1 00:00:02,920 --> 00:00:12,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 2 00:00:12,640 --> 00:00:14,400 Speaker 1: with Alex Steina and Paul'sweenye. 3 00:00:14,520 --> 00:00:17,720 Speaker 2: The real app performance has been the US corporate high yield. 4 00:00:17,880 --> 00:00:20,239 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:20,320 --> 00:00:23,880 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:23,600 --> 00:00:27,200 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:27,240 --> 00:00:29,880 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:30,080 --> 00:00:33,159 Speaker 2: These are two big time blue chip companies. 9 00:00:33,320 --> 00:00:36,920 Speaker 3: The window between the peak and cut changing super fast. 10 00:00:37,080 --> 00:00:41,720 Speaker 1: Bloomberg Intelligence with Alex Steinhall and Paul's Wheenye on Bloomberg Radio. 11 00:00:43,120 --> 00:00:45,680 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 12 00:00:45,720 --> 00:00:47,920 Speaker 2: business story impacting Wall Street and the global markets. 13 00:00:48,080 --> 00:00:50,080 Speaker 3: Each and every week we provide in depth research and 14 00:00:50,159 --> 00:00:51,920 Speaker 3: data on some of the two thousand companies and one 15 00:00:52,000 --> 00:00:54,480 Speaker 3: hundred and thirty industries our analysts cover worldwide. 16 00:00:54,840 --> 00:00:57,520 Speaker 2: Today, we'll look at why shares of the IT company 17 00:00:57,640 --> 00:01:01,040 Speaker 2: super Microcomputer roast the most since February plaus. 18 00:01:00,760 --> 00:01:03,520 Speaker 3: We'll discuss how a weak housing market impacted quarterly sales 19 00:01:03,520 --> 00:01:04,759 Speaker 3: at the department store lows. 20 00:01:05,120 --> 00:01:08,200 Speaker 2: First, we dive into corporate earnings from AI giant Nvidia, 21 00:01:08,319 --> 00:01:10,840 Speaker 2: the chip maker delivered a revenue forecast that failed to 22 00:01:10,880 --> 00:01:14,080 Speaker 2: meet analyst expectations, and this suggests that the company's dizzey 23 00:01:14,080 --> 00:01:15,600 Speaker 2: and growth has its limits. 24 00:01:15,720 --> 00:01:18,200 Speaker 3: However, in Nvidia did ashore investors that its new product 25 00:01:18,280 --> 00:01:21,720 Speaker 3: lineup can maintain the company's AI fueled growth run for more. 26 00:01:21,840 --> 00:01:24,400 Speaker 3: Paul was joined by man Deep Sing Bloomberg Intelligence senior 27 00:01:24,480 --> 00:01:25,520 Speaker 3: tech industry analyst. 28 00:01:25,720 --> 00:01:27,480 Speaker 2: I first asked man Deep for his take on in 29 00:01:27,600 --> 00:01:28,679 Speaker 2: Vidia's most recent quarter. 30 00:01:29,080 --> 00:01:32,280 Speaker 4: Any slight miss in the networking side, which was the 31 00:01:32,360 --> 00:01:35,600 Speaker 4: case here, or even a gross margin degradation which they 32 00:01:35,680 --> 00:01:39,480 Speaker 4: said will go up in the second half of next year, 33 00:01:39,520 --> 00:01:43,560 Speaker 4: So it's really a transitory thing. I think overall, the 34 00:01:43,760 --> 00:01:48,360 Speaker 4: demand side looks pretty solid, they said. Jensen called out 35 00:01:48,800 --> 00:01:52,520 Speaker 4: there will be no CAPEX digestion until the data center 36 00:01:52,720 --> 00:01:54,600 Speaker 4: spending hits a trillion dollars. 37 00:01:54,920 --> 00:01:55,480 Speaker 5: That's huge. 38 00:01:55,520 --> 00:01:58,040 Speaker 4: I mean, just think about you know how much runway. 39 00:01:58,120 --> 00:02:02,080 Speaker 4: He thinks, without a pause. Now, does the market believe it? 40 00:02:02,160 --> 00:02:06,320 Speaker 4: Probably not, Given what we heard at our conference yesterday 41 00:02:06,520 --> 00:02:09,720 Speaker 4: is it's moving from training to inferencing, and on the 42 00:02:09,880 --> 00:02:14,440 Speaker 4: inferencing side there is probably more. So if once you 43 00:02:14,520 --> 00:02:18,440 Speaker 4: have a train model, you're deploying that model in co 44 00:02:18,680 --> 00:02:22,720 Speaker 4: pilots or chat pots, and it's basically a train model 45 00:02:22,800 --> 00:02:27,440 Speaker 4: that's being used for answering queries and that's inferencing answering 46 00:02:27,520 --> 00:02:30,600 Speaker 4: queries or you know, providing some productivity benefit. 47 00:02:31,160 --> 00:02:33,840 Speaker 5: And that's where do you really need a high end 48 00:02:33,840 --> 00:02:36,920 Speaker 5: in video chip. The answer is divided. 49 00:02:37,160 --> 00:02:40,720 Speaker 4: Some people say, for the older versions of in video chips, 50 00:02:40,919 --> 00:02:43,240 Speaker 4: you could use that for inferencing. The latest one will 51 00:02:43,280 --> 00:02:46,840 Speaker 4: continue to get used for training, and that's a plausible answer, 52 00:02:47,120 --> 00:02:50,680 Speaker 4: but as we have learned, there is growing competition on 53 00:02:50,720 --> 00:02:53,639 Speaker 4: the inferencing side from the likes of AMD as well 54 00:02:53,639 --> 00:02:57,600 Speaker 4: as startups like sam Banava, Cerebras and all these companies 55 00:02:57,639 --> 00:02:59,960 Speaker 4: are trying to get some portion of that part. 56 00:03:00,800 --> 00:03:03,480 Speaker 2: When you listen to this the management team in Nvidia, 57 00:03:04,280 --> 00:03:06,280 Speaker 2: where do they say, I mean, can they look a 58 00:03:06,360 --> 00:03:08,600 Speaker 2: year two years in advance? How do they think their 59 00:03:08,600 --> 00:03:09,760 Speaker 2: business is going to develop? 60 00:03:10,120 --> 00:03:10,320 Speaker 5: Yeah? 61 00:03:10,360 --> 00:03:13,399 Speaker 4: I mean, look the fact that they're saying gross margins 62 00:03:13,480 --> 00:03:16,240 Speaker 4: will go down to around seventy one percent over the 63 00:03:16,280 --> 00:03:17,080 Speaker 4: next two quarters. 64 00:03:17,080 --> 00:03:19,600 Speaker 5: But readbound seventy one, seventy one grows. 65 00:03:19,440 --> 00:03:23,720 Speaker 4: Smart Yes, wow, and it's it's again terrific when you 66 00:03:23,760 --> 00:03:27,920 Speaker 4: look at it from every angle is just the way 67 00:03:28,000 --> 00:03:31,560 Speaker 4: expectations were priced for it's mid seventy percent, So the 68 00:03:31,639 --> 00:03:33,960 Speaker 4: fact that they are going down to seventy one percent, 69 00:03:34,400 --> 00:03:40,640 Speaker 4: but in Jensen's case, he called out those margins going 70 00:03:40,720 --> 00:03:43,200 Speaker 4: back to seventy five percent. So it's really a ramp 71 00:03:43,280 --> 00:03:46,640 Speaker 4: up of their new architecture Blackwell, which is causing the 72 00:03:46,920 --> 00:03:50,920 Speaker 4: transitory gross margin degradation. But once they get that in 73 00:03:51,000 --> 00:03:54,040 Speaker 4: full production, he expects gross margins to go back to 74 00:03:54,040 --> 00:03:57,119 Speaker 4: seventy five percent. Now I do think again there will 75 00:03:57,160 --> 00:04:00,160 Speaker 4: be more competition, but he clearly doesn't believe that to 76 00:04:00,200 --> 00:04:00,680 Speaker 4: be the case. 77 00:04:00,720 --> 00:04:02,640 Speaker 2: All Right, I mean, here are just some crazy numbers 78 00:04:02,680 --> 00:04:06,280 Speaker 2: of folks, just total Revenue's let's go really simple here. 79 00:04:06,360 --> 00:04:11,880 Speaker 2: Revenue roughly calendar year twenty two, twenty seven billion of revenue, 80 00:04:12,040 --> 00:04:15,560 Speaker 2: calendar year twenty four, one hundred and twenty eight billion 81 00:04:15,560 --> 00:04:18,920 Speaker 2: of revenue. Have you seen anything like this in technology? 82 00:04:19,520 --> 00:04:21,839 Speaker 4: I mean, the closest thing that comes to mind is 83 00:04:21,880 --> 00:04:25,599 Speaker 4: the build out of the internet infrastructure back in nineteen 84 00:04:25,680 --> 00:04:29,360 Speaker 4: ninety nine. I think Cisco had a similar ramp up 85 00:04:29,400 --> 00:04:33,360 Speaker 4: on the networking side. But what's different is in Vidia 86 00:04:33,400 --> 00:04:37,800 Speaker 4: clearly has the balance sheet as well as they are 87 00:04:37,960 --> 00:04:42,279 Speaker 4: in more products than Cisco was. So Cisco was just 88 00:04:42,360 --> 00:04:46,120 Speaker 4: providing the networking gear. In Nvidia has a software line, 89 00:04:46,279 --> 00:04:49,279 Speaker 4: they have a networking business and then their core ship business. 90 00:04:49,279 --> 00:04:52,040 Speaker 5: So clearly in Vidia is going with the. 91 00:04:52,000 --> 00:04:56,040 Speaker 2: Platform a stupid income statement. They have fifty five percent 92 00:04:56,160 --> 00:05:00,200 Speaker 2: net income margins, so and they have no capback to 93 00:05:00,240 --> 00:05:03,080 Speaker 2: speak of two three four poen so the free cash 94 00:05:03,080 --> 00:05:05,279 Speaker 2: flow is just freakish. 