one ever takes that seriously. No matter what
Speaker 4: Elon tweets no matter, you know, how weird he behaves
Speaker 4: on social media, because it's pretty clear that a lot
Speaker 4: of the value is tied up in investors belief that
Speaker 4: he is going to be able to pull an extrabbit
Speaker 4: out of the hat, whether it's optimists or full self driving,
Speaker 4: you know, Tesla's driverless car thing or something else.
Speaker 5: And he has proved that time and again.
Speaker 4: But but of course, you know, nothing lasts forever, and
Speaker 4: at some point it's not going to work, and we're
Speaker 4: going to see a real test for Elon Muski, you.
Speaker 5: Know, Max.
Speaker 2: It's so interesting though, when we talk about Elon, we
Speaker 2: talk so much, of course, about Tesla. We talk about SpaceX,
Speaker 2: we talk about Twitter, We talked about the boring company.
Speaker 5: We talk about what was it, Neuralink. I'm going through
Speaker 5: my list.
Speaker 2: We're talking about Elon, the person, the disruptor, the provocteur,
Speaker 2: you know, who can say something and shake things up.
Speaker 2: You know, we've got a great chart just to show that,
Speaker 2: you know, it's standing has been kind of weakening. Among
Speaker 2: the world's largest megacaps Apple, Microsoft, way up top. You know,
Speaker 2: Tesla's there, number nine, but it's a lot smaller than
Speaker 2: some of its other tech. I guess, brethren, if you will,
Speaker 2: Having said that, I mean Tesla is really the core
Speaker 2: of his wealth, correct.
Speaker 6: And kind of his power seat.
Speaker 4: Yes, and I do think you know one of the
Speaker 4: big mysteries, you know, what is Elon doing with Twitter?
Speaker 4: Why is he starting an anti woke AI company that's
Speaker 4: that's this thing called Xai and their product is grock.
Speaker 4: It's sort of a chat GBT but supposedly, you know,
Speaker 4: politically incorrect and like one thing he's done here is
Speaker 4: created a reasonable threat that he can make because the
Speaker 4: truth is he can say, yeah, I might, I might
Speaker 4: go and work for a different company, because look he's
Speaker 4: already doing it, and and the board has overlooked that
Speaker 4: before and has has sort of gone along with it.
Speaker 4: But you do wonder, you know, at what point it
Speaker 4: becomes too much or the other thing we should say
Speaker 4: is there is this issue of his old compensation package,
Speaker 4: which is still being over fifty.
Speaker 2: The ev story, though, to be fair, GM struggling, Ford struggling.
Speaker 2: We've talked how many times at nauseum, but for a
Speaker 2: good reason about yep, people are still buying evs, but
Speaker 2: the growth rate is slower, So is he getting kind
Speaker 2: of stuck in that also, well.
Speaker 4: Sure, and not only just getting suck in that, but
Speaker 4: getting something in the fact that that Tesla sells a
Speaker 4: lot of cars now and when you want to have
Speaker 4: you know, he he's they've seem to have backed off
Speaker 4: their growth promises. But if you want to have fifty
Speaker 4: percent annual growth, that gets hard when the numbers get
Speaker 4: big and and investors have sort of come up with
Speaker 4: stories that they've they've told to explain why that would
Speaker 4: be possible. So one option is, hey, these cars are
Speaker 4: all going to become robotaxes are going to be driving
Speaker 4: twenty four to seven, and Tesla is going to get
Speaker 4: a huge chunk not just of the automotive market, but
Speaker 4: of the transportation market at large. You know, none of
Speaker 4: that's happened. It's not clear that it will happen anytime soon.
Speaker 4: It's not clear that you.
Speaker 5: Know, many people outside of the Tesla enthusiast.
Speaker 4: Community buy it. So that's kind of the challenge. You
Speaker 4: got to give credit where it's due, which is in
Speaker 4: some sense, these challenges are a product of Elon Musk's success.
Speaker 4: Because Elon Musk set out to make electric cars mainstream,
Speaker 4: and he has done that. I mean, they are selling
Speaker 4: a lot of Model wise that's the suv version of
Speaker 4: the Model three mentioned earlier.
Speaker 2: Kind of betting against him.
Speaker 4: Yeah, and not only that, but he's but but there
Speaker 4: are many other companies who are also in this market.
Speaker 4: There is a lot of there's consumer demand, but there's
Speaker 4: arguably more companies trying to meet that demand than there
Speaker 4: is demand.
Speaker 3: Hey, Max thirty seconds left byd is one of those
Speaker 3: companies that's not struggling right now, and a big part
Speaker 3: of that is because they're selling cars in China twenty
Speaker 3: five thousand dollars price point for a future less expensive
Speaker 3: Tesla that's still too expensive compete with a lot of
Speaker 3: the companies in China.
Speaker 4: Now, well, yeah, I mean, and and then there's the
Speaker 4: question of how what what China.
Speaker 5: Of course, there are a lot of potential restrictions.
Speaker 4: Elon Musk has had a very i'd say positive relationship
Speaker 4: with Beijing to date, but it does seem like the
Speaker 4: goal of China, of course, is to help its domestic companies,
Speaker 4: and at some point you wonder how how that's going
Speaker 4: to play long term in China. Is there other potential
Speaker 4: restrictions that Elon mushould be worried about you know, he's
Speaker 4: had a really easy time opening up factories. Does that always?
Speaker 4: Is that always the case? So I think there are
Speaker 4: lots of open questions there. I mean, he definitely has to,
Speaker 4: you know, play diplomat in China.
Speaker 5: All right.
Speaker 2: Max Chaffin, colmnist, Bloomberg Business Week, Thank you so much,
Speaker 2: contributor to the Elon Inc. Podcast. The latest episode of
Speaker 2: the podcast on the Bloomberg and at Bloomberg dot com
Speaker 2: slash Elon Inc.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: So addition to the gdp AT initial job list gams
Speaker 3: data that we got this morning, we also got a
Speaker 3: real estate update. Sales of new homes in the US
Speaker 3: exceeding forecast in December. This is a drop in mortgage
Speaker 3: rates entice prospective buyers. That news shows that some momentum
Speaker 3: heading into twenty twenty four is underscored by the first
Speaker 3: pickup in annual sales when it comes to three years.
