Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: The reason Credit Suite was so good, Mark Flaherty and Oil,
Speaker 2: et cetera, et cetera, was their research was gorgeous, Which
Speaker 2: is why I hate laur Kelvisina because she sends over
Speaker 2: one hundred and three page power point read it because
Speaker 2: I got time to read every single screen.
Speaker 3: What do you marry?
Speaker 4: Meeker's in disguise, that's the mini pulse, that's the meeting.
Speaker 4: We cut it down recently. It was getting up to
Speaker 4: around like one hundred and thirty hundred and forty.
Speaker 3: It's just sick. Laurie.
Speaker 2: You're too young to remember this, but I remember LIFO
Speaker 2: FIFO and all the accounting that went into more traditional companies.
Speaker 2: Does big tech hyperscalers do they have accountable LIFEO fi
Speaker 2: fo balance sheets.
Speaker 4: That I'm not qualified to comment on. Tom, I'm not
Speaker 4: really sure. But the reality is that we are seeing
Speaker 4: the nervousness around that top ten cohort for one reason
Speaker 4: or another. Right, is it cash flow? Are we at
Speaker 4: a peak in the CAPEC cycle? How much are these
Speaker 4: technologies being used? Are we overspending? That nervousness you know,
Speaker 4: tends to rise and people start to pull things, you know,
Speaker 4: from all over the place when we get to peak valuations.
Speaker 4: And that's exactly what we saw last fall, and that's
Speaker 4: what we're starting to see again, though I would say
Speaker 4: it's not to the same degree. Give you a couple
Speaker 4: of examples. I mean, talking to clients earlier this week
Speaker 4: about you know, sort of the semi sell off that
Speaker 4: we saw on Friday. The general vibe I was getting was, Yeah,
Speaker 4: this stuff feels like it's been a little bit ahead
Speaker 4: of itself, but we still like these stories longer term.
Speaker 4: And if I go back to a month ago when
Speaker 4: I was in Europe, I was talking to a lot
Speaker 4: of clients in London and Zurich, I would say, in particular,
Speaker 4: where they're like, we've been in the semis, we've been
Speaker 4: on the AI theme.
Speaker 5: Is there anything else we.
Speaker 4: Should be looking at? We want to explore other opportunities.
Speaker 4: You could sense that impulse to diversify, But at the
Speaker 4: same time, when we would go through and look at
Speaker 4: all the other sectors, the picking seemed pretty slim, and
Speaker 4: I've picked up on that same vibe this week as well.
Speaker 6: Small mid caps. The Russell outperforming here today. What do
Speaker 6: you make of that?
Speaker 3: So if you look at.
Speaker 4: Russell, it's been outperforming since last fall, but it's been very,
Speaker 4: very choppy. It's been sort of jagged, you know, with
Speaker 4: big swings up and down, and one thing that seems
Speaker 4: to trip small caps up. You know, the fundamentals are
Speaker 4: fantastic right now in terms of jobs growth, three accelerating
Speaker 4: ism is above fifty for several months in a row.
Speaker 4: The animal spirits feel like they're coming back to the economy.
Speaker 4: But at the same time, interest rates and when you
Speaker 4: bake in hikes from the Fed or dial down your
Speaker 4: dubbishness since twenty twenty two, that's been a surefire way
Speaker 4: to trip up the small cap trade. So we've been
Speaker 4: a little bit less enthusiastic here of.
Speaker 2: Lake a little more time with Lori Kelvicina Ira Jersey
Speaker 2: coming up. Jeff given as well. The tape does better.
Speaker 2: Negative seventy was a negative fifty now negative thirty seven.
Speaker 3: And the SMB futures.
Speaker 2: The Vics twenty handle twenty point ninety seven is better
Speaker 2: from twenty two to twenty one into a better twenty
Speaker 2: point ninety seven. Even oil comes in off the back
Speaker 2: and forth tweets, if you will, and newsfall from Iran
Speaker 2: to sixteen hundred Pennsylvania Avenue. In the yield space, thirty
Speaker 2: year bond five oh two becomes a five oh one.
Speaker 2: I'm running it out to four decimal points because that's
Speaker 2: the way we roll as well. Ten yere yield four
Speaker 2: point five two percent. Discuss companies make profit versus the
Speaker 2: nonprofit companies.
Speaker 4: This is a complicated issue. I mean, it's one that
Speaker 4: comes up quite a bit in smallcalf. We're seeing, you know,
Speaker 4: kind of low earnings quality stocks out performed similar to
Speaker 4: what we saw last year off the April eighth low.