95 00:05:05,800 --> 00:05:07,680 Speaker 5: So what do they do with the cash? 96 00:05:07,920 --> 00:05:11,760 Speaker 4: Well, right now they're doing some share buybacks, but acquisitions 97 00:05:11,800 --> 00:05:15,080 Speaker 4: maybe on the table if the incoming Trump administration loses 98 00:05:15,120 --> 00:05:15,760 Speaker 4: the regulation. 99 00:05:15,960 --> 00:05:18,480 Speaker 2: So okay, let's go down that road there. What's the 100 00:05:18,560 --> 00:05:22,360 Speaker 2: feeling in Silicon Valley in technology about that opportunity, because, boy, 101 00:05:22,720 --> 00:05:24,880 Speaker 2: your industry, in particularly some of the bigger companies that 102 00:05:24,920 --> 00:05:27,040 Speaker 2: you cover, the Amazons of the world, the Google's the world, 103 00:05:27,240 --> 00:05:30,560 Speaker 2: they can't do anything these days. Is the expectation that 104 00:05:30,640 --> 00:05:31,359 Speaker 2: might loosen up. 105 00:05:32,240 --> 00:05:35,760 Speaker 4: Well, the overall m andy environment an IP environment may 106 00:05:35,760 --> 00:05:39,080 Speaker 4: get better, but in terms of big tech, I doubt 107 00:05:39,120 --> 00:05:42,600 Speaker 4: it's anything is changing on that front, especially for the 108 00:05:42,720 --> 00:05:47,000 Speaker 4: likes of Alphabet and Meta. Probably an Apple or an 109 00:05:47,080 --> 00:05:50,520 Speaker 4: Nvidia may be able to do more acquisitions, but I 110 00:05:50,520 --> 00:05:53,760 Speaker 4: think the companies that are in the crosshairs of you 111 00:05:53,800 --> 00:05:58,560 Speaker 4: know what the incoming administration feels on the consumer side. 112 00:05:58,720 --> 00:06:01,799 Speaker 4: I doubt they'll allow them to make any for their acquisition, 113 00:06:02,080 --> 00:06:02,279 Speaker 4: all right. 114 00:06:02,320 --> 00:06:05,480 Speaker 3: Thanks to Mandy pep Seeing Bloomberg Intelligence, Senior tech industry analyst. 115 00:06:05,839 --> 00:06:08,520 Speaker 2: Each week we look at research from Bloomberg and EF 116 00:06:08,640 --> 00:06:10,719 Speaker 2: previously known as New Energy Finance, so the. 117 00:06:10,680 --> 00:06:13,440 Speaker 3: Team at Bloomberg that tracks and analyzes the energy transition 118 00:06:13,520 --> 00:06:17,360 Speaker 3: from commodities to power, transport, industries, buildings, and ag sectors. 119 00:06:17,640 --> 00:06:19,680 Speaker 2: This week we took a look at what Donald Trump's 120 00:06:19,760 --> 00:06:22,560 Speaker 2: upcoming presidency will mean for the energy transition for more. 121 00:06:22,560 --> 00:06:24,799 Speaker 3: We are joined by Derek flakel Bloomberg b and EF 122 00:06:24,880 --> 00:06:27,640 Speaker 3: lead US policy analyst, and we first asked Derek for 123 00:06:27,680 --> 00:06:30,000 Speaker 3: his take on what changes will come next. 124 00:06:30,400 --> 00:06:31,880 Speaker 6: First of all, there's a lot of worries about the 125 00:06:31,920 --> 00:06:34,400 Speaker 6: future of the Inflation Reduction Act. The US is signature 126 00:06:34,760 --> 00:06:38,920 Speaker 6: climate subsidy program. We expect that will mostly remain intact. 127 00:06:39,240 --> 00:06:42,520 Speaker 6: A lot of Republican district states for benefiting fourteen. How 128 00:06:42,600 --> 00:06:45,200 Speaker 6: Republicans have signed a letter saying they don't want to 129 00:06:45,240 --> 00:06:47,599 Speaker 6: see those tax credits repealed hastily, and the Speaker of 130 00:06:47,600 --> 00:06:49,960 Speaker 6: the House has said that he wants to see the scalpel, 131 00:06:50,000 --> 00:06:51,600 Speaker 6: not a sledgehammer, So we think a lot of that 132 00:06:51,640 --> 00:06:53,760 Speaker 6: will survive. Where you're likely to see more change is 133 00:06:53,839 --> 00:06:58,279 Speaker 6: regulations and some voluntary initiatives like the procurement for clean 134 00:06:58,320 --> 00:06:59,520 Speaker 6: products from the federal government. 135 00:07:00,400 --> 00:07:04,239 Speaker 2: So I'm just looking. You have a great, great chart 136 00:07:04,360 --> 00:07:07,200 Speaker 2: graphic here. Fossil fuels are likely to farewell on our 137 00:07:07,240 --> 00:07:12,480 Speaker 2: Trump administration. Electric vehicles are not. Wouldn't mister Musk have 138 00:07:12,560 --> 00:07:14,840 Speaker 2: something to say about the fate of electric vehicles? 139 00:07:15,920 --> 00:07:17,960 Speaker 6: He certainly would, But the question is what is Tesla's 140 00:07:17,960 --> 00:07:20,760 Speaker 6: strategy going to be visa VI of a electric vehicle producers, 141 00:07:21,080 --> 00:07:24,520 Speaker 6: most of the valuation comes from the dream of a ROBOTAXI. 142 00:07:24,600 --> 00:07:27,360 Speaker 6: And we've certainly seen some Bloomberg reporting recently saying that 143 00:07:27,440 --> 00:07:29,880 Speaker 6: Musk is likely to put for a favorable framework on 144 00:07:30,000 --> 00:07:33,400 Speaker 6: av's when it comes to evs or electric vehicles. You know, 145 00:07:33,600 --> 00:07:35,800 Speaker 6: he has said and the business and now may or 146 00:07:35,800 --> 00:07:38,840 Speaker 6: may not bear this out that Tesla would do better 147 00:07:39,240 --> 00:07:42,520 Speaker 6: sort of survive the loss of the EV tax credits 148 00:07:42,520 --> 00:07:44,480 Speaker 6: in a way that some of his EV competitors might not. 149 00:07:45,160 --> 00:07:47,920 Speaker 6: It ultimately depends on what you and what he thinks 150 00:07:47,960 --> 00:07:50,760 Speaker 6: tesl's interest is whether it's dominating a smaller EV market 151 00:07:50,920 --> 00:07:52,920 Speaker 6: or having a smaller share of a larger EV market. 152 00:07:53,200 --> 00:07:54,680 Speaker 3: Let's move into some of the stuff that feels a 153 00:07:54,720 --> 00:07:57,320 Speaker 3: little bit disier, and those are the tax credits that 154 00:07:57,400 --> 00:08:00,640 Speaker 3: are part of the IRA. So one is as a 155 00:08:00,800 --> 00:08:04,160 Speaker 3: tax credit for carbon that's captured, how you store, how 156 00:08:04,200 --> 00:08:06,560 Speaker 3: you capture it is debatable in terms of how much 157 00:08:06,560 --> 00:08:08,320 Speaker 3: tax credit you receive, and the other has to do 158 00:08:08,360 --> 00:08:11,920 Speaker 3: with hydrogen. How do we feel about those two policies 159 00:08:12,760 --> 00:08:14,960 Speaker 3: either staying in place or getting reduced. 160 00:08:16,080 --> 00:08:19,960 Speaker 6: So these tax credits are favored by industrial interests, oil 161 00:08:19,960 --> 00:08:22,560 Speaker 6: and gas interests. From what I've heard, there's not a 162 00:08:22,600 --> 00:08:24,600 Speaker 6: lot of Republican appetite to appeal either of the votes. 163 00:08:24,640 --> 00:08:27,160 Speaker 6: But you're likely to see is looser regulations on both, 164 00:08:27,280 --> 00:08:29,680 Speaker 6: which actually strengthens the business case for both. We might 165 00:08:29,680 --> 00:08:32,320 Speaker 6: see a better outlook for both carbon caster and for 166 00:08:32,440 --> 00:08:36,440 Speaker 6: hydrids than under Trump administration. Now, as for emissions benefits, 167 00:08:36,480 --> 00:08:38,880 Speaker 6: the market acceptance of that, that might be a little 168 00:08:38,880 --> 00:08:43,400 Speaker 6: bit diceier, but nevertheless we see the economic case too 169 00:08:43,760 --> 00:08:45,960 Speaker 6: being a little bit easier as compliance costs go down. 170 00:08:47,160 --> 00:08:50,360 Speaker 2: So I'm just looking again winners and losers here, how 171 00:08:50,440 --> 00:08:53,320 Speaker 2: much of this is a day one type of policy 172 00:08:53,360 --> 00:08:56,720 Speaker 2: thing versus boy, this is just take a while. To 173 00:08:56,800 --> 00:08:59,640 Speaker 2: the extent that Trump administration may want to shift gears 174 00:09:00,200 --> 00:09:03,480 Speaker 2: on the energy transition, it seems like a lot of 175 00:09:03,520 --> 00:09:05,880 Speaker 2: stuff has already been spent. There's a lot of investment 176 00:09:05,920 --> 00:09:08,160 Speaker 2: already on my ground. What's the timing, do you think? 