Speaker 2: All right, so we knew we wanted to get a
Speaker 2: real estate update for that. Return to Michael Levy. He's
Speaker 2: CEO at Crow Holdings. It's the Dallas based privately owned
Speaker 2: real estate investment and development firm, about thirty one billion
Speaker 2: in assets under management. And Michael kind enough to join
Speaker 2: us here in studio.
Speaker 5: Hello, Hello, welcome here.
Speaker 7: Thanks great to be here.
Speaker 5: You're are New Yorker.
Speaker 7: H I am a lifelong New Yorker and it's nice
Speaker 7: to be in Bloomberg's fabulous studios here.
Speaker 8: Thank you, Thank you.
Speaker 2: We want to talk about your business because you guys
Speaker 2: do it all. You've got multifamily, residential, industrial, office, So
Speaker 2: talk to us about the different verticals of real estate,
Speaker 2: and then geography, what you are seeing in terms of
Speaker 2: trent and sure where the strength is and where there's
Speaker 2: some weaknesses.
Speaker 7: Sure well, let me try and answer in a little
Speaker 7: higher level than what we do. But you know, I'd
Speaker 7: boil down to three things.
Speaker 1: You know.
Speaker 7: The first is the market is highly bifurcated in terms
Speaker 7: of haves and have nots, and today the have nots
Speaker 7: as office buildings, and the have nots is a lot
Speaker 7: of the downtown urban cores that are impacted by the
Speaker 7: flexible workforce and not having as many people there in
Speaker 7: the issues. There's a lot of halves in the business today,
Speaker 7: which is the industrial sector and the residential rental sector,
Speaker 7: the data center sector. So it's a highly bifurcated not
Speaker 7: painting with a single brush across real estate in anyway.
Speaker 3: But you guys have some commercial office we have very little.
Speaker 7: We do have were building a fabulous mass timber building,
Speaker 7: the largest mass timber office building. We have a fabulous
Speaker 7: office campus in Dallas at the very upper end of
Speaker 7: the office sector. Buildings like this, they're very attractive to people,
Speaker 7: they meet the modern needs. They're well leased. So the
Speaker 7: top third of offices great. The bottom third is going
Speaker 7: to be dirt. It just doesn't know it.
Speaker 3: I just want to make sure I get this right.
Speaker 3: You're actually actively building.
Speaker 5: We're active.
Speaker 7: We have a development company.
Speaker 3: But an office building.
Speaker 9: Correct.
Speaker 5: It's the largest Jallas.
Speaker 7: It's in Frisco, which is effectively Dallas Fort Worth metroplex.
Speaker 3: Okay, So when did you start, When did you make
Speaker 3: the plans for that? Versus and right after COVID, right
Speaker 3: after right after So how are you designing that in
Speaker 3: this flexible work environment that you described?
Speaker 7: First of all, the building is not made of steel,
Speaker 7: it's made of timber using a construction technology. So from
Speaker 7: a sustainability perspective, you know, it's a much more sustainable building,
Speaker 7: which appeals to lots of corporations and individuals today. It's
Speaker 7: also physically beautiful because the interiors would so the structure
Speaker 7: is shown and the layout is just big, open, collaborative
Speaker 7: spaces and amenities, and it'll be in a neighborhood with
Speaker 7: a hotel ultimately and other amenities, and people will be
Speaker 7: able to live, work, play in this area and that's
Speaker 7: what people.
Speaker 5: Want, all right.
Speaker 2: So you are in New Yorker, you understand this market
Speaker 2: really really well. I'm assuming you play in the commercial
Speaker 2: real estate space. Would you not want to be someone
Speaker 2: here in New York who owns maybe that's second or
Speaker 2: third to your office property right now.
Speaker 7: Like most things, it's all about what your basis, your cost.
Speaker 7: But yes, as a general rule, let's just call it
Speaker 7: the bottom third of office buildings. A lot of these
Speaker 7: buildings you see, for example, on Third Avenue, for example,
Speaker 7: these are really tough properties that are likely to wind
Speaker 7: up in the hands of people who buy them at
Speaker 7: huge discounts to their value of just a few years
Speaker 7: ago and ultimately look to repurpose them. But this is
Speaker 7: a multi decade problem. This is not going to be
Speaker 7: resolved in the next two or three years.
Speaker 2: So no crisis.
Speaker 7: There's not a broader real estate crisis. There is distress
Speaker 7: in the office space, but if you really look at
Speaker 7: the percentage of disposure that people have to this asset
Speaker 7: class in the totality of the real estate sector, it's
Speaker 7: relatively small. If you talk to the banks and their exposure.
Speaker 7: It's not going to take the financial system down, it's
Speaker 7: not going to take the real estate industry down. But
Speaker 7: those lower third of office buildings across the country, they
Speaker 7: are very difficult assets and people are going to lose them.
Speaker 3: Why do you think it's going to be such a
Speaker 3: multi decade long turnaround or at least experience.
Speaker 7: Well, one, you can look at things that have already happened,
Speaker 7: like the mall sector, which started to get disintermediated in
Speaker 7: the early two thousands, and you can see lots of
Speaker 7: dormant malls all over America. The issue is one it
Speaker 7: needs to from a price perspective, get down to ultimately
Speaker 7: the value of the land so someone can redevelop it
Speaker 7: and it makes sense. And secondly, the entitlement process, you know,
Speaker 7: going from zoning and entitlements. You know, communities and neighborhoods
Speaker 7: don't necessarily want to entitle you for apartments, for example,
Speaker 7: if you were zoned for office and so this takes decades,
Speaker 7: and it's going to take decades.
Speaker 2: Michael, your company's seventy five years years old. Obviously you
Speaker 2: haven't been there the whole time. But you guys have
Speaker 2: seen a lot of different cycles. I mean, if you
Speaker 2: had one word two words to describe the real estate
Speaker 2: cycle right now, how would you And I know that's
Speaker 2: hard because different geographies, but would how would you describe it?