Speaker 4: That's something that tends to happen off recession typelows. But
Speaker 4: we're also starting to see that show up in the
Speaker 4: S and P five hundred as well. You Know, what
Speaker 4: I would say is, especially when you get into small cap,
Speaker 4: there's a question of our loss makers really low quality.
Speaker 4: A lot of biotech stocks, for example, early stage technology companies.
Speaker 4: You know, I have seen frankly, in the small cap space,
Speaker 4: people are getting a little bit more comfortable with biotech,
Speaker 4: which is not something I would have heard five and
Speaker 4: ten years ago. And those are technically, you know, like
Speaker 4: quote unquote low quality because of the earnings component, but
Speaker 4: not really so I do think small caps, you know,
Speaker 4: I'm starting to increasingly think they're getting us a bad
Speaker 4: rap on the quality issue.
Speaker 2: Laurie, thanks so much for coming in the new slow
Speaker 2: is crazy. I don't know how you do it. I
Speaker 2: don't know anybody in that.
Speaker 4: I don't sleep.
Speaker 3: Yeah, we don't sleep.
Speaker 2: Literally, that's about five hours a night and it's one
Speaker 2: hour here, three hours there kind of thing. And then
Speaker 2: on the weekend and we take eight naps.
Speaker 4: I had an hour and forty nine minute nap on
Speaker 4: Sunday afternoon.
Speaker 3: Yes, heaven. Yeah, you gag the children.
Speaker 4: Their grandparents.
Speaker 2: I thank you, Lloyd Kelvicina, thank you so much. Of course,
Speaker 2: always and forever with RBC. We're gonna get Tira Jersey
Speaker 2: here in a moment. We got to have an extended
Speaker 2: time with him not only on what he sees off
Speaker 2: this CPI report, but also is work on the World
Speaker 2: Cup again. As I noticed on stub ub tickets issued.
Speaker 2: Tickets released today for so many games at this World
Speaker 2: Cup is like a huge deal. When was the last
Speaker 2: time we talked about the Nis Alexis?
Speaker 3: Oh a few minutes. It's been way too Our ticket
Speaker 3: price has gone up since then. Yeah.
Speaker 2: Jeff Gibbon joins how to develop market fixed income at
Speaker 2: Manual Life Investor. Thank you for coming today and just
Speaker 2: a crazy day. How do you synthesize a higher CPI?
Speaker 2: And this angst about what about core a Manual Life?
Speaker 2: How do you fold that into the bond story? Yeah?
Speaker 7: I mean one thing to look at is, you know,
Speaker 7: how temporary is this going to be?
Speaker 3: And you know, one of the.
Speaker 7: Dangers that we're in right now I was we're having
Speaker 7: all these one off shocks and we try to push
Speaker 7: it away and say it's one off, it's one off.
Speaker 7: At what point in time does it become not one off?
Speaker 7: You know, we're not trying to play too too much
Speaker 7: into the recent run up in CPI as it is
Speaker 7: more energy related and if we start to get oil
Speaker 7: flowing through the straight again, maybe that comes off a
Speaker 7: little bit. However, if we stay up here another three, four,
Speaker 7: five months, then we're gonna have to you know, really
Speaker 7: consider what the FED has to do to slow this
Speaker 7: economy down.
Speaker 6: We've got it seems like the bomb market's doing the
Speaker 6: Fed's work. Here, We've got rates moving higher. Here, I'm
Speaker 6: looking at the ten year four fifty two year. What
Speaker 6: do you think we end the year on a tenure exactly?
Speaker 7: You know, I do think we ended a ten year
Speaker 7: around the four to fifty ish level. It's really hard
Speaker 7: for me to see the tenure coming down a whole lot.
Speaker 7: It's hard to see getting back into pricing in FED
Speaker 7: cuts like we were at the end of February. You know,
Speaker 7: there is a risk it goes a bit higher. However,
Speaker 7: if we get to the point that we have to
Speaker 7: price in the bed saying we're going to need to
Speaker 7: crush inflation, I think that ends up being curved, flattener,
Speaker 7: and maybe an inverted curve, because you know, I don't
Speaker 7: think they're going to have to go gradually just to
Speaker 7: you know, make themselves feel better.
Speaker 6: So again, we got this inflation print today in line
Speaker 6: with expectations, but it's higher, I mean, and how much
Speaker 6: of that is just energy? I mean, I'm looking at
Speaker 6: the core that's higher too, But I mean, I don't know.
Speaker 7: Yeah, I mean, I think it's not just energy story. Right,
Speaker 7: We're starting to see a bit stronger inflation back even
Speaker 7: in January and February when you look at some of
Speaker 7: the subcomponents, and so there's other things going on now
Speaker 7: that what we don't know is, you know, energy prices
Speaker 7: usually have a six to twelve month lag on the economy,
Speaker 7: and does that put the consumer at risk when he
Speaker 7: hit October this year?