177 00:09:09,520 --> 00:09:11,320 Speaker 6: Right? Well, it depends on what you're talking about. If 178 00:09:11,320 --> 00:09:13,360 Speaker 6: you're talking about taxes, there's going to be a big 179 00:09:13,400 --> 00:09:16,200 Speaker 6: tax negotiation taking up probably most of twenty twenty five 180 00:09:16,280 --> 00:09:18,360 Speaker 6: to do with extending the Trump tax cuts, seeing what 181 00:09:18,400 --> 00:09:20,840 Speaker 6: happens with the IRA et cetera. You're likely to see 182 00:09:21,200 --> 00:09:22,600 Speaker 6: closure on that by the end of the year. But 183 00:09:22,640 --> 00:09:25,680 Speaker 6: after that will come regulatory changes and so forth. In general, 184 00:09:25,679 --> 00:09:30,160 Speaker 6: regulatory changes, including those for existing tax credits, take usually 185 00:09:30,240 --> 00:09:34,240 Speaker 6: about two or three years, give or take, and so 186 00:09:34,640 --> 00:09:36,800 Speaker 6: a lot of the stuff can't really happen on day one. 187 00:09:36,840 --> 00:09:40,560 Speaker 6: You can't really shift to sip on a dime. However, 188 00:09:40,640 --> 00:09:43,280 Speaker 6: in terms of carrif, those are things that can be 189 00:09:43,320 --> 00:09:47,120 Speaker 6: done more or less immediately, though politically that might not 190 00:09:47,200 --> 00:09:51,760 Speaker 6: fly too well. And programs that are sort of voluntary 191 00:09:51,880 --> 00:09:54,240 Speaker 6: like again federal procurement of clean products, Those could be 192 00:09:54,360 --> 00:09:56,720 Speaker 6: killed more or less day one by an executive order. 193 00:09:56,920 --> 00:09:59,440 Speaker 3: What about wind and solar? So to some extent a 194 00:09:59,480 --> 00:10:01,880 Speaker 3: lot has our been thrown into that, and it's hard 195 00:10:01,880 --> 00:10:04,199 Speaker 3: to see onshore wind and solar, it's hard for me 196 00:10:04,280 --> 00:10:08,080 Speaker 3: to reconcile that being really stripped away. But the offshore 197 00:10:08,160 --> 00:10:10,920 Speaker 3: wind space that has question marks for me. 198 00:10:11,880 --> 00:10:14,199 Speaker 6: Yeah, it does have quite a few. If you look 199 00:10:14,240 --> 00:10:18,079 Speaker 6: at BNFS modeling for what might happen if the IRA 200 00:10:18,280 --> 00:10:20,720 Speaker 6: were repealed at the earliest opportunity, which again we don't 201 00:10:20,720 --> 00:10:22,720 Speaker 6: think will happen, but even if it did, you would 202 00:10:22,720 --> 00:10:25,560 Speaker 6: see about a seventeen percent drop overall in the combination 203 00:10:25,679 --> 00:10:28,920 Speaker 6: of wind, solar, and storage installations. Wind itself, though, would 204 00:10:28,920 --> 00:10:31,120 Speaker 6: see a much bigger drop because it's very expensive and 205 00:10:31,160 --> 00:10:33,679 Speaker 6: tax pres dependent. You might see about like thirty percent 206 00:10:33,760 --> 00:10:36,520 Speaker 6: drop in on store wind and an over forty percent 207 00:10:36,640 --> 00:10:38,960 Speaker 6: drop in offshore wind, and that's only based on the 208 00:10:38,960 --> 00:10:39,920 Speaker 6: financial subsidies. 209 00:10:39,960 --> 00:10:40,160 Speaker 7: Right. 210 00:10:40,440 --> 00:10:44,000 Speaker 6: Trump has a lot more control over offshore leasing as 211 00:10:44,080 --> 00:10:47,120 Speaker 6: well as federal permits. There's a pipeline of products that 212 00:10:47,120 --> 00:10:49,640 Speaker 6: already have both offer leases and permits, but a lot 213 00:10:49,640 --> 00:10:52,240 Speaker 6: of proposed ones don't have that yet, and there's also 214 00:10:52,360 --> 00:10:54,960 Speaker 6: questions about how the Unity would approach litigate and against 215 00:10:54,960 --> 00:10:58,440 Speaker 6: existing off for wind permits. You might see some of 216 00:10:58,480 --> 00:11:00,960 Speaker 6: that fall by the wayside depending on how lawsuits go. 217 00:11:01,679 --> 00:11:06,000 Speaker 2: Derek just broadly defined how committed is Congress as a 218 00:11:06,120 --> 00:11:10,040 Speaker 2: legislative body to this whole energy transition. Do they feel 219 00:11:10,040 --> 00:11:13,720 Speaker 2: like it's real or how did they feel about it? 220 00:11:13,800 --> 00:11:17,720 Speaker 3: Are facilities being built in their states? Yeah, so that 221 00:11:16,440 --> 00:11:18,679 Speaker 3: might act they answer. 222 00:11:18,480 --> 00:11:22,360 Speaker 6: To exactly from what we attract in clean tech factory deployments, 223 00:11:22,360 --> 00:11:25,280 Speaker 6: I think about ninety percent is going to red or purple. 224 00:11:25,280 --> 00:11:28,280 Speaker 6: It has swing states, so there's a lot of electoral consequences, 225 00:11:28,360 --> 00:11:31,200 Speaker 6: especially if you zoom down at the district level, where 226 00:11:31,240 --> 00:11:35,480 Speaker 6: overwhelmingly it's Republican districts with the planned better labor costs, 227 00:11:36,400 --> 00:11:38,880 Speaker 6: rich resource these are the place they're seeing the most investment. 228 00:11:38,920 --> 00:11:42,520 Speaker 6: And so I think the commitment primarily is to economic development, 229 00:11:42,600 --> 00:11:46,120 Speaker 6: local opportunity, as well as to some degree on storing 230 00:11:46,240 --> 00:11:50,680 Speaker 6: and supply chained diversificatement and de risking, and that I 231 00:11:50,679 --> 00:11:53,280 Speaker 6: think is fairly durable in a bipartisan manner. 232 00:11:53,679 --> 00:11:57,800 Speaker 2: Our Thanks to Derek flakel BN ef lead US Policy ammost. 233 00:11:57,679 --> 00:11:59,360 Speaker 3: Coming up, we're going to break down how Wall Street 234 00:11:59,360 --> 00:12:02,480 Speaker 3: banks are planning money into artificial intelligence as the next 235 00:12:02,480 --> 00:12:03,000 Speaker 3: big thing. 236 00:12:03,240 --> 00:12:06,199 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 237 00:12:06,240 --> 00:12:08,320 Speaker 2: depth research and data on two thousand companies and one 238 00:12:08,400 --> 00:12:11,199 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 239 00:12:11,240 --> 00:12:12,480 Speaker 2: b I go on the terminal. 240 00:12:12,640 --> 00:12:15,600 Speaker 3: I'm Paul Sweeney and I'm Alex Deel, and this is Bloomberg. 241 00:12:20,720 --> 00:12:24,600 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 242 00:12:24,679 --> 00:12:28,040 Speaker 1: weekdays at ten am Eastern on Affocarplay and Android Auto 243 00:12:28,120 --> 00:12:31,080 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 244 00:12:31,120 --> 00:12:34,800 Speaker 1: get your podcasts, or watch us live on YouTube. 245 00:12:35,920 --> 00:12:38,760 Speaker 3: We move next to news on the information technology company 246 00:12:38,840 --> 00:12:40,160 Speaker 3: super micro Computer. 247 00:12:40,520 --> 00:12:44,000 Speaker 2: This week, super micro computer shares rose the most since February, 248 00:12:44,040 --> 00:12:46,240 Speaker 2: and this came after the company hired a new auditor, 249 00:12:46,360 --> 00:12:48,040 Speaker 2: BDO USA. 250 00:12:48,120 --> 00:12:50,680 Speaker 3: Super Micro also filed a plan to come into compliance 251 00:12:50,679 --> 00:12:53,880 Speaker 3: with Nasdaq listing requirements. If the plan is accepted, super 252 00:12:53,920 --> 00:12:57,200 Speaker 3: Micro's deadline for filing its financial disclosure reports will likely 253 00:12:57,240 --> 00:12:58,440 Speaker 3: be extended to February. 254 00:12:58,559 --> 00:13:00,520 Speaker 2: This would allow the company to stay listed on the 255 00:13:00,600 --> 00:13:03,400 Speaker 2: NASTAC until a final decision is made. For more. We're 256 00:13:03,480 --> 00:13:06,720 Speaker 2: joined by Woujin Hell Bloomberg Intelligence Senior Technology channelst We 257 00:13:06,760 --> 00:13:07,400 Speaker 2: first asked. 258 00:13:07,200 --> 00:13:09,360 Speaker 3: Wujin for his take on this week's news. 259 00:13:09,679 --> 00:13:13,120 Speaker 8: The fact that they actually got an auditor, given what 260 00:13:13,160 --> 00:13:15,720 Speaker 8: they've gone through over the last two to three months, 261 00:13:16,520 --> 00:13:18,199 Speaker 8: is actually positive news for them. 262 00:13:18,679 --> 00:13:20,680 Speaker 2: Which when I kind of just look at this story again, 263 00:13:20,679 --> 00:13:23,880 Speaker 2: they've had some real concerns with their auditors and some 264 00:13:23,920 --> 00:13:26,040 Speaker 2: of the auditors concerns about the risk controls. I guess 265 00:13:26,080 --> 00:13:28,480 Speaker 2: at the company, can you give us your opinion of 266 00:13:29,040 --> 00:13:31,920 Speaker 2: management of this company and the board of this company. 267 00:13:32,840 --> 00:13:36,840 Speaker 8: Yeah. You know, one of the reasons why I and 268 00:13:36,840 --> 00:13:40,800 Speaker 8: why resigned as an auditor as part of the AK 269 00:13:40,960 --> 00:13:45,080 Speaker 8: filing was that there were some integrity issues that they 270 00:13:45,160 --> 00:13:49,120 Speaker 8: found as part of trying to get some financial documents. 