Speaker 7: Sure, I would describe it as we are just beginning
Speaker 7: to merge because of the interest rate cycle and inflation.
Speaker 7: We are just becoming beginning to emerge, literally just beginning
Speaker 7: to emerge from a very contracted, frozen period of time.
Speaker 7: Twenty twenty four, it looks like in terms of the
Speaker 7: capital markets and lending, because of inflation and interest rates,
Speaker 7: the friction that's been in the business is beginning to
Speaker 7: be alleviated. So there's a capital market cycle that's been
Speaker 7: destructive with respective valuation levels and transaction levels. But the
Speaker 7: fundamentals rental growth, occupancy, with the exception of the office sector,
Speaker 7: have been great generally across the country in most major markets.
Speaker 2: You are obviously watching the rate cycle very carefully. Does
Speaker 2: it matter if the FED does two rate cuts, three
Speaker 2: rate cuts, five rate cuts this year in terms of
Speaker 2: what it means for your business?
Speaker 7: I I don't think there's a very direct course. I
Speaker 7: certainly would not speculate the two is bad and five
Speaker 7: is good. I can just say in general, for our
Speaker 7: levered asset class, don't fight the FED. And the FED
Speaker 7: is relaxing rates and they're coming down. That's going to
Speaker 7: be good for our industry in terms of transaction, activity, financing,
Speaker 7: valuation levels, the you know, the grease that allows the
Speaker 7: industry to move forward.
Speaker 3: We recently spoke about a Bloomberg big take by our
Speaker 3: own Sean Donn and about how Americans are moving around,
Speaker 3: especially in swing states, and that could impact the presidential
Speaker 3: election outcome. You have people all over the country, you
Speaker 3: have businesses and properties all over the country. Give us
Speaker 3: some color about the demographic trends that you're seeing.
Speaker 7: Yeah, look, there is no doubt America is moving to
Speaker 7: the southeast and southwest, now at one level, that's a set,
Speaker 7: you know, seventy five year trend when air conditioning started,
Speaker 7: but it is accelerated, it's sustaining itself, and it's it's
Speaker 7: a virtuous cycle. Cities that thirty years ago, as someone
Speaker 7: from New York you may not wanted to have lived
Speaker 7: in today are vibrant and with restaurants and culture and food,
Speaker 7: and so this trend is continuing.
Speaker 3: Does that make you barish on New York?
Speaker 6: I think be careful. There's a lot of New Yorkers right.
Speaker 7: I understand New York has some very significant challenges, not
Speaker 7: as difficult as some other cities such as San Francisco.
Speaker 7: But the reality is our office buildings. This was a
Speaker 7: city that forever has been first work, second play, third live. Well,
Speaker 7: people are coming into the office a lot less. And
Speaker 7: if they come into the office a lot less, that
Speaker 7: means not only the offices occupied less, the retailers have less.
Speaker 7: It's hurting on top of people are not only people,
Speaker 7: but wealth is and business is leaving the city and
Speaker 7: the state. You can look at the data for lower cost,
Speaker 7: higher quality of life markets.
Speaker 2: We got to run really a great perspective. Michael Levy,
Speaker 2: Chief executive Officer of cro Holdings, joining us here at
Speaker 2: our New York studio. This is Bloomberg Business Week.
Speaker 5: Michael.
Speaker 3: Thank you.
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Speaker 3: So last week I get any email from my insurance
Speaker 3: company about renewing my auto insurance. You get this every
Speaker 3: six months. We were can I buy a year of insurance?
Speaker 3: By the way, this happens every six You can't buy
Speaker 3: a year of insurany make me do it every six months.
Speaker 3: This email was different though. One thousand, nine hundred and
Speaker 3: eighty four dollars and sixty five cents for six months
Speaker 3: of auto insurance. Yeah, okay, three hundred and thirty dollars
Speaker 3: a month, up from seventeen to fifty just six months ago.
Speaker 3: That's a thirteen percent increase in just six months. Okay,
Speaker 3: that's crazy. I email my insurance agent asked him what
Speaker 3: I could do change my coverage, raise my deductibles, anything
Speaker 3: to get the price down. A few minutes later he
Speaker 3: emails me back and he says, Yeah, it's ugly out there.
Speaker 2: I think you need a new insurance.
Speaker 3: He's a broker though, like he has he has the
Speaker 3: view everywhere in the market's.
Speaker 2: Telling you I could buy a policy for a year.
Speaker 3: No, there are companies now in New York that don't
Speaker 3: even they don't even write insurance in New York.
Speaker 8: New Jersey.
Speaker 3: It's out there, all right. So the couse of auto
Speaker 3: insurance in the US rose more than twenty percent in
Speaker 3: twenty twenty three. It's the biggest annual jump since nineteen
Speaker 3: seventy six. That's according to data from the US Bureau
Speaker 3: of Labor Statistics. Rates are up with thirty seven percent
Speaker 3: carrol since January of twenty twenty.
Speaker 5: All right, Well.
Speaker 2: In the forthcoming issue Bloomberg Business Week, which is at
Speaker 2: on newstands tomorrow, already online at Bloomberg dot com Slash
Speaker 2: BusinessWeek also on the Bloomberg Bloomberg News, auto reporter Keith
Speaker 2: Naughton gets at the reasons why insurance has gone up
Speaker 2: so much in such a short time. He joins us
Speaker 2: on Zoom from Detroit, so glad you are back with
Speaker 2: us to talk about this story. What the heck is
Speaker 2: going on?
Speaker 3: And how can we help him? No, but what can't
Speaker 3: help me?
Speaker 10: What's going on?
Speaker 11: Well, there isn't much hope for any of us on
Speaker 11: the auto insurance front. To complement Ten's story, I was
Speaker 11: talking to another editor at Bloomberg Today who lives in
Speaker 11: New York, and he said, the insurance premium quotes he
Speaker 11: was getting on his new car were five hundred dollars
Speaker 11: a month. So it's like having two car payments on
Speaker 11: the same car.
Speaker 6: Oh my god, why yeah?