Speaker 2: What is a five thirty year bond signal? I mean,
Speaker 2: and again after this inflation report, looking at really yields,
Speaker 2: some of the hourly real yield statistics were negative. I mean,
Speaker 2: what is the how does your day to day grine
Speaker 2: ensure with a five percent thirty year?
Speaker 7: Yeah, I mean, I you know, I worry a little
Speaker 7: bit more about the tenure. If the tenure got up
Speaker 7: to five percent, I'd be very concerned. As far as
Speaker 7: where we're going a big move. I would take a
Speaker 7: look at which mortgage rates. He's seeing housing prices across
Speaker 7: the across the US slowing and you know in some
Speaker 7: areas podcat is turning negative, and if you added another
Speaker 7: fifty basis points to mortgage rates, I mean, I think
Speaker 7: that's a problem. For the overall economy and in addition
Speaker 7: to having higher energy prices at the same time.
Speaker 6: How much credit risk are you taking these days?
Speaker 7: You know, we're moving our credit risk a bit higher quality.
Speaker 7: I mean, you don't have to reach for yield anymore.
Speaker 7: And I think that's one of the things that you
Speaker 7: can't be missed. Like, when's the last time we've been
Speaker 7: able to learn four and a half percent on tenure
Speaker 7: treasury and if you're throw in another hundred basis points,
Speaker 7: so so for credit five and a half percent, that's
Speaker 7: pretty good. And you're seeing fixed annuity buyers come in
Speaker 7: the market because they like that print insurance companies, you know,
Speaker 7: we you know, as a total return investor maybe five
Speaker 7: percent thirty years, you know, a bit scary at times,
Speaker 7: but an insurance company, they loving that environment.
Speaker 6: Interesting, So that's kind of the place to be. I
Speaker 6: think people want to talk to these bodcasts now, well.
Speaker 3: Yeah, they have no right for years. Is it a
Speaker 3: total return man your life or you just clipped the cooper.
Speaker 7: We're more we're totally more total return approach. You know,
Speaker 7: you know, we're benchmark against the AG but it's a
Speaker 7: bit of AG aware and looking for a fair amount
Speaker 7: of access.
Speaker 3: Did you have v body at Boston University?
Speaker 7: I was not fortunate enough to take one of his classes,
Speaker 7: but I had obviously had to read his book.
Speaker 3: I mean, Paul, you know this has got to be
Speaker 3: a Duke equivalent.
Speaker 2: Yeah, if you go academics from BU to I mean
Speaker 2: you have to switch from Cornwalls, which is the bar
Speaker 2: for BU, and you.
Speaker 3: Got to go up to Marianne's. Okay, all right, I
Speaker 3: mean that's a whole of a shift in Boston. It's
Speaker 3: one of my little part.
Speaker 2: I mean, Boston College in Boston University, they're just two
Speaker 2: separate worlds, aren't.
Speaker 3: They They are.
Speaker 7: I mean it's teach pub versus Marianne's after a hockey
Speaker 7: game all the day, all day long.
Speaker 2: Yeah, I mean I don't think people understand like Duke
Speaker 2: and in the UNC, how far are a part of
Speaker 2: They like.
Speaker 3: Literally about a mile.
Speaker 7: Yeah, it's a little a mile, and they integrate like
Speaker 7: when you the student sections the lines of blurred.
Speaker 8: Yeah.
Speaker 3: Absolutely, we'll have to see.
Speaker 2: Thank you for coming in. We got massive breaking news
Speaker 2: today that we've got to run to. Can you I
Speaker 2: hope you can come back again when it's not nuts.
Speaker 3: Jeffrey given had a developed.
Speaker 2: Market fixing income and fixed income portfolio manager, a manual
Speaker 2: life of Boston. So here's what we're going to do.
Speaker 2: Hugely anticipate. I've got a lot of emails on this
Speaker 2: is Ira coming on today.
Speaker 3: Yeah, we're gonna do the World Cup, but.
Speaker 2: We've got to do the inflation report first, and all
Speaker 2: of his wonderful fixed income work as well. Ira, go
Speaker 2: phobosy on me here and tell me what matters within
Speaker 2: the four characteristics of the curve right now, discuss the premium,
Speaker 2: the fancy stuff you guys work in every day.
Speaker 9: Yes, so if you're talking about term premium, you know
Speaker 9: basically the risk premium that you need to hold in
Speaker 9: order to or get the extra yield you need in
Speaker 9: order to hold a bond for the long term. You know,
Speaker 9: that's actually been very stable for five years out.