271 00:13:49,160 --> 00:13:52,640 Speaker 8: You know, Paul, I haven't seen the word integrity issues 272 00:13:53,160 --> 00:13:57,960 Speaker 8: in an AK filing or an auditor resignation since back 273 00:13:57,960 --> 00:13:59,920 Speaker 8: in the end run days. I'm not saying that this 274 00:14:00,080 --> 00:14:03,320 Speaker 8: is an Enron, but this is something that you don't 275 00:14:03,320 --> 00:14:07,000 Speaker 8: typically find in filing. So you know, I have called 276 00:14:07,000 --> 00:14:10,120 Speaker 8: for you may need an overhaul of the board or 277 00:14:10,200 --> 00:14:13,920 Speaker 8: greater independence and possibly change of the CFO, because this 278 00:14:13,960 --> 00:14:17,240 Speaker 8: is not the first rodeo of having delayed filings. 279 00:14:17,800 --> 00:14:21,239 Speaker 3: Do you feel like the stock move is justified? 280 00:14:21,840 --> 00:14:25,720 Speaker 8: Yeah, So if we think about the recent moves, there's 281 00:14:25,800 --> 00:14:30,080 Speaker 8: actually been more headline risk that's been driving the stock 282 00:14:30,160 --> 00:14:33,600 Speaker 8: than the fundamentals. I think much of this is more 283 00:14:33,600 --> 00:14:37,400 Speaker 8: of a relief rally that they're not going to get delisted. Now, 284 00:14:37,520 --> 00:14:41,080 Speaker 8: delisting would have meant a couple of things. First of all, 285 00:14:41,280 --> 00:14:43,680 Speaker 8: for they get delisted and it is going to start 286 00:14:43,720 --> 00:14:47,680 Speaker 8: some force selling, but it also potentially well it would 287 00:14:47,720 --> 00:14:49,880 Speaker 8: have forced the removal of the S and P five hundred, 288 00:14:50,240 --> 00:14:52,920 Speaker 8: which would have been another round of forced selling when 289 00:14:52,920 --> 00:14:57,640 Speaker 8: the rebalancing comes in December the fifth. So that eliminates 290 00:14:57,920 --> 00:15:01,160 Speaker 8: that risk for super micro risk. Some relief there, but 291 00:15:01,200 --> 00:15:02,480 Speaker 8: they're still not out of the woods. 292 00:15:03,440 --> 00:15:06,320 Speaker 2: Where does this company fit into kind of your part 293 00:15:06,320 --> 00:15:08,240 Speaker 2: of the tech stack, Wouge in terms of being a 294 00:15:08,280 --> 00:15:11,520 Speaker 2: supplier of you know, hardware and components and things like that, 295 00:15:11,560 --> 00:15:14,200 Speaker 2: Because I mean it's got twenty five billion of I 296 00:15:14,200 --> 00:15:16,880 Speaker 2: guess revenue. I'm just looking at the FA function forecasted 297 00:15:16,920 --> 00:15:18,760 Speaker 2: for June twenty five. I mean, it's a big company. 298 00:15:19,960 --> 00:15:24,200 Speaker 8: Yeah, look, it's all about AI AI AI. The question 299 00:15:24,280 --> 00:15:27,240 Speaker 8: I have is how reliable are those estimates? Keep in 300 00:15:27,240 --> 00:15:30,760 Speaker 8: mind there's been several coverage suspensions and I don't know 301 00:15:30,800 --> 00:15:32,480 Speaker 8: how up to date those estimates are. 302 00:15:32,680 --> 00:15:35,720 Speaker 3: Who are the customers for zuper Micro? 303 00:15:36,040 --> 00:15:39,200 Speaker 8: Yeah, so we do know that there's one large cloud customer, 304 00:15:40,040 --> 00:15:43,560 Speaker 8: which we suspect is Meta, but it's tier two cloud 305 00:15:43,600 --> 00:15:47,480 Speaker 8: customers company that may be filing for an IPO called 306 00:15:47,520 --> 00:15:53,800 Speaker 8: core Weave, and also Tesla's XAI. They bought probably about 307 00:15:53,800 --> 00:15:56,880 Speaker 8: a one point five billion dollars in equipment from super 308 00:15:56,920 --> 00:15:58,720 Speaker 8: Micro this past year, and. 309 00:15:58,640 --> 00:16:01,040 Speaker 2: Which to your point about the analyst coverage, right, just 310 00:16:01,040 --> 00:16:04,040 Speaker 2: pulled up the A and R function for analysts recommendations. 311 00:16:04,640 --> 00:16:09,119 Speaker 2: Most or a lot of the annals have suspended coverage 312 00:16:09,680 --> 00:16:12,440 Speaker 2: or not rated. Is kind of what we see. So 313 00:16:12,480 --> 00:16:13,920 Speaker 2: we of the ones that do have a rating on 314 00:16:13,960 --> 00:16:17,280 Speaker 2: their three buys, seven holds, and two sells. So it 315 00:16:17,320 --> 00:16:19,760 Speaker 2: sounds like this company has a lot of ground a 316 00:16:19,800 --> 00:16:22,360 Speaker 2: head of it to rebuild confidence from the analyst community, 317 00:16:22,400 --> 00:16:24,920 Speaker 2: probably their customers, and from investors. Is that kind of 318 00:16:25,280 --> 00:16:25,720 Speaker 2: your thought? 319 00:16:25,920 --> 00:16:26,200 Speaker 7: Yeah? 320 00:16:26,800 --> 00:16:30,400 Speaker 8: Yeah, I mean, look, I think some of the headline 321 00:16:30,480 --> 00:16:33,360 Speaker 8: risk has been eliminated for now, or at least extended. 322 00:16:34,480 --> 00:16:37,640 Speaker 8: You know, they only received an extension from the Nasdaq. 323 00:16:38,360 --> 00:16:41,760 Speaker 8: The next milestone, quite frankly, is probably February twenty fifth, 324 00:16:41,840 --> 00:16:45,720 Speaker 8: when if they don't follow their filings on time by 325 00:16:45,720 --> 00:16:49,120 Speaker 8: that time, the delisting questions going to start arising again. 326 00:16:49,520 --> 00:16:51,200 Speaker 8: They essentially kick the can down the road. 327 00:16:52,120 --> 00:16:54,160 Speaker 3: This might be a super silly question. At one point 328 00:16:54,160 --> 00:16:55,920 Speaker 3: I probably knew the answer to this, But where does 329 00:16:55,960 --> 00:16:58,640 Speaker 3: super micro sit in the AI play stack? 330 00:17:00,160 --> 00:17:03,960 Speaker 8: Yeah, so they're actually in the server space. It's the 331 00:17:04,680 --> 00:17:09,560 Speaker 8: hardware equipment that helps run the models. Among the US vendors, 332 00:17:09,560 --> 00:17:12,879 Speaker 8: they actually had the largest amount of AI service sales, 333 00:17:13,520 --> 00:17:15,159 Speaker 8: larger than Dell and larger than HPE. 334 00:17:15,480 --> 00:17:18,280 Speaker 3: So they're very much like needed in this market. Like 335 00:17:19,200 --> 00:17:21,320 Speaker 3: it's going to be hard to replace them either way, right, 336 00:17:21,320 --> 00:17:23,000 Speaker 3: Like they're needed essential. 337 00:17:23,960 --> 00:17:29,679 Speaker 8: Well, that's a good comment and good question. Competition has grown. 338 00:17:30,200 --> 00:17:33,840 Speaker 8: Dell is actually strengthening their AI chops quite a bit. 339 00:17:34,400 --> 00:17:36,840 Speaker 8: But I came back from a couple of conferences recently 340 00:17:36,960 --> 00:17:40,040 Speaker 8: and we're starting to see other companies with similar capabilities 341 00:17:40,920 --> 00:17:43,400 Speaker 8: that we'll be making it much more competitive. And one 342 00:17:43,400 --> 00:17:46,040 Speaker 8: of the evidence there so far is the lower gross 343 00:17:46,080 --> 00:17:49,800 Speaker 8: margin they peaked their gross margin at around seventeen percent 344 00:17:49,840 --> 00:17:51,720 Speaker 8: a couple of years back when they were the sole player, 345 00:17:52,200 --> 00:17:54,360 Speaker 8: and now that you have more players coming in, their 346 00:17:55,000 --> 00:17:59,479 Speaker 8: gross margin the last couple of quarters went from went 347 00:17:59,520 --> 00:18:02,040 Speaker 8: to about three team percent in eleven percent all. 348 00:18:01,960 --> 00:18:05,160 Speaker 3: Right, thanks to Bujin Hoo, Bloomberg Intelligence Senior Technology Analyst. 349 00:18:05,480 --> 00:18:07,840 Speaker 2: This week we focused on a Bloomberg Big Take story 350 00:18:08,000 --> 00:18:11,000 Speaker 2: entitled Wall Street Banker Spot a fat payday in one 351 00:18:11,240 --> 00:18:13,000 Speaker 2: trillion dollar AI hysteria. 352 00:18:13,200 --> 00:18:15,520 Speaker 3: You can find it on Bloomberg dot com and the Terminal, 353 00:18:15,680 --> 00:18:17,480 Speaker 3: and the story looks at how Wall Street banks are 354 00:18:17,520 --> 00:18:20,800 Speaker 3: plowing capital into artificial intelligence as the next big thing 355 00:18:21,160 --> 00:18:21,520 Speaker 3: from work. 356 00:18:21,640 --> 00:18:23,960 Speaker 2: We're joined by one of the stories authors, Neil Callanan, 357 00:18:24,119 --> 00:18:25,359 Speaker 2: Bloomberg Senior Editor. 