Speaker 1: So yes.
Speaker 11: So the why here is that cars are just loaded
Speaker 11: with more technology now to help you avoid accidents, and
Speaker 11: those technological bits it's cameras and sensors and sonar from
Speaker 11: bumper to bumper on the car, really drives.
Speaker 10: Up repair costs.
Speaker 11: And then those repair costs are being passed on through
Speaker 11: your auto insurance rates, which are skyrocket.
Speaker 3: If you have Keith Starry tired interrupt. I just want
Speaker 3: to make sure I get this point. If our cars
Speaker 3: are filled with this technology that helps us avoid accidents,
Speaker 3: shouldn't we be getting in fewer accidents and therefore there
Speaker 3: should be fewer repairs and insurance companies wouldn't have to
Speaker 3: pay out as much.
Speaker 2: Basically drives itself.
Speaker 5: It's so much safer.
Speaker 2: Than rather me driving it.
Speaker 10: To be quite honest, yes that's way too logical.
Speaker 11: That's exactly what should be happening but is not happening.
Speaker 11: And in fact, what's been happening since twenty twenty is
Speaker 11: auto insurance claims are going up, not down, despite all
Speaker 11: this whiz bang crash avoidance technology that today's cars are
Speaker 11: laden with. The reason behind that has something to do
Speaker 11: with distracted driving. We all have our phones in the car,
Speaker 11: or if you're not looking at your phone, which is
Speaker 11: illegal in New York and many other states while you're driving,
Speaker 11: then you have this big touch screen in the middle
Speaker 11: of your dashboard that you're glancing over at or touching
Speaker 11: or you know, focused on instead of the road. So
Speaker 11: accidents are up, fatalities are up. It's the safety technology.
Speaker 11: It might be helping us survive crashes, but it's not
Speaker 11: reducing crash I'm just going.
Speaker 2: To tell you guys, I even get a dividend check
Speaker 2: at the end of the year from my insurance company,
Speaker 2: which I've been with for almost thirty years since I
Speaker 2: was a teenage driver on my dad's policy and I
Speaker 2: kept it, and then when they have a good year,
Speaker 2: we get a dividend check.
Speaker 3: So I'm going to.
Speaker 5: Oh, it's just I'm sorry.
Speaker 3: You should check to see how much you're paying though,
Speaker 3: because I bet it's a lot.
Speaker 2: No, I do look, but I will check again. It's
Speaker 2: kind of wild and you know what I'm worried about
Speaker 2: is and well, wait a minit I'm going to go
Speaker 2: on my soapbox for a little bit more here, Keith,
Speaker 2: because I do feel like I wish I wish like
Speaker 2: traffic cops actually police driving too, because I do feel
Speaker 2: like driving has gotten more aggressive. People fly through stop signs,
Speaker 2: Like I just feel like there's some stuff going on
Speaker 2: that it's kind of the wild wild West on the road.
Speaker 2: But I don't know that that relates to your story,
Speaker 2: but I just feel like people are a little crazy
Speaker 2: on the roads today. And maybe that's why when an
Speaker 2: AX they get in an accident and they're also distracted.
Speaker 2: There's a lot going on, and so then it's just
Speaker 2: going to cost more.
Speaker 11: I don't know, And that's why auto insurance companies now,
Speaker 11: some of them offer you the option of you know,
Speaker 11: attaching and device to your car so they can monitor
Speaker 11: your driving, and if you prove to be a good driver,
Speaker 11: like I'm sure you would, Carol, then you actually get
Speaker 11: a reduction in rates.
Speaker 10: But that raises sort of privacy concerns.
Speaker 11: Lots of folks don't want their insurance company knowing everywhere
Speaker 11: they're going at all hours, so people decline that. But
Speaker 11: that is one way to try and reduce your rates.
Speaker 11: But rates are climbing. I did the same thing Tim
Speaker 11: did last year. I looked at what I was paying
Speaker 11: and I couldn't believe it, and so I started shopping
Speaker 11: around and found a cheaper rate.
Speaker 10: But it's getting.
Speaker 11: Harder and harder to find a lower rate because all
Speaker 11: of them are going up. And the insurance companies are
Speaker 11: not only doing it because they have higher repair and
Speaker 11: crash costs, but also because they are now making a
Speaker 11: lot more money doing that.
Speaker 3: I'm glad you bring up the more money part, because
Speaker 3: it turns out that insurance companies are doing pretty well
Speaker 3: right now. So Travelers closed at an all time high
Speaker 3: earlier this week. We learned from Progressive earlier this week
Speaker 3: that profit for the most recent quarter more than doubled
Speaker 3: from a year.
Speaker 2: Earlier, so maybe they're charging too much. If their profit
Speaker 2: is going up that much, that means obviously, even when
Speaker 2: we have an accident, it's not clusting that much.
Speaker 5: Even whatever they.
Speaker 3: Pay out, I don't know, I mean, what are we logically?
Speaker 3: It turns out that you know, we're all paying for like,
Speaker 3: it's pretty good to be an investor in some of
Speaker 3: these companies, Keith, And perhaps not so good because we're
Speaker 3: paying so much as customers, right, And it's.
Speaker 11: Not just that the insurance companies are gouging us. There
Speaker 11: really are goodness reasons that it costs more. Let me
Speaker 11: give you one example from my story, and that is
Speaker 11: the Toyota camera. So that was the best selling Current
Speaker 11: America for decades, and in twenty eighteen, Toyota redesigned it
Speaker 11: and added a whole bunch of driver assist features technology
Speaker 11: Radar sonar camera is throughout the car, but just looking
Speaker 11: at the front bumper assembly, it went from having eighteen
Speaker 11: parts to forty three parts. And so as a result,
Speaker 11: you get into a relatively minor fender bender with.
Speaker 10: A Toileta came. And I'm not picking on Toyota.
Speaker 9: This is.
Speaker 10: Strong cars.
Speaker 11: But this particular example given to me by the folks
Speaker 11: at Mitchell International said, what that did is it drove
Speaker 11: repair costs for the camera when you get in a
Speaker 11: front end collision. It drove them up by forty three percent.