Speaker 8: The thirty years.
Speaker 9: Over the last couple of months, it's the two year
Speaker 9: really that's been moving around quite a lot. And initially
Speaker 9: that was because inflation expectations jumped much higher, and now
Speaker 9: it's really because the policy rate is now expected maybe
Speaker 9: to be increased, So basically the Fed hiking interest rates.
Speaker 9: So that's where you get two year yields up above
Speaker 9: four percent and the yield curve flattening a little bit.
Speaker 8: I think that's probably about done.
Speaker 9: We put out a note just this morning noting that
Speaker 9: we thought the two year yield was fully priced for
Speaker 9: the realistic outcomes for the policy and for the FED,
Speaker 9: and a big reason for that was this number today.
Speaker 9: Because this number, this four point two percent year on
Speaker 9: year CPI print, is price by the market to be
Speaker 9: the high print of this cycle. So so I think
Speaker 9: that's very important because if inflation starts to come down,
Speaker 9: then two year yield's good stable.
Speaker 3: I you agree with that.
Speaker 2: I don't mean to be rude here, but this is
Speaker 2: like saying Senegal is going to be France. Do you
Speaker 2: that you believe four point two percent the peak? It probably?
Speaker 2: It probably is now obviously there's a lot of risk
Speaker 2: in that. But but but based on where the where
Speaker 2: the oil futures curve is pricing based on the fact
Speaker 2: that you you get a level adjustment, right, So we
Speaker 2: have to be careful because I think a lot of
Speaker 2: times people say, oh, there's still a lot of inflation,
Speaker 2: because you know, bread prices are you know, five dollars
Speaker 2: a you know a bag or whatever, but but the
Speaker 2: issue is is that that a jump in UH in
Speaker 2: prices to a new level doesn't mean that you're going
Speaker 2: to get high a bigger change in the future, right.
Speaker 2: It just means that the level is high of individual prices,
Speaker 2: But it doesn't mean that that you're going to have
Speaker 2: persistent inflation and persistently increasing prices even if prices never
Speaker 2: go down, right. I think that's it's a kind of
Speaker 2: one of the observational fallacies that a lot of people,
Speaker 2: you know, wind up having because they'll say, oh, you know,
Speaker 2: gas prices are still four dollars a gallon.
Speaker 9: Yeah, but they're still at four. They're not going to five. Right,
Speaker 9: That's the I think one of the issues that people
Speaker 9: don't don't see. It's changed versus level. So yeah, I
Speaker 9: think that four point two percent probably is the high now.
Speaker 9: Of course, if we continue to run at three percent,
Speaker 9: which is something that the market's also priced for over
Speaker 9: the next year or so, you know, obviously it's going
Speaker 9: to be difficult for the Federal Reserve to decrease interest
Speaker 9: rates if you're still well above their targeted inflation level.
Speaker 6: We haven't been, as some quoted, we haven't been in
Speaker 6: two percent inflation and like forever, where did this two
Speaker 6: percent number go?
Speaker 3: Can we kick this to the curb?
Speaker 9: Well, I actually think that it was kind a little
Speaker 9: bit of a mistake to have any kind of hard
Speaker 9: two percent number, right, So Paul, you know, you know,
Speaker 9: we think back in the nineteen nineties, we were running
Speaker 9: a bit above that, right, PC deflator was running around
Speaker 9: two point three two point five percent. Things seemed fine, right,
Speaker 9: because wages were growing faster than that and we had
Speaker 9: a decent, decent economic activity. You know, I think the
Speaker 9: Fed lost a little bit of flexibility and how they
Speaker 9: approach their inflation target by by you know, having a
Speaker 9: hard two percent target. And you know, quite frankly, that
Speaker 9: is something Kevin Moorsh would like to would like to revisit.
Speaker 9: So as he comes in next week and to his
Speaker 9: first meeting as the FOMC chair, you know, he'll need
Speaker 9: to He'll need to try to figure out with his colleagues, like, Hey,
Speaker 9: should we actually have this hard two percent number or
Speaker 9: should we think about it more as in is it
Speaker 9: two point three percent two point five percent and stable?
Speaker 8: Right?
Speaker 9: That that's really probably more important in my view to
Speaker 9: the health of the economy is give certainty to how
Speaker 9: quickly prices are going to grow, and the economy will
Speaker 9: figure it out around that, which it always has done.