358 00:18:25,520 --> 00:18:27,359 Speaker 3: We first asked Neil to talk to us about how 359 00:18:27,440 --> 00:18:30,000 Speaker 3: much money Wall Street banks are actually steering towards AI. 360 00:18:30,400 --> 00:18:33,680 Speaker 7: We're talking about a trillion in credit and two trillion 361 00:18:33,720 --> 00:18:38,880 Speaker 7: and overall expenditure on data centers and AI and everything 362 00:18:38,880 --> 00:18:41,760 Speaker 7: related to that. And basically what we have at the 363 00:18:41,760 --> 00:18:45,440 Speaker 7: moment is the banks and private credit providers saying the 364 00:18:46,200 --> 00:18:49,600 Speaker 7: flow of capital that's needed to fund these things means 365 00:18:49,600 --> 00:18:51,320 Speaker 7: that we don't even have to compete with each other 366 00:18:51,400 --> 00:18:55,040 Speaker 7: because everybody is going to get a slice of the 367 00:18:55,080 --> 00:18:58,480 Speaker 7: pie regardless of what happens. But having said all that, 368 00:18:58,600 --> 00:19:01,520 Speaker 7: actually it's probably the that's part of financing right now, 369 00:19:01,560 --> 00:19:05,080 Speaker 7: and margins are quite tight compared with other types of lending, 370 00:19:05,200 --> 00:19:07,600 Speaker 7: so you know, less than two percentage points if you've 371 00:19:07,600 --> 00:19:10,719 Speaker 7: got one of these hyperscalers like Amazon or Meta or 372 00:19:12,320 --> 00:19:14,239 Speaker 7: Alphabet is one of your tenants in one of these 373 00:19:14,320 --> 00:19:17,639 Speaker 7: data centers, and each one is massive, so you know, 374 00:19:17,880 --> 00:19:19,920 Speaker 7: these things are going to cost about twelve billion dollars 375 00:19:20,000 --> 00:19:23,040 Speaker 7: each to construct. They're about the size of a skyscraper 376 00:19:23,080 --> 00:19:26,359 Speaker 7: if you put it down sideways, and they're just filled 377 00:19:26,359 --> 00:19:29,200 Speaker 7: them with rocks of computing powered and tended to drive 378 00:19:29,240 --> 00:19:29,919 Speaker 7: AI forward. 379 00:19:30,440 --> 00:19:32,879 Speaker 2: Neil, talk to us about this Morgan Stanley dinner you 380 00:19:32,920 --> 00:19:34,200 Speaker 2: wrote about in the piece. 381 00:19:35,640 --> 00:19:38,400 Speaker 7: Yeah, it's a dinner between the bank and a number 382 00:19:38,440 --> 00:19:42,320 Speaker 7: of private credit firms. You know, usually these these companies 383 00:19:42,359 --> 00:19:46,800 Speaker 7: are competing quite heavily with each other. Among the invitees 384 00:19:46,800 --> 00:19:51,440 Speaker 7: are Ares and Blackstone and Apollo, for example. But at 385 00:19:51,440 --> 00:19:53,520 Speaker 7: that dinner day kind of mood was like, we don't 386 00:19:53,560 --> 00:19:55,560 Speaker 7: need to compete in the same way in this in 387 00:19:55,560 --> 00:19:58,760 Speaker 7: this area because there's just a demound for so much 388 00:19:58,800 --> 00:20:01,879 Speaker 7: capital at the moment and so much credit that we 389 00:20:01,880 --> 00:20:04,800 Speaker 7: can all make out quite well out of this. And 390 00:20:05,000 --> 00:20:06,480 Speaker 7: you know, it's kind of a new goal rush as 391 00:20:06,520 --> 00:20:06,719 Speaker 7: it were. 392 00:20:07,440 --> 00:20:09,679 Speaker 3: Up Did that message land like, are they all on 393 00:20:09,680 --> 00:20:10,560 Speaker 3: the same page about that? 394 00:20:12,400 --> 00:20:13,679 Speaker 7: I think the fact we got a hold of the 395 00:20:13,680 --> 00:20:17,800 Speaker 7: details suggests perhaps not. And again, the competition seems to 396 00:20:17,840 --> 00:20:21,240 Speaker 7: be there in terms of the pricing of the loans 397 00:20:21,240 --> 00:20:24,240 Speaker 7: for the construction of data centers, which are very competitively 398 00:20:24,240 --> 00:20:25,040 Speaker 7: priced at the moment. 399 00:20:25,800 --> 00:20:29,320 Speaker 2: And is this equity financing, debt financing both all of 400 00:20:29,320 --> 00:20:32,320 Speaker 2: the above public private? What kind of capital is being raised? 401 00:20:33,080 --> 00:20:36,240 Speaker 7: It's pretty much everything. So you know a lot of 402 00:20:36,240 --> 00:20:39,080 Speaker 7: people I wouldn't get involved in data centers until such 403 00:20:39,119 --> 00:20:42,480 Speaker 7: time as they're built, so particularly for the pre construction 404 00:20:42,640 --> 00:20:45,920 Speaker 7: works where you're adding the power and stuff, and that's 405 00:20:46,240 --> 00:20:49,679 Speaker 7: very much equity driven at the moment. And then the 406 00:20:49,840 --> 00:20:52,840 Speaker 7: debt comes in for construction of these data centers, but 407 00:20:52,920 --> 00:20:56,160 Speaker 7: also for the power and the utilities that are needed 408 00:20:56,160 --> 00:20:58,320 Speaker 7: to service them as well, and that's coming from a 409 00:20:58,359 --> 00:20:59,800 Speaker 7: mix of public and private sources. 410 00:21:00,280 --> 00:21:02,520 Speaker 3: So this is enttally un for a question, who do 411 00:21:02,520 --> 00:21:04,040 Speaker 3: you think is going to win. Like, if they're not 412 00:21:04,080 --> 00:21:06,600 Speaker 3: all happy, go likely, let's work together and there's enough 413 00:21:06,600 --> 00:21:09,040 Speaker 3: pie for everybody who's in the lead in this right. 414 00:21:08,960 --> 00:21:12,000 Speaker 7: Now, I think there will be enough pie for everyone. 415 00:21:12,280 --> 00:21:14,520 Speaker 7: Maybe I'm being naive Alex by saying that, but I 416 00:21:14,840 --> 00:21:16,520 Speaker 7: actually think this is going to be a big driver 417 00:21:17,160 --> 00:21:21,600 Speaker 7: of credit markets in particular coming forward. These bankers have 418 00:21:21,640 --> 00:21:24,679 Speaker 7: suffered from you know, private equities difficulties, meaning there's been 419 00:21:24,760 --> 00:21:27,920 Speaker 7: less leverage loans around. That's got to change because these 420 00:21:28,119 --> 00:21:30,159 Speaker 7: these of the checks that need to be written for 421 00:21:30,200 --> 00:21:35,640 Speaker 7: these will also drive a bigger resuscitation in the securitization markets. 422 00:21:36,000 --> 00:21:37,920 Speaker 7: They're they've been quite good in the US, but they've 423 00:21:37,920 --> 00:21:41,080 Speaker 7: been murbed and in Europe. So you know, overall, this 424 00:21:41,119 --> 00:21:43,720 Speaker 7: should be a very very positive thing for both banks 425 00:21:43,760 --> 00:21:44,520 Speaker 7: and private credit. 426 00:21:45,280 --> 00:21:47,160 Speaker 3: Will there be some idea as long as it works. 427 00:21:47,040 --> 00:21:48,879 Speaker 7: That should be the qualifier. As long as it works. 428 00:21:48,880 --> 00:21:52,199 Speaker 7: There is a chance of these things are not going 429 00:21:52,280 --> 00:21:54,600 Speaker 7: to work, and banks are kind of trying to protect 430 00:21:54,600 --> 00:21:58,520 Speaker 7: themselves by they're giving lower leverage for data centers that 431 00:21:58,560 --> 00:22:01,080 Speaker 7: are AI focused on a charge more for them as well. 432 00:22:01,240 --> 00:22:04,320 Speaker 7: So that's their attempt to protect themselves if AI doesn't 433 00:22:04,320 --> 00:22:06,840 Speaker 7: come true in the way people hope, Well, that's kind. 434 00:22:06,760 --> 00:22:08,840 Speaker 2: Of our what I wanted to go neil, because for 435 00:22:09,000 --> 00:22:11,879 Speaker 2: some folks saying, are we really going to get the 436 00:22:11,960 --> 00:22:14,520 Speaker 2: return on investment? We being these companies that are making 437 00:22:14,520 --> 00:22:17,800 Speaker 2: these big capital expenditures, and as equity investors, are we 438 00:22:17,800 --> 00:22:20,840 Speaker 2: going to get their returns from all this spending? So 439 00:22:20,920 --> 00:22:23,040 Speaker 2: there's a note caution that's been kind of coming into 440 00:22:23,040 --> 00:22:26,120 Speaker 2: the AI story a little bit. Are the banks thinking 441 00:22:26,160 --> 00:22:27,120 Speaker 2: about that as well. 442 00:22:27,840 --> 00:22:31,000 Speaker 7: Yeah, one hundred percent. It's something that's definitely on their minds, 443 00:22:31,160 --> 00:22:34,000 Speaker 7: and one of the ways they protect themselves is those 444 00:22:34,119 --> 00:22:38,520 Speaker 7: kind of higher returns that they're demanding from ai A 445 00:22:38,640 --> 00:22:41,000 Speaker 7: focused data centers, because the risk is if these things 446 00:22:41,000 --> 00:22:43,919 Speaker 7: don't work out, you're left with an obsolete auset, So 447 00:22:43,960 --> 00:22:47,959 Speaker 7: you definitely need some downside protection there. There's also been 448 00:22:48,040 --> 00:22:50,119 Speaker 7: cases of some of these data centers that have been 449 00:22:50,160 --> 00:22:53,200 Speaker 7: built and can't get connections, So there there's already talked 450 00:22:53,320 --> 00:22:56,639 Speaker 7: of what people are calling zombie data centers, and one 451 00:22:56,680 --> 00:22:59,360 Speaker 7: of the ways investors can protect themselves against those risks 452 00:22:59,359 --> 00:23:02,800 Speaker 7: to actually do the plumbing instead. And we have some 453 00:23:02,840 --> 00:23:08,440 Speaker 7: stuff about people advising that the utilities and the power 454 00:23:08,480 --> 00:23:11,200 Speaker 7: providers may be a better way of playing this game 455 00:23:11,560 --> 00:23:14,280 Speaker 7: rather than investing directly in the data centers themselves. 