Speaker 5: That makes sense, Yeah, Keith.
Speaker 3: One thing that was so shocking to me about your
Speaker 3: story was the difference with EV's and you bring up
Speaker 3: the Hurts issue. We only have about a minute left,
Speaker 3: but talk to us about how much more complicated evs
Speaker 3: are to repair and why that's also driving uprates.
Speaker 11: Right, and Hurts is selling off a big chunk of
Speaker 11: its EV fleet and one of the reasons they cited
Speaker 11: is that eve's cost twice as much to repair as
Speaker 11: regular cars. One of the reasons is that big battery
Speaker 11: tim that's in every EV. You have to disconnected, power
Speaker 11: it down, or in some cases remove it all together
Speaker 11: to avoid injury to the technicians, to avoid fire risk.
Speaker 10: And this just adds time in the repair shop.
Speaker 2: And cost unbelievable. There's also an interesting part of your
Speaker 2: story where you talk about a new all this new
Speaker 2: technologies also added a costing step to the repair process.
Speaker 2: It has to do with calibration, which is you just understand,
Speaker 2: you know, I've.
Speaker 3: Got to calibrate the sensors. It costs five hundred bucks
Speaker 3: more to do that. When you get a right, it's
Speaker 3: amazing it. Thank you for this story. I sent it
Speaker 3: to my whole family because I was complaining to them
Speaker 3: about insurance recently. So it turns out I said a
Speaker 3: lot of key stories to my whole family. This is
Speaker 3: a street Yeah, it's like he writes about cool stuff.
Speaker 7: It does and it makes so much sense.
Speaker 2: Keith, Thank you, Bloomberg News Auto reporter Keith Not as
Speaker 2: we said. This is in the upcoming new issue of
Speaker 2: Bloomberg Business Week. It's going to be a newstands tomorrow,
Speaker 2: but it's already at Bloomberg dot com and on the
Speaker 2: Bloomberg turbil Actually think the news Dan today.
Speaker 3: Okay, go check go check out how much you're paying
Speaker 3: for insurance?
Speaker 5: Thank you for insurance.
Speaker 2: I know I just saw the bill come in.
Speaker 1: Yeah.
Speaker 2: Well, husband just kind of slides it away, so maybe
Speaker 2: maybe wait.
Speaker 1: To see it. This is Bloomberg BusinessWeek inside from the
Speaker 1: reporters and editors who bring you America's most trusted business magazine,
Speaker 1: plus global business, finance and tech news as it happens.
Speaker 1: Bloomberg Business Week with Caro Messer and Tim Stenebek on
Speaker 1: Bloomberg Radio.
Speaker 2: All Right, everybody, as you just heard, Intel earnings are out.
Speaker 2: The stock is down about six percent in the aftermarket.
Speaker 2: Some concerns in terms of the outlook. So we want
Speaker 2: to get to a breakdown the quarter even more.
Speaker 3: Yeah, we got Dan Morgan, with a senior portfolio manager
Speaker 3: at Sonovis Trust, joining us on Zoom from Atlanta. We
Speaker 3: check in with Dan. In the wake of many a company,
Speaker 3: including Intel, Snovis Trust Company has about eighteen point eight
Speaker 3: billion dollars in assets under management. That was as of
Speaker 3: last month. Dan, you have had about five minutes. That's generous,
Speaker 3: about three minutes to look at these time for usually
Speaker 3: give me. Yeah, it is a of a time frame
Speaker 3: than to usually give you. As Carol mentioned, we're seeing
Speaker 3: shares move lower in the after hours before the call.
Speaker 3: We should note what is your instant reaction to these numbers?
Speaker 12: Well, obviously, Timmy Carroll, the guidance going into the first
Speaker 12: quarter is disappointing. Even if you look at the midpoint
Speaker 12: of that range at they gave in revenues and the
Speaker 12: came at twelve point seven billion, Street was at fourteen
Speaker 12: point two billion, and then that EPs number was a
Speaker 12: big miss. You know, when you look at the area
Speaker 12: I was kind of focusing on, which was client computing,
Speaker 12: which is their chips that they sell to lapsetops and PCs.
Speaker 9: That pretty much came in with expectations eight point eighty four.
Speaker 3: Why are you watching the sorry? Why are you watching?
Speaker 3: Why are you watching that segment?
Speaker 12: Well, Tim, I was really looking for a little bit
Speaker 12: of a rebound here in regards to PC chips. We
Speaker 12: know that Intel is behind both AMD in Nvidia in
Speaker 12: regards to AI we can talk about a little bit
Speaker 12: later in terms of the chips that they have, but
Speaker 12: they had a pretty strong quarter last quarter in terms
Speaker 12: of that client computing group. So I was expecting that
Speaker 12: momentum to kind of carry over and maybe and get
Speaker 12: a beat. But they came in line, which was fine,
Speaker 12: But obviously the guidance Tim McCarroll for the first quarter
Speaker 12: was very disappointing, or hopeful.
Speaker 9: A little bit better than that.
Speaker 6: Yeah, yeah, it kind of hap to blow out their quarter.
Speaker 2: Well, what's interesting too, and I'm looking at our right
Speaker 2: through by our own semiconductor king, and that is Ian King,
Speaker 2: and he says that the chip maker's PC business is recovering.
Speaker 2: You were talking about this, it has been losing ground
Speaker 2: in the lucrative market for data center chips. Tim and
Speaker 2: I were talking earlier about you know, and even kind
Speaker 2: of on the residential side or commercial real estate side,
Speaker 2: I mean data centers. People continue to build, they continue
Speaker 2: to need, they use a lot of energy. Does that
Speaker 2: worry you that they are losing ground in that market specifically, Well.
Speaker 12: That's been the condundrum for Intel is that we know
Speaker 12: that we've talked about Nvidia before on the show. There's
Speaker 12: been a huge adoption of their GPU chips A one
Speaker 12: hundred and the H one hundred, which are their key.
Speaker 9: AI chips.