Speaker 2: Across America, Ira Jersey, with us driving all of Bloomberg
Speaker 2: intelligence fixed income that covers definitive at credit squeeze years ago, Ira,
Speaker 2: help us here off your remit with the complexity of
Speaker 2: the fixed income transactions of the technology. Bro Paul and
Speaker 2: I learned that if we see the word mezzaning, circle
Speaker 2: it in the perspectives. This is back folks when there
Speaker 2: was pencil and paper. We've gone way beyond mezzaning. Do
Speaker 2: you see a complexity and a frenzy like two thousand
Speaker 2: and six.
Speaker 9: It's not quite as bad, but there are people who
Speaker 9: were you know, I think, I think when you go
Speaker 9: back to that period of time, remember we spent five
Speaker 9: years with the Fed fundrate at one percent.
Speaker 8: Interest rates were relatively low and stable.
Speaker 9: And you had a lot of financial engineering and a
Speaker 9: lot of new products that were trying to be used
Speaker 9: for yield enhancement purposes. I actually think, and I wrote
Speaker 9: about this actually when I was at.
Speaker 8: Credits a long time ago.
Speaker 9: Was one of the reasons why the markets created all
Speaker 9: of these you know, CDOs and all of the triple
Speaker 9: A tranches of different fixed income products was really because
Speaker 9: the Federal Reserve didn't increase the money supply quickly enough.
Speaker 9: And I know a lot of you know, academic economists
Speaker 9: don't agree with me with this, but the fact this
Speaker 9: is that money demand was going very quickly during that
Speaker 9: period of time. And when money demand is outstripping money supply,
Speaker 9: then obviously the market will create new kinds of money,
Speaker 9: and then of course, once that doesn't become money, you
Speaker 9: wind up putting on the financial crisis. I think in
Speaker 9: today's environment, we have plenty of money out there. There's
Speaker 9: some funding market needs that need to be addressed and
Speaker 9: have been addressed by the Fed. But otherwise, no, we
Speaker 9: don't see the same kind of you know, gearing that
Speaker 9: we had back then.
Speaker 3: Nobody cares, Okay, iira.
Speaker 2: What they care about is two thirds of America doesn't
Speaker 2: care about the World Cup. I guess a lot of
Speaker 2: them do care about the World Cup. The world's coming
Speaker 2: to America for the World Cup. And I saw on
Speaker 2: stub ub today all sorts of games with new ticket issueance.
Speaker 2: How bad has FEFA screwed up the tickets nationwide?
Speaker 8: Yeah? I think they've made some you know, pretty big mistakes.
Speaker 9: I mean they were trying to maximize I think their
Speaker 9: their profits by you know, leaking out leaking out tickets.
Speaker 9: But then you know, that became a problem for the
Speaker 9: resellers and the like. There's a lot of people that
Speaker 9: I've talked to in Europe, a lot of my friends
Speaker 9: from when I was in graduate school and the like,
Speaker 9: who are like, you know, tickets are crazy expensive.
Speaker 8: How are we going to go?
Speaker 9: Like when you know, when we went to Russia where
Speaker 9: we went to cutter, like, yeah, there were some tickets
Speaker 9: that were expensive, but we were able to get into
Speaker 9: a match for you.
Speaker 8: Know, one hundred euros or whatever.
Speaker 9: And so these were eye popping kind of prices for
Speaker 9: a lot of people, especially when you have to consider
Speaker 9: you have to travel over you know, over an ocean,
Speaker 9: and then you have all of the relatively high priced
Speaker 9: accommodations in the United States compared to other places where
Speaker 9: the World's Cup has been held over the last twenty
Speaker 9: years or so, So there is a big sticker shock.
Speaker 9: So I'm a little bit concerned that you won't get
Speaker 9: the kind of environment that where you have a sellout crowd,
Speaker 9: or you'll have a lot of a lot of maybe
Speaker 9: domestic people going to games instead of people from these
Speaker 9: countries to create a great stadium environment.
Speaker 8: So I'm really interested to see how that's going to work.
Speaker 2: We'll have to see our jersey. Thank you so much.
Speaker 2: Driving all the fixed incoment, Bloomberg Intelligence is Surveillance World
Speaker 2: Cup corresponded.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 3: Joining Center Studio usually in San Francisco.
Speaker 2: Edward Lovelow driving all of our technology coverage. Open question,
Speaker 2: How do you study SpaceX this morning?
Speaker 10: I study it as a pitch on the economic of
Speaker 10: a satellite of great scale, that is a data center.
Speaker 10: So in a satellite, you have the body, and right now,
Speaker 10: the body in any given satellite is a probe of
Speaker 10: some kind. It creates data intents about down to Earth.