456 00:23:14,359 --> 00:23:15,760 Speaker 3: Yeah, that's what I was going to bring up too. 457 00:23:15,800 --> 00:23:18,960 Speaker 3: It's not just building the data center, but especially when 458 00:23:18,960 --> 00:23:21,120 Speaker 3: you have say, you know, the report from the information 459 00:23:21,160 --> 00:23:23,760 Speaker 3: on video saying that it's just really hot and it's 460 00:23:23,800 --> 00:23:26,520 Speaker 3: too hot, and that's why sort of we may see 461 00:23:26,520 --> 00:23:29,080 Speaker 3: some delays in chips AKA you need air conditioning, you 462 00:23:29,119 --> 00:23:33,080 Speaker 3: need power, et cetera. Is there one company that's making 463 00:23:33,119 --> 00:23:36,240 Speaker 3: a bigger bed on one area of AI versus the other. 464 00:23:38,520 --> 00:23:42,520 Speaker 7: I don't think so at this stage, but the difficulty, 465 00:23:42,960 --> 00:23:45,400 Speaker 7: I mean, you could probably cite some of the power 466 00:23:45,440 --> 00:23:48,840 Speaker 7: companies in Virginia because Virginia is the kind of capital 467 00:23:48,840 --> 00:23:54,600 Speaker 7: of data centers globally. You know, the scale of power 468 00:23:54,640 --> 00:23:58,159 Speaker 7: that's needed for these things is the equivalent in just 469 00:23:58,240 --> 00:24:01,040 Speaker 7: in the US is the equivalent of Tree New York cities. 470 00:24:01,680 --> 00:24:06,880 Speaker 7: So that is just huge amount of power. So utilities, 471 00:24:06,880 --> 00:24:09,320 Speaker 7: particularly around Richmond, which is, as I say, they're kind 472 00:24:09,359 --> 00:24:11,840 Speaker 7: of capital of these things, they're probably the ones who 473 00:24:11,880 --> 00:24:15,280 Speaker 7: are taking the biggest risk. But one way that people 474 00:24:15,320 --> 00:24:17,840 Speaker 7: are looking to mitigate that is they're talking about building 475 00:24:17,880 --> 00:24:22,879 Speaker 7: small nuclear reactors next to these power centers. They sorry 476 00:24:22,920 --> 00:24:25,800 Speaker 7: next to these data centers to provide a power for them, 477 00:24:26,440 --> 00:24:29,240 Speaker 7: because basically, what we don't want to happen is for 478 00:24:29,280 --> 00:24:31,919 Speaker 7: consumers set up paying higher energy prices in order for 479 00:24:31,920 --> 00:24:34,720 Speaker 7: people to be able to play on Instagram more than 480 00:24:34,760 --> 00:24:36,240 Speaker 7: they normally would before. 481 00:24:36,520 --> 00:24:39,160 Speaker 2: Our thanks to Neil Callanan, Bloomberg Senior Editor. 482 00:24:39,280 --> 00:24:40,840 Speaker 3: Coming up on the program will take a look at 483 00:24:40,840 --> 00:24:43,160 Speaker 3: why Ford Motor is cutting more jobs in Europe. 484 00:24:43,200 --> 00:24:46,119 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 485 00:24:46,200 --> 00:24:48,280 Speaker 2: depth research and data on two thousand companies in one 486 00:24:48,359 --> 00:24:51,200 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 487 00:24:51,240 --> 00:24:53,280 Speaker 2: bio on the terminal Paul Sweeney. 488 00:24:53,000 --> 00:24:55,000 Speaker 3: And am Malex deal and this is Bloomberg. 489 00:25:00,160 --> 00:25:04,000 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 490 00:25:04,080 --> 00:25:07,600 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 491 00:25:07,640 --> 00:25:10,399 Speaker 1: Auto with the Bloomberg Business Act. You can also listen 492 00:25:10,520 --> 00:25:13,639 Speaker 1: live on Amazon Alexa from our flagship New York station, 493 00:25:14,000 --> 00:25:16,760 Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty. 494 00:25:18,000 --> 00:25:20,399 Speaker 3: We moved next to the Home improvement Space and Lows. 495 00:25:20,720 --> 00:25:23,520 Speaker 2: This week, the company reported at declining comparable sales for 496 00:25:23,600 --> 00:25:26,000 Speaker 2: the third quarter. This was due to a weak housing 497 00:25:26,040 --> 00:25:28,640 Speaker 2: market and high interest rates, which a weight on home 498 00:25:28,680 --> 00:25:29,520 Speaker 2: improvement spending. 499 00:25:29,840 --> 00:25:32,200 Speaker 3: For more, we are joined by Drew Reading Bloomberg Intelligence, 500 00:25:32,280 --> 00:25:33,320 Speaker 3: US home building analyst. 501 00:25:33,600 --> 00:25:35,840 Speaker 2: We first asked Drew to break down this week's results 502 00:25:35,840 --> 00:25:36,480 Speaker 2: from Lows. 503 00:25:36,720 --> 00:25:39,080 Speaker 9: Yeah, not too dissimilar from what we heard from Home 504 00:25:39,119 --> 00:25:42,359 Speaker 9: Depot was a beaten raise on same store sales. That 505 00:25:42,440 --> 00:25:45,280 Speaker 9: being said, there were some non core items as you mentioned. 506 00:25:45,920 --> 00:25:49,040 Speaker 9: You know, we know, we had a prolonged period of warm, 507 00:25:49,160 --> 00:25:51,959 Speaker 9: dry weather across the US, which provided a lift to 508 00:25:52,000 --> 00:25:55,200 Speaker 9: some of their seasonal and outdoor categories. At the same time, 509 00:25:55,840 --> 00:25:58,960 Speaker 9: there were beneficiaries of some of the hurricane activity we 510 00:25:59,000 --> 00:26:01,800 Speaker 9: saw in the South out one hundred basis point impact 511 00:26:02,440 --> 00:26:06,120 Speaker 9: to same store sales. Home Deepo called out fifty basis points, 512 00:26:06,560 --> 00:26:09,440 Speaker 9: So some transitory items in there. But I think when 513 00:26:09,440 --> 00:26:13,240 Speaker 9: you look at the core business, while it certainly appears 514 00:26:13,280 --> 00:26:15,520 Speaker 9: that maybe things have stabilized, I think if you were 515 00:26:15,560 --> 00:26:18,440 Speaker 9: looking for that inflection point, I don't think you got 516 00:26:18,440 --> 00:26:21,560 Speaker 9: it yet. We continue to see consumers pressured by the 517 00:26:21,600 --> 00:26:25,959 Speaker 9: cumulative impact of inflation, economic uncertainty, and you know, housing 518 00:26:25,960 --> 00:26:29,000 Speaker 9: activity which is at the lowest level in over a decade, So. 519 00:26:29,040 --> 00:26:32,400 Speaker 3: Drew, do you expect then for twenty twenty five consentsus 520 00:26:32,400 --> 00:26:35,280 Speaker 3: to start coming down to reflect that or just pushed out? 521 00:26:36,800 --> 00:26:39,360 Speaker 9: Well, I think the recovery in housing has certainly been 522 00:26:39,400 --> 00:26:42,840 Speaker 9: pushed out, you know. I think expectations for home improvement 523 00:26:42,880 --> 00:26:45,679 Speaker 9: as a whole are somewhat depressed. But what you have 524 00:26:45,680 --> 00:26:48,359 Speaker 9: to keep in mind is, although housing activity is very low, 525 00:26:49,640 --> 00:26:52,520 Speaker 9: home people and Lows will start to lap those comparisons, 526 00:26:52,560 --> 00:26:55,879 Speaker 9: so strictly from an optics perspective, things will become a 527 00:26:55,920 --> 00:26:57,720 Speaker 9: little bit easier. So we do think you could start 528 00:26:57,720 --> 00:26:59,720 Speaker 9: to see a little bit of growth maybe in the 529 00:27:00,080 --> 00:27:02,160 Speaker 9: back half of next year off of a lower base. 530 00:27:03,000 --> 00:27:06,360 Speaker 3: Operationally, how is Low's doing, say, compared. 531 00:27:06,359 --> 00:27:10,880 Speaker 9: To Home Depot, They do have some company specific things 532 00:27:10,920 --> 00:27:13,879 Speaker 9: going on, and the two that I'd call out and 533 00:27:13,920 --> 00:27:15,560 Speaker 9: that they point to are what they're doing in their 534 00:27:15,640 --> 00:27:18,960 Speaker 9: pro business and what they're doing online. When you compare 535 00:27:19,000 --> 00:27:22,040 Speaker 9: Home Depot and Lows, that's really the big differentiators. Home 536 00:27:22,080 --> 00:27:24,879 Speaker 9: Depot has a lot more exposure to the professional contractor 537 00:27:25,000 --> 00:27:28,160 Speaker 9: fifty percent of sales. Lows only has about twenty five 538 00:27:28,160 --> 00:27:30,680 Speaker 9: percent exposure to that business. But it's over the last 539 00:27:30,680 --> 00:27:33,040 Speaker 9: summer years, since Marvin Ellison came in and took over, 540 00:27:33,359 --> 00:27:35,720 Speaker 9: it's really been a point of emphasis for the company. 