Speaker 12: We know that for example, Events micro Devices has their
Speaker 12: three hundred X and I three hundred A that's both
Speaker 12: going to be coming out. They're going to be in
Speaker 12: that same space which is the most lucrative so far,
Speaker 12: which has been data center for AI. Now, Intel does
Speaker 12: have some products coming out. They have their Falcon Shores.
Speaker 12: They also have their Habana Gandhi. I'm hoping I'm pronouncing
Speaker 12: that correctly. Three those are their key chips that should
Speaker 12: help them in that space, but they're not coming out
Speaker 12: till later this year or maybe next year, and that
Speaker 12: I think, Carolyn Tim has been really the hurdle for
Speaker 12: Intel competing in that data center space is that they
Speaker 12: just don't have the same offerings right now as AMD
Speaker 12: and Nvideo.
Speaker 3: How's Pat Gelsinger doing with turning the company around with
Speaker 3: the transition.
Speaker 9: Well, Tim, that's exactly what this is as a turnaround.
Speaker 12: As they moved towards becoming a foundry, they actually had
Speaker 12: some revenues they posted on this quarter from that.
Speaker 9: So in terms of getting back on top, I mean.
Speaker 12: Intel was the top player over AMD forever just in
Speaker 12: terms of performance and everything, and they've kind of climbing
Speaker 12: a staircase back.
Speaker 9: To get back to where they were before. So he's
Speaker 9: got a lot of moving parts.
Speaker 12: Right, and it's just you know, getting AI chips out,
Speaker 12: getting the founderies up and running, getting that performance and
Speaker 12: so forth back to what it was to compete against AMD.
Speaker 9: So just a lot of moving parts for them to
Speaker 9: execute on.
Speaker 12: And I think that's kind of coming out here, guys
Speaker 12: in this upcoming guidance that we're seeing for the first quarter,
Speaker 12: where you are kind of seeing some of those doubts
Speaker 12: come to fruition with the blow the estimates in terms
Speaker 12: of what the street was looking for.
Speaker 2: So, Net Net Dan, I mean, do you see signs
Speaker 2: that the transformation that Pat Keelsinger is doing to kind
Speaker 2: of restore Intel's might that it had for so long
Speaker 2: and so many years, do you see signs of those
Speaker 2: changes kind of paying off?
Speaker 9: I think so, Carol.
Speaker 12: I mean, if you reported on the Electronics show in
Speaker 12: Vegas a couple of weeks ago, we know that Intel
Speaker 12: came out introduced two new chips, AIPC chips. They're targeting
Speaker 12: one hundred million of those chips to be sold going forward,
Speaker 12: and aipcs. They're very you know, feeling really good about that.
Speaker 12: They had some really good, strong performance coming from those two.
Speaker 12: I believe one is called Lunar and one is called
Speaker 12: arrow Lake. Which are they always come up these interesting
Speaker 12: names now used to be Intel and Pentium. Now it's
Speaker 12: all these different geographical locations. But so they do have
Speaker 12: things coming up. So I do think they're on the
Speaker 12: right track. It's just that it's going to take more time.
Speaker 3: Like how much time should investors expect here?
Speaker 9: Well, probably the next quarter, Tim, I'm just kidding.
Speaker 3: I mean I would have seen the different guidance.
Speaker 9: That's the case, right, Yeah, Yeah, the street has no patients.
Speaker 12: I think we have to bear in mind too that
Speaker 12: even though we were looking for encouraging numbers in that
Speaker 12: client computing group, if you look at the overall framework
Speaker 12: of what's happening in the semiconductor industry, you know, we've
Speaker 12: been in an ever present increase in terms of turnaround
Speaker 12: since the first quarter of twenty three, roughly around February
Speaker 12: of twenty three. I've had ten consecutive quarters of consecutive
Speaker 12: sales growth in that overall industry. So I would expect
Speaker 12: Intel to continue to move forward and prosper as the
Speaker 12: overall industry rebounds. But again, Tim and Carroll, you know,
Speaker 12: we've got AMD coming out with numbers, we'll have Qualcomm
Speaker 12: next week, we already had TI which is a little disappointing,
Speaker 12: and then we'll get in Vidia, and everyone's going to
Speaker 12: measure up those reports versus the Intel numbers. And you know,
Speaker 12: as I said, the streets never patient.
Speaker 2: Yeah, no, no doubt. It's like, what have you done
Speaker 2: for me yesterday? So having said that, I'm looking at
Speaker 2: you know, some of the actually corporate releases from Intel,
Speaker 2: and they talk about, you know, efficiencies in the fourth
Speaker 2: quarter comfortably achieved our commitment to deliver three billion cost
Speaker 2: savings in twenty twenty three. We expect to unlock further
Speaker 2: efficiencies in twenty twenty four and beyond as we continue
Speaker 2: to or we as we implement our new internal foundry model,
Speaker 2: which is designed to drive greater transparency and accountability and
Speaker 2: higher returns on our owner's capital. Is that still a
Speaker 2: question in your mind?
Speaker 12: You know what's interesting, Carol, is that I followed have
Speaker 12: followed Intel stock for over thirty years, and they had
Speaker 12: a standard gross margin that was between sixty and sixty
Speaker 12: five percent for like, until more recently. Now their margins
Speaker 12: are around forty six percent. So I think what they're
Speaker 12: trying to do is they're trying to get their margins
Speaker 12: back right through these efficiencies, trying to basically, you know,
Speaker 12: cost cut, try to retool. You know, they cut their
Speaker 12: dividend about a year ago. You guys probably reported that
Speaker 12: pretty significantly. So they have done things to you know,
Speaker 12: change their overall use of capital, trying to use it
Speaker 12: more towards newer products, foundaries and so forth, getting their
Speaker 12: margins back.
Speaker 9: So again, it's just it's it's a it's a it's
Speaker 9: going to be a challenge for them to do it.
Speaker 3: But that's the goals, Tim, What would you ask Pat
Speaker 3: Gelsinger tonight.