Speaker 10: What SpaceX is pitching is a story where there are
Speaker 10: thousands and thousands of satellites and in the body of
Speaker 10: that satellite with massive soda arraisin reads is a server.
Speaker 2: You're in Charlotte, sil Virginia and your lecture in CFA
Speaker 2: Institute on this, what's your ex access to the hopes
Speaker 2: and dreams of mister Musk? Is it three years?
Speaker 3: Is it thirty years?
Speaker 10: This is why it's worth us discussing this on air
Speaker 10: right now Wednesday morning for an IPO that will price
Speaker 10: tomorrow and trade Friday, because actually something has been happening
Speaker 10: since Sunday night. Bankers around the country have been pitching
Speaker 10: this idea in real time, and based on our reporting,
Speaker 10: the institutional investors' long only asset managers are placing orders
Speaker 10: for ten billion dollars of shares big blocks because they
Speaker 10: believe in the economics of what Elon Musk is pitching
Speaker 10: on the data center side. In other words, I'm saying
Speaker 10: the road shows worked. Based on our reporting Sunday night,
Speaker 10: they had a certain number of orders. By Wednesday morning
Speaker 10: they had many more, and thus we arrived to a
Speaker 10: place where they're oversubscribed. By the way that the math
Speaker 10: on a space based data centers is the same as
Speaker 10: a day central on Earth. It's a dollar per token.
Speaker 10: How many dollars it takes to generate a token or
Speaker 10: a dollar per killer? What the dollar to generate a killer?
Speaker 10: What worth of compute which is measured in the electrical
Speaker 10: draw It's exactly the same. I know, Paul, I.
Speaker 3: See it in your face. It hasn't been done.
Speaker 6: When did they expect to deploy some of this technology?
Speaker 10: So this is why I say this is a live situation.
Speaker 10: The roadshow has meaning. In the prospectus, they very clearly
Speaker 10: outlined that they expected to put an orbital data center
Speaker 10: in place twenty twenty eight into twenty twenty nine. The
Speaker 10: bankers and SpaceX's representatives have been telling very important investors
Speaker 10: ahead of the IPO that they actually might pull that
Speaker 10: forward a little bit and do a demo, a test,
Speaker 10: a pilot in twenty twenty seven. But given that three
Speaker 10: days ago we saw the design of the thing for
Speaker 10: the first time, and how many times have you rolled
Speaker 10: your eyes at me or caution me on Elon Musk
Speaker 10: stating a date and then see where we actually land.
Speaker 10: So all of that gets taken into account. But he
Speaker 10: is also in the boilerplate risk factors of the document,
Speaker 10: you know, So that's how I view it.
Speaker 6: Ages has Elon been on the road pitching this person.
Speaker 3: Do we know?
Speaker 10: You know, I don't have any reporting or evidence that
Speaker 10: he has done much beyond the conversation he had with
Speaker 10: Jamie Diamond. Brett Johnson is SpaceX's CFO. He's much less known.
Speaker 10: He's basically space x is only ever CFO, and he
Speaker 10: is going to preside over the finance org that does
Speaker 10: the biggest IPO in history, much more engaged directly with
Speaker 10: the bankers, the important shareholders. You will note that Ela Musk,
Speaker 10: I don't know. I see the Elizabeth Warre and headlines
Speaker 10: on the SEC. I don't really have any reporting on that,
Speaker 10: but that's fine. I would say Ela Musk has continued
Speaker 10: to post on X quite often.
Speaker 3: So there's in this period two questions.
Speaker 2: Let's start with this same blood low with this folks
Speaker 2: the high ground on technology. Do you just assume SpaceX
Speaker 2: and Tesla made at some point?
Speaker 10: Yes, I mean, well, I don't assume the market assumes
Speaker 10: that in the end SpaceX and Tesla.
Speaker 3: Still this drives and I think.
Speaker 2: Of George Noble definitive Fidelity Overseas and many many other
Speaker 2: critics of all does he think the ed loud Low
Speaker 2: world is just you know, yeah, it's going to hell
Speaker 2: on the desk, Kerra Carlson, Bloomberg News. Yes, Tesla has
Speaker 2: fifty nine robotaxis in three Texas cities, and yet people
Speaker 2: talking to you say this is the second coming of whatever. Yeah,
Speaker 2: I mean that's the discontinuous nature of the ed blood
Speaker 2: low world.
Speaker 3: Yeah, just discussed that.