541 00:27:35,760 --> 00:27:38,720 Speaker 9: They didn't really have a strategy before. They didn't have 542 00:27:38,880 --> 00:27:42,640 Speaker 9: proper inventory staffing the brands that pros need it. So 543 00:27:42,840 --> 00:27:45,240 Speaker 9: they've made significant investments in that part of the business, 544 00:27:45,280 --> 00:27:47,720 Speaker 9: not only in getting the product into the store and 545 00:27:47,760 --> 00:27:51,000 Speaker 9: how they're serving their customers, but through supply chain investments 546 00:27:51,000 --> 00:27:55,000 Speaker 9: and how they're actually getting that product to their contractors, 547 00:27:55,000 --> 00:27:57,159 Speaker 9: whether it's on the job site, you know, through online 548 00:27:57,160 --> 00:27:59,760 Speaker 9: delivery or in store pick up, things of that nature. 549 00:28:00,680 --> 00:28:04,399 Speaker 9: At the same time, we're seeing improvement in their online business. Again, 550 00:28:04,680 --> 00:28:07,920 Speaker 9: they were operating an antiquated platform which really didn't allow 551 00:28:07,960 --> 00:28:10,000 Speaker 9: consumers to go in and find the products they need. 552 00:28:10,000 --> 00:28:12,440 Speaker 9: So they've made significant investments there and we actually saw 553 00:28:12,960 --> 00:28:15,320 Speaker 9: mid single digit growth in that business. So when you 554 00:28:15,359 --> 00:28:17,840 Speaker 9: look longer term, certainly you need the macro to turn 555 00:28:17,880 --> 00:28:21,560 Speaker 9: in order for these businesses to return to growth. But 556 00:28:21,640 --> 00:28:25,080 Speaker 9: I think once once that happens, they've made the investments 557 00:28:25,119 --> 00:28:27,760 Speaker 9: in the appropriate place to capitalize on that turnaround. 558 00:28:28,040 --> 00:28:28,280 Speaker 10: All right. 559 00:28:28,280 --> 00:28:31,720 Speaker 3: Thanks to Drew Reading Bloomberg Intelligence, US home building analyst We. 560 00:28:31,640 --> 00:28:34,480 Speaker 2: Moved next to earnings from the department store TJX. 561 00:28:34,520 --> 00:28:37,400 Speaker 3: The off price retailer reported overall comp sales that beat 562 00:28:37,440 --> 00:28:38,640 Speaker 3: analyst expectations. 563 00:28:38,800 --> 00:28:41,320 Speaker 2: TJX also raised its earnings outlook for the full year, 564 00:28:41,600 --> 00:28:44,680 Speaker 2: but lower than expected sales at the company's TJ Max 565 00:28:44,680 --> 00:28:47,880 Speaker 2: and Marshall stores dampen investor enthusiasm for more. 566 00:28:47,920 --> 00:28:50,720 Speaker 3: We were joined by Mary Ross Gilbert Bloomberg Intelligence, senior 567 00:28:50,760 --> 00:28:53,200 Speaker 3: equity analysts. We first asked Mary for her take on 568 00:28:53,280 --> 00:28:53,800 Speaker 3: the numbers. 569 00:28:54,200 --> 00:28:57,280 Speaker 11: The way we look at it is that TGX for 570 00:28:57,360 --> 00:28:59,920 Speaker 11: the quarter, their comp sales came in at three percent, 571 00:29:01,120 --> 00:29:03,800 Speaker 11: and that was sort of considered. You know, it's at 572 00:29:03,840 --> 00:29:07,960 Speaker 11: the high end of their estimate. It was below analyst estimates, 573 00:29:07,960 --> 00:29:10,560 Speaker 11: particularly on the marmac side, and you said that you're 574 00:29:10,600 --> 00:29:13,960 Speaker 11: a tjmac shopper. They had strength and home goods and 575 00:29:14,000 --> 00:29:17,360 Speaker 11: also international up seven percent. But I think if you 576 00:29:17,400 --> 00:29:21,080 Speaker 11: look at the outlook, they basically raised the profit outlook, 577 00:29:21,120 --> 00:29:25,040 Speaker 11: but it was below analyst estimates. So in looking for 578 00:29:25,280 --> 00:29:28,440 Speaker 11: EPs of as high as a four dollars and fifteen 579 00:29:28,480 --> 00:29:31,800 Speaker 11: cents for the full year, the estimate out there is 580 00:29:31,840 --> 00:29:34,960 Speaker 11: four nineteen and then for the quarter it's one nineteen 581 00:29:35,160 --> 00:29:40,080 Speaker 11: versus about one fifteen for the company's guidance. But what 582 00:29:40,200 --> 00:29:42,880 Speaker 11: we also think with TJX is they like to put 583 00:29:42,880 --> 00:29:46,040 Speaker 11: out conservative figures. We wouldn't be surprised if they come 584 00:29:46,080 --> 00:29:48,920 Speaker 11: in at four twenty for the year, and already the 585 00:29:48,920 --> 00:29:51,320 Speaker 11: fourth quarter is starting out strong for the company. 586 00:29:51,880 --> 00:29:56,800 Speaker 2: So, Mary, who is a TJX shopper? And what's the 587 00:29:56,800 --> 00:29:58,280 Speaker 2: company saying about that shopper? 588 00:29:58,320 --> 00:30:00,600 Speaker 3: Everyone? Everyone is a tj shopper. 589 00:30:00,680 --> 00:30:06,880 Speaker 11: Mary, That's exactly right. It actually appeals across income bands. 590 00:30:06,920 --> 00:30:10,240 Speaker 11: But we did notice that when you look at shoppers 591 00:30:10,640 --> 00:30:15,080 Speaker 11: earning with a household income over one hundred thousand, it's 592 00:30:15,120 --> 00:30:18,440 Speaker 11: well distributed across that even above two hundred and fifty thousand. 593 00:30:18,440 --> 00:30:20,600 Speaker 11: And the reason for that is if you look at 594 00:30:20,600 --> 00:30:25,120 Speaker 11: their assortment, you can actually buy handbags such as Chloe 595 00:30:25,280 --> 00:30:31,360 Speaker 11: Burberry Valentino and also Botega Vanetta, so here you can 596 00:30:31,400 --> 00:30:34,720 Speaker 11: get the cream of the crop. But it also appeals 597 00:30:34,760 --> 00:30:38,160 Speaker 11: to lower income consumers where they have more accessible brands 598 00:30:38,200 --> 00:30:42,320 Speaker 11: like a Juicy Juicy couture and you can get Nike 599 00:30:42,840 --> 00:30:48,200 Speaker 11: in tennis shoes. So it's a wonderful place to treasure 600 00:30:48,280 --> 00:30:51,520 Speaker 11: hunt across income bands. And so they do have that 601 00:30:51,640 --> 00:30:52,400 Speaker 11: strong appeal. 602 00:30:52,800 --> 00:30:55,880 Speaker 3: So this is what you've never been in Tjmax, right, Paul, No, right, Okay, 603 00:30:55,960 --> 00:30:58,200 Speaker 3: So here's how it goes. In most of the stores, 604 00:30:58,240 --> 00:31:00,959 Speaker 3: they have this runway section. One way section is all 605 00:31:00,960 --> 00:31:04,040 Speaker 3: the designer stuff that comes from whatever agreements that they 606 00:31:04,080 --> 00:31:06,760 Speaker 3: have with different other designers or big stores like a SAX. 607 00:31:07,040 --> 00:31:08,800 Speaker 3: They don't have a SAX, but you get my Drift 608 00:31:09,000 --> 00:31:10,840 Speaker 3: and then they have that on sale. Then they had 609 00:31:10,840 --> 00:31:13,080 Speaker 3: the clearance there and you can get some seriously good deals, 610 00:31:13,160 --> 00:31:14,719 Speaker 3: and then you have other stuff and you got some 611 00:31:14,760 --> 00:31:17,280 Speaker 3: food you can get you get housewares and that's also 612 00:31:17,360 --> 00:31:19,320 Speaker 3: not related to the home goods part, which is a 613 00:31:19,320 --> 00:31:20,520 Speaker 3: whole different store. 614 00:31:22,120 --> 00:31:22,479 Speaker 1: Store. 615 00:31:22,560 --> 00:31:24,479 Speaker 3: Yeah, and then you get toys, and then you get 616 00:31:24,560 --> 00:31:27,040 Speaker 3: kids clothes, and then you get towels and you get sheets, 617 00:31:27,040 --> 00:31:28,960 Speaker 3: and it's like and in all the stores you get 618 00:31:29,000 --> 00:31:33,560 Speaker 3: kind of the similar footprint. Did I do justice there? Mary? 619 00:31:33,640 --> 00:31:34,120 Speaker 11: You did? 620 00:31:34,280 --> 00:31:34,920 Speaker 6: Absolutely? 621 00:31:35,040 --> 00:31:38,440 Speaker 11: But they also have beauty, and beauty has been a 622 00:31:38,440 --> 00:31:41,000 Speaker 11: big draw. So for example, you could get Clinique or 623 00:31:41,040 --> 00:31:47,000 Speaker 11: even Laura Mercia, so it has incredible options again across 624 00:31:47,040 --> 00:31:50,200 Speaker 11: the income band, even in beauty. So beauty and fragrance 625 00:31:50,200 --> 00:31:52,720 Speaker 11: has also been one of the stronger categories for them. 626 00:31:52,920 --> 00:31:54,880 Speaker 3: So is there a read through to other stores Mary 627 00:31:55,080 --> 00:31:57,600 Speaker 3: from this or is this a unique TJX thing. 628 00:31:59,360 --> 00:32:01,800 Speaker 11: You know, if you get the numbers that came out 629 00:32:01,840 --> 00:32:05,440 Speaker 11: from Target, it was very disappointing, especially when you had 630 00:32:05,560 --> 00:32:09,720 Speaker 11: such robust figures coming out of Walmart, and Walmart indicated 631 00:32:09,760 --> 00:32:13,320 Speaker 11: that a big percentage out performance was due to that 632 00:32:13,800 --> 00:32:17,680 Speaker 11: consumer from a household earning over one hundred thousand, So 633 00:32:17,800 --> 00:32:21,320 Speaker 11: you can see that that consumer is looking for value everywhere, 634 00:32:21,760 --> 00:32:25,160 Speaker 11: and with Walmart, they're getting those better prices on essentials, 635 00:32:25,160 --> 00:32:28,240 Speaker 11: and while they're there, they're also shopping apparel because that's 636 00:32:28,280 --> 00:32:31,640 Speaker 11: where Target saw some weakness. So some challenges going on 637 00:32:32,080 --> 00:32:35,560 Speaker 11: with Target, which is always appealed to the premium shopper. 638 00:32:36,240 --> 00:32:39,440 Speaker 11: So I think that it comes down to execution and 639 00:32:39,480 --> 00:32:42,680 Speaker 11: then also the fact that we have this hire income 640 00:32:42,800 --> 00:32:47,360 Speaker 11: consumer really looking for value in TJMAX and TJX as 641 00:32:47,400 --> 00:32:50,320 Speaker 11: a company, I mean, they sort of fit that they're 642 00:32:50,360 --> 00:32:54,600 Speaker 11: one of the companies that are picking up share. 643 00:32:55,040 --> 00:32:58,080 Speaker 2: Our thanks to Mary Ross Gilbert Bloomberg Intelligence Senior Equadanalysts. 644 00:32:58,320 --> 00:33:00,600 Speaker 3: We move now to the auto industry and Ford. This 645 00:33:00,680 --> 00:33:02,760 Speaker 3: week we heard that Ford Motor will look to eliminate 646 00:33:02,800 --> 00:33:05,040 Speaker 3: another four thousand jobs in Europe. 647 00:33:05,120 --> 00:33:07,800 Speaker 2: The reductions, which to mount about fourteen percent of Ford's 648 00:33:07,880 --> 00:33:11,120 Speaker 2: europe workforce, will primarily hit operations in Germany and the 649 00:33:11,200 --> 00:33:12,720 Speaker 2: UK by the end of twenty twenty seven. 650 00:33:12,800 --> 00:33:15,320 Speaker 3: Now, this comes as the region's transition to electric vehicles 651 00:33:15,400 --> 00:33:18,120 Speaker 3: is losing traction industry wide and from More. We were 652 00:33:18,200 --> 00:33:20,800 Speaker 3: joined by Craig Trudell, Bloomberg Global Autos Editor. 653 00:33:21,040 --> 00:33:23,680 Speaker 2: We first asked Craig, what's behind the recent layoffs at Ford. 654 00:33:24,080 --> 00:33:27,160 Speaker 10: Yeah, I mean this is a story that's both sort 655 00:33:27,160 --> 00:33:30,120 Speaker 10: of one that's bigger than just Ford and yet very 656 00:33:30,160 --> 00:33:33,400 Speaker 10: acute for them. You know, Europe, we've seen just the 657 00:33:33,440 --> 00:33:37,000 Speaker 10: last few months sort of one automaker after another do 658 00:33:37,160 --> 00:33:41,040 Speaker 10: profit warnings. Whether you're talking about Volkswagen or Stilantis or 659 00:33:41,080 --> 00:33:44,920 Speaker 10: BMW Mercedes. It's really been sort of across the board 660 00:33:44,960 --> 00:33:48,240 Speaker 10: that a lot of manufacturers are having trouble with the 661 00:33:48,800 --> 00:33:52,120 Speaker 10: increase in competition at a time when we're not seeing 662 00:33:52,200 --> 00:33:56,560 Speaker 10: demand growth, and so you know, that leads to some 663 00:33:57,120 --> 00:33:59,520 Speaker 10: real need to kind of take a look at how 664 00:33:59,520 --> 00:34:03,280 Speaker 10: many people you're employing, how many plants you've got running, 665 00:34:03,320 --> 00:34:05,640 Speaker 10: and whether you need to take shifts out or even 666 00:34:05,680 --> 00:34:08,319 Speaker 10: go so far as to potentially take plants down. And 667 00:34:08,400 --> 00:34:11,719 Speaker 10: so you know, we've seen Volkswagen, you know, for the 668 00:34:11,719 --> 00:34:14,720 Speaker 10: first time minute's history actually looking at at closing plants 669 00:34:14,760 --> 00:34:19,080 Speaker 10: in in in Germany. Ford has been pulling back in 670 00:34:19,120 --> 00:34:21,640 Speaker 10: Europe for quite some time, and they're they're doing just 671 00:34:21,760 --> 00:34:23,279 Speaker 10: you know, sort of more of the same here. They 672 00:34:23,280 --> 00:34:26,319 Speaker 10: were really trying to to kind of you know, get 673 00:34:26,320 --> 00:34:29,600 Speaker 10: off to a fresh start and and move more aggressively 674 00:34:29,680 --> 00:34:32,000 Speaker 10: to evs and some of their competitors, and that hasn't 675 00:34:32,040 --> 00:34:33,319 Speaker 10: panned out particularly well. 676 00:34:33,520 --> 00:34:36,399 Speaker 3: They also said that pricing power on us EV's next 677 00:34:36,480 --> 00:34:39,160 Speaker 3: year is going to get hit. And then that's on 678 00:34:39,280 --> 00:34:41,839 Speaker 3: and then we're counting in those rollbacks of the tax 679 00:34:41,880 --> 00:34:43,960 Speaker 3: credit of cent of f one hundred dollars. Are we 680 00:34:44,000 --> 00:34:46,160 Speaker 3: going to see more cuts than to the US. 681 00:34:47,480 --> 00:34:51,920 Speaker 10: I think for Ford, you know, the amount of investment 682 00:34:52,000 --> 00:34:56,400 Speaker 10: in electric vehicles has been curtailed pretty significantly, so we 683 00:34:56,520 --> 00:34:59,720 Speaker 10: may not see a ton of pressure for them, although 684 00:35:00,160 --> 00:35:02,640 Speaker 10: you know we have we have actually you know, seen 685 00:35:02,680 --> 00:35:04,920 Speaker 10: them you know, already pulling back even some of the 686 00:35:04,960 --> 00:35:08,759 Speaker 10: existing production of of the F one fifty Lightning and 687 00:35:08,920 --> 00:35:12,400 Speaker 10: Mustang Machi. Their their two main electric vehicles. We have 688 00:35:12,440 --> 00:35:16,120 Speaker 10: a development The Automotive News reported that the Bronco SUV 689 00:35:16,280 --> 00:35:19,919 Speaker 10: actually will have a direction and in production early next year. 690 00:35:20,320 --> 00:35:23,160 Speaker 10: So you know, this is this is beyond just electric vehicles. 691 00:35:23,160 --> 00:35:24,840 Speaker 10: I think what we're seeing is is maybe sort of 692 00:35:24,880 --> 00:35:27,920 Speaker 10: a topping out of sales and and I mean to 693 00:35:27,960 --> 00:35:30,880 Speaker 10: your question in terms of the outlook for the US 694 00:35:31,280 --> 00:35:33,960 Speaker 10: next year, I do think there's some some real, uh 695 00:35:34,080 --> 00:35:36,160 Speaker 10: you know, questions you have to ask yourself about, you know, 696 00:35:36,280 --> 00:35:39,120 Speaker 10: just how much you can count on electric vehicle demand 697 00:35:39,480 --> 00:35:42,160 Speaker 10: continuing to grow in the US if Trump follows through 698 00:35:42,160 --> 00:35:43,600 Speaker 10: with some of the things he was threatening on the 699 00:35:43,600 --> 00:35:44,279 Speaker 10: campaign trail. 700 00:35:44,640 --> 00:35:47,800 Speaker 2: Craig just thirty seconds. What's the feeling out there today 701 00:35:47,880 --> 00:35:51,640 Speaker 2: consent US about demand for evs? Is it really softening? 702 00:35:52,160 --> 00:35:54,920 Speaker 10: Yeah? I mean I think here in Europe, uh, you know, 703 00:35:55,120 --> 00:35:58,799 Speaker 10: we were further along in making this transition, and yet 704 00:35:58,960 --> 00:36:02,719 Speaker 10: that was a large part due to significant and sustained 705 00:36:03,000 --> 00:36:05,839 Speaker 10: support from governments. And what we've seen is that if 706 00:36:05,840 --> 00:36:08,400 Speaker 10: that support gets pulled, you see a sort of immediate 707 00:36:09,040 --> 00:36:11,120 Speaker 10: falling out in terms of demand. And we've seen that 708 00:36:11,160 --> 00:36:13,680 Speaker 10: in Germany in particular, and that's been very, very troubling 709 00:36:13,960 --> 00:36:14,200 Speaker 10: all right. 710 00:36:14,239 --> 00:36:16,560 Speaker 3: Thanks to Craig Drudell, Bloomberg Global Autos Editor. 711 00:36:17,160 --> 00:36:21,680 Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 712 00:36:21,880 --> 00:36:24,800 Speaker 1: and anywhere else you will get your podcasts. Listen live 713 00:36:24,880 --> 00:36:28,480 Speaker 1: each weekday, ten am to noon Eastern on Bloomberg dot com, 714 00:36:28,560 --> 00:36:32,000 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 715 00:36:32,120 --> 00:36:35,200 Speaker 1: You can also watch us live every weekday on YouTube 716 00:36:35,320 --> 00:36:37,600 Speaker 1: and always on the Bloomberg terminal here