Speaker 12: Again, the street is going to really focus on the
Speaker 12: timing of these upcoming AI chips, Tim, I mean, really,
Speaker 12: they are in a different situation because the AI chips
Speaker 12: that they produce are under a CPU technology. The Nvidia
Speaker 12: chips are using GPU their graphic processors, where they're using
Speaker 12: computer processing units. It's a little bit of different way
Speaker 12: of approaching things. So there's are going to be a
Speaker 12: lot of questions not only on the new AI PC
Speaker 12: chips that I mentioned, but also in terms of this
Speaker 12: roadmap that they have to compete directly against am AMD
Speaker 12: and Nvidia, and the timing of Falcon Shores and Haban
Speaker 12: Habana gion day if I'm pronouncing that correct number three,
Speaker 12: So it'll be you know again, guys, every conference call
Speaker 12: is a million questions on AI. We're going to get
Speaker 12: it next week with with alphabet and that and all
Speaker 12: those guys too.
Speaker 2: Hey, real real quickly, thirty seconds you know ASML hit
Speaker 2: record as orders for its high end chip machine sore.
Speaker 2: You've got the Intel news today KLA Core coming out too.
Speaker 2: They're down about six percent in the aftermarket following their earnings.
Speaker 2: It's not just the same for everyone. Is there some
Speaker 2: story that you're you're getting from the semi industry about
Speaker 2: the overall economy and just got forgive me twenty seconds for.
Speaker 12: You, Yeah, Carol, I mean t I, as you know,
Speaker 12: reported numbers that didn't meet expectations. They're mostly auto and industrial.
Speaker 9: Yeah, you mentioned ASML and the equipment space. They get
Speaker 9: kind of subdued forecast, but I expect them to beat that.
Speaker 11: Yeah.
Speaker 9: So I guess there's just a lot of moving things
Speaker 9: happening right now in chips. It's very exciting. We'll getting
Speaker 9: a lot of different contradictory information, not.
Speaker 2: Cross currents, Dan Morgan, but you make sense of it all,
Speaker 2: Senior portfolio manager at so Novas on Zoom in Atlanta.
Speaker 3: This is bluebarbalymuck.
Speaker 2: The journal about you.
Speaker 1: Let me drive.
Speaker 7: Oh no, no, no, no, honey, please, I'll do the
Speaker 7: driving gravel right, I want to try.
Speaker 9: It's a good question.
Speaker 3: This is the drive to the globes on Bloomberg Radio.
Speaker 2: All right, everybody definitely grind on Wall Street. I mean
Speaker 2: we're in the green across the board, but just barely
Speaker 2: on the Nasdaq could be another record though it could.
Speaker 3: Be in the green exactly.
Speaker 5: Yeah, that works right, exactly and likely.
Speaker 3: For the S and P five hund But we're in
Speaker 3: the red.
Speaker 5: Yeah, what do you mean for the year?
Speaker 3: No, no, no, no, just for today.
Speaker 2: Well we're not We're up three points.
Speaker 3: I'm looking at the Nasdaq one hundred. Yeah, I'm sorry, Okay, all.
Speaker 6: Right, you're right about that.
Speaker 2: Uh and then doubt really the opper former we heard
Speaker 2: Charlie just bringing down the number is just an interesting trade.
Speaker 1: Here we're off our lows.
Speaker 2: So let's get to with Greg Halter, see what he
Speaker 2: has to say, Director of research at Carnegie Investment Council.
Speaker 2: They got about four billion in assets under management. He's
Speaker 2: with us on Zoom from Cleveland, Ohio. Hey, Greg, nice
Speaker 2: to have you here with us. I am curious among
Speaker 2: the investors that you deal with, institutional or otherwise, what's
Speaker 2: top of mind when they pick up the phone and
Speaker 2: give you a call or shoot you a message.
Speaker 6: Again, thanks you, thanks for having me on the program.
Speaker 9: Again.
Speaker 8: I would say top of mind is the disbelief that
Speaker 8: the market did as well as it did in twenty
Speaker 8: twenty three.
Speaker 6: When they're looking at their statements and their.
Speaker 8: Returns and of course wondering what that leads us into
Speaker 8: for twenty twenty four.
Speaker 3: Well, past performance is no guarantee of future results. I've
Speaker 3: heard that. I've heard that somewhere before. Where does it
Speaker 3: lead us in twenty twenty four?
Speaker 6: Greg, Well, we're we haven't an election year. We have
Speaker 6: the potential for FED, the FED to cut rates.
Speaker 8: Our belief is in long term investing, and our general
Speaker 8: long term belief is the market goes up, not every year,
Speaker 8: but goes up over time eight to ten percent. We
Speaker 8: do think twenty twenty four is going to be a
Speaker 8: decent year for the market, certainly not as strong as
Speaker 8: twenty twenty three, but we think.
Speaker 3: It'll be up all right.
Speaker 2: So if you think it's going to be up, though,
Speaker 2: what do you think is going to get it there?
Speaker 2: And where do you think that investors should commit money to?
Speaker 10: Sure?
Speaker 8: I think the larger names excluding Tesla today will continue
Speaker 8: to do well. I mean this is not like two thousand.
Speaker 8: You have companies like Microsoft at three trillion dollar market cap, Apple, Meta, Google, Amazon,
Speaker 8: These are large companies that are just producing huge amounts
Speaker 8: of free cash flow allows them to do so much
Speaker 8: with that, And besides that we think the market will
Speaker 8: broaden out where some of these smaller names and small
Speaker 8: might be one hundred billion, but some of these smaller
Speaker 8: names will participate more in twenty twenty four than they
Speaker 8: did last year.
Speaker 3: Okay, well, let's talk about some of those smaller names
Speaker 3: that you've got your eye on. I mean, well, not
Speaker 3: actually that small. Strikers are pretty huge company, medical device maker.
Speaker 3: It's on our radar because one of the I don't
Speaker 3: want to say Air, but I guess we would say
Speaker 3: Air of the Striker Fortune just made a huge gift
Speaker 3: to Spelman College. So far, it's up three percent year
Speaker 3: to date. You're bullish on the company moving forward?
Speaker 1: Why?
Speaker 6: We are definitely bullish long term.
Speaker 8: They have a medical business and then of course the
Speaker 8: orthopedic implants, shoulders, knees, hips.
Speaker 6: I can speak from an experience.
Speaker 8: It's two months ago today I had my hip replace wow,
Speaker 8: and it's been actually quite amazing.
Speaker 10: The pain is gone.
Speaker 8: Obviously there's a recovery, but I've done all the work
Speaker 8: that you need to do. But it's quite incredible what
Speaker 8: can happen when you get these implants and the change
Speaker 8: in your life and lifestyle where I couldn't walk half
Speaker 8: a mile non walking three miles cycling thirty miles. It's
Speaker 8: huge difference. And we're talking only two months so far.
Speaker 8: So we think Striker will continue to do well. People
Speaker 8: are looking for those types of implants. I can't tell
Speaker 8: you how many people when I did my research said
Speaker 8: why did I wait so long? And a Striker has
Speaker 8: a top of the top of the line robotic system
Speaker 8: called the Mako, which they bought ten years ago for
Speaker 8: I think a billion dollars.
Speaker 6: People laughed at them. They're not laughing now.
Speaker 8: I think it's still early early innings for that, and
Speaker 8: certainly for that internationally.
Speaker 3: Hey Greg, just real quick. First of all, it's great
Speaker 3: to hear that you're doing so well after such an
Speaker 3: invasive surgery, So congratulations, and yeah, we're sending you our
Speaker 3: best wishes. Before you went and did that, did you
Speaker 3: know you wanted to use a Striker product? Like take
Speaker 3: me through the decision making process as a patient here
Speaker 3: if you don't mind me asking, because I don't know
Speaker 3: if if it's really up to patience, right, is it?
Speaker 3: It's the provider who chooses this stuff.
Speaker 6: Now, correct?
Speaker 8: And in fact, I did not have a Striker I'm
Speaker 8: just speaking generally interesting because orthopedic implants. Mine's a JNJ,
Speaker 8: which is depew And you're right, it is up to
Speaker 8: the surgeon, so I could not go in and say, oh,
Speaker 8: mis or missus, surgeon, please use Striker. You know they're
Speaker 8: going to use what they're comfortable with. So obviously there's
Speaker 8: there's maybe different variations, but I think a hip en
Speaker 8: plant is kind of a hip and plant at this point.
Speaker 2: Yeah, no, it's interesting. You get a little bit of
Speaker 2: a dividend play too. I was just kind of looking
Speaker 2: at it. It was up about twenty two percent last year.
Speaker 2: But yeah, it really plays into we're all getting older
Speaker 2: and someday you and I Tim will need one as well.
Speaker 2: I know no, but it makes sense, right And I
Speaker 2: hear that from a lot of people who finally get
Speaker 2: surgery and like a hip replacement, and they're like, oh
Speaker 2: my god, game changer, Like I can kind of go
Speaker 2: back to living my life. We want to go to
Speaker 2: the other side of things because I think AI is
Speaker 2: something in general and technology that's on your radar. How
Speaker 2: are you what's the smart thinking in your view about
Speaker 2: that and the investible thought around that.
Speaker 6: Yes, it's a great question.
Speaker 8: There's lots of interest given what happened last year and
Speaker 8: is continue and so far this year, at least from
Speaker 8: the on the semiconductor side with AI chips, I'm calling
Speaker 8: this the chip ripper market so far. I mean, you've
Speaker 8: got Nvidia up another twenty five percent this year, Yeah, AMD, Broadcom.
Speaker 8: I mean, there's so many of these chip names that
Speaker 8: are doing well. So we think it's going to be
Speaker 8: those types of companies as well as again the Microsofts
Speaker 8: of the world that have this AI technology.
Speaker 6: Google.
Speaker 8: Again, these are not small companies. They're spending I can't
Speaker 8: remember what the number was that I looked at. Maybe
Speaker 8: it was on Google or Amazon. Seventy five billion in
Speaker 8: R and D in a year. That's incredible. That's more
Speaker 8: than the GDP of some company countries.
Speaker 2: You're probably not going to be surprised, but the second
Speaker 2: best performing stock in the S and P five hundred
Speaker 2: was the number one top stock performing name in the
Speaker 2: S and P five hundred last year. We're talking about Nvidia.
Speaker 2: It's already up about twenty four percent so far this year,
Speaker 2: and I know it's something We're going to watch Intel
Speaker 2: to see whether or not they are making any kind
Speaker 2: of gains on video. Everybody's gunning for envideo.
Speaker 3: So Greig, thirty seconds left. Do you see any frothiness
Speaker 3: when it comes to this AI?
Speaker 6: Definitely.
Speaker 8: Again, you look at some of these stock charts and
Speaker 8: they're just spiking, you know, in a flag pattern, if
Speaker 8: you will. That gets us a little nervous when you
Speaker 8: get so far away from the two hundred day moving average.
Speaker 8: So there may be some weakness or softening there or pullback.
Speaker 8: But over the long term, it certainly seems to be
Speaker 8: a place to be.
Speaker 2: Not chef, we can jam this in, but we did
Speaker 2: have a story today Alphabet, Amazon, Microsoft, they're going they
Speaker 2: have to provide information to the us FTC on their
Speaker 2: investments and partnerships with AI startups like open ai and
Speaker 2: some others. Twenty seconds Is that anything to be concerned about?
Speaker 2: Any thought on that?
Speaker 7: Real quickly?
Speaker 10: Sure?
Speaker 6: This has been going on for a decade probably at least.
Speaker 8: Yeah, with Microsoft and all these others relative to the
Speaker 8: regulatory side and whether or not they're too large, it's
Speaker 8: going to continue, whether or not they break these companies up,
Speaker 8: who knows.
Speaker 2: Yeah, they're definitely different approaches from the FDC on that. Hey, Greg,
Speaker 2: really great to catch up with you. And we hope
Speaker 2: your recovery continues to go well. Greg Halter, he's director
Speaker 2: of Research at Carnegie Investment Council. Joining us on zoom
Speaker 2: from Cleveland, Ohio. You're listening and watching Bloomberg Radio.
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