Speaker 10: So the thesis is that if Tesla gets there on
Speaker 10: the end where they have fleets of thousands and thousands
Speaker 10: of robotaxis, in other words, a Tesla vehicle that has
Speaker 10: no human driver, it drives itself. There is an element
Speaker 10: in that of onboard compute. The cars have computers on
Speaker 10: them which helps them perceive the world around them. But
Speaker 10: this is still AI where you are asking an underlying
Speaker 10: algorithm AO model to do something that still requires some
Speaker 10: kind of mathematics going on in data center. So the
Speaker 10: link is if SpaceX is going to do thousands of
Speaker 10: satellites and orbits that are data centers and they are
Speaker 10: focused on what we call inference running the AI model,
Speaker 10: Tesla becomes the first big customer of that. Gotcha, it
Speaker 10: is Elon having a negotiation with Elon, how.
Speaker 2: Is a robotaxi going to pick somebody up a terminal
Speaker 2: one at JFK.
Speaker 3: Good question.
Speaker 10: How they've done it at other airports is to have
Speaker 10: asignated pickup areas.
Speaker 3: Very simples jf K. Yeah, you know Kansas City gorgeous
Speaker 3: new airport. Frankly, Manila has a gorgeous new airport. Can
Speaker 3: I give you a case study? SFO?
Speaker 10: Right, so WEIMO off services SFO. Dear listener, if you
Speaker 10: know what's you on YouTube, I'm waving my fingers in
Speaker 10: the air in Asterisk operates at SFO. You have to
Speaker 10: go out the terminal, up the escalator, onto the air
Speaker 10: train change stop, go on another stop, walk five hundred
Speaker 10: feet and then you can get picked up by a
Speaker 10: WEIMO SFO. So like that's the reality of it.
Speaker 3: What's going to happen Thursday? What's your I mean?
Speaker 2: I don't want to pinion down if you're wrong. We
Speaker 2: understand that I'm wrong all the time.
Speaker 3: Well, look, do you what's your best guess that's going
Speaker 3: to happen?
Speaker 10: Thursday Friday, Kyle Porter and I reported that SpaceX had
Speaker 10: had valued this and priced this IPO early at one
Speaker 10: point seven seven trillion. A Musk replied on X saying false.
Speaker 10: In the end, when all the documents came out. It
Speaker 10: was one point seven to seven tri billion and one
Speaker 10: hundred and thirty five dollars per share price, so we
Speaker 10: got that right. However, because this is a typical and unusual,
Speaker 10: they priced ahead of the road show. People don't know
Speaker 10: what will happen. There is every legal, mechanical, and psychological
Speaker 10: chance that the price goes way up. You know that
Speaker 10: they price it higher. That we're talking about a company
Speaker 10: in excess of two trillion. How it trades at the
Speaker 10: Friday whenever that gets going, I'm not idea. It's academic,
Speaker 10: isn't it. It doesn't matter, But right now the state of
Speaker 10: player is so clear. This is a massively oversubscribed IPO
Speaker 10: and people want to participate in it.
Speaker 6: How about retail? I think they allocata initially maybe thirty thirty.
Speaker 6: So how's that playing out?
Speaker 10: There's an outstanding question, which is indirectly. Musk has promised
Speaker 10: Tesla's very loyal, quite broad retail shareholder base that they
Speaker 10: would get some kind of access to this IPO, and
Speaker 10: that's not been codified, no mechanism for that, so I'd
Speaker 10: be interested in that, you know. He Musk has talked
Speaker 10: about rewarding loyalty in that sense. It'd be interesting to
Speaker 10: see how those TESTA shareholders react if they weren't able
Speaker 10: to participate. Remember, the institutional book closes four pm today.
Speaker 10: But all these different platforms offering the retail trade that
Speaker 10: I think that carries on till Thursday night.
Speaker 8: I didn't know that.
Speaker 6: Yeah today, yeah, yeah, all right, I'll get to get
Speaker 6: my order in.
Speaker 10: You're looking at me with great skepticism. But that's healthy,
Speaker 10: Like how healthy is that?
Speaker 3: That's good?
Speaker 8: Yep, all right, I'm on it.
Speaker 6: I'll take my index allocation.
Speaker 3: That's how we roll. My love love great, Thank you,
Speaker 3: thank you, thank you for so much. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am. Easter Listen on Apple,
Speaker 1: Karplay and Android Otto with the Bloomberg Business Up, or
Speaker 1: watch us live on YouTube.
Speaker 2: Odetta Kushi joins US now Deputy Chief Economists, First American
Speaker 2: out of Northeastern out of Saint John Fisher College, Paul,
Speaker 2: Like you know, they open the other the PGA RA
Speaker 2: at the Oak Kill up in Rochester.
Speaker 3: The other year Saint John Fisher. I mean the kids
Speaker 3: just roll out of bed, is that right? And they
Speaker 3: they do eighteen holes at hops, very good, that's the
Speaker 3: way they roll. It's Saint John Fisher a college.
Speaker 2: Odetta, what do you expect to see in the CPA report?
Speaker 3: What is the distinction for you?
Speaker 11: What I'm really looking for is whether we're seeing inflation
Speaker 11: broadening across categories. The consensus is that we'll have a
Speaker 11: print above four percent. Consider that just a year ago
Speaker 11: the inflation was with a two handle, and so the
Speaker 11: question really is are we seeing it broaden outside of
Speaker 11: just the energy sector into goods and services?
Speaker 5: And that would really be the concern from the fence perspective.
Speaker 2: I mean, off George Bory Paul Core CPI two point
Speaker 2: ninety percent up from two point eight percent.
Speaker 3: Can you imagine a three handle on core?
Speaker 6: Boy, that's not what the market's looking for, Odetta. If
Speaker 6: we do, in fact see higher core inflation, where do
Speaker 6: you think it's coming from? Because a lot of folks
Speaker 6: definitely feel it when they go to the gas station
Speaker 6: to fill up the tank of gas. They fill it
Speaker 6: at the shopping center when they go to buy groceries.
Speaker 6: Where is inflation most problematic for you.
Speaker 11: Well, you know, as a real estate economist, we see
Speaker 11: that the higher gas prices is in facting construction costs.
Speaker 11: We're seeing it flow through to diesel prices obviously, which
Speaker 11: is which is very important for construction and higher and
Speaker 11: certainly burdens them to breaking ground on more homes.
Speaker 5: So that's certainly one area that we're monitoring.
Speaker 6: Where are you seeing in your business here in real estate?
Speaker 6: I mean we have mortgage rates, boy, you know, back
Speaker 6: up to six and a half percent here, and we
Speaker 6: just got a housing number yesterday, you know, still that
Speaker 6: four handle four million used homes.
Speaker 8: It seems tough for.
Speaker 6: The real estate business.
Speaker 11: It's been a challenging year, though I will see a
Speaker 11: better year than last year. Mortgage rates while they've hit
Speaker 11: about six and a half percent, mortgage rates are still
Speaker 11: lower than a year ago. Inventory is still a bit
Speaker 11: higher than it was a year ago, so that's helping
Speaker 11: move transactions in the right direction, albeit very slowly. But
Speaker 11: we did start the year with a rate of six
Speaker 11: percent and now we've moved up to six and a
Speaker 11: half so certainly that slowed the momentum.
Speaker 2: So what's the inflation series you lean on? I mean,
Speaker 2: is it trim this, trim that, Cleveland, the eighteen other
Speaker 2: flavors we've got. What does a denkush you believe in?
Speaker 11: You know, I'm classic look at the core inflation, and
Speaker 11: then what I tend to do is break it out
Speaker 11: into its main components, and I track core goods inflation,
Speaker 11: core services inflation, and then I tend to break out
Speaker 11: shelter on its own.
Speaker 5: Shelter inflation makes up.
Speaker 11: Forty percent of core, and so we like to see
Speaker 11: what's happening with shelter and the good news there is
Speaker 11: that you know, that tends to trail what's happening with
Speaker 11: rents on new leases, and we know that we continue
Speaker 11: to see acceleration in new leases, So that should drag
Speaker 11: overall shelter inflation lower later this year. I think that's
Speaker 11: a tailwind to getting inflation back down.
Speaker 2: That's really important. Is that zeitgeist in the market right now?
Speaker 2: This idea of oeer and you know, eight other ways
Speaker 2: of calculating real estate disinflation.
Speaker 3: Is that in the zeitgeist right now? Or is that
Speaker 3: a surprise to come?
Speaker 11: I think I think it's pretty well understood that shelter
Speaker 11: inflation should continue to drag overall inflation lower. I think
Speaker 11: all eyes right now are certainly on the energy sector
Speaker 11: and whether we start to see those higher oil prices
Speaker 11: flow into other portions of our of our inflation back.
Speaker 6: Get affordability in housing here? Is there a solution out there?
Speaker 6: Is it just build more houses?
Speaker 11: I do think that the supply side should be getting
Speaker 11: the attention here, because what happens if you juice up
Speaker 11: the demand side of the equation in a supply and
Speaker 11: strain market is you just start to see house prices
Speaker 11: go up. And so I think building more homes, making
Speaker 11: it less burdensome, less costly to build new homes is
Speaker 11: the solution.
Speaker 2: Thank you so much. The new slow folks this morning
Speaker 2: is just killing me. O Data Cushion, Thank you so
Speaker 2: much